1

Ba r Reviewer
on
LABOR LAW

Annotation
Based on the Topics in the Supreme Court-
Prescribed 2019 Syllabus for Labor Law

By

PROF. JOSELITO GUIANAN CHAN

Legal Practitioner, Professor of Law
& Bar Reviewer

Managing Partner
C h a n R o b le s L aw F irm
www.chanrobles.com *

C h a n R o b le s In te r n e t B ar R e v ie w
www.chanroblesbar.com

4 th R e v is e d E d itio n
2019

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 ii bar Reviewer o n labor law

Ba r R e v i e w er o n L a b o r La w
4thRevised Edition, 2 0 1 9
© P h ilip p in e C o p y rig h t
2 0 12 ,2 0 1 4 ,2 0 1 7 & 2 0 19

by
PROF. JOSELITO GUIANAN CHAN

All Rights Reserved

ISBN 978-621-8079-02-1

No portion of this book may be copied or reproduced in

books, pamphlets, outlines or notes, w hether printed,-m arbjne-
copied, mimeographed, typew ritten, or in^artV other form, for1
.sale, w ithout th e v written adm ission of the author.
Any copy of th isb e q k w ithout theXorresponding num ber and
genuine signature of th e'a n th o r o representative on this page,
either proceeds from an ill^gitim :e source or is in possession of
one who has no authority to dl ;e thereof.

AuthorizecL$iz
Serial No.'

Published & D istributed by:

ChanRobles P ublishing Company

22nd Floor, Philippine Stock Exchange Centre, Tektite East Tower
Exchange Road, Ortigas Center, Pasig City
Metro Manila, Philippines
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A Division o/ChanRobles Publishing Company

J9JC9B0M
 Ta b u OF CONTENTS 111

FOREWORD
To the 4th Revised Edition
2019

Exciting new developments in the field of labor law necessitated

the revision of this book for the fourth time.

Notably, the 2019 Syllabus for Labor Law has undergone a major
overhaul not only in terms of re-arranging the prescribed topics but most
significantly, in the introduction of new topics that have not been
mentioned nor made part of the previous syllabi. Utmost are new topics
such as Bona Fide Occupational Qualifications (BFOQs), Employment of
Non-Resident Aliens, Disability and Death Benefits not only under the
Labor Code but under the POEA-Standard Employment Contract
(POEA-SEC), Employment of Security Guards, Doctrine of Floating
Status, and Judicial Review of Labor Rulings.

The enactment of new laws likewise required the revision of

significant parts of the annotation. Some of these laws with great impact
on labor law are:
(a) R A No. 11199 [February 07,2019], otherwise known as the
"Social Security Act 0/2018";
(b) R A No 11223 [February 20,2019], otherwise known as the
"Universal Health Care Law";1
(c) R A No. 112 10 [February 20,2019], otherwise known as the
“105-Day Expanded Maternity Leave Law";
(d) R A No. 11058 [August 17, 2018], entitled “An Act
Strengthening Compliance with Occupational Safety and
Health Standards and Providing Penalties fo r isolations
Thereof;** and
(e) R A No. 10911 [July 21, 2016], otherwise known as the
“Anti-Age Discrimination in Employment A ct"
Additionally, new rulings of the Supreme Court as well as new
issuances of labor agencies were included in this latest edition.

1 Thefii^cfR A N o.11223feattad»das4ppencfriC *tolhi5booli

* ’RieMGEsxtorRA.No. 11058lspresentBdas^ppende(*A*andttiatcf(is imptenier1ngf%i1es.0epartment0rderNc>. 198.
Senes of 2018, as >Vve«fcr,8 'to (his etffion.

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 IV Bar Reviewer on U bor Law

The author wishes to thank law students and bar reviewees for the
very positive reception they have been giving this book since its first
edition in 2012.

The author likewise would like to express his gratitude to

professors of labor law in various law schools nationwide who graciously
prescribe this book as reference material in the classroom.

It is the fervent hope and prayer of the author that this book, along
with his 3-Volume series cn the Labor Code and his annual Last-Minute
Bar Review Notes, would prove useful to law students and bar
candidates.

Jo s e lito G u ian an C han

Managing Partner
Chan Robles Law Firm
22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center
Pasig City, Metro Manila, Philippines

May 27,2019

J9JC9B0M
 Table of Contents v

FOREWORD
To the 3rd Revised Edition
2017

The issuance of this latest edition of this book becomes imperative

in the light of recent laws, labor issuances and rulings of the Supreme
Court affecting some of the topics prescribed in the Syllabus for labor law
which, earlier this year, was revised by the Supreme Court Bar
Examination Committee for the forthcoming 2017 bar examinations.

The author is grateful for the favorable feedbacks he received from

bar reviewees who have used this book in preparing for the bar
examination in labor law and from undergraduate law students who used
this book as supplement to their curriculum-prescribed labor law
subjects.

The commentaries in this book, though expansive and broad,

remain focused on the topics and sub-topics prescribed in the labor law
syllabus. This, the author believes, is what makes this book unique and
helpful to bar reviewees and law students who are constantly faced with
stressful deadlines and short timelines in their preparation for the
examination in the bar and in the classroom.

This book, together with the updated 3-Volume series by the

author on the Labor Code, would greatly enhance the chances o f its
readers in hurdling the labor law examinations.

joSELiTO Guianan C han

Managing Partner
Chan Robles Law Firm
22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center
Pasig City, Metro Manila, Philippines

July 15,2017

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 vi Bar Reviewer o n U bor Law

FOREWORD
To the 2nd Revised Edition
2014

This latest revision of this book was occasioned by the chief

changes introduced in the 20x3 syllabus for Labor Law which were
replicated in toto in the 2014 syllabus and presumably in the next
syllabus for subsequent bar examination in this subject.
'»
Structurally, the eight (8) major topical classifications in the 2011
and 2012 syllabi remain unperturbed. However, some topics and sub­
topics were either expanded or pruned down or merely re-arranged or
relocated.

For better and more effective presentation, the author took the
liberty of re-organizing some topics which, in his view, is extremely
necessary. Appropriate notes pointing out the changes are indicated in
the comments of the author.

Additionally and most significantly, the passage of new

amendatory laws and promulgation of new doctrinal pronouncements by
the Supreme Court in this subject have made this latest revision very
compelling. The author has thus expanded in no small measure his
commentaries on each and every topic in the syllabus, in the hope that
law students and reviewees preparing for the bar examinations of 2014
and beyond will have a comprehensive reference material in Labor Law
that is focused on the syllabus-prescribed topics.

Notably, this book appears to be thus far the first and only attempt
at annotating and commenting on the Supreme Court-prescribed
syllabus for a bar subject. Examinees for the 2012 and 2013 bar exams
who had used this book had given it their stamp of approval as a worthy
reference material for Labor Law. To this, die author expresses his
utmost thanks and sincere appreciation.

Before ending, it bears stressing that unknown to so many

practitioners and students, the Labor Code has been ordered renumbered
in 2011 by Republic Act No. 10 151.1 However, until this writing, only very
few decisions of the Supreme Court have cited the new renumbering

1 Entitled 'An Act Allowing the Employment of Night Workers, Thereby Repealing Articles 130 and 131 oi
Presidential Decree Number Four Hundred Forty-Two. As Amended. Otherwise Known as the Labor Code d
thePtoBpptnes.*Thiswas approvedon June 21,2011.

J9JC9B0M
 Table o f Co u n ts Vll

scheme prescribed by this law. Labor tribunals have likewise continued

to cite the old numbering— as if the mandate of R A No. 10 151 does not
exist in our statute books.

This led the author to write to the Office of the Secretary of Labor
and Employment in 2013 to suggest that it come out with a definitive
issuance on this matter in order to provide for a uniform re-numbering of
the affected provisions of the Labor Code. A DOLE Undersecretary
promptly replied that the DOLE will look into this matter. However,
almost a year had passed from that letter, and almost three (3) years
from the enactment of R A No. 10 151, but no such issuance has been
made by the DOLE - the government agency primordially tasked to
implement and enforce the Labor Code. Hopefully, an Explanatory
Bulletin, Circular or similar issuance will be released by the DOLE as
soon as possible to dispel the mix-up.

For purposes of guiding the readers of this book on the

renumbering of the Labor Code, the author is reproducing in full his
paper submitted to the Office of the DOLE Secretary, entitled
“CLARIFYING THE NEW RENUMBERING OF THE LABOR CODE." A
copy of this material is presented after this Foreword.

However, to avoid confusion, the new renumbering of the Labor

Code will not be used in this edition. One reason for this hesitancy is that
even the 2014 syllabus for Labor Law does not use or make reference
thereto.
J o se l it o G u ia n a n C h an
Managing Partner
Chan Robles Law Firm
22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center
Pasig City, Metro Manila, Philippines

June 15 ,2 0 14

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 Bar Reviewer , o n labor u w
Vlll

FOREWORD
To the 1st Edition
The dramatic and substantial revision of the format of the 2011 bar
examinations by the Supreme Court triggered the publication of this
book. From the previous open-ended format, the Supreme Court has laid
down a syllabus for every bar subject in the 2011 bar examinations and in
the forthcoming examinations this 2012. With the syllabus prescribing
specific major topics and sub-topics for every point of law, preparation
for the bar exams becomes systematic, precise, clear-cut and well-
defined.
This book seeks to discuss in a simple and concise manner, each
topic and sub-topic mentioned in the syllabus for labor law. Pertinent
provisions of law, rules and regulations and other issuances, as well as
the applicable jurisprudential precepts, are cited in the discussion of each
and every major topic and sub-topic. This manner of presenting the
discussions would, in the humble view of the author, assure the bar
reviewee of a broader and more methodical understanding and
comprehension of the important aspects of the topic under
consideration.
The contents of this book are based on the more-than-a-decade of
pre-bar and pre-week review lectures of the author on the subject Some
relevant commentaries of die author in his two (2) volumes on the Labor
Code of the Philippines are likewise cited in this book. For a more
extended and authoritative discussion on the topics prescribed in the
syllabus, his commentaries in these 2 volumes would certainly prove
helpful.
In the light of the introduction of multiple choice questions
(MCQs) in the 2011 bar examinations and in subsequent ones, sample
MCQs for each topic are presented at the end of this book. These MCQs
could well be used by the bar reviewees in honing their skill at answering
this type of questions.
It is hoped that this book would serve as a useful tool of bar
reviewees in hurdling the bar examination in labor law in the
forthcoming bar examinations in 2012 and beyond.
Jo s e l it o G u ia n a n C h a n
Managing Partner
Chan Robles Law Firm
22/F , Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center
Pasig City, Metro Manila, Philippines
March 19,2012

J9JC9B0M
 T a 8 ie of Co n te n t s ix

C itin g th e R e n u m b e re d P ro v isio n s
o f th e L a b o r Code

In the light of the renumbering o f certain

provisions of the Labor Code, as mandated under
R A . N o , i o i 5 i l2 and D O LE D e p artm e n t
A d v iso ry N o . 0 1, S e rie s o f 2 0 15 / both the
renum bered and old provisions o f the affected
Labor Code provisions are cited in this book
alongside each other.

Example:

Article 130 [132]3

where “ 13 0 ” is the new renumbering while
“ [ 1 3 2 ] ” is its counterpart old number.

By so presenting together both the new and the old

numbers, the reader would be well guided on the proper
provision to cite.

1 Ttts law wasenacted on June 21.201U is enfiled 'AN ACT ALLOWING THE EMPLOYMENT OF NiGlITW ORKm S.
THEREBY REPEALING ARTICLES 130 AND 131 OF PRESIDENTIAL DECREE NUMBER FOUR HUNDRED FORTY-
TWO, AS AMENDED, OTHERWISE KNOWJ AS THE LABOR CODE OF THE PHILIPPINES *
1 &nSSedaRensrbean9arSieljaborCo(Jeof0iePhaip(^nes.3S AfnendaTissuedby9ieIXH£SeoetaryooJid/2<1.2015.
2 T fe a r^ is erSiedTacSies^WcTnen'This is the W aftide affectedby ^fe«M>eringun(JefRA No. 10151.

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 X Ba r Reviewer o n Labor Law

TAM E OF CONTENTS

Topics are based on the

Suprem e Court-prescribed
2019 SYLLABUS FOR LABOR LAW

CHAPTER ONE

GENERAL PROVISIONS.............................................................. 1

A BASIC POLICY ON LABOR............................................................................... 1

B. CONSTRUCTION IN FAVOR OF LABOR.................................................. 2
C. CONSTITUTIONAL AND CIVIL CODE PROVISIONS
RELATING TO LABOR LAW....................................................... 6
1. CONSTITUTIONAL PROVISIONS
1-A DECLARATION OF PRINCIPLES AND STATE POLICIES
(Article II o f the Constitution)
1-B. BILL OF RIGHTS
(Article III o f the Constitution)
1-C. SOCIAL JUSTICE AND HUMAN RIGHTS
(Article X III o f the Constitution)
1-D. CONSTITUTIONAL RIGHTS THAT
CANNOT BE INVOKED IN
COMPANY-LEVEL ADMINISTRATIVE CASES
A. INAPPLICABILITY OF
RIGHT TO CONSTITUTIONAL DUE PROCESS
B. INAPPLICABILITY OF
RIGHT TO EQUAL PROTECTION OF THE LAWS
C. INAPPLICABILITY OF
RIGHT TO COUNSEL
2 aVIL CODE PROVISIONS

CHAPTER TWO

PRE-EMPLOYMENT......................................................................................................... 36

A. RECRUITMENT AND PLACEMENT OF

LOCAL AND MIGRANT WORKERS
(Labor Code and R A 9042,
as amended b y R A 10022).......................................................................... ................ 36
1. ILLEGAL RECRUITMENT
AND OTHER PROHIBITED ACTIVITIES
1-A ILLEGAL RECRUITMENT IN LOCAL EMPLOYMENT

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 T able of Co n te n t s XI

1 -B .'ILLEGAL RECRUITMENT IN OVERSEAS EMPLOYMENT

1-C. 'TYPES OF ILLEGAL RECRUITMENT AND THEIR ELEMENTS
a. SIMPLE ILLEGAL RECRUITMENT
b. ILLEGAL RECRUITMENT INVOLVING
ECONOMIC SABOTAGE
1-D. ILLEGAL RECRUITMENT VS. ESTAFA
2. LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER
a. SOLIDARY LIABILITY
b. THEORY OF IMPUTED KNOWLEDGE
3. TERMINATION OF CONTRACT OF MIGRANT WORKER
WITHOUT JUST OR VAUD CAUSE
I, GENERAL PRINCIPLES ON TERMINATION OF OFWs
II. MONETARY CLAIMS OF OFWs, IN GENERAL
HI. MONETARY CLAIMS OF OFWs ARISING FROM ILLEGAL DISMISSAL
4. BAN ON DIRECT-HIRING
B. EMPLOYMENT OF NON-RESIDENT ALIENS....................................................... 102

CHAPTER THREE

LABOR STANDARDS........................... . ........................................................ .................. 113

A CONDITIONS OF EMPLOYMENT...............................................................................114
1. COVERAGE
2. HOURS OF WORK
a. NORMAL HOURS OF WORK; HOURS WORKED
b. MEAL PERIODS
c. NIGHT SHIFT DIFFERENTIAL
d. OVERTIMEWORK
e. COMPUTAVON OF ADDITIONAL COMPENSATION
(RATES ONLY)
e-1. FACILITIES VS. SUPPLEMENTS
3. WEEKLY REST PERIODS
4. HOLIDAYS
5. SERVICE INCENTIVE LEAVE
6. SERVICE CHARGES
7.13™ MONTH PAY
B. WAGES....................................................................................................................... 158
1. PAYMENT OF WAGES
2. PROHIBITIONS REGARDING WAGES
3. WAGE DISTORTION, CONCEPT
a. WAGE ORDER

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 x ii Baa Reviewer o n Labor Law

b. WAGE DISTORTION
4. NON-DIMINUTION OF BENEFITS
C. LEAVES........................................................................
114
1. SERVICE INCENTIVE LEAVE
2 MATERNITY LEAVE
3. PATERNITY LEAVE
4. SOLO PARENT LEAVE
5. LEAVE BENEFITS FOR WOMEN WORKERS
UNDER R A 9710 and R A 9262
a. SPECIAL LEAVES FOR WOMEN WORKERS
(R A No. 9710)
b. LEAVE FOR VICTIMS OF VIOLENCE
AGAINST WOMEN AND CHILDREN
(R.A. No. 9262)
D. SPECIAL GROUPS OF EMPLOYEES........................ 114
1. WOMEN
a. DISCRIMINATION
b. STIPULATION AGAINST MARRIAGE
c. PROHIBITED ACTS
d. SEXUAL HARASSMENT
2. MINORS
[R A No. 7610, as Amended by R.A. No. 9231)
3 . KASAMBAHAY
(R.A. No. 10361)
4. HOMEWORKERS
5. NIGHT WORKERS
6. APPRENTICES AND LEARNERS
7. PERSONS WITH DISABILITIES
a. DISCRIMINATION
b. INCENTIVES FOR EMPLOYERS

CHAPTER FOUR
SOCIAL WELFARE LEGISLATION................................... 264
A.SSSLAW ........................................................................
264
1. COVERAGE AND EXCLUSIONS
a. COVERAGE
b. EXCLUSIONS
2. DEPENDENTS AND BENEFICIARIES
a. DEPENDENTS
b. BENEFICIARIES
3. BENEFITS

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 Table o f Co n t e n t s X1U

a. SOCIAL SECURITY BENEFITS

1. SICKNESS BENEFIT
2. MATERNITY LEAVE BENEFIT
3. RETIREMENT BENEFITS
4. UNEMPLOYMENT INSURANCE
OR INVOLUNTARY SEPARATION BENEFITS
5. DISABILITY BENEFITS
6. DEATH BENEFITS
7. FUNERAL BENEFIT
b. EMPLOYEES’ COMPENSATION BENEFITS

B. GSISLAW ..............................................................................
1. COVERAGE AND EXCLUSIONS
a. COVERAGE
b. EXCLUSIONS
2. DEPENDENTS AND BENEFICIARIES
a. DEPENDENTS
b. BENEFICIARIES
3. BENEFITS
1. COMPULSORY LIFE INSURANCE
2. RETIREMENT BENEFIT
3. SEPARATION BENEFIT
4. UNEMPLOYMENT BENEFIT
5. DISABILITY BENEFITS
6. SURVIVORSHIP BENEFITS
7. FUNERAL BENEFITS
LIMITED PORTABILITY LAW................................................
C. DISABILITY AND DEATH BENEFITS..............................
1. LABOR CODE
a. EMPLOYEES' COMPENSATION PROGRAM
b. EMPLOYEES' COMPENSATION BENEFITS
I. MEDICAL BENEFITS
II. REHABILITATION SERVICES
III. DISABILITY BENEFITS
UFA. TEMPORARY TOTAL DISABILITY
lll-B . PERMANENT TOTAL DISABILITY
lll-C . PERMANENT PARTIAL DISABILITY
IV. DEATH BENEFIT
V. FUNERAL BENEFIT
c. BENEFICIARIES .
2. POEA-STANDARD EMPLOYMENT CONTRACT
(POEA-SEC)

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 x iv Ba r Reviewer o n La bo r Law

/. MONETARY CLAIMS OF SEAFARERS FOR

SICKNESS AND DISABILITY BENEFITS
II. EXISTENCE AND EXTENT OF SEAFARER'S
DISABILITY, HOW DETERMINED AND DECLARED
III. MONETARY CLAIMS OF SEAFARERS
FOR DEATH BENEFITS

CHAPTER FIVE
LABOR RELATIONS.................................................................... .*..................................378
A RIGHT TO SELF-ORGANIZATION.............................................................................. 379
1. COVERAGE
a. PERSONS WHO CAN EXERCISE
RIGHT TO SELF-ORGANIZATION
b. PERSONS WHO CANNOT EXERCISE
RIGHT TO SELF-ORGANIZATION
2. INELIGIBILITY OF MANAGERIAL EMPLOYEES;
RIGHT OF SUPERVISORY EMPLOYEES
a. MANAGERIAL EMPLOYEE RULE
b. SUPERVISORY EMPLOYEE RULE
c. CONFIDENTIAL EMPLOYEE RULE
d. SEPARATION OF UNIONS DOCTRINE
3. EFFECT OF INCLUSION AS MEMBERS OF EMPLOYEES
OUTSIDE OF THE BARGAINING UNIT
4. NON-ABRIDGEMENT
(OF RIGHT TO SELF-ORGANIZATION)
5. HOW AUNIONIS ORGANIZED
6. AFFILIATION AND DISAFFILIATION
B AR G A ININ G UNIT..................................................................................................... 403
C. BARGAINING REPRESENTATIVE....................................................................... 407
1. SOLE AND EXCLUSIVE BARGAINING AGENT
(SEBA)
a. REQUEST FOR SEBA CERTIFICATION
(This Mode Repealed and Replaced 'Voluntary Recognition')
b. CERTIFICATION ELECTION
U CERTIFICATION ELECTION
IN UNORGANIZED ESTABUSHMENTS
b-ii. CERTIFICAVON ELECTION
IN ORGANIZED ESTABLISHMENTS
tH ii. DENIAL OF THE PCE
b-iv. BAR RULES
I. Contract Bar Rule

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 T able of Co n t e n t s XV

II. Statutory Bar Rule

III. Certification Year B ar Rule
IV. Negotiations B ar Rule
V. Bargaining Deadlock B ar Rule
b-v. THE DOUBLE MAJORITY RULE
b-vi. CHALLENGING OF VOTES AND PROTEST
c. CONSENT ELECTION
d RUN-OFF ELECTION
e. RE-RUN ELECTION
D. RIGHTS OF LABOR ORGANIZATIONS.................................................................. 451
1. CHECK-OFF, ASSESSMENTS, AND AGENCY FEES
a. CHECK-OFF
b. ASSESSMENTS
c. AGENCYFEES
Z COLLECTIVE BARGAINING
a. DUTYTOBARGAINCOLLECTIVELY
b. DUTYTOBARGAINCOLLECTIVELY
IN THE ABSENCE OF CBA
c. DUTYTOBARGAINCOLLECTIVELY
WHEN THERE EXISTS A CBA
d. COLLECTIVE BARGAINING AGREEMENT (CBA)
e. THE COLLECTIVE BARGAINING PROCESS
E UNFAIR LABOR PRACTICES (U LP s)...................................................................... 483
1. NATURE, ASPECTS
Z ULP B Y EMPLOYERS
I. INTERFERENCE WITH, RESTRAINT OR COERCION
OF EMPLOYEES IN THE EXERCISE OF THEIR
RIGHT TO SELF-ORGANIZATION
II. YELLOW DOG CONTRACT
III. CONTRACTING OUT OF SERVICES AND FUNCTIONS
IV. COMPANY UNION
V. THREE SEPARATE CONCEPTS TREATED
IN PARAGRAPH (E), ARTICLE 259 [248]
V-1. DISCRIMINATION
V-2. UNION SECURITY CLAUSE
V-2-A. DISMISSAL DUE TO VIOLATION OF
UNION SECURITY CLAUSE
V-2-B. DUE PROCESS IN TERMINATION DUE TO
VIOLATION OF UNION SECURITY CLAUSE
VI. FILING OF CHARGES OR GIVING OF TESTIMONY
VII. CBA-RELATED ULPs
Vll-A. VIOLATION OF THE DUTY TO BARGAIN

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 XVI Bar reviewer o n Labor Law

COLLECTIVELY
Vll-B. PAYMENT OF NEGOTIATION FEES
OR ATTORNEYS FEES
Vll-C. VIOLATION OF THE CBA
3. ULP BY LABOR ORGANIZATIONS
I. RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT
TO SELF-ORGANIZATION
II. DISCRIMINATION
III. VIOLATION OF DUTY OF UNION TO BARGAIN
COLLECTIVELY
TV. FEATHERBEDDING LAW
V. DEMAND OR ACCEPTANCE OF NEGOTIATION
FEES OR ATTORNEYS FEES
VI. VIOLATION OF THE CBA
F. PEACEFUL CONCERTED ACTIVITIES................
1. STRIKES
I. NATURE AND CONCEPT OF STRIKE
II. VARIOUS FORMS AND CLASSIFICATION
OF STRIKES
III. PROCEDURAL BUT MANDATORY
REQUISITES FOR A VALID STRIKE
IV. UNION-BUSTING
V. STRIKES IN HOSPITALS, CLINICS
AND MEDICAL INSTITUTIONS
VI. STRIKE IN THE GOVERNMENT SERVICE
VII. VARIOUS PROHIBITED ACTS PER LAW,
RULES AND JURISPRUDENCE
VIII. LIABILITY RESULTING FROM THE
CONDUCT OF STRIKE
A. LIABILITY FOR ILLEGAL STRIKE
B. LIABILITY FOR DEFIANCE OF ASSUMPTION/
CERTIFICATION ORDER OR RETURN-TO-WORK ORDER
2. PICKETING
3. LOCKOUTS
4. ASSUMPTION OF JURISDICTION
BY THE DOLE SECRETARY
I. TWO (2) OPTIONS OF DOLE SECRETARY
II. ASSUMPTION OF JURISDICTION
III. CERTIFICATION OF LABOR DISPUTE TO
NLRC FOR COMPULSORY ARBITRATION
IV. RETURN-TO-WORK ORDER
5. INJUNCTIONS

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 T able of Co n t e n t s x v ii

CHAPTER SIX

POST EMPLOYMENT....................................................................................................... 622

A EMPLOYER-EMPLOYEE RELATIONSHIP......................... ..................................... 621
1. TESTS TO DETERMINE EXISTENCE
OF EMPLOYER-EMPLOYEE RELATIONSHIP
2. KINDS OF EMPLOYMENT
a. REGULAR EMPLOYMENT
b. CASUAL EMPLOYMENT
c. PROBATIONARY EMPLOYMENT
d. PROJECT EMPLOYMENT
e. SEASONAL EMPLOYMENT
f. FIXED-TERM EMPLOYMENT
g. SECURITY GUARDS
h. FLOATING STATUS
3. LEGIVMATE SUBCONTRACTING VS.
LABOR-ONLY CONTRACTING
a. TRILATERAL RELATIONSHIP
b. ELEMENTS
I. LEGITIMATE JOB CONTRACTING ARRANGEMENT
II. LABOR-ONLY CONTRACTING ARRANGEMENT
III. OTHER ILLICIT FORMS O F EMPLOYMENT
IV. EFFECTS OF LABOR-ONLY CONTRACTING AND ENGAGING IN OTHER
ILLICIT FORMS OF EMPLOYMENT
V. LEGITIMATE JOB CONTRACTING VS. LABOR-ONLY CONTRACTING
C. SOLIDARY LIABILITY
B. TERMINATION BY EMPLOYER.............................................................................683
1. JUST CAUSES
I. SERIOUS MISCONDUCT
II.INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
III. GROSS AND HABITUAL NEGLECT OF DUTIES
IV. ABANDONMENT OF WORK
V. FRAUD
VI. WIULFUL BREACH OF TRUST AND CONFIDENCE
VII. COMMISSION OF CRIME OR OFFENSE
VIII. OTHER ANALOGOUS CAUSES
l AUTHORIZED CAUSES
I. INSTALLATION OF LABOR-SAVING DEVICE
II. REDUNDANCY
III. RETRENCHMENT

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 x v iii bar reviewer o n La b o r Law

Ili-A. REDUNDANCY VS. RETRENCHMENT

IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS
IV- A RETRENCHMENT VS. CLOSURE OF BUSINESS
V. DISEASE
V- 1. SUBSTANTIVE REQUISITES
V-2. PROCEDURAL REQUISITES
3. DUE PROCESS
a. TWIN-NOTICE REQUIREMENT
b. HEARING
I. STANDARD SITUATIONS IN TERMINAVON CASES '
II. VARIATIONS IN PROCEDURAL DUE PROCESS
ll-A JUST CAUSE TERMINATION DUE PROCESS
ll-B. AUTHORIZED CAUSE TERMINATION DUE PROCESS
ll-B-1. DUE PROCESS IN TERMINATION DUE
TO BUSINESS-RELATED CAUSES
ll-B-2. DUE PROCESS IN TERMINATION DUE
TO HEALTH-RELATED CAUSES
ll-C. DUE PROCESS IN OTHER FORMS OF EMPLOYMENT
III. INDEMNITY IN THE FORM OF NOMINAL DAMAGES
C. TERMINATION BY EMPLOYEE.............................................................................763
/. VOLUNTARY RESIGNATION
(Termination by Employee W ithout Just Cause)
II. INVOLUNTARY RESIGNATION
(Termination by Employee With Just Cause)
III. CONSTRUCTIVE DISMISSAL
D ,PREVENTIVE SUSPENSION....................................................................................... 758
E. RELIEFS FROM ILLEGAL DISMISSAL......................................................................760
/. REINSTATEMENT
II. SEPARATION PAY IN LIEU OF REINSTATEMENT
III. BACKWAGES
IV . D IS T IN C T IO N S (BETWEEN REINSTATEMENT,
SEPARATION PAY IN UEU THEREOF AND BACKWAGES)

F. MONEY CLAIMS ARISING FROM EMPLOYER-EMPLOYEE

RELATIONSHIP............................................................................................................779
G. RETIREMENT...............................................................................................................780
I. COVERAGE
II. REVREMENTAGE
III. YEARS OF SERVICE
IV. AMOUNT OF RETIREMENT PAY
V. RETIREMENT OF UNDERGROUND MINE WORKERS

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W. RETIREMENT OF WORKERS PAID BY RESULTS

VII. RETIREMENT OF PART-TIME WORKERS
VIII. RETIREMENT BENEFITS VS. SEPARATION PAY

CHAPTER SEVEN

MANAGEMENT PREROGATIVE........................................................................................798

A. DISCIPLINE
6. TRANSFEROR EMPLOYEES
C. PRODUCTIVITY STANDARD
D. BONUS
E. CHANGE OF WORKING HOURS
F. BONA FIDE OCCUPATIONAL QUALIFICATIONS
G. POST-EMPLOYMENT RESTRICTIONS

C H A P TE R E IG H T

JURISDICTION AND RELIEFS.........................................................................................832

PRELIMINARY CONSIDERATIONS
ON JURISDICTION AND REMEDIES
A LABOR ARBITER......................................................................................................... 834
I. JURISDICTION
1. JURISDICVON OVER ULP CASES
2. JURISDICTION OVER ILLEGAL DISMISSAL CASES
3. JURISDICTION OVER MONEY CLAIMS CASES
3-A JURISDICTION OF LABOR ARBITER
VS. DOLE REGIONAL DIRECTOR
4. JURISDICTION OVER CLAIMS FOR DAMAGES
5. JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS
8. JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE DISTORTION
7. JURISDICTION OVER ENFORCEMENT
OR ANNULMENT OF COMPROMISE AGREEMENTS
8. JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
9. JURISDICTION OVER CASES OF OVERSEAS,
FIUPINO WORKERS (OFWs)
10. OTHER CASES OVER WHICH LABOR ARBITERS
HAVE JURISDICVON
11. OTHER CASES OVER WHICH LABOR ARBITERS
HAVE NO JURISDICVON
II. REQUIREMENTS TO PERFECT APPEAL TO NLRC

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 XX Bar reviewer o n labor Law

III. REINSTATEMENT PENDING APPEAL

IV. REVERSAL OF LABOR AREITER'S REINSTATEMENT ORDER
BY NLRC OR HIGHER COURTS
1. ROGUERO DOCTRINE
2. GENUINO DOCTRINE
3. GARCIA DOCTRINE
B. NATIONAL LABOR RELATIONS COMMISSION (N LR C).......................................889
C. JUDICIAL REVIEW OF LABOR RULINGS................................................................891
1. JUDICIALREVIEWTHROUGH
RULE 65 PETITION FOR CERTIORARI
2. JUDICIAL REVIEW OF DECISIONS OF VOLUNTARY ARBITRATORS
THROUGH RULE 43 APPEAL
3. JUDICIAL REVIEW BY THE SUPREME COURT
THROUGH RULE 45 PETITION FOR REVIEW ON CERTIORARI
D. BUREAU OF LABOR RELATIONS..........................................................................908
I. JURISDICTION, IN GENERAL
II. LABOR OFFICIALS HAVING JURISDICTION
OVER ARTICLE 232 [226] CASES
III. CASES PROVIDED UNDER ARTICLE 232 [226J
lll-A . INTER-UNION AND INTRA-UNION DISPUTES
IIIS . OTHER RELATED LABOR RELATIONS DISPUTES
IV. ORIGINALANDEXCLUSIVEJURISDICTION
OFMED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR
1. MEDIATOR-ARBITER’S
ORIGINAL AND EXCLUSIVE JURISDICTION
2. DOLE REGIONAL DIRECTOR’S
ORIGINAL AND EXCLUSIVE JURISDICTION
3. BLR DIRECTOR’S
ORIGINAL AND EXCLUSIVE JURISDICTION
V. APPELLATE JURISDICTION OF THE BLR DIRECTOR
AS DISTINGUISHED FROMTHATOF THE DOLE SECRETARY
1. APPEALS FROM DECISIONS OFMED-ARBITERS.
I APPEALS FROM DECISIONS OF DOLE REGIONAL DIRECTORS
3. APPEALS FROM DECISIONS OFMED-ARBITERS.
VI. REMEDIES FROM DECISIONS OF
BLR DIRECTOR AND DOLE SECRETARY
RENDERED IN THEIR APPELLATE JURISDICTION
VII. ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs
E NATIONAL CONCILIATION AND MEDIATION BOARD............................. ............. 935
1. NATURE OF PROCEEDINGS
2. CONCILIATION VS. MEDIAVON

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 T able o f C o n t e n t s XXI

3. PREVENTIVE MEDIATION
F. DOLE REGIONAL DIRECTORS...................................................................................942
1. JURISDICTION
EXPANDED DISCUSSION OF IMPORTANT TOPICS
I. VISITORIAL AND ENFORCEMENT POWERS
II. LABOR STANDARDS ENFORCEMENT CASES
III. SMALL MONEY CLAIMS CASES
IV. OCCUPATIONAL SAFETY AND HEALTH VIOLATIONS
V COMPLAINTS AGAINST PRIVATE RECRUITMENT
AND PLACEMENT AGENCIES (PRPAs) FOR LOCAL EMPLOYMENT
VI. CASES SUBMITTED TO REGIONAL DIRECTORS FOR VOLUNTARY
ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO VOLUNTARY
ARBITRATORS (EVAs)
G. DOLE SECRETARY.......................................................................................................961
I. ORIGINAL AND EXCLUSIVE JURISDICTION
1. ASSUMPTION OF JURISDICTION AND CERTIFICATION
BY DOLE SECRETARY OF NATIONAL INTEREST CASES
Z POWER TO SUSPEND EFFECTS OF TERMINATION
3. ADMINISTRATIVE INTERVENTION
FOR DISPUTE AVOIDANCE (AIDA)
4. VOLUNTARY ARBITRATION BYDOLE SECRETARY
II. APPELLATE JURISDICTION
II-A. APPEALS FROM DOLE REGIONAL DIRECTORS
IIS . APPEALS FROM MED-ARBITERS
II S APPEALS FROM BLR DIRECTOR
II S APPEALS FROM POEA
H. GRIEVANCE MACHINERY............................................ ............................. ................ 976
I. GRIEVANCE AND GRIEVANCE PROCEDURE OR MACHINERY
II. INITIATION OF GRIEVANCE THROUGH GRIEVANCE MACHINERY
III. DECISIONS OF GRIEVANCE COMMITTEE
I. VOLUNTARY. ARBITRATOR........................................................................................982
1. VOLUNTARY ARBITRATION IN GENERAL
2. JURISDICTION
I. JURISDICTION OVER UNRESOLVED GRIEVANCES
II. JURISDICTION OVER VIOLATION OF CBA
III. JURISDICTION OVER OTHER LABOR DISPUTES
IV. JURISDICTION OVER NATIONAL INTEREST CASES
V. JURISDICTION OVER WAGE DISTORTION CASES
VI. JURISDICTION OVER DISPUTES INVOLVING
THE PRODUCTIVITY INCENTIVES PROGRAM

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V II SOME PRINCIPLES ON JURISDICTION

3. PROCEDURES
J. PRESCRIPTION OF ACTIONS...........................
1. MONEY CLAIMS
2. ILLEGAL DISMISSAL
3. UNFAIR LABOR PRACTICE
4. OFFENSES UNDER THE LABOR CODE
5. ILLEGAL RECRUITMENT

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If
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C h apter one
GENERAL PROVISIONS

TOPICS PER SYLLABUS

I. GENERAL PROVISIONS
A. Basic policy on labor
B. Construction in favor of labor
C. Constitutional and Civil Code provisions relating to Labor Law

A.
BASIC POLICY ON LABOR

1. DECLARATION OF BASIC POLICY.

Article 3 o f the Labor Code declares die State’s basic policy on labor,
thus:

“Article 3. Declaration of Basic ?oBc/. - The State shall afford

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

Article 3 is a substantial reiteration o f Section 9, Article II o f the 1973

Constitution1 under whose regime the Labor Code was enacted. The primordial
reason for the passage o f labor laws is social justice. B oth under the Constitution
and Article 3, the State is duty-bound to provide and guarantee the following:

a) Full protection to labor;

b) Promotion o f full employment;
c) Promotion o f equal work opportunities regardless o f sex, race or creed;
d) Regulation o f the relations between workers and employers;
e) Protection o f die rights o f workers to:
i. self-organization;
ii. collective bargaining;
iii. security o f tenure; and

1 SEC. 9. TheSlatsshalifofd protectiontolabw, promoteM employmentandequally inemployment ensureequalwoilc

oppoclnSesregardlessofsex, race, or creed, and regulateDierelafionsbetweenvwiters and employers. The State ste3
assuretherightsofwortos tosefotganizafion, coBedwebagging, securityofteem, andjustandhumaneccnrffionsof
wo*. TheStetemayprawfeforcompulsoryarbiliafion

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 2 Bar review er o n La bo r u w

iv. just and humane conditions o f work.

The foregoing principles, being constitutionally mandated, should be

treated as the standard guidepost to which all labor laws and social legislations
should conform and upon which their legality and validity should be measured.

2. PO LICE POW ER OF T H E STATE.

Even without die applicable provisions o f die Constitution mandating the

protection and promotion o f the interest o f labor, the State is empowered to enact
labor laws and social legislations based on the immemorially-honored principle o f
police power, one that inheres in the State to protect itself and all its constituents.
It is principally vested in the legislature to make, ordain and establish all manners o f
wholesome and reasonable laws, statutes and ordinances, either with penalties or
without, not repugnant to the Constitution. The presumption is that die exercise
thereof is meant for the good and welfare o f the State and o f the subjects thereof.
This is a settled principle and the validity o f the exercise o f such power is not
affected by the imposition o f certain restrictions and regulations on die pursuit o f
business, occupation or profession.

The right to work, just like the right o f every person to pursue a business,
occupation or profession, is subject to the paramount right o f government,
pursuant to its police power, to impose such regulations and restrictions as the
protection o f the public may require. They are necessary for the orderly conduct o f
society. For as long as such regulations and restrictions are implemented and
enforced in accordance with appropriate limitations, their validity should be upheld
at all times.

B.
CONSTRUCTION IN FAVOR OF LABOR

1. CIVIL C O D E ’S ARTICLE 1702, IN R E L A T IO N T O LA B O R C O D E ’S

A RTICLE 4.

The immemotially honored rule that doubts in labor cases should be

resolved in favor o f labor has a strong basis in civil law and labor law.
Article 1702 o f the Civil Code states:
“Article 1702. In case o f doubt, all labor legislation and all labor
contracts shall be construed in favor o f the safety and decent living for the
laborer.”1

On the other hand, Article 4 o f the Labor Code declares:

PMpptne National Construction Corporation v. NLRC, G R No. 10153$, Jan 22,1993.

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 CHAPTER ONE 3
GENERAL PROVISIONS

“Article 4. Construction in Favor oj Labor. - All doubts in the

implementation and interpretation o f the provisions o f this Code, including
its implementing rules and regulations, shall be resolved in favor of labor."

Observably, a discussion o f die Civil Code’s Article 1702 cannot be

complete without correlating it with the Labor Code’s Article 4. While the former
generally speaks o f doubts in labor laws and labor contracts, the latter is specifically
confined to doubts involving the provisions o f the Labor Code and its
Implementing Rules. There is thus a clear delineation between the two provisions
insofar as their respective subject matters are concerned. More definitively, while
Article 1702 is more comprehensive in that it covers all “labor legislations”which
necessarily include the Labor Code and other special laws, as well as all forms o f
“labor contracts” which cover employment contracts and collective agreements,
Article 4 is focused and confined solely on the Labor Code and its Implementing
Rules. This explains the frequent joint invocation by the courts o f these twin
articles in resolving doubts in labor cases.
The rule enunciated in the foregoing articles applies to all workers -
whether in the government o r in the private sector - in order to give flesh and vigor
to die pro-poor and pro-labor provisions o f the Constitution.1 It is in keeping with
the constitutional mandate o f promoting social justice and affording protection to
labor.2 Thus, when conflicting interests o f labor and capital are to be weighed on
the scales o f social justice, the heavier influence o f the latter should be counter­
balanced by sympathy and compassion die law must accord the underprivileged
worker.3 This is, o f course, no t a harsh rule. T he framers o f the Labor Code and
the Gvil Code had fully taken cognizance o f the disparity in terms o f resources and
standing between labor and capital. In any legal controversy between them, the
former always suffers the most. Hence, the common adage that those who have
less in life should have m ore in law is best exemplified and made real in both
Articles 4 and 1702. The- worker must look up to the law for his protection. 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. He must not be taken for
granted.4

2. DOUBT OR AMBIGUITY IN LABOR CONTRACTS.

a. Rule in case o f em ploym ent contracts.
The general rule remains that where the law speaks in clear and categorical
language, there is no room for interpretation; there is only room for application.5
Contracts which are not ambiguous are to be interpreted according to their literal

1 LandandHousingDevetopmertCap.v. EsquBo,GR No. 152012.Sept 30,2005.

2 SeeSection18,Artide(loflheConsfiu8pn.ManiaBecbicCampanyv.MJ{C.GitNa.76763.JuV 12,1989.
3 MarcopperMnbg Cc:pofo&nv. NLRC, GJR. No. 103525, March29,1996.
4 CebuRoyalPtant[SanMiguelCorporation]v. MWsteroflabor, G.R No.58639,Aug. 12.1987.
5 lecndov.MST MarineServices, Inc., 6.R. No. 230357,06 Dec. 06.2017.

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 4 Bar Reviewer o n Labo r Law

meaning and not beyond their obvious intendm ent*1 Only when the law is
ambiguous or o f doubtful meaning may the court interpret o r construe its true
intent2 Thus, the liberal interpretation o f the Labor Code and its Implementing
Rules in its Article 4 has been applied to employment contracts3 by virtue o f Article
1702 o f the New Civil Code which mandates that "all labor contracts" shall likewise
be construed in favor o f the laborer.
Insofar as overseas employment is concerned, the PO EA Standard
Employment Contract (POEA-SEQ which is required to be sighted by every O FW
deployed abroad, should be construed liberally in favor o f .the OFW. A strict and
literal construction o f die 2010 POEA-SEC,4 especially when the same would
result into inequitable consequences against labor; is not subscribed to in this
jurisdiction. Concordant with the State’s avowed policy to give maximum aid and
fuQ protection to labor as enshrined in Article XIII o f the 1987 Philippine
Constitution, contracts o f labor, such as the 2010 POEA-SEC, are deemed to be so
impressed with public interest that the more beneficial conditions must be
endeavored in favor of the laborer. The rule therefore is one o f liberal construction,
as enunciated in Philippine Transmarine Carriers, Inc. v. NLR.C:5
“The POEA Standard Employment Contract for Seamen is designed
primarily for the protection and benefit o f Filipino seamen in the
pursuit o f their employment on board ocean-going vessels. Its
provisions m ust [therefore] be construed and applied fairly,
reasonably and liberally in their favor [as it is only] then can its
beneficent provisions be fully carried into effect”6

Applying the rule on liberal construction, the Court is thus brought to the
recognition that medical repatriation cases should be considered as an exception to
Section 20 of the 2000 POEA-SEC. Accordingly, the phrase “w ork-related death
of the seafarer, during the term o f his em ploym ent contract” under Part A (1)
of the said provision should not be strictly and literally construed to mean that the
seafarer’s work-related death should have precisely occurred during the term of bis
employment. Rather, it is enough that the seafarer's work-related injury or illness
which eventually causes his death should have occurred during the term o f his
employment Taking all things into account, the Court reckons that it is by this
method o f construction that undue prejudice to the laborer and his heirs may be
obviated and the State policy on labor protection be championed. For if the
laborer’s death was brought about (whether fully or partially) by the work he had

1 BabcoCMfoctiphis.]. Inc.v. Babcock-HbcNjPMs.]. he. MakaSEmployeesUnion. G il No. 156260. March10.2005.

1 kt
1 Id.,citingMatcopperMningCorporationv.NLRC.G.R. No. 103525,March29,1996,255 SCRA322.
4 IKsisfielatastAmendedSiandaRlTennsandConcEfionsGcHerrfngtieOmiseasEmidoymeniofRviRoSeeSaiasOn-
BoartOc^vGoingSHps MerrxmkiraCira^Na 10, Seri®of2010,Ctetober26,2010^1x^.2000 POEA-
SEC(StandardTermsandCondSon$Governing the Employment cf FIjpino Seaferers On BoardOceangoing Vessels,
issuedpuBuarttoOOlEDepartinertOlderNo.4, Seriesof2000 ^ 3 1 ,2000Di
» 6R No. 123891,Feb.28,2001,405 PM.487.
4 Enptasssuppled.

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 C h a pt er O n e 5
' GENERAL PROVISIONS

harbored for his master's profit, then it is but proper that his demise be
compensated. Hence, if it has been established that (a) the seafarer had been
suffering from a work-related injury or illness during the term of his employment,
(b) his injury o r illness was the cause for his medical repatriation, and (c) it was later
determined that the injury o r illness for which he was medically repatriated was the
proximate cause o f his actual death although the same occurred after the term of
his employment, the above-mentioned rule should squarely apply.

b. R ule in case o f collective agreements.

In the area o f employment bargaining, the employer stands on higher
footing than the employee. The law m ust protect labor to the extent, at least, o f
raising him to equal footing in bargaining relations with capital and to shield him
from abuses brought about by die necessity to survive.1 Thus, the rule is laid that
while a CBA’s terms and conditions constitute the law between the parties, it is not
an ordinary contract to which is applied the principles o f law governing ordinary’
contracts. N o t being an ordinary contract as it is impressed with public interest, a
CBA must be construed liberally rather than narrowly and technically, and the
courts must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and the purpose for which it
is intended to serve.2

3. DOUBT OR AMBIGUITY IN EVIDENCE.

The rule enunciated in Article 4 and Article 1702 likewise applies in the
appreciation o f evidence in labor proceedings. Consequently, when there is a doubt
between the evidence presented by the employer and the employee, such doubt
should be resolved in favor o f die latter.3 Time and again, the Supreme Court has
pronounced that “if doubt exists between the evidence presented by the employer
and the employee, the scales o f justice must be tilted in favor o f the latter.”4 The
policy is to extend the doctrine to a greater number o f employees who can avail
themselves o f the benefits under the law, which is in consonance with the avowed
policy o f the State to give maximum aid and protection to labor.5

In illegal dismissal cases, the consistent rule is that the employer must
affirmatively show rationally adequate evidence that the dismissal was for a just or
authorized cause. In case it fails, then it would result in having the termination
declared illegal.6

Sanchezv. HanyLyonsConsfcucfonCotporafan,G il No.1-2799, Oct 19,1950.

MarcopperMniigCaporaSonv. NLRC,GR No. 103525, March29,1996.
SouthEastInSemaSonalRattan,be.v, JesusJ. Cccnhg,G.RNo. 186621, March12,2014
BearriandHotelResortv.Johnson,G.R.No.191455, March12,20142,2010.
MetopcfianBankandTrustCompanyv. NLRC,GJlno. 152928,June18,2009.
HatoTrafiig Co, hc.v.CA,GJlftoi 148241,Sept 27,2002.

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4. THE RULE DOES NOT DEPRIVE EMPLOYERS OF FAIR

TREATMENT.
Certainly, this rule o f interpretation and construction in favor o f labor
does not mean that capital should, at all times, be at the losing end o f a
controversy. The law does not say so. For while die Constitution and the law tend
to favor the working man, protection to the employer is also assured. Protection o f
the rights of the laborer authorizes neither the oppression nor self-destruction o f
die employer. While the Constitution is committed to the policy o f social justice
and the protection o f the working class, it should not be supposed that every labor
dispute will be automatically decided in favor o f labor. Management also has its
own tights which as such are entitled to respect and enforcement in the interest o f
simple fair play. Out of its concern for those with less privilege in life, the Court
has inclined more often than not towards the worker and upheld his cause with his
conflicts with the employer. Such favoritism, however, has not blinded the Court
to rule that justice is, in every case, for the deserving, to be dispensed in the light o f
the established facts and applicable law and doctrine.1

The Philippine Constitution, while inexorably committed towards the

protection o f the working dass from exploitation and unfair treatment,
neverthdess mandates the policy o f social justice so as to strike a balance between
an avowed predilection for labor, on the one hand, and the maintenance o f the
legal rights of capital, the proverbial hen that lays the golden egg, on the other. The
Supreme Court, in PLOT v. NLRC,2 underscored that although it is bound by the
social justice mandate of the Constitution and the laws, such policy o f sodal justice
is not intended to countenance wrongdoing.

c.
CONSTITUTIONAL AND CIVIL CODE PROVISIONS
RELATING TO LABOR LAW

1.
CONSTITUTIONAL PROVISIONS

1. N O SPECIFIC C O N S T IT U T IO N A L PR O V ISIO N S R E F E R R E D T O
IN T H E SYLLABUS.

Unlike the previous labor law syllabi, the 2019 Syllabus no longer specifies
the constitutional provisions which bar candidates should focus on. However,
based on past topics prescribed for labor law, the following are the major artides
and sections thereof which relate to labor law:*

* Revidadv.KLRC,GRNO.111105.Juie27,’995.
’ Phippine Long DistanceTelephoneCo. v. NLRC. O R No. L-80G09. Aug. 23.1988.164 SCRA671.

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 C hapter One 7
GENERAL PROVISIONS

(a) Article I I (D eclaration o f P rinciples a n d State P olicies) - Sections 9,

10,18 and 20 thereof;
(b) Article III (Bill o f R ights) - Sections 4,8,10,16 and 18(2) thereof; and
(c) Article X III (Social Ju stic e a n d H u m a n R ights) - Sections 2, 3, 13 and
14 thereof.1
Focus should therefore be m ade only on the above specified provisions.
F or ease in discussion, all the foregoing sections and articles are discussed below in
seriatim.

1-A.
DECLARATION OF PRINCIPLES AND STATE POLICIES
(Article II of the Constitution)

1. A R T IC L E II HAS T W O PA RTS.

Article II o f the Constitution is divided into two (2) parts, tn\.:

(a) Principles covering Sections 1 to 6; and

(b) State Policies covering Sections 7 to 28.

Notably, Sections 9, 10, 18 and 20 o f Article II fall under State Policies.

O ut o f the 28 Sections o f Article II, only these four (4) Sections need to be
discussed herein. These provisions state as follows:

ARTICLE II
DECLARATION OF PRINCIPLES AND STATE POLICIES
STATE POLICIES
Section 9. The State shall promote a just and dynamic social order that
will ensure the prosperity and independence of the nation and free the
people from poverty through policies that provide adequate social services,
promote full employment, a rising standard of living, and an improved
quality o f life for all
Section 10. The State shall promote social justice in all phases of national
development
Section 18. The State affirms labor as a primary social economic force. It
shall protect the rights of workers and promoter their welfare.
Section 20. The State recognizes the indispensable role o f the private
sector, encourages private enterprise, and provides incentives to needed
investments.
2. S E C T IO N 9 (P R O M O T IO N O F F U LL E M P L O Y M E N T ).
Section 9’s relevance to labor law is accentuated by the State’s policy to
prom ote full employment to free the people from poverty with the end o f ensuring
the prosperity and independence o f the nation.

' A^Xin'ser^"SocialJusfeand rtjmanRghb.*

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 8 Bar reviewer o n Labor Law

Section 9 is aligned with the policy enunciated in Employment Policy

Convention, 1964 (No. 122)1 o f the International Labor Organization (ILO) which
aims at ensuring that (a) there is work for all who are available for and seeking
work; (b) such work is as productive as possible; (c) there is freedom o f choice o f
employment and the fullest possible opportunity for each worker to qualify for, and
to use his skills and endowments in, a job for which he is well suited, irrespective o f
race, colour, sex, religion, political opinion, national extraction or social origin.2

3. SECTION 10 (SOCIAL JU ST IC E ).
It is a fundamental poiicy o f the State to promote soda! justice in all
phases of national development CentralBank? pronounces that equality is one ideal
which cries out for bold attention and action in the Constitution. The Preamble
proclaims "equality” as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section
10, in "allphases ofnationaldevelopment,”further expounded in Article XIII,4 are clear
commands to the State to take affirmative action in the direction o f greater
equality. There is thus in the Philippine Constitution no lack o f doctrinal support
for a more vigorous state effort towards achieving a reasonable measure o f equality
Our present Constitution has gone further in guaranteeing vital social and
economic rights to marginalized groups o f society, including labor. Under the
policy of social justice, the law bends over backward to accommodate the
interests o f the working class cn the humane justification that those with less
privilege in life should have more in law. And the obligation to afford protection to
labor is incumbent not only on the legislative and executive branches but also on
the judiciary to translate this pledge into a living reality. Social justice calls for the
humanization o f laws and the equalization o f social and economic forces by die
State so that justice, in its rational and objectively secular conception, may at least
be approximated.5
4. SECTION 18 (PROTECTION-TO-LABOR CLAUSE).
Among die sections in Article II, it is Section 18 which is often cited in
labor cases as one o f the two ptotection-to-labor clauses in the Constitution, the
other being Section 3 of Article X III thereof infra. It is often invoked in resolving
doubts or ambiguities in die interpretation o f labor laws, employment contracts,
and collective bargaining agreements and in die appreciation o f evidence presented
in labor proceedings. The constitutional tenet embodied in Section 18 is also die
basis for the following provisions in the law; (1) Article 1702 o f the Civil Code,
which provides that all labor legislation and labor contracts should be construed in

1 Convention concerning Employment Pc&y (Eitry into force: 15 July 1966) Adopfon: Geneva, ILC session (09 Jul
1964). See fitted at HO^ website locatedat tatpsy/wwwjtocf^. Lastaccessed: Mach 18.2019.
1 SeeAifide 1of AOCmptoymenlPoScyConvenOon, 1964(No. 122).
3 Central BankCmpIqveesAssociabon. Inc. v. BangkoSenbatng PQjAias. G.R. No. 148208. Dec. IS. 2004.
4 En^'Social Justiceand Human Rigte.*
5 Catebngv.Wffiams.GRNo.47800.Oet2,1940,70PNL726.

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 C ha pter O ne 9
GENERAL PROVISIONS

favor o f the safety and decent living for the laborer; and (2) Article 4 o f the Labor
Code, which states that all doubts in the implementation and interpretation o f its
provisions, including its implementing rules and regulations, shall be resolved in
favor o f labor.1
Thus, when conflicting interests o f labor and capital are to be weighed on
the scales o f social justice, die heavier influence o f the latter should be counter­
balanced by sympathy and compassion the law must accord the underprivileged
worker.2 In interpreting die protection to labor and social justice provisions o f the
Constitution and the labor laws o r rules and regulations implementing the
constitutional mandates, the liberal approach which favors the exercise o f labor
rights should always be adopted.3
The same provision is the constitutional touchstone for the State's
discharge o f its avowed duty o f protecting and prom oting the exercise o f all the
rights granted to workers, such as die right to full employment and equality o f
employment opportunities, self-organization, collective bargaining and
negotiations, strike and other peaceful concerted activities, security o f tenure,
humane conditions o f work, and a living wage, including die tight to participate in
policy and decision-making processes affecting their tights and benefits as may be
provided by law.4
The constitutional policy in Section 18 is n o t meant to be a sword to
oppress employers. T he commitment o f the Court to the cause o f labor does not
prevent it from sustaining die employer when it is in die right F o r instance, an
employer should not be compelled to pay employees for work not actually
performed and in fact abandoned.3 N o r should an employer be compelled to
continue employing a person who is admittedly guilty o f misfeasance or
malfeasance and whose continued employment is patently inimical to the employer.
The law, in protecting the rights o f the laborer, authorizes neither oppression nor
self-destruction o f the employer.4
5. ON SECTION 20 (ROLE OF PRIVATE SECTOR).
Section 207 is the constitutional basis for die enactment o f laws that lay
down a healthy environment which encourages the private sector to put up
businesses that generate employment and provide much-needed goods and
services. It likewise paves the way for local and foreign investors to put their

12,2014.
> MarcopperMningCotpcrafcnv. NLRC,G il No. 103525,Mar** 29,1996.
* Adamson&Adamson,lnc.v.CIR,GJlNo.L-3512l),Jan.31,1984l127SCRA268.
4 SeeSection3, ArtdeXIiJ of &»CofjstfijfionandArtide3 of fie Labor Code. See alsoPl^jpheNaSonal Bankv.Padao.
G il Nos. 180849and 187143, Nov. 18,2011.
* Agabonv. NLRC,G.R. No. 158693,Nw. 17.20O4,ti6rgCapiv. NLRC.GA No. 117378,March26.1997.
< Id,dSngFapro, he.v. NLRC,G il No.1-70546,Oct 16.1986.145SCRA123.
' Section20. The Statsrecognizes tie ndispensable rale of theprivatesector, encouragesprivate enterprise, and pwides
natives toneededhvestmenls.

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 10 Bar Reviewer o n Labor Law

investments into the local economy. Indeed, the State cannot do it alone; it needs
the active participation of the private sector as a main engine for national growth
and development1 The State's role is simply to provide the m ost appropriate
favorable incentives to mobilize private resources for this purpose.2 Consequently,
this section has been cited as basis for the enactment o f such major laws as R A
No. 7916, (The Special Economic Zone Act o f 1995),5 R A N o. 9184 (The
Government Procurement Reform Act); R A No. 6957/ as amended by R A No.
7718 (Ihe Amended Bufld-Operate-and-Transfer (BOT| Law], to name but a few.

6. STATE POLICIES, NOT SELF-EXECUTING PROVISIONS.

By its very title, Article II o f the Constitution simply reflects the State’s
'‘declaration efprinciplesandstatepondes. ” As such, the provisions under this article are
not intended to be in the nature o f self-executing principles ready for enforcement
through the courts.5 They are used by die judiciary as aids or guides in die exercise
of its power o f judicial review, and by the legislature, in its enactment o f laws. The
disregard o f these provisions cannot give rise to a cause o f action in the courts. The
reason is that they do not embody judicially enforceable constitutional rights but
mere guidelines for legislation.6 These broad constitutional principles need
legislative enactments to implement them.7 The reasons for denying a cause o f
action based on alleged infringement o f broad constitutional principles are sourced
from basic considerations of due process and the lack o f judicial authority to wade
“into the uncharted ocean o f social and economic policy-making.”8

1-B.
BILL OF RIGHTS
(Article 111 of the Constitution)

t FIV E (5) RELEVANT SE C T IO N S.

O ut of the 22 Sections o f the Bill o f Rights (Article III), only five (5) are
most relevant to labor law, to ait. Sections 4, 8, 10, 16 and 18(2), whose provisions
state as follows:

1 See $«6on 1, R A No. 6957 JJity 9.1990). enteed ’An Act Autoarizing h e Fnanang. Consturion, Operated and
Mattenatioeoftttaslrucauref^c^cfct¥the:siwatBSector1an(Jor01herPmposes.'
2 Id.
3 Asanendedty R A N a874& punef. l99Sl>entifled‘>AnActAmentfngReptfb6cActNo. 7916, O fteiw te Known as h e
■SpeoaJ EconomicZone Ad O f1995.’
4 Supra.
3 Ttfada v. Angaa, GR No. 118295. May 2,1997; Tondo Medical Center Employees Association v. CA, G.R. No.
167324, iuly 17.2007 p Banc).
3 AsheBhheleaitegcasedKtoSb^Incofporatedv.Morato,G JU to . 118910,July 17.1995.
3 Basoov. Paooor, G A No.91649, May 14,1991,197 SCRA52,68.
• T tfad av.JS I^sq p ra: See alsoOposav.?adoran, J r, G.R. No. 101083,Jdy 30.1993.224 SCRA792,817.

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 C hapter O ne 11
GENERAL PROVISIONS

ARTICLE III
BILL OF RIGHTS
Section 4. No law shall be passed abridging the freedom o f speech, o f
expression, or of the press, or the right of the people peaceably to assemble
and petition the government for redress of grievances.
Section8. The right of the people, including those employed in the public
and private sectors, to form unions, associations, or societies for .purposes
not contrary to law shall not be abridged.
Stdion 10. N o law impairing the obligation of contracts shall be passed.
Stdion 16. All persons shall have die right to a_speedy disposition of
their cases before all judiriaL quasi-judieial- or administrative bodies.
Section 18. xxx (2) No involuntary servitude in any form shall exist
except as a punishment for a crime whereof die party shall have been duly
convicted.
2. SECTION 4 (FREEDOM OF SPEECH).
As far as labor law is concerned, Section 4 is relevant only in connection
with dre exercise o f the right to picket provided in the Labor Code,1 but not in
relation to the exercise o f the right to strike which derives its constitutional mooring
from a different provirion2 thereof. Simply put, these rights, although considered
twins or look-alikes in nature, are not one and die same. Thus, the right toJacket is
based on Section 4, Article III o f the Constitution; while, the right to strike is
anchored on Section 3, Article X III3 thereof.
Picketing may be distinguished from strike in that while the latter centers
on stoppage o f work, the former focuses on publicizing the labor dispute and its
incidents to the public. For its validity, picketing, being a freedom o f speech
activity, is not bound by the mandatory requirements for the conduct o f a strike. It
is simply required to be peaceful for its validity. Picketing thus simply involves the
act o f marching to and fro in front o f the employer’s premises, usually
accompanied by the display o f placards and other signs making known the facts
involved in a labor dispute. It is an activity separate and distinct from a strike.
(NOTE: Fora more comprehensive discussion on picketing and strike,
please read Chapter Five {Labor Relations!, Infra).
3. SECTION 8 (FREEDOM OF ASSOCIATION).
Section 8 generally guarantees the right o f the people to form unions,
associations, or societies for purposes not contrary to law. T he State makes this
right available to both public4 and private5 sector employees. More meaningfully,

' Artcle279 (254],laborCate

2 Mo(eparticiilariy;SQCIian3arA(fScioXBlhe(eof.
3 Oalemv.NaltenriiabffUnion,GJlNaL-7566;Jaa30,1957.
4 See ExbcuAo Order No. ISO. Series of 1987 which provides trie gukf^nes for fiie exercise of the right to organize of
governmentetqiloyees.

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 12 Ba r reviewer o n La b o r law

for purposes o f the exercise o f this freedom o f association, Section 3, Article X III
o f the Constitution guarantees the right o f all workers to self-organization.

T o breathe life to this constitutional tenet, the L abor Code:

(a) protects the right o f w orkers to self-organization and to form , join, o r

assist labor organizations o f their ow n choosing.1
(b) declares as a policy o f the State the fostering o f a free and voluntary
organization o f a strong and united labor m o v em en t2
(c) declares that it shall b e unlawful fo r any person to restrain, coerce,
discriminate against o r unduly interfere with employees and workers in
their exercise o f the right to self-organization, w hich includes the right
to form, join, or assist labor organizations for the purpose o f collective
bargaining through representatives o f their own choosing and to
engage in lawful concerted activities for the sam e purpose o r for their
mutual aid and protection.3

4. SECTION 10 (FREEDOM OF CONTRACT).

The purpose o f the non-im pairm ent clause o f the Constitution is to
safeguard the integrity o f contracts against unw arranted interference by the State.
As a rule, contracts should not b e tam pered w ith by subsequent laws that would
change or modify the rights and obligations o f the parties.4 Im pairm ent is anything
that diminishes the efficacy o f the c o n tra c t T here is an im pairm ent if a subsequent
law changes the terms o f a contract betw een die parties, im poses new conditions,
dispenses with those agreed upon o r withdraw s remedies fo r the enforcem ent o f
the rights o f the parties.s T he non-im pairm ent d a u se is lim ited in application to
laws that derogate from prior acts o r contracts by enlarging, abridging o r in any
manner changing the intention o f th e parties.6 Necessarily, die constitutional
proscription would n o t apply to laws already in effect at the time ofcontractexecution?

A good illustrative case is Anucension v. National Labor Union * A t issue in

this case is R.A. N o. 33509 w hich exem pts m em bers o f any religious sects that
prohibit affiliation o f their m em bers in any labor organization, from being covered
by a union securin' dause. T h e union contends th at IL A N o . 3350 is
unconstitutional for impairing the obligation o f its contract, specifically, the “union
security clause**embodied in its Collective Bargaining A greem ent (CBA) w ith the

AiSdes3 and253 [243),laborCode.

Aifide218(^(dP11(A)(c)l. LaborCode.
Ajfcte257p46). laborCode.
GoldenwayMercharxfcing Corporationv. EquitablePCI 8ank, GA Na 196540, March 13,2013.
Id;
BarangayAssod^Son for National Advancement and Tiansparenqr (BANAT) PartjMJst v. Comnusston pn QecSons, GiL
No. 177508, Aug. 7.2009. efingSenanov. Gallant Martime Services, he, GA No. (67614, March24,2009.
HaciendaLuisita, he v. PARC. GA No. 171101. July 5,2011.
GA No. L-26097, Nov. 29.1977.
EnactedonJune 18.1961. amending Section4 (a), paragraph 4 of RA. No. 875.

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 Chatter One 13
GENERAL PROVISIONS

company, by virtue o f which “membership in die union was required as a condition

for employment for all permanent employees and workers.” Ib is agreement was
already in existence at the time R.A. No. 3350 was enacted on June 18,1961, and it
cannot, therefore, be deemed to have been incorporated into the agreem ent But by
reason o f this amendment, Anucension as well as others similarly situated, could no
longer be dismissed from his job even if he should cease to be a mem ber, o r
disaffiliate from the union, and the company could continue employing him
notwithstanding his disaffiliation from the union. The Act, therefore, introduced a
change into the express to m s o f the union security dause; the company was partly
absolved by law from the contractual obligation it had with the union o f employing
only union members in permanent positions. It cannot be denied, therefore, that
there was indeed an impairment o f said union security clause.

The Supreme Court, however, ruled that the prohibition to impair the
obligation o f contracts is n o t absolute and unqualified. In spite o f the constitutional
prohibition, the State continues to possess authority to safeguard the vital interests
o f its people. Legislation appropriate to safeguard said interest may modify or
abrogate contracts already in effect Otherwise, important and valuable reforms
may be precluded by the simple device o f entering into contracts for the purpose o f
doing that which otherwise may be prohibited. It follows that not all legislations
which have the effect of impairing a contract are obnoxious to the constitutional
prohibition as to impairment, and a statute passed in the legitimate exerdse o f
police power, although it inddentally destroys existing contractual tights, must be
upheld by the courts. This has special application to contracts regulating relations
between capital and labor which are not merely ordinary but impressed with public
interest and therefore must yield to the common good.

What then was the purpose sought to be achieved by R.A. No. 3350? Its
purpose was to insure freedom o f belief and religion, and to promote the general
welfare by preventing discrimination against those members o f religious sects
which prohibit their members from joining labor unions, confirming thereby their
natural, statutory and constitutional right to work. It cannot be gainsaid that said
purpose is legitimate. It may n o t be amiss to point out here that the free exercise o f
religious profession or belief is superior to contract rights. In case o f conflict, the
latter must, therefore, yield to the former.1

As held in the 2009 tn banccast o f Serrano v. Gallant Maritime Services, Inc..2

“The prohibition [against impairment of the obligation o f contracts] is

aligned with the general principle that laws newly enacted have only a
prospective operation* * and cannot affect acts or contracts already

< See alsoAbelav. NLRC, G .R No. 71813, July 20,1987.

* Serranov. GafentMaritimeServices, Inc, GR No. 1S7614. March24,2009.
» Origas &Co.. Ud. v. CA, GA No. 126102. Dec4.2000.346 SCRA748.

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 >4 Bar Reviewer o n La b o r La w

perfected;1 however, as to laws already in existence, their provisions arc read

into contracts and deemed a part thereof.2 Thus, the non-impairment
clause under Section 10, Article III [of the Constitution] is limited in
application to laws about to be enacted that would in any way derogate
from exisdng acts or contracts by enlarging, abridging or in any
manner changing the intention o f the parties thereto.”3

Thus, in this case, the enactment in 1995 o f R A . No. 8042, otherwise

known as the ‘Migrant Workers and Overseas Filipinos Act of 1995" preceded the
execution of the employment contract between petitioner and respondents in
1998. Hence, it cannot be argued that R A . No. 8042, particularly the subject
clause,4 impaired die employment contract o f the parties. Rather, when the
parties executed their 1998 employment contract, they were deemed to have
incorporated into it all the provisions o f R A . No. 8042.
Police Power vs. Freedom o f C ontract.
It must be borne in mind that police power is superior to the non­
impairment clause.5 In other words, the constitutional guaranty o f non-impairment
of obligations o f contract is limited by the exercise o f the police power o f the State,
in the interest o f public health, safety, morals and general welfare.6
Thus, in Conference ofMaritime ManningAgencies, Inc., v. POEA,7 the Court
did not consider violative o f the constitutional non-impairment clause, Resolution
No. 01, Senes of 1994, of the Governing Board of die PO EA and PO EA
Memorandum Circular No. 05, Series o f 1994s that amended and increased die
rates affecting death and workmen's compensation and other benefits provided in
the POEA Standard Employment Contract (POEA-SEQ for seafarers and
provided that “[u]pon effectivity, the new compensation and other benefits shall
apply to any Filipino seafarer already on-board any vessel provided, that the cause
o f action occurs after die said compensation and benefits take effectf.]”

1 PicopResouces,ltc.v. BaseMetals Resourcestopoation,GJlNa 163509, Dec. 6,2006,510SCRA400.

1 lt^Assu3nceCoiporatov.RepubBcdtieRi^)p(nes.GRNo.156571,Ju!y9,2008.
5 Undercoolingsuppied.
4 Thesubjeddause68>elastciauseb9>e5r paragraphofSec(ion10cfRANa8042,towt,$ec.10. MoneyCtaims.-
xxxIncase oftemins&onofnerceas employmentwithoutjust, vaDda autfneed cause as defined by lawor con&act the
waters shaBbe enWedtobe fttBramburcement ofhis placement fee wftfi interestoftwelvepercent (12%) perannum, plus
hissaiaries^irieunexp^portxxirfteerTptoyinemaxtkactorJbf AreM9ryyeartrfff»ur)euiprecf6ef7rL,
wttta/or&fes&xxx (Enni^a^andiaidefSOQnngsuppGedinttnorigmallextoftitedeci^cml.'ntisclausewasdedaed
unconsSufcnal toWscase
5 PhSppineNational Bankv. Rerrigb, GJl No.78508,21 March 1994.
6 ThePhSppineAmericanLife Conrsnyv. TheAuiSa General, GR No. L-19255, Jan. 18,1968.
! Corfete«edMarierneManringAgencies,t[C,v;POEA,GJlNo.114714lA(i(a21.1995.
1 MemorandumOcular No. 05, issuedon 19 January 19942 by POEAAdministrator Fefcisimo Joson and addressed to el
FSpbo seafarers. manning agencies. shjpowvercLmanagers and principals hmg FSpho seafarers, informed fliem .that
Gcweming BoardResolutionNo.01 adjusted l» rates of compensafion andotter benefits h Part II, SectionC. paragraph 1;
Section L, paragraphs 1 and 2; and Appendix 1-Aof the POEA Standard Employment Contracts for Seafarers, which
adjustments tookeffect on 20 Marid) 1994, and fiat "VI Upon etfec&iiy. foe newcompensafion and otoer benefits shal
apply to any Fifpho seafarer already avtoart any vessel prwided, that the case of action occurs after the sadd

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 C ha pter O ne 15
GENERAL PROVISIONS

The challenged Resolution and Memorandum Circular were held to be

valid implementations o f E.O. No. 797, the executive order creating the POEA
which was enacted to further implement the social justice provisions o f the 1973
Constitution and which have been greatly enhanced and expanded in the 1987
Constitution. They were enacted under the police power o f the State and thus, they
cannot be struck down on the ground that they violate the contract clause. T o hold
otherwise is to alter long-established constitutional doctrine and to subordinate the
police power to the contract clause.
This must be so because constitutional prohibition against impairing
contractual obligations is not absolute and is not to b e read with literal exactness. It
is restricted to contracts with respect to property o r some object o f value and
which confer tights that may be asserted in a court o f justice; it has no application
to statutes relating to public subjects within the domain of the general legislative
powers o f the State and involving the public tights and public welfare o f the entire
community affected by i t It does not prevent a proper exercise by the State o f its
police power by enacting regulations reasonably necessary to secure the health,
safety, morals; comfort, or general welfare o f the community, even though
contracts may thereby be affected, for such matters cannot be placed by contract
beyond die power o f die State to regulate and control them.1
Police power legislations adopted by die State to promote the health,
morals, peace, education, good order, safety, and general welfare o f die people are
generally applicable n o t only to future contracts but even to those already in
existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to prom ote public welfare.2
5. SECTION 16 (SPEEDY LABOR JUSTICE).
Section 16 guarantees to all persons, employees and employers alike, the
tight to a speedy disposition o f their labor cases and disputes before all quasi-
judidal or administrative bodies like the NLRC, Bureau o f Labor Relations, D O L E
and other agencies tasked to dispense labor justice as well as before judicial
tribunals like the Court o f Appeals and the Supreme Court when such labor cases
and disputes are elevated to these superior courts by way o f Rule 6$ certiorari
petition or appeal, as the case may be.

However, “speedy disposition of cast/ ’ or “speedy laborjustici' is a relative term

and a flexible concept It is consistent with delays and depends upon the
dtcumstances o f each case. W hat the Constitution prohibits are unreasonable,
arbitrary and oppressive delays which render tights nugatory.3

1 ConferenceofM ar^ ManningAgencies, Ire, v. POEAGR No. 114714, Aprii2U995.

* Serranov. GaflantMarira Setvioes, he, GR No. 167614, March24.2009.
3 Cad*v.POEANLRC.GRNos. 104776,104911-Hand 105029-32,Dec.05.1994.

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 i6 Bar Reviewer on Labor Law

Speedy labor justice, in :erms o f period, is provided under Article 292(i)

[277(i)J of the Labor Code, thus:

“(l) To ensure speedy labor justice, the periods provided in this Code
within which decisions or resolutions of labor relations cases or matters
should be rendered shall be mandatory. For this purpose, a case or matter
shall be deemed submitted for decision or resolution upon the filing of the
last pleading or memorandum required by the rules of the Commission or by
the Commission itself, or the Labor Arbiter, or the Director of the Bureau of
Labor Relations or Med-Arbiter, or the Regional Director."

In the determination of whether or not the right to a “speedy trial' has

been violated, certain factors may be considered and balanced against each other.
These are the length of delay, reason for the delay, assertion o f the right or failure
to assert it, and prejudice caused by the delay. The same factors may also be
considered in answering the judicial inquiry as to whether or not a person officially
charged with the administration o f justice has violated the speedy disposition o f
cases.1

While the speedy disposition o f labor cases may be the policy of the law, it
must be emphasized that speed alone is not the chief objective o f a trial. It is the
careful and deliberate consideration for the administration o f justice, a genuine
respect for the rights of all parties and the requirements o f procedural due process,
and an adherence to the Court’s standing admonition diat the disposition of cases
should always be predicated on the consideration that more than the mere
convenience of the courts and of the parties in the case, the ends o f justice and
fairness would be served thereby. These are more important than a race to end the
trial.2 As eloquently expressed by the US Supreme Court in one case,3 which,
although not legally controlling in this jurisdiction, nevertheless has persuasive
effect -

‘The establishment of prompt efficacious procedures to

achieve legitimate state ends is a proper state interest worthy of
cognizance in constitutional adjudication. But the Constitution
recognizes higher values than speed and efficiency. Indeed, one may
fairly say of the Bill of Rights in general, and the Due Process Clause in
particular, that they were designed to protect the fragile values of a
vulnerable citizenry from the overbearing concern for efficiency and
efficacy that may characterize xxx government officials xxx”

6. SECTION 18 [2 ] (INVOLUNTARY SERVITUDE).

A reading of Section 184 indicates that it is obviously applicable to criminal
cases only. This explains why its 2nd paragraph on involuntary servitude is phrased

' Caballero v. Alfonso, Jr., 153SCRA153 (1987; Gonzales v. Sandiganbayan, 199 SCRA 298.
1 Habana v. NLRC, G R No. 129418, Sept 10.1999; See De Guzman v. El&nias, G R No. 57395, AprJ17.1989.
3 Id., ciing Stanley v.lSnois, 405 U.S. 645,658.
4 Section 18. (1) No person shall be detained sotety by reason of his poitical befiefs and aspirations

J9JC9B0M
 C hapter One 17
' GENERAL PROVISIONS
in this fashion: “N o involuntary servitude in any form shall exist except as a
punishment for a crime whereof the part)7 shall have been duly convicted.”
However, in at least three (3) labor law situations, the concept o f involuntary
servitude finds application, namely:

(1) Voluntary resignation;

(2) Retum-to-work order in national interest disputes; or
(3) Compulsory fulfillment of military or civic duty.

6 .1. VOLUNTARY RESIGNATION.

“Involuntary servitude is every condition of enforced or compulsory service
o f one to another, no matter under what form such servitude may be disguised.*1
The constitution categorically prohibits involuntary servitude.2 It is on the basis o f
this constitutional precept that employees are granted the right to resign or to
terminate their employment relationship with their employers under Article 300
[285]3 o f the Labor Code. This article recognizes the equality o f the parties to an
employment relationship. Thus, an employee may resign from employment at any
time he wishes and with or without just cause, subject only to certain minimum
conditions imposed by law.4

The case o f BPI v. BP1 Employees Union,5 is instructive on this point. It

involves the merger o f BPI with FEBTC,6 where the Voluntary Arbitrator ruled
that, in accordance with Section 80 of the Corporation Code, the employees of
FEBTC form part o f the “assets and liabilities” transferred to the surviving bank,
petitioner BPI, by virtue of the merger. The Supreme Court, however, did not
agree to this postulation. In legal parlance, human beings are never embraced in the
term “assets and liabilities.” It is contrary to public policy to declare the former
FEBTC employees as forming part of the assets or liabilities of FEBTC that were
transferred and absorbed by BPI in the Articles o f Merger. Assets and liabilities, in
this instance, should be deemed to refer only to property rights and obligations o f
FEBTC and do not include, the employment contracts o f its personnel. A
corporation cannot unilaterally transfer its employees to another employer like
chattel. Certainly, if BPI as an employer had the right to choose who to retain
among FEBTC’s employees, FEBTC employees had the concomitant right to
choose not to be absorbed by BPI. Even though FEBTC employees had no choice

(2) No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been
duly convicted.
1 Rubi v. Provincial Board of Muvloro, G R No. L-14078. March 7,1919,39 Phil. 660.
2 Section 18 [2], Article ill [BS of Rights], 1987 Constitution.
3 Entitled Temiinaton by Employee." This is commonly known as "resignation * As renumbered pursuant to Section 5, R A
No. 10151, June 21,2011 and DOLE Department ArNisory No. 01, Series ol 2015 (Renumbering of the Labor Code of the
Philippines, as Amended), issued on July 21,2015.
4 Such as when an employee resigns or terminates without just cause the employee-employer relationship, by serving a
written notice on he employer at least one (1) month in advance (See Article 300 {285], Labcx Code).
5 BPI v. BPI Employees UrtavOavao Chapter-federation of Unions in BPI Unbank, G.R No. 164301, Aug. 10,2010.
6 Far East Bank and Trust Company (FEBTC).

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 i8 BAR REVIEWER ON UBOR LAW

or control over the merger o f their employer with BPI, they had a choice whether
or not they would allow themselves to be absorbed by BPL Certainly nothing
prevented the FEBTCs employees from resigning o r retiring and seeking
employment elsewhere instead o f going along with the proposed absorption.
Employment is a personal consensual contract and absorption by BPI o f a former
FEBTC employee without the consent o f the employee is in violation o f an
individual's freedom to contract It would have been a different matter if there was
an express provision in the Articles o f Merger that as a condition for the merger,
BPI was being required to assume all the employment cpnttacts o f all existing
FEBTC employees with the conformity o f the employees. In the absence o f such a
provision in the Articles o f Merger, then BPI clearly had die business management
decision as to whether or not to employ FEB TC s employees. FEBTC employees
likewise retained the prerogative to allow themselves to be absorbed or not;
otherwise, that would be tantamount to involuntary servitude.

6.2. RETURN-TO-W ORK O R D E R IN N A T IO N A L IN T E R E S T

DISPUTES.

In national interest cases1 where the D O LE Secretary exercises his

assumption or certification power, returning to work on the part o f die worker by
virtue of a retum-to-work order is not a matter o f option o r voluntariness but o f
obligation.2 It must be discharged as a duty even against the worker’s will. The
worker must return to his job together with his co-workers so that the operation o f
the company can be resumed and it can continue serving the public and promoting
its interest.3 This is the real reason such return can be compelled. So imperative is
the order in fact that it is not even considered violative o f die constitutional right
against involuntary servitude, as held in Gotmco Saw Mi/l* A retum-to-work order
is immediately executory in character and should be stdcdy complied with by die
parties even during the pendency o f any motion o r petition questioning its validity
in order to maintain the status quo while the determination is being made.5 The
obligation so imposed must be discharged as a duty more than as a right that may
be waived. While the workers may choose not to obey, they do so at the risk o f
severing their relationship with their employer.6

6.3. COMPULSORY F U L F IL L M E N T O F M ILITA R Y O R CIVIC DUTY.

Article 301 [286]7 o f the Labor Code which provides for compulsory
fulfillment o f military o r civic duty on the part o f employees, is another instance

' AsptwidedinAttde278(g)(263(g^LaborCode.
1 MartxipperMningCorporaSonv. Britantes, GJt. No. 119381, March11,1996.
> Saniertov.Tuico.6il Nos. 75271*73,June27,1988,162 SCRA676.
4 KasatongMgaMang3ag3vasaKahoysaP^)inasv.GotamooSawNSI,GANo.L-1573tMarct)29ll9«,
4 Marcoooef MninoCorooraSonv, Mantes, suora.
1 PMcomEmployees Unionv. PhJippineGlobal Communications, G il No. 144315,July 17,2006.
7 Enatecf*WhenEmployment NotDeemed Tetmrated.*Uxlerthisarticle, employees maybe caSedtofaffiBcertainmtlitatyor
avicdu^b^ suchshallnrttemv^ employment

J9JC9B0M
 C h a pter O ne 19
' GENERAL PROVISIONS

which falls under the exception to this constitutional proscription on involuntary

servitude. This is so because die constitutional prohibition should be subordinated
to the right o f the government to call upon its citizens to protect their State as
provided under Section 4, Article II o f the Constitution. The survival o f the State is
die paramount justification for such involuntary servitude.

1-C.
SOCIAL JUSTICE AND HUMAN RIGHTS
(Article XIII of the Constitution)

1. FO U R (4) R ELEV A N T S E C T IO N S O F A R T IC L E X III.

Article XIII embodies 19 Sections but only four (4) are most relevant to
labor law, w^.: Sections 2 ,3 ,1 3 and 14, whose provisions are as follows:

ARTICLE XIII
SOCIALJUSHCE AND HUMAN RIGHTS
Sedan 2. The promotion of social justice shall include the commitment
to create economic opportunities based on freedom of initiative and self-
reliance.
LABOR
Section 3. The State shall afford fall protection to. labor, local and
overseas, organized and unorganized, and promote fall employment and
equality of employment opportunities for all
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entided to KCWty-Of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including mnriltarinnr and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right o f labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to investments, and to
expansion and growth.
WOMEN
Sedan 14. The State shall protect working women by providing safe and
healthful working conditions, taking into account their maternal functions,
and such facilities and opportunities that will enhance their welfare and
enable them to realize their fall potential in the service of die nation.

J9JC9B0M
 20 Ba r Reviewer o n La bo r law

2. SECTIO N 2 (SOCIAL JU STICE).

Section 10 o f Article II o f the Constitution declares that it is a policy o f

die State to promote social justice in all phases o f national development Section 2
o f Article XIII thereof is the amplification o f this policy in that the promotion o f
social justice shall include the commitment to create economic opportunities based
on freedom o f initiative and self-reliance.

The Article on Social Justice was apdy described as the “heart o f the new
Charter” by the President o f the 1986 Constitution Commission, retired Justice-
Cecilia Munoz-Palma.1Social justice is identified with the broad scope o f the police
power o f the state and requires die extensive use o f such power.2 In Calalang v.
WilBms;3 the Court, speaking through Justice Jose P. Laurel, expounded on social
justice thus:
“Soda) justice is ‘neither communism, nor despotism, nor
atomism, nor anarchy,’ but 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. Social jusdee means the promotion of the welfare of all
the people, the adoption by the Government of measures calculated to
insure economic stability o f all die competent dements of society,
through the maintenance of a proper economic and social equilibrium
in the interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise o f powers underlying the existence
of all governments on die time-honored principle of solus popuB at
supnmakc
“Social justice, therefore, must be founded on the recognition
of the necessity of interdependence among (fivers and diverse units of a
society and of die protection that should be equally and evenly extended
to all groups as a combined force in our social and economic life,
consistent with the fundamental and paramount objective of die state of
promoting the health, comfort, and quiet of all persons, and of banging
about ‘the greatest good to die greatest number.”*

In sum and as articulated in the Constitution, the aim o f social justice is to

protect and enhance die right o f all die people to human dignity, reduce social,
economic, and political inequalities, and remove cultural inequities.4

3. SECTIO N 3 (PR O T E C T IO N -T O -L A B O R CLAUSE).

Section 3 is the principal prottetion-to-bbor clause in the 1987 Constitution,

the other being Section 18 of Article II which declares that “ [tlhe State affirms

> O rterew edM a^M anniigA gencies,Inc,v.PO EA .G R .N o. 114714,April21,1995.

2 td.. ca^tgEnnqueM. Femando.TTie CortsStutianorthe Phfippines. ^ e d . (1977], 79-80.
) Catafang v. V\ASams, GJL No. 47800. Dec. 2,1540,70 P hi 726.
4 SeeSecfonl.AifcteXm thereof.

J9JC9B0M
 C hapter O ne 21
GENERAL PROVISIONS

labor as a primary social economic force. It shall protect the lights o f workers and
promote their welfare.” T he underlined keywords in the quoted provisions o f this
section above are worthy to be taken note o f considering that they reflect the rights
and principles that encompass almost all of the provisions o f the Labor Code and
other related laws.

In the workplace, where the relations between capital and labor are often
skewed in favor o f capital, inequality and discrimination by the employer are all die
more reprehensible.1 Section 3 specifically provides that labor is entitled to
"h u m an e conditions o f w ork." These conditions are not restricted to the
physical workplace - the factory, the office o r the field - but include as well the
manner by which employers treat their employees.2 T he same provision o f the
Constitution also directs die State to prom ote "equality o f employment
opportunities for all” Similarly, die Labor Code3 provides that the State shall
"ensure equal work opportunities regardless o f sex, race o r creed." It would be an
affront to both the spirit and letter o f these provisions if the State, in spite o f its
primordial obligation to prom ote and ensure equal employment opportunities,
doses its eyes to unequal and discriminatory terms and conditions o f employment.4*

Discrimination, particularly in terms o f wages, is frowned upon by the

Labor Code. Article 133 [135), for example, prohibits and penalizes3 the payment
o f lesser compensation to a female employee as against a male employee for work
o f equal value. A rtide 259 [248] declares it an unfair labor practice for an employer
to discriminate in regard to wages in order to encourage o r discourage membership
in any labor organization.

It bears noting that unlike all die rights granted under Section 3, die last
paragraph6 thereof has no t been implemented by any provision in die Labor Code
o r in any other laws. I t was, however, d ted in Asia Bm/try, Inc. v. TPMA,1 in
declaring that the D O L E Secretary has gravdy abused her discretion when she
relied on the unaudited financial statements o f petitioner corporation in
determining the wage award because such evidence is sdf-serving and inadmissible.
N ot only did this violate the December 19, 2003 O rder o f the D OLE Secretary
h etsd f to petitioner corporation to submit its complete audited finandal
statements, but this may have resulted to a wage award that is based on an

‘ h S e m a ^ School Affiana of EducaaxspSAEJv.QiiisuTting.GR. No. 128845, June 1,2000.

* ML
3 h A ifc te 3 fo » o t
* IrfemaSonal School ASarce of Educators [ISAEJ v. Quisuntng. supra; Arfide 133 [135J of lie Labor Code cfecteres if
uitawfiuiiDrfl)eemplcyerfe>rB(|ulnn,notordyasaoon(BBonofenrp)o^nentbutalsoasaoon(fiBonlbr8ieoontinunSonof
un io yn ^ tiataw o n B n sh sin o to etin an iel

J9JC9B0M
 22 BAR REVIEWER ON LABOR lAW

inaccurate and biased picture o f petitioner corporation's capacity to pay - one o f the
more significant factors in making a wage award. Petitioner corporation has offered
no reason why it failed and/or refused to submit its audited financial statements for
the past five years relevant to this case. This only further casts doubt as to the
veracity and accuracy o f the unaudited financial statements it submitted to the
DOLE Secretary. Verily, this procedure cannot be countenanced because dais could
unduly deprive labor o f its right to a ju s t sh are in th e fruits o f p ro d u ctio n *1 and
provide employers with a means to understate their profitability in order to defeat
the right o f labor to a just wage.

4. SECTION 14 (PR O T E C T IO N O F W O M E N ).

The Constitution, cognizant o f the disparity in tights between men and

women in almost all phases o f social and political life, provides a gamut o f
protective provisions. To die a few o f die primordial ones: Section 14, Article II on
the Declaration o f Principles and State Policies, expressly recognizes the role o f
women in nation-building and commands die State to ensure, at all times, the
fundamental equality before the law o f women and men. Similarly, Section 14 o f
Article X SI mandates that die State shall protect working women through
provisions for opportunities that would enable them to reach their full potential.2

Several laws have been enacted promoting and protecting women

employees before the passage o f the Labor Code on May 1,1974 as P.D. No. 442.1
Corrective labor and social laws on gender inequality have emerged with more
frequency in die years since the Labor Code was enacted, largely due to our
country’s commitment as a signatory to the United Nations Convention on the
Elimination o f All Forms of Discrimination Against Women (CEDAW). Principal
among these laws ate:

(a) R.A. N o. 6725 [May 12, 19891, which expliddy prohibits

discrimination against women with respect to terms and conditions
o f employment, promotion, and training opportunities;
(b) R JL N o. 6955 [June 13, 1990], which bans the “mail-order-bride”
practice for a fee and the export o f female labor to countries that
cannot guarantee protection to die rights o f women workers;
(c) R.A. N o. 7192 (Februaiy 12, 1992], also known as the Women in
Development and Nation building A ct” which affords women equal

enploy^, recogniririg tierightof tabatoisiustsharein tiehinteof producfion and fie r^htof enterprises to reasonabfe
mtiri«oninw8Strnents.aridto€D9ansionaidgrawth.a
1 Id.

Shops^ Factories, Industry. AghcufliBnt and Mercanfie EstabSshments, and 09ier Place of Lsbor in Rv^ppcne Islands,
to f^ F e n aS e sfo rM o b ficn s Hereof and for OherPuposeS,i(2 ) R A No. 679 (April 15,1952), enSted "An A d to
Regulate he Employmentof Women and CMdnen, toftw ife Fenafes torVfcfefion H a w ta d fr0 9 w R a p o e e s *;(3 )
R A No. 1131 (June 16,1954) amending R A No. 679; (4) R A No. 2714 (June 16, I960), creating h e Bureau of Women
and Mnors; and (5) PD . No. 148 (March 13.1973fc fisher amending R A No. 679.

J9JC9B0M
 C ha pter O n e 23
GENERAL PROVISIONS

opportunities with men to act and to enter into contracts, and for
appointment, admission, training, graduation, and commissioning in
all military or similar schools o f the Armed Forces o f the Philippines
and the Philippine National Police;
(d) R A N o . 7322 [March 30,1992], increasing die maternity benefits
granted to women in the private sector,
(e) R A N o . 7877 (February 14, 1995], which outlaws and punishes
sexual harassment in the workplace and in the education and training
environment;
(f) R A N o . 8042 [June 7, 1995], or die’ "Migrant Workers and Overseas
FilipinosAct o f1995, "which prescribes as a matter o f policy, interalia,
the deployment o f migrant workers, with emphasis on women, only
in countries where their rights are secure. likewise, it would not be
amiss to point out that in the Family Code (Executive Order N o. 209
dated July 6, 1987 [effective on August 3, 1988]), women’s rights in
the field o f dvil law have been gready enhanced and expanded;1
(g) R A N o . 10151 (June 21,2011], an A ct Allowing the Employment o f
Night Workers, Thereby Repealing Articles 130 and 131 o f PJD. N o.
442, as amended, Otherwise Known as the Labor Code o f the
Philippines"; and
(h) R A N o . 11210 [February 20, 2019], otherwise known as the “105-
Day ExpandedMaternityLeaveLav. ”
Additionally, the following laws were enacted to combat violations against
die rights o f women, including their children:

1) R A N o . 9208 [May 26, 2003], an Act to institute policies to

eliminate trafficking in persons especially women and children,
establishing the necessary institutional mechanisms for the protection
and support o f trafficked persons, providing penalties for its
violations, and for other purposes, otherwise known as the “Anti-
Trafficking in VersonsAct of2003. ”
2) R A N o . 9262 [March 08, 2004], an Act defining violence against
women and their children, providing for protective measures for
victims, prescribing penalties therefor, and for other purposes,
otherwise known as the “Anti-Violence Against Women and Their
ChildrenAct of2004“
5. A R T IC L E X III, N O T S E L F -E X E C U T IN G PR O V ISIO N S.

While all the provisions o f die 1987 Constitution are presumed self­
executing,2 there are some which the Court has declared not judicially

' PMippine Telegraph and Telephone Co. v. NLRC, 6 .R No. 118878, May 23,1997.
2 Seflam v.G aaartM ari^Savces,inc,G JlN o.187614.M arch24.2009.

J9JC9B0M
 24 BAR REVIEWER ON U B O R lAW

wifAirwhlf Article XIII being one o f them,1particularly the provisions on social

justice,2 labor* and women,4 as pronounced in a number o f cases.5 They ate mere
statements o f principles and policies. As such, they are mere directives addressed
to the executive and the legislative departments. I f unheeded, the remedy will n o t
lie with the courts; but rather, the electorate’s displeasure may be manifested in
their votes.6
More specifically, on Section 3 thereof, the Court, in Agabon v. NLRC,7
explained:

"Thus, the constitutional mandates of protection to labor and security

of tenure may be deemed as self-executing in the sense that these are
automatically acknowledged and observed without need for any enabling
legislation. However, to declare that the constitutional provisions are enough
to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not
unrealistic The espousal of such view presents the dangerous tendency of
being overbroad and exaggerated. The guarantees of ‘full protection to labor’
and 'security of tenure’, when examined in isolation, are facially unqualified,
and the broadest interpretation possible suggests a blanket shield in favor of
labor against any form o f removal regardless of circumstance. This
interpretation implies an unimpeachable right to continued employment - a
utopian notion, doubtless • but still hardly within the contemplation of the
framers. Subsequent legislation is still needed to define the parameters of
these guaranteed rights to ensure the protection and promotion, not only of
the rights of die labor sector, but of die employers' as wdL Without specific
and pertinent legislation, judicial bodies will be at a loss formulating their
own conclusion to approximate at least the aims of the Constitution.

"Ultimately, therefore, Section 3 o f Article X III cannot, on its

own, be a source o fapositive enforceable right to stave off the dismissal
of an employee for just cause owing to the failure to serve proper notice or
hearing. As manifested .by several framers of the 1987 Constitution, the
provisions on social justice require legislative enactments for their
enforceability.”8

Thus, Section 3 cannot be treated as a principal source o f direct

enforceable rights, for the violation o f which the questioned clause may be

1 kl.d& i98asav.R ippheAniBem enlandG am iigCa|Xxa8on,G ilNo.91M 9.M ay14.1991l 197SCRA52.

3 Sections 1 and 2 (hereof; Agabon v. NLRC, G R . No. 158G93, Non. 17,2004,442 SCRA 573. See Sepaate Opinion of
Juste Dante Toga ii his case.
3 S ecfa3fw eo f; See AgPbonv.NIJRC, supra.
* Section 14 (hereof; See Tondo MetficaiCeftter Employees AssodaSon v. CA, GJ?. No. 167324. Jtiy 17.2007 (En Bate),
s Sixti as tie cases erfBasmv.PhJippraArriisemert aid Gaming Corporation 6 J I No. 91649. ffey 14,1991.
6 Tondo Steical Center Bti^oyeesAssodiionv.CA,GR No. t67324,Jti)f 17,2007 (BiBanci.
1 G.R. No. 158®3, Nov. 17,2004,442 SCRA 573. Ttvs quotation was Ifted from the Separate Opinion cf Justice Dante Tnga
in Agabonv. NLRC.
e Enphasis added in the original decision h Serrano v. Gdant Maritime Services. Inc tr ite quoted this portion of (he
Separate Opinion of Juste Dante Tinga in Agabcnv. NLRC, supra.

J9JC9B0M
 C hatter O n e 25
GENERAL PROVISIONS

declared unconstitutional. It may unwittingly risk opening the floodgates o f

litigation to every worker or union over every conceivable violation o f so broad a
concept as social justice for labor.1 Section 3 merely clothes it with the status o f
a sector for whom die Constitution urges protection through executive or
legislative action and judicial recognition. Its utility is best limited to being an
impetus not just for die executive and legislative departments, but for the
judiciary as well, to protect the welfare o f die working class.2

1-D.
CONSTITUTIONAL RIGHTS THAT CANNOT BE INVOKED IN
COMPANY-LEVEL ADMINISTRATIVE CASES

1. IN A PPLIC A BILITY P E R JU R IS P R U D E N C E .

Certain constitutional rights and precepts may N O T be invoked in labor

cases> particularly in company-level administrative investigations leading to the
termination o f employment because they can only be asserted against the
government or the state but not against a private party like an employer. More
particularly, the following tights, per wdl-entrenched jurisprudence, generally find
no application in company-level administrative cases initiated o r lodged by the
employer against an erring employee:

(a) Right to constitutional due process;

(b) Right to equal protection o f die laws; and
(c) Right to counsel

The above constitutional tights can be invoked only when the labor case
is finally lodged with die labor and judicial courts, in which case, any deprivation
thereof would afford the employee die right to invoke them, this time, against the
government or state as represented by the labor and judicial authorities.

A.
INAPPLICABILITY OF
RIGHT TO CONSTITUTIONAL DUE PROCESS

L STATUTORY D U E PROCESS A PPLIES.

According to Agabon v. NLRC,3 the constitutionaldue process prescribed in

Section 1, Article III o f the Constitution does not apply to company level
administrative investigation that may result in die dismissal o f an employee. W hat
applies is the statutory due process laid down in Article 292(b) (277(b)] o f the Labor *

1 Serrano v. Gailaril Martens Services, Inc., G.R. No. 167614, March 24.2009.
* Id.
J AgSbon v. NLRC, G A No. 156693, Nw. 17,2004.

J9JC9B0M
 26 Ba r Reviewer o n Labor Law

Code. The Court, in justifying the shift in doctrine, distinguished constitutional due
process from statutory due process in this wise:

process under the Labor Code, like Constitutional due

process, has two aspects: substantive, i.e., the valid and authorized
causes of employment termination under the Labor Code; and
procedural, it., the manner of dismissal. Procedural due process
requirements for dismissal are found in the Implementing Rules o f P.D.
442, as amended, otherwise known as the Labor Code o f the
Philippines in Book VI, Rule I, Sec. 2, as amended by Department
Order Nos. 9 and 10. Breaches of these due process requirements
violate the Labor Code. Therefore statutory due process should be
differentiated from failure to comply with constitutional due
process.

Constitutional due process protects the individual from

the government and assures him of his rights in criminal, civil or
administrative proceedings: while statutory due process found in
the Labor Code and Implementing Rules protects employees
from being unjustly terminated without iust cause after notice and
hearing.”1

In othet words, when the employer, in terminating its employee, does not
afford the latter die procedural due process he deserves, it is not the constitutional
due process that is violated but only the statutory due process provided in die Labor
Code, more specifically, Article 292(b) [277(b)] thereof12

2. C ON STITUTIO NA L D U E PROCESS, W H E N O BSER V ED .

The observance o f constitutional due process becomes necessary only

when a labor case has already been filed with the labor courts and subsequendy,
when it teaches the superior courts (CA and SC). As distinguished from employer’s
company-level due process, the government is now involved; hence, any
deprivation of due process o f either party - the employee or employer - to the
labor suit by such labor officials/tribunals o r superior courts would constitute a
violation o f the right to constitutional due process under Section 1 o f Article III o f
the Constitution.

B.
INAPPLICABILITY OF
RIGHT TO EQUAL PROTECTION OF THE LAWS

L RATIONALE FOR ITS IN A PPLIC A BILITY .

In earlier rulings o f the High Court, it was declared that the failure o f the
employer to give the employee the benefit o f procedural due process before he is

1 Underscoring suppSed
’ SeelOngtrfrangsTransport. he. v. Martas G.R No. 166208. June 29.2007.

J9JC9B0M
 C ha pter O n e 27
GENERAL PROVISIONS

dismissed constitutes an infringement not only o f his constitutional right to due

process o f law but to equal protection o f the laws.‘.However, it is a settled principle
that the commands o f the equal protection clause are addressed only to the state or
those acting under color o f its authority. It has been held in a long array o f U.S.
Supreme Court decisions that the equal protection clause erects no shield against
merely private conduct, however discriminatory or wrongful it may have been.2

The only exception occurs when the State, in any o f its manifestations o r
actions, has been found to have become entwined or involved in a wrongful private
conduct Absent this exception, this constitutional tenet cannot be invoked in
private proceedings such as an administrative case o f an employee leading to
his/her dismissal

For example, such exception has been declared absent in the case o f
Duncan Association of Detailman-PTGWO and Pedro A . Tecson v. Glaxo Welcome
Philippines, Inc.,* where the employer’s policy prohibiting its employees from any
personal or marital relationships with employees o f competitor companies was held
not violative o f die equal protection clause in the Constitution and n o t
unreasonable under the circumstances because relationships o f that nature might
compromise die interests o f the company. SigniOcandy, the company actually
enforced the policy after repeated requests to the employee to comply therewith.
Indeed, the application o f the said policy was made in an impartial and even-
handed manner with due regard for the lot o f the employee. In any event, from the
wordings o f the contractual provision and the policy in its employee handbook, it is
dear that die company does not impose an absolute prohibition against
relationships between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and many persons o f their own
choosing. What the company merely seeks to avoid is a conflict o f interest between
the employees and the company that may arise out of such relationships.

T he same pronouncement was made in Yrasuegui v. Philippine Airlines, Inc.,*

where petitioner was dismissed because o f his failure to measure up to the weight
standards set by respondent airline company. His termination due to obesity was
held legal and not violative o f the equal protection clause in the Constitution. The
High Court observed that the United States Supreme Court, in interpreting the
Fourteenth Amendment which is the source o f the equal protection guarantee in
the 1987 Constitution, is consistent in saying that the equal protection dause
erects no shield against private conduct, however discriminatory or wrongful it may 1

1 W 6npHCoporafionv.NLRC,GANo.80587,Feb.8.1989.
2 District of ColumMav. Cater, 409 US 418,34 LEd.2d 613,93 S. CL 602,35 L.Ed2d 694,93 S. C l 1411; Moose Lodge No.
107 v. bvis, 407 US 163,32 LEcL2d 627,92 S. C l 1965; United States v Price. 383 US 787,16 L Ed. 2d 267,66 S. a
1152.
3 G R N o. 162994,Sept 17.2004.
4 G R N o. 168081,Oct 17,2008.

J9JC9B0M
 28
Ba r Reviewer o n Labo r law

be. Private actions, no matter how egregious, cannot violate the equal protection
guarantee.

C.
INAPPLICABILITY OF
RIGHT TO COUNSEL

1. INVOCATION OF R IG H T T O C O U N SE L IN A N A D M IN IST R A T IV E
PROCEED IN G.

The rffif to counsel cannot be invoked in administrative proceedings.

This principle has been enunciated in Manuel v. N. C. Construction Supply} In this
case, petitioners were positively identified as being involved in a series o f thefts at
respondent company. They were thus invited to the Pasig police station for
investigation regarding their alleged involvement in the offense. A t the police
station, the private respondents’ counsel conducted in their behalf an investigation
regarding petitioners' involvement in the theft He interrogated the petitioners on
' their alleged participation in the series o f thefts committed at respondent company.
Petitioners initially denied the charge. However, after being positively identified by
Jay Calso, petitioners admitted their guilt and offered to resign in exchange for the
withdrawal o f any criminal charge against them. The company lawyer accepted their
resignation.

In the illegal dismissal case they filed against private respondents,

petitioners argued that their admission made at die Pasig police station regarding
their involvement in the theft as well as their resignation were not voluntary but
were obtained by private respondents’ lawyer by means o f threat and intimidation.
They contended that their admission is inadmissible as evidence against them under
Section 12 o f Article III [Bill of Rights] o f the 1987 Constitution. In rejecting this
argument and upholding the validity o f their dismissal, die Supreme Court
emphasized that the right to counsel under the said provision o f the 1987
Constitution is meant to protect a suspect in a criminal case who is under custodial
investigation. Custodial investigation is the stage where the police investigation is
no longer a general inquiry into an unsolved crime but has begun to focus on a
particular suspect who has been taken into custody by die police to carry out a
process of interrogation that lends itself to elicit incriminating statements. It is that
point when questions ate initiated by law enforcement officers after a person has
been taken into custody or otherwise deprived o f his freedom o f action in any
significant way. The right to counsel attaches only upon the start o f such
investigation.2 Therefore, die exclusionary rule under said provision o f the Bill o f
Rights o f the 1987 Constitution applies only to admissions made in a criminal
investigation but not to those made in an administrative investigation.

> 6 R Nd 127553,Nw.28.1997,282 SCRA326**

* Peoplev. Bandula, G Jl No.89223, May27,1994,232 SCRA566.

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 C h a pt er O ne 29
' GENERAL PROVISIONS

In the case at bat, the admission was made by petitioners during the
coutse o f the investigation conducted by ptivate respondents' counsel to determine
whether there is sufficient ground to terminate their employment Petitioners were
not under custodial investigation as they were n o t yet accused by the police o f
committing a crime. The investigation was merely an administrative investigation
conducted by the employer, not a criminal investigation. T h e q uestions w ere
p ro p o u n d ed by th e em ployer's law yer, n o t by police officers. T h e fact th a t
the investigation w as conducted a t th e police station d id no t necessarily p u t
petitioners u n d e r custodial investigation as th e venue o f the investigation
w as m erely incidental. H ence, d ie ad m issio n s m ade by p etitioners d u rin g
su ch investigation may be used as evidence to justify th eir dism issal.

2. E F F E C T O F FA ILU R E O F E M P L O Y E R T O IN F O R M E M P L O Y E E
O F H IS R IG H T T O C O U N SEL.

But would the failure o f die employer to inform the employee, who is
undergoing administrative investigation, o f his right to counsel amount to
deprivation o f due process?

This was answered in the affirm ative in Punqal ». ETSI Technologies, Inc.}
where petitioner’s contention that she was denied due process was upheld because
the records do not show that she was informed o f her tight to be represented by
counsel during the conference with her employer. The protestations o f
respondent-employer that the right to be informed o f the right to counsel does n o t
apply to investigations before administrative bodies and that law and jurisprudence
merely give the employee the option to secure the setvices o f counsel in a hearing
or conference, fall in the light o f the clear provision o f Article 292(b) (277(b)J o f
the Labor Code that “the employerxxx shallafford [the worker whose employment is sought to
be terminatedj ample opportunity to he heard and to defend himself with the assistance of his
representatives if he so desires in accordance with company rules and regulations pursuant to
guidelines set by the Department of Labor and Employment, ” and the Supreme Court’s
explicit pronouncement that “[ajmple opportunity connotes every kind of assistance that
managment mustaccordthe employeeto enablehim toprepareadequatelyfor his defenseincluding
kgal repnsetttation.i' Consequently, the petitioner was awarded nominal damages in
the am ount o f P30,000.00 for violation o f her right to statutory due process.

3. T H E L O P E Z D O C T R IN E .

The Punyal ruling above no longer holds because a new pronouncement

was made in die 2011 case o f Lope%v. A hum Group ofCompanies} to die effect that
the right to counsel and the assistance o f one in investigations involving
termination cases is neither indispensable nor mandatory. It is only under any o f
the following circumstances that such right becomes indispensable and mandatory:*

1 G J l N o t 17038445, March 9.2007.

* G .R No. 191008, April 11,2011,647 SCRA568.

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 30 Bar reviewer o n Labor Law

1) When the employee himself requests for counsel; or

2) When he manifests that he wants a formal heating on the charges
against him.

Consequently, if there is no showing that an employee has requested for a

formal heating to be conducted o r that he be assisted by counsel, there can be no
deprivation o f due process to speak of.

In this case of L opttf the NLRC*2 held that petitioner should have been
afforded, or at least advised o f the right to counsel. It thus held that “any
evaluation which was based only on the explanation to the show-cause letter and
any so-called investigation but without confrontation o f the vital witnesses, do[es]
not suffice.” la reversing this ruling, the Supreme Court pronounced that:
“Parenthetically, the Court finds that it was error for the
NLRC to opine that petitioner should have been afforded counsel or
advised of the right to counsel. The right to counsel and the
assistance of one in investigations involving termination cases is
neither indispensable nor mandatory, except when the employee
himself requests for one or that he manifests that he wants a
formal hearing on the charges against him. In petitioner’s case,
there is no showing that he requested for a formal hearing to be
conducted or that he be assisted bv counsel. Verily, since he was
furnished a second nonce informing him of his dismissal and the
grounds therefor, the twin-notice requirement had been complied with
to call for a deletion of the appellate court’s award of nominal damages
to petitioner.”3

2.
CIVIL CODE PROVISIONS

L RELEVANT PROVISIONS.

There are a number o f provisions o f die Civil Code related to labor law.
However, only four (4) articles thereof are mentioned in die most recent syllabi in
connection with the major topic o f "Fundamental Principles and Concepts” which is
now denominated as 'General Principles” under die 2019 Syllabus. These articles
state:

Art 1700. The relations between capital and labor are not merely
contractual They are so impressed with public interest that labor
contracts must yield to die common good Therefore, such contracts
are subject to the specal laws on labor unions, collective bargaining,

< GR.No. 191008,April 11,2011,647SCRAS68.

2 Offing SBIawv. NLRC,GR. No. 90766, Sept 27,1991,202 SCRA7.
1 Emphasis suppSed.

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 C h a pter O n e 31
GENERAL PROVISIONS

stokes and lockouts, dosed shop, wages, working conditions, hours of

labor and similar subjects.

A rt 1701. Neither capital nor labor shall act oppressively against the
other, or impair the interest or convenience of the public

Art. 1702. In case o f doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for the
laborer.

A rt 1703. No contract which practically amounts to involuntary

servitude, under any guise whatsoever, shall be valid.1

Although provided in the Civil Code, the civil law principles reflected in
the afore-quoted articles are often invoked in labor cases.
2. A R T IC L E 1700.
A contract is defined as “a meeting o f minds between two persons
whereby one binds himself, with respect to the other, to give something or to
render some service."2 Parties are free to stipulate on terms and conditions in
contracts as long as these “are not contrary to law, morals, good customs, public
order, or public policy."3 This presupposes that the parties to a contract are on
equal footing. They can bargain on terms and conditions until they are able to reach
an agreement O n the other hand, contracts o f employment are different and have
a higher level o f regulation because they are impressed with public interest The
employer and the employee are not on equal footing.
Thus, employment contracts are subject to regulatory review by the labor
tribunals and courts o f law. The law serves to equalize the unequal The labor force
is a special class that is constitutionally protected because o f the inequality between
capital and labor.4 It is axiomatic that the employer and the employee do not stand
on equal footing, a situation which often causes an employee to act out o f need
instead o f any genuine acquiescence to die employer.5 “Protection to labor" dots not
signify the promotion o f employment alone. W hat concerns the Constitution more
paramountly is that such an employment may be above all, decent, just and
humane.5

T he supremacy o f die law over contracts is explained by die fact that

labor contracts are not ordinary contracts; these ate imbued with public interest
and therefore are subject to the police power o f the State.7 The provision o f Article

1 These provisions are found in Secfion 2 [Contract of Labor], Chapter 3 (Wort and Labor], 1 % VIII [lease] of Book IV
fObfigaficns and C ontact of 9 » C M Code.
2 Article 1305, C M Code.
* Article 1306. Id.
4 Fuj Television Networt, Inc. v. Espcrtu, G il Nos. 2W 54445, Dec. 3,2014.
s Jacufeev.Si&nanUtaeisfy. & R . No. 156934, March 16,2007.
* PhSp^AsscxiaSondSeiviceB(po(te(s.lnav.Hon.Oion,&R-No.81958JuR830.1988.
1 VBav. NLRC.G Jl No. 117043, Jaa 14,19% .

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 32 Bar reviewer o n Labo r Law

1700 o f the Civil Code reflects this exercise o f police power.1 Consequently, labor
contracts must yield to the common good and pursuant to the inherent police
power of the State, they are subject to the provisions o f the Labor Code and special
laws on such matters as labor unionism, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours o f labor and similar subjects.
Simply, this means that provisions o f these applicable laws, especially provisions
relating to matters affected with public policy, ate deemed written into the contract.
Put a little diffetendy, die governing principle is that the parties may not contract
away applicable provisions of law especially peremptory provisions dealing with
matters heavily impressed with public interest The law relating to labor and
employment is dearly such an area and parties are n o t at liberty to insulate
themselves and their relationships from the impact o f labor laws and regulations by
simply contracting with each other.2 The private agreement o f the parties cannot
prevail over Article 1700 of the Civil Code.3

2.1. KINDS O F LABOR CON TRA CTS.

The employment contracts referred to in A rttde 1700 may either be

(1) Employment contract; or

(2) Collective bargaining agreement (CBA).
Leyte Geothermal v. P N O C -E D C illustrates a case involving an
employment contract. The issue here is whether the members o f petitioners ate
project employees or regular employees. The Court pronounced that A rdde 295
[280]5 of the Labor Code, as worded, establishes that the nature o f the employment
is determined by law, regardless o f any contract expressing otherwise. The
supremacy o f the law over the nomendaturc o f the contract and die stipulations
contained therein is to bring to life the policy enshrined in the Constitution to
"afford hill protection to labor."6 Thus, labor contracts are placed on a higher plane
than ordinary contracts; these are imbued with public interest and therefore subject
to the police power of the State.7 However, notwithstanding die foregoing
iterations, project employment contracts which fix die employment for a spedfic
project or undertaking remain valid under the law. In the case at bar, the records
reveal that the “officers and the members o f petitioner union signed employment
contracts indicating the specific project or phase o f work for which they were
hired, with a fixed period o f employment As deady shown by petitioner union’s
own admission, both parties had executed the contracts fredy and voluntarily

' ConferenceofMariticneMaradigAgencies.he.,v.F0EA,GJtNo. 114714,April21,1995.

1 PaJastanArtnesCofpocatnriv.Opte.GR No 61594,Sept 28,1990.
1 Innoda&Kno^eSeniices.lncv.Wng GR No. 211892, Dec. 06,2017.
* Leyte Geofcermal Power Progresswe Employees UraonALU-TUCP v. Ptfipp'ne National Oil. Company-Energy
DevelopmentCorporation,GR No. 1703S1. March30,2011.
5 295(280] - ReguJarandCasial Erx^oyment
* SeeSection3, ArticleXIB, 1987Constitution.
7 SeeArticles1700and 1702oftie Ctf Code; Wav. NLRC, GR No. 117043. Jan. 14,1998,348 PM. 118,140-141.

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 C h a pter O n e 33
' GENERAL PROVISIONS

without force, duress or acts tending to vitiate the workers’ consent. Thus, there is
no reason not to honor and give effect to the terms and conditions stipulated
therein.
Davao Integrated Pori Stevedoring Sendees o. Abarquetf illustrates a case
involving a collective bargaining agreement. The CBA in Article 263 [252]2 o f the
Labor Code refers to a contract executed upon request o f either the employer or
die exclusive bargaining representative incorporating the agreement reached after
negotiations with respect to wages, hours o f work and all other terms and
conditions o f employment, including proposals for adjusting any grievances or
questions arising under such agreement While the terms and conditions o f a CBA
constitute the law between the parties, it is not, however, an ordinary contract to
which is applied die principles o f law governing ordinary contracts. A CBA, as a
labor contract within the contemplation o f Article 1700 o f the Civil Code, is not
merely contractual in nature but impressed with public interest, thus, it m ust yield
to the common good.3 As such, it must be construed liberally rather than narrowly
and technically, and the courts must place a practical and realistic construction
upon it, giving due consideration to. the context in which it is negotiated and
purpose which it is intended to serve.4
3. A R T IC L E 1701.

Article 1701 clearly mandates that neither capital n o r labor shall act
oppressively against the other, or impair the interest ox convenience o f the public.
O ur laws provide for a d ear preference for labor. This is in recognition o f the
asymmetrical power o f those with capital when they are left to negotiate w ith their
workers without the standards and protection o f law. The preferential treatment
given by our law to labor, however, is not a license for abuse. I t is not a signal to
commit acts o f unfairness that will unreasonably infringe on the property tights o f
the company. Both labor and employer have social utility, and the law is n o t so
biased that it does not find a middle ground to give each their due.5

For example, in one case,6 the employer was allowed to withhold terminal
pay and benefits pending the employee's return o f its housing property. The
employer daim s that its property is in petitioners’ possession by virtue o f their
status as its employees. It allowed petitioners to use its property as an act o f
liberality. Put in other words, it would n o t have allowed petitioners to use its
property had they no t been its employees. Clearly, in this case, it is for the workers

' GR No. 102132, March 19,1993.

2 Ascenumbered pusuant to Section 5, RA No. 10151. June 21.2011 and DOLE Department Advi90iy No. 01. Series of
2015 (Renumberingof he Labor Codedfte PhSppines,as Amended), issuedon July21.2015.
3 See alsoGrtek Employeesla to U n o > 4W v .(^ B e cto te ,tn c,G R No. 190515, Nov. 15.2010.
4 48AAmJur2d, s. 1800,pp. 255-256.
5 Man v.NLRC,GJlNa 202961,Feb. 4,2015
s Manv.NLRC^upra.

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 34 Bar Reviewer o n ubor Law

to return their housing in exchange for the release o f their benefits. This is what
they agreed upon. It is what is fair in the premises.
4. ARTICLE 1702, IN R E L A T IO N T O A R T IC L E 4 O F LA B O R C O D E .

(NOTE: See discussion above on the topic of

“B. CONSTRUCTION IN FAVOR OF LABOR”).
5. A RTICLE 1703.
Article 1703 is very dear in its prohibition that no contract which
practically amounts to involuntary servitude, under any guise whatsoever, shall be
valid. There is likewise a related provision on involuntary servitude in A rdde 32 o f
the Civil Code which holds liable for damages “ [a]ny public officer or employee, or
any private individual, who direcdy o r indirecdy obstructs, defeats, violates or in
any manner impedes or impairs xxx th e rig h t to be free from involuntary
servitude in any form /’1
N ot only is involuntary servitude prohibited and penalized in the Civil
Code, the Revised Penal Code likewise punishes forced labor in some o f its
provisions.2
The Constitution, in paragraph 2, Section 18 o f A rtide IE 3 thereof, is very
categorical in declaring that “[n]o involuntary servitude in any form shall exist
except as a punishment for a crime whereof the party shall have been duly
convicted.”
In 1930, the ELO has passed the Forced L abour C onvention N o. 29
concerning forced or compulsory labour.4 Under this convention, the term forced
or compulsory labour shall mean all work or service which is exacted from any
person under the menace o f any penalty and for which the said person has not
offered himself voluntarily. Nevertheless, for the purposes o f this Convention, the
term forced or compulsory labour shall n o t in d u d e -
(a) any work or service exacted in virtue o f compulsory military service
laws for work o f a purdy military character,
(b) any work or service which forms part o f the normal rivic obligations
of the atizens of a M y self-governing country;
(c) any work or service exacted from any person as a consequence of a
conviction in a court o f law, provided that the said work or service is
carried out under the supervision and control o f a public authority and
that the said person is not hired to or placed at the disposal o f private
individuals, companies or associations;
(d) any work or service exacted in cases o f emergency, that is to say, in the
event of war or o f a calamity or threatened calamity, such as fire,

' SeeNo. 14hereof.

• Such as Artide 272 on Sfever); AiUde 273 on 09ibaaSbn of cWtf labor; Arfide 274 on Serums rendered under
conpufsw ii w m t of(fete. AndAiMe 286on Graeawcfoa
1 BBcfRgMs.
4 Enty intofens 01 May 1932;Adc^: Geneva, 14ft 1C session(KJun 1930).

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 CHAPTER ONE 35
' GENERAL PROVISIONS

flood, famine, earthquake, violent epidemic or epizootic diseases,

invasion by animal, insect o r vegetable pests, and in general any
circumstance that would endanger the existence or the well-being o f
the whole o r part o f the population;
(e) minor communal services o f a kind which, being performed by the
members o f the community in the direct interest o f die said
community, can therefore be considered as normal civic obligations
incumbent upon the members o f the community, provided that the
members o f die community o r their direct representatives shall have
die right to be consulted in regard to the need for such services.

(NOTE: For more extensive discussion on involuntary servitude, please

read the annotation on Section 18(2), Article II of the Constitution, supra).

0O0

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C hapter T w o
PRE-EMPLOYMENT

TOPICS PER SYLLABUS

PRE-EMPLOYMENT
A. Recruitment and placement of local and migrant workers (Labor
Code and R.A. 8042, as amended by R.A. 10022)
1. Illegal recruitment and other prohibited activities
a. Elements
b. Types of illegal recruitment
c. Illegal recruitment vs. estafa
2. Liability of local recruitment agency and foreign employer
a. Solidary liability
b. Theory of imputed knowledge
3. Termination of contract of migrant worker without just or valid
cause
4. Ban on direct hiring
B. Employment of non-resident aliens

A.
RECRUITMENT AND PLACEMENT OF
LOCAL AND MIGRANT WORKERS
(Labor Code and RA. 8042,1as amended by R.A. 10022)
[Note; The topics under this Section will be rearranged

1. WHAT CON STITUTES R E C R U IT M E N T A N D PL A C E M E N T

ACTIVITIES.

a. As defined in the Labor Code.

The Labor Code, in its Article 13(b), defines "recruitment and
placementMactivity as referring to any act of;

Otherwiseknow asthe W ip a n l W o tto ts a n d OverseasF & p i m s M 0 (1 9 9 5 .'

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 C hapter .Two 37
PRE-EMPLOYMENT

(a) canvassing,
(b) enlisting,
(c) contracting,
(d) transporting,
(e) utilizing, o r
(Q hiring procuring workers.
It also includes:
(1) referrals,
(2) contract services,
(3) promising, or
(4) advertising for employment, locally or abroad, whether for profit or
not

b. N o change in meaning as these terms are defined in special laws

and rules.
B oth the applicable laws for recruitment and placement for local
em ploym ent1 and overseas em ploym ent2 have retained the above definition and
concept o f recruitment and placement as originally rendered in Article 13(b) o f the
Labor Code.3

2. M E A N IN G O F T H E PROVISO IN A R T IC L E 13(b).

Article 13(b) contains a proviso that states: “Provided, T h a t any p erso n

o r entity w hich, in any m anner, offers o r prom ises for a fee, em plo y m en t to
two o r m ore persons shall be d eem e d engaged in recru itm en t and
p la c e m e n t”

The proviso above has been explained by the Supreme Court in People v.
Pam,4 a case involving recruitment for overseas employment The issue o f whether
there is recruitment and placement was raised considering that the four (4) separate
criminal informations filed against the accused for operating a fee-charging
employment agency without being duly licensed to do so, merely mentioned ooe
person in each o f the information as having been recruited by him. The accused
contends that under Article 13(b) o f the Labor Code, there could only be illegal
recruitment when two or more persons in any manner were promised o r offered
any employment for a fee.

1 Secbon42, firstpanagraplvld^Section1, Rule W. OmniMis RulesandRegutafionstm(riemer£ngtheMgrantWortcersand

Overseas FSphos Act of 1995, as Amended by RA No 10022, issued on July8.2010: See also Section 76. Rule X
Revised POEA Rules and RegutaSons Governing the Recruitment and Employment of Land-Based Overseas Flipino
Workers of 2016; Section 72, Ride X 2016 Revised POEA Rides and RegutaSons Governing Die Recruitment and
EmploymentofSeafarersissuedonFebruary26.2016.
2 Section6 ofRA Mo.8042, asamendedbySector 5of RA No. 10022.
3 Noticeably, in the definSon in (he 2014 Rides far beat employment of what constitutes Segal recrutmenL (he word
Transporting’ ismissing. (See Section42, Revised Ridesand RegulationsGoverningRecruitment andPlacementfor Local
Employment, DepartmentOrderNo. 141-14, Seriesof2014 (November20,20140.
4 GJlNos.L-58674-77.Juty 11.1986.142SCRA664.

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 38 Ba r Reviewer o n laso r Law

The Court declared, however, that the above-quoted proviso in Article

13(b) was intended neither to impose a condition on the basic rule nor to provide
an exception thereto but merely :o create a presumption. The presumption is that
the individual or entity is engaged in recruitment and placement whenever he or it
is dealing with two or more persons to whom, in consideration o f a fee, an offer or
promise o f employment is made in die course o f the “canvassing, enlisting,
contracting, transporting, utilizing, hiring o r procuring o f workers.”

The number o f persons dealt with is not an essential ingredient o f the act
of recruitment and placement o f workers. Any o f the acts mentioned in the basic
rule in Article 13(b) will constitute recruitment and placement even if only one
prospective worker is involved. The proviso merely lays down a rule o f evidence that
where fee is collected in consideration o f a promise or offer o f employment to two
or more prospective workers, the individual or entity dealing with them shall be
deemed to be engaged in the act o f recruitment and placement The words “shall be
deemed”should, by the same token, be given the force o f a disputable presumption
or o f a primaJade evidence o f engaging in recruitment and placement

1.
ILLEGAL RECRUITMENT
AND OTHER PROHIBITED ACTIVITIES

1. APPLICATION T O B O T H LOCAL A N D OVERSEAS

EM PLOYM ENT.

The concept o f ' Illegal recruitment” under Article 38l o f the Labor Code
applies to recruitment and placement for both localand overseas employment But a
distinction must be pointed out at the very outset that as far as recruitment for
local employment is concerned, the sole basis thereof is Article 38 and nothing
more, unlike recruitment for overseas employment where new laws2 have been

1 ART.3&fif^recn^iient-(3)Anyreaifitrnentac&^es.incfaidhgeieprohlAedp(acGoesenunnetatediinderAi&le34of
lus Code, tobe undertakentqr nontensees or noivhcUeis of aultoriV, shaDbe deemed Oegaf and pumshsfdeunder
Artde 39 oftfe Code. TheDepartnert ofLaborand Employmentor anylawenforcement officer mayingate complaints
underlitisAiMe.
(b) ISegal recruitioent whencommittedbya syncficateor inlargescale shall beconsideredan offense hvrdvingeconomic
sabotageandshaJbepenaSzedinaccordancewti Aride39hereof.
BegatrecndJTient is deemedcommilEd bya syrafcafe tf earnedout by a groupof tree (3) or more personsconspiring
andtorcontederafingwft oneanothern canyingoutanyuriawlidorOegal transaftn, ertopiise orschemedefinedunder
thefast paragraphhereof. tBegal recnabnenl is deemed conuntted in largosesdoIf oommHtedagainst &vee (3) or mono
peisomintMdtfifiyaasagioup.
(c)TheSecreiaiyoflabor aid Employmentor hisdulyauthorizedrepresentativesshadhavethepowertocauseBlearest
anddetentionotsud»nontcenseeornontdderof authorityI afteriwesjgafai itisdetemdnedthathisaefrSesconstitute
adangerb nationalsecurflyaid pubicorderorwBleadtofather etpfeiialionofjoteeetas TheSecretasyshallorderfoe
seanhottheoSceor premisesandseizureof documents, paaphemaiia, propertiesandotherimplementsusedin Uegaf
reauitmentactivitiesandtheclosureof companies, establishmentsandenSies foundtobe engagedin the recruitment of
votes faromiseasemployment,wftoutharngbeenficensedorauthorizedtodo»
> Suchas1*1995 law,RA. No.8042,anditsamendablylaw,RA. No. 10022,at*hvaspassed'n2010.

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 C hapter Two 39
PRE-EMPLOYMENT

enacted to govern and regulate it, if not to supersede i t Under these new laws' as
well as their implementing rules,*2 the concept o f illegal recruitment under the Labor
Code has been broadened.3*Thus, while under the original rendering o f the Labor
Code, the prohibited activities enumerated in Article 34 constitute illegal
recruitment only when undertaken by non-licensees or non-holders of authority* the
commission thereof is now considered illegal recruitment, in cases o f recruitment
for overseas em ploym ent, both under R.A. No. 8042 and its amendatory law,
R_A. No. 10022, when the same are committed by “any person, whether a non­
licensee, non-holder, licensee or holder ofauthority”56

Although there is no similar corresponding amendment to Article 38 that

would have justified the same “broadening” o f its application to illegal
recruitment involving local employment, the 2014 Ruled1 have now likewise
reflected the same broadened coverage as to include prohibited acts when
committed by "any person, w h eth er o r not a holder o f a license or authority.”7
This is as it should be since die intendment o f die law can never be enlivened and
vivified unless such coverage is broadened as is now provided in the prevailing
Rules.
2. L IC E N S E O R A U T H O R IT Y .

a. License vs. authority.

“License" refers to the document issued by the D O LE Secretary
authorizing a person, partnership or corporation to operate a private
recruitment/manning agency.8

“Authority" refers to a document issued by the D O L E Secretary

authorizing the officers, personnel, agents or representatives o f a licensed

’ II
2 Such as the Omnaxjs Rules and Regdadons lmp!emen&ig he MigrantWaters and Qraseas Flpinos Act of 1995, as
Amended by RA No. 10022, issued onJuly 8,2010; Revised POEARules and Regulations Governing tie Recruitment
andEmploymentofLandflasedOverseasFiipnoWorkersof2016;2016RevisedPOHARulesandRegiafions Gowning
he RecnribnentandEmploymentofSeafarersissuedonFebruary26.2016.
3 The SuptemeCout has declared hat R. A. No. 8042 has broadened he concept of 3egal recnftnent under he labor
Code. (Peoplev. TotenGno. G.R. No. 208686, July 01,2015; Peoplev. Daud, GJl No. 197539, June02.2014; Peoplev.
Oaten, GJl No. 173198, June 1,2011; People v. Trinidad, GJl No. 161244, Aug. 09,2010; Peoplev. Nogra, GJl No.
170834,Aug. 29,2008).
* Peoplev. Cabacang.GR No. 113917,July 17,1995,246SCRA530.
5 SeeSec6on6ofRA No. 8042, asamendedbySection5 ofRA No. 10022.
6 RevisedRulesandRegubSoruGowerraigRecrutnnertardPlaoemenj hr IccaJEmployment, Department Order No. 141-
14,Sedesof2014[November20,2014).
7 SeeSection42hereof.
3 Section 1(w), Rule II, Omnixis Rules and Regulations Impiemerting the Mgrant VMers and Overseas Fiphos Act of
1995,asamendedbyRA No. 10022. issuedonJuly8,2010.

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 40 Ba r Reviewer o n labor Law

recruitmcnt/manoing agency to conduct recruitment and placement activities in a

place stated in the license or in a specified place.1

b. “Non-licensee” or “non-holder o f authority.”

The term "non-Kansu” o r "non-holder of authority” refers to any person,
partnership or corporation with no valid license2 o r authority3 to engage in
recruitment and placement o f workers o r whose license o r authority is revoked,
cancelled, terminated, expired o r otherwise delisted from the toll o f licensed
recruitment/manning agencies registered with the P O E A /D O L E .4

The acts mentioned in Article 13(b) o f the Labor Code can lawfully be
undertaken only by licensees o r holders o f authority to engage in the recruitment
and placement o f workers.5 To reiterate for emphasis purposes, non-possession o f
a license or authority to recruit is, under the law, an essential ingredient o f the
crime of illegal recruitment penalized under the law.5

A recruiter may be a natural person o r juridical person like a partnership

or corporation.7

1-A.
ILLEGAL RECRUITMENT IN LOCAL EMPLOYMENT

1. LOCAL ILLEGAL R E C R U IT M E N T .

Local illegal recruitm ent is committed under any o f the following

situations, to mt.

(1) When any of the follow ing acts are u n dertaken by a non-licensee
or non-holder o fauthority;

1 Section 1(b), Rule II, Omribus Rdes and RegulaSons Implementing the Mgrant W aters and Overseas Ffyinos Act of
1995, as amended by R A No. 10022, issued on Jdy 8.2010.
2 Thetolcense'r^lD ihedocutertissuedbytietX X fS eaetayajhoaziTgaperson.partfieshjpofaxpora& ntD
operate a private recruSnoeotfrnanning agency. (Sec6on 1(w), Rule II, Qmnbus Ruies aid Regulations implemenSng the
MgrantW atas and Overseas FIjpinos Act of 1995, as Amended by R A No. 10022, issued on Ju!y8.2010).
3 The tern *authart/ refers to a document issued bv h e DOLE Secretary auhorizhn the officers oeisonnel. acenis or

in he fcense or in a speeded place. (Secfion 1(b), Ride It, Omnfcus Rules aid Regulations bnplemenisng the Migrant
Wcrkereand Overseas FEphosArtcf1 9 9 5 ,» Amended by R A No. 10022, issued on Ju!y8,2010).
4 Only he term ^xn4cmsee'txArd^xx>+x)ber of a u th o r Vituch is d^ned h Section 1(cc), Rule II. Om nixs Rules and
Regulations tmptemenSng h e MgrantWorkers and Ovemeas FSphos Actof 1995, as Amended by R A No. 10022, issued
on JuV 8,2010, See also he definSon of h e term *nontansee* in No. 25, Rub II, Revised POEA Rules and R e g io n s
Governing he Reautment end Employment of land4ased Ovaseas Fip'no Wotkers of 2016; See also h e deSn&nof
tl,
he term TnorvfcenseeT h No. 31, R ib 2016 Revised POEA Rules end RegutaSons Governing h e ReenSment and
Employment of Seafarers issued on February 26,2016; See also Secfion 1(d), Rubs tnpbmenfing P.D. No. 1920, July 12.
1984 vtere the terms “rm fensee- and "tm tolder of auhority’ are defined as referring to any person, corporation a
er^Vibichhasndbem issuedavafidfcem euautto^toengagehreautmertmdplacernentbytheDOLESecretery,
orwhose Gcerse or authority has been suspended, revoked or canceBed by he POEA or h e DOLE Secr&ry.
3 Peopfev.Bodozo.GA No. 96621.Oct 21/9 92.215 SCRA 33.
5 Peoplev. Taguba. GA. Nos. 95207-17, Jan 10.1994; Peoplev. Sendon, GA. Nos. L-10157W 2, Dec. 15,1993.
7 People v. Saub, G il No. 125903. Nov. 15,2000.

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• Any act o f canvassing, enlisting, contracting, utilizing, hiring o r

procuring workers, and includes referrals, contract services,
promising or advertising for localemployment, whether for profit o r
n o t1
(2) W hen any o f the follow ing acts w hich have been declared by law
as prohibited are com m itted by any person, whether or not a
holder o fa license or authority.
a) To charge or accept direcdy or indirecdy any amount or to make a
worker pay die agency or its representatives any amount greater
than that actually loaned or advanced to him;
b) To furnish o r publish any false notice or information in relation to
recruitment o r employment;
c) To give any false notice, testimony, information or document o r
commit any act o f misrepresentation for the purpose o f securing a
license or authority;
d) To induce o r attem pt to induce a worker already employed to quit
his employment in order to offer him another unless the transfer is
designed to liberate a worker from oppressive terms and
conditions o f employment;
e) To influence o r attempt to influence any person or entity not to
employ any worker who has not applied for employment through
his agency;
f) To engage in die recruitment or placement o f workers in jobs
harmful to public health or morality or to the dignity of the
Republic o f the Philippines;
g) To obstruct or attempt to obstruct inspection by the D O L E
Secretary or by h is/her duly authorized representatives;
h) T o substitute o r alter to the prejudice o f die worker, employment
contract prescribed by the D O LE from die time o f actual signing
thereof by die parties up to and including the period o f the
expiration o f the same without the approval o f die DOLE.2

All the foregoing acts are embodied in Article 34 o f the Labor Code, with
die exception o f certain acts which apply exclusively to otmeos employment.3

OnierNo. 141-14, Series of2014 [Ntwember20,2014).

2 w.
3 SuchasteUkjm ngacts:
*(h) To hi to (Da reports on (he status of employment placement vacancies, remSance of ta ig n exchange earnings,
sep atstolim ijobs, d e p a rts and su n o lh e rn u t^ or nkxTna&on as may bereqidredby theSecr^aiyofLabor.
" f t To become an officer or member of h e Board o( any corporation engaged h t a d agency or to be engaged (fitedy or

J9JC9B0M
 42 Bar Reviewer o n labor Law

2. D IST IN C T IO N B ET W E E N T H E TW O (2) SETS O F ACTS.

The acts described in N o. 1 above are, as a general rule, lawful and valid
acts of recruitment and placement o f workers for local employment when
undertaken by licensees or holders of authority to recruit. What makes it unlawful and
therefore constitutive o f illegal recruitment is when the same acts are undertaken by
any of the following; (a) Non-licensee;or (b) Non-holderofauthority.

The acts enumerated in N o. 2 above, being unlawful, constitute illegal

recruitment when the same are committed by any o f die following; (a) Any person:
(b) A licensee; (c) A holder o f authority; (d) A non-licensee^ o r (e) A non-holder o f
authority.

The word “person” in letter (a) above may refer to an “individual" o r

“entity”pet Article 34 o f the Labor Code.*1

1-B.
ILLEGAL RECRUITMENT IN OVERSEAS EMPLOYMENT

1. ACTS CO N ST IT U T IN G OVERSEAS IL L EG A L R E C R U IT M E N T .

R A No. 8042, as amended by R A N o. 10022,2* classifies the acts

constituting illegal recruitm ent in accordance with die offender,

(1) When any o f the following acts are u n d ertak en by a non-licensee

Ofnon-holder o fauthority*
• Any act o f canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring workers, and includes referring, contract
services, promising or advertising for employment abroad, whether
for profit or not.4

ifjOTousffthoMarder^lraveldocumentsfiQmappScant w akes before departure far m onetayy financial consktaaBons

oBierltantiosenulhocizBtfunderlNsCodeanilttsimptemeraingndesandregiiaSons."
1 The cpen^ paragraph of A to 34 (PtohM edPracto) slates: ^ s h a l be unlawM for any individual, enfiy.fcensee, or
holderofaitafyf r
1 Secfion6ofRA No.8042, as amended by Sec6on5ofRANo. 10022.

4 Section 6 of R A No. 8042. as amended by SecSon 5 of R A. No. 10022: See abo SedSon 1. RJe IV, Ocnritofi Rules and
Regulations hplemen&ig the Mgrant Wtxkes and Overseas F3jHnos Act of 1995, as Amended by R A No. 10022, issued
on JutyB, 2010. See also SecSon 76, Rule X. Revised POEA Rules and Regulators Governing file Recruitment and
Employment of Land-Based (Xreseas Ffijpho Workers of 2016; Section 72. Rule X. 2016 Revised POEA Rules and
Regulations Govemiig the Recmitmentand Employmentof Seafares issued on February 26.2016.

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 C h a pter T w o 43
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(2) W hen any o f th e follow ing acts w hich have b een declared
prohibited by law ,1 are com m itted by any person, w hether a non-
licensee, wn-b<?ld?r, liwn$ee qr fo lder QCm f a tfte
(a) To charge or accept directly or indirectly any amount greater than
that specified in the schedule o f allowable fees prescribed by the
Secretary o f Labor and Employment, or to make a worker pay o r
acknowledge any amount greater than that actually received by
him as a loan or advance;
(b) To furnish or publish any false notice or information o r
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or
commit any act o f misrepresentation for the purpose o f securing a
license or authority under the Labor Code, or for the purpose o f
documenting hired workers with the POEA, which include the
act o f reprocessing workers through a job order that pertains to
non-existent work, work different from the actual overseas work,
or work with a different employer, whether registered or not with
the POEA;
(d) To induce or attempt to induce a worker already employed to quit
his employment in order to offer him another unless die transfer
is designed to liberate a worker from oppressive terms and
conditions o f employment;
(e) To influence or attempt to influence any person o r entity n o t to
employ any worker who has not applied for employment through
his agency o r who has formed, joined or supported, o r has
contacted o r is supported by any union or workers' organization;
(f) To engage in the recruitment o r placement o f workers in jobs
harmful to public health or mobility or to the dignity o f the
Republic o f die Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary o f
Labor and Employment or by his duly authorized representative;
(h) To fail to submit reports on the status o f employment, placement
vacancies, remittance o f foreign exchange earnings, separation
from jobs, departures and such other matters or information as
may be required by the Secretary o f Labor and Employment;*

* As enumerated under Aifide 34 cllhe Labor Code and nowpiwided under SecSon 6 of R A No. 8042, as amended by
SecSon 5 of R A No. 10022; See also SecSon 1, Rule IV, Omnibus Rules and Regulations tnptemenfing the M giani
W o tes and Oveiseas Ffynos Act of 1995, as Amended by R A No. 10022, issued on Jity 8,2010. See dso SecSon 76.
Rule X, Revised POEA Rules and Regulations Governing Bie Recruitment and Employment of larx^Based Overseas
Ffipino W rite s ot 2016; SecSon 72. Rule X. 2016 Revised POEA Rules and Regulations Governing t e Recroitmert and
Employment of Seaferos issued on February26,2016.

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 44 Bar Reviewer o n Labor law

(i) To substitute or alter to the prejudice o f the worker, employment

contracts approved and verified by die Department o f Labor and
Employment from the time o f actual signing thereof by the
parties up to and including the period o f the expiration o f the
same without the approval o f the Department o f Labor and
Employment;
Q For an officer or agent o f a recruitment o r placement agency to
become an officer or member o f the Board o f any corporation
engaged in travel agency or to be engaged directly or indireedy in
the management o f travel agency,
(k) To withhold or deny travel documents from applicant workers
before departure for monetary o r financial considerations, o r for
any other reasons, other than those authorized under the Labor
Code and its implementing rules and regulations;
(D Failure to actually deploy a contracted worker without valid
reason as determined by the Department o f Labor and
Employment;
(m) Failure to reimburse expenses incurred by the worker in
connection wi'h his documentation and processing for purposes
o f deployment, in cases where the deployment does not actually
take place without the worker’s fault; and
(n) To allow a non-Filipino citizen to head o r manage a licensed
recruitment/manning agency.1

An example o f a case where die accused was convicted for committing

the acts enumerated under the provisions o f Section 6 (a), 0 and (m) above is
Suliman o. People} when: (1) they separately charged the private complainants the
amounts of PI 32,460.00, Pi 20,000.00 and P21,400.00 as placement fees [Section 6(a)];
(2) they failed to actually deploy the private complainants without valid reasons
[Section 6(1)}; and (3) they failed to reimburse the said complainants after such failure
to deploy [Section 6(m)].

2. D IST IN C T IO N B E T W E E N T H E TW O (2) SETS O F ACTS.

The distinction applicable to illegal recruitment for local employment

earlier cited equally applies to the above two (2) sets o f acts constituting illegal
recruitment in overseas employment. Consequendy, the acts described in N o . 1
above constitute illegal recruitment only when they are undertaken by any o f the
following: (a) a non-licensee; or (b) a non-holder ofauthority, and the acts enumerated in
No. 2 above, being prohibited, are considered illegal recruitment when they are*

• id.; W.; Id.; Id.; d.

* Sufrnan v. People, G il N a 190970, Nov. 24.2014.

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 C hapter T w o 45
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committed by any o f the following; (a) any person,1 regardless o f whether (b) a
licensee; (c) a holder o f authority; (d) a non-licensee; or (e) a non-holder of
authority.

3. P R O H IB IT E D A CTIV ITIES.

T o the above enumeration o f acts constituting illegal recruitment, the

following prohibited acts were added by R.A. No. 10022:2

(1) Granting o f a loan to an overseas Filipino worker with interest

exceeding eight percent (8%) per annum, which will be used for
payment o f legal and allowable placement fees and make the
migrant worker issue, either personally o r through a guarantor o r
accommodation party, post-dated checks in relation to the said loan;
(2) Imposition o f a compulsory and exclusive arrangement whereby an
overseas Filipino worker is requited to avail o f a loan only from
specifically designated' institutions, entities or persons;
(3) Refusal to condone or renegotiate a loan incurred by an overseas
Filipino worker after the latter’s employment contract has been
prematurely terminated through no fault o f his o r her own;
(4) Imposition o f a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo health examinations
only from specifically designated medical clinics, institutions, entities
or persons, except in the case o f a seafarer whose medical
examination cost is shouldered by the prindpal/shipowner,
(5) Imposition o f a compulsory and exclusive arrangement whereby an
overseas Filipino worker is requited to undergo training, seminar,
instruction or schooling o f any kind only from specifically
designated institutions, entities or persons, except for
recommendatory trainings mandated by principals/shipowners
where the latter shoulder h e cost o f such trainings;
(6) For a suspended recruitment/manning agency to engage in any kind
o f recruitment activity, including the processing o f pending workers'
applications; and
(7) For a recruitment/manning agency o r a foreign prindpal/em ployer
to pass on the overseas Filipino worker or deduct from his or her
salary the payment o f the cost of insurance fees, premium or other

‘ The wxd THSon* may refer to either a n ‘faSwJuaT or 'enB yper Atfcfe 34 of h e Labor Code. TNsis so becausethe
opening paragraph of Ws article (Prohibited Practices) states: ‘ it shall be unlawful for any indcvidual. entity, licensee, or
holderof authoiiyf.r
2 Secfion 6 of R A No. 8042, as amended by Sec&on 5 of R A No. 10022; See also Sec5on1, Rule iV.Om nixjs Rules and
RegidaSons Implemenfing the Mgrant Wbrkeis and Ovaseas Rfphos Act of 1995, as Amended by R A No. 10022, issued
on July 8.2010. See also Section 76, Rule X, Revised POEA Rules and RegtdaSons Govemhg the Recmitment and
Employment of Land-Based Ovaseas F fy iio Woritos of 2016; Section 72. fa te X, 2016 Revised POEA Rides and
Regulations Governing tie Recnritment and Employmentof Sedaros issued on Febnay26,201$.

J9JC9B0M
 46 Bar R eviewer on La bo r Law

insurance related charges, as provided under the compulsory

worker's insurance coverage.1

1-C.
TYPES OF ILLEGAL RECRUITMENT AND THEIR ELEMENTS

1. TWO (2) TYPES OF ILLEGAL RECRUITMENT.

There are two (2) types o f illegal recruitment, to wit.

(a) Simple illegal recruitment; and

(b) Illegal recruitment involving economic sabotage consisting o f either:
1) Illegal recruitment committed by a syndicate; or
2) Illegal recruitment committed in large scale.
Further discussion o f these topics follows.

a.
SIMPLE ILLEGAL RECRUITMENT
1. CONCEPT.

Simple illegal recruitm ent or simply, illegal recruitment, covers any

recruitment and placement activity undertaken by a non-licensee or a non-holder of
authority. It also includes the commission of prohibited acts as enumerated under
the law,2 not only by a non-licensee or a non-holder of authority but also by a licensee or
holder of authority.

2. ELEMENTS PER JURISPRUDENCE.

Most pieces of jurisprudence3 have, over the years, consistendy declared

that simple illegal recruitment is committed when two (2) essential elements
concur,

(1) That the offender has no valid license4 or authority1 required by law to
enable him to lawfully engage in the recruitment and placement of
workers; and

' Id.; Id.; Id.; Id.

2 Spedfica!y, as enumerated under Article 34 of the labor Code and now provided under Section 6 of R A No. 8042, as
amended by Section 5 of RA. No. 10022; See also Section 1, Rite IV, Omnibus Rules and Regulations Implementing the
Mgrant Workers and Overseas Filipinos Ad of 1995, as Amended by R A No. 10022, issued on July 8,2010. See also
Section 76, Rule X, Revised POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Ffipino Workers of 2016; Section 72, Rule X, 2016 Revised POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers issued on February 26,2016.
3 Almost all cases where these elements are mentioned iwotve reauitment for overseas employment Most noteworthy of
these cases are People v. Estrada, G.R. No. 225730, Feb. 28,2018; People v. Chua, G.R. No. 187052, Sept 13,2012;
Romero v. People, G.R. No. 171644, Nov. 23,2011; Ritualo v. People, GR. No. 178337, June 25,2009.
4 Defined in Article 13(d) of the Labor Code, as amended, as 'a document issued by the Department of Labor authorizing a
peraon or entity to operate a private employment agency." (See People v. Cabacang, G.R. No. 113917, Juty 17,1995).

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(2) That the offender undertakes any activity within the meaning of
"'recruitment and placement” defined under Article 13(b),12 or any
prohibited practices enumerated under the law.3

3. ADDITITIONAL ELEM ENTS PER LAW.

A survey indicates that the criminal cases where the foregoing elements
were used as the guidepost in determining the culpability of the accused for illegal
recruitment, involve persons who are non-licensees and non-holders of authority.
The above enumeration o f the elements curiously failed to consider that under the
broadened45concept o f illegal recruitment under the 1995s law, R.A. No. 8042,
which, it must be noted, has not been changed by the latest amendment introduced
thereto in 20106 by R.A. No. 10022, the term '!'illegal recruitment”, unlike illegal
recruitment as defined under the Labor Code which is limited to recruitment
activities undertaken by non-licensees or non-holders o f authority,7 now includes
the commission o f the prohibited acts enumerated thereunder, “w h eth er
com m itted by any p erson, w hether a n on-licensee, non-holder, licensee or
holder of authority.”89Therefore, under Section 6 of R.A. No. 8042, as amended,7
illegal recruitment (for overseas employment) may be committed not only by n o n ­
licensees or non-holders o f authority but also by licensees or holders of authority.10
Section 6, as amended,11 enumerates fourteen (14) acts or practices [(a) to (n)] plus
seven (7) additional prohibited acts, which constitute illegal recruitment, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder
of authority. Except for the last three (3) acts [(1), (m) and (n)] as well as the seven

1 Defined in Article 13 (f) of the Labor Code, as amended, as 'a document issued by the Department of Labor authorizing a
person or association to engage ii recruitment and placement activities'as a private recruitment entity’ (See People v.
Cabacang, supra).
2 Artide 13(b) of the labor Code defines ’recruitment and placement" as: Any act of canvassing, enlisting, contracting
transporting, utilzing, hiring, or procuring workers, and ndudes referrals, contract services, promising or advertising for
employment locally or abroad, whether for profit or not Provided, that any person or entity which, in any manrer. offers or
promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement
3 See enumeration under Artide 34 of the Labor Code and new provided under Section 6 of R A No. 8042, as amended by
Section 5 of R A No. 10022; See also Section 1, Rule IV, Omnbus Rules and Regulations implementing the Migrant
Workers and Overseas Rhinos Act of 1995, as Amended by R A No. 10022, issued on July 8,2010. See also Section 76.
Rule X. Revised POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas
FTp'no Workers of 2016; Section 72, Rule X. 2016 Revised POEA Rules and Regulations Governing the Reauiment and
Employment of Seafarers issued on February 26,2016.
* The Supreme Court has declared that R A No. 8042 has broadened the concept of Slegal recruitment under the Labor
Code. (People v. Abela, G R No. 195666, Jan. 20,2016; People v. Daud, G R No. 197539, June 02,2014).
5 June 7,1995.
6 March 10.2010.
2 Peoplev.Totentino.GRNo.208686.July01.2015.
8 See enumeration under Section 6 of R A No. 8042, as amended by Section 5 of RA. No. 10022; See also Section 1, Rule
IV, Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as Amended by
RA. No. 10022, issued on July 8,2010. See also Section 76, Rule X, Revised POEA Rules and Regulations Governing the
Recruitment and Employment of Land-Based Overseas FTpino Workers of 2016; Section 72, Rule X, 2016 Revised POEA
Rules and Regulations Governing the Recruitment and Employment of Seafarers issued on February 26,2016.
9 Section 6 of R A No. 8042, as amended by Section 5 of R A No. 10022.
10 People v.Totentino. supra.
” Section 6 of RA. No. 8042, as amended by Section 5 of RA No. 10022.

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 48 Bar. Reviewer o n La b o r Law

(7) additional prohibited acts, on die list under Article 6 o f RA 8042, as amended,1
the first eleven (11) acts or practices are also listed in Article 34 o f the Labor Code
under the heading "Prohibitedpractices” Thus, under Article 34, it is unlawful for any
individual, entity, licensee or holder o f authority to engage in any o f the
enumerated prohibited practices, but such acts or practices do not constitute illegal
recruitment when undertaken by a licensee or holder o f authority.2 However, under
Article 38(a) o f the Labor Code, when a non-licensee or non-holder o f authority
undertakes such “ prohibitedpractices, ” he or she is liable for illegal recruitment. R.A.
No. 8042, as amended, broadened the definition o f illegal recruitment for overseas
employment by including the afore-said prohibited acts or practices which now
constitute as illegal recruitment, whether committed by a non-licensee, non-holder,
licensee or holder o f authority.3

Simply put, under R.A. N o. 8042, as amended, a non-licensee or n o n ­

holder of authority commits illegal recruitment for overseas employment in two
ways:

(1) By any act o f canvassing, enlisting, contracting, transporting, utilizing,

hiring, or procuring workers, and includes referring, contract services,
promising or advertising for employment abroad, whether for profit or
not; and
(2) By undertaking any o f die acts enumerated under Section 6 o f R.A.
No. 8042, as amended.

On die other hand, a licensee o r h older o f authority is also liable for

illegal recruitment for overseas employment when he or she undertakes any o f the
prohibited acts or practices listed under Section 6 o f RA 8042, as amended.**

Consequendy, if a recruiter is charged with violation o f any o f the

prohibited acts under Section 6, as amended, there is no more need to prove
whether he is a licensee or holder o f authority or not because it is no longer an
element of the crime.5

And it bears noting that this broadened concept o f illegal recruitment also
applies to recruitment for local employment where die 2014 Revised Rules expliddy
states that the acts enumerated thereunder "sh all be unlaw ful w h en co m m itted
by any person, w hether or not a ho ld er o f a license o r authority.”6

' Id.
* Peoplev.TdenSno.G.R No. 208686.JuVOI,2015.
5 Id.
4 Id.
s People v. Jimmy Ang. G R No. 181245, Aug. 06,2008; People v. Nogra, G A No. 170834, Aug. 29.2008; People v.
Gasacao. G R No. 168445. Nov 11.2005.
1 SeeSectjGn42.R8vsedRule5andRegtiaSonsGoventing RecnstmentaRdPtacementlorLocalErnploymertLOepartiTiem
Order No. 141-14, Series tf 2014 [November 20,2014J, tor locd employment

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 Cha pter .T w o 49
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Moreover, since illegal recruitment becomes qualified if committed by 3

or more recruiters (syndicated) o r when there ate 3 o r more recruitees (large-scale),
as the case may be, the total number o f recruiters a n d /o r recruitees in order for a
case to remain one for simple illegal recruitment should not be more than two (2)
persons.

In the light o f the foregoing disquisition, the elements o f sim ple illegal
recruitm ent should now be re-stated as follows:

(1) That the offender engages in acts o f recruitment and placement o f

workers as defined under Article 13(b) o f the Labor Code, o r in any
prohibited activities enumerated under die law,1 irrespective o f
whether the offender is a non-licensee, non-holder, licensee or holder
o f authority:

(1) That die offender has no valid license o r authority required by law to
enable him to lawfully engage in die recruitment and placement o f
workers;23and

(3) That the number o f recruiter/s who committed die unlawful acts
an d /o r recruitee/s who fell victim /s thereto should not be more than
two (2) persons.2

N o . 3 above is a significant element o f simple illegal recruitment

considering that in illegal recruitment cases, die total number o f recruiters o r
recruitees is detetminadve o f the nature o f the crime. Thus, where illegal
recruitment is committed by o r against one or two persons only, the accused may
be convicted o f simple illegal recruitment only, which is punishable with a lower
penalty.45Corollady, where the offense is committed by or against three (3) or more
persons, it is qualified as an illegal recruitment involving economic sabotage which
would m eat the imposition o f a higher penalty.s

1 See erem ra to i under Article 34 of he Labv Code and now provided under Sectoi 6 of RA. No. 8042, as amended by
Section 5 of RA. No. 10022; See also SecSon 1, Rub IV, Omribus Rules and Regulafions Implementing he Mgrant
Workers aid G aseasFtybos Actof 1995, as Amended by R A No. 10022, issued on July 8,2010. See also Sectot 76,
Rule X, Revised POEA Rules aid RegriaSons Gcvemhg h e RecruSment and Employment of Land-Based Overseas
FJpiioWbrkers of 2016; Section 72, Ride X, 2016 Revised POEA Rules and RegutaBons Gowning he ReouSment and
B nplopent of S ealers issuedon February26,2016.
7 h People v Velasco. G J l No. 195668, Jkm eB. 2014, N s second element isstafed as M ows:12) that the accused had
not complied vrih h e guideines issued by h e Secretary of labor and Employmentw ft resped to h e requirement to secure
a license or authority to recnA end deployw rkersf
3 Aooonfng to People v.Sadiosa. G Jl No. 107084, May 15,1998: TAhen h e persons recruited are three or more, the ofm e
becomes llegdrecnuhtent in large scale under Art 38 (b)of h e Labor Coda’
4 See People v. Orfe-MyaJce, G R. Nos. 115338-39, Sept 16.1997,344 P h i 598,608609. In this case, h e provision
referred to is paragraph (c) of Article 39 of h e Labor Code, new paragraph (a), Section 7, of R A No. 8042, as amended by
Secfion6ofRA.No. 10022.
5 SeePeoplev.(Mh-Miyake,sup(a.ThepnMMrefe(redtoisparagraph(a)ofArljcle39o(heLaborCodel noiMparagRaph
(b), Section 7, of RA. No. 8042, as amended by Sector 6 of R A . No. 10022.

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 50 Bar Reviewer on Labor law

4. APPLICABILITY TO B O T H LOCAL AND OVERSEAS

EMPLOYMENT.

Although the cases surveyed where the foregoing elements were invoked by the
High Court involve recruitment and placement activities for overseas employment,
the same concept and principles may well apply with the same force and effect to
those committed for local employment.

b.
ILLEGAL RECRUITMENT INVOLVING ECONOMIC SABOTAGE

1. ELEM ENTS.

The first two (2) elements for simple illegal recruitment as cited and
discussed above likewise apply to illegal recruitment invoking economic sabotage.
A third element is added1 regarding die requirement that there be at least three (2)
recruitees, in the case of large-scale illegal recruitm ent, or at least three (3)
recruiters, in the case of syndicated illegal recru itm en t

2. W H EN CONSIDERED E C O N O M IC SABOTAGE.

To iterate, illegal recruitment is considered a crime involving economic

sabotage when it is committed:

1) By a syndicate; or
2) In large scale.2

2.1. SYNDICATED ILLEGAL R E C R U IT M E N T .

Illegal recruitment is deemed committed by a syndicate if it is carried out by

a group of three (3) or more persons conspiring or confederating with one
another.3 The law, it must be emphasized, does not require that the syndicate
should recruit more than one (1) person in order to constitute this crime.
Recruitment of one (1) person would suffice to qualify the illegal recruitment act as
having been committed by a syndicate.

' See People v. Pascua, GH. No. 125081. Oct 3,2001, where I was stated that There is large-scale illegal recruitment if it is
committed against three (3) or more persons individuaSy or as a gnxip; its etements, therefore, are the two above^nentioned
plus the fact that it is committed against three or more persons.’ See also People v. SaKraferra, G.R No. 200884, June 4,
2014, where it is stated: ‘xxx a fwJ element is addd: that the offender commits any of the acts of recruitment and
placement against three or more persons, individually a as a group.'
2 Article 38(b), labor Code; See also Section 2, Rule IV, Omnbus Rules and Regulations Implementing the Mg rant Workers
and Overseas Ftyhos Act of 1995, as Amended by R A No. 10022, issued on July 8,2010. It bears to point out that there is
no sim2ar provision on iltegai recruitment invoking economic sabotage (large-sc^e or syndcated) in both the Revised POEA
Rules aid Regiiafons Governing the Recruitment and Employment of Land-Based Overseas Fipino Workers of 2016 and
the 2016 Revised POEA Rules and Regulators Governing the Recruitment and Employment of Seafarers issued on
Februay 26,2016. See People v. Nogra, G.R. No. 170834, Aug. 29,2008.
3 Article 38(b), labor Code; Section 6, R A No. 8042, as amended by Section 5, R A No. 10022 (March 8,2010); Section 6,
RA No. 8042, as amended by Section 5, R A No. 10022 [March 8,20101 See also Section 2, Rule IV, Omnbus Rules and
Regulations Implementing Ihe Mgrant Workers and Overseas FUpnos Actcrf 1995. as Amended by RA No. 10022, issued
on July 8,2010; See People v. Lali, GR. No. 195419, O d 12.2011; People v. Gallo, G.R. No. 187730, June 29.2010.

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 Chapter Two 51
PR£-EMPLOYMENT
The core o f this kind of illegal recruitment is the conspiracy among the
perpetrators, without which, no syndicated illegal recruitment could be committed.
Under Article 8 of the Revised Penal Code, there is conspiracy when two or more
persons come to an agreement concerning the commission o f a felony and decide
to commit it.12Thus, in finding the accused-appellants guilty of syndicated illegal
recruitment in People v. Lalli} the High Court noted that Lalli, Aringoy and
Relampagos have conspired and confederated with one another to recruit and place
Lolita for work in Malaysia, without a POEA license. The three elements o f
syndicated illegal recruitment are present in this case, in particular: (1) the accused
have no valid license or authority required by law to enable them to lawfully engage
in the recruitment and placement o f workers; (2) the accused engaged in this
activity o f recruitment and placement by actually recniiting, deploying and
transporting Lolita to Malaysia; and (3) illegal recruitment was committed by three
persons (Aringoy, Lalli and Relampagos), conspiring and confederating with one
another.345

In People v. Guevarra} the accused-appellants3 asserted that the offense

should not have been qualified into illegal recruitment by a syndicate since there
was no proof that they acted in conspiracy’ with one another. However, the acts o f
accused-appellants showed unity o f purpose. Guevarra would visit each of the
complainants in their houses for several times, convincing them to work abroad,
and giving them the impression that she had the capability of sending them abroad.
She would accompany them to the house o f the other accused, spouses Bea, who,
in turn, would collect the placement fees and process the passports and plane
tickets. All these acts o f the appellants established a common criminal design
mutually deliberated upon and accomplished through coordinated moves.

2.2. LARGE-SCALE ILLEGAL R E C R U IT M E N T .

Illegal recruitment is deemed committed in large scale if it is committed

against three (3) or more persons, individually or as a group.6 Therefore, a
conviction for large scale illegal recruitment must be based on a finding in each case
of illegal recruitment o f three (3) or more persons having been reemited, whether
individually or as a group.7 The failure to prove at least three (3) persons reenuted
makes die crime a case of simple illegal recruitment.8 This is so because in

1 People v. Lago, G il No. 121272, June 6,2001.

2 People v.L a li.G R No. 195419, Oct 12,2011.
3 See also People v. Hernandez, G R Nos. 141221-36. March 7,2002.
4 People v. Guevara; G R No. 120141, Aprt21,1999.
5 The three (3) accused-appetants h this case are Loma B. Guevara, Josie Bea and Pedro Bea, Jr.
6 Article 38(b), Labor Code; Section 6, RA. No. 8042, as amended by Section 5, RA. No. 10022 (March 8,2010); See also
Section 2, R ile IV, Omnbus Rules and Regulations Implementing the Migrant Workers and Overseas Ftipinos Act 0?1995.
as Amended by R A No. 10022, issued on July 8,2010; People v. Cagafingan, G R No 198664. Nov. 23,2016; People v.
Bayker.GRNo. 170192, Feb. 10,2016; People v. AbeOa.GR No. 195666, Jan. 20,2015.
7 People v. Jimmy Ang, G R No. 181245, Aug. 06,2008; People v. Hrxvada, G R Nos. 112178-79. April 21,1995.
• People v. Hu, G R No. 182232, OcL 06,2008.

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bar R eview er o n labor u w

offenses in w hich the n u m b er o f victim s is essential, failure o f th e

prosecution to prove by convincing evidence th a t th e offense is c o m m itted
sgainst the m inim um num ber o f p erso n s req u ited by law is fatal to its c a u se
of action.1

Moreover, there can be no illegal recruitment in large scale if the same is

based on several informations filed by only one complainant This was the ruling in
People v. Hernandez23where the High Court agreed with the accused-appellants’
argument that the trial court erred in convicting diem o f illegal recruitment in large
scale by cumulating the eight (8) individual informations filed by private
complainants. It noted that each information was filed by only one
complainant As held in People v.Kqes*
“xxx When the Labor Code speaks o f illegal recruitment
‘committed against three (3) or more persons individually or as a group,'
it must be understood as referring to the number o f complainants in
each case who are complainants therein; otherwise, prosecutions for
single crimes of illegal recruitment can be cumulated to make out a case
o f large scale illegal recruitment In other words, a conviction for large
scale illegal recruitment must be based on a finding in each case o f
illegal recruitment of three or more persons whether individually or as a
group."

2.3. SYNDICATED VS. LARGE-SCALE.

As distinguished from illegal recruitment committed by a syndicate, illegal

recruitment in large scale may be committed by only one (1) person. W hat is
important as a qualifying element is that there should be at least three (3) victims o f
such illegal recruitment, individually o r as a group.4

The number of offenders is not material in illegal recruitment in large

scale. As held in People v. Laurel* the number o f offenders, whether an individual or
a syndicate, is clearly not considered a factor in the determination o f the
commission o f illegal recruitment in large scale. Counsel for accused-appellant was
misled by the fact that illegal recruitment in large scale is defined immediately after
illegal recruitment by a syndicate. However, die only reason therefor is that they are
both considered offenses involving economic sabotage as the law itself so provides.

In situations where there are three o r more illegal recruiters and there are
three or more recruitees involved in one case, the Olegal recruiters may be
convicted either as a syndicate o r in large-scale, depending on the evidence

« Id.
* G R Nos. 141221-36. March7,2002.
3 G R No. 105204, Mach9,1995,242SCRA 264.
4 Peojrfev. Am at^GR No. 205153. Sepl9,2015; Peoptev.Baufista,GRNa 113547,Feb. 9,1995.
s G R N a 120353.Feb. 12.1998.

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 C h a pt er Two 53
PRE-EMPLOYMENT

presented. In any case, the penalty imposable is the same for both since the law1
does not make any distinction between these two.

A n example o f a case where persons were charged with violation o f

Section 6 in relation to Section 7 o f R A No. 8042 for "large scale illegal
recruitment committed by a syndicate” is Peoph v. Trinidad.2*A fter due proceedings,
accused Trinidad was ultimately found “guilty o f illegal recruitment in large scale,
sentencing her to suffer the penalty o f life imprisonment and ordering her to pay a
fine and actual damages.”

3. A PPLIC A B IL IT Y T O B O T H LOCAL A N D OVERSEAS

EM PLOY M ENT.

Albeit the illegal recruitment cases involving economic sabotage studied

and surveyed involve recruitment and placement activities for overseas
employment, the same concept and principles may also apply with the same force
and effect to those committed for local employment. Notably, however, there is no
single provision in the 2014 Rulesfor local employment that treats o f large-scale o r
syndicated illegal recruitment.4 But since the governing law, Article 38 o f the L abor
Code, contains a provision thereon, the same should likewise apply to local illegal
recruitment cases.

1. SO M E P R IN C IP L E S O N ILL EG A L R E C R U IT M E N T .

• M ere im pression is sufficient to co n stitu te illegal re c ru itm e n t T o convict

a person for illegal recruitm ent it suffices to show that he gave the victim die
distinct impression that he had the pow er o r ability to send him abroad for w ork
such that the latter was convinced to part with his money in order to be
employed.5
• M ere prom ise o f em ploym ent a b ro ad am o u n ts to recruitm ent. T o be
engaged in the. practice o f recruitment and placement, it is plain that there

1 Secfim 7(b) of R A N a 8042, as anrended by Secfim 6 of R A No. 10022, p rw ides:^) The p e r ^ of f e imprisonment
andafineofnottessfoanTw o nvGcn pesos (P2£OO,0OOjOO) nor mors than F«re mfion pesos (P5jOOO^XX)iX}) shad be
imposed if aega) reauim ent ccnsfiuSes economic sabotage as defined to rc h ; Provided, however, That h e maximum

2 Tbispronouncemertwasrnadein Peoplev.Trinidad,GRNa181244,Aug.09,2010.
5 R e v i^ Rules and R egiM ]m G ow (^R ecru2m entandP taoem ertfortxcalB TtA yr^O epam ientO rderN o. 141-
14, Series of 2014 [November20,2014).
4 h Ihesame m annulistaShou^ there isaprovisim m lag&scaleand syra&ca^&galrecruEm e^in Sec&n2, Rule IV
oftie Omnibus Rides and Regulators Implementing tie W grantW otas and Ouoseas Ftymos Actof 1995, as Amended
by R A N a 10022, issued on ,M y 8,2010, there is also no sirdar provision on Segal recadment rooking economic
sabotage (taigescafe a syndicated) in both the Reused POEA Rules and Regiiafions Governing (he Recndment and
Employment of laxffiase d Overseas Fijpho W akes of 2016 and t o 2016 Reused POEA Riles and Regulations
Governing the Reauihient and Employmentof Seatoas issued on February26,201GL
* Peopfev.Fem andez,Gil No. 199211, June04,2014; Peoplev.A bat.G R .Na 168851,March 1$,2011.

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 54 Ea r Reviewer o n labor Law

must, at least, be a promise or an offer o f employment from the person posing

as a recruiter whether locally or abroad.1
• There is no need to show th a t accused rep resen ted h im self as a licensed
recruiter. Evidencewise, it suffices that the prosecution has established that
the POEA did not authorize o r license the recruiter to engage in recruitment
activities and that despite the absence o f such authority or license, he still
recruited his victims.2
Referrals may constitute illegal tecruitm ent. Article 13(b) o f the Labor
Code includes ‘‘referrals” in (he definition o f what constitutes “recruitment
and placement"34In convicting the accused-petitioner* in Rodotfo v. People,* the
Supreme Court declared that the act o f referral within the contemplation of
the law, is “the act o f passing along o r forwarding o f an applicant for
employment after an initial interview o f a selected applicant for employment to
a selected employer, placement officer or bureau.” Petitioner's admission that
she brought private complainants to the agency whose owner she knows and
her acceptance o f fees including those for processing betrays her guilt5
Conduct of interviews m ay am o u n t to illegal re c ru itm e n t The conduct o f
interviews by the representatives o f the foreign principal amounts to illegal
recruitment under Section 6 o f R-A. No. 8042.6*
• It is immaterial w hether th e recruitm ent is d o n e for p ro fit o r n o t The
argument o f the accused-appellants that there was no p ro o f that they received
money from the private complainants deserves no credence because money is
not material to a prosecution for illegal recruitment considering that the
definition o f "illegal recruitment" under die law includes the phrase "whetherfor
profit ornot!1
• Actual receipt of fee, n o t a n elem en t o f th e crim e o f illegal recruitm ent.
Thus, even if the accused recruiter did not actually receive any fee, his
representation that he had die capacity to secure employment for private
complainants made him liable for illegal recruitment since he had no authority
or license from the POEA.8 E ven in the absence o f money or other valuables
given as consideration for the "services" o f the recruiter, he is considered as
being engaged in recruitment activities.9

1 Peoplev.laogo,G R No. 176264,Jan. 10,2011;Peopfev.Doningo,GRN& 181475,April7,2Q09.

1 Pieoplev. BaaestenoSvOR- Nos. 11690&808. Aug.6.2002;PeQpte v. Cabacang.GR Nol 113917,July 17.1996.
1 Aifide13(b)of he Labor Cote d eto *recn im en t and placement* as fa )y act of canvassing, en5s*ig, contracting,
transporting, uSizhg, hinng or procuring woikas, and includes n&nals, contract sendees, prarrisng or advertising for
emptayinent.localVorabioad.wheSiertorpraftornoi*
4 G R N o. 146964, Aug. 10,2006.
5 See also Peopfev. Gooe.GR No. 1 t3 1 6 \ Aug. 29,1995; People v.Aiforte, G .R Nos. 91711-15, March 3,1993.
c CF. Sharp Crew Management, hc.v. Hor. Espanoi, Jr., G R No. 155903, Sept 14,2007.
' Ifeoptev.Matoi, G R N o. 198012, Apr! 22,2015; Peopfev. Chua, G R N o. 187052, Sept 13,2012.
• Peoplev. Balestoos, G.R Nos. 116905808, Aug. 6,2002.
* Peopfev.Jamaosa.GR No. 169076,Jan 27,2007.

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 CHAPTER TWO 55
PRE-EM PLOYM ENT

• E ffect o f receip t o f p a y m en t after expiration o f license. Receipt o f

payments after the expiration o f the license constitutes, as a general rule, illegal
recruitm ent But, if the receipt o f payment, although after the expiration o f
the license, was meant for services rendered before such expiration, it docs not
constitute illegal recruitment for purposes o f criminal prosecution.1
• A bsence o f receip t n o t essential. Receipt issued by the recruiter is a
documentary evidence that proves that he/she is engaged in recruitment and
placement activities.2 However, the absence o f receipts to prove payment o f
recruitment fees is not material nor fatal.3 The absence o f receipts to evidence
payment to the recruiter would not warrant an acquittal, a receipt not being
fatal to the prosecution’s cause.4
• A bsence of d o cu m en ts evidencing th e recruitm ent activities
stren g th en s, n o t w eakens, th e case for illegal re c ru itm e n t5
• N on-prosecutio n o f a n o th e r su sp ect, im m aterial. It is well settled that only
one person recruited is sufficient to convict one for illegal recruitment.6 The
non-prosecution o f another suspect provides no ground for an accused-
appellant to fault the decision o f the trial court convicting her.7
• E x ecu tio n o f affidavit o f d e sistan ce affects only th e civil liability b u t has
n o effect o n d ie crim inal liability for illegal re c ru itm e n t8

1-D.
ILLEGAL RECRUITMENT VS. ESTAFA

1. ILLEGAL RECRUITMENT, NO BARTO FILING OF ESTAFA.

R A . No. 10022 has introduced an amendment to R A . N o. 8042, which

now statutorily recogni2es the junsprudendally settled fact that die filing o f an
offense punishable under said law, such as for illegal recruitment, “shall be without
prejudice to the filing o f cases punishable under other existing laws, rules o r
regulations”9 such as sw indling or estafa, under Article 315, paragraph 2 (a) o f the
Revised Penal Code, o r trafficking in persons, under R A . No. 9208,10I as
amended by R A . No. 10364,u Clearly, illegal recruitment is an independent action.1

< Aquinov. CA, OR Na91896. Nov.21,1991,204 SCRA240.

* Peopfev.CagafogaaGR. No. 198664,Nov.23.2016.
2 Peoplev. Dorringo.GR. No. 181475,Api 7,2009.
1 Peoplev. Abat, GR. No. 168651.March16,2011; Peoplev. BtRaber,GR. Nos. 114967-68. Jai.26,2004.
6 Peopfev. Pantaloon, GR No. 108107,June19,1997.
6 Peopfev.Raris.G.R.Nos.L-58674'77,July 11,1886,142SCRA664.
I Peopfev.Sendon.GR.Nos. 10157W9,Dec. 15,1993; SeealsoPeoplev.Gooe.G.R No. 113161.Aug. 29,1995
t Peopfev.Laurel. GR. No. 120353,Feb. 12,1998,
9 Sectfen6,R A to . 8042, as amended by Sectfon5,R A Ito. 10022.
* OheflMsetawMas'AnS-Tiafl^
II 0!tew«se knowi as (he'ExpandedArtj-TrafWdng ii PersonsAdof 2012.* It isan Ad expantfng RA. No. 9208 enffled
*AnAd to InstitutePo&Sesto QranafeTraffickingin Persons EspedalyWomenandChildren, Establishingthe Neoessary

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 56 Bar reviewer o n Labor law

Illegal recruitment and estafa cases may be Bled simultaneously and

separately.2 The filing of charges for illegal recruitment does not bar the filing o f
estafa, and vice versa} Illegal recruitment and estafa are entirely different offenses
and neither one necessarily includes or is necessarily included in die other.4

2. CON VICTIO N FOR B O T H ILLEG A L R E C R U IT M E N T & ESTAFA.

In cases where swindling or estafa is committed in the process o f illegal

recruitment, conviction under the Labor Code, a special law, does n o t preclude
punishment therefor under die Revised Penal Code, a general law.* H ie reason
therefor is not hard to discern: illegal recruitment is malm probibiim, while estafa is
malm in se. In fatfirst, the criminal intent o f the accused is not necessary for
conviction; the fact alone that the accused violated the law warrants his conviction.4
In the second, such an intent is imperative.7 Thus, it is setded that a person, for the
same acts, may be convicted separately o f illegal recruitment, whether simple or
committed in large scale or by a syndicate, under R.A. No. 8042, as amended, or
the Labor Code, and estafa under Article 315 (2) (a) o f the RPC,8 which provides:

“Artide 315. Swindling (estafa). • Any person who shall defraud

another by any of the means mentioned herein below xxx
xxx
2. By meaos of any of die following false pretenses or
fraudulent acts executed prior to or simultaneously with the
commission of the fraud:
(a) By using fictitious name, or falsely pretending to
possess power, influence, qualifications, property,
credit, agency, business or imaginary transactions, or by
means of other similar deceits.”

Under the above-quoted provision, there are three (3) ways o f committing
estafa: (1) by using a fictitious name; (2) by falsely pretending to possess power,
influence, qualifications, property, credit, agency, business or imaginary
transactions; and (3) by means o f other similar deceits.9

hst&Gonal Mechanismsforbe Profecfon and Supportof Trafficked Persons, Prowling PenaSes (or ttsViotalSonsand for
OtherPurposes.*
1 Sec&n8.F^tV.OfTy^f^£ndRegub6cnslmpiemenfingttie N^tantWcxtersandOvaseasFiipixisAclof1995.
asAmendedbyRA No. 10022,issuedonJuly8,2010.
* Syv. People, G il No. 183879,April 14,2010.
7 Id.
4 Id.
* Peoplev. Fernandez, GR No. 199211,June04,2014; Peoplev. Turda, GR Nos.97044-46.July6,1994.
* Peoplev.Temporada,G il No. 173473, Dec. 17.2008; Peoplev. Gamboa, GR No. 135382. Sept 29.2000.
7 Peoplev. Btfestercs,G il Nos. 116905-908,Aug. 6,2002; SeealsoPeoplev. Enriquez,G il No. 127159, May5,1999.
* Peoplev. Estrada, G il No. 225730, Feb. 28,2018; Peoplev. De Los Reyes, GR No. 198795, June 7,2017; Peoplev.
Bayker, GR No. 170192.Feb. 10,2016; Peoplev. Tdentino. GR No 208686.July1.2015.
> Peopl3v.Gaflo.GRNo. 185277,Utah 18,2010;Peoplev.lnGR No. 175229,Jan29.2009,577 SCRA116,132.

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 C hapter T w o c7
PRE-EM PLO YM ENT
cJt
It must be stressed that n o t all acts which constitute the felony o f estafa
under the Revised Penal Code necessarily establish the crime o f illegal recruitment
under the Labor Code. Estafa is wider in scope and covers deceits, whether related
or no t related to recruitment activities.12This is d ear from the following elements o f
estafa, in general, to unt.
(1) The accused defrauded another by abuse o f confidence or by means
o f deceit; and
(2) ih e ottended party

T he elements o f estafa by means o f deceit under Article 315, paragraph 2

(a) o f die Revised Penal Code are the following,
(a) T hat the accused used fictitious name or false pretense or fraudulent
representation as to his power; influence, qualifications, property,
credit, agency, business or imaginary transactions o r other similar
deceits;
(b ) That he used such deceitful means, fidse pretense or fraudulent
representation prior to or simultaneous with the commission o f the
fraud;
(c) That the offended party relied on such deceitful means, fiilse pretense
and fraudulent act to part with his money o r property; and
(d) That, as a result thereof, the offended party suffered damage.3

T o emphasize, under this class o f estafa, die element o f deceit is

indispensable. It is essential that the fidse statement or fraudulent representation
constitutes the very cause or die only motive which induces die complainant to part
with the thing o f value.4 To convict for this type o f crime, therefore, it is essential
that the fidse statement o r fraudulent representation constitutes the very cause o r
the only motive which induces the complainant to part with the thing o f value.5

Thus, in convicting the accused spouses for estafa in People v. CagaSnganp

the High Court found that private complainants were led to believe by accused
spouses that they possessed the power and qualifications to provide them with
work in Macau when in fact they were neither licensed nor authorized to do so.
Accused spouses made it appear to private complainants that Beatriz was requested
by her employer to hire workers for Macau, when in fact she was not. They even
recruited their own relatives in the guise o f helping them get better jobs with higher

1 Peoplev.Tunla,G il Nos.97044-46,July6,1994,233 SCRA702.

2 Peoplev. De LosReyes, GR Not 198795, June 7,2017; Peoplev. Bayker, GR No. 170192, Feb. 10.20(6; People v.
Amae, GR No.205153,Sept9,2015; Peoplev. Tdenfino,GR No. 208686,July01,201$.
3 Peoplev. Radio, GR No 227505, Oct 02,2017; Subnanv. People, GR No. 190970, Nov. 24, 2014; Lopezv. People,
GR No. 199294,July31,2013; Peoplev. Ctua, GR No. 187052, Sept 13,2012.
4 Peoplev. Cana&wai GR No 198664. Nw. 23.2016.
5 Peoplev. Ga8o,GR No. 185277,March18,2010;Peoplev. Lo, GR No. 175229,Jan. 29,2009,577 SCRA116,132.
4 Peoplev.Cagaingan,GA No. 198664, Now.23,2016.

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 58 Ba x reviewer o n La bo r Law

pays abroad for them to improve their standard o f living. Likewise, private
complainants were deceived by accused spouses by pretending that the latter could
arrange their employment in Macau, China. With these misrepresentations, false
assurances and deceit, they suffered damages and they were forced to part with
their hard-earned money, as one o f them even testified to have mortgaged her
house and another, to have borrowed money from a lending institution just to raise
the alleged processing fees.

The same deceit was employed in People 9. Gallo} where appellant

Mardr led the private complainants to believe that they possessed the power,
qualifications and means to provide work in Korea. During the trial o f these r av s,
it was clearly shown that, together with Martir, appellant disrpssed with private
complainants the fact of their being deployed abroad for a job if they pay the
processing fee, and that he actually received payments from private complainants.
Thus, it was proven beyond reasonable doubt that the three private complainants
were deceived into believing that there were jobs waiting for them in a factory in
Korea when in fact there were none. Because o f the assurances o f appellant, each
of the private complainants parted with their money and suffered damages as a
result o f their being unable to leave for Korea. T he elements o f estafa - deceit and
damage - are thus indisputably present, making the conviction for estafa
appropriate.

3. ACQUITTAL IN ILLEGAL R E C R U IT M E N T , N O BAR T O

CO N V ICTIO N FOR ESTAFA.

Considering that illegal recruitment and estafa are distinct crimes, a person
acquitted of illegal recruitment may be held liable for estafa.2 A persons acquittal in
the illegal recruitment case does not prove that she is not guilty o f estafa. Double
jeopardy will not set in as discussed below.3

4. C O N V ICTIO N FO R B O T H ILLEGAL R E C R U IT M E N T A ND
ESTAFA, N O T D O U B L E JEO PARDY .

For the same reason as above, that is, that illegal recruitment is malm
prohibitum, whereas estafa is malm in se, there can be no double jeopardy if a person
is convicted for both illegal recruitment and estafa for one and the same ac t4 The
iniriauon of an illegal recruitment case does not bar the filing o f estafa against one
and the same person since these two crimes are entirely different offenses and
neither one necessarily includes or is necessarily included in the other. Double
jeopardy could not result from prosecuting and convicting the accused-appellant

1 Peopfev.Gato.supra.
* Syv People, GA No. 183879.April 14,20**0.
» Id.
Fordoublejeopardytoexist three (3) requisitesmustbepresent (1)a listjeopardymusthaveattachedpriortoIhesecond:

thefirst

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59
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for both crimes considering that they were entirely distinct from each other not
only from their being punished under different statutes but also from their
elements being different1 A person who is convicted o f illegal recruitment may, in
addition, be convicted o f estafa under Article 315 2(a) o f the Revised Penal Code.
There is no problem o f jeopardy in this situation.23

5. USE OF SAME EVIDENCE FOR ILLEGAL RECRUITMENT &

ESTAFA.
To successfully prosecute the illegal recruiter for estafa, die prosecution
needs only to present the very same evidence proving his commission o f the crime
o f illegal recruitment2 Case law holds that die same pieces o f evidence that
establish liability for illegal recruitment confirm culpability for estafa.4 It is thus
enough to show that the recruiter and his cohort acted with unity o f purpose in
defrauding die victims by misrepresenting that they had the power, influence,
agency and business to obtain overseas employment for diem upon payment of a
placement fee, which they did pay and deliver to die recruiter.5

6. C R IM IN A L A C T IO N , N O T A BAR T O A D M IN IST R A T IV E A C T IO N .

The institution o f criminal action for illegal recruitment is without

prejudice to any administrative action against the licensee o r holder o f authority
cognizable by the POEA, which could proceed independently o f the criminal
action.6 Simply stated, the administrative action is independent from the criminal
action.7

2.
LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER
a.
SOLIDARY LIABILITY

1. APPLICABILITY TO ALL FORMS OF LIABILITY.

T he joint and several nature o f the liability o f the principal/foreign
employer and the local recruitment/placement agency applies to any and all

1 Peoplsv. Bayker,GJLNa 170192, Feb. 10,2016.

2 Feoptev.Bfiaber.GRNos. 114967-68,Jan.26.2004.
3 Peopbv.Satefe^GJlNo.200684,June412014;Peoptev.Chua.GJlNo.187052,Sept 13,2012;CarmenRituaiov.
Peojde,GJl No.178337,June25,2009;Peoptev.Temporada,GRNo.173473,Dec. 17.200S.
4 Peoptev. R adio,G Jl No.227505,O ct02.2017; Peopbv.Chua.G R.Na 187052, Sgrt.13.201Z
5 Peoptev.AfeonaGRNo. 132029,July30,2004.
4 Section77. Rule X, Revised POEA Rulesand RegiMms Governing Ihe Recruitment and Employment of Land-Based
Ovetseas Rjpino Waters of 2016; Section 73, Rule X. 2016 Revised POEA Rifes and Regulations Governing the
Ronriln^ andEnplopedofSeafarersissuedonFeta^
7 kLU

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 6o Bar reviewer o n Labor Law

Monetary A *™ arising out o: the implementation o f the employment contract

involving Filipino workers for overseas deployment.1
^ RATIONALE b e h i n d t h e s o l i d a r y l i a b i l i t y .

R.A. No. 8042 is a police power measure intended to regulate the

Recruitment ^ deployment OFWs. It aims to curb, if not eliminate, the
injustices and abuses suffered by numerous OFW s seeking to work abroad.2 In
Samar,* it was explained that the provision on joint and several liability in R.A. No.
8042 is in line with the state's policy of affording protection to labor and alleviating
workers' plight It assures overseas workers that their rights will not be frustrated
by difficulties in filing money claims against foreign employers. Hence, in the case
of overseas employment, either the local agency o r the foreign employer may be
sued for all claims arising from the foreign employer's labor law violations. This
way, the overseas workers are assured that someone-at the very least, the foreign
employer's local agent-may be made to answer for violations that the foreign
employer may have committed. By providing that the liability o f the foreign
employer may be "enforced to die foil extent" against die local agent, the overseas
worker is assured o f immediate and sufficient payment o f what is due them. The
local agency that is held to answer for the overseas worker's money claims,
however, is not left without remedy. The law does not preclude it from gping after
the foreign employer for reimbursement o f whatever payment it has made to the
employee to answer for the money claims against the foreign employer.

3. A PRE-QU ALIFICA TION R E Q U IR E M E N T .

It is one o f the pre-qualification requirements, both under die 2016 Revised

Rulesfor Land-based and Sea-Bastd OFWs, that any person applying for a license to
operate a recruitment agency/manning agency, should, together with the written
application, file with the POEA, a duly notarized undertaking by the sole
proprietor, the managing partner, or the president o f the corporation stating that
the applicant4 shall assume full and complete responsibility for all claims and
liabilities which may arise in connection with the use o f the license5 and assumejoint
and several liability with the foreign employer/shipowner/prindpal for all claims and
liabilities which may arise in connection with the implementation o f the contract,
including, but not limited to, unpaid wages, death and disability compensation and

1 Sectiw 10. RAtto. 8042. asamended by Secta 7. RAtto. 10022; Seclim 3, RuteVB,Ornni)iBl^ and Regulations
(mplemenfing the MgrantWaters and Overseas Ffyros Act of 1995, as Amended by RA No. 10022, issued on Juty 8,
2010.
2 Gopcv.Bajfeta,GRNa2O5953,Jun0O6, 2O18.
3 SameerOvereeas PlacementAgency, ha v. NLRC.GR No. 132564, Oct 20, 1999.
4 gyfrn rfl, Ride II. Part B. Revised POEA Rides and Remfefons Gowenvo (he Recruitment and Employment of Land-
Based Overseas FSpino Waters of 2016: Section 4(F). Rule 0. Part II, 2016 Revised POEA Rules'and Regulations
GoverraigtteReavihiertandEmpbymertofSeafarers is ^
5 jjfrlfri 4(F)(2). Rule 11Part H. 2016Revised POEA Rulesand RegiilaSons Gowerrmg the Recniitiiientand Employmentof
Seafarersissuedon February26, 2016.

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repatriation.1And in case o f a corporation oc partnership, it is further required that

a duly notarized undertaking be executed by the corporate officers and directors, or
partners, that they shall be jointly and severally liable with the corporation or
partnership for claims a n d /o r damages that may be awarded to the workers.2

4. IN C O R P O R A T IO N IN T H E E M P L O Y M E N T C O N T R A C T.

The joint and several obligation must be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval.*

5. W H O A R E L IA B L E I N CASE O F JU R ID IC A L P E R SO N S?

I f the local recruitment/manning agency is a juridical being, the corporate

officers and directors and partners, as the case may be, shall themselves be jointly
and severally liable with die corporation o r partnership for the aforesaid claims and
damages.4 This is so because joint and several liability shall likewise refer to the
nature o f liability o f partners, o r officers and directors with the partnership or
corporation over claims arising from employer-employee relationship.5

6. C O N T IN U IN G LIA BILITY .

The joint and several liabilities discussed above shall continue during the
entire period or duration o f the employment contract and shall not be affected by
any substitution, amendment o r modification made locally o r in a foreign country
o f the said contract6

7. E F F E C T O F C O M PU LSO R Y IN SU R A N C E C OV ERA GE.

Under a new provision7 introduced by R A N o. 10022 to RA. No. 8042,

every O FW should now be compulsorily covered by insurance to answer, among

< S e ria l 4/fVSI Rids 8 P ^ [l (teR aerii&Tienfandfiiiclovm entfrfLand-

Based Overseas Fipino Workers of 2016; Secfion 4(F)(3), Ride 11, Part El. 2016 Revised POEA Rules and Regtdafions
Governing the Rem anentand Emptajmentof Seaferas issued on Febtuay26.2016.
2 See aisoS ecS ai^), Rub II, F W II, Revised TOEA Rules and Regufefiois&wsmingBteRecnjitn^ and Employmentof
Land-Based Overseas Rfcho Vtakecs of 2016; Secfion 4(0), Rub H, Part 0,2018 Revised POEA Rubs and Regdafions
G w en ty t e Recniinertand E tn p fa ^ ^
3 Secfim 10, R A No. 8042, as amended by Secfim 7, R A fto . 10022; Sedion 3, Ride VB.Otmbus Rules and Regdations
hpbmenftig (he MgrantWbriceis and Overseas Ffyinos Act of 1995. as Amended by R A No. 10022. issued on Juty 8
2010.
4 Secfion 10, R A No.8042, as amended by Secfion 7, R A No. 10022; Secfion 1(s) of Rule II and Secfion 3 .2 ^ paragraph.
Rub VO. OrndNJS R ibs and Regiiaiions Implementing the Mgiant W aters and Overseas Fipinos Ad of 1995. as
AmendedbyRA Nol 10022, issued on July8,2010.
s Mo. 17, Rub IL Rart l Revised POEA Rdes and Regdafions Governing the Reerubnert and Bnptoyment of land& sed
(Verseas Fipno Workers of 2016; No. 20, Rule U, Part l, 2016 Revised POEA Rules and Regubfons Governing the
ReauSmentandBTploymentofSeabrasissuedmFetxuaiyTe^e.
6 Secfion 10, R A N a 8042, as amended by Secfion 7, R A No. 10022; Secfiai 3, Rub VII, <>nnaxis Rides and Regdaiions
Implemenfing the MgrantWoiters and Ovaseas Rfoiros Act of 1995, as Amended by R A No. 10022. issued on July 8.
2010.
1 Section 37-A, R A No. 6042, as added by Secfion 23. R A No. 10022; Secfion 1, Rub XVI. Qmnius Rubs and
Regulations bnpbmenfing tie MgiantWorkers and Overseas Ftyinos Ad of 1995, as Amended by R A N o. 10022, issued
on July 8,2010.

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 62 bar Re v i e w e r o n La bo r La w

others, for his/her monetary claims.1 This compulsory insurance coverage,

however, should not affect the joint and several liability o f the foreign employer
and die local recruitment/manning agency2 as provided in the law.3

b.
THEORY OF IMPUTED KNOWLEDGE

1. CON CEPT.

This theory refers to a cognizance o f a circumstance or feet attributed to a

patty because o f its posidon, or its relationship with o r responsibility for another
party. The relationship of the local recruitment agency/local manning agency vis-a-
vis its foreign principal is that o f agent-principal, the former being die agent and the
latter, die principal. Consequendy, the theory o f im puted know ledge ascribes the
knowledge o f the agent to die principal.

This was, however, not the case in Sunace v. NLR.C,* where die OFW
(Divina), a domestic helper in Taiwan, has extended her 12-month contract after its
expiration for two (2) more years after which she returned to the Philippines. It was
established by evidence that the extension was without the knowledge o f die local
recruitment agency, petitioner Sunace. The CA, however, affirmed the Labor
Arbiter’s and NLRC’s finding that Sunace knew o f and impliedly consented to the
extension o f Divina’s 2-year contract It went on to state that "It is undisputed that
[Sunace] was continually communicating with [Divina’s] foreign employer." It thus
concluded that "[a]s agent o f the foreign principal, ‘petitioner cannot profess
ignorance of such extension as obviously, the act o f the principal extending
complainant (m) employment contract necessarily bound i t ’"

In finding that the application o f this theory o f imputed knowledge was

misplaced, the High Court ruled that this theory ascribes die knowledge o f the
agent, Sunace, to the foreign principal/employer Xiong, not the other way around.
The knowledge of the foreign principal/employer cannot therefore be imputed to
its agent Sunace. There being no substantial proof that Sunace knew o f and
consented to be bound under the 2-year employment contract extension, it cannot
be said to be privy thereto. As such, it and its "omer>' cannot be held solidary

1 See paragraph (f) of Section 37-A.RA No. 8042, as added by Secfon 23, RA. No. 10022; Section 1(f), Rule XVI, Omnfcus
Rties and RegifeSons Implementing 9ie Mg?anl W ortas and Overseas Fgjp'ros Ad of 1995, as Amended by R A No.
10022.issuedonJuV8.2010.
2 See Secfon 37A(jB),RA No. 8042, as added by Section 23, RA. No. 10022; Section 10(6), Rule XVI, Omnlius Rules and
Regulations hplemaifing the hfgiant W aters and O oseas FBpinos Ad of 1995, as Amended by R A No. 10022, issued
onJdy8,2010.
1 Section 10, RA. No. 8042, as amended by Secfon 7, R A No. 10022; Sedan 3, RuteVH,OmribusRUtes and Regulations
ImplemenSng the Migrant Vfalcers and O w seas Rhinos Act of 1995, as Amended by RA. N ql 10022, issued on JuV 8.
2010; Seeaiso No. 17, Rule D, PartI. Revised POEA Rules and Regulations Gouemiig h e Recrutowft and Employmentof
Land-Based Oveseas RQpino Workers of 201ft Not 20. Ride It. Part 1.2016 Revised POEA Rules aid Regubfons
Govendng theReouibnentand Em ployn^of Seaferes
4 SUnaoeW e»nafiondManagemenlSe(v^hcv.NU?C,&RNo. 161757,Jan 25.2006.

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liable foe any o f Divina’s claims arising from the 2-year employment extension. A s
the New Civil Code provides: “Contracts take effect only between the parties, their
assigns, and heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision o f
law.”

Furthermore, as Sunace correcdy points out, there was an implied

revocation o f its agency relationship with its foreign principal when, alter the
termination o f the original employment contract, die foreign principal direedy
negotiated with Divina and entered into a new and separate employment contract
in Taiwan. Article 1924 o f the N ew Civil Code reading: “ [t]he agency is revoked if
die principal direedy manages the business entrusted to the agent, dealing direedy
with third persons” thus applies. As defined, a "prinapal" refers to a foreign
employer or foreign placement agency hiring or engaging Filipino workers for
overseas employment through a licensed local private recruitment/manning
agency.1

3.
TERMINATION OF CONTRACT OF MIGRANT WORKER
WITHOUT JUST OR VALID CAUSE

1. O R D E R O F T O P IC A L D ISC U SSIO N .

The discussion o f this topic is divided into the following sections:

I. GENERAL PRINCIPLES ON TERMINATION OF OFWs

II. MONETARY CLAIMS OF OFWs, IN GENERAL
III. MONETARY CLAIMS OF OFWs ARISING FROM ILLEGAL DISMISSAL
Note; Monetary claims of OFWs arising from work-related disability, sickness or
death is discussed in Chapter Four [Social Welfare Legislation] under the
topic of “C. Disability and Death Benefits m l POEA-Standard
Employment Contract, ” infra.

GENERAL PRINCIPLES ON TERMINATION OF OFWs

1. OFW s D ESE R V E T O B E P R O T E C T E D BY O U R LAWS.

OFWs belong to a disadvantaged class. M ost o f them come from the

poorest sectors o f our society. Their profile shows they live in suffocating slums,
trapped in an environment o f crimes. Hardly literate and in ill health, their only
hope lies in jobs they can hardly find with difficulty in our country. Their

1 Section 1(oc} Rub 11. Qmntous Rdes and Regulations Implementing he Mgrart Woctas and Overseas Riphos Ad of
t 9S5,A sfe m J^ 6yRAN o.t0022^ferchC8. 201Ci.

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 64 Bar R eviewer on Labo r Law

unfortunate circumstance makes them easy prey to avaricious employers. They will
climb mountains, cross the seas, endure slave treatment in foreign lands just to
survive. Out of despondence, they will work under sub-human conditions and
accept salaries below the minimum. The least we can do is to protect them with our
laws.1

There is an extreme need for the strict enforcement o f the law and the
rules and regulations governing Filipino contract workers abroad. Many hapless
citizens of this country who have sought foreign employment to earn a few dollars
to ensure for their families a life worthy o f human dignity and provide proper
education and a decent future for their children have found themselves enslaved by
foreign masters, harassed or abused and deprived of their employment for tire
slightest cause. No one should be made to unjustly profit from their
suffering. Hence, recruiting agencies must not only faithfully comply with
government-prescribed responsibilities; they must impose upon themselves the
duty, borne out of a social conscience, to help citizens of this country sent abroad
to work for foreign principals. They must keep in mind that this country is not
exporting slaves but human beings, and above all, fellow Filipinos seeking merely
to improve their lives.2

2. APPLICABILITY OF T H E SECURITY OF TENU RE DOCTRIN E.

OFWs, regardless of their classifications, have the right to security of

tenure guaranteed under the Constitution,3 notwithstanding the fact that their place
of work is overseas.4 Thus, even if a Filipino is employed abroad, he or she is
entided to security of tenure, among other constitutional rights.5 For the entire
duration of employment agreed upon in their contracts, their security o f tenure
remains even if they work in a different jurisdiction. This is so since their
employment contracts are perfected in the Philippines, and following the principle
of lex loci contractus (the law of the place where the contract is made), these contracts
are governed by our laws, primarily the Labor Code o f the Philippines and its
implementing rules and regulations.67At the same time, our laws generally apply
even to employment contracts o f OFWs as our Constitution explicidy provides
that the State shall afford full protection to labor, whether local or overseas.1 Thus,
even if a Filipino is employed abroad, he or she is entided to security o f tenure,

' Yap v. Thenamaris Ships Management, G.R No. 179532, May 30,2011.
2 JSS Indochina Corp. v. Fener, G il No. 156381, Oct 14,2005.
3 Section 3, Artide XIII, PhSppine ConsbtLidon.
4 Sameer Overseas Placement Agency, Inc. v. Joy C. Cab3es, G.R. No. 170139, Aug. 05,2014; Gopio v. Bautista, G.R. No.
205953, June 06,2018.
5 Dagasdas v. Grand Placement and General Services Corporation, G.R. No. 205727, Jan. 18,2017,814SCRA 529,541.
6 Dagasdas v. Grand Placement and General Services, supra, citng Sameer Overseas Placement Agency, Inc. v.Cabiles,
supra.
7 Id., Per Section 3, ArideXIII of liie Constitution: ‘Section 3. The State shall afford ful protection to labor, local and overseas,
orgarized and unorganized, and promote full employment and equality of employment opportunities for all.'

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 C hapter. T w o 65
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among other constitutional rights.1 Consequently, OFWs cannot be dismissed

without observing both substantive and procedural due process. If they were
illegally dismissed, their right to security o f tenure is violated.2

3. PO EA STAN DA RD E M P L O Y M E N T C O N T R A C T (POEA-SEC).

Under the POEA Pules, all foreign employers and principals are required
to adopt the POEA-SEC. The provisions, however, differ for land-based and sea-
based OFWs. They are discussed hereunder.

a. Minimum provisions o f employment contracts.

Consistent with welfare promotion thrusts of the POEA, the following

shall be the minimum provisions in employment contracts for OFWs:

a. Complete name and address o f the employer/companv;

b. Position and jobsite of the OFW;
c. Basic monthly salary, including benefits and allowances and mode o f
payment. The salary shall not be lower than the prescribed minimum
wage in the host country or prevailing minimum wage in the National
Capital Region of the Philippines, whichever is higher;
d. Food and accommodation or the monetary equivalent which shall be
commensurate to the cost o f living in the host country, or off-setting
benefits;
e. Commencement and duration o f contract;
f. Free transportation from and back to the point of hire, or off-setting
benefits, and free inland transportation at the jobsite or off-setting
benefits;
g. Regular work hours and day off;
h. Overtime pay for services rendered beyond the regular working hours,
rest days and holidays;
i. Vacation leave and sick leave for every year of service;
j. Free emergency medical and dental treatment;
k. Just/valid/authorized causes for termination o f the contract or o f the
services o f the workers, taking into consideration the customs,
traditions, norms, mores, practices, company policies and the labor
laws and social legislations o f the host country;
l. Settlement o f disputes;
m. Repatriation o f worker in case of imminent danger due to war,
calamity, and other analogous circumstances, at the expense o f
employer; and
n. In case o f an OFW’s death/repatriation of his human remains and
personal belongings, at the expense of the employer.1

' Id., Industrial Personnel & Management Services, Inc. v. De Vera, G.R. No. 205703, March 7,2016.

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 66 Bar Reviewer o n Labor Law

The POEA may formulate country- or skills-spedfic policies and

guidelines based on the following: (a) Existing labor and social laws o f the host
country; (b) Relevant bilateral and multilateral agreements or arrangements with the
host country; and (c) Prevailing condidons/realities in the market.12

b. Freedom to stipulate.
The parties to overseas employment contracts are allowed to stipulate
other terms and conditions and other benefits than those provided in the POEA-
SEC.3 These benefits should be over and above the minimum standards; provided,
that the stipulations are mutually beneficial to both parties and are not contrary to
law, public policy and morals.4 Consequently, a contract freely entered into is
considered die law between the parties.5

c. Disclosure o f terms and conditions o f employment.

As far as land-based OFWs are concerned, the rule states that the licensed
recruitment agency shall, prior to the signing o f the employment contract, inform
the OFWs o f their rights and obligations, and disclose die full terms and conditions
of employment The licensed recruitment agency shall likewise ensure that the
OFW is provided with a copy o f the POEA-approved contract, to give him /her
ample opportunity to examine the same.6 This same rule applies to sea-based
OFWs where die licensed manning agency and the seafarer are required to fully
disclose all relevant information in relation to the recruitment and employment o f
the seafarer.7

d. Interpretation o f overseas employment contract

Any ambiguity in the overseas employment contract shall be interpreted
against the parties that drafted i t 8 Labor contracts must be interpreted liberally in
favor o f the worker.9 T he provisions contained in the POEA-SEC are
manifestations o f the State in favor o f the working class, consistent with the social
justice and protection of the working class provisions o f the Constitution.10

1 Secfon135. Rule I, Part V, Revised POEA Rules and R eguM oreG w aniighe Reauamert and Employment of Land-
Based OvereeasFlphoWwkasof201$.
2 kt
2 DebsSankBv.JebseaM aftne,he,G U N a 154185,N w .22,2005.
4 Secfion 136. Ride I. Part V. Jd.; Section 116. Rute I. Part IV. 2016 Revised POEA Rules and Regulafions Govenvng the
Reauitmentand&npbyment of Seafsos issued on Febnoy 26,2016.
5 ATC! Overseas CorporaBon v. Bchn, O R No. 178551. OcL 11.2010.
6 Secfon 137, Rule I, Part V, Revised POEA Rules and Regulations Governing the Recruitment and Employment of Land-
Based Overseas F i^ W o te s of 2016.
1 Section 117, RuSe t. Part IV, 2016 Revised POEA Rules and ReguiaSons Governing foe Recurrent and Employment of

Seafarers issued on Febcuay26.2016.

8 Cadafnv.POEA’sAdnw istrator.G ilNa 104776.0ec5,1995.238SCRA721.
8 Ditanv. POEA, G il No.79560, Dec. 3.1990,191 SCRA823.
» Eastern Shipping Lines, Inc. v. POEA, G il No. L-76633, O c ll8,1988,166 SCRA533.

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4. U N A U T H O R IZ E D S U B S T IT U T IO N /A L T E R A T IO N O F
E M PL O Y M E N T C O N T R A C T.

ILA. N o. 8042 explicitly prohibits the substitution o r alteration, to the

prejudice o f the worker, o f employment contracts already approved and verified by
the PO E A from the time o f actual signing thereof by die parties up to and
including the period o f their expiration without the approval o f the PO EA .1

Thus, if prior to his deployment and while still in the Philippines, the
OFW was made to sign a POEA-approved contract with a licensed recruitment or
placement agency in die Philippines, on behalf o f a foreign employer, and, upon
arrival in die foreign country, the foreign employer made him sign a new
employment contract, this new contract is void.2 T o be valid, the new contract
must be shown to have been processed through the P O E A Under our Labor
Code, employers hiring OFWs may only do so through entities authorized by the
D O L E Secretary.3 Unless the employment contract o f an OFW is processed
through the POEA, the same does not bind the concerned O FW because if the
contract is not reviewed by the PO EA , certainly the State has no means o f
determining die suitability o f foreign laws to our overseas workers.4 Moreover, this
new contract also breached die O F W s original contract as it was entered into even
before the expiration o f the original contract approved by die POEA. Therefore, it
cannot supersede die original contract; its terms and conditions being void.5

T he same voidness holds true in a case where the subsequently executed

side agreement o f an OFW with her foreign employer reduced her salary below die
amount approved by die P O E A The reason is that such scheme is against our
existing laws, morals and public policy. T h e side agreement cannot supersede her
standard employment contract approved by the POEA.6 In addition to such
voiding, disciplinary sanctions may be imposed upon the errant
employer/prindpaL7

1 S m Sen 60 , R A N& 8042, as amended tySecGm 5, R A to . 10022; See Section 10 , Rule IV, Omnbus Riles and
Ragubfions tnplemenGrig the ImpartVtafcasand Overseas Rphos Actof 1995, as Amended ty R A N a 10022, issued
on July 8,2010.
7 Daga^v.GrandPtaoem entandGen6ralSeivices,GAto.205727l Jan.18,2017.
3 Id , See Article 18. Ban onO recfrtw g.-N o employer may hire a Flipino worker to weiseasem plopent accept trough
S>e Boarris and ertilfes athhoiized by the Secretary of Labor. Direct-hinng by members of Sie diptomatic corps, irtcmafional
organizaSons and such olher employers as may be atowed by the Secretary of Labors exempted from t e p ro e m
(L^»rCodeof0iePh2ippines,Amenc(ed&Renim*ered, JuJy21,2015).
1 Id , Industrial Peisonrd&lybfagementSeMces, h a v.D e Vera, 6 R No. 205703. M a d i7 ,2016
3 Id^D aljm m v.FW & isnw potoM aniow andProm otim Savioes.he,G R .N o. 156029, Nw 14,2008,591 P h t662.
5 C havK V .B ontoftfez.6A No. 103808, Match 1,1995,242 SCRA 73,82; 312 PM. 88; See also PtacweBIntemafional
Services C op.v.C am cie,G A to. 189973,June26,2006.
7 FortancH)asedOFWs,suchsubs&£onoraneraSanoftiePOEA«|]fxowedoontracttoOiepfqutSceoftheOFWwOmefft
ffie impcsfBoo of the penaiy erf permanent rfisquafi5ca5on and deSsSng from the roster of accrafced pmcipals/emptayas.
(Section 144{Q(i), Ride IV, Revised POEA Rides and Regulations Governing he Recruitment and Employment of Land-
Based Ovetseas F^pino Workers of 2016). For seatoased OFWs, such subsShrfion or aOeraSon of Hie POEArapprwed
contract wffl be penaEzed as fotows: 1* OSertse - Rrte of PSOJOOOXIO; 2nd Offense - Fine of P100.000.00; 3s1Oflense -
Suspension to n pariripaSon in h e overseas employment program (Sx months b One year); 4 * Offense • Permanent

J9JC9B0M
 68 Ba r Reviewer o n U bor Law

5. D OCTRINE O F PROCESSUAL PR ESU M PT IO N .

It is a hornbook principle that the party invoking the application o f a

foreign law has die burden o f proving such law under the doctrine o f protessual
presumption or "presmei-identity approach,M This is an International Law doctrine
which dictates that where a foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that such foreign law is the same as Philippine law.
Thus, under this situation, Philippine labor laws should apply in determining the
issues presented in a case.2

It must be noted that the Philippines does not take judicial notice o f
foreign laws, hence, they must not only be alleged; they must be proven. This is so
because in international law, the party who wants to have a foreign law applied to a
dispute or case has the burden o f proving the foreign law. The foreign law is
treated as a question o f feet to be properly pleaded and proved as the judge or
Labor Arbiter cannot take judicial notice o f a foreign law. He is presumed to know
only domestic or forum law.3 To prove a foreign law, the party invoking it must
present a copy thereof and comply with Sections 244 and 25s o f Rule 132 o f the
Revised Rules o f Court

In EDl-Stafjbmldcrs,6 die employment contract signed by the private

respondent OFW specifically states that the Saudi Labor Laws will govern matters
not provided for in the contract (eg, specific causes for termination, termination
procedures, etc.). Being the law intended by the parties (lex loci iritentiones) to apply
to the contract, Saudi Labor Laws should govern all matters relating to the
termination o f the employment o f the OFW. Unfortunately for petitioner, it did
not prove the pertinent Saudi Labor Laws on the matter, thus, the International
Law doctrine o f pnsumed-identitf approachor processualpresumption comes into play.

Petitioners in ATCI Overseas1 contend that Philippine labor laws on

probationary employment arc not applicable since it was expressly provided in

DisquaScaSon and deCs&ng tom the roster of arxrerfited prindpatsfempbyers. (Section 127(B)(2), Rule IV, 2016 R ased
POEA Rules and R e g u la r (kweming the Reautnent and EniptoymertotSeafeieis issued on February26,2016).
1 tt
2 Id., cSng ED^Ssftcldeis Memafanal. Inc. v. t&RC, G il No. 14558. Oct 26,2007.
3 EDI^tatoddefslnlBmafional,tnev.NLRCtsupra.
4 This prewsion states: "SEC. 24. Proof of official record.— The record of pubfc documents referred to in paragraph (£0 of
Section 19, when adrrisstile tor any purpose, may be evidenced by an official publication thereof a by a copy attested by
9)3 officer hawing the legal custody of Bie record, a by life deputy, and accompanied, I h e recced is not kept b tie
PhSppines. a certScate Qiat such officer has the custixly. If tie oSice n Mhicti Sie record is kept is in a foreign county,
tie cerfficate may be made by a secretary of Bte embassy or legation, const! general, consd. vice cored, or oonsdaragent
or by any officer in tie foreign service of the PtiSppnes stafioned in the foreign county in which tie record is kept, and
autienlicatadbylhesealofhisoffice.
5 This sedan provides: *$EC. 25. attestation of copy must state. - Whenever a copy of a document or record is
attested Jar he purpose of the evidence, fie attestation must slab, in substance. Sot the copy fc,a correct copy of the
original, aa sp ^ p a rtth e re o t, as fie case may be. The attestabon must be under iheotSdal seal of the attesting officer,
ffie re be any,aJhe be the detkofacatrthaviigaseai. underthe seal of such court.’
* Supra.
3 ATCI Owrseas Corporationv. GcNn, GjR. No. 178551, Oct 11.2010.

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 CHAPTER TWO 69
PRE-EMPLOYMENT

respondent’s employment contract, which she voluntadly entered into, that the
terms o f her engagement shall be governed by prevailing Kuwaiti Civil Service
Laws and Regulations, as in fact PO EA Rules accord respect to such rules, customs
and practices o f the host country. T o prove the Kuwaiti law, petitioners submitted
the following: MOA between respondent and her foreign employer, the Ministry o f
Public Health o f Kuwait (the Ministry), as represented by ATCI, which provides
that the employee is subject to a probationary period o f one (1) year and that d ie
host country’s Civil Service Laws and Regulations apply; a translated copy (Arabic
to English) o f die termination letter to respondent stating that she did not pass th e
probation terms, without specifying die grounds therefor, and a translated copy o f
die certificate o f termination, both o f which documents were certified by M l
Mustapha Alawi, Head o f die Departm ent o f Foreign Affairs-Office o f Consular
Affairs Islamic Certification and Translation Unit; and respondent’s letter o f
reconsideration to the Ministry, wherein she noted that in her first eight (8) m onths
o f employment, she was given a rating o f “Excellent” albeit it changed due to
changes in her shift o f work schedule. The Supreme Court, however, ruled that
these documents, whether taken singly o r as a whole, do n o t suffidentiy prove th at
respondent was validly terminated as a probationary employee under Kuwaiti civil
service laws. Instead o f submitting a copy o f the pertinent Kuwaiti labor laws duly
authenticated and translated by Embassy officials thereat, as required under d ie
Rules, what petitioners submitted were mere certifications attesting only to the
correctness of the translations o f the M OA and the termination letter which does
not prove at all that Kuwaiti civil service laws differ from Philippine laws and th at
under such Kuwaiti laws, respondent was validly terminated.

Indeed, the parties to an overseas employment contract may select the law
by which it is to be governed. A basic policy o f contract is to protect the
expectation o f the parties and such party expectation is protected by giving effect
to the parties’ own choice o f the applicable law. In such a case, the foreign law is
adopted as a “system"to regulate the relations o f the parties, including questions o f
their capacity to enter into the contract, die formalities to be observed by the
parties, matters o f performance and die like. Instead o f adopting the entire mass o f
the foreign law, the parties may just agree that specific provisions o f a foreign
statute ate to be deemed incorporated in their contract “as a set of Urns. ” By such
reference to the provisions o f die foreign law, the contract does not become a
foreign contract to be governed by such foreign law since the said law does n o t
operate as a statute but merely as a set o f contractual terms deemed written in die
contract

The choice o f law must, however, bear some relationship to the parties o r
their transaction. For instance, as CadaM pronounced, where the services o f the
claimants were rendered in Bahrain, there is no question that the contracts sought
to be enforced have a direct connection with Bahrain. Consequently, where the 1

1 C adafov.PO ER !sA ihinarate,G ilN a 104775, D ec.5,1895,238 SCRA 721.

J9JC9B0M
 70 Bar. Reviewer o n la bo r Uw

claims are for benefits granted under the Bahrain law, only die claimants who
worked in Bahrain should be entitled to file their claims in a class suit, excluding
those who worked elsewhere.

6. OFWs MAY B E T ER M IN A T E D O N L Y A F T E R D U E PROCESS.

As earlier discussed, OFWs are entitled to security o f tenure as

guaranteed under die Constitution and die laws o f die Philippines.*1 Thus, OFW s
may only be terminated for a just or authorized cause (substantive due process)
and after compliance with procedural due process requirements.2 Article 297 [282]
of the Libor Code enumerates the just causes o f terminatiftn by die employer3 and
Articles 298 [283] and 299 [284] thereof enumerate die authorised causes. The
fundamental procedural rights afforded under Philippine laws to workers equally
apply to OFWs.4 This means that the employer must give the concerned employee
at least two (2) notices before his or her termination. Specifically, the employer
must inform the employee o f the cause or causes for his or her termination, and
thereafter, the employer’s decision to dismiss him. Aside from the notice
requirement, the employee must be accorded the opportunity to be heard.5

The 2014 en banc case o f Sameer v. Cabiles? is a classic example o f illegal

dismissal o f an OFW. Respondent’s dismissal grounded on inefficiency and
negligence less than one year from hiring and her repatriation on the same day
show not only failure on the part o f petitioner to comply with die requirement o f
the existence o f just cause for termination; they patendy show that the employers
did not comply with the due process requirement Thusly:

“A valid dismissal requires both a valid cause and adherence

to the valid procedure of dismissal.7 The employer is required to give
the charged employee at least two written notices before termination.8
One of the written notices must inform the employee of the particular
acts that may cause his or her dismissal.9 The other notice must
‘[inform] the employee of the employer’s decision.’10 Aside from the
notice requirement, the employee must also be given ‘an opportunity to
beheard.’11

' Gopiov.Bautista,GR No. 205953,June06,2016.

7 SameerOvemeas PlacementAgency, be. v JoyC .& H es,G R N o. 170139,Aug.05,2014.
* Id.
* M.
5 Dagasdas v. Grand Placement and General Services, G il No. 205727, Jan. 18,2017, cSng EDI-SMxiSders International,
be. v.NLRC.GR No. 14558. Oct 26,2007.563 P N .1 ,28-29.
( Sameer Overseas Placement Agency, be. v. Joy C. Catties, G J l No. 170139, Aug. 05,2014. The foreign employer
afleged r bis case that respondents dismissal was due b inefficiency b herwxk and negligence b her duties.
1 H c^SK ppem Unfed Patiffc, h e v. Data, G R No. 175558, F e tn » y 8,2012,665 SCRA412,426.
« Id.
» Id., Id.
* H id .

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 C h a pt er t w o 71
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“Petitioner failed to comply with the twin notices and

hearing requirements. Respondent started working on June 26, 1997.
She was told that she was terminated on July 14,1997 effective on the
same day and barely a month from her first workday. She was also
repatriated on die same day that die was informed of her termination.
The abruptness o f the termination negated any finding that she was
properly notified and given the opportunity to be heard. Her
constitutional right to due process of law was violated.”

In PCL Shipping,1petitioners contend that the twin requirements o f notice

and heating apply strictly only when the employment is within the Philippines and
that the same need no t be strictly observed in cases o f international maritime o r
overseas employment The Supreme Court, however, disagreed. The provisions o f
the Constitution as well as the Labor Code which afford protection to labor apply
to Filipino employees whether working within the Philippines o r
abroad. Moreover, the principle o f lex lod contractus (the law o f the place where the
contract is made) governs in this jurisdiction. In the present case, it is not disputed
that the Contract o f Employment entered into by and between petitioners and
private respondent was executed here in the Philippines with the approval o f the
POEA. Hence, the Labor Code, together with its implementing rules and
regulations and other laws affecting labor, apply in this case. Accordingly, as to the
requirement o f notice and hearing in die case o f a seafarer, the Court has already
ruled in a number o f cases that before a seaman can be dismissed and discharged
from the vessel, it is required that he be given a written notice regarding die charges
against him and that he be afforded a formal investigation where he could defend
himself personally or through a representative. Hence, the employer should stricdy
comply with the twin requirements o f notice and hearing without regard to the
nature and situs o f employment or the nationality o f the employer. Petitioners
failed to comply with these twin requirements.

TaSdano1 also declares that the minimum requirement o f due process in

termination proceedings must be complied with even with respect to seamen on
board a foreign vesseL3 Centennial Transmarine,4 however, is mote categorical in
declaring that for officers and crew who are working in foreign vessels involved in
overseas shipping, there must be compliance with the applicable laws on overseas
employment as well as with the regulations issued by the POEA, such as those
embodied in die Standard Contract for Seafarers Employed Abroad (Standard
Contract).5

' P a Shipping Ptippines, Inc. v. NLRC, G R No. 153031, Dec. 14,2005.

2 T afid atw v.F alO T M ato & A ^S avices.ln a.G JlN o . 172031.July 14,2008.
3 See eboDe la Crwv.MaerskFfynasCrewing, h o , G il No. 172038, April 14,2008.
4 Centeni^Transn«^,lnc.v.DdaCiuz,G .R.No.180719,Aug.22,2008.
5 Now deromrafed as ^Revised Standard Terms and Corxfions Governing the Ovaseas Employment of FEpiio Seafares
OaGoard Oceangoing Ships,* issued on October 4,2010 by virtue of POEA Gowning Board Resrtufon No. 09, Senes of
2010.

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 72 Ba r r e v ie w e r o n La b o r La w

In Dagudas,1 petitioner OFW’s termination on the basis o f a void

substituted employment contract which was subsequently executed upon his artival
in Saudi Arabia, in replacement o f the POEA-approved employment contract
which he earlier executed in the Philippines, was declared illegal. More so when
there is no dear justification for the dismissal o f Dagasdas other than the exerdse
of the foreign employer’s right to terminate him within the probationary period.
While our Civil Code recognizes that parties may stipulate in their contracts such
terms and conditions as they may deem convenient, these terms and conditions
must not be contrary to law, morals, good customs, public order or policy.2 The
right granted to the foreign employer to terminate the employment contract
without serving any notice to petitioner OFW is contrary to law because our
Constitution guarantees that employees, local o r overseas, are entitled to security o f
tenure. To allow employers to reserve a right to terminate employees without cause
is violative o f this guarantee o f security o f tenure.

In Gopio? the Court declared that respondent Bautista's incompetence as

the alleged just cause for his dismissal was not proven by substantial evidence
because die evaluation report o f his superior was made only on August 22, 2009,
and the declaration o f Paul Thompson, Supervising Engineer o f the Project to
which Bautista was assigned, was executed only on October 1,2009, which dates
are beyond the date o f termination o f Bautista's employment on July 10,2009. The
CA correctly concluded that these were made as an afterthought in order to lend
credence to the claim that die termination o f Bautista's employment was for a valid
reason. In Skippers United,* it was held that the Master’s Statement Report presented
by therein petitioners to corroborate their claim that the dismissal o f therein
respondents was for just cause, i.e., incompetence, was issued 78 days after therein
respondents were repatriated to Manila and two months after die latter instituted a
complaint for illegal dismissal before the NLRC. Such report can no longer be a
fur and accurate assessment o f therein respondents' competence as the same was
presented only after the complaint was filed Its execution was a mere afterthought
in order to justify the discussal o f therein respondents which had long been
effected before the report was made; hence, such report is a self-serving one.

6 .1 STIPULATED P R E -T E R M IN A T IO N W IT H O U T N E E D F O R D U E
PROCESS, ILLEGAL.

In the same case o f Gopio, respondent Bautista's employment was

terminated on the basis o f Article 4.3 o f the employment contract by giving him
one-month salary in lieu o f one month's written notice. The said provision states:

( Dagasdasv. Grand Placement and Genoa! Setvices. G.R. No. 205727, Jan. 18,2017.
2 The CM Code of tie Ptippnes, in its Article 1306. provides: "The contracting pasties may estabfish such stipulations,
clauses; terns and conditions as they may deem convenient provided they are not oonfiay to law. morals, good customs,
puMc order,crpubfepofcy.*
1 Gopbv.Baufista.GJR.Na 205953,Ju»06,2016.
4 Skipperstti8edPacfc,hc.v.Maguad.GRNa 166363,Aug. 15,2006.

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 C h apter Tw o 73
PRE-EMPLOYMENT

“4.3 The Employer or Employee may terminate this contract on other

grounds. The Employer should give one month's written notice of
his intention to terminate or in lieu thereof pay the Employee a
sum equivalent to one month's salary. The Employee may likewise
terminate this Contract by giving three months' notice to the
Employer.”

In holding that Bautista’s termination was illegal as it was based on said

paragraph 4 3, the High Court pronounced that the due process requirement is n o t
a mere formality that may be dispensed with at will. Its disregard is a matter o f
serious concern since it constitutes a safeguard o f the highest order in response to
man's innate sense o f justice. To meet the requirements o f due process, the
employer must furnish the worker sought to be dismissed with two written notices
before termination o f employment can be legally effected, (1) a notice which
apprises the employee o f the particular acts or omissions for wltich his dismissal is
sought; and (2) the subsequent notice after due hearing which informs the
employee o f the employer’s decision to dismiss him.

Here, Bautista was dismissed under Article 4.3 o f the employment

contract which allegedly permits his employer, Shorncliffe, to terminate die
contract on unspecified "other grounds" by giving one month's written nodee o f its
intendon to terminate, or in lieu thereof to pay the employee a sum equivalent to
one month's salary. Baudsta was notified on July 6, 2009 that his services will be
terminated effective on die close o f business hours on July 10, 2009, allegedly
because his performance was "unsatisfactory and did not meet die standards o f die
Company." He was also paid one-month salary in lieu o f one month's notice o f die
termination o f his employment. Surely, this cannot be considered compliance with
die two-notice requirement mandated by the Labor Code in effecting a valid
dismissal The Labor Code requires both notice and hearing; notice alone will n o t
suffice. The requirement o f notice is intended to inform the employee concerned
o f die employer's intent to dismiss him and die reason for the proposed dismissal.
O n the other hand, the requirement o f hearing affords the employee an
opportunity to answer his employer’s charges against him and accordingly defend
himself therefrom before dismissal is effected. In this case, Bautista was not given a
chance to defend himself. Five days after the notice was served, he was repatriated.
Clearly, he was denied his right to due process.

Article 4 3 deprives the employee o f his right to due process o f law as it

gives the employer die option to do away with the notice requirement provided
that it grants one-month salary to the employee in lieu thereof. It denies the
employee o f the right to be apprised o f the grounds for the termination o f his
employment without giving him an opportunity to defend himself and refute the
charges against him. Moreover, the term "other grounds" is all-encompassing. It
makes the employee susceptible to arbitrary dismissal. T he employee may be
terminated not only for just or authorized causes but also for anything under die

J9JC9B0M
 Ba r R e v i e w e r on La b o r Law
74

sun that may suit his employer. Thus, the employee is left unprotected and at die
mercy of his employer, subjected to the latter's whims.

The validity o f Article 4.3 o f the employment contract cannot be

sustained as it contravenes the constitutionally-protected right o f every w o rk e r to
security o f tenure. Bautista's employment was for a fixed period o f 31 months.
Article 4.3 took back this period from him by tendering it in effect a facultative one
at die opdon o f Shomdiffe, which may shorten that term at any time and for any
cause satisfactory to itself, to a one-month period or even less, by simply paying
Bautista a month's salary. The net effect o f Article 4i3 is to tender Bautista's
employment basically employment a t the pleasure o f Shomdiffe. The Court
coadders that the provision is intended to prevent any security o f tenure from
accruing in favor o f Bautista even during the limited period o f 31 months.

6.2. TER M IN A T IO N O F E M P L O Y M E N T O F SEAFARERS.

a. Different set o f rules.

The 2010 POEA-SEC provides in its Section 18, the following rules on
termination o f employment o f seafarers:

A. The employment o f the seafarer shall cease when the seafarer

completes his period of contractual service aboard die ship, signs-off from the ship
and arrives at die point o f hire.

B. The employment o f the seafarer is also terminated effective upon

arrival at the point of hire for any o f the following reasons:

1. When the seafarer signs-off and is disembarked for medical reasons

pursuant to Section 20 (A) (5)1o f the POEA-SEC.
2. When the seafarer signs-off due to shipwreck, ship’s sale, lay-up of
ship, discontinuance o f voyage or change o f ship prindpal in
accordance with the following provisions o f the POEA-SEC:
(a) Section 22 {Termination Due to Sbipmtck and Ship's Foundering);2
(b) Section 23 (Termination Due to Sale ofShip, Lay-Up or Discontinuance of
Voryayfy} and
(c) Section 26 (Change ofPrincipal}.4
3. When die seafarer, in writing, voluntarily resigns and signs o ff prior to
expiration o f contract pursuant to Section 19 (G)1o f die POEA-SEC.

' SecSm 20 (A X 5 )d te 2010 POEA-SEC states:‘5. Incase a seafarer is tisembarted fa n the shfc f a medicaJ reasons,
the employer shaB beer ths i d cost of repatriation fri the went he seafarer is declared (1) fttorrepalr&fion; cr (2) ft to wok
buthe enp byerfeu iateb fin d en p li^^teth eseafaferm b o ari hfcfamer sh b w an o tersfyd tteem p tyer.'
2 Seedscusdon below.

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 Ch a p t e r T w o 75
PRE-EMPLOYMENT

4. When the seafarer is discharged for just cause as provided for in

Section 3312 o f the POEA-SEC.

b. Grounds uniquely applicable to seafarers.

The POEA-SEC enumerates the following grounds for termination that
apply to seafarers:

(1) T erm in atio n d u e to shipw reck an d sh ip 's foundering.

Where the ship is wrecked necessitating the termination o f employment

before the date indicated in the contract, die seafarer shall be endded to earned
wages, medical examination at employer's expense to determine his fitness to
work, repatriation at employer’s cost and one month basic wage as termination
pay.3

In case o f termination o f employment o f the seafarer before the

expiration o f the term o f his contract due to shipwreck, actual or constructive total
toss or foundering o f the ship, the seafarer shall be entided to earned wages,
medical examination at employer’s expense to determine his fitness to work,
repatriation at employer's cost and one month basic wage as termination pay.4

(2) T erm ination due to sale o f ship, lay-up or discontinuance o f

voyage.

Where the ship is sold, laid-up, o r the voyage is discontinued

necessitating die termination o f employment before die date indicated in the
contract, the seafarer shall be entided to earned wages, repatriation at employer’s
cost and one (1) month basic wage as termination pay, unless arrangements have
been made for the seafarer to join another ship belonging to the same principal to
complete his contract in which case, die seafarer shall be entided to basic wages
until the date o f joining the other ship.5

1 Secfion 19 (6 ) provides: ‘SECTION 19. REPATRIATION. Xxx 6 A seafarer who requests for early lamination of his
contact shaD be iabfe for his repatriation cost as wel as the transportafion cost of his replacement The employer may, h
case of compassionate grounds, assume (he transportation costof Ihe seafarers replacement.'
2 Section 33 contains flie table defenses and oonesponr^ arkrirasliaSve penaBies. Tlia Mroductny part of file section
states:‘SerTlO N 33. TABLE OF O R R IS E S AND (XTRRESPONDWGAOMSTRATlVEPBtALTES.
‘A. Pursuantto Section 17 and 18 of the Contact the tfcdptnary grounds feted h the Table of OSenses and AdmMstafive
PenaSes hereunder or analogous acts tierelo shat be penalized according to it> grovfy and frequency of cormtssioa
imposed by fte Master ot the shfa. Such ofenses shafi be penaized as indicated.
*8. Gomrrission of a seafarer of ary of the offenses enumerated n tee Table of OIEenses and A dnftsbdto PeraKes
hoeunder or ot sinifer offenses shall be ground tor (fisq p tay adnuds&aGve acton at the POEA where the Mowing
conespomfing penafyshaD be imposed.
"C. The penalties for admirestra&/e actons by the Master andtor the POEA prowled herein shat be separala and distinct
tom whateverappropriate criminal action fia t may betted againsttie seafarer.*
3 Section22.2010POEA-SEC.
4 Id.
3 Section 23, Id.

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 Ba r r e v ie w e r o n La b o r La w
76

(?) Termination d u e to unseaw orthiness.

If die ship is declared unseaworthy by a classification society, poet state

or flag state, the seafarer shall not be forced to sail with (be ship.1

If the ship's unseaworthiness necessitates the termination o f employment

before the date indicated in the Contract, die seafarer shall be endded to earned
wages, repatriation at cost to the employer and termination pay equivalent to one
(1) month basic wage.2

(4) Term ination d u e to R egulation 1/4. control procedures o f the

1978 STCW convention, as am ended.

If the seafarer is terminated an d /o r repatriated as a result o f port state

control procedures/acdons in compliance with Regulation 1 /4 o f the 1978
STCW Convention, as amended, his termination shall be considered valid.
However, he shall be entided to repatriation and earned wages and benefits only.3

(51 C hange of principal.

Where there is a change o f Principal o f the ship necessitating the pre-

termination of employment o f the seafarer, the seafarer should be entided to
earned wages and repatriation at employer's expense. H e shall also be entided to
one (1) month basic pay as termination pay.4

In case arrangements have been made for the seafarer to direedy join
another ship o f the same. Principal to complete his contract, he shall only be
entided to basic wage from die date o f his disembarkation from his former ship
until the date of his joining die new ship.5

c. Disciplinaryprocedures.
The 2010 POEA-SEC prescribes in its Section 17, a complete set o f
disciplinary procedural rules insofar as seafarers who are undergoing administrative
investigations are concerned. Thus, it is provided therein that the Master shall
comply with the following disciplinary procolures against an erring seafarer

A. The Master shall furnish die seafarer with a written notice containing
the following:

1. Grounds for the charges as listed in Section 33*

* o f the Contract or
analogous act constituting die same.

2. Date, time and place for a formal investigation o f die charges

against the seafarer concerned.

> Secfion 24 (A), Id.

* Secfion 24(B), Id.
» Secfion 25, Id.
< Section 26(A). Id.
* Secfion 26(B), Id.

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 C h a pter Two 77
PRE-EMPLOYMENT

B. The Master or his authorized representative shall conduct the

investigation or hearing, giving the seafarer the opportunity to explain or defend
himself against the charges. These procedures must be duly documented and
entered into the ship's logbook.

C. I f after the investigation or hearing, the Master is convinced that

imposition or a penalty is justified, the Master shall issue a written notice o f penalty
and the reasons for it to the seafarer, with copies furnished to the Philippine agent.

D . Dismissal for just cause may be effected by the Master without

furnishing the seafarer with a notice o f dismissal if there is a clear and existing
danger to the safety o f the crew or the ship. The Master shall send a complete
report to the manning agency substantiated by witnesses, testimonies and any other
documents in support thereof.1

Explaining the foregoing rules, the Court in Skippers Pacific} held:

“Note that under Section 17 of what is termed the Standard

Format, the ‘two - notice rule* is indicated. An erring seaman is given a
written notice of the charge against him and is afforded an opportunity
to explain or defend himself. Should sanctions be imposed, then a
written notice o f penalty and the reasons for it shall be furnished the
erring seafarer. It is only in the exceptional case o f d e a r and
existing danger to the safety o f the crew or vessel that the required
notices are dispensed with; but just the same, a complete report
should be seot to the manning agency, supported by substantia] evidence
o f the findings.”

In holding that respondent’s dismissal was illegal in Evic? die Court

emphasized that the records axe bereft o f any evidence showing that respondent
was given a written notice o f die charges against him, or that he was given an
opportunity to explain or defend him self Neither is there proof that respondent
was furnished with a written notice o f the penalty imposed against him and the
reasons for its imposition. Indeed, petitioners admit that these required notices
were dispensed with because, according to them, there was a d ear and existing
dangier to the safety o f the crew o r vessel. Unfortunately for petitioners, however,
there is, again, no evidence that was presented to prove such was the situation
when respondent was terminated.

7. BURDEN OF PROOF.
In term ination cases, where the employer-employee relationship has
been established, the onus probandi (burden o f proof) that die dismissal o f an
employee is for a just cause, lies with the employer.4 The employer must

1 SeeTiansglobal Maritene Aeency, lnc.v. Chu% Jr.,G Jl.N o. 22243Q,Aug. 30,2017.

1 Sappers PacSc,he.v. Mra, 6 J I No. 144314, Nov.21,2002,392SCRA 371.
1 EvicHjmanResourceMana9ementlnc.v.Pandion.GJlNo.2O609O.July31.2O17.
4 StoWtfetsen Marine Services (Phas i he. v. NLRC, G.R. No. 105396, Nov. 19,1996.

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 78 Baf. Reviewer o n Labor Law

affirmatively show rationally adequate evidence that die dismissal was for a
justifiable cause.1 Failure to show that there was valid or just cause for termination
would necessarily mean that the dismissal was illegal.2

In monetary claims cases, the rule was reiterated in the case o f G &
that the burden o f proving payment of monetary claims rests on herein petitioner
employer, it being die employment agency or recruitment entity and agent o f the
foreign principal which recruited respondent4

Because of the joint and solidary nature o f the liability o f the foreign-
based employer and the local recruitment agency, the burden o f proof to show that
the dismissal o f the OFW is legal and valid devolves upon the both o f them.
Hence, in the case o f EDl-Stofjbmldm? it was held that even though E D I a n d /o r
ESI were merely die local employment or recruitment agencies and not the foreign
employer, they should have adduced additional evidence to convincingly show that
the O FW s employment was validly and legally terminated. The burden devolves
not only upon the foreign-based employer but also on the recruitment agency for
the latter is not only an agent o f the former but is also solidarity liable with the
foreign principal for any claims or liabilities arising from the dismissal o f the
worker.

8. QUANTUM OF EVIDENCE IN OFW CASES.

a. Substantial evidence required.

A fact may be deemed established in cases filed before administrative or
quasi-judicial bodies like die PO EA and NLRC, if it is supported by substantial
evidence. POEA and NLRC are not bound by the technical rules o f procedure and
evidence and the rules obtaining in die courts o f law. Their proceedings are non-
litigious in nature.5

b. E ffect o f absence ofsubstantial evidence.

In Panganibem? it was held that while the Court commiserated with die
petitioner who suffered from brief psychotic disorder, but absent substantial
evidence from which reasonable basis for the grant o f benefits prayed for can be
drawn, the Court is left with no choice but to deny his petition, lest an injustice be
caused to the employer. Otherwise stated, while it is true that labor contracts are
impressed with public interest and the provisions o f the POEA-SEC must be
construed logically and liberally in favor o f Filipino seamen in the pursuit o f their

1 Sameer Overseas Ptacemeot Agency, be. v. Joy C. Cables, G.R. No. 170139. Aug 05.2014, ding Hiton Heavy
EqidpmentCapocaSon v. 0y.GjR.No. 1648G0, Feb. 2.2010.611 SCRA329,338.
7 SfcMiefcen Marine Services [Phk], Inc v. NLRC. G Jl No. 105396. Nw 19.1996.
3 G & M (Ptias.1, kw. v. Ctuz, G.R. No. 140495, Apd 15.2005.
* ^Engineering,kxxv.N LR C .G R N aH 2314,Jiaie28,2001.
s EDWtafibuiiasIntemafionaL he. v.W JC , G J l N a 14558, Oct 26.2007.
5 Rase v. NLRC, G.R. No. 110637, Oct 7,1994; ManSbv. RoUarvConfesor, G.R. No. 102358. Nov. 19,1992.
7 Panganfcanv.Tara Trading Shipmanagenent, Inc., G.R. No. 187032. O d 18,2010.

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employment on board ocean-going vessels, still the rule is that justice is, in every
case, for the deserving, to be dispensed with in the light o f established facts, the
applicable law and existing jurisprudence. It need not be overemphasized that in
the absence o f substantial evidence, working conditions cannot be accepted to have
caused or at least increased the risk of contracting the disease o f brief psychotic
disorder. Substantial evidence is more than a mere scintilla. The evidence must be
real and substantial and not merely apparent; for the duty to prove work-causation
or work-aggravation imposed by law is real and not merely apparent

c. Ship's or Captain's logbook; evidentiary value thereof.

The ship’s logbook is the official record o f a ship’s voyage which its
captain is obligated by law to keep. It is the official repository o f the day-to-day
transactions and occurrences on board the vessel.1 It is where the captain records
the decisions he has adopted, a summary o f the performance o f the vessel and
other daily events.2 The entries made in the ship’s logbook by a person performing
a duty required by law are prim foot evidence o f the facts stated therein.3 However,
such entries constitute primajade evidence o f the incident only if the logbook itself,
containing such entries or photocopies o f the pertinent pages thereof, is presented
in evidence. The logbook is a respectable record that can be relied upon to
authenticate die charges filed and the procedure taken against the employees prior
to their dismissal4 It is a vital evidence since Article 612 o f the Code o f Commerce
requires the captain to keep a record o f the decisions he had adopted as the vessel’s
head. Thus, in Walltm Maritime,56die Supreme Court held that a copy o f an official
entry in die logbook is legally binding and serves as an exception to the hearsay
rule.3

MONETARY CLAIMS OF OFWS, IN GENERAL

L M O N E Y CLAIMS CASES.

a. Bases o f claims.
The money claims o f OFW s over which Labor Arbiters have jurisdiction
may arise from any o f die following:

(1) From employer-employee relationship;

(2) By virtue o f any law, and

1 Transgtobat M arifre Agency, Inc. v. Chua, Jr., G .R. No. 222430, Aug. 30.2017.
2 W ,S a d a ^ v .R ^ P a < ^ In te r n a l Sttpping, he.. G.R No. 152636mAug. 8,2007.
2 Sadagnctv. Reinef Pacific Inlema5onal Shipping, Inc., G R No. 152636, Aug. 8,2007.
1 StotNBsen Marine Services {P ttisl Inc. v. NLRC. G R No. 105386, Nw . 19.1996.
5 WaJemMauffimeSeivioes, (nc. v. NLRC.cShg Haverton Sapping Ltd. v. NLRC, G.R No. L-65442. Apr915.1S85.
6 SeealsoMagsaysayMolMarine,lnc.v.A!r^e,G^.No.22919ZJuly23,2018.

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 Bar Reviewer o n Labor Law
8o

(3) By reason o f contract1

Any resultant or related claims for actual, moral, exemplary and other
forms o f damages necessarily will have to be litigated in the same proceeding
initiated before die Labor Arbiter.2

From the foregoing, it is clear that Labor Arbiters may exercise

jurisdicdon over an OFW case even absent the employment relationship, such as
when the cause o f action arose from violation o f law or breach o f c o n tra c t This
is an exception to the general rule that the existence o f employer-employee
relationship between die parties-Utigants is a pre-requisite for the exercise o f
jurisdicdon over labor disputes by the Labor Arbiters, the NLRC and the other
labor agencies.3

b. Law as basis.
The pertinent laws and issuances that may give rise to a cause o f action
refer to R A No. 8042, as lately amended by R.A. N o. 10022 and its Omnibus
Implementing Rules,4 as well as the Rules and Regulations Governing Overseas
Employment for land-based OFWs and seafarers.5

c. Contract as basis.
The applicable contracts, the breach o f which may give rise to a cause o f
action cognizable by the Labor Arbiters, vary between a land-based OFW and a
seafarer, to wit.

1. For land-based OFW .

The following contracts apply to land-based OFWs:

0) Em ploym ent C o n tract/O ffer o f E m ploym ent, which refers to an

individual written agreement between the principal/employer and the
worker who is hired through a licensed recruitment agency or

1 Section tO, R A No. 8042, as amended by R A No. 10022; Section 1, Rule VB, Omribus Rides and Regulations
Implementing he MgrafllVfokers and Overcieas R atios Act of 1995, as Amended by R A N a 10022, issued on July 8.
2010; See also the previous Section 58, Rules and Regulations tnptemenSng the Mjgmnt V M e ts and Oweiseas Flphos
Act of 1995; Secfcn 62, Omnhus Rides and Regutatons ImpfemenJing file Mgrant Workers and Overseas Rfphos Ad of
1995issued on’Feb.29,1996; SecSon 1, KLRC en banc Resolution No. 1-05, Series erf 1995.
1 Ibid.; Id. tt is father stated under Ws provision that “consistent wth tus mandabs, the NLRC shaS endeavor to update and
keep abreastwititiedoielopments h the global sendees indusby.'
1 HawaBaivFHEppinetkinipanyv.GiAnato. GA. Na 106231.Nov. 16.1^4.
4 RefeningrxwtolheiatestveisiondtieOm ntus Rides and R e g U ^ o n s h p ie rB ^ he MgrantWakeis and Overseas
ffpnos Actof1895. as Amended by R A N a 10022, issued on July 8,2010.
5 Refeoing now to too (2) issuances, namely: Revised POEA Rules and Regulations Goweming tie RecwSment and
Employment of LandCased Oiraseas Flpino W o te s of 2016 and 2016 Revised POEA Rides end RegiiaScns Governing
tie Recnftnentand EmploymentofSeaferers issued on Febnay 26,2016.

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through the Administration (POEA), containing the minimum terms

and conditions o f employment1
(ii) PO E A -Standard E m ploym ent C ontract (POEA-SEC), which
refers to the POEA-prescribed contract containing the minimum
terms and conditions o f employment2

Additionally, there is a M aster E m ploym ent C ontract, which refers to

die model employment agreement submitted by the ptindpal/employer,
containing the terms and conditions o f employment o f each worker to be
hired by such ptindpal/employer, with such contract to be duly verified
by the PO LO 3 o r authenticated by die Philippine Embassy/Consulate and
approved by the POEA.4

2. F o r seafarers.

The following contracts apply to seafarers:

0 Individual E m ploym ent C ontract, which refers to the contract

containing the terms and conditions o f the employment o f the
contracted seafarer3 which die parties stipulated and mutually agreed
upon over and above die minimum standards set forth in the PO EA -
SEC, provided that the stipulations therein are mutually beneficial to
both parities and are not contrary to law, public policy and morals.6
(ii) PO E A -Standard E m ploym ent C ontract (PO EA-SEC), which
refers to the POEA-prescribed contract containing the minimum
terms and conditions o f employment, which shall commence upon
actual departure o f the seafarer from the Philippine airport or seaport
in die point o f hire.7

In addition to the foregoing, a seafarer, who is a member o f a labor union,

is also covered by the Collective B argaining A greem ent (CBA) which
operates as a supplement to the POEA-SEC and the Individual

< No. 12. Rule 0. Revised POEA Rides and RegdaGons Governing tie Recruitment and Empbymen! of landfiased
Overseas FSpiio Wooers of 2016.
3 No. 44, Rule II, Ibid.
3 Ptffip|teOvuseastaborOffice(POLO).
4 No. 22, Ride Q, Revised POEA Rules and Regulations Governing tie Recruitment and Employment of Land-Based
Overseas FBpiw WWters of 2016.
5 A ‘contracted seafarer* refers to a Fflpino sedarer vrfiose employment contract has been processed by the POEA for
overseas deployment (No. 8* Rule II, 2016 Revised POEA Rules and Regulations Governing (he Recruitment and
Employmentof Seafarers issued on February26,2016).
« Section 11 6,ftd e1, Part W, 2016 Revised POEA Rules and Regriafcns Governing tie Recndment and Employment of
Seafarers issued on February 26,2016. ft is provided herein, thus: *SecSon 116. Freedom to Stipulate.— Parties to the
ixlividualen^loymentcontrad are flowed tos^pulate and mtduaSyagreebotierterms and conr£dons over and above the
minimum s ta r x l^ provided. Ihat h e s&puiaSons are r r u U ^ b e n ^ Id botipardes and are not contray to l»/.pubSc
poky and morals.'

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Employment Contract and whose terms shall prevail to the extent that
they give better benefits to the seafarer.1

d. Pertinent jurisprudence.
The case o f Santiagp- is the best example o f die exception to die general
rule that die existence of employer-employee relationship between the parties-
litigants is a pre-requisite for the exercise o f jurisdiction over labor disputes by the
Labor Arbiters, the NLRC and the other labor agencies.3 Here, petitioner seafarer
has already sighed a POEA-approved employment contract but was no t deployed
overseas. Consequendy, it was ruled that despite the absence o f an employer-
employee relationship between petitioner and respondent, the Labor Arbiter has
jurisdiction over petitioner’s complaint because his jurisdiction is n o t limited to
claims arising from such relationship based on Section 10 o f H A. No. 8042, as
amended, but also “hy virtue of any law or contract involving Filipino workers for
overseas deployment, including claims for actual, moral, exemplary and other forms
of damage m .” Considering that petitioner was not able to depart from the airport
or seaport in the point o f hire, the employment contract did not commence to be
effective and thus, no employer-employee relationship was created between the
parties. However, a distinction must be made between die perfection o f the
employment contract and the commencement o f the employer-employee
relationship. The perfection of the contract, which in this case coincided with the
date of execution thereof, occurred when petitioner and respondent agreed on the
object and the cause, as well as the rest o f the terms and conditions set forth
therein. The commencement o f the employer-employee relationship would have
taken place had petitioner been actually deployed horn the point o f hire. Thus,
even before the start o f any employer-employee relationship, contemporaneous
with the perfection of the employment contract was die birth o f certain tights and
obligations, the breach o f which may give rise to a cause o f action against the erring
party. Thus, if the reverse had happened, that is, die seafater failed o r refused to be
deployed as agreed upon, he would have been held liable for damages.
Consequendy, respondent here was held liable to pay petitioner actual and
compensatory damages of US$4,635.00 in the form o f the loss o f nine (9) months’
worth o f salary as provided in the contract

This case o f Santiago was cited in the 2012 case o f BrightMaritime,4where it

was ruled that while respondent seafarer cannot be deemed as having been illegally
dismissed considering that the employer-employee relationship has no t yet
commenced, nevertheless, petitioners’ act o f preventing respondent from leaving

1 The most common CBA for FZjpoo crew s # * one negotiated between AM0SUP (Associated Marine Offioas and
Seanrn'sl^oft»R i£ppgries)am eniptcyas.
* Santiago* CF ShaipGrewManagement tnc.. G.R. No. 162419.Ally 10.2007.
1 Hawaiian-Ph^ppineCoRipan]rv.GUkraSoo.6.RNo. 106231, Nov. 16.1994.
4 BrightMaiiSmeCorporafionv.Fartonial. G.R No. 165935, Feb. 8,2012.

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and complying with his contract o f employment*1constitutes breach o f contract for

which petitioner company is liable for actual damages to respondent for the loss o f
one-year salary as provided in the contract2 Additionally, respondent was awarded
moral damages in the amount o f P30,000.00, exemplary damages o f P50,000.00 and
10% o f all recoverable amounts as attorney’s fees.3

2. CLAIMS O F O FW s T H A T A RE M O N E T A R Y I N N A T U R E .

An O FW s monetary claims may be brought about by any o f the

following events:

(a) Illegal dismissal;

(b) Disability;
(c) Death; or
(d) Other benefits.

The foregoing monetary claims are not rooted upon any o f the provisions
o f the Labor Code.4 It is Section 10 o f R.A. No. 8042,5*which is the appropriate
legal basis for such claims. And as earlier discussed, all o f the foregoing money
claims fall under the jurisdiction o f the Labor Arbiters, regardless o f whether they
arose from (1) employer-employee relationship; (2) by virtue o f any law, or (3) by
reason o f contract.4

MONETARY CLAIMS OF OFWs

ARISING FROM ILLEGAL DISMISSAL

1. A R T IC L E 294 [279] R E L IE F S N O T AVAILABLE T O OFW s.

The provision o f Article 294 [279|7 o f the Labor Code is not the proper
basis for the money claims that may be asserted by OFWs as a result o f their illegal
dismissal It is Section 10 o f R.A. No. 8042, a plain reading o f which readily shows

* lntecase,l^w asavaM P O & \-appro^(X )f^be& veenpe51ionefS and respondent

1 The maiSily salary s S p d ^ r9 ie a rtra d 's US$670, in ctsw of sDcwanca
3 This award is based on b e fact that because of peffioners" failure to deploy respondent based on an unjjsffied ground,
resoondentwas forced to fie (his case.
4 N Y K fl Slip Management h a v. The NLRC.G.R. No. 161104. Sepl 27,2006.
5 O fem ise known as he'M grant Workers and Overseas RfoinosActof 1995,* which was amended on March 8,2010 by
Sec6on7ofRA No. 10022.
8 Section 10, R A No. 8042, as amended by R A No. 10022; Section 1, Rule VH, Omnibus Riles end Regulations
Implementing he kfigrant Workers and Overseas FSphos Ad of 1996, as Amended by R A No. 10022, issued on July 8.
2010; See dso (he pnwous Sector 58, Rules and Regttafions Implementing he Mgrant Workers and Overseas FEpfoos
Adof1995; Section 62, Qmribus Rules and Regulations Implementing the Migrant Workers and Owenseas raphes Act of
1995issued on Feb. 29,1996; Secfionl.N IR C en banc Resolution No. 1-95, Series o f1995.
7 Iptw ides/A itide 279. Securiy of Tenure ~ h cases d regular employment tte employer shal not tenmhatelhe services
of an employee except for a jud cause or when authorized by his Tite. An employee who is unjusBy (Ssmissed turn work
sftal be enSSed to rerelatement wBiouf bss of seniority rights and oher privfleges and to his U badwages. ndustoe of
aflowances, and to his o!hef benefits or tie r monerary equvaiert computed from (he time his oompensaSon was w&iteJd
tom him up to the time of Ns actual reinstatement'

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that it applies only to cases o f illegal dismissal and finds no application in ras**?
where the OFW was not illegally dismissed.*1 Resultandy, the remedies provided for
under Article 294 [279], such as reinstatement or its altemadve remedy o f
separation pay in lieu thereof, or full backwages, are not available to OFWs. This is
as it should be since OFWs are contractor’s employees whose rights and
obligations are governed primarily by the POEA Standard Employment Contract
(POEA-SEC), the Rules and Regulations Governing Overseas Employment2 and
more importantly, by said RA. No. 8042, as lately amended by R A . No. 100223
and its Omnibus Implementing Rules.4

Moreover, another justification for not granting the Labor Code's reliefs
to illegally dismissed OFWs is the fact that the same are available only to regular
employees, as this term is understood within the context o f the Labor Code. Under
well-established jurisprudence, it has been consistently declared, except in one rare
case,5 that OFWs can never acquire regularity o f employment, their employment
being always fixed term in nature.6

2. SE C T IO N 10 O F R A N O . 8042 AS BASIS O F M O N E T A R Y AWARDS.

The legal basis for the reckoning o f die monetary awards in case o f illegal
dismissal o f OFWs is the 5th paragraph o f Section 10 o f R A . N o. 8042, which
provides as follows:

“In case of termination of overseas employment without just,

valid or authorized cause as defined by law or contract, the workers
shall be entitled to the full reimbursement of his placement fee with
interest of twdve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three ft) months
for every year of the unexpired term, whichever is less.”7

’ Poseidon bfemafcnal M arine Sennoes. he. v. Tamab, G R No. 186475, June 26.2013; See also htemaSonal
Management Semcesv. Legate, G R No. 163657. Apt! 18.2012.
1 Referring now to two (2) issuances, namely Revised POEA Rules and RegulaSons Governing the Recnriment and
Employment of Land-Based Otoseas Rfeho V M e is of2016 and2016 Raised POEA Rules and RegubBonsGwemhg
heRecrnmientandEnfr)lcynieriofSeaferersissuedcnFebnja(y26,2016.
1 Skippers Unfed Pacific, he. v. MRC, G.R. No. 148893, July 12,2006.
4 R e f^ n o w b ^ !3 te s tv « 5 io n o lttie 0 n rh is Rules and RegulaSons (mptenefdnglheWgrant WofkasarxJOvefseas
Fljpinos Actof 1995, as Amended byRA. No. 10022, issued on July 8,2010.
5 The only Bme that OFWs were declared regular emplciyees and frws enf9ed to backwages and separafion pay in leu of
rehsbtement was in the 2001 easecfATO Overseas CotporaSonv. CA, G R No. 143940, Aug.9,2001.
1 This was significanfiy made vay dear in he second 2002 resolution in M2ares v. NLRC, G R N o 110524, Juty 29,2002,

385 SCRA 306, neversrigte firs!nAig in h e same case promulgaJed on March 14.2000 (328 SCRA 79 (2000)), where Ihe
Supreme Court cted as reason fcr its holding hat OFWs cannot aajiine regular employment, h e bet hat employment of
seafarers is governed by he cortacb hey sign every fime hey are relied and h e r employment is termhated when he
oorriaclexpves.Ttieren^cyTnentisoontnacluafyfeQBdfbracertamperiodofGme.'nieyfalluiNferlheescoepfionbAifide
295[280)whoseeniploymerthasbemfxedfofaspedBcprejedaimdertald(igheconyle6cinatemiria6on(ifwtBdihas
been detenrined at he fine of engagement of h e enployee or where he stork or sendee to be performed is seasonal h
nature and h e employment is hr he duration of h e season. Indeed, as early as h e 1990 case of Scent School, he. v.
Zamora and Alegre, G R No. 48494, Feb. 5,1990, he Kgh Court had already pronounced hat seamen and overseas
contractworkers ate notcoveredby h e termTegutar empfaymenTas defined h Artcb 295 (280) of the Labor Code

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3. SE R R A N O D O C T R IN E - PA RT O F PAR. 5, SEC. 10 O F R A N O .
8042 D E C L A R E D U N C O N S T IT U T IO N A L .

T he above-quoted underlined phrase • "orfor three monthsfor mmyear qfthe

unexpired term, whichever is less” - has been declared unconstitutional in Serrunfl for
being discriminatory, among other significant reasons cited therein. Consequent to
this ruling, illegally dismissed OFW s are now entitled to all the salaries for the
entire unexpired portion o f their employment contracts, irrespective o f the
stipulated term or duration th ereo f In other words, the Supreme Court reverted to
the old rule prior to the effectivity o f R A . No. 8042 on August 25, 1995 as
discussed in die Edi-Staffbuilders1-4
32case.
M ost significandy, although the subject clause was declared not violative
o f Section 10f Article IIP o f die Constitution on non-impairment o f contracts
because the enactment o f R A . N o. 8042 in 1995 preceded the execution o f the
employment contract between petitioner and respondents in 1998,5 it was,
however, pronounced that it violated Section I,6 Article HI; Section 18,7Article II; and

1 Anton»M.SeJT3im .GaEanlftMirneServioes, h e and Marlow NavigaSon C o, U d^G R hto. 167614, March 24,2009.
PeSk)nerSeaanowa5lnredtv(espon(lent5iin(leraP(£A-approv9dConCiactofEiupioymentlbrape(iodof12nio(t86or
torn Match 19,1938 up to hferch 19.1999. On March 19 .1S98, die dais of his d ep atre. peSoner was constrained to
accept a downgraded employment contact tor the posffion of Second Officer wSi a monthly salary of US$1 jOOOJOO.upon
the assurance and rapresertafon of respondents hat he would be made Chief Officer by the end of April 1998.
Respondent did not defter on heir promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as
Second Officer and was rep&iated to the Ptippines on May 26,1998. PeSioner's 12-morth employment contract was
thus cut short henoa, at (he Sme of his repatriation on May 26,1998, he had sewed only 2 months and 7 days of his
contract, leavhg an ueqared portion of 9 (norths and 23 days. Peffioner Bed with tie labor A rtier (LA) a Complaint
against respondents for constucSve cSsnisssl and for payment of his money darns in the total amount of US$26,442A1,
represenfng a ! his salaries for the unexpred portal of te contract The LA rendered a Decision dated Jdy 15,1999,
dedaring tie (fisnussed of peGSoner Segal and awarding Km monetae benefits in h e amount of US S8,770jOO. representing
h e comp&nants salary for three (3) months of he unexpired portion of h e contract of employment. In awarding this
amount, h e LA based Ms computation on h e salay period of 3 monhs ortff - raher han h e enSre unexpired portion of 9
monhs and 23 days of pefilfoneft employment contract - applying h e subjectdause. On appeal, h e NLRC corrected he
LA's computation of he lumpsum salary awarded to peffioner by reducing h e appicabte salay rate form US$2390.00 to
US$1,400.00because RANo.8042M oesnot provide ferhe award of overtime pay.vutnch should be proven t> have been
aefoafy performed, and for vacation leave pay.’ On cerfaad h e CA affirmed h e NLRC riding on he reduefion of he
applicable salary rate; howewr, heC A sttted heconsSufional issue raised by peffioner.
2 EDI-Staflbuiklers international, he. v. NLRC, G R No. 145587, Oct 28,2007, instructs hat in temhabon cases arising
before the effecSvfy of R A No. 8042, on August 25,1995 [approved on June 7,1995] v,tere the OFWs are dismissed
wfth(xftjustc3use,tit^areenS9edtothepaymentoftheirsafMe5COCPeq}ondingtoOieuR»pirBdpon5onofthe{rfKe(Remi
cortrad.C ^insequenSy,^heO FW hhis case was dismissed priortoherifec&r^ of R A No. 8042, he is enfitiedtoail
his salaries for h e uneqrked potion ofNs contract wtdxUheqMaSHQSonncwfbundiriSecSon lOofsatd law.
3 SecSonlOprovidesItolawirripaihgheObEigaGonofoonlractsshaabepassed.'
4 69 of Rights.
5 The prohbfionis aligned wBt h e general principle that laws newty enacted haw orty a prospec&re operate, and cannot
aflect acts or contacts already perfected; however, as to laws already h existence, heir provisions are read into contracts
and deemed a part hereof. This, h e rm im pannent clause under Sector 10, Arfide U is Ended in appication to laws
about to be enacted h at would in any way derogate from existing ads or contracts by eferghg. abridging or h any mamer
changing h e in tenteo f Slepaties thereto.
6 SecSon 1N o person s h d te deprived of tte,aerV , aproperty vv^nout due process (flaw n as h ^ any person be denied
he equal protection of h e law.
1 Section 18. The State affirms tabaasaphnary social eexyromic farce. Ishall protecthe rights ofwotkecs and pronxte (her

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Section 3} Article XIU o f the Constitution on labor as a protected sector. To Filipino

workers, the rights guaranteed under these constitutional provisions translate to
economic security and parity: all monetary benefits should be equally enjoyed by
workers o f similar category, while all monetary obligations should be borne by
them in equal degree; none should be denied the protection o f the laws which is
enjoyed by, or spared the burden imposed on, others in like circumstances.2 A
doser examination o f the subject clause reveals that it has a discriminatory intent
against, and ah invidious impact on, OFWs at the following levels: First, OFWs
with employment contracts rh a n o n e v e a f w -a-w O F W s with employment
contracts A fn n ey ^ n r more: Second, among OFWs with employment contracts
o f m ote than one year, and Third, OFWs vis-a-vis local workers with fixgd-
Pcriod e m p lo y m en t

On the first, it is plain that prior to R A No. 8042, all OFWs, regardless
o f contract periods or the unexpired portions thereof, were treated alike in terms o f
the computation o f their monetary benefits in case o f illegal dismissal. Their claims
were subjected to a uniform rule o f computation: their basic salaries multiplied by
the entire unexpired portion o f their employment contracts. The enactment o f the
subject clause in R.A. No. 8042 introduced a differentiated rule o f computation of
the money claims o f illegally dismissed OFWs based on their employment periods,
in die process singling out one category whose contracts have an unexpired portion
o f one year or more and subjecting diem to the peculiar disadvantage o f having
their monetary awards limited to their salaries for 3 months or for the unexpired
portion thereof whichever is less, but all the while sparing the other category from
such prejudice, simply because the latter's unexpired contracts fall short o f one
year.

On the second, the subject clause “orfor three (I) monthsfor everyyear ojthe
unexpired tern, whichever is less" contains the qualifying phrases “every year” and
"untxpind Urn." By its ordinary meaning, the word “term" means a limited or
definite extent o f time. Corollarily, that “everyyear”is but part o f an “unexpired tern"
is significant in many ways: ftrst, the unexpired term must be at least one year, for if
it were any shorter, there would be no occasion for such unexpired term to be
measured by every year, and second, the original term must be more than one year,
for otherwise, whatever would be die unexpired term thereof will not reach even a
year. Consequendy, the m ote decisive factor in the determination o f when the
subject clause ‘for three (3) monthsfor everyyear ofthe unexpired term, whicheveris less” shall
apply is not the length o f the original contract period, b u t the length o f die
unexpired portion of the contract period - the subject clause applies in cases when
the unexpired portion o f the contract period is at least one year, which
arithmetically requires that the original contract period be more than one year.

t S ec9m 3.1heStatesha3aM U protacSontolaba,l(x^and()veiseas.O Q ai^a(xltirK xg<riizaj.andpnxnctey

en^foymentandequafi^ofemployTneritopporluniSesfbraL
> Q tn g o fM a ife v .la g w o .G J lN o . 118127,A jxi 12,2005,455S C R A M

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Viewed in that light, the subject clause creates a sub-layer o f discrimination among
OFWs whose contract periods are for mote than one year those who are illegally
dismissed with less than one year left in their contracts shall be entided to their
salaries for the entire unexpired pordon thereof, while those who arc illegally
dismissed with one year or more remaining in their contracts shall be covered by
the subject clause, and their monetary benefits limited to their salaries for three
months only.

O n the third, prior to R A . No. 8042, a uniform system o f computation

o f the monetary awards o f illegally dismissed OFWs was in place. This uniform
system was applicable even to local workers with fixed-term employment. In sum,
prior to R A . No. 8042, OFWs and local workers with fixed-term employment who
were illegally discharged were treated alike in terms o f the computation o f their
money claims: they were uniformly entided to their salaries for the entire unexpired
portions o f their contracts. But with the enactment o f R A . No. 8042, specifically
the adoption o f the subject clause, illegally dismissed OFWs with an unexpired
portion o f one year or more in their employment contract have since been
differendy treated in that their money claims are subject to a 3-month cap, whereas
no such limitation is imposed on local workers with fixed-term employment T h e
Court concludes that the subject clause contains a suspect classification in that, in
the computation o f the monetary benefits o f fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim o f OFWs with an uncxpired
portion o f one year or more in their contracts, but none on the claims o f other
OFWs o r local workers with fixed-term employment. T he subject clause singles o u t
one classification o f OFWs and burdens it with a peculiar disadvantage-

In addition to the foregoing, the subject clause is not supported by the

existence o f a compelling state interest that would justify the perpetuation of the
discrimination against OFWs under the subject clause. The Court dug deep into the
records o f this case but found no compelling state interest that the subject clause
may possibly serve. Assuming that, as advanced by the OSG, the purpose o f the
subject clause is to protect the employment o f OFW s by mitigating the solidary
liability o f placement agencies, such callous and cavalier rationale will have to be
rejected. There can never be a justification for any form o f government action that
alleviates the burden o f one sector, but imposes the same burden on another
sector, especially when the favored sector is composed o f private businesses such
as placement agencies, while the disadvantaged sector is composed o f OFW s
whose protection no less than the Constitution commands. The idea that private
business interest can be elevated to the level o f a compelling state interest is odious.

Moreover, the subject clause violates petitioner's right to substantive due

process, for it deprives him o f property, consisting o f monetary benefits, without
any existing valid governmental purpose. T he argument o f the Solicitor General is
that die actual purpose o f the subject clause o f limiting die entitlement o f OFW s to
their three-month salary in case o f illegal dismissal is to give them a better chance

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of getting hired by foreign employers. This is plain speculation. As earlier

discussed, there is nothing in the text o f the law o r the records o f the deliberations
leading to its enactment or the pleadings o f respondent that would indicate that
there is an existing governmental purpose for the subject clause, or even just a
pretext o f one. The subject clause does not state o r imply any definitive
governmental purpose; and it is for that precise reason that the dause violates not
just petitioner's right to equal protection, but also her right to substantive due
process under Section 1, Article III o f the Constitution.

The subject clause being unconstitutional, petitioner Serrano was declared

entided to his salaries for the entire unexpixed period o f 9 months and 23 days o f
his employment contract, pursuant to law and jurisprudence prior to the enactment
o f R.A. No. 8042.

Prior to Serrano, as a form o f relief, the amount o f monetary award to

which an illegally dismissed OFW is entided under Section 10 o f R-A. No. 8042,
was made dependent on the duration o f his contract o f employment1 Thus, for
purposes of simplification:

1) I f the duration o f the employment contract is less than one (1) year, an
illegally dismissed OFW shall be entided to all his salaries for the
unexpired portion thereof;2 or
2) If the duration o f the employment contract is at least one (1) year3 or
more,4 an illegally dismissed OFW shall be entided to 'Whicheveris less”
between his "salariesfor (be unexpiredportion ofIris employment contract” or
his salaries for three (3) monthsfor evesyjear ofthe unedited term.”

' See Skippers Pacific, Inc. v.M ra,G R No. 144314,N w .21,2002,392 SCRA371.
2 Examples of cases wriere fre cfurESon of the emptoyment cxxitract is below one (1) year are Supers United PaciSc, tnc. v.
Maguad, G R No. 186363, Aug. 15,2006 where he period mvotved b nhe (9) monte pbts or rranus one (1) month by
mutual consent; and Skippers PacSc, he. v. M ra, supra, where he durafon of h e overseas contract was only for sbe (5)
monfits. (See also Pfd. Bnpiay Senices snd Resources, tnc.v. Parantio, G R No. 144786, Apif 15,2004).
1 Examples* cases vritera the duraSon of h e employment ccnSact h a t least one (1) year ate M ental Shjpmanagement
Co^ Inc. v. Hon. GA, GlR No. 153750, Jaa 25,2006 where respondents Cuesta and Gorcsaga tuars separately con&scted
for oroyear savioe as seafarer but when repatriated to Mania, Ihey had each been employed fix erfy a BSe over too (2)
moots and less than one (1) monft raspeefiveftr, of foe oneyear contract d a te v.‘ ffyena, G R No. 148407, Nov. 12,
2003 where Sw OFW had worked for only 21 days af the onoyear corttrad; and Tafidano v. Falcon MariSme & AEQed
Sennces.tnc.GRNo. 172031. July 14,2008, where die OFW (seafarer) worfeed from October 15,1996 to Janua^ 21,
1997oraperiod of afiliew er tree (3) mentis.
4 Examples of cases where foe duration of fte employment contract is mere than one year are Athenna Wemsfional
Manpower Services, tnc v. Vffinos. G R No. 151303, April 15,2005, where In O FW w s engaged fa rt year, tOmonths
and 28 days btd was temninatBEj after ont/ a monh of serine^ Floulsh MariBrhe St^^^9 v. Ahtanor, QJR No. 177948,
M a rt 14.2006, where Ite O W w a h irtfc ra h tD y e a r contract but actually worked for only 26 days prior to his illegal
dismissal There is a t ^ a simiar factual between IheFlouish case aid (Xartejsupral T in only dSerencefes in
(he length of 8ie subject employment contact Oarfe involved a om year centred; wide h e erpptoymertin tiiscase
covets a twoyear period. However. Ihey bolh fed under tee three monte’ salary rule sihoe lie term of In contract is fat
least one year or more* tn (Xarte as well as in JSS Indochina Caporpfion v. Ferrer, G R N a 156381, O ct 14,2005,473
SCRA120 and Universal Staffing Services, Inc v. M RC, G R No. 177576, July 21,2008, the employer of (he flegafy
dismissed OFW was ordered topay tee amount equivalentto tvee (3) months? salary.

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In other words, in the computation o f the lump-sum salary due an illegally

dismissed overseas employee, there are two (2) clauses as points o f reckoning: first
is the cumulative salary for the unexpired portion o f his employment; and second
is the grant o f three (3) months’ salary for every year o f the unexpired term,
whicheveris lesser.1
By reason o f this latest Serrano doctrine, all past decisions subjecting the
monetary award to the afore-mendoned qualifying clause no longer apply.

4. T H E SAME U N C O N S T IT U T IO N A L CLAUSE R E -E N A C T E D IN R.A.

N O . 10022.

It is, however, baffling that despite the March 24,2009 e« bancdeclaration

o f unconsdtudonality o f the said qualifying provision in Serrano, R.A. No. 10022,
which was enacted barely a year later on March 8, 2010, replicated it verbatim} The
insistence by Congress of foisting this unconstitutional provision in the law created
a constitutional issue. Did such replication in the newly minted Section 10 o f R.A.
No. 10022 result in curing its patent nullity and unconstitutionality?

5. SC’S REFUSAL T O R U L E O N R E -E N A C T E D
U N C O N S T IT U T IO N A L LAW.

Notably, for a time, the Supreme Court, in the following cases, refused to
rule on the constitutionality o f the amendment by RA. No. 10022 o f the 5th
paragraph o f Section 10 o f FLA. N o. 8042:

(1) The 2012 case o f Steppers* vAlere die said unconstitutionality was
invoked and cited and the amendatory reiteration o f die same provision was
acknowledged. “Nevertheless,” said the Supreme Court, “since die termination
occurred in January 1999 before the passage o f die amendatory R A 10022, we shall
apply RA 8042, as u n am en d e d , without touching on the constitutionality o f
Section 7 o f RA 10022.”

(2) In another 2012 case, Pert/CPM,* where die same issue was raised b u t
the Supreme Court refused to rule thereon, thus:

“Whether or not RA. 10022 is constitutional is not for us to

rule upon in die present case as this is an issue that is not squarely before
us. In other words, this is an issue that awaits its proper day in court: in
the meanwhile, we make no pronouncement on it”

1 AtoralntemaSonalMaR(XMerSeivices, Inc. v.V S anos,G JlN a 151303, Apnl 15,2005; See also Marsaman Manning
Agency, Inc. v. NLRC, G R No. 127195, Aug. 25,1999,313SCRA 88.
2 The same 5 * paragraph of Secfioo 10 states: Tn case of ternwiation of w aseas employment w ftcut just, vafid or
au9n(ized(ajseasd^nedbylawaax^aanyunaiitxnzeddeducSomtotnni^wn^stia^,9iewo(ker
shai be eniied to h e id reimUssement of his placement fee and (he deducSons made v S i interest at twelve percent
far
(12%) per amum, ptis Ks salaries far (he unexpired portion of hb employment contact or for three (3) months every
year o fh e unexpired term, whatever s less.’
3 SdpperelW tedPactfc,lnc.v.Ooza,6RNo.175558.Feb.8,2012.
4 PertCPMManpoMW&pORentCo^ln&v.VinuyaGRN0.197K8,Sept5,2012.

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6. T H E SAMEER D O C T R IN E REAFFIRMS SERRANO.

That prftppr Am in co u rt arrived when, in 2014, the Supreme Court en
banc held in Sameer,' that the unconstitutionality o f the said reinstated clause1
2
remains. Thus, limiting wages that should be recovered by an illegally dismissed
OFW to three (3) months is both a violation o f due process and the equal
protection clauses o f the Constitution.3

The following ratiocinations were cited:

(1) O n violation o f th e equal p rotection clause:

The reinstated clause does not satisfy die requirement o f reasonable

classification. A reasonable classification “(1) must rest on substantial distinctions;
0 must be germane to the purposes o f die law, (3) must not be limited to existing
conditions only; and (4) must apply equally to all members o f the same class.” A
law is void if classifications are made arbitrarily.

In Serrano, the classifications made by the reinstated clause were identified.

It distinguished between fixed-period overseas workers and fixed-period local
workers. It also distinguished between overseas workers with employment
contracts o f less than one year and overseas workers with employment contracts o f
at least one year. 'Within the class o f overseas workers with at least one-year
employment contracts, there was a distinction between those with at least a year
left in their contracts and those with less than a year left in their contracts when
they were illegally dismissed. There is here a “legislative classification which
impermissibly interferes with the exercise o f a fundamental right o r operates to the

1 Sameer (Xerseas Placement Agency, he. v. Joy C. Cattles, G A No. 170139, Aug. 05,2014. Respondent Joy Cattles
K»scecnx(edbypet6onerSam^teaon&yearemployR^oontiactinTawan.Herinonfliiysalafy«(a5Nr$1$^60XX).
She atleged fliat Sameer required her to pay a placement fee of P70 jOOOjOOwhen she sfcned fte employment contract
She was deployed b wort for Taiwan Vfaooal, Co. LkL (WacoaO on June 26,1997. She aieged (hat h her employment
contract, she agreed to woik as quaE^ control for one year. In Taiwan, however, she was asked to w o * as a cutter.
Accortflng to Sameer, she was later (fentissed due to her lieflidency, negligence in her dufes. and her “lailurB to comply
wflh he vmk requirements M l her foreign {employe^* On October 15,1997, Joy Bed a complaint w ft he NLRC against
peSSoner and Waooat She claimed that she *a s Begaty rfismissed. She asked lor flie return of her placement fee, he
w S M I amount ftr repatriation costs, p^m ert of her salary tor 23 monlhs as wefl as moral and exempiaiy damages. She
idenffied Wacoal as Sameer Overseas Placement Agency'S foreign prinqpaL The labor Aib&r tfismissed Joy’s oomptaitt
because 1 was based on mere aBegations. On appeal, h e NLRC declared that Joy was tegafy dsrissed. th e NUtC
asManledJayonly3(nonSisrwo(tiofsabBymQieamountflfNT$4GijOaaL1herdmbwsementofaieNT(3jOOO^Bihdclfioni
her, and a to n e d fees of NT5300. On cetforari, h e CA affirmed h e decision of the NLRC v*8i respect to the finfiig of
Begat cferrissal, Jo/s enfflement to (he equivalent of 3 m onte1w aft of safety, rerrtxusemert of wftiheld repatriation
expense, and attane/S tees. Before the Supreme Court, petitioner rased the issue of whether the Court of Appeals ened
when l affkmed tie ruling of he NLRC finding respondent Joy Eegafy dismissed and avartfng her 3 mores' worth of
sateuy. the reirrtorsement of ihe cost other repatriaSon, and attorney’s fees despite the atteged existence of just causes o(
tennination.
2 The d ispose portion of die decision in M s case party states: T l» clause, fer for hree{J)m onhs fo r e w y year of the
un»pjpedtenR «lvd^B les$, 'n S e c iim 7 riR A 1^10022 amending Section 1 0 riR e^ A n N o .8tM 2 h d ec b red
uncmsGbtiond aid, h ere to , nul and void.*
3 Section 1 ,A ^ iO of 8x3 ConsStito provides: ^ p e e m s h a fl be depivedet Be, 3 ) ^ , or property wfiiout due pnxess
offew, nor sheBany person be denied h e equal protection of h e laws.*

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peculiar disadvantage o f a suspect class” because “the subject clause creates a sub­
layer o f disctiminadon among OFWs whose contract periods are for more than
one yean those who are illegally dismissed with less than one year left in their
contracts shall be entided to their salaries for the entire unexpired portion thereof,
while those who are illegally dismissed with one year or more remaining in their
contracts shall be covered by die reinstated clause, and their monetary benefits
limited to their salaries for three months only.” These dassificadons do not rest on
any real o r substantial distinctions that would justify different treatments in terms
o f the computation o f money claims resulting from illegal termination. Moreover,
these classifications are not relevant to die purpose o f the law, which is to
“establish a higher standard o f protection and promotion o f the welfare o f migrant
workers, their families and overseas Filipinos in distress, and for other purposes.”
Further, it is specious to argue that reducing die liability o f placement agencies
“redounds to the benefit o f the [overseas] workers.”

Putting a cap o n die money claims o f certain overseas workers does no t

increase die standard o f protection afforded to them. O n die other hand, foreign
employers are more incentivized by the reinstated clause to enter into contracts o f
at least a year because it gives them more flexibility to violate ou r overseas workers’
rights. Their liability for arbitrarily terminating overseas workers is decreased at the
expense o f the workers whose rights they violated. Meanwhile, these overseas
workers who are impressed with an expectation o f a stable job pverseas for- the
longer contract period disregard other opportunities only to be terminated earlier.
They are left with claims that are less than what others in die same situation would
receive. T he reinstated clause, therefore, creates a situation w here die law meant to
protect them makes violation o f rights easier and simply benign to the violator.

Further, “[t]here can never be a justification for any form of government

action that alleviates die burden o f one sector, but imposes the same burden on
another sector, especially when the favored sector is composed o f private
businesses such as placement agencies, while the disadvantaged sector is composed
o f OFWs whose protection n o less than die Constitution commands. The idea that
private business interest can be elevated to die level o f a compelling state interest is
odious.”

(2) On vidatfrtLQphfiAie psofiggs-ctewsa

Along the same line, it was held that the reinstated clause violates due
process rights. It is arbitrary as it deprives overseas workers o f their monetary
claims without any discemable valid purpose.

(3) Final disposition o f th e case.

Respondent Joy Cabiles was declared entided to her salary for the
unexpired portion o f her contract, in accordance with Section 10 of R.A. No. 8042.
The award o f the three-month equivalence o f respondent’s salary has been thus

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modified accordingly. Since she started working on June 26, 1997 and was
terminated on July 14, 1997, respondent was declared entitled to her salary from
July 15,1997 tojune 2 5 , 199a
•j APPLICATION OF THE SERRANO AND SAMEER RUUNGS.
The clause "orfo r thne monthsfor ever/year of the untxpired term, whichever is
Its? having been declared unconstitutional in Serrano and Sameerafter the provision
found its way again in HA. No. 10022 which took effect in 2010, the proper
indemnity in illegal dismissal cases, according to Gopio,1 should be the amount
equivalent to the unexpired term o f the employment contract In this since
respondent Bautista’s contract is for 31 months with a monthly salary o f
PI 15,850.00 and he was illegally dismissed just nine (9) months after his
deployment in Papua New Guinea, therefore, there remain 22 months o f his
unexpired contract Hence, said amount should be simply multiplied by 22 months,
the remaining term o f his employment contract, or a total amount o f
P2,548,700.00.2

8. C O M PO N E N T OF C O N TRA C T’S U N E X P IR E D P O R T IO N .

In the computation o f the amount due to an illegally dismissed OFW,

only the salaries for the unexpired portion o f the employment contract should be
included, as pronounced in Serrano? thus:

T h e word salaries in Section 10 (5) does not include

overtime and leave pay. For seafarers like petitioner, DOLE
Department Order No. 33, series of 1996, provides a Standard
Employment Contract of Seafarers, in which salary is understood as
the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work
‘performed’ in excess of the regular eight hours, and holiday pay is
compensation for any work ‘performed’ on designated rest days and
holidays.”4

As far as entitlement to overtim e pay is concerned, the correct criterion

in determining whether or not sailors are entitled to overtime pay is not whether
they were on board and cannot leave ship beyond the tegular eight (8) working
hours a day, but whether they actually rendered service in excess o f said number o f
hour$.s In PCL Shippingf the High Tribunal found that private respondent OFW
was not entitled to overtime pay because he failed to present any evidence to prove
that he tendered service in excess o f the regular eight working hours a day.7 This

1 Gopb v. Bautista, G R No. 205953, J ira 06,2018.

2 See alsoEvicKumanResouroe Management Inc. v.Panahcn, G il No. 206890, July 31,2017.
3 Aidocfo lA Senarov.G aSartM artirraSeivte, Inc, G J tN a 167614,March 24,2009.
4 SeedsoP hib ^TiansfnanieC am as.inav.C aiia.G R N a 157975,June26,2007.
s StoWfelsen Ivbrbe Services (FWs.). tnc.v. NLRC, G A No. 105396. Nw . 19.1996,264 SCRA307; 332 P hi 340,352,
4 PCL Stepping PHppines,!nc.v. KIRC, 3.R . No. 153031, Dec. 14,2006.
1 Seealso CentennialTransmarine, tnc.v.De)aCric,aR. No. 180719, Aug. 22,2008.

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holds true even iii cases o f guaranteed overtime pay as held in several cases.1 But in
Acuna,2 die claim foe overtime pay was allowed despite the failure o f petitioner-
OFWs to substantiate diem on die ratiocination that the claim o f overseas workers
against foreign employers could not be subjected to the same rules o f evidence and.
procedure easily obtained by complainants whose employers ate locally
based. While normally the presentation o f payrolls, daily time records and similar
documents before allowing claims for overtime pay may be requited, however; in
this case, that would be requiring the near-impossible. Here, it is private
respondents who could have obtained the records o f their principal to refute
petitioners’ claim for overtime pay. By their M u re to do so, private respondents
waived their defense and in effect admitted the allegations o f the
petitioners. Accordingly, it was ruled that private respondents were solidarity liable
with die foreign principal for the claims for overtime pay o f petitioners.

In regard to allowances, they are also not included in such computation.3

However, this rule on exclusion o f allowances does not apply in case they are
encapsulated in the basic salary clause.4

9. N A T U R E O F M O N E T A R Y AWARD T O A N ILLEG A LLY D ISM ISSED

OFW.

The monetary award consisting o f the illegally dismissed OFW*s salaries

for tile unexpired portion o f his employment contract is n o t in the nature o f
backwages or separation pay in lieu of.reinstatement but a form o f indemnity which
tile law grants to him by reason o f the illegality o f his dismissal5

10. O T H E R M O N E T A R Y AWARDS C O N S E Q U E N T S ILLEG A L

DISMISSAL.

In addition to the monetary award discussed above, an OFW is entitled to

the following monetary awards as a result o f illegal termination o f his employment:

(a) R eim bursem ent o f placem en t fee.

Full reimbursement o f his placement fee is subject to twelve percent

(12%) interest per annum, under any o f the following:

1 Such as the cases of Bahia Shipping Setvices, Inc. v. Chua, G.R. No. 162195, April 8,2009; Santiago v. C f Sharp Crew
' Management h e , G.R. No. 162419. Jidy 10.2007.
* A anav.K oaC A .G ilN a1SS332.M ay5.2006.
3 P a S tip ^ P h 5 p (» ie ^ ln c .v .h lR C ,G J l No. 153031, Oec. 14,2006.
4 fi was heUhYap v.ThenamafisShqs Management G R N a 179532, May 30,2011, thus: *A dose pemsaioih e contract
neveab that the lanto ettawance of US$130jQ0 wes not categorized as a bonus but was rather encapsul^ed h 8b base
safety ctause, hence, taming part of the basic salay ol petitioner. Respondents hemsetves h heir pefi&on for cato ari
before the CA averred that petfioner’s bade safety, pursuant to the contract was US$1,300.00 + US$130.00 tanker

5 SWppets United Pacific, he. v .N U £ ,G J l to . 148893, Juty 12,2006.

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 94 8 ah Review er o n U b o r Law

(1) In case of termination o f overseas employment without just, valid or

authorized cause as defined by law or contract; or
(2) In case of any unauthorized deduction or withholding from the
migrant worker’s salary.1

(b) Refund of un<wthorize(*iteflMfiftQM frppt salary,

In case of No. 2 above, the OFW is entitled to the full reimbursement or
refund o f the deductions made, with interest o f twelve percent (12%) per annum,
reckoned from the date the deduction was made. To iterate, this remedy is in
addition to the full reimbursement o f his placement fee as*discussed above.2

It bears noting that said 12% interest is not affected by die latest Circular
No. 799, Series of 2013,3 issued by the Bangko Sentral ng Pilipinas Monetary
Board (BSP-MB), which reduced the legal interest to 6% effective July 1,2013. The
reason is that such reduced 6% is applicable only in the absence o f a stipulation or
a law that sets a different rate. Since it is the law itself Section 10 o f R A . No. 8042,
as amended, which sets die rate at 12%, the same shall be the rate that should apply
and not the BSP-Monetary Board-prescribed rate o f 6%4

(c) £p_st of repatriatjonjind tran sp o rt of personal belongings.

The repatriation o f the worker and die transport o f his personal

belongings shall be the primary responsibility o f the agency which recruited or
deployed the worker overseas. All costs attendant to repatriation shall be borne by,
or charged to, die agency concerned a n d /o r its principal However, in cases where
the termination of employment is due solely to the fault o f the worker, die
principal/employer or agency shall not in any manner be responsible for the
repatriation o f the former an d /o r his belongings.5

1 Section 10, R A N a 8042, as amended by Sec&on 7. R A No. 1tX)22; Section 5, Rule VH,0mni»us Rides and Regulations
ImpJemenfing he Mgrant Workers and Overseas F$hos Act of 1995, as Amended by R A No. 10022, issued on Jtiy 8,
2010; See also Afterma tntemaSonai Manpower Sovioes. h a v. VBanos, G J l No. 151303, Apfl 15; 2005; P hi Employ
Savioes am Resources, h a v.Pafaro,G JlN o.14478Sl A (ri 15,2004.
2 Id; Id; SameerOvefseasRaoernertMQency.h&v.JoyC.&Hes, G J l N a 170139,Aig. 06,2014.
} Dated June 21,2013.
4 1 was e n ^ h a ^ h he 2014 en bam r i^ h t h e case cfSameer Overseas Placanent Agency, he. v. Joy C.CaUes,
G Jl No. 170139, Aug. 05,2014,that Circular No. 799 is not applicable when hero isalaw thatstatesothemise. While he
Bangko Sentral ng PSphas has he power to set a 6n i Interest rates; hese Merest rates do not a p ft when h e law
provides hatadrSerenthlerestrateshal be app6ed.^C ental Bank Ocular cannot repeal a law. O nyabw can repeal
anotherlaw'(See also See PaIancav.CA.G.R No. 106685,Dec. 2,1994,238 SCRA593,601).
5 See Section 15, R A No. 8042; Section 1, Rule XH1, O rm fos Rules and RegUaSons kuptemenfog h e Mgrant W ato s
and Overseas FipinosAclof 1995, as Amended b yR A . No. 10022, issued on Jify 8,2010; Section 213, W e ll, Revised
P0EA Rules and Regulafions Governing Vie Recniftnent aid Bnfdoymentof Land^ased Ouoseas F^moWoilcers of
2016; Section 197, R iie H 2016 Revised POEA Rules and R eg iM n s Gowning h e Recnflnerti.and Employment d
Seafarers issued on February 26,2016; See SevBana v. I.T. [IntemaSonal) ta p , G J l No. 99047, Aprt 16.2001; Sam e*
Overseas RaoementAgency. he. v. Joy C. Cables, G J l No. 170139, Aug. 05,2014. Kbears noting hat this responsbfily
hchdesheiepabiaSonoliemahs and transport of the personal brionghgsofadeceased worker. P u s, aloo6ts attendant
her^shaa be borne by the principal arxlAx beat agency.

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I t must be noted that R A . N o. 10022 has introduced a new provision in

R A N o. 8042,1 denominated as A rticle 37-A, which requites compulsory
insurance coverage for agency-hired workers deployed by a recruitment/manning
agency, to be secured at no cost to the said workers. Such insurance policy is
required to be effecdve for the duration o f the migrant worker’s employment and
among its coverage is the repatriation cost o f the worker, including the tran sm it o f
his or her personal belongings, when h is/her employment is terminated without
any valid cause, or when he/she terminates such employment with cause.2

However, notwithstanding the provisions o f said Section 37-A, the

primary responsibility to repatriate entails the obligation on the part o f the principal
or agency to advance the repatriation and other attendant costs, including plane
hire, deployment cost of the principal, and immigration fines and penalties, and to
immediately repatriate the worker, should the need for it arise, without a prior
determination of the cause o f the termination o f the worker's employment.
However, after the worker has returned to the country, the principal or agency may
recover the cost of repatriation from the worker if the termination o f employment
was due solely to his/her fault3 Every contract for overseas employment shall
provide for the primary responsibility o f the principal or employer and agency to
advance the cost of plane fare, and the obligation o f the worker to refund the cost
thereof in case his/her fault is determined by the Labor Arbiter.4

H ie right o f the employer to recover the cost o f repatriation from the

wages and earnings o f the OFW hinges on whether die latter was legally o r illegally
dismissed. As held in PCL Shipping? die employer has die right to recover the cost
o f repatriation from the seaman’s wages and other earnings only if the concerned
seaman is validly discharged for disciplinary measures. In the present case,
however, since petitioners failed to prove that private respondent OFW was validly
terminated from employment on the ground o f desertion, it only follows that they
do not have the right to deduct the cost o f private-respondent’s repatriation from
his wages and other earnings.

1 See S e c ^ 23 th e re c tv ^ added a new prevision, SecSon 37-A, enSDed'CompuisQcylnsuraneCweragefcr^efXY-

Hired W akes.’ This is in addSon to the perfbonanoe bond reqused Is be Sed by (he (Baiflmenttriannhg agency under
SecSan10ofRANo.8042.asanend8dbvSecSon7ofRANo.10022.
2 See Secdon 37-A (d). R A No. 8042, as amended by SecSon 23. R A No. 10Q22; Section 1(d), Ride XVI, Omnlwjs Rules
and Regiiafions Impiefnertjng the Mgrant W aters and Overseas FSpJnos Act of 1995, as Amended by R A No. 10022,

BoensedfitneralhQni^nwmjafyadirectdispos^bdQt/toproparothebodylbrbanspoit.contpledrigaldocumenlaSon,
obtaining legal clearances, procuring consular services, providing neoessay cmket or air transport container, as wefl as
transporGng (he remains, hdufiig retrieval from site of death and defray to the reoeMngijnefalhome.
3 S ec tim ^ R u fc M il,O ro & sR ite arx iR eg u la rh jilem en S n g th eM g rartW ^ ^
as Amended by R A No. 10022, issued on Jut/ 8.2010.
4 Id; n is further provided in this Section (hat in countries where here is a need to secure an exit visa for (he w ake's
repatriafon, the principal or employer shal be primarily responsHetwsecuring h e visa atnocosttofte woriter. The agency
shal ooonfinate with the principal or employerin securing the visa
5 PCL Shipping fMppines. Inc. v. NLRC. 6 R No. 153031, Dec 14,2006.

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 96 Bar Reviewer on Labor Law

11. AWARD O F DAMAGES A N D A TTO RN EY ’S FE ES.

Recruitment agencies, as part o f their bounden duty to protect the welfare
o f the Filipino workers sent abroad from whom they take their profit,1 should in
conscience not add to the misery o f maltreated and abused Filipino workers by
denying them the reparation to which they are entided. Instead, they must
"faithfully comply with their government prescribed responsibilities"2 and be the
first to ensure the welfare o f die very people upon whose patronage their industry
thrives.3
As a result o f illegality o f dismissal, an OFW is,entided to the following
damages:
(■) and com pensatory dam ages.
“Actualorcompensatorydamag? except as provided by law o r by stipulation,
is an adequate compensation for pecuniary loss suffered by a person as he has duly
proved.4 Its award is based on the Civil Code and not on the Labor Code.5 The
following cases illustrate when an O FW has b e a t awarded actual and compensatory
damages:
(1) Sooting v. CF Sharp Cm> Management, Inc.,* where it was ruled that
respondent recruitment agency which failed to deploy petitioner overseas after a
POEA-approved employment contract was signed by diem is liable to the latter for
actual damages. Respondent’s act o f preventing petitioner from departing the port
of Manila and boarding ‘M SV Seaspread" constitutes a breach o f contract, giving
rise to petitioner’s cause o f action. Respondent unilaterally and unreasonably
reneged on its obligation to deploy petitioner and must therefore answer for the
actual damages he suffered. Respondent is thus liable to pay petitioner actual and
compensatory damages o f US$4,635.00 in the form o f the loss o f nine (9) months’
worth o f salary as provided in the contract
(2) Bright Maritime Corporation v. Fantonial,1*where, based on the same
principles cited in Santiago, a similar award o f actual and compensatory damages
was made on the basis o f the finding that while respondent, who was not deployed
overseas, cannot be deemed as having been illegally dismissed considering that the
employer-employee relationship has not yet commenced, nonetheless, petitioners’
act o f preventing respondent from leaving and complying with his contract o f
employment8 constitutes breach o f contract for which petitioner company should

1 Nahasv. (tale, GK. No.169247,June2,2014.

1 ld.:dtng AsiaVy^RocaBhientlna v. l^tfionaltUbvRetafionsCommissicin. G R No. 113363. Aug.24.1999.
1 M.; effing Datumsi v. Fast Cosmopoftan Manpowerand PromotionServices, he., supra.
4 Article2199,CM Code.
5 Id.
8 GR.No. 162419,JUyiO,2007.
' G il No. 165935, Feb. 8,2012.
6 h Sits case, (here was a vafid POEAappraied contact between peioners and respondent who was employed as
b o ^ s ^ o f ^fixeignvessdW V AUKfxoneyear, v^abasicm onSifysatay of USJ450, plus anatowanceof US$220.
Respondent was made to undergo a medical examiraeon at In Cfflsfian Medcal CSnic, wWch was peffionei’S accredited

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 CHAPTERTWO 97
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be held liable foe actual damages for the loss o f respondent’s one-year salary as
provided in the contract^
(b) M oral and exem plary dam ages an d anomevls.fe.es.
The twin awards o f moral2 and exemplary3 damages ate also based o n the
Civil Code and not on the Labor Code. Hence, the general civil law principles
behind such awards are equally applicable to OFW cases. Notably, evidence o f bad
faith, fraud or 31 motive on the part o f the recruitment agency a n d /o r its principal
is necessary to successfully assert any claim for moral damages, the absence o f
which will not merit such an award. Thus, in Acuna* the mere allegation o f
petitioners that they suffered humiliation, sleepless nights and mental anguish,
thinking how they would pay the money they borrowed for their placement fees,
was not considered sufficient justification for the award o f moral damages, absent
any evidence to prove bad frith, fraud or ill motive on the part o f private
respondents.
As far as exemplary damages are concerned, they cannot generally be
awarded if there is no award o f moral damages. Exemplary or corrective damages are
imposed by way o f example o r correction for die public good.s They cannot be
recovered as a matter o f right The court will have to decide whether or n o t they
should be adjudicated.6 Under Article 2232 o f the Gvil Code, exemplary damages
may be awarded if the defendant acted in a wanton, fraudulent, reckless, oppressive
or malevolent manner. As applied to labor cases, the same standards should be
followed. Thus, an award for exemplary damages is only justified when the
dismissal was made in a wanton, fraudulent, oppressive or malevolent manner.
Absent any adequate evidence thereof, exemplary damages should not be awarded.7
The basis o f die 10% attorney’s fees is the Labor Code,8 more particularly,
Article 111 thereof, and also Article 2208 o f the Civ3 Code, which cites the
instances where attorney’s fees and expenses o f litigation may be awarded.9

uneqfted portion of he employment contract and for tie a ta ri of moral, exemplary, and aerial damages as n el as
attorney's fees.
1 11minon9i^sa^sQputatecllitieoontFactisUSS670,inclusNeof£iowanoe.
2 See A ^ 2 2 2 0 d h e CM lxnxxal damages. M d e 2219 enumerates the cases underfttwh moral damages may
berecovered. See Ctuzv. KLRC, GK. N a 116334, Feb. 7,2000.
J Under Ai&fe 2232 of the CM Cod^exem pfeydaiages may be a v a rie d l the defiendarriactedha wmnton. (raudidenl
reddess,oppcessYeama)ewlertmaim.
< A caftav.Hon.CA.G JlNo. 159832.May5,2006.
5 This ts g ta ^ h a d c S ^ to toe moral, tenperato,&qudated a conpensatory damages that may be awarded in a case.
See Article 2229, Civ9 Code; PhfyptoeAeote Automotive United Gotporetion v. NLRC, G J l No. 124617, A p t 28,2000.
' Aride 2233, CM Code.
1 National Bookstore, he.V.C A .G R N o. 146741,Feb.27.2002.
8 Sameer Overseas P taaren t Agency, kcv.Jo yC . Cables, G J l Na170139.Aug.05,2014,citing Article111of the Labor
Code, thus ‘Affide 111. Atarayfc Fees - (a) h cases of unlawU wtihok&ig of wages, h e culpable party may be
assessed attome/s fees e ip iv ^ to tm peroertd h e a n w rt ofwages recovefed.’
» SeeVjem es,daLv.NLRC,G JlNa 108405,Apri!4,2003.

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 98 Bar . Reviewer o n La b o r La w

Attorney's fees awarded in labor cases are deemed part o f damages.1Attorney’s fees
should be granted as soon as it is established that legal services have been rendered
by the lawyer,2 or if the employee is compelled to litigate in order to seek redress,3
or if the dismissal is attended with bad faith.4*
More importandy, in addition to the foregoing grounds for the grant o f
damages and attorney’s fees, examination o f cases involving OFWs indicates that
die mere breach of the employment contract would suffice for such awards. Thus,
in the same case o f Bright Maritime* respondent, because o f such breach, was
likewise granted, in addition to the award o f actual and. compensatory damages,
moral damages o f P30,000.00, exemplary damages o f P50,000.00 and 10% o f all
recoverable amounts as attorney’s fees.6*In Athenna,1 the same breach o f contract
and bad faith merited the award o f P50,000, in moral damages and P50,000, in
exemplary damages, in addition to attorney’s fees o f 10% o f the aggregate
monetary awards.89Also, in the case o (A T G Overseas? die award o f attorney’s fees
equivalent to 10% o f the total award was held legally and morally justified as die
OFWs were compelled to litigate and thus incur expenses to protect their tights
and interests.10
In the 2018 case o f Gopio,u the Labor Arbiter’s award o f moral and
exemplary damages to Bautista was upheld based on the finding that his dismissal
was without just and authorized cause, in complete disregard o f his right to due
process of law, and done in bad faith, in ad d itio n to b ein g anti-Filipino an d
capricious. Likewise, the award o f attorney's fees was held proper since it is setded
that when an action is instituted for die recovery o f wages, or when employees are
forced to litigate and consequendy incur expenses to protect their tights and
interests, the grant o f attorney’s fees is legally justifiable.

fc) Indem nity in the form of n o m in al d am ages.

As earlier asserted, if an OFW is dismissed for a just o r authorized cause

and after affording him procedural due process, his dismissal is considered
perfeedy valid and legal and, therefore, he is no t entided to any salary for the

• Parffla Machine Stop v.Jadgas.G R No. 175960. Feb. 19.2008.

2 tBoquaGroiJpofGorr9aniesv.Vigan.GJR.No.143723,June2Bw2001.
1 P h ^ ^ S p ^ V to Resources, h a v.C A and M ahaurn,G RNa 205278, Juie 11,2014; Zu e lig F rei^ ato Cargo
Systansv. NLRCandSanMguetGA No. 157900, July22,2013.
4 ASviadov.ProctefiGarnWe Phis, fn c,G A No. 160506,M ay9,2010.
s B ^ > fe ^ C o ip (x a iio n v .F a n ^ G R N a 1 6 5 9 3 5 .F e b .8 ,2 0 1 2
6 This award is based on the fedhat because ofpefiSonecS'feflure to deploy respondent based on an unjustified ground,
respondentwas forced to fle N s case.
1 A fo en rah fem a^ Manpower Sewices, he. v.V2anos,G R to151303,A pd 15,2005.

8 T h e s e s also tie a rim fe awarded by way ofmoral and exemplary damages and afaney’sfe e s ii h e case of Oriental
SKpmanagementCo, he. v. Hon. CA, G A No. 153750, Jan. 25,2006.
9 ATaOueiseasCorporaSonv.CA.GJR No. 143949. Aug. 9.2001.4U PhL883w893.
* See ato S an S a jo v.ff Sharp Crew Management h a , G R No. 152419, July 10.2007; P a Shaping PHfojhes, h a v.
faP C .G R No. 153031, Dec. 14.2006.
« Gopiov. Baufista.GR No. 205953,JuneOS,2018.

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 Ch a p t e r T w o 99
PRE-EMPLOYMENT

unexpired portion o f his employment contract or any other form of relief.

However, if there is just or authorized cause but procedural due process was not
afforded to him, the rule that applies is the Agabon doctrine,1 thus, his dismissal is
considered valid and legal but he shall be awarded an indemnity in the form o f
nominal damages for lade or procedural due process.2 Following Agabon, indemnity
in die form o f nominal damages has been consistently awarded in cases involving
termination o f OFWs.3*

12. LEGAL IN T E R E S T O N M O N ETA R Y AWARDS.

Legal interest should be imposed upon the monetary awards granted to

OFWs. But it bears stressing that in the absence o f stipulation, legal interest is no
longer 12% but 6% effective July 1,2013. This was pointed out in the 2013 tn banc
decision in Nacar,* which recognized the validity o f the change in reckoning the
legal interest in the absence o f stipulation thereon. This was based on the latest
issuance o f the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB),5
particularly its Resolution No. 796 dated May 16,2013.6

13. E X E C U T IO N O F W AIVER O R Q U IT C L A IM .

The execution o f a waiver or quitclaim by an OFW in favor o f his

employer does not preclude him from subsequendy filing a suit demanding benefits
to which he is entitled and from filing an illegal dismissal case.7 This is because
waiver or quitclaim is looked upon with disfavor, and is frowned upon for being
contrary to public policy. Unless it can be established that the person executing the

* Agabon v. f&RC, G Jt No. 158693, Nov. 17.2004.

2 Deb Rosa v.MchaelmarfMpjrines. Inc, [G R N a 182262, Aprt 13.2011.
3 Foriistanoo, Qie amountof indeaiiay of P30JOOOJOOwas auwanfed in DMA Shviwg Pl^pphes. Inc. v. Cabilar. G.R. No.
155389, Feb. 28,2005 and PIOjOOOJDOh fee case of P C I Shipping Ph3ppines.!nc.v. NLRC.G R No. 148418, July 28.
2005.
< Nacarv.Gafay Frames. G R N a 189871,Aug. 13,2013.
5 in tie raced ofAdvocales for T ^ n L e n ^ , Inc. and Eduardo B.OIaguerv. Bangko SerdralM one(a^6osd,[GJl
No. 192988. Jan. 15,201% 668 SCRA 53 0,5471*8 Sqjreme Gout afim ed (he atdhofy of tie BSP-MB to set interest
rates andtoissue and enforaaQ niasw hm S niledM tK B S P M B cn^prascrtrateinagdnunraletf rates of interest
for all bans or renewals hereofor tie (abearance of any money, {oods or crerfis. iKkxSng Ouse for bans of b v priority
such as oonsuner bans, as wet as sudi bans made by pawnshops, finance oompanes and sntiarcnxfiinsSkjGons. S
even a u fc ra s the BSP-MJ to prescribe ty ra n t madman rate or rates for tffe rert types of borrowings, iid u & ig
OepQSQSWO(KpOSSSUDSQBJIBStOTuanSOIfranCa ItisCn^
5 Ths R e s o ld apptwedflio amendmentof Sec6on2ofCtuJar No. 905, Series of 1982 and, acconfingV,issued O railar
No. 799, Series of 2013 dated June 21,2013. This section provides: -SECTION 2. The rate oT foterast for tie loan v
forbearance ofany money,goodsorcnxBs and (ho rate slowed In judgments, h tie absenceof express contractas to such
rate of interest, shall confine to be taeto percent (12%) per annum.* As datffied filte r in foe 2014 en banc nifing in foe
C3seof$am eerO w se3sP tacenienlA ge^,lncv.JcyaC aM es,G R Ifo.170139,A u9.05,2014,C irnilarN o.799is
appicable only ti bans and fixbaaranoa of money, goods or crecHSt and h judgmerte vtften there is no sQptdafion on tie
appicable irderest ratB. Rafter, 81s only applicable? tie judgmentdid not become final and oteculMy before Jdy 1,2013.
Further, t was emphasized h foe same case of Sameer, that C iu fer No. 799 is not appGeafale when here is a tew tia t

apply when tie (aw provides fia t a dfiarant Merest rate shat be appSed.VI Cental Bank Circular cannot repeal a law.
Ontyalawcan repealanotherlaw.*(SeePalancav.CA,GJl No. 106685, O ee2,1994^ 238 SCRA593,601).
1 Dagasdasv. Grand PtacementandGeneral Seivfoes,GJl No.205727, Jan. 18,2017.

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 BAR REVIEWER ON LABOR UW
10 0

waiver voluntarily did so, with full understanding o f its contents, and with
reasonable and credible consideration, the same is not a valid and binding
undertaking.1
Moreover, the burden to prove that the waiver or quitclaim was
voluntarily executed is with the employer.2 Thus, in case neither the recruitment
and placement agency nor its foreign principal successfully discharged its burden,
both shall be held solidarity liable for the claims o f the OFW. Indeed, even if the
OFW has signed a quitclaim, it does not necessarily follow that he freely and
voluntarily agreed to waive all his claims against his employer.3

4.
BAN ON DIRECT-HIRING

1. DEFINITION.
“Direct hiring" refers to the process of directly hiring workers by employers
for overseas employment as authorized by the DOLE Secretary and processed by
the POEA, including:

1. Those hired by international organizations;

2. Those hired by members o f the diplomatic corps;
3. Name hires or workers who are able to secure overseas employment
opportunity with an employer without the assistance or participation
of any agency.45

2. BAN ON DIRECT-HIRING; EXEM PTION.

It is the general rule under Article 18s that no employer shall direedy hire
an OFW for overseas employment6 The following, however, are exempted from
this ban on direct luring:

a) Members of the diplomatic corps;

b) International organizations;
c) Heads of state and government officials with the rank o f at least
deputy minister; or

• Id.
3 Id.. Urwersal Steffhg S eries, Inc. v. NLRC, G.R. No. 177576, July 21.2008,581 Phi. 199,209-210.
3 Id.
* Section 1[i), Rule II, Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act
of 1995, as Amended by R. A. No. 10022 (March 08,2010).
5 Article 18 provides as foiews 'Artide 18. Ban on Direct-Hiring. - No employer may hire a FSpoo worker for overseas
employment except through the Boards and entities authorized by the Secretary of Labor. Drecthiring by members of the
diplomatic corps, international organuaSons and such other employers as may be allowed by the Secretary of Labor is
exempted from this provision *
s Artide 18, Labor Code; See also Section 123. Rule II, Part III, Revised POEA Rules and Regulations Governing the
Recruitment and Employment of Land-Based Overseas Ffipino Workers of 2016.

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d) O ther em ployers as may be allowed by the D O L E Secretary, such
as:
1) Those provided in (a), (b) and (c) above, who bear a lesser rank, if
endorsed by the POLO,1or Head o f Mission in the absence o f the
POLO;
2) Professionals and skilled workers with duly executed/authenticated
contracts containing terms and conditions over and above the
standards set by the POEA. The number of professional and
skilled OFWs hired for the first time by the employer shall not
exceed five (5). For the purpose o f determining the number,
workers hired as a group shall be counted as one; or
3) Workers hired by a relativc/family member who is a permanent
resident o f the host country.2
3. RATIO NA LE FO R T H E BAN.
The reason for banning direct hiring o f Filipinos for overseas
employment is to ensure that such employment is fully regulated by the
government through its agencies, such as the POEA. In this way, adverse
exploitation of the migrant workers by foreign employers is minimized, if not
eradicated.
4. N A T IO N A LIT Y O F E M PL O Y E R N O T M A TERIA L.
It must be emphasized that pertinent laws and regulations generally make
reference to employment o f Filipinos overseas, /.*., outside the Philippines. They do
not limit the coverage to non-Filipino employers. Filipinos working overseas share
the same risks and burdens whether their employers be Filipino or foreign.3 For
instance, it is well-known that foreign-owned and foreign-registered vessels have
frequently also secured Philippine registration where the interest o f convenience o f
the owners dictated such second or dual registration. The undedying regulatory
policy is that Filipino seamen working in ocean-going vessels should receive the

’ ThePti5ppheOi,er5easLaborOffce(POLO)oftfieDepartmentofLaborand &nptoyment(DOLE).
2 Article 18. Id.; See also Section 124, Rule II. Part III, Id; H ie OFWs hired by those employers exempted from the ban on
direct hiring may be registered by the Administrafion upon submission of the following documents:
a) VenSed/authenticated original employment oontract which is over and above the POEA-presafced employment contract;
b) Passportvalid at least six (6) months from the date of 'ntended departure;
c) VaDd and appropriate visa or work permit;
d) Certificate of medical fitness;
e) Proof of certificate of insurance average covering at least the benefits provided under Section 37-A of RA 8042, as
amended;
0 Certificate of attendance to the required employment otientataVbriefing; and
g) Clearance from the DOLE Secretary for those covered under Section 124 (d) of these Rules. The Administration shall
ensure that the w riter is made Wty aware cf tie terms and conditions of the employment contract and fie advantages and
disadvantages of tfrect-hiring. (Section 125, Rule II, Part III, Revised POEA Rules and Regulations Governing the
Recruitment and Employment of Land-Based Overseas Ffyho Walters of 2016.).
3 Phfippine-Singapore Ports Corporation v NLRC, G il No. 67035, Jan. 29,1993,218 SCRA 77. Eastern Slipping Lines,
Inc. v. POEA, G.R. No. 77828, Feb. 8,1989,170 SCRA 54.

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Ba r Reviewer o n Labor Law

same wages and benefits without regard to the nationality or nationalities o f the
vessels on which they serve.1
5. SUABILITY O F F O R E IG N C O R PO R A TIO N S D IR EC TLY H IR IN G
FIL IPIN O WORKERS.
A non-resident foreign corporation domiciled outside o f the Philippines
which recruits Filipino workers for employment abroad is, in law, doing business in
the Philipp*"*** Indeed, if a foreign corporation not engaged in business in the
Philippines is not barred from seeking redress from courts in the Philippines, a
fortiori, that same corporation cannot claim exemption from being sued in
Philippine courts for acts done against a person or persons in the Philippines.2

B.
EMPLOYMENT OF
NON-RESIDENT ALIENS
1. POLICY DECLARATION.
Article 403 o f the Labor Code imposes the requirement that any alien
seeking admission to the Philippines for employment purposes and any domestic
or foreign employer who desires to engage an alien for employment in the
Philippines shall obtain an Alien Employment Permit (AEP) from the Department
o f Labor and Employment The AEP is n o t an exclusive authority for a foreign
national to work in the Philippines. It is just one o f the requirements in the
issuance o f a work visa (9g) to legally engage in gainful employment in the country.
The foreign national must obtain the required Special Temporary Permit (STP) from
the Professional Regulation Commission (PRC), in case the employment involves
practice o f profession and Authority to EmployAlien (AEA) from die Department o f
Justice (DOJ) where die employment is in a nationalized or partially nationalized
industry and Department o f Environment and Natural Resources (DENR) in case
o f mining.4

1 Eastern Shipping Unes, Inc v.P O E A G A N a 77828, Feb. 8,1989,170 SCRAM.

2 FacSfesManagemerltGoiporaSonv.OelaRosa.GA.No.L-38649,March26.1979.89SCRA 131.
3 A(ficie40. &rtpb^n^Asrm}ofNbr>^l9SiierdAiansL -Anyafiensedang admission toihe PhiEppinesIbremployinont
puiposesandarydomesfcafareigneRployawhottesirestoengagematafafemptoyirerthlheRiSppiiesste!
o b tom enpbyi^pem ifonl?»O ep af6nent of Labor.

farwhich(heafeflisdesired.
Fa an enterprise registered h preferred areas of investments, said employment pemtt may be issued upon
recontnendata offtegovemmertagencydiatgedwft^
4 SeePtfcyDedaaBon, DepartmentOlder Na 188j Series of 2017 (Nov. 16,2017), Revised Rules fa the Issuance of
Employment Permits to Foreign Nationals. This latest issuance repeals or modifies ecccriingty, Ta]H guMe2nes,
rules end regulations, procedures and agreements Inconsistent herewith xxx* (per its Section 19. Repealing
Clause).

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 C h a pter T w o 10 3
PRE-EMPLOYMENT

2. A L IE N E M PL O Y M E N T P E R M IT (A E P), D E F IN E D .
. An Alien Employment Permit (AEP) is a document issued by the D O L E
Secretary through the DOLE-Regional Director who has jurisdiction over the
intended place o f wodc o f the foreign national, authorizing the foreign national to
work in the Philippines.
3. COVERAGE.
All foreign nationals who intend to engage in gainful em ploym ent in the
Philippines shall apply for AEP. The term “ gain fu l employment** shall refer to a
state o r condition that creates an employer-employee relationship between the
Philippine-based employer and the foreign national where the former has the
power to hire o r dismiss the foreign national from employment, pays die salaries o r
wages thereof and has authority to control die performance o r conduct o f the tasks
and dudes.1
4. E X E M P T IO N .
The following categories o f foreign nationals are exem pt from securing
an AEP:
a. AH members o f die diplomatic service and foreign governm ent
officials accredited by and with reciprocity arrangement with d ie
Philippine government;
b. Officers and staff .of international organizations o f which the
Philippine government is a member, and their legitimate spouses
desiring to work in the Philippines;
c. Owners and representatives o f foreign principals whose companies are
accredited by the POEA, who come to the Philippines for a limited
period and solely for the purpose o f interviewing Filipino applicants
for employment abroad;
d. Foreign nationals who come to the Philippines to teach, present
a n d /o r conduct research studies in universities and colleges as visiting,
exchange or adjunct professors under formal agreements between th e
universities or colleges in the Philippines and foreign universities o r
colleges; or between the Philippine government and foreign
government, provided that the exemption is on a reciprocal basis;
e. Permanent resident foreign nationals and probationary or temporary
resident visa holders under Section 13 (a-f) o f the Philippine
Immigration Act o f 1940 and Section 3 o f the Alien S ocial
Integratio n A ct o f 1995 (R.A. 7917);2

1 Section 1, DepartmentOrderto . 186,Series of2017{Nov. 16,2017), Revised RuSesfor the Issuanceof Employment
Pantis to ForeignNationals.
* Referenoe to Ous prowsian of **Secfion 3 of die ASen Soad tntegi^on Act of 1995 (R A 7917)T was not found in the
enumerator! of exempted persons r i the previous Department Order to . 146-15. Series of 2015 (August 20,2015),
Revised Rules for the Issuance of Employment Permits to Foreign Nationals. Foreign nationals under this
provision are now expressly exempted from AEP coverage.

J9JC9B0M
 U>4 bar Reviewer o n labor Law

f. Refugees and Stateless Persons recognized by D OJ pursuant to Article

17 o f die UN Convention and Protocol Relating to status o f Refugees
and Stateless Persons;1and
g. All foreign nationals granted exem ption by law.2

5. EXCLUSION.

The following categories o f foreign nationals are excluded from securing

an AEP:

a. Members o f the governing board with votidg tights only and do not
intervene in the management o f the corporation or in the day to day
operation o f the enterprise.
b. President and Treasurer, who are part-owners o f the company.3
c. Those providing consultancy services who do not have employers in
the Philippines.
d. Intra-corporate transferee who is a manager, executive or specialist as
defined below in accordance with Trade Agreements and an employee
o f the foreign service supplier for at least one (1) year continuous
employment prior to deployment to a branch, subsidiary, affiliate or
representative office in the Philippines.
i. an Executive: a natural person within the organisation who
primarily directs the management o f the organisation and exercises
wide latitude in decision-making and receives only general
supervision or direction from higher level executives, the board o f
directors, or stockholders o f the business; an executive would not
directly perform tasks related to the actual provision o f the service
or services o f the organisation;
ii. a M anager a natural person within the organisation who primarily
directs the organisation/department/subdivision and exercises
supervisory and control functions over other supervisory,
managerial or professional staff; does not include first-line
supervisors unless employees supervised are professionals; does
not include employees who primarily perform tasks necessary for
die provision o f the service; or

Juste fo d f) pumant to Article 17 of the UN ConwnBoh and tolacol ReMng b Status of Refugees and

3 ttbeas noBngtatundertie previous2015 AEP 1 ^ p . 0 . 146-15), corporateoffices asproviteuntatetaporalion

Code of he Rffippines, /teles of honporaSon, and Bylaw of 8» CaporaSon such as Resident, Secrcteiy and
Treason amexcludedtomsecurityan AEP (Section3|b) ftereol). Hcwerar. the Secretay andoter corporateofficers.
pravidedunderthe CoqxxaSonCotfe, Articles of tncorpomtion and By-Lawshave been removed inBie 2017 AB5Rules
(D.0. No. 186-17).

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 CHAPTER. TW O 105
PRE-EMPLOYMENT

iil a S p ecialist a natural person within the organisation w ho

possesses knowledge at an advanced level o f expertise essential to
die estabiishment/provision o f the service and/or possesses
proprietary knowledge o f the organisation's service, research
equipment, techniques o r management; may include, but is n o t
limited to, members o f a licensed profession.
All other intra-corporate transferees not within these categories as
defined above are required to secure an AEP prior to their
employment in the Philippines.
e. Contractual service supplier who is a manager, executive or specialist
and an employee o f a foreign service supplier which has no
commercial presence in the Philippines:
i. who enters the Philippines temporarily to supply a service pursuant
to a contract between h is/h er employer and a service consum er in
the Philippines;
ii. m ust possess the appropriate educational and professional
qualifications; and
iii. must be employed by the foreign service supplier for at least one
year prior to the supply o f service in the Philippines.
f. Representative o f the Foreign Principal/Employer assigned in the
Office o f Licensed Manning Agency (OLMA) in accordance with the
PO EA law, rules and regulations.1

6. PR O C E SSIN G A N D ISSUANCE O F C E R T IF IC A T E O F E X C L U SIO N .

All foreign nationals excluded from securing AEP shall secure Certificate
o f Exclusion from the Regional Office. Further, Regional Offices shall issue the
Certificate o f Exclusion within two (2) working days after receipt o f complete
documentary requirements and fees.

A foreign national requesting for the issuance o f a Certificate o f Exclusion

shall submit the following

1. Letter request addressed to the D O L E Regional Director,

2. Valid business/Mayor's permit o f the Philippine-based company o r
enterprise;
3. Photocopy o f passport (bio page) with valid visa; and
Additional documents shall be required for specific categories, such as the
follow ing
a. ForPresident, Treasurer, and Members ofGoverning Boards (excluding those listed
in the Foreign Investment Negative List):

1 Section3, DepartmentOrderNo. 188, Series of2017(Nov. 16,2017), Revised Rules forthe Issuanceof Employment

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 io 6 8 ar Reviewer o n U bor Uw

- Certified true copy o f the updated General Information Sheet (GIS)

showing the name and position o f the foreign national;
- Certification that the requesting foreign national is a member o f the
governing board with voting rights only, will not in any manner
intervene in the management and operation o f enterprise and with no
intention to obtain gainful employment;
- Board Secretary's Certificate o f Election.
b. ForIntra-corporate Transferee:
- Contract o f Employment from the Origin Company including proof
of salary;
- Secondment Agreement.
c. For ContractualServiceSupplier.
- Contract of Employment from the Origin company including proof
of salary;
- Service contract between the Philippine based company and the
foreign company
d. For Consultant.
• Service Contract between the Philippine based company and the
consultant or foreign consulting company.
e. For Representative ofthe Foreign Principal/Employerassignedin OLMA.
- Letter of Acknowledgment from POEA
In case an authorised representative will file/claim die Certificate, an
Authorization Letter must be required.*1

7. PROCEDURE IN T H E PR O C E SSIN G O F A PPLIC A T IO N S F O R A EP.

a. All applications for AEP shall be filed and processed at the D O L E

Regional Office or Field Office having jurisdiction over the intended place o f work.

A duly accomplished application form with the following complete

documentary requirements must be submitted:

1. Photocopy o f Passport with valid visa, except for temporary viator's

visa in case o f renewal or Certificate o f Recognition for Refugees or
Stateless Persons;
2. Original copy o f notarized appointment or contract o f employment
enumerating the duties and responsibilities, annual salary, and other
benefits of the foreign national;
3. Photocopy o f Mayor's Permit to operate business, in case o f locators
in economic zones, Certification from the PEZA2 or. the Ecozone

1 Sectioo4,ld.
1 Philippine EconomicZona Authority |PEZA).

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 CHAPTER TWO 10 7
PRE-EMPLOYMENT

Authority that the company is located and operating within the

ecozone, while in case o f a construction company, photocopy o f
license from PCAB1or D .0.174-172 Registration should be submitted
in lieu o f Mayor's Permit; and
4. Business Name Registration and Application Form with Department
o f Trade and Industry (DTI) or SEC Registration and GIS3;
5. If the position tide o f the foreign national is included in the list o f
regulated professions, a Special Temporary Permit (STP) from the
Professional Regulation Commission (PRC); and
6. If die employer is covered by the Anti-Dummy Law,4 an Authority to
Employ Foreign National (ATEFN) from the DOJ or from the
DENR, in case o f mining.
b. In the case o f foreign nadonals to be assigned in related companies,
applications may be hied in the Regional Office or Field Office having jurisdiction
over any o f the applicant's intended places o f work.
c. Additional position o f the foreign national in the same company or
subsequent assignment in related companies during the validity or renewal o f the
AEP will be subject for publication requirement. A change o f position or employer
shall require an application for new AEP.
d. At any given time only one AEP shall be issued to a foreign national5
8. F E E S .

Upon filing o f application, the applicant shall pay a fee o f P9,000.00 for
an A EP with a validity o f one year. In case the period o f employment is more than
one year, an additional P4,000.00 shall be charged for every additional year or
fraction thereof. In case o f renewal, the applicant shall pay a permit fee o f
P4,000.00 for each year o f validity or fraction thereof.
A courier fee o f P200.00 shall be charged to die foreign national upon the
implementation o f the AEP online application system.
Loss o f A EP or change o f information o r entries in the AEP shall be
subject to payment o f P i ,500.00 for A EP replacement. In case o f loss, the request
for replacement shall be supported by a duly notarized Affidavit o f Loss.
Processing and issuance o f certificate o f exclusion shall be subject to
payment o f P500.00 per application.

1 PhSippine Contractors Accreditation Board (PCAB).

2 OepffitmentOiderNo. 174,Seriesol2017l theRulestai(demefttSngAificJen106to109oftheLaborCods,asAmended.
1 General Information Sheet(GIS).
4 Commonweal Act No. 108. An Act to Amish Acts of Evasion of (he law s on toe ttefonaizafion of Certain Rights,
Franchises or Privfeges, Approved on October 30.1936.
5 Section 5, Department Older No. 186, Series of 2017 (Nov. 16,2017), Revised Rules tor the Issuance of Employment
Peim te to Foreign Nationals.

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 io8 Bar. Reviewer o n Labor Law

All fees covered by official receipt issued by the Regional Office are non-
refiindable.1
9. LABOR MARKET TEST & O T H E R O B JE C T IO N A GA INST T H E
FO REIG N NATIONAL.
The DOLE Regional Office shall publish in a newspaper2 o f general
circulation all applications for new AEP, change o r additional position in the same
company or subsequent assignment in related companies within (2) two work days
from receipt o f application.
The same shall be published in the D O LE website and posted in the
PESO,3 such publication and p o stin g shall b e for a p eriod o f thirty (30) day6
and shall contain the name, position, employer and address, a brief description o f
the functions to be performed by the foreign national, qualifications, monthly
salary range and other benefits, if there are any.
It shall also indicate in the same notice o f publication that any person in
die Philippines who is competent, able and willing at the time o f application to
perform die services for which the foreign national is desired may file an objection
at the DOLE Regional Office.
Any objection or information against the employment o f the foreign
national relative to labor market test m ust be filed with the Regional Office within
thirty (30) days after publication.
The DOLE Regional Office shall refer to the D OLE's Philjobnet and
PESO Employment Information System (PEIS), the PRC Registry o f
professionals, and the Technical Education and Skills Development Authority
(IESDA) registry o f certified workers to establish availability or non-availability o f
able and qualified Filipino worker.
Information or criminal offense and grave misconduct in dealing with or
ill treatment o f workers may be filed with the Regional Offices any time.4
10. PROCESSING PE R IO D .
Applications for new AEP shall be processed and an AEP shall be issued
within three (3) working days after publication and payment o f required fees and
fines, if there are any. Applications for renewal o f AEP shall be processed within
one (1) day after receipt3

1 Sec6on6,li
2 Bonnemvs.C(utofAppeai$>G R N o.L49101l Oct24,1983,12$SCRA122.where9washdd:Tqbeanewspapero(
9enemlciruibSon.ftisenoughBiat1tispubishedlbr1he<fisseminafionoflocalneiMsarKlgeneralWbnnaSon:QiatRhasa

1 Pubfc EmploymentServiceOffice(PESO).
4 Sec6on7.DepartmentOrderNo. 188, Series of2017 (Nov.16,2017),Revised Rules torthe Issuance ofEmployment
PemtfetoFbreign National
5 Section 8, id.

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 C ha tter T w o 109
PRE-EMPLOYMENT

11. V E R IF IC A T IO N IN S P E C T IO N .
The authorized representatives o f the Regional Director may conduct
inspection to verify legitimacy o f employment o f the foreign national as deemed
necessary, based on the documents submitted within two (2) working days upon
payment o f fees.1
12. V ALID ITY O F A EP.
The AEP shall be valid for the position and the company for which it was
issued for a period o f one (1) year, unless the employment contract, or other modes
o f engagement provides otherwise, which in no case shall exceed three (3) years.2
13. REN EW A L O F AEP.
An application for renewal o f A EP shall be filed not earlier than sixty (60)
days before its expiration. In case die foreign national needs to leave the country or
in other similar circumstances that will hinder the filling o f renewal within this
prescribed period, the application may be filed earlier.
Expired AEP shall be processed as a new application subject to the
payment o f required fees and penalties in relation to Section 17 (Penalty for
Working without AEP) o f this Department O rder No. 186, Series o f 2017.
In the case o f officers whose appointment or election takes place before
the expiration o f AEP, the application must be filed not later than fifteen (15)
working days after appointment, o r before its expiration, whichever comes later.
In case the appointment o r election will take place after the expiration o f
the AEP, the application for renewal m ust be filed before the expiration o f the
AEP which can be renewed for one (1) year. Within fifteen (15) working days after
the date o f appointment or election, the foreign national shall submit to the issuing
Regional Office the Board Secretary's Certification. The Regional Director shall
revoke the AEP after one (1) m onth from its issuance, if no Certification is filed.3
14. D E N IA L O F A P P L IC A T IO N F O R N E W O R R EN E W A L O F A EP.
An application for A EP o r die renewal thereof may be denied by the
Regional Director based on any o f die following grounds:
a. Misrepresentation o f facts in the application, including fraudulent
misrepresentation L t, false statement that has a negative effect in the
evaluation o f the application made knowingly, or without belief in its
truth, or recklessly whether it is true or false
b. Submission o f falsified documents;
c. Conviction o f a criminal offense or a fugitive from justice in the
country o r abroad;
d. Grave misconduct in dealing with or ill treatment o f workers;

• Section 9, Id.
* SecSon10.il
3 Sec6on11.il

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 110 Bar reviewer o n Labor Law

e. Availability o f a Filipino who is competent, able and willing to do die

job intended for or being performed by the foreign national based on
data in die PEIS, PRC Registry o f Professional and TESDA Registry
o f Certified Workers;
f. Worked without valid AEP for more thaa a year, or
g. Application for renewal with expired visa or with temporary visitor's
visa.
The Regional Director shall issue an O rder denying the application for
new or renewal o f AEP which shall have the effect o f forfeiture o f the fees paid by
die applicant1
15. C A N C EL L A T IO N /R EV O C A TIO N O F A EP.

The Regional Director may, motuproprio o r upon petition, cancel or revoke

an AEP after due process, based on any o f the following grounds:

a. Non-compliance with any o f the requirements o r conditions for which

the AEP was issued;
b. Misrepresentation o f facts in the application including fraudulent
misrepresentation Le., false statement that has a negative effect in the
evaluation o f the application made knowingly, or without belief in its
truth, or recklessly whether it is true or false;
c. Submission o f falsified or tampered documents;
d. Meritorious objection or information against the employment o f the
foreign national;
e. Foreign national has been convicted o f a criminal offense or a fugitive
from justice;
L Employer terminated the employment o f foreign national; and
g. Grave misconduct in dealing with o r ill treatment o f workers.
In such cases, the Regional Director shall issue an Order cancelling or
revoking die AEP.2
16. A DD ITION A L G R O U N D U N D E R A R T IC L E 41.
Paragraph (a) of Article 41 enunciates another ground for the cancellation
o f the employment permit issued to an alien. Here, the alien, without the prior
approval o f die DOLE Secretary, is prohibited from committing any o f the
following acts:
a) To transfer to another job; or
b) To change his employer.

Such transfer to another job or change in position or in employer requires

die filing o f an application for new AEP.1*

• Section 12. Id.

* Section 13, Id.

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 C hapter T w o 111
PRE-EM PLOYM EN T

17. E F F E C T O F D E N IA L /C A N C E L L A T IO N O R REV O CA TIO N O F

A EP.

A foreign national whose AEP has been denied or cancelled is disqualified

to re-apply within a period o f ten (10) years in case the grounds for denial or
cancellation is any o f die following:

a) Conviction o f criminal offense or fugitive from justice in the country or

abroad; or
b) Grave misconduct in dealing with or ill treatment o f workers.
Correspondingly, a foreign national whose AEP has been denied or
cancelled due to misrepresentation o f facts or submission o f falsified documents
with the intent to deceive, conceal or omit to state matedal facts and, by reason o f
such omission or concealment, the DOLE was prompted to approve/issue the
AEP that would not otherwise have been approved/issued, shall be disqualified to
re-apply within a period o f five (5) years.2
18. E F F E C T O F FR A U D U L E N T A PPLICA TIO N FO R AEP.
Employers, employer's or foreign national's representatives, and/or agents
acting in behalf o f the applicant found to have filed fraudulent application for AEP
for three (3) counts shall be barred from filing application for a period o f five (5)
years after due process.3
19. APPEAL.
T he aggrieved foreign national or his authorized representative may file an
appeal with the D O L E Secretary within ten (10) days after receipt o f the copy o f
denial/cancellation/revocation order.
T he decision o f the D O L E Secretary shall be final and executory unless a
motion for reconsideration is filed within ten (10) days after receipt o f the decision.
N o second motion for reconsideration shall be allowed.4
20. PE N A L TY F O R W O R K IN G W IT H O U T A EP.
T he Regional Director shall impose a fine o f Ten Thousand Pesos (P10,
000.00) for every year ox a fraction thereof to foreign nationals found woxking
without a valid AEP. Employers found employing foreign nationals without a valid
A EP shall also pay a fine o f Ten Thousand Pesos (P10,000.00) for every year o r a
fraction thereof Providedfurther, that an employer found to have failed to pay the
penalty provided herein shall n o t be allowed to employ any foreign national for any

1 Section 4{c), Department Order No. 146-15, Series of 2015 (August 20, 2015), Revised Rides for tie Issuance of
Employment P a m * to Foreign NaSonals. TNs paragraph states: ^ AdtfSonal postion of file foreign rvaSonal h the same
compaiy or subsequent ass&nment h related companies during tie vafidfy or renewal of (he AEP wiU be subject for
refinem ent Achange of postxn or employersh aflrec^ an appfeadon for AEP*
* Sec& »14,U .
1 8ecSm 15bli
4 Section 16, Id.

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 112 Bar reviewer o n Labor Law

Newly hired or appointed officers may file the application for new AEP
without penalty thereof within fifteen (15) working days after signing o f contract or
appointment
If the commencement o f employment is later than the fifteen (15)
working days grace period, the application for new AEP may be filed before the
commencement o f employment without penalty.1

21 MONITORING AND EVALUATION.

The Regional Offices shall submit a monthly repprt on the issuance o f
AEP to the Bureau o f Local Employment (BLE).2

< Section 17. W.

’ Section 18, Id.

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 113

C hapter Three
LABOR STANDARDS

TOPICS PER SYLLABUS

III.
LABOR STANDARDS

A. Conditions of employment
1. Coverage
2. Hours of work
a. Normal hours of work; hours worked
b. Meal periods
c. Night-shift differential
d. Overtimework
e. Computation of additional compensation (rates only);
facilities vs. supplements
3. Weekly rest periods
4. Holidays
5. Service Incentive leaves
6. Service charges
7 . 13th month pay
B. Wages
1. Payment of wages
2. Prohibitions regarding wages
3. Wage distortion; concept
4. Non-diminution of benefits
C. Leaves
1. Service incentive leave
2. Maternity leave
3. Paternity leave
4. Solo parent leave
5. Leave benefits for women workers under R.A. 9710 and R.A.
9262
D. Special groups of employees
1. Women
a. Discrimination
b. Stipulation against marriage
c. Prohibited acts

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 Bar Reviewer o n Labor Law
U4

d. Sexual harassment (R.A. 7877)

2. Minors (R.A. 7610, as amended by R.A. 9231)
3. Kasambahay(R.A. 10361 )
4. Homeworkers
5. Night workers
6. Apprentices and learners
7. Persons with disabilities
a. Discrimination
b. Incentives for employers

A.
CONDITIONS OF EMPLOYMENT

1 .
COVERAGE

1. EMPLOYEES COVERED.

As a general rule, the provisions o f Tide 1 {Working Conditions and Rest

Periods], Book III [Conditions o f Employment] and die corresponding provisions
in the Rules to Implement the Labor Cade, are applicable to all employees in all
establishments and undertakings, whether operated for profit o r n o t*1

2. EM PLOYEES N O T C O V ERED .

Article 82 o f the Labor Code and its Implementing Rules2 expressly

exclude die foDowing persons or employees from the coverage o f Tide I, Book ID
thereof, to mk

1) Government employees;
2) Managerial employees;
3) Other officers or members o f a managerial staff,
4) Domestic servants (now Kasmbabayfy
5) Persoos in the personal service o f another;
6) Workers paid by results;
7) Field personnel; and
8) Members o f the family o f die employer.

Notably, in addition to the foregoing Arricle 82 exemptions, a 9th

exemption is provided under the I.abor Code’s Article 94 (Right to Holiday Pay)
and Article 95 (Right to Service Incentive Leave), covering retail an d service
establishm ents regularly em ploying less th a n te n (10) w orkers. A similar
exemption o f retail and service establishments is also provided for under the Labor

1 Artx*82,LafaorCo(fe;Sectjon1.Rutel.Book[tLRidestotn¥fementtheLat)orCode.
1 SeeSecGon2.Rulel.6ook[QortheRiilstolmplementtheLat>orCo(te.

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 C hapter T hree >15
LA BO R STA NDA RDS

Code’s IRR on night shift differential pay but the number of regular employees
required for exemption is "n o t m ore than five (5) w orkers.” 1

2.
HOURS OF WORK

1. COMPENSABLE HOURS WORKED.

The following shall be considered as compensable hours worked:

a) All time during which an employee is required to be on duty o r to be

at the employer’s premises or to be at a prescribed workplace; and
b) AO time during which an employee is suffered or permitted to w ork2

2 . SOME PRINCIPLES IN DETERMINING HOURS WORKED.

The foUowing general principles shaU govern in determining whether die

time spent by an employee is considered hours worked:

a) AO hours are hours worked which the employee is required to give to

his employer, regardless o f whether or no t such hours are spent in
productive labor o r involve physical or mental exertion;
b) An employee need n o t leave the premises o f die workplace in order
that his rest period shall not be counted, it being enough that he stops
working, tests completely and leaves his workplace to gp elsewhere,
whether within or outside the premises o f his workplace;
c) If the work performed was necessary or it benefited the employer or
the employee could not abandon his work at the end o f his normal
working hours because he had no replacement, aQ time spent for such
work shall be considered as hours worked if the work was with the
knowledge o f his employer or immediate supervisor;
d) The time during which an employee is inactive by reason o f
interruptions in his work beyond his control shall be considered
working time either if the imminence o f the resumption o f work
requires the employee’s presence at die place o f work or if die interval
is too brief to be utilized effectively and gainfully in the employee’s
own interest3

It bears emphasizing that the employer retains the management

prerogative, whenever exigencies o f the service so require, to change the working
hours o f its employees.4 Moreover, the age-old rule which governs the relationship

1 Section 1 (b). Ride tl {Night Shfft DiffefEntiat), Book t!) of Ihe Rules to fn^ifement the Labor Code.
2 Arfde 84, Labor Code; Section 3, Rule I, Book III, Rules to Implement Ihe Labor Code; Rada v. NLRC, G R No. 96078, Jan.
9.1992.205 SCRA69.
3 Secfcn4, Rule I, Book [II. Rules to ImpJemenl the LaborCode.
< Union Carbide Labor Union v. Union Carbide PhSppines, toe., 215 SCRA 654 [1992].

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 zx6 Ba r Review er o n labor law

between labor and capital or management and employee o f “no work, nopay”or a
'Jar day's wag for a fair day's labor," remains the basic factor in determining the
employees’ wages and backwages.1

a.
NORMAL HOURS OF WORK; HOURS WORKED

t NORMAL HOURS OF WORK OF EMPLOYEES.

The purpose o f die law in limiting the number o f working hours in each
day is ptincipaUy to protect the health and welfare o f the employees. It is also for
the purpose o f affording adequate time to employees to lead richer and more
fruitful, meaningful lives and to be able to participate intelligently in public
concerns. Article 83 o f die Labor Code enunciates die general rule that the total
number o f working hours o f a worker o r employee shall not exceed eight (8) hours.
This eight (8) hour period is called die normalhoursofwork.

Any work in excess o f eight (8) hours is considered overtime work.

Consequendy, the employee who is permitted or required to work beyond the
eight-hour period deserves to be paid an additional compensation for the overtime
work rendered.2

2 . WORK DAY, HOW RECKONED.

The term "work day" means the twenty-four consecutive-hour period

which commences from the time the employee regularly starts to work. Hence, the
24-hour period, in the case o f employees working from 8:00 a.m. to 5:00 p.m., is
from 8:00 a.m. to 8:00 a.m. o f the following day and the period from 8:00 a.m. to
5:00 p.m. is called the "rtgdar working hours" o r "shift" Work rendered beyond the
regular working hours within the "work day" is considered overtime. It must be
emphasized that "work day” does not necessarily mean the ordinary calendar day
from 12:00 midnight to 12:00 midnight unless die employee starts working at the
unusual hour of 12:00 midnight, in which case, his "work day"\s> the calendar day.

3. WORK WEEK; HOW RECKONED.

A "work wttk"\s a week consisting o f 168 consecutive hours or seven (7)
consecutive 24-hour work days, beginning at the same hour and on the same
calendar day each calendar week.

4. HOURS OF WORK OF PART-TIME WORKERS.

The rules implementing the different Wage Orders issued by the Regional
Tripartite Wages and Productivity Boards (RTWPBs) in the various regions in the
country cany a uniform provision to die effect that wages and allowances o f part-*

' DurafaSRecappingPbntCompanyv. NLRC, 6 A No.1-76746,July 27,1987,152SCRA32S.

* Artx^87, LatxxCode; Secfion8, Rite I, Boohto, F?ulestotmptement ff>eLaborCo0e.

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 C h apter T h ree
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LA BO R STA N D A R D S

time workers shall not be less than the compensable time that they actually
rendered work. Hence, in the case o f cost-of-living allowance (COLA), if the
worker rendered work for less than the prescribed eight (8) hours, say, for four (4)
hours only, the employer may validly make proportionate payment o f COLA, if it
has granted a proportionate payment in the worker's basic wage. Following the
principle o f “no work, no pay, no allowance, ” the workers are not entided to said
benefits for the four-hour period that they did not render work. It is important to
stress, however, that the employees should have entered into an agreement with the
employer that they will be employed as part-time workers.

In view o f the foregoing, on die issue o f whether the company should

give the part-time employees concerned only fifty percent (50%) o f the wages and
other benefits that die employer may pay the workers who will work for four (4)
hours a day, say, from 6:00 to 10:00 in the evening it was opined in die Advisory
Opinion on Conditions ofEmployment ofPart-time Workers issued by the D O L E ’S Bureau
o f Working Conditions, that compensation in proportion to the time they actually
rendered work or equivalent to only four (4) hours a day must be given to part-time
workers. This is, however, without prejudice to any individual or collective
agreement or company practice or policy that provides higher basis o f computation
o f wages.

5. B R O K E N H O U RS.

The normal eight (8) working hours mandated by law do not always mean
continuous and uninterrupted eight (8) hours o f work. As may be required by
peculiar circumstances o f employment, it may mean broken hours of, say, four
hours in the morning and four hours in the evening or a variation thereof, provided
the total o f eight (8) hours is accomplished within one “work day” as this term is
understood in law. Hence, the 4-hour work done in the evening as in the example
above, should not be considered overtime work since the eight-hour period has not
yet been exceeded.

6. R E D U C T IO N O F E IG H T -H O U R W O R K IN G DAY.

The employer, in the lawful exercise o f its prerogative, is not prohibited

from reducing the 8-hour normal working time per day provided that no
corresponding reduction is made on the employee’s wag? or salary equivalent to an
eight-hour work day. In instances where the number o f hours required by the
nature o f work is less than eight (8) hours, such number o f hours should be
regarded as die employee’s full wotking day.

7. W ORK IN D IF F E R E N T SH IF T S .

In establishments where work is in different shifts, work done by the

employee beyond his eight-hour shift is considered overtime work which should be
compensated accordingly. For example, if there are three (3) eight-hour shifts in a
“work day” say, the first shift is from 6:00 a.m. to 2:00 p.m.; the second shift from

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 118 BAR REVIEWER ON LABOR lA W

2:00 p.m. to 10:00 p.m.; and the third shift from 10:00 p.m. to 6:00 a.m. o f the
following day, the employee whose regular eight-hour work is in the first shift (6:00
a.m. to 2:00 p.ra.), once required to work in the second o r third shift, should be
given additional compensation for such work done beyond his regular working
hours which legally is considered overtime work.

8. COMPRESSED WORK W E E K (CWW).

a. C o n c e p t.

The Labor Code provides that the normal wor^ hours per day shall be
eight (8) hours. Work may be performed beyond eight hours a day provided the
employee is paid for the overtime work. O n the other hand, the normal number of
workdays per week shall be six (6) days, or a total of forty-eight (48) hours based
on the normal workday of eight (8) hours. This is without prejudice to firms whose
normal workweek is five (5) days, o r a total o f forty (40) hours based on the normal
workday o f eight (8) hours.1

*'Compressed Workweek *’ o r 'XSWW" refers to a situation where die normal

workweek is reduced to less than six (6) days but the total number o f work-hours
o f 48 hours per week remains. The normal workday is increased to more than eight
(8) hours but not to exceed twelve (12) hours, without corresponding overtime
premium.2 This concept can be adjusted accordingly in cases where die normal
workweek o f the firm is five (5) days.5

CWW is a kind o f flexible w ork arran g em en t which is considered as

better alternative to the outright termination o f the services o f the employees or the
total closure of the establishment Anchored on voluntary basis and conditions
mutually acceptable to both die employer and the employees, it is recognized as
beneficial in terms o f reduction o f business costs and helps in saving jobs while
maintaining competitiveness and productivity in industries.4

‘Flexible work arrangements” refer to alternative arrangements or schedules

other than the traditional or standard work hours, workdays and workweek. The
effectivity and implementation o f any o f the flexible work arrangements should be
temporary in nature.5

Under R A No. 8972, otherwise known as ‘The Solo Parents' Welfare Act of
2000, "solo parents are allowed to work on a flexible schedule, thus:

1 DepartmentAcMsofyNo.2l Senes(tf20(K-.issuedbyti)8DOLESecre^a(yonDecenfiber2.2004imptemen&ngcantpressed
workweek (CWW) schemes.
2 DepartmentAdvisoiy No. 2. Series of 2009. issued on January 29,2009 by DOLE Secrdaiy Mananito 0 . Roque enunciating
QieGuideBnesonQieAdOfiGonarFlexlileVVbikAnangements.
2 DepartmentAdvisory Na 2. Series of2004. supra
< DepartmentAdvisoryNo. 2, Series ot2009, supra
* W.

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 cha pter three 119
LA BO R ST A N D A R D S

“Sec 6. Flexible Work Schedule. - The employer shall provide

for a flexible working schedule for solo parents: Provided, That the same
shall not affect individual and company productivity: Provided, farther,
That any employer may request exemption horn the above
requirements from the DOLE on certain meritorious grounds.”*1

The phrase *'flexible work schedule" is defined in the same law as the tight
granted to a solo parent employee to vary his/her anival and departure time
without affecting the core work hours as defined by the employer.2

b. Other forms o f flexible work arrangements.

O ther than the CWW, the following are flexible work arrangements which
may be considered, among others:

1. '"Reduction of Workdays" refers to one where the normal workdays per

week are reduced but should no t last for more than six (6) months.
2. "Potation of Workers" refers to one where the employees are rotated or
alternately provided work within the workweek.
3. 'forcedLeave" refers to one where the employees are required to go on
leave for several days or weeks utilizing their leave credits, if there are
any.
4. “Broken-time schedule" refers to one where the work schedule is n o t
continuous but the work-hours within the day or week remain.
5. “Flexi-hoBdaysschedule"refers to one where the employees agree to avail
o f die holidays at some other days provided there is no diminudon o f
existing benefits as a result o f such arrangement.3

U nder these flexible work arrangements, die employers and the

employees are encouraged to explore alternative schemes under any agreement and
company policy or practice in order to cushion and mitigate the effect o f the loss o f
income o f the employees.4

c. Conditions for availment.

D O L E shall recognize CWW schemes adopted in accordance with the
following:

1. The CWW scheme is undertaken as a result o f an express a n d

voluntary agreem en t o f m ajority o f th e covered em ployees or their d u ly
authorized representatives. This agreement may be expressed through collective
bargaining or other legitimate workplace mechanisms o f participation such as
labor-management councils, employee assemblies or referenda.

* Section 6. R A N a 8972.
1 See Secfon3{e] thereof.

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 120 Bar reviewer on La b o r law

2. In firms using substances, chemicals and processes or operating under

conditions where there are airborne contaminants, human carcinogens or noise
prolonged exposure to which may pose hazards to the employees health and
safety, there must be a certification from an accredited health and safety
organization or practitioner or from the firm’s safety committee that work beyond
eight (8) hours is within the threshold limits or tolerable levels of exposure, as set in
the Occupational Safety and Health Standards (OSHS).
3. The employer shall notify the DOLE, through its Regional Office
having jurisdiction over the workplace, of the adoption o f the CWW scheme. The
notice should be made in DOLE CWW Report F orm .*1

d. Effects.

A CWW scheme which complies with the foregoing conditions shall have
the following effects:

L Unless there is a more favorable practice existing in the firm, w ork

beyond eight (8) hours will not be com pensable by overtime prem ium
provided the total num ber of hours w orked p e t day shall not exceed twelve
(12) hours. In any case, any work performed beyond twelve (12) hours a day or
forty-eight (48) hours a week shall be subject to overtim e pay.

2. Consistent with Article 852 of die Labor Code, employees under a

CWW scheme are entided to m eal periods of n o t less than sixty (60) m inutes.
Nothing, however, shall impair the right of employees to rest days as well as to
holiday pay, rest day pay or leaves in accordance with law or applicable CBA or
company practice.

3. Adoption of the CWW scheme shall in no case result in dim inution

of existing benefits. Reversion to the norm al eight-hour workday shall not
constitute a dim inution of benefits. The reversion shall be considered a
legitimate exercise of management prerogative provided that the employer shall
give the employees prior notice of such reversion within a reasonable period o f
time.3

A case in point is Bisig Manggagam sa Tiyco v. NLRC,4 where private

respondent Tryco and the petitioners signed separate Memorandja] of Agreement
(MOA), providing for a compressed workweek schedule to be implemented in the
company effective May 20,1995. The MOA was entered into pursuant to DOLE
Department Order (D.O.) No. 2\ Series of 1990 enunciating the Guidelines on the
Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12

’ Department Advisory No. 2, Series of 2004, supra.

1 It provides: 'Artide 85. Nteal Periods. - Sut>ect to such regulations as 1he Secretary erf Labor may prescribe, it shal be the
duty of every employer to give his employees not less than sixty (60) minutes timeoff for their tegular meals.*
3 Department Advisory No. 2, Series cf 200-1, supra.
< G.R. No. 151309. Oct 15.2008.

J9JC9B0M
r C hapter T hree 12 1
LABOR STANDARDS
p.m., from Monday to Friday, shall be considered as the regular working hours, and
no overtime pay shall be due and payable to the employee for work rendered
during those hours. The MOA specifically stated that the employee waives the right
to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from
Monday to Friday considering that the compressed workweek schedule is adopted
in lieu o f the regular workweek schedule which also consists o f forty-six (46) hours.
However, should an employee be permitted or required to work beyond 6:12 p.m.,
such employee shall be entided to overtime pay.

Tryco informed the Bureau o f Working Conditions (BWC) of the

Department of Labor and Employment o f the implementation of the said
compressed workweek in the company.

In upholding the validity o f the compressed workweek, it was noted that

Department Order No. 21 sanctions the waiver of overtime pay in consideration o f
the benefits that the employees will derive from the adoption o f a compressed
workweek scheme, thus:

“The compressed workweek scheme was originally conceived for

establishments wishing to save on energy costs, promote greater work efficiency
and lower the rate of employee absenteeism, among others. Workers favor die
scheme considering that it would mean savings on the increasing cost of
transportation fares for at least one (1) day a week; savings on meal and snack
expenses; longer weekends, or an additional 52 off-days a year, that can be
devoted to rest, leisure, family responsibilities, studies and other personal matters,
and that it will spare diem for at least another day in a week from certain
inconveniences that are the normal incidents of employment, such as commuting
to and from the workplace, travel time spent, exposure to dust and motor vehicle
fumes, dressing up for work, etc Thus, under this scheme, the generally observed
workweek of six (6) days is shortened to five (5) days but prolonging the working
hours from Monday to Friday without the employer being obliged for pay
overtime premium compensation for work performed in excess of eight (8) hours
on weekdays, in exchange for the benefits above-cited that will accrue to the
employees.”

In declaring the compressed workweek arrangement in the 2007 case o f

Linton Commercial Co., Inc. v. HeHera} as unjustified and illegal and in holding that
petitioners are guilty o f illegal reduction o f work hours, the Supreme Court found
specious the petitioners attempt to justify their action by alleging that the company
was suffering from financial losses owing to the Asian currency crisis. Petitioners’
claim o f financial losses was not supported by evidence. A close examination o f
petitioners’ financial reports for 1997-1998 shows that while the company suffered
a loss of P3,645,422.00 in 1997, it retained a considerable amount o f earnings and
operating income. Clearly then, while Linton suffered from losses for that year,
there remained enough earnings to sufficiendy sustain its operations. In business,1

1 G.R. No. 163147, Oct 10,2007.

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 122 bar Review * ° N Labor Law

sustained operations in the black is the ideal but being in the red is a cruel reality.
However, a year o f financial losses would not warrant the immolation o f the
welfare o f the employees which in this case was done through a reduced workweek
that resulted in an unsettling diminution o f the periodic pay for a protracted period.
Permitting reduction o f work and pay at the slightest indication o f losses would be
contrary to the State’s policy to afford protection to labor and provide full
employment All taken into account, the compressed workweek arrangement was
unjustified and illegal. Thus, petitioners committed illegal reduction o f work
hours.”

9. R ED U C T IO N O F W ORKING DAYS D U E T O LOSSES.

An Explanatory bulletin1 enunciated the rules in determining when an

employer can validly reduce the regular number o f working days. It states that a
reduction of the number o f tegular working days is valid where the arrangement is
resorted to by the employer to prevent serious losses due to causes beyond his
control, such as when there is a substantial slump in the demand for his goods or
services or when there is lack of taw materials. This is more humane and in keeping
with sound business operations than the outright termination o f the services or the
total closure o f die enterprise.2 Consequendy, the employer may deduct the wages
and living allowances corresponding to the days taken off from the workweek, in
the absence o f an agreement specifically providing that a reduction in the number
of workdays will not adversely affect the remuneration o f the employees. This view
is consistent with the principle o f “no-work-no-pay. ” Furthermore, since the
reduction of workdays is resorted to as a cost-saving measure, it would be unfair to
require the employer to pay the wages and living allowances even on unworked
days that were taken off from the regular workweek.3

In Philippine Graphic Arts, Inc. v. NLRC,4 the High Court upheld the
validity o f the reduction o f working hours, taking into consideration die following:
the arrangement was temporary; it was a mote humane solution instead o f the
retrenchment o f personnel; there were notices and consultations with the workers
and supervisors; a consensus was reached on how to deal with the deteriorating
economic conditions; and it was sufficiendy proven that the company was suffering
from losses.

Notably, although the said Explanatory Bulletin stands more as a set o f

directory guidelines than a binding set o f implementing rules, it has one main
consideration, consistent with the ruling in Phitippine Graphic Arts, in determining

1 TheEqianakxyBu9^mtnBectrfReductoo(W o(1«laysm W a9es/lJvingAS(MancesdatedJu!y23.1985 issued by

0 0 t£ DirectorAugusbG. Sanchez.
* ML
} bid.; See also No. 1 [F], 2019 Handbook on Workers’ Salutary Monetary Benefits, issued by the Bureau of Working
O riSons, DOLE
4 6 R No. L-80737. Sept 29,1988,166 SCRA118.

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 C h a pter T h ree 123
LA BO R STA N DA RDS

the validity o f reduction o f working hours, U , that the company was suffering
from losses.

In declaring die compressed workweek arrangement in Linton Commercial

Co., Inc. ». Helltra,l as unjustified and illegal and in holding that petitioners are guilty
o f illegal reduction o f work hours, the Supreme Court found specious the
petitioners attempt to justify their action by alleging that the company was suffering
from financial losses owing to the Asian currency crisis. Petitioners’ claim o f
financial losses was n o t supported by evidence. A close examination o f petitioners’
financial reports for 1997-1998 shows that while the company suffered a loss o f
P3,645,422.00 in 1997, it retained a considerable amount o f earnings and operating
income. Clearly then, while die company suffered from losses for that year, there
remained enough earnings to sufficiendy sustain its operations. In business,
sustained operations in the black is the ideal but being in the ted is a cruel reality.
However, a year o f financial losses would not warrant the immolation o f the
welfare o f die employees which in this case was done through a reduced workweek
that resulted in an unsetding diminution o f the periodic pay for a protracted period.
Permitting reduction o f work and pay at the slightest indication o f losses would be
contrary to the State’s policy to afford protection to labor and provide full
employment.

It bears stressing, however, that work reduction scheme sans proof o f

losses may amount to constructive dismissal F or instance, in Fe la Rosa ».
Ambassador Hotel?- die records fail to show any documentary proof that the work
reduction scheme was adopted due to respondent’s business
reverses. Respondent’s memorandum dated April 5, 2000 (sict should be 2002)
informing petitioners o f die adoption o f a two-day w odt scheme effective April 5,
2002, made no mention why such scheme was being adopted. Neither do die
records show any documentary proof that respondent suffered financial losses to
justify its adoption o f the said scheme to stabilize its operations. W hat is
undisputed, as found by both the Labor Arbiter and the NLRC and admitted by
respondent itself, is that die complaints for violation o f labor standards laws were
filed by petitioners against respondent at die DOLE-NCR, some o f which
complaints were partially settled; and that almost immediately after the partial
settlement o f the said complaints, the work reduction/rotation scheme was
implemented.

Case law holds that constructive dismissal occurs when there is cessation
o f work because continued employment is rendered impossible, unreasonable o r
unlikely; when there is a demotion in rank o r diminution in pay or both; or when a
clear discrimination, insensibility, or disdain by an employer becomes unbearable to
the employee. Respondent’s sudden, arbitrary and unfounded adoption o f the

• G-R.No. 163147, Oct 10,2007.

2 G il No. 177059, March 13,2009.

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 124 Bar Reviewer o n Ia 80R Law

two-day work scheme which greatly reduced petitioners’ salaries renders it liable for
constructive dismissal.

10. REGULAR WORKING DAYS O F H O SPIT A L O R C L IN IC

PERSO N N EL

The regular working days o f covered employees shall not be more than
five (5) days in a workweek. The workweek may begin at any hour and on any day,
including Saturday or Sunday, designated by the employer. Employers are not
precluded from changing the time at which the workday or workweek begins
provided that the change is not intended to evade the requirements o f die Rules.*

The DOLE Secretary issued Policy Instructions No. 54 {Subject. Working

Hours and Compensation of Hospital!(Me Personnel^ on April 12, 1988 to clarify the
enforcement policy of the D OLE on the working hours and compensation o f
personnel employed by hospitals or clinics with a bed capacity o f 100 or more and
those located in cities and municipalities with a population o f one million or more.
It was recognized in this issuance that the Labor Code, in its Article 83, has
adopted and incorporated the basic provisions o f R~A. 59012 and retained its spirit
and intent which is to shorten die workweek o f covered hospital personnel and at
the same time assure them o f a frill weekly wage. Consequently, consistent with
such spirit and intent, it was declared that personnel in subject hospitals and clinics
are endded to a full weekly wage for seven (7) days if they have completed the 40-
hour/5-day workweek in any given workweek.

The Supreme Court, however, has voided Policy Instructions No. 54 in the
case of SanJuan de Dios Hospital EmployeesAssociation ». NLRO thereby voiding the
rule that hospital employees who worked for onfy 40 h ours/5 days in any given
workweek should be compensated for full weekly wage for seven (7) days. The
reliance upon R.A. No. 5901 is misplaced for this law has long been repealed with
die passage o f the Labor Code on May 1,1974. The governing law is now A rdde
83 o f the Labor Code. A cursory reading o f this ardde betrays petitioners’ position
that “hospital employees” are entitled to “a full weekly salary with paid two (2)
days’ off if they have completed die 40-hour/5-day workweek.” W hat Article 83
merdy provides are: (1) the regular office hour o f eight hours a day, five days per
week for health personnel; and (2) where die exigencies o f service requite that
health personnd work for six days o r forty-eight hours then such health personnd
shall be entided to an additional compensation o f at least thirty percent (30%) o f

1 Secfim6,Ri^lABook 111oitie^tobnptemert6ieLabaCoda
* Repubfc Act 5901, *An Act Presetting Forty Homs a Week of Labor for Gwemment and R vate Hospitals or C&fc
PorsonneI,*enactedonJune21.1969,prescA)esa4(Hioutf5Klayw«1med(farhospltaVcGnoepersormeiAt8iosan»6ne.
fie Act fxohtts the (firrarwtion of fie compensaSon of ftese w okas who would suffer a reduction h therweeldywageby
reason o( fie shortened ankweek prescribed fay Ihe Act fo e fe c tR A 5901 r a ^ B ia t the r a ^ h o s p y w riters
wto used to work se«n (7) days a week should be paid for such number of days far waking only 5 days or 40 hours a

3 G.R. No. 126383.Nw. 28.1997.

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 C h a ftsr t h r e e 125
LABOR STA N D A R D S

their regular wage for work on the sixth day. There is nothing in the law that
supports then Secretary o f Labor’s assertion that “personnel in subject hospitals
and clinics are entided to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given workweek.” Needless to say,
die Secretary o f Labor exceeded his authority by including a two days o ff with pay
in contravention o f the clear mandate o f the statute. Administrative interpretation
o f the law is at best merely advisory and the Court will not hesitate to strike down
an administrative interpretation that deviates from the provision o f the statute.

11. P O W E R IN T E R R U P T IO N S /B R O W N O U T S

The following are the effects o f work interruption due to brownouts:1

1. Brown-outs o f short duration but not exceeding twenty (20) minutes

shall be treated as worked or compensable hours whether used
productively by the employees or n o t
2. Brown-outs running for more than twenty (20) minutes may not be
treated as hours worked provided any o f die following conditions are
present:
a) The employees can-leave their workplace or go elsewhere w hether
within or without the work premises; or
b) The employees can use the time effectively for their own interest
3. In each case, the employer may extend the working hours o f his
employees outside the regular schedules to compensate for the loss o f
productive man-hours without befog liable for overtime pay.
4. Industrial-enterprises with one or two workshifts may adopt any o f the
workshifts prescribed for enterprises with three (3) workshifts to
prevent serious loss or damage to materials, machineries o r equipment
that may result in case o f power interruptions.2
5. The days when work was n o t required and no work could be done
because o f shutdown due to electrical power foterfuptions, lack o f raw
materials and repair o f machines, are not deemed hours worked.3

b.
MEAL PERIODS

1. G E N E R A L R U L E O N M EA L P E R IO D .

As a general rule, every employer is required to give his employees,

regardless o f sex, not less than one (1) hour (or 60 minutes) time-off for regular

1 PoG9lndnKtoto.36da^May22,l978was'EsuedbytheUnde(secr^ofUhorandErq)loperabda%lhe
^ctsrfptwrtefrup^abfOwna^OTproduc^mai^xius.
3 PoScy InstmcSons No. 36. May 22.1978.
3 DufaMt Recapping PlarJConpanyv.NlRC. G il No. L-76746, July 27,1987,152 SCRA328.

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 126 Bar Reviewer on Ia b o r Law

meals.1 Being time-off, it is not compensable hours worked. In this case, die
employee is free to do anything he wants, except to work. If he is required,
however, to work while eating, he should be compensated therefor.

2 . SHORTENING OF MEAL TIM E TO NOT LESS THAN 20

MINUTES, WHEN COMPENSABLE.
In the following cases, a meal period of not less than twenty (20) minutes
may be given by the employer provided that such shorter meal period is credited as
compensable hours worked of the employee:

a) Where the work is non-m anual work in nature or does not involve
strenuous physical exertion;
b) Where the establishment regularly operates for not less than
sixteen (16) hours a day;
c) In cases of actual or im pending em ergencies or when there is
urgent work to be performed on machineries, equipment or
installations to avoid serious losses which the employer would
otherwise suffer; and
d) Where the work is necessary to prevent serious loss o f perishable
goods.2

3. SHORTENING OF MEAL TIM E TO NOT LESS THAN 20

MINUTES, WHEN NOT COMPENSABLE.
The law allows a situation where the employees themselves request for the
shortening of meal period to not less than twenty (20) minutes (say, thirty minutes,
or from 12:00 to 12:30 p.m. instead of 12:00 to 1:00 p.m.) for the purpose of
allowing them to leave work earlier than the lapse of the eight (8) hours required by
law (say, 4:30 p.m. instead of 5:00 p.m.). This shortened period, however, shall not
be considered compensable working time provided the following conditions arc
complied with:

a) The employees voluntarily agree in w riting to a shortened meal

period of thirty (30) minutes and are willing to waive the overtime pay
for such shortened meal period;
b) There should be no dim inution in the benefits o f the employees
which they receive prior to the effectivity o f the shortened meal
period;
c) The work of the employees does not involve strenuous physical
exertion and thev are provided with adequate coffee breaks in the
m orning and afternoon;*

1 Article 85, Labor Code; Section 7, Rule I, Book III, Rules to Implement the labor Code.
* Section 7, Rule I, Book III, Ibid.

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 C hapter T hree 12 7
LABOR STANDARDS

d) The value of the benefits derived by the employees from the

proposed work arrangement is equal to or com m ensurate with the
compensation due diem for the shortened meal period as well as the
overtime pay for 30 minutes as determined by the employees
concerned;
e) The overtim e pay of the employees will become due and demandable
if ever they arc permitted or made to work beyond 4:30 p.m.; and
f) The effectivity o f the proposed working time arrangement shall be for
a tem porary duration as determined by the D O LE Secretary.1

4. S H O R T E N IN G O F MEAL T IM E T O LESS T H A N 20 M IN U TES,

EFFECT.

The law does not allow that meal time be shortened to less than twenty
(20) minutes. If so reduced, die same shall no longer be considered as meal time
but merely as rest period or coffee break and, therefore, becomes compensable
working time.2

5. C O F F E E BREAKS AND R EST P E R IO D S O F SH O R T D U R A T IO N .

Rest periods o f short duration during working hours are considered and
counted as hours worked.3 Rest periods or coffee breaks running from five (5) to
twenty (20) minutes are considered compensable working time.4

6. C H A N G IN G FR O M 30-M IN U T E PAID “ O N CALL” L U N C H BREAK

T O O N E (1) H O U R MEAL T IM E W IT H O U T PAY, E F F E C T .

The case of Sim Darby Pilipinas, Inc. v. NLRC,5 is illustrative o f this point.
Prior to the present controversy, all company factory7workers in Mankina including
members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a
30-minute paid "on call” lunch break. Petitioner, by way o f a memorandum,
changed die meal time schedule from 30 minutes to one (1) hour without pay.
Since private respondent union felt affected adversely by the change in the work
schedule and discontinuance o f the 30-minute paid "on call” lunch break, it filed on
behalf of its members a complaint with the Labor Arbiter for unfair labor practice,
discrimination and evasion of liability. Tn declaring the change in the work schedule
as valid, the Supreme Court held:

“(The petitioner) rationalizes that while the old work schedule included a
30-minute paid lunch break, the employees could be called upon to do jobs during
that period as they were 'on call. ' Even if denominated as iunch break, this period
could very well be considered as working time because the factory employees were

1 Letter-Opinion dated Nov. 27,1989 of Secretay Frankln Dribn to Kodak Philippines.

3 Id.
3 Artide 84, Labor Code.
1 Section 7, Rule I, Book III, Rules to Implement the Labor Code.
5 G il No. 119205, April 15,1998,289 SCRA 86.

J9JC9B0M
 12 8 Bar. review er on Labo r Law

required to work if necessary and were paid accordingly for working. With the new
work schedule, the employees arc now given a one-hour lunch break without any
interruption from their employer. For a full one-hour undisturbed lunch break, the
employees can freely and effectively use this hour not only for eating but also for
their rest and comfort which are conducive to more efficiency and better
performance in their work. Since the employees are no longer required to work
during this one-hour lunch break, there is no more need for them to be
compensated for this period. We agree with the Labor Arbiter that the new work
schedule fully complies with the daily work period of eight (8) hours without
violating the Labor Code. Besides, the new schedule applies to all employees in the
factory similarly situated whether they are union members or not”

7. M E A L T IM E INVOLVING SEVERAL SH IFTS.

In a company where work is continuous for several shifts, the mealtime

breaks should be counted as working time for purposes of overtime compensation.
Consequendy, the workers who are required to work in two (2) full successive
shifts should be paid for sixteen (16) hours and not fourteen (14), the two hours
for rest or mealtime breaks being included as compensable working time. The idle
time that an employee may spend for resting wherein he may leave the work area
should not be counted as workmg time only when the work is not continuous.1

C.
NIGHT SHIFT DIFFERENTIAL

1. HOW RECKONED.

Night shift differential is equivalent to 10% of employee's regular wage

for each hour o f work performed between 10:00 p.m. and 6:00 a.m. of the
following day.2

2. COVERAGE.

Night shift differential pay applies to all employees except.

1) Government employees, whether employed by die National

Government or any o f its political subdivisions, including those
employed in government-owned and/or controlled corporations with
original charters or created under special laws;
2) Those of retail and service establishments regularly employing not
more than five (5) workers;
3) Kasambahay and persons in the personal service of another,
4) Managerial employees, if they meet all o f the following conditions:
4.1 Their primary' duty is to manage the establishment in which they
are employed or o f a department or subdivision thereof;

’ National Development Company v. Court of Industrial Retabons, G.R. No. L-15422, Nov. 30.1962.
? No. 5 (A), 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE

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 C h a p te r T hree 12 9
LABOR STANDARDS

4.2 They customarily and regularly direct the work o f two or more
employees therein; and
4.3 They have the authority to hire or fire other employees o f lower
rank; or their suggestions and recommendations as to hiring,
firing, and promotion, or any other change o f status of other
employees are given particular weight.
5) Officers or members o f a managerial staff, if they perform the
following duties and responsibilities:
5.1 Primarily perform work directly related to management policies
of their employer,
5.2 Customarily and regularly exercise discretion and independent
judgment;
5.3 (a) Regularly and directly assist a proprietor or managerial
employee in the management of the establishment or
subdivision thereof in which he or she is employed; or (b)
execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or
knowledge; or (c) execute, under general supervision, special
assignments and tasks; and
5.4 Do not devote more than twenty percent (20%) of their hours
worked in a workweek to activities which are not dirccdy and
closely related to the performance of the work described in
paragraphs 5.1,5.2, and 5.3 above;
6) Field personnel and those whose time and performance are
unsupervised by the employer,1 including those who are engaged on
task or contract basis, purely commission basis, or those who are paid
a fixed amount for performing work irrespective o f the time
consumed in the performance thereof.2

3. R EA SO N FO R A D D IT IO N A L C O M PEN SA T IO N .

Night shift differential pay is given as a premium for working at a time

when the employee is supposed to sleep and rest in accordance with tire law of
nature. Night work cannot be regarded as desirable. The lack o f sunlight tends to
produce anemia and tuberculosis and a predisposition to other illness. Night work
brings increased liability to eyestrain and accident. Serious moral dangers are also
likely to result from the necessity o f traveling the streets alone at night, and from
the interference with normal home life.

Moreover, from an economic point of view, investigations show that

night work is unprofitable, being inferior to day work both in quality and in
quantity. Wherever it had been abolished, in the long run, the efficiency both of

' No. 5 [B], Id.; See also Section 1, Rule II (Night Shift Differential), Book III of the Rules to Implement the labor Code.
2 Section 1 (e), Rule II (Night Shift Differentia!). Book III. Rules to Implement the labor Code.

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 13 0 Bar. Reviewer on La b o r Law

the management and of the workers was raised. Furthermore, it was found that
nightwork laws are a valuable aid in enforcing acts fixing the maximum period of
employment.1

Additional compensation for nighttime work is founded on public policy.

Therefore, the same cannot be waived.2

3. PERCENTAGE OF N IG H T SH IFT D IF F E R E N T IA L PAY.

A covered employee should be paid night shift differential pay of no less

than ten percent (10%) of his regular wage for each hour of work performed
between ten (10) o’clock in the evening and six (6) o’clock in the morning of the
following day.3

4. N IG H T SH IFT D IFFE R E N TIA L PAY VS. O V E R TIM E PAY.

When the work of an employee falls at night time, the receipt of overtime
pay shall not preclude the right to receive night differential pay. The reason is the
payment of the night differential pay is for the work done during the night; while
the payment of the overtime pay is for work in excess of the regular eight (8)
working hours.

5. COM PUTATION OF N IG H T S H IFT D IF F E R E N T IA L PAY.

1) Where night shift (10p.m. to 6 a.m.) work is regular work.

a. On an ordinary day: Plus 10% o f the basic hourly rate or a total
o f 110% of the basic hourly rate.
b. On a rest day, special holiday or regular holiday: Plus 10% of
the regular hourly rate on a rest day, special day or regular holiday
or a total o f 110% o f the regular hourly rate.
2) Where night shift (10 p.m. to 6 a.m.) work is overtime work.
a. On an ordinary day: Plus 10% o f the overtime hourly rate on an
ordinary day or a total of 110% o f the overtime hourly rate on an
ordinary day.
b. O il a rest day or special holiday or regular holiday: Plus 10%
of the overtime hourly rate on a rest day or special day or regular
holiday.
3) For overtime work in the night shift. Since overtime work is not
usually eight (8) hours, the compensation for overtime night shift
work is also computed on the basis of the hourly rate.

' Shell Company of the Philippine 'Blands, IH . v. National Labor Union, G.R No 1-1309, July 26,1946,81 Phil. 315, quoting
Principles of labor Legislation, Commons and Andrews, 4th Rev. Ed., p. 142].
J Article 6, Civil Code; Mercury Drug Co., Inc. v. Dayao, G.R. No. L-30452, Sept 30,1982.
3 Section 2. Rule II, Book III, Rules to Implement the labor Code; No. 5 (A), 2019 Handbook on Workers’ Statutory Monetary
Benefits, issued by the Bureau of Woridng Conditions, DOLE; See GMA Network, Inc. v. Pabriga, G.R No. 176419, Nov. 27,
2013

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LABOR STANDARDS

a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a

total o f 110% o f 125% of basic hourly rate,
h. On a rest day or special holiday or regular holiday. Plus 10% o f
130% o f regular hourly rate on said days or a total o f 110% of 130%
of the applicable regular hourly rate.

d.
OVERTIMEWORK

1. M EA N IN G .

Work rendered after or beyond die normal eight (8) hours of work is
called “overtime w ork.”

2. BASIS.

In computing overtime work, "regular wage" or "basic salary" means "cash"

wage only without deduction for facilities provided by the employer.

3. PREM IU M PAY VS. O V E R T IM E PAY.

"Premium pay" refers to the additional compensation required by law for

work performed within eig h t (8) hours on non-working days, such as rest days
and regular and special holidays.1 On the other hand, "overtime pay ” refers to the
additional compensation for work performed beyond eig h t (8) hours a day. Ever)'
employee who is entided to premium pay may likewise be entided to the benefit of
overtime pay if he/she has rendered overtime work on such premium days as rest
days and regular and special holidays.2

4. EXCLUSION O F COLA FR O M O V ER TIM E PAY C O M PU T A T IO N .

In computing overtime pay, the cost-of-living allowance (COLA)

provided under the Wage Orders is not to be included.3 For instance, the P I0.00
COLA granted under W age O rder N o. NCR-21 [October 05, 2017],4 for the

1 No. ill. DOLE Handbook on Workers Statutory Monetary Benefits.

2 No. IV, Ibid.
3 Per Labor Advisory dafed 7 July 2011 issued by former DOLE Secretary RosafmdaDimapi5s-Baldoz.lt was declared therein
that while COLA is hduded in the computation of the regular holidays, it is not inebded in the oomputadon of other wage-
related benefits such as overtime pay, premium pay, night-shit differential pay, 13* month pay and retirement pay. See also
No. 4 (CJ, 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE;
See also discussion on Chapter II (WEEKLY REST PERIODS), Labor Code [infra].
4 Wage Order No. NCR-21 fa the National Capital Region which took effect on October 05,2017, granted a basic wage
increase of P21.00 per day and maintained the P10.00 COLA under the previous wage order, thus-___________
I New
Minimum
S edorflndustry Basic Wage Basic Wage Increase jNew Basic Wage COLA
Wage
Rates
Non-Agriculture P481.00 P21U0 |P50200 P10.00 P 51200
Agriculture (PlarlaSon and Non Plantation) [P444.0Q P21.00 jP465.00 P10.00 P 47500

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 132 Bap. Reviewer on La b o r Law

National Capital Region, is not included in its computation. The basis should,
therefore be the New Basic Wage o f 1*502.00 and not die New Minimum Wage Rate of
P512.00.

5. H O W T O COM PUTE O V E R TIM E PAY.

a) For overtime w ork perform ed on an ordinary day, the overtime

pay is plus 25% of the basic hourh rate.
b) For overtime work perform ed on a rest day or on a special day,
the overtime pay is plus 30% of the basic hourh rate which includes 30%
additional compensation as provided in Article 95 [a] of the Labor Code.
c) For overtime w ork perform ed on a rest day w hich falls on a
special day, the overtime pay is plus 30% of the basic hourh rate which
includes 50% additional compensation as provided in Article 93 [c] of the Labor
Code.
d) For overtime work perform ed on a regular holiday, the overtime
pay is plus 30% of the basic hourly rate which includes 100% additional
compensation asprovided in Article 94 [b] of the Labor Code.
e) For overtime work perform ed on a rest day w hich falls on a
regular holiday, the overtime pay is plus 30% of the basic hourh rate
which includes 160% additional compensation.

6. BUILT-IN OVERTIM E PAY.

In case the employment contract stipulates that the compensation

includes built-in overtime pay and the same is duly approved by the Director of the
Bureau of Employment Services (now Bureau of Local Employment), the non­
payment by the employer o f any overtime pay for overtime work is justified and
valid.1

In PtiSALA v. NLRC,2 where the period of normal working hours per

day was increased to twelve (12) hours, it was held that the employer remains liable
for whatever deficiency in the amount for overtime work in excess of the first eight
(8) hours, after recomputation shows such deficiency.

7. EM ERGENCY O V ERTIM E W O R K

The general rule remains that no employee may be compelled to render

overtime work against his wifi. The following are the exceptions when employee
may be compelled to render overtime work:

1. When the country is at war or when any other national or local

emergency has been declared by the National Assembly or the Chief
Executive;

' Engheemg Equipment Inc. v. Mnister of .aba, G.R. No. L-64967, Sept 23,1985
2 PAL Employees Savings and Loan Association, Inc. [PESALA] v. NLRC, G.R. No. 105963, August 22,1996.

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LABOR STANDARDS

2. When overtime work is necessary to prevent loss of life or property

or in case of imminent danger to public safety due to actual or
impending emergency in the locality caused by serious accident, fire,
floods, typhoons, earthquake, epidemic or other disasters or
calamities;
3. When there is urgent work to be performed on machines,
installations or equipment, or in order to avoid serious loss or
damage to the employer or some other causes o f similar nature;
4. When the work is necessary to prevent loss or damage to perishable
goods;
5. When the completion or continuation o f work started before the 8th
hour is necessary to prevent serious obstruction or prejudice to the
business or operations o f the employer; and
6. When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.

It must be emphasized that an employee cannot validly refuse to render

overtime work under any of the foregoing circumstances. When an employee
refuses to render emergency overtime work under any o f the foregoing conditions,
he may be dismissed on the ground o f insubordination or willful disobedience o f
die lawful order of the employer.

8. U N D E R T IM E N O T O FFSET BY O V E R T IM E .

The following rules shall apply:

a) Undertime work on any particular day shall not be offset by overtime

on any other day.
b) Permission given to the employee to go on leave on some other day o f
the week shall not exempt the employer from paying the additional
compensation required by law such as overtime pay or night shift
differential pay.

9. WAIVER O F O V E R T IM E PAY.

The right to claim overtime pay is not subject to a waiver. Such right is
governed by law and not merely by the agreement o f the parties.1

While rights may be waived, the same must not be contrary to law, public
order, public policy, morals or good customs or prejudicial to a third person with a
right recognized by law.2

' Mercader v. MaiSa Polo Club, G.R No. L-8373, Sept 28,1956; Ciuz v. Yee Sing, G il No. t-12046. Oct 1959; Manila
Tenranal Co., Inc. v. CR. G .R No. L-9265, Apr! 29,1957,48 0 . G. 7, p. 2725,91 P h i 625.
2 Article 6, Civil Code; Pampanga Sugar Development Co, Inc. v. OR, G il No. L-39387, June 29,1982.

J9JC9B0M
 134 Bar review er on Labor law

But if the waiver is done in exchange for and in consideration of certain

valuable privileges, among them that of being given tips when doing overtime
work, there being no proof that the value of said privileges did not compensate for
such work, such waiver may be considered valid.1

10. E N T IT L E M E N T OF SEAFARERS T O O V E R TIM E PAY.

a. Actual overtime service necessary.

The correct criterion in determining whether or not seafarers are entitled
to overtime pay is not whether they were on board and cannot leave ship beyond
the regular eight (8) working hours a day, but whether they actually rendered
service in excess of said number of hours.2

In Sto/t-Nielsen? invoking the illegal dismissal o f a seaman whose contract

stipulates the payment of ‘fixed overtime, ” the Supreme Court, in reversing the
NLRC ruling that the seaman is entided thereto even for the remaining six (6)
months and three (3) days o f his contract, at which time he was no longer
rendering services as he had already been repatriated, cited its holding in the earlier
case of Cagatnpan? where it was ruled that the contract provision means that the
fixed overtime pay of 30% would be the basis for computing the overtime pay if
and when overtime work would be rendered. Simply stated, the rendition of
overtime work and the submission of sufficient proof that said work was actually
performed are conditions to be satisfied before a seaman could be entided to
overtime pay which should be computed on the basis o f 30% o f the basic monthly
salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established. Realistically speaking, a
seaman, by the very nature of his job, stays on board a ship or vessel beyond the
regular eight-hour work schedule. For the employer to give him overtime pay for
the extra hours when he might be sleeping or attending to his personal chores or
even just lulling away his time would be extremely unfair and unreasonable.”

In PCL Shipping* the Supreme Court found that private respondent was
not entided to overtime pay because he failed to present any evidence to prove that
he rendered service in excess o f the regular eight (8) working hours a day. But in
Acuna? petitioners’ claims for overtime pay were allowed despite their failure to
substantiate them. It was declared in this case that the claims o f OFWs against
foreign employers could not be subjected to the same rules o f evidence and
procedure applicable to complainants whose employers are locally based. While
normally, the Court would require the presentation o f payrolls, daily time records*35

’ Meralco Workers Union v. Mania Bedric Co, G.R. No. L-11876, May 29,1959.
’ SW-Nietsen Marne Servces (Phils.), Inc. v. NLRC, G.R. No. 105396, Nov. 19.1996,264 SCRA 307; 332 Phi. 340,352.
3 Siot-Nielsen Marine Services [Phfe.], Inc. v. NLRC, G.R. No. 109156, July 11,1996.
1 Caganpan v. NLRC, G.R. Nos. 85122-24, March 22,1991,195 SCRA 533.
5 PCL Shpping Philippines, Inc. v. NLRC, G.R No. 153031, Dec. 14,2006.'
8 Acuna v. Hon. CA, G.R. No. 159832, May 5.2006.

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LABOR STANDARDS

and similar documents before allowing claims for overtime pay, in this case, that
would be requiring the near impossible. Here, it is private respondents who could
have obtained the records of their principal to refute petitioners’ claims for
overtime pay. By their failure to do so, private respondents waived their defense
and in effect admitted the allegations o f the petitioners. Accordingly, it was ruled
that private respondents were solidarily liable with their foreign principal for the
claims for overtime pay of petitioners.

b. Guaranteed overtime pay, not included in computation o f salary

for unexpired portion.
In the computation o f the monetary award to an illegally dismissed OFW,
the “guaranteed overtime” pay should not be included as part o f his salary for the
unexpired portion o f his contract.1 This is so because it is improbable that the
OI1*37W has rendered overtime work during the unexpired term of his contract.
Consequently, there is no factual or legal basis therefor.2

11. O V E R T IM E PAY C A N N O T CAUSE WAGE D IST O R T IO N .

In PAL Employees Savings,3 the petitioner’s contention that the agreed

salary rate in the employment contract which provides for twelve (12) normal
working hours per day should be deemed to cover overtime pay (although the
amount thereof was not suffleient to include overtime pay), otherwise serious
distortions in wages would result “since a mere company guard will be receiving a
salary much more than the salaries o f other employees who are much higher in
rank and position than him in the company,” is a flimsy argument, undeserving o f
consideration. Said the Supreme Court: “How can paying an employee the
overtime pay due him cause serious distortions in salary rates or scales? And how
can ‘other employees’ be aggrieved when they did not render any overtime
service?”

e.
COMPUTATION OF ADDITIONAL COMPENSATION
(RATES ONLY)

1. PR EM IU M PAY.

Article 934 o f the Labor Code enunciates the premium pay which refers to
the additional compensation for work performed w ithin eig h t (8) hours on non-

1 Bahia Shipping Services, Inc. v. Chua, G.R. No. 162195, April 8,2008.
* Stoft-Nietsen Marine Services [Phis.], Inc. v. NLRC, G R. No. 109156, July 11, 1996; Santiago v. CF Sharp Crew
Management, Inc., G.R. No. 162419, July 10,2007.
3 PAL Employees Savings and Loan Association, Inc. [PESALAJv. NLRC, G.R. No. 105963, August 22,1996.
1 Article 93. Compensation for Rest Day, Sunday a Holiday W ork-(a) Where an employee is made or permitted to work on
hs scheduled rest day, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage. An
employee shat be entitled to such additional compensation fpr work performed on Sunday only when it is his established
rest day.

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 136 Bar Reviewer on La bo r Law

work days, such as rest days and special days (or special holidays)1or regular
holidays.2

2. COVERAGE.

The premium pay benefit applies to all employees except.

1) Government employees, whether employed bv the National

Government or any of its political subdivisions, including those
employed in government-owned and/or controlled corporations with
origmal charters or created under special laws;
2) Managerial employees, if they meet all of the following conditions:
2.1. Their primary duty is to manage the establishment in which they
are employed or o f a department or subdivision thereof;
2.2. They customarily and regularly direct the work of two or more
employees therein;
2.3. They have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to hiring,
firing, and promotion, or any other change o f status of other
employees are given particular weight.
3) Officers or members o f a managerial staff, if they perform the
following duties and responsibilities:
3.1. Primarily perform work direedy related to management policies of
their employer,
3.2. Customarily and regulady independent judgment;
3.3. (a) Regularly and direedy assist a proprietor or managerial
employee in the management o f the establishment or subdivision
thereof in which he or she is employed; or (b) execute, under
general supervision, work along specialized or exercise discretion
and technical lines requiring special training, experience, or
knowledge; or (c) execute, under general supervision, special
assignments and tasks; and
3.4. Do not devote more than twenty percent (20%) of their hours
worked in a workweek to activities which are not direedy and

(b) When the nature of the wort: of the employee is such lhat he has no regular workdays and no regular rest days can be
scheduled he shal be paid an additional compensation of at least thirty percent (30%) of his regular wage for work
performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the
regular wage of the employee. Where such holiday work fals on the employee’s scheduled rest day, he shal be entitled to
an additions compensation of at least fifly per cent (50%) of his regular wage.
(d) Where te cotectve ba/gariing agreement or other appfcable employment contract stipulates the payment of a higher
premium pay than lhat prescribed under this Article, the emptoyer shall pay such higher rate.
’ No. 3 (A). 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.
? Article 94. Labor Code on regular hoSday pay.

J9JC9B0M
 C hapter T u r n 13 7
LABO R STAN D AR D S

closely related to the performance of the work desenbed in

paragraphs 3.1, 3.2, and 3.3 above.
4) Kasambahays and persons in the personal service o f another;
5) Workers who are paid by results, including those who are paid on
piece rate, takay.pakyaw or task basis, and other non-time work, if their
output rates are in accordance with the standards prescribed in the
regulations, or where such rates have been fixed by the DOLE
Secretary; and
6) Field personnel, if they regularly perform their duties away from the
principal or branch office or place o f business o f the employer and
whose actual hours o f work in the field cannot be determined with
reasonable certainty.1

3. D IST IN C T IO N S.

a. Regular holidays vs. special days/special holidays.

The principal distinctions2 between regular holiday, on the one hand,
and special day/special holiday, on the other hand, are as follows:

1. A covered employee who does not work during a regular holiday is paid
100% of his regular daily wage; while a covered employee who does not work
during a special day/special holiday does not receive any compensation under the
principle of “no work, nopay. ”

2. A covered employee who works during a regular holiday is paid 200% of

his regular daily wage; while a covered employee who works during a special
day/special holiday is only paid an additional compensation of not less than 30% of
the basic pay or a total of 130% and at least 50% over and above the basic pay or a
total o f 150%, if the worker is permitted or suffered to work on a special da//spedal
holiday which falls on his scheduled rest day.

Unless otherwise modified by law, order or proclamation, the following

are the four (4) special days or special holidays in a year under the law3 that shall be
observed in the Philippines:4

• Ninoy Aquino Day - Monday nearest August 21

• All Saints Day - November 1
• Feast of Immaculate
Conception o f Mary - December 8

’ No. 3(B), Id.

3 It bears noting that under Section 2 of Executive Order No. 203 (June 30,1987], it is prwided that '[h]enceforth, the terms
legal a regular holiday" and 'special hoSda/, as used in laws, orders, rules and regulations a other issuances shall now be
referred to as ‘regular hofday" and 'special d a /, respectively.'
3 Executive Order No. 292, as amended by RA. No. 9849, and as further amended by R A No. 10956.
4 No. 3 [C], 2019 Handbook on Workers' Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.

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 13 8 Bar reviewer on La b o r Law

• Last Day of the Year - December 311

b. Special days/special holidays vs. special working days or special

working holidays.
As distinguished from special days/special holidays as discussed above,
for work performed on a declared special working day or special working holiday, an
employee is entided only to his/her daily wage rate. No premium pay is required
since work performed on said day is considered work on an ordinary workday.2

An example of a special working holiday is the National Bible Day

prescribed under R.A. No. 11163, otherwise known as the ‘National Bible Day Act,”
which was signed into law on December 20,2018 by President Rodrigo R. Duterte.
It declared the last Monday of every year as National Bible Day. Another example
is the National Women’s Day provided for under R.A. No. 6949 [April 10, 1990]
which declared March 8th of every year as a special working holiday to celebrate it.345

c. Inclusion/non-inclusion o f COLA in the computation.

According to a Labor Advisor/ issued by the DOLE Secretary, while
COLA is included in the computation of the regular holidays, it is n o t included
in the computation of other wage-related benefits such as prem ium pay, overtim e
pay, night-shift differential pay, 13th m o n th pay and retirem ent pay.

4. COM PUTATIO N OF PREM IUM PAY F O R HOLIDAYS.

Iuibor Advisory No. 06, Series oj 2013? on the Payment of Wages for the
Regular Holidays, Special (Non-working) Days and Special Holiday, specifically
promulgated the following rules that shall apply:

1. REGULAR HOLIDAYS

* I f the employee did not work he/she shall be paid 100 percent of
his/her salary for that day. Computation: (Daily rate + Cost of Living
Allowance) x 100%. T he COLA is included in the com putation
of regular holiday pay.

• I f the employee worked, he/she shall be paid 200 percent o f

his/her regular salary for that day for the first eight hours.
Computation: (Daily rate + COLA) x 200%. T he COLA is also
included in com putation of regular holiday pay.

' Id.
7 CXXE Menxxandum Circular No. 1, March 8.2004.
3 Section 2. R A No. 6949.
4 Per Labor Advisory dated 7 July 2011 issued by former DOLE Secretary Rosalinda D'mapfe-Baidoz; See atso No. 3 [D],
2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.
5 lssuedmOctober1,2013byAdingSecretayDanitoP.Cnjz.

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LABOR STANDARDS

• I f the em ployee w orked in excess o f eight hours (overtime

work), he/she shall be paid an additional 30 percent of his/her
hourly rate on said day. Computation: Hourly rate o f the basic daily
wage x 200% x 130% x number o f hours worked.

• I f the em ployee w orked during a regular holiday that also falls

on h is/h er rest day. he/she shall be paid an additional 30 percent o f
his/her daily rate o f 200 percent. Computation: (Daily rate + COLA)
x 200%] + (30% P aily rate x 200%)].

• I f the em ployee w orked in excess o f eight hours (overtim e

work) during a regular holiday that also falls on h is/h er rest
day, he/she shall be paid an additional 30 percent o f his/her hourly
rate on said day. Computation: (Hourly rate o f the basic daily wage x
200% x 130% x 130% x number of hours worked);

Sim plified Com putation:

a. If w ork is rendered on an employee’s regular workday -

• If unworked - 100%
• If worked - 1st 8 hours - 200%
• Work in excess o f 8 hours - plus 30% o f hourly rate on said day
b. If it is an em ployee’s rest day -
• Ifu nw ork ed -1 0 0 %
• If worked - first 8 hours - plus 30% of 200%
• Work in excess of 8 hours - plus 30% o f hourly rate on said day

2. SPECIAL fN O N -W O R K IN Q DAYS OR SPECIAL

HOLIDAYS
• I f die em ployee did not work, the ' ‘no work, no pay” principle
shall apply, unless there is a favorable company policy, practice, or
CBA granting payment on a special day.
• I f the em ployee worked, he/she shall be paid an additional 30
percent o f his/her daily rate on the first eight hours o f work.
Computation: [p aily rate x 130%) + COLA).
• I f the em ployee w orked in excess o f eight hours (overtim e
work), he/she shall be paid an additional 30 percent of his/her
hourly rate on said day. Computation: (Hourly rate o f the basic daily
wage x 130% x 130% x number of hours worked).
• I f the em ployee w orked during a sp ecial day that also falls on
h is/h er rest day, he/she shall be paid an additional fifty percent o f
his/her daily rate on the first eight hours of work. Computation:
[Paily rate x 150%) + COLA].

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 140 Bar review er on Labor Law

• I f the employee worked in excess o f eight hours (overtime work)

during a special day that also falls on his/h er rest day. he/she
shall be paid an additional 30 percent of his/her hourly rate on said
day. Computation: (Hourly rate o f the basic daily wage x 150% x
130% x number of hours worked).
Simplified Computation:
a. If unworked -
• No pay, except if there is a company policy, practice, or collective
bargaining agreement (CBA) which grants, payment of wages on
special days even if unworked.
b. If worked -
• First 8 hours - plus 30% of the daily rate of 100%
• Work in excess of 8 hours - plus 30% of hourly rate on said day
c. If falling on the em ployee’s rest day and i f worked -
• First 8 hours - plus 50% o f the daily rate of 100%
• Work in excess of 3 hours - plus 30% of hourly rate on said day

6*1.
FACILITIES VS. SUPPLEMENTS
(NOTE: This is included under this topic of Hours of Work.
For better presentation, it s discussed under the topic "B. Wages", infra)

3.
W E E K L Y R E S T P E R IO D S

1. DURATION.

It shall be the duty o f every employer, whether operating for profit or not,
to provide each of his employees a weekly rest period o f not less than twenty-
four (24) consecutive hours after every six (6) consecutive norm al work
days.'

2. PREROGATIVE O F E M PL O Y E R T O S C H E D U L E WEEKLY REST

DAY; EX C EPTIO N - R EL IG IO U S G RO U N D .

The employer has the prerogative to determine and schedule the weekly
rest day of his employees subject to the CBA and such rules and regulations as the
DOLE Secretary may provide. However, the employer shall respect the preference
of emplovees as to their weekly rest day when such preference is based on
religious grounds.12

1 Article 91(a) tabor Code.

2 Article 91(b; Id.

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 C h a pter T hree 14 1
LABOR STANDARDS

In other words, the employer’s right and prerogative is subject to the

preference in the choice by the employee o f his rest day based on religious grounds.
Article 91, in fact, makes the employer duty-bound to respect such preference of
the employee if based on religious grounds. Where, however, the choice o f the
employees as to their rest day based on religious grounds will inevitably result in
serious prejudice or obstruction to the operations o f the undertaking and the
employer cannot normally be expected to resort to other remedial measures, the
employer may so schedule the weekly rest day o f their choice for at least two (2)
days in a month.1*

3. SUNDAY N O T T H E REST DAY D ESIG N A T E D BY LAW.

With the repeal of the Blue Sunday Laifi by the Labor Code,3 Sunday is no
longer the rest day designated by law. Consequent to such repeal, the rule now is
that all establishments and enterprises may operate or open for business on
Sundays and holidays provided that the employees are given the weekly rest day
and the resultant benefits as provided in the law and its implementing rules.4

4. W H E N EM PL O Y E R MAY R E Q U IR E W ORK O N REST DAY.

The employer may require any o f its employees to work on their

scheduled rest day for the duration of the following emergency and exceptional
conditions:

a) In case of actual or impending emergencies caused by serious

accident, fire, flood, typhoon, earthquake, epidemic or other disaster
or calamity, to prevent loss o f life and property, or in case o f Jorce
majeure or imminent danger to public safety;
b) In case o f urgent work to be performed on machineries, equipment, or
installations, to avoid serious loss which the employer would otherwise
suffer,
c) In the event of abnormal pressure o f work due to special
circumstances, where the employer cannot ordinarily be expected to
resort to other measures;
d) To prevent serious loss of perishable goods;
e) Where the nature o f the work is such that the employees have to work
continuously for seven (7) days in a week or more, as in the case of the
crew members of a vessel to complete a voyage and in other similar
cases; and

1 Section 4, Rule ill, Book III, RuJes to Implemert the Labor Code.
7 RA. No. 946 (June 20,1953], otherwise known as fie 'Blue Sunday Law,’ provides that no commercial, industrial or
agricultural enterprise or establishment, including stores and shops of any kind, shall be open on any Sunday. Christmas
Day, New Year's Day, Holy Thursday, and Good Friday, from 1200 midnight to 12.00 midnight
3 Article 317 (302], Labor Code; Section 1 |q]. Rule III, Book VII. Rules to Implement fie Labor Code.
4 Section 2. Rule III, Book III, Ibid.

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 142 Bar Reviewer o n labor Uw

f) When the work is necessary to avail o f favorable weather or

environmental conditions where performance or quality o f work is
dependent thereon.1

5. EXCLUSIVE NATURE OF THE ENUMERATION.

No employee shall be required against his will to work on his scheduled
rest day except under the circumstances provided therein where work on such day
may be compelled.2*However, in case work on rest day is required and not one of
the said circumstances is present, the employee may work during such rest day b u t
only on voluntary basis. And once an employee volunteers to work on his rest
day, he should express such willingness and desire to work in writing. Accordingly,
he should be paid the additional compensation for working on his rest day under
the law.1
6 . SOME PRINCIPLES ON WEEKLY REST DAY.

• Where the weekly rest is given to all employees simultaneously, the employer
should make known such rest period by means o f a written notice posted
conspicuously in the workplace at least one (1) week before it becomes
effective.4
• Where the rest period is not granted, to all employees simultaneously and
collectively, the employer shall make known to the employees their respective
schedules of weekly test day through written notices posted conspicuously in
die workplace at least one (1) week before they become effective.5
• An express waiver o f compensation for work on test days and holidays
provided in an employment contract which fixes annual compensation o f the
employees is not valid and does not operate to bar claims for extra
compensation therefor.6
• Rest day cannot be offset by regular workdays.7

4.
HOLIDAYS

1. LIST OF HOLIDAYS.
The current regular holidays and nationwide special holidays are as
follows:

’ Secfion 6, Rule 111.Book 111, Rules to Implement the Labor Code; AiScle 92, Labor Code.
2 Id.
* U
4 Section 5 & Rule HI, Book III, Ibid.
5 Section 5 [b], Rule fll8ock IB, Ibid.
* Ashe)dinMeraflyDfugCo,lnc. v. Dayao,GJtNo.l-3W52,Sept30.1982.
' Lagafc v. NLRC. G H No. 121004, Jan 28.1998.

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 C h apter T h ree
LA B O R S T A N D A R D S

fa) Regular H olidays

New Year’s Day - January 1
Maundy Thursday - Movable Date
Good Friday - Movable Date
Eidul Fitr - Movable Date
EidulAdka - Movable Date
Araw ng Kagitingan
(Bataan and Corregidor
Day) - Monday nearest April 9
Labor Day - Monday nearest May 1
Independence Day - Monday nearest June 12Nationai Heroes
Day - Last Monday o f August
Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
RizalDay - Monday nearest December 30
(b) N ationw ide Special H olidays
Ninoy Aquino Day - Monday nearest August 21
All Saints’ Day - November 1
Last Day o f the Year - December 31

2. TWELVE (12) GUARANTEED PAID REGULAR HOLIDAYS.

Article 94 o f the Labor Code and the subsequent amendments1 thereto
guarantee a worker the enjoyment o f twelve (12) paid regular holidays in a year.
This is important for purposes o f reckoning certain divisors and computation o f
employee benefits.

The provision on holiday pay is m andatory, regardless o f whether an

employee is paid on a monthly or daily baas.2

3. HOLIDAY PAY RULE

"Holiday pay” refers to the payment of the tegular daily wage for any
unworked regular holiday.3 The H oliday Pay Rule, therefore, applies to
entidement to holiday pay during tegular holidays and not during special non­
working days. Thus, every employee covered by the H oliday Pay Rule is entitled
to the minimum wage rate (D aily Basic Wage and COLA). This means that the
employee is entitled to at least 100% o f his minimum wage rate even if he did not
report for work, provided he is present or is on leave of absence with pay on the
workday immediately preceding the holiday. Should the worker work on that day.

1 SuchasExecutiveOnlerNo.203l R A .No.9177,R A N o.9492andR A N o.9849.

2 Insular Bank of Asia and America Employees' Union (IBAAEU) v. W ong, G.R. No. L-52415, O ct 23,1984,132 SCRA663;
Chartered Bark Employees Association v. Opte, G it No. L-44717, Aug. 28.1985,138 SCRA 273; Manfrade/FMMC
Division Employees and Workers Union v. Bacungan, G.R. No. 1-48437, Sept 30,1986,144 SCRA 510.
3 No. 2 (AJ, Id.: Section 3, Rule tV, Book III, Rides to Implement (he Labor Code; OOLE Memorandum Ocular No. 01, March
8,2004.

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 144 Ba r Reviewer o n La bo r Law

such work performed on that day would merit at least twice or two hundred
percent (200%) of the wage rate o f the employee.1

4. COVERAGE OF THE HOLIDAY PAY RULE; EXEMPTED

EMPLOYEES.
As a general rule, the holiday pay benefit is applicable to all employees.
The following, however, are not covered by this benefit as they are considered
exempted employees:

1. Government employees, whether employed by the National

Government or any o f its political subdivisions, including those
employed in government-owned and/or controlled corporations with
original charters or created under special laws;
2. Those of retail and service establishments regularly employing less than
ten (10) workers;
3. Kasambakay and persons in the personal service o f another;
4. Managerial employees, if they meet all o f the following conditions:
4.1. Their primary duty is to manage die establishment in which they
are employed or o f a department or subdivision thereof,
4.2. They customarily and regularly direct the work o f two or mote
employees therein; and
4.3. They have the authority to hire or fire other employees o f lower
rank; or their suggestions and recommendations as to hiring, firing,
and promotion, or any other change o f status o f other employees
are given particular weight
5. Officers or members o f a managerial staff, if they perform the
following duties and responsibilities:
5.1. Primarily perform work directly related to management policies of
their employer,
5.2. Customarily and regularly exercise discretion and independent
judgment;
5.3. (a) Regularly and directly assist a proprietor or managerial
employee in the management o f the establishment or subdivision
thereof in which he or she is employed; or (b) execute, under
general supervision, work along specialized or technical lines
requiring special training, experience, or knowledge; or (c) execute,
under general supervision, special assignments and tasks; and
5.4. Do not devote more than twenty percent (20%) o f their hours
worked in a workweek to activities which are not directly arid
closely related to the performance o f the work described in
paragraphs 5.1,5.2, and 5.3 above.

1 No. 2(C), id: Sedioo4, RUe N , Book III, Rules to Implement the laborCode.

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 C h /u t c r T h r e e 145
IA B O R STA N D A R D S

6. Field personnel and other employees whose time and performance are
unsupervised by the employer, including those who are engaged on task
o r contract basis, purely commission basis o r those who are paid a fixed
amount for performing work irrespective o f die time consumed in the
performance thereof.1

5. RIGHT TO HOLIDAY PAY IN CASE OF ABSENCES.

1) Employees on leave o f absence with p a y - entitled to holiday pay
when they are on leave o f absence with pay.2
2) Em ployees on leave o f absence without pay on the day
im m ediately preceding the regular holiday - may not be paid the
required holiday pay if they have not worked on such regular holiday.3
3) Employees on leave while on SSS or employee's compensation
benefits - Employers should grant the same percentage of the holiday
pay as the benefit granted by competent authority in the form of
employee's compensation or social security payment, whichever is
higher, if they are not reporting for work while on such benefits.4
4) When day preceding regular holiday is a non-working day or
scheduled rest day - should not be deemed to be on leave o f absence
on that day, in which case, employees are endded to the regular
holiday pay if they worked on the day immediately preceding the non­
working day or rest day.5

6 . RULE WHEN REGULAR HOLIDAY FALLS ON A SUNDAY.

The latest DOLE Handbook states that when a regular holiday falls on a
Sunday, the following Monday shall not be a holiday, unless a proclamation is
issued declaring it a special day. The President issues a proclamation in advance for
the following year which specifies the dates when all the holidays should be
celebrated or observed. In the absence o f a presidential proclamation, what should
be observed is the provision o f R A No. 9849 which states that if the holiday falls
on a Sunday, the holiday will be observed on the Monday that follows.

7. SUCCESSIVE REGULAR HOLIDAYS.

Where there are two (2) successive regular holidays, like Maundy Thursday
and Good Friday, an employee may not be paid for both holidays if he absents
himself from work on the day immediately preceding the first holiday, unless he

1 2019 Karx9xiokm W o(1(ers'SatidDiyM on^Bene% issued by tie Bureau of WoiVingCont2ions, DOLE.

1 Section 6 (a], Rufe IV, Book til, RuSes to Implement tie Labor Code; No. B[E), DOLE Handbook on Woricas Sfalutay

5 &S^SlV,BooklIl,lbii:No.lip,lbli
< Sec6on6§t>l,Rute(V,BockUl,lbi(L;No.a[g.tbil
5 Sec&n6fcj,RuleIV.Bock III Itu t-N a B I^ b k L
e N a2 ^ 201 9K an ± o o k on WExtos^SatAxyMonetiiyBeneSs, issued by Ihe Bureau ofWatingConclSons. DOLE

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 146 Bar Reviewer o n La b o r La w

works on the first holiday, in which case, he is entitled to his holiday pay on the
stcottd holiday. *
8. TWO REGULAR HOLIDAYS FALLING O N T H E SAME DAY.

There are cases in the past2 when two (2) regular holidays fell on one and
the same day, such as when Aranr ng Kagtingan falls on the same day as Maundy
Thursday or Good Friday. The rule5 is that a covered employee is entided to the
following;

o If unworked - 200% for the two regular holidays;

o If worked - 200% foe the two regular holidays plus premium of 100% for
work on that day for a total o f 300% o f the daily wage.4

The 200% represents the two (2) guaranteed paid regular holidays o f Aralv
ng Kagtingan and either Maundy Thursday or Good Friday. If w orked another 100% is
added to his 200% basic pay for working not mote than eight hours in consonance
with the requirement of wage legislations. However, if the same day happens to be
the employee’s scheduled test day, and he is permitted or suffered to work, he is
entided to an additional 30% of his wage for that day, that is, 300% o f his daily rate,
or a total of 390%.* It bears noting that the DOLE Explanatory Budetirfi enunciating
the above manner o f reckoning die holiday pay has been declared valid in Asian
Transmission Corporation v. CA?
9. RIGHT TO HOLIDAY PAY OF TEACHERS.

a. Private school teachers, in general.

Private school teachers, including faculty members o f colleges and

universities, may not be paid for die regular holidays during semestral vacations.
They shall, however, be paid for the regular holidays during Christmas vacation.8

b. Holiday pay o f hourly-paid teachers.

A school is exempted from paying hourly-paid faculty members their pay

for regular holidays, whether the same be during die regular semesters o f die

1 Section 10, R i^ IV, Book 111,l^ to lrn p lm ia d the LabvCod^ See also N a 2 p , 2019 Hancfixx)); on Wotecs’ StaU xy
MonebyBen^its,issuedbylbe6urBauofWal(irigCondiBonswDOl£.
2 S urtas»tethappenedm A p rf9.1993*toA raw ng K ag2^arrtG oalFtid ayfeS O Tt!»sarradayandw A pti9,

April9,2004 wtaiboftAiavngKagSngan and Good Fridayfelon Sesame day.

1 Per 'Explana&xy Biiefin on W afas' EnHemert to HoKday Pay on 9 Aprt 1993. Arsw ng Kagfiigan and Good Friday*
issuedm k^11,1993t^O O lE U nde^ecretafyC resend3roB .T[r^TlrisB iM iv/asreprci(ixedonjanuaiy23,
1998,vuhenborii Maundy ThrsdaymdAiawngKagSngan also teSon fiie sameday-Apr19,1993.
4 U^SecQon10,RuteiV, BookUl,Riiieslolmplement1heL^orCo(Je.
» No. 2, H i
4 Bq^an^BuDelin on Wotos'BiStlementtoKoGday Pay on9A(vi 1993, ArawngKagifingan and Good Friday issued on
March11.1993byOOI£UndeisecretaiyC(esendamB.Tr^ano.
’ GR No. 144664, March IS. 2004.
9 Section 8 [a), Rule IV, Book fll,b il.; No. IIQ , H i

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 C h apter T h ree 147
LABORSTANDARDS

school year or during semestral, Christmas, or Holy Week vacations. However, it is

liable to pay the faculty members their regular hourly rate on days declared as
special holidays or if, for some reason, classes are called off or shortened for the
hours they are supposed to have taught, whether extensions o f class days be
’ ordered or not; and in case of extensions, said faculty members shall likewise be
paid their hourly rates should they teach during said extensions.1

10. RIGHT TO HOLIDAY PAY O F PIE C E WORKERS, TAKAY AND

OTHERS PAID BY RESULTS.

a. Holiday p a y o f piece workers, takay or employees paid by results.

Where a covered employee is paid by results or output such as payment
on piece-work, his holiday pay should not be less than his average daily earnings
for the last seven (7) actual w orking days preceding the regular holiday. In no
case, however, should the holiday pay be less than the applicable statutory
minimum wage rate.2

b. Workers p a id by results classiSed into supervised and

unsupervised.
The principal test to determine entitlement to holiday pay is whether the
employees’ time and performance o f the work ate “supervised" or “unsupemsed" by
their employer. If supervised, the employee is entided to holiday pay. I f
unsupervised, he is not.3
S'
2? The distinctions between supervisedand unsupemsedworkers paid by results
are as follows:

(1) Those whose Ja n e and, performance are supervised by the

employer. Hem, diem is an dem ent o f control and supervision over
die manner as to how the work is to be performed. A piece-rate
worker belongs to this category especially if he performs his work in
the company premises; and
(2) Those whose time and performance am unsupemsed Here, die
employer’s control is over the result o f the work. Workers on pakyao
and takay basis belong to this group. Both classes o f workers are
paid per unit accomplished. Piece-rate payment is generally practiced
in garment factories where work is done in the company premises,
while payment on pakyao and takay basis is commonly observed in the
i

’ Jose Rzal CoOegev.NLRC.GR No.65482, December 1,1987.

? Section 8 jb), fate IV, Book (11, Rules to Implement Ihe Labor Code; No. 0 G j, DOLE Handbook on Workers Statutory
Monetary Benefits.
3 Labor Congress of the Phippinesv. NLRC, G J l N a 12838, May 21.1998,290 SCRA 509; Tan v lagrama. G R No.
151228. August 15,2002.

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 148 Bar Reviewer on Labor Law

agricultural industry, such as in sugar plantations where the work is

performed in bulk or in volumes, hence, difficult to quantify.1

11. RIGHT T O HOLIDAY PAY O F SEASONAL WORKERS.

Seasonal workers are entitled to holiday pay while working during the
season. They may not be paid the required regular holiday pay during off-season
where they are not at work.2

12. RIGHT TO HOLIDAY PAY O F SEAFARERS.

Anv hours of work or duty including hours o f watchkeeping performed

by the seafarer on designated rest days and holidays shall be paid rest day or holiday
pay.345

13. MONTHLY-PAID EM PLOY EES, N O T EXCLUDED.

In the cases of IBAAEU v. Indong,* and The Chartered Bank v. Qple} the
provision of Section 2, Rule IV, Book III o f the Labor Code’s Implementing Rules,
which provides that:
"SEC. 2. Statu: of employeespad by the month. - Employees
who arc uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
established minimum wage, shall be presumed to be paid for all
days in the month whether worked or not
“For this purpose, the monthly minimum wage shall not
be less than the statutory minimum wage multiplied by 365 days
divided by twelve.”
was declared null and void by the Supreme Court, alongside with Polity Instructions
No. 9 [Paid Legal Holidays] issued by the D O LE Secretary because in the guise of
clantying the provision on holiday pay o f the Labor Code, the same, in effect,
■amended it by amplifying the scope o f its exclusion.6 The Labor Code does not
exclude monthly-paid employees from the benefit o f holiday pay. However, the
implementing rules on holiday pay excluded monthly-paid employees from the said
benefit by inserting Section 2 under Rule IV, Book III thereof which provides that
monthly-paid employees are presumed to be paid for all days in the month,
whether worked or not. Further, in Polity Instructions No. 9, the D O LE Secretary
categorically declared that the benefit of holiday pay is intended primarily for daily-
paid employees when the law clearly states that every worker should be paid his

’ lambov NLRC.G.R.No. 111042,October26,1999,317SCRA420.

? Section 3 (c). Rule IV. Book III, Rules to Inplement the Labor Code; No. IIGJ, DOLE Handbook on Workers Statutory
Monetary Benefits.
3 Section 11 (Overtime and Hobdays), Memorandum Circular No. 10, Series of 2010, October 26.2010 [Amended Standard
Terms and Conditions Governing the Overseas Employment of FJipino Seafarers On-Board Oceangoing Ships].
4 Insular Bank of Asia and America Employees Union [IBAAEU] v. kxaong, G.R No. L-52415. Oct 23.1984,132 SCRA 663.
5 The Chartered Bank Employees Association v. Ople. G .R No. 1-44717, Aug. 28,1985.
4 See also Viluga v. NLRC, G.R No. 75038, Aug. 23,1993,225 SCRA 537.

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 C hapter T hree 149
LABOR STANDARDS

regular holiday pay. This is a flagrant violation of the mandatory directive o f Article
4 of the Labor Code which states that doubts in the implementation and
interpretation of the Labor Code, including its implementing rules, should be
resolved in favor o f labor. Moreover, it should always be presumed that the
legislature intended t'o enact a valid and permanent statute which would have the
most beneficial effect that its language permits.1

14. SOM E IM PO R T A N T P R IN C IP L E S O N HOLIDAYS.

• N on-M uslim s are entitled to M uslim holiday pay during M uslim

holidays2 considering that all private corporations, offices, agencies, and
entities or establishments operating within the designated Muslim provinces
and cities are required to observe Muslim holidays, hence, both Muslims and
Christians working within the Muslim areas may not report for work on the
days designated by law as Muslim holidays.3
• The day designated by law for holding a general election is deemed a regular
holiday.45But recent issuances by the President declared general elections as
special (non-working) holidays. For instance, the May 9, 2016 national and
local elections and the May 13, 2019 midterm elections were declared by
President Benigno Aquinos and President Rodrigo Duterte,6 respectively, as
special (non-working) holidays.
• Offsetting of holiday work with work on regular days is not allowed.7

5.
SERVICE INCENTIVE LEAVE
1. R IG H T T O SERV IC E IN C E N T IV E LEAVE.

Under Article 958 of the Labor Code, every covered employee who has
rendered at least one (1) year of service is entitled to a yearly service incentive leave

’ Insular Batk of Asia and America Employees Union pBAAEU)v.lndong, supra.

3 San Miguel Corporation v. The Hon. CA, G.R. No. 146775, Jan. 30,2002.
3 1999 Handbook on Wooers’ Statutory Benefits, approved by then DOLE Secretary Benvenido E. Laguesma on December
14,1999.
* Artide 94(c), Labor Code; See Associated Labor Unions [ALU)-TUCP v. Letrondo-Montejo, G.R. No. 111938. Oct 14.
1994,237 SCRA 621 wrtch irjvotves the election of Sangguniang Kabataan (Si^. The term 'general ejections' means, in the
context of the Sangguniang Kabataan (SK) elections, the regular etections for members of the SK, as (isfinguished from the
special elections for such officers.Moreover, the fact that only those between 15 and 21 took part in the election for members
of the SK does not make such election any less a regular local election. Consequent, it was held that whether in the contexl
of the CBA or the Labor Code, Dec. 4,1992 was a holiday for vJVtch holiday pay should be paid by respondent employer.
5 Per Presidential Proclamation No. 1254 (April 25,2016).
6 Per Presidential Proclamation No. 719 (May 9,2019).
3 Lagatic v. NLRC, G R No. 121004, Jan. 28,1998.
8 ART. 95. R ig ht to service incertw leave. - (a) Every employee who has rendered at least one year of service shal be
entitled to a yearty service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation
leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in

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 150 Bax Revifweron Labor Law

(SIL) o f five (5) days with pay.*1The phtase “leave withpay”means that the employee
is endded to his full compensation during his leave o f absence from work.2

The term “at least oneyear ofsenate”should mean service within twelve (12)
months, whether continuous or broken, reckoned from the date the employee
started working, including authorized absences and paid regular holidays, unless the
number of working days in the establishment as a matter o f practice or policy, or
that provided in the employment contract, is less than twelve (12) months, in which
case, said period should be considered as one (1) year for the purpose o f
determining enddement to the service incentive leave benefit3

In JPL p. CA,4 where an employee was never paid his service incentive
leave during all the time he was employed, it was held that the same should be
computed not from the start o f employment but a year after commencement of
service, for it is only then that die employee is endded to said benefit This is
because the entitlement to said benefit accrues only from the time he has rendered
at least one year of service to his employer. The computation thereof should only
be up to the date o f termination o f employment There is no cause for granting
said incentive to one who has already terminated his relationship with the
employer.

2. COVERAGE.

This benefit applies to all employees except

1. Government employees, whether employed by the National

Government or any o f its political subdivisions, including those
employed in government-owned and/or controlled corporations with
original charters or created under special laws;
2. Persons in the personal service of another;
3. Managerial employees, if they meet all of die following conditions:
3.1. Their primary duty is to manage the establishment in which they
are employed or o f a department or subdivision thereof,
3.1 They customarily and regularly direct the work o f two or more
employees therein; and
3.3. They have the authority to hire or fire other employees o f lower
rank; or their suggestions and recommendations as to hiring

orGnandalccmdfiohtfsuchesteijGshmertL
(c) T te grant of benefl in excess of that provided heresi shall not be made a subject of arbitration or any court or
adrrinistraSveacGon.
1 No. 7 |AJ, 2019 Handbook on Workers' Sfe&Jtory Monetay Benefits, issued by the Bureau of Wotting Corxffions, DOLE;
See a^o Article 95 ^4. l-obor Code: Secfior 2. Rule V. Book □. F%uSesto tmplemer^the L^xx Code.
2 Esoosurav.San^«2lBreway,ln(x16RNo.L-16096;Jan.31,1962.
3 Secfan 3, R ile V, Book 10, Rules to Implement the labor Code: No. VI [Bl, DOLE Han&ook on Workers Statutory
Monetay Benefc; Integrated Contractorand P artin g Worts, he. v. M R C , G R No. 152427, Aug. 9,2005.
< JPL Martefog Prcmofcns v. CA, G R No. 151966. July 8.2005.

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 C h apter Th ree jc j
LA BO R STA N D A R D S

fixing, and promotion, or any other change o f status o f other

employees are given particular weight.
4. Officers or members o f a managerial staff, if they perform the

4.1. Primarily perform work directly related to management policies o f

their employer;
4.2. Customarily and regularly exercise discretion and independent
judgment;
4.3. (a) Regularly and directly assist a proprietor or managerial
employee in the management o f the establishment or subdivision
thereof in which he or she is employed; or (b) execute, under
general supervision, work along specialized o r technical lines
requiring special training experience, or knowledge; or (c)
execute, under general supervirion, special assignments and tasks;
and
4.4. Do not devote more than twenty percent (20%) o f their hours
worked in a workweek to activities which are not directly and
closely related to the performance o f the work described in
paragraphs 4.1,4.2, and 4.3 above;
5. Held personnel and those whose time and performance are unsupervised
by the employer,1including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective o f the time consumed in the
performance thereof,2
6. Those already enjoying this benefit;
7. Those enjoying vacation leave with pay of at least five (5) days; and
8. Those employed in establishments regularly employing less than ten
(10) employees.3
3. KASAM BAHAYSASE NOW E N T IT L E D T O SIL.

The grant o f 5-day SIL to domestic workers or kasambahtgs is not based

on Article 95 o f the Labor Code but on the following provision of R.A. 10361:4
“SEC. 29. Lease Benefit. - A domestic worker who has
rendered at least one (1) year of service shall be entitled to an annual
service incentive leave of five (5) days with pay: Provided, That any
unused portion of said annual leave shall not be cumulative or carried

SeealsoAiftle82, labor Code; Section 1,R ubV, Book Bl, Rules b Implementthe labor Code
2 SecSont (d).RidoV^efvtcelncen&ve(jBave>.6ookUI.RuIestDirnplementtheLatx}rCo(ie.
2 No. 7 (A), 2019 Handbook on W a te tf Staritay Monetary Benefis, issued by the Bureau ot Wotking CondSoos, DOLE;
See also Article82, Labor Code; Section 1, Rule V, Book Rules to Implementthe labor Code
« O te ft^ J ro u n a s T J o m e s fc V M e B A tf(x ’B atasK asaitaha/’ a rta p p rw e d b y P ^ ^
Januay 18,2)13.

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 15 2 Bar reviewer on Labor Law

over to the succeeding years. Unused leaves shall not be convertible to

cash.”1

Clearly, as distinguished £rom the SIL under Article 95, this kind o f SIL
benefit is not convertible to cash, if unused.

4. USAGE/CONVERSION T O CASH; BASIS O F C O M PU TA TIO N .

a. Use o f SIL for sick and vacation leave.

The service incentive leave may be used for sick and vacation leave
purposes.2

b. Commutability to cash i f unused.

The unused service incentive leave is commutable to its money equivalent
at the end of the year.3

c. Basis o f computation.
In computing the SIL benefit, the basis is the salary rate at the date of
conversion.4 The use and conversion of the SIL benefit may be on a pro-rata basis.5

d. Illustration.
To illustrate the computation o f the SIL cash commutation, an employee
who is hired on January 1,2018 and resigned on March 1,2019, assuming he has
not used or commuted any of his accrued SIL, is entitled upon his resignation to
the commutation of his accrued SIL as follows:6

SIL earned as of D ecem ber 31,2018 - Five (5) days

Proportionate SIL for Jan. and Feb.
2019 (2 /1 2 x 5 days) - 0.833 day
Total accrued SIL as of M arch 1, 2019 - 5.833 days

5. RIGHT O F PART-TIME W ORKERS T O SIL.

In an Advisory Opinion issued by DOLE’s Bureau o f Working Conditions,

it was declared that part-time workers are entided to the full benefit o f the yearly
five (5) days SIL with pay. The reason is that the provision o f Article 95 of the

’ See Section 7, Rule IV, Implementing Fules and Regulations of R A No. 10361 which provides: “SECTION 7. Service
Incen&ve Leave. - A Kasambahay Abo has rendered at least one (1) year of service shal be entitled to an annual service
incentive leave of at least five (5) days with pay.
‘Any unused portion of said annual leave shal not be cumulative or carried over to the succeeding years. Unused leaves
shal not be convertible to cash.'
1 No. 7 |C], 2019 Handbook on Workers' Stotutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.
3 Section 5, Rule V, Book III, Rules to Implement the Labor Code: No. 7 [C], 2019 Handbook on Workers'Statutory Monetary
Benefits, issued by the Bureau of Workhc Conditions, DOLE.
4 No. 7 p |. bid.
5 Id This is based on the opinion of DOLE Legal Service
6 Id., based on the opinion of DOLE Legal Service.

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 C h apter T hree 15 3
LABORSTANDARDS
Labor Code and its implementing rules, speak o f the number o f months in a year
for entitlement to said benefit Resultantly, part-time employees are also entitled to
the full SIL benefit and not on a piv-rata basis.1

6. CU RIO U S A NIM AL D O C T R IN E .

Auto Bus Transport System, Inc. v. Bautista,2 clarified the correct reckoning o f
the prescriptive period for SIL pay in that it is a curious anim al in relation to
other benefits granted by the law to every employee. This is so because in the case
of SEL, the employee may choose to either use his leave credits or commute it to its
monetary equivalent if not exhausted at the end of the year. Furthermore, if the
employee entided to SIL does not use or commute the same, he is entided upon his
resignation or separation from work to the commutation of his accrued service
incentive leave. In other words, an employee who has served for one year is entided
to it. He may use it as leave days or he may collect its monetary value. To limit the
award to three years is to unduly restrict such right.3

Correspondingly, it can be conscientiously deduced that the cause o f

action o f an entided employee to claim his SIL pay accrues from the moment the
employer refuses to remunerate its monetary equivalent if the employee did not
make use o f said leave credits but instead chose to avail o f its commutation.
Accordingly, if the employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his cause o f
action to claim the whole amount of his accumulated SIL shall arise when the
employer fails to pay such amount at the time of his resignation or separation from
employment.

Applying Article 306 [291] of die Labor Code in light o f this peculiarity o f
the SIL, it can be concluded that the three (3)-year prescriptive period commences,
not at the end of the year when the employee becomes entided to the commutation
of his SIL, but from the time when the employer refuses to pay its monetary
equivalent after demand o f commutation or upon termination o f the employee's
services, as the case may be.

Thus, in the 2017 case o f Lourdes C. Rodrigue^ v. Park N Ride, Inc,*

involving an employee who has not availed o f SIL for the entire 25 years o f her
employment, it was held that the prescriptive period with respect to petitioner's
claim for her entire SIL pay commenced only from the time o f her resignation or
separation from employment. Since petitioner had filed her complaint for illegal
dismissal on October 7, 2009, or a few days after her resignation in September
2009, her claim for SIL pay has not prescribed. Accordingly, petitioner was

1 Advisory Opinion of the Bureau of WorVng Condftons, Department of Labor and Employment, on Conditions of
Employment of Part-time Workers, Cebu Institute of Technology v. Ope, G.R. No. L- 55870, Dec. 18,1987,156 SCRA 629.
* G il No. 156367. May 16.2005.
3 Fernandezv. NLRC, G.R. No. 105892, Jan. 28,1998,285 SCRA 149.176; 349 PM 65.
* LourdesC.Rodriguezv.ParkNRide,Inc.,G.R.No 222980.March20,2017

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 154 Bar Reviewer on Labor Iaw

awarded SIL pay for her entire 25 years o f service— from 1984 to 2009— and not
only three (3) years' worth (2006 to 2009) as determined by the Court o f Appeals.1

6.
SERVICE CHARGES

1. ESTABLISHMENTS COVERED.

Article 962 of the Labor Code enunciates the rules on service charges
which apply only to establishments collecting service charges, such as hotels,
restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bars,
casinos and gambling houses, and similar enterprises, including those entities
operating primarily as private subsidiaries of the government.3

2. EMPLOYEES COVERED; EXCLUSION.

The same rules on service charges apply to all employees of covered

employers, regardless of their positions, designations or employment status, and
irrespective of the method by which their wages are paid except those receiving
more than P2,000.00 a month.4

Specifically excluded from coverage arc employees who are receiving

wages of more than P2,000.00 a month.5 However, it must be pointed out that the
P2.000.00 ceiling is no longer realistic considering the applicable minimum wages
prevailing in the country. Hence, it must be disregarded.6

3. D ISTRIBU TION .

All service charges collected by covered employers are required to be

distributed at the following rates:

1) 85% to be distributed equally among the covered employees; and

2) 15% to management to answer for losses and breakages.7

The share of the employees referred to above should be distributed and

paid to them not less often than once every two (2) weeks or twice a month at
intervals not exceeding sixteen (16) days.1

1 See also Baroga v. Quezon Colleges of the North, G il No. 235572, Dec. 05,2018 where (he award of SIL from 1985 to
retirement granted by the CA was affirmed by tfie Supreme Court
7 ART. 96. S ervice charges. • All service charges collected by hotels, restaurants and similar establishments shall be
distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for
management The share of the employees shall be equally distributed among them, tn case the service charge is
abolished, the share of the covered employees shall be considered integrated in their wages.
5 Id.; Section 1, Rule VI [Service Charges], Book III of the Rules to Implement the Labor Code.
4 Section 2, Rule VI, Book III, Rules to Implement the Labor Code.
5 id
6 No. VII [A), DOLE Handbook on Workers Statutory Monetary Benefits.
’ Section 3, Rule VI, Book III. Ibid.; No. VII [A], Ibid.

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 CHArTERTHREE I55
LABOR. STANDARDS
4. IN T E G R A T IO N .

In case the service charge is abolished, the share of covered employees

should be considered integrated in their wages, in accordance with Article 96 of the
Labor Code. The basis of the amount to be integrated is the average monthly share
of each employee for the past twelve (12) months immediately preceding the
abolition or withdrawal of such charges.*2

5. SO M E PR IN C IPLE S O N SERV IC E CHARGE.

• T ips and services charges are two different things. Tips are given by
customers voluntarily to waiters and other people who serve them out o f
recognition of satisfactory or excellent service. There is no compulsion to give
rips under the law. The same may not be said o f service charges which are
considered integral part o f the cost o f the food, goods or services ordered by
the customers. As a general rule, tips do not form part o f the service charges
which should be distributed in accordance with the sharing ratio prescribed
under Article 96 o f the Labor Code. However, where a restaurant or similar
establishment does not collect service charges but has a practice or policy o f
monitoring and pooling tips given voluntarily by its customers to its
employees, the pooled tips should be monitored, accounted for and distributed
in the same manner as the service charges.3 Hence, the 85% : 15% sharing
ratio should be observed.
• Service charge is not in the nature o f profit share and, therefore, cannot be
deducted from wage. It is not part of wages.4

7.
13th MONTH PAY
1. COVERAGE.

Under the law,5 all employers are required to pay all their rank-and-file
employees, a 13th month pay not later than December 24 of every year.

Only rank-and-file employees, regardless of their designation or

employment status and irrespective o f the method by which their wages are paid,
are entitled to the 13th month pay benefit.6 Managerial employees are not

' Section 4, Rule VI, Book III, Ibid.; No. VII [B], Ibid,
i Section 5, Rule VI, Book III, Ibid.; No. VII [B], Ibid.
3 No. VII [C], DOLE Handbook on Workers Statutory Monetaiy Benefits.
4 Mayon Hotel & Restaurant v. Adana, G.R. No. 157534, May 16.2005.
5 P D No 851 (December 16, 1975; Memorandum Order No 28 (August 13. 1986; Revised Guidelines on the
Implemenlation of the 13th Month Pay Law [November 16,1987.
6 Ibid.; Section 1. Memorandum Order No. 28.

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 156 3ar reviewer on Labo r Law

entitled to 13th month pay1 unless they are so granted under an em ploym ent
contract or a company policy or practice.

2. EX CLU SIO N S/EX EM PTIO N S FROM COVERAGE.

The following employers are not covered by the 13th month pay law;2

1) The government and any o f its political subdivisions, including

government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of tire
government.3
2) Employers already paying their employees 13th mondi pay or more in
a calendar year or its equivalent at the time o f the issuance o f the
Revised Guidelines.4
3) Employers of those who are paid on purely commission, boundary,
or task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis, in
which case, the employer shall be covered by tire Revised Guidelines
insofar as such workers are concerned. W orkers paid on piece-rate
basis shall refer to those who are paid a standard amount for every
piece or unit of work produced that is more or less regularly
replicated without regard to the time spent in producing the same.5

2.1. DOM ESTIC WORKERS O R KASAMBAHA YS, N O W COV ERED .

Previously, not covered by the 13th month pay law are employers of
household helpers and persons in the personal service o f another in relation to
such workers.6 However, R.A. No. 103617 is now explicit in its commandment that
a domestic worker or kasambahay is entided to 13th month pay as provided by law.

3. N ATURE OF 13™ M O N T H PAY.

13* month pay is in the nature of additional incom e granted to

employees who are not receiving the same.8 P.D. No. 851 is undoubtedly a labor

1 House of Sara Lee v.R ey.G R No. 149013, Aug. 31,2006.

2 P.D. No. 851, as amended.
3 No. 2 [a]. Revised GuideSnes on the implementation of the 13” Month Pay Law, fomierty Section 3 [b], Rules and
Regulations Inplementing P.0. No. 851; AJSance of Government Workers v. Mnister of Labor and Employment G.R. No. L-
60403, Aug. 3,1983.
4 Section 2, P.D. No. 851; No. 2 [b], Revised GuideSnes on the Implementation of the 13” Month Pay Law, formerly Section 3
[c], Rules and Regulations Implementing P.D. No. 851.
5 No. 2 (dj. Ibid., formerly Section 3 (e],Rufes and Regulations Implementing P.D. No. 851.
« No. 2 H . Reused Guidefnes on the Implementation of the 13” Month Pay Law, formerly Section 3 [d]. Rules and
Regulations Implementing P.D. No. 851.
1 Section 25, Article IV, R A No. 10361, otherwise known as the “ Domestic Workers AcT (January 18,2013).
a Agabon v. NLRC, G.R. No. 158693, Nov. 17,2004.

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 C harter Three 157
IABORSTANDARDS

standards law whose purpose is to increase the real wages of the workers.1 It is
based on wage but not part o f wage.2

4. M IN IM U M A M O U N T O F 13™ M O N T H PAY.

The minimum 13th month pay required by law should not be less than
one-twelfth (1/12) of the total basic salaty earned by an employee within a calendar
year.3

5. M IN IM U M P E R IO D O F SERVICE R E Q U IR E D .

To be endded to the 13th month pay benefit, it is imposed as a m inim um

service requirem ent that the employee should have worked for at least one (1)
m onth during a calendar year.4

6. COM M ISSION VIS-A-VIS \3m M O N T H PAY.

In order to be considered part o f 13th month pay, the commission should

be part of the basic salary of the employee. However, whether or not a commission
forms part of the basic salary depends upon the circumstances or conditions for its
payment which indubitably are factual in nature for they will require a re­
examination and calibration of the evidence on record.5

If the commission paid in addition to the basic salary is in the nature of a

productivity bonus or profit-sharing benefit which is dependent on and generally tied
to the productivity or capacity for revenue production of a company, it should not
be considered as part of basic salary.6 But if the commission paid in addition to the
basic salary has a clear direct or necessary relation to the amount of work actually
done by the employee, it should be considered as part of basic salary.7

If the employee is paid on commission basis only, he is excluded from

receiving the 13th month pay benefit.8

7. CBA VIS-A-VIS tt™ M O N T H PAY.

For purposes of computing the 13th month pay, “basic salary” includes
all remunerations or earnings paid by the employer 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 the cash equivalent of

1 Alliance of Government Workers v. Mn'ster of Labor, G Jl No. L-60403, Aug. 3,1983.

2 Central Azucarera de Tariac v. Central Azucarera de Tariac Labor Union-NLU, G.R. No. 188949, July 26,2010.
3 Section 2 [a], Rules aid Regulations Implementing P.D. No. 851.
* No. 1, Revised Guidelines on the Implementation of the 13* Month Pay Law, No. X [A], DOLE Handbook on Workers
Statutory Monetary Benefits.
5 Reyes v. NLRC, G R No. 160233, Aug. 8,2007.
6 Philippine Duplicators, Inc. v. NLRC, G R No. 110068, Feb. 15,1995; Boie-Takeda Chemicals, Inc. v. Dela Sema, G.R. No.
92174J and FMippine Fuji Xerox Corporation v. Trajano, G R No. 102552, March 24.1994.
7 Id.
King of Kings Transport, Inc v. Mamac, G R No. 166208, June 29,2007.

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 158 Bar Reviewer on Labor Law

unused vacation and sick leave credits, maternity leave, overtime, premium, night
differential and holiday pay, premiums for work done on rest days and special
holidays and cost-of-living allowances. However, these salary-related benefits
should be included as part of the basic salary in the computation o f the 13th month
pay if by individual or collective bargaining agreem ent, company practice or
policy, the same are treated as pan of the basic salary of the employees.1

8. SOME PRINCIPLES O N 13th M O N T H PAY.

1. "Basic salary" or "basic wage” contemplates work within the normal eight (8)
working hours in a day. This means that the basic salary of an employee for
purposes of computing the 13th month pay should include all remunerations
or earnings paid by the employer for services rendered during normal
working hours.2
2. For purposes of computing the 13th month pay, "basic salary” should be
interpreted to mean not the amount actually received by an employee, but 1/12
of their standard monthly wage multiplied by their length o f service within a
given calendar year.3
3. Extras, casuals and seasonal employees are entided to 13th month pay.4

B.
WAGES
1.
PAYMENT OF WAGES
1. BASIC WAGE.

The term “basic wage" means all the remuneration or earnings paid by an
employer to a worker for services rendered on normal working days and hours b u t
does not include cost-of-living allowances, profit-sharing payments, premium
payments. 13th month pay or other monetary benefits which are not considered as
part of or integrated into the regular salary o f the workers.5

Further, as held in Honda,6 the following should be excluded from the

computation of "basic salary, ” to wit. paym ents for sick, vacation and m aternity

' No. 4 [a], Revised Guidelines on the Implementation of the 13*’ Monti Pay Is a . formed/ Section 2 [b] of the Rules and
Regulations Implementing P.0. No. 851: No. X [C|. DOLE Handbook on Workers Statutory Monetary Benefits.
2 See No. 1, DOLE Explanatory Bulletin on the Inclusion of Teachers' Overload Pay n the 13* Month Pay Determination [Dec.
03.1993.
3 Honda Phis., Inc. v. Samahan ng Malayang Manggagawa sa Honda, G R. No. 145561. June 15, 2005; San Mguel
Corporation (Cagayan CocaOHa Plant) v. Inaong, G R. No 149774. Feb. 24,1981,103 SCRA139.
4 BWC Opinion dated Dec. 19,1987, Bagong Piipino World's Fashion Workers Union, World’s Fashion, Inc.
5 Item (n). Definition of Terms, Rules Implementing Republic Act No. 6727.
6 Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, G.R. No. 145561, June 15,2005,460 SCRA
187.

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 C hapter T hree 15 9
LABOR STANDARDS

leaves, night differentials, regular holiday pay and prem ium s for work done
on rest days and special holidays.1

2. A TTRIBUTES O F WAGE.

“IP'i7g<?” paid to any employee has the following attributes:

1) It is the remuneration or earnings, however designated, for work done

or to be done or for services rendered or to be rendered;
2) It is capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece or commission basis, or other
method o f calculating the same;
3) It is payable by an employer to an employee under a written or
unwritten contract o f employment for work done or to be done or for
services rendered or to be rendered; and
4) It includes the fair and reasonable value, as determined by the DOLE
Secretary, o f board, lodging, or other facilities customarily furnished
by the employer to the employee. “Fair and reasonable value" shall not
include any profit to the employer or to any person affiliated with the
employer.2

3. M IN IM U M WAGE.

The m inim um w age rates prescribed by law shall be the basic cash
wages without deduction therefrom o f whatever benefits, supplements or
allowances which the employees enjoy free of charge aside from the basic pay.3

4. STATUTORY M IN IM U M WAGE.

“Statutory minimum wage ” refers simply to the lowest basic wage rate fixed by
law that an employer can pay his workers.4

5. REG IO N A L M IN IM U M WAGE RATES.

'‘Regional minimum wage rates" refer to die low est basic wage rates that an
employer can pay his workers, as fixed by the Regional Tripartite Wages and
Productivity Boards (RTWPBs), and which shall not be lower than the applicable
statutory minimum wage rates.5

The minimum wage rates for agricultural and non-agricultural employees

and workers in each and every region of the country shall be those prescribed by

1 See also San Mguel Coiporafon Cagayan CocaCda Plant v. Indong, G.R. No. L-49774, Feb. 24,1981,103 SCRA 139.
2 Based on the defireSon of'wage'in Artde 97(f), Labor Code.
3 Section 1. Rule Vll-A, Book III, Rules to Implement the Labor Code, as amended by Memorandum Circular No. 3, Ncv. 4,
1992.
4 Item jo], Definition cf Terms, Rules Implementing RA. No. 6727; Section 4 [I]. Rule I, NWPC Guidelines No. 01, Series of
2007, June 19,2007 [Amended Rules of Procedure on Minimum Wage Fixing.
s Section 4 [kj. Rule I, NWPC Guidelines No. 01, Senes of 2007, June 19,2007 (Amended Rules of Procedure on Mnimum
Wage Fixing.

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the “RTWPBs.>K These wage rates may include wages by industry, province or
locality as may be deemed necessary by the RTWPBs.*2

6. WAGE RATES.

"Wage rates" include cost-of-living allowances as fixed by the

RTWPB, but excludes other wage-related benefits such as overtime pay, bonuses,
night shift differential pay holiday pay, premium pay. 13th month pay, premium
pav. leave benefits, among others,3*

7. RATIONALE.
The principal reason why a legislated wage increase is considered valid is
that it prevents the exploitation of defenseless workers who are situated in an
unequal position vis-a-vis their employers in terms o f bargaining power. By setting
the minimum below which the law considers illegal, the workers are assured of
decent living subsistence without need for them to bargain for the same.

The employer cannot hope to validate his non-compliance with the

legislated minimum wage by contending that he has liquidity problem or is
suffering from financial reverses or business losses. Whatever problem he may have
in the operation of his business cannot certainly affect his obligation to pay die
minimum wage rate fixed by law.

Thus, in Mayon Hotel & Restaurant v. Adana,* the Supreme Court ruled that
petitioner’s repeated invocation o f serious business losses is not a defense to
payment of labor standard benefits. The employer cannot exempt himself from
liability to pay minimum wages because o f poor financial condition o f die
company. The payment of minimum wages is not dependent on the employer’s
ability to pay.5

It must be noted that acceptance by the employee of w age below the

minim um set by law does not preclude him from suing for the deficiency.
The principle o f estoppel or laches does not apply in this situation.

8. IN T EG R A T IO N OF COLA A ND O T H E R M ONETARY B E N E F IT S
IN T O T H E BASIC PAY.

a. M eaning o f cost-of-living allow ance (COLA).

Clearly, COLA is not in the nature o f an allowance intended to reimburse

expenses incurred by employees in the performance of their official functions. It is
not payment in consideration o f the fulfillment of official duty.6 As defined, “cost

’ See Article 99 (Regional Minimum Wages),.as amended by Section 3, R A No. 6727, June 9,1989.
} Article 99, Labor Code; Section 1. Chapter lit Rules Implementing R A No. 6727.
3 Section 2 G], Department Order No. 10, Seres of 1998 [May 04,1998.
‘ G.R. No. 157634, May 16,2005.
5 See also Vda. de Radio v. Municipality of Hagan, G.R. No. L-23542, Jan. 2,1968,22 SCRA1.
« Gutierrez v. DBM, G.R. No. 153266, March 18,2010,616 SCRA 1.18.

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of living” refers to “the level of prices relating to a range of everyday items”1 or

“the cost of purchasing the goods and services which are included in an accepted
standard level of consumption.”2 Based on this premise, COLA is a benefit
intended to cover increases in the cost of living.3

b. Validity ofintegration.

The integration o f monetary benefits into the basic pay o f workers is not a
new method o f increasing the minimum wage.

By way o f latest illustration, under Section 1 o f Wage Order No. NCR-20

which was issued on May 17, 2016, the COLA o f P i5.00 per day under the
previous Wage Order No. NCR-19 was ordered integrated into the basic pay of
P466.00 upon its effectivity thereby making P481.00 as the new basic wage.
Further, a new COLA o f P10.00 per day was added resulting in the new minimum
wage rate of P491.00.

9. “N O WORK, N O PAT” PRINCIPLE.

It must be emphasized that the age-old rule governing the relation

between labor and capital, or management and employee of “no work, no pay" or
‘fair day’s wageforfair day’s labor" remains to be adhered to in our jurisdiction as the
basic factor in determining the wages o f employees. I f the worker does not work,
he is generally not entided to any wage or pay. The exception is when it was the
employer who unduly prevented him horn working despite his ablcness, willingness
and readiness to work; or in cases where he is illegally locked out or illegally
suspended or illegally dismissed, or otherwise illegally prevented from working, in
which event, he should be entided to his wage.4

10. WAGE VS. SALARY

The term ,<wage”is used to characterize the compensation paid for manual
skilled or unskilled labor. "Salary, ” on the other hand, is used to describe the
compensation for higher or superior level o f employment.5

In cases o f execution, attach m en t or garn ish m en t o f the compensation

of an employee received from work issued by the court to satisfy a judicially-
determined obligation, a distinction should be made whether such compensation is
considered “wage”ot "salary."U nder Article 1708 o f the Civil Code, if considered a
"wagi, ” the employee’s compensation shall not be subject to execution or
attachment or garnishment, ex cep t for debts incurred for food, shelter, clothing

1 Id. at 19, citing The New Oxford American Dctionary, Oxford University Press, 2005 Edition.
2 Id., citing Webster's Third New International Dietjonary, Meniam-Webster Inc., 1993 Edition.
3 Maynilad Water Supervisors Association v. MaynHad Water Services, Inc., G.R. No. 198935, Nov. 27,2013.
4 Aklan Electric Cooperative v. NLRC, G Jl No. 121439, Jan. 25,2000.
5 The terms "Wage’ (etymologically from the Middle English word \vagen’), 'salary (from the Roman word ‘saT and Latin
word ‘sderium "} are synonymous ii meaning and usage. They ai refer to the same thing, i.e., a compensation paid on
account of work or services rendered.

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and medical attendance. If deemed a "salary," such compensation is not exem pt

from execution or attachment or garnishment. Thus, the salary, commission and
other remuneration received by a managerial employee (as distinguished from an
ordinary worker or laborer) cannot be considered wages. Salary is understood to
relate to a position or office, or the compensation given for official or other
service; while wage is the compensation for labor.1

11. FACILITIES VS. SUPPLEM ENTS.

a. Facilities, defined.
The term "facilities" includes articles or services for the benefit o f the
employee or his family but does not include tools o f the trade or articles or services
primarily for the benefit o f the employer or necessary to the conduct o f the
employer’s business.2 They are hems o f expense necessary for the laborer’s and his
family’s existence and subsistence which form part o f the wage and when furnished
by the employer, are deductible therefrom, since if they are not so furnished, the
laborer would spend and pay for them just the same.3

b. Supplements, defined.

The term !supplements" means extra remuneration or special privileges or

benefits given to or received by the laborers over and above their ordinary earnings
or wages.4

c. Facilities distinguished from supplements.

The benefit or privilege given to the employee which constitutes an extra
remuneration over and above his basic or ordinary earning or wage is supplement,
and when said benefit or privilege is made part of the laborer’s basic wage, it is a
facility. The criterion is not so much with the kind of the benefit or item (food,
lodging, bonus or sick leave) given but its purpose. Thus, free meals supplied by
the ship operator to crew members, out o f necessity, cannot be considered as
facilities but supplements which could not be reduced having been given not as
part of wages but as a necessary matter in the maintenance o f the health and
efficiency of the crew during the voyage.5

12. SOME PRIN CIPLES O N FA C ILITIES AND SU PPLE M E N TS.

• Facilities are deductible from wage but not supplements.6

’ Gaa v. CA, hfra; See also Equitable Banking Corp v. Sadac, G.R. No. 164772, June 8,2006.
2 Section 2, Rule VILA, Book III, Rules to Implement the Labor Code, as amended by Memorandum Circular No. 3, Nov. 4,
1992.
3 State Marine Cooperation and Royal Line, !r>;. v. Cebu Seamen’s Association, Inc., G.R. No. L-12444, Feb. 28,1963.
* Atok Big Wedge fAning Co., Inc. v. Atok Big Wedge Mutual Benefit Association, G.R. No. L-5276, Mardi 3.1953.
s Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16,2005; Mabeza v. NLRC, G.R. No. 118506, Apri 18,1997.
6 State Maine Corporation and Royal Line, Inc. v. Cebu Seamen’s Association, Inc., supra.

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• Legal requirements must be complied with before facilities may be deducted

from wages. The employer simply cannot deduct the value from the
employee’s wages without satisfying the following;
(1) Proof that such facilities are customarily furnished by the trade;
(2) The provision o f deductible facilities is voluntarily accepted in writing by
the employee; and
(3) The facilities are charged at fair and reasonable value.1
• An employer may provide subsidized meals an d snacks to his employees
provided that the subsidy shall not be less than thirty percent (30%) of the
fair and reasonable value of such facilities. In such a case, the employer may
deduct from the wages o f the employees not more than seventy percent
(70%) o f the value of the meals and snacks enjoyed by the employees,
provided that such deduction is with the written authorization of the
employees concerned.2
• The free board and lodging petitioner SIP furnished its employees cannot
operate as a set-off for the underpayment of their wages.3

2.
PROHIBITIONS REGARDING WAGES
1. P E R T IN E N T LABOR C O D E PROVISIONS.

The Labor Code devotes an entire Chapter45on the prohibitions regarding

wages, spanning Articles 112 to 119 thereof. Below is a discussion of all these
prohibitions.

2. N O N -IN T E R F E R E N C E BY EM PLO Y ER IN T H E DISPOSAL BY

EM PLO Y EES O F T H E IR WAGES.

Article 112s o f the Labor Code is clear-cut in it's interdiction that no

employer is allowed to limit or otherwise interfere with the freedom o f any
employee to dispose of his wages and no employer shall in any manner oblige any
of his employees to patronize any store or avail o f the services offered by any
person.6

1 Mabezav.NLRC, supra.
3 Section 1, Rule VILA, Book III, Rules to Implement the Labor Code, as amended by Memorandum Circular No. 3, Nov. 4,
1992.
3 See Article 124, Labor Code.
4 See Chapter IV (Prohibitions Regarding Wages). Title II (Wages), Book III (Conditions of Employment), Labor
Code.
5 ART. 112. Noninterference 'n disposal of wages. - No employer shaS limit or otherwise interfere with the freedom of any
employee to dispose of his wages. He sha* not in any manner force, compel, a oblige his employees to purchase
merchandise, commodities or other property from any other person, or otherwise make use of any store or services of such
employer or any other person.
6 See also Section 12, Rule VIII, Book III, Rules to Implement the Labor Code.

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Bar reviewer on Labor Law

3. WAGES NOT SUBJECT TO E X E C U T IO N O R A TT A C H M E N T ;

EXCEPTION.
The general rule is that laborer’s wages are not subject to execution or
attachment. The exception is when such execution or attachment is made for debts
incurred for food, shelter, clothing and medical attendance.1

4. D ED UCTIO NS FROM WAGES.

The general rule is that an employer, by himself or through his

representative, is prohibited from m aking any deductions from the wages of
his employees. The employer is not allowed to make unnecessary deductions
without the knowledge or authorization of the employees.2

4.1. PERMISSIBLE D ED U C T IO N S FROM WAGES.

a. Deductions allowed under Ardclc 113.

Article 1133 of the Labor Code allows only three (3) kinds of deductions,
namely:

(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the
amount paid by him as prem ium on the insurance;
(b) For union dues, in cases where the right of the worker or his union
to check-off has been recognized by the employer or authorized in
writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations
issued by the DOLE Secretary.

b. Other deduedons.
Under other provisions o f the Labor Code and other laws, deductions
from the wages o f employees may be made by the employer in any of the following
cases:

1) Deductions for loss or dam age under Article 1144 of the Labor
Code;

1 Article 1708, Cwi Code.

2 Gafradoresv. Trajano, G.R. No. L-70O67, Sept 15,1986,144 SCRA138.
3 ART. 113. Wage deduction. - No employer, in his own behalf a in behalf of any person, shall make any deduction from the
wages of his employees, except
(a) In cases where the worker is insured wfrh his consent by the employer, and the deduction is to recompense the employer
hr the amount paid by him as premium on he insurance;
(b) For union dues, incases where the right of the worker or his union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned, and
(c) In cases where the employer is autoorized by law or regulations issued by the Secretary of Labor and Employment
4 ART. 114. Deposits for loss or damage. -N o employer shall require his worker to make deposits from which deductions shall
be made for the reimbursement of loss of a damage to tools, materials, or equipment suppled by the employer, except
when the employer 's engaged n such trades, occupations or business where the practice of making deductions or requiring

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LABOR STANDARDS
2) Deductions made for agency fees from non-union members who
accept the benefits under the CBA negotiated by the bargaining union.
This form o f deduction does not require the written authorization o f
the non-bargaining union member concerned;*1
3) Union service fees;2
4) When the deductions are with the written authorization of the
employee for paym ent to a third person and the employer agrees to
do so, provided that the latter does not receive any pecuniary benefit,
directly or indirectly, from the transaction;3
5) Deductions for value of m eal and other facilities;4
6) Deductions for prem ium s for SSS, PhilH ealth, em ployees’
com pensation and Pag-IBIG;
7) W ithholding tax mandated under the National Internal Revenue
Code (NIRC);
8) Withholding of wages because of the employee’s d ebt to the employer
which is already due;5
9) Deductions made pursuant to a court judgm ent against the worker
under circumstances where the wages may be the subject o f
attachment or execution but only for debts incurred for food, clothing,
shelter and medical attendance;6
10) W ien deductions from wages are ordered by the court;
11) Salary' deductions o f a member of a cooperative.7

5. P R O H IB IT IO N AGAINST D E P O S IT R E Q U IR E M E N T .

a. General rule; exceptions.

Article 1148 of the Labor Code enunciates the general rule that while
deductions from the employees’ wages may be made for cash bonds or deposits,
the employer, however, is not allowed to unilaterally impose upon its employee's
the giving of cash bonds or deposits. To justify such imposition, the employer
should first prove and establish that it falls under any of the following exceptions:

(a) That it is engaged in such trades, occupations or business where

the practice o f making deductions or requiring deposits is a
recognized one; or

deposits is a recognized one. a is necessary or desirable as determined by the Secretary of Labor anc Employment in
appropriate roles and regulations.
1 Article 259(e) [248(e)]. Labor Code
J Radio Communications of the Phils.. Inc. v. Secretary of Labor and Employment G.R. No. 77959. Jan 9,1989
3 Section 13, Rule VIII. Book III. Rules to Implement the Labor Code.
4 Section 7, Rule VI, Book III, Ibid.
5 Article 1705. Cwl Code.
6 Article 1703. Ibid.
7 Article 59, RA. No. 6938, The Cooperative Code of the Philippines.
8 Supra.

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(b) That the cash bond or deposit is necessary or desirable as determined

by the DOLE Secretary in appropriate rules and regulations.

In 2014, the DOLE Secretary12made known her determination of such

exception in her Labor Advisory No. 11, Series of 20141 where she clarified that it is
only in private security agency where the practice is recognized or allowed.3
With this clarification, the rules and legal principles proclaimed in Articles 114 and
11545arc, at the moment, applicable only to private security agencies, absent any
other appropriate rules and regulations declaring other sectors as falling under the
exception. Thus, the Labor Advisory states that “ [deductions or requiring cash
deposits from employees to answer for reimbursement of loss or damage on tools,
materials, or equipment supplied by the employer is allowed in private security
agencies as a recognized and reasonable industry practice given the nature
of the service/business.”s

b. Due process required before deduction from deposits.

Due process should first be afforded the employee before any deduction
from his deposits for the actual amount of the loss or damage alleged to have been
committed by him, may be made therefrom. This presupposes, o f course, that the
deposits from which such deductions may be taken are legally allowed or permitted.

Consequently, for deductions of such nature to be valid, the following

conditions must be observed:

a) The employee concerned is clearly shown to be responsible for the

loss or damage;
b) The employee is given reasonable opportunity to show cause why
deductions should not be made;
c) The amount o f such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
d) The deduction from the wages of the employee does not exceed 20%
of the employee's wages in a week.6

c. Amount o f cash deposit.

In the event that a private security agency requires a cash deposit from
its employees, the maximum amount shall not exceed the employee's one month
basic salary. The said a s h deposit may be deducted from the employee's wages in

’ Refermg to D 0l£ Secretary Rosalinda Cfmapfis43aldoz.

2 Issued on September 03.2014 and is entfled 'Non-Interference in the Disposal of Wages and Allowable Deductions ’
3 See Opening Paragraph thereof.
4 ART. 115. LMtaSons.-No deduction frori the deposits ofan employee for the actual amount of foe loss or damage shall be
made unless the employee has been hear) thereon, and his responsfcifity has been dearly shown.
5 No. 3. le tx f Advisory No. 11. Series of 2014 (September 03, 2014], Non-Interference in the Disposal of Wages and
AJkwable Deductions.
6 id.; See also Section 14. Rule VIII, Book la, Rules to Implement the Labor Code.

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LABOR STANDARDS

an amount which shah not exceed twenty percent (20%) of the employee's wages in
a week.1

d. R efund o f cash deposit.

The full amount of cash deposit deducted shall be returned to the

employee within ten (10) days from his/her separation from the service.2

e. Lim itation.

No other deductions from the wages o f the employees or cash

deposit/bond shall be required by the employer without express authonzadon
from the DOLE Secretary through an advisory or guidelines.3

f U nauthorized deductions.

Deductions made from the employees' wages for company uniforms, cash
deposits for loss or damage, personal protective equipment (PPE), capital share or
capital build-up in service cooperatives, training fees, and other deductions not
included in the enumeration above, are unauthorized.4

g. R elevant cases.
In Five J Taxi? the Supreme Court, considered violative of Aruclc 114 o f
the Labor Code the P i 5.00 daily deposit required by the employer from taxi drivers
for the purpose o f defraying shortage in “boundary,” since there is no showing that
the DOLE Secretary has recognized the same as a “practice” in the taxi industry.
While Article 114 provides the rule on deposits for loss or damage to tools,
materials or equipment supplied by the employer, it does not, however, permit
deposits to defray any deficiency which the taxi driver may incur in the remittance
of his “boundary” Such illegally collected deposits should be refunded to the
drivers.*67

In Fluor Than Blue,1 the petitioner deducted the amount of P8,304.93 from
respondent Esteban’s last salary. According to the petitioner, this represents the
store’s negative variance for the year 2005 to 2006. The petitioner justifies the
deduction on the basis o f alleged trade practice and that it is allowed by the Labor
Code. The Supreme Court, however, disagreed because the petitioner failed to
sufficiently establish that Esteban was responsible for the negative variance it had
in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to
show cause why the deduction from her last salary should not be made. The Court

' No. 4, Id.

7 No. 5. Id.
3 No. 6, Id.
4 No. 7, Id.
s FweJTaxiv. NLRC, G.R. No. 111474, Aug. 22.1994,235 SCRA 556.
6 See also Dentech Manufacturing Corporation v. NLRC, GR. No. 81477, April 19,1989,172 SCRA 588.
7 Buer Than Blue Joint Ventures Company v. Glyza Esteban, G R. No. 192582, April 07,2014.

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 168 Bar Reviewer o n La b o r U w

cannot accept die petitioner’s statement that it is the practice in the retail industry
to deduct variances from an employee’s salary, without more.

In NinaJewelry,1the Court ruled that:

“[T]he petitioners should first establish that the making of deductions

from the salaries is authorized by law, or regulations issued by the
Secretary of Labor. Ruther, the posting o f cash bonds should be
proven as a recognized practice in the jewelry manufacturing business,
or alternatively, the petitioners should seek for the determination by the
Secretary o f Labor through die issuance o f appropriate rules and
regulations that the policy the former seeks to implement is necessary
or desirable in the conduct of business. The petitioners failed in this
respect It bears stressing that without proofs that requiring deposits
and effecting deductions are recognized practices, or without securing
the Secretary of Labor's determination of the necessity or desirability of
the same, the imposition of new policies relative to deductions and
deposits can be made subject to abuse by the employers. This is not
what the law intends.”

6. P R O H IB IT IO N O N W IT H H O L D IN G O F WAGES.

Article 1162 of the Labor Code categorically prohibits and considers it

unlawful for any petson, whether employer or not, direedy or indireedy, to
withhold any amount from die wages o f a worker.

Under Article 1706 o f the Civil Code, withholding o f the wages, except
for a debt due, is not allowed to be made by the employer. Moreover, under Article
1709 o f the same Code, the employer is not allowed to seize or retain any tool or
other articles belonging to the laborer.

The above-cited provisions are dear and need no further ducidation.

Indeed, as hdd in Special Steel Products, Inc. v. Villareal,3 an employer has no legal
authority to withhold the employee’s 13th month pay and other benefits. What an
employee has worked for, his employer must pay. Thus, an employer cannot
simply refuse to pay the w^jes o r benefits o f its employee because he has either

1 ^ Marx&dumgofM^al Arts. h av .M o rtec ao .G A N a 188169, Nov. 28,2011,661SCRA 416. On August

13,2004, a poky fcrgoldsnithsrapiingtiem to post cash bonds or deposits ri varying amcuits
but h no case exceeding 15% of to late 's salaries per week. The deposits were Mended to answer for any loss or
dam ageudMNSaJesji^ReysusIdhlvfeasonoflhBgbkfcnihsrfiatAarne^enoeiritiantangVieRflldenbusbadtD
theniTtedeposfeshdtetdim edupm cornptefaicifftegoBsn^vw riandaftafffliaccounfingofBiegcldreoeived.
N ^ J e ^ a fle g to tto ^ g o id s n x h s v ^ given tte q jfim not to post depose but to sign a u h o fe fo is a & M ^ fiie
tamer to deduct ta n the late's sabres amounts not exceetihg 18% ct M r take home pay shoukt l be found fta t hey
lost fie gold entrusted to hem The respondents darned otoeivifee nsisEng that Kite Jewety leS tie gddsm&s wSi no
cpSon but to post file deposfis. The respondents aSeged 6iat 8iey were construcfi^ly (fisrrussed by bfifla Jewfiky as their
conjnusdempioynMnts were mads deoendenton Ihoirraacfinoss to post Ihe required deposits. *
1 ART. 116. W tthGkfiq of wages and kickbacks proWbtai. - It s td be unlawful far a y person, (fireefly or indirectly, to
MtftWd any sn o u t tom fce wages of a w ater or induce h rn to g te u p a n y p a rto fh is wages by force, steaSi,
intinndatioa&ireatorbyanyoAiermeanswAatsoeverwaxut8ieworioa<'$(xnseni
2 G H No. 143304, July8,2004.

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LA BO R STANDARDS

defaulted in paying a loan guaranteed by his employer, or violated their

memorandum o f agreement; o r failed to render an accounting o f his employer’s
property.

In SHS Perforated Materials, Inc. p. Dia%1 petitioners contended that

withholding respondent employee’s last salary coveting the period from November
16 to November 30,2005, was justified because respondent was absent and did not
show up for work during that period. He also failed to account for his whereabouts
and work accomplishments during said period. Petitioners further argued that when
there is an issue as to whether an employee has, in fact, worked and is entided to
his salary, it is within management prerogative to temporarily withhold an
employee’s salary/wages pending determination o f whether o r not such employee
did indeed work. In disagreeing to this postulation o f petitioners, the High Court
stated that although management prerogative refers to “the right to regulate all
aspects o f employment,” it cannot be understood to include the right to
temporarily withhold salary/wages without the consent o f the employee. To
sanction such an interpretation would be contrary to Article 116 o f the Labor
Code. Any withholding o f an employee’s wages by an employer may only be
allowed in the form o f wage deductions under the circumstances provided in
Article 113 of the same Code. As conecdy pointed out by the Labor Atbiter,
“absent a showing that the withholding o f complainant’s wages falls under the
exceptions provided in Article 113, die withholding thereof is thus unlawful.”
Although it cannot be determined with certainty whether respondent worked for
the entire period from November 16 to November 30,2005, the consistent rule is
that if doubt exists between the evidence presented by the employer and that by the
employee, the scales o f justice must be tilted in favor o f the latter in line with the
policy mandated by Articles 2 and 3 o f the Labor Code to afford protection to
labor and construe doubts in favor o f labor. For petitioners’ failure to satisfy their
burden o f proof, respondent is presumed to have worked during the period in
question and is, accordingly, entitled to his salary. Therefore, the withholding o f
respondent’s salary by petitioners is contrary to Article 116 o f the Labor Code and,
thus, unlawful

6.1. WHEN WITHHOLDING OF WAGES AMOUNTS TO

CONSTRUCTIVE DISMISSAL.
In the same case o f SHS Perforated Materials, the unlawful withholding o f
the last salary o f respondent was declared to constitute constructive dismissal since
for this reason, he was forced to resign as it has made it impossible, unreasonable
o r unlikely for him to continue working for petitioners. It is o f no moment that he
served his resignation letter o n November 30, 2005, the last day o f the payroll
period and a non-working holiday, since his salary was already due him on
November 29,2005, being the last working day o f said period. In fact, he was then

1 G R . No. 185814, Oct 13,2010.

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 170 Bar Revifw er o n Ia b o r Iaw

in fo rm e d th a t th e w ages o f all th e o th e r S H S e m p lo y e e s w ere a lre a d y re le a se d , a n d

o n ly his w as b ein g w ith h eld . W h a t is sig n ific a n t is th a t th e r e s p o n d e n t p r e p a r e d a n d
se rv ed his re sig n atio n le tte r rig h t a f te r h e w a s in fo rm e d th a t h is salary w a s b e in g
w ith h eld . It w o u ld be a b s u rd to re q u ire re s p o n d e n t to to le ra te th e u n la w fu l
w ith h o ld in g o f his salary fo r a lo n g e r p e r io d b e fo re his e m p lo y m e n t c a n b e
c o n sid e re d as so im p o ssib le, u n re a s o n a b le o r u n lik ely as to c o n s titu te c o n s tru c tiv e
dism issal. E v e n g ra n tin g th a t th e w ith h o ld in g o f r e s p o n d e n t’s sa lary o n N o v e m b e r
30, 2005, w o u ld n o t c o n s titu te a n u n la w fu l a c t, th e c o n tin u e d re fu sa l to re le a se his
salary a fte r th e p ayroll p e rio d w a s clearly u n la w fu l. T h e p e titio n e rs ’ claim th a t th ey
p re p a re d th e ch e c k ready fo r p ic k -u p c a n n o t u n d o th e ’u n law fu l w ith h o ld in g . I t is
w o rth y to n o te th at in his re sig n a tio n le tte r, re s p o n d e n t cited p e titio n e rs ’ "'illegal and
unfair iabor praclict" as h is c a u s e fo r re sig n a tio n . A s c o rre c d y n o te d by th e C A ,
re s p o n d e n t lo st n o tim e in s u b m ittin g h is re s ig n a tio n le tte r a n d e v e n tu a lly filing a
co m p la in t fo r illegal d ism issal ju st a few d a y s a fte r his salary w as w ith h e ld . T h e s e
c irc u m sta n c e s are in c o n s is te n t w ith v o lu n ta ry re sig n a tio n an d b o ls te r th e fin d in g o f
c o n s tru c tiv e dism issal.

6 .2 . V A L ID I T Y O F W I T H H O L D I N G O F R E L E A S E O F L A S T
P A Y M E N T S T O E M P L O Y E E S F O R F A IL U R E T O C O M P L Y W IT H
C L E A R A N C E R E Q U IR E M E N T S .

A lth o u g h as a g e n e ra l ru le , e m p lo y e rs are p ro h ib ite d fro m w ith h o ld in g

w a g e s1 fro m em p lo y ees, th e y u su a lly w ith h o ld d ie release o f th e la st sa la ry a n d
b e n e fits o f te rm in a te d o r re s ig n in g e m p lo y e e s p r io r to o r p e n d in g th e ir c o m p lia n c e
w ith c e rtain cle a ra n c e p ro c e d u re s . T h is a p p e a rs to b e a s ta n d a rd p r o c e d u r e a m o n g
em p lo y ers, w h e th e r p u b lic o r p riv a te .23 C le a ra n c e p ro c e d u re s a re in s titu te d to
e n s u re th a t th e p ro p e rtie s , re a l o r p e rs o n a l, b e lo n g in g to th e e m p lo y e r b u t a re in
th e p o ss e s sio n o f th e s e p a ra te d e m p lo y e e , a r e r e tu rn e d to th e e m p lo y e r b e f o r e th e
e m p lo y e e ’s d e p a rtu re .56

T h e law s u p p o rts d ie e m p lo y e r s ’ in s titu tio n o f c le a ra n c e p r o c e d u r e s

b e fo re th e release o f w a g e s .4 A s a n e x c e p tio n to th e g e n e ra l ru le th a t w a g e s m ay
n o t b e w ith h e ld 5 a n d b e n e fits m a y n o t b e d im in is h e d ,5 th e L a b o r C o d e p r o v id e s in
its A rticle 113 [W age D e d u c tio n ] th a t “ [n]o e m p lo y e r, in h is o w n b e h a lf o r in
b e h a lf o f an y p e rs o n , shall m a k e a n y d e d u c tio n f ro m th e w ag es o f h is e m p lo y e e s ,
exceptxxx (3) I n c a s e s w h e r e t h e e m p l o y e r is a u t h o r i z e d b y la w o r r e g u l a t i o n s
i s s u e d b y t h e S e c r e ta r y o f L a b o r a n d E m p l o y m e n t ”

1 Referring to Article 116 of toe Labor Code, entitled ‘ Withholding of wages and kckbacks prohibited.'
2 Man v. NLRC and Solid Mils, Inc.. G.R. No. 202961. Feb. 04.2015.
3 Id.
4 Id.
5 See Abide 116 ol toe Labor Code, entitled 'Witohoklng of wages and kickbacks prohtoted.'
6 Referring to Articie 100 of the Labor Code wtiich provides: ’Art. 100. Prohbiijon against eSmination or diminutjon of benefits.
Nothing h tors Book shall be construed to eliminate a in arty way diminish supplements, or other employee benefits being
enjoyed at toe time of promulgation of this Code.'

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 C hapter T hree 17 1
LABORSTANDARDS
T h e C iv il C o d e 1 p ro v id e s th a t th e e m p lo y e r is a u th o riz e d to w ith h o ld
w ag es fo r d e b ts d u e . “ D e b t ” in th is c a se re fe rs to a n y o b lig a tio n d u e fro m t h e
e m p lo y e e to th e e m p lo y e r. It in c lu d e s a n y accountability th a t th e e m p lo y e e m a y
h a v e to th e e m p lo y e r. T h u s , th e r e is n o r e a s o n to lim it its s c o p e to u n ifo rm s a n d
e q u ip m e n t.

“ A c c o u n t a b i l i t y , ” in its o rd in a ry s e n s e , m e a n s o b lig a tio n o r d e b t.2 T h e

o rd in a ry m e a n in g o f th e te rm ‘‘accountability’’ d o e s n o t lim it th e d e f in itio n o f
a c c o u n ta b ility to th o s e in c u rre d in th e w o rk s ite .3 A s lo n g as th e d e b t o r o b lig a tio n
w as in c u rre d b y v ir tu e o f th e e m p lo y e r-e m p lo y e e re la tio n s h ip , g en erally , it shall b e
in c lu d e d in th e e m p lo y e e ’s a c c o u n ta b ilitie s th a t a re su b je c t to c le a r a n c e
p ro c e d u re s .45 T h e r e is n o re a s o n to lim it its s c o p e to u n if o rm s and e q u ip m e n t.
“accountability" was c o n s tru e d in th e 2 0 1 5 c ase o f Milan v. NLRC and
T h u s , th e te rm
Solid Mills, Inc.} as in c lu d in g p e titio n e rs ’ p o s s e s s i o n o f th e ir c o n s tru c te d h o u s e s
w ith in th e S M I V illag e, a p r o p e rty o f p riv a te r e s p o n d e n t S olid M ills w h e r e
p e titio n e rs a n d th e ir fam ilies w e r e a llo w ed to o c c u p y d u rin g th e ir e m p lo y m e n t.
W h e n S o lid M ills c lo s e d its o p e r a tio n s r e s u ltin g in th e te rm in a tio n o f p e titio n e r s ,
th e y w e re b o u n d to v a c a te a n d tu r n -o v e r th e ir p o s s e s s io n o v e r th e ir h o u s e s to S o lid
M ills. C o n s e q u e n tly , th e ir re fu s a l to d o so ju stifie d th e w ith h o ld in g b y S o lid M ills o f
th e ir s e p a ra tio n p a y a n d te r m in a tio n b e n e fits .6

6 .3 . KICKBACKS.
T h e s e c o n d in s ta n c e p r o h ib ite d b y A rtic le 1 1 6 o f th e L a b o r C o d e is d i e
so -c a lle d “kickback ” w h ic h c o n s is ts in d ie a c t o f a n y p e r s o n , w h e th e r e m p lo y e r o r
n o t, d ire e d y o r in d ire e d y , to in d u c e a w o r k e r to g iv e u p any p a r t o f iiis w a g e s b y
fo rc e , ste a lth , in tim id a tio n , th r e a t o r b y an y o t h e r m e a n s w h a ts o e v e r, w ith o u t t h e
w o rk e r’s c o n s e n t

7. PROHIBITION AGAINST DEDUCTION TO ENSURE

EMPLOYMENT.
A rtic le 1 1 7 7 o f th e L a b o r C o d e p r o h ib its a n d c o n s id e rs it u n la w fu l fo r a n y
p e rs o n , w h e th e r th e e m p lo y e r h im s e lf o r h is re p re s e n ta tiv e o r a n in te rm e d ia ry , t o
r e q u ire th a t a d e d u c tio n b e m a d e o r to a c tu a lly m a k e a n y d e d u c tio n fro m th e w a g e s
o f an y e m p lo y e e o r w o r k e r, f o r th e b e n e f it o f s u c h e m p lo y e r o r his r e p re s e n ta tiv e
o r a n in te rm e d ia ry , a s c o n s id e ra tio n o f a p r o m is e o f e m p lo y m e n t o r, w h e n a lre a d y
e m p lo y e d , fo r th e c o n tin u a tio n o f su c h e m p lo y m e n t o r re te n tio n th e re in .

’ Article 1705. Withholding of the wages, except for a debt due, shall not be made by the employer.
2 Man v. NLRC and Solid Ml's, Inc., G R No. 202951, Feb 04,2015.
3 Id.
4 Id.
5 G R No. 202961, Feb. 04,2015.
6 Consisting of vacation and sick leave benefits and 13* month pay.
7 ART. 117. Deduction to ensure employment - It shall be unlawful to make any deduction from the wages of any employee
for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention
h employment

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 172 Bar Reviewer on Labor Law

8. RETALIATORY ACTIONS BY EMPLOYER.

A rticle 118* o f th e L a b o r C o d e p r o h ib its a n d d ec la re s it u n la w fu l fo r th e
em p lo y er:

a) to re fu se to p a y th e w a g e s a n d b e n e fits o f a n e m p lo y e e ; o r
b) to re d u c e h is w a g e s a n d b e n e fits ; o r
c) to disc h arg e h im fro m e m p lo y m e n t; o r
d) to d isc rim in a te a g a in s t h im in an y m a n n e r;

o n a c c o u n t a n d b y reaso n o f sa id e m p lo y e e ’s:

1) a c t o f filing an y c o m p la in t o r in s titu tio n o f an y p r o c e e d in g u n d e r T itle

I I [W ages], B o o k I I I o f th e L a b o r C o d e ; o r
2) a c t o f testify in g in sa id p ro c e e d in g s o r w h e n h e is a b o u t to testify
th erein .

8 .1. WHEN RETALIATORY ACT CONSIDERED ULP.

T h e c o m m issio n o f th e re ta lia to ry a c t o f d is c h a rg in g o r in a n y m a n n e r
d isc rim in a tin g ag ain st any e m p lo y e e w h o h a s filed a n y c o m p la in t o r in s titu te d any
p ro c e e d in g o r h a s testified o r is a b o u t to te stify in s u c h p r o c e e d in g d e s c rib e d in
A rtic le 118 m a y b e c o n s id e re d a n u n f a ir la b o r p ra c tic e u n d e r A rtic le 2 5 9 (f) [248(f)]
o f th e L a b o r C o d e . A s p ro v id e d th e re in , it is a n a c t o f u n fa ir la b o r p r a c tic e f o r an
e m p lo y e r to d ism iss, d isc h a rg e o r o th e rw is e p re ju d ic e o r d is c rim in a te a g a in s t an
e m p lo y e e fo r h a v in g given o r b e in g a b o u t to g iv e te s tim o n y u n d e r th e L a b o r C o d e .

I t m u s t b e n o te d th a t i t is o n ly th is ty p e o f u n f a ir la b o r p ra c tic e
m e n tio n e d in A rticle 259 [248] (U n fa ir L a b o r P ra c tic e s o f E m p lo y e rs ) w h ic h m ay
o r m ay n o t b e related to o r c o n n e c te d w ith th e e x e rc ise b y th e e m p lo y e e o f his
rig h t to se lf-o rg a n iz a tio n o r c o lle c tiv e b a rg a in in g . T h e e m p lo y e e g iv in g te s tim o n y
o r a b o u t to give o n e , m ay o r m a y n o t b e a m e m b e r o f a u n io n .2

T o cite an e x a m p le , in th e c ase o f Philippine American Cigar? t h e e m p lo y e r

d ism issed th e b r o th e r o f a n e m p lo y e e w h o filed a c a se a g a in st th e c o m p a n y . T h e
S u p re m e C o u r t ruled th a t s u c h a c t o f th e e m p lo y e r c o n s titu te s a n u n f a ir la b o r
p ractice. A th o u g h S ectio n 4 (a) 5 o f R .A . N o . 8 7 5 (n o w A rtic le 2 5 9 (f) [248(f)] o f
th e L a b o r C o d e ) w o u ld se e m to r e fe r o n ly to th e o n e w h o file d c h a rg e s a g a in s t the
c o m p a n y as c o n s titu tin g u n f a ir la b o r p ra c tic e , th e legislativ e in te n t is to a ssu re
a b s o lu te fre e d o m o f th e e m p lo y e e s to e s ta b lis h la b o r o rg a n iz a tio n s a n d u n io n s , as
well as to p r o ff e r c h arg es fo r v io la tio n o f la b o r law s. I f th e d is m is s a l o f an
em p lo y e e d u e to th e filing b y h im o f c h a rg e s w o u ld b e a n d is a n u n d u e r e s tra in t 123

1 ART. 118. RetaTiafexy measures. - It shaS be unlawful for an employer to refuse to pay or reduce the wages and benefits,
discharge or in any manner discriminate against any employee vho has filed any complaint or hstiMed any proceeding
under this Tide or has testified or is about to testify in such proceedings.
2 P tiilcnm Fm ployees Union v. P hilippine G lobal C om m unications, G .R. No. 144315, July 17,2005.
3 Philippine American Cigar and Cigarette Factory Workers Independent Union v. Phfipphe American Cigar and Cigarette
Manufacturing Co., G.R. No. L-18364, Feb. 28,1963.

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 C hapter T hree 17 3
LABOR. STANDARDS

u p o n said f re e d o m , d ie d ism issa l o f h is b r o t h e r o w in g to th e n o n -w ith d ra w a l o f t h e

c h a rg e s o f t h e f o rm e r , w o u ld b e a n d c o n s titu te as m u c h , in fa c t a g re a te r a n d m o r e
e ffe c tiv e , r e s tra in t u p o n th e sa m e f re e d o m . W h a t is p ro h ib ite d to b e d o n e d ire c tly
shall n o t b e a llo w e d to b e a c c o m p lis h e d in d ire c tly .

I n a n o th e r c a se , Itogon-Suyoc,*
l th e H ig h C o u r t d e c la re d th a t an u n f a ir la b o r
p ra c tic e w a s c o m m itte d b y th e e m p lo y e r w h e n it d ism is se d th e w o r k e r w h o h a d
te s tifie d in th e h e a r in g o f a c e r tific a tio n e le c tio n c a s e d e s p ite its p r io r re q u e s t f o r
th e e m p lo y e e n o t to te stify in th e sa id p r o c e e d in g a c c o m p a n ie d w ith a p r o m is e o f
b e in g r e in s ta te d i f h e fo llo w e d s a id re q u e s t.2

9. FALSE STATEMENT, REPORT OR RECORD.

A rtic le 1 1 9 3 o f th e L a b o r C o d e p r o h ib its a n d c o n s id e rs i t u n la w fu l fo r a n y
p e r s o n , w h e th e r e m p lo y e r o r n o t , to m a k e an y false s ta te m e n t, r e p o r t o r r e c o r d
r e q u ire d to b e file d o r k e p t in a c c o r d a n c e w ith a n d p u r s u a n t to th e p r o v is io n s o f
th e L a b o r C o d e , k n o w in g s u c h s ta te m e n t, r e p o r t o r r e c o r d to b e false in a n y
m a te ria l re s p e c t.4

E x a m p le s o f s u c h s ta te m e n t, r e p o r t o r r e c o r d r e q u ire d to b e file d o r k e p t
u n d e r th e L a b o r C o d e a re p a y ro lls , tim e r e c o r d s , e m p lo y m e n t r e c o r d s and
p r o d u c tio n r e c o r d s , a m o n g o th e r s .

3.
WAGE DISTORTION
CONCEPT

a.
WAGE ORDER

1. WAGE ORDER, D EFIN ED .

T h e te r m 'Wage Order" r e fe rs to th e o r d e r p r o m u lg a te d by th e R T W P B 5
p u r s u a n t to its w a g e fix in g a u th o r ity .6

2. PRESCRIBED INCREASES OR ADJUSTMENTS, D EFIN ED .

"Prescribed increases or adjustments" r e fe r to th e am ount of in c re a s e s

o r a d ju s tm e n ts in th e w a g e ra te o f w o r k e rs fix e d b y th e R T W P B (hereafter may be

' ttogon-Suyoc Mnes, Inc. v. Baldo, G H No. L-17739, Dec. 24,1964.

1 See aiso National Fastener Corporation v. CIR. 1 SCRA17; Henares & Sons v. National Labor Union, 3 SCRA765.
3 ART. 119. False reporting. - It shall be unlawful for any person to make any statement report or record fifed or kept pursuant
to the provisions of Hits Code knowing sudi statement, report or record to be false in any material respect
4 Section 13, Rule X, Book III, Riies to Implement the Labor Code.
5 R egional T rip a rtte W ages and P roductivity Board (RTW PB).
6 Section 4 [nj, Rule I. NWPC Guidelines No. 01, Series of 2007, June 19,2007 [Amended Rules of Procedure on Mnimum
Wage Fodng]; Section 2 [h]. Department Order No. 10, Series of 1998 [May 04,1998],

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 174 Ba r Reviewer o n u b o r law

referred to as “Regotudboard') which the employer is mandated to pay upon effectivity

o f a Wage Older.1

3. W H EN PR O PER T O ISSUE WAGE O R D E R .

Whenever conditions in the region so warrant, the Regional Board shall

investigate and study all pertinent facts and based o n the prescribed standards and
criteria, shall proceed to determine whether a Wage O rder should be issued. Any
such Wage Order shall take effect after fifteen (15) days from its complete
publication in at least one (1) newspaper o f general circulation in die region.2

4. PUBLIC H EA R IN G S/C O N SU LT A TIO N S.

In die performance o f its wage-determining functions, the Regional Board

shall conduct public hearings/consultations, giving notices to employees’ and
employers’ groups, provincial, city and municipial officials and other interested
parties.3

5. STAN DA RDS/CRITERIA FO R M IN IM U M WAGE FIX IN G .

a. Relevant factors to consider in fixin g m inim um wage.

The minimum wage rates to be established by die Regional Board shall be
as neatly adequate as is economically feasible to maintain the minimum standards
o f living necessary for the health, efficiency and general well-being o f the workers
within the framework o f national economic and social development goals. In the
determination o f regional minimum wages, the Regional Board shall, among other
relevant factors, consider the following:

(1) N eeds o f w orkers an d th eir families

a) Demand for living wages;
b) Wage adjustment vis-a-vis die consumer price index;
c) Cost o f living and changes therein;
d) Needs o f workers and their families;
e) Improvements in standards o f living.
(2) CapacityLtojiay
a) Fair return on capital invested and capacity to pay o f employers;
b) Productivity.
(3) Comparable w ages an d incom es
a) Prevailing wage levels.
(4) R equirem ents o f econom ic an d social developm ent
a) Need to induce industries to invest in die countryside;
b) Effects on employment generation and family income;

1 Sec6on2g, DepartmentOrderNo. 10, Seriesof1998[May04,1998.

2 Article 123.laborCode.

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 Ch apter th ree 175
LABORSTANDARDS

c) Equitable distribution o f income and wealth along die imperatives

o f economic and social developm ent1

b. Standardprevailing m inim um wages in every region.

The wages shall be die standard prevailing minimum wages in every
region. These wages shall include wages varying with industries, provinces o r
localities if in die judgment o f the Regional Board, conditions make such lo cal
differentiation proper and necessary to effectuate the purpose o f the law.2

6. M E T H O D S O F FIX IN G T H E M IN IM U M W AGE RATES.

The Supreme Court has identified two (2) methods o f fixing the minimum
wage, namely.

1. "Floor-Wag” method which involves the fixing o f a determinate

amount to be added to the prevailing statutory minimum wage rates.
This was applied in earlier wage orders; and
2. “Salary-Cap" or “Salary-Ceiling”method where the wage adjustment is
to be applied to employees receiving a certain denominated salary
ceiling. In other words, workers already being paid more than the
existing minimum wage (up to a certain amount stated in the Wage
Order) are also to be given a wage increase.34
The “SalayCap"or "SahyCethg”method is the preferred mode.*
The distinction between the two (2) methods is best shown by way o f an
illustration. Under the 'Floor Wag Method, ” it would be sufficient if the Wage O rder
simply set P15.00 as die amount to be added to the prevailing statutory minimum
wage rates; while in the "SalaryCdbig Method,” \t would be sufficient if the Wage
Order states a specific salary, such as P250.00, and only those earning below it shall
be entided to the wage increase.
When neither o f the two (2) methods is used and instead what was
granted was an across-the-board (ATB) wage increase, die Regional Board is
deemed to have exceeded its authority {ultra pins) by extending the coverage o f die
Wage O rder to wage earners receiving more than the prevailing minimum wage
rate without a denominated salary ceiling.3

1 Seclm 2. R ^ lN W P C G u d e ^ F h 01. Series of2007, June 19,2007 {Amended Rules of PraceduBtnMnimwn

WageFargfcAride 124, LaborCode.
* kt
1 Employes Confederation ofthePhfyphes v. NWPC, G fi. No. 96169, Sept 24,1991,201SVRMSt See also Norids
Freeand todependsflVtalasUnion v. NoddsTracfingCompany. hc,G Jl No. 157098.June 30,2005.
4 The secondmeftod above was usediiRepubfc Acts Nos. 6640 and 6727 and hPresdertial Decrees Nos.525,1123,
1614,1634,16IB, 1713 andWbge Ortas Nos. 1,2,3,5 and 6.Thismethodis petered as 1 mnmizes dispute invoking
w agetfstafaifli).
s MebopoOan Bank and Trust Co, Inc. v. NWPC, GJl No. 144322, Feb. 6,2007; Nasjpi Integrated Anastre and
Stevedoring Services, Inc. (MASS)] v. Nasjft Employees Labor Union (NELO}ALU-TUCP. G il No. 162411. June 27,
2008.

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 176 Bar. Reviewer o n labor law

W h ile A T B w ag e in c re a se s h a v e b e e n g ra n te d in d ie p a s t, c u r r e n t p o lic y
d isco u rag es th e R eg io n al B o a rd s fro m g ra n tin g A T B a d ju s tm e n ts as th e y c r e a te
m o re d is to rtio n s in th e la b o r m a r k e t w h ic h in tu rn a f fe c t a d v e rse ly d ie in c o m e a n d
sta n d ard o f liv in g o f w o rk e rs a n d th e ir fam ilies. S p ecifically A T B w a g e in c re a s e s (1)
h av e g re a te r im p a c t o n in fla tio n ; (2) a re d is in c e n tiv e s to tra d e u n io n is m ; a n d (3) a re
n o t c o n s iste n t w ith th e m in im u m w ag e fix in g m a n d a te o f th e R e g io n a l B o a rd s .1

7. S O M E P R IN C IP L E S O N W A G E F IX IN G .

a. O n i s s u a n c e o f w a g e o r d e r,

• Contents o f Wage Order. - A W a g e O r d e r shall sp e c ify th e re g io n ,

p ro v in c e , o r in d u stry to w h ic h th e m in im u m w ag e ra te s p r e s c r ib e d
th e re u n d e r shall a p p ly an d p r o v id e e x e m p tio n s , i f an y , s u b je c t to
g u id elin es issu ed b y th e C o m m is s io n .2
• Frequency o f Wage Order. - A n y W ag e O r d e r iss u e d b y th e R e g io n a l
B o a rd m ay n o t b e d is tu rb e d fo r a p e rio d o f tw elv e (12) m o n th s f ro m its
cffc ctiv ity , and n o p e titio n fo r w ag e in c re a s e shall b e e n te r ta in e d w ith in
th e said p e rio d e x c e p t w h e n th e re a re s u p e rv e n in g c o n d itio n s , s u c h as
e x tra o rd in a ry in c re a se in p ric e s of p e tr o le u m p r o d u c ts and b a sic
g o o d s /s e r v ic e s , w h ic h d e m a n d a re v ie w o f th e m in im u m w ag e r a te s as
d e te rm in e d by th e R e g io n a l B o a rd a n d c o n f irm e d b y th e C o m m is s io n
(N W P C ),3 in w h ic h c a se , th e R e g io n a l B o a rd shall p r o c e e d to e x e rc is e its
w ag e fix in g fu n c tio n e v e n b e f o re th e e x p ira tio n o f th e sa id p e r io d .4
• Effectivity o f Wage Order; requirement o f publication. - A W age
O r d e r shall b e p u b lis h e d o n ly a f te r its re v ie w by th e C o m m is s io n a n d
sh a ll ta k e e ffe c t fifte e n (15) d ay s a f te r its p u b lic a tio n in a t le a s t o n e (1)
n e w s p a p e r o f g e n e ra l c irc u la tio n in th e re g io n .5

b . O n p u b lic h e a rin g s /c o n s u lta tio n s .

• H e a rin g s m ay b e c o n d u c te d by th e R e g io n a l B o a rd en banc o r b y a d u ly
a u th o riz e d c o m m itte e th e r e o f w h e re in e a c h s e c to r sh a ll b e r e p re s e n te d .6

• N o p re lim in a ry o r p e r m a n e n t in ju n c tio n o r te m p o ra ry r e s tra in in g o r d e r

m ay b e issu ed b y an y c o u rt, trib u n a l o r an y o th e r e n tity a g a in s t a n y
p ro c e e d in g b e f o re th e C o m m is s io n o r R e g io n a l B o a rd .7

1 SeehttpiAwvw.mvpc.dole.gw.pMaq.htiil.
1 Section 2, Rule IV, NWPC Guidelines No. 01, Series o f 2007, June 19.2007 [Amended Rules of Procedure on Mn'mum
Wage Fixing).
3 Referring to the National Wages and Producfrrity Commission (NWPC)
* Section 3, Rule IV, NWPC Guidelines No. 01, Series of 2007, June 19,2007 [Amended Rules of Procedure on Mnunum
Wage Feting).
5 Artide 123, Labor Code; Section 4, Chapter III, Rules implementing RA. No. 6727. Section 5, Rule (V, NWPC Guidelines
No. 01, Series of 2007, June 19,2007 [Amended Rules of Procedure on Minimum Wage Fixing).
6 Section 2. Rule III. NWPC Guidelines No. 01. Series of 2007. June 19.2007 [Amended Rules of Procedure on M nim um
Wage Roong).
7 Section 7, Rule III, bid.

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• F a ilu re to c o n d u c t p u b lic h e a r in g s /c o n s u lta tio n s a n d to p u b lis h a w ag e
o r d e r r e n d e r s it in v a lid .1
c. On applicability of wage order,
• W age in c re a s e s m a n d a te d by w ag e o r d e rs a p p ly o n ly to co v ered
e m p lo y e e s s p e c ifie d th e r e in .2

• I f n o n e o f th e e m p lo y e e s a re re c eiv in g salaries b e lo w th e p re s c rib e d

m in im u m w a g e , a n e m p lo y e r is n o t o b lig e d to g ra n t th e w ag e in c re a se to
a n y o f th e m .34

b.
WAGE DISTORTION

1. W A G E D IS T O R T IO N , AS D E F IN E D IN T H E LAW A N D
IM P L E M E N T IN G R U L E S .

‘Wage distortion’A c o n te m p la te s a s itu a tio n w h e r e a n in c re a s e in p re s c rib e d

w a g e ra te s re su lts in e ith e r o f th e fo llo w in g :

1. Elimination o f th e q u a n tita tiv e d iffe re n c e s in th e ra te s o f w ag es o r

sa laries; o r

2. Seven contraction o f in te n tio n a l q u a n tita tiv e d if fe r e n c e s in w a g e o r salary

ra te s b e tw e e n a n d a m o n g e m p lo y e e g r o u p s in a n e s ta b lis h m e n t as to
e ffe c tiv e ly o b lite ra te th e d is tin c tio n s e m b o d ie d in s u c h w ag e s tr u c tu r e
b a s e d o n th e fo llo w in g c rite ria :

a) Skills;
b) L e n g th o f se rv ic e ; o r
c) O t h e r lo g ical b a s e s o f d if fe r e n tia tio n .5

Wage distortion presupposes a classification of positions a n d ranking o f

th e s e p o s itio n s a t v a rio u s le v e ls . O n e v isu a liz e s a h ie ra rc h y o f p o s itio n s w ith
c o rre s p o n d in g ra n k s b asically in te r m s o f w a g e s a n d o th e r e m o lu m e n ts . W h e r e a
sig n ific a n t c h a n g e o c c u r s a t th e lo w e s t lev el o f p o s itio n s in te r m s o f b a s ic w a g e
w ith o u t a c o rre s p o n d in g c h a n g e in th e o t h e r lev el in th e h ie ra rc h y o f p o s itio n s ,
n e g a tin g a s a r e s u lt t h e r e o f th e d is tin c tio n b e tw e e n o n e level o f p o s itio n fro m th e
n e x t h ig h e r level, a n d re s u ltin g in a p a rity b e tw e e n th e lo w e s t level a n d th e n e x t
h ig h e r le v e l o r ra n k , b e tw e e n n e w e n tr a n ts a n d o ld h ire s, th e r e e x is ts a w age

' Cagayan Sugar Milting Company v. Secretary of Labor and Employment, G.R. No. 128399 Jan. 15.1998.
3 Capitol Wireless, Inc. v. Bate, G R No. 104682, July 14.1995.
3 Pag-Asa Sled Worts, Inc. v. CA, G.R. No. 166647, Mach 31,2006.
4 Mabeza v. NLRC, G.R. No. 118506, April 18,1997,271SCRA 670.
5 Article 124, Labor Code; Item [p], Definition of Terns, Rules Implementing Repubfc Act No. 6727; Section 4 [mj, Rule I,
NWPC Guideines No. 01, Series of 2007, June 19,2007 (Amended Rules of Procedure on Mnimum Wage FbcjngJ; See
also Section 1(1], Rule II, NCMB Revised Procedural Guidelines in the Conduct of Volintary Arbitration Proceedings (Od 15.
2004],

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d isto rtio n , xxx. T h e c o n c e p t o f w a g e d is to r tio n a s s u m e s a n e x is tin g g r o u p in g o r

classificatio n o f em p lo y ees w h ic h e s ta b lis h e s d is tin c tio n s a m o n g su c h e m p lo y e e s
o n so m e rele v a n t o r leg itim a te b a sis. T h is cla ssific a tio n is re fle c te d in a d iffe rin g
w age ra te fo r each o f th e e x is tin g cla sse s o f e m p lo y e e s .1

2. F O U R (4 ) E L E M E N T S O F W A G E D I S T O R T I O N .

'ITie fo u r (4) e le m e n ts o f w a g e d is to r tio n a re as follow s:

(1) A n ex istin g h ie ra rc h y o f p o s itio n s w ith c o rre s p o n d in g salary ra te s;

(2) A sig n ifican t c h a n g e in th e sa lary ra te o f a lo w e r p a y c lass w ith o u t a
c o n c o m ita n t in c re a s e in th e sa lary ra te o f a h ig h e r o n e ;
(3) T h e e lim in a tio n o f t h e d is tin c tio n b e tw e e n th e tw o levels; a n d
(4) T h e ex iste n ce o f th e d is to r tio n in th e s a m e re g io n o f th e c o u n try .2

N o rm a lly , a c o m p a n y h a s a w a g e s tru c tu re o r m e th o d o f d e te r m in in g th e
w ages o f its em p lo y ees. In a p r o b le m d e a lin g w ith "wage distortion," tire b a s ic
a s su m p tio n is th a t th e re e x is ts a g r o u p in g o r c la ssific a tio n o f e m p lo y e e s th a t
esta b lish e s d istin c tio n s a m o n g th e m o n s o m e re le v a n t o r le g itim a te b a s e s.3

In v o lv e d in th e c la s sific a tio n o f e m p lo y e e s a re v a rio u s f a c to rs s u c h as th e

d e g re e s o f r e s p o n s ib ility , th e s k i l l s a n d k n o w l e d g e re q u ire d , th e c o m p l e x i t y o f
th e jo b , o r o t h e r lo g ic a l b a s i s o f d iffe re n tia tio n . T h e d iffe rin g w a g e ra te fo r e a c h
o f th e ex istin g classes o f e m p lo y e e s re fle c ts th is cla ssific a tio n .

3. “E LIM IN A T IO N ”VS. “SE V E R E C O N T R A C T IO N .”

In o rd e r to ju stify a d ju s tm e n t in w ag e ra te s , it is n o t re q u ire d th a t th e re
sh o u ld b e a c o m p le te e lim in a tio n o f q u a n tita tiv e w a g e d iffe re n c e s . T h e e x is te n c e
of "severe contraction”o f su c h q u a n tita tiv e w a g e d iffe re n c e s is s u ffic ie n t.

T h e law m e n tio n s "intentional quantitative differences” in w a g e o r salary ra te s

b e tw e e n a n d am o n g e m p lo y e e -g ro u p s in a n e sta b lis h m e n t. B y th e te r m "intentional”
m e a n s th a t th e q u a n tita tiv e d if fe r e n c e s h a d b e e n a rriv e d a t th r o u g h th e c o lle c tiv e
b a rg a in in g p ro c e ss a n d c o n c lu d e d by th e p a rtie s. T h e in te n tio n o f th e p a rtie s o n
th e issu e o f w h e th e r o r n o t th e b e n e f its u n d e r th e C B A s h o u ld b e e q u a te d w ith
th o se g ra n te d by law m u s t p re v a il a n d s h o u ld b e g iv e n full e ffe c t.

4. S E V E R E C O N T R A C T I O N ; M E A S U R E T H E R E O F .

In Metro Bank* th e S u p re m e C o u r t said th a t th e c o n tr a c tio n b e tw e e n

p e rs o n n e l g ro u p in g a t a b o u t e ig h ty -th re e p e r c e n t (83% ) c e rta in ly c a n n o t b e

1 National Federafion of labor v. NLRC, G.R. No. 103586, July 21,1994,234 SCRA 311; See also Metropolitan Bank md
Trust Company Employees Union-ALU-TUCP v. NLRC, G .R No. 102636, Sept 10,1993,226 SCRA 268; Cadona v.
NLRC, G.R No. 89007, M arti 11.1991.195 SCRA 92; Associated labor Unions-TUCP v. NIRC, G.R No. 109328, Aug.
16,1994,235 SCRA 395.
J Poibankers Association v. Prudential Bank and Trust Company. G il No, 131247, Jan. 25,1999,302 SCRA 74.
3 National Federate of laborv. NLRC, G.R No. 103586, July 21,1994,234 SCRA 311.
* Metropolitan Bank and Trust Company Employees Union-ALU-TUCP v. NLRC, G R No. 102636, SepL 10,1993.

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c o n s id e re d less th a n se v ere . C o n s e q u e n d y , th e r e is n o d o u b t th a t th e re is a n
e v id e n t se v e re c o n tr a c tio n w h ic h re su lte d in w ag e d is to rtio n .

5. C A S E S W H E R E N O W A G E D I S T O R T I O N O C C U R S .

In Prubankers} it w as d ec la re d th a t w a g e d is to rtio n p r e s u p p o s e s a n
in c re a se in th e c o m p e n s a tio n o f th e lo w e r ra n k s in a n o ffic e h ie ra rc h y w ith o u t a
c o r re s p o n d in g ra ise fo r h ig h e r-tie re d e m p lo y e e s in th e sa m e re g io n o f d ie c o u n tr y ,
re su ltin g in d ie e lim in a tio n o r th e se v ere d im in u tio n o f th e d is tin c tio n b e tw e e n th e
tw o g ro u p s . S u c h d is to r tio n d o e s n o t arise w h e n a w a g e o r d e r gives e m p lo y e e s in
o n e b r a n c h o f a b a n k h ig h e r c o m p e n s a tio n th a n th a t g iv e n to th e ir c o u n te r p a r ts in
o t h e r re g io n s o c c u p y in g th e same p ay scale, w h o a r e n o t c o v e re d b y said w a g e
o r d e r. I n s h o r t, th e im p le m e n ta tio n o f w a g e o r d e r s in o n e re g io n b u t n o t m o t h e r s
d o e s n o t in its e lf n e c e ssa rily re s u lt in w ag e d is to r tio n .

A d i s p a r i t y in w a g e s b e t w e e n e m p l o y e e s h o l d i n g s i m i l a r p o s i t i o n s
b u t in d iffe re n t re g io n s d o e s n o t c o n s titu te w a g e d is to r tio n as c o n te m p la te d
b y la w . I t is th e h ie ra rc h y o f p o s itio n s a n d t h e d is p a rity o f th e ir c o r r e s p o n d in g
w a g e s a n d o th e r e m o lu m e n ts th a t a rc s o u g h t to b e p re s e rv e d by th e c o n c e p t o f
w a g e d is to rtio n . P u t d iffe re n d y , a w ag e d is to r tio n a rises w h e n a w a g e o r d e r
e n g e n d e rs w a g e p a rity b e tw e e n e m p lo y e e s in different ru n g s o f th e o rg a n iz a tio n a l
la d d e r o f th e sa m e e s ta b lis h m e n t. I t b e a rs e m p h a s is th a t w a g e d isto rtio n in v o lv e s a
p a rity in th e sa la ry ra te s o f different pay c la s se s w h ic h , as a resu lt, e lim in a te s t h e
d istin c tio n b e tw e e n th e d if fe r e n t ra n k s in th e s a m e re g io n .

T h e d if fe r e n c e in w a g e s b e tw e e n e m p lo y e e s in th e sa m e p a y sc a le in
different re g io n s is n o t th e m is c h ie f s o u g h t to b e b a n is h e d b y th e law . I n fact, R .A .
N o . 6 7 2 7 *2 r e c o g n iz e s “ e x i s t i n g r e g io n a l d i s p a r i t i e s in t h e c o s t o f liv in g ” in
its S e c tio n 2.3

6. F O R M U L A F O R R E S O L V I N G W A G E D I S T O R T I O N .

In th e sa m e c a s e o f Metro Bank, th e C o u r t h a s g iv e n its imprimatur to th e

fo llo w in g fo rm u la fo r th e c o r re c tio n o f w a g e d is to r tio n in th e pay scale s tr u c tu r e s
fo r b e in g ju st a n d e q u ita b le :

Minimum Wage = % x Prescribed Increase = Distortion Adjustment

Actual Salary

7. W A G E D I S T O R T I O N ; H O W R E C T I F I E D .

1. I n orwnned establishments. - W h e r e t h e a p p lic a tio n o f a n y p r e s c r ib e d

w a g e in c re a se b y v irtu e o f a W age O r d e r is s u e d b y th e R T W P B re s u lts in

' Prubankers Association v. Prudential Bank and Trust Company. G.R. No. 131247. Jan. 25.1999,302 SCRA 74.
2 R A No. 6727, ottierwise known as the *Wage Rationalization Act"

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d is to rtio n s o f th e w age s tr u c tu r e w ith in a n e s ta b lis h m e n t, th e e m p lo y e r a n d th e

u n io n sh o u ld n eg o tiate to c o r r e c t th e d is to rtio n s . A n y d is p u te a risin g f ro m w ag e
d isto rtio n s sh o u ld b e re so lv e d th r o u g h th e g rie v a n c e p r o c e d u r e u n d e r th e ir C B A
an d , if it re m a in s u n re so lv e d , th r o u g h v o lu n ta ry a rb itra tio n . U n le s s o th e rw is e
ag reed by th e p a rtie s in w ritin g , s u c h d isp u te s h o u ld b e d e c id e d b y th e V o lu n ta ry
A rb itra to r o r p a n e l o f V o lu n ta ry A r b itra to r s w ith in te n (10) day s fro m th e tim e sa id
d isp u te w as re fe rre d to v o lu n ta ry a r b itra tio n .1

2. I n unomnbed establishments. - I n cases w h e r e th e re a re n o c o lle c tiv e

a g re e m e n ts o r re c o g n iz e d la b o r u n io n s , th e e m p lo y e rs and w o rk e rs s h o u ld
e n d e a v o r to c o rre c t su c h d is to r tio n s . A n y d is p u te arisin g th e r e fr o m s h o u ld b e
se ttled th ro u g h th e N a tio n a l C o n c ilia tio n a n d M e d ia tio n B o a rd (N C M B ) a n d , i f it
rem ain s u n re so lv e d a fte r te n (10) d ay s o f c o n c ilia tio n , s h o u ld b e re fe rre d to a n y o f
d ie L a b o r A rb ite rs o f th e a p p r o p r ia te b ra n c h o f th e N L R C . I t sh a ll b e m a n d a to ry
fo r th e N L R C to c o n d u c t c o n tin u o u s h e a rin g s a n d d e c id e th e d isp u te w ith in
tw en ty (20) days fro m th e tim e said d isp u te is s u b m itte d fo r c o m p u ls o ry
a rb itra tio n .23

3. Effect ofpendency of a wave distortion dispute. - T h e p e n d e n c y o f a d is p u te

arisin g fro m w ag e d is to rtio n sh a ll n o t, in an y w ay, d e la y th e ap p lic a b ility o f an y
in crease in p re sc rib e d w ag e r a te s p u r s u a n t to th e p r o v is io n s o f th e W ag e O r d e r .5

8. P R O H I B I T IO N O N S T A G IN G O F S T R IK E O R L O C K O U T .

A n y issue in v o lv in g w a g e d is to r tio n is n o t a valid g r o u n d fo r a strik e o r

lo c k o u t.4 W ag e d is to rtio n s s h o u ld b e c o rre c te d th ro u g h v o lu n ta ry n e g o tia tio n o r
a rb itra tio n in ste a d o f strik e s, lo c k o u ts o r o th e r c o n c e r te d activities. U n ila te ra l o r
n e g o tia te d w ag e in crease s g r a n te d b y e m p lo y e rs fo r th e p u r p o s e o f c o rre c tin g s u c h
w ag e d is to rtio n s a re in k e e p in g w ith th e p u b lic p o licy o f e n c o u ra g in g e m p lo y e rs to
g ra n t w ages h ig h e r th a n le g isla te d w a g e ra te s.5

T o c o m p e l e m p lo y e rs sim p ly to a d d u p o n leg islated in c re a se s in sa laries o r

allo w an ces w ith o u t re g a rd to w h a t is a lread y b e in g p a id w o u ld b e to p e n a liz e
e m p lo y ers w h o g ra n t th e ir w o r k e rs m o r e th a n th e sta tu to rily -p re s c rib e d m in im u m
ra te s o f in crease s. C learly, th is w o u ld b e c o u n te r -p r o d u c tiv e so f a r as se c u rin g th e
in te re sts o f la b o r is c o n c e r n e d .6

1 Paragraph 1, Secfion 1, Rule VII, NWPC Guidelnes No. 01, Series of 2007, June 19,2007 [Amended Rules of Procedure
on Mnimum Wage Rang]; Article 124, Labor Code; Secfion 7, Chapter II, Rules Implementing R A No. 6727.
2 Paragraph 2, Secfion 1, Rule VII, Ibid.; Article 124, bid.; Section 7, Chapter Ilf Ibid.
3 Paragraph 2, Secfion 1, Rule VII, bid.; Article 124, Ibid.; Section 7, Chapter III, bid.
4 Secfion 16, Chapter I, Rules Implementing R A No. 6727; Haw at BukJod ng Manggagawa v. NLRC, 6.R. No. 91980, June
27,1991.
5 Associated Labor Unions-TUCP v. N .R C , G.R. No. 109328, Aug. 16,1994,235 SCRA 395.
6 Apex Wring Co.. Inc. v. NLRC. G R No. 86200, Feb. 25,1992,206 SCRA 497,501; Metropolian Bank and Trust Company
Employees Urioo-ALU-TVCPv. NLRC G it No. 102636, Sept 10.1993.

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LABORSTANDARDS
9. W A G E D I S T O R T I O N N O T V A L ID S U B J E C T O F S T R IK E O R
LOCKOUT.

W a g e d is to r tio n is n o t a p r o p e r g r o u n d to b e in v o k e d in s u p p o r t o f a
strik e o r lo c k o u t. D is p u te s a risin g f ro m w a g e d is to r tio n re su ltin g fro m w a g e o r d e rs
iss u e d b y th e R T W P B s w h ic h a r e alleg ed in th e n o tic e o f strik e o r n o tic e o f lo c k o u t
s h o u ld b e r e f e r r e d to t h e L a b o r A r b i t e r i f n o t se ttle d w ith in te n (10) c a le n d a r
d a y s o f c o n c ilia tio n b y th e N C M B .1

10. W A G E D I S T O R T I O N , W H E N C O R R E C T I B L E .

T h e e m p lo y e r c a n n o t legally b e o b lig a te d to c o r re c t “wage distortion ” if th e

in c re a se in th e w a g e s a n d sa laries o f th e n e w ly -h ire d e m p lo y e e s w as n o t d u e to a
p r e s c r ib e d la w o r w a g e o r d e r b u t d u e to in c re a s e s it v o lu n ta rily g r a n te d to th e m .
T h e w o r d in g s o f A rtic le 124 a re clear. I f it w as th e in te n tio n o f th e le g isla to rs to
c o v e r all k in d s o f w a g e a d ju s tm e n ts , th e n th e la n g u a g e o f th e la w s h o u ld h a v e b e e n
b ro a d , n o t re stric tiv e , a s it is c u r re n d y p h ra s e d .

I f th e c o m p u ls o ry m a n d a te u n d e r A rtic le 124 to c o r re c t “wage distortion ” is

a p p lie d to voluntary and unilateral in c re a se s e ffe c te d b y th e e m p lo y e r in fix in g lu n n g
ra te s w h ic h a re in h e r e n d y a b u s in e s s ju d g m e n t o r p re ro g a tiv e , th e n th e h a n d s o f
th e e m p lo y e r w o u ld b e c o m p le te ly tie d e v e n in c a s e s w h e re a n in c re a s e in w a g e s o f
a p a rtic u la r g ro u p is ju stifie d d u e to a re -e v a lu a tio n o f d ie h ig h p ro d u c tiv ity o f a
p a rtic u la r g r o u p , o r th e n e e d to in c re a s e th e c o m p e titiv e n e s s o f th e e m p lo y e r ’s
h irin g ra te . A n e m p lo y e r w o u ld b e d is c o u ra g e d f r o m a d ju s tin g th e salary ra te s o f a
p a rtic u la r g r o u p o f e m p lo y e e s fo r fe a r th a t it w o u ld re su lt to a d e m a n d b y all
e m p lo y e e s fo r a sim ila r in c re a s e , e s p e c ia lly i f t h e fin a n c ia l c o n d itio n s o f th e
b u s in e s s c a n n o t a d d r e s s a n across-the-board in c re a se .

I n th e c a se o f Bankard,23th e p e titio n e r c ite d Metro TransitJ to s u p p o r t its

c la im th a t th e o b lig a tio n to re c tify w a g e d is to r tio n is n o t c o n f in e d to w a g e
d is to r tio n r e s u ltin g f ro m g o v e r n m e n t d e c r e e d la w o r w ag e o r d e r. R e lia n c e o n Metro
Transit is, h o w e v e r , m is p la c e d a s th e o b lig a tio n th e re in to re c tify th e w age
d is to r tio n w a s n o t b y v ir tu e o f A rtic le 1 2 4 o f th e L a b o r C o d e b u t o n a c c o u n t o f a
th e n e x is tin g “company practice" th a t w h e n e v e r ra n k -a n d -file e m p lo y e e s w e r e p a id a
s ta tu to rily m a n d a te d salary in c re a s e , s u p e rv is o ry e m p lo y e e s w e re , as a m a tte r o f
p ra c tic e , a lso p a id t h e s a m e a m o u n t p lu s a n a d d e d p re m iu m .

T h e m e r e fa c tu a l e x is te n c e o f w a g e d is to r tio n d o e s n o t, h o w e v e r , ipsofacto
re s u lt to a n o b lig a tio n to r e c tify it, a b s e n t a la w o r o t h e r s o u r c e o f o b lig a tio n w h ic h
r e q u ire s its re c tific a tio n .

1 Section 6 [c], Rule V, NCMB Manual of Procedures for Coodlaton and Prevents Mediation Cases.
2 Bankard Employees Union-Workers Alliance Trade Unions, v. NLRC, G.R. No. 140689, Feb. 17,2004.
3 Metro Transit Organization, Inc. v. NLRC, GR. No. 116008, July 11,1995,245 SCRA767.

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 182 Ba r Reviewer o n Labor La w .

11. R ESTO RA TIO N O F SU BSTA NTIA L D IF F E R E N T IA T IO N .

It must be noted that in correcting wage distortion, the law does not
require that the difference which had previously existed between and among the
employees o f different classes be restored in exacdy the same am ount What is
required is substantial difference in such wage rates.1

4.
NON-DIMINUTION OF BENEFITS

1. TWO (2) PRIN CIPLES E N U N C IA T E D IN A RTIC LE 100.

Article 1002 ordains two (2) principles, namely: [1] the non-eSmination and
(2) the non-diminution, in any way, o f the “supplem ents or other employee
benefits.” This means that the reduction or diminution o r withdrawal by
employers o f any such benefits, supplements or payments as may be provided in
existing laws, individual or collective agreements or voluntary employer practice or
policy, is not allowed.3

2. M EANING O F “SUPPLEMENTS OR OTHER EMPLOYEE

BENEFITS”IN A RTIC LE 100.
Generally, employees have a vested right over existing benefits voluntarily
granted to them by their employer.4 Thus, any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by die employer.3 Elimination, discontinuance o r diminution o f benefits
refers to the act o f the employer in unilaterally withdrawing the benefits already

The principle o f non-elimination or non-diminution enshrined in Article

100 covers only "supplements or other employee benefits. 'n Verily, the phrase “supplements
or otheremployee benfits”isi Article 100 is construed to mean the compensation and
privileges received by an employee aside from regular salaries o r wages.8

The issue o f what is meant by the term "benefits”under die contemplation

o f Article 100 was ridsed in Rvyal Plant v. Coca-Cola? Respondent company
removed die chairs o f its bottling operators who, as early as 1974, were provided

NaSondFuteraKonofLaborv. M JtC ,G R No. 103586,JuV21,1994,234 SCRA 311.

M.IOO.notMnag^eCmHia&nwi&m^ofba^.-Nciihi^inlhisBookshaSbecons&uedtoetniuteor'n
a n y ^ c f r i^ supplements, a tfte re m p to y m b e r^ b ^ e n o y e d a t (he firo of promigafion of his Code.
Repubic Ranters Bank, now Iro m as PNB-RepublcBarkv.NlRC,6R No. 117460, Jan 6,1997.
Vergarat Jr. v.OxaColaBotJem Pt^ppiies,he, G R No. 176985, A p ril,2013.
Eastern TeleootntmaticaSons Pl^ppines. Inc. v. Eastern Telecoms Employees Union, G R No. 185665, Feb. 8,2012.
Vergara, Jr. v. CocaGola 8o8ers Rttppnes, Inc., supra: See also Supreme Steel CorpqpSon v. Nagkakaisang
Manggagawang Supreme IndependentUnion (NMS^Nt>APL).GR No. 185556, March 28,2011.
NeEnk Computer Inc v.0elnx),G R No. 160827. June 18.2014.
Id.
Royal PlantWorkers Union v. CocaCoia Boaters Philippines, inc.-Cebu Plant, G R No. 188783, April 15,2013.

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L A B O R ST A N D A R D S

with chairs upon their request. Sometime in September 2008, o r after more than
30 years, the chairs provided for the operators were removed pursuant to a
national directive o f respondent company which is in line with its "I Operate, l
Maintain, 1 Clean” program for bottling operators, wherein every bottling operator
is given the responsibility to keep the machinery and equipment assigned to him
dean and safe. The program reinforces the task o f bottling operators to constantly
move about in the performance o f their duties and responsibilities. The union
claimed that the CCBPI’s decision to unilaterally remove the operators’ chairs
constitutes diminution o f benefits provided in Article 100 o f the Labor Code. The
Supreme Court, however, ruled dial there can be no violation o f Article 100
because the operators’ chairs cannot be considered as one o f the "employee benefits”
covered thereunder. In the Court’s view, die term "benefits”mentioned in die non­
diminution rule refers to monetary benefits or privileges given to the employee
with monetary equivalents. Such benefits o r privileges form part o f die employees’
wage, salary or compensadon making them enforceable obligations.

It must be noted that several cases have been dedded regarding the non-
diminution rule where die benefits or privileges involved therein mainly concern
monetary considerations or privileges with monetary equivalents. Thus, die “other
employee benefits" spoken jof by A rtide 100 should pertain only to those which are
susceptible o f monetary considerations. Indeed, this could only be the m ost
plausible condusion because the cases tackling Artide 100 involve mainly -with
monetary considerations or privileges converted to their monetary equivalents.
Some o f these cases are:

(1) Eastern Telecommunication Phils. Inc. v. Eastern Telecoms Employees Union,1

where the case involves the payment o f 14th, 15th and 16th month
bonuses;
(2) CentralAqucarem De Tarlac v. CentralAqucarera De Tarlac Labor Union-
NLU,23regarding the 13th month pay, legal/special holiday pay, night
premium jpay and vacation and sick leaves;
(3) TSPIC Carp. 0. TSPIC ' Employees Union,1 regarding salary wage
increases;
(4) American Wire and Cable Daijy Employees Union 0. American Wire and
Cable Compary, Inc,4 involving service awards with cash incentives,
premium pay, Christmas party with inadental benefits and
promotional increase.

But there ate some monetary claims that cannot be considered as falling
within the definition o f “benefits”under the non-diminudon prinriple in A rtide 100.

1 G A No. 185665, Feb. 8,2012.

* G A No. 188949.July26.2010.
3 G.R. 163419. Feb. 13.2008.
4 G A No. 155059, Aprt 29.2005.

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 184 Bar Reviewer o n Labor Law

F o r in stan c e, in San Miguel Corp. v. Layoc, Jr.} it w a s h e ld th a t o v e rtim e pay is n o t a

“benefit” as th is te rm is u n d e r s to o d w ith in th e c o n te m p la tio n o f A rtic le 100 sin c e
tire em p lo y e e s c o u ld n o t d e m a n d o v e rtim e p a y f ro m th e ir e m p lo y e r if they d id n o t
re n d e r o v e rtim e w ork. The r e q u ire m e n t of re n d e rin g a d d itio n a l se rv ic e
d iffe re n tia te s o v e rtim e pay fro m b e n e fits s u c h as 1 3 th m o n th p a y o r yearly m e rit
increase. T h e s e b e n e fits do not re q u ire an y a d d itio n a l se rv ic e fro m th e ir
b en efician es. T h u s , o v e r tim e p a y d o e s n o t f a ll w i t h i n t h e d e f i n i ti o n o f b e n e f i t s
u n d e r A r tic le 100 o f t h e L a b o r C o d e . C o n tr a r y to th e n a tu re o f b e n e fits ,
p e titio n e rs d id n o t freely g iv e th e p a y m e n t f o r o v e r tim e w o r k to re s p o n d e n ts .
P etitio n e rs p a id re sp o n d e n ts o v e r tim e p ay as c o m p e n s a t i o n fo r se rv ic e s r e n d e r e d
in a d d itio n to th e reg u lar w o r k h o u rs . R e s p o n d e n ts r e n d e r e d o v e rtim e w o rk o n ly
w h e n th e ir se rv ices w ere n e e d e d a f te r th e ir re g u la r w o rk in g h o u r s a n d o n ly u p o n
th e in stru c tio n s o f th e ir s u p e rio rs . R e s p o n d e n ts e v e n d if fe r as to th e a m o u n t o f
o v e rtim e p a y receiv ed o n a c c o u n t o f th e d if fe r e n c e in th e a d d itio n a l h o u r s o f
services re n d e re d .

T h e e a rlier case o f Manila Jockey Club Employees Labor Union PTGIVO v.

Manila Jockey Club, Inc.} h a s b e e n m o r e c a te g o ric a l in its ru lin g th a t o v e rtim e p a y is
n o t c o v e re d by th e n o n -d im in u tio n d o c tr in e u n d e r A rtic le 100. R e s p o n d e n t
co m p an y w as n o t o b lig ed to a llo w all its e m p lo y e e s to r e n d e r o v e rtim e w o r k e v e ry
day fo r th e w h o le year, b u t o n ly th o s e e m p lo y e e s w h o s e se rv ices w e re n e e d e d a f te r
th eir reg u lar w o rk in g h o u rs a n d o n ly u p o n th e in s tr u c tio n s o f m a n a g e m e n t. T h e
o v e rtim e p ay w as n o t g iv e n to e a c h e m p lo y e e c o n s is te n tly , d e lib e ra te ly a n d
u n c o n d itio n a lly , b u t as a c o m p e n s a t i o n f o r a d d itio n a l se rv ic e s re n d e re d . T h u s ,
o v e r tim e p a y d o c s n o t fa ll w i t h i n t h e d e f i n i t i o n o f b e n e f i t s u n d e r A r tic le 100
o f th e L a b o r C o d e o n p r o h i b i t i o n a g a in s t e lim in a tio n o r d im in u tio n of
b e n e f its .

I n th e 2018 case o f Coca-Cola v. ICCPELU} th e C B A p ro v id e s fo r w o rk

to b e re n d e re d o n S atu rd ay s. In th e d e c is io n o f th e C A , it w a s h e ld th a t th e fa c t
th at p e titio n e r C C B P1 h a d b e e n p r o v id in g w o r k to its e m p lo y e e s e v ery S a tu rd a y fo r
several y ears, a c irc u m sta n c e th a t p r o v e d S a tu rd a y w a s p a r t o f th e re g u la r w o rk
w eek, m a d e th e g ra n t o f S a tu rd a y w o rk r ip e n in to c o m p a n y p ra c tic e c o v e r e d by
A rticle 100 o f th e L a b o r C o d e . T h e S u p re m e C o u r t, h o w e v e r, d isa g re e d w ith th is
CA ruling. I t p r o n o u n c e d th a t it is n o t S a tu rd a y w o r k per se w h ic h c o n s titu te s a
b e n e f it to th e c o m p a n y 's e m p lo y e e s . R a th e r, th e b e n e f it in v o lv e d in th is c a s e is th e
p r e m iu m w h ic h th e c o m p a n y p ay s its e m p lo y e e s a b o v e a n d b e y o n d th e m in im u m
re q u ire m e n ts se t by law. T h e C B A b e tw e e n C C B P I a n d th e r e s p o n d e n t u n io n
g u a ra n te e s th e em p lo y e e s th a t th e y w ill b e p a id th e ir re g u la r w a g e plu s a n a d d itio n a l
5 0 % th e r e o f fo r th e first e ig h t (8) h o u r s o f w o r k p e r fo r m e d o n S a tu rd a y s.
T h e re fo re , th e b e n e f it, i f e v e r th e re is o n e , is th e p re m iu m p a y g iv en by re a s o n o f *23

> G R . No 149640, O c t 19,2007.

2 G.R. No. 167760, March 7,2007.
3 Coca-Cola BoCers Phis., Inc v. Go3c Coca-Cola Plant Employees Labor Union, G R No. 195297, Dec. 05,2018.

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 C hapter T hree 18 5
LARORSTANDARDS
S a tu rd a y w o rk , a n d n o t th e g r a n t o f S a tu rd a y w o rk itse lf. A s h e ld in Royal Plant} th e
te r m "benefits" m e n tio n e d in th e n o n - d im in u tio n ru le re fe rs to m o n e ta ry b e n e fits o r
p riv ile g e s giv en to th e e m p lo y e e w ith m o n e ta ry e q u iv a le n ts . S ta te d o th e rw ise , th e
e m p lo y e e b e n e fits c o n te m p la te d b y A rtic le 100 a re th o s e w h ic h are c a p a b le o f
b e in g m e a s u re d in te rm s o f m o n e y . T h u s , it c a n b e read ily c o n c lu d e d fro m p a s t
ju ris p ru d e n tia l p r o n o u n c e m e n ts th a t th e s e p riv ile g e s c o n s titu te d m oney in
th e m s e lv e s o r w e re c o n v e r tib le in to m o n e ta r y e q u iv a le n ts .

In o r d e r f o r th e r e to b e p r o s c r ib e d d im in u tio n o f b e n e fits th a t p re ju d ic e d
th e a ffe c te d e m p lo y e e s , C C B P I s h o u ld h a v e u n ila te ra lly w ith d ra w n th e 5 0 %
p r e m iu m p ay w ith o u t a b o lis h in g S a tu rd a y w o rk . T h e s e a re n o t th e facts o f th e c a s e
a t b a r. C C B P I w ith d r e w th e S a tu rd a y w o r k itself, p u r s u a n t, a s a lread y h e ld , to its
m a n a g e m e n t p re ro g a tiv e . I n fa c t, th is m a n a g e m e n t p r e ro g a tiv e h ig h lig h ts th e f a c t
th a t th e s c h e d u lin g o f th e S a tu rd a y w o r k w a s a c tu a lly m a d e s u b je c t to a c o n d itio n ,
i.e., th e p re ro g a tiv e to p r o v id e th e c o m p a n y 's e m p lo y e e s w ith S a tu rd a y w o rk b a s e d
o n th e e x is te n c e o f o p e r a tio n a l n e c e s sity

3. C L A R IF IC A T IO N O F T H E N O N - D I M I N U T I O N R U L E .

Wesleyan University-Philippines,1
2su e d n ed y c la rifie d th a t th e N o n -
D i m i n u t i o n R u le f o u n d in A rtic le 100 e x p lic id y p r o h ib its e m p lo y e rs fro m
e lim in a tin g o r r e d u c in g th e b e n e f its re c e iv e d b y th e ir e m p lo y e e s p ro v id e d su c h
b e n e f its a re b a s e d o n an y o f th e fo llo w in g :

(1) E x p re s s p o lic y ,
(2) W ritte n contract*, o r
(3) C o m p a n y p ra c tic e .3

T h e re is n o t m u c h c o n tr o v e rs y i f th e b e n e f it in v o lv e d is p r o v id e d f o r
u n d e r N o s . 1 a n d 2 a b o v e . T h u s , if it is e x p re ss ly laid d o w n in a w ritte n p o lic y
u n ila te ra lly p r o m u lg a te d b y th e e m p lo y e r, th e e m p lo y e r is d u ty - b o u n d to a d h e r e
a n d c o m p ly by its o w n p o licy . I t c a n n o t b e a llo w e d to re n e g e fro m its c o m m itm e n t
as e x p re s s e d in th e p o licy . I f t h e b e n e f it is g r a n te d u n d e r a w ritte n c o n tr a c t s u c h a s
a n e m p lo y m e n t c o n tr a c t o r a C B A , th e e m p lo y e r is lik e w ise u n d e r legal c o m p u ls io n
to so c o m p ly th e re w ith .

N o . 3 a b o v e p r e s e n ts a d if fe r e n t co m p le x ity ' sin c e th e b e n e fits are n o t c a s t

in s to n e , so to sp e a k , as th e r e is n o w r itte n in s tr u m e n t th a t r e fle c ts th e m w h ic h c a n
readily e sta b lish th e ir b in d in g e f fe c t a n d e n fo rc e a b ility . T h e d is c u s s io n o n c o m p a n y
p ra c tic e b e lo w is e n lig h te n in g a n d illu m in a tin g .

4. C O M P A N Y P R A C T I C E A N D P R I N C I P L E O F N O N - D I M I N U T I O N
O F B E N E F IT S .

1 Royal Plant Workers Union v. Coca-Cola BotOers PMippnes, lnc.-Cebu Riant, G.R. No. 198783, April 15,2013.
2 Wesleyan Urwefsity-PtiJippines v. Wesleyan Unwersity-PhSpp'ries Faculty and Staff Association, G R. No. 181806, March
12,2014.
3 Cling Central Azucarera De Tariac v. Central Azucarera De Tariac labor Union-NlU, G.R. No. 188949, July 26,2010.

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 186 Ba r Re v i e w e r on La b o r La w

a. N o bard and fast rule to establish companypractice.

Jurisprudence has not laid down any hard-and-fast rule as to the length o f
time that company practice should have been exercised o r observed in order to
constitute voluntary employer practice.1 There is no such rule which may be used
and applied in determining whether a certain act o f the employer may be
considered as having ripened into a practice which, having been elevated to such
status, may thus be accorded die same enforceability and binding effect equivalent
to a demandable polity or agreement

b. The grant o fbenefit should not be by reason o flegal or

contractual obligation but by reason oflibetality.
To ripen into a company practice that is demandable as a matter o f right,
the giving o f the benefit should n o t b e b y reason o f a strict legal or co n tractual
obligation b u t by reason o f an a c t o f liberality on th e p art o f the
employer.2 Hence, even if a company continuously grants a wage increase as
mandated by a Wage O rder or pursuant to a CBA, the same would not
automatically ripen into a demandable company practice if it has so acted on its
belief that it was obliged to do so under the CBA.3

c. Diminution o fbenefits, requisites.

According to Vtrfpra, Jr.,* there is diminution o f benefits when the
following requisites are present:

(1) The grant or benefit is founded on a polity or has ripened into a

practice over a long period o f time;
(2) T he practice is consistent and deliberate;
(3) The practice is not due to error in the construction o r application o f a
doubtful or difficult question o f law, and
(4) The diminution or discontinuance is done unilaterally by the employer.5

These requisites ate discussed in seriatim below.

4 . t FIRST REQUISITE: T H E G R A N T O R B E N E F IT IS F O U N D E D O N
A PQ L IQ CQ.RBAS. RXg fiNJBP IN TO_A
P E R IO D O E T IM E .

• M^cpo&an Bank and TnstC om paiyv.N LR C .G R N a 152928, June IS, 2009,589 SCRA 376,38W 86; Arm Metal
Products, Co, Inc. v. Samahan ng mga Manggagawa sa Aico MebW AFlU (SAMARMNAFLU), G R . No. 170734. May
14,2008,554 SCRA 110,119; Honda P H *, he. v. Samahan 19 Malayan M xggagauasa Honda, O R . No. 145561,
June15,2005,460SCRA 186,195.
3 Pag^sa Steel Wdtks, Inc. V .C A .G JI No. 166647, March31,2006.
3 Id.
« V e^ ra, Jr. v.CocaCotaBoaersPN^phes, Inc, G R No. 176985, Aprt 1,2013.
3 See also SupreroS^CorporatiOTv.NagkakaisangManggaga^ng Supreme Independent
Not 185556, March 28,2011,646 SCRA 501, S27; TSPiC Corporation v. TSPIC Employees Union (FFW), G.R. No.
163419. Feb. 13.2008.545 SCRA215.225.

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LABOR STA N D A R D S

The application o f the prohibition against die diminution o f benefits

presupposes that a company practice, policy or tradition favorable to die employees
has been clearly established and that die payments made by the employer pursuant
to the practice, policy, or tradition have ripened into benefits enjoyed by them.1 T o
be considered as a practice, policy or tradition, however, the giving o f the benefits
should have been done over a considerable or long period o f time.2 It is relevant to
mention that no specific minimum number o f years3 has been setded as the length
o f time sufficient to ripen the practice, policy or tradition into a benefit that the
employer cannot unilaterally withdraw.4*

If done only once as in the case o f Pkilacor? where die CBA signing bonus
was granted only once during the 1997 CBA negotiation, o r in Supreme Steel Corp.6
where the COLA under Wage O rder No. RBHI-10 was erroneously implemented
across the board for less th a n a year, die same cannot be considered as having
been practiced “over a long period o f time.”

While it is true that jurisprudence has n o t laid down any rule requiring a
specific minimum number o f years in order for a practice to be considered as a
voluntary act o f die employer, under existing jurisprudence on this matter, an act
carried out within a year o r less than a year would certainly not qualify as such.7

In die same vein, if an act is done merely as an isolated instance, it cannot

be considered as constitutive o f company practice. In the 2018 case o f Del Rio v.
DPO Philippines, Inc,8 petitioner9 voluntarily resigned from respondent company. It
was accepted by the latter. Later, he filed a monetary claims case asserting that it
has been a company practice o f respondent company to grant separation pay to
resigning employees. In his attempt to prove this fact, he presented the payslips of
Martinez and Legaspi showing that they received separation pay after they resigned.
The Supreme Court, however, was unconvinced. The rule remains that an
employee who voluntarily resigns from employment is not eotided to separation
pay, except when it is stipulated in the employment contract or the CBA, o r it is
sanctioned by established employer practice or policy.10 T he d ted exceptions do
not obtain in this case. As correctly found by the CA, there was no employment
contract, much less a CBA, which contained the stipulation that would grant

' P lip phe JoumaSstR he. v. Journal Employees Union (JEU), G J l No. 192601. June 03, 2013; See also B orodin v.
National P tm r CotpcraSon Employees ConsoHaSed Union (NECU), G R No. 162716, Sept 27,2006,503 SCRA 611,
628
2 MetrcpoStmBankandTfUstCanpanyv.NlRC.GJlNa 152928,June 18,2009,589SCRA376.384.
3 NeSnk Computer Inc. v. Debro, d R . No. 180327, June 18,2014.
* Sevfe Trading Companyv. Semara, G.R. No. 152456, Apri 28,2004,428 SCRA 239.249.
3 Fli^ppineAppGanoeC^iriiocdSonfPtiilaoor) v. CA.Gi%. No. 149434, June 3,2004.
* Supreme Steel CotpotaSon v. NagkaWsang Manggagawa ng Supreme Independent Union (NMS4ND-API), G J l No.
185556, March28,2011.
1 See also Nafionai Sugar Refineries CoiporaSanv.NlRC.GR No. 1 0 1 7 6 1 ^ 2 4 .1 9 9 3 .2 2 0 SCRA452.

* Del Ifav.DPO Ptiippines, Inc, G R No. 211525, Dec. 10,2018.

* At Biefime of fereagntfion, he was hokfingflie position of Assistant CourUy Manager.
« Del f^ v . DPO PhifppineR h e , supra, d6ng'J*MaricetingCoip.v.Ta(an,GR NO. 163924, June 18,2009.

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separation pay to resigning employees. Neither was there a company practice or

policy that was proven to exist in the instant case.

To be considered a company practice, the giving o f the benefits should

have been done over a long period o f time, and must be shown to have been
consistent and deliberate.*1 As records would show, the giving o f the monetary
benefit by respondents in favor o f Legaspi and Martinez is merely an isolated
instance. From the beginning o f respondents' business and up until petitioner's
resignation took effect on O ctober 7,2009, there was no showing that payments o f
such benefit had been made by respondents to their employees who voluntarily
resigned. The first and only instance when such a benefit was given to resigned
employees was on or after November 15, 2009 - not because it was a company
practice but only to pave the way for Legaspi and Martinez's graceful exit, so to
speak. As explained by respondents, the said benefit was n o t intended as a
separation pay but more o f a promise or an assurance to Legaspi and Martinez that
they would be paid a benefit if they tender their resignation. Given respondents'
knowledge o f Legaspi and Martinez's acts o f disloyalty and betrayal o f trust,
respondents opted to give them an alternative way o f exit, in lieu o f termination.
Respondents' decision to give Legaspi and Martinez a graceful exit is perfectly
within their prerogative. It is settled that there is nothing reprehensible or illegal
when the employer grants the employee a chance to resign and save face rather
than smear die 1atier's employment record.2 Relying on respondents' assurance,
Legaspi and Martinez tendered their resignation and it is incumbent upon
respondents to make good o f their promise.

h i the case o f CostUng v. Peretf a similar claim for separation pay was
asserted by a teacher who resigned from employment in petitioner Diliman
Preparatory School. In an effort to show that the school has a policy o f granting
separation pay to its employees who resigned, Perez submitted an Affidavit
executed by one Teresita Limochin (Limochin), a co-teacher who attested that she
received separation pay from die school following her voluntary resignation. A
scrutiny o f Limochin's affidavit, however, reveals that the school's grant o f
separation benefits or financial assistance to her was an isolated act, not borne out
by any established employer practice or policy. In fact, Limochin stated that she
was made to choose either to voluntarily resign from work with’ payment of
separation benefits or to face administrative proceedings, which may lead to
termination, in view of her habitual absenteeism. Rather than face an investigation,
limochin chose the first option. Still, there is nothing in her affidavit that would
disclose that die School granted her monetary benefits by virtue o f an established
practice or policy. Besides, Limochin's situation was different from Perez's; aside
from resigning three years after Perez did, the school gave Limochin a choice only

* U^oSng Sodefie MecnaSonaleOe Teleoomnwnic^onsAeranaufque~<v. HuGganga. GJ%. No. 215504.August20.20t6.

1 td^dting Cosue v. Femtz htegnated OeMetopmentCo(p..GK. No. 230664. Jtdy 24.2017.
» G R No. 185938. Sept 06.2017.

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because she faced the possibility o f an eventual termination o f employment,

whereas Perez did not. In Cb'tang Ktri Sbek College v. Toms} the Court acknowledged
that, a compromise agreement, which allows an employee facing an imminent
dismissal to opt for honorable severance from employment, may be validly entered
into between an employer and employee.

In another 2018 case, Societe Internationale de TelecommunicationsAmnautiques

(SITA) v. Hubganga} the claim o f respondent Huliganga for retirement benefits
provided in the CBA for rank-and-file employees was denied because he was a
managerial employee and thus not eligible to join, assist or form any labor
organization under Article 255 [245] o f the Labor Code. Most significantly, he was
not able to show by evidence that there exists a company policy o r practice
granting the same retirement benefits to managerial employees. To be considered a
company practice, the giving o f the benefits should have been done over a long
period o f time, and must be shown to have been consistent and deliberate.3 The
test or rationale o f this rule on long practice requires an indubitable showing that
the employer agreed to continue giving the benefits knowing fully well that said
employees are not covered by the law requiring payment thereof.4 In other words,
the act o f extending benefits o f the CBA to managerial employees must have been
practiced for a long period o f time and must be shown to be consistent and
deliberate.5

In the following cases, the act o f the employer has been declared as
having ripened to a company practice drat can no longer be withdrawn:

(1) In Davao Fruits Corp. v. ALU,6involving the employer's act for six (6)
years o f freely and continuously including in the computation o f the 13th m onth
pay, certain items that were expressly excluded by law.
(2) In Sevilla Trading Co. v. Semana,7 where petitioner kept the practice o f
including non-basic benefits such as paid leaves for unused sick leave and vacation
leave in the computation o f the employees' 13th month pay for at least two (2)
years.
(3) In CentralAspcartra v. Central Aqucamu,6 where petitioner, for thirty
(30) years, granted its workers the mandatory 13th month pay computed in
accordance with the following formula: T o tal B asic A nnual Salary divided by
twelve (12). Included in petitioner’s computation o f the Total Basic Annual Salary
were the following, basic monthly salary; first eight (8) hours overtime pay on

1 G R No. 189456, Apri 2.2014.

1 Sodets Internationale de Telecornrranications AercnauSques (SITA) v. Hutganga, G R No. 215504, Aug. 20,2018.
3 Id., effing National Sugar Refineries Corporation v. NLRC, GR. No. 101761. March 24,1993.
4 1d.,dQngPhSppcne ApplanoeCotporaSonv.CA. G R N a149434, June3,2004.
* «.
6 Davao Fiufe&xporationv.Assoce^Lalxx Unions, G.R. No. 85073, Aug. 24,1993,225 SCRA 562.
7 SevaaTrac&igCompanyv. A. V .A Semana, G R No. 152456, Apri 28,2004,438 SCRA239.
3 Central Azucareta de Tarfac v. Central Azucarera de Tartac Labor UniorvNLU, G.R. No. 188949. Juty 26.2010.

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 ig o Bar Reviewer o n labor Law

S u n d ay and le g a l/sp e c ia l h o lid a y ; n ig h t p re m iu m p ay ; a n d v a c a tio n a n d sick le av es

fo r each year.

(4) In Meralco v. Secretary oj Labor} w h e r e M e ra lc o f u rth e r g ra n te d its

em p lo y ees an ad d itio n a l C h r is tm a s b o n u s a t th e ta il-e n d o f th e y e a r sin c e 1988,
asid e from co m p ly in g w ith th e re g u la r 13th m o n th b o n u s . W h ile th e sp e c ia l b o n u s e s
d iffe re d in a m o u n t an d b o r e d if fe r e n t titles, it c a n n o t b e d e n ie d th a t th e s e w e re
g iv en v o lu n tarily a n d c o n tin u o u s ly o n o r a b o u t C h r is tm a s tim e . T h e c o n s id e ra b le
le n g th o f tim e M e ralco h a s b e e n g iv in g th e s e sp e c ia l g ra n ts to its e m p lo y e e s
in d icates a u n ilateral an d v o lu n ta r y a c t o n its p a r t to c o n tin u e g iv in g said b e n e f its
k n o w in g th a t su c h a c t w a s n o t re q u ire d b y law.
(5) In Davao Integrated v. Abarquetf w h e re th e e m p lo y e r, fo r th r e e (3) y e ars
a n d n in e (9) m o n th s , a p p r o v e d th e c o m m u ta tio n to c a s h o f th e u n e n jo y e d p o r tio n
o f th e sick leav e w ith p ay b e n e f its o f its in te r m itte n t w o rk e rs .

(6) In Tiartgco v. l^eogardo, Jr.} w h e re th e e m p lo y e r c a rrie d o n th e p r a c tic e

o f giving a fixed m o n th ly e m e rg e n c y a llo w a n c e f ro m N o v e m b e r 1976 to F e b r u a ry
1980, o r fo r a p e rio d o f th r e e (3) y e a rs a n d f o u r (4) m o n th s .

(7) In Metrobank v. NLRCJ in v o lv in g M e tr o b a n k ’s a c t, f o r o v e r a d e c a d e ,

o f co n sisten tly , d e lib e ra te ly a n d v o lu n ta rily g r a n tin g im p ro v e d b e n e fits to its
o fficers, a fte r th e sig n in g o f e a c h C B A w ith its ra n k -a n d -file e m p lo y e e s , re tro a c tiv e
to Ja n u a ry 1st o f th e sa m e y e a r as th e g ra n t o f im p r o v e d b e n e fits a n d w ith o u t th e
co n d itio n th a t th e o ffic e rs s h o u ld re m a in e m p lo y e e s as o f a c e rta in d a te . T h is
u n d en iab ly in d icates a u n ila te ra l a n d v o lu n ta ry a c t o n M e tro b a n k ’s p a rt, to g iv e sa id
b en efits to its o ffic e rs, k n o w in g th a t s u c h a c t w a s n o t r e q u ire d by law o r th e
c o m p an y re tire m e n t p lan . I n th is c ase, it w as h e ld th a t b e c a u s e o f th is c o m p a n y
practice, p riv ate re s p o n d e n ts P a ta g a n d F lo ra , f o r m e r A s s is ta n t M a n a g e r a n d S e n io r
M anager, resp ec tiv ely , o f p e titio n e r M e tro b a n k , a re e n tid e d to th e im p ro v e d
retire m e n t b e n e fits a lth o u g h th e y re tire d a fte r th e c o n c lu s io n o f th e re n e w e d C B A .5

(8) In Nellink v. Delmo} w h e re th e p a y m e n t o f sales c o m m is s io n s in U S

dollars in stea d o f P h ilip p in e c u rre n c y w a s d e c la re d as h a v in g rip e n e d in to a
co m p an y p ra c tic e .7*356

' Mania Electric Company v. Secretary of Labor, G.R. No. 127598, Jan. 27,1999.
7 G. Da/ao Integrated Port Stevedoring Services v. Abarqoez, R. No. 102132, March 19,1993,220 SCRA197.
3 G R No. 1-57636, May 15,1983,122 SCRA 267; 207 Phi 2285.
1 Metropolitan Bank and Trust Company v. NLRC, Felipe A Patag and Bienvenido C. Flora, G R no. 152928, June 18,2009.
5 But see Padtb v Rural Bank of Nabjnturan, Inc., G.R No. 199338, Jan. 21,2013, where it was pronounced by the High
Court, citing this case of Metropolitan Bank, that there is no company practice or policy upon which petitioner can assert his
claim for retirement benefits.
6 Neiink Computer Inc. v. Delmo. G.R No. 160827, June 18,2014. Respondent Eric S. Delmo was an account manager
tasked to canvass and source clients for petitioner and convince them to purchase the products and services of Nellink.
Delmo worked in the field most of the time.
1 See RA. No 8183, ‘An Act Repealng Republic Act Numbered Five Hundred Twenty-Nine, As Amended, Entiled ‘An Act
To Assure the Uniform Value of Philippine Coin and Currency." This law provides as follows: ‘Section 1. A1 monetary
obigatons s h il be sealed h the PhiSppine currency which is legal tender in the Phlipphes. Howwer, the partes may agree
that toe obkgaton or transaction shal be settled in any other currency at the time of payment* See also CF. Sharp & Co. v.
Northwest Aifnes. Inc., G R No. 133498, Aprt 18.2002,381 SCRA 314,319-320.

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4 .2 . SECO ND R E Q U ISITE : T H E P R A C T I C E IS C O N S I S T E N T A N D
D E L IB E R A T E .

T o b e c o n s id e re d a s a p ra c tic e , p o lic y o r tra d itio n , th e g iv in g o f - t h e

b e n e fits s h o u ld b e s h o w n to h a v e b e e n c o n s is te n tly a n d d e lib e ra te ly d o n e .1 T h e
in te n tio n to m ak e a c e rta in a c t a c o m p a n y p ra c tic e m a y b e lo g ically in fe rre d fro m
th e p e c u lia r c irc u m s ta n c e s o b ta in in g in e a c h c ase. A n e x a m p le is Tiangco v. Leogardo,
Jr.,2 w h e r e th e d is c o n tin u a n c e b y th e e m p lo y e r e ffe c tiv e F e b ru a ry , 1 980 o f th e fix e d
m o n th ly e m e rg e n c y a llo w a n c e w h ic h it h a s c o n s is te n d y g r a n te d to th e e m p lo y e e s
s in c e N o v e m b e r , 1 9 7 6 , in s o f a r as n o n - w o rk in g d a y s a rc c o n c e r n e d b a s e d o n th e
p rin c ip le o f "no work, nopay," w a s d e c la re d v io la tiv e o f th e n o n - d im in u tio n p rin c ip le
in A rtic le 100 o f th e L a b o r C o d e .

In Standard Chartered Bank v. SCBEU,3 it w a s h e ld th a t p e titio n e rs

e m p lo y e e s are e n tid e d to “ o u tp a tie n t m e d ic in e r e im b u rs e m e n ts ” d is tin c t a n d
s e p a ra te fro m th e “ m e d ic in e a llo w a n c e s ” g r a n te d in th e C B A b e c a u s e d te re is a n
e s ta b lis h e d c o m p a n y p ra c tic e o f r e im b u rs e m e n t o f o u tp a tie n t s e n d e e s , in c lu d in g
m e d ic in e re im b u rs e m e n t, d e s p ite th e absence o f a p r o v is io n in th e g ro u p
h o sp ita liz a tio n in s u r a n c e p la n r e g a rd in g o u tp a tie n t b e n e fits.

A n o th e r e x a m p le is Republic Planters Bank v. NLRC,4 w h e r e it w as ru le d

d ia t s in c e p e titio n e r P N B - R B h a s c o n s is te n d y a n d d e lib e ra te ly a d o p te d th e p ra c tic e
o f g r a n tin g g ra tu ity b e n e f its to its re tirin g o ffic e rs b a s e d o n th e sa lary ra te o f th e
n e x t h ig h e r ran k e v e n a fte r th e e x p ira tio n o f th e 1 9 7 1 -1 9 7 3 C B A , a lth o u g h it k n e w
fully w e ll th a t it w a s n o t r e q u ire d to g iv e th e b e n e f its a f te r th e e x p ira tio n o f th e
1 9 7 1 -1 9 7 3 C B A , s u c h g r a n t o f g ra tu ity p ay h a s alre a d y r ip e n e d in to a c o m p a n y
p ra c tic e o r policy' w h ic h c a n n o lo n g e r b e p e r e m p to rily w ith d ra w n .

4 .3 . TH IR D REQ U ISITE: T H E P R A C T IC E IS N O T D U E T O E R R O R
IN T H E C O N S T R U C T IO N O R A P P L IC A T IO N O F A D O U B T F U L
O R D IF F IC U L T Q U E S T IO N O F LAW .

a. General rule.

T h e g e n e ra l ru le is th a t i f it is a p a s t e r r o r th a t is b e in g c o r re c te d , n o
v e s te d rig h t m ay b e said to h a v e a rise n th e r e fr o m n o r a n y d im in u tio n o f b e n e f it
u n d e r A rtic le 100 o f th e L a b o r C o d e m a y h a v e r e s u lte d b y v ir tu e o f th e c o r re c tio n 1*3

1 Vergara, Jr. v. Coc^Cola Bottlers Philippines, Inc., G R No. 176985, Aprfl 1, 2013; Eastern Telecommunications
Philippines, Inc. v. Eastern Telecoms Employees Union, G.R. No. 185665, Feb, 8,2012,665 SCRA 516,532; Supreme
Steel Corporation v. Nagkakatsang Manggagawa ng Supreme Independent Union (NMS-IND-APL), G R No. 185556,
March 28,2011,646 SCRA 501,527, 528; and Metropolitan Bank and Trust Company v. NLRC, G.R. No. 152928, June
18,2009,589 SCRA 376,384.
* G R No. L-57636, May 16,1983,122 SCRA 267; 207 Phil. 2235.
3 Standard Chartered Bank v. Standard Chartered Bank Employees Union (SCBEU), G R No. 165550, Oct. 8,2008.
1 Republic Planters Bank, [new know as PNB-RepubSc Bank] v. NLRC, G R No. 117460, Jan. 6,1997.

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192

thereof.1 The error, however, must be corrected immediately after its discovery;2*
otherwise, the rule on non-diminution o f benefits would still apply.5

In the following cases, the erroneous application o f a law has been

declared as not having ripened into a binding company practice:

(1) In Globe Mackay Cable and Radio Corporation v. N L R C 4 petitioner

corporation, pursuant to Wage O rder No. 6 (effective O ctober 30,1984), increased
die COLA, o f its monthly-paid employees by multiplying the P3.00 daily COLA by
22 days which is the number o f working days in die company. The union disagreed
with die computation, Haiming that the daily COLA rate o f P3.00 should be
multiplied by 30 days which has been the practice o f the company for several years.
The Supreme Court, however, upheld die contention o f petitioner corporation and
thus pronounced that the grant by the employet o f benefits through an erroneous
application o f the law due to absence o f d ear administrative guidelines is not
considered a voluntary act which cannot be unilaterally discontinued.

(2) In TSPIC Cotp. ». TSPIC Employees Union [FFW]p the Supreme Court
reiterated the rule enunciated in Globe-Mackay, that an erroneously granted benefit
may be withdrawn without violating the prohibition against non-diminution o f
benefits.

(3) In PrubankenAssociation ». PrudentialBank and Trust Compart/ petitioner

asserts that respondent Bank has already adopted a uniform wage policy which has
attained the status o f an established management practice; thus, it is estopped from
implementing a wage order for a specific region only. In this case, respondent Bank
has previously implemented Wage Orders Nos. NCR-01 and NCR-02 nationwide
although they are supposedly applicable to the National Capital Region only. With
the issuance o f Wage O rder No. RB 05-03 (applicable for Region V) and Wage
Order No. RB VII-03 (applicable for Region VII), respondent Bank started to
regionalize die implementation o f die wage increases. In holding that this argument
o f petitioner is not persuasive, the Supreme Court ruled that although the Bank
implemented Wage Orders Nos. NCR-01 and NCR-02 nationwide instead o f
regionally even after the effectivity o f R A . No. 6727, the Bank at the time was still
uncertain about how to follow the new law. In any event, that single instance
cannot constitute "managementpractice."

t Goto MadayCabfev. NLRC, W a.

2 CentralA zucaeraD eTariacv.to^A zut^araD eTartac LaborUnior>t«fLU,GJl No. 186949, July26,2010.
1 W esieyanUiher^Phpppliesv. WesfeyanUniw8(sit^Ri^pf)inesFacu^randSt^FAssoci^on.GJ%.Nat. 181606. March
12,2014.
< G Jl No. 74156, June 29,1988,163 SCRA 71.
5 G J lN a 163419. Feb. 13.2003.
« GR. to . 131247, Jan 25.1999,302SCRA 74.

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b. E xception.
But if the error does n o t proceed from the interpretation or construction
o f a law or a provision in the CBA, die same may ripen into a company practice.
Thus, in Hinatuan Mining Corporation,* the act o f the employer in granting separation
pay to resigning employees, despite the fact that the Labor Code does not grant it,
was considered an established employer practice.

In A m MetalProducts, Inc.,2 petitioner, despite the provision o f the law and

the CBA that 13th month pay, vacation leave and sick leave conversion to cash
should be computed in amounts proportional to the service the employees have
actually rendered within a year, had no t pro-rated the payment o f the same
benefits to seven (7) employees w ho had not served for the full 12 months in 1992,
1993, 1994, 1996,1999,2003, and 2004. Petitioner claims that its full payment o f
benefits regardless o f the length o f service to the company docs not constitute
voluntary employer practice. It points out that the payments had been erroneously
made and they occurred in isolated cases in the years 1992,1993, 1994,1999,2002
and 2003. According to petitioner, it was only in 2003 that the accounting
department discovered the error “when there were already three (3) employees
involved with prolonged absences and the error was corrected by implementing the
pro-rata payment o f benefits pursuant to law and their existing CBA.” It adds that
the seven earlier cases o f full payment o f benefits went unnoticed considering the
proportion o f one employee concerned (per year) vis-a-vis the 170 employees o f the
company. Petitioner describes the situation as a “clear oversight” which should
not be taken against it. To further bolster its case, petitioner argues that for a grant
of a benefit to be considered a practice, it should have been practiced over a long
period o f time and must be shown to be consistent, deliberate and intentional,
which is not what happened in this case. Petitioner tries to make a case out o f the
fact that the CBA has not been modified to incorporate die giving o f full benefits
regardless o f the length o f service, proof that the grant has not ripened into a
company practice.

The Supreme Court, however, disagreed:

“In the years 1992, 1993, 1994, 1999, 2002 and 2003,
petitioner had adopted a policy o f freely, voluntarily and consistendy
granting full benefits to its employees regardless of the length of sendee
rendered. True, there were only a total of seven employees who
benefited from such a practice, but it was ah established practice
nonetheless, jurisprudence has not laid down any rule specifying a
minimum number of years within which a company practice must be
exercised in order to constitute voluntary company practice. Thus, it can
be six (6) years, three (3) years, or even as short as two (2) years.1

' Kna&fln Wring CoiporaSon andforihe Managerv. KLRC, G R No. 117394, Feb. 21.1997.
1 Atm Metal Products, Inc. v. Samahang ng mga Manggagawa sa Arco MetaWAFLU (SAMARMNAFLU), G R No.
170734, May 14,2008.

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Petitioner cannot shirk away from its responsibility by merely claiming

that it was a mistake or an error, supported only by an affidavit of its
manufacturing group head.
XXX
“Indeed, if petitioner wants to prove that it merely erred in
giving full benefits, it could have easily presented other proofs, such
as the names of other employees who did not fully serve for one year
and thus were given prorated benefits. Exponentially, a perfect
attendance in die workplace is always the goal but it is seldom achieved.
There must have been other employees who had repotted for work less
than a full year and who, as a consequence received only prorated
benefits. This could have easily bolstered petitioner’s theory o f
mistake/error, but sadly, no evidence to that effect was presented ”
The same issue o f the validity o f the pro-rating of the 13th month pay as
well as the 14* month pay and financial assistance was raised in Honda Phils., Inc} It
has not been refuted that Honda has not implemented any pro-rating o f the 13*
month pay before the instant case. Honda did not adduce evidence to show that
die 13* month, 14* month and financial assistance benefits were previously subject
to deductions or pro-rating or that these were dependent upon the company's
financial standing. As held by the Voluntary Arbitrator, Honda expliddy accepted
that it was the strike held that prompted them to adopt a pro-rata computation,
aside from being in a state o f rehabilitation due to Php227M substantial losses in
1997, P hpll4M in 1998 and Php215M loss o f sales in 1999 due to strike. This is
an implicit acceptance that prior to die strike, a full month basic pay computation
was die “present practice” intended to be maintained in the CBA. The
memorandum dated November 22,1999 which Honda issued shows that it was the
first time a pro-rating scheme was to be implemented in the company. I t was a
convenient coincidence for the company that the work stoppage held by the
employees lasted for thiriy-one p i ) days or exactly one month. This enabled them
to devise a formula using 11/12 o f the total annual salary as base am ount for
computation instead o f the entire amount for a 12-month period. That a full month
payment o f the 13* month pay is the established practice at Honda is further
bolstered by die affidavits executed by Feliteo Bautista and Gdgardo
Cruzada. Both attested that when they were absent from work due to motorcycle
accidents, and after they have exhausted all their leave credits and were no longer
receiving their monthly salary from Honda, they still received die full amount of
their 13* month, 14* month and financial assistance pay.
H ie argument o f petitioner, in PhilippineJournalists, Inc.,2 that the grant o f
the funeral and bereavement benefit was not voluntary but resulted from its
mistaken interpretation as to who was considered a ‘legal dependent” o f a regular
employee deserves scant consideration. T o be sure, no doubtful or difficult*1

1 HondaPhJs..lnc. v. Samahanng Mabyang Manggagawa sa Honda, G.R. No. 145561, June 15,2005.
1 PMippineJoumafsfe,lnev.Jounal Employees Union (JEU),G.R No. 192601, June03,2013.

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LA BO R STANDARDS

question o f law was involved inasmuch as the several cogent statutes existing at the
time the CBA was entered into already defined who were qualified as the legal
dependents o f another. Moreover, the voluntariness o f the grant of the benefit
became even manifest from petitioner’s admission that, despite the memorandum it
issued in 2000, in order to “correct” the interpretation o f the term legal dependent,
it still approved in 2003 the claims for funeral and bereavement aid o f two
employees, namely: (a) Cecille Bulacan, for the death o f her father, and (b) Chadto
Cartel, for the death o f her mother, based on its supposedly mistaken
interpretation.
It is further worthy to note that petitioner granted claims for funeral and
bereavement aid as early as 1999, then issued a memorandum in 2000 to correct its
erroneous interpretation o f legal dependent under Section 4, Article X III o f the
CBA. This notwithstanding, the 2001-2004 CBA still contained the same provision
granting funeral or bereavement aid in case o f the death of a legal dependent o f a
tegular employee without differentiating the legal dependents according to the
employee’s civil status as married or single. The continuity in the grant o f the
funeral and bereavement aid to tegular employees for the death o f their legal
dependents has undoubtedly ripened into a company policy. W ith that, the denial
o f respondent Alfante’s qualified claim for such benefit pursuant to Section 4,
Article XQI o f the CBA violated the law prohibiting the diminution o f benefits.
c. N o m ore error can be asserted at th is late hour.
In connection with the grant o f the mandatory 13* m onth pay, error in
the interpretation o r construction o f what should be included in the term ‘'basic
salary” as basis for its computation, as mandated under the law, P.D. N o. 851, as
well as its implementing rules and regulations can no longer be asserted at this late
hour. This is so because from the inception o f P.D. No. 851 on December 16,
1975, clear-cut administrative guidelines have been issued to insure uniformity in
the interpretation, application, and enforcement o f the provisions o f P.D. No. 851
and its implementing rules and regulations. Thus, an employer cannot successfully
assert that it has committed an honest error in including such salary-related benefits
as the cash equivalent o f unused vacation and sick leave credits, overtime,
premium, night differential and holiday pay, and cost-of-living allowances in the
computation o f die 13* month pay.
Petitioner, in GntralAqtcanra de Tarlac} argued that there was an error in
the computation o f the 13* month pay o f its employees as a result o f its mistake in
implementing P.D. No. 851, an error that was discovered by the management only
when respondent union raised a question concerning the computation o f the
employees’ 13* m onth pay for 2006. Petitioner included in the computation o f the
13* month pay the cash equivalent o f unused vacation and sick leave credits,
overtime, premium, night differential and holiday pay, and cost-of-living
allowances. Admittedly, it was an error that was repeatedly committed by petitioner

’ Central Azucarea de Tariac v. Central Azucarera de Tailac labor Un'on-NlU, G.R No 188949. July 26,2010.

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for almost thirty (30) years. Petitioner insisted that the length o f time during which
an employer has performed a certain act beneficial to the employees, does not
prove that such an act was not done in error. It maintained that for the claim o f
mistake to be negated, there must be a clear showing that the employer had freely,
voluntarily, and continuously performed the act, knowing that he is under no
obligation to do so. Petitioner asserted that such voluntariness was absent in this
case. The Supreme Court, however, found this argument deserving o f scant
consideration. No doubtful or difficult question o f law is involved in this case. The
guidelines set by the law are not difficult to decipher. The voluntariness o f the
grant o f the benefit was manifested by die number o f years die employer had paid
the benefit to its employees. Petitioner only changed the formula in the
computation o f the 13d1 m onth pay after almost thirty (30) years and only after the
dispute between the management and employees erupted. This act o f petitioner in
changing the formula at this time cannot be sanctioned, as it indicates a badge o f
bad faith.

4.4. f o u r t h m u i s i r n w m m m m m
D ISCON TINU AN CE IS D O N E UNILA TERALLY BY T H E
employer,
Diminution of benefits refers to the act o f the employer in unilaterally
withdrawing the benefits already enjoyed by the employees.1 Consequently, if die
diminution or discontinuance o f a certain benefit is by mutual consent o f the
employer and the employee, there can be no violation o f the non-diminution
principle.

For instance, parties to a CBA may validly agree in die CBA to reduce
wages and benefits of employees provided such reduction does not go below the
minimum standards. While it is a fundamental rule that the parties to the CBA are
not allowed to stipulate below the minimum labor standards set by law, they are
not, however, prohibited by law or jurisprudence from negotiating and agreeing to
the reduction o f wages and benefits provided such reduction does not go below
the minimum standards.

The case o f InsularHotelEmployees Union-NFL,2is instructive on this p o int

It was held here that the Memorandum o f Agreement (MOA) executed by the
exclusive bargaining union and respondent hotel providing for the diminution
and/or elimination of some o f the benefits provided in the CBA in order to avert
further financial losses on the part o f respondent hotel and to enable it to re-open
and resume its operation, did not violate Article 100. And even assuming arguendo
that Article 100 applies to the case at bar, it was further held that the same does not
prohibit a union from offering and agreeing to reduce wages and benefits o f the*

1 Vogara, Jr. v. CaaCoia Bodes PiSpphes, he., supra; See also Supreme Steel Corporator v. Magkakaisang
M aw gaw a ng Supreme IndependentUnion (NM S^NMPL), O R. No. 185556, March 28.2011.
* Insular Ho&ei Emptoyees Unioo-t^L v. Waterfront Instdar Hotel Davao. 6.R. Nos. 17404041, Sept22.2010.

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LA BO R STA N D A R D S

employees, as held in Rivera v. Espiritu.* It was ruled in this case that the tight to free
collective bargaining includes the right to suspend i t 12

The same principle in InsularHoteland Rivera was cited in Octavio,3where it

was held that even assuming that there has been a diminution of benefits on
petitioner's part, Article 100 does no t prohibit a union from offering and agreeing
to reduce wages and benefits o f the employees as the right to free collective
bargaining includes the right to suspend i t

5. N O COM PANY P R A C T IC E W H E N B E N E F IT S A R E G RA N TED

D U E T O C E R T A IN S P E C IF IE D CIRCU M STA N CES.

N o company practice could ripen in situations where certain benefits are

granted only under certain specified circumstances. Consequently, even if the
employee has been enjoying certain benefits for quite a long period o f time, if the
circumstances have changed which no longer justify the continuation o f the grant
o f said benefits, the removal thereof does not certainly constitute a violation o f the
non-diminution o f benefits principle. Thus, die grant o f relocation allowance,
dislocation pay, gasoline allowance o r per diem intended for board and lodging once
an employee is assigned away from his home base, may be discontinued if die
employee is no longer assigned to posts requiring the grant thereof.4

6. E L IM IN A T IO N O R D IM IN U T IO N O F B E N E F IT S MAY
C O N S T IT U T E D E M O T IO N O R C O N S T R U C T IV E D ISM ISSA L

Elimination or diminution o f certain benefits may amount to constructive

dismissal. This (rind o f dismissal is technically considered an act o f involuntary
resignation resorted to when continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank a n d /o r a diminution in
pay, or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee that it could foreclose any choice by him
except to forego his continued employment56

C.
LEAVES

1.
SERVICE INCENTIVE LEAVE*
(NOTE: This topic is extensively discussed above)

1 GANO 1135547. Jan. 23.2002.

2 Octavio v. PhiEppine Long OistanceTelephone Company. GJA Nol175492, Feb. 27,2013.
3 O daviov.Phippre Long Distance Telephone C«rpanyl GANo.175492, Feb. 27,2013.
4 1 ^ Laboratories, Inc. v. Courtof W ustialRelali(ins,G Jl No. L-24632, O ct 26,1968; Aasv.Mnister of Labor, G A Nos.
58094-95, March 15,1989.
5 Unicorn Safely Glass. Inc. v.Basarte,G A No. 154689, Nov 25,2004.
6 Article 95 (a). Labor Code.

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 198 Ba r Reviewer o n La bo r law

2 .
MATERNITY LEAVE

1 .105-DAY EXPANDED M A T E R N IT Y LEAVE LAW (R A . N O . 11210).

O n February 20, 2019, President Rodrigo Duterte approved R.A. No.

11210, otherwise known as die ‘7 05-DayExpandedMaternity Leave Law. ’* This is the
prevailing law on maternity leave benefit It repealed or modified “[a]U laws,
decrees, orders, rules and regulations or parts thereof inconsistent [therewith]” and
this necessarily includes Article 131 [133] o f die Labor Code, as amended.12

O n May 1, 2019, die Implementing Rules and Regulations (IRR) o f this

law was signed by die D O L E Secretary, Chairperson o f the Civil Service
Commission (CSC) and President and CEO o f the Social Security System (SSS).

Inconsistency in recent enacted laws.

It bears noting that about 13 days before the signing into law o f R A . No.
11210, President Duterte approved on February 07, 2019, R.A. No. 11199,
otherwise known as the “Social Security Act of 2018” which re-enacted the exact
provision o f Section 14-A o f the previous R A . No. 8282, the “SocialSecurityAct of
1997“ which grants maternity leave o f sixty (60) days for normal delivery or
seventy-eight (78) days in case o f caesarian delivery. Obviously, the provisions o f
RA. No. 11210 should prevail over those o f Section 14-A o f 11199.

2. COVERAGE:

The Expanded Maternity Leave Law (EMLL) shall cover the following:

1. Female wo deers in die Public Sector,

2 Female workers in the Private Sector,
3. Female workers in the Informal Economy;
4. Female members who are voluntary contributors to the Social Security
System (SSS); and
5. Female national athletes.3

3. WHAT B EN E FIT S A R E G R A N T E D .

The following benefits ate granted under the 105-Day Expanded

Maternity Leave Law (EMLL) to die corresponding sectors:

1 Tfciw isen!^'An Ad trweasing to MatemfyUave Periodb OneHundrrt Five (105) Daysfor FemateWrites wft
an 0p6onto Bdend for an AddBonal TTwty (30) Days wdhout Pay. and Granting an AdcSonal Fifteen (15) Days for Soto
Motorsart ForOtorftiposes.*
2 The provisions of paragraphs (a) ffld (c) of Article 131 [133] of the Labor Code on matemty leave benefits ceased to be
appfable in to Eight of to integration of these benefits into RA No. 1161, to Soria! Security lav, by PD. No. 1202
(September27,19771art to amendments(heretointroducedby RA No. 7322(Apr! 23,1992Jart subsequeriy, by RA
No.8282,otherwiseknownasto'Social SecurtyAd of 1997.’ (May01.1997). However,theprwaSnglawnowis RA No.
11210(Febiuary20,201SLotorafeeknownasto*105DayBranded Materity Leavelaw.’
2 Section1.Ridetn, IRRofRA No. 11210.

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 C h a tter T hree 19 9
LABOR STANDARDS

1. Paid leave benefit granted to a qualified female worker in die

PU B L IC SE C T O R , for the duration o£

a. O n e H u n d re d Five (105) days for live childbirth, regardless o f

the mode o f delivery, and an additional fifteen (15) days p a id
leave if die female worker qualifies as a solo parent under R A
No. 8972, o r die "Sob Parents' WelfareA rt of2000"’, or

b. Sixty (60) days paid leave for miscarriage and emergency

termination o f pregnancy,

2. Paid leave benefit granted to a qualified female worker in the

PR IV A T E SE C T O R coveted by the SSS, including those in the
informal economy, for the duration of:

a. O ne H u n d red Five (105) days for live childbirth, regardless o f

die mode o f delivery, and an additional fifteen (15) days p a id
leave if the female worker qualifies as a solo parent under R A .
No. 8972, or the "Sob Parents' WelfareA rt of2000"; or

b. Sixty (60) days paid leave for miscarriage and emergency

termination o f pregnancy,

Employed female workers shall receive full pay which consists o f

(i) SSS maternity benefit computed based on their average daily
salary credit and (ii) salary differential to be paid by the employer, if
any;

3. An option to extend for an additional thirty (30) days without pay in

case o f live childbirth;

4. Paid maternity leave, allowances and benefits granted to female

national athletes; and

5. Health care services for pre-natal, delivery, postpartum and pregnancy-

related conditions granted to female workers, particulady those w ho
are neither voluntary nor regular members o f the SSS, as governed by
die easting rules and regulations o f the Philippine Health Insurance
Corporation (PhilHealth).1

4. G R A N T O F M A T E R N IT Y LEAVE.

All coveted females regardless o f civil status, employment status, and die
legitimacy o f her child, shall be granted o n e h u n d red five (105) days m atern ity
leave w ith full pay, and an additio n al fifteen (15) days w ith full pay in case the
female worker qualifies as a solo p a re n t under R A . No. 8972, o r the "Solo Parents'
WelfareA rt of2000."

1 Section 2. Rule 111. W.

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In cases of miscarriage or emergency termination o f pregnancy sixty

(60) days maternity leave w ith full pay shall be granted.1
5. M A NN ER O F E N JO Y M E N T O F T H E B E N E F IT .

Enjoyment o f maternity leave c an n o t be deferred but should be availed

o f either before or after the actual period o f delivery in a continuous and
uninterrupted manner, and such that:

a. In cases o f live childbirth, one hu n d red five f!05^ days maternity

leave with full pay shall be granted; or *
b. In cases o f miscarriage or emergency termination o f pregnancy,;
sixty (601 days maternity leave shall be granted.

In all o f the above instances, the maternity leave can be credited as

combinations o f prenatal and postnatal leave as long as it does not exceed one
hundred five (105) days or sixty (60) days, as the case may be. In no case shall
postnatal care be less than sixty (60) days.2

6. EX T E N D E D M A T ER N IT Y LEAVE.
In cases o f live childbirth, an additional maternity leave o f thirty (30)
days w ithout pay can be availed of, at die option o f the female worker, provided
that the employer shall be given due notice. D ue notice to the employer must be in
writing and must be given at least forty-five (45) days before the end o f die female
worker's maternity leave. However, no prior notice shall be necessary in the event
o f a medical emergency but subsequent notice shall be given to the employer.

The above period o f extended maternity leave without pay shall n o t be

considered as gap in die service.3

7. FREQ U EN CY O F T H E GRANT.

Maternity leave shall be granted to a qualified female worker in every

instance o f pregnancy, m iscarriage or em ergency term ination o f pregnancy
regardless o f frequency.4

8. GRANT O F M A T ER N IT Y LEAVE B E N E F IT S A FTE R

T ER M IN A T IO N O F E M PL O Y M E N T .

Maternity leave with full pay shall be granted even if the childbirth,
miscarriage, or emergency termination o f pregnancy occurs n o t m ore th an
fifteen (15) calendar days after the term ination o f a n em ployee's service, as
her right thereto has already accrued. Such period is not applicable when the
employment o f the pregnant woman worker has been term inated w ith o u t ju st

' Secfonl.RuleW , W .;Secfon3,RANo.11210.

* Secfion2,Ru5eiV, Id.
1 Section 3, Rub W. I I
4 Section4, Rub IV, Id.; Section 3, R A No. 11210.

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 C h apter T hree 201
LA BO R STA N D A RD S

cause, in which case the employer will pay her the full am ount equivalent to her
salary for one hu n d red five (105) days for childbirth and sixty (60) days for
m iscarriage or em ergency term in atio n o f pregnancy b a se d on h er full pay, in
addition to the other applicable daily cash m aternity ben efits that she should
have received had her employment not been illegally terminated.1

9. M A T E R N IT Y LEAVE O F A FE M A LE W O RK ER W IT H P E N D IN G
A D M IN IST R A T IV E CASE.

The maternity leave benefits granted under R.A. N o. 11210 and the Rules
shall be enjoyed by a female worker in the public sector and in the private sector
even if she has a pending administrative case.2

10. M A T E R N IT Y LEAVE F O R FE M A LE W ORKERS IN T H E PU B L IC

SEC TO R .

a. Eligibility.

Any pregnant female worker in the government service, regardless o f

employment status and length o f service, in National Government Agencies
(NGAs), Local Government Units (LGUs), Government-Owned or Controlled
Corporations (GOCCs), State Universities and Colleges (SUCs), or Local
Universities and Colleges (LUCs) shall be granted maternity leave o f o n e h u n d red
five (105) days w ith full pay regardless o f the m an n e to f delivery o f die chad, and
an additional fifteen (15) days p a id leave if the female worker qualifies as a solo
parent under R.A. No. 8972, o r die "Solo Vomits' Wefan Act of2000." She shall be
entitled to maternity leave o f sixty (60) days w ith full p ay for m iscarriage o r
em ergency term ination o f p re gnancy,3

b. Notice o f pregnancy and application for maternity leave.

The female worker shall give prior notice to the head o f agency o f her
pregnancy and her availment o f maternity leave at least thirty (30) days in advance,
whenever possible, specifying the effective date o f the leave. The female wotker
shall use die prescribed civil service form in the filing o f the maternity leave
application, supported by a medical certificate.4

c. Maternity leave in the teaching profession.

Female teachers in the teaching profession may also avail o f maternity
leave even during long vacations, summer and Christmas vacations, in which

* Section5. Rule (V, Id.

1 Sec6on6,RutelV, W.; Sec&on12. RA No. 11210.
3 Section1,RideV, H;Secton4,RA No. 11210.
4 Secfion2,RuieV, kl.

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 202 Bar reviewer o n labor Law

case, both the maternity leave benefits and the proportional vacation pay (PVP)
shall be granted.1

d. Extended maternity leave.

In cases o f live childbirth, the female worker has the option to extend
her maternity leave for a n additional thirty (30) days w ithout pay, or use h er
earned sick leave credits for extended leave w ith pay. In case the sick leave
credits are exhausted, the vacation leave credits may be used.2

e. Manner o f payment o f maternity leave benefits.

The female worker shall be entided to full pay during maternity leave
which shall be paid by the agency. The female worker shall have the option to
receive full pay either through lump sum payment o r tegular payment o f salary
through agency payroll. A clearance from money, property and work-related
accountabilities shall be secured by the female worker. Money, property and. work-
related accountabilities as well as pending administrative case shall not deprive the
female worker o f the availment o f her maternity leave benefits.3

f. Consecutivepregnancies and multiple childbirths.

In case o f overlapping maternity benefit claims, eg., one m iscarriage or
emergency term ination o f pregnancy after the other or foQowed by live
childbirth, the female member shall be granted maternity benefits for die two
contingencies in a consecutive manner. The female worker shall be paid only one
maternity benefit, regardless o f the number o f offspring, per chfldbirth/deBvety.4

g. Dispute resolution.
Any dispute, controversy or claim arising out o f or relating to the payment
of full pay shall be filed by the concerned female worker initially to the head o f
agency and may be appealed to the Civil Service Commission (CSC) Regional
Office having jurisdiction over the agency, and to the Commission Proper,
respectively. The agency shall not hold o r delay the payment o f full pay to the
female worker pending the resolution o f the dispute, controversy o r claim.3

11. M ATERNITY LEAVE F O R FEM A LE W O RK ERS IN T H E PRIV ATE

SECTOR.

a. Eligibility.
To qualify for the grant o f maternity leave benefit, the female worker
must meet the following requirements:

‘ Section 3, Rute V, U.
2 Sec6on4,RuteV, Id.
1 Section 5, Ads V, Id.
4 Section 6, Rule V, Id.
* Section 7. Rule V, M.

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 C h a pter T hree 203
LABO R STA N D A R D S

a. She must have at least three (3) monthly contributions in the twelve-
month period immediately preceding the semester o f childbirth,
miscarriage, or emergency termination o f pregnancy.

In determining the female member's enddement to the benefit, the SSS

shall consider only those contdbudons paid prior to the semester o f
contingency; and

b. She shall have notified her employer o f her pregnancy and the probable
date o f her childbirth, which nodce shall be transmitted to the SSS in
accordance with the rules and regulations it may provide.1

b. N otice requirement.
The notification process for SSS-covered female workers a n d /o r
members and employers shall be governed by the following rules:

a. The female member, upon confirmation o f pregnancy, shall

immediately inform her employer o f such fact and the expected date
o f childbirth;
b. The employer shall, in turn, notify the SSS through the prescribed
manner,
c. The above rules notwithstanding, failure o f the pregnant female
worker to notify the employer shall not bar her from receiving the
maternity benefits, subject to guidelines to be prescribed by the SSS;
and
d. Self-employed female members, including those in the inform al
econom y, O FW s and voluntary SSS m em bers may give notice
directly to the SSS.2

c. Amount o f benefit.

Covered female workers availing of the maternity leave benefits must

receive their full pay. Full payment o f the maternity leave benefit shall be advanced
by the employer within thirty (30) days from die filing o f the maternity leave
application.

In the case o f self-em ployed female members, including those in the

inform al econom y, O FW s an d voluntary SSS m em bers, the SSS shall direedy
pay die maternity benefit.3

d. Reimbursement.
The SSS shall immediately reimburse to the employer die maternity
benefits advanced to the employed female member, only to the extent o f one

1 Section1, RuleVI, H.;Secfai5,RANo. 11210.

2 Section2, RuleVI, U
2 Section3. RuleVI, Id.

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hundred percent (100%) o f her average daily salary credit for one h u n d red five
(105) days, one hundred twenty (120) days or sixty (60) days, as the case m ay
be, upon receipt o f satisfactory and legal p ro o f o f such payment1

e. Salary differential, exceptions.

Employers from the private sector shall pay for the difference between
the full salary and the actual cash benefits received from the SSS. Female workers
employed by exempt establishments and enterprises, which satisfy the requirements
and criteria listed below, shall not be entided to the salary differential. The said
female workers shall be entided to receive only their SSS maternity benefits.

Upon submission o f proofs and other necessary documents, the following

establishments in the private sector may be exempted from paying the salary
differential herein prescribed, provided the criteria ate satisfied:

1. Those operating distressed establishments.

2. Those retail/service establishments and other enterprises employing
not more than ten (10) workers:
3. Those considered as micro-business enterprises and engaged in the
production, processing, or manufacturing o f products o r commodities,
including agro-processing, trading, and services, whose total assets are
not more than P3 Million in accordance with the Barangay Micro
Business Enterprises (BMBE's) Act o f 2002; and
4. Those who are already providing similar or more than the benefits
herein provided under an existing Collective Bargaining Agreement
(CBA), company practice or policy.2

f. Bar to recovery o f sickness beneffts.

The payment o f daily SSS maternity benefits shall be a bar to recovery o f

sickness benefits provided under R A No. I l l 99,3 for the same period for which
daily maternity benefits have been received.4

g. Consecutive pregnancies and m ultiple cbildbirtbs.

The payment of the SSS maternity benefits in cases o f consecutive
pregnancies resulting in overlapping maternity leaves and in cases o f multiple
childbirths shall be governed by die following rules:

a. In case o f the overlapping o f two (2) maternity benefit claims, the

female member shall be. granted maternity benefits for the two
contingencies in a consecutive manner. However, the amount o f

1 SacSoHRuteVI, id.
1 Section5, RuleVI, Id.
3 09ierwiselmownasfheaSod^Seax^Actof20l8*(Februaiy€7.2019).
1 Section6,RileVI, IRRofRANa 11210.

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LABO R STANDARDS

benefit corresponding to the period where there is an overlap shall be

deducted from the current maternity benefit claim; and
b. The female member shall be paid only one maternity benefit,
regardless o f the number o f offspring, per childbirth/delivery.1

h. Liability o f the employer.

The employer shall pay to the SSS damages equivalent to the benefits
which said female member would otherwise have been entitled to in any o f the
following instances:

a. Failure o f employer to remit to the SSS the required contributions for

the female worker; or
b. Failure o f the employer to transmit to SSS the female worker's
notification on the fact o f pregnancy and probable date o f childbirth.2

i. Dispute resolution.
Any dispute, controversy, or claim as regards the grant o f SSS maternity
leave benefit under the Rules shall be filed before the Social Security Commission
(SSQ. The filing, determination, and settlement o f disputes shall be governed by
the Rules and Regulations o f the SSC, which provide that all petitions shall be filed
with the Office o f the Executive Clerk o f the Commission or his/her Deputy, o r a t
any Regional Commission Legal Department. Any dispute, controversy, or claim
arising out of or relating to the payment o f salary differential shall be filed before
the D O LE Field/Provindal/Regional Office having jurisdiction over the
workplace and shall be subject to existing enforcement mechanisms o f the D O LE.3

12. M A T ER N IT Y LEA V E B E N E F IT S F O R W O M E N I N T H E
IN FO R M A L E C O N O M Y .

Maternity benefits shall cover all married and unmarried women,

including female workers in the informal economy. Female workers in die informal
economy are entided to maternity leave benefits if they have remitted to the SSS at
least dime (3) monthly contributions in the twelve (12)-month period immediately
preceding the semester o f her childbirth, miscarriage, o r emergency termination o f
pregnancy.4

13. A LL O C A T IO N O F M A T E R N IT Y LEAVE C R E D IT S.

a. Allocation to the child's father or alternate caregiver.

A female worker endded to maternity leave benefits may, at her option,
allocate up to seven (7) days o f said benefits to the child's father, whether o r n o t

• Section7, RuleVt Id.

* Section 8.RuleVI, Id.
3 Sec6on9,RuieVt Id.
4 Section1. RuleVII, Id.

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 206 Ba r Reviewer o n labor Uw

the same is mariied to the female worker. The allocated benefit granted to the
child's father under this law is over and above that which is provided under R.A.
No. 8187, or the "PaternityLeaveAct of 1996."

In case o f death, absence, or incapacity o f the child's father, the female

worker may allocate to an alternate caregiver who may be any o f the following,
upon the election of the mother taking into account the best interests o f the child:

a. A relative within the fourth degree o f consanguinity, or

b. The current partner, regardless o f sexual orientation or gender identity,
of the female worker sharing the same household.

The option to allocate maternity leave credits shall not be applicable in

case the female worker suffers miscarriage or emergency termination o f pregnancy.1

b. Allocation for the SSS-covered female workers.

In case the female worker avails o f the option to allocate, the SSS shall
pay her the amount of the maternity benefit corresponding to die period not
allocated.

As applicable, die father or, in his death, absence, ox incapacity, the

alternate caregiver shall be granted by his employer a leave with pay equivalent to a
period from one (1) to seven (7) days, which may be enjoyed either in a continuous
or in an intermittent manner not later than the period o f the maternity leave availed
of.

The female worker shall notify her employer o f her option to allocate with
her application for maternity leave. The father or alternate caregiver, as the case
may be, shall notify the employer concerned o f his o r her availment o f die allocated
leave and the inclusive dates therefor.

This written notice to the employers shall be required even if the child's
father or the alternate caregiver is employed in the public sector.2

c. Allocation ofmaternity leave credits for female workers in the

public sector.
In case the female worker avails o f the option to allocate, she shall submit
a written notice to the head o f agency or the head o f agency's authorized
representative, with her application for maternity leave.

The allocated maternity leave may be enjoyed by the child's father or the
alternate caregiver either in a continuous or in an intermittent manner not later
than the period of the maternity leave availed of.*

• Section1,RuleVID, Id.
* Section2, RuleVIO, Id.

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 C ha pter T hree 207
W B O R ST A N D A R D S

In case full pay has been given to the female worker, the child's father o r
the alternate caregiver, as die case may be, shall only be excused from work (leave
without pay). The leave without pay shall not be considered as a gap in the service.1

d. Death or permanent incapacity o f the female worker.

In the event the beneficiary female worker dies o r becomes permanendy
incapacitated, the balance o f her maternity leave benefits, if any, shall accrue to the
child's father or to a qualified alternate caregiver as provided in the preceding
sections subject to the following conditions:

a. That the maternity leave benefits have not yet been commuted to
cash, if applicable; and

b. That a certified true copy o f the death certificate or medical certificate

or abstract is provided to the employers o f both the female w orker
and the child's father or alternate caregiver.

In case the maternity leave benefits o f die deceased o r permanendy

incapacitated female worker have already been paid to the latter in full, the child's
father or alternate caregiver shall be entided to enjoy the remaining unexpired leave
credits o f the female worker, if there be any, without pay: Provided, That such leave
without pay shall no t be considered as a gap in die service o f die child's father or
alternate caregiver, in both the public and private sector.23

14. M A T E R N IT Y LEAVE F O R FE M A L E N A T IO N A L A T H L E T E S .

In the event that a national athlete who is in the roster o f national athletes
o f the National Sports Association (NSA) to which she is affiliated becomes
pregnant, she will be referred to a physician o f die Philippine Sports Commission
(PSQ or an obstetrician-gynecologist to determine her fitness to continue training.
She will be allowed to participate in all team-related activities, unless the physician
advises that participation is n o t medically safe o r should be limited. Upon medical
advice, she shall go on maternity leave until cleared to return to training. She shall
continue receiving her allowance and be endded to the same benefits while on
maternity leave prior to childbirth and up to six (6) months after, unless she can
resume sooner as advised by her physician, in which case, she will continue to
receive die same allowances and benefits she received prior to and during the
pregnancy: Provided, That a female national athlete employed in the public sector
shall not receive double compensation o r benefits.1

' Sedan3, RuleVIS, Id.

2 Section4, RuleVIA, Id.
3 Section1,RuleIX, Id; Section 113, RA No. 11210.

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 208 Ba r R e v i e w e r on La b o r la w

3.
PATERNITY LEAVE
1. C O N C EPT AND PU RPO SE.

Under R A No. 8187,* otherwise known as the ‘Paternity Leave Act of

1996," every married male employee in die public*2 and private sectors, regardless
of his employment status (eg, probationary, regular contractual, project basis),3 is
entided to a paternity leave o f seven (7) calendar days with full pay for die first
four (4) deliveries456of the legitim ate spouse3 with whom he is cohabiting.3 If
die spouses are not physically living together because o f the workstation or
occupation, the male employee is still entided to the paternity leave benefit.2

The purpose o f the leave is to enable die male employee to effectively

lend support to his wife in her period o f recovery a n d /o r in the nursing o f the
newly-born child.8 Therefore, the usage o f the paternity leave shall be after the
delivery9 which means that this benefit is granted to the qualified male employee
after the delivery by his wife. This is without prejudice to an employer allowing an
employee to avail of the benefit before o r during die delivery, provided that the
total number o f days should not exceed seven (7) calendar days for each delivery.
In the event that the paternity leave benefit is not availed of, said leave shall n o t he
convertible to cash10and shall n o t be cumulative.11

The married male employee should apply for paternity leave with his
employer within a reasonable period o f time from the expected date o f delivery by
his pregnant spouse, or within such period as may be provided by company rules
and regulations, or by CBA. In case o f a m iscarriage, prior application for paternity
leave shall not be required.12

' RANo. 8187, The ftatemfyleave Act of 1996* (tone 11,1996, mffied'An Act Granting PaJemSyLeave of Seven (7)
Dayswffli Ful PaytoAl MarriedMaleEmployees h tie fttoate and PUMcSectorstor Ste First Far (4) Dehwies ofthe
Legimte SpouseWBiWhomHeIsGohtixSngandforOher Fuposes.*TWswasapprovedonJune 11,1996. OnMatch
13,1997, (he Department of labor and Employment and Department of Healthjointly Issued the Revised Implementing
RulesandReguldSonsofRANo.8187.
2 Government employeesarealsoen&fedtohts benefit but hey aregovernedbytie Civ) Servicerules. (Na 9 (A], 2019
HandboakonMbr1cem*St3]utb(yM(vietBuy6ene&l5i,issuedt^teBuiaauorWo(t&igCon(S6on^OOL^(.
1 No 9|A].1M.
4 Theterni'de§^indj(]esch2ldbirhtfanyniiscamag&(Sect)m2,S^Sec&)n1^Bal.).
5 "Spouse* rates to he laafiJwfe. For his purpose, lawful wife* rates to a woman Mho is legally married to he male
emptoyeeconcemed. (Sechon 1 {dh B>id.).
6 ‘CohaUSng'retestoheobfi^on of h e husband and w ieto ive togeher. (SectSonl hid.).
1 N a 9 {8 l 2019Harxhook onW txt^'Staluto^hteietaryBeneSs, issued ty h e Bure^ofVlteldngCfn&ions, DOLE.

8 Sedxn3. RAIto.8187;SecGon1 (a].Reusedtn^tenenfingRulesandRegulaSonsofRANo.8187 (March13,1997).

8 No 9 [B], 2019HanflxiokmVMers’S tati^R tav^B aTe^ issued ho BureauolWotteijContaions, DOLL
w No 9(Q ib ilS edoR s 5 and 8. Revised Implernenfng Rules and Regula5onsofRANa 8187 [M sdi 13,1997];
" No. 9 [E], bid.
'? No. 9 [DJ, B»d.; Section 2, R A No. 8187.

J9JC9B0M
 CHAPTER THREE 209
LABOR STANDARDS

2. C O N D IT IO N S F O R A V A IL M E N T .

A married male employee is entided to this benefit provided that he has

m et the following conditions:

1. H e is an employee at die time o f die delivery o f his child;

2. H e is cohabiting with his spouse at the time that she gives birth o r
suffers a miscarriage;
3. H e has applied for paternity leave with his employer within a reasonable
period o f time from die expected date o f delivery by his pregnant
spouse, o r within such period as may be provided by company rules
and regulations, o r by CBA; and
4. His wife has given birth o r suffered a miscarriage.1
T he following are the rules for crediting o f existing benefits to paternity
leave:
1. I f the existing paternity leave benefit under die CBA, contract, or
company policy is greater than seven (7) calendar days as provided for
in RA 8187, the greater benefit shall prevail
2. I f the existing paternity leave benefit is less than that provided in RA
8187, the employer shall adjust the existing benefit to cover the
difference.2
Where a company policy, contract, or CBA provides for an em erg en cy
or contingency leave without specific provisions on paternity leave, the employer
should still grant to the employee seven (7) calendar days o f paternity leave.3

4.
SOLO PARENT LEAVE
1. C O N C E P T A ND PU RPO SE.
R A . N o. 8972,* otherwise known as 'The Sob Parents' WelfareAct of2000,"
grants a parental leave o f no t more than seven (7) w orking days every year to a
solo parent who has rendered service o f at least one (1) year, to enable h im /h e r to
perform parental duties and responsibilities where his/her physical presence is
required.5
I h is leave privilege, is an additional leave benefit which is separate and
distinct from any other leave benefits provided under existing laws o r agreements.6

1 No.9tq.aiki
1 No. 9 [FI,a>kl
’ Id.
4 R A . No. 8972, T h e Sob Parent? Wettare Act of 200QT (Nouennlier 7,200(9, enffed'An Act Profiting for Benefits and
ffivieges to Solo Patents and Their Children, Appropriating Funds Therefor and Ibr Otter Rnposes.' It was approved on
November7,2000.
5 Section 8. RA. No. 8972; N a 10 [BJ. 2019 Handbook on Workers’ Statutory Monetary Benelits. issued by the Bureau of
Vtaking Condons, DOLE
« H ; No. 10 [Cl, bid.

J9JC9B0M
 2 10 Bar R eviewer on Labo r L aw

T h e sev en -d a y p a re n ta l leav e is n o n - c u m u la d v e .1 I f th e r e is a n e x is tin g o r sim ila r

b en efit u n d e r a co m p a n y p o lic y o r a C B A , d ie s a m e sh a ll b e c r e d ite d as su c h . I f th e
sam e is g re a te r th a n th e se v e n (7) d ay s p ro v id e d f o r in R A 8 9 7 2 , th e g re a te r b e n e f it
shall p rev ail.23E m e rg e n c y o r c o n tin g e n c y leav e p r o v id e d u n d e r a c o m p a n y p o lic y o r
a C B A shall n o t b e c re d ite d as c o m p lia n c e w ith th e p a r e n ta l le a v e p r o v id e d fo r
u n d e r R A 8972.3

T h e p a re n ta l le a v e is w ith full p ay , c o n s is tin g o f b a sic sa lary a n d

m a n d a to r)' a llo w an ces fix ed b y th e R e g io n a l W a g e B o a rd , i f an y , p ro v id e d th a t
h is /h e r pay shall n o t b e less d ia n th e m a n d a te d m in im u m wage.4 I n th e e v e n t th a t
this leave is n o t availed o f , it shall n o t b e co n v ertib le? to ca sh , u n le s s sp e cifically
agreed o n p re v io u sly .5

2. C O N D IT IO N S F O R A V A IL M E N T .
M o re specifically, th is leav e b e n e fit is g r a n te d to a n y so lo p a r e n t o r
individual w h o is left alo n e w ith th e re sp o n s ib ility o f p a r e n th o o d d u e to:
1. G iv in g b irth as a resu lt o f rap e o r , as u s e d by th e law , o th e r c rim e s
ag ain st ch astity ;
2. D e a th o f sp o u s e ;
3. S p o u se is d e ta in e d o r is se rv in g s e n te n c e f o r a c rim in a l c o n v ic tio n fo r
a t least o n e (1) year,
4. P h y sica l a n d / o r m e n ta l in c a p a c ity o f s p o u s e as c e rtifie d by a p u b lic
m ed ical p ra c titio n e r,
5. L eg al se p a ra tio n o r d e fa c to s e p a ra tio n f r o m s p o u s e fo r a t le a s t o n e (1)
y e a r P ro v id e d th a t h e / s h e is e n tr u s te d w ith th e c u s to d y o f th e
ch ild ren ;
6. D e c la ra tio n o f n u llity o r a n n u lm e n t o f m a rria g e as d e c re e d b y a c o u r t
o r by a c h u rc h : P ro v id e d , th a t h e / s h e is e n tr u s te d w ith th e c u s to d y o f
th e ch ild ren ;
7. A b a n d o n m e n t o f s p o u s e fo r a t le a s t o n e (1) year;
8. U n m a rrie d f a t h e r /m o th e r w h o h a s p r e f e r r e d to k e e p a n d re a r h i s / h e r
c h ild /c h ild re n , in s te a d o f h a v in g o th e r s c a r e fo r th e m o r g ive th e m u p
to a w elfare in s titu tio n ;
9. A n y o th e r p e r s o n w h o so lely p r o v id e s p a r e n ta l c a r e a n d s u p p o r t to a
ch ild o r c h ild re n : Provided, th a t h e / s h e is du ly lic e n s e d as a fo s te r
p a r e n t by th e D e p a r tm e n t o f S o cial W e lfa re and D e v e lo p m e n t
(D S W D ) o r d u ly a p p o in te d leg al g u a r d ia n b y th e c o u r t; a n d
10. A n y fam ily m e m b e r w h o a s su m e s th e r e s p o n s ib ility o f h e a d o f fam ily
as a re su lt o f th e d e a th , a b a n d o n m e n t, d is a p p e a ra n c e , o r p ro lo n g e d
absence of th e p a r e n ts or so lo p a re n t: Provided, th a t su c h

1 Section 8, R A No. 8972; Section 18. Article V, Rules and Regulations Implementing R A No. 8972.
5 No. 10 [F], 2019 Handbook on Workers' Statutory Monetary Benefits, issued by the Bureau of Workirtg Conditions, DOLE
3 Id; Section 21, Article V, Ibid.
4 No. 10 [C], 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions. DOLE.
5 No. 10 [E], Ibid.; Section 20, Article V, Rules and Regulations Implementing R A. No. 8972.

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 C h a pter T hree 211
LABOR. STANDARDS

a b a n d o n m e n t, d is a p p e a ra n c e , o r p r o lo n g e d a b s e n c e la s ts fo r a t le a s t
o n e (1) y e a r.1

F o r p u r p o s e s o f th is le a v e , "child’-'' r e fe rs to a p e r s o n liv in g w ith a n d

d e p e n d e n t o n th e s o lo p a r e n t f o r s u p p o r t. H e / s h e is u n m a r r ie d , u n e m p lo y e d , a n d
b e lo w e ig h te e n (18) y e a rs o f a g e , o r e v e n e ig h te e n (18) y e a rs o ld a n d a b o v e b u t is
in c a p a b le of s e lf- s u p p o r t because h e /s h e is m e n ta lly - a n d /o r p h y sic a lly -
c h a lle n g e d .2

A s o lo p a r e n t e m p lo y e e is e n tid e d to th e p a r e n ta l le a v e , p r o v id e d th a t:

1. H e / s h e has re n d e re d a t le a st o n e (1) y ear o f se n d ee, w h e th e r

c o n tin u o u s o r b r o k e n ;
2. H e /s h e has n o tifie d h is /h e r e m p lo y e r th a t h e /s h e w ill a v a il
h i m s e lf /h e r s e lf o f it, w ith in a re a s o n a b le p e r io d o f tim e; a n d
3. H e / s h e h a s p r e s e n te d to h i s / h e r e m p lo y e r a S o lo P a r e n t I d e n tif ic a tio n
C a rd , w h ic h m a y b e o b ta in e d fro m th e D S W D o ffic e o f 't h e c ity o r
m u n ic ip a lity w h e r e h e / s h e re sid e s .3

A c h a n g e in th e s ta tu s o r c ir c u m s ta n c e o f th e p a r e n t c la im in g th e b e n e f it
u n d e r th e law , s u c h th a t h e / s h e is n o lo n g e r le ft a lo n e w ith th e re s p o n s ib ility o f
p a r e n th o o d , sh a ll te r m in a te h i s / h e r elig ib ility f o r th is b e n e f it.45

N o e m p lo y e r sh a ll d is c rim in a te a g a in s t any s o lo p a r e n t e m p lo y e e w ith

re s p e c t to te r m s a n d c o n d itio n s o f e m p lo y m e n t o n a c c o u n t o f h i s / h e r b e in g a s o lo
p a r e n t.3

5.
LEAVE BENEFITS FOR WOMEN WORKERS
UNDER R.A. 9710 and R.A. 9262
a.
SPECIAL LEAVES FOR WOMEN WORKERS
(R.A. No. 9710)

1. CO N CEPT AND PU RPO SE.

U n d e r R .A . N o . 9 7 1 0 ,67o th e r w is e k n o w n as 'The Magna C.arta of Women

7 a w o m a n e m p lo y e e , re g a rd le s s o f a g e a n d civil sta tu s , h a v in g r e n d e r e d c o n tin u o u s
a g g re g a te e m p lo y m e n t s e rv ic e o f a t le a st six (6) m o n d is f o r th e last tw e lv e (12)

' No. 10 (A), bid.; Section 6 [b], Article III, Rules and Regulations implementing RA. No. 8972.
2 No. 10 [B], bid.
3 No. 10 [D], Ibid.; Section 19, Article V, Rules and Regulations Implementing RA. No. 8972.
1 No. 10IG), bid.
5 No. 10 [H], Ibid.
6 Entitled "An Act Providing lor the Magna Carta ofWomen enacted on August 14.2009
7 This is the proper desenption of this law, R A. No. 9710, otherw.se knovm as 'The Magna Carta of Women' [August
14,2009], not ‘Magna Carta for Women’ since this is whaf is embodied in the law.

J9JC9B0M
 2 12 Bar Reviewer on La b o r Law

m o n th s shall b e en titled to a sp e cial leav e b e n e fit o f tw o (2) m o n t h s w ith full pay-

b ased on her g ro ss m o n th ly c o m p e n s a t i o n 1 fo llo w in g surgery' c a u s e d by
g y n e c o lo g ic a l d is o r d e r s .2

“Gynecological disorders” re fe r to d is o rd e rs th a t w o u ld r e q u ire surgical

p ro c e d u re s su c h as, b u t n o t lim ite d to , d ila ta tio n a n d c u re tta g e a n d th o s e in v o lv in g
fem ale re p ro d u c tiv e o rg a n s s u c h as th e v ag in a , ce rv ix , u te ru s , fa llo p ia n tu b e s ,
ovaries, b re a st, ad n ex a an d p elv ic flo o r, as c e rtifie d b y a c o m p e te n t p h y sic ia n . I t
shaE also in c lu d e h y ste re c to m y , o v a rie c to m y a n d m a s te c to m y .34

2. C O N D IT IO N S F O R A V A IL M E N T .

T h e follow ing a re th e c o n d itio n s fo r e n title m e n t o f th is le a v e b e n e fit:

1. S h e has r e n d e re d a t le a st six (6) m o n th s c o n tin u o u s a g g re g a te

em p lo y m e n t se rv ic e fo r th e la s t tw elv e (12) m o n th s p r io r to su rg e ry ,

2. She has filed a n a p p lic a tio n fo r sp e cial le a v e w ith h e r e m p lo y e r w ith in

a reaso n ab le p e rio d o f tim e f ro m th e e x p e c te d d a te o f su rg e ry o r
w ithin such p e rio d as m a y b e p ro v id e d by c o m p a n y ru le s a n d
regulations o r C B A ; a n d

3. S h e has u n d e rg o n e su rg e ry d u e to g y n e c o lo g ic a l d is o r d e r s as c e rtifie d
by a c o m p e te n t p h y s ic ia n /

T h e special leave sh a ll b e g r a n te d to th e q u a lifie d e m p lo y e e a f t e r s h e h a s

u n d e rg o n e su rg ery , w ith o u t p re ju d ic e to a n e m p lo y e r aU ow ing a n e m p lo y e e to
receive h e r p ay before or during th e su rg e ry .5 I t is n o n - c u m u la tiv e a n d n o n -
c o n v e rtib le to cash unless o d ie r w is e p r o v id e d b y a C B A .6

b.
LEAVE FOR VICTIMS OF VIOLENCE
AGAINST WOMEN AND CHILDREN
(RA. No. 9262)

1. CO N CEPT AND PURPOSE.

R A . N o . 9262,7 o th e rw is e k n o w n a s th e "Anti-Violence Against Women and

Their Children Act of 2004," g ra n ts to v ic tim s a le av e o f u p to t e n (10) d a y s w ith full
pay, c o n s istin g o f basic sa lary a n d m a n d a to r y a llo w a n c e s fix ed b y th e R e g io n a l

’ Gross monthly compensation refers © the monthly basic pay plus mandatory atowances fixed by the Regional Wage
Boards.
7 Section 18. RA No. 9710, Mo. 12 [A] and P ), 2019 Handbook on Wooers' Statutory Monetary Benefits, issued by the
Bureau of Working Conditions, DOLE
3 No. 12 [B], 2019 Handbook on Wofkets’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions. DOLE
4 No. 12 (C). Ibid.
5 No. 12 [El, M .
5 No. 12 [F], ibid.
7 Entitled *An Ad Defining Violence Against Women and Ther Chidren. Providing for Protects Measures for Victims.
Prescribing Penalties Therefor, and F a Other Purposes.’ This taw was enacted on March 08,2004.

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 C h apter T hree 2 13
LABOR STANDARDS

W a g e B o a rd , i f a n y .1 T h is is in addition to o t h e r p a id le a v e s u n d e r th e L a b o r C o d e
a n d C iv il S e rv ic e R u le s a n d R e g u la tio n s . I t is e x te n d ib le w h e n th e n e c e ssity a r is e s as
s p e c ifie d in th e p r o te c tio n o r d e r is s u e d b y th e b a ra n g a y o r th e c o u r t.2

P riv a te s e c to r w o m e n e m p lo y e e s w h o a r e v ic tim s a s d e fin e d in R A 9 2 6 2

sh a ll b e e n title d to th e p a id te n -d a y le a v e b e n e f it u n d e r s u c h te rm s a n d c o n d itio n s
p r o v id e d h e re in . T h e le a v e b e n e f it sh a ll c o v e r th e d a y s th a t th e w o m a n e m p lo y e e
h a s to a tte n d to m e d ic a l a n d legal c o n c e r n s .3 T h e u sa g e th e r e o f sh a ll b e a t th e
o p tio n o f th e w o m a n e m p lo y e e . I n th e e v e n t th a t th e le a v e b e n e f it is n o t a v a ile d o f ,
it sh a ll n o t b e c o n v e r tib le in to c a s h a n d sh all n o t b e c u m u la tiv e .4

‘Violence against women and their children," a s u s e d in R ,A , 9 2 6 2 , re fe rs to a n y

a c t o r a sc rie s o f a c ts c o m m itte d by a n y p e r s o n a g a in s t a w o m a n w h o is h is w ife ,
f o r m e r w ife , o r a g a in s t a w o m a n w ith w h o m th e p e r s o n h a s o r h a d a s e x u a l o r
d a tin g re la tio n s h ip , o r w ith w h o m h e h a s a c o m m o n c h ild , o r a g a in st h e r c h ild ,
w h e th e r le g itim a te o r ille g itim a te , w ith in o r w ith o u t th e fam ily a b o d e , w h ic h w ill
re s u lt in o r is likely to re s u lt in p h y sic a l, se x u al, p s y c h o lo g ic a l h a rm o r s u ffe rin g , o r
e c o n o m ic abuse, in c lu d in g th re a ts of such a c ts , b a tte ry , a ssa u lt, c o e r c io n ,
h a r a s s m e n t o r a rb itra ry d e p r iv a tio n o f lib e rty .5

2. C O N D IT IO N F O R A V A IL M E N T .

T o b e c n tid e d to th e le a v e b e n e f it, th e o n ly r e q u ire m e n t is f o r th e v ic tim -

e m p lo y e e to p r e s e n t to h e r e m p lo y e r a c e rtific a tio n f r o m th e b a ra n g a y c h a ir m a n
(Pnnong Barangay) o r b a ra n g a y c o u n c ilo r ( barangay kagawad) o r p r o s e c u to r o r th e
C le rk o f C o u rt, a s th e c a s e m a y b e , th a t a n a c tio n re la tiv e to th e m a tte r is p e n d i n g .6

D.
SPECIAL GROUPS OF EMPLOYEES

1.
WOMEN

a.
DISCRIMINATION

1. A C T S O F D IS C R IM IN A T IO N U N D E R T H E L A B O R C O D E .

A rticle 133 [135] o f th e L a b o r C o d e c o n s id e rs a s u n la w fu l th e act o f an

e m p lo y e r to d is e n m m a te a g a in s t any w o m a n e m p lo y e e w ith re sp e c t to te rm s a n d

’ No. 11 p ], 2019 Handbook on Wooers' Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.
3 Id.
3 Section 43, RA. No. 9262; No 11 [BJ. 2019 Handbook on Workers' Statutory Monetary Benefits, issued by the Bureau of
Working Ccndtions. DOLE
4 Id.; No. 11 [Ej. Ibid.
5 Section3 .ibid:No. 11 (A).ibid.
6 No. 11 [CJ, 2019 Handbook on Workers' Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.

J9JC9B0M
 214 Ear review er o n La bo r law

c o n d itio n s o f em p lo y m e n t solely o n a c c o u n t o f h e r ' sex. M o r e sp e c ific a lly , it

e n u m e ra te s th e fo llow ing a c ts o f d isc rim in a tio n :

(a) P a y m e n t o f a lesser c o m p e n s a tio n , in c lu d in g w a g e , salary o r o th e r

fo rm o f re m u n e ra tio n a n d frin g e b e n e fits , to a fe m a le e m p lo y e e as
ag ain st a m ale e m p lo y e e , fo r w o r k o f e q u a l valu e; a n d

(b) F a v o rin g a m ale e m p lo y e e o v e r a fe m a le e m p lo y e e w ith r e s p e c t to

p ro m o tio n , tra in in g o p p o r tu n itie s , s tu d y a n d s c h o la rs h ip g r a n ts solely
o n a c c o u n t o f th e ir sex es.
•w
2. A C T S O F D IS C R IM IN A T IO N U N D E R T H E M A G N A C A R T A O F
W OM EN.

R .A . N o . 9 7 1 0 ,1 o th e rw ise k n o w n a s 'The Magna Carta of Women," is a

c o m p re h e n siv e w o m e n ’s h u m a n rig h ts la w th a t se e k s to e lim in a te d is c rim in a tio n
against w o m e n by reco g n izin g , p ro te c tin g , fu lfillin g a n d p r o m o tin g th e rig h ts o f
F ilipino w o m e n , especially th o s e in th e m a rg in a liz e d s e c to rs .

B ased o n th e d e fin itio n o f th e te r m “Discrimination Against Women”in R .A .

N o . 9710,2 th e follow ing are c o n s id e re d d is c rim in a to ry acts:

1. A n y g e n d e r-b a se d d is tin c tio n , e x c lu s io n , o r re s tric tio n w liic h h a s th e

e ffe c t or p u rp o s e of im p a irin g or n u llify in g th e re c o g n itio n ,
en jo y m e n t, o r ex e rc ise b y w o m e n , irre s p e c tiv e o f th e ir m a rita l sta tu s ,
o n a basis o f e q u ality o f m e n a n d w o m e n , o f h u m a n rig h ts a n d
fu n d a m e n ta l fre e d o m s in th e p o litic a l, e c o n o m ic , so c ia l, c u ltu ra l, civil
o r any o th e r field;

2. A n y act o r o m iss io n , in c lu d in g b y law , p o lic y , a d m in is tra tiv e m e a s u re ,

o r practice, th a t d ire c tly o r in d ire e d y e x c lu d e s o r re s tric ts w o m e n in
th e reco g n itio n a n d p r o m o tio n o f th e ir rig h ts a n d th e ir a c c e ss to a n d
e n jo y m e n t o f o p p o r tu n itie s , b e n e f its o r p rivileg e s;

3. A m e a su re o r p ra c tic e o f g e n e ra l a p p lic a tio n th a t fails to p r o v id e fo r

m e c h a n ism s to o ffs e t o r a d d r e s s sex o r g e n d e r-b a s e d d is a d v a n ta g e s o r
lim ita tio n s o f w o m e n , as a r e s u lt o f w h ic h w o m e n a re d e n ie d o r
re stric te d in th e re c o g n itio n a n d p r o te c tio n o f th e ir r ig h ts a n d in th e ir
acce ss to an d e n jo y m e n t o f o p p o r tu n itie s , b e n e fits , o r p riv ile g e s; o r
w o m e n , m o re th a n m e n , a re s h o w n to h a v e s u f f e re d th e g re a te r
a d v e rse effe cts o f th o s e m e a s u re s o r p ra c tic e s; a n d

4. D isc rim in a tio n c o m p o u n d e d b y o r in te rs e c tin g w ith o th e r g ro u n d s ,

sta tu s, o r c o n d itio n , s u c h a s e th n ic ity , a g e , p o v e rty o r re lig io n .1

1 R A No. 9710, approved on August 14,2009.

2 Section 4(b), Chapter II, R A No. 9710, approved on August 14,2009; See also Section 7(c), Rule II, Implementing Rules
and Regulations ot RA. No. 9710.

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 C h apter T hree 215
LABOR STANDARDS

A d d itio n a lly , w o m e n a re g u a r a n te e d th e ir rig h t to d e c e n t w o rk . T h e S ta te

sh a ll p ro g re s siv e ly realize a n d e n s u re d e c e n t w o r k s ta n d a rd s fo r w o m e n th a t
in v o lv e th e c re a tio n o f jo b s o f a c c e p ta b le q u a lity in c o n d itio n s o f f re e d o m , e q u ity ,
s e c u rity a n d h u m a n d ig n ity .*2

b.

STIPULATION AGAINST MARRIAGE

1. I N V A L I D I T Y O F S T I P U L A T I O N A G A I N S T M A R R I A G E .

A rtic le 1 3 4 [136] o f th e L a b o r C o d e c o n s id e rs a s a n u n la w fu l a c t o f t h e
e m p lo y e r to re q u ire as a c o n d itio n f o r o r c o n tin u a tio n o f e m p lo y m e n t th a t a
w o m a n e m p lo y e e sh a ll n o t g e t m a r rie d o r to s tip u la te e x p re s s ly o r tac itly th a t u p o n
g e ttin g m a rrie d , a w o m a n e m p lo y e e sh a ll b e d e e m e d re s ig n e d o r s e p a ra te d .

I t is lik e w ise a n u n la w fu l a c t o f th e e m p lo y e r, to a c tu a lly d is m is s ,

d isc h a rg e , d is c rim in a te o r o th e r w is e p re ju d ic e a w o m a n e m p lo y e e m e re ly b y r e a s o n
o f h e r m a rria g e .3

2. R E L E V A N T J U R I S P R U D E N C E .

T h e fo llo w in g c a se s a re re le v a n t:

1) Zialcita v. PAL,4 a c a se d e c id e d b y th e O ffic e o f th e P re s id e n t, w h e r e

th e p ro v is io n in a c o n tr a c t b e tw e e n a n a irlin e c o m p a n y a n d a flight a tte n d a n t w h ic h
sta te s th a t “ flig h t a tte n d a n t- a p p lic a n ts m u s t b e sin g le a n d th a t th e y sh a ll b e
a u to m a tic a lly s e p a ra te d f ro m e m p lo y m e n t in th e e v e n t th e y s u b s e q u e n d y g e t
m a rrie d ,” w as d e c la re d n u ll a n d v o id a n d th u s c a n n o t b e e n f o rc e d fo r b e in g
c o n tr a ry to A rtic le 1 3 4 [136] o f th e L a b o r C o d e a n d th e p r o te c tio n - to - la b o r c la u s e
in th e C o n s titu tio n .

2) FT&T v. N L R C .,5 w h e re it w a s d e c la re d th a t th e c o m p a n y p o lic y o f

n o t a c c e p tin g o r c o n s id e rin g a s d isq u a lifie d f ro m w o rk a n y w o m a n w o r k e r w h o
c o n tr a c ts m a rria g e r u n s a fo u l o f th e te s t o f, a n d th e rig h t a g a in st, d is c rim in a tio n
a f fo r d e d all w o m e n w o rk e rs by our la b o r law s a n d by no le ss th a n th e
C o n s titu tio n .6

' Id.
2 Section 25, Rule V, Implementing Rules and Regulations of R A No. 9710.
3 See also Section 13 fej, Rule XII, Book III, Rules to Implement the Labor Code; Gualberto v. Mahnduque Mning Industrial
Corporation, CA-G.R. No. 52753-R, June 28,1978.
4 Ziatata v. Philippine Airlines, Inc., Case No. R04-3-398-76, Feb. 20,1977.
5 Philippine Telegraph end Telephone Company v. NLRC. G.R. No. 118978, May 23,1997,272 SCRA 596,605.
6 See also Gualberto v. Marinduque Mning & Industrial Corporation, supra; Saida, v. Phapphe Airfnes, supra; 45A Am. Jur.
2d, Job Discrirnnation, Sec. 506, p. 486.

J9JC9B0M
 216 Ba r R e v i e w e r on La b o r u w

3) Star Paper Gap. v. Simbol} where die following policy was struck down
as invalid fot violating the standard o f reasonableness, otherwise called the
“Reasonable BusinessNecessity Rule, ’’which is being followed in our jurisdiction:
"1. New applicants will not be allowed to be hired if in case he/she has
[a] relative, up to [the] 3rd degree of relationship, already employed
by the company.

“2 In case of two of our employees (both singles [sic], one male and
another female) developed a friendly relationship during the course
of their employment and then decided to get married, one of them
should resign to preserve the policy stated above.”

4) Duncan v. Glaxo Welcome} where the prohibition against marriage

embodied in the following stipulation in the employment contract was declared
valid:
“10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with co-
employees or employees of competing drug companies. Should ir pose a
possible conflict of interest in management discretion, you agree to resign
voluntarily from the Company as a matter of Company policy.”

The Supreme Court ruled that die dismissal based on above stipulation in
the employment contract is a valid exercise o f management prerogative. The
prohibition against personal or marital relationships with employees o f competitor
companies upon its employees was held reasonable under the circumstances
because relationships o f this nature might compromise the interests o f die
company. In laying down the assailed company policy, the employer only aims to
protect its interests against the possibility that a competitor company will gain
access to its secrets and procedures.

c,
PROHIBITED ACTS

1. PR O H IB IT E D ACTS U N D E R A R T IC L E 135 [137] A N D ITS

IM PLE M E N TIN G RU LES.

Artide 135 [137] o f the Labor Code and its implementing rule consider

1) To discharge any woman employed by him for the purpose of

preventing such woman from enjoying maternity leave, facilities and
other benefits provided under the Labor Code;*1

1 StarPaper Cap. v. Smbd, Coma and Esfrefla. G.R. No. 164774,Apri 12.2006.
1 DuncmAssoc^dO^aititan^GWOv.QaxoWdcnnePhippnes, Inc., G.R. No. 162994. SeplU. 2004.

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 C h a pter Three 217
LA BO R STA N DA RDS

2) T o discharge such woman on account o f her pregnancy, or while on

leave o r in confinement due to her pregnancy,
3) To discharge or refuse the admission o f such woman upon returning
to her work for fear that she may again be pregnant;
4) To discharge any woman o r any other employee for having filed a
complaint or having testified or being about to testify under the Labor
Code; or
5) To require as a condition for or continuation o f employment that a
woman employee shall n o t get married or to stipulate expressly or
taddy that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason o f marriage.1

2. D E N IA L O F B E N E F IT S .

The following are the prohibited acts under Artide 135 [137] o f die Labor
Code:*2

1) To deny any woman employee the following benefits,3 namely:

a) Facilities for women;4

b) Maternity leave benefits;5 and
c) Family planning services and incentives for family planning.6

2) T o discharge any woman employee for die purpose o f preventing her

from enjoying any o f the benefits provided under the Labor Code.7

Under N o . 1 above, mere denial o f the afore-described benefits would

already constitute a violation o f A rtide 135 [137]. Under N o . 2 above, it is required
that there must not only be denial but actual discharge or dismissal o f the w om an
employee meant to prevent her from enjoying n o t only the benefits under Chapter
I, Tide m o f Book m o f the Labor Code but any o f the benefits granted under die
other provisions thereof

3. D ISC H A R G IN G A W OM AN D U E T O PREG N AN CY .

A rtide 135 [137]1 contemplates the following prohibited acts in

connection with the pregnancy o f a woman employee:

' Seclion 13, Rule X I. Book HI (hereof.

2 See paragraph [a] (1) thereof.
1 As provided in Chapter I (Employment of Women), Title 111 (Woridng Conditions for Special Groups of Employees)
of Bode III of the Labor Code.
4 Under Article 1301132], Ibid.
5 The proving law now is R A No. 11210 (February 20,2019), obewiseknowi as be *10SOay Expanded Maternity Leave
^2W*
« Under Article 132 (134), Labor Code.
1 Seeafso Section 13. Rule XH. Book IB, ftdes to Implement he LabcrCode.

J9JC9B0M
 218 bar R eviewer on La b o r Law

1) T o d isc h arg e h e r o n a c c o u n t o f h e r p re g n a n c y ;
2) T o d isc h a rg e h e r w h ile sh e is o n le av e d u e to h e r p re g n a n c y ;
3) T o d isc h a rg e h e r w h ile sh e is in c o n f in e m e n t d u e to h e r p re g n a n c y ;
4) T o d isc h arg e h e r u p o n r e tu rn in g to h e r w o r k fo r fe a r th a t sh e m ay
again b e p re g n a n t; o r
5) T o re fu se h e r a d m iss io n u p o n r e tu rn in g to h e r w o rk fo r fe a r th a t sh e
m ay again b e p re g n a n t.*2

In Del Monie Philippines, Inc. v. Velasco,3 th e se rie s o f a b s e n c e s o f th e

re sp o n d e n t d u e to h e r p re g n a n c y a n d its re la te d a ilm e n ts , su c h a s u rin a ry tra c t
in fectio n , w e re fo u n d n o t to b e a valid g r o u n d to d ism is s h e r f ro m e m p lo y m e n t.
T h e S u p re m e C o u rt a g re e d w ith th e C o u r t o f A p p e a ls in c o n c lu d in g th a t
re sp o n d e n t’s sic k n ess w as p re g n a n c y -re la te d a n d th e r e fo r e th e p e titio n e r c a n n o t
te n n in a te r e s p o n d e n t’s se rv ic e s b e c a u s e in d o in g so , p e titio n e r w ill, in e ffe c t, b e
violating th e L a b o r C o d e w h ic h , u n d e r A rtic le 135 [137] th e r e o f, p ro h ib its a n
e m p lo y er to d isc h a rg e a n e m p lo y e e o n a c c o u n t o f th e la tte r ’s p re g n a n c y . The
C o u rt w as c o n v in c e d th a t th e p e titio n e r te r m in a te d th e se rv ic e s o f r e s p o n d e n t o n
a c c o u n t o f h e r p re g n a n c y w h ic h ju stifie d h e r a b s e n c e s a n d it th u s c o m m itte d a
p ro h ib ite d a c t re n d e rin g th e d ism issa l illegal.

In Lakpue Drug, Inc. v. Belga,4 r e s p o n d e n t B elg a w a s d is m is s e d fo r alleg ed ly

deliberately c o n c e a lin g h e r p re g n a n c y a n d fo r in c u r rin g a b s e n c e s w ith o u t o ffic ia l
leave fo r 16 d ay s a t w h ic h tim e s h e d e liv e re d h e r b ab y . P e titio n e r a rg u e d th a t su c h
n o n -d isc lo s u re is ta n ta m o u n t to d is h o n e s ty . I n fin d in g t h e p e n a lty o f d ism issa l to o
h a rsh a n d illegal, th e S u p re m e C o u rt ru le d th a t th e alleg ed m is c o n d u c t o f
re sp o n d e n t B elga barely falls w ith in th e s itu a tio n c o n te m p la te d b y law . H er
a b sen ce fo r 16 d ay s w as ju s tifie d c o n s id e rin g th a t s h e h a d ju s t d e liv e re d a ch ild ,
w h ich can h a rd ly b e c o n s id e re d a fo rb id d e n a c t, a d e re lic tio n o f d u ty , m u c h less
d o e s it im p ly w ro n g fu l in te n t on h e r p a rt. P e titio n e r h a rp s on th e alleg ed
c o n c e a lm e n t by B elga o f h e r p re g n a n c y . T h is a r g u m e n t, h o w e v e r, b e g s th e q u e s tio n
as to how one can conceal a fu ll-te rm p re g n a n c y . T h e C o u r t a g re e d w ith
re s p o n d e n t’s p o s itio n th a t it c a n h a rd ly e s c a p e n o tic e h o w sh e g ro w s b ig g e r e a c h
day. W hile th e re m ay b e in s ta n c e s w h e re th e p re g n a n c y m a y b e in c o n s p ic u o u s , it
has n o t b e e n su fficien tly p r o v e n b y p e titio n e r th a t B e lg a’s c ase is su c h .

4. D IS C H A R G IN G A W O M A N E M P L O Y E E F O R H A V IN G F IL E D A
CA SE O R F O R T E S T IF Y IN G IN A C A SE

A n a d d itio n a l p ro h ib ite d a c t5 is th e a c t o f d is c h a rg in g an y w o m a n o r any

o th e r e m p lo y e e fo r h a v in g filed a c o m p la in t o r h a v in g te s tifie d o r b e in g a b o u t to

' See paragraph [a ] (2 ) and (3 ) th e reo f.

2 See aiso Section 13, Rule X II, Book III, R ules to Im plem ent the Labor C ode.
> G R No. 153477, M arch 6,2007.
4 G R No. 166379, O ct 20,2005.
5 See Section 13, Rule X II, Book III o f the R ules to Im plem ent the Labor Code.

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 O m p t e r T hr .ee 219
LAROR STANDARDS

te stify u n d e r th e L a b o r C o d e . O f re le v a n c e to th is p r o h ib ite d a c t a re th e p a ra lle l

p ro v is io n s in A rticles 118 a n d 2 5 9 (f) [248(f)] o f th e L a b o r C o d e .

U n d e r A rtic le 118, it is c o n s id e re d u n la w fu l fo r a n e m p lo y e r to d is c h a rg e
o r in a n y m a n n e r d is c rim in a te a g a in st a n y e m p lo y e e w h o h a s file d any c o m p la in t o r
in s titu te d a n y p ro c e e d in g u n d e r T id e II (W ages) o f B o o k I I I (C o n d itio n s o f
E m p lo y m e n t) o r h a s te s tifie d o r is a b o u t to testify in su c h p ro c e e d in g s .

U n d e r A rtic le 2 5 9 (f) [248(f)], it is c o n s id e re d a n u n fa ir la b o r p r a c tic e

(U L P ) to d ism is s, d is c h a rg e o r o th e rw is e p re ju d ic e o r d is c rim in a te a g a in s t a n
e m p lo y e e fo r h a v in g g iv e n o r b e in g a b o u t to g ive te s tim o n y u n d e r th e L a b o r C o d e .
T h is is th e o n ly U L P a c t o f th e e m p lo y e r w h ic h n e e d n o t b e re la te d to th e e x e rc is e
by th e e m p lo y e e o f h is rig h t to s e lf-o rg a n iz a tio n a n d c o lle c tiv e b a rg a in in g .1

d.

SEXUAL HARASSMENT
1. T H R E E (3 ) S I T U A T I O N S O N L Y .

R .A . N o . 7 8 7 7 ,2 o th e rw is e k n o w n as t h e "Anti-Sexual Harassment A ct of
1995," d e c la re s se x u a l h a r a s s m e n t u n la w fu l o n ly in th r e e (3) s itu a tio n s , n am ely :

(1) employment e n v ir o n m e n t;
(2) education e n v ir o n m e n t; a n d
(3) training e n v ir o n m e n t.

N o ta b ly , se x u a l h a r a s s m e n t is n o t th e so le d o m a in o f w o m e n as m e n m a y
a lso b e s u b je c te d to th e s a m e d e s p ic a b le a c t. S a id la w d o e s n o t lim it th e v ic tim o f
se x u al h a r a s s m e n t to w o m e n .

2. S P E C IF I C A C T S P E N A L I Z E D .

T h e law p u n is h e s se x u a l h a r a s s m e n t i f th e sa m e is:

1. « w .£ -rela te d ; o r
2. educalion-Tchtcfr, o r
3. training-re la te d .3

3. P E R S O N S W H O M A Y B E L IA B L E F O R S E X U A L H A R A S S M E N T .

W o rk , e d u c a tio n o r tra in in g -re la te d se x u al h a r a s s m e n t is c o m m itte d b y

an y e m p lo y e r, e m p lo y e e , m a n a g e r, s u p e rv is o r, a g e n t o f th e e m p lo y e r, te a c h e r ,
in s tr u c to r , p r o fe s s o r , c o a c h , tra in o r, o r an y o th e r p e r s o n w h o , h a v in g a u th o r ity ,
in flu e n c e o r m o ra l a s c e n d a n c y o v e r a n o th e r in a w o rk o r tra in in g o r e d u c a tio n
e n v ir o n m e n t, d e m a n d s , r e q u e s ts o r o th e rw is e r e q u ire s a n y s e x u a l f a v o r f ro m

’ Ph3com Em ployees U nion v. P hilippine G lobal C om m unications, G R N o. 144315, Ju ly 17, 2006; See a lso B e q
M anggagaiva sa T ryco v. N LR C . G .R. N o. 151309, O c t 15,2008.
2 R A . N o. 7877, Feb. 14,1995.
3 Section 3, R A No. 7877.

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 220 Bar Reviewer on Labo r Law

a n o th e r, reg ard le ss o f w h e th e r th e d e m a n d , r e q u e s t o r r e q u ire m e n t fo r s u b m is s io n

is a c c e p te d by th e o b je c t o f said a c t.1

F u rth e r, any p e rso n w h o d ire c ts o r in d u c e s a n o th e r to c o m m it a n y a c t o f

sexual h a ra s s m e n t as d e fin e d in th e law , o r w h o c o o p e r a te s in th e c o m m is s io n
th e re o f b y a n o th e r w ith o u t w h ic h it w o u ld n o t h a v e b e e n c o m m itte d , shall a ls o b e
h eld liable u n d e r th e law.2

4. SEX U A L H A R A S S M E N T IN A W O R K -R E L A T E D O R
E M P L O Y M E N T E N V IR O N M E N T .

In a w o rk -re la te d o r e m p lo y m e n t e n v ir o n m e n t, se x u a l h a r a s s m e n t is
c o m m itte d w h e n :

1. T h e sexual fa v o r is m a d e a c o n d itio n in th e h irin g o r in th e

e m p lo y m e n t, rc -c m p lo y m e n t or c o n tin u e d e m p lo y m e n t of said
in d iv id u al o r in g r a n tin g said in d iv id u a l fa v o ra b le c o m p e n s a tio n ,
te rm s, c o n d itio n s, p r o m o tio n s , o r p riv ile g e s; o r th e re fu s a l to g r a n t th e
sexual fav o r resu lts in lim itin g , se g re g a tin g o r cla ssify in g th e e m p lo y e e
w h ic h in any w ay w o u ld d isc rim in a te , d e p riv e o r d im in is h e m p lo y m e n t
o p p o rtu n itie s o r o th e rw is e a d v e rse ly a f fe c t sa id e m p lo y e e ;

2. T h e a b o v e acts w o u ld im p a ir th e e m p lo y e e ’s rig h ts o r p riv ile g e s u n d e r

ex istin g la b o r law s; o r

3. T h e a b o v e acts w o u ld re su lt in a n in tim id a tin g , h o s tile , o r o ffe n s iv e

e n v iro n m e n t fo r th e e m p lo y e e .34

4.1. IL L U S T R A T IV E C A SE S.

T h e fo llo w in g cases b e s t e x e m p lify w o r k -r e la te d se x u a l h a ra s s m e n t:

(1) Villarama v. NLRC,* w h e re p e titio n e r w as p riv a te resp o n d en t

c o m p a n y ’s M a terials M an ag er. H e w a s c h a rg e d w ith se x u a l h a ra s s m e n t b y D iv in a
G o n z a g a , a c le rk -ty p ist a s sig n e d in his d e p a r tm e n t. T h e h u m ilia tin g e x p e rie n c e
co m p e lle d h e r to resign fro m w o rk . I n h e r le tte r-re s ig n a tio n , s h e a lleg ed th e
follow ing in c id e n t:

“ Last Friday, July 7, 1989, Mr. D elfin Villarama and Mr. Jess
de Jesus invited all the girls o f Materials D ep a rtm e n t for a d inner w hen
in (sic) the last minute th e o th er three (3) girls decided not to join the
group anymore. I do (sc ) n o t have second th o u g h ts ) in accepting their
invitation for they arc m y collc(a)gues and I had nothing in m ind that
would in any manner p ro m p t me to refuse to w h at appeared to m e as a
simple and cordial invitation. We w en t to a restaurant along M akati

' Id.
3 Id.
3 Section 31a), R A . No. 7877.
4 DeTn G . V illaram a v. NLRC and Golden D onuts, In c , G .R. N o. 106341, S e p t 2 ,1 9 9 4 ,2 3 6 SCRA 280.

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LABOR STANDARDS

A venue w h ere w e ate o u r dinner. Mr. V illaram a, Mr. O laybar and Mr.
Jess de Je su s w ere drinking while w e were eating and (they) even
offered m e a few drinks an d w hen w e were finished, they decided to
b ring m e hom e. While on my way, I found out that Mr. Villarama was not
driving tlx way to my houst. 1 was wondering why we were taking the wrong way
until I found out that we were entering a motel I was really shocked). I did not
expect that a somewhat reputableperson Ike Mr. Villarama could do such a thing
to any of his subordinates. I should have left the company without any word but I
feel that I would be unfair to those who might be similarly situated. I ho p e that
you w ould find tim e to investigate th e veracity o f my allegations and
m ake each (sic) responsible fo r his ow n deed.” 1

T h e S u p r e m e C o u rt, in fin d in g th a t p e titio n e r ’s d ism is sa l w a s leg al,

ra tio c in a te d :

“ xxx (Ljoss o f tru st an d co nfidence is a good ground for

dism issing a m anagerial em ployee. It can be proved by substantia]
evidence w hich is p resen t in the case a t bench. A s further observed by
the Solicitor G eneral:

*... assuming arguendo that Dejesus and Gonzaga were

sweethearts and that petitioner merely acceded to the request of the
former to drop them in the motel, petitioner acted in collusion with
the immoral designs of De Jesus and did not give due regard to
Gonzaga's feeling on the matter and acted in chauvinistic disdain of
her honor, thereby justifying public respondent's finding of sexual
harassment Thus, petitioner not only failed to act accordingly as a
good father of the family because he was not able to maintain his
moral ascendancy and authority over the group in the matter of
morality and discipline of his subordinates, but he actively facilitated
the commission of immoral conduct of his subordinates by driving
his car into the motel. (Comment, April 29,1993, p. 9)’

“ As a managerial em ployee, petitioner is bound by a m ore

exacting w ork ethics. H e failed to live up to this higher standard o f
responsibility w hen he succum bed to his m oral perversity. A nd when
such m oral perversity is perpetrated against his subordinate, he
provides justifiable g round for his dismissal for lack o f trust and
confidence. It is the right, nay, the duty o f every em ployer to protect its
em ployees from over sexed superiors.”

(2) Libres v. NLRC,2 w h e r e p e titio n e r, an e le c tric a l e n g in e e r w h o w as a n

A s s is ta n t M a n a g e r in p riv a te r e s p o n d e n t N a tio n a l S te e l C o r p o r a tio n (N S C ), w a s
s u s p e n d e d fo r 30 d a y s w ith o u t p a y o n th e b a s is o f th e c h a rg e o f se x u al h a r a s s m e n t
m a d e b y S u sa n D . C a p ira l, a se c re ta ry . S e x u al h a r a s s m e n t is c o n s id e re d a v io la tio n
o f th e P la n t’s R u le s a n d R e g u la tio n s .3 H is a c t c o n s is ts o f “ to u c h in g a fe m a le
s u b o r d in a te ’s h a n d a n d s h o u ld e r, c a re s sin g h e r n a p e a n d tellin g o t h e r p e o p le th a t

' Em phasis found in Ihe original te xt o f the Suprem e C ourt decision m this case.
2 Carlos G. Utxes v. NLRC. G.R. No. 123737, May 28,1999
3 Ite m 2 ,T a b le V th e re o f.

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 222 Bar. Reviewer on Labo r Iaw

C ap iral w as th e o n e w h o h u g g e d a n d k isse d h im a n d th a t s h e r e s p o n d e d to th e
sexual a d v a n c e s.” T h e S u p re m e C o u rt a f fir m e d th e v a lid ity o f h is 3 0 -d a y
su sp e n sio n .

(3) Philippine Aeolus v. NLRC,1 w h e r e p r iv a te r e s p o n d e n t C o r te z w a s

c h a rg e d by p e titio n e r c o m p a n y , a m o n g o th e r s , th a t o n A u g u s t 2 , 1 9 9 4 , s h e
c o m m itte d a c ts c o n s titu tin g g ro s s d is r e s p e c t to h e r s u p e rio r , W illia m C h u a , th e
P la n t M a n ag er, c o n sistin g o f h e r a c t o f th r o w in g a s ta p le r a n d u tte r in g a b u s iv e
language u p o n th e p e rso n o f th e la tte r. I n h e r d e f e n s e , C o r te z cla im s th a t as e a rly as
h e r first y ear o f e m p lo y m e n t, W illia m C h u a a lre a d y m a n if e s te d a sp e c ia l lik in g fo r
h e r, so m u c h s o th a t sh e w as re c e iv in g sp e c ia l tr e a tm e n t fro m h im . H e w o u ld
o fte n tim e s in v ite h e r " fo r a d a te ," w h ic h sh e w o u ld as o f te n re fu s e . O n m a n y
o c c a sio n s, h e w o u ld m ak e sex u al a d v a n c e s - to u c h in g h e r h a n d s , p u ttin g h is a rm s
a ro u n d h e r sh o u ld e rs , ru n n in g h is fin g e rs o n h e r a rm s a n d te llin g h e r s h e lo o k e d
b eau tifu l. T h e special tre a tm e n t and se x u al advances c o n tin u e d d u r in g her
e m p lo y m e n t fo r 4 years b u t sh e n e v e r re c ip ro c a te d h is flirta tio n s , u n til finally, s h e
n o tic e d th a t his a ttitu d e to w a rd s h e r c h a n g e d . H e m a d e h e r u n d e r s ta n d th a t i f sh e
w o u ld n o t g ive in to his sexual a d v a n c e s , h e w o u ld c a u s e h e r te r m in a tio n f r o m th e
service; a n d lie m a d e g o o d his d ir e a t w h e n h e s ta r te d h a r a s s in g h e r. S h e ju s t fo u n d
o u t o n e day th a t h e r table w h ic h w a s e q u ip p e d w ith te le p h o n e a n d in te r c o m u n its
an d c o n ta in in g h e r p e rso n a l b e lo n g in g s w a s tr a n s f e r re d w ith o u t h e r k n o w le d g e to a
place w ith n e ith e r te le p h o n e n o r in te r c o m , f o r w h ic h r e a s o n , a n a r g u m e n t e n s u e d
w h e n sh e c o n f ro n te d W illiam C h u a r e s u ltin g in h e r b e in g c h a r g e d w ith g ro s s
d isre sp e c t.

On th e fo reg o in g c h a rg e , th e S u p re m e C o u rt r u le d th a t p riv a te
re s p o n d e n t’s a c t o f th ro w in g 2 s ta p le r a n d u tte r in g a b u s iv e la n g u a g e u p o n th e
p e rso n o f th e p la n t m a n a g e r m a y b e c o n s id e r e d , f ro m a la y m a n 's p e r s p e c tiv e , a s a
se rio u s m isc o n d u c t. H o w e v e r, in o r d e r to c o n s id e r it a s e rio u s m is c o n d u c t th a t
w o u ld ju stify d ism issal u n d e r th e law , it m u s t h a v e b e e n d o n e in re la tio n to th e
p e rfo rm a n c e o f h e r d u tie s as w o u ld s h o w h e r to b e u n f it to c o n tin u e w o r k in g fo r
h e r em p lo y e r. T h e acts c o m p la in e d o f, u n d e r th e c ir c u m s ta n c e s th e y w e r e d o n e ,
d id n o t in an y w ay p e rta in to h e r d u tie s a s a n u r s e . H e r e m p lo y m e n t id e n tific a tio n
c a rd d isc lo se s th e n a tu re o f h e r e m p lo y m e n t a s a n u r s e a n d n o o th e r . A ls o , th e
m e m o ra n d u m in fo rm in g h e r th a t s h e w a s b e in g p r e v e n tiv e ly s u s p e n d e d p e n d in g
in v e stig a tio n o f h e r case w as a d d r e s s e d to h e r a s a n u rs e .

O n th e delay in th e filin g o f th e c a s e , th e S u p re m e C o u r t o b s e rv e d , th u s:

“W e are not p ersuaded. T h e gravam en o f the offense in

sexual harassm ent is n ot the violation o f the em ployee's sexuality b u t
the abuse o f pow er by th e em ployer. A ny em ployee, male o r female,
may rightfully cry ‘foul’ provided th e claim Is well substantiated. Stricdy
speaking, there is no tim e period w ithin w hich h e o r she is expected to

1 Phifippine Aeolus A utom otive U nted C orporation v. NLRC and R osalinda C. C ortez, G .R . N o. 124617, A pril 2 8,2000.

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LABOR. STANDARDS

com plain th ro u g h the p ro p e r channels. T h e tim e to d o so m ay vary

d ep en d in g u p o n th e needs, d ic u m sta n c e s, and m o re im portandy, the
em otional th resh o ld o f the em ployee.

‘T riv a tc resp o n d en t adm ittedly allow ed fo u r (4) years to pass

befo re finally co m in g o u t w ith h e r em ployer's sexual im positions. N o t
m any w o m en , especially in this co u n try , are m ade o f th e stu ff that can
en d u re the agony and trau m a o f a public, even co rp o ra te , scandal. If
p etitio n er c o rp o ra tio n had n o t issued the third m em orandum that
term inated th e services o f private resp o n d en t, w e could only speculate
how m u ch lo n g er she w ould keep h er silence. M o reo ver, few persons
are pnvileged in d eed to tran sfer from o n e em p lo y er to another. T he
dearth o f quality em p lo y m en t has beco m e a daily ‘m o n ste r’ roam ing the
streets that o n e may n o t b e expected to give u p o ne's em ploym ent
easily b u t to han g on to it, so to speak, by all tolerable m eans. Perhaps,
to private re sp o n d en t's m in d , for as long as sh e could outw it her
em ployer's p loys, she w ould continue o n h er job and consider them as
m ere occu p atio n al hazards. T his uneasiness in h er place o f work
thrived in an atm o sp h e re o f tolerance fo r four (4) years, and o n e could
only im agine th e prevailing anxiety an d re sen tm en t, if n o t bitterness,
th at beset h e r all that tim e. But W illiam C h u a faced reality soon
enough. Since he had no place in private re sp o n d en t's heart, so m ust
she have n o place in his office. So, he p ro v o k ed h er, harassed her, and
finally dislodged her, and for finally v en tin g her p e n t-u p anger fo r years,
h e ‘fo u n d ’ the p erfe ct reason to term inate her."

5. S E X U A L H A R A S S M E N T I N A N E D U C A T IO N O R T R A IN IN G
E N V IR O N M E N T .

I n a n e d u c a tio n o r tra in in g e n v ir o n m e n t, s e x u a l h a r a s s m e n t is c o m m itte d :

1) a g a in s t o n e w h o is u n d e r th e c a re , c u s to d y o r su p e rv is io n o f th e
o f fe n d e r;
2) a g a in s t o n e w h o s e e d u c a tio n , tra in in g , a p p r e n tic e s h ip o r tu to r s h ip is
e n tr u s te d to th e o f fe n d e r,
3) w h e n t h e se x u a l f a v o r is m a d e a c o n d itio n to th e g iv in g o f a p a s s in g
g ra d e , o r t h e g ra n tin g o f h o n o r s a n d s c h o la rs h ip s , o r th e p a y m e n t o f
a s tip e n d , a llo w a n c e o r o t h e r b e n e f its , p riv ile g e s, o r c o n s id e ra tio n s ;
or
4) w h e n th e se x u al a d v a n c e s r e s u lt in an in tim id a tin g , h o s tile or
o ffe n s iv e e n v ir o n m e n t f o r th e s tu d e n t, tr a in e e o r a p p r e n tic e .1

6. D U T Y O F T H E E M P L O Y E R O R H E A D O F O F F I C E .

I t is th e d u ty o f th e e m p lo y e r o r th e h e a d o f th e w o rk -re la te d , e d u c a n o n a l
o r tra in in g e n v ir o n m e n t o r in s titu tio n , to p r e v e n t o r d e te r th e c o m m is s io n o f a c ts

Section 3[bJ, R A . No. 7877.

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 224 Ba r r e v ie w e r o n L a b o r La w

of sexual harassment and to provide the procedures for the resolution or

prosecution of acts of sexual harassment.

Towards this end, the employer or head o f office is required to:

1. promulgate appropriate rules and regulations, in consultation with and

jointly approved by die employees or students or trainees, through
their duly designated representatives, prescribing the procedure for the
investigation o f sexual harassment cases and the administrative
sanctions therefon The said rules and regulations issued shall include,
among others, guidelines on proper decorum in the workplace and
educational or teaming institutions.
2. create a committee on decorum and investigation o f cases on sexual
harassment The committee shall conduct meetings, as the case may
be, with officers and employees, teachers, instructors, professors,
coaches, trainors and students or trainees to increase understanding
and prevent incidents o f sexual harassment. It shall also conduct the
investigation o f alleged cases constituting sexual harassment.

In the case o f work-related environment, the committee is composed o f

at least one (1) representative each from die management, the union, if any, the
employees from the supervisory tank and from the rank-and-file employees. In the
case of educational or training institution, the committee is composed o f at least
one (1) representative from the administration, die trainors, teachers, instructors,
professors, or coaches and students o r trainees, as the case may be.1

7. SOME PRIN CIPLES O N SEXUAL HARASSM ENT.

1) The employer or head o f office or the educational or training institution are

solidadly liable for damages arising from the acts o f sexual harassment
committed in an employment, education or training environment, if such
employer or head o f office or educational or training institution is informed
of such acts by the offended party and no immediate action is taken
thereon.2
2) The victim o f sexual harassment is not precluded from instituting a separate
and independent action for damages and other affirmative reliefs.3
3) Any action arising from sexual harassment prescribes in three (3) years.4
4) Any person who violates the provisions of R A No. 7877 shall, upon
conviction, be penalized by imprisonment o f not less than one (1) month
nor more than six (6) m onths, or a fine of not less than P10,000.00 nor
more than P20,000.00, o r both such fine and imprisonment at the discretion

• Section 4, IW .
* Section 5, Wd.
3 Section 6, Ibid.
4 Section 7. Md.

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LABOR STANDARDS

o f the couit.1* T he case o f Dr. Ruo S. Jacutin v. People1 best illustrates the
proper penalty imposable on die violator. Here, the Supreme Court affirmed
the Sandiganbayan’s decision finding Dr. Rico Jacutin y Salcedo guilty o f the
crime o f sexual harassment defined and punished under R.A. No. 7877,
particularly Sections 3 and 7 thereof, and penalizing him with imprisonment
o f six (6) m onths and to pay a fine o f P20,000.00, with subsidiary
imprisonment in case o f insolvency. Additionally, he was ordered to
indemnify the offended patty, Juliet Yee, in the amount o f P30,000.00 and
P20,000.00 by way o f moral damages and exemplary damages, respectively.

2.
MINORS
(R A No. 7610, as Amended by R A No. 9231)

t G O V E R N IN G LAW O N T H E E M P L O Y M E N T O F C H IL D R E N .
Section 12, Article V III o f R A . No. 7610,3 specifically treats die subject
o f employment o f children. It was first amended by R A . No. 7658,4 and later, by
R A N o. 9231.s As amended, Section 12 now reads as follows:

“Sec 12. Employment of Children. - Children below fifteen (15)

years of age shall not be employed e x c e p t
“(1) When a child works directly under the sole responsibility
of his/her parents or legal guardian and where only
members of his/her family are employed: Provided,
however, That his/her employment neither endangers
his/her life, safety, health, and morals, nor impairs
his/her normal development: Provided, further, That the
parent or legal guardian shall provide the said child with
the prescribed primary and/or secondary education;
“(2) Where a child’s employment or participation in public
entertainment or information through cinema, theater,
radio, television or other forms of media is essential:
Provided, That the employment contract is concluded by
die child's parents or legal guardian, with the express
agreement of the child concerned, if possible, and the
approval of the Department of Labor and Employment:

1 Section 7. kid.
z G R No. 140604, March 6,2002.
3 0£henMseIaKwmastie“SpeaaIProtectjooof CKklren AgainstAbuse. Exploflafion ^Dtscrim m aijonAct*
4 Entitled *AN ACT PROHIBITING THE EMPLOYMENT OF CHILDREN BELOW 15 YEARS OF AGE IN PUBLIC
AND PRIVATE UNDERTAKINGS, AMENDING FOR ITS PURPOSE SECTION 12, ARTICLE VIII OF R A 7810."
* Entitled ‘AN ACT PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND
AFFORDING STRONGER PROTECTION FOR THE WORKING CHILD, AMENDING FOR THIS PURPOSE
REPUBLIC ACT NO. 7610, AS AMENDED. OTHERWISE KNOWN AS THE 'SPECIAL PROTECTION OF
CHILDREN AGAINST CHILD ABUSE, EXPLOITATION AND DISCRIMINATION ACT."

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 226 Ba r r e v ie w e r o n l a b o r La w

Prodded, further, That the following requirements in all

instances arc strictly complied with:
(a) The employer shall ensure the protection, health,
safety, morals and normal development of the
child.
(b) The employer shall institute measures to prevent
die child's exploitation or discrimination taking
into account the system and level of remuneration,
and the duration and arrangement of working time;
and v
(c) The employer shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing program for
training and skills acquisition of the child.
“In the above exceptional cases where any such child may be
employed, the employer shall first secure, before engaging such child, a
work permit from the Department of Labor and Employment which
shall ensure observance of the above requirements.
“For purposes of this Article, the term 'child’shall apply to all
persons undec eighteen (18) years of age.”

To reflect the changes introduced by die said amendatory R.A. No. 9231,
a new set of Implementing Rulerand Regulations was issued in 2004.1

2. WORKING CHILD.

For legal purposes, the term "child”refers to any person less than eighteen
(18) years o f age. On the other hand, a "working child”refers to any child engaged as
follows:

i. When the child is below eighteen (18) years o f age, in work or

economic activity that is not "child labor”-} and
ii. When the child below fifteen (15) years o f age:
(a) in work where he/she is direedy under the responsibility o f
his/her parents3 or legal guardian1 and where only members o f
the family2 o f the child are employed;3 or

1 On July 26,20M ,(om «fDO l£Seaetay Patricia Santo Tomas issued he ImpteuenSng Rules and Regiiafions of R A No.
9231 «Ndh amended R A Na7610, as amended. The Rifes superceded Department Order No. 18, SeriesoM 994or8»
Rules and Regdafions bqtenerthg R A No. 7668. Ail other issuances which are tnconastent IherewSh are deemed
modified atxatfngly. (S aion 29, Chapter 9, Department Onler No. 6504). However, I bears stressing foat Ihe Rides
should not be interpreted to enpatr contests executed prior to its eSecfcty. A l other general tries m iu icn paim entof
contracts shd apply. (Section 30, Chapter 9. Ibid.), these Rides cover a! pawns and enftes engaging 8ie setvices ot or
ernployingdtl(ben.(SecSon1,Ctiapter1,bid.).
t Theterm*chUtabor”nwn6onedabowereferstoanyworkoreoonoRiicac6t%perfonnedbyacMdQiatstA3ectslilTWt)erto
aiyfonnofexploitefionorishamngrilotiisJherttealthandsaf^orphysic^mentalorpsycho^odaldeMelopmenL
» AsunifamtoodMdhIn&ieoontesdoftheabovedescrIptianofawofkingctdd.Sieterm'parertrnefisrstoeifierSieMologIcalor
adoptivemotheror falter

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 C h a pter T h ree 227
LA BO R ST A N D A R D S

(b) in ''public entertainment or information” which refeis to artistic,

literary, and cultural performances for television show, radio
program, cinema or film, theater, commercial advertisement,
public relations activities or campaigns, print materials, internet,
and other media.

3. P R O H IB IT IO N O N T H E E M P L O Y M E N T O F C H IL D R E N B E L O W
15 YEARS O F A G E ; E X C E P T IO N S A N D C O N D IT IO N S .

Based on the above discussion, the general rule is that no child below
fifteen (15) years o f age shall be employed, permitted or suffered to work in any
public o r private establishment4 The only exceptions to the prohibition on the
employment o f a child below fifteen (15) years o f age are as follows:

(a) When the child works under the sole responsibility o f his/her parents
or guardian, provided that only members o f foe child’s family are
employed.
(b) When foe child’s employment o r participation in public
entertainment or information is essential, regardless o f foe extent o f
foe child’s role.5

Such employment shall be strictly under foe following conditions:

L The total number o f hours worked shall be in accordance with foe

working hours prescribed in foe Ruler,6
il The employment does not endanger foe child’s life, safety, health and
morals, nor impair foe child’s normal development?
iii. The child is provided with at least foe mandatory elementary o r
secondary education; and
iv. The employer secures a work permit for the child.8

' The term iguanfianT refers to any person who so u ses subs&ute parental autwcty, reganfiess of whettier or not such
parerdatauSKX^werachUhbedD^byacout
2 TliepIvaselrnerrbem oflftefan^refevstofoecKIfspanBnts.guaitfan.brolhefsorsistetsvfoefoeroffijBorhalfblood.
and other ascendants and desoendanls or oolateial relaStfes w9iin foe fo trfi dui degree of oonsanguku^. (Secfion 3,
Chap&r1, Department (M e r No.
3 For purposes of this law, fteterniietnptoyer* o fa working cMd refers to anyperson, VktieQier na&jral or juridical who,
whether for valuable constieraSon or not, ifiecty or imfiecSy procures, uses, arafls feel d , contracts out or dherefee
derh«bene3fit)mbewo(1(ffser^rfad^ha(70cnjpa^mdert3iang.fxtjedorac^,whe9ieri(xprfoanot.
^niK ]esa(7 p e rs m a c ^ h ^ e i^ ^ e s t ofsuch employer. (SecOonS.Chapterl.DepatriatfOrder No. 6504)
4 SecSon4.Clmpter2.Bdd.
5 Section7, Chapter3, H i
s SeeSec£on15^1ousofVVcxkafaV\fo(1ckqChld]afDepartnentOnlerNa65-04.
1 'ttoneldevdopmentofCiscfBkrreGBistofoeplT^cal.emoBond.m ent^.andspnlLialgioweiofacttldwihiiasafoand
nurturing environment where tefcte is $ven adequate nourishment, care and protacfion and h a opportunSy to perform
tasteappn3prtaSsateach$tet9eof<letnebp(nertL(S9Cflbn3>ChaptBr1>lbkf^.
3 ld4hacm darK*w ithSec6crs8to12hereot

J9JC9B0M
 228 Bar Reviewer on Labor Law

4. P R O H IB IT IO N O N T H E E M P L O Y M E N T O F C H IL D R E N IN
W O R ST F O R M S O F C H IL D L A B O R .

T h e rule is th a t n o c h ild sh a ll b e e n g a g e d in d ie w o r s t fo rm s o f c h ild

lab o r. T h e p h ra se "worstform! ofchild labor" re fe rs to an y o f th e follow ing:

(a) All fo rm s o f s la v e r y 1 o r p ra c tic e s sim ila r to sla v ery , su c h as sale a n d

t r a f f ic k in g o f c h i l d r e n , 2 d e b t b o n d a g e 3 a n d s e rf d o m a n d fo rc e d o r
c o m p u lso ry la b o r, in c lu d in g r e c r u i t m e n t o f c h i l d r e n fo r u s e in
a r m e d c o n f lic t.4

(b) T h e u se, p ro c u rin g , o ffe rin g o r e x p o s in g o f a c h ild fo r p r o s t i t u t i o n , 56

fo r th e p ro d u c tio n of p o rn o g ra p h y * or fo r p o r n o g ra p h ic
p e rfo rm a n c e s .

(c) T h e use, p r o c u rin g o r o ffe rin g o f a c h ild fo r illegal o r illicit a c tiv ities,
in clu d in g th e p r o d u c tio n o r tra ffic k in g o f d a n g e r o u s d ru g s o r v o latile
su b s ta n c e s p ro h ib ite d u n d e r e x istin g law s; o r

(d) W o rk w h ich , by its n a tu r e o r th e c irc u m s ta n c e s in w h ic h it is c a rrie d

o u t, is h a z a r d o u s 1 o r likely to b e h a r m fu l to th e h e a lth , sa fe ty o r
m o ra ls o f c h ild re n , s u c h th a t it:

' Under RA. No. 9208 [May 26,2003], otherwise known as the 'Anti-Trafficking in Persons Act of 2003,' the term forced
labor and slavery" refers to the extraction of work or services from any person by means of enticement vioience, intimidaCon
or threat, use of force or coercion, including deprivation of freedom, abuse of authority or moral ascendancy, debt-bondage
or deception. (Section 3 thereof).
2 Under RA No. 7610 [June 17,1992], otherwise known as the "Special Protection of Children Against Abuse, Exploitation
and Discrimination Act," as well as the rales implementing it, the term "trafficking" refers to the act of trading or dealing with
chidren, including, but not limited to, the buying and seTng of chJdren for money, or for any other consideration or baiter.
(Section 1 [b] thereof, See also Section 7, Artide IV, R A No. 7610). However, under RA. No. 9208, "frafficking in persons’
is broadly defined as the recruitment, transportation, transfer or harboring, or receipt of persons with cr without the victim’s
consent or knowledge, within or across national borders by means of tveat or use of force, or other forms of coercion,
abduction, fraud, deception, abuse of power or of position, taking advantage of the vulnerability of the person, or, the giving
or receiving of payments or benefits to achieve the consent of a person having control ewer another person for the purpose (rf
exploitation which includes at a minimum, the exploitation or the prostitution of ohers a other forms of sexual exploitation,
forced labor or services, slavery, servitude or the removal or sale of organs. (See Section 3 thereof). The recruitment,
transportation, transfer, harboring or receipt of a chid for the purpose of exploitation shafl also be considered as "trafficking in
persons" even if it does not involve any of the means set forth in the definition of "trafficking in persons' in the preceding
paragraph. (Id.).
3 Under RA. No. 9208, "debt bondage'refers to the pledging by the debtor of hislher personal services a labor a those of a
person under his/her control as security or payment for a debt, when the lengfi and nature of services are not dearly defined
or when the value of the services as reasonably assessed is not appled twrard the liquidation of the debt (Section 3
thereof).
4 In regard to the recruitment of children for use in armed confict i is declared under Section 22, Article Xof R A No. 7610,
that children are zones of peace. Consequently, it shall be the responsbity of the State and all other sectors concerned to
resolve armed conflicts in order to promote the goal of children as zones of peace. To attain this objective, the law lays down
certain policies that need to be observed.
5 UnderRA No. 9208, 'prostitution" refers to any ad. transaction, scheme or design involving the use cf a person by another,
for sexual intercourse or lascvious condud n exchange for money, profit or any other consideration. (Section 5, Chapter 2,
Ibid.)
6 ■Pornography," according to RA. No 9208. refers to any representation, through publication, exhibition, cinematography,
^decent shews, information technology, or by whatever means, of a person engaged in real a simulated explicit sexual
activities or any representation of tne sexual parts of a person for primariy sexual purposes (Section 5. Chapter 2. Ibid).

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 C hapter T hree 229
LABOR STANDARDS

i. D e b a s e s , d e g r a d e s o r d e m e a n s th e in trin s ic w o r th a n d d ig n ity o f a
c h ild a s a h u m a n b e in g ; o r

ii. E x p o s e s th e c h ild to p h y sic a l, e m o tio n a l o r s e x u a l a b u s e , 12 o r is

f o u n d to b e h ig h ly s tre s s fu l p sy c h o lo g ic a lly o r m a y p re ju d ic e
m o ra ls; o r

iii. Is p e r f o r m e d u n d e r g r o u n d , u n d e r w a te r o r a t d a n g e r o u s h e ig h ts ;
or

iv. In v o lv e s th e u s e o f d a n g e ro u s m a c h in e ry , e q u ip m e n t a n d to o ls
s u c h as p o w e r -d r iv e n o r e x p lo s iv e p o w e r -a c tu a te d to o ls; o r

v. E x p o s e s th e c h ild to p h y sic a l d a n g e r, s u c h as, b u t n o t lim ite d to ,

th e d a n g e r o u s fe a ts o f b a la n c in g , p h y sic a l s tr e n g th o r c o n to r tio n ,
o r w h ic h r e q u ire s th e m a n u a l tr a n s p o r t o f h e a v y lo a d s ; o r

vi. Is p e r fo r m e d in a n u n h e a lth y e n v ir o n m e n t e x p o s in g th e c h ild to

h a z a r d o u s w o r k in g c o n d itio n s , e le m e n ts , s u b s ta n c e s , c o -a g e n ts o r
p ro c e s s e s in v o lv in g io n iz in g , ra d ia tio n , fire , fla m m a b le
s u b s ta n c e s , n o x io u s c o m p o n e n ts a n d th e lik e, o r to e x tr e m e
te m p e r a tu re s , n o is e le v e ls o r v ib ra tio n s ; o r

vii. Is p e r f o r m e d u n d e r p a rtic u la rly d iffic u lt c o n d itio n s ; o r

viii. E x p o s e s th e c h ild to b io lo g ic a l a g e n ts s u c h a s b a c te ria , fu n g i,

v iru se s , p r o to z o a , n e m a to d e s a n d o t h e r p a ra s ite s ; o r

ix. I n v o lv e s th e m a n u f a c tu r e o r h a n d lin g o f e x p lo s iv e s a n d o t h e r
p y r o te c h n ic p r o d u c ts .34

5. P R O H IB IT IO N O N E M P L O Y M E N T O F C H IL D R E N IN C E R T A IN
A D V E R T IS E M E N T S .

N o c h ild b e lo w e ig h te e n (18) y e a rs o f ag e is a llo w e d to b e e m p lo y e d as a

m o d e l in a n y a d v e r tis e m e n t d ir e c tly o r in d ire c tly p r o m o tin g a lc o h o lic b e v e ra g e s ,
in to x ic a tin g d rin k s , to b a c c o a n d its b y -p ro d u c ts , g a m b lin g o r a n y f o r m o f v io le n c e
o r p o rn o g ra p h y /

1 Whle ‘hazardous’ w rit is defined and futy described in details in Section 5, Chapter 2 of Department Oder No. 65-04,
there is no definition thereto of the term ’nonhazardous' work. The Rules' to implement the Labor Code, however, defines a
’norvhazardousT work or undertaking as any work or activity in which the employee is not exposed to any risk which
constitutes an imminent danger Idhis safety and health. The Secretary of Labor and Employment shal, from time to time,
pubish a list of hazardous work and activities in which persons 18 years of age and below cannot be employed. (See
Section 3, Rule XII, Book III, Rules to Implement the Labor Code). The Bureau of Working Conditions (BWC) shall, with the
approval of toe Secretary of Labor and Employment issue from time to lime, a detailed list of hazardous workplaces.
(Section 8, Rule I, Book IV, Rules to Implement toe Labor Code).
7 ’Sexual exploitation,’ under R A No. 9208, refers to participation by a person in prostitution or toe production of pornographic
materials as a result of being subjected to a threat deception, coercion, abduction, force, abuse of authority, debt bondage,
fraud or through abuse of a victim's vulnerability. (Section 5, Chapter 2, bid.).
3 Section 5, Ch^ter 2, bid.; Section 12-D, RA. No. 7610, as added by Section 3, R A No. 9231; See also Section 8, Rule I,
Book IV, Rules to Implement toe Labor Code.
4 Section 6, Chapter 2, Department Oder No. 65-04; Section 14, Article VIII, R A No. 7610, as amended by Section 5, RA.
No. 9231.

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 230 Ba r R e v i e w e r on U bor U w

6 . HOURS O F WORK OF A W O RK IN G C H IL D .

As applied to working children, “hours of work " include (1) all time during
which a child is required to be at a prescribed workplace, and (2) all time during
which a child is suffered or permitted to work. Rest periods o f short duration
during working hours shall also be counted as hours worked.1

More concretely, die following hours o f work shall be observed for any
child allowed to work under the law.2

(a) For a child below 15 years o f age, the houfe o f work shall not be
more than 20 hours per week, provided that the work shall not be
more than 4 hours at any given day;
(b) For a child 15 years o f age b u t below 18. the hours o f work shall
not be mote than 8 hours a day, and in no case beyond 40 hours a
week; and
(c) N o child below 15 years o f ago shall be allowed to work between 8
o’clock in the evening and 6 o’clock in die morning o f the following
day and no child 15 years o f age bu t below 18 shall be allowed to
work between 10 o ’clock in the evening and 6 o'clock in the morning
o f die following day.3
Sleeping time as well as travel time o f a child engaged in public
entertainment or information from his/her residence to his/her workplace shall
not be included as hours worked without prejudice to the application o f existing
rules on employees’ compensation.4

3.
KASAM BAHAY
(R.A. No. 10361)

1. EXPRESS REPEA L OF E N T IR E C H A P T E R III, T IT L E III, B O O K III

O F T H E LABOR CODE.

The Chapter on H ousehelpers originally covers Articles 139 [141] to 150

[152] o f the Labor Code. The entire Chapter III, however, has been expressly
repaded by R A No. 10361, otherwise known as ‘Domestic Workers Act”or < cBatas
Kasambabay” approved by President Benigno S. Aquino III on January 18,2013.®

' SecSon3,Ct)apter1,DepertnientOnlerNo.6&04.
J R A Nol9231 and its touleflienSnQ Rules.
3 Secto IS , Chapter $,lb il;S e d o n 1 2 A R A No. 7610, as added by Sec6on3,RA No. 9231.
4 kL
5 it's pro^'nteSecfim 44, thus:*SEC. 44.Repea6igaaiisa-A !3rtdesapfOw^ofChapter!a(Ernpioyinertcf
Househelpeis) of P.D. No. 442. asamended and rerwrfcered by RA No; 10151 are herebyexpresslyrepealed. All laws.

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 C h a pter th ree 231
LA BO R STA N DA RDS

Further, note must be made that R.A. No. 10361, despite its expressed
intent o f repealing the said provisions, did not follow the numbering pattern o f the
Labor Code, as renumbered lately pursuant to Section 5 o f R.A. No. 10151 [|une
21,2011]. It, in fact, has its own designation o f its provisions which it denominated
as “sections.” This notwithstanding the fact that it merely rehashed or revived
some principles already embodied in the repealed provisions o f the Labor Code.
For purposes o f discussion, therefore, its substantive provisions are presented
herein following the presentation in the law itself.

2. COVERAGE.

R A . N o . 10361 applies to all dom estic w orkers employed and working

within the country.*1 It shall cover all parties to an employment contract for the
services o f the following Kasmbahays, whether on a live-in or live-out
arrangem ent, such as, bu t n o t limited to:

(a) General househelp;

(b) Yaya;
(c) Cook;
(d) Gardener,
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one household
on an occupational basis.2

3. EXCLUSION S.

T he following are n o t coveted:

(a) Service providers;

(b) Family drivers;
(c) Children under foster family arrangement;3 and
(d) Any other person who performs work occasionally or sporadically
and not on an occupational basis.4

4. D E F IN IT IO N S .

Some important terms are defined below:

Consequently, the Mowing eleven (11) pcwisioRS entraced in said Chapter applicable to ai househelpers, whether
employed on M a p a r t * * basis, are already expressly repealed: Article 1391141) (Coverage); Article 140 [142| (Contract
of Domestic Service); Article 141 [143] (Mnanum Wage); Article 142 (144] (NWmum Cash Wage): Article 143 [145]
(Assignment Id Non-Household W ak); Article 144 [146] (Opportutity far Education]; Article 145 (147| (Treatment of
Househelpers}; Article 146 [146] (Board, Lodging, and Medical Attendance); Article 147 (149] (Indemnity far Unjust
TemsnaSon of Sendees); Article 1481156] (Sendee of TermfaaSon Notice); Article 149 (151] (Employment Certification) and
Article 150 (152] (Employment Record).
1 Sectfan 3, Article I, R A No. 10361.
* Section 2, RuteL implementing Rules arfa Regulation of R A No. 10361.
3 Section 3(a), Ride 1, Implementing Rules and Regulations of RA. No. 10361.
4 Section 4(d), Article 1,R A No. 10361; Section 3(e), Ridel, implementing Rules and Regulations of R A No. 10361.

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 23 2 Ba r R e v ie w e r o n La b o r La w

(a) “Domtstic worker” or “'kasambahay” refers to any person engaged in

domestic work within an employment relationship, whether on a live-in or live-out
arrangement, such as, but not limited to, general househelp, "yaya", cook, gardener,
or laundry person, but shall exclude service providers, family drivers, children who
are under foster family arrangement, or any person who performs domestic work
only occasionally or sporadically and not on an occupational basis.1

This term shall not include children who are under foster family
arrangement which refers to children who are living with a family or household of
relative/s and are provided access, to education and given an allowance incidental to
education, i.e., "baon", transportation, school projects, and school activities;
provided, that the foster family and foster care arrangements are in compliance
with the procedures and requirements as prescribed by R.A. No. 10165 or tire
“Foster Care Act of2012 .’z
Because of these new terminologies prescribed in the law, the use o f the
term “househelper" may no longer be legally correct.

(b) “Domestic work” refers to work performed in or for a household or

households.3

(c) "Household" refers to the immediate members of the family or the

occupants of the house who arc directly and regularly provided services by the
Kasambahay*

(d) "Employer1' refers to any person who engages and controls the services
of a Kasambahay and is party to the employment contract.5

(e) "Live-out arrangement" refers to an arrangement whereby the Kasambahay

works within the employer's household but does not reside therein.6

(f) "Service provided1 refers to any person or entity that carries an

independent business and undertakes to perform a job, work or service on his/her
own for a household, according to his/her own manner and method, and free from
the control and direction of the employer in all matters in connection with the
performance of the work except as to the results thereof.7

5. H IR IN G O F KASAMBAHAY.

a. Mode of Hiring. - A Kasambahay can be hired by the employer directly

or indireedy through a licensed “Private Employment Ageny (PEA)”* which refers to

Section 2, Rule I, Ibid.

Section 4 [d], A rticle I, R A . No. 10361; Section 3 (a ), R ule I, Im plem enting R ules and R egirtatioos o f R A N o. 10361.
Section 4 (cj, A rticle I, Ibid.; Section 3(d), R ufe 1, Ibid.
Section 4 p], A rtd e I. Ibid.; Section 3(g), Rule 1, foid.
Section 4 (e), A rticle I, ib id .; Section 3(0, Rule 1. Ibid.
Section 3(h), Rule I, ibid
Section 3® , Rule I, Ibid.
Section 1, Rule II, Ibid.

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 CHArrER T hree 233
LABOR STANDARDS

any individual, partnership, corporation or entity licensed by the DOLE to engage

in the recruitment and placement o f Kasambahay for local employment.1

b. C ost o f H irin g . - The employer shall shoulder the cost of hiring of a

Kasambahay, whether h e/she is hired through a licensed PEA.23In no case shall the
recruitm ent or finder's fees be charged against the Kasambahay?

“Recruitment andfinder'sfees" refer to charges or any amount collected by the

licensed PEA from the Kasambahay for his/her recruitment and placement.4

c. D eploym ent E xpenses. - The employer, whether the Kasambahay is

hired direedy or through a PEA, shall pay the expenses direedy used for his/her
transfer from place o f origin to the place o f work. The employer may recover
deployment costs from the Kasambahay whenever he/she leaves without justifiable
reason within six (6) months from employment.5

"Deployment expenses" refer to expenses that are direedy used for the
transfer o f the Kasambahay from place of origin to the place of work covering the
cost of transportation, meals, communication expense, and odier incidental
expenses. Advances or loans by the Kasambahay arc not included in die definition o f
deployment expenses.6

6. P R E -E M PL O Y M E N T R E Q U IR E M E N T .

Prior to the execution o f the employment contract, the employer may

require the following from the Kasambahay.

(a) Medical certificate or a health certificate issued by a local government

health officer,
(b) Barangay and police clearance;
(c) National Bureau o f Investigation (NBl) clearance; and
(d) Duly authenticated birth certificate or, if not available, any other
document showing die age of the Kasambahay such as voter’s
identification card, baptismal record or passport

The foregoing shall be die standard requirements when the employment

o f the Kasambahay is facilitated through a PEA. The cost of the foregoing shall be
borne by the prospective employer or agency,7 as the case may be.8

’ S ection 3 (i), R ule I, Ibid.

2 Section 2, R ule II, b id .
3 Id.
4 Section 3 (j), R ule I. b id .
5 Section 3 , R ule II, Ibid.
6 Section 3(c), R ule I. b id .
7 R eferring b a private em ploym ent agency (PE A ).
* Section 12, A rticle III, R A . N o. 10361; S ection 4 , R ule II, Im plem enting R ules and R egulations o f R A . No. 10361.

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 234 BAR REVIEWER ON LABOR LAW

7. W R ITTEN EM PLOYM ENT C O N TRA C T.

a. The employment contract m ust b e in writing and should contain

the conditions set by law.

To make the relationship between the employer and the kasambahay more
formal, RA. No. 103611 requires that a written contract of employment be
executed between them. T his is a very significant improvement since not even the
Labor Code requires the execution o f a written instrument in order to create or
establish an employer-employee relationship. It is a well-established rule that such
relationship need not be documented by a written contract. Once the elements o f
die employer-employee relationship are determined and established, it is immaterial
whether such relationship was created verbally or in writing.

b. Contents o f the em ploym ent contract.

Before the commencement o f the service, a written employment contract

between the Kasambahay and the employer shall be accomplished in three (3) copies.
The contract shall be in a language or dialect understood by both the Kasambahay
and the employer, and shall include the following:

(a) D u tie s an d r e s p o n s ib ilitie s of th e Kasambahay, in c lu d in g th e

resp o n sib ility to r e n d e r s a tis fa c to ry s e rv ic e a t all tim e s;
(b) Period of employment;
(c) Compensation;
(d) Authorized deductions;
(e) Hours of work and proportionate additional payment;
(f) Rest days and allowable leaves;
(g) Board, lodging and medical attention;
(h) Agreements on deployment expenses, if any;
(i) Loan agreement, if any,
(j) Termination of employment; and
(k) Any other lawful condition agreed upon by both parties. If the
Kasambahay is below 18 years old, the employment contract shall be
signed by his/her parent or lawful guardian on his/her behalf.2

Upon the request o f either party, the Vunong Barangay or his/her

designated officer shall read and explain the contents o f the contract to both parties
and shall serve as its witness.3

c. Standard em ploym ent contract.

The employment contract shall conform to the DOLE Standard

Employment Contract {Kontrata sa Paglilingkod sa Tahanan) or Form BK-1.1

’ Section 11. Article III Ibid.

? S ecfim 11, A rtjde III to d : Section 5. R u'e II. bid.
3 Id.

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d. D istribution o f cop ies o f em ploym ent contract.

The employer shall have the obligation to furnish a copy o f the

employment contract to the Kasambahay and to the Office o f the Punong Barangay in
the barangay where the employer resides.*2

e. R enew al o f Contract.

Should the parties mutually agree to continue their employment

relationship upon expiration of the contract, they shall execute a new contract to be
registered with the concerned barangay. However, if the parties fail to execute a new
contract, the terms and conditions o f the original contract and other improvements
granted during the effectivity of said contract are deemed renewed.3

f. D om estic w orkers cannot acqu ire regularity o f em ployment.

Despite the repeal of the entire chapter of the Labor Code on

Househelpers by R.A. No. 10361, all the indicia of regularity of employment remain
absent in the employment of domestic helpers. The following factors clearly show
that domestic helpers can never become regular employees:

1) By express provision o f the law, the employment contracts o f

Kasambahays arc for fixed or definite term .4 They do not fix the
period o f employment nor put a cap on their duration, unlike in
Article 140 [142] o f the Labor Code.56
2) The law does not recognize any probationary employment of
Kasambahayrf

' S ection 6, R ule II, Ibid.

2 S ection 7, R ule II. Ibid.
3 Section 8, R ule II, Ibid.
* Section 11 [b ]. A rticle III, R A N o. 10361, in relation to Section 3 2, A rtid e V o f R A . N o. 10361. Section 11(b) o f A rticle III
thereof d e a rly states that th e em ploym ent co n tra ct by and betw een foe dom estic w orker and foe em ployer should include a
■period o f employment’ C orrelating th is provision w ith S ection 32 o f A rticle V thereof w ould result in the inescapable
conclusion th a t such em ploym ent contract is fo r a te rm ', thus: ‘ SEC. 3 2 Term ination o f S ervice. - N either the dom estic
w r ie r nor th e em ployer m ay term inate the contract before the expiration o f the term except fo r grounds provided fo r in
S ections 33 a rx l 34 o f this A c t x x ri This observation s further strengthened by the opening paragraphs o f said S ections 33
and 34, thus: 'S E C . 33. Term ination foB ated by foe D om estic W orker. - The dom estic w orker m ay term inate foe
em ploym ent relationship a t any tin e before foe e xp ia tio n o f the co n tra ct fo r any o f foe fbCcwing causes: xxx* and “SEC . 34.
Term ination Initiated by foe E m ployer. - An em ployer m ay term inate the services o f foe dom estic w orker at any tim e before
the expiration o f foe contract, fo r any o f foe fotow ing causes:"
5 N otably. R A N o. 10361 no lo ng e r m andates th a t a definite num ber o f years be stipulated h foe original contract o f
em ploym ent o f dom estic w orkers. Under foe o rig in al rendering o f A rticle 142 o f the Labor C ode, it is provided th a t '(t)h e
original contract o f dom estic service shall not la st fo r m ore than tw o (2) years but it m ay be renew ed for such periods as m ay
be agreed upon by the parties.’ T his perio d -im ita tio n has already been deleted in foe new law.
6 N either R A N o. 10361 n or the Labor C ode em bodies a ry probationary em ploym ent applicable to dom estic w orkers.
Although in cases o f overseas F ilipino w orkers w ho are deployed as dom estic w orkers abroad, the va lidity o f such
probationary period o f em ploym ent is recognized, but the sam e is o nly for the purpose o f determ ining w hether foe dom estic
w orker has q ua ffied fa foe fixed-term em ploym ent contem plated by foe parties as held m P nlem pby S ervices and
Resources, Inc v A nita R odriguez, G A N o 152616, M arch 3 1 ,2 0 0 6

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 236 Bar Reviewer on U bo r Law

3) The Kasarnbahays are not included in the concept o f regular

employment under Article 295 [280] (Regular and Casual
Employment) of the Labor Code;1
4) The Kasarnbahays are not entitled to the reliefs provided under Article
294 [279] of the Labor Code such as “reinstatement without loss of
seniority rights and other privileges and to his/her full backwages,
inclusive of allowances, and to his/her other benefits or their
monetary equivalent computed from the time his/her compensation
was withheld from him /her up to the time of his/her actual
reinstatement”;23
5) The Kasatnbahay{ enjoyment o f security o f tenure holds true only
during the effective o f their fixed-term employment;5
6) The employment o f Kasarnbahays ceases upon the expiration of the
fixed term thereof;4
7) The contract of employment of Kasarnbahays is terminable by mere
notice, a clear indication that the employment is not regular in nature;5
8) The Kasambahay is given the right to pre-tenninate the employment
contract.6

1 This rs obvious from the fa ct that there is no provision o f la w w hich m akes reference to the appScabOity o f said provision to
the em ploym ent o f dom estic w oikers. On the contrary, the em ploym ent o f w o oe rs fo r an indefinite period is n ot allow ed and
they do not becom e regular em ployees by reason o f the nature d th e ir w ork. Series o f re -h iin g or renew al o f the contract o f
em ploym ent o f a dom estic w orker does not likew ise ripen in to regular em ploym ent
2 The to an ile g a ly dism issed dom estic w o rker is found in S ection 32, A r6de V o f R A . No. 10361 w hich speaks o f the
penalty w hen the em ployer “unjustly dism isses' the dom estic w orker. Thus, "(i)f the dom estic w o ike r is unjustly dism issed,
the dom estic w orker shaS be paid the com pensation already earned plus the equivalent o f fifteen (15) days w ork by w ay o f
indem nity.’
3 This is dea r from the afore-quoted provision o f S ection 32 o f A rticle V o f R A . N o. 10361 during the effectrvity o f th e ir contract
and before the e xp iatio n o f its term , neither th e dom estic w orker n or the em ployer m ay term inate it except on the grounds
m entioned in the law itse lf.
4 This is dea r from Section 32, thus: ’SEC. 32. Term ination o f S ervice - N either the dom estic w orker nor the em ployer m ay
term inate Hie contract before the expiration of the term except fo r grounds provided fo r in Sections 33 and 34 o f th is A c t.'
Section 33 treats o f the ju st causes in cases o f term ination Initiated by the D om estic W orker and S ection 34 speaks o f the
ju st causes when term ination is initiated by the em ployer.
5 til case tie em ploym ent contract for dom estic services does not provide for a specific o r d efinfjve term , 2nd paragraph o f
Section 32, A rticle V o f R A No. 10361 states, thus: ’ SEC . 32. Term ination o f S ervice. - xxx ‘ If the duration c f the dom estic
service is not determ ined either in stipulation o r b y the nature o f the service, the em ployer or the dom estic w orker m ay give
notice to end tie w a kin g relationship five (5 i days before the intended term ination o f the service.’ It is thus crystal d e a r from
this prevision, w hich is a com plete rehash c r the repealed A rtide 150 o f the Labor C ode, that no presum ption o f reg u la rity o f
em ploym ent m ay arise from the failure -of the em ployer and the dom estic w orker to stipulate on a d efinite term .
C onsequently, fie em ploym ent relationship is term inable by the sim ple expedience o f the em ployer o r the dom estic w o ike r
W n g ) notice to end fie working relationship five (5 ) days before the intended term ination o f the service ’
6 This is another indication that fie em ploym ent relationship betw een a dom estic w orker and his/her em pkjyef is n ot reg u la r in
nature is fie grant o f fie right to either of h e m to pre-term inate th e ir contract o f em ptoym ent under the 3rd paragraph o f
Section 32, A rtid e V o f R A . No. 10361, h u s : *SEC. 32. Term ination o f S ervice - xxx T h e dom estic w orker and the
em ployer m ay rru tu a fy agree upon w ritten notice to pre-term inate the contract o f em ploym ent to end the em ploym ent
relationship.’ It bears noting that there is no s im la r provision in the entire Labor C ode w hich grants the sam e rig h t o f pre-
term ination to the em ployer and Ihe dom estic w orker (househelpef). U nder existing law and jurisprudence, never is it
provided o r allow ed n any way for the e m fio ye r and em ployee to p re -te n rin a te th e ir regular relationship by sim ply in king an
agreem ent o f pre-term inaSon. In fact, such agreem ent on pre-term ination has been struck dow n as a mi stipulation in an
em ploym ent contract in the case o f P rice v . Innodata P h is ., IncA nnodata C o rp , G .R . N o. 178505, S e p t 30,2 00 8 .

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LABO R S T A N D A R D S

8. R IG H T S A ND PR IV ILEG ES O F KASAM BAH A Y.

The nights and privileges1of the Kasambabay are as follows:

(a) Minimum wage;

(b) Other mandatory benefits, such as the daily and weekly rest periods,
service incentive leave and 13th month pay,
(c) Freedom from employer’s interference in the disposal o f wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(l) Access to education and training;
0 Right to form, join or assist labor organization;
(k) R ig h t to b e p r o v id e d a c o p y o f th e e m p lo y m e n t c o n tra c t;
0 Right to certificate o f employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural practices.2

The foregoing rights and privileges are discussed below.

9. MINIMUM WAGE.
a. Amount o f minimum wages.

The new minimum wage rates prescribed in R.A. No. 103613 are as
follows:

“ SEC 24. Minimum Wage. - T h e m inim um wage o f dom estic w orkers

shall n o t be less than the following:
(a) T w o thousand five hundred pesos (P2, 500.00) a month for those
em ployed in the N ational C apital Region (NCR);
(b) T w o th o u s a n d p e s o s (P2,000.00) a month for those em ployed in
chartered cities and first class m unicipalities; and
(c) One thousand five hundred p e s o s ( P i, 500.00) a month for those
em ployed in o th er municipalities.

“ A fter o n e (1) year from the effectiviry o f this Act, and periodically
thereafter, th e Regional T ripartite and Productivity Wage B oards (RTPW Bs)
shall review , and if p ro p er, determ ine an d adjust the m inim um wage rates o f
dom estic w orkers.”4

1 P er S ection 1, R ule IV , Im plem enting R ules and R egulations o f R A . N o. 10361.

* Id.
3 See S ection 24, A rtid e IV thereof.
* See also S ection 2, R ule IV , Im plem enting R ules and R egulations o f R A N o. 10361.

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b. Some important principles on wage.

• Frequency of paym ent o f w ages. - The wages o f the Kasambahay

shall be paid at least once a month.1This is so because the minimum
wage rates are on a monthly hasis.2
• The equivalent m inim um daily wage rate o f the Kasambahay shall
be determined by dividing the applicable minimum monthly rate by
thirty (30) days.3
• The amount o f the minimum wage depends on the geographical
area where the Kasambahay works.4
• Payment of wages:
1 To whom paid. - It should be made on time directly to the
Kasambahay to whom they are due in cash at least once a month.5
2. Deductions, prohibition; w hen allowed. - The employer,
unless allowed by the Kasambahay through a written consent,
shall make no deductions from the wages other than that which
is mandated by law6 such as for SSS, P h ilH ealth or Pag-IBIG
contributions.7
Deduction for loss or dam age shall only be made under the
following conditions:

(a) The Kasambahay is clearly shown to be responsible for the

loss or damage;
(b) The Kasambahay is given reasonable opportunity to show
cause why deduction should not be made;
(c) The total amount o f such deductions is fair and reasonable
and shall not exceed the actual loss or damage; and
(d) The deduction from the wages o f the Kasambahay does not
exceed 20% o f his/her wages in a month.
The DOLE shall extend free assistance in the determination
of fair and reasonable wage deductions.8

1 Section 4, RuSe IV, Im plem enting Rules and R egulations o f R A . N o. 10351.

7 As distinguished from the legally m andated increases in the m in im u n w ages (such as those m andated by R A N o. 5640,
R A . No. 6727 a x ) W age O rders passed by the RTW PBs) w hich are on a d a fy-ra te basis, the m n in u n w age rates
preserved in R A . N o. 10361 are on a m onthly basis.
5 Section 6, Rule X III, Book III. Rutes to Im ptenrent fr»e Labor Code.
* S ectico 24. A rticte IV . R A N o. 10361.
5 Section 25, A rticle IV , Ibid
$ y

7 Section 30, A rticle IV , Ibid.

8 S ecticn 6, Rule V, In^tem enting Rules and R egulations o f R A No. 10361.

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LABOR. STANDARDS

3. M ode of paym ent. - It should be paid in cash and not by

means o f promissory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than cash wage.1
4. Pay slip. - The employer shall at all times provide the
Kasambahay with a copy o f the pay slip containing the amount
paid in cash every pay day, and indicating all deductions made, if
any. The copies of the pay slip shall be kept by die employer for
a period of three (3) years.2

5. Prohibition on interference in the disposal of w ages. - It

shall be unlawful for the employer to interfere widi the freedom
o f the Kasambahay in the disposition o f his/her wages, such as:
(a) Forcing, compelling, or obliging the Kasambahay to purchase
merchandise, commodities or other properties from the
employer or from any other person; or
(b) Making use o f any store or services of such employer or any
other person.3

6. Prohibition against w ithholding of w ages. - It shall be

unlawful for an employer, direcdy or indirectly, to withhold the
wages of the Kasambahay. If the Kasambahay leaves without any
justifiable reason, any unpaid salary for a period not exceeding
fifteen (15) days shall be forfeited. Likewise, the employer shall
not induce the Kasambahay to give up any part o f the wages by
force, stealth, intimidation, threat or by any other means
whatsoever.4

10. T ER M S AND C O N D IT IO N S O F E M PL O Y M E N T .

The following is a rundown of the basic terms and conditions that should
be observed in the employment o f a Kasambahay.

a. Em ployable age. - Children whose age is below 15 years are

absolutely prohibited to work as Kasambahay.5

b. N orm al daily hours of w ork. - Because R.A. No. 10361 docs not
contain any provision on the number o f normal hours o f work that a Kasambahay
should render in a day but merely prescribes said daily rest period o f eight (8) hours

1 Section 30, A rtid e IV. b id .; S ection 3, R ule IV , Ib id .

2 Section 26, A rtid e IV , R A N o. 10361; S ection 2, R ule V , Ibid.
3 Section 27, A rtid e IV , b id ,- S ection 5, R ule V , Ibid.
* Section 28, A rtid e IV , b id ; S ection 4, R ule V , Ibid.
5 Section 16, A rtid e III o f R A N o. 10361 states in ve ry d ea r te rm s, thus: 'S E C . 16. E m ploym ent A ge o f D om estic W orkers. -
It sha3 be u n la w fti to em ploy any person below fifte en (15) years o f age as a dom estic w orker. E m ploym ent o f w x k in g
chidren, a s defined under th is A ct. shad be su b ject to tee provisions o f S ection 10(A ), paragraph 2 o f S ection 12-A,
paragraph 4 o f Section 12-D, and Section 13 o f R A No. 7610, a s am ended, otherw ise know n a s tee ’ S pecial P rotection o f
C hildren A ga in st C hild A buse, E xploitation and D iscrim ination A ct.’

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 240 Ba r R e v i e w e r on La b o r La w

pet day, it may be deduced that the Kasambabay should wotk fot at least a total of
sixteen (16) hours per day as normal hours o f work Congruendy, it must be
noted that the Labor Code does not contain any provision on the normal hours of
wotk of househelpers. However, Article 1695 of the Civil Code specifically
provides that househelpers shall not be required to work for more than ten (10)
hours a day. Since R.A. No. 10361, a special law, is the most recent piece of
legislation, it should prevail over the general provision of the Civil Code.
c. Normal daily hours of work for working cbi\d-kasam bahay is
eight (8) hours per day.1 >

d. 13th month pay. - The Kasambabay who has rendered at least one (1)
month of service is entitled to a 13* month pay which shall not be less than one-
twelfth (1/12) of his/her total basic salary earned in a calendar year. The 13*
month pay shall be paid not later than December 24 of every year or upon
separation from employment.2

e. Daily rest period. - The Kasambabay shall be entitled to an aggregate

test period of eight (8) hours per day.3

f. Weekly rest period. - The Kasambabay shall be entitled to at least

twenty-four (24) consecutive hours of rest in a week. The employer and the
Kasambabay shall agree in writing on die schedule of die weekly test day but die
preference of the Kasambabay, when based on religious grounds, shall be
respected.4 Nothing in this provision shall deprive the Kasambabay and the employer
horn agreeing to die following:

(1) Offsetting a day of absence with a particular rest day;

(2) Waiving a particular rest day in return for an equivalent daily rate of
pay,
(3) Accumulating rest days not exceeding five (5) days; or
(4) Other similar arrangements.5

g. Service incentive leave. - A Kasambabay who has rendered at least one

(1) year of service shall be entitled to an annual service incentive leave o f at least

1 Shoe as earier discussed, R A No. 7610, as amended by R A No. 9231, apples t> a W wMcb term, n legal
contenpb8m ieteutoanypeism «d»'surNterei^Ben(1Qyeam (da 9eldomes6ew oiteRvhom a 3eteuidweighteen
(18) years are subject to the hows of wort, of a "woddng chid.’ Section 16, Arficte HI of R A No. 10361 states tu t tee
enpbymertdvrortdrig children is subject to tee provision of paragraph 2 of Section 12-A of R A No. 7610, as amended.

1 Section 25, Article IV. R A No. 10361; Secfon 8. Rule IV, Implementing Rules and Regulations of R A No. 10561. Note
n e t be made ta t previously, employers <f household helpers and peisons h tee personal setice of another in reteSon to
such w oteis are not oblgated to pay 13* monte pay to these folds of employees. (No. 2 f t Revised Guidelines on tee
Implementation of tee 13te month Pay Law, formerly Section 3 [dj, Rules and Regulations ImplemenSng P.D. No. 851).
3 Section20, ArtcSe IV, R A No. 10361; Section 5, Rule IV, Implemenfing Rules and RegubSons of RA. No. 10561.
4 Section 21. Arhde IV. ttiid.; SecSon6. R ile <V. bid.

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 C h apter T h ree 241
LA BO R ST A N D A R D S

five (5) days with pay. Any unused portion of said annual leave shall not be
cumulative or carried over to the succeeding years. Unused leaves shall nor he
convertible to cash.1

h. Social security benefits. - A Kasambabay who has rendered at least one

(1) month of service shall be covered by the Social Security System (SSS),
Employees Compensation Commission (ECC), Philippine Health Insurance
Corporation (PhilHealth), and Home Development Mutual Fund or Pag-IBIG, and
shall be entitled to all the benefits in accordance with their respective policies, laws,
rules and regulations.2
Benefits under the SSS include sickness, maternity, disability, retirement,
death and funeral. A unified benefit package under PhilHealth includes Inpatient
Hospital Care and Outpatient Care.3
Mandatory premium payments or contributions shall be shouldered by the
employer. However, if the Kasambabay is receiving a monthly wage rate o f Five
Thousand Pesos (P5,000.00) and above, the Kasambabay shall pay the proportionate
share in the premium payments or contributions, as provided by law.4

In the event the Kasambabay avails of certain loan privileges from Pag-
IBIG Fund which require the payment o f additional or upgraded contributions, the
said additional or upgraded contributions shall be shouldered solely by the

The SSS, Pag-IBIG and PhilHealth shall develop a unified system o f

registration and enrollment within six (6) months from the promulgation o f the
Implementing Rules and Regulations (IRR) ofILA. No. 10361.*

L Obligation o f employer to register and enroll with SSS,

PhilH ealth, and Pag-IBIG. - As employer of the Kasambabay, he/she shall
register himself/herself with, and enroll die latter as his/her employee to die SSS,
PhilHealth, and Pag-IBIG.7

j. Loan assistance. - An employer may agree to extend loan assistance to

die Kasambabay 'm. an amount not exceeding his/her six (6) months' salary. This
provision shall not apply to working children.8

k. Deduction for loans. - By written agreement, the employer may

deduct the loans from the wages o f the Kasambabay, which amount shall not exceed
20% of his/her wages every month.1

1 Section 29, Article IV, bid.; Section 7, Rule IV, bid.

2 Section30. Article IV. Ibid.; Section9. RuleIV. Ibid.
3 kL;U
4 ii;M.
5 Id.; ML
6 Id.; id.
1 Section3.RuleV.lbid.
8 Section 10. Rule IV, Ibid.

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 242 Bar reviewer o n Labor Law

I. Deposits for loss or dam age. - It shall be unlawful for the employer
or any other person to require a Kasambahay to make deposits from which
deductions shall be made for the reimbursement o f loss or damage to tools,
materials, furniture and equipment in the household.*2

11. OTHER TERMS AND CONDITIONS OF EMPLOYMENT.

In addition to the foregoing, the following terms and conditions are
mandated under R.A. No. 10361:

a. Standard of treatm ent. - The Kasambahay shall be treated with respect

by the employer or any member o f the household. H e/she shall not be subjected to
any kind of abuse, including repeated verbal or psychological, nor be inflicted with
any form of physical violence or harassment or any act tending to degrade his/her
dignity, as defined under the Revised Penal Code, Violence Against Women and
their Children Law (R.A. No. 9262), Special Protection o f Children Against Child
Abuse, Exploitation and Discrimination Act (R.A. No. 7610) as amended by R.A.
No. 9231, Anti-Trafficking in Persons Act o f 2003 (R.A. No. 9208), and other
applicable laws.3

b. Board, lodging and m edical attendance. - The employer shall

provide for the basic necessities of. the Kasatnbahay, to include the following:

(1) At least three (3) adequate meals a day, taking into consideration the
Kasambahay's religious beliefs and cultural practices;
(2) Humane sleeping condition that respects the person's privacy for
live-in arrangement; and
(3) Appropriate rest and medical assistance in the form of first-aid
medicines, in case o f illnesses and injuries sustained during service
without loss of benefits.

For the Kasambahay under live-out arrangement, h e/she shall be provided

space for rest and access to sanitary facility. At no instance shall the employer
withdraw or hold in abeyance the provision of these basic necessities as
punishment to, or disciplinary action against, the Kasambahay.4

c. Guarantee of privacy. - The employer shall, at all times, respect the

right of the Kasambahay to privacy, which shall extend to all forms of
communication and personal effects.5

d. Access to outside com m unication. - During free time, the

Kasambahay shall be granted access to outside communication. In case o f

' Section 11, Rule IV , Ibid.

7 Section 14, A rticle III, R A . No. 10361; Section 7 , Rule V , Ibid.
3 Section 5, A rticle II, ib id ; Section 12, R ule IV , Ibid.
4 Section 6, A itid e II, Ibid.; Section 13, R ule IV , Ibid.
* Section 7, A rticle II, Ibid.; Section 14, R ule IV , Ibid.

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emergency, access to communication shall be granted even during working time.

Should die Kasambahay use the employer's telephone or other communication
facilities, the costs shall be borne by the Kasambahay, unless waived by die
employer.1

e. Prohibition ag ain st privileged inform ation. - All communication

and information pertaining to the employer or members of the household shall be
treated as privileged and confidential, and shall not be publicly disclosed by die
Kasambahay during and after employment. Such privileged information shall be
inadmissible in evidence, except when the suit involves the employer or any
member o f the household in a crime against persons, property, personal liberty and
security and chastity.2

f. O pportunities for education and training. - The Kasambahay shall be

afforded the opportunity to finish basic education, which shall consist o f
elementary and secondary education. H e/she may be allowed access to alternative
learning systems and, as far as practicable, higher education or technical vocational
education and training.

The employer shall adjust the work schedule o f the Kasambahay to allow
his/her access to education or training without hampering the services required by
the employer. Access to education may include financial assistance at the option o f
the employer.

The Department o f Education (DepEd) shall ensure continued access o f

the Kasambahay to alternative learning system education.3

g. M em bership in lab o r organization. - The Kasambahay shall have die

right to join a labor organization o f his/her own choosing for purposes o f mutual
aid and collective negotiation. The Kasambahay shall be afforded opportunity to
attend organization meetings during free time.4

h. H ealth an d safety. - The employer shall safeguard the safety and

health o f the Kasambahay in accordance with the standards which the DOLE shall
develop through the Bureau o f Working Conditions (BWC) and the Occupational
Safety and Health Center (OSHC) within six (6) months from the promulgation o f
the Implementing Rules and Regulations (IRR) o f R.A. No. 10361. The said
standards shall take into account die peculiar nature o f domestic work.5

i. Prohibition on d e b t bondage. - It shall be unlawful for the employer

or any person acting on h is/her behalf to place die Kasambahay under debt

' S ection 8 , A rbde II. te d .; S ection 15. R ule IV . to id .

7 S ection 8 , R ule V , Ibid.
3 S ection 9 , A rticle II, Ib id.; Section 16. R ule IV , Ib id .
* S ection 17, Rule IV, Ibid.
5 S ection 19, A rticle IV , R A N o. 10361; S ection 12. R ule V , Ibid.

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 244 BAR REVIEWER ON LABOR LAW

bondage.1 "Debt bondage" refers to the rendering of service by the Kasambahay as

security or payment for a debt where the length and nature of service is not clearly
defined or when the value of the service is not reasonably applied in the payment
of the debt.2

j. Assignment to non-household w ork. - The employer shall n o t assign

the Kasambahay to work, whether in full or part-time, in a commercial, industrial or
agricultural enterprise at a wage rate lower than that provided for agricultural or
non-agricultural workers.3

The following cases decided prior to R.A. No. 10361, are still relevant to
this proscription in the law:
[1] Apex Mining Company, Inc. v. NLRC .4 - In this case, the High Court
held that a househelper in the staffhouses o f an industrial company is considered a
regular employee thereof. The mere fact that the househelper is working within the
premises of the business of the employer and in relation to or in connection with
its business, as in its staffhouse; for its guest or even for its officers and employees,
warrants the conclusion that such househelper is and should be considered as a
regular employee of the employer and not as a mere family househelper or as
contemplated in the law.5

[2] Remington Industrial Sales Corp. v. Castaneda.6 - The same ruling as in

Apex was made in this case. Respondent worked at the company premises and her
duty was to cook and prepare its employees’ lunch and merienda. Clearly, the situs as
well as the nature of respondent’s work as a cook, who caters not only to the needs
of Mr. Tan (Managing Director of petitioner) and his family but also to that o f the
petitioner’s employees, made her fall squarely within the definition of a regular
employee under the doctrine enunciated in the Apex Mining case. That she works
within company premises and that she does not cater exclusively to the personal
comfort of Mr. Tan and Iris family, is reflective of the existence of the petitioner’s
right of control over her functions, which is the primary indicator o f the existence
of an employer-employee relationship.

[3] Barcenas v. N LR C 7 - In this case, private respondent contends that

petitioner was not an employee but a servant at the Manila Buddhist Temple. The
Supreme Court, however, disagreed. It held that petitioner was a regular employee
thereof considering that the work that she performed in the temple could not be
categorized as mere domestic work. Petitioner, being proficient in the Chinese

1 Section 15, A rticle III, Ibid.; Section 9, Rule 7 , Ibid.

2 Section 4{a). A rttfe I, Ibid.; Section 3(b), R ile I, Ib id .; See a lso S ection 3, R A N o. 9203.
3 Section 22, A rticle IV , Ibid.; Section 10, Rule V , Ibid.
« G .R. No. 34951. A pril 22.1991.196 SCRA 251.254-255.
5 Id.
« G R Nos. 169295-95, Nov. 20,2006.
7 G.R. No. 87210. July 16.1990.

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 c h a pt er T hree 245
LABOR STANDARDS

language, attended to the visitors, mosdy Chinese, who came to pray or seek advice
before Buddha for personal or business problems; arranged meetings between
these visitors and the Head Monk and supervised the preparation of the food for
the temple visitors; acted as tourist guide o f foreign visitors; acted as liaison with
some government offices; and made the payment for the temple's Meralco, MWSS
and PLDT bills. Indeed, these tasks may not be deemed activities of a household
helper. They were essential and important to the operation and religious functions
of the temple.

k. E x ten t o f duty outside the household. - The Kasambahay and the

employer may mutually agree for the Kasambahay to temporarily perform a task for
the benefit o f another household under the following conditions:

(a) There is an agreement between die Kasambahay and the employer for
the purpose, particularly on the tasks to be performed;

(b) 'Die Kasambahay is enutled to additional payment of not less than the
applicable minimum wage rate:

(c) The original employer shall be responsible for any liability incurred
by the Kasambahay on account o f such arrangement; and

(d) The original employer is not charging any amount from the other
household for the arrangement.

The temporary performance of work shall not exceed tliirty (30) days per
assignment. The other household where the Kasambahay is temporarily assigned is
solidarily liable with the original employer for any non-payment o f wages during
such temporary assignment.

It shall be unlawful for the original employer to charge any amount from
die said household where the service o f die Kasambahay was temporarily
performed.1

12. STANDARDS F O R E M PL O Y M E N T O F W O RK IN G C H IL D R E N .

a. W orking children. - This term refers to Kasambahays who are fifteen

(15) years old and above but below eighteen (18) years old.23

b. G eneral prohibition. - It shall be unlawful to employ any person

below fifteen (15) years o f age as Kasambahay}

c. Benefits o f w orking children. - Working children shall be entided to

m inim um w age, and all benefits provided under R.A. No. 10361, the Batas
Kasambahay, which include access to education and training.1

1 Section 23, A rticle IV , Ib id .; S ection 11. Rule V , Ibid.

2 Section 3{k), R ule I, Im plem enting R ules and R egulations o f R A No. 10351.
3 Section 1, R ule V I, Ibid.

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 246 Ba r Reviewer o n La so r Law

d. Employment of working children. - Pursuant to ILA. No. 9231,12

working children shall ngj be subjected to the following;

(1) Work for more than eight (8) hours a day and beyond forty (40)
hours a week;
(2) Work between ten o'clock in the evening and six o'clock in the
morning of the following day; and
(3) Work which is hazardous or likely to be harmful to the health, safety
or morals of children, as defined under existing laws and regulations.3

13. TERMINATION OF KASAMBAHAY.

a. Pre-termination o f employment.
The following rules shall be observed;
(1) In case the duration of employment is specified in the contract, the
Kasambabay and the employer may mutually agree upon notice to
terminate tire contract of employment before the expiration o f its
term.4
(2) In case the duration is not determined by stipulation or by nature of
service, the employer or die Kasambabay may give notice to end die
employment relationship five (5) days before die intended
termination of employment5

b. Termination of employment initiated by the Kasambabay.

The Kasambabay may terminate the employment relationship at any time
before the expiration of the contract for any o f the following causes:

(1) Verbal or emotional abuse of the Kasambabay by the employer or any

member of the household;
(2) Inhuman treatment, including physical abuse of the Kasambabay by
the employer or any member o f die household;
(3) Commission of a crime or offense against the Kasambabay by the
employer or any member of the household;

1 Section 16, Article HI, R A No. 10361; Section 3, Rule VI. Ibid.
2 EntSed *An Act Provicfing for the SmEna^on of Sie Worst Forms of Chad Latxx and Aferding Stronger Protecfion for Sie
W o^C fiJ,Am eref'ngfertlisRjrp(«RepubicAdNoJ610.AsAn«nded,O ff!enM seknow 3sttw ‘SpedaiPrrtec6on
ofCWdten AgarnstChid Abuse. Exploitation and OiscrimhationAcl*
1 Section 2, Rule VI,Implementing RJes and Regulations of R A .N o. 10361. AddfionaD/.Sfe provided herein as Wows:
"SeCTtON 4. FVogranns for the Efiminatjon of Worst Forms of CMd Labcr in Domesdc Work. - The DOLE, through Sie
Nationd M O tid Labor Commtee (NClC) and h collaboration with the NCLC member-agencies, shaB continue to
implement programs to withdraw. rescue, and rehab&ate unking children below Steen (15) years of age. th e NCLC shal
ensue that working cHdren and Bier tansies arc provided wSh access to education, aocess to produce resources, and
that measures are r place to ensure compsance with the standards tor employment of dddren in domestic work as
prescribed in this Rule *
4 Section32,AiticfcV,R^ttoJ0361;Sectioni.RuieVltlm plem enfingRulesandRegulationsofllA.Na 10361.
* Id ; id

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LA BO R STA N DA RDS

(4) Violation by die employer o f die terms and conditions o f the

employment contract and other standards set forth in the lair,
(5) Any disease prejudicial to die health o f the Kasambabay, die employer,
or members of the household; and
(6) Other causes analogous to the foregoing.1

If the Kasambabay leaves without cause, any unpaid salary due, not
exceeding the equivalent of fifteen (15) days work, shall be forfeited. In addition,
the employer may recover from the Kasambahay deployment expenses, if any, if
the services have been terminated within six (6) months from employment2

c. Termination o f employment initiated by the employer.

An employer may terminate the employment of the Kasambabay at any
time before the expiration of the contract for any of the following causes:

(1) Misconduct or willful disobedience by the Kasambabay of the lawful

order o f the employer in connection with the former’s work;
(2) Gross or habitual neglect or inefficiency by the Kasambabay in the
performance of duties;
(3) Fraud or willful breach of the trust reposed by the employer on the
Kasambabay,
(4) Commission of a crime or offense by the Kasambabay against the
person o f the employer or any immediate member o f die employer's
family;
(5) Violation by the Kasambabay of the terms and conditions o f the
employment contract and other standards set forth under die law;
(6) Any disease prejudicial to the health o f die Kasambabay, die employer,
or members of the household; and
(7) Other causes analogous to the foregoing.3

If the employer dismissed the Kasambabay for reasons other than die
above, be/she shall pay the Kasambabay die earned compensation plus indemnity in
the amount equivalent to fifteen (15) days work.4

d. Invalidground for termination.

Pregnancy and marriage of the Kasambabay are not valid grounds for
termination o f employment.5

1 Section 33, Article V, IM ; Section 2, Rule VII, Ibid.

* SecSon32,AifcleV.bid.;Section2 ,RubVII,W d.
1 Section34,A iW eV.W d.;Secfon3 ,RuleVII,B k L
4 Section 32. Article V. Ebid^ Section 3. Rule VI). BAL
5 Section 4, Rub VII. bid.

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 248 Bar review er on Labo r U w

e. Employment CcrdGcation.

Upon the termination of employment, the employer shall issue the

Kosambabay, within five (5) days from request, a certificate o f employment
indicating the nature, duration o f the service and work description.1

f. Mechanism for settlement/disposition o f labor-related disputes.

All labor-related disputes shall be filed before the DOLE
Field/Provincial/Regional Office having jurisdiction over the workplace and shall
go through the thirty-day (30) mandatory conciliation under the DOLE Single
Entry Approach (SEnA) program to exhaust all efforts for the settlement of the
dispute.2 The DOLE Secretary issued Labor Advisory No. 17, Series o f2018 [October
30, 2018], for purposes of promulgating the Clarificatory Guidelines on the
handling of Kasambahay complaints or request for assistance.3*

The phrase “all labor-related disputes” necessarily includes and covers not
only monetary claims, regardless of amounts thereof, but termination or illegal
dismissal issues as well.

g. Compliance order.

In case the parties fail to reach a setdement, a mandatory conference not

exceeding thirty (30) days shall be conducted by the DOLE
Field/Provincial/Regional Office from referral o f the unsetded dispute. The
DOLE-Regional Director shall issue a Compliance Order within ten (10) days from
the submission of the case for resolution/

h. Motion for reconsideration.

Any aggrieved party may file a motion for reconsideration from the
Compliance Order within ten (10) days from receipt thereof.5

i. Appeal.

The Resolution on the Motion for Reconsideration of the DOLE-

Regional Director may be appealed to the DOLE Secretary' within ten (10) days
from receipt thereof. Thereafter, the Order of the DOLE Secretary shall be final
and executory.6

1 Section 35, A rticle V . Ibid.; Section 5. R ule \A I, Ibid.

7 Section 37, ArticJe V I. Id.; Section 1, Rule X !, Id.
3 The fu ll te xt o f this issuance is avaiSabte a t th e DO LE w ebsite a t
https7Avww.dole.gov ph/fdesAJabcx% 20Advtsor/% 20M o_% 2017% 20-
% 20Ctarifx2tory% 20gukleinesVc20<xi% 201wKjrng% 2C»<asarnbahayo/o2()corriplaints.pdf. Last A ccessed: M arch 19,2019.
1 Section 2. Rule X I, Id : See also Nos. V II and V III, Labor A dvisory No. 17, Series o f 2018 (O ctober 3 0,2 01 8 ].
5 Section 3, Rule XI, Id.
£ Section 4, Rule X I, Id ; See also No IX , Labor A dvisory No. 17, S eries o f 2018 (O ctober 3 0 ,2 0 1 8 ].

J9JC9B0M
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LABOR STANDARDS

/. Crimes and offenses.

Ordinary crimes or offenses committed by either party under the Revised
Penal Code and odier special penal laws shall be filed with the appropriate courts.'

4.
HOMEWORKERS*2

1. DEFINITIONS.
For clarity in understanding, the following terms are defined as follows:

a) industrial homeworker” refers to a worker who is engaged in industrial

homework3
b) industrial homework ” refers to 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. It differs
from regular factory production principally in that, it is a decentralized form o f
production where there is ordinarily very little supervision or regulation o f methods
o f work.4
c) “Home” means any nook, house, apartment or other premises used
regularly, in whole or in part, as a dwelling place, except those situated within the
premises or compound of an employer, contractor/subcontractor and the work
performed therein is under the active or personal supervision by or for the latter.5
d) “Field personnel" refers to a non-agricultural employee who regularly
performs his duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot be determined
with reasonable certainty.6
e) “Employer" refers to any natural or artificial person who, for ltis own
account or benefit, or on behalf o f any person residing outside the Philippines,
direedy or indirectly, or through any employee, agent, contractor, subcontractor or
any other person: (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 o f or distributed in accordance with his direction; or (2)
sells any goods, articles or materials for the purpose of having such goods or

' Section 5, R ule X I, Id.; See also Section 37, A rticle V II, R A N o. 10361; No X , Labor A dvisory N o. 17, S eries o i 2018
[O ctober 30,20181
2 R elevant P rovisions: A rticles 151 [153] to 153 [1 5 5 ], Labor C ode; D epartm ent O d e r No. 5, [February 4 ,1 9 9 2 ] enunciating
the regulations governing the em ploym ent o f hom ew orkers. T h is D epartm ent O rder is now know n as Rule X IV , B ook III o f
the R ules to Im plem ent the Labor C ode.
3 S ection 2 , D epartm ent O rder N o. 5 [R ule X IV , B ook III, R ules to Im plem ent Labor Code).
4 Id.
5 Id.
6 A rticle 82, Labor Code

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 250 Bar Reviewer,on Labor Law

articles processed in or about a home and then repurchases them himself or

through another after such processing.
f) “Contractor” or “subcontractor” refers to any person who, for the account
or benefit of an employer, delivers or causes to be delivered to a homeworker,
goods or articles to be processed in or about his home and thereafter to be
returned, disposed of or distributed in accordance with the direction o f the
employer.1
g) ‘"Processing” refers to manufacturing, fabricating, finishing, repairing,
altering, packing, wrapping or handling in any way connected with the production
or preparation of an article or material.23

2. DUTIES OF EMPLOYER, CO N TRA C TO R OR SUBCO NTRACTOR.

Whenever an employer contracts with another for the performance o f the

employer’s work, it shall be die duty of such employer to provide in such contract
that the employees or homeworkers of the contractor and the latter’s subcontractor
shall be paid in accordance with the provisions o f the Pules to Implement the Labor
Code? In the event that such contractor or subcontractor fails to pay the wages or
earnings of his employees or homeworkers as specified in said Rules, such employer
shall be jointly and severally liable with the contractor or subcontractor to the
workers of the latter, to the extent that such work is performed under such
contract, in the same manner as if the employees or homeworkers were direedy
engaged by the employer. The employer, contractor or subcontractor shall assist
the homeworkers in the maintenance o f basic safe and healthful working
conditions at the homeworkers’ place of work.4

3. PAYMENT FOR HOM EW ORK.

Immediately upon receipt o f the finished goods or articles, the employer

is required to pay the homeworker or the contractor or subcontractor, as the case
may be, for the work performed less the corresponding homeworker’s share of
SSS, PhilHealth and ECC premium contributions which should be remitted by the
contractor or subcontractor or employer to the SSS with the employer’s share.
However, where payment is made to a contractor or subcontractor, the
homeworker should likewise be paid immediately after the goods or articles have
been collected from the workers.5

4. PR O H IB IT IO N S ON C ER T A IN K INDS O F H O M E W O R K

No homework shall be performed on the following;

1) Explosives, fireworks and articles o f like character;

1 Section 2, D epartm ent O rder No. 5 [R ule X IV , Book 111, R ules to Im plem ent Labor CodeV
2 Id.
3 See Rule XIV thereof.
* Section 11, Departm ent O rder No. 5 [R ule X IV , Book III, R ules to Im plem ent the Labor C ode.
5 Section 6, Ibid.

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 C hapter T hree 251
LABOR STANDARDS

2) Drugs and poisons; and

3) Other articles, the processing o f which requires exposure to toxic
substances.1

5. C O N D IT IO N S FO R D E D U C T IO N FROM H O M E W O R K E R ’S
EA R N IN G S.

N o employer, contractor or subcontractor shall make any deduction from

the homeworker’s earnings for the value of materials which have been lost,
destroyed, soiled or otherwise damaged unless the following conditions are met:

a) The homeworker concerned is clearly shown to be responsible for the

loss or damage;
b) The homeworker is given reasonable opportunity to show cause why
deduction should not be made;
c) The amount of such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
d) The deduction is made at such rate that the amount deducted does not
exceed twenty percent (20%) o f the homeworker’s earnings in a week.2

5.
NIGHT WORKERS
1. SIG N IFIC A N C E O F T H E LAW.

R.A. No. 101513 has repealed Article 130 [Nightwork Prohibition] and
Article 131 [Exceptions] o f the Labor Code and accordingly renumbered the same
articles. Additionally, it has inserted a new Chapter V to Title III of Book III o f the
Labor Code entitled “Employment o f Night Workers” which addresses the issue
on nightwork of all employees, including women workers. Chapter V covers newly
renumbered Articles 152 [154] up to 167 [161] o f the Labor Code.

2. COVERAGE O F T H E LAW.

The law on nightwork applies not only to women but to all persons, who
shall be employed or permitted or suffered to work at night, except those
employed in agriculture, stock raising, fishing, maritime transport and inland
navigation, during a period of n o t less th an seven (7) consecutive hours,
including the interval from m id n ig h t to five o 'clock in the m orning, to be

1 Section 13, Ibid.

2 R elevant P rovisions: (1 ) A pprentices - covered by A rbcies 57 to 72. Labor C ode; (2) Learners - covered by A rticles 7 3 to
77, Labor C ode; (3) R A N o. 7796 (Technical E ducation and SkJIs D evelopm ent A ct o M 994) and its Im plem enting R ules
and R egulations.
3 E ntitled 'A n A ct A llow ing the Em ploym ent o f N ig ht W orkers, Thereby Repeating A rticles 130 and 131 of P D. N o. 442, A s
Am ended. O therw ise Known a s the L a txx Code o f the P hilip pin e s' w as approved on June 21,2 01 1 .

J9JC9B0M
 252 Bar . reviewer o n La bo r law

determined by the DOLE Secretary, after consulting the workers’

representatives/labor organizations and employers.1

3. NIGHT WORKER, MEANING.

"Night worker" means any employed person whose work covers the
period from 10 o'clock in the evening to 6 o'clock the following morning
provided that the worker perfotm$ no less than seven (7) consecutive hours of
work.2

4. HEALTH ASSESSMENT.

At their request, workers shall have the right to undergo a health

assessment without charge and to receive advice on how to reduce or avoid health
problems associated with their work:

(a) Befote taking up an assignment as a night worker,

(b) At tegular intervals during such an assignment; or
(c) If they experience health problems during such an assignm ent

With the exception of a finding of unfitness for night work, die findings,
of such assessments shall be confidential and shall not be used to their detriment,
subject, however, to applicable company policies.3

5. MANDATORY FACILITIES.

Mandatory facilities shall be made available for workers performing night

work which include die following:

(a) Suitable first-aid and emergency facilities as provided for under

Rule 1960 (Occupational Health Services) o f the Occupational Safety
and Health Standards (OSHS);
(b) Lactation station in required companies pursuant to ILA. No.
10028 (The Expanded Breastfeeding Promotion Act o f 2009);
(c) Separate toilet facilities for men and women;
(d) Facility for eating w ith potable drinking water; and
(e) Facilities for transportation and/or properly ventilated temporary
sleeping or resting quarters, separate for male and female
workers, shall be provided except where any of the following
circumstances is present:

1 Aificfe 152 [154], LaborCode; as snended by SecSon 4, R A No. 10151.

2 See SecSon 2, Department Oder No. 119-12, Series of 2012 (Rules Implementing R A No. 10151). It bears noting that the
definSon o l‘night ro te * under the law b as fellow: *MgW wotteT means any employed person vhose wok requres
performance of a substantial nunter of hous of night wod< wWch exceeds a spectSed ^ T h sfm ish aS b eftced b ylh e
SecnataiyofLaborafteroonsuttngihewaVe»srreprBsentaSvesteboro(ganizafionsgideniployers.*(ftrticle 152I154|.Lgtxy
Code, as amended by Section 4, R A No. 10151).
3 Section 3, Department Order No. 119-12, Series of 2012 (Rules Implementing R A No. 10151); Article 153 (155], Labor
Code, as amended by Section 4, R A No. 10151.

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 C hapter .T hree 253
LABOR STANDARDS

i. Where there is an existing company guideline, practice or policy,

C8A or any similar agreement between management and workers
providing for an equivalent or superior benefit; or
ii. Where the start or end o f the night work does not fall within 12
midnight to 5 o'clock in the morning; or
iii. Where the workplace is located in an area that is accessible
twenty-four (24) hours to public transportation;
iv. Where the number of employees does not exceed a specified
number as may be provided for by the DOLE Secretary in
subsequent issuances.*
1

6. TRANSFER D U E TO U N FITN ESS O F WORK FOR HEALTH

REASONS.

Night workers who are certified by competent physician, as unfit to

render night work due to health reasons, shall be transferred to a job for which
they are fit to work whenever practicable. T he transfer of the employee m ust be
to a similar or equivalent position and in good faith.

If such transfer is not practicable or die workers are unable to render

night work for a continuous period of riot less than six (6) months upon die
certification of a competent public health authority, these workers shall be
granted the same company benefits as other workers who are unable to work due
to illness.

A night worker certified as temporarily unfit for night work for a

period of less than six (6) months shall be given the same protection against
dismissal or notice of dismissal as other workers who are prevented from working
for health reasons.2

7. W OM EN N IG H T WORKERS, ALTERNATIVE MEASURES T O

N IG H T WORK FOR PREGNANT AND NURSING EMPLOYEES.

Employers shall ensure that measures shall be undertaken to provide an

alternative to night work for pregnant and nursing employees who would otherwise
be called upon to perform such work. Such measures may include the transfer to
day work, where it is possible, as well as the provision of social security benefits
or an extension of maternity leave.

(a) Transfer to day work. - As far as practicable, pregnant or nursing

employees shall be assigned to day work, before and after childbirth for a period o f
at least sixteen (16) weeks which shall be divided between the time before and after
childbirth.

1 Section 4, Id. Arfde 156. W.

1 Sections ld.Ar8cte157.ld.

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 254 Bar Reviewer on Labor Law

Medical certificate issued by competent physician (it ., Obstetrician/

Gynecologist, Pediatrician, etc.) is necessary for the grant ofi

i. additional periods of assignment to day work during pregnancy or

after childbirth other than the period mentioned in die foregoing
paragraph, provided that the length of additional period should not be
more than four (4) weeks o r for a longer period as may be agreed
upon by the employer and the worker,
ii. extension of maternity leave; and
iil clearance to render night work. '

(b) Provision of social security benefits. - Social security benefits, such

as paid maternity leave shall be provided to women workers in accordance with the
provisions of R A No. 8282 (Social Security Act of 1997) and other existing
company policy or CBA.
(c) Extension of maternity leave. - Where transfer to day work is not
possible, a woman employee may be allowed to extend, as recommended by a
competent physician, her maternity leave without pay or using earned leave credits
of die worker, if any.1

8. NON-DIM INUTION OF MATERNITY LEAVE BENEFITS U N D ER

EXISTING LAWS.
The law and its rules shall not be construed to authorize diminution or
reduction of the protection and benefits connected with maternity leave under
existing law.2

9. PROTECTION AGAINST DISMISSAL AND LOSS OF BENEFITS

ATTACHED TO EMPLOYMENT STATUS, SENIORITY AND
ACCESS T O PROMOTION.

Where no alternative work can be provided to a woman employee who is

not in a position to render night work, she shall be allowed to go on leave or on
extended maternity leave, using her earned leave credits.
A woman employee shall not be dismissed for reasons of pregnancy,
childbirth and childcare responsibilities. She shall not lose the benefits
regarding her employment status, seniority, and access to promotion which may
attach to her regular night work position.3
10. COMPENSATION.
The compensation for night workers in the form of working time, pay or
similar benefits shall recognize the exceptional nature of night work.4

' Section 6. kLAride 158. U.

> Secfion7.ld.Aitide158.ld.
5 Sections, UArtide 158, Id.
4 Article 159, Id.

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 C h a tter T hree
255
LABOR STANDARDS

Consequently, such compensation shall include, but not be limited to,

working time, pay and benefits under the Labor Code, as amended and under
existing laws, such as service incentive leave, rest day, night differential pay,
13th m onth pay, and other benefits as provided for by law, company policy or
CBA.‘
1L SOCIAL SERVICES.
Appropriate social services shall be provided for night workers and, where
necessary, for workers performing night work.*2
12. N IG H T WORK SCHEDULES.
The employer shall at its own initiative, consult the recognized workers'
representatives or union in the establishment on the details o f the night work
schedules and the forms of organization of night work that are best adapted to the
establishment and its personnel, as well as on the occupational health measures and
social services which are required.
In establishments employing night workers, consultation shall take place
regularly and appropriate changes of work schedule shall be agreed upon before it
is implemented.3
SPECIAL WORKERS

In the Labor Code, there ate three (3) groups that ate considered “special
workers"under Title II, Book II thereof, namely:
a) Apprentices - coveted by Articles 57 to 72;
b) Learners - covered by Articles 73 to 77; and
c) H andicapped workers - covered by Articles 78 to 81.

Following is a discussion of these groups of workers as prescribed in the

Syllabur.
6 .
APPRENTICES AND LEARNERS
L DEFIN ITIO N S.

a. Apprenticeship-related term s.
“Apprenticeship” means practical training on. the job supplemented by
related theoretical instructions involving apprenticeable occupations and trades as
may be approved by the DOLE Secretary.4 It is a training within employment with
compulsory related theoretical instructions involving a contract between an

» Section 9. Id.
2 AiBdelfiO.id.
2 Section 10, H A ricle 161, Id.
< Artde 58 [a]. Labor Code; Section 2. Rule VI, Book II, Rules to Imptement the Labor Code.

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Bar reviewer , on Labor Law

apprentice and an employer or an enterprise on an approved apprenticeable

occupation.1

An "apprentice” is a worker who is covered by a written apprenticeship

agreement with an individual employer or any o f the entities recognized under the
law.2 He is a person undergoing training for an approved apprenticeable occupation
during an established period and covered by an apprenticeship agreement3

An "apprenticeable occupation” means any trade, form o f employment or

occupation approved for apprenticeship by the DOLE Secretary, which requires
for proficiency, more than three (3) months of practical training on the job
supplemented by related theoretical instructions.'4 It is an occupation officially
endorsed by a tripartite body and approved for apprenticeship by 1ESDA.S6

An "apprenticeship asreement” is an employment contract wherein the

employer binds himself to train the apprentice and the apprentice in turn accepts
the terms of the training and agrees to work for the employed' for a recognized
apprenticeable occupation, emphasizing the rights, duties and responsibilities of
each part}'.7

b. Leamership-rekted terms.
“Leamership"refers to any practical training on leamable occupation which
may or may not be supplemented by related theoretical instructions.8

“Learner” refers to a person hired as a trainee in semi-skilled and other

industrial occupations which are non-apprenticeable and which may be learned
through practical training on the job for a period not exceeding three (3) months,
whether or not such practical training is supplemented by theoretical instructions.9

1 Section 4 [j], R A No 7796; Section 1, R ule X , R ules and R egulations Im plem enting the TESDA A ct o f 1994; Letter B (1),
D epartm ent O rder N o. 68-04, S eries o f 2004; N o. 2. TESO A C ircular N o. 16. S eries o f 2004.
2 A rticle 58 [b ], Labor Code, referring to C hapter I, TB e II o f Book II o f the Labor C ode; Section 2. Rule V I, Book II, Rules to
Im plem ent the Labor Code.
3 Section 4 [k], R A No. 7796; Section 1 , Rule X , R ules and R egulations Im plem enting the TESDA A ct o f 1994; L ette r B {2),
D epartm ent O rder No. 6 80 4 , S eries o f 2004; N o. 2. TESD A C ircular No. 16, S eries o f 2004, dated A ug. 12,2004.
4 A rticle 58 (c), Labor Code; Section 2, R u e V I, Book II. R ules to Im plem ent Ihe Labor Code.
5 Section 4 (m ], R A . No. 7796; Section 1. R ule X , R ules and R egulations Im plem enting Ihe TESDA A ct o f 1994; Letter B (4),
D epartm ent O rder No. 68-04, S eries o f 2004; N o. 2. TESD A C ircufer N o. 16, S eries o f 2004.
6 A rtide 58 (d], Labor Code; Section 2 , RiAe V I, B ook I! thereof.
1 Section 4 p], R A . No. 7796; Section 1, R ule X , R ules and R egulations Im plem enting Ihe TESDA A ct o f 1994; Letter B (3),
D epartm ent O lder No. 6 8 0 4 , S eries o f 2004; N o. 2. TESD A C ircular N o. 16, S eries o f 2004.
8 No. 2, TESDA C ircular No. 16, S eries o f 2004, dated Aug. 12, 2004 [R evised G uidelnes in the Im plem entation of
A pprenticeship and Leam ership P rogram s].
9 Section 4 [n], R A . No. 7796; Section 1, Rule X, R ules and R egulations Im plem enting the TESDA A ct o f 1994; (N o. 2,
TESDA C ircular No. 16, Series o f 20QA dated A ug. 12,2 00 4 [R evised G uidelines in the Im plem entation o f A pprenticeship
and Leam ership Program s); Section 1 (a], Rule VII, Book II, TESDA C ircular N o. 16, S eries o f 2004, dated Aug 12,2004
[Revised G uidelnes in the Im plem entation o f A pprenticeship a id Leam ership Program s]

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 Chapter three 257
LABOR STANDARDS

“Leamership agreement” refers to the employment and training contract

entered into between the employer and the learner.1

2. D IS T IN C T IO N S B E T W E E N L E A R N E R S H IP A ND
A P P R E N T IC E S H IP .

The following are the distinctions:

C r ite r ia L e a m e r s h ip A p p r e n tic e s h ip

P r a c t i c a l t r a in in g P ra c tic a l tra in in g o n -th e -jo b P ra c tic a l tra in in g o n -th e -jo b

T r a in in g a g r e e m e n t L e a m e rs h ip A g re e m e n t A p p re n tic e s h ip A g re e m e n t
L e a m a b le o c c u p a tio n s c o n s is tin g o f A p p r e n t ic e a b le o c c u p a tio n s o r a n y
O c c u p a t io n . s e m i- s k ille d a n d o th e r in d u s t r ia l tra d e , fo rm o f e m p lo ym e n t o r
o c c u p a t io n s w h ich a re n o n - o c c u p a tio n a pp ro ve d fo r
a p p re n tic e a b le a p p re n tic e s h ip b y th e D O LE S e c re ta ry
T h e o r e t ic a l M a y o r m a y n o t be s u p p le m e n te d S h o u ld a lw a y s b e s u p o le m e n te d b y
in s t r u c t i o n s b y re la te d th e o re tic a l in s tru c tio n s re la te d th e o re tic a l in s tru c tio n s
R a t io o f t h e o r e t ic a l N o rm a l ra tio is 100 h o u rs o f N o rm a l ra tio is 100 h o u rs o f th e o re tic a l
in s tr u c tio n s a n d o n - th e o re tic a l in s tru c tio n s fo r e ve ry in s tru c tio n s fo r e v e ry 2 ,0 0 0 h o u rs o f
t h e - jo b t r a in in g 2 2 ,0 0 0 h o u rs o f p ra c tic a l o r o n -th e - p ra c tic a l o r o n -th e -jo b tra in in g
jo b tra in in g
D u r a t io n o f t r a in in g P ra c tic a l tra in in g on th e jo b fo r a P ra c tic a l tra in in g on th e jo b o f m o re
p e rio d n o t e x c e e d in g th re e (3 ) th a n th re e (3 ) m o n th s b u t n o t o v e r
m o n th s s i x (6 ) m o n t h s 3
C irc u m s ta n c e s N o s im ila r p ro v is io n in th e L a b o r C o d e
A rtic le 74 o f th e L ab o r C ode,
ju s t if y in g h ir in g o f
e x p re s s ly p re s c rib e s th e p re ­
t r a in e e s
re q u is ite s b e fo re le a rn e rs m a y be
v a lid ly e m p lo y e d , to w it.

(a ) W h en n o e x p e rie n c e d w o rk e rs
a re a v a ila b le ;
(b ) T h e e m p lo y m e n t o f le a rn e rs is
n e c e s s a ry to p re v e n t
c u rta ilm e n t of e m p lo ym e n t
o p p o rtu n itie s ; and
(c ) The e m p lo ym e n t does not
c re a te u n fa ir c o m p e titio n in
te rm s o f la b o r c o s ts o r im p a ir
o r lo w e r w o rk in g s ta n d a rd s .4
L i m it a t i o n o n th e A p a rtic ip a tin g e n te rp ris e is a llo w e d N o s im ila r ca p
n u m b e r o f t r a in e e s to ta k e in le a rn e rs o n ly u p to a
m a xim u m o f tw e n ty p e rc e n t (2 0 % )
o f its to ta l re g u la r w o rk fo rc e 5

1 Section 1 [b ]. Rule V II, Book II. R ules to Im plem ent the Labor C ode.
J Section 28, Rule VI, Book U. bid.
3 CXXE Ocular No. 2, Series ol 2006, (A n ^n g C e rtjn P rcvi^jo iD e p a ftrie n lO rd e f No. 6WM] issued on August 11 2006 by boner DOLE
o(
Secretary (new Assocafe Justioe be Supreme Cool) A rtro 0. Brion
1 See a!so Section 2, Rule VII, Book!!, Rules blmpiement he Labor Code.
» No. 37.. bid.

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 258 Bar Reviewer on U bor uw

O ption to e m p lo y The e n te rp ris e is o b lig e d to h ire T h e e n te rp ris e is g iv e n o n ly a n

th e le a rn e r a fte r th e la p s e o f th e “ o p tio n " to h ire th e a p p re n tic e a s an
le a m e rs h ip p e rio d e m p lo y e e .1
W age rate S e v e n ty -five p e rc e n t (7 5 % ) o f th e S e v e n ty -fiv e p e rc e n t (7 5 % ) o f th e
s ta tu to ry m in im u m w a g e .2 s ta tu to ry m in im u m w a g e .3
Q ua lification s N o q u a lific a tio n s e x p re s s ly
A rtic le 59 o f th e L a b o r C o d e re q u ire s
m e n tio n e d in th e la w
th e a p p re n tic e :

(a ) B e a t le a s t fo u rte e n (1 4 ) y e a rs
o f age;
(b ) P o sse ss v o c a tio n a l a p titu d e a nd
c a p a c ity fo r a p p ro p ria te te s ts ;
a nd
(c ) P o sse ss th e a b ility to
co m p re h e n d a nd fo llo w o ra l a nd
w ritte n in s tru c tio n s .

3. CON FLICT IN T H E AGE R E Q U IR E M E N T FOR A P P R E N T IC E S ,

HOW RESOLVED.
While the age prescribed for apprentices under Article 59 is 14 years of
age, however, the Implementing Rules provided the following age requirement, to wit
Be at least fifteen (15) years of age, provided those who are at least fifteen (15)
years of age but less than eighteen (18) may be eligible for apprenticeship only in
non-hazardous occupations.4
Notably, there is a difference in the age requirement between the 14-year
old prescribed in the law and the 15-year old enunciated in the Implementing Rules.
Generally, the well-setded role o f legal hermeneutics dictates that if there is a
conflict between the law and its implementing rule or regulation, the provision of
the former should prevail over die latter. The implementing rule cannot certainly
operate to amend the law. Consequently, the minimum age requirement should
have been fourteen (14) years of age except for the fact that the age requirement in
the said Implementing Rules is based on and more congruent with latest legislation,
more particularly, the 2003 law, R.A. No. 9231,5 where it is provided that:

1 SeeNo.llO ofTESDAQ rcularNo. 16, Series of 2004 and DOLE Circular No 2. Series of 20G5.
2 Sector 29, Rub VI, Bock II, bid; Sector £, Republc Ad No. 6640, Sector 10, Rules implementing R A No. 6640, Sector 10, Rules
Implementing R A No. 6727; No. I (HI D C tf Hanctoook on W otes StaWay Monetary Bcnets; No. 1 8 , TESDA Q a ta r No. 16, Series ot
2004, dated August 12,2004 (Revised Guidelines in the Implementator of Apprenticeship and Leamership Programs
1 Secfcn 29, Rub VI, Book II, Ibid.; Secfon 5, Republc Act No. 6640, Sector 10, Rules implementing RA No. 6640, Secfon 10, Rubs
knpbmentog RA No. 6727; No. I (It). DOLE Handbook on Worters Statutory Monetary Benefits; No. 3.8, TESDA Ocular No. 16, Series of
2004, dated August 12,2004 Revised Gu'defces in the Impienentafcn of Apprenticeship and leamemhp Programs.
4 The otoer 3 requirem ents are: (1) Be phvsicaty f t for the occupation in w hich he desres to be trained; (2) P ossess vocational
aptitude and capacity fo r the particular occupation as estabfched through appropriate tests; and (3) P ossess the abSity to
com prehend and W tow oral and w ritten instructions.
5 Entitled "AN ACT PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND AFFORDING
STRONGER PROTECTION FOR THEW ORKING CHILD, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 7610,
AS AMENDED, OTHERWISE KNOWN AS THE 'SPECIAL PROTECTION OF CHILDREN AGAINST CHILD ABUSE,
EXPLOITATION AND DISCRIMINATION A C T approved on D e ce rrter 19,2003.

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IABOR STANDARDS

(1) All persons under eighteen (18) years o f age shall be considered as a
“child”; and
(2) Children below fifteen (15) years of age shall not be employed except
if he/shc falls under any of the exceptions*1 mentioned and
enumerated in the law.2*

Apprenticeship is not one o f the exceptions, therefore, this prohibition on

employing an apprentice below the age o f fifteen (15) years applies to apprentices.
Consequently, the proper age qualification is fifteen (15) years but not because o f
the Implementing Rules’ provision as mentioned above but by reason of R.A. No.
9231.

7.
PERSONS WITH DISABILITIES
1. LEGAL BASIS.

Prior to the advent of R.A. No. 7277,J otherwise known as the “Magna
Cartafor Disabled Persons, ” the relevant provisions arc found in the Labor Code on
handicapped w orkers, namely: Articles 78 to 81 thereof. R.A. No. 7277 is now
the prevailing law. Subsequently, however, R.A. No. 94424 was enacted for
purposes, inter alia, o f changing the tide o f R.A. No. 7277 to read as the ‘Magna
Cartafor Persons with Disability, ” and all references in the said law to “disabledperson"
were likewise amended to read as “person with disability'' or 'P\VD. ” The term
“handicapped workers” therefore should no longer be used to describe persons with
disability as this is no longer legally correct

1 The exceptions, as enum erated in Section 12 o f R A N o. 7610, as am ended by S ection 2 o f R A No. 9231 are as fo llo w s:
(1) W hen a c h id v e rts d ire c t)/ m d e r the so le responsiW ity o f h is/h e r parents o r legal guardian and w here o niy m em bers o f
his/her fa m iy are em ployed: P rovided, how ever, T h a t h is/h e r em ploym ent n eithe r endangers his/her tfe , safety, h ea lth , and
m orals, n o r im pairs h is/h e r norm al d evelopm ent P rovided, fu rth e r, That the parent o r legal guardian shaJ provide th e said
child w ith tt^e prescribed prim ary a nd/or secondary education; o r
(2) W here a chiefs em ploym ent o r p articipation in public entertainm ent or inform ation through cinem a, theater, ra d io ,
television o r other form s o f mecSa is essential: P rovided, T hat th e em ploym ent contract is concluded by the child's parents o r
legal guardian, w ith the express agreem ent o f the c h id concerned, if possfcle. and the approval o f the D epartm ent o f L ab o r
and E m ploym ent P rovided, further, That the foScMing requirem ents in a l instances are strid tyco m p fe d w ith:
(a) The em ployer s h a l ensure the protection, h ea lth , safety, m orals and norm al developm ent o f the child.cralaw
(b) The e m p tie r sh a ll ris h tu te m easures Id prevent the ch ie fs e x p b ta to n o r discrim ination taking into account the system
and level o f rem uneration, and the duration and arrangem ent o f w orking tim e, and
(c) The em ployer s h a l form ulate and im p lem ent subject to the approval and supervision o f com petent a uthorities, a
continuing program fo r training and s kills acquisition o f the ch ild.
In the above exceptional cases w here any such child m ay be em ployed, the em ployer shall first secure, before engaging
such ch id , a w ork p erm it from the D epartm ent c f Labor and Em ptoym en; w hen shall ensure observance o f the above
requirem ents.
1 A rticle 59, Labor C ode; S ection 11, R ule V I. Book II, R ules to Im plem ent the Labor Code
J Approved on March 2 4 ,199Z
* See Section 4 thereof. This law became efioctve on April 30.2007. Secfon 4 states "S tC 4 The tide o( R A No 7277 3 hereby amended b
read as he “Magna Carta b r Persons with D sa b it/*, and aS references on the sa ri law to '(fcafcfcd persons- shal fc w s e be amended to read
as‘persons w H idsaM iy*

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 260 Bar reviewer on Labor Law

2. D E FIN IT IO N OF IM PO R TA N T TERM S.

The following terms are specifically defined in the law;

1. “Persons with Disability” are those suffering from restriction or different

abilities, as a result of a mental, physical or sensory impairment, to
perform an activity in the manner or within the range considered
normal for a human being.

2. “Impairment” refers to any loss, diminution or aberration of

psychological, physiological, or anatomical structure or function.

3. ‘Disability" means (1) a physical or mental impairment that

substantially limits one or more psychological, physiological or
anatomical functions o f an individual or activities o f such individual;
(2) a record of such an impairment; or (3) being regarded as having
such an impairment.

4. “Handicap” refers to a disadvantage for a given individual, resulting

from an impairment or a disability that limits or prevents the function
or activity that is considered normal given the age and sex o f the
individual.

5. “Marginalised Persons with Disability” refer to persons with disability who

lack access to rehabilitative services and opportunities to be able to
participate fully in socio-economic activities and who have no means of
livelihood and whose incomes fall below the poverty threshold.

3. EQUAL O PPO R TU N ITY FO R EM PL O Y M E N T .

Under the law',1PWDs are entided to equal opportunity for employment.

Consequently, no PWD shall be denied access to opportunities for suitable
employment. A qualified employee with disability shall be subject to the same terms
and conditions of employment and the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a qualified able-bodied person.

Five percent (5%) o f all casual emergency and contractual positions in the
Departments of Social Welfare and Development, Health, Education and other
government agencies, offices or corporations engaged in social development shall
be reserved for PWDs.2

4. PWDs ARE ELIGIBLE F O R A P P R E N T IC E S H IP A ND

LEARNERSHIP.

Under R A No. 7277,3 it is provided that subject to the provisions o f the

Labor Code, as amended, PWDs shall be eligible as apprentices, or learners;*5

1 Under RA No. 7277, oterwse known as fie'M agna Carta farDsabled Persons" [now known as H agra Carta ter Persons Willi D isabiy.
7 Secfcn 5, Chapter 1, Tide II, R A No. 7277.
5 Secfon 7, Chapter I, Trtte Btiereof.

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 Chapter Three 261
IABOR. STANDARDS

provided that their handicap is not as much as to effectively impede the

performance of job operations in the particular occupation for which they are hired
and provided further that after the lapse o f the period of apprenticeship, if found
sadsfactory in the job performance, they shall be eligible for employment.

5. WAGE RATE.

Under Article 80 of the Labor Code, handicapped workers are endded to

not less than seventy-five percent (75%) o f the applicable adjusted minimum wage.1
In view, however, o f R.A. No. 7277,2 the wage rate o f PWDs is 100% o f the
applicable minimum wage.

Wage orders issued by the Regional Tripartite Wages and Productivity

Boards (RTWPBs) normally reflect this principle. To cite an example, Section 7 o f
Wage O rder N o. NCR-20, which was approved on May 17, 2016345 by the
RTWPB-National Capital Region, states:

“All qualified handicapped workers shall receive the full amount of the
minimum wage rate prescribed herein pursuant to Republic Act No. 7277,
otherwise known as the Magna Cartafor DisabledPersons.”*

Moreover, in case o f legally-mandated wage increases enunciated in wage

orders issued by the RTWPBs, the employment agreements with persons with
disability are deemed automatically modified insofar as their wage clauses arc
concerned to reflect the said increases.5

6. WAGE RATE AS A P P R E N T IC E O R LEA R N ER .

A PWD hired as an apprentice or learner shall be paid not less than

seventy-five percent (75%) of the applicable minimum wage.

If the PWD, however, is hired as a learner and employed in piece or

inccnuve-ratc jobs during the training period, he shall be paid one hundred percent
(100%) o f the applicable minimum wage.

a.
DISCRIMINATION

1. D ISC R IM IN A T IO N O N E M P L O Y M E N T P R O H IB IT E D .

N o entity, whether public or private, shall discriminate, against a qualified

PWD by reason o f disability in regard to job application procedures, the hiring,

' Article 80 [b], Labor Code; Secfcn 5, Repubfc Act No. 6640; Section 10. Riies Imptemenfog Republic Act No. 6640; Secfcn 10, Rules
Smpiementing RcpubQc Act No. 6727; No. I f t l CXXE Handbook on Workers Stakrtry Monetary BeneSs.
J Secfcn 5, Chapter 1, Tile II o (R A No. 7 27.
3 The«vageordervespubEstejiiThePhippineStaronM 3/18.2016.lt6»vusefccfvecn2,2016.
4 See also Section 8. Rdafl, Rules Impfemenfcg Wage Order No. NCR-20 a p p n ^ by toe DOl£$ecretay on May 27,2016.
5 Arfde 124, Labor Code as amended by Section 3, Repubfc Act No. 6727; Secfcn 10, Rules ImpiemenSng Repubfc Ad No 6727; Section 5,
Repubfc Act No. 6640; Section 10. Rifes Implementing Repubfc Act No. 6640 [applying by analogy sin lar provisions appfcabte to
apprenfceship and bamership agreements mentioned therm

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 262 Ba r Reviewer o n Labor law

promotion, or discharge of employees, employee compensation, job training, and

other terms, conditions and privileges of employment The following constitute
acts of discrimination:

(a) Limiting, segregating or classifying a job applicant with disability in

such a manner that adversely affects his work opportunities;
(b) Using qualification standards, employment tests or other selection
criteria that screen out or tend to screen out a PWD unless such
standards, tests or other selection criteria are shown to be job-related
for the position in question and are consistent with business
necessity;
(c) Utilizing standards, criteria, or methods of administration that:
(1) have the effect o f discrimination on the basis of disability; or
(2) perpetuate the discrimination of others who ate subject to
common administrative control.
(d) Providing less compensation, such as salary, wage or other forms of
remuneration and fringe benefits, to a qualified employee with
disability, by reason o f his disability, than the amount to which a non­
disabled person performing the same work is entitled;
(e) Favoring a non-disabled employee over a qualified employee with
disability with respect to promotion, training opportunities, and study
and scholarship grants solely on account o f the latter’s disability;
(f) Re-assigning or transferring an employee with a disability to a job or
position he cannot perform by reason of his disability;
(g) Dismissing or terminating the services o f an employee with disability
by reason of his disability unless the employer can prove that he
impairs die satisfactory performance o f the work involved to the
prejudice of the business entity, provided, however, that the
employer first sought to provide reasonable accommodations for
persons with disability;
(h) Failing to select or administer in the most effective manner
employment tests which accurately reflect the skills, aptitude or other
factor of the applicant or employee with disability that such tests
purports to measure, rather than die impaired sensory, manual or
speaking skills o f such applicant or employee, if any, and
(i) Excluding PWD from membership in labor unions or similar
organizations.1

S eria l 32. Chapter I, W a ll, kid

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 Ch a pter.T h r e e 263
LABORSTANDARDS

b.
INCENTIVES FOR EMPLOYERS

1 INCENTIVES FO R EMPLOYERS W HO EMPLOY PWDs.

To encourage the active participation of the private sector in promoting

the welfare of PWDs and to ensure gainful employment for qualified persons with
disability, adequate incentives shall be provided to private entities which employ
PWDs.1

Private entities that employ PWDs who meet the required skills or
qualifications, either as a regular employee, apprentice or learner, shall be entitled to
an additional deduction from their gross income equivalent to twenty-five percent
(25%) o f the total amount paid as salaries and wages to persons with disability;
provided, however, that such entities could present proof as certified by the
Department of Labor and Employment P O L E ) that PWDs are under their
employ and provided further that the employee with disability is accredited with the
DOLE and the Department of Health as to his disability, skills and qualifications.2

Private entities that improve or modify their physical facilities in order to

provide reasonable accommodation for PWDs shall also be entitled to an
additional deduction .from their net taxable income equivalent to fifty percent
(50%) of the direct costs of the improvements or modifications.3

■oOo

^ Secfion 8(a), Chapter 1,TJje0,a)id.

2 Secfion8{bll Chaptar1,TBaB,bit
3 TliisSecto,howeveradoesratappVtt>inr|)(ove(nei4sorino(fiEcaSonsoffiacS6esreqiiredunder6alasParnbansaaang
344 febcuaiy 25 ,1S831 enSJed 'An Act to Enhance Die Mobfiy of Disabled Persons by Requfing Certan Buffings,
teffirfons, Estebishmente.and Pubic Utfties to instal FacBies and Olher Devioes.' (Section 8 ^ . Chapter 1, Tide 0, bid.).

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 C hapter F our
SOCIAL WELFARE LEGISLATION

TOPICS PER SYLLABUS

IV.
SOCIAL WELFARE LEGISLATION

A. SSS Law (R.A. 8282)

1. Coverage and exclusions
2. Dependents and beneficiaries
3. Benefits

B. GSIS Law (R.A. 8291)

1. Coverage and exclusions
2. Dependents and beneficiaries
3. Benefits

C. Disability and death benefits

1. Labor Code
2. POEA-Standard Employment Contract

A.
SSS LAW
1. R.A. 8282, REPEALED BY R.A. 11199.

The 2019 Labor Lav Syllabus still prescribed R A No. 8282 as the
reference for the discussion of the SSS Law. However, on February 07, 2019,
President Duterte approved R.A. No. 11199,1 otherwise known as the "Social
Security Act of 2018, ’’which expressly repealed2 R.A. No. 8282.

' RA. No. 11199 is entitled 'AN ACT RATIONALIZING AND EXPANDING THE POWERS AND DUTIES OF THE SOCIAL
SECURITY COMMISSION TO ENSURE THE LONG-TERM VIABILITY OF THE SOCIAL SECURITY SYSTEM,
REPEALING FOR THE PURPOSE REPUBLfC ACT NO. 1161, AS AMENDED BY REPUBLIC ACT NO. 8282,
OTHERWISE KNOWN AS THE'SOCIAL SECURITY ACT OF 1997"
2 RA. No. 11199 embodies the foSowng prevision: ‘SEC. 33. R e pe a in g Clause. - Republic Act No. 1161 and RepubSc Act
No 8282 and all other laws, proclamations executive orders, rules and regulations or parts thereof inconsistent with this Act

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SOCIAL WELFARE LEGISLATION

This topic therefore will be discussed in accordance with R.A. No. 11199.

1.
COVERAGE AND EXCLUSIONS
a.
COVERAGE

1. COMPULSORY COV ERA GE.

Coverage in the SSS shall be compulsory upon all employees, including

kasambahays or domestic workers not over sixty (60) years o f age and their
employers.1

“Employer” is any person, natural or juridical, domestic or foreign, who

carries on in the Philippines any trade, business, industry, undertaking, or activity o f
any kind and uses the services o f another person who is under his orders as regards
the employment, except the government and any o f its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the
Government*. Provided, That a self-employed person shall be both employee and
employer at the same time.2

‘Employee” is any person who performs services for an employer in which

either or both mental o r physical efforts are used and who receives compensation
for such services, where there is an employer-employee relationship: Provided, That
a self-employed person shall be both employee and employer at the same time.3

2. COMPULSORY C OV ERA GE O F SE L F-E M PL O Y E D PERSO N S.

Coverage in the SSS shall also be compulsory upon such self-employed

persons as may be determined by the Commission under such rules and regulations
as it may prescribe, including, but not limited to, the following:

(a) All self-employed professionals;

(b) Partners and single proprietors o f businesses;
(c) Actors and actresses, directors, scriptwriters and news correspondents
who do not fall within the definition o f the term "employee" (supra)]
(d) Professional athletes, coaches, trainers and jockeys; and
(e) Individual farmers and fishermen.4

Unless otherwise specified in the law, all provisions thereof applicable to

covered employees shall also be applicable to the covered self-employed persons.1

are hereby repealed, modified or amended accordingly: P rovided, That no person shal be deemed to be vested with any
property or other right by virtue of the enactment a operation of this Act’
Section 9(a), R A No. 11199.
Section 8(c), Id.
Section 8(c), Id.
Section 9-A, Id.

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 266 Ba r Reviewer o n labor Uw

“Stif-employid” is any person whose income is not derived from

employment as defined under this Act, as well as those workers enumerated
above.2

3. COMPULSORY COVERAGE O F OFW s.

a. Coverage o f all OFWs.

Coverage in the SSS shall be compulsory upon all sea-based and land-
based OFWs,3 Provided, That they are not over sixty (60) years o f age.4

All benefit provisions under this Act shall apply to all covered OFWs. The
benefits include, among others, retirement, death, disability, funeral, sickness and
maternity.5

b. Sea-based OFWs.
Manning agencies are agents o f their principals and are considered as
employers o f sea-based OFWs.

For purposes of die implementation o f R A . No. 11199, any law to the

contrary notwithstanding manning agencies are jointly and severally or solidarily
liable with their principals with respect to die civil liabilities incurred for any
violation thereof.

The persons having direct control, management or direction o f the

manning agencies shall be held criminally liable for any act or omission penalized
under RA. No. 11199 notwithstanding Section 28(0 thereof.4

c. Land-based OFWs.
Land-based OFWs are compulsory members o f the SSS and considered in
the same manner as self-employed persons under such rules and regulations that
die Commission shall prescribe.7

The Department o f Foreign Affitirs (DFA), the Department o f Labor and

Employment (DOLE) and all its agencies involved in deploying OFW s for
employment abroad are mandated to negotiate bilateral labor agreements with the
OFWs' host countries to ensure that the employers o f land-based OFWs, similar to
the principals o f sea-based OFWs, pay die required SSS contributions, in which

• ML
7 Secfon8(s),ld.
1 AsW stem 'OFW 'Bde5iedurK!6fFlANo.8042,o()ie»v^luxwnas(heM 3rantVVbr1^3ndOveiseasFi]pnosActof
1995, as amended by R A No. 10022;
< Section9-8 (a), RA. No. 11199.
s U
1 Secfim 9 6 (b), R A hkx 11199; Sedrn 28© states: SEC. C la u s a -m (OB he ad a omission penafeed by
this Ret be commlted by an association. patoashjp, ccxpcraSon OT anyoher institution. is managing h e a t ifrectoisor.
pam asshal be iableftr he penaSes presided in ihis Actfcrlheottense.*
' Section 9 6 (c),RANo.11199.

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S O C IA L W ELFA RE L E G IS L A T IO N

case, these land-based OFWs shall no longet be considered in the same manner as
self-employed persons. Instead, drey shall be considered as compulsorily covered
employees with employer and employee shares in contributions that shall be
provided for in die bilateral labor agreements and their implementing
administrative agreements: Prwidtd, I h a t in countries which already extend social
security coverage to OFWs, the DFA through die Philippine embassies and the
D O LE shall negotiate further agreements to serve the best interests o f the OFW s.1

The DFA, the D O LE and, the SSS shall ensure compulsory coverage o f
OFWs through bilateral social security and labor agreements and other measures
for enforcement2

4. V O LU N TA R Y COVERAGE.

In addition to the foregoing OFW s who are eligible for voluntary

coverage, the following may be dted:

1) N on-w orking spouses o f SSS m em bers

Spouses who devote full time to managing the household and family
affairs, unless they are also engaged in other vocation or employment
which is subject to mandatorv coverage, may be covered by the SSS
on a voluntary basis.3

2) ®
Upon die termination o f their employment overseas, OFW s may
continue to pay contributions on a voluntary basis to maintain their
rights to full benefits.4

3) Filipino p erm an en t m ig ran ts, in clu d in g Filipino im m igrants,

p erm an en t residents an d n atu ralized citizens o f their h o st
CM inffigs

Filipino permanent migrants, including Filipino immigrants,

permanent residents and naturalized citizens o f their host countries
may be covered by the SSS on a voluntary basis.5

5. E F F E C T IV E D A T E O F C O V ERA G E.

The effectivity date o f die compulsory coverage are as follow:

1) For em ployer - Compulsory coverage o f the employer shall take

effect on die first day o f his operation.1

1 Section 9 6 (<0,11
1 Secflon 9 6 (e ), H.
J Section 9(b), U
4 Section 9 6 Q .I1
5 Section 9 6 (g),kL

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2) For employee - Compulsory coverage o f the employee shall take

effect on the first day o f his employment2
3) For self-employed - The compulsory coverage o f the self-employed
person shall take effect upon his registration with the SSS.3

6. E FFEC T O F SEPARATION F R O M E M PL O Y M E N T .

When an employee under compulsory coverage is separated from

employment, his employer's contribution on his account and his obligation to pay
contributions arising from that employment shall cease at the end o f die month o f
separation but said employee shall be credited with all contributions paid on his
behalf and endded to benefits according to the provisions o f R A No. 11199. He
may, however, continue to pay die total contributions to maintain his right to full
benefit4

7. E FFEC T O F IN T E R R U P T IO N O F BUSINESS O R PR O FESSIO N A L

IN C O M E.

If the self-employed member realizes no income in any given month, he

shall not be required to pay contributions for that month. He may, however, be
allowed to continue paying contributions under the same rules and regulations
applicable to a separated employee m em ber Provided, That no retroactive payment
o f contributions shall be allowed other than as prescribed under Section 22-A5 o f
R A N o .lll9 9 .«

b.
EXCLUSIONS

1. EXCLUDED EM PLOYER.

Government and any o f its political subdivisions, branches or

instrumentalities, including corporations owned or controlled by the Government7
with original charters.

2. EXCLUDED EM PLOYEES.

Workers whose employment or service falls under any o f the following

circumstances ate not covered:

1 SecfolO pfecfeD ateofO K efageLM .

* kL
1 Id.
4 SecSon 11 [E^ofSepar^»nfromErnplc>Tnenq, id.
5 SEC. 22-A. R e n til& K Q d C o n & M io n s o< S e f- & n p b y d d Member. ■ Se*amployed members shafl re n t their monthly
conitutons quatety on such dates and schedules as the Commisaon may sperfy through nfes and regulations:
AtMdMTtaroieiroac&epaymrttfanHwS^
« Secto11AP^dWHn^dBu9nessaPnfesiC)ndta»^,RA.No.11199.
r Secfan 8(c). RA. No. 11199.

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SO C IA L W ELFA RE L E G ISLA TIO N

(1) Services where there is no employer-employee relationship in

accordance with existing labor laws, rides, regulations and
jurisprudence;
(2) Service performed in the employ o f the Philippine Government or
instrumentality or agency thereof,
(3) Service performed in the employ o f a foreign government or
international organization, o r their wholly-owned instrumentality:
Provided, however, That this exemption notwithstanding, any foreign
government, international organization or their wholly-owned
instrumentality employing workers in the Philippines or employing
Filipinos outside o f the Philippines, may enter into an agreement with
the Philippine Government for the inclusion of such employees in the
SSS except those already covered by then respective civil service
retirement systems: Provided, further, That the terms o f such agreement
shall conform with die provisions o f R.A. No. 11199 on coverage and
amount o f payment o f contributions and benehts: Provided,finally, T hat
the provisions o f this Act shall be supplementary to any such
agreem ent and
(4) Such other services performed by temporary and other employees
which may be excluded by regulation o f die Commission. Employees
o f bonafide independent contractors shall not be deemed employees o f
the employer engaging the service o f said contractors.1

2.
DEPENDENTS AND BENEFICIARIES
a.
DEPENDENTS

L W HO ARE D EPEN D EN TS.

T he dependents shall be the following:

(1) The legal spouse entided by law to receive support from the member,
(2) The legitimate, legitimated o r legally adopted, and illegitimate child
who is unmarried, not gainfully employed, and has not reached
twenty-one (21) years o f age, o r if over twenty-one (21) years o f age,
he is congenitally or while still a minor has been permanendy
incapacitated and incapable o f self-support, physically or mentally: and

(3) The parent who is receiving regular support from the member.2*

1 SecSon8Q.il
* Sec6on8(e).tl

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b.
BENEFICIARIES
1. PRIMARY B EN EFIC IA RIES.

The following ate primary beneficiaries:

1. The dependent spouse until he o t she remarries;

2. The dependent legitim ate, legitim ated o t legally adopted, and

illegitimate children;

The dependent illegitim ate children shall be entitled to 50% of the

share of the legitimate, legitimated o t legally adopted children.
However, in the absence o f the dependent legitimate, legitimated
children of the member, his/her d ep en d en t illegitim ate children
shall be entitled to 100% of the benefits1

2. SECONDARY B EN EFIC IA R IES.

The following are seconriatybeneficiaries:

1. The dependent parents, in the absence o f die primary beneficiaries.

2. Any other person designated by die member as h is/h er secondary

beneficiary, in the absence o f aO die foregoing primary beneficiaries
and dependent parents.2

3.
BENEFITS
1. TW O (2) M AIN CLASSIFICATIONS.

The SSS benefits may be classified as follows:

(a) Social security benefits:

1) Sickness
2) Maternity Leave
3) Retirement
4) Unemployment Insurance or Involuntary Separation
5) Disability
6) Death
7) Funeral

(b) Employees’ com pensation benefits

1 Section 8{k),M.
} IfcW.

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S O C IA L W E L FA R E L E G IS L A T IO N

a.
SOCIAL SECURITY BENEFITS
1.
SICKNESS BENEFIT

1. W H O M A Y A V A IL .

The sickness benefit is a daily cash allowance paid fot the number of days
a member is unable to work due to sickness or injury. This benefit may be availed
o f as follows:

A member who has paid at least three (3) monthly contributions in the
12-month period immediately preceding the semester o f sickness or injury and is
confined therefor for more than three (3) days in a hospital or elsewhere with the
approval o f the SSS, shall, for each day o f compensable confinement or a fraction
thereof be paid by his employer, or the SSS, if such person is unemployed ot self-
employed, a daily sickness ben efit equivalent to ninety p e rcen t (90%) of h is
average daily salary c re d it1 subject to the following conditions:

(1) In no case shall the daily sickness benefit be paid longer than one
hundred twenty (120) days in one (1) calendar year, nor shall any
unused portion o f the one hundred twenty (120) days o f sickness
benefit granted under this section be carried forward and added to the
total number o f compensable days allowable in the subsequent year;
(2) The daily sickness benefit shall not be paid for more than two hundred
forty (240) days on account o f the same confinement, and
(3) The employee member shall notify his employer o f the fact o f his
sickness or injury within five (5) calendar days after the start o f his
confinement unless such confinement is in a hospital or the employee
became sick or was injured while working or within the premises o f
the employer, in which case, notification to the employer is not
necessary. Provided,- That if the member is unemployed or self-
employed, be shall directly notify the SSS o f his confinement within
five (5) calendar days after the start thereof unless such confinement is
in a hospital, in which case, notification is also not necessary: Provided,
further, That in cases where notification is necessary, the confinement
shall be deemed to have started not earlier than the fifth day
immediately preceding the date o f notification.2

1 SecSon 8(n) of RA. No 111S9 states: a(n} Average dacV safary cnoc£F- The resuS obtatned by dividing the sum ot 0ie six (6)
highest monthly salary credits in tie tweh/e-monti period innmeefiaaety preceding foe semester of conSngency by one
hundred eighty (180).*
2 SecSon 14{a), R A No. 11199.

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2. COMPENSABLE C O N F IN E M E N T .

The compensable confinement shall begin on die first day of sickness,

and the payment of such allowances shall be prompdy made by the employer every
regular payday or on the fifteenth and last day o f each month, and similarly in the
case of direct payment by the SSS, for as long as such allowances are due and
payable: Provided, That such allowance shall begin only after all sick leaves of
absence with full pay to the credit of the employee member shall have been
exhausted.1

One hundred percent (100%) o f the daily Benefits provided in die

preceding paragraph shall be reimbursed by the SSS to said employer upon receipt
of satisfactory proof of such payment and legality thereof: Provided, That the
employer has notified the SSS of the confinement widiin five (5) calendar days after
receipt of the notification from the employee member: Provided, further, That if the
notification to die SSS is made by the employer beyond five (5) calendar days after
receipt of the notification from the employee member, said employer shall be
reimbursed only for each day of confinement starting from the tenth calendar day
immediately preceding the date o f notification to the SSS: Provided, finally, That the
SSS shall reimburse the employer or pay the unemployed member only for
confinement within the one-year period immediately preceding the date the claim
for benefit or reimbursement is received by the SSS, except confinement in a
hospital, in which case, the claim for benefit or reimbursement must be filed within
one (I) year from the last day of confinement.2

3. N O T IFIC A TIO N R E Q U IR E M E N T .

Where the employee member has given the required notification but the
employer fails to notify the SSS o f the confinement or to file the claim for
reimbursement within the period prescribed in this section resulting in the
reduction of the benefit or denial o f the claim, such employer shall have no fight to
recover the corresponding daily allowance he advanced to the employee member as
required in this section.** The provisions regarding the notification required o f the
member and the employer as well as the period within which the claim for benefit
or reimbursement may be filed shall apply to all claims filed with the SSS.4

4. ADJUDICATION OF CLAIM O F R EIM B U R SE M E N T .

The claim of reimbursement shall be adjudicated by the SSS within a

period of two (2) months from receipt thereof: Provided, That should no payment
be received by the employer within one (1) month after the period prescribed

' Section 14(b). Id.

* Secfion 14(C), k l
J Section 14(d), Id.
1 Section 14(f), Id.

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 C ha pter fo u r 273
SOCIAL WELFARE LEGISLATION

herein for adjudication, the reimbursement shall thereafter earn simple interest of
one percent (1%) per month until paid.1

2.
MATERNITY LEAVE BENEFIT

1. R.A. N O . 11210, T H E PR EV A IL IN G LAW.

R.A. No. 11199, otherwise known as the "Social Security Act of 2018 ”,
which was approved on February 07, 2019. re-enacted the exact provision o f
Section 14-A23of the repealed R-A. No. 8282, the "Social Security Act of 1997."
However, 13 days later, or on February 20, 2019. President Rodrigo Duterte
approved R.A. No. 11210, otherwise known as the "105-Day Expanded Maternity
Leave Law’* which contains diametrically different provisions from R.A. No. 11199.
There is thus no doubt that die prevailing law on maternity leave benefit is R.A.
No. 111210 which repealed or modified “ [a]ll laws, decrees, orders, rules and
regulations or parts thereof inconsistent [therewith].”

The maternity leave benefit under R.A. No. 11210 is discussed extensively
under the topical heading of “ C. LEAVES” in C hapter T hree, supra.

3.
RETIREMENT BENEFITS

1. TW O TYPES O F R E T IR E M E N T B E N E F IT S .
Retirement benefit is a cash benefit either in m onthly pension or lum p
sum paid to a member who can no longer work due to old age.

The two (2) types of retirement benefits arc:

1) Monthly pension, and

2) Lump sum amount.

The m ondily pension is a lifetime cash benefit paid to a retiree who has
paid at least 120 monthly contributions to the SSS prior to the semester o f
retirement. The lum p sum am o u n t is granted to a retiree who has not paid the
required 120 monthly contributions. It is equal to the total contributions paid by
die member and by the employer including interest.

2. W H O A RE Q U A LIFIED .

A member who has paid at least one hundred twenty (120) monthly
contributions prior to the semester of retirement and who:

’ Section 14(e), Id.

2 SEC. 14-A-Matem iy Leave Beneft.
3 This law is entitled ‘An Act Increasing the Maternity Leave Period to One Hundred Five (105) Days for Female Workers with
an Opficn to Extend for an Additional Thirty (30) Days without Pay, and Granting an Additional Fifeen (15) Days for Solo
Mothers and F a Other Purposes.’

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(1) has reached the age o f sixty (60) years and is already separated from
employment or has ceased to be self-employed: or
(2) has reached the age o f sixty-five (65) years, shall be entided for as long
as he lives to the monthly pension,

Provided, That he shall have the option to receive his first eighteen (18)
monthly pensions in lum p sum discounted at a preferential rate o f interest to be
determined by die SSS.1

A covered member who is sixty (60) years old at retirement and who
does not qualify for pension benefits as above described, shall be endded to a
lump sum benefit equal to the total contributions paid by him and on his behalf:
Provided, That he is separated from employment and is not continuing payment of
contributions to the SSS on his own.2

3. REEM PLO YM EN T OR R ESU M PT IO N O F SELF-EM PLO Y M E N T .

The monthly pension shall be suspended upon the reem ploym ent or
resumption of self-employment of a retired member who is less than sixty-five
(65) years old. He shall again be subject to Section 18 (Employee’s Contributions)
and his employer to Section 19 (Employer’s Contributions) of RA. No. 11199.3

4. DEATH O F R ET IR E D M EM BER.

Upon the death of the retired m em ber, his prim ary beneficiaries as o f
the date of his retirement shall be entided to receive the monthly pension: Provided,
That if he has no primary beneficiaries and he dies widiin sixty (60) months from
the start of his monthly pension, his secondary beneficiaries shall be entided to a
lump sum benefit equivalent to the total monthly pensions corresponding to the
balance of the five-year guaranteed period, excluding the dependents' pension.4

5. R E T IR E M E N T O F M EM B ER A FTER R E A C H IN G 60.

The monthly pension o f a member who retires after reaching age sixty
(60) shall be the higher of either (1) the monthly pension computed at the earliest
time he could have retired had he been separated from employment or ceased to be
self-employed plus all adjustments thereto; or (2) the monthly pension computed at
the time when he actually retires.5

6. R E T IR E M E N T O F U N D E R G R O U N D M IN EW O R K ER S.

An underground mineworker shall be entided to retirement benefits if he:

' Section 12-8 (a), R A No. 11199.

? Section 12-8 (b), id.
J Section 12-8(c). Id.
4 Section 12-B(d), Id.
s Section 12-8 (e). Id.

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SOCIAL WELFARE LEGISLATION

1. has reached the age o f 55 years old and is an underground mineworkcr

for at least 5 years (either continuous or accumulated) prior to the
semester o f retirement but whose actual date o f retirement is not
earlier than March 13,1998; separated from employment or in the case
of self-employed, has ceased self-employment, and has paid at least
120 monthly contributions prior to the semester of retirement.

2. has reached the age of 60 years old whether employed or not.

7. M O N T H LY P E N S IO N .

a. Amount o f monthly pension.

The monthly pension shall be the highest o f the following amounts:
(1) The sum o f P300 plus 20% o f the average monthly salary cred it1
plus 2% o f the average monthly salary credit for each credited year
of service (CYS) in excess of 10 years; or
(2) 40% of the average m onthly salary cred it; or
(3) P I,000 if the member had less than 10 credited years of service (CYS);
P I,200 if widi at least 10 CYS; or P2,400 if with at least 20 CYS. The
monthly pension is paid for not less than 60 months.2

b. Additional monthly benefit allowance.

Pursuant to Memorandum from die Executive Secretary dated 22
February 2017, by authority o f the President o f the Republic o f the Philippines, an
additional monthly benefit allowance amounting to P I,000 shall be given to all
retirement, death, and disability pensioners receiving monthly pensions in or after
January 2017.3

c. Dependents1pension.

Where monthly pension is payable on account o f death, p erm an en t

total disability or retirem ent, dependents' pension equivalent to 10% o f the
monthly pension or P250, whichever is higher, shall also be paid for each
dependent child conceived on or before the date o f the contingency but not
exceeding five (5), beginning with the youngest and without substitution: Provided,
That where there are legitimate and illegitimate children, the former shall be
preferred.4

1 Section 8(m) of RA. No. 11199 states: “(m) Average m onthly sa la ry credit - The result obtained by dwdhg the sum of the
last sixty (60) monthly salary credits immediately preceding the semester of contingency by sixty (60), or the result obtained
by dividing the sum of all the monINy salary credits paid prior to the semester of contingency by the number of monthly
contritxrions paid in the sarrx2period, whtiiever is greater ftovibfed, That the rjury a ackness caused the drsatx%
shafl be deemed as the permanent disablity fa the purpose of computing the average monthly salary credit’
3 Section 12(a) and (b).RA. No. 11199
3 Section 12(c), Id.
4 Section 12-A, Id.

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8. R E T IR E E ’S A D D ITIO N A L B E N E F IT S .

The retiree is entitled to a 13th month pension payable every December.

All retiree pensioners prior to the effectivity o f R.A. No. 7875* on March 4,1995
are automatically considered members o f PhilHealth and he and his legal
dependents are cntided to its hospitalization benefits. On the other hand, retirees
effective March 4,1995 up to die present will be entitled to hospitalization benefits
under PhilHealth only if they have contributed 120 monthly Medicare
contributions. The counting o f 120 monthly contributions shall start in 1972, when
the Medical Care Act o f 1969 started implementation. v

UNEMPLOYMENT INSURANCE
OR INVOLUNTARY SEPARATION BENEFITS

R.A. No. 11199 grants this benefit to a member who is not over sixty (60)
years of age who has paid at least thirty-six (36) months contributions twelve (12)
months o f which should be in die 18-month period immediately preceding die
involuntary unemployment o r separation. H e shall be paid benefits in the form o f
monthly cash payments equivalent to fifty percent (50%) o f the average monthly
salary credit for a maximum o f two (2) months: Provided, That an employee who is
involuntarily unemployed can only claim unemployment benefits once every three
(3) years: Provided,further, That in case o f concurrence o f two or more compensable
contingencies, only the highest benefit shall be paid, subject to the rules and
regulations that the Commission may prescribe.2

5.
DISABILITY BENEFITS

1. PER M A N EN T TO TA L D ISA BILITY B E N E F IT S .

Upon the perm anent total disability o f a member who has paid at least
thirty-six (36) monthly contributions prior to die semester o f disability, he shall be
entitled to the monthly pension: Provided, That if he has not paid die required thirty-
six (36) monthly contributions, he shall be entitled to a lump sum benefit
equivalent to the monthly pension times the number o f monthly contributions paid
to the SSS or twelve (12) times the monthly pension, whichever is higher.3

2. REEM PLO YM EN T O R R E S U M P T IO N O F SE LF-EM PLO Y M E N T .

A member who (t) has received a lump sum benefit; and (2) is
teemployed or has resumed self-employment not earlier than one (l) year from the

' Tfelaw solhew iseluio^ as Ihe’Na&jria Health Insurance Act <rf1995*

a Section 14-6. RA. No 11199.
» Section IW (a). R A No 11199.

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SO C IA L WELFARE LEG ISLA TIO N

date o f his disability shall again be subject to compulsory coverage and shall be
considered a new member.1

The monthly pension and dependents’ pension shall be suspended upon

the reemployment or resumption o f self-employment or the recovery o f the
disabled member from his permanent total disability or his failure to present
himself for examination at least once a year upon notice by the SSS.2

3. D E A T H O F P E R M A N E N T T O T A L D ISA BILITY P E N S IO N E R .

Upon the d e a th o f the perm an en t to tal disability pensioner, his

prim ary beneficiaries as o f the date o f disability shall be entitled to receive th e
monthly pension: Provided, That if he has no primary beneficiaries and he dies
within sixty (60) months from die start o f his monthly pension, his secondary
beneficiaries shall be entitled to a lump sum benefit equivalent to the total
monthly pensions corresponding to the balance o f the five-year guaranteed period
excluding the dependents’ pension.3

4. P E R M A N E N T T O T A L D ISA B ILITIES.

The following disabilities shall be deemed permanent total;

(1) Complete loss o f sight o f both eyes;

(2) Loss o f two limbs at or.above the ankle o r wrists:
(3) Permanent complete paralysis o f two limbs;
(4) Brain injury resulting to incurable imbecility or insanity; and
(5) Such cases as determined and approved by die SSS.4

5. P E R M A N E N T PA RTIA L D ISA B ILITIES.

If the disability is p e rm an en t p a rtia l and such disability occurs before

thirty-six (36) monthly contributions have been paid prior to die semester o f
disability, die benefit shall be such percentage o f the lump sum benefit described in
the preceding paragraph with due regard to die degree o f disability as the
Commission may determine.5

I f the disability is p erm an en t partial and such disability occurs after

thirty-six (36) monthly contributions have been paid prior to the semester o f
disability, the benefit shall be the monthly pension for; p erm an en t total disability
payable not longer than the period designated in the following schedule:6

• It
* Section 13A (b),Id.
3 Section 134(c), W.
4 Section 134(d), Id.
3 Section 134
3 Section 134(1),Id.

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Complete and perm anent Num ber

lo ss o ffuse o f of
M onths
One thum b 10
One index finger 8
One m iddle finger 6
One ring finger S
One little finger 3
One big toe 6
One band 39
One arm 50
One foot 31
One leg
« v
One ear 10
Both ears 20
H earing o f o n e ear 10
H earing o f b o th ears 50
Sight o f one eye 25

The percentage degree of disability which is equivalent to the ratio that

the designated number of months of compensability bears to seventy five (75),
rounded to the next higher integer, shall not be additive for distinct, separate and
unrelated permanent partial disabilities, but shall be additive for deteriorating and
related permanent partial disabilities, to a maximum o f one hundred percent
(100%), in which case, the member shall be deemed as permanently totally
disabled.1

In case of perm anent partial disability, the monthly pension benefit

shall be given in lump sum if it is payable for less than twelve (12) months.2

For the purpose of adiudicadng retirem ent, death and p erm an en t total
disability pension benefits, contributions shall be deemed paid for the months
during which the member received partial disability pension: Provided, That such
contributions shall be based on his last contribudon prior to his disability.3

Should a member who is on partial disability pension rerire or die, his

disability pension shall cease upon his retirement or death.4

6.
DEATH BENEFITS

5. W HO ARE E N T IT L E D .

Death benefit is a cash benefit either in monthly pension or lump sum

paid to the beneficiaries of a deceased member.

Upon the death o f a member who has paid at least thirty-six (36)
monthly contributions prior to the semester of death, his prim ary beneficiaries

' Section 13-A(g), Id.

2 Section ttA (h ),ld .
3 Section 13-A (0. Id.
4 Section 13-A©,Id.

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SOCIAL WELFARE LEGISLATION

shall be entitled to the m onthly pension: Provided, That if he has no primary

beneficiaries, his secondary beneficiaries shall be entitled to a lum p sum benefit
equivalent to thirty-six (36) times the monthly pension. If he has not paid the
required thirty-six (36) monthly contributions, his prim ary or secondary
beneficiaries shall be entitled to a lump sum benefit equivalent to the monthly
pension times the number o f monthly contributions paid to the SSS or twelve (12)
times the monthly pension, whichever is higher.1

2. TYPES O F D E A T H B E N E F IT S .
Based on the foregoing, there are two (2) types o f death benefits, to wit.
1) Monthly pension; and
2) Lump sum amount.

The m onthly pension is granted only to the prim ary beneficiaries of a

deceased member who had paid 36 monthly contributions before the semester o f
death.

The lum p sum is the amount granted to the prim ary beneficiaries of a
deceased member who had paid less than 36 monthly contributions before the
semester o f death. The secondary beneficiaries shall be entitled to a lump sum
benefit

3. A M O U N T O F B E N E F IT S .

The m onthly pension depends on the member’s paid contributions,

including the credited years o f sendee (CYS) and the number of dependent minor
children but not to exceed five (5V

The amount o f monthly pension will be the highest of:

1. the sum of P300 plus 20 percent o f the average m onthly salary

credit2 plus two percent of the average monthly salary credit for each
credited year of service (CYS) in excess o f 10 years; or
2. 40 percent o f the average monthly salary credit; or

3. P I,000 if the member had less than 10 credited years of service (CYS);
P I,200 if with at least 10 CYS; or P2,400 if with at least 20 CYS. The
monthly pension is paid for not less than 60 months.

If a deceased member is survived by less than five (5) minor legitimate,

legitimated, or legally adopted children, the illegitim ate m inor children will be

' Section 13, Id.

2 Section 8(m) of R A No. 11199 states: \m ) A verage m o n th !/ sa la ry cre d it - The result obtained by dividing the sum of (tie
last sixty (60) monthly salaiy credits immediately preceding the semester of contingency by sixty (50), or the result obtained
by dividing the sum of all the monthly salaiy credits paid prior to the semester of contingency by the number of monthly
contributions paid in the same period, whichever is greater P rovided, That the injury a sickness which caused the Usability
shal be deemed as rie permanent dsabiity for the purpose of computing the average monthly salary credit'

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 280 Bar reviewer o n Labor Law

entitled to 50% of the share o f the legitimate, legitimated or legally adopted

children in die basic pension and 100% o f the dependents* pension.

In cases where there are no legitimate, legitimated, o r legally adopted

children, the illegitimate minor children shall be entitled to 100% o f the basic
pension.

The primary beneficiaries o f a deceased member who has paid less than
36 monthly contributions shall he endded to lump sum benefit which shall be the
higher of: *

1) monthly pension times the number o f monthly contributions paid

prior to the semester o f death; or
2) twelve (12) times the monthly pension.

The secondary beneficiaries o f the deceased member shall be endded to

a lum p sum benefit equivalent to:

a. 36 times the monthly pension; if the member has paid at least 36

monthly contributions prior to the semester o f death; or
b. monthly pension times the number o f monthly contributions paid or
twelve (12) times the monthly pension, whichever is higher, if the
member has paid less than 36 monthly contributions prior to die
semester of death.

The primary o r secondary beneficiaries o f a deceased employee-

member, who had no contribution payment at all and who was reported for
coverage shall be endded to funeral benefit only.

The dependent legitimate, legitimated, legally adopted o r illegitimate

children, conceived on or before the date o f death o f a deceased wdl each receive a
dependents* pension equivalent to 10% o f the members* monthly pension o r P250,
whichever is higher.

Only five (5) minor children, beginning from the youngest, are endded to
die dependents’ pension. N o su b stitu tio n is allowed.

Where there are m ore than five (5) legitimate and illegitimate minor
children, the legitimate shall be preferred.

The dependents* pension stops when die child reaches 21 years old, gets
married, gets employed or dies. However, the dependents* pension is granted for
life to children who are over 21 years old, provided they are incapacitated and
incapable of self-support due to physical or mental defect which is congenital and
acquired during minority.

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S O C IA L W E L F A R E L E G IS L A T IO N

4. O T H E R B E N E F IT S T H E D E C E A SE D M E M B E R ’S B E N E F IC IA R IE S
CAN AVAIL O F.

H ie deceased member’s beneficiaries ate entitled to a 13d1 month pension

payable every December and die funeral benefit, which is paid to whoever,
shouldered the funeral expenses o f the deceased member.

Survivorship pensioners prior to the efFecdvity o f R.A. 7875* on March 4,

1995 are also endded to hospitalization benefits under PhilHealth. They need to
register under PhilHealth.

Survivorship pensioners under the effectivity o f RA 7875 on March 4,

1995 and thereafter, are no longer covered. However, those who wish to avail o f
PhilHealth benefits may enroll in the Individually-Paying Program (for
voluntary/self-employed) or the Indigent Program (IP) o f PhilHealth.

7.
FUNERAL BENEFIT

1. A M O U N T O F FU N E R A L B E N E F IT .

A funeral grant equivalent to P 12,000 shall be paid, in cash or in kind, to

help defray the cost o f funeral expenses upon the death o f a member, including
permanendy totally disabled member o r retiree.2

b.
EMPLOYEES’ COMPENSATION BENEFITS

This is the second class o f benefits under die SSS Law, the first being die
Social Security Benefits discussed above. For purposes o f discussing this topic in
an orderly fashion, the same shall be presented under the topic “ C . D ISABILITY
A N D D E A T H B E N E F IT S ” , infm.

B.
GSIS LAW

1. LEGAL BASIS.

R A . No. 8291, entided ‘The Government ServiceInsuranceSystemAct of1997 ”*

1

1 Thislawisotherwiseknownasthe"NafonalHealft InsuranceM of 1995*

1 See6onBB,RA No 11199.

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1.
COVERAGE AND EXCLUSIONS
a.
COVERAGE

1. COMPULSORY M EM B ER SH IP IN T H E GSIS.

(1) AH government personnel, whether elective or appointive, irrespective

of status of appointment, provided they are receiving fixed monthly compensation
and have not reached the mandatory retirement age o f d5 years, are compulsorily
covered as members of the GSIS and shall be required to pay contributions.1

(2) However, employees who have reached the retirement age of 65 or

more shall also be covered, subiect to die following rules:

An employee who is already beyond the mandatory retirement age o f 65

shall be compulsorily covered and be required to pay both the life and retirement
premiums under the following situations:

a) An elective official who at the time o f election to public office is

below 65 years o f age and will be 65 years or more at the end o f his
term of office, including the period/s of his re-election to public office
thereafter without interruption.
b) Appointive officials who, before reaching the mandatory age o f 65,
are appointed to government position by the President o f the Republic
of the Philippines and shall remain in government service at age
beyond 65.2
c) Contractual employees including casuals and other employees with
an employee-government agency relationship are also compulsorily
covered, provided they are recaving fixed monthly compensadon and
rendering the required number of working hours for the month.3

2. CLASSES O F M EM B ERSH IP.

Membership in the GSIS is classified either by type or status o f

membership.4

• As to type of members, there are regular and special members:

(a) Regular M em bers - are those employed by the government o f the

Republic of the Philippines, national or local, legislative bodies,
government-owned and controlled corporations (GOCCs) with

' Section 2 .1 Rule II, Implementing Rules and Regulations of R A No. 8291.
? Section 2 2 , Rule II, bid.
3 Section 2 1 , Rule II, ibid.
4 Section Z4„ Rule II, Ibid.

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SOCIAL WELFARE LEGISLATION

original charters, government financial institutions (GFIs), except

uniformed personnel of the Armed Forces o f the Philippines, the
Philippine National Police, Bureau o f Jail Management and
Penology (BJMP) and Bureau of Fire Protection (BFP), who are
required by law to remit regular monthly contributions to the GSIS.
(b) Special M em bers - are constitutional commissioners, members o f
the judiciary, including those with equivalent ranks, who are
required by law to remit regular monthly contributions for life
insurance policies to the GSIS in order to answer for dicir life
insurance benefits defined under RA 8291.1

• As to status o f membership, there are active and inactive members.

(a) Active m em ber - refers to a member of the GSIS, whether

regular or special, who is still in the government service and
together with the government agency to which he belongs, is
required to pay the monthly contribution.
(b) Inactive m em b er - a member who is separated from the service
either by resignation, retirement, disability, dismissal from the
service, retrenchment or, who is deemed retired from the service
under the GSIS Law.2

3. EFFEC T IV IT Y O F M E M B E R S H IP .

The effective date o f membership shall be the date o f the member’s

assumption to duty on his original appointment or election to public office.3

4. E F F E C T O F SE PA R A T IO N FROM T H E SERV IC E.

A member separated from the service shall continue to be a member, and

Tiall he entitled to whatever benefits he has qualified to in the event o f any
contingency compensable under the GSIS Law.4

b.
EXCLUSIONS

1. EXCLUSION FR O M COM PULSORY COVERAGE O F GSIS LAW.5

The following employees arc excluded from compulsory coverage:

(a) U niform ed personnel o f the Armed Forces of the Philippines

(AFP), Philippine National Police (PNP), Bureau o f Fire Protection
(BFP) and Bureau o f Jail Management and Penology (BJMP);1

’ Section 2.4.1.. Rule II, bid.

2 Section 2.42 , Rule II, bid.
3 Section 5, Rule II, bid.
‘ Section 4, R A No. 8291.
s Section 3., Riie II, ttxJ.

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(b) Barangay and Sanggunian Officials who arc not receiving fixed
monthly compensation;12
(c) Contractual Em ployees who are not receiving fixed monthly
compensation;3 and
(d) Employees who do n o t have monthly regular hours o f work and are
not receiving fixed monthly compensation.4

2.
DEPENDENTS AND BENEFICIARIES
a.
DEPENDENTS

1. KINDS O F D E PE N D E N T S.

Dependents shall be the following:

(a) The legitimate spouse dependent for support upon the member or
pensioner;
(b) The legitimate, legitimated, legally adopted child, including the
illegitimate child, who is unmarried, not gainfully em ptied, not over the
age of majority, or is over the age o f majority but incapacitated and
incapable of self-support due to a mental or physical defect acquired
prior to age of majority; and
(c) The parents dependent upon the member for support.5

Gainful Occupation - Any productive activity that provided the member with
income at least equal to the minimum compensation of government employees.6

b.
BENEFICIARIES
1. TWO KINDS.

There are two (2) kinds o f beneficiaries under the GSIS Law as follows:

1. Primary beneficiaries - The legal dependent spouse until he/she

remarries and the dependent children.
2. Secondary beneficiaries - The dependent parents and, subject to the
restrictions on dependent children, the legitimate descendants.7

1 Section 3.1.1., Rule II, Ibid.

7 Section 3.12„ Rule II, Ibid.
3 Section 3 .U ., Rule II, Ibid.
4 Section 3.1.4., Rule II, Ibid.
5 Section 2(f), bid.
8 Section 2(p), bid.
7 Section 2(g), R A No. 8291.

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 C hapter Fou r 28 5
SOCIAL WELFARE LEGISLATION

3.
BENEFITS
1. KINDS O F B E N E F IT S .

The following are the benefits under the GSIS Law.

(1) Compulsory Life Insurance

(2) Retirement
(3) Separation
(4) Unemployment
(5) Disability
(6) Survivorship
(7) Funeral

1.
COMPULSORY LIFE INSURANCE

1. L IFE E N D O W M E N T PO LICY (LEP)>

A member under this policy may be entitled to any of the following

benefits, depending on the circumstances:

a) Maturity benefits, which is the face amount payable to the member

upon maturity o f the policy.
b) Cash Surrender Value, which is earned values during the term o f the
insurance payable to the member when he is separated from the
service before maturity date o f the policy or when he is considered as
a case o f PTD.
c) Death Benefit, which is the face value of the policy payable to
designated beneficiary/benefidaries or legal heirs, in the absence o f
the former, upon the death o f a member.
d) Accidental Death Benefit fADB) is an additional benefit equivalent to
the amount o f Death Benefit when the member dies by accident. In
this connection, proof must be presented to sufficiendy establish that
the cause o f the member’s death is accidental.
e) The right to present sufficient proof to show that death was accidental
shall prescribe if the claim for ADB is filed four (4) years after the
death o f the member.
f) Cash Dividend. A policyholder is entided to dividends subject to the
guidelines as approved by the GSIS Board. This is not a guaranteed
benefit.*2

' Section 18., Rule IV, bid.

2 Sections 18.1. to 185., Rule IV, bid.

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2. E N H A N C ED LIFE POLICY (E L P ).1

A member under this policy may be entided to any o f the following

benefits, depending on the circumstances:

1. Death Benefit equivalent to the latest annual salary multiplied by

amount of insurance (AOI) factor which is 1.5 or 18 times the current
monthly salary o f the member or as determined by the GSIS, payable
to the legal heirs, less all outstanding obligations o f the member in
accordance with the CLIP.
2. Termination Value. The policy earns a Termination Value during the
life of the policy computed from the percentage o f life insurance
premiums actually remitted and paid to GSIS.

o Termination value is equivalent to a percentage o f monthly life

insurance premiums as determined by the GSIS, due and paid in
full, either by direct remittance or dirough an APL facility.

• The accumulated termination value will grow at such rate as

determined by the Actuary.
• The termination value shall be paid to the member upon his
separation from the government service less all indebtedness of the
member with the GSIS in accordance with CLIP.
3. Cash Dividend. A policyholder is entided to dividends, subject to the
guidelines as approved by the GSIS Board. This is not a guaranteed
benefit.2
2.
RETIREMENT BENEFIT
1. C O M PO N EN T.
The retirement benefit consists of a monthly pension which is computed
based on years o f creditable service and Average Monthly Compensation (AMQ
for the last 3 years.3
2. ELIGIBILITY.
The member.
1) has rendered at least fifteen (15) years of service;
2) is at least sixty (60) years o f age; and
3) is not receiving a monthly pension benefit from permanent total
disability.4

' Section 19.. Rule IV. bd.

2 Sections 19.1. to 19.3, Rule IV, ibid
3 Section 20., Rule IV, Ibid.
4 Sections 20.1.1. to 20.1.3, Rule (V. Ibc

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SOCIAL WELFARE LEGISLATION

3. R E T IR E M E N T B E N E F IT O P T IO N S .
A retiring member has the following options:
(1) Five (5) year lump sum equivalent to sixty (60) months of the basic
monthly pension (BMP), subject to qualification requirements, less all outstanding
obligations of the member in accordance with the Claims and Loans
Interdependency Policy (CLIP), plus an old-age pension benefit equal to the BMP
payable for life, starting on the first day o f the month following the expiration o f
the five year guaranteed period; or
(2) A cash payment benefit equivalent to eighteen (18) times o f the BMP,
subject to qualification requirements, less all outstanding obligations o f the member
in accordance with the CLIP, plus monthly pension for life payable on die first
month following the date of retirem ent1
4. C O N V E R SIO N IN T H E M O D E O F R E T IR E M E N T .
Conversion in the mode o f retirement from RA. No. 8291 to any other
retirement laws and vice versa administered by the GSIS shall not be allowed.

Those who became GSIS members prior to the implementation o f R.A.

No. 8291 shall have the option to retire under PD 1146, RA 660, or RA 1616,
subject to eligibility.2
5. C H A N G E O F R E T IR E M E N T B E N E F IT O P T IO N U N D E R RA 8291.
Change o f retirement benefit option from eighteen (18) months cash
payment plus immediate pension to five (5) year lump sum, or vice versa, shall n o t be
allowed. The GSIS shall process the claim for retirement benefits based on the
member’s records in the GSIS database.3

6. PR O C E SSIN G O F R E T IR E M E N T B E N E F IT S O F M E M B E R S W H O
D IE D W H IL E T H E IR CLAIMS A RE B E IN G PR O C ESSED .

For those qualified for retirement benefits:

1. If the deceased member opted for five year lump sum benefit as
indicated in his/her claim for retirement application, his legal heirs
shall be entided to five-year lump sum benefit equivalent to sixty (60)
months basic monthly pension (BMP). However, the survivorship
pension to qualified primary beneficiaries, if any, shall be granted after
the end o f the 5-year guaranteed period, but filing o f claim for
survivorship benefit should be done before the end o f the 4-year
prescription period.

2. If die deceased member opted for immediate pension as indicated in

his/her claim for retirement benefit his legal heirs shall be entided to

' Sections 202.1. to 2022. Rule IV. Ibid.

J Section 20.3., Rule IV. ibid.
3 Section 20.4., Rule IV, Ibid.

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 288 Bar Reviewer on Labor Law

retirement benefits equivalent to eighteen (18) months of BMP, plus

accrued pension, if any, up to the date o f death o f the retiree. The
corresponding survivorship pension shall be paid to the qualified
primary beneficiaries, if any, and shall be computed from the date of
death of the retiree, subject to filing of claim.

3. In case the deceased member failed to indicate in his/her retirement

option, it shall be computed as if he/she opted for immediate pension.

4. The proceeds o f retirement benefits shall be paid and distributed to

the legal heirs in accordance with the law^on succession under the
Civil Code of the Philippines.*1

For those not qualified for retirement benefits, the GSIS shall determine
if he/she is qualified to other applicable benefits under R.A. 8291 or such other
laws administered by the GSIS.2

7. EFFECTS OF R EEM PLO Y M EN T.

When a rctired/separated member is reemployed or reinstated in the

service, his/her previous services credited at the time o f his/her
retirement/separation for which a corresponding benefit had been awarded, shall
be excluded in the computation o f service. In effect, he/she shall be considered a
new entrant.

However, for those who retired prior to the enactment o f R.A. 8291, the
previous services of a rerired/'separated member may be added in the computation
of his creditable services (subject to premium-based policy) upon subsequent
retirement under RA. 8291 only when both conditions are met: (a) the retiree
reentered government service before June 24, 1997; and (b) the total amount of
benefit previously received, if any, including the prescribed interest was refunded to
GSIS on or before March 2, 2006.3

8. BASIS OF C OM PUTATIO N O F T O T A L SERVICE.

Total Length of Service (TLS) is the number o f years in government

sendee regardless of status o f employment, with or without premium contributions.

For purposes of computing the total length o f service under part-time

status of employment, services shall be converted to their full-time equivalent using
torty-hour week and fifty two-week a year as basis.4

’ Section 20 51., Rule IV. Ibid.

•’ Section 20.5 2 . Rule IV, Ibid.
1 Sections 20 6.1. to 20.6.2., Rule IV, Ibid.
1 Sections 20 M . to 20 7.2, Rule IV, bid.

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SOCIAL WELFARE LEGISLATION

9. C O M PU T A T IO N O F C R E D IT A B L E SERV ICE.

The computation of creditable service for the purpose o f determining the

amount o f benefits payable shall include the period or periods o f sendee with the
required premium contributions.1

10. C O M PU T A T IO N O F AVERAGE M O N T H L Y C O M P E N S A T IO N
(AMC).

The AMC shall be computed on the basis o f the average salary of the
member for the last 36 months o f creditable service immediately preceding his
retirement or separation.

The basis for computing the AMC o f a separated or retired member

requesting for computation o f benefits shall be the prevailing policy on AMC at the
time the claim is being processed.2

11. C O M PU T A T IO N O F REV A LU ED M O N T H L Y C O M PEN SA T IO N .

AMC plu s Seven Hundred Pesos (P700.00).3

12. C O M PU T A T IO N O F BASIC M O N T H L Y P E N S IO N .

The formula for computing the BMP may be adjusted subject to the
approval of the Board upon the recommendation by the President and General
Manager.

As a general rule, the BMP shall only be computed for those members or
dependents/heirs of members who are eligible to receive benefits under this law. It
shall be computed on the basis o f a percentage o f the RAMC at the rate o f 2.5%
for every year o f creditable service, but in no case shall it exceed 90% of the AMC
of the member. The formula for computing BMP shall be: BMP = RAMC x (2.5%
x RCS)4

13. A D JU ST M E N T /IN C R E A S E IN P E N S IO N .

Periodic adjustments o f the monthly pension o f all existing pensioners

shall be done on the basis o f what is sustainable and prudent for the GSIS as
recommended by its Actuary and approved by the Board.5

14. PO LIC IES A FFE C T IN G P E N S IO N A D M IN IS T R A T IO N .

1) Regardless of the date o f retirement, the monthly pension shall

commence on the Is' day of the month following the month o f retirement.

1 Section 20.8., Rule IV. Ibid.

2 Sections 20.9.1. to 20.92, Rule IV, bid.
3 Section 20.10., Rule IV, Ibid.
4 Section 20.11., Rule IV, Ibid.
5 Section 20.12, Rule IV, Ibid.

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 290 BAR REVIEWER ON LABOR lAW

2) Annual Renewal o f Active Status (ARAS) o f Old Age and Survivorship

Pensioners is required on their birth month every year.

3) Effects o f non-renewal o f active status as pensioner

b) Non-entitlement to cash gift if status is suspended at the time o f

declaration;
c) Non-entitlement to pension increases if status is suspended at the
time o f declaration.1 *

3.
SEPARATION BENEFIT

1. ENTITLEMENT.2
Separation benefit is either one o f the following:

(1) For those members who are separated from service and who have at
least 3 years o f service but less than 15 years shall be entitled to a s h payment
equivalent to 100% of the member’s AMC for each year o f creditable service, but
not less than Pl2,000.00, payable upon reaching age 60, or upon his separation if
he is already 60 years o f age at the time o f separation.3

(2) A cash payment equivalent to eighteen (18) times the basic monthly
pension payable at die time o f resignation or separation, provided the member
resigns or separates from the service after he has rendered at least 15 years of
service and is below 60 years o f age, plus an old-age pension benefit equal to the
basic monthly pension payable monthly for life upon reaching the age o f 60.4

(3) Reckoning Date o f Separation o f Uniformed PNP, BJMP and BFP

Personnel shall be February 1,1996. The computation o f benefit shall be based on
their basic monthly salary (premium-based) when they ceased to be members o f the
GSIS.5

(4) Processing o f separation benefit o f members who died while their

claims are being processed:

a) I f die member dies during the pendency o f his claim for

separation benefit and he has rendered at least 15 years o f
creditable service, his legal heirs shall be entided to receive cash
payment equivalent to eighteen (18) times the basic monthly
pension, plus accrued BMP, if any, up to the date o f death o f the

1 Sections2113.1.b 20.133. RdeIV. bid.

* Section21, RuleW.ttiU.
> Section 21.1, Rite IV, hid.
< Section212, RuleIV, bid.
5 Section212, Rub IV, bid.

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S O C IA L W E L F A R E L E G IS L A T IO N

member. Thereafter, the primary beneficiaries shall be entitled to

survivorship pension.1

b) I f die member dies during the pendency o f his claim for

separation benefit and he has rendered less than 15 years o f
creditable service, his legal heirs shall be entitled to cash payment
equivalent to one hundred percent (100%) o f AMC for each year
o f creditable service, b ut not less than P i 2,000.00.2

4.
UNEMPLOYMENT BENEFIT
L E N T IT L E M E N T .3

A member shall be entitled to the unemployment benefits if the following

conditions are met:

1) he/she was a permanent employee at time o f separation;

2) his/her separation was involuntary due to the abolition o f his/her
office or position resulting from reorganization; and
3) he/she has been paying the required premium contributions for at
least one (1) year but less than 15 years prior to separation.4

The amdunt o f unemployment benefit is equivalent to 50% o f the AMC

and shall be paid in accordance with the Schedule in die Implementing Rules.s

5.
DISABILITY BENEFITS
t D E F IN IT IO N .6

"Disability”ttftts to any loss o r impairment o f the normal functions o f the

physical an d /o r mental faculties o f a member, which permanendy or temporarily
prevents him to continue with his work or engage in any other gainful occupation
resulting in the loss o f income.7

2. BASIS O F R EC K O N IN G .

The corresponding disability benefits for each kind o f disability shall be

granted to a member based on die d u ratio n o f incapacity to w ork a n d actu al
loss o f incom e.8

Section214.1, RubIV, M l
SecBon21.42,fablV)ML
Section22, RuleIV,Ibid.
SecBons22.1.1.6)22.1.3, Ride(V,ML
Section222, ftde IV, ML
Section23, Rub IV, Ml.
Section23.1, Rub IV, Ml.
6L

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3. KINDS OF DISABILITY.
There are three (3) kinds o f disability which shall be determined by the
GSIS based on established medical standards:

• Permanent Total Disability

• Permanent Partial Disability
• Temporary Total Disability1

4. POLICIES G O V ER N IN G D ISABILITY B E N E F IT S .

1. Perm anent T otal D isability (P T D ) - disability due to injury or

disease causing complete, irreversible and permanent incapacity that will
permanently disable a member to work or to engage in any gainful occupation
resulting to loss o f income.

The following disabilities shall be deemed total and permanent:

a) Complete loss o f sight for both eyes;

b) Loss o f two limbs at or above the ankle o r wrists;

c) Permanent complete paralysis o f two limbs;

d) Brain injury resulting in incurable imbecility or insanity; and

e) Such other cases as may be determined and approved by the GSIS.2

2. Perm anent Partial D isability (PPD ) - arises due to the complete and
permanent loss o f the use of any o f the following resulting to the disability to work
for a limited pedod o f time:
1) any finger 2) any toe 3) one arm; 4) one hand; 5) one foot; 6) one leg; 7)
one or both ears; 8) heating o f one or both ears; 9) sight o f one eye; 10)
such other cases as may be determined and approved by the GSIS.3

3. Tem porary Total D isability fT T D ) - accrues or adses when the

impaired physical and/or mental faculties can be rehabilitated and/or restored to
their normal functions, but such disability shall result in temporary incapacity to
work or to engage in any gainful occupation.4

5. DISABILITY O R INJURY N O T C O V ERED .

Any disability or injury as a result of, or due to grave misconduct,

participation in riots, gross and inexcusable negligence, under the mfluence_of

' U.
* Section 2321.. Rule IV, ted.
> Section 2 3 2 2 , Rub IV, ted.
< Section 2323., Rule IV, Wd.

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SO C IA L WELFARE LEG ISLA TIO N

drugs o t alcohol o r willful intention to injure o r kfll himself o r another, shall n o t be

compensable.1

6. ACTUAL LOSS OF INCOME.

The actual loss o f income shall refer to die number o f days when a
member went on leave o f absence without pay (LWOP) reckoned immediately
from the date o f commencement o f disability and for the duration o f entitlement
thereto, based on medical evaluation. Any LWOP incurred after the duration o f
entidement to die benefit shall not be compensable.2

7. ENTITLEMENT IN CASE OF TWO OR MORE DIFFERENT

CONTINGENCIES.
I f the member has two o r more different contingencies during the same
period o f benefit enddement, he shall be compensated only once for the
overlapping periods.3

8. EXCLUSIONS BY REASON OF P.D. 626.

All injuries, disabilities, illnesses and all other infirmities compensable

under P.D. 626 shall not be compensable under this Act (R.A. 8291).4

9. SUSPENSION OF BENEFIT.
Any applicable disability benefit shall be suspended when he/she:

a) is re-employed; or
b) recovers from h is/h er disability as determined by the GSIS, whose
dedsion shall be final and binding; or
c) fails to present himself for medical examination when required by
GSIS; or
d) is receiving any other pension either from GSIS or another local or
foreign insdtudon o r organization.56

10. COMPUTATION OF BENEFIT.

1. Permanent Total Disability (PTD). - A member who becomes

pecmanendy and totally disabled shall be endded to the monthly income benefits
for life equivalent to the basic monthly pension (BMP) effective from the date o f
Hisflhilitv.4

1 Section23.2.4., RUbIV. V i
1 Section2325., Ate IV, bid.
1 Section2325., RuleIV, bid.
4 Section232.7„ RuleIV, bid.
5 Section2328.. RideIV, bid.
6 Section2321., Ade IV. bid.

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2. Perm anent Partial Disability (PPD ). - The period o f entidement to

PPD benefit shall be determined after due medical evaluation; but such period of
entidement to the benefit shall not exceed 12 months for the same contingency.
Only the leave of absence/s without pay incurred during the period o f entidement,
duly certified by the authorized officer o f the agency where he is employed, shall be
compensable. The amount of PPD benefit shall be computed by dividing the BMP
by 30 days and multiplying the quotient by the number o f compensable calendar
days of leave of absence without pay (LWOP).1

3. Temporary Total Disability' HTTP). - The period of entidement to

TTD benefit shall be determined after due medical evaluation and proof o f actual
loss of work resulting in loss o: income by way o f the incurred actual number o f
days of leave of abscnce/s without pay duly certified by the authorized officer of
the agency where he is employed; but such period o f entidement to die benefit
shall not exceed 120 days in one calendar year. However, if the disability requires
more extensive treatment that lasts beyond 120 days, die payment o f the TTD may
be extended by die GSIS but not to exceed a total of 240 days.

Only die leave of absence/s without pay incurred during the period of
entitlement shall be compensable. Entidement, however, shall start from the fourth
day of the disability. The amount o f TTD benefit shall be computed by multiplying
75% of the daily salary' of the member by the number o f days of disability based on
die medical evaluation but net to exceed 240 days for the same contingency.
However, the computed daily salary shall not be less than P70.00 but not to exceed
P340.00 per day.2 For the purpose o f computing the corresponding benefit of
inactive members for each kind o f disability, die-BMP, with respect to PTD and
PPD, and daily salary, with respect to TIT), shall be computed as of the time of
separation from GSIS.3

11. C O N D ITIO N S FOR E N T IT L E M E N T .

1. Permanent Total D isability (PT D ) - A member who becomes

perraanendy and totally disabled shall be entided to the PTD benefits when:

a) he/she is in the service at the time of disability, or

b) if separated from die service, he lias paid at least thirty six (36) mondis
contnbutions within die five year (5) period immediately preceding
his/her disability; or has paid a total o f at least one hundred eighty
(180) months comributions prior to his/her disability;

Provided, however, that the following conditions shall be met:

’ Section 23.32. Rule IV. Ibid

J Section 2 3 2 1 . Rule IV. Ibd.
3 Section 232.4., Rule IV. Ibd.

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S0CIA1. WELFARE LEGISLATION

• he/she is gainfully employed prior to the commencement of disability

resulting in loss o f income as evidenced by any incontrovertible proof
thereof;
• hc/she is not a registered member of any social insurance institution;
and
• he/she is not receiving any other pension cither from GSIS or another
local or foreign institution or organization.1

In addition to the monthly income benefits for life, a cash payment

equivalent to eighteen (18) times his/her basic monthly pension (BMP), shall be
paid to a member who was in the service at the time of his/her permanent total
disability and who has paid a total o f one hundred eighty (180) monthly
contributions.2

A separated member who has at least three (3) years of service and
becomes permanently and totally disabled but has not paid a total of at least one
hundred eighty (180) monthly contributions prior to his/her disability shall be
entided only to cash payment equivalent to one hundred percent (100%) o f his/her
average monthly compensation for each year of service with paid contributions but
not less than twelve thousand pesos (P12,000.00).3

2. Perm anent Partial Disability (PPD ). - A member whose disability is

partial shall be entided to the PPD benefit when:

a) he/she is in the service at the time o f disability, or

b) if separated from the service, he has paid at least thirty six (36) months
contributions within the five (5) year period immediately preceding
his/her disability; or has paid a total o f at least one hundred eight}'
(180) months contributions prior to his/her disability, Provided,
however, that the following conditions shall be met:
• he/she is gainfully employed prior to the commencement o f
disability resulting in loss of income as evidenced by any
incontrovertible proof thereof;
• he/she is not a registered member of any social insurance
institution; and
• he/she is not receiving any other pension either from GSIS or
another local or foreign institution or organization.4

3. T em porary Total Disability HTTP). - A member shall be entitled to

the TTD benefit when:

a) hc/she is in the service at die time o f disability; or

1 Section 23.4.1.1., Rule IV. Ibid.

3 Section 23.4.12. Rule IV, Ibid.
3 Section 23.4.13., Rute IV, Ibid.
4 Section 23.42, Rule IV, Ibid.

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b) if separated from the service, he has paid at least thirty six (36) months
contributions within the five (5) year period immediately preceding
his/her disability; or has paid a total of at least one hundred eighty
(180) months contributions prior to his/her disability; Provided,
however, that the following conditions shall be met:
• he/she is gainfully employed prior to the commencement of
disability resulting in loss of income as evidenced by any
incontrovertible proof thereof;
• he/she is not a registered member o f any social insurance
institution; and
• he/she is not receiving any other pension either from GSIS or
another local or foreign institution or organization.1

The payment of IT 'D benefit may be extended by the GSIS up to a

maximum of two hundred forty (240) days, subject to medical evaluation.2

12. FO RFEITU RE OF D ISABILITY B EN E FIT S.

All the foregoing provisions notwithstanding, any meml>er who is

enjoying disability benefits shall automatically forfeit his/her right to the continued
enjoyment thereof if he/she refuses or deliberately fails to:

a) have himself/herself medically treated by a physician when required by

the GSIS; or
b) take the prescribed medications; or
c) have himself/herself confined in a hospital without justifiable reason,
when such confinement is required by the GSIS; or
d) avail himself/herself o f such rehabilitation facilities as may be duly
recommended by the GSIS and made available for him /her; or
e) observe such precautionary and/or preventive measures as prescribed
by a physician or expressly required of him /her to prevent the
aggravation or continuance o f his/her disability.

However, upon compliance with the requirements, his/her benefits shall

be resumed if he/she is still qualified.3

6.
SURVIVORSHIP BENEFITS

1. E N T IT L E M E N T .4

When a member or pensioner dies, the beneficiaries shall be entided to

the following survivorship benefits, whichever is applicable:

1 Section 2 3 .4 1 1 Rule IV, bid.

2 Section 23.4.32, Rule IV, bid.
3 Section 23.4.6., Rule IV, Ibid.
« Section 24, Rule IV, Ibid.

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SOCIAL WELFARE LEGISLATION

(1) Survivorship pension consisting of:

a) the basic survivorship pension which is fifty percent (50%) of the

BMP; and
b) the dependent children’s pension equivalent to 10% o f the BMP for
each child but not to exceed fifty percent (50%) o f the BMP.1

(2) Cash payment equivalent to eighteen (18) months BMP;2

(3) Cash payment equivalent to one hundred percent (100%) of the AMC
for every year of service with paid contributions but not less than Twelve
Thousand Pesos (P12,000.00).3

2. SU RV IV ORSHIP B E N E FIT S OF M EM B ERS IN ACTIVE SERVICE.

(1) If at the time of death, a member was in the service and has rendered
at least fifteen (15) years of creditable service:

a) his primary beneficiaries shall receive the survivorship pension and

cash payment equivalent to 18 x the BMP; or
b) in the absence of primary beneficiaries, his secondary' beneficiaries
shall receive die cash payment equivalent to 18 x the BMP; or
c) in the absence o f secondary beneficiaries, the legal heirs shall receive
the cash payment equivalent to 18 x the BMP.4

(2) If at the time of death, die member was in the service with less than
fifteen (15) years of creditable service; his primary beneficiaries shall receive the
cash payment equivalent to 100% of the AMC for every year of creditable service.5

3. SU RV IV ORSHIP B E N E FIT S O F IN A C TIV E M EM BERS.

Primary beneficiaries of inactive members who have at least 15 years of

creditable service shall receive the survivorship pension only.

1) Primary beneficiaries of inactive members who have at least 3 years

but less than 15 years o f creditable service and were less dian 60 years
old at the time of death shall receive the cash payment equivalent to
100% o f the AMC for every year o f creditable service, but not less
than P I 2,000.00.
2) Primary beneficiaries o f inactive members who have less than 15 years
o f creditable service but were at least 60 years old at the time o f
separation and have received the corresponding separation benefit,
shall not be entided to survivorship benefits. However, if the member

1 Sedan 24.1.1., Rule IV, Ibid.

1 Section 24.12. Rule IV. bid.
3 Section 24 .1 1, Rule IV, bid.
4 Section 2421., Rule IV. bid.
5 Section 2 4 2 2 , Rule IV, Ibid.

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has not received vet his separation benefit within four years after
his/her separation, the primary beneficiaries shall receive die cash
benefit equivalent :o 100% o f die inactive member’s AMC for every
year o f creditable service, but not less than P I 2,000.00.1

4. PAYMENT O F SURVIVORSHIP B E N E F IT S .

The survivorship benefits shall be paid as foDows:

1. When the dependent spouse is the only survivor, he shall receive the
basic survivorship pension;
2. When only the dependent children are the survivors, they shall be
endded only to the dependent children’s pension equivalent to 10% of
the BMP for every dependent child, not exceeding five (5), counted
from the youngest and without substitution;
3. When the survivors are the dependent spouse and the dependent
children, the dependent spouse shall receive the basic survivorship
pension for life or until he remarries or cohabits, and die dependent
children shall receive the dependent children’s pension.
4. When the dependent spouse and dependent children are already
receiving the basic survivorship pension and dependent children’s
pension, respectively, any subsequent death, emancipation or
disqualification o f any one o f them shall not entitle the other
beneficiaries to the forfeited share.
5. In the absence of a natural guardian, the guardian de facto o f
dependent children, as well as the physically o r mentally incapacitated
dependent children, must file a Petition for Guardianship to be able to
claim the survivorship benefits on behalf o f die dependent children.
6. When the pensioner dies within the 5-year period after receiving the
five-year lump sum, the survivorship pension shall be paid only after
the end of the said five-year period. However, filing o f claim for
survivorship benefit should be done before die end o f die 4-year
prescription period.2

5. C O N D ITIO N S FO R E N T IT L E M E N T .

The primary and secondary beneficiaries, except dependent children, shall

be entided to applicable survivorship benefits, subject to the following:

a) not engaged in ar.y gainful occupation;

b) the surviving spouse and the deceased member were living together as
husband and wife;
c) not gainfully engaged in a business o r economic activity (self-
employed);

< Sec6oo24.3 t .ftJ e lV .tW .

* Section 24.4.1.. f t * IV, IW

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SO C IA L W ELFARE LEG ISLA TIO N

d) employed/engaged in a business or economic activity but receiving

income less than the minimum compensation o f government
employees.
e) not receiving any other pension from the GSIS o r another local or
foreign institution or organization; and
f) In the case o f the dependent spouse, payment o f the basic
survivorship pension shall discontinue when he remarries, cohabits, or
engages in common-law relationship.

The foregoing conditions, except the last one, must be present

immediately preceding the death o f the member or pensioner.1

7.
FUNERAL BENEFITS

1. N A T U R E O F B E N E F IT .

Funeral benefit is intended to help defray the expenses incident to the

burial and funeral o f the deceased member, pensioner or retiree under R.A. 660,
R A 1616, P.D. 1146 and R.A. 8291.2

2. T O W H O M PAYABLE.

It is payable to any qualified individual, in accordance with the M o w in g

order o f priority:

1) Legitimate spouse;
2) Legitimate child who spent for the funeral services; or
3) Any other person who can show incontrovertible proof that he
shouldered the funeral expenses o f the deceased.3

3. AMOUNT OF FUNERAL BENEFIT.

The amount o f funeral benefit are as M ow s:

1) The prevailing am ount approved by die Board o f Trustees at die time

o f death o f the member o r pensioner.
2) For uniformed members o f die PNP, BJMP and BFP, the amount o f
funeral benefit is fixed at P10,000.(X).4

4. CONDITIONS FOR ENTITLEMENT.

Funeral benefit shall be paid upon the death of.

1) An active member, or

> Section 24.5, Rule W, Hid.

* Secfion2S.1^Ru)8lV<B»d.ThelaMsmentionedinlhissec6onrefertDpfeviousmnendabxylmMStotfieGSiS Law.
» Id.
4 Section 2 5 2 , Rite IV, Ibid.

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2) A member who has been separated from the service with more than
15 years of creditable service, but entidcd to future separation or
retirement benefits; or
3) Old age or disability pensioner; or
4) A retiree who at the time of his retirement is at least 60 years o f age
and with at least 20 years o f service but who opts to retire under R.A.
1616 on or after June 24,1997; or
5) A member who retired under R.A. 1616 prior to June 24,1997 with at
least twenty (20) years o f service, regardless o f age.1

LIMITED PORTABILITY LAW23

1. R.A. N O . 7699.

R.A. N o. 7699,3 was enacted to enable those from the private sector
who transfer to the government service or from the government sector to the
private sector to combine their years o f service and contributions which have been
credited with the SSS or GSIS, as the case may be, to satisfy the required number
of years of service for entidement to the benefits under the applicable laws.4

'Totalisation” refers to the process o f adding up the periods of creditable

services or contributions under each of the Systems, SSS or GSIS, for die purpose
of eligibility and computation o f benefits.5 O n die other hand, the term ' 'portability”
refers to the transfer of funds for the account and benefit o f a worker who
transfers from one system to the other.67
The benefits provided under R.A. No. 7699 apply to active or inactive
members of eidier System (GSIS/SSS) as o f the date o f its effectivity on May 20,
19947

2. COVERAGE.

R.A. No. 7699 and its implementing rules apply to all worker-members of
the GSIS and/or SSS who transfer from the public sector to the private sector or
vice-versa, or who wish to retain their membership in both Systems.8

' Section 253., Rule IV. Ibid.

? This topic has been included in past Syllabi for labor law. In the 2019 SySabus, it is no looget included. However, a short
discussion thereof is justified in view of te importance.
3 RA. No. 7699, entitled 'An Act Instituting Limited Portability Scheme in the Social Security Insurance System by Totalizing
the Workers’ Creditable Services or Contributions in Each of the Systems' approved on May 1,1994
1 R.A. No. 8282, for SSS members and R A . No. 8291, for GSIS members.
5 Section 2, RA. No. 7699; Section 1 je|, Rule III, Rules and Regulations Implementing RA. No. 7699
6 Section 2, Ibid.; Section 1 [b]. Rule III, Ibid.
7 Section 1, Rule VII, Rules and Regulations Implementing RepubSc Act No! 7699.
8 Section 1, Rule I, Ibid.

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3. C RED ITA B ILITY AND T O T A L IZ A T IO N O F C O N T R IB U T IO N S

AND B E N E FIT S IN SSS A N D GSIS.

Under R.A. No. 7699,1 it is enunciated that provisions of any general or

special law or rules and regulations to the contrary notwithstanding, a covered
worker who transfers employment from one sector to another (/. e., from private
sector to public sector, or vice versa), or is employed in both sectors, shall have his
creditable services or contributions in both Systems (GSIS and SSS) credited to his
service or contribution record in each o f the Systems and shall be totalized for
purposes o f old-age, disability, survivorship and other benefits in case the covered
member does not qualify for such benefits in either or both Systems without totalisation
provided, however, that overlapping periods o f membership shall be credited only
once for purposes o f totalization.

4. L IM IT E D PO RTA BILITY O F FU N D S.

The processes involved in the prompt payment of money benefits to

eligible members are the joint responsibility of the GSIS and SSS.2 The System or
Systems responsible for the payment o f money benefits due a covered worker shall
release the same within fifteen (15) working days from receipt o f the claim, subject
to the submission o f the required documents and availability of complete
employee/employer records in the System or Systems.3

c.
D IS A B IL IT Y A N D D E A T H B E N E F IT S

1.
LABOR CODE4

a.
EMPLOYEES’ COMPENSATION PROGRAM

1. T H E STATE IN SU R A N C E FU N D [SIF].

a. SIF created from contributions o f employers.

The State Insurance Fund (SIF) is built up by the contributions o f
employers based on the salaries o f their employees as provided under the Labor
Code.

1 See Section 3 thereof.

2 Section 1, Rule (V, Rules and Regulations Implementing R A No. 7699.
3 Section 2, Rule IV, Ibid.
* Relevant provisions: Articles 172 [166] to 215 [208-A], Title II, Book IV of the Labor Code.

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 302 Ba r . R e v i e w e r on La b o r L a w

b. Two (2) separate SIFs.

There are two (2) separate and distinct State Insurance Funds: one
established under the SSS for private sector employees; and die other, under the
GSIS for public sector employees. The management and investment o f die Funds
are done separately and distincdy by the SSS and the GSIS. It is used exclusively for
payment o f the employees' compensation benefits and no amount thereof is
authorized to be used for any other purpose.1

c. Three (3) agencies involved in the implementation o f the ECP.

There are three (3) agencies involved in the implementation o f the
Employees’ Compensation Program (ECP). These are: (1) The E m ployees'
Compensation Commission (ECC) which is mandated to initiate, rationalize and
coordinate policies of the ECP and to review appealed cases from (2) the
Government Service Insurance System (GSIS) and (3) the Social Security
System (SSS), the administering agencies o f the ECP.

d. Role o f the GSIS and SSS.

Being administering agencies o f the ECP, both die GSIS and SSS are
tasked to:

1) evaluate all employees compensation (E Q claims filed within a given

period and pay the corresponding EC benefits;
2) collect EC premiums remitted by employers; and
3) manage the SIF.

Both the GSIS and the SSS invest die funds in profitable ventures to
generate earnings which will form part o f the State Insurance Fund (SIF) from
which payments for employees' compensation claims arc sourced.

e. Role o f the ECC.

The law applies the social security principle in the handling o f workmen’s
compensation. Towards this end, the Employees' Compensation Commission
(ECC) administers and setdes claims from a fund under its exclusive control The
employer does not intervene in die compensation process and it has no control, as
in die past, over payment o f benefits. The open-ended Table ofOccupationalDiseases
requires no proof o f causation. A covered claimant suffering from an occupational
disease is automatically paid benefits.

f. Role o f the employer.

On the part of the employer, its duty is only to pay the regular monthly
premiums to the System (GSIS/SSS). It does n o t look for insurance companies to
meet sudden demands for compensation payments or set up its own funds to meet

1 Ai6de179,asamendedbySection4,PX>.No. 1368.

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SO C IA L W ELFARE LEG ISLA TIO N

those contingencies. It does not have to defend itself from spuriously documented
or long past claims.

g. Role o f the employee.

The injured worker does not have to litigate his right to compensation.
There is no notice o f injury o r requirement o f controversion. T he rick worker is
simply required to file a claim with the ECC which determines, on the basis .of the
employee's supporting papers and medical evidence, whether o r not compensation
should be paid. T he payment o f benefits is m ore prom pt ad the cost o f
administration is low.

The employer no longer opposes o r fights a claim for compensation by

the employee. Resultandy, the lop-sided situation o f an employer against one
employee is absent1

2. SCOPE O F CO V ERA G E O F T H E EC P.

a. General coverage.

The following shall be covered by the Employees’ Compensation

Program (ECP):

1) All employers;
2) Every employee not over sixty (60) years o f age;
3) An employee over 60 years o f age who had been paying contributions
to the System (GSIS/SSS) prior to age sixty (60) and has not been
compulsorily retired; and
4) Any employee who is coverable by both the GSIS and SSS and should
be compulsorily covered by both Systems.2

b. Sectors o f employees covered by the BCP.

The following sectors are covered under the ECP:

1) All p u b lic sector employees including those o f government-owned

an d /o r controlled corporations and local government units covered by
the GSIS;

3) Overseas Filipino workers (OFWs), namely:

a. Filipino seafarers compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer, natural
or juridical, is engaged in any trade, industry or business
undertaking in the Philippines; otherwise, they shall not be covered
by the ECP.

1 Sairiattov. ECC,GA No. 1-65680, May11.1888.161SCRA312.

2 Article 174 (168J, LaborCode; Section 2, Rule l, Amended Rules on Employees'Compensation,

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c. Start o f coverage o f em ployees under the ECP.

The coverage under the ECP o f employees in the private and public
sectors starts on the first day o f their employment.

d. Nature o f coverage.

Tire coverage is com pulsory in nature.'

b.
EMPLOYEES’ COMPENSATION BENEFITS

1. KINDS OF BENEFITS.

The following are the benefits provided under the Labor Code:

1) Medical Benefits1
2
2) Rehabilitation Services.3

3) Disability Benefits4
a. Temporary total disability56
b. Permanent total disability*
c. Permanent partial disability7
4) Death Benefit8
5) Funeral Benefit9

I.
MEDICAL BENEFITS

1. CONDITIONS FOR E N TIT L E M E N T TO MEDICAL SERVICES,

APPLIANCES AND SUPPLIES.

Any employee is entitled to such medical services, appliances and supplies

as the nature of his disability and the progress of his recovery may require, subject
to the expense limitation as contained in Annex “C" o f the Amended Rules on
Employees' Compensation, if all of the following conditions are satisfied:

1 Article 174 (168), Ibid.; See also Section 1. Rule I, Ibid.

7 Articles 191 (185] to 196 (190], Chapter V, Tide II, Book IV, Labor Code.
3 Article 196 (190], Ibid.
4 Articles 197 [191] to 199 (193], Chapter VI, Tide II, Book IV, Ibid.
3 Article 197 [191]. Ibid.
« Article 198 (192], Ibid.
' Article 199 (193], Ibid.
6 Article 200|194], Chapter VII, Tide II, Book IV, Ibid.
» Section 1, Rule XIV, Amended Rules on Employees' Compensation.

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SOCIAL WELFARE LEGISLATION
(a) He has been duly reported to the System (GSIS/SSS);
(b) He sustains an injury or contracts sickness; and
(c) The System has been duly notified o f the injury or sickness.1

2. PERIOD OF EN TITLEM EN T.

The medical services, appliances and supplies are required to be provided

to the afflicted employee beginning on the first day of injury or sickness, during die
subsequent period o f his disability, and as the progress o f his recovery may
require.2 The obligation o f the SIF to provide medical services shall continue for as
long as the employee is sick. This duty is not ended even if employment was
terminated.3

3. EXTENT OF SERVICES.

The employee is entitled to the benefits only for the ward services of an
accredited hospital and accredited physician. However, if the employee chooses
accommodations better than ward services, the excess of the total amount o f
expenses incurred over the benefits provided under Annex “C”o { the Amended Rules
011 Employees' Compensation shall be bome by the employee.4

The hospital shall provide all the medicines, drugs or supplies necessary
for the treatment o f the employee at a cost n o t exceeding the retail prices
prevailing in local d ru g stores.5 In view o f the enactment of R.A. No. 9502,
otherwise known as "The Universally Accessible Cheaper and Quality Medicines Act of
2008" and its Implementing Rules and Regulations which provide that the
President o f the Philippines, upon recommendation of the Secretary o f the
Department o f Health, shall have the power to impose Maximum Drug Retail
Prices (MDRP) over any or all drugs and medicines as enumerated and provided
for in the law, the ECC passed Board Resolution No. 09-09-134 on September 25,
2009, approving as a policy that all reimbursements o f medicines under P.D. 626,
as amended, shall be in accordance with the amount that may be prescribed under
R.A. No. 9502 and its Implementing Rules and Regulations.

Payments shall be made directly to the providers of such services in such

amount as are prevailing in the community for similar services or provided under
the schedule set forth in said Annex (C ,’’whichever is less.6

The right o f flic employee to seek reimbursement for medical expenses

docs not only pertain to those incurred for the principal or primary ailment but

’ Section 1, Rule VIII, Amended Rules on Employees' Compensation.

7 Section 2. Rule VIII, Amended Rules on Employees' Compensation.
3 togon-Suyoc Nines, Inc. v. Dulay, G.R. No. L-18974, Sept 30,1963.
* Section 3 (a]. Rule VIII, Amended Rules on Employees' Compensation.
* Section 3 [b]. Rule VIII, Ibid.
5 Section 3 (c], Rule VIII, Ibid.

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extends to those incurred for complications arising therefrom even if the same
occurred after the employee had already retired.

4. LOSS OF WAGES OR E A R N IN G CAPACITY N O T R EQ U IR ED .

It is worthy to note that Article 191 [185] does not impose as a pre­
requisite for the grant of medical benefits, that the injured or sick employee should
show proof that he suffered loss o f wages or earning capacity as a result of such
injury or sickness. The law is clear that the injured or sick employee is “immediately”
entitled to be provided during the subsequent period of his disability, with such
medical services and appliances as the nature o f his sickness or injury and progress
of his recovery may require.1The only limitation imposed by law is in the matter of
expenses which the ECC may prescribe.2 A claimant who, despite his illness,
continues to work in order to avoid economic loss is nonetheless entided to
medical benefits.3

II.
REHABILITATION SERVICES

1. D E FIN IT IO N S.
"Person with Work-Related Disability (PWRD)" means a worker who has
suffered from a work-connected disease or injury adversely affecting the earning
capacity.4

'Rehabilitation is the process by which there is provided a balanced

program of remedial treatment, vocational assessment and preparation designed to
meet the individual needs of each handicapped employee to restore him to suitable
employment and to help each PWRD to develop his/her mental, vocational or
social potential.5

‘Rehabilitation Facility” is an organized service offering one or more types

of service for the rehabilitation o f a person with disability.6

2. NATURE AND C O N D IT IO N OF E N T IT L E M E N T .

Coverage under this benefit shall be voluntary. Entitlement to

rehabilitation services shall be upon approval o f the EC claim for disability benefits
by the Systems.7

Article 191 (185), Labor Code; Corales v. ECC, G R No. L-44053, Feb. 27,1979,88 SCRA 547.
Article 191 [185], Labor Code.
Corales v. ECC, supra.
Section 1 (a), Rule IX Amended Rules on Employees’ Compensation, as amended by Board Resolution No. 144)7-19, s.
2014, Februaiy 19,2014.
Section 1(b), Rule IX Id.
Section 1(c), Rule IX Id.
Section 2, Rule IX Id.

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SOCIAL WELFARE LEGISLATION

3. PE R IO D O F E N T IT L E M E N T .

Rehabilitation services shall be provided during the period of the disability

as the nature and progress of the recovery of the PWRDs may require as
determined by the rehabilitation experts. Rehabilitation services shall be suspended
or terminated upon refusal o f the PWRD to continue rehabilitation.1

4. E X T E N T O F R E H A B IL IT A T IO N SERVICES.

Rehabilitation services may be in the form of any of the following:

a. Medical-surgical management;
b. Hospitalization;
c. Necessary appliances and supplies;
d. Physical restoration;
e. Psychosocial counseling;
f. Psychiatric evaluation;
g. Skillstraining;
h. Entrepreneurship training;
i. Hearing impairment rehabilitation;
j. Visual impairment rehabilitation.2

5. T R A IN IN G O F PW RD.

The PWRD trainee shall be entitled to tuition fees, reimbursement of the

cost of training materials, and meal and transportation allowances,3 as applicable,
within the amount prescribed by the Commission (ECC).4

The Commission shall enter into an agreement with any government or

private hospitals/institutions for purposes o f utilizing their service facilities for
rehabilitation.5

The Commission may establish a rehabilitation facility, as may be

necessary and appropriate, such facility being a part o f an existing medical facility
or in a separate site, offering one or more types of services for the rehabilitation o f
PWRDs.6

6. L IM IT A T IO N O F LIABILITY.

The System shall not be responsible for the payment of rehabilitation

services when the injury, sickness, disability or death during the rehabilitation

' Section 3, Rule IX, Id.

2 Section 4, Rule IX, Id.
3 Meal and transportation allowance was increased from P I,800.00 to P2,500.00. (As provided under Board Resolution No.
10-10-158, October 20,2010).
4 Section 5, Rule IX, Id.
s Section 6, Rule IX, Id.
6 Section 7, Rule IX. W.

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period of the PWRD is occasioned by any o f the following: (1) Intoxication; (2)
Willful intent to injure oneself or another, and (3) Notorious negligence.1

7. M O NITO RING OF A CTIV ITIES A ND PROGRESS O F PWRDs.

The Secretariat shall establish a mechanism to monitor the activities and

progress of PWRDs. For this purpose, the Secretariat may conduct home visits for
the successful implementation o f the delivery o f services/projects of the
rehabilitation program of the Commission.2

III.
DISABILITY BENEFITS

1. DISABILITY, M EA N IN G .

‘Disability” means the loss or damage o f a physical or mental function

resulting from an injury or sickness that prevents an employee from performing
his/her work, or from being engaged in any gainful occupation.3 In general, as a
basis for compensation, it is the combination of partial or total physical incapacity
and of inability to work, or inability to work with the same ease and competency as
prior to the injury, or the loss, total or partial, of earning power from the injury.4

2. T H R E E KINDS OF DISABILITY U N D E R T H E LABOR COD E.

There are three (3) kinds o f disability benefits under the Labor Code, as
amended by P.D. No. 626,5 namely:

(1) Temporary total disability (Article 197 [191]);

(2) Permanent total disability (Article 198 [192]); and
(3) Permanent partial disability (Article 199 [193]).

All the foregoing are discussed in seriatim herein-below.

The compensation for the disabilities mentioned and described in the law
is not mutually exclusive. For instance, recovery o f compensation for temporaiy total
or permanentpartial disability shall not preclude recovery for permanent total disability.

The purpose of the law in providing benefits to the injured or sick

employee during temporaiy disability is to compensate him for what he might have
earned during the period while his injury or sickness is being medically treated. The
object of the law in providing benefits for permanent disability is to compensate him
for the actual and permanent loss o f physical or mental function o f his body.6 This

1 Section 8, Rule IX. Id.

7 Section 9, Rule IX, Id.
3 Article 173 (n), LaborCode.
1 Hada Hataie v. ECC. G.R No. 92803, March 22,1991.195 SCRA 580.
5 The Employees' Compensation la *.
4 Ca/fete v. Insular Lumber Co., G.R. No. L-42175, July 10,1935,61 Phi. 592; Garcia v. Philippine Education Company, 62
PM. 634

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SOCIAL WELFARE LEGISLATION

is as it should be; otherwise, the social justice policy underlying the enactment of
labor laws would lose its meaning.1

Ill-A.
TEMPORARY TOTAL DISABILITY

1. T O T A L DISABILITY, W H E N TEM PORA RY .

A total disability is temporaiy if, as a result of the injury or sickness, the

employee is unable to perform any gainful occupation for a continuous period of
not exceeding one hundred twenty (120) days, except when such disability still
requires medical attendance beyond 120 days, but not to exceed 240 days.2

If the disability is the result of an injury or sickness, the penod of

compensability shall be counted from the first day of such injury or sickness. An
employee who later had to stop working due to a compensable illness is also
entided to temporaiy total disability benefits.34An employee-claimant who retires or is
otherwise separated from employment after the 120 days of TTD but before 240
days, may present himself to the System (GSIS/SSS) for another physical and
medical examination to determine if h e/she is entided to additional benefits.*

2. C O N D IT IO N S T O E N T IT L E M E N T .

An employee shall be entided to an income benefit for temporaiy total

disability if all o f the following conditions are satisfied:

1. He has been duly reported to the System (GSIS/SSS);

2. He sustains die temporaiy total disability as a result o f the injury or
sickness; and
3. The System has been duly notified of the injur)' or sickness which
caused his disability.

His employer shall be liable for the benefit if such illness or injury
occurred before the employee is duly reported for coverage to the System
(GSIS/SSS).5

3. P E R IO D O F E N T IT L E M E N T .

The income benefit in the case o f temporaiy total disability should be paid
beginning on the first day of such disability. I f caused by. an injury or sickness, it
should not be paid longer than one hundred twenty (120) consecutive days except
where such injury or sickness still requires medical attention beyond 120 days but

1 Social Security Convnission v. CA, Gi?. No. 152058, Sept 27.2004.

2 Aitide 197 [191). Labor Code; Section 2 (a). Rule VII, Amended Rdes on Employees’ Compensation; ECC Boarf
Resolution 93-08-0068 issued on August 5.1993.
3 Fedfio v. WCC, G.R. No. L43642, Jan. 17,1985,134 SCRA 56.
4 ECC Board Resolution No. 93-08-0068, August 5,1993.
5 Section 1, Rule X, Amended Rules on Employees'Compensation.

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not to exceed 240 days from the onset o f the disability, in which case, benefit for
temporary total disability shall be paid. However, the System (GSIS/SSS) may declare
the total and permanent status at any time after 120 days of continuous temporary total
disability as may be warranted by the degree of actual loss or impairment of
physical or mental functions as determined by the System (GSIS/SSS).1

After an employee has fully recovered from an illness as duly certified to

by the attending physician, the period covered by any relapse he suffers or
recurrence of his illness, which results in disability and is determined to be
compensable, shall be considered independent of, and. separate from, the period
covered by the original disability in the computation of his income benefit for
temporary total disability.2

4. AMOUNT O F B E N E FIT .

Any employee entided to benefit for temporary total disability shall be

paid an income benefit equivalent to ninety percent (90%) of his average daily
salary credit, subject to die condition that the daily income benefit shall not be less
than P I0.00 or more dian P200.001 nor paid longer than 120 days for the same
disability, unless the injury or sickness requires more extensive treatment that lasts
beyond 120 days, but not to exceed 240 days from onset o f disability, in which
case, he shall be paid benefit for temporary total disability during the extended
period.4

lil-B.
PERMANENT TOTAL DISABILITY

1. DISABILITY, W H EN T O T A L AND P E R M A N E N T .

A disability is total and permanent if, as a result o f the injury or sickness, the
employee is unable to perform any gainful occupation for a continuous period
exceeding one hundred twenty (120) days.5 The fact, however, that the permanendy
and totally disabled employee continues to work after such disability does not
deprive him of the benefits provided under the law.6 For what is important
consideration is the inability to do substantially all material acts necessary for the
prosecution of a gainful occupation without serious discomfort or pain and without
material injury or danger to life. In disability compensation, it is not the injury perse

' Section 2 [a]. Rule X. bid.

7 Section 2 (b|, Rule X. bid.: ECC Resolution No. 1029, August 10.1978.
3 The amount c( daily income benefit tor temporary total disability (TTD| was increased from P90.00 to P200.00, as
provided under ECC Board Resolution No. 96-10-0429, October 10,1996 and ECC Board Resolution No. 12-09-21,
Septerriber 27,2012.
4 Section 3, Rule X. bid.; ECC Resolution No. 1029, August 10,1978.
5 Section 2 [b]. Rule VII, Amended Rules on Employees' Compensation; Crystal Shipping, Inc. v. Natwdad, G.R. No. 154798,
Oct 20.2005; GSIS v. Cadiz. G.R. No. 154093, July 8,2003,405 SCRA 450.454.
6 Makabai v. ECC, G.R. No. L-51533, Ncv. 29,1983.

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SOCIAL WELFARE LEGISLATION

which is compensated but the incapacity to work.1The test to determine its gravity
is the impairment or loss o f one’s capacity to earn and not its mere medical
significance.2

2. C O N D IT IO N S T O E N T IT L E M E N T .

An employee is entitled to an income benefit for permanent total disability if

all of the following conditions are satisfied:

1) He has been duly reported to the System (GSIS/SSS);

2) He sustains the permanent total disability as a result of the injury or
sickness; and
3) The System has been duly notified of the injury or sickness which
caused his disability.3

His employer shall be liable for the benefit if such injury or sickness
occurred before the employee is duly reported for coverage to the System
(GSIS/SSS).4

3. T O T A L D ISA B ILITIES D E E M E D P E R M A N E N T .

The following total disabilities shall be considered permanent:

(1) Temporary total disability lasting continuously for more than 120
days, except as otherwise provided for temporary total disability.5
(2) Complete loss o f sight o f bodi eyes;
(3) Loss o f two limbs at or above the ankle or wrist;
(4) Permanent complete paralysis of two limbs.
(5) Brain injury resulting in incurable imbecility and insanity, and
(6) Such cases as determined by the System (GSIS/SSS) and approved
by the Commission.6

4. P E R IO D O F E N T IT L E M E N T .

The full monthly income benefit shall be paid for all compensable
months o f disability.7 After the benefit under the Employees' Compensation shall
have ceased as provided under the preceding paragraph, and if the employee is
otherwise qualified for benefit for the same disability under another law
administered by the System, he shall be paid a benefit in accordance with the

’ Bejerano v. ECC, G.R No. 84777, Jan. 30.1992; Crystal Shipping, Inc. v Natwidad.GR No. 154708. Oct 20.2005
J Seagul Wartime Corp.v. Dee, G.R No. 165156, April 2,2007
3 Section 1 [a]. Rule X). Amended FUies on Employees' Compensation.
* Rule XI, Amended Rules on Employees' Compensation
5 Temporary total disability as provided in Rule X, Amended Rules on Employees' Compensation.
6 Section 1 [b], Rule XI, Amended Rules on Employees' Compensation
7 Section 2 (a), Ruie XI, Id.

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provisions of that law. This paragraph applies to contingencies which occurred

prior to May 1, 1978.1

Except as otherwise provided for in other laws, decrees, orders or letters

of instructions, the monthly income benefit shall be guaranteed for 5 years and
shall be suspended under any o f the following conditions:

(1) Failure to present himself for examination at least once a year upon
notice by the System;
1.1. Compliance with the said requirement shall lift the suspension
and obligation of the System to rcturrt the suspended EC PTD
benefits automatically arises.2
(2) Failure to submit a quarterly medical report certified by his attending
physician;1
(3) Complete or full recovery from his permanent disability, or
(4) Upon being gainfully employed.4

5. AMOUNT O F B E N E F IT .

In the case of the SS3, any employee entitled to permanent total disability
benefit shall be paid by the System a monthly income benefit5 The number of
months of paid coverage shall be the number o f monthly contributions remitted
to the System including contributions other than for Employees’
Compensation if paid before March 31, 1975. The full monthly income benefit
shall be paid for all compensable months of disability.6 The first day preceding the
semester of temporary total disability shall be considered for purposes of
computing the monthly income benefit for permanent total disability.7

It bears noting that in 2014, there has been a ten percent (10%) across-
the-board increase in EC pension for all EC permanent total disability pensioner in
the private sector.8 The 10% across-the-board increase has a retroactive application
to September 2013.9

6. AMOUNT OF B E N E F IT FO R D E P E N D E N T C H IL D R E N .

Each dependent child, but not exceeding five (5), counted from die
youngest and without substitution, shall be entitled to ten percent (10%) o f the

' Section 2 [b], Rule XI. Id.

2 As provided under ECC Board Resolution No. 10-02-03, dated February 26.2010.
3 As required under Section 5 of Rule IV of he Amended Rules on Employees' Compensation.
4 Section 2 {cj, Rule XI, Amended Rules on Employees' Compensation.
5 Section 3 (a), Rule XI, Id. As defned in Section 9 (a), Rule VI of the Amended Rules on Employees'Compensation.
6 Section3(b).RuleXI,Id.
2 Section 3(c), Rule XI, Id.
8 Per Section 2, Executive Order No. 167, dated May 26,2014.
9 As provided under Board Resolution No. 14-06-29, dated June 6,2014.

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monthly income benefit of the employee. This rule, however, shall not apply to
causes of action which accrued before May 1,1978.*

7. E N T IT L E M E N T T O T H E N E W IN C O M E B E N E F IT U N D E R P.D.
1641.

The new amount o f the monthly income benefit computed under the
Amended Rules shall be applicable to all contingencies occurring on or after January
1, 1980. However, for contingencies which occurred before May 1, 1978, the
limitation o f Pl2,000 or 5 years, whichever comes first, shall be enforced.*2

In the case o f the SSS, the present monthly income benefit of current
pensioners shall be increased by twenty percent (20%) effective January 1 ,1980.3

In the case o f the GSIS, the monthly income benefit of current

pensioners shall be adjusted and recomputed to reflect the twenty percent (20%)
increase over the benefit under P.D. 1146 effective January 1 ,1980.4

8. A G G REG A TE M O N T H L Y B E N E F IT PAYABLE.

-Except the benefit to dependent children,5 the aggregate monthly benefit

payable, in the case o f the GSIS, shall in no case exceed the monthly wage or salary
actually received by the employee as o f the date o f his permanent total disability.6

Ill-C.
PERMANENT PARTIAL DISABILITY

1. D ISABILITY, W H E N PARTIAL AND P E R M A N E N T .

A disability is partial and permanent if, as a result o f the injury or sickness,

the employee suffers a permanentpartial loss o f the use o f any part o f his body.7

2. C O N D IT IO N S T O E N T IT L E M E N T .

An employee shall be entitled to an income benefit for permanent partial

disability (PPD) if all o f the following conditions are satisfied:

1. He has been duly reported to the System (GSIS/SSS);

2. He sustains the permanent partial disability as a result o f the injury or
sickness; and
3. The System has been duly notified o f the injury or sickness which
caused his disability.

’ Section 4 (a), Rule XI, Amended Rules on Employees' Oxnpensafoo.

2 Section 5 (a). Rule XI. Id.
3 Id.
4 Id.
5 Under Section 4 of Ns Rule XI.
6 Section 6, Rule XI, Id.; See also ECC Resolution No. 2819, August 9,1984.
1 Section 2 jc], Rule VII, Amended Rules on Employees’ Compensation

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 3 14 Ba r r e v ie w e r o n l a b o r Law

His employer shall be liable for the benefit if such injury or sickness
occurred before the employee is duly reported for coverage to the System
(GSIS/SSS).1
For purposes o f entitlement to income benefits for permanent partial
disability, a covered employee shall continue to receive the benefits provided
thereunder even if he is gainfully employed and receiving his wage o r salary.2

3. PERIOD O F ENTITLEME1SIT.

The income benefit shall be paid beginning on the first month o f such
disability, but not longer than the designated number o f months in accordance with
the schedule found in Article 199(b) [193(b)] o f die Labor Code.3

A worker who sustained work-related injuries that resulted to functional

loss and/or physical loss o f any part o f his body shall be granted Temporary Total
Disability (TTD) and Permanent Partial Disability (PPD) benefits successively.
Any earlier compensation for TTD that may have been paid to an injured worker
shall not be deducted from the PPD benefit that may be later granted to him.4

A loss o f a wrist shall be considered a loss o f the hand, and a loss o f an

elbow shall be considered a loss o f the arm; a loss o f an ankle shall be considered a
loss of the foot, and a loss o f a knee shall be considered a loss o f the leg, a loss o f
more than one joint shall be considered a loss o f die whole finger o r toe, and a loss
o f only the first joint shall be considered a loss o f one-half o f the whole finger or
toe. Other permanent partial disabilities shall be determined by the Medical Officer
o f the Sy$tem.s

The degree of permanent disability shall be equivalent to the ratio that the
designated number of compensability beats to IS.6

4. SCHEDULE O F IN C O M E B E N E F IT PAYM ENT.

The income benefit shall be paid beginning with the first month o f
disability, but no longer than the designated number o f months in the following
schedule:7
C o m p le te a n d P e tm n m n l N o. o f
L a s s o f th e u s e o f M o n th s
o n e th u m b 10
one index fin g e r 8
one m id d le fin g er 6
one rin g finger S
one little fin g e r 3

Secbonl [aJ.RiieXII.AmencledRutesonErTployees’Compensation.
Secfcn 1(b), RuleXII. W.
Sedixi2|a).Ru3eXU,W
id.'.AsprowjdedundereoardResafajtionNo. 10-09-114.Senesof 2010, September2,2010.
Secfion2(b). RuleXH,M.
Secficn2(c). Rule»!, kid.
Per Section 2. Rule XBof (he Amended Rules on Employees' Compensalioa

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SO C IA L WELFARE LEG ISLA TIO N

o n e b ig toe 6
an y toe 3
one band 39
o n e a im SO
o n e foot 21
o n e le g 46
one car 10
b o th ears 20
h e a rin g o f o n e c a r 10
h e a rin g o f b o th ears 50
sig h t o f o n e eye 25

5. A M O U N T O F B E N E F IT .

Any employee entitled to permanent partial disability benefit shall be paid

by the System a monthly income benefit for the number o f months indicated in the
schedule embodied in the law (Articlel99(b) [193(b)]) and the Amended Rules} If the
indicated number o f months exceed twelve, the income benefit shall be paid in
monthly pension; otherwise, the System may pay income benefit in lump sum o r in
monthly pension.12

In case o f permanent partial disability less than the total loss o f the
member, die same monthly income shall be paid for a portion o f the period
established for the total loss o f the member in accordance with die proportion that
the partial loss bears to the total loss. If the result is a decimal fraction, the same
shall be rounded off to the next higher integer.3

In case o f simultaneous loss o f more than one member or a part thereof,

the same monthly income shall be paid for a period equivalent to die sum o f the
periods established for the loss o f the member or part thereof but not exceeding
75. If the result is a decimal fraction, the same shall be rounded o ff to the higher
integer.4

The new amount o f the monthly income benefit computed under the
Amended Rules shall be applicable to all contingencies occurring on o r after January
1, 1980. However, for contingencies which occurred before May 1, 1978, the
limitation o f PI 2,000.00 or five (5) years, whichever comes first, shall be enforced.5

In the case o f the SSS, the present monthly income benefit o f current
pensioners shall be increased by twenty percent (20%) effective January 1 ,1980.6

In the case o f die GSIS, the monthly income benefits o f current

pensioners shall be adjusted and recomputed to reflect'die twenty percent (20%)
increase over the benefit under P.D. 1146 effective January 1 ,1980.1

1 Section 2 tiered.
2 Section3 f t RifeXII, Md.
1 Section3 f t Rife XII, Wd.
4 Section3f t Rife XII, Ibid.
5 SecSon3ftRu)eXIi,BNd.

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It bears noting that there has been a ten percent (10%) across-the-board
increase in EC pension for all EC survivorship pensioner in the private sector.12 The
10% across-the-board increase has a retroactive application to September 2013.34

6. UNLISTED INJURIES AND ILLNESSES.

In cases of injuries or illnesses not listed in the schedule in Article 199(b)

[193(b)] and the Amended Rules* the benefit shall be an income benefit equivalent to
the percentage of the permanent loss of the capacity for work.5

7. LITMUS T EST AND D IS T IN C T IO N B E T W E E N P E R M A N E N T

TOTAL DISABILITY AND PE R M A N E N T PARTIAL DISABILITY.

In Vicente v. ECC,6 the Supreme Court laid down the litmus test and
distinction between Permanent Total Disability and Permanent Partial Disability, to wit.
"(Wjbile 'permanent total disability’ invariably results in an
employee’s loss of work or inability to perform his usual work,
'permanentpartial disability,’ on the other hand, occurs when an employee
loses the use of any particular anatomical part of his body which
disables him to continue with his former work. Stated otherwise, the
test of whedicr or not an employee suffers from ‘permanent total disability'
is a showing of the capacity of the employee to continue performing his
work notwithstanding the disability he incurred. Thus, if by reason of
the injury or sickness he sustained, the employee is unable to perform
his customary job for more than 120 days and he does not come within
the coverage of Rule X of the Amended Rules on Employees
Compensability (which, in a more detailed manner, describes what
constitutes temporary total disability), then the said employee
undoubtedly suffers from ‘permanent total disability’ regardless of whether
or not he loses the use of any part of his body. ’7

It bears emphasizing that a person’s disability may not manifest fully at

one precise moment in time but rather over a period of time. It is possible that an
injury which at first was considered to be temporary may later on become
permanent or one who suffers a partial disability becomes totally and permanendy
disabled from the same cause.8

1 Id.
2 Section 2, Executive Order No. 167, dated May 25,2014.
3 As provided under Board Resdution No. 14-06-29, dated June 6,2014.
4 Under Section 2 thereof
5 Noo-Scheduted DisabStes.
6 G.R. No. 85024, Jan. 23.1991,193 SCRA190
1 See also Sodat Security Cormssion, v CA. G R. No. 152058, Sept 27,2004; Ijares v. Court of Appeals, G.R No. 105854,
Aug. 26,1999,313 SCRA 141, Gonzaoa v. ECC, G.R No. L-62287, Jan. 31,1984,127 SCRA 443; Marcefmo v. Seven Up
Botfng Company of the Phfippnes, G.R No. L-30443, Oct 31 .1 972,150-C Phil 133; Landicho' v. WCC, G.R. No. I-
45996 March 26 1979.89 SCRA 147; .egaspi v. Province of Negros Oriental, G.R. No. L43066, Dec. 29,1978.
8 GSIS v. CA G.R No. 117572. Jan. 29.1998.285 SCRA 430 citing GSIS v. CA G R No. 116015, Jtiy 31.1996,260 SCRA
133.

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IV.
DEATH BENEFIT

1. D E A T H ; M E A N IN G .

Within the context o f the employees’ compensation program, the term

"death" means loss of life resulting from an injury or sickness.1 “Compensable death”
refers to death which is the result o f a work-related injury or sickness.

2. C O N D IT IO N T O E N T IT L E M E N T .

The beneficiaries of a deceased employee shall be entitled to an income

benefit if all of the following conditions are satisfied:

(1) The employee has been duly reported to the System;

(2) He died as a result o f an injury or sickness; and
(3) The System has been duly notified of his death as well as the injury or
sickness which caused his death. His employer shall be liable for the
benefit if such death occurred before the employee is duly reported
for coverage to the System.2
If the employee has been receiving monthly income benefit for
permanent total disability at the time of his death, the surviving spouse must show
that the marriage has been validly subsisting at the time o f his disability. In
addition, the cause o f death must be a complication or natural consequence o f the
compensated Permanent Total Disability.3
3. P E R IO D O F E N T IT L E M E N T .

A. For Prim ary Beneficiaries:

(a) The income benefit shall be paid beginning at the month of death and
shall continue to be paid for as long as the beneficiaries are entitled thereto. With
respect to the surviving legitimate spouse, the qualification is that he/she has not
remarried. For the dependent children, the qualifications are:
1) Unmarried;
2) N ot gainfully employed; and
3) Over 21 years of age provided he/she is incapable o f self-
support due to a physical or mental defect which is congenital or
acquired during minority.4

1 Artcie 173(m) [167(m)}, Labor Code.

2 Section 1 [a]. Rule XIII. Amended Rules on Employees' Compensation.: Gau Stieng Phis., Inc. v. Joaquin, G R. No.
144655, Sept 8,2004, citing Boniiia v. CA. G.R. No. 136453, Sept 21,2000,340 SCRA 760.
3 Section 1 [b]. Rule XIII, Id.; As provided under Board Resolution No. 19-09-116, dated Septembef2,2010.
4 Section 2 (A) (a], Rule XIII, Id.; As provided under Board ResoWon No. 12-07-16, dated July 27,2012.

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(b) The monthly income benefit shall be guaranteed for five (5) years
which in no case shall be less than Pi 5,000.00. Thereafter, the beneficiaries shall be
paid the monthly income benefit for as long as they are entided thereto.1
B. For Secondary Beneficiaries:
(a) The income benefit shall be sixty (60) rimes the monthly income
benefit of a primary beneficiary which in no case be less than P15,000.00, which
shall likewise be paid in monthly pension.2
4. AMOUNT OF B E N E FIT .
*
(a) In the case of prim ary beneficiaries - The monthly income benefit
shall be equivalent to the monthly income benefit for permanent total disability,
which shall be guaranteed for five years, increased by ten percent for each
dependent child but not exceeding five (5), beginning with the youngest and
without substitution: Provided, That, the aggregate monthly benefit payable in the
case of the GSIS shall in no case exceed the monthly wage or salary actually
received by the employee at the time of his death; and Provided, Further, That the
minimum income benefit shall not be less than P15,000.00. The death benefit shall
be paid during the entire period for which they are entitled thereto.
If the employee has been receiving income benefits for permanent total
disability at the time of his death, the primary beneficiaries shall be paid the
monthly income benefit equivalent to eighty percent plus the dependent's pension
equivalent to ten percent (10%) thereof for every dependent child but not
exceeding five (5) counted from the youngest and without substitution.3
(b) In the case of secondary beneficiaries - The income benefit is
payable in monthly pension which shall not exceed the period o f 60 months
and the aggregate income benefit shall not be less than P i5,000.00. If the
employee has been receiving monthly income benefit for permanent total disability
at the time of his death, the secondary beneficiaries shall be paid the monthly
pension, excluding the dependent's pension o f the remaining balance of the five
year guaranteed period.4 It bears stressing that there has been a ten percent (10%)
across-the-board increase in EC pension for all EC survivorship pensioner in the
private sector.5 The 10% across-the-board increase has a retroactive application to
September 2013.6
(c) Qualified wives and children beneficiaries o f M uslim s.

In relation thereto, the following are the guidelines on the grant o f EC

death benefits to qualified wives and children beneficiaries o f Muslims:

1 Section 2 (A) [b], Rule XIII. Id.; ECC Resolution No. 2799, Jut/ 25,1984.
2 Section 2 (B), Rule XIII, Id.; Id.
3 Section 3 (a), Rule XIII, Id.
4 Section 3 (b), Rule XIII, Id.; ECC Resolution No. 2799, July 25,1984.
5 Section 2, Executive Order No. 167, dated May 26,2014.
6 As provided under Board Reso&Jtion No. 14-06-29, dated June 6,2014.

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1) The basic monthly pension shall be divided equally among the
surviving wives;
2) Upon the death or re-marriage o f any o f the wives, her basic monthly
pension shall be equally re-distributed to the remaining wives;
3) The qualified dependent children not exceeding five (5) beginning
with the youngest and without substitution, who are entitled to
dependent’s pension, shall be counted from among the collective
number o f children o f the wives o f the Muslim and not counted from
the children o f each wife o f the Muslim.1

(d) Benefits u p o n the death of a pensioner.

The provision o f paragraph (b) o f Article 200 [194] of the Labor Code, as
amended, applies to death occurring on or after January 1,1980, regardless o f the
date of the onset of the permanent total disability.2

Upon die death of a pensioner as mentioned in the said paragraph (b) of

Article 200 [194], eighty percent (80%) o f the monthly income benefit and die
dependents’ pension shall be paid to the primary beneficiaries in cases where the
cause o f death is a complication or natural consequence o f his compensated
Permanent Total Disability.3

This provision does not apply to cases where a member under permanent
partial disability dies during the period dial he is receiving monthly income benefit
for permanentpartial disability.4

Upon the death o f a pensioner who is survived by secondly beneficiaries,

the latter are entided only to the balance of the five (5) year guaranteed period,
provided that the total amount o f compensation benefits for the five-year period
shall not be less than Fifteen thousand pesos (P I5,000.00). But if the member
under permanent total disability dies after the five-year guaranteed period, secondary
beneficiaries are no longer entided to any benefits.5

5. E N T IT L E M E N T T O T H E N E W IN C O M E B E N E F IT U N D E R P.D.
1641.

The new amount o f the monthly income benefit computed under

the Amended Rules shall be applicable to all contingencies occurring on or after
January 1,1980. However, for contingencies which occurred before May 1,1978,
the limitation of PI 2,000 or 5 years, whichever comes first, shall be enforced.

' As provided under Board Resoluiion No. 14-07-34, dated July 28,2014; See also No. I (1], Annex *D \ Supptetory Rules to
Amended Rules on Employees' Compensation [Resolution No. 90-03-0022 dated March 23,1990].
7 No. II [1], Annex TT, Suppletory Rules to Amended Rules on Employees' Compensation [Resolution No. 96030022 dated
March 23,1990].
3 No. II [2], Ibid., as amended by Board Resolution No. 1609-116. Series of 2010, September 2,2010.
* No. II [3], Ibid.
5 No. II [4], Ibid.

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In the case of die SSS, the present monthly income benefit of current
pensioners shall be increased by twenty percent (20%) effective January 1,1980.

In die case of the GSIS, die monthly income benefit o f the current
pensioners shall be adjusted and recomputed to reflect the twenty percent (20%)
increase over the benefit under P.D. 1146 effective January 1 , 1980.1

The new amount of lump sum benefit computed under the Amended Rules
shall be applicable to all contingencies occurring on or after May 1,1980, otherwise
entidement thereto shall be governed by the foregoing rules?

6. DEATH B EN EFITS, N O T PART OF T H E ESTA TE O F T H E

DECEASED.

The deadi benefits being paid under the law are not part o f the deceased’s
estate. They are not in die nature of inheritance. They arc granted by operadon of
law as financial compensadon and aid for the death of the employee.

It must be noted that the dependents mentioned in the law are not
referred to as the ‘heirs" but rather as “beneficiaries." It may be further observed that
the dependents are not necessarily the “heirs” o f the deceased, as this term is
understood in civil law.

7. PRESUMPTIVE D EA TH.

In 2014, ECC Board Resolution No. 14-07-20 [July 28, 2014], was issued
promulgating the Guidelines on the Grant of EC Benefits Due to Calamity or Fatal Event
Amendingfor this Purpose, Paragraph 5 of Board Resolution No. 93-08-0068 [August 5,
1993J. Accordingly, said Paragraph 5 shall now read as follows:

5. "Guidelines on the Grant of EC benefits for the Beneficiaries of

Missing Persons while in the Performance of Duty during Calamity or Fatal Events

5.1. Coverage. "These guidelines shall apply to all covered workers or

employees' and uniformed personnel who had been reported missing while they
were in the performance of their duties during calamities or fatal events such as,
but not limited to, police or military operation, earthquake, typhoon, and volcanic
eruption.

5.2. Period of Filing. "The beneficiaries may file their claims for EC death
with funeral benefits within the three year-prescriptive period from the time the
missing person has been presumed dead after the lapse o f four years from the
occurrence of the incident.

In lieu of Death Certificate, the Systems may require the submission of

cernfication from any concerned government institution showing that the

' Section 4, Rule XIII. Amended Rules on Employees' Compensation.

1 Section 5. Rule XIII, Id (The Rules refeired to are the ones found in Section 4 of this Rule XIII).

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concerned employee or uniformed personnel has been included in the list o f

missing persons due to a calamity or fatal event an d /o r has been missing for a
period of four years.

5.3. Grant of EC funeral benefits. “EC funeral benefits shall be provided to

the qualified beneficiaries despite the absence of burial ceremony.

5.4. Non-Refund of EC benefits. "If the missing employee appears or without

appearing his/her existence is proved, the EC death with funeral benefits which
have been previously provided shall no longer be returned by the concerned
beneficiaries to the Systems."

ECC Circular No. 15-01-20 (January 20, 2015], is a clarificatory Advisory

on the Definition o f Missing Persons under EC Board Resolution No. 14-07-20
[supm\. The following arc the series of events which should be considered in the
grant of EC benefits:

1. The word "m issing" refers to unknown fate or there is no trace o f

whereabouts of a worker, employee and uniformed personnel while
he/she is in the performance of his/her duties during calamities or
fatal events.
2. The worker, employee or uniformed personnel was not seen or heard
from after die lapse o f four years from the occurrence of the incident.
3. The disappearance o f the worker, employee or uniformed personnel
gives rise to presumption o f death.
4. The death of the worker, employee or uniformed personnel arises out
of and in the course o f employment.

8. JU R ISPR U D E N C E .

Under the law on employees’ compensation, death is compensable only

when it results from a work-connected injury or sickness.1Thus, if the death o f the
employee did not occur while in the performance o f his duties as a gasoline
attendant, the claimant cannot be extended the death benefits under the law.234

In Tolosa v. ECC,1 it was pronounced that the employee’s widow is n o t

entided to death benefits because her husband had stopped working when he
became physically disabled to do his work at the time o f his retirement in 1975 and
died on February 14,1984, or almost nine (9) years after, which is clearly not within
the two-year period required by the old Workmen’s Compensation Act. But in
M anual v. ECC,* where the employee died about 4 V2 years after retiring from the
service due to a stroke, a cardiovascular accident caused by thrombosis, the

' Buena Obrav. SSS. G R No. 147745. A p i 9.2003.

2 Lu v. WCC. G R No. L-43181, Oct 27,1986.145 SCRA170.
3 G R No. 60509, May 8,1985,136 SCRA 335.
4 G R No. 88573. June 25,1990,185 SCRA 738.

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Supreme Court, in reversing the denial of the claim by the ECG, ruled that the
dependents are entitled to the benefits, although the death occurred after the
retirement, because the cause o f death, rryocardial infarction, is closely related to the
cause of his compulsory retirement.

In GS1S v. Cuanong} where the employee died a year after retirement, the
Supreme Court held that indeed, if a death which occurred almost 4 Vz years after
retirement was held to be within the coverage of the death benefits under P.D. No.
626, as in the Manuyon case, with more reason should a death which occurred
within one year after retirement be considered as covered under the same law. A
claim for benefit for such death cannot be defeated by the mere fact of separation
from service.1
2

Upon the death of a covered member during the period that he/she was
receiving permanent partial disability (PPD) benefits, the remainder of his PPD
benefits shall be paid to lus primary beneficiaries. However, the beneficiaries shall be
entitled to the same benefits enjoyed by the beneficiaries o f a permanent total
disability (PTD) pensioner upon his death, provided, that the cause o f death was
the same illness or injury for which he/she was awarded PPD benefits.

V.
FUNERAL BENEFIT

1. E N T IT L E M E N T TO FU N ER A L B E N E F IT .

A funeral benefit o f P20.000.003 shall be paid upon the death o f a covered

employee in both the private and public sectors or permanently totally disabled
pensioner to one of the following:

(a) The surviving spouse; or

(b) The legitimate child who spent for the funeral services; or
(c) Any other person who can show incontrovertible proof or proof of
his having borne the funeral expenses.4

2. C O N D IT IO N TO E N T IT L E M E N T .

The EC funeral benefits shall be granted after the SSS or the GS1S has
declared the following in the evaluation of claims for EC death benefits:

1 G.R. No. 158846, June 3,2004.

2 Ciing |aresv. CA, G.R. No. 105854,Aug. 26.1999,313 SCRA141.
3 Funeral benefit was increased to Twenty “housand Pesos (P20.000 00). as provided under Executive Order No. 167, dated
May 26,2014, in relation to Board Resolutions Nos 144)5-29 [GuideSnes in the Implementation of Executive Order No. 167
in the Private Sector) aid 144)6-30 (Guidetines in the Implementation of Executive Order No. 167 in the Public Sector), both
dated June 06,2014. See also the earlier Board Resolution No. 13-07-14, July 2,2013
< Section 1, Rule XIV, Amended Rules on Employees' Compensation, See also ECC Resolution No. 3582, July 21,1987.

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1. Death due to sickness - causal relationship between the death and the
working conditions of the covered member.
2. Death due to injury - causal relationship between the death and
the work-related accident.
3. Death o f EC Permanent Partial Disability (PPD) or Permanent Total
Disability (PTD) pensioner - the cause of death is a complication or
natural consequence of previously compensated PPD or PTD.1

c.
B E N E F IC IA R IE S

1. D E F IN IT IO N .

The term "beneficiaries” means the dependent spouse until h e/sh e

remarries and dependent children who are the primary beneficiaries. In their
absence, the dependent parents and subject to the restrictions imposed on
dependent children, the illegitimate children and legitimate descendants, who are
the secondary beneficiaries, provided that the dependent acknowledged natural child
shall be considered as a primary beneficiary when there are no other dependent
children who are qualified and eligible for monthly income benefit.2

2. G EN ER A L CLA SSIFICA TIO N .

Beneficiaries under the Labor Code may be classified as follows:

1. Primary, or
2. Secondary.3

Beneficiaries shall be determined at the time o f the employee’s death.4

3. PRIMARY B E N E F IC IA R IE S .

The following beneficiaries shall be considered primary.

(A) The legitimate spouse until he/she remarries. The surviving spouse
found not to be living with the covered employee at the time the employee died
should be entitled to employees’ compensation benefits provided that the
separation occurred owing to any of the following circumstances:

1 Section 2, Rule XIV, Id.; As provided under Board Resolution Nos. 14-06-29 and 1406-30, both dated June 6,2014.
2 Article 173® (167(j)], Labor Code.
3 Section 1 (a]. Rule XV, Amended Rules on Employees’ Compensation
4 Id.; Consequently, aJhough in other jurisdictions, posthumous children who died before the emptyee's death ate considered
as dependents, hewever, under the laws of the Phiippines, they cannot generally be so considered snee beneficiaries are
determined at the time of the death of the employee However, in Vda de Makabenta v Davao Stevedore Terminal
Company, G.R. No. L-27489, April 30,1970, the daughter bom after the death of the employee and therefore a posthumous
chid, was considered a legal dependent of the deceased employee. See also King v. Peninsulas Portland Cement Co., 216
Mch. 335).

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1. Refusal of the covered employee to continue living with the surviving

spouse; or die employee’s abandonment of the said spouse, without
justifiable or valid cause;

2. Attempt of the coveted employee against the life of the surviving

spouse, common ctuld/children of the spouse;

3. Commission of an act o f sexual abuse against the surviving spouse,

common child/childrcn or child/children o f the spouse by the
covered employee; •„

4. The covered employee’s recurrent commission of physical violence, or

grossly, abusive conduct, against the surviving spouse, common
child/children or child/children of the spouse;

5. The covered employee’s infliction o f physical violence, or imposition

of moral duress, to compel die surviving spouse, common
child/children or child/children of the spouse to change their religious
or political affiliation;

6. Attempt of the covered employee to corrupt, or induce the surviving

spouse, common child/children or child/children o f the spouse to
engage in prostitution, or to make them connive with the employee in
such an act of corruption or inducement;

7. Drug addiction or habitual alcoholism o f the covered employee;

8. Lesbianism or homosexuality o f the covered employee;

9. Contraction of bigamous marriages by the covered employee, whether

in the Philippines or abroad;

10. Sexual infidelity ot perversion o f the covered employee;

11. The covered empbyce’s act o f allowing the surviving spouse, common
child/children or child/children of the spouse to be subjected to acts
of lasciviousness; and

12. The covered employee’s contraction of serious, sexually transmitted

disease extra-maritally.1

(B) Legitimate, legitimated, legally adopted or acknowledged natural

children, who are unmarned not gainfully employed, not over 21 years of age, or
over 21 years of age: Provided, chat he is incapacitated and incapable o f self-support
due to physical or mental defect which is congenital or acquired during minority,
Provided, further, that a dependent acknowledged natural child shall be considered as
a primary beneficiary only when diere are no other dependent children who are

' Section 1 pi), Rule XV, Amended Rules on Employees’ Compensation, as provided under Board Resolution No. 97-09-
0500, Septenter 4,1997 entiled ‘Policy on Surviving Spouse.'

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SOCIAL WELFARE LEGIS1ATION
qualified and eligible for monthly income benefit; provided finally, that if there are
two or more acknowledged natural children, they shall be counted from the
youngest and without substitution, but not exceeding five (5).1

4. SEC O N D A R Y B E N E F IC IA R IE S .

The following beneficiaries shall be considered secondary.

(1) The legitimate parents wholly dependent upon the employee for
regular support;

(2) The legitimate descendants and illegitimate children who are

unmarried, not gainfully employed, and not over 21 years of age, or over 21 years
o f age provided that he is incapacitated and incapable o f self-support due to
physical or mental defect which is congenital or acquired during minority.2

5. PR IO R ITY .

Primary beneficiaries shall have priority claim to death benefit over

secondary beneficiaries. Whenever there are primary beneficiaries, no death benefit
shall be paid to his secondary beneficiaries.3

If the deceased employee has no primary beneficiaries at the time o f his

death, the death benefit shall be paid to his secondary beneficiaries.4

If the deceased employee has no beneficiaries at the time of his death, the
death benefit shall accrue to the Employees’ Compensation fund.5

6. M O N T H L Y IN C O M E B E N E F IT .

Primary beneficiaries shall be entided to a monthly income benefit. In

their absence, the secondary beneficiaries shall be entided to a monthly
income benefit not to exceed 60 months and the death benefit shall not be less
than P15.000.00.6

7. E V ID E N C E T O PROVE R E L A T IO N S H IP AND D E P E N D E N C Y .

A marriage certificate issued by the parish priest who solemnized the

marriage between the surviving spouse and the deceased is sufficient to establish
marriage relationship.7

The baptismal certificates and birth certificates of the children are also
sufficient evidence to prove the relationship of the dependents with the deceased.

' Section 1 [b], Rule XV, Id.; ECC Resolution No. 2799, July 25,1984.
2 Section 1|c], Rule XV. Id.
3 Section2|a],RuleXV,Id.
4 Section 2 [b], Rule XV, Id.
5 Section 2(c). Rule XV, Id.
6 Section 3, Rule XV, Id.; ECC Resolution No. 2799 dated July 25,1984.
1 Tfculan v. Indong, G.R. No. 48576, Aug. 11,1989,176 SCRA 316

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Strict observance of the technical rules of evidence is not properly demanded in

employees’ compensation cases.1

2.
POEA-STANDARD EMPLOYMENT CONTRACT
(POEA-SEC)

1. ORDER OF TOPICAL PRESENTATION.

For an orderly discussion, the topics in this section are discussed in the
following order:
I. MONETARY CLAIMS OF SEAFARERS FOR SICKNESS AND DISABILITY
BENEFITS
II. EXISTENCE AND EXTENT OF SEAFARER'S DISABILITY, HOW
DETERMINED AND DECLARED
III. MONETARY CLAIMS OF SEAFARERS FOR DEATH BENEFITS

MONETARY CLAIMS OF SEAFARERS

FOR SICKNESS AND DISABILITY BENEFITS

1. BASES FOR DISABILITY B E N E F IT S CLAIM,

a. L egal bases.

It is settled that the entidement o f a seafarer on overseas employment to

disability benefits is governed by the following:

1) Law,
2) Parties’ contracts; and
3) Medical findings.2

i. Law

By law, the claim for disability benefits is governed by Articles 197 [191] to
199 [193], Chapter VI (Disability Benefits) o f the Labor Code, in relation to Section
2 (a), Rule X3 of the Amended Rules on Employee Compensation (AREC).1

1 Id.
2 Deocariza v. Fleet Management Services Phfppines. Inc., G.R. No. 229955, July 23, 2018; Tdabcng v. MST Marine
Services (Phils.), Inc., G.R. Nos. 202113 X 202120, June 06,2018; Phasynergy Maritime, Inc. v. Gallano, Jr„ G.R. No.
228504, June 05,2018; Career Philippines Shipmanagement Inc. v. Sfvestre, G.R. No. 213465, Jan. 08,2018; Ventura. Jr.
v. Crewtech Shipmanagement Philippines. Inc., G.R. No. 225995, Nov. 20,2017.
3 Deocaiza v. Fleet Management Services Philippines. Inc., supra, Section 2 (a), Rule X of AREC provides:
*RuleX
Temporary Total Disability

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ii. P atties’ Contracts

By parties' contracts, there are material contracts that bind the seafarer and
his employer to each other, namely:

(a) The POEA-Standard Employment Contract (SEC) the latest version

o f which is enunciated in Memorandum Circular No. 10, Series o f
2010,*12 otherwise known as the 2010 Amended Standard Terns and
Conditions Governing the Overseas Employment of Filipino Seafarers On-Board
Ocean-Going Ships issued on O ctober 26,2010;
(b) Individual Employment Contract between the seafarer and the
employer,3
(c) The parties’ CBA;4 and/or
(d) ITF Agreement.
As part o f a seafarer's deployment for overseas work, he and the vessel
owner or its representative local manning agency arc required to execute the first
contract above, the POEA-SEC.5 Containing the standard terms and conditions o f
seafarer’s employment, the POEA-SEC is deemed included in the second contract
- the individual contract o f employment - in foreign ocean-going vessels.6
Consequently, the rule insofar as the first and second contracts above are
concerned is that the terms under the POEA-SEC, considered fundamentally as
the law between the parties,7 are to be read in accordance with what the Philippine
law provides and thus, for all legal intents and purposes, they are deemed
incorporated in and integrated with the individual employment contract.8
Resultantly, in resolving disputes regarding disability benefits, their provisions must
be “construed and applied fairly, reasonably, and liberally in the seafarer’s favor,
because only then can the provisions be given full effect.”9

'Section 2. P erio d o f e rfife rm n l - (a) The income benefit shall be paid beginning on the fast day of such disability. If caused
by an injury or sickness it shall not be paid longer than 120 consecutive days except where such injury or sickness still
requires medical attendance beyond 120 days but not b exceed 240 days from onset erf disabfity in which case benefit for
temporary total cfeability shaB be paid. However, file System may declare the total and permanent status at any time after
120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical
or mental functions as determined by the System.
XXX*

1 (July 21,1987); Phteynergy Maritime, he. v. Gcflano, Jr., G.R. No. 228504, June 06.2018.
2 See also the previous DOLE Department Order No. 4, Series of 2000, Amenrfing (he Standard Terms and Conditions
Governing the Employment of Fffipcno Seafarers On Board OceamGoing Vessels.
3 This was cited separately in Gamboa v. Maunlad Trans, Inc., G.R. No. 232905, Aug. 20,2018.
4 Philsynergy Maritime, Inc. v.Gallano, Jr., G.R. No. 228504. June 06,2018.
5 Sharpe Sea Personnel, Inc. v. Mabunay, Jr.. G.R. No. 206113, Nov. 6,2017.
6 Id.; Waflem Maritime Services, Inc.v.Tanawan, G.R. No. 160444, Aug. 29,2012.
1 Phfippine Hammonia Ship Agency, he. v. Dumadag, G il No. 194362, June 26,2013; See also OSG Ship Management
Mania, Inc. v. Monje, G.R. No. 214059, Oct 11,2017; Jebsens Maritime, he, v. Rapiz, G.R. No. 218871, Jan. 11,2017;
Seacrest Maritime Management he. v. Roderos, G.R No. 230473, April 23,2018.
6 Id.; Loadstar International Shipping, he. v. Yamson, G.R No. 228470, Apri 23, 2018; Sharpe Sea Personnel, Inc v.
Mabunay, Jr., G.R. No. 206113, Nov. 6,2017, C.F. Sharp Crew Management he. v. Legal Heirs of the late Godofredo
Repiso, G il No. 190534, Feb. 10,2016.
9 Maersk FiSpinas Crewing Inc. v. Ramos, G.R No 184256, Jan. 18,2017.

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 328 Bar Reviewer o n Labor uw

The third contract, rhe CBA, is the law between the parties because its
provisions are the product of negotiation and mutual consent. It is a fundamental
doctrine in labor law that the CBA is the contract between both tire employer and
the employees. An executed CBA, thus, is a valid and binding contract between the
parties with the force and effect o f law.1 A CBA refers to the negotiated contract
between a legitimate labor organization and the employer concerning wages, hours
of work and all other terms and conditions of employment in a bargaining unit. As
in all contracts, the parties in a CBA may establish such stipulations, clauses, terms
and conditions as they may deem convenient provided these are not contrary to
law, morals, good customs, public order or public policy. Thus, where the CBA is
clear and unambiguous, it becomes the law between the parties and compliance
therewith is mandated by the express policy of tire law.2

The fourth contract is technically denominated as the International

T ransport Workers Federation Standard Collective A greem ent (/T77
Agreement) whose provisions on benefits, as held in one case,3 if found to be
more superior and thus favorable to the seafarers, shall prevail over the POEA-
SEC and the parties’ CBA. The ITF Standard Collective Agreement dated January
01, 2015 sets out the standard terms and conditions applicable to all seafarers
serving on any ship in respect o f which there is in existence a Special
Agreement made between the union, an affiliate o f the International Transport
Workers’ Federation (the ITF) and the company who is the owner/agent of the
owner of the ship. This agreement is deemed to be incorporated into and to
contain the terms and conditions of employment o f any seafarer whether or
not the company has entered into an individual Contract o f Employment with
the seafarer. The Special Agreement requires the company (inter alia) to
employ the seafarers on die terms and conditions o f this Agreement, and to
enter into individual contracts o f employment widi each seafarer incorporating
the terms and conditions o f this Agreement.

The interplay of these legal and contractual provisions is best exemplified

in the case of Mairsk-Filipinas* which involves the principal issue of applicability of
the following contracts: the POEA-SEC, the CBA, and the ITF Agreement. The
entitlement to disability benefits o f seafarers on overseas work is a matter governed
not only by medical findings [infra1, but also by law and contract.5 By contract, the
POEA-SEC and the CBA bind seafarers and their employers.6 An overriding

' Anuat v. Pacific Ocean Manning, Inc/Trans Star Shipping Agency Corporation, G.R. No. 220898, July 23,2018.
7 Id., Id.
3 Maersk-Ffipinas Crewing. Inc. v. Maicse, G.R. Nos 200576 & 200626, Nov. 20.2017.
4 Maersk-Ffip'mas Crewing, Inc. v. Maicse, G.R. Nos. 200576 & 200626, Nov. 20,2017. This case involves a seafarer who
died of "multiple organ dysfunction. Septicemia and Mononudeosis due to Cytomegalovirus."
5 Id., citing Tagalog v. Oossworid Marine Services, Inc., G.R. No. 191899, June 22,2015,759 SCRA 632.
6 Id., citing Vergara v.HarnrrmaMantirrie Services, lnc ,G.R. No 172933, Oct 6,2008,567 X R A 610.

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SOCIAL WELFARE LEGISLATION

instrument, such as the instant ITF Agreement, also forms part o f the covenants o f
the parties to each other.1

Insofar as the ITF Agreement is concerned, it was held here that the
following conditions for its applicability must concur, to wit (1) the seafarer is a
member o f a union, (2) which is affiliated with the ITF, (3) that has entered into a
Special Agreement with petitioners. It was, however, established, based on the
records, that while the first requirement o f membership with a union23was satisfied,
none of the pieces o f evidence adduced by the parties has depicted with clarity the
relationship of the seafarer’s labor union - Singapore Organisation o f Seamen -
with the ITF. Furthermore, none o f the documents herein portray that petitioners
entered into any Special Agreement. In this light, the High Court found grave abuse
of discretion on the part of the CA for awarding the death benefits provided by the
ITF Agreement sans any proof o f the applicability thereof. What was thus applied
were the death benefits provided in the CBA and not those provided in the PO EA -
SEC, the former being more beneficial to the seafarer because Section 25(5)
thereof grants USD40,000 regardless o f whether the seafarer died of a work-related
illness, provided that he died while in the employment of petitioners. In the case at
bar, none o f the parties dispute that the seafarer died o f multiple organ failure
secondary to septicemia caused by severe infection on 29 May 2007 or during the
term o f his contract with petitioners.

In Legal Heirs oj Deauna} it was clarified that beneficial CBA clauses

prevail over the POEA-SEC:

“More importantly, the special clauses in collective

bargaining agreements must prevail over the standard terms and
benefits formulated by the POEA in its Standard Employment
Contract A contract of labor is so impressed with public interest that
the more beneficial conditions must be endeavored in favor of the
laborer. This is in consonance with the avowed policy of the State to
give maximum aid and full protection to labor as enshrined in Article
XIII of the 1987 Constitution.”45

However, if, conversely, the CBA docs not apply to a claimant-seafarer’s

case, this does not imply that he is not entitled to disability benefits just because o f
such CBA’s inapplicability since, aside from the CBA, the POEA-SEC may find
application, such as in the 2018 case o f Buenaventura} In other words, ”[t]hc PO EA -
SEC and the CBA govern the employment relationship between [Buenaventura]
and the [respondents]. The two instruments are the law between them. They are
bound by then: terms and conditions, particularly in relation to this case, the

1 Id., citing Magsaysay Maritime to p v. Panogafinog, G il No. 212049, July 15.2015,763 SCRA140.
2 Referring to toe Singapore Organization of Seamen which has a CBA with toe seafarer’s employer, petitioner Maersk.
3 Legal Heirs of Deauna v.RLStar Maritime to p ., G.R. No. 191563, June 20.2012.
4 Emphasis supplied.
5 Buenaventura v. Career Philippines Shipmanagement, Inc., G.R. No. 224127, Aug. 15,2018.

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 33 0 Bar Reviewer o n Labor Law

mechanism prescribed to determine liability for a disability benefits claim."1 In

cases therefore where the disability claim cannot be granted under the CBA, resort
to the POEA-SEC should be made to determine if the claim can be granted
therein. The best illustration of this situation is the 2018 case of Gen? The CBA
between AMOSUP and the respondents3 states that: (1) only when the disability
grading is at 50% or more, or (2) only when the company-designated physician
certifies that the seafarer is medically unfit to continue work - even if the disability
grading is less than 50% - could the seafarer be entitled to total and permanent
disability benefits in accordance with the medical unfitness clause. In the present
case, even the petitioner's personal physician assessed hinAonly at Grade 8 disability
grading. According to the schedule of disability allowances indicated in the POEA-
SEC, this impediment grade translates to only 33.59%, which definitely falls short
in the 50% requirement o f Article 20.1.4 of the CBA. O n the other hand, neidier
did the company-designated physician issue a certification that the petitioner was
medically unfit to continue performing his seafaring duties. O n these grounds, the
medical unfitness clause of the CBA finds no application.

Nonetheless, the petitioner is not without any benefit to lean back on.
The POEA-SEC provides that seafarers suffering from total and permanent
disability are entitled to 120% o f US$50,000.00, or a total of US$60,000.00. Indeed,
the Court of Appeals is correct in applying the provisions o f the POEA-SEC rather
than die provisions of the CBA when it said:

"As correctly argued by Petitioners, the permanent medical

unfitness clause under the parties' CBA awarding a total and permanent
disability benefit of US$95,949.00 does not apply to private respondent
because neither the company doctor nor his own doctor assessed
his disability at 50% or more. Moreover, while die permanent medical
unfitness clause provides that any seafarer assessed at less than 50%
disability is entitled to full compensation, the same clause mandates
that the certification must be made by the company doctor which
is not the situation in the present case.”4

In the 2019 case of Torillos,* the Court found that petitioner Torillos did
not meet any accident on board the ship that could have entided him to disability
benefit under the CBA. It was held, however, that this finding of inapplicability of
the CBA does not mean that he is no longer entided to any disability benefit since
his illness is work-related and dierefore compensable under the POEA-SEC and

' Citing Phiipp'ne Hammonia Ship Agency, Inc. v. Dumadag, G.R. No. 194362, June 26,2013.
7 Gere v. Anglo-Eastern Crew Management Phils., Inc., G R Nos. 226656 & 226713, April 23,2018
3 Collective Bargaining Agreement (AMOSUP / ANGLO-EASTERN) Between Associated Marine Offers' and Seamen's
Union of the Philippines and Anglo-Eastern Crew Management (SG) PTE. LTD. Represented by Anglo-Eastern Crew
Management Philippines, Inc.
4 Emphasis and underscoring supp&ed in the deaskxi itself citations omitted.
5 Torillos v. Easlgate Maritime Corporation, G .R Nos. 215904 &216165, Jan. 10,2019.

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SOCIAL WE1JARE LEGISLATION

relevant labor laws which are deemed written in the contract o f employment with
Eastgate.

iii. Medical Findings

Lasdy, the medical findings o f the company-designated physician, the

seafarer's personal physician, and those of the mutually-agreed third physician,
pursuant to the POEA-SEC, govern.1

2. APPLICABLE LAW IN CASESE INVOLVING T H E POEA-SEC.

By express provision o f Section 31 of the 2010 POEA-SEC, “ fa]ny

unresolved dispute, claim or grievance arising out o f or in connection therewith,
including the annexes thereof, shall be governed by the laws of the Republic o f the
Philippines, international conventions, treaties and covenants to which the
Philippines is a signatory.” This provision signifies that the terms agreed upon by
the parties pursuant to the POEA-SEC are to be read and understood in
accordance widi Philippine laws, particularly, Articles 197 [191],2 198 [192]3 and
199 [193]4 o f the Labor Code and the applicable implementing rules and
regulations in case o f any dispute, claim or grievance.5

3. OFW’S BEN EFIT CLAIMS VIS-A-VIS BENEFITS IN T H E LABOR

CODE.

It must be underscored that the claims for disability, death and burial
benefits involving OFWs over which the Labor Arbiters o f the NLRC have
jurisdiction, are not the same as the claims against the State Insurance Fund under
Tide II, Book IV o f the Labor Code for the same benefits, over which the
Employees’ Compensation Commission (ECC) has jurisdiction.

In Inter-Orient,67involving the death of a migrant worker suffering from

mental disorders in the hands o f a policeman in Bangkok while he was being
repatriated to the Philippines, the Supreme Court debunked the claim of the
employer which invoked the ruling in De Jesus v. ECC,1 that it is not liable because
the cause o f the death of the worker is not an occupational disease listed by law.
Finding no parallelism with De Jesus, the Highest Court ruled:

“Petitioner’s (employer’s) reliance on De Jesus is misplaced, as the

death and burial benefits being claimed in this case are not payable by
the Employees’ Compensation Commission and chargeable against

* Jebser. Maritime Inc. v. Ra/ena, G il No. 200556, Sept 17,2014.

2 Temporary total disability.
3 Permanent total disability.
4 Permanent partial disablity.
5 New Ripho Maritime Agencies, Inc, v. Despabeladeras, G R No. 209201, Nov. 19,2014,747 Phfl. 626,640; Magsaysay
Marifime Corporation v. NLRC, G R No. 191903. June 19,2013.
6 Inter-Orient Maritime Enterprises, Inc. v. NLRC, G R No. 115497, Sept 10,1996.
7 G R No. L-56191, May 27,1986,142 SCRA 92.

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 332 Ba r Re v i e w e r on La b o r L a w

the State Insurance Fund These claims arose from the responsibility
of the foreign employer together with the local agency for the safety of
the employee during his repatriation and until his arrival in this
country, U , the point of hire. Though the termination of the
employment contract was duly effected in Dubai, still, the
responsibility of the foreign employer to see to it that Pineda (the
seaman-employee) was duly repatriated to the point of hiring,
subsisted Section 4, Rule VIII of die Rules and Regulations
Governing Overseas Employment dearly provides for the dotation of
the mandatory personal accident and life insurance covering accidental
health, dismemberment and disability of overseas workers.”1

4. T H E LA BO R C O D E ’S C O N C E P T O F P T D A P P L IE S T O C LA IM S O F
SEAFARERS.

Permanent disability transpires w hen the inability to w ork continues

beyond 120 days, regardless o f w hether o r n o t h e loses the use o f any part o f his
body.2 O n the other hand, total disab ility m eans the incapacity o f an employee to
earn wages in the same o r similar kind o f w ork that he was trained for, o r is
accustomed to perform, or in any kind o f w ork that a person o f his mentality and
attainments can do. It does n o t m ean absolute helplessness.3

Accordingly, permanent total d isa b ility (PTD ) means th e inability to do

substantially all material acts necessary to the prosecution o f a gainful occupation
without serious discomfort o r pain and w ithout material injury or danger to life. In
disability compensation, it is not the injury per st which is com pensated b u t the
incapacity to work.4 The concept o f this kind o f disability under A rticle 198 [192]
o f the Labor Code is applicable to the permanent total d isab ility o f seafarers.
T he ruling in RemiguP is instructive o n this p o in t Petitioner here claims to have
suffered from permanent total disability as defined under Article 198(c), (1) [192(c),
(1)] o f the Labor Code,

“Art 198 [192] (c). The following disabilities shall be

deemed total and permanent:
“(1) Temporary total disability lasting continuously for more
than one hundred twenty days, except as otherwise provided in die
Rules; xtx”

Petitioner likewise cited Vicent£ and Abqya, Jr.? both o f w hich w ere
decided applying the Labor C ode provisions on disability benefits. Private
respondents, on the other hand, contended that petitioner erred in applying the *

* War-OrientMaritmeEnterprises,tnc.v.NIRC, [OR No. 115497,Sept 10,19961-

2 CareerPh^ipinesShprnanagernert, tnc.v. SiVestre, Gi^. No.213465, January08,2018.
3 Id;, WCShbmanagementInc.v. Rosales,GRNa 195832,OcL01,2014.
4 W;OSdanav Jet)sensMatime.lnc,GRNo.215313,Oct21.2015.
* Rerrigov. NLRC.G-R. No. 1S9887,Apii 12,2006,487SCRA190.
* Vicentev. ECC,G.R. No.85024.Jan.23,1991,193SCRA190,195.
' Abaya.Jr v. ECC. 6 R. No. 64255.Aug. 16.1989.176 SCRA507.511.

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 C h a p t e r Fo u r 333
SOCIAL WELFARE LEGISLATION

definition o f ' 'perm anent to ta l disability" u nder the L abor C ode and in invoking cases
decided u n d er the E C C as the instant case involves a contractual claim u n d e r the
1996 PO EA -SE C .

In affirm ing the contention o f the petitioner, the Suprem e C o u rt

pronounced, thus:

‘T he standard employment contract for seafarers was

formulated by the POEA pursuant to its mandate under E O . No. 247
to ‘secure the best terms and conditions of employment of Filipino
contract workers and ensure compliance therewith’ and to ‘promote and
protect the well-being of Filipino workers overseas.’ Section 29 of the
1996 POEA SEC itself provides that ‘[ajll rights and obligations of the
parties to (the) Contract, including the annexes thereof, shall be
governed by the laws of the Republic of the Philippines, international
conventions, treaties and covenants where the Philippines is a
signatory.’ Even without this provision, a contract of labor is so
impressed with public interest that the New Civil Code expressly
subjects it to ‘the special laws on labor unions, collective bargaining,
strikes and lockouts, dosed shop, wages, working conditions, hours of
labor and similar subjects.”’

Based o n th e foregoing disquisition in Remig'o, it was ruled in Kestrel

Shipping that it is n o w well-settled that the provisions o f th e Labor C ode and
Amended Rules on Employees**Compensation (A R E Q im plem enting T id e 'll, B ook IV o f
the Labor C ode o n disabilities are applicable to the case o f seafarers such th at the
P O EA -SE C is n o t th e sole issuance th a t governs their tights in d ie event o f w ork-
related death, injury o r illness.

In Wallem,2 the H igh C ourt cited the consistent application o f th e

definition o f permanent disability under S e c 2 (b), R ule V II o f the Im plem enting
Rules o f B ook V o f th e L abor C ode, as am ended by P .D . N o. 626, which provides:

"(b) A disability is to ta l and permanent if as a m u lt o j tbe injury or

sickness tbe employee is unable to perform any gainfod occupationfo r a continuous
period exceeding 120 detys, except as otherwise provided far in Rule X of
these Rules.”

M oreover, it was further explained in Wallem th a t the lapse o f die 120-day

threshold period is n o t the benchm ark fo r considering a perm anent disability d u e
to injury o r illness; “rather, th e true test o f w hether respondent suffered from a
perm anent disability is w hether there is evidence that h e was unable to perform his
customary w ork as m essm an for m o te than 120 days.” It is, therefore, n ow a well-

’ Kestrel ShippingCo., inc.v. (Anar. G R No. 198501.Jan 30,2013.

* WallemMarifimeSetvioes, Inc. v.NLRC.GR No. 163838, Sept 25.2008,566 SCRA338,349.

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 334 Bar Reviewer on Labor U w

settled rule in jurisprudence that the Labor Code concept o f perm anent to ta l disability
is applicable to the case of seafarers.1

5. COM PENSATION AND B E N E F IT S FO R IN JU RY OR ILLNESS.

The compensation and benefits for injuries or illnesses suffered by
seafarers are provided for in Section 20 (A) o f the 2010 Amended Standard Terms and
Conditions Governing the Overseas Employment of Filipino Seafarers On-Board Ocean-Going
Ships} thus:
“SECTION 20. COMPENSATION AND BENEFITS
“A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
‘The liabilities of the employer when the seafarer suffers work-related
injury or illness during the term of his contract are as follows:
“1. The employer shall continue to pay the seafarer his wages during the
time he is on board the ship;
“2. If the injury or illness requires medical and/or dental treatment in a
foreign port, the employer shall be liable for the full cost of such
medical, serious dental, surgical and hospital treatment as well as
board and lodging until the seafarer is declared fit to work or to be
repatriated. However, if after repatriation, the seafarer still requires
medical attention arising from said injury or illness, he shall be so
provided at cost to the employer until such time he is declared fit or
the degree of his disability has been established by the company-
designated physician.
“3. In addition to the above obligation of the employer to provide
medical attention, the seafarer shall also receive sickness allowance
from his employer in an amount equivalent to his basic wage
computed from the time he signed off until he is declared fit to work
or the degree of disability has been assessed by the company-
designated physician The period within which the seafarer shall be
entitled to his sickness allowance shall not exceed 120 days. Payment
of the sickness allowance shall be made on a regular basis, but not
less than once a month.
“The seafarer shall be entitled to reimbursement of the cost of
medicines prescribed by the company-designated physician. In case
treatment of the seafarer is on an out-patient basis as determined by
the company-designated physician, the company shall approve the
appropriate mode of transportation and accommodation. The
reasonable cost of actual traveling expenses and/or accommodation*7

1 See, for exam ple, P hilippine Transm arine Cam era v. N LR C , G R No. 123891, Feb. 2 8 ,2 0 0 1 ; C rystal S hipping, Inc. v.
Natividad G .R . No. 154798, O ct 20,2005; M cronesia R esources v . Cantom ayor, G .R N o. 156573, June 19,2007; P afsoc
v. Easways M arine, Inc. G .R No. 152273, S e p t 1 1,2007; Ikxeta v . P hilippine Transm arine C arriers, Inc., G .R No. 183908,
Dec. 4 ,2 0 09 ; O riental Shipm anagem ent C o , Inc. v . B astot, G .R N o. 186289, June 2 9,2010.
7 Amended Standard Term s and Conditions G overning the O verseas Em ploym ent t f F ilipino S eafarers O n-Board O cean-
Going Ships (PO EA Memorandum C ircular No. 10, S eries o f 2010, O ctober 2 6,2 01 0 ). Form erly, S ection 20 (B) o f Standard
Term s and C onditions G overning the Em ploym ent o f F i'p 'n o S eafarers O n Board O cean-G oing V essels, issued pursuant to
DOLE D epartm ent O rder No. 4, Series o f 2000 [M ay 3 1,2000).

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SOCIAL WELFARE LEGISLATION

shall be paid subject to liquidation and submission of official receipts

and/or proof of expenses.
"For this purpose, the seafarer shall submit himself to a post-
employment medical examination by a company-designated
physician within three working days upon his return except when he
is physically incapacitated to do so, in which case, a written notice to
the agency within the same period is deemed as compliance. In the
course of the treatment, the seafarer shall also report regularly to the
company-designated physician specifically on the dates as prescribed
by the company-designated physician and agreed to by the seafarer.
Failure of the seafarer to comply with the mandatory reporting
requirement shall result in his forfeiture of the right to claim the
above benefits.
“If a doctor appointed by the seafarer disagrees with the assessment,
a third doctor may be agreed jointly between the employer and the
seafarer. The third doctor’s decision shall be final and binding on
both parties.
“4. Those illnesses not listed in Section 321 of this Contract arc
disputably presumed as work-related.
“5. In case a seafarer is disembarked from the ship for medical reasons,
the employer shall bear the full cost of repatriation in the event the
seafarer is declared (1) fit for repatriation; or (2) fit to work but the
employer is unable to find employment for the seafarer on board his
former ship or another ship of the employer.
“6. In case of permanent total or partial disability of the seafarer caused
by either injury or illness, the seafarer shall be compensated in
accordance with the schedule of benefits enumerated in Section 322
of his Contract Computation of his benefits arising from an illness
or disease shall be governed by the rates and the rules of
compensation applicable at the time the illness or disease was
contracted.
‘The disability shall be based solely on the disability gradings
provided under Section 323 of this Contract, and shall not be
measured or determined by the number of days a seafarer is under
treatment or the number of days in which sickness allowance is paid.
“7. It is understood and agreed that the benefits mentioned above shall
be separate and distinct from, and will be in addition to, whatever
benefits which the seafarer is entitled to under Philippine laws such
as from the Social Security System, Overseas Workers Welfare
Administration, Employees’ Compensation Commission, Philippine
Health Insurance Corporation and Home Development Mutual
Fund (Pag-IBIG Fund).”

' Section 32 is entitled ’ S chedule o f D isability o r Im pedim ent lo r Injuries S uffered and D iseases In ctidin g O ccupational
D iseases o r Illness C ontracted.’
2 Id.

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 336 Bar reviewer o n Labor U w

6. R E Q U IS IT E S F O R C O M P E N S A B IL IT Y O F IN JU R Y O R IL L N E S S .

T o be entitled to disability benefits, the C ourt refers to the provisions o f

the POEA-SEC, as it sets forth the rninimnm rights o f a seafarer and the
concomitant obligations o f an em ployer.1 F o r disability to be com pensable un d er
Section 20 (A) o f the 2010 PO EA -SE C , two elem ents m ust c o n c u r

(1) The injury o r illness m u st be w ork-related; and

(2) T he w ork-related injury o r illness m ust have existed d u rin g th e
te rm o f the seafarer's em ploym ent contract2^

The same provision defines a work-related illness as "any sickness as a

result o f an occupational disease listed under Section 32-A o f (the PO EA -SEC )
with the conditions set therein satisfied."3 T here should be a "reasonable linkage
between the disease suffered by the employee and his work."4 M eanwhile, illnesses
not mentioned under Section 32 o f th e 2010 PO E A -SE C are disputably presum ed
as work-related.5 Notwithstanding die presum ption o f work-relatedness o f an
illness under Section 20 (A) (4), the seafarer m ust still prove by substantial evidence
that his work conditions caused or, a t least, increased die risk o f contracting the
disease.4 This is because awards o f com pensation cannot rest entirely o n bare
assertions and presumptions.7 In order to establish compensability o f a non-
occupational disease, reasonable p ro o f o f w ork-connecdon is sufficient - direct
causal relation is not required.8 It is thus this probability o f connection, and n o t the
ultimate degree o f certainty, that is th e test o f p ro o f o f com pensation proceedings.9

7. R E Q U IS IT E S F O R C O M P E N S A B IL IT Y O F O C C U P A T IO N A L
D ISE A SE .

In order for an o c c u p a tio n a l d ise a se and the resulting d isa b ility or

d e a th to be compensable, Section 32-A o f die 2010 P O E A -S E C 10 requires that all
o f die following conditions, as supported by substantialevidence, m ust be established:
l.T h e seafarer's work m ust involve the risks described in th e P O E A -
SEC;

' ScannerMar&neServicesInc, v. DeLeon,GJl No. 199977,Jan. 25,2017.

7 GuenErov.Ri^ppneTransn^Camas, Ino. GJl No. 222523,0(103,2018.
3 bstitimo v. NYK-fl Ship Management toe- GR No. 237487, June 27,2018; See No. 16, OetnBon of Tams, 2010
POGfrSEC; SeacrestMaii&neManagement ha v. Rodens,GR No. 230473,Aprs23.2018.
4 Bwenaav. SoulhfielclAgencies. Ino. G it Na 208396. litemh14,2018.
5 afingSec.20^J(4) of8re20t0 POEA-SECwhichstates:'4. ThoseianessesncdSsfedinSecSon32ofthisContractam
<Bs|)Utafa^pm9un«daswo(k-mlate(f”SBaarestManG(neManasement.bic.v.Rode(DS,supia.
* Id., effingRtityhe TransmarineCarriers, me. v. ASgway, GR No. 201793, SepL 16,201$; Magatv. inierotientMarine
Enterprises, he, GR No.232892,Apd04,2018; DeLeonv. MaunladTrans, to, GR No. 215293,Feb.8,2017.
1 Magdiv.InleiaierlMabieEntaprises, Inn, GR No.232692,Apt!04,2018.
« id.,tiiirigGraceMarineStqjj^Corporafionv.Alaron.GRNa 201536.SepL09,201$.
* Id,ringGabunas,9r.v.ScannwMariSmeServices,lna,GRNa 188637,Dec15,2010.
® See"Section32 - A. OCCUPATIONALDISEASES," AmendedStandardTermsandContifons Gwerraig he Overseas
Employment of F£pino Seafcrers OvBoard OcearvGcing Ships (POEA MemorandumCircular No. 10, Series of 2010,
October26,2010).

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SO C IA L W ELFARE LEG ISLA TIO N

2. T h e disease was contracted as a result o f the seafarer's exposure to the

described risks;
3. T h e disease was contracted within a period o f exposure and under such
o th er factors necessary to contract it; and
4. T here was no notorious negligence on the part o f the seafarer.1

8. C O R R E L A T IO N O F S E C T IO N 20 (A) A N D S E C T IO N 32-A O F P O E A -
SEC.

A s pointed o u t above, Section 20 (A)2 o f the PO E A -SE C governs the

com pensation and benefits fo r th e w ork-related injury o r illness th a t a seafarer o n
bo ard sea-going vessels m ay have suffered during the term o f his em ploym ent
c o n tra c t T his section should be read together with Section 32-A3 o f the P O E A -
SE C that enum erates the various diseases deem ed occupational and, therefore,
com pensable. T hus, for a seafarer to be entitled to die com pensation and benefits
un d er Section 20 (A), th e disability causing illness o r injury m ust b e one o f those
listed u nder Section 32-A.4

O f course, the law recognizes that under certain circumstances, certain

diseases n o t otherwise considered as an occupational disease under d ie PO E A -SE C
may nevertheless have been caused o r aggravated by the seafarer's w orking
conditions. In these situations, the law recognizes the inherent paucity o f the list
and die difficulty, if n o t the outright improbability, o f accounting for all the know n
and unknow n diseases that may be associated with, caused o r aggravated by, such
w orking conditions.3

H ence, the PO EA -SE C provides fo r a disputable presum ption o f work-

relatedness for non-PO EA -SEC-listed occupational disease and the resulting illness
o r injury w hich he may have suffered during the term o f his em ploym ent co n tra c t4

9. S E A F A R E R H A S B U R D E N O F P R O O F IN D IS A B IL IT Y C LA IM S.

a. Disputable presumption does not signify an automatic grant of

compensation and/or benefits claim.
T h e above-m entioned disputable presum ption is m ade in the law to
signify that die non-inclusion in the list o f com pensable diseases/ilbesses does not
translate to an absolute exclusion from disability benefits.7 In o th e r w ords, the

' Id; Ba&av.Twala HumanResources, Inc, GA No. 184933,Apr! 13,201&

7 SecSon20 ot POEA MemorandumOmuls No. tO. Series of 20t0, Odober 26,20Uk Fonnedy. Secfion 20 (|Byof
StandardTams andGomffionsGoverningdie EmploymentofHjpino SeafarersOn BoardOceangoingVessds, issued
pureuanlbDOLEDepartmentOrderNo.4, Seriesof2000[May31,2000).
1 * *Seclion32-A. OCCUPATONALDISEASES.*POEAMemorandumOroJarNa 10, Seriesof2010, October26.2010.
< JebsenMafiine ha v.Rawna,G.R. No.200566, Sept 17,2014.
* lit
• Id.
7 Madridejosv. NYK-fJShipManagement he.. GR No. 204262, June07,2017.

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 338 Bar Reviewer on Labor Law

disputable presumption does not signify an automatic grant of compensation an d /o r

benefits claim.1 The seafarer must still prove his entitlem ent to disability
benefits by substantial evidence of his illness* work-relatedness2 and that the
ailment was acquired during the term of his contract.3 He must show that he
experienced health problems while at sea, the circumstances under which he
developed the illness,4 as well as the symptoms associated with it.5

The seafarer cannot solely rely on die disputable presumption.6

Accordingly, the disputable presumption "does not allow him to just sit down and
wait for respondent company to present evidence to. overcome the disputable
presumption of work-relatedness o f the illness." Concomitantly, there is still a need
for him to corroborate his claim for disability benefits.

The rule therefore is clear that whoever claims entitlement to the benefits
provided by law should establish his or her right thereto by substantial evidence.7
Thus, the burden is placed upon the claimant-seafarer to present substantial
evidence, or such relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion that there is a causal connection between the nature
of his employment and his injury or illness, or that the risk of contracting the illness
was increased by his working conditions.8 The onus probandi fell on the claimant-
seafarer to establish his claim for disability benefits by the requisite quantum o f
evidence that would serve as basis for the grant of the relieP and as such, it cannot
rest on mere speculations, presumptions or conjectures.10

Thus, in situations where the seafarer seeks to claim the compensation

and benefits that Section 20 (A)11 grants to him, the law requires the seafarer to
prove that:

(1) he suffered an illness;

(2) he suffered this illness during the term o f his employment contract;
(3) he complied with the procedures prescribed under Section 20 (A);u

' Id.. Id.

3 Id.
3 Scanm ar M aritim e Services Inc., v. De Leon, G il N o. 199977, Jan. 25,2017.
4 Id., citing Tagle v. A n g lo Eastern Crew M anagem ent, P hils., Inc., G R N o. 209302, Ju ly 9 ,2 0 1 4 ,7 2 9 SCRA 677.
5 Id., citing Oohle-PhSman Manning Agency, Inc. v . H eirs o f G azzingan, G .R . No. 199568, June 17,2015.
6 Quizora v. Denholm Crew M anagem ent (P h iip pin e s), Inc., G .R . N o. 185412, N ov. 16,2011.
I G uerrero v. P hlip p he Transm arine C arriers, Inc., G R N o. 222523, O c t 0 3,2018.
4 M agsaysay M aritim e Corporation v.N L R C .G R N o. 186180, M arch 2 2.2010.
5 G uerrero v. PhSpp'ne Transm arine C arriers, In c , supra; M aunlad Trans Inc. v . Isidro. G R N o. 222699, July 2 4 ,2 0 1 7 ;
Scanm ar M aritim e Services In c , v. De Leon, G R N o. 199977, Jan. 2 5,2017.
10 G abunas.S r.v Scanm ar M aritim e S ervices, Inc., G R No. 188637, Dec 15,2010;
II Section 20 (A) o f the Am ended Standard Term s and C onditions G overning the O verseas Em ploym ent o f F iip in o S eafarers
O n-B carr Ocean-Going Ships (POEA M em orandum O c u la r No. 10, Series o f 2010, O ctober 26,2 01 0 ). Form erly, Section
20 (8 ) of Standard Term s and Conditions G overning the Em ploym ent o f F fip in o S eafarers On Board O cean-G oing V essels,
issued pursuant to DOLE Departm ent O rder No. 4 , S eries o f 2000 (M ay 3 1.2 00 0 ].

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SOCIAL WELFARE LEGISLATION

(4) his illness is one o f the enumerated occupational diseases or that his
illness or injury is otherwise work-related; and
(5) he complied with the four (4) conditions enumerated under Section
32-A for an occupational disease or a disputably-presumed work-
related disease to be compensable.1

10. P R IN C IP L E O F W O RK -R ELA TED N ESS.

The principle o f work-relatedness o f an injury or illness means that the

seafarer's injury or illness has a possible connection to one's work, and thus, allows
the seafarer to claim disability benefits therefor.2

The 2010 POEA-SEC defines a w ork-related injury as an "injury resulting

in disability or death arising out of and in the course of employment," and a w ork-related
illness as "any sickness resulting to disability or death as a result of an occupational disease
listed under Section 32-A of this Contract with the conditions set therein satisfied. ’3

For illnesses not mentioned under Section 32, the 2010 POEA-SEC4
creates a disputable presumption in favor o f the seafarer that these illnesses are
work-related. However, the presumption does not necessarily result in an automatic
grant of disability compensation. The claimant, on due process grounds, still has
the burden to present substantial evidence that his work conditions caused or at
least increased the risk o f contracting the illness.5 This is because awards of
compensation cannot rest entirely on bare assertions and presumptions. In order to
establish compensability o f a non-occupadonal disease, reasonable proof o f work-
connection is sufficient - direct causal relation is not required. Thus, probability,
not the ultimate degree of certainty, is the test of proof in compensation
proceedings.6

As a general rule, the principle of work-relatedness requires that the

disease in question must be one o f those listed as an occupational disease under
Section 32-A o f the POEA-SEC. Nevertheless, should it be not classified as
occupational in nature, Section 20 (A),7 paragraph 4 o f the 2010 POEA-SEC
provides that such diseases are disputably presumed as work-related.8 This
disputable presumption operates in favor o f the employee as the burden rests upon
his employer to overcome the statutory presumption. Hence, unless contrary

1 Id .; C utanda v . M arlow N avigation P h fc , In c , G R N o. 219123, S e p t 11,2017.

2 G uerrero v .P h lip p h e T ra n s m a rh e C arriers, In c , G .R . N o. 2 2 2 5 2 3 ,0 1 0 3 ,2 0 1 8 .
3 Skippers U nited P acffic, h a v . Lagne, G R N o. 217036, A ug. 2 0 ,2 0 1 8 ; O SG S hip M anagem ent M a nia, h e . v . M onje, G .R .
No. 214059, O c t 1 1,2017; O e Leon v. M aurtad Trans, h e , G R N o 215293, Feb. 8 ,2 0 17 .
4 See S ection 20 (A) (4 ) o f h e 2000 PO EA-SEC.
5 Ventura, J r. v . C revvtedi S hipm anagem ent P hiip p in e s, In c , G .R . N o. 225995, N w . 20,2017.
6 Skippers U nited P acific, h e . v. Lagne, G R N o. 217036, A ug. 2 0 ,2 0 1 8 , De Leon v. M aunlad Trans, In c , G R N o 215293,
Feb. 8, 2017; M agsaysay M ol M arine, Inc. v . A traje , G R N o. 229192, July 23, 2018; M agat v. Interorient M aritim e
Enterprises, In c , G R No. 232892, A pril 4 ,2 0 1 8 ; Leonis N avigation C o , Inc. v. O brero, G .R. No 192754, S ep t 7 ,2 0 1 6 .
L e e rs N avigation C o , Inc. v . V illa m a le r, G .R. N o. 179169, M arch 3 ,2 0 10
7 Form erly S ection 2 0 (B ) o f the 2000 POEA-SEC.
8 Ventura, J r. v. C rew lech S hipm anagem ent P hiip p in e s, In c , G R N o. 225995, Nov. 20,2017.

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 340 Bar Reviewer o n La bo r Law

evidence is presented' by the seafarer's employer, this disputable presum ption

stands.1

This principle was best discussed in jebsens M aritim e.1 T he 2000 P O E A -

SEC3 contract governs the claims for disability benefits by respondent Babol as he
was employed by the petitioners in Septem ber o f 2006. Pursuant to the said
contract, the injury or illness m ust be w o rk -related god m ust have existed d u rin g
th e term o f the seafarer's em ployment in order for compensability to arise.4 W ork-
relatedness must, therefore, be established. It is undisputed that N asopharyngeal
Carcinoma (N P Q afflicted respondent while o n board petitioners' vessel As a non-
occupational disease, it has die disputable presum ption o f being work-related. This
presumption obviously works in th e seafarer's favor.5 H ence, unless contrary
evidence is presented by the employers, the work-relatedness o f the disease m ust
be sustained.6 In this wise, the petitioners, as em ployers, failed to disprove die
presumption o f N P C s work-relatedness. They primarily relied on die medical
report issued by D r. Co Pefia. T h e report, however, failed to make a categorical
statement confirming the total absence o f w ork relation.

Black's Law Dictionary defines likely as *'probable** and lik e lih o o d as

“probability. ‘e T h e use o f the w ord likely indicates a hesitant and an uncertain tone
in die stated medical opinion and does n o t foreclose the possibility that
respondent's N PC could be work-related. In other w ords, as the doctor opined
only a probability, there was no certainty that his condition was n o t work-related.
T here being no certainty, the C ourt will lean in favor o f d ie seafarer consistent w ith
die mandate o f the PO EA -SEC to secure the b est term s and conditions o f
employment for Filipino workers. H ence, the presum ption o f N PC 's w ork-
relatedness stays.

11. P R IN C IP L E O F W O R K -A G G R A V A T IO N .

In the same 2013 case o f jebsens M aritim e? the principle o f work-

aggravation was discussed. T hus, assuming for the sake o f argum ent that the
presumption o f work-relation was refuted by petitioners, compensability may still
be established on the basis o f die theory o f w ork aggravation if, by substantial

1 PbJManMarineAgency, he v.Dedaoe,Jr., G.R. No. 199162,.toy04,2018,r^Magsaysay MartimeServicesv. Laurel,

Git No. 195518,March20.2013,707PuL210,227-228.
7 JebsensMar&ne, hav.BabctGJl No.204076.Dec.04.2013.
3 TTiscasewasdecidedoothebasisof&is provisionofSie2000 POEA-SEC^4iichtatatyhasbeensi^iersededbythe 2010
POEA-SEC, pursuant totie Amended Standard Tams and CorxEons Govemiig he Overseas Employment of Fffipino
SeaferasOnboardOceavGdngShips(POEAMemorandumCkcutarNo. 10, Seriesof2010, October26,2010).
4 CfingMagsaysayMafSmeServicesandPrincessCniseLines, LUv. Laurei, GR No. 195518, March20,2013,694 SCRA
225,tilingJebsensMaitime, Inc.v. Undag,GA No. 191491, Dec. 14.2011,662 SCRA670,677.
5 C5ngJessieV Davidv. OSGShipmanagemertManta, Inc. andtorMchaeimarShippingServices, G.R. No. 197205. Sept
26,2012.
« CangF^StarMartSmeCorporafionv.Ro6ele.GilNa 192686,Nov.23,2011,661 SCRA247.255.
’ rah Etffon. p.534.
• W.
* GRNa 204076,Dec.04,2013.

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 C hapter four 34»
SO C IA L WELFARE LEG ISLA TIO N

evidence,1it can be demonstrated that the working conditions aggravated or at least

contributed in the advancement o f respondent's cancer.2 As held in Rosano* "[t]he
burden is on the beneficiaries to show a reasonable connection between the
causative circumstances in the employment of the deceased employee and his death
or permanent total disability."

In the 2018 case of Lagae,* both the NLRC and the CA found Lagne's
rectal illness to be compensable for permanent and total disability, because they
found that his dietary provisions while at sea increased his risk of contracting colon
cancer because he had no choice o f what to eat on board. Suffice it to say, the
strenuous nature of Lagne's job, combined with his poor diet which consists of
mosdy carbohydrates and meat, usually with saturated fat, his advanced age as he
was 55 at the time of hiring, we find it reasonable to conclude that Lagne acquired
or developed his illness during the term of his contract There is a probability that
Lagne's work as an oiler caused or contributed even to a small degree to the
development or aggravation of his rectal illness.

It was, thus, stressed that in determining the compensability of an illness,

the Court does not require that the employment be the sole factor in the growth,
development, or acceleration of a claimants' illness to entide him to the benefits
provided for. It is enough that his employment contributed, even if only in a small
degree, to die development of die disease.5

Indeed, setded is the rule drat for illness to be compensable, it is not

necessary that the nature o f the employment be the sole and only reason for the
illness suffered by the seafarer.6 It is sufficient that there is a reasonable linkage
between die disease suffered by die employee and his work to lead a rational mind
to conclude that his work may have contributed to the establishment or, at the very
least, aggravation of any pre-existing condition he might have had.7

Even assuming that the ailment of the worker was contracted prior to his
employment, this still would not deprive him of compensation benefits. For what
matters is that his work had contributed, even in a small degree, to the
development of die disease. Neither is it necessary, in order to recover
compensation, that die employee must have been in perfect health at the time he
contracted the disease. A worker brings with him possible infirmities in the course

1 Ashekl inReyesv. ECC, GJL No. 93003. March3.1992,206 SCRA726,732, citingMagistradov. ECC, GR No. 52641,
June30,1989.174 SCRA605. SubstsnSalevidencemeanssuchrete/antevidenceasa reasonablemixl might acceptas
adequatetosupportsconclusion.
3 GStSv. Emmanuel P.Cuntapay,GA No. 168862. Apia30,2008,553 SCRA520; 576 Phil. 482 492.
3 ResolutioninRosariov. DenXiavMaine, GR No. 166906, March16,2005.
< Stype&Uh&dPacfe.Incv. Lagne,GANo.217036,Aug.20,2918.
5 CF.ShapCrewManagement,ln&v.jLegdHeirsofIheLatnGodofinedoRepiso.GJ^.No. 190534.Feb. 10.^)t6.
5 Sustridmov. NYK-FI ShipManagement, he, GA No. 237487, June27,2018, citing .Grieg Philippines, Inc v. Gonzales,
GA No. 228296,July26,2017.
1 kL,c£ng MagsaysayMaSmeServicesv.Laurel,GANo.195518,March20,2013.

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 342 Bar reviewer o n Labor Law

of his employment, and while the employer is not the insurer of the health o f die
employees, he takes them as he finds them and assumes the risk of liability.1

12. IN JU R Y O R IL L N E SS M U S T O C C U R D U R IN G T E R M O F
CON TRA CT.

As earlier quoted, Section 20 (A)2 of the 2010 POEA-SEC categorically

reads:
“The liabilities of the employer when the seafarer suffers
work-related injury fir illness during the term of his contract are as
follows: to"
Based on this provision, an injury or illness is compensable when, first, it
is work-related and, secon d, the injury or illness existed, during tk t.ty m o f the
seafarer’s employment contract The correct approach in adjudging claims of
seafarers for death and disability benefits is to determine whether the claimants
have proven the requisites of compensability3 under Section 32-A of the 2010
POEA-SEC.4 This provision states that for an occupational disease and the
resulting disability or death to be compensable, all of the following conditions
need to be satisfied:
(1) The seafarers work must involve the risks described therein;
(2) The disease was contracted as a result of the seafarer's exposure to
the described risks;
(3) The disease was contracted within a period of exposure and under
such other factors necessary to contract it; and
(4) There was no notorious negligence on the part of the seafarer.5

13. W O R K IN G C O N D IT IO N S A L O N E N O T S U F F IC IE N T .

It need not be overemphasized, according to Panganiban,6 that in die

absence of substantial evidence, working conditions cannot be accepted to have
caused or at least increased the risk o f contracting the disease, in this case, brief
psychotic disorder. Substantial evidence is more than a mere scintilla. The evidence
must be real and substantial, and not merely apparent; for the duty to prove work-

1 SeagdShipmanagementandTransporLInc.v.NIRC.GANa 123619.June8.2000.
2 Sec&onZOWoftheAmeniledStandaalTennsandConrSBonsGavenungheOueiseasBnpioyinentofF^pirioSBa&ras
OrvBoardOcearvGoing Shps (POEAMemomndumDncular Nol 10, Seriesof2010, October 26,2010). Ttus provision is
vertia&n fte same as in (he former provision of Section 20 (B) of be Standard Terms and CcntSnns Governing fte
Employment of FEpino Seataras On Board Oceangoing Vessels, issued pusuant to DOLE Department Order No- 4,
Seriesd 2000[May31,2000).TMsis alsohe sameaste previous1996POEA-SEC.
3 Maerstc-Fa^inasCrewinfi, tnc.v. Mdkse, G.l^ Na200576, Nov. 2Q,2017;Tu(riesav.AbacaslS^pping Co^ h&,Gi^Na.
229779,Api 17,2017;JebsensMaritime, Inc.v. Babol. GA No. 204076.Dec.04,2013.
4 TNs provision *saveftefim reproductionof be samepotion of Section 32-Aof fte 2000 POEA45K (StandardTerms
andCondSonsGoverning he Employmentof Ffyho SeafarersOnBoardOcean-GoingVessels, issuedpusuanttoD0l£
DepartmentOrderNo.4, Seriesof2000(May31.2000]).
5 PhlsynergyMaritime, Inc.v. Gafeno,Jr., G.R. No.228504,June06,2018.
5 Panganfcanv. Tara TradingSNpmanagement, too,GA No. 187032,Oct 18,2010.

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 Chapter four 343
SO C IA L W ELFA RE L E G IS L A T IO N

causation ot work-aggravation imposed by law is real and not merely apparent.

Petitioner in this case, who suffered brief psychotic disorder, pointed out that his
illness was work-related simply because had it been a land-based employment,
petitioner would have easily gone home and attended to the needs of his family.
H ie Supreme Court, however, did not submit to this argument since this is not the
^ rk-relaled" instance contemplated by the provisions o f the employment contract
(POEA SEC) in order to be entitled to die benefits. Otherwise, every seaman
would automatically be entitled to compensation because the nature of his work is
not land-based and die submission of the seaman to the company-designated
physician as to the nature o f the illness suffered by him would just be an exercise o f
futility. The. fact is that the petitioner failed to establish, by substantial evidence,
that his brief psychotic disorder was caused by the nature o f his work as oiler o f the
company-owned vessel. In fact, he failed to elaborate on the nature o f his job or to
specify his functions as oiler o f respondent company. It is thus difficult to find any
link between his position as oiler and his illness. The fact that petitioner was a
seaman for 10 years serving 10 to 18-month contracts and never did he have any
problems with his earlier contracts cannot be given less importance. It can only be
surmised that the brief psychotic disorder suffered by him was brought about by a
family problem. His daughter was sick and, as a seafarer, he could not just decide to
gp home and be with his family. Even the psychiatric report prepared by the
evaluating private psychiatrist o f petitioner showed that the hospitalization o f
petitioner’s youngest daughter caused him poor sleep and appetite. Later, he started
hearing voices and developed fearfulness.
Even in case of death o f a seafarer, the grant of benefits in favor of the
heirs of the deceased is not automatic. As in the case of Rivera,1 without a post­
medical examination or its equivalent to show that the disease for which the
seaman died was contracted during his employment or that his working conditions
increased the risk of contracting the ailment, the employer/s cannot be made liable
for death compensation.

In fact, in Mabuhay Shipping** the Court held that the death of a seaman
even during the term of employment does not automatically give rise to
compensation. Several factors must be taken into account, such as the
circumstances which led to the death, the provisions o f the contract, and die right
and obligation of the employer and the seaman with due regard to the provisions o f
die Constitution on the due process and equal protection clauses.

14. DISABILITY ARISING FROM ACCIDENT.

Black’s Law Dictionary defines “accident" ns “ [a]n unintended and unforeseen

injurious occurrence; something that does not occur in the usual course o f events or
that could not be reasonably anticipated, xxx [a]n unforeseen and injurious occurrence

' R^v.VV^fcfeSneSeMKS,tna.GR.No. 160315,Nw. It, 2005,474 SRA714,723.

* MahteyShjpphgSavices, lnc.v. NLRC. GR No. 94167,Jai. 21,1991,193SCRA141,145.

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 344 Bar reviewer o n La bo r Law

not attributable to mistake, negligence, neglect or misconduct.” The Philippine Law

Dictionary defines the word ’accident” as “ [t]hat which happens by chance or
fortuitously, without intention and design, and which is unexpected, unusual and
unforeseen.”1*3

Raised as issue in NFD International. i s whether or not the incident where

respondent figured should be classified as accident or an injury. On May 16, 2003,
when respondent had been on board the vessel M /V Shinrei for seven months as
Third Officer, the Captain and Chief Officer ordered him to carry 25 fire hydrant
caps from the deck to the engine workshop, then back to the deck to refit the caps.
The next day, while carrying a heavy basketful of fire hydrant caps, respondent felt a
sudden snap on his back, with pain that radiated down to the left side o f his hips. He
immediately informed the ship captain about his condition, and he was advised to
take pain relievers. As the pain was initially tolerable, he continued with his work.
After a few days, the pain became severe, and respondent had difficulty walking. The
Court held that the snap on the back o f respondent was not an accident, but an injury'
sustained by respondent from carrying the heavy basketful of fire hydrant caps, which
injury resulted in his disability'. The injury cannot be said to be the result of an
accident, that is, an unlooked for mishap, occurrence, or fortuitous event, because the
injury resulted from the performance o f a duty. Although respondent may not have
expected the injury, yet, it is common knowledge that carrying heavy objects can
cause back injury, as what happened in this case. Hence, the injury cannot be viewed
as unusual under the circumstances, and is not synonymous with the term “accident” as
defined above.

15. N ON -COM PEN SABILITY O F S E L F -IN F L IC T E D INJURY.

Section 20 (D) of the 2010 POEA-SEC is clear, vi%:

“SECTION 20. COMPENSATION AND BENEFITS

XXX

“D. No compensation and benefits shall be payable in respect

of any injury, incapacity, disability or death of the seafarer resulting from
his willful or criminal act or intentional breach of his dudes; Provided,
however, that the employer can prove that such injury, incapacity,
disability or death is directly attributable to the seafarer.”

From the above provision, the onus probandi falls on the employer to
establish or substantiate its claim that the seafarer's injury was caused by his willful
or intentional act with the requisite quantum o f evidence.5 In labor cases, as in
other administrative proceedings, only substantial evidence or such relevant
evidence as a reasonable mind might accept as sufficient to support a conclusion is

1 Philsynefgy Maitime, Inc. v. Gaitano, Jr. G.R. No. 228504, June 06,2018; C.F. Sharp Crew Management, Inc. v. Perez,
G.R No 194885,Jan. 26,2015
J NFD International Manning Agents, Inc. m ISescas. G.R. No. 183054, Sept 29,2010.
3 Career PhSpphes Shpmanagement Inc v. S&estre, G R No. 213465, Jan. 08,2018.

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 C hapter . Fo u r 34 5
SOCIAL WELFARE LEGISLATION

required.1*3 Hence, as held in Career.} if it can be gleaned from the records that
petitioners never presented any evidence before the Labor Arbiter to support the
conclusion that the seafarer's injury is directly attributable to his willful or criminal
act or intentional breach o f duty, as when the accident report, by itself, does not
support the finding that his act was willful or intentional, clearly then, the seafarer
suffered an injury that is work-related during the term of his employment contract
and such is compensable. A willful act differs essentially from a negligent act. The
one is positive and the other one is negative. Intention is always separated from
negligence by a precise line o f demarcation. If at all, there was merely inadvertence
or negligence on the part of the seafarer but not a willful or intentional breach of
duty.-5

In Moradas,4 which was decided under the 1996 POEA-SEC, it was ruled
that self-inflicted injury' which was established through substantial evidence is not
compensable pursuant to Section 20 (D) thereof. Respondent here was employed
as wiper for the vessel MV Commander by petitioner INC Shipmanagement, Inc. for
its foreign principal for a period of 10 months. He was later diagnosed to have
sustained “thermal bunts, upper and lower extremities and abdomen, 2°-3", / / % ” for which
he underwent debridement. Based on evidence, however, it was declared that this
injury was self-inflicted.

19. N O N -C O M P E N S A B IL IT Y O F S E L F -IN F L IC T E D D EA T H .

(NOTE: For a more comprehensive discussion on this topic, please read the annotation
below under the heading: “MONETARY CLAIMS OF SEAFARERS FOR DEATH
BENEFITS”).

II.
EXISTENCE AND EXTENT OF SEAFARER’S DISABILITY,
HOW DETERMINED AND DECLARED

1. P R E -E M P L O Y M E N T M ED IC A L E X A M IN A T IO N (PEM E); N O N ­
C O M PE N SA B IL IT Y O F D ISA B ILITY FR O M PR E-EX IST IN G
ILLN ESS.

a. L egal basis.
Pursuant to Section 20 (A) o f the 2010 POEA-SEC, the employer is liable
for disability benefits when the seafarer suffers from a work-related injury or illness
during the term o f his contract. In this regard, Section 20 (E) thereof mandates the

1 Id., citing INC Shipmanagement Inc. v. Moradas, G R No. 178564, Jan. 15.2014.
7 Career Phiippines Shipmanagement Inc. v. Silvestre, supra. Note: This case was decided under the 2000 POEA-SEC,
whose provision in its Section 20(D) is similar to the 2010 POEA-SEC.
3 Id.
* INC Shipmanagement Inc. v. Moradas, G.R. No. 178564, Jan. 15,2014.

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seafarer to disclose all his pre-existing illnesses or conditions in his PEME; fading
in which shall disqualify him from receiving disability compensation,1«>.:

“SECTION 20. COMPENSATION AND BENEFITS

XXX
“E. A seafarer who knowingly conceals a pre-existing illness
or condition in the Pre-Employment Medical Examination (PEME)
shall be liable for misrepresentation and shall be disqualified from any
compensation and beneGts. This is likewise a just cause for termination
of employment and imposition of appropriate administrative
sanctions.”

At the outset, it bears to point out that Section 20 (E) o f the 2010 POEA-
SEC speaks of an instance where an employer is absolved from liability when a
seafarer suffers a work-related injury or illness on account o f the latter's willful
concealment or misrepresentation o f a pre-existing condition or illness.2 Thus, the
burden is on the employer to prove such concealment o f a pre-existing illness or
condition on the part of the seafarer to be discharged from any liability. In this
regard, an illness shall be considered as pre-existing if prior to the processing o f the
POEA contract, any of the following conditions is present, namely:

(a) The advice of a medical doctor on treatment was given for such
continuing illness or condition; or
(b) The seafarer had been diagnosed and has knowledge of such illness or
condition but failed to disclose the same during the PEME, and such
cannot be diagnosed during the PEME.3

b. PEME is not a totally in-depth and diorough exam ination o f an

applicant’s m edical condition.

The PEME cannot be a conclusive proof that the seafarer was free from
any ailment prior to his deployment.4 A seafarer only needs to pass the mandator}7
PEME in order to be deployed on duty at sea.5 The fact that the seafarer passed the
company’s PEME is of no moment. The PEME could not have divulged the
seafarer’s illness considering that the examinations were not exploratory in nature
and cannot be relied upon to arrive at his true state of health.6 It is not intended to
be a totally in-depth and thorough examination of an applicant’s medical condition.
It does not allow the employer to discover any and all pre-existing medical
conditions with which the seafarer is suffering and for which he may be presently

’ Ventua, Jf. v. Crewtech Shipmanagement Philippines. Inc., G.R No. 225995, Nov 20,2017.
7 Deocaiza v. Fleet Management Services FMppjies, Inc., G.R No. 229955, July 23,2018.
3 Id.; See Philsynergy Maritime, Inc. v. Gafano, Jr., G.R No. 228504, June 6, 2018; See also Item No. 11 (a) and (b).
Definition of Terms, 2010 POEA-SEC.
* Taiosig v. United Philippine Lines, Inc., G.R No. 198338, July 28,2014, Doroteo v. Philimare Inc . 'G R No 184917 &
184932, March 13,2017.
5 Madridejos v. NYK-FI Ship Management Inc, G.R. No. 204262, June 07,2017.
6 C.F. Sharp Crew Management Inc. v. Castle, G.R. No. 208215, April 19.2017.

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SOCIAL WELFARE LEGISLATION

taking medication.1It is nothing more than a summary examination o f the seafarer's

physiological condition.23It merely determines whether one is ‘fit to work" at sea or
'fit for sea service; ’5 it does not state the real state of health o f an applicant.4

For the seafarer therefore to claim that the issuance o f a clean bill of
health to him after a PEME means that his illness was acquired during his
employment is a non sequilur. In the case o f NYTC-F/L Ship Management, Inc. v.
NLRC,5 it was held:
“Wc do not agree with the respondent’s claim that by the
issuance of a clean bill of health to Roberto, made by the physicians
selected/accredited by the petitioners, it necessarily follows that the
illness for which her husband died was acquired during his employment
as a fisherman for the petitioners.

“The pre-employment medical examination conducted on

Roberto could not have divulged the disease for which he died,
considering the fact that most, if not all, arc not so exploratory. The
disease of GFR, which is an indicator of chronic renal failure, is
measured thru the renal function test In pre-employment examination,
the urine analysis (urinalysis), which is normally included measures only
the creatinine, the presence of which cannot conclusively indicate
chronic renal failure.”

An honest mistake of claimants in giving account o f their state o f health

does not negate compensability. This is so because as laypersons, seafarers cannot
be expected to make completely accurate accounts o f their state o f health. Unaware
o f the nuances o f medical conditions, they may, in good faith, make statements that
turn out to be false. These honest mistakes do not negate compensability for
disability arising from pre-existing illnesses shown to be aggravated by their
working conditions. It is only when a seafarer's proper knowledge of pre-existing
conditions and intent to deceive an employer are established that compensability is
negated.6

c. N o concealm ent i f em ployer know s the seafarer’s m edical history.

But if employer is well aware of the seafarer’s medical history, there can
be no concealment to speak of. For instance in Ventura, Jr.,1 the Court pronounced
that contrary to the findings o f the CA, there was no concealment on the part o f
petitioner when he failed to disclose in his 2013 PEME that he was previously
treated for prostatitis in 2011. As culled from the records, respondents were well

' Status Maritime Capocalionv. Spouses Detalamon.GR No. 198097. July 30,2014.
2 Espere v. NFD International Manning Agents, Inc., G il No. 212098, July 26,2017.
3 NYK-Fi Ship Management Inc. v. The NLRC. G.R No. 161104, Sept 27,2006.
4 EstateofPosedioOrtegav.CA,G.RNo.175005,April30.2008.
5 NYK-FIL Ship Management, Inc. v. NLRC, supra.
6 Manansala v. Marlow Navigation Phils., Inc., G.R No. 208314, Aug. 23,2017.
1 Ventura, Jr. v. Crewtech Shipmanagement Philippines, Inc., G.R No. 225995, Nov. 20,2017.

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aware of petitioner's past medical history given that the company-designated

physician was able to provide a detailed medical history o f the latter in the Medical
Report dated May 2, 2014 which showed all o f his past illnesses, the year he was
treated and where he obtained his treatment. Moreover, since petitioner's prostatitis
was shown to have been treated in 2011 with no indication that he was required to
undergo further medical attention or maintenance medication for the same, he
cannot be faulted into believing that he was completely cured and no longer
suffering from said illness. This is further bolstered by the fact that he was rehired
by respondents the following year in 2012 and no longer found to be suffering
from prostatitis during his PEME. Evidently, petitioner's non-disclosure o f the
same in his PEME in 2013 did not amount to willful concealment o f vital
information and he was in fact, truthful in answering "no" to the query on whether
or not he was "suffering" from any medical condition likely to be aggravated by sea
service or render him unfit for such service on board the vessel.

2. T H E 120-DAY/240-DAY T R E A T M E N T P E R IO D RULE.

a. Significance o f the period.

Pursuant to Section 20 (A) of the 2010 POEA-SEC, when a seafarer

suffers a work-related injury or illness in the course o f employment, the company-
designated physician is obligated to arrive at a definite assessment of the former's
fitness or degree of disability w ithin a period of 120 days from repatriation.1
During the said period, the seafarer shall be deem ed on tem porary total
disability and shall receive his basic wage until he is declared fit to work or his
temporary disability is acknowledged by the company to be permanent, eith er
partially or totally, as his condition is defined under the POEA-SEC and by
applicable Philippine laws. However, if the 120-day period is exceeded and no
definitive dcclarauon is made because the seafarer requires further m edical
attention, then the tem porary total disability period may be extended up to a
maximum of 240 days, subject to the right o f the employer to declare within this
period that a perm anent partial or total disability already exists.2

But before the company-designated physician may avail o f the allowable

240-day extended treatment period, he must perform some significant act to justify
the extension of the original 120-day penod.3 Otherwise, the law grants the
seafarer the relief of perm anent total disability benefits due to such non-
compliance.4

Case law thus states that without a valid final and definitive assessment
from the company-designated physician within the 120-day/240-day period, the

' Gamboa v.Maunlad Trans, Inc, G.R. No. 232905, Aug. 20,2018.
7 Id.; See also DOHLE Ph2man Manning Agency, Inc. v Doble, G.R. Nos. 223730 & 223782, O ct'04, 2017; Jebsens
Maritime, Inc. v. Rapiz. G.R. No. 218871,. an. 11,2017.
3 Id., citing Talaroc v. A/papta! Shpping Corporation. G R. No 223731, Aug. 30,2017.
4 Id, Ebutg Shipmanagement PMs, Inc. v. Qubgue. Jr.. G R. No 211882, July 29,2015.

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law already steps in to consider petitioner's disability as total and p erm an en t.1
Thus, a temporary total disability becomes total and permanent by operation o f
law.2 Consequendy, in a case where it was only after the lapse o f more than six (6)
months that the company-designated physician issued a certification declaring the
seafarer to be entided to a disability rating o f Grade 10, going beyond the period o f
120 days, without justifiable reason, the Court held that his disability was correcdy
adjudged to be permanent and total.34

b. Summary o f Rules on the p eriod s to assess the seafarer.

The 2015 case o f E/burg,* and later reiterated in a number o f cases,5

summarized the rules on the periods when the company-designated physician
must, as a duty, assess the seafarer and issue a final medical assessment, as follows:

1. The company-designated physician must issue a final medical

assessment on the seafarer’s disability grading within a period o f 120
days from the time the seafarer reported to him;
2. If the company-designated physician fails to give his assessment
within the period o f 120 days without any justifiable reason, then the
seafarer’s disability becomes p erm an en t and total;
3. If the company-designated physician fails to give his assessment
within the period o f 120 days with a sufficient justification (e.g.,
seafarer required further medical treatment or seafarer was
uncooperative67), then the period o f diagnosis and treatment shall be
extended to 240 days. The employer has the burden to prove that the
company-designated physician has sufficient justification to extend
the period; and
4. If the company-designated physician still fails to give his assessment
within the extended period of 240 days, then the seafarer’s disability
becomes p erm anent and total, regardless of any justification.

The above rule was further refined in the 2015 case o f Marlow Navigation
Phifippines, Inc. t. Osias,1 where the Court declared - and this is the current rule - as
follows:

(1) that mere inability to work for a period of 120 days does not entide a
seafarer to permanent and total disability benefits;

' Id., Talaroc v. Arpaphi Shipping Corporation, supra.

2 Id., Tamil v. Magsaysay Maritime Corporation, G.R. No. 220608, Aug. 31,2016; See also Phil-Man Marine Agency. Inc. v.
Dedace, Jr., G R No. 199162, July 04,2018.
3 Career Philippines Ship Management Inc. v. Acub, GiR. No. 215595, Afxil 26,2017.
4 Eburg Shipmanagement Phils., Inc. v. Quiogue, Jr., G R No. 211882, July 29,2015,764 SCRA 431.
5 Such as Gere v. Angb-Eastem Crew Management Phils., Inc., G.R. Nos. 226656 & 226713, April 23,2018: Magsaysay
Mtsui OSK Marine, Inc v. Buenaventura, G.R. No. 195878, Jan. 10,2018.
6 An example ot uncooperativeness is the case otMariow Navigation Philippines, Inc. v. Osias, supra, where Osias. based on
he evidence presented, did not fufy comply wth the preserved medical therapy.
7 G R No. 215471, Nov. 23,2015.

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(2) that the determination o f the fitness o f a seafarer for sea duty is
within the province o f the company-designated physician, subject to
the periods prescribed by law,
(3) that the company-designated physician has an initial 120 days to
determine the fitness or disability o f the seafarer; and
(4) that the period of treatm ent may only be extended to 240 days if
a sufficient justification exists such as w hen further m edical
treatment is required or w hen the seafarer is uncooperative.1

For as long as the 120-day period under the Labor Code and the POEA-
SEC and the 240-day period under the IRR co-exist, the Court must bend over
backwards to harmoniously interpret and give life to both of the stated periods.
Ultimately, the intent of our labor laws and regulations is to strive for social justice
over the diverging interests of the employer and the employee.2

c. Conditions required for the claim for total and perm anent
disability benefits to prosper.

In sum, according to the 2019 case o f Torillos,34in order for a seafarer’s

claim for total and permanent disability benefits to prosper, any of the following
conditions should be present:

(a) The company-designated physician failed to issue a declaration as to

lus fitness to engage in sea duty or disability even after the lapse of
the 120-day period and there is no indication that further medical
treatment would address his temporary total disability, hence, justify
an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company
designated physician;
(c) The company-designated physician declared that he is fit for sea duty
within the 120-cay or 240-day period, as'the case may be, but his
physician of choice and the doctor chosen under Section 20 (B) (3)*
of the POEA-SEC arc o f a contrary opinion;
(d) The company-designated physician acknowledged that he is partially
permanendy disabled but other doctors who he consulted, on his
own and joindy with his employer, believed that his disability is not
only permanent but total as well;
(e) The company-designated physician recognized that he is totally and
permanendy disabled but there is a dispute on the disability grading;

1 See also TradepM Shipping Agencies. Inc v. Deta Cruz, G.R. No. 210307, Feb. 22,2017; Emphasis supplied.
1 Philippine Hammonia Shp Agency v. Israel, G.R. No. 200258, Oct 03,2018; See also Tulabing v. MST Marine Services
(Phils), Inc., G.R Nos 202113 8 202120, June 06,2018.
3 Torilbs v. Eastgate Maritime Corporation, G.R Nos. 215904 & 216165, Jan. 10,2019.
4 This ts the pwtsior under the 2000 POEA-SEC. It is now designated as Section 20 (A) (3) of the 2010 POEA-SEC.

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(f) The company-designated physician determined that his medical

condition is not compensable or work-related under the POEA-SEC
but his doctor-of-choice and the third doctor selected under Section
20 (B) (3)12 o f the POEA-SEC found odierwisc and declared him
unfit to work;
(g) The company-designated physician declared him totally and
permanently disabled but the employer refuses to pay him the
corresponding benefits; and
(h) The company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse
of said periods.

d. The extent o f disability (w hether total or partial) is determ ined,

not by the num ber o f days that one could not work, but by the
disability grading the doctor recognizes.

The CA, in the 2018 case of C.F. Sharp} found that since respondent was
unable to work as a seafarer for more than 120 days, he is deemed to have a
permanent and total disability. The Court, however, disagreed. While a seafarer is
entitled to temporary total disability benefits during his treatment period, it does
not follow that he should likewise be entided to permanent total disability benefits
when Iris disability was assessed by the company-designated physician after his
treatment. He may be recognized to have permanent disability because o f the
period he was out o f work and could not work, b u t the extent of his disability
(w hether total or partial) is determ ined, not by the n um ber of days th at he
could n o t work, b u t by the disability g rad in g the doctor recognizes b ased on
his resulting incapacity to w ork and earn his w ages.3

Certainly, the disability should not be determined by simply counting the

duration o f the seafarer’s illness. This system would inevitably induce the
unscrupulous to delay treatment for more than 120 days to avail o f the more
favorable award o f permanent total disability benefits.4

It is the doctor's findings that should prevail as he or she is equipped with

the proper discernment, knowledge, experience and expertise on what constitutes
total or partial disability. The physician's declaration serves as the basis for the
degree o f disability that can range anywhere from Grade 1 to Grade 14. Notably,
this is a serious consideration that cannot be determined by simply counting the
number of treatment lapsed days. Accordingly, the timely medical assessment of a
company-designated physician is given great significance by the Court to determine

' id.
2 C f. Sharp Crew Management Inc. v. Santos, G.R. No. 213731, Aug. 01.2018.
3 Citing INC Shipmaiagement Inc. v. Rosales, G.R. No. 195832, Oct 01,2014.
* INC Shipmanagement Inc. v. Rosales, G.R. No. 195832, Oct 01,2014.

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whether a seafarer is entitled to disability benefits. Indeed, the mere inability of a

seafarer to work for a period of 120 days is not the sole basis to determine a
seafarer's disability.

In this case, respondent was repatriated in the Philippines on January 12,

2012. The next day, or on January 13, 2012, he was immediately referred to CF
Sharp’s company-designated physicians. He was then subjected to different tests
and treatments, which were recorded in several medical reports. It was confirmed
that he had Diabetes Mellitus II and hypertension. On May 4, 2012, respondent
was cleared from the nephrology standpoint and was ^advised to continue his
maintenance medications. Thereafter, after 118 days from repatriation, the
company-designated physicians issued a certification stating that respondent's
condition was not work-related and that his final disability grading assessment for
his hypertension and diabetes was Grade 12.

Verily, the company-designated physicians suitably gave their medical

assessment of respondent's disability before the lapse of the 120-day period. It was
even unnecessary to extend the period of medical assessment to 240 days. After
rigorous medical diagnosis and treatments, the company-designated physicians
found that respondent only had a partial disability and gave a Grade 12 disability
rating. As the medical assessment of the company-designated physicians was
meticulously and timely provided, it must be given weight and credibility by the
Court.

3. POST-EM PLOYM ENT M ED IC A L E X A M IN A TIO N .

a. Mandatory subm ission fo r post-em ploym ent m edical

examination by a com pany-designated physician.

Section 20 (A) (3) of the 2010 POEA-SEC, reads:

“COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

“The liabilities of the employer when the seafarer suffers

work-related injury or illness during the term of his contract are as
follows:
XXX

“For this purpose, the seafarer shall submit himself to a post­

employment medical examination by a company-designated
physician within three working days upon his return except when he
is physically incapacitated to do so, in which case, a written notice to the
agency within the same period is deemed as compliance. In the course of
the treatment, the seafarer shall also report regularly to the company-
designated physician specifically on the dates as prescribed by the
company-designated physician and agreed to by the seafarer. Failure of
the seafarer to comply with the mandatory reporting requirement shall
result in his forfeiture of the right to claim the above benefits.”

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It is clear from the foregoing that for a seafarer’s claim for disability to
prosper, it is m andatory and must be strictly observed that w ithin three (3)
w orking days from his repatriation, he is exam ined by a com pany-
designated physician.1 Non-compliance with this mandatory requirement results
in the forfeiture o f the right to claim for compensation and disability benefits.2
Consequently, the complaint filed by a non-compliant seafarer should be dismissed
outright.3

The rationale for this rule is that reporting the illness or injury within
three (3) working days from repatriation fairly makes it easier for a physician to
determine the cause o f the illness or injury'.4 It would be fairly manageable for the
physician to identify whether the disease was contracted during the term o f his
employment or that his working conditions increased the risk o f contracting the
ailment5 Ascertaining the real cause o f the illness or injury beyond the period may
prove difficult To ignore the rule might set a precedent with negative
repercussions, like opening floodgates to a limitless number o f seafarers claiming
disability benefits, or causing unfairness to the employer who would have difficulty
determining the cause of a claimant’s illness because of the passage o f time. The
employer would then have no protection against unrelated disability claims.6

b. E xceptions.

This rule is not absolute, however. It admits o f excepdon as (1) when the
seafarer is incapacitated to report to the employer upon his repatriation; and (2)
when the employer inadvertently or deliberately refused to submit the seafarer to a
post-employment medical examination by a company-designated physician.78

In the first instance above, a written notice to the agency within the same
period is deemed as compliance. An example of this exception is Wallem Maritime,9'
where the claimant, Faustino Inductivo, admittedly did not subject himself to post­
employment medical examination within three (3) working days from his return to
the Philippines, as required by the POEA-SEC. Indeed, for a man who was
terminally ill and in need o f urgent medical attention, one could not reasonably
expect that he would immediately resort to and avail of the required medical
examination, assuming that he was still capable of submitting himself to such
examination at that time. It is quite understandable that his immediate desire was to
be with his family in Nueva Ecija whom he knew would take care of him. Surely,

1 De Andres v. Diamond H Marine Services & Shipping Agency. Inc, G R No. 217345, July 12.2017.
7 Manila Shipmanagement&Manning, Inc. v.Aninang.GR No. 217135. Jan 31,2018.
3 Interorient Maritime Enterprises, Inc. v. Creer III, supra.
4 Scanmar Maritime Services Inc., v. De Leon, G R No 199977. Jan. 25.2017
5 Ebuengav.SouthfieW Agencies, Inc, G R No. 208395, March 14,2018.
6 WaSem Maritime Services. Inc. v. Tanawan, G R No. 160444. Aug. 29,2012
1 De Andres v. Diamond H Marine Services & Shipping Agency, Inc, G R No 217345, July 12,2017.
8 WaJem Maritime Services, Inc. v. NLRC, GR. No. 130772, Nov. 19,1999,376 Phil. 738.

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 354 Bar Reviewer on Labor Law

under the circumstances, he or his surviving heirs after his death cannot be denied
the right to claim benefits under the law.

Another example is Delalamon} where the very same factual circumstances

in Wallem Maritime exist. When Margarito was repatriated on September 6, 2006, he
was already suffering from “Renal Insufficiency: Diabetes Me/litus; IHD
Blood+CBC+Anemia. ’’Less than a week thereafter, he was confined at the Las Pinas
Doctor’s Hospital for the same ailment of renal insufficiency, but this time
aggravated by coronary artery disease. He started undergoing hemodialysis
treatments in December when his ailment worsened to end stage renal disease due
to a cyst at the right renal cortical. He became bedridden thereafter until he passed
away on September 11, 2007. The medical episodes that transpired after his
disembarkation from the vessel show that he was already in a deteriorating physical
condition when he arrived in the Philippines. Thus, it cannot be reasonably
expected of him to prioritize the errand o f personally reporting to the petitioners’
office instead of yielding to the physical strain caused by his serious health
problems.

In the second situation above, an example is Interorient} where the Court

recognized and addressed the unscrupulous practice of employers o f deliberately or
inadvertently refusing to refer the seafarer to the company-designated physician to
deny his disability claim. The seafarer here reported to the employer for post­
employment medical examination within three (3) working days from repatriation.
The employer, however, did not refer him to a company-designated physician
because he already signed a quitclaim, releasing it from liability. The Court ruled
that the absence of post-employment medical examination should not be taken
against the seafarer because the employer declined to provide the same. Likewise,
the quitclaim was declared void due to lack of consideration and unconscionable
terms. Hence, the Court granted full disability benefits to the seafarer's family.

4. FINDINGS OF COM PAN Y-D ESIG NA TED PH YSICIA N N O T

AUTOMATICALLY FIN AL, B IN D IN G A ND C ON CLU SIV E.

While jurisprudence is replete with pronouncements that it is the

company-designated physician’s findings and evaluations which should form as the
basis of the seafarer's disability claim,3 the same, however, are not automatically
final, binding or conclusive on the claimant-seafarer, the labor tribunals or the
courts,4 as their inherent merits would still have to be weighed and duly considered.*23

' Status Maritime Caporationv. Spouses Delalamon.GR No. 198097, July 30,2014.
2 tnterorient Maritime Enterprises, Inc. v. Remo, G.R. No. 181112, June 29,2010.
3 Seacrest Maritime Management Inc. v. Roderos, G R No. 230473, April 23,2018.
* DOHLE PtiJman Manning Agency, Inc. v. DoWe, G.R. Nos. 223730 & 223782, Oct 04,2017; Andrada v. Agemar Manning
Agency. Inc., G.R. No. 194758, Oct 24,2012; See also Magsaysay Mtsui OSK Marine, Inc. v. Buenaventura, G R No.
195878, Jan. 10,2018, TradepM Shipping Agencies, Inc. v. Dria Cruz, G.R No. 210307, Feb. 22,2017.

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The seafarer may thus dispute such assessment by seasonably exercising

his prerogative to seek a second opinion and consult a doctor o f his choice, in
which case the medical report issued by the latter shall be evaluated by the labor
tribunal and die court, based on its inherent merit.1 In case of disagreement
between the findings o f the company-designated physician and the seafarer's doctor
of choice, the employer and die seaman may agree joindy to refer die latter to a
third doctor whose decision shall be final and binding on them.2 Based on
jurisprudence, the findings o f the company-designated physician prevail in cases
where die seafarer did not observe the third-doctor referral provision in the
POEA-SEC.3 However, if the findings o f the company-designated physician are
clearly biased in favor o f the employer, then courts may give greater weight to the
findings of the seafarer's personal physician.4

On the part o f the labor tribunals and the courts, they need not adopt the
company-designated doctor’s findings hook, line and sinker as they may set them
aside if it is shown that the diagnosis is attended widi clear bias, manifested by die
lack of sciendfic relation between the diagnosis and the symptoms felt by the
seafarer or if the final assessment o f the company-designated doctor is not
supported by the medical records o f the seafarer.5

6. A U T H O R IT Y O F LABOR T R IB U N A L S A N D COU RTS T O MAKE

O W N EVA LUA TION .

Labor authorities like the Labor Arbiter and die NLRC as well as the
courts have the power to make their own evaluation of the merits of the medical
findings in case there is a conflict between the medical finding o f the company-
designated physician and that o f the doctor appointed by the seafarer and there was
no third doctor appointed by both parties whose decision would be binding on
diem.6 The POEA-SEC78 provides that “ [i]f a doctor appointed by the seafarer
disagrees with the assessment [of the company-designated doctor], a third doctor
may be agreed joindy between the Employer and the seafarer,” and “ [t]he third
doctor’s decision shall be final and binding on both parties.” According to
Dalusong* in case there was no third doctor appointed by both parties whose
decision would be binding on them, it is up to the labor tribunal and the courts
to evaluate and weigh the merits o f the medical reports o f the company-
designated doctor and the seafarer’s doctor.9

’ Tradepha Slipping Agencies, Inc. v. Deia O uz, supra; G R No. 210307, Feb. 22,2017.
2 Maunlad Transport, Inc. v. Manigo, Jr., G R No. 161416, June 13,2008.
3 NorthSeaMarineServtesCorpv.Enriquez,GRNo.201806,Aug. 14,2017.
4 C.F. Sharp Crew Management, Inc. v. Casfik), G.R. No. 208215, April 19,2017.
5 Magsaysay Mitsui OSKMarine, Inc. v. Buenaventura, G R No. 195878, Jan. 10,2018.
6 Espere v. NFD International Manning Agents, Inc., G R No. 212098, July 26,2017.
7 See Section 20(B) (3)15 thereof.
8 Dalusong v. Eagle Clare Slipping PhiSppines. Inc., G R No. 204233, Sept 03,2014.
9 See also Balatero v. Senator Crewing (Manila) Inc, G R Nos. 224532 & 224565, June 21,2017; Ubang, Jr. v. Indochina
Ship Management Inc., G R No. 189863, Sept 17,2014.

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 356 Bar. Reviewer on U bor Law

7. RIGHT O F SEAFARER T O SEEK A SE C O N D O P IN IO N .

a. When right to seek second opinion accrues.

At the outset, it bears pointing out that the seafarer has the right to seek a
second opinion once the company-designated physician makes a definitive and final
assessment within the 120-day period; otherwise, no such obligation devolves on
die seafarer to consult his own doctor.

This was the pronouncement in the 2018 case of Phil-Man.* Thus, it was
held that Dedace was under no obligation to consult with a physician of his choice
under the given circumstances as the duty of a seafarer to consult with his own
physician arises only if the company-designated physician was able to issue an
assessment within 120 days from the date o f his repatriation. In this case, since the
petitioners' company-designated physician, Dr. Cruz, failed to make an assessment
within the aforesaid period, Dedace's failure to adduce a medical certificate from a
physician of his choice is not fatal to his cause. It is not the issuance o f a medical
certificate showing that the seafarer's illness is work-related or diat he is totally and
permanendy unfit for sea duties which makes the employer liable. A seafarer's
cause of action for total and permanent disability benefits accrues when, among
others, the company-designated physician fails to issue a declaration as to his
fitness to engage in sea duty or disability rating even after the lapse o f the 120-day
period and there is no indication that further medical treatment would address his
temporary total disability.1
2

b. Second opinion must not be sought while the case is already

pending with the Labor Arbiter or on appeal with the NLRC.

The second opinion, however, should not be the product o f a mere

afterthought, such as when the second opinion was rendered two (2) months after
the filing by the seafarer o f his complaint, as in the case o f Ocangos,3 or when die
case was already pending appeal with the NLRC.'4 According to Ocangas,
compelling the Court to consider the opinion rendered by respondent's physician
of choice, submitted two (2) months after the filing o f the complaint, would
undermine the right of the petitioners to refute the findings and avail o f the option
to joindy refer with the respondent the disputed diagnosis to a third doctor o f the
parties' choice, as agreed upon by the parties under the POEA-SEC.

c. P roof o f bad faith or m alice o f company-designated physician,

not required to enable seafarer to seek second opinion.
Further, under the POEA-SEC, the presence of bad faith or malice on the
part of company-designated physicians is not required before a seafarer may seek

1 PhitMan Marine Agency, Inc. v. Dedace, Jr., G.R No. 199162, July 04,2018.
* See also C f. Sharp Crew Management Inc vs. Taok, G.R No. 193679, July 18.2012.691 PH. 521.538.
3 Oriental Shipmanagement Co., Inc. v. Ocangas, G.R No. 226766,27 Sept 27,2017.
4 As in the case ofTuiab'ng v. MST Marine Services (Phils.). Inc., G.R Nos. 202113 & 202120, June 06,2018.

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the opinion of another doctor.1

8. TH E THIRD DOCTOR R U LE - M ANDATORY PR O C E D U R E IN

JO IN T L Y E N G A G IN G A T H IR D D O C T O R .

a. R eferral to a third-party doctor, when required.

The conflicting Endings of the company's doctor and the seafarer's

physician often stir suits for disability compensation. As an extrajudicial measure o f
settling their differences, the POEA-SEC gives the parties the option o f agreeing
jointly on a third doctor whose assessment shall break die impasse and shall be the
final and binding diagnosis.2

While it is the company-designated doctor who is given the responsibility

to make a conclusive assessment on the degree of the seafarer's disability and his
capacity to resume work within 120/240 days, die parties, however, are free to
disregard the findings o f the company doctor as well as the chosen doctor o f the
seafarer, in case they cannot agree on the disability gradings issued and joindy seek
the opinion of a third-party doctor pursuant to Section 20 (A) (3) of the 2010
POEA-SEC3 which states:

“SECTION 20. COMPENSATION AND BENEFITS

“COMPENSATION AND BENEFITS FOR INJURY OR
ILLNESS
“The liabilities of the employer when the seafarer suffers
work-related injury or illness during the term of his contract are as
follows:
3. xxx
“If a doctor appointed by the seafarer disagrees with the
assessment, a third doctor may be agreed jointly between the
Employer and the seafarer. The third doctor's decision shall be
final and binding on both parties.”4

In other words, the referral to a third doctor is mandatory when:

(1) there is a valid and timely assessm ent by the company-designated

physician; and
(2) the appointed doctor o f the seafarer refuted such assessment.5

The assessm en t refers to the declaration of fitness to work or the degree

of disability, as can be gleaned from the first paragraph o f Section 20 (A) (3). It
presupposes that the company-designated physician came up with a valid, fin a l, a n d

1 MagsaysayMtsuiOSK Marine, Inc. v. Buenaventura, G.R No. 195878, Jan 10,2018.

2 C.F. Sharp Crew Management, Inc. v. CastjJo, G.R No. 208215, April 19.2017
3 Sonit v. OSM Maritime Services, G.R. No. 223035, Feb. 27,2017; See also North Sea Marine Services Corp v. Enriquez,
G.R No. 201806, Aug. 14,2017; Magsaysay fvitsui OSK Marine, Inc. v. Buenavenlura, G.R. No. 195878, Jan. 10,2018.
4 Emphasis supplied.
5 CF. Sharp Crew Management Inc. v. Santos, G R No. 213731, Aug. 01.2018; DOrlLE Philman Manning Agency, Inc. v.
Doble, G.R Nos. 223730 & 223782, Oct 04,2017; Silagan v. Southfield Agenoes. Inc., G.R. No 202808, Aug. 24,2016.

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 358 baa Reviewer on Labor Law

definite assessment on the seafarer's fitness o r unfitness to w ork before the

expiration o f the 120-day or 2^0-day period.1 Resultantly, the third doctor-referral
provision does not apply if there is no definite disability assessm ent from the
company-designated physician.2 Alternatively put, absent a certification from the
company-designated physician, the seafarer had nothing to contest and the law
steps in to conclusively characterize his disability as total and perm anent3

b. Conflict-Resolution Procedure for referral to third-party doctor.

In INC Shipmanagtment* the C ourt stated that to definitively clarify h o w
a conflict situ a tio n sh o u ld b e h a n d le d , u p o n notification that th e seafarer
disagrees with die company doctor's assessm ent based on the duly and fully
disclosed contrary assessment from the seafarer's ow n doctor, d ie s e a fa re r sh a ll
th e n signify h is in ten tio n to resolve th e c o n flic t b y d ie referral o f th e
con flictin g assessm en ts to a th ird d o c to r w hose ruling, under d ie PO E A -SE C ,
shall be final and binding o n the pardes. U p o n n o tific a tio n , th e c o m p a n y c a rrie s
th e b u rd e n o f initiating th e p ro c e ss fo r d ie re fe rra l to a th ird d o c to r
commonly a g re e d betw een th e p arties.

c. Some principles.
• N o n -referral to a th ird p h y sic ia n , w h o se d e c is io n s h a ll b e
co n sid ered a s final a n d b in d in g , c o n s titu te s a b re a c h o f th e
P O E A -SE C . T his referral to a third d o cto r h a s been held by the
High C ourt to be a m a n d a to ry p ro c e d u re as a consequence o f
die provision that it is the company-designated d o cto r w hose
assessment should prevail In o th e r w ords, the com pany can
insist on its disability rating even against a contrary opinion by
another doctor, unless the seafarer expresses his disagreem ent by
asking for the referral to a third d o cto r w ho shall make his o r h er
determination and whose decision is final and binding on die
parties. This rule has been followed in a string o f cases.5 T hus, at
this point, the m atter o f referral pursuant to the provision o f the
POEA-SEC is a settled ruling.6
• T h e em ployer h a s n o d u ty to refer to th ird d o c to r if th e re is n o
re q u e s t from cla im a n t-se a fa re r. Clearly, the duty to secure the

' MagsaysayMrtMaihe, he v.Atoje,GR No 229192.July23.2018.

2 Magsa^MolMarine.Inc.v.Alraje.sipa.
3 Id, effing Kesfei Shipping Co, Inc. v. Munar, GR No. 198501, Jan. 30,2013; See also Phisyneigy Maritime, Inc. v.
Gafeno,Jr, GRNo.228504,June06.2018;Talafocv.Aipaphi ShippingCoqxxa5on,GRNa223731,Aug.30,2017.
* NCSNpmanagementhe v. Rosales,supra
* Sudi as tustirimov. NYK-fi ShipManagement. Inc. GR No. 237487, Jire 27,2018; Seatrest Mari&ne Managerrent,
he.v. Roderos,GR No. 230473,April23.2018.
6 INCShipmanagemert,he.v. Rosales,GR No. 195832.Oct 01,2014.

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SO C IA L WELFARE LEGISLA TION

opinion o f a third doctor belongs to the employee asking for

disability benefits.1 H e m ust actively o r expressly request for it.2
• N o p e rio d w ith in w h ic h th ird d o c to r sh o u ld m a k e a d is a b ility
a s s e s s m e n t T he 120/240-day period in Article 198 (c), (1) [192 (c),
(1)] o f the Labor C ode and Rule X, Section 2 o f the A REC only
applies to die company-designated doctor, and n o t to th e third
doctor.3
• T h e th ird -p a rty d o c to r’s a s s e s s m e n t m u s t b e d e fin ite a n d
c o n clu siv e. T he em ployer and the seafarer are bound by the
disability assessm ent o f die third-party physician in the event that
they choose to appoint one.45
• D e lib e ra te ly c o n c e a lin g o r d e la y in g d ie re le a se o f d ie d is a b ility
ra tin g , a n a c t o f b a d fa ith . Respondent, in d ie 2018 case o f
Magsqysay MoP was kept in the dark about his medical condition. I t is
die height o f unfairness, bordering o n bad faith, for petitioners to
dem and from respondent com pliance w ith die third doctor rule w h en
they a n d their designated physicians, in the first place, did n o t fulfill
their obligations u n d er die law and th e P O E A -S E C G iven th e
company-designated physicians’ inaction o r failure to disclose
respondent’s m edical progress, the extent o f his illnesses, and their
effect o n his fitness o r disability, respondent w as justified in seeking
the medical expertise o f the physician o f his choice.

9. M E D IC A L A B A N D O N M E N T A N D P R E M A T U R E F IL IN G O F
C O M P L A IN T F O R D IS A B IL IT Y C LA IM .

T h e act o f a seafarer in refusing to undergo m edical treatm ent o r in

refusing to continue his medical treatm ent w ith the com pany-designated physician
is called "medical abandonment” which would result in the denial o f his disability
claim. M oreover, the filing o f a com plaint for disability claim before the lapse o f
the 120-day/240-day treatm ent period will result in its dismissal o n the ground o f
prem aturity as at that point, the cause o f action may be said to have not yet accrued
as a m atter o f rig h t6

T h e following cases sufficiently illustrate this principle:

1 Hernandez v .M a p a j^ Maritime C opraG m G R No 226100, Jan. 24.2018; MagsaysayMsriOSK Maine, he. v.

Buenaventura, G R No. 195078, Jan. 10.2018.
2 Id., See C.F. Sharp Crew Management, he. v. Sartos, G R No. 213731, Aug. 01,2018.
3 SUnJv.OSMMarSne Sendees, G R No. 223035, Feb. 27,2017.
« Id.
5 MaBsaysayMotMarine.lnav.AinfeGANo.229192.July23.2018.
* Anuatv. Pacific Ooean Manning, Inc/Trans Star Shipping Agency Corporation. G R No. 220898, July 23,2018; Scanmar
Marfine Sendees, h e v. Hernandez,Jr.. G R No. 211187, April 16,2018.

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 360 Bar reviewer on Labor Law

(1) Solpia Marine and Ship Management, Inc. v. Postrano,1 where die Court
declared that the award of permanent and total disability benefits to respondent
seafarer, Postrano, was not proper as he abandoned his treatment which prevented
the company-designated physician from making any final and definitive assessment.
In this case, Postrano was repatriated on January 1, 2013. Upon his return, he was
referred to the company-designated physician for examination and the latter
prescribed medication for Postrano's condition. He was then advised to undergo
physical therapy sessions for the betterment of his condition. After completing ten
sessions of physical therapy or on March 14, 2013, he reported to the company-
designated physician who further advised him to continue with said therapy as his
condition was notably improving. He was also asked to report again for a follow­
up. However, Postrano failed to return to the company-designated physician after
completing another series o f physical therapy sessions. Without the final
assessment of the company-designated physician, Postrano is deemed suffering
from temporary total disability. More so, the 120 day-period provided by law had
not yet lapsed.
(2) Anuat v. Pacific Ocean Manning, Inc./Trans Star Shipping Agency
Corporation} where petitioner Anuat no longer went back to respondent Pacific's
company-designated physician on 30 September 2011. Instead, Anuat filed a claim
against Pacific for total and permanent disability benefits on 26 October 2011 or
160 days from the onset of his work-connected injury. The Court thus ruled that
Anuat prematurely filed his total and permanent disability claim. When Anuat filed
his disability claim he was still under medical treatment by Pacific's company-
designated physician. In fact, he was advised by Pacific's company-designated
physician to return on 30 September 2011 for a medical examination and he chose
not to do so. Notably, the 240-day extended period o f medical treatment provided
by Sections 2 and 3(1), Rule X of the Amended Rules on Employees'
Compensation had not yet lapsed.

(3) C.F. Sharp Crew Management, Inc. v. Orbcta? where for a little over 120
days, or from February 10, 2010 to June 16, 2010,126 days to be exact, respondent
underwent treatment by the company-designated physician. On June 16, 2010, he
was partially diagnosed with "lumbosacral muscular spasm with mild spondylosis L3-LA;"
the company physician also concluded that there was no compression fracture, and
respondent was told to return for a scheduled bone scan. However, instead of
returning for further diagnosis and treatment, respondent opted to secure the
opuiion of an independent physician o f his own choosing who, although arriving at
a finding of permanent total disability, nonetheless required respondent to subject
himself to further Bone Scan and Electromyography and Nerve Conduction
Velocity tests "to determine the exact problem on his lumbar spine." Instead o f heeding the*3

' G.R. No. 232275. July 23.2018.

? Anuat v. Pacific Ocean Vanning, Inc/Frans Star Shipping Agency Caporafion, G.R No. 220898, July 23,2018.
3 G R N o 211111 Sept 25.2017.

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SOCIAL WELFARE LEGISLATION
recommendations o f his own doctor, respondent went on to file the labor
complaint. In point o f law, respondent's filing o f the case was premature. This is so
because the company-designated physician and his own doctor, Dr. Escutin, are
one in recommending that respondent undergo at least a bone scan to determine
his current condition while undergoing treatment, thus indicating that respondent's
condition needed further attention.

10. RULE IN CASE OF CONFLICT OF O PIN IO N S.

In any case, the Supreme Court underscored in Naqareno1 that “the

bottomline is this: In a situation where the certification o f the company-designated
physician would defeat the O F ^ s claim while the opinion of the independent
physicians would uphold such claim, the Court adopts the findings favorable to the
OFW. The law looks tenderly on the laborer. Where the evidence may be
reasonably interpreted in two divergent ways, one prejudicial and the other
favorable to him, the balance must be tilted in his favor consistent with the
principle o f social justice.”2

11. EFFECT OF M ISREPRESENTATION O N DISABILITY CLAIMS.

Misrepresentation on the part o f the claimant would defeat the claim for
total permanent disability. Misrepresentation is a question o f fact which may be
reversed on appeal by a contrary factual finding.3 In Ayungo,4 petitioner did not
disclose that he had been suffering from hypertension and/or had been actually
taking medications therefor (i.e., Lifezar) during his PEME. As the records would
show, the existence o f Ayungo’s hypertension was only revealed after his
repatriation, as reflected in the Medical Report dated March 26, 2008 and
reinforced by subsequent medical reports issued by Metropolitan Medical Center.
To the Court’s mind, Ayungo’s non-disclosure constitutes fraudulent
misrepresentation which, pursuant to Section 20 (E) of the 2000 POEA-SEC,5
disqualifies him from claiming any disability benefits from his employer.

The same ground o f misrepresentation was cited as basis for not awarding
any of the claims for total and permanent disability benefits, sickness allowance,
and reimbursement o f medical expenses, o f respondent in Vetyard.6 Respondent’s
claim that his eye ailment, "right eye-posterior subs capsular cataract” and "left eye-
pseudophakia, posterior capsule opacification, ” was occasioned when paint accidentally hit
his eye for which he suffered pain and that he afterwards experienced blurred

’ G.R. No. 209201. Nov. 19.2014.

3 Citing Abante v. KJGS Fleef Management Manila, GJL No. 182430, Dec. 4.2009.
3 OSM Shipping Phi. lx . v. de la Cruz, G.R. No. 159146 Jan. 28,2005.
4 Ayungo v. Beamko Shipmanagerrent Corporation, G.R. No. 203161, Feb. 26,2014.
5 Section 20. Compensation and Benefits, xxx E. A seafarer who knowingly conceals and does not dsdose past medical
condition, (fisabfity and history in the preemployment medical examination constitutes fraudulent misrepresentation and
shal disqualify him from any compensation and benefits. This may also be a valid ground for termination of employment and
imposition of the appropriate administratve and legal sanctions.
6 Vetyard T erm inals & S hipphg S ervices, tec. v . Suarez. G .R . N o. 199344. M arch 5.2 0 14 .

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vision, was belied by the subsequent finding by a Medical City doctor which he
admitted that it was cataract extraction, not paint droppings, that caused his
ailment
12. SEAFARERS’ PROTECTION AGAINST AMBULANCE CHASING
AND EXCESSIVE FEES.
R.A. No. 10706* [November 26, 2015], otherwise known as the “Seafarers
ProtectionAct, ” considers it unlawful for any person to engage in ambulance chasing
or the act of soliciting, personally or through an agent, from seafarers, or their
heirs, the pursuit of any claim against their employers for*the purpose of recovery
of monetary claim or benefit, including legal interest, arising from accident, illness
or death, in exchange for an amount or fee which shall be retained or deducted
from the monetary claim or benefit granted to or awarded to the seafarers or their
heirs.2
When any contract or arrangement between a seafarer or his/her heirs,
and a person who appears for or represents them in any case for recovery of
monetary Haim or benefit, including legal interest, arising from accident, illness or
death before the NLRC or any Labor Arbiter, the NCMB, the POEA, the DOLE
or its regional offices, or other quasi-judicial bodies handling labor disputes,
stipulates that the person who appears for or represents them shall be entitled to
fees, such fees shall not exceed ten percent (10%) of die compensation or benefit
awarded to the seafarer or his/her heirs. For purposes of this Act, fees referred to
in this section shall mean the total amount of compensation of the person who
appears for or represents the seafarer, or his/her heirs for services rendered.3

MONETARY CLAIMS OF SEAFARERS

FOR DEATH BENEFITS
L LEGAL BASES.

It is setded that the employment of seafarers, including claims for death

benefits, is governed by the contracts they sign at the time of their engagement4 As
long as the stipulations in said contracts are not contrary to law, morals, public
order, or public policy, they have the force of law between the parties.5
Nonetheless, while the seafarer and his employer are governed by their mutual

* Entitled 'AN ACT PROTECTING SEAFARERS AGAINST AMBULANCE CHASING AND IMPOSITION OF EXCESSIVE
FEES,ANDPROViDtNG PENALTIESTHEREFOR*
* SecGon3,RANa 10706.
» Secfcn4,W.
4 Marlow Navigation Philippines. Inc. v. Heirs of Ricardo S. Ganai. G R No. 220168. June 07.2017; C.F Sharp Crew
Management, h a v.Legal Heirs offfie late GodofedoRepiso,G.R No. 190534, Feb. 10,2016.

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SO C IA L W ELFA RE LEG ISLA TIO N

agreement, the POEA Rules and Regulations require that the POEA-Standard
Employment Contract be integrated with every seafarer's contract1

Section 20 (B)2 of die 2010 POEA-SEC,3 and a long line of jurisprudence4

explaining this provision, require that for the seafarer to be entided to death
benefits, he must have suffered a work-related death during the term of his
contract The provision reads:
“B. COMPENSATION AND BENEFITS FOR DEATH
“1. In case of work-related death of the seafarer, during the term of
his contract, the employer shall pay his beneficiaries the Philippine
currency equivalent to the amount of Fifty Thousand US dollars
(US$50,000) and an additional amount of Seven Thousand US dollars
(US$7,000) to each child under die age of twenty-one (21) but not
exceeding four (4) children, at the exchange rate prevailing during the
time of payment
“2. Where death is caused by warlike activity while sailing within a
declared war zone or war risk area, the compensation payable shall be
doubled. The employer shall undertake appropriate war zone insurance
coverage for this purpose.
“3. It is understood and agreed that the benefits mentioned above shall
be separate and distinct from, and will be in addition to whatever
benefits which the seafarer is endded to under Philippine laws from the
Social Security System, Overseas Workers Welfare Administration,
Employee's Compensation Commission. Philippine Health Insurance
Corporation and Home Development Mutual Fund (Pag-EBIG Fund).
"4. The other liabilities of the employer when the seafarer dies as a
result of work-related injury or illness during the term of
employment are as follows:
“a. The employer shall pay the deceased’s beneficiary all
outstanding obligations due die seafarer under this Contract.
“b. The employer shall transport the remains and personal
effects of the seafarer to die Philippines at employer’s expense except if
the death occurred in a port where local gpvemment laws or regulations
do not permit the transport of such remains. In case death occurs at sea,
die disposition of die remains shall be handled or dealt with in
accordance with the master’s best judgment In all cases, the
employer/master shall communicate with the manning agency to advise
for disposition of seafarer’s remains.
**c. The employer shall pay the beneficiaries of the seafarer
the Philippine currency equivalent to the amount of One Thousand US

1 M.
1 Fbmwty, Secfon 20 (A) of Standard Terns and CondSons Governing Ite Employment of FBpho Seafarers On Board
Ocean-Going Vessels, isated pursuantto DOLEDepartmentOnto No.4, Series of 2000 [May 31,2000).
1 Amended Standard Terms and Condfions Governing he Overseas Employmenl d FBpino Seafarers OrvBoari Ocsan-
GohgShlps(POEAMeniorandumQiailarNo. 10, Seriesof2010, October26,2010).
* MedfneManagement,he.v.Ros&id^GRNo. 168715,Sept 15.2010.

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dollars (US$1,000) for burial expenses at the exchange rate prevailing

during the time of payment."

2. REQUISITES.

Clearly from the foregoing, to be entitled to death compensation benefits

from die employer, the death o f the seafarer

(1) must be work-related; and

(2) must happen during the term of the employment contract

Under the Amended POEA Contract, mrk-nlateims is now an important

requirement The qualification that dead) must be work-related has made it
necessary to show a causal connection between a seafarer’s work and his death to
be compensable.1
2.1. p r R E Q U IS IT E : DEATH MUST BE WORK-RELATED.

a. M eaning o f w ork-related death.

While the 2010 and the earlier 2000 POEA-SEC do not expressly define
what a “work-related death” means, it is evident from Part B (4) as above-quoted
that the said term refers to the seafarer’s death resulting from a w ork-related
injury or illness.2 This denotation complements die definitions accorded to die
terms “work-related injury” and ^ode-related illness” under the 2010 POEA-
SEC as follows:

“Definition ofTerms:
"For purposes of this contract, the following terms are defined as follows:
XXX
“16. Work-Related Illness - any sickness as a result of an occupational disease
listed under Section 32~A of this Contract with the conditions set therein
satisfied.
“17. Work-Related Injury - injury arising out of and in the course of
employment3

What is dear from the. foregoing is that work-related injury is one

resulting in disability or death arising out of and in the course of employm ent
Thus, there is a need to show that the injury resulting to disability or death must
arise (1) out of employment; and (2) in the course of employment.4

1 Syv.RiiippineTransmarineCameis.inc.,GRNo.191740.Feb.il,2013.
2 See rfiscussionon Ibis point aflhough cSng sinrdar pmvi^on in Part4(A) dTIhe 2000 POEA-SEC, in GonchSaJ. RaceBs v.
UnitedPhSppinelines, Inc., GR No. 198408, Nov. 12,2014.
1 The de&ifions aocoded to Ihe terms ‘wxlwefeted injur/ and *wori«elatod Dress' under the 2000 POEA-SEC are as
Mows:Yfcxtotelated Injuiy-injuryfies) resulting in (fisabByvdeafii arisingoutofand in Ihe courseofemployment1and
■VM-Refeied Illness - any sickness resulting Id disab&y or death as a resea of an occupaSonai disease fsted under
Sec&m 32Aritt«cor^ win tnconc&m setthecerisa&slied.'(See(^nudv.Ma^aysay Mariam Corpaet»n,GR
No. 190161, Oct 13,2014; See alsoConchfeJ. Racefev. Unted Pl^ppineLhes, hc.,GR No. 188408, Nov. 12,2014).
4 Syv. PNBpf^ie TransmarineCaniers. Ina. G.R No. 191740, Feb. 11,2013.

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SO C IA L W ELFA RE L EG ISLA TIO N

As defined under the above-dted Standard Terms and Conditions, work-

related injury, or in this case, death, is any injury arising out o f and in the course of
employment1*3According to Canned the legal attribution o f the phrase “arising out
o f and in the course of employment*’ per Iloilo Dock? is still apt and relevant,
thus:
“The two components of the coverage formula - 'arising
out oP and ‘in the course of employment* - are said to be separate
tests which must be independently satisfied; however, it should not be
forgotten that the basic concept of compensation coverage is unitary,
not dual, and is best expressed in the word ‘work-connection,’
because an uncompromising insistence on an independent application
of each of the two portions of the test a n , in certain ases, exclude
deady work-connected injuries. Hie words 'arising out oP refer to the
origin or cause of the accident, and are descriptive of its character,
while the words 'in the course oP refer to the time, place and
circumstances under which the accident takes place.4
“As a nutter of general proposition, an injury or acadent is
said to arise 'in the course of employment* when it takes place within
the period of the employment, at a place where the employee
reasonably may be, and while he is fulfilling his duties or is engaged in
doing something incidental thereto.”5

As held in More Maritime,6 “ (i]f the injury is the proximate cause o f [the
seafarer’s] death or disability for which compensation is sought, [his] previous
physical condition xxx is unimportant and recovery may be had for injury
independent of any pre-existing weakness or disease.”

b. E ffe c t i f illn e ss w hich caused death n o t lis te d as an occupational

disease.
As a general rule, the principle of work-relatcdness requires that the
disease in question must be one o f those listed as an occupational disease under
Section 32-A of the POEA-SEC Nevertheless, should it be not classified as
occupational in nature, Section 20 (B) paragraph 4 of the POEA-SEC provides that
such diseases are disputablv presumed as work-related.7 This disputable
presumption that a particular injury or illness that results in disability, or in some
cases, death, is work-related stands in the absence of contrary evidence.8 Hence,
even if die illness is not listed under Section 32-A o f the POEA-SEC as an
occupational disease or illness, the same shall still be presumed as work-related and

1 MartowNavig^PWppiies, Inc.v.HeasofffenfeS.Gartal,GRNo. 220168,June07,2017.

1 AnrtaCanuelv.Ma9S3ys3yMariSrneCo(poration,GR Mo. 190161,0ct 13,2014.
3 M o Dodc & Engineefrg Co. v. Workmen's Compensation Commissioa, G R No. L-2S341, Nov. 27.1968.
4 SeeatoSyv.PhappineTransnrafineCanieis.ha.GRNo. 191740, Feb.11,2011
5 Bnphasessuppled.
8 More Marfirm Agoides, Ina v. NLRC, GJL No. 124927. May 18.1999; 366 Ptd. 646.
7 JebsensMari&ne;Incv.BdxdGRNo.204076,Oec.4,2013.
8 RSlarMarifineGoiporatov.Rosete.GftNa 192686. Nw.23,2011,661 SCRA247.

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 BAR REVIEWER o n LABOR lAW
366

it is incumbent on the employer to overcome die presumption.1This presumption

should obviously work in the seafarer's favor. Hence, unless contrary evidence is
presentedbytheemployer, thework-relatedness of the disease must be sustained.2
2.2. 2"DREQUISITE r DEATH MUST OCCUR DURING TER M O F
EMPLOYMENT.

a. The death should happen during employment.

The general rule has been declaredin a number of cases,3that in order to
avail ofdeathbenefits, thedeathof die OFWshould occpr duringthe effecdvityof
the employment contract For emphasis, die death of a seafarer during the termof
employment makes the employer liable to his heirs for death compensation
benefits.4This is the onlycondition for compensability. The employer is therefore
liable upon proof that the seafarer died during the effecdvity of his employment
contract.5
b. I f death happens after termination o f employment, no death
benefits should, as a general rule, be paid.

But if the seafarer dies after the termination of his contract of

employment, his beneficiaries ate not endded to die death benefits.6 Thus, in
Medline,1 it was pronounced that the heirs/benefidaries of Juliano Roslinda, a
seafarer, are not endded to the death benefits under die Standard Employment
Contract for Seafarers since he did not die while he was under die employ of
petitioners. His contract of employment ceasedwhenhe was discharged onJanuary
20,2000, after havingcompleted his contract thereat He died on August 27,2001
or 1year, 7months and7days after the expiration ofhis contract8
c. When to reckon the termination o f employment ofa seafarer who
died.
Section 18 of the 2010 POEA-SEC definitively reckons the termination
ofemploymentofaseafarerin two (2)ways, to w it
(A) Whendie seafarer completes his pedod of contractual service aboard
theship, signs-offfromdie ship andarrives at die point ofhire.

• G x id fe ^ .R a c e b v .lh W P t% h e lines, te ,G R N a 198408,Nov. 12,2014.

2 JebsensMarih»,lnav.Babcl,supta.
3 Such as he cases of Gau Sheng Phis* he. v. Joaquin, G il No. 144665, Sept 8,2004; Hermogenes v. Oseo Shipping
Services, hex. G P. No. 141505.Aug. 1S, 2005,467 SCRA 301; Pnxle^a] Shaping and Managernent CcxporaSon v. Sta
Rte, G R No. 186680, Feb. 8,2007; and Waveness M arine Agency, he. v. Beneficiaries of Alas, G.R. No. 168560, Jan.

4 Estateof Fose& O itegav.C A G R N a 175005, Apr)30,2008,553 SCRA649.6SS656.

s Escadnv.leonisNa^S3fionCo^lnt,GRNo. 182740,July5,2010.
3 EstateofP ose*) Orte5av .C A .G R N a 175005.Apri 30,M 08,553 SCRA649,655^56.
7 M ed5neM ana3ernenthtv.RosW a.GRNa 168715,Sept 15,2010.
* See also Sea Power Shipping Enterprise^ h a v.Am iandoLSaiazar.GR No. 188595, Aug. 28,2013.

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SO C IA L W ELFARE L E C IS IA T IO N

(B) Effective upon arrival at the point of hire for any of the following
reasons:
1) When the seafarer signs-off and is disembarked for medical
reasons;1
2) When the seafarer signs-off due to shipwreck, ship's sale, lay-up of
ship, discontinuance ofvoyage or change ofship principal;2
3) When the seafarer, in writing, voluntarily resigns and signs off
prior to expiration of contract;3
4) When the seafareris discharged for just cause.4*
On this issue of when to reckon die termination of the employment of a
seafarer, Escarcha,s which was decided under the regime of die 1996 POEA-SEC,
instructs that under Section 18(B) (1) thereof the employment of the seafarer is
terminated when he “signs-offand is disembarkedfor medical reasonspursuant to Section 20
(B) [4] of [the] Contract." Consequendy, the seafarer here (Eduardo) was repatriated
for medical reasons; he arrived in the Philippines on June 17, 1999 to undergo
further evaluation and treatment after being diagnosed with advanced mycobacterium
tuberculosis, advanced H IV disease, cardiac dysrhythmias, and anemia. Eduardo’s
employment was therefore terminated upon his repatriation on June 17,
1999. Thus, when Eduardo died onJune 9, 2001, approximately two (2)years after
his repatriation, his employment with the respondents had longbeen terminated.
d. Exception when death after termination o f employment is
compensable.
Secdon 32-A of the POEA-SEC considers the possibility of
compensation for the death of the seafarer occurring after the termination of the
employment contract on account of a work-related illness. But for death under this
provision to be compensable, die claimant must satisfy all of the following
conditions:
(1) The seafarer's work must involve the risks described in the POEA-
SEQ
(2) The diseasewas contracted as a result of the seafarer's exposure to the
describedrisks;
(3) The disease was contracted within a period of exposure and under
suchother factors necessaryto contractit; and
(4) Therewas no notorious negligence on die part of die seafarer.6

’ Pumuarti to Section 20 (A)f51 of the 2010 POEA-SEC (ConfracQ.

* tnaocodanm wi^SecSons22,23and26of9i8Coniacl
3 PuRsuarrttoSecSon19(G)of1heContract
* AsprowktedfbrinSec6on33(if(teOon&acL

6 Escarchav.UonisNa^36onCo,[nc,GJR.No.182740.Ju!y5l 2010.
6 Thesecm(S6cnsin Secto32^dBiePOEA-SECnem ainunchangednte2000 and 2010versions.

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 368 Bar reviewer o n Labor Law

In fulfillingtheserequisites, substantial evidence must be presented which

is more than a mere scintilla; it must reach the level of relevant evidence as a
reasonablemindmightaccept as sufficient to support a conclusion.*
e. M edical repatriation a s an exception.

Expoundingfurther on this second requirement for death compensability,

die Supreme Court clarified in Canueh12 that while die general rule is that the
seafarer’s death should occur during die term of his employment, die seafarer’s
death occurring after the termination of his employment due to his medical
repatriation on account of a work-related injury dr illness constitutes an
exception thereto. Thisis based on a liberal construction of the 2000 POEA-SEC34
as impelled by the plight of the bereaved heirs who stand to be deprived of a just
and reasonable compensation for the seafarer’s death, notwithstanding its evident
work-connection.
In essence, according to RaceHs,* the work-related death under such
circumstance need not precisely occur during the termof his employment as it is
enough that the seafarer’s work-related injury or illness which eventually causes his
deathhadoccurredduringthetermofhis employment
The petition in C a m l is a case in point Here, the repatriation of the
seafarer5occurredduringthe 8* month of his 1-yearemployment contract Wereit
not for his injury, whichhad been earlier established aswork-related, he would not
havebeen repatriated for medical reasons and his contract consequently terminated
pursuantto the 2000POEA-SEC.6
Applyingdierule on liberal construction, the Court is thus brought to the
recognition that medical repatriationcases shouldbe consideredas an exception to
Section 20of the 2010POEA-SEC. Accordingly, the phrase “work-related death
of the seafarer, during the term of his contract" under Part B (1) of the said
provision, should not be strictly and literally construed to m«n that die seafarer’s
work-related death should have precisely occurred du rin g die term of his
employment Rather, it is enough seafarer’s work-related injury or illness
which eventually causes his death should have occurred during the term of his
employment Taking all things into account, the Court reckons that it is by this

1 SeaFU«rSW ppr9Enietp(ises,lnc.v.AimanJoLSalazar,GJlNo.188595,Aug.28,2()13.
* AnttaCanuefv.MagsayssyMxffineCorpo(a6on.Gi^No. 190161,0ct 13.2014.
3 New 2010 POEA-SEC.
4 C en to J.R acefev.U n ^ P h ip p reL in es,In c,6JIN o . 198408,New. 12,2014.
s Nan&g.tatendofpefioner.
* O frtievanaisPart1dSecfa18(B)cffte2Q O O PO EkSEC,w tochslate:
‘SECTION 18. TERMINATION OF BPLOYMENT
XXX
U . The empfaymert of he seaferer is also terminated wrfien foe seafarer antes at the pomt of hie for any of h e Wowing
reasons:

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 CHATTER FOUR 369
SOCIAL WELFARE LEGISLATION

method of construction that undue prejudice to the laborer and his heirs may be
obviated and die State policy on labor protection be championed. For if the
laborer's death was brought about (whether fully or partially) by the work he had
harbored for his master’s profit, then it is but proper that his demise be
compensated. Hence, if it has been established that (a) the seafarer had been
suffering from a work-related injury or illness during the term of his
employment, (b) his injury or illness was the cause for his medical
repatriation, and (c) it was later determined that the injury or illness for
which he was medically repatriated was the proximate cause of his actual
death, although the same occurred after the term of his employment, the
above-mentionedrule should squarelyapply.
As elucidated in Canuel, the foregping liberal approach was applied in a
catena of cases,1wherein die Court had previously allowed die recovery of death
benefits even if the seafarers in those cases had died after repatriation, given that
there was proof of a clear causal connection between their work and the illness
whichwas contracted in the course of employment and their eventual death.2The
converse conclusion was reached in some cases3 since die element of work­
relatedness had not been established. All in all, the sensegathered fromthese cases,
as pointed out in Carnet is that it is crucial to determine whether the death of the
deceased was reasonably connected with his work, or whether the working
conditions increased die risk of contracting the disease that resulted in the
seafarer’s death. If the injury or illness is the proximate cause or, at least, increased
the risk of his death for which compensation is sought; recovery may be had for
said death, or for that matter, for the injury or illness.4Needlessly, if the death of
the seaman was due to an illness that was not contracted during the term of his
employment contract, the employer is not liable for death compensation arising
under the standardformat contract5
f. Non-m edical repatriation cases where death occurred after
repatriation, hence, death benefits denied.
To reinforce the point, a survey of previous Court rulings wherein death
compensabilityhad been denied the heirs of the seafarer actually demonstrates the
significance of the work-relatedness element in workers' compensation cases. For
instance, in Gau Sktngf the illness of the seafarer therein, who was terminated
based on mutual consent, was found to be non-compensable since he died of
chronic renal failure which was not listed as a compensable illness. Likewise, in

• Such as h Inter-Orient Maritime, hoapora&J v. Candava, G R No. 201251, June 26,2013,700 SCRA174; tntemrient
MariSme E n te r a l foe v. Rente GRto . 181112, June 29,2010.
* Seefor instance,Wa8em Maritime Service, Inc. v. NLRC, G R to . 130772, Nov. 19,1999,318 SCRA 623.376 P h i 738.
3 Such as in Gau Sheng Phis., Inc. v. Joaquin, G R to . 144665, Sept 8,2004; Spouses Aya-ay, Sr. v. A/paphil Shipping
Goip.,GRto155359.Jan.31,2006;Hem «genesv.OsaShipping Services, he., G R to 141505. Aug. 18,2005.
4 & nchtoJ.R ac^v.uii& dP M ipjw lines,1n c,G R to.198408.N ov.12,2014.
5 Sealanes Marine Services, Inc. v. NLRC, G R to .84 812 , Oct 5,1990,190 SCRA 337.
6 Gau Sheng Phils., foe. v. Joaquin. G R No. 144665, Sept. 8,2004.

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 370 f ar reviewer o n Labor Law

Aja-ay, Sr.,1 the Court denied the claim for death compensation because the
seafater therein was repatriated due to an eye injury but subsequently died of a
stroke, which was not listed as a compensable illness under the POEA-SEC. Death
compensation was also denied to the claimants in Hemogenes,2since no evidence
was offered to prove the cause of the termination of the contract of employment,
whereas it was found that die seafarer therein died three (3) years after his
disembarkation of an illness which was not shown to have been contracted during
his employment An identical ruling was tendered in Prudential,1 wherein die
seafarer in said casewas repatriated due to umbilical hernia but died one (1) year
after of cardiopulmonary arrest, which was not, however, established as work-
related. Similarly, death compensation was denied the claimants in Ortega*
consideringthat the seafarer therein died of lungcancer whichwas not found to be
work-related5
h. When death occurred during term o f employment but no death
beneSts awarded.
There are caseswhere no death benefits were granted despite the fact that
the death occurred during the term of the employment. The Supreme Court
emphasized in Mabubcy Shipping,6 that the death of a seaman even during die term
of employment does not automatically give rise to compensation. The
cucumstances whichled to the death as well as the provisions of the contract, and
die right and obligation of the employer and the seafarer must be taken into
consideration, in consonancewith the due process and equal protection clauses of
theConstitution.
For instance, in Sy,1 petitioner’s husband, Alfonso N. Sy, was hired as an
Able Seaman (AB) on board M/V ChekiangonJune 23, 2005 and was found dead
on October 1, 2005, with drowning as the cause of death while he was on shore
leavewhile the vessel was at die Port ofJakarta, Indonesia. In denying petitioner’s
claimfordeathbenefits, the High Court ruled:
“Notably, at the time of die accident, AB Sy was on shore
leave and there was no showing that he was doing an act in relation to
his duty as a seaman or engaged in the performance of any act
incidental thereto. It was not also established that, at the time of the
accident, he was doing work which was ordered by his superior ship
officers to be done fo: the advancement of his employer's interest On
the contrary, it was established that he was on shore leave when he
drowned and because of the 20% alcohol found in his urine upon

1 Aya^y,Sr. v.ArpapN Shipping Cotp^GA No. 155359,Jan. 31.2006

2 Hermogenesv.QscoShippingServices,he, G R No. 141505. Aug. 18.200$.
3 PwdenGal Shipping and Managementto p . v. Sta. Rte, G R No. 168580, Feb. 8.2007.
4 Ortega v. CA, G R No. 175005, Apri 30.2008,576 PH . 601.
5 Ew ^JO Tfededsm inC anuelv.M agsaysayM affeC ofporabm .G RN o. 190161,O ct 13.2014.
« Mabuhay Shipping Services, he. v. NLRC. G R No. 94167. Jan. 21.1991.193 SCRA141.
2 Syv. Ph^ppheTransmarhe C aros, h e . G R N a 191740, Feb. 11.2013.

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SO C IA L W ELFA RE LEG ISLA TIO N

autopsyof his body, it canbe safelypresumed that he just came froma

personal social function which was not related at all to his job as a
seaman. Consequently, his death could not be consideredwork-related
tobecompensable.
"Petitioner argues that A8 Sy's death happened inthe course
of employment, because if not for his employment he could be
somewhere elseandwas not on shore leave; andthat hewould not be
in the riverside ofJakarta, Indonesia and had not answered the call of
natureandfell intotheriveranddrowned.
"Wearenotpersuaded.
"While A6 Sy's employment relationship with respondents
did not stop but continues to be in force evenwhen he was on shore
leave, their contract deady provides that it is not enough that death
occurred during the term of the employment contract, but must be
work-related to be compensable. There is a need to show die
connection of AB Sy’s dead) with the performance of his duty as a
seaman. Aswe found, ABSywasnot in theperformanceofhisdutyas
aseaman,butwasdoinganact for hisownpersonal benefit at die time
oftheaccident ThecauseofABSy’s deathat thetimehewasonshore
leavewhichwas drowningwas not brought about bya riskwhichwas
only peculiar to.his employment as a seaman. In fact, he was in no
different circumstance with other people walking along the riverside
who might also drown if no due care to one's safety is exercised.
Petitioner failed to establish by substantial evidence her right to the
entitlementordiebenefitprovidedbylaw.”
i. When death occurred lo n g a fter th e m ed ica l repatriation.

Prudential Shipping illustrates this point. Virgilio, respondent's deceased

husband, was repatriated for medical reasons. He arrived in the Philippines on
March 8, 2000 for surgical repair after he was diagnosed with umbilical hernia.
Virgilio’s employment was thus terminated upon bis repatriation on March 8,
2000. Consequently, when he died a year later or on March 18, 2001, his
employment with petitioners had long been terminated. Hence, respondents are
not entitled to receive death benefits under the Contract from petitioners. Neither
are petitioners liable for sickness allowance since it appears from the records that
these had already been paid to respondents in June and September 2000, and
January 2001.

3. DEATH CAUSED BY T H E SEAFARER HIMSELF, N O T

COMPENSABLE.

a. L eg al basis.

Section 20 (D) of the 2010 POEA-SEC provides:•

• Pm datfiSKpphg and Managem ertCop.v.Sta.Rila,GR No. 166580, Feb.8,2007.

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“D. No compensation and benefits shall be payable in

respect of any injury, incapacity, disability or death of the seafarer
resulting from his willful or criminal act or intentional bread) of bis
duties, provided however, that the employer can prove that such
injury, incaparity, disability or death is directly attributable to the
seafarer.”

Also, there are decisions1involving overseas seafarers where the Court

heldthat Article 178[172] ofthe Labor Codeonlimitations on liabilityis applicable
to situations contemplated in Secdon 20 (D), as far as the compensation for
workers covered by die Employees Compensation and State Insurance Fund are
concerned, to wit
“Article 178 [172]. Limitations of BabiBtj. - The State Insurance
Fund shall be liable for the compensation to die employee or his
dependents except when the disability or dead) was occasioned by the
employee's intoxication, willful intent to injure or kill himself or another,
notorious negligence, or otherwise provided under this Tide.”

While the death of a seafarer during the term of his employment makes
the employer liable to the former's heirs for deathcompensation benefits,2this rule,
however, is not absolute. The employer may be exempt from liability if it can
successfully prove that the seafarer's death was caused by an injury direedy
attributable to his deliberate or willful act.3 Hence, die daim of the heirs for
entidement to any death benefit depends on whether the employer’s evidence
suffices to prove that the seafarer committed suidde, and the burden of proof tests
on his employer.45
b. Death by suicide.
In the 2017 case of Seapower Shipping a case dedded on the basis of the
1989 POEA-SEC which was in force on July 20, 1995, the date Seapower hired
Sabanal, but whose provision is substantially similar to die current Section 20 (D)
of the 2010 POEA-SEC as quoted above. Since it is undisputed that Sabanal’s
death happened during the term of the employment contract, the burden rests on
the employer to prove by substantial evidence that Sabanal’s death was direedy
attributable to his deliberateor willful act For its part, Seapower submittedthe ship
log entries and master's report to prove that Sabanal suddenly jumped overboard
the MTMontana. The Labor Arbiter, NLRC, and Court of Appeals all agree that
the evidence presented sufficiently establish that Sabanal indeed jurxiped into die
sea. The Court of Appeals, however, ruled that Sabanal’s act was not a willful one
because he was not in his right mental state when he committed the act Evidence

’ Martow Navigation Ptiifppines, he. v. Heirs af Ricardo S. Ganal, G A No. 220168, June07,2017.
1 Waflem M a t a Seivioes. Inc. v. Pedrajas, 6.R.N 0. 192993, Aug. 11,2014.
3 Id.
4 Lapid v. NLRC, G R No. 117518, Apri 29, ’ 999,306 SCRA 349,357; 366 PNL10.
5 Seapower Shipping E d Inc. vs. Heos of Sabanal, G il No. 198544, June 19,2017.

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o f insanity or mental sickness may be presented to negate the requirement o f

willfulness as a matter of counter-defense.1 But the burden of evidence is then
shifted to the claimant to prove that the seafarer was of unsound mind.2 The
question, therefore, is whether Elvira3 was able to prove by substantial evidence
that Sabanal has lost full control o f his faculties when he jumped overboard. Or,
more precisely, whether his unusual behavior prior to die incident is such
substantial evidence. 1

Elvira did not present any evidence to support her claim that Sabanal was
already insane when he jumped overboard. She only relied on the strange behavior
o f Sabanal as detailed by die ship captain in the ship log and master's report
However, while such behavior may be indicative o f a possible mental disorder; it is
insufficient to prove that Sabanal had lost full control o f his faculties. In order for
insanity to prosper as a counter-defense, the claimant must substantially prove that
the seafarer suffered from complete deprivation of intelligence in committing the
act or complete absence of the power to discern the consequences of his action.
Mere abnormality of the mental faculties does not foreclose willfulness. In fact, the
ship log shows Sabanal was still able to correct maps and type the declarations of
the crew hours before he jumped overboard. The captain observed that Sabanal did
not app'ear to have any problems while performing these simple tasks, while the
sailor-on-guard reported that Sabanal did not show any signs of unrest immediately
before the incident These circumstances, coupled with the legal presumption of
sanity, tend to belie Elvira's claim that Sabanal no longer exercised any control over
his own senses and mental faculties.

A similar conclusion was reached Agile,* which also involved a seafarer

jumping overboard. It was thus held that “[sjince die willfulness may be inferred
from the physical act itself of the seafarer (his jump into the open sea), the insanity
or mental illness required to be proven must be one that deprived him o f the full
control o f his senses; in other words, there must be sufficient proof to negate
voluntariness.” The Court of Appeals in Agile similarly relied on die unusual
demeanor and actuations by the seafarer a few days before the incident to conclude
that the seafarer was no longer in his right mind, and therefore, his act o f jumping
into the open sea cannot be considered willful. On petition for review, the High
Court reversed the Court of Appeals. It was held that the seafarer's strange
behavior alone is insufficient to prove his insanity. Without proof that his mental
condition negated the voluntariness he showed in stepping overboard, die Court o f
Appeals' finding of insanity was merely speculative.

• Agie Maritime Resources, Inc.v. Safer, G J I No. 191034, Oct 1,2014,737 SCRA 360,377.
1&
3 Sabanaftvrife.
< Ag3e Maritime Resources, Inc. v. Safer, G Jl No. 191034, OcL 1,2014.737 SCRA 360.377.

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The was also the same conclusion made in CrtaRnk,l where the seafarer
jumped into the sea, with the widow raising the counter-defense that her husband
suffered from a psychotic disorder, or Mood Disorder Bipolar Type, to disprove
the willfulness of her husband's act. The High Court, however, found the argument
unmetitonous because, other than her bare allegation that her husband was
suffering from a mental disorder, the claimant presented no evidence, witness, or
any medical report to support the claim of insanity.

In die following cases, the death by suicide was likewise held not
compensable:

(1) TSM Shipping (Phils.), Inc. v. De Cbavetf where the seafarer was found
dead inside his cabin bathroom hanging by the shower cord and
covered with blood.
(2) Wallcm Maritime Services, Inc. v. Pedrajas? where the seafarer hanged
himself on the Upper Deck B of the vessel with a rope tied to his
neck.
(3) Great Southern Maritime Services Corp. v. Surigao,4 where the seafarer was
found dead inside the bathroom of his hospital room with a belt ded
around his neck.
(4) Maritime Factors, Inc. v. Hindang,5where the seafarer’s body was found
hanging by a strap on his neck in a kneeling posidon inside die
locker (wardrobe) of his cabin.

The foregoing cases, however, should be contrasted to the cases of

Naesf and tapid? which upheld the presumption of self-preservation over the
employer’s claim of suicide.
In Naess, the Court affirmed the award of death benefits to a seafarer
who <r]umped or fell overboard” as he tan towards the deck after fatally stabbing a
co-worker. The Court reasoned out that the parties’ contract makes Naess
"unqualifiedly liable to pay compensation benefits for [die seafarer's] death while
in its service.” Given this conclusion, the Court only “parenthetically” observed
that the “events surrounding the death of [the seafarer] have not been established
with any degree of certitude.” In short, the employer was liable without
qualifications for death benefits because the employer’s liability arises solely from
die fact of die seafarer's death.

• C w •**,ln c .v .T a iig lem g .G J lN o . 166803.Oct 11,2012.6849CRA12.21.

* O R No. 188225, Sept 27.2017.
J G Jl No. 192993,Aug. 11,2014.
« G R No. 183646, Sept 18,2009,616 P hi 758.
5 G RNo.151993.O d19.2011.
« Naess Shpping PKEppines. tna v. NLRC. G .R No. 73441, Sept 4,1987.
7 Laptiv.NLRC.GRNo. 117518,April29,1999.

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 C h a pter fo u r 375
SOCIAL WELFARE LEGISLATION

H ie contract in Lapid is different from Naess. It provides that if the death

o f die seafarer is due to his own willful act, then the employer is not liable for
death benefits. The seafarer in this case was found dead while hanging in an
abandoned warehouse. While the employer presented a report staling that the
cause o f death was asphyxia by hanging, the employer failed to investigate and,
consequently, to present evidence on die circumstances surrounding the seafarer’s
death to indicate that it was a suicide rather than a crime. The employer tried to
bolster its theory of suicide by relying on the seafarer’s co-employees’ assertion
that the deceased had an unidentified family problem. But this claim ran counter to
the seafarer’s own letters to his family showing his excitement to go home. The
records are bereft of any substantial evidence showing that the respondent
employer successfully discharged its burden of proving that the seafarer committed
suicide, so as to evade its liability for death benefits under POEA's Standard
Employment Contract for Filipino Seaman.
c. Death directly attributable to the seafarer.

Death by suicide is not the only case contemplated under the POEA-
SEC that may not merit compensation. There are other situations that could be
categorized as a deliberate and willful act on a seafarer’s own life direcdy
attributable to him. For example, in Mabubay Shipping the seaman, in a state o f
intoxication, ran amuck, or committed an unlawful aggression against another,
inflicting injury on die latter, so that in his own defense, the latter fought back and
in the process killed the seaman. The circumstances of the death of die seaman
could be categorized as a deliberate and willful act on his own life direcdy
attributable to him. First he challenged everyone to a fight with an axe. Thereafter,
he returned to die messhall, picked up and broke a cup and hurled it at an oiler
who suffered injury. Thus provoked, the oiler fought back. The death of the
seaman is attributable to his unlawful aggression and is thus not compensable.

The case of Marlow,2 also is one in point Around 7 o'clock in the evening
of April 15, 2012, a party was organized for the crewmen of M V Stadt Hamburg
while the ship was anchored at Chittagong, Bangladesh. After finishing his shift at
12 midnight, the seafarer, the late Ricardo Ganal (Ganal), joined the party. Around
3 o'clock in the morning of April 16,2012, the ship captain noticed that Ganal was
already drunk so be directed him to return to Ids cabin and take a rest. Ganal
ignored the ship captain's order. Thus, a ship officer, a security watchman and a
member of the crew were summoned to escort Ganal to his cabin. The crew
members attempted to accompany him back to his cabin but he refused. They then
tried to restrain him but he resisted and, when he found the chance to escape, he
ran towards the ship's railings and, without hesitation, jumped overboard and
straight into the sea. The crew members immediately threw life rings into the water*

* Stepping Setvioes, tnc. v. NLRC (1st Division). G.R. No. 94167. Jan 21.1991.271 PM. 142.146.
* Marlow Navigafion Phfypnes, he. v. Heirs ofRicardo S. Ganal, G A No. 220168. June 07,2017.

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towards the direction where he jumped and the ship officer sounded a general
alarm and several alarms thereafter. Contact was also made with the coast guard
and the crew members searched for Ganal, to no avail. Ganal was later found dead
and floating in the water. The subsequent medico-legal report issued by the
Philippine National Police showed that the cause of his death was asphyxia by
drowning. Subsequendy, Ganal's wife, Gemma Boragay (Boragay), for herself and
in behalf of their minor children, filed a claim for death benefits with petitioners,
but the latter denied the claim.

The Supreme Court found that the accident which produced this tragic
result did not arise out of such employment. The occasion where Ganal took
alcoholic beverages was a grill party organized by the ship officers o f MV Stadt
Hamburg. It was a social event and Ganal attended not because he was performing
his duty as a seaman, but was doing an act for his own personal benefit.

Moreover, Ganal's act was likewise declared as being willful. In

accordance with the ruling in Mabuhay Shipping [supra], Ganal's act o f intentionally
jumping overboard, while in a state of intoxication, could be considered as a
deliberate and willful act on his own life which is direedy attributable to him.
Moreover, contrary to respondents' contention, petitioners took the necessary
precautions when: (1) the ship captain advised Ganal to proceed to his cabin and
take a rest; (2) Ganal was assisted by no less than three crew members who tried to
persuade him to return to his cabin; (3) when he refused, the crew members tried
to restrain him but he escaped and immediately ran away from them and, without
warning, jumped into the sea. The law does not intend for an employer to be the
insurer of all accidental injuries befalling an employee in the course o f the latter's
employment, but only for those which arise from or grow out of the risks
necessarily associated with die workman's nature of work or incidental to his
employment. Ganal's act of jumping overboard was not, in any way, connected
with the performance of his duties as ship oiler. Neither could petitioners have
reasonably anticipated such acr on the part o f Ganal. Thus, having proven their
defense, the burden now rests on the shoulders of respondents to overcome
petitioners' defense.

The Court agrees with the Labor Arbiter and the NLRC that there was
no competent proof to show that Ganal's state of intoxication during the said
incident actually deprived him o f his consciousness and mental faculties which
would have enabled him to comprehend the consequences o f his actions and keep
in mind his personal safety. Respondents failed to present evidence to overcome
die defense of petitioner and show that, prior to and at the time that he jumped
overboard, Ganal was deprived of the use of his reason or that his will has been so
impaired, by reason of his intoxication, as to characterize his actions as
unintentional or involuntary. Ganal may have become unruly by reason of his
inebriation but such recalcitrant behavior does not necessarily prove that his
subsequent act of jumping overboard was not willful on his part. Stated differendy,

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 C hapter Four 377
s o c ia l w e l f a r e l e g is l a t io n

the fact alone that he refused to be escorted to his cabin, that he resisted efforts by
other crew members to restrain him and that he jumped overboard without
hesitation or warning does not prove that he was not in full possession o f his
faculties as to characterize his acts as involuntary or unintentional.

4. A M O U N T O F D E A T H B E N E F IT S .

Section 20 (B) (l)1 o f the 2010 POEA-SEC provides for the following
compensation and benefits:

1. Philippine currency equivalent o f US$50,000; and

2. Additional amount o f US$7,000 to each child under the age of 21 but
not exceeding four (4) children, at the exchange rate prevailing during the time o f
payment.
3. Where death is caused by warlike activity while sailing within a declared
war zone or war risk area, the compensation payable shall be doubled. The
employer shall undertake appropriate war zone insurance coverage for this
purpose.
4. The benefits mentioned above shall be separate and distinct from, and
will be in addition to, whatever benefits which the seafarer is entided to under
Philippine laws from the Social Security System (SSS), Overseas Workers Welfare
Administration (OWWA), Employees’ Compensation Commission (ECC),
Philippine Health Insurance Corporation (PHIC) and Home Development Mutual
Fund (HDMF or Pag-IBIG Fund).
5. The other liabilities o f the employer when the seafarer dies as a result o f
work-related injury or illness during the term of employment are as follows:
a. The employer shall pay die deceased’s beneficiary all outstanding
obligations due the seafarer u
b. The employer shall transport the remains and personal effects o f the
seafarer to the Philippines at employer’s expense except if the deadt
occurred in a port where local government laws or regulations do not
permit the transport o f such remains. In case death occurs at sea, the
disposition o f the remains shall be handled or dealt with in accordance
with the master’s best judgment. In all cases, the employer/master
shall communicate with the manning agency to advise for disposition
of seafarer’s remains.
c. The employer shall pay the beneficiaries o f the seafarer the Philippine
currency equivalent of US$1,000 for burial expenses at the exchange
rate prevailing dunng die time o f payment under this Contract.

oOo-------------

1 Entitled *B. COMPENSATION AND BENEFITS FOR DEATH ’

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Chapter Five
LABOR RELATIONS

TOPICS PER SYLLABUS

V.
LABOR RELATIONS

A. Right to self-organization
1. Coverage
2. Ineligibility of managerial employees; right of
supervisory employees
3. Effect of inclusion as employees outside of the
bargaining unit
4. Non-abridgement
B. Bargaining unit
C. Bargaining representative
D. Rights of labor organizations
1. Check off, assessments, and agency fees
2. Collective bargaining
E. Unfair Labor Practices
1. Nature, aspects
2. By employers
3. By labor organizations
F. Peaceful concerted activities
1. Strikes
2. Picketing
3. Lockouts
4. Assumption of jurisdiction by the DOLE Secretary
5. Injunctions

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LABOR. RELATIONS

A.
RIGHT TO SELF-ORGANIZATION

1 .
COVERAGE
a.
PERSONS WHO CAN EXERCISE
RIGHT TO SELF-ORGANIZATION

1. PRIVATE SE C T O R .

The following are eligible to join, form or assist a labor organization in the
private sector:

1) All persons employed in commercial, industrial and agricultural

enterprises;1
2) Employees o f government-owned a n d /o r controlled corporations
without original charters established under the Corporation Code;2
3) Employees o f religious, charitable, medical or educational institutions,
whether operating for proht or not;3
4) Front-line managers, commonly known as supervisor)- employees [See
discussion below];4
5) Alien employees [See discussion below];
6) Working children [Sec discussion below];
7) Homeworkers [See discussion below);
8) Employees o f cooperatives [See discussion bdowj; and
9) Employees o f legitimate contractors - not with the principals but with
the contractors [See discussion below].

2. PUBLIC SECTO R.

In the public sector, all rank-and-file em ployees of all branches,

subdivisions, instrumentalities, and agencies o f government, including government-
owned and/or controlled corporations with original charters, can form, join or

' Artide 253 [243], Labor Code.

2 Article 254 [244], Labor Code.
3 Artide 253 [243], Labor Code; Section 2, Rule 11, Book V, Rules to Implement he Labor Code, as amended by
Department Order No. 4003, Series of 2003, [Feb. 17,2003] and further amended by Department Order No. 4004)5,
Series of 2005 [March 7,2005; See also Article 243, Labor Code.
4 Article 255 [245], Labor Code; Paper Industries Corporation of fie PhEpprnes v. Laguesma, G.R. No. 101738, April 12,
2000]; United PepsLCola Supervisory Union [UPSU] v. Laguesma, G R No. 122226, M ath 25,1998,288 SCRA15.21-23.

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 bar reviewer o n La b o r Iaw
380

assist labor organizations called “employees’ organizations” o f their own

choosing.1
3. RIGHT OF CERTAIN SPECIFIC WORKERS.

a. Supervisors (a.k.a. Brst-line managers).

There is no prohibition in the law or in the implementing rules regarding

the right of supervisory employees to organize a labor organization or workers’
association of their own. They ate, however, not allowed to become members of a
labor union composed of rank-and-file employees. This is clear under Article 255
[245] of the Labor Code.2 In case there is mixed membership o f supervisors and
rank-and-file employees in one union, the new rule enunciated in Article 256 [245-
A]3 of the Labor Code, unlike in the old law, is that it cannot be invoked as a
ground for the cancellation of the registration of the union The employees so
improperly included are automatically deemed removed from the list of members
of said union In other words, their removal from die said list is by operation of
law.

b. Alien employees.
For an alien employee to exercise his right to self-organize, the following

(1) He should have a valid working permit issued by the DOLE; and
(2) He is a national of a country which grants the same or similar rights
to Filipino workers or which has ratified either ILO Convention No.
874 or ILO Convention No. 98,5 as certified by the Philippine
Department of Foreign Affairs (DFA).

c. Working children.

Working children have the same freedom as adults to jo b the collective

bargaining union of their own choosing b accordance with existing law. Under
P.D. No. 603,6 it is deady provided that neither management nor any collective

1 Secfions 1 and 2, Exea^veCWer No. 180, June01,1987; Secfions land 2, Rule D, Rules and Regutations to G overns
E^roseofffieR^cfGovemmentEmptoyees toSefOrgamzafion.
* bid.
3 A new provision inserted into tie LatxrCkxte by Sectim 9tf Republic Ad No. 9481 (effecfiveon June 14,2007).
4 UnderArticle2 o! 1 0 Convenfon No.8 7 (Freedomd Association artoProtecfo of tte RighttoOrganize)dwhichthe
Phijppines is a signatory, V oters and employers, without (fefincfion whatsoever, shall have the right to estabGsh and
only to toe rules of the organization concerned, job organizations of their own choosing without previous
aulrurizafai*
i Anxde2ola.OConvencxxibto.98vmich(toweftecxitheRigmtoOtga(uzeandCo(iectiveBaiganing.
« Otoerwbknown as T to t^ a d Y o u to W fe fa e Code.*

J9JC9B0M
 C h a pter Five 38l
LABOR R ELA TIO N S

bargaining union shall threaten or coerce working children to join, continue or

withdraw as members of such union.1

d. Homeworkers.
Homeworkers have the right to form, join or assist organizations of their
own choosing in accordance with law.2 The registration of homeworkers’
organizations or associations following the requirements prescribed by law will vest
legal personality thereto.5

e. M embers or employees o f cooperatives.

Members o f a cooperative have no tight to form or join labor

organizations for purposes of collective bargaining for being themselves co-owners
of Ae cooperative. This prohibition covers employees of the cooperative who are
at the same time members thereof4 However, insofar as the cooperative’s
employees who ate not members or co-owners thereof are concerned, they are
entitled to exercise their right to self-organization and collective bargaining as
guaranteed in die Constitution and existing laws. It is the fact of ownership of the
cooperative and not involvement in the, management rhewnf which disqualifies a
member from joining any labor organization within the cooperative. But employee-
members o f a cooperative may withdraw as members of die cooperative for
purposes of joining a labor union.5

£ Employees o f legitimate contractors.

An employee of a legitimate job contractor is entided to all the rights and
privileges due a tegular employee as provided in the Labor Code, such as the right
to self-otganization, collective bargaining and peaceful concerted activities,
including the right to strike.6 But this right cannot be exercised and invoked against
the principal but only against the independent contractor which employed them.

g . Workers allowed to organize labor organizations only for mutual

aid andprotection and not for collective bargainingpurposes.

As a general rule, labor oiganizations ate established principally for the

purpose o f allowing the employees to engage in collective bargaining with their
employers. However, workers who have no employers with whom they can
collectively bargain are allowed to organize labor oiganizations or workers’
associations for their mutual aid and protection. These workers include ambulant,

1 Aitoe 111, Chaptn 3. Tlte V I,P D .lto . 603, as amended by flnesideirial Deeres No. 1179 which took Keeton Aug. 15.
1977.
* Section 3, Oepabnent Order No. 5, Feb.04,1992.
2 Sec6»4,lWd.
4 Cooperate Rural Bartt of Davao Cty, Inc v. Femer-CaO^a, G il No. 77951, Sept 26.1988; San Jose Bectric Savice
Cooperate, h e v.MnSs6yoJlabor,(iRNo.77231,May 31,1989.
5 Centra) Negros Hectic Corporate v. Secretay of labor, G .R No. 94045, Sept 13,1991.
6 Section 10(e), Department Onto No. 174,Seriesof2917.

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 382 Bar Reviewer on Labor Law

intermittent and other workers, the self-employed, rural workers and those without any definite
employers.*

3. SOME PRIN CIPLES O N T H E R IG H T T O SE LF-O R G A N IZA TIO N .

• Any employee, whether employed for a definite period or not, shall, beginning
on the first day of his service, be eligible for membership in any labor
organization.*2
• Right to join a union cannot be made subject of a stipulation in an
employment contract or CBA.3

4. SOME PRIN CIPLES O N G O V ER N M E N T E M PLO Y EES’ R IG H T T O

SELF-ORGANIZATION.

■ The labor organization in the government sector is technically called an

“employees’ organization.”4
• Registration of employees’ organizations is made with both Civil Service
Commission (CSC) and the Bureau of Labor Relations (BLR) o f the
Department of Labor and Employment (DOLE). Once registered, it is
technically called a “registered employees’ organization.”5 In the private
sector, this is theoretically known as a “ legitim ate labor organization.”
Cancellation of registration of an employees’ organization is likewise made by
both the CSC and the BLR
■ The sole and exclusive bargaining union is called an “ accredited em ployees’
organization.”6 In the private sector, this is in principle known as a “sole
and exclusive bargaining agent (SEBA).”
■ The unit where the government employees’ organization seeks to operate and
represent is called “organizational unit.” It is the employer’s unit consisting
of rank-and-file employees unless circumstances otherwise require.7 In the
private sector, this is technically known as “bargaining un it.”
• The right to strike is absolutely prohibited in the governm ent sector.8

’ Article 243, Labor Code; FEU-Dr. Nicanor Reyes Merfcal Foundation, Inc. v.Trajano. G R No. 76273, July 31,1987.
2 Article 292(c) (277(c)], Labor Code; No. 10, Basic Amendments under R. A. 6715, prepared by Members of the Senate-
House Conference Committee of Congress.
3 Southern PMpphes Federation of Labor (SPFL) v. Caiieja, G R No. 80882, Apri 24,1989,172 SCRA 676.
4 Section 1 [h], Rule I, Rules and Regulations to Govern the Exercise of the Right of Government Employees to Self-
Organization.
5 Section 1fl. Rule I. Ibid.
« Section 10, Rule I, bid.
7 Secticn9, Executive Order No. 180.
8 CSC Memorandum C'rculaf No. 6, s. 1987, [April 21,1987] promulgated by the Civil Service Commission categorical
prohibits ail gevemnent officials and employees from staging strkes, demonstrations, mass leaves, watk-outs and other
forms of mass action which wH result in the temporary stoppage a disruption of public services Allowing them to strike or
conduct the said prohbited acts is to undermine or prejudice the government system. Executive Order No. 180, (June 1,
1987], which provides the guidelines on the exercise of he right of government workers to organize, impfidfly endorsed said
CSC Memorandum Crcular No. 6, s. 1987, dated April 21,1987 [supra] by stating that the Crvi Service Law and rules

J9JC9B0M
 Chapter. Five 383
LABOR RELATIONS

b.
PERSONS WHO CANNOT EXERCISE
RIGHT TO SELF-ORGANIZATION
1. PRIVATE SECTO R.

The following are not eligible to join, form or assist a labor organization
in the private sector;

1) Managerial employees; and

2) Confidential employees.

2. PUBLIC SECTO R.

The following arc not eligible to join, form or assist a labor organization
in the public sector:

1) High-level employees whose functions arc normally considered as policy­

making or managerial or whose duties are of a highly confidential
nature;*1
2) Members of the Armed Forces o f the Philippines;
3) Police officers;
4) Policemen;
5) Firemen; and
6) Jail guards.2

2.
INELIGIBILITY OF MANAGERIAL EMPLOYEES;
RIGHT OF SUPERVISORY EMPLOYEES
a.
MANAGERIAL EMPLOYEE RULE

L LEGAL BASIS.

Article 255 [245] o f the Labor Code provides;

“Article 255 [245]. Ineligibility ofManagerial Employees toJoin any

Labor Organisation; Right oj Supervisor Employees. - Managerial employees
arc not eligible to join, assist or form any labor organization.
Supervisory employees shall aot be eligible for membership in the
collective bargaining unit of the rank-and-file employees but may join,
assist or form separate collective bargaining units and/or legitimate

governing concerted activities and strikes in the government service shall be observed. (Jacinto v. Hon. CA, G.R. No
124540. Nov. 14,1997).
1 Section 3, Executive Order No. 180, June 01.1987; Section 2, Rule II. Rules and Regulations to Govern the Exercise of the
Right of Government Employees to SetfOrganization.
7 Section 4, Executive Order No. 180, Section 1, Rule II, Ibid.; See also Chapter 6, Book V, Administrative Code of 1987
[Executive Order No. 292J.

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 384 Bar reviewer o n Labor Law

labor organizations of their own. The rank-and-file union and the

supervisors’ union operating within the same establishment may join the
same federation or national union.”1

2. TYPES OF MANAGERIAL EMPLOYEES.

There are three (3) types of managerial employees for purposes of
determining whether they could exercise their right to self-organization:
1) Top Management;
2) Middle Management; or
3) First-Line Management (technically known as '"supervisors’)?

Top Management is composed o f a comparatively small group of

executives. It is responsible for the overall management o f die organization. It
establishes operating policies and guides die organization's interactions with its
environment. Typical tides of top managers are “chief executive officer,”
“president,” or “senior vice-president” Actual tides vary from one organization to
another and are not always a reliable guide to membership in the highest
management classification.

Middle Management refers to more than one level in an organization.

Middle managers direct the activities of other managers and sometimes also those
of operating employees. The middle managers’ principal responsibilities are to
direct the activities that implement their organization’s policies and to balance the
demands of their superiors with the capacities o f their subordinates. A plant
manager in an electronic firm is an example of a middle manager.

First-Line Management is the lowest level in an organization at which

individuals are responsible for the work o f others. First-line managers direct
operating employees only; they do not supervise other managers. Examples of
first-line managers are the “foreman” or production supervisor in a manufacturing
plant, the technical supervisor in a research department, and the clerical supervisor
in a large office. First-level managers are often called supervisors.

3. NOT ALL MANAGERIAL EMPLOYEES ARE PRO H IBITED FROM

FORMING, JO IN IN G OR ASSISTING A U N IO N .

Based on die above classification, “managerial employees" may fall into two
(2) distinct categories: namely:

1) The “managers” perse composed o f top and middle managers; and

2) th e “supervisors” composed of first-line managers.*

• As amended by Section 18. R A No. 6715. March 21,1989 aid SecSon 8, RA. N a 3481 wtuch lapsed r£o law an May 25.
2007 and became elfec&w on June 14.2007; As renumbered pursuant to SecGon 5, R A No. 10151,June21,2011 and
DOLE Department Advisory No. 01, Series of 2015 dtenunbering of tw Labor Code of h e PhEppfoes, as Amended),
issuedon Juty21.201S.
* Paper Industries Corporation of tie PK&ppiies v. Laguesma, O R No. 101738, Apr0 12, 2000; Unfed PepsK&a
Supervisory Union [UP$U]v. laguesma. G Jl N a 122228, March 25.1998,288 SCRA15.21-23.

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LA BO R RELA TIO N S

No. 1 above are absolutely prohibited from forming, joining or assisting

any labor unions for purposes of collective bargaining.1 Only No. 2 above are so
allowed to form a labor union o f their own kind.2

b.
SUPERVISORY EMPLOYEE RULE

L SUPERVISORS MAY ORGANIZE OW N U N IO N BUT ARE

PROHIBITED FROM JO IN IN G T H E RANK-AND-FILE U N IO N .

The reason for die segregation of supervisory and rank-and-file employees

with respect to the exercise of their light to self-organization is die difference in
their interests. Supervisory employees are more closely identified with the
employer than with the rank-and-file employees. If supervisory and rank-and-file
employees in a company are allowed to form a single union, the conflicting
interests of these groups impair their relationship and adversely affect discipline,
collective bargaining and stakes. These consequences can obtain not only in cases
where supervisory and rank-and-file employees in the same company belong to a
single union but also where unions formed independently by supervisory and rank-
and-file employees of a company are allowed to affiliate with the same national
federation.3

C.
CONFIDENTIAL EMPLOYEE RULE

1. W HO ARE CONFIDENTIAL EMPLOYEES.

Within the context of labor relations, "confidential employees”are those who

meet the following criteria:

(1) They assist or act in a confidential capacity,

(2) To persons or officers who formulate, determine, and effectuate
management policies specifically in the field of labor relations.

The two (2) criteria are cumulative and both must be met if an employee
is to be considered a "confidential employee" that would deprive him o f his right to
form, join or assist a labor organization.4

* This fectear under Article 245 of tie Labor Code; Paper Industries Coporafion of fie Phifppines v. Laguesma, G R No.
101733, Apt912,2000; UnSed Pepsi-Cola Supmvisory Union (UPSU] v. Lagueana, G R N a 122226, March 25,1998,288
SCRA 15,21-23.
2 Paper Industries Corporation of he Ptfjppfces v. Laguesma, stpa; United PepsiCola Supervisor Union [UPSU] v.
Laguesma, supra.
3 LaSaBeUrevera^MetrcriCentoandCoaegeofMe&iriev.Laguesma,GAMo. 102084,Aug. 12,1998,294 SCRA 141.
4 Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery v. Asia Brewer*, Inc., G.R. No. 162025, Aug. 3,2010;
Sugtwanon Rural Bank, h e. v. Laguesma, G A No. 116194, Feb. 2,2000.

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A confidential employee may be a rank-and-file or supervisory employee

but because in the normal course of his duties, he becomes aware of management
policies relating to labor relations, he is not allowed to assist, form or join a rank-
and-file union or supervisory union, as the case may be. His exclusion from the
bargaining unit is justified under the "confidentialemployee rule. ”To allow him to join a
union would give rise to a potential conflict o f interest Management should not be
requited to handle labor relations matters through employees who are represented
by the union with which the company is required to deal and who, in die normal
performance of their duties, may obtain advance information on the company’s
position with regard to collective bargaining negotiations, the disposition of
grievances, or other labor relations matters.1

However, the mete access of an employee to confidential labor relations

information which is merely incidental to his duties and, therefore, knowledge
thereof is not necessary in the performance o f said duties, does not make such
employee a confidential employee. If access to confidential labor relations
information is to be a factor in the determination o f an employee’s confidential
status, such information must relate to the employer’s labor relations policies.
Therefore, access to information which is regarded by the employer to be
rrwifidftntial from the business standpoint, such as financial information or
technical trade secrets, will not render an employee a confidential employee under
this rule. An employee may not be excluded from an appropriate bargaining unit
merely because he has access to confidential information concerning the employer’s
internal business operations which is not related to the field of labor relations.2
Thus, even a bank cashier who also serves as die secretary of the board of
directors may not be classified as a confidential employee disqualified to join a
union. True, the board of directors is responsible for corporate policies, the
exercise of corporate powers and the general management of the business and
affairs of the corporation. As secretary of the bank’s governing body, the employee
serves the bank’s management, but could not be deemed to have access to
confidential information specifically relating to the bank’sJabor relations policies.
absent a clear showing on this matter.3

2. DOCTRINE OF NECESSARY IMPLICATION.

The doctrine of necessary implication is the legal basis for the

ineligibility of a confidential employee to join a union. The disqualification of
managerial and confidential employees from joining a bargaining unit of rank-and-
file employees or supervisory employees is already well-entrenched in
jurisprudence. While Article 255 [245] of the Labor Code limits the ineligibility to

1 San Miguel Cap. Supervisors and Exempt Employees Union v. Laguesma, G.R. No. 110399, Aug. 15,1997.
2 SeeSaiMsuelCo(poratianSupeivisotsandExemptEniptoyeesUnionv.Laguesnia.supra;N36onalAssoda6onofTEade
Unions • Reputtc Planters Bar* Supervisors Chapterv. Tones, G.R. No. 93468, Dec. 29,1994,239 SCRA 546,560.
* Su^uanonRuralBank.lnc.v.Laguesma.GANo. 116194,Feb.2,2000.

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join, assist or form a labor organization to managerial employees, jurisprudence has

extended this prohibition to confidential employees or those who, by reason of
their positions or nature of work, are required to assist or act in a fiduciary manner
to managerial employees and, therefore, are likewise privy to sensitive and highly
confidential records.1

Article 255 [245] o f the Labor Code does not directly prohibit confidential
employees from engaging in union activities. Their disqualification proceeds
merely from the application of the “doctrine of necessary implication" because what
Article 255 [245] singles out as ineligible to join, assist or form any labor
organization are managerial employees. By necessary implication, confidential
employees are similarly disqualified. This doctrine states that what is implied in a
statute is as much a part thereof as that which is expressed.2

Simply stated, in the collective bargaining process, managerial employees

are supposed to be on the side o f die employer to act as its representatives and to
see to it that its interests are well protected. The employer is not assured of such
protection if managerial employees themselves are union members. Collective
bargaining in such a situation can become one-sided. 1: is the same reason why the
positions of confidential employees ate included in the disqualification found in
Article 255 [245] as if such disqualification was written in die provision. If
confidential employees could unionize in order to bargain for advantages for
themselves, then they could be governed by their own motives rather than the
interest o f die employer. Moreover, unionization of confidential employees for the
purpose o f collective bargaining would mean die extension of the law to persons or
individuals who are supposed to act “in the interest o f ’ the employers. It is not
far-fetched that in the course o f the collective bargaining negotiations, they might
jeopardize that interest which they are duty-bound to protect.

3. CONFIDENTIAL EMPLOYEES N O T ALLOWED T O JO IN

UNIONS.

Based on jurisprudence, the following arc considered confidential

employees under the confidential employee rule:

1. Accounting personnel and radio and telegraph operators;3

2. Division secretaries, all Staff o f General Management, Personnel and
Industrial Relations Department, Secretaries of Audit, EDP and
Financial Systems;4
3. Legal secretaries who are tasked with, among others, the typing of
legal documents, memoranda and correspondence, the keeping o f

• Standard Chartered Bar* Employees Union (SCBEI>NUBE]v. Standard Chartered 8ank,G.R. No. 161933, Aprl 22.2008.
2 Chuav. CivS Service C(mmission,G^. No. 88979,Feb. 7 .1992.2069CRA65
) Golden Farms, h a v.Ferrer-Cafl^a, G A No. 78755, Ju* 19,1989,175 SCRA471.
4 PM jpshdtsliialDeveiopnenthaV.NLRC.G ANo 88957,June25,1992,210SCRA339.

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 388 Bar REVIEWER O N LABOR LAW

records and files, the giving of and receiving notices, and such other
duties as required by the legal personnel of die corporation.1
4. Executive secretaries of die General Manager and die executive
secretaries of the Quality Assurance Manager, Product Development
Manager, Finance Director, Management System Manager, Human
Resources Manager, Marketing Director, Engineering Manager,
Materials Manager and Production Manager were also considered
confidential employees since they have access to “vital labor
information.”2 *

4. CONFIDENTIAL EMPLOYEES ALLOWED TO JO IN UNIONS.

Confidential employees are not absolutely prohibited from joining unions.

This is the correct view since confidential employees are allowed to join unions in
some cases. For instance, in Southern Philippines? the inclusion o f the confidential
rank-and-file employees in the bargaining unit of rank-and-file employees was
upheld by the Supreme Court. Much earlier, the High Court proclaimed in Fihtifi
that confidential rank-and-file employees may join the union of supervisors,
especially in a situation where the confidential employees ate very few in number
and are, by practice and tradition, identified with the supervisors in their role as
representatives of management vis-a-vis the rank-and-file employees. Such identity
of interest has allowed their inclusion in the bargaining unit of supervisors for
purposes of collective bargaining. They remain employees in relation to the
company as their employer. This identity of interest logically calls for their inclusion
in the same bargaining unit and at the same time fulfills the law’s objective of
insuring to them the full benefit of their right to self-organization and to collective
bargaining which could hardly be accomplished if the respondent association’s
membership were to be broken up into five separate ineffective tiny units,
jurisprudence, therefore, has established that there is no legal prohibition against
confidential employees who are not performing managerial functions to form and
join a union.34*

d.
SEPARATION OF UNIONS DOCTRINE

L INAPPLICABILITY OF T H E D O C TR IN E

R.A. No. 94816 amended Article 255 [245] by adding die phrase: "T he
rank-and-file union and the supervisors* union operating within the same

1 F^8Aoastm & StevoctortigServices. tnc v.RoUan-Confesor,f6i^. No. 110854,Feb. 13,1995.241 SCRA294.

2 MetraiabIndustries.hc.v.RotimOnfescr.GANa 108855.Feb.28.1996,2M SCRA182;324PKl416.
3 Southern Phitppines Federation erfLabor v.Fm ef-Cafleja, G R No.80882,April24,1889,172SCRA676.
4 Filoa Refinery Coip. v. Filed Supenisofy end Confidential Employees Association, G il No. L-26736, Aug. 18,1972.
4 San Mguel Corp. Supervisors and Exempt Employees Union v. Laguesra, G il No. 110399, Aug. 15,1997,; Nafional
Association of Trade Unions • Republic Planteis Bank Supervisors Chapter v. Tones, G il No. 93468, Dee 29,1994.
4 Secbon8ofRA No.9481 {effective Afoe 14,2007).

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IA B O R . R ELA TIO N S

establishment may join the sam e federation or national union.” By reason of

this amendment, the so-called "separation of unions doctrine" enunciated in Atlas
Litbogapbic,*1 and in other related cases no longer applies. This doctrine prohibits
die situation where the supervisory union and the rank-and-file union operating
within die same establishment are both affiliated with one and the same federation
because of the possible conflict o f interest which may arise in the areas, inter aba, of
discipline, collective bargaining and strike. Thus, if die intent of the law is to avoid
a situation where supervisors would merge with the rank-and-file or where the
supervisors* labor organization would represent conflicting interests, then a local
supervisors’ union should not be allowed to affiliate with the federation with which
the rank-and-file union is also affiliated and where the federation actively
participates in the union activities in the company. The intent of the law is clear
especially where die supervisors will be co-mingling with the rank-and-file
employees whom they direcdy supervise in their own bargaining unit.2*

Likewise affected by the amendatory provision of R.A. No. 9481 is the

ruling in Coastal Subic Bay? where the Supreme Court declared that both the
supervisory union and rank-and-file union which have separately affiliated with
different federations with commingling or common set of officers have not
attained the status o f legitimate labor organizations. Here, private respondents
CSBTI-RFU,4 a rank-and-file union, and CSBTI-SU,S a supervisory union, filed
separate petitions for certification election before die Med-Arbiter. Both private
respondents insist that they are legitimate labor organizations because, on the part
o f the rank-and-file union, it was issued a charter certificate by the ALU,( and on
the part of the supervisory union, it was issued a charter certificate by the
APSOTEU.7 However, this arrangement, according to the Supreme Court, gives
occasion for possible conflicts o f interest among die common officers of the two
federations. For as long as they are affiliated with the APSOTEU and ALU, the
supervisory and rank-and-file unions both do not meet the criteria to attain the
status of legitimate labor organizations, and thus could not separately file their
respective petitions for certification election.

As earlier pointed out, however, in the light of the amendment o f Article

255 [245] by R A No. 9481, the above ruling in CoastalSubic Bay no longer applies
as the law itself now expliddy allows die more, extreme situation o f a rank-and-file
union and a supervisors’ union operating within the same establishment joining one
and the same federation or national union as affiliates thereof

' ABasL8hographicSavices.lnc.v.Laguesma,GRNo.96566,Jan.6l 19 9I
2 See PepsiCola Products Phfippnes, he. v. Hon. Secretary of Labor, G il No. 96663, Aug. 10,1999; La Sate University
Mecfical Center and College of Medicine v. laguesma, G R No. 102084, Aug. 12,1998.
1 Coastal Subic BayTerminal, h e v. DOL£-O(5ce ofh e Secretary, G R No. 157117, Nov. 20,2006.
4 Coastal Subic Bay Terminal. Inc. Rank-and-file Union (CSSTU^Fll).
s Coastal Subic Bay Terminal, h e Supervisory Union (CSBTVSU).
4 Associated Labor Union (AUJ).
1 Associated Professional, Supervisory, O to and Tedrical&iTployees Union (APSOTHJ).

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 390 Ba r Reviewer. cn Labor Law

3.
EFFECT OF INCLUSION AS MEMBERS OF EMPLOYEES
OUTSIDE OF THE BARGAINING UNIT
1. LEGAL BASIS.

The following provision in the Labor Code1 addresses the issue of

commingling or mixture of membership in one union, dius:

Article 256 [245-A]. Effect of Inclusion as Members of Employees

Outside the Bargaining Unit. - The inclusion as union members of
employees outside the bargaining unit shall not be a ground for the
cancellation of the registration of the union. Said employees are
automatically deemed removed from the list of membership of said
union.23

2. PREVAILING RULE.

Previously, it was the doctrine enunciated in Toyota* that a labor

organization composed o f both rank-and-file and supervisory employees is no
labor organization at all. It cannot, for any guise or purpose, be a legitimate labor
organization. Not being one, an organization which carries a mixture o f rank-and-
file and supervisory employees cannot possess any of the rights o f a legitimate
labor organization, including the right to file’a petition for certification election for
the purpose of collective bargaining. It becomes necessary, therefore, anterior to
the granting of an order allowing a certification election, to inquire into the
composition of any labor organization whenever its status is challenged on the
basis of Article 255 [245] of the Labor Code.456In the same vein, it was held in
Dunloft that for as long as the supervisors’ union counts rank-and-file employees
among its members, it has no legal right to file a petition for certification election
to represent a bargaining unit composed o f supervisors.

The above doctrinal rulings in Toyotcfi and Dunlop7 no longer hold sway in
the present altered state of the law, Article 256 [245-A], as quoted above brought
about by the enactment of the amendatory' R.A. No. 9481.8 Under this provision,
the inclusion as union members of employees outside the bargaining unit is not a
ground for the cancellation of the registration o f the union. T he employees so

1 Section 9 of R A No. 9481 inserted Article 256 [24SA] into the labor C oder 2007.
7 Introduced as new provision by Section 9, R A No. 9481 which lapsed into law on May 25,2007 aid became effective on
June 14,2007; As renumbered pursuant to Section 5, R A No. 10151, June 21,2011 and DOLE Depatment Advisory No.
01, Series of 2015 (Renumbering of (he Labor Code of the Phfippines, as Amended), issued on July 21,2015.
3 Toyota Motor Philippines v. Toyota Motor Phippines Corporation Labor Union, G.R. No. 121084, Feb. 19,1997.
4 See also Toyota Motor Philippines Corporation Labor Union v. Toyota Motor Philippines Corporation Employees and
VM ers Union, Toyota Motor Philippines Corporation, G.R. No. 135806, Aug. 8,2001
5 Dunlop Slazenger [Phils.], Inc. v. Secretary of Labor and Employment, G.R. No. 131248, Dec. 11,1998.
6 Toyota Motor Phippines v. Toyota Motor Phippines Corporation Labor Union, G.R. No. 121084, Feb. 19,1997.
7 Dunlop Slazenger [Phils.], Inc. v. Secretary of Labor and Employment, G.R. No. 131248, Dec. 11,1998.
a Republic of the Phippines v. Kawashma Textile Mg., Phiipp'nes, Inc., G.R. No. 160352, July 23,2008.

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U B O R RELATIONS

improperly included are automatically deemed removed from the list o f members
o f said union by operation o f law.123Thus, in Charter Chemical involving the mixed
membership o f supervisory and rank-and-file employees in the rank-and-file union,
it was held that the inclusion o f supervisory employees in petitioner union does not
divest it o f its status as a legitimate labor organization. The CA’s reliance on Toyota
is misplaced in view o f the subsequent ruling in Kawashimct’ where it was explained
at length how and why the Toyota doctrine no longer holds sway under the altered
state of the law and rules applicable to this case.45

3. E X C L U D E D M E M B E R S A U T O M A T IC A L L Y R E M O V E D BY
O P E R A T IO N O F LAW.

A s is now provided in Article 256 [245-A], any excluded members are

automatically deemed removed by operation o f law from the list o f legitimate
members o f the union concerned. Thus, if supervisory employees are included as
members o f a rank-and-file union, they are deemed automatically removed from
the roster o f members o f said union and vice versa.

4. M IXED M E M B E R S H IP , A P R O H IB IT E D G R O U N D T O C A N C E L
U N IO N R E G IS T R A T IO N .

Under the Implementing RaleP o f the Labor Code, mixed membership is

now deemed a prohibited ground for the cancellation o f union registration.

4.
NON-ABRIDGEMENT6
(OF RIGHT TO SELF-ORGANIZATION)
1. LEGAL BASIS.

Article 257 [246] speaks o f the principle of non-abridgment of the right to

self-organization as follows:

“Article 257 [246]. Non-Abridgm ent o f Right to Self-Organisation.

- It shall be unlawful for any person to restrain, coerce, discriminate
against or unduly interfere with employees and workers in their exercise
of the right to self-organization. Such right shall include the right to

' See also Section 6, Rule XIV, Book V, Rules to Implement the Labor Code, as inserted by Department Order No. 40-F-03,
Series of 2008 [Oct 30,2008).
2 Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms
(SMCC-SUPER)v. Charter Cbemica! and Coating Corporation, G R . No. 1697171, March 16,2011.
3 Repubfccf he Phippines, Represented by DOLE v. KawashrnaTextfle Mfg., Philippines, Inc., supra.
4 See also The Heritage Hotel Manila v. Secretary of Labor and Employment G.R. No. 172132, July 23,2014.
5 New Section 6, Rule XIV, Book V, Rules to Implement the Labor Code, as inserted by Department Order No. 40-F-03,
Series of 2008 (OcL 30,2008J. This section provides: "’Secfon 6. Prohibited Grounds for Canceflatkxi of Registration. - TTie
indusion as union members of employees who are outside the bargaining unit shall not be a ground to cancel the union
registration. The 'neiigble employees are automatically deemed remeved from the list of membership of the union."
5 This is hew this word "Abridgement" is spelled in the 2019 Syllabus. Note that in Article 257 [246] of the Labor Code, this
word is spelled as "Non-Abridgment"

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form, join, or assist labor organizations for the purpose o f collective

bargaining through representatives of their own choosing and to engage
in lawful concerted activities for the same purpose or for their mutual
aid and protection, subject to the provisions o f Article 2641 o f this
Code.”

2. M EANING O F R IG H T T O SELF O R G A N IZ A T IO N .

The right o f self-organization-mcludes the right to organize o r affiliate

with a labor union or determine which o f two o r more unions in an establishment
to join, and to engage in concerted activities with co-workers for purposes o f
collective bargaining through representatives o f their own choosing, or for their
mutual aid and protection, U , the protection, promotion, o r enhancement o f their
rights and interests.2

More aptly, Article 257 [246] describes the legal concept o f the “right to
stlj-orgam^ation, ”which, as a legal proposition, includes two (2) basic rights, namely:
(1) "to form, join, or assist labor organizations for th e p u rpose o f
collective bargaining through representatives o f th eir ow n
choosing;” and

(2) "to engage in lawful concerted activities fo r th e sam e pu rpose or

for their m utual aid an d protection, subject to die provisions o f
Article 279 [264]» o f [the Labor] Code.”

N o. 1 above is the rudimentary and hornbook description o f the "tight to

self-organization” but N o. 2 needs some dissecting and further expounding.

The term “concerted activities” refers to either o r both (1) a “strike;”

considered the most potent democratic weapon4 o f workers in the economic war
between labor and management, an d /o r (2) a "picket**, which is protected under
the freedom o f speech and o f expression in the Constitution.5 U nder this concept,
a strike or picket may be staged for two purposes, namely: (1) "for the purpose
o f collective bargaining” ; o r (2) "for their m u tu al aid a n d protection.”

' 1 ^ m itered as 279anden^TroM)itEdAd\to'[nStrftes andLodaxrtsJ.

1 Aim 14 Mendozav. Offices ofManfeWaterEmployeesUnim(MWEU),G.R. No. 201595,Jan. 25,2016.
1 EnfiSedVraWi^Actvties’ pnStBcesandLockcxitsj
4 Junspmtfenliady, a strike, because it is prernsed on the concept of economicwar between laborand management, has
beendescribedasaYieapon*thatcanefterteeaSteHetoordestroyhe unionandis merrtws, andonetut mustalso
necessary affect management and itsmembers (Phimco Industries, Inc. v. Phimco InfasJfes labor Association (P1A),
GA. No. 170830, Aug. 11,2010, ding Associationof Independent Unionsin he Phones v. MAC. GA. No. 120505,
March25,1999,384 Phi. 697,707).
* Section 4, Arfde til of he 1987 Consaiition which povides: “Section 4. No law shaB be passed Abridging he freedom ot
speed), of expression, or of the press or he right of me people peaceably to assemble and petition he government far

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LA BO R RELA TIO NS

T he Labor Code’s principal provision on *strikes” and "picketing,”

Article 278 [263],1 reiterates the foregoing two (2) purposes in its p a ra g ra p h (b),
thus:

“(b) Workers shall have the rig h t to engage in concerted

asfcfttefi for purposes o f collective bargaining or for their m utual
benefit and protection. The right o f legitimate labor organizations to
strike and picket and o f employers to lockout, consistent with the
national interest, shall continue to be recognized and respected.
However, no labor union may strike and no employer may declare a
lockout on grounds involving inter-union and intra-union disputes.”2

From the foregoing disquisition, it is clear that the twin rights to strike
and to picket are not separate and distinct, stand-alone rights but are part and
parcel o f the primordial and fundamental right to self-organization. N o meaningful
strike or picket can be staged by the workers without their being organized first
into one potent force - as a union. Self-organization therefore is the main key that
could open the door to the valid exercise o f the tights to strike and to picket
Consequently, any act o f restraint, coercion, discrimination or interference in the
conduct o f a strike o r picket would necessarily violate th e employees’ lawful
exercise o f their right to self-organization.
3. O B JE C T O F T H E LAW.
T he right to form, join, o r assist a union is specifically protected by the
Constitution5 and such right4 shall n o t be abridged.5 Article 257 [246] emphatically
testates the policy o f the State to prom ote and emphasize die primacy o f free
collective bargaining and negotiations, fixe trade unionism and free and voluntary
organization o f a strong and united labor m ovem ent6
4. R IG H T T O U N IO N M E M B E R S H IP .
a. R ight to union m embership is n o t absolute.
An employee cannot invoke an absolute right to union membership.7
Although the right to self-organization and collective bargaining is duly guaranteed
under the Constitution, it is subject, however, to regulation by the State. For
instance, it is mandated by law that no labor organization shall knowingly admit as
member or continue in membership, any individual who belongs to a subversive
organization or who is engaged directly o r indirectly in any subversive activity.8

1 EnA99ed*Stil(es,PkJceGngandljOctouts.*
* UnderscoringsuppSed.
1 Sector)3, ArticleXIII (hereof.
4 Accortfngto Section8, Article 111of the Cons&Aon vtfich provides: *Section6. The rightof tie people, nctoding hose
employedinhe puttieandprivatesectors, tofamunions, associations, orsodefiesfcrpuposesnotcontrarytolawshall
notbeabndged.*
5 S.S.Ventures InternationalInc.v.S£.VenturesLatxxlWon,Gfi.No. 161690.July23.2008.
* See alsoArticle218P11J, labor Code.
7 U>cal7, Press&PSinrGngFreeWorkas(FFVV)v.Tabagne, OR. Na L-1S093.ttov.29, I960.110 Phi. 276.
4 Article250(e) (241(e)], LaborCode.

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 bar Reviewer o n Labor Law
394

b. Freedom o f choice.
An employee has the tight to join or not to join a labor union.1A.member
o f a labor union may leave and cancel his membership at any time. An employee
who joins a union does not make any commitment or assume any undertaking to
continue his membership therein for a fixed period o f time, much less indefinitely.
In this regard, he is a free agent2The same may not be said, however, in case there
is a valid union security clause in the CBA such as a closed-shop o r union-shop
arrangement between management and the union. In such a case, the employee
concerned is duty-bound to keep his union membership for the duration o f the
CBA as a condition for his continued employment. I f such membership in die
union which is the collective bargaining agent is validly terminated, he may likewise
be distnfrsgrf from his employment The only exception to this is when die
employee objects to such membership on the ground o f religious belief.3
c. Right to join a union acquired from first day o f employment.
By express provision of Article 292(c) [277(c)] o f the Labor Code, any
employee, whether employed for a definite period or not shall, beginning on his
first day of service, be considered an employee for purposes o f membership in any
labor union.

d. Union members who are not employees do not possess the right
to join union.

If the union members are not employees, no right to organize for

purposes o f collective bargaining n o r to be certified as bargaining agent can be
recognized. The question o f whether employer-employee relationship exists is a
primordial consideration before extending labor benefits under the workmen’s
compensation, social security, PhilHealth, termination pay and labor relations law.
It is important in the determination o f who shall be included in the proposed
bargaining unit because it is the sine qua non, the fundamental and essential
condition that a bargaining unit be composed o f employees. Failure to establish
this juridical relationship between the union members and the employer affects die
legality of the union itself. It means the ineligibility o f the union members to
present a petition for certification election as well as to vote therein.4

1 Victorianotf. EKzaldeRopeWWtas Union,G il No. L-2S246, Sept 12,1974; UST FacuSyUnion[USTFU]v. Btonio, Gil
No. 131235, Nov. 16,1999.
2 Basav-FOfTAF, G il No. 1-27113, Nov. 19,1974,61SCRA93; Pagkatesav. Enriquez, G il No. L-12999,July26.1960.
3 Vfc&ianov. BzaWeRopeVMers Union, supra; De LaSafe Universityv. DeLa Safe UrwersSy EmployeesAssociation,
G il No. 109002,April 12,2000.
4 Singer Sewing MachineCompany v. Drfon, GR. No. 91307, Jan. 24.1991; La Suerte Cigar and Cigarette Fadny v.
Director o( LaborRefeSons, GJl No. L-55674, July 25,1983,123 SCRA 679; RepuMc Planters Bank Generd Seivices
Bnp!(^ IWnNalional Associalionrf Trade UWonsv.laguesira.GR No. 1196W, Nov. 21,1996,264 SCRA637,
643.

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IABOR RELATIONS *

5. R IG H T S O F U N IO N M E M B E R S U N D E R A R T IC L E 250 [241].

Article 250 [241] o f the Labor Code enumerates the specific legal tights
o f a member o f a labor union as well as die legal conditions o f such membership.
More specifically, these rights and conditions may be grouped into the following

a. Fiscal rights.
Financial rights indude die following:

(1) Right against arbitrary, oppressive or excessive fees, fines and

forfeitures;
(2) Right to full and detailed reports on all financial transactions in
accordance with the constitution and by-laws o f the union;
(3) Right against unauthorized collection o f any fees, dues or other
contributions;
(4) Right to claim receipt for every payment o f fees, dues or other
contributions;
(5) Right to prevent funds o f the organization from being applied for
any purpose or object other than those expressly provided by the
union’s constitution and by-laws or allowed expressly by written
resolution adopted by the majority o f the members at a general
meeting duly called for the purpose;
(6) Right to demand or require that every income or revenue as well as
every expenditure o f the union shall be recorded o r receipted, which
record o r receipt shall form part o f die financial records o f the
union;
(7) Right against unauthorized check-off for special assessments,
attorney’s fees, negotiation fees or any other extraordinary fees
without an individual written authorization duly signed by the
employee;
(8) Right to vote on the compensation of union officers; and
(9) Right against unreasonable assessments to finance labor relations
seminars and other labor education activities.

b. R ight to information.
Right to information includes the following.

(1) Right to require the treasurer and the other officers o f the union
responsible for the account o f the union as well as for the
collection, management, disbursement, custody or control o f the
funds, moneys and other properties, to render a true and correct
account thereof, at least once a year within thirty (30) days after the

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dose of its fiscal year and at such other times as may be required by
a resolution of the majority o f the members o f the union and upon
vacating his office;
(2) Right to require that the account be duly audited and verified by
affidavit and a copy thereof be furnished to the D O L E Secretary;
(3) Right to inspect the books o f accounts and other financial records
of the union and to require full and detailed reports from their
officers and representatives on all financial transactions as provided
for in the constitution and by-laws o f the qrganization;
(4) Right to be informed o f the provisions o f the constitution and by­
laws, CBA, the prevailing labor relations system and all their rights
and obligations under existing labor laws through the medium o f
labor relations seminars or other labor education activities; and
(5) Right to seek investigation o f any irregularity.

It must be noted that the law considers it unlawful for any person to make
any statement, report, or record filed o r kept pursuant to the provisions o f the
Labor Code, knowing such statement, report or record to be false in any material
respect1

c. Political rights.

Political tights include the following:

(1) Right to vote and be voted for as an officer o f the union, subject to
the qualifications and disqualifications mentioned in Article 250
[241] of the Labor Code;2 and
(2) Right to be appointed to appointive positions in the organization,
subject to the qualifications and disqualifications mentioned in
Article 250 [241] o f the Labor Code.

d. Right to participate in decision-making.

Right to participate in decision-making process includes the following:

(1) Right to vote by secret ballot on any question o f major policy

affecting die entire membership o f the organization and
(2) Right to initiate and participate in impeachment or expulsion
proceedings against an erring officer or member o f the union.*

’ ArtScte119,laborCode.
* Suchasmemberctyi^ainrastecrpneaSon orengaging,drecty or
dacriroheMng moraltrp&xta

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 C ha pter five 397
LABOR RELATIONS

5.
HOW A UNION IS ORGANIZED1

L N E E D T O DISCUSS H O W T O O R G A N IZ E A U N IO N .

Labor Relations is a complicated subject Since unionism is at its very

core, this subject is better understood if its discussion will start with the answer to
the lingering question o f how a labor organization is created and established. Thus,
after discussing the tight to self-organization above and before delving into the
other specific topics prescribed in the 2019 Syllabus under this major topic o f
“Labor Relations,"z preliminary discussion on the modes o f creating and establishing
a union would certainly prove helpful.

2. “ LABOR O R G A N IZ A T IO N ” A ND “ U N IO N ,” D E F IN E D .

A “labororgmsatiotl' is any union or association o f employees which exists

in whole or in part for the purpose o f collective bargaining or for dealing with
employers concerning the terms and conditions o f employment.2 It is created for
mutual aid, interest, cooperation, protection or other lawful purposes.3 O n die
other hand, the term “union" is technically defined as any labor organization in the
private sector organized for collective bargaining and for other legitimate
purposes.4 These two terms may, however, be used interchangeably. A “legitim ate
labor organisation" refers to any labor organization in the private sector registered or
reported with the D O LE, in accordance with the Labor Code and its implementing
rules. It includes any branch or local thereof3

3. T W O (2) BASIC PU R PO SE S O F A LABOR O R G A N IZ A T IO N .

Based on the legal definition o f the term “labor organisation," there are two
(2) basic purposes o f a labor organization, namely:

1. for collective bargaining; and

1 for dealing with die employer.

4. TW O (2) M O D ES O F C R E A T IN G A LABOR O R G A N IZ A T IO N

Under the Labor Code, there are two (2) modes o f creating or establishing
a labor organization, it-, through:

1 Tlu5tDfHcisnctapatofthe2019Sytabus.
* A lto 219(g) (212(g)}, tabor Code; See also Section 1(13), (U s III, NCM8 Manual of Procedures for Concfiafon and
Preven&sMofiaSon Cases.
* Secto1[ocj, RijteI, BockV.Rutestokrjtemenilheiaba Code, asamendedbyDepartmentOrderNo. 4003, Seriesot
2003, [Feb.17.2003).
4 Section1[z4Rufel, BookV.M .
s SeeAito 219(h) pi2(hftLaba Code; l^es (II [Registiato ofUbaOrganizafcrel and iV[ProvisioreConTnonto^
Registrationd LaborOrgarfeaforeandWaters’ AsstoSonsj, h relationtoSection 1 (ee). Rub I, BookVd the Rulesto
hplemertlhe LaborCode, asamendedbyDepartmentOrderNo. 4003, Senescf2003, [Feb. 17,2003.

J9JC9B0M
 398 bar Reviewer o n labor Law

(1) Independent registration;1 and

(2) Chartering o f local chapter/chartered local.2

5. ONLY FED ER A TIO N OR N A T IO N A L U N IO N MAY D IR EC TLY

CREATE A LOCAL C H A P T E R /C H A R T E R E D LOCAL.

Under Article 241 [234-Aj, it is clear that the authority to direcdy create a
local chapter/chartered local is vested only with the federation or nationalunion, to the
exclusion of all others. It is only a federation or nationalunion which is empowered to
directly issue a charter certificate indicating the establishment o f the local
chapter/chartered local.3

6. TRADE U N IO N C EN TER S N O T ALLOW ED.

Article 240 [234], as amended by R A No. 9481, now includes “trade union
center" as among the organizations which may register as a legitimate labor
organization. But interestingly, Article 241 [234-A], the provision enunciating the
procedure for chartering o f a local chapter/chartered local, does not include “trade
union center" as among the labor organizations that is empowered, besides the
federation or national union, to create such local chapter/chartered local through the
process of chartering.

Also worth emphasizing is that even in the series o f amendments4 to die

Rules to Implement the Labor Code, such as Department OrderNo. 40-F-03, Series of2008*
which was issued to implement the amendments introduced by R A No. 9481,
there was no mention o f a “trade union center” as being among the labor
organizations allowed to charter a local chapter/chartered local. Thus, applying the
Latin maxim expressio uttius est exclusio alterius, it was held in San Miguel Corp.,6 that
trade union centers7 are not allowed to charter direcdy a local chapter/chartered
local because the pertinent statutes and applicable implementing rules do not grant
such authority thereto. The power granted to labor organizations to direcdy create
a local chapter/chartered local through chartering is given only to a federation or
national union.

1 AspfMdedutderAffcfe240(2341.
2 Aspro/idedunderArticte241 (234-Aj.
1 Section2, DepartmentOrderNo. 40£03, Seriesof2008, [October30.2008]vtffcfi amendedSedan2, paragraphE, Rule
01ofBookVofhe knplemenfingRatesoftheLaborCode, asearter amendedbyDepartmentOrderNo.4064)3 (Febnay
16,2004).
4 Suchasfose inSoduoedbyDepartnentOrder No. 4O-B-03 February l6,2004)DepataiertOrdefNo.40£<)5[Manrti7,
2005) DepartmentOrderNo.4MW5 (September13,2005) andthemostrecentDepartmentOrderNo. 40-F-03, Senesof
2008(October30,2008)
4 October30,2008.
4 San Mgue) Cap. Employees UniorvPTGVVOv. San Mguel Packaging Products Employees Union - POMP, GR No.
171153,Sept 12,2007.

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 C h a pter Five
LA BO R R ELA TION S 399

In sum, although the trade union center1 in this case is a legitimate labor
organization, it has no power to direcdy create a local chapter/chartered local.

7. D IST IN C T IO N S.

The following are the distinctions between independent registration and

chartering:

Criteria indenendent Charterina

Realstration
Documented Articte 2401234P
requirements Articte 241 (234-Ap
(a) Independent labor
organization Local chapter
Unions coveted (b) Federation or
(c) National union Chartered local
(d) Industry union
(ei Trade union center4
Acquires legal personality in two(2) stages:
Acquistiion oflegal Acquires lull legal personalty First staoe: PertraJ teoal oersonaBtv which it
personality upon issuanceof a Certificate acquires upon the issuance to it of a Charter
of Registration by the BLR.5 Certificate by a federation or national union.
Second staoe: FuB teoal oeisonaGtv which is
accorded to a local chapter/chartered local only
upon submission to the DOLE of its Charted
Certificate and the documents mentioned in Articte
241 [234-A).
Note: No independent registration is requited tor it
to acquire legal personality. Hence, no similar
Certificate of Registration is issued. The
subsequent issuance of the Certificate of Creation
of Chartered Local by toe DOLE is not material to
its acquisition of legal personalty but the
submission of the documents mentioned to Article
241 (234-A).
Upon Issuanceofa Charter Certificate by a
Right to file PCB Upon issuance of Certificate of federation or national union {First Stageabove),
Registration both or either the local chapter/chartered local
and/or the federation or national union can fife the
PCE7

1 II
1 Artjcte240p4]-Reqiwn^ofRegisWiOT.
1 ArSde241 {234-A]*CharteringandCreaBonofaLocalChapter.
4 San Mgud Cap. Employees UniocvPTGWOv. San Mguel Packaging Products Employees Union- POMP, G il No.
171153. Sept 12,2007.
5 See 240[2341LabffCode;CerfeaSofRegisfraSonissuedbytfieBureauol LaborRebfcnsfBLf^.
* FeffionbrCertifcafonSection(PCE).
7 SeeArticles2681256]and2W[257] ofiheLalxxCcxtetthicnprwide'n pat “xxx(teaseswherehe pefiionwasfled bya
naflonatunionorfederation,itshaSnotberequiredtodisclosetie namesofthelocalchapter'sofficesandmembers.’

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 400 B M REVIEWER O N LABOR LAW

6.
AFFILIATION AND DISAFFILIATION

t u n i o n v is -A-v isy t s m e m b e r s .

The relationship between the union and its members is that o f principal
and agent, the former being the agent while the latter, the principal. Their
relationship is fiduciary in character. The union is but an agent o f its members for
the purpose o f securing for them fair and just wages and proper, good working
conditions. It includes the obligation to give its members as its principals, all
information relevant to the union and labor matters entrusted to i t The court has
the duty to protect workers from the unfair treatment and unjust exploitation not
only by oppressive employers but also by their own unworthy leaders. Where the
union leadership is recreant in its duty towards the union members, the courts must
be vigilant to protect the individual interests o f the union members.*1

2. M O TH ER U N IO N VIS-A-VIS A F F IL IA T E O R LOCAL
C H A PT ER /C H A R T ER E D LOCAL
In relation to an affiliate or local chapter/chartered local, the federation or
national union is commonly known as the <(m other union.” This term is not
found in law but oftentimes, the Supreme Court uses this term to describe a
federation or a national union.
'ihe mother union, acting for and in behalf o f its affiliate, has the status o f
an agent while the affiliate or local chapter/chartered local remains die principal -
the basic unit o f the association free to serve the common interest o f all its
members, subject only to the restraints imposed by the constitution and by-laws o f
the association.2
3. PURPOSE O F A FFILIATIO N

The purpose o f affiliation is to further strengthen die collective bargaining

leverage of the affiliate. No doubt, the purpose o f affiliation by a local union with a
mother union is to increase by collective action its bargaining power in respect o f
the terms and conditions o f labor.3

4. R IG H T T O DISAFFILIATE.

The tight o f the affiliate union to disaffiliate from its mother federation or
national union is a constitutionally-guaranteed right which may be invoked by the
former at any time. It is axiomatic that an affiliate union is a separate and voluntary

’ HereofTeoduloM. Cnizv. OR GK. Nos.t-23331-32,Dec 27,1969,30SCRA917.

? ProgresswDevetopnientCorporal SeoetaiylDepaitTiertofLat)orandErTipbyrnertiGJlNo.96425,Feb 4.199Z
1 Nafional Unionof Bar* Employees v. PhOnabank EmfdoyeesAssodaSon (PStM), Gi%. Nb.174287. August 12.
2013,dtingMaiayangSamatianngmgaPitenggagawasaM.Greenfieldv. Hon. Ramos.GJl No. 113907, Feb.28,2000.

J9JC9B0M
 C h a pter Five
401
LA BO R RELA TIO N S

association free to serve the interest o f all its members - consistent with the
freedom o f association guaranteed in the Constitution.1

5. D IS T IN C T IO N S AS T O A F F IL IA T IO N & D IS A F F IL IA T IO N .

The following are die distinctions between independently registered union

and local chapter/chartered local, insofar as their relationship with the federation
o r national union is concerned:

Criteria Independently Local Chanter or Chartered

Realstered Union Local
Properterm to describe
the relationshipwith Affiliation Chartering
federationornational
union
Properdenomination of Affiliate* Local Chapteror Chartered LocaP
the union
Nature ofcontractual Principal-Agent Principal-Agent
relationship with
ftmdjpaf-AIKate Union fttoc^-Uxal Chapter/CharteredLocal
federation or national Agent- FederationorNational Union Agent- FederationorNational Union
union
Proofofrelationship Contract of AfftRadon Charter Certificate
Since it is a creation of the federation or
Effect of Does notaffect In anyway its national union, its legal personality is
alliBation/chartering independent legal personality depended uponand coterminousvrithits
association with its creator-the
federation or national union
Does not affect legal personality erases to have any legal personality
Effect of DisaMation since it has its own Independent Exception: If prior to disaffiliation, it has
registration secured independent registration

6. SO M E PR IN C IPL E S O N A F F IL IA T IO N .
• Independent legal personality o f an affiliate union is not affected by
affiliation.4
• The affiliate union is a separate and distinct voluntary association owing its
creation to the will o f its members. It does n o t give the mother union the
license to act independendy o f the affiliate union.5
• The fact that the affiliate union is not a legitimate labor organization does not
affect the principal-agent relationship.1

1 VotechdLaborUnionv.BureauofLaborRe&ions,GJl No.L-45824,June19.1985,137SCRA42.
1 An’SfSatf refersto:

&omthefederaSonarn^onaluniQnwlu(itcrea£ad(L{SecOon1 |a|.l%il8l.BodkV.Ru)es&>tnnple(nent«ieLaborCode;as
amendedbyOepnfbnentO(derNo.40-03.Seriesof2003>9:eb.17,2003D.
1 Technicaay.alocdcf^ae^lfTOjghlhereodedctetEringbyamotoeu^ underArticle241 [234-A]oftoeLabor
Code,cannotbepropertycaledmfef^dahm notacquiredanyIndependentregfctaSonofft m i l
« AdaremandAdamsonv.CR, G il No.L-35120,Jan.31,1984.
5 Ir^HotelEnptoyeesUnton^v.WatetortlnsularHotdOavaOi G il Nos. 17404941.Sept 22,2010.

J9JC9B0M
 402 Bar reviewer on Labor Law

• Affiliate union becomes subject of the rules of the federation or national

union.12
• The appendage of the acronym of the federation or national union after the
name of the affiliate union in the registration with the DOLE does not change
the principal-agent relationship between them. Such inclusion o f the acronym
is merely to indicate that the local union is affiliated with the federation or
national union at the time of the registration. It does not mean that the
affiliate union cannot independendy stand on its own.3
• The fact that it was the federation w hich negotiated the CBA does not
make it the principal and th e affiliate or local union w hich it represents,
the agent.4
• However, if it was the federation which negotiated all the CBAs in the
establishment, the local chapter cannot negotiate the renewal of the CBA
without the consent and participation o f the federation.5
• The fact that it was the name o f the federation that was particularly mentioned
as die bargaining party in the CBA without specifying the affiliate local union
does not have any effect on the right o f the federation to participate in the
bargaining process.6
• It is the local union and not the federarion/national union widi which it is
affiliated that has the right to administer and enforce the CBA with the
employer.7
• In case of illegal strike, the local union, not the m other union, is liable
for dam ages.8

7. SOME PRINCIPLES ON D ISA FFILIA TIO N .

" Disaffiliation docs not divest an affiliate union o f its legal personality.9
1 Disaffiliation of an affiliate union is not an act o f disloyalty.10
• Disaffiliation for purposes of forming a new union docs not terminate the
status of the members thereof as employees of die company. By said act of
disaffiliation, the employees who are members of the local union did not form
a new union but merely exercised their right to register their local union. The
local union is free to disaffiliate from its mother union.11

1 FtSpino Ppe aid Foundry Corporation v. NLRC, G R No. 115180, Nov. 16,1999.
7 See afeo Matayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos, G R No. 113907, Feb. 28,2000.
3 Tropical Hut Food Employees Union - CGW v. Trepeal Hut Food Martel, G R No. 43495-99, Jan. 20,1990.
4 Efeco-EJirol Labor Union (NAFLU] v. Noriel, GR. No. 41955, Dec. 29,1977.
s Abariav. NLRC, G R Nos. 154113.187778,187861 & 196156, Dec. 7,2011,661 SCRA686.
6 F’ambansang Kapa&an ng mga Anak Paws sa Formey Plastic National Workers Brotherhood v. Laguesma, G R No.
111836, Feb. 1,1996,253 SCRA 96.
’ 0isco-Brol Labor Union [NAFLU] v. Noriel, G.R. No. 41955, Dec. 29,1977.
! Filipino Pipe and Foundry Corporation v. NLRC. G.R. No. 115180, Nov. 16,1999.
9 Philippine Skylanders, Inc. v. NLRC, G.R. No. 127374, Jan. 31,2002
10 People's Industrial and Commercial Employees and Workers Organization [FFW] v. People’s Industrial and
Commercial Corporation, G.R. No. L-37687, March 15,1982,112 SCRA 440
” Elisco-Elrol Labor Union [NAFLU] v. Noriel, G. R. L-41955, Dec. 29,1977.

J9JC9B0M
 Chapter Five 403
LABOR RELATIONS

■ Disaffiliation should be approved by the majority of the union members.1

* Disaffiliation terminates the right to check-off federation dues. The
obligation to check-off federation dues is terminated with the valid
disaffiliation of the affiliate union from the federation with which it was
previously affiliated.2
■ Disaffiliation does not affect the CBA. It does not operate to amend it or
change the administration of the contract.3
■ As a general rule, a labor union may disaffiliate from the mother union to form
an independent union only during the 60-day freedom period prior to the
expiration of the existing CBA. It is not, however, legally impossible to effect
the disaffiliation prior to the freedom period, provided that the same is
approved by the majority of the members o f the bargaining unit. Under this
situation, the CBA continues to bind the members o f the new or disaffiliated
and independent union up to the expiration thereof.4
* Disaffiliating from the federation and entering into a CBA with the employer
does not constitute an unfair labor practice.5
■ Disaffiliation is not a violation o f the union security clause.6
* Election protest involving both the mother federation and local union is not a
bar to disaffiliation.7
* The issue of affiliation or disaffiliation is an inter-union conflict the
jurisdiction of which properly lies with the Bureau o f Labor Relations IBLR)
and not with the Labor Arbiter.8

B.
BARGAINING UNIT

1. BARGAINING U N IT , M E A N IN G .

A “bargaining unit” o r m o re a p p ro p ria te ly , “collective bargaining

unit (CBU ),” refers to a group o f employees sharing mutual interests within a
given employer unit, comprised o f all or less than all o f the entire body of
employees in the employer unit or any specific occupational or geographical
grouping within such employer unit.9 It may also refer to the group or cluster of

1 VBarv. Indong, supra; Lberty Cotton k€!s Workers Union v. Liberty Cotton Mills, Inc., G R No. L-33987, Sept 4,1975.
2 Votkschel Labor Union v. Bureau of labor Relations, G R No. L-45824, June 19,1985137 SCRA 42.
3 Volkschel Labor Union v. Bureau of Labor Relations, supra.
4 Associated W aters Union PTGWO v. NLRC, G R Nos. 87266-69, July 30,1990.
5 Phiippne Skylanders, Inc. v. NLRC, G R No. 127374, Jan. 31,2002],
6 Tropical Hut Employees Union - CGW, v. Tropical Hut Food M attel Inc., G .R No. L-43495-99, Jan. 20,1990.
7 Philippine Skylanders, Inc. v. NLRC. G.R. No 127374, Jan. 31,2002.
8 Id.
9 Section 1, Rule I, Book V, Rules to Implement toe Labor Code, as amended by Department Order No. 4M 3, Series of
2003, Feb. 17,2003],

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 404 Bar Reviewer on L\bor Law

jobs or positions within the employer’s establishment that supports the labor
organization which is applying for registration.

It is a legal collectivity for collective bargaining purposes whose members

have substantially mutual bargaining interests in the terms and conditions of
employment as will ensure to all employees their collective bargaining rights. To be
appropnate, a bargaining unit must involve a grouping of employees who have
substantial, mutual interests in wages, hours o f work, working conditions and other
subjects of collective bargaining.1

2. N O HARD AND FAST RULE T O D E T E R M IN E A CBU.

There is no hard and fast rule in determining an appropriate bargaining

unit. The test whether the designation o f a bargaming unit is appropriate is whether
it will best assure to all employees the exercise o f their collective bargaining rights.
There should be a community of interest which should be reflected in groups
having substantial similarity of work and duties or similarity of compensation and
working conditions, among other criteria.2

3. TESTS T O D ET E R M IN E AN A PPR O PR IA T E CBU.

Based on jurisprudence,3 there are certain tests which may be used in

determining the appropriate collective bargaining unit, to wit

(1) Community or mutuality o f interest doctrine;

(2) Globe doctrine;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.

3.1. COM MUNITY OR MUTUALITY O F IN T E R E S T D O C T R IN E .

Under this doctrine, the employees sought to be represented by the

collective bargaining agent must have community or mutuality o f interest in terms
of employment and working conditions as evinced by the type of work they
perform. It is charactenzed by similarity o f employment status, same duties and
responsibilities and substantially similar compensation and working conditions.4

In San Miguel Corporation v. Laguesma,5 the Supreme Court applied this

principle in the petition of the union which seeks to represent the sales personnel
in the various Magnolia sales offices in Northern Luzon. Petitioner took the
position that each sales office should constitute one bargaining unit. In disagreeing
to this proposition of petitioner, the High Court said: “What gready militates
against this position (of the company) is the meager number of sales personnel in

' Durtop Siazenger ptu!s J. Inc. v Seaetary c<Latxx and Enployment. G R No. 131248, Dec. 11,1998. i
J Democratic Latxx Association v. Cebu Stevedomg Co., lnc.,G R N o. 10321, Feb. 28,1958.
3 International School Aliance of Educators PSAE] v Qutsumbing. G R. No. 128845, June 1,2000)
< San Miguel Corporation Employees Union-PTGWO v Confesoc.G.R No 111262, Sept 19,1996,262SCRA81,93.
^ G R No 100485. Sept 21,1994 i
i

J9JC9B0M
 Chaiter Five 405
LABOR RELATIONS

each of the Magnolia sales offices in Northern Luzon. Even the bargaining unit
sought to be represented by respondent union in the entire Northern Luzon sales
area consists only o f approximately fifty-five (55) employees. Surely, it would not
be for the best interest of these employees if they would further be fractionalized.
The adage ‘there is strength in number’ is the very rationale underlying the
formation o f a labor union.”

In San Miguel Corporation Supervisors and Exempt Employees Union v.

Laguesma} the fact that the three (3) plants comprising the bargaining unit are
located in three (3) different places, namely, in Cabuyao, Laguna, in Otis, Pandacan,
Metro Manila, and in San Fernando, Pampanga, was declared immaterial.
Geographical location can be completely disregarded if the communal or mutual
interests o f the employees are not sacrificed. The distance among the three (3)
plants is not productive of insurmountable difficulties in the administration of
union affairs. Neither arc there regional differences that are likely to impede the
operations o f a single bargaining representative.

In University of the Philippines v. Eerrer-Calleja'1-all non-academic rank-and-file

employees o f the University o f the Philippines in Diliman, Quezon City, Padre
Faura, Manila, Los Banos, Laguna and the Visayas were allowed to participate in a
certification election as one bargaining unit.

In St. James School ofQuezon City v. Samahang Manggagawa sa St. James School of
Quezon City;3 the Court allowed respondent union to represent only the rank-and-
file employees (consisting o f the m otor pool, construction and transportation
employees) of petitioner-school’s Tandang Sora campus. It debunked petitioner-
school’s contention that the bargaining unit should not only be composed o f said
employees but must include administrative, teaching and office personnel in its five
(5) campuses. The motor pool, construction and transportation employees o f the
Tandang Sora campus had 149 qualified voters at the time of the certification
election, hence, it was ruled that the 149 qualified voters should be used to
determine the existence of a quorum during the election and not all the employees
in petitioner’s five (5) campuses.

3.2. G LO B E D O C T R IN E .

This principle is based on the will o f the employees. It is called Globe

doctrine because this principle was first enunciated in the United States case o f
Globe Machine and Stamping Co.J where it was ruled, in defining the appropriate
bargaining unit, that in a case where the company’s production workers can be
considered either as a single bargaining unit appropriate for purposes o f collective
bargaining or as three (3) separate and distinct bargaining units, the determining 1*34

1 G R No. 110399, Aug. 15.1997,277 SCRA 370,380-381.

* G R No. 96189, July 14,1992,211 SCRA 451.
3 G R No. 151326, Nov. 23,2005.
4 3 NLRB 294 (1937).

J9JC9B0M
 406 Bar reviewer on Labor U w

factor is the desire of the workers themselves. Consequently, a certification

election should be held separately to choose which representative union will be
chosen by the workers.1

In International School Alliance of Educators [ISAE] v. Quisumbingf the High

Court ruled here that foreign-hired teachers do not belong to the bargaining unit of
the local-hires because the former have not indicated their intention to be grouped
widi the latter for purposes of collective bargaining. Moreover, the collective
bargaining history of the school also shows that these groups were always treated
separately. *

3.3. COLLECTIVE BARGAINING HISTORY D O C T R IN E .

This principle puts premium to the prior collective bargaining history and
affinity of the employees in determining the appropriate bargaining unit. However,
the existence of a prior collective bargaining history has been held as neither
decisive nor conclusive in the determination of what constitutes an appropriate
bargaining unit.3

It was ruled in National Association of Free Trade Unions v. Mainit Lumber

Development Company Workers Union * that there is mutuality o f interest among the
workers in the sawmill division and logging division as to justify their formation of
a single bargaining unit. This holds true despite the history o f said two divisions
being treated as separate units and notwithstanding their geographical distance
from each other.

In San Miguel Corporation v. Laguesmap despite the collective bargaining

history of having a separate bargaining unit for each sales office, the Supreme
Court applied the principle o f mutuality or commonality o f interests in holding that
the appropriate bargaining unit is comprised of all the sales force in the whole of
Northern Luzon.

3.4. EM PLOYM ENT STATUS D O C T R IN E .

The determination of the appropriate bargaining unit based on the

employment status of the employees is considered an acceptable mode.6 For
instance, casual employees and those employed on a day-to-day basis do not have
the mutuality or community of interest with regular and permanent employees.
Hence, their inclusion in the bargaining unit composed o f the latter is not justified.7

t See also Mechanical Department Labor Union sa PhSppine National Raiways v. CIR, G. R. No. 1-28223, Aug. 30,1968.
2 G.R. No. 128845, June 1,2000.
3 San Mguel Corporation v. Laguesma, iifra; National Association of Free Trade Unions v. Mainit Lumber Development
Company Workers Union, infra.
4 G R No. 79526. Dec. 21,1990.
5 G R No. 100485. Sept 21,1994.
6 Rothenberg on Labor Relations, pp. 482-510.
1 Philippine Land-Air-Sea Labor Union v. CIR, G.R. No. L-14656, Nov. 29,1960.

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 Chapter Five 407
LABOR RELATIONS

The case o f Bcfyca Corporation v. Ferrtr-Calltja,1 best illustrates this mode.

This case involves a corporation engaged in piggery and poultry raising, planting o f
agricultural crops and operation o f supermarts and cinemas. The Supreme Court
ruled that it is beyond question that the employees o f the livestock-agro division o f
the corporation perform work entirely different from those being performed by
employees in the supermans and cinemas. The differences among them lie in their
working conditions, hours o f work, rates o f pay, including the categories of their
positions and employment status. As stated by petitioner in its position paper, due
to the nature of the business in which its livestock-agro division is engaged, very
few o f its employees therein are permanent, the overwhelming majority o f whom
are seasonal and casual and not regular employees. Definitely, they have very little
in common with the employees o f the supermans and cinemas. To lump all its
employees in its integrated business concerns cannot result in an efficacious
bargaining unit comprised of constituents enjoying a community or mutuality o f
interest. Undeniably, die rank-and-file employees o f the livestock-agro division
fully constitute a bargaining unit diat satisfies both requirements o f classification
according to employment status and o f substantial similarity o f work and duties
which will ultimately assure its members the exercise o f their collective bargaining
rights.2

c.
BARGAINING REPRESENTATIVE

1.
SOLE AND EXCLUSIVE BARGAINING AGENT
(SEBA)
1. M E A N IN G .

“Sole and exclusive bargaining agent (SEBA)” refers to a legitimate

labor union duly certified3 as the sole and exclusive bargaining representative or
agent o f all the employees in a collective bargaining unit (CBU).4 A labor union
certified as SEBA means that it shall remain as such during the existence of the
CBA, to the exclusion o f all other labor organizations existing and operating in the
same CBU, and no petition for certification election (PCE) questioning its majority
status shall be entertained nor shall certification election be conducted outside o f
the 60-day freedom period immediately before the expiry date o f the 5-year term o f

> G.R. No. 77395, Nov. 29,1988.

2 See also Democratic Labor Association v. Cebu Stevedoring Co., Inc, G A No. 10321, Feb. 28,1958,103 P hi 1103.
3 The wiion becomes the SEBA through any of the foOcwing processes: certification election, coosentetection, rurv-off ejection
or re-run ejection. Voluntary recognition, as a mode of designating a SEBA, has already been repeated and replaced by the
new mode called 'Request for SEBA Certification’ per amendment by Section 3, Department Order No. 40-M 5, Series of
2015 [September 07, 2015], entitled Timber Amending Department Order No. 40, Series of 2003, Amending the
Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.'
4 Artide 219® [2120)]; Section 1[t], Rule I, Book V, Ibid.

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 408 bar Reviewer o n La bo r Law

the CBA.1 Once certified, what is represented by the SEBA are not only its
members but also those who are members o f other unions, called "minority”unions,
who are included in the CBU.2

2. A N O N -C E R T IF IE D U N IO N C A N N O T C O L L EC T IV EL Y BARGAIN.

Under Article 267 [255]3 o f the Labor Code, it is clear that only the labor
organization selected by the majority o f the employees in an appropriate CBU
through any of the proper certification election processes can act as the exclusive
representative or SEBA o f all the employees in such unit for purposes o f collective
bargaining with the employer. Hence, if the union is admittedly not the exclusive
representative of the majority of the employees in a CBU, it could not demand
from the employer the right to bargain collectively in their behalf.4

3. R IG H T O F INDIVIDUAL E M PL O Y E E O R G R O U P O F E M PL O Y E ES
T O BRING GRIVANCES D E S P IT E E X IS T E N C E O F S E B A

Article 267 [255]5 recognizes an exception to the SEBA exclusivity rule.

The existence and designation of a SEBA does not have the effect o f depriving an
individual employee or group o f em ployees, regardless o f w hether they are
mem bers or non-m em bers of th e SEBA, to exercise their right at any time to
present grievances direedy to their employer, with or without the consent,
pardcipadon or intervention of the SEBA.4 This simply means that a SEBA cannot
force an individual employee or group of employees to use only die union
grievance procedure or machinery in bringing grievances to the employer, although
it may insist on having a representative present at die grievance meeting o f the
individual employee or group of employees with the employer. Thus, any employee
or group o f employees who want to settle a problem direedy with the employer
may do so without getting afoul o f the exclusivity rule that generally the SEBA
could invoke. They cannot be accused o f committing any anti-union violation or
act o f disloyalty against their union.

* 265(253-Al.liibaCcxle;TradeUnionsofthePWippines/FfibiiiaiySxMovement[RIPAS/FS^v.Laguesma,GR
No.95013, Sept 21,1994.
* NationalBoeway&AEfedIndustriestrior UnionofthePhBppinesv. SanMguel Brewery, Inc, G il No. L-18170,Aug. 31,
1963,8SCRASOS;DaiyQueenPnoductsofOiePHSjppines.Inc.v. CIR, Gil. No.L-35009,Aug. 31,1977.78 SCRA439.
3 The&stparagic^dlhisartde|xc^:,Art)cte267^Exrfe)^Baiga^Represerta6OTandVtoteB,Partdpa0m
in Poky and DedsiotvMalang. - Hie laboroganfeaSon designated a selected by the majority of toe employees to an
appropriatetofecGvebargainingunitshal beAteexclusiverepresentafiveof theen^toyeesh suchunitforthepurposeof
cdfecfcebarring. However, an MMdual employee orgroupof employees shal havethe right at anytime topresent
grievancestothe*employer/
4 Pfippine DiamondHotel aid Resort, Inc. [Mania Diamond HoCe!]v. Mante Diamond Hotel EmptoyeesUnion, GR No.
158075,June30,2006.
5 Artide 267 (255). Exclusive Bargsniig Representation and Waters' ParScipaSon in Pofcy and DedsiorvMaking. - The
tabororganizationdesignatedorselectedbytoem$rty oftheemployeesinan appropriatecotecfivebargainingunitshal
be toe exclusive representa&ve of toe employees in such uni tor toe purpose of cofec&ve bargaining. However, an
Individual employeeorgroupofemployeesshall havethe rightatanyArneto presentgrievancestothecremployer.
* Article267(255), laborCode.

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 CHAPTER FIVE 409
LA BO R RELA TIO N S

Article 267 [255] has not defined nor described with clarity who the
individual employee and/or group o f employees referred to therein are but it may
be logically inferred from a reading o f this article, in correlation with relevant
jurisprudence, that these employees may either be:

(1) Members o f the SEBA, as in the case o f Tabigte,1*or

(2) Non-SEBA members who belong to another union, as in the case o f
Insular Hotel.1
H owever, this rig h t does n o t authorize th e individual em ployee o r
group o f em ployees to bring th eir grievances through th e CBA’s grievance
m achinery and, if unsettled, elevate th em to voluntary arbitration w ith o u t
the participation of the SEBA. While Article 267 [255] deadly enunciates the rule
that an individual employee or group o f employees ate allowed to bring grievances
direedy to the employer without need to secure die prior consent or partidpadon
o f the SEBA, jurisprudence, however, has clarified that they cannot have their
grievances processed through the grievance machinery and voluntary arbitration
mechanism provided in the CBA without the parddpation o f the SEBA, th e reason
being that such processes are contractually granted by die parties thereto - the
employer and the SEBA - hence, their consent, especially that o f the SEBA’s,
should first be secured by the individual employee or group o f employees.

Atlas Farms* is very definitive on this requirement,

“m Pursuant to Artide 273 [260] of the Labor Code, the parties
to a CBA shall name or designate their respective representatives to the
grievance machinery and if the grievance is unsettled in that level, it
shall automadcally be referred to the voluntary arbitrators designated in
advance by parties to a CBA Consequently, only disputes involving
the union and the company shall be referred to the grievance
mRchinery.or.vQlimtaty.^rbit^t9rs”45
Resultantly, if the grievance or dispute is between an individual employee
or group o f employees [but not the SEBA], on the one hand, and the employer
(referred to as company in Allas), on the other hand, there is no way it could be
referred to or processed through the grievance machinery or voluntary arbitration
provided in the CBA.

The case o f TabiguP has reiterated Atlas Farms. The petitioners in this
case are members o f 1NTERCO Employees/Laborers’ Union (the union), the
bargaining agent in respondent company. Without the participation o f the union,
petitioners filed a Notice o f Preventive Mediation with the NCMB against

1 Tabiguev. IntemaSonal CopraExportCorporation, GR. No. 163335, Dec. 23.2009.

1 hsriarHotElBiployeesUnjoftt^v.WaSe^hsijtarHotd Dawo. G.R. Nos. 174WW1,Sepl 22,2010.
1 AllasFame, Ire V.NU&.GA No. 142244, Nov. 18,2002,440 PM. 620.
4 EnphasisandundascoringsuppBed.
5 Supra.

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 4io Bar Reviewer on Labor Law

respondent company for notation of the CBA and for failure to sit on the grievance
conference/meeting. As the parties failed to reach a settlement before the NCMB,
petitioners requested to elevate the case to voluntary arbitration. The NCMB thus
set a date for the parties to agree on a Voluntary Arbitrator. However, before they
could finally meet, respondent company presented before the NCMB, a letter of
the president of the union of which petitioners are members, addressed to
respondent company’s plant manager, stating that petitioners "are not duly authorised
by [the] board or the officers to represent the union, [hence] ... a/l actions, representations or
agreements made by these people with the management will not be honored or recognised by the
union. ” Respondent company thus moved to dismiss petitioners’ complaint for lack
of jurisdiction. In affirming the position taken by the union president, the Supreme
Court reasoned that the right of any employee or group of employees to, at any
time, present grievances to the employer docs not imply the right to submit the
same to voluntary arbitration. In this case, petitioners have not been duly
authonzed to represent the union, hence, they cannot present their unsettled
grievances for voluntary arbitration.1
Insular Hotel,2 reiterated Tabigue. In this case, the DIHFEU-NFL,3 the
recognized SEBA, entered into a Memorandum o f Agreement (MOA) with the
respondent hotel which superseded the affected provisions o f the existing CBA.
The MOA was executed to effect the re-opening o f the hotel which earlier
suspended its operation due to extreme business losses. Individual members of
another union, the IHEU-NFL,4 petitioner in this case, which claimed to be
affiliated also with the same federation, questioned the validity of the MOA by
filing a Notice of Preventive Mediation with the NCMB.
On die issue of the identity of the duly recognized union, the respondent
hotel contended that it is DIHFEU-NFL which is the only recognized bargaining
agent in their establishment, the other union, IHEU-NFL, being a non-entity
since, as certified by the DOLE, it is not a registered labor organization. It was
held, however, that respondent hotel is already estopped from questioning the
same as it did not raise the said issue in the proceedings before the NCMB and the
Voluntary Arbitrator. A perusal of the records revealed that the main theory posed
by respondent hotel was whether or not the individual employees had the authority
to file the complaint, notwithstanding the apparent non-participation of the union.
Respondent hotel never put in issue the fact that D IHFEU -NFL was not the same
as IHEU-NFL. Consequently, it was declared already too late in the day to assert
the same.

Resolving the issue raised by respondent hotel o f whether the individual

members of IHEU-NFL have the requisite standing to question the MOA before

1 See atsoAtSas Farms, Inc. v NLRC, G R No. 142244, Nov. 18,2002,440 Phil. 620.
1 Insula' Hotel Employees Union-NFL v. Waterfront Insular Hotel Davao, G R Nos. 174040-41, Sept 22,2010.
3 Da'/ao insular Hotel Free Employees Un«o-Natiooal FederaOon of Labor (DiHFEl^NFL).
4 Insular Hotel Employees Union-National Federation of Labor (IHEU-NFL).

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 Chapter. Five 4U
LABOR RELATIONS

the NCMB and the Voluntary Arbitrator, the Supreme Court, invoking its ruling in
Tabigue and the provision of the NCMB Manual of Procedure1 which provides that
only a voluntarily recognized2 or certified bargaining representative has the right to
file a notice or request for preventive mediation, declared that the individual
members of the union have no authority to file the Notice oj Preventive Mediation
and/or voluntary arbitration case. Clearly, therefore, the NCMB and the Voluntary
Arbitrator have no jurisdiction to entertain the Notice of Preventive Mediation and the
voluntary arbitration case. In order to acquire legal standing3 to initiate the
complaint which, in this case, was in the nature of a Notice of Preventive Mediation, the
individual employee or group of employees should be shown to have been duly
authorized to represent the SEBA. Petitioners have not, however, shown by
evidence that they have been duly authorized to represent the SEBA.

4. FIV E (5) M ODES.

The SEBA of the employees in a CBU may be determined through any of

the following modes:

(a) Request for SEBA certification4 (which repealed and replaced

‘Voluntary Recognition'5 as a mode of securing SEBA status);
(b) Certification election;6
(c) Consent election;7
(d) Run-off election.8
(e) Re-run election.9

1 Section 3. Rule IV of the NCMB Manual of Procedure.

2 It must be noted that "Voluntary Recognition" as a mode of designating a SEBA has already been repealed and replaced by
(he mode known as ‘Request for SEBA Certification,* per Department Order No. 404-15, Series of 2015, issued on
September 07,2015. Particularly repealed is Rule VII [Voluntary Recognition], Book V, Rules to Implement Hie Labor Code,
as amended by Department Order No. 40453, Series of 2003, [Feb. 17, 2003], This provision has been repealed and
replaced by a new provision entitled, "REQUEST FOR SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA)
CERTFICATION", pursuant to the amendment introduced by Section 3 of said Department Order No. 40-1-15, Series of
2015.
J According to Joya v. Presidential Commission on Good Government G R No. 95541, Aug. 24,1993, leg al standing-
means a personal and substantial interest in the case such that toe party has sustained or will sustain direct injury as a result
of the xxx act being challenged. The term "interest* is material interest an interest in issue and to be affected by the decree,
as (Sstinguisted from mere interest in the question hvoted, or a mere incidental interest fAocewer, he interest of the party
plaintiff must be personal and not one based on a desire to vindicate Ihe constitutional right of some third aid unrelated
party. (See Cagayan Electric Power & Trading Company, Inc. (CEPALCO) v. CEPALCO Employee's Labor Union-
Associated Labor Unons-TUCP, G.R. Nos. 211015& 213835, June 20,2016).
4 This is a new mode which repealed and replaced “Voluntary Recognition', per amendment by Section 3, Department Order
No. 4 0 H 5 , Series of 2015 [September 07.2015). entitled ‘Further Amending Department Order No. 40. Series of 2003,
Amending the Implementing Rules and Regulations of Book V of Ihe Labor Code of the Phlipp'nes, as Amended."
5 Formerly denominated as Section 2, Rule VI, Book V, Rules to Implement the Labor Code, as amended by Department
Oder No. 404)3, Series of 2003. [Feb. 17,2003],
6 Id.
7 Id.
8 Id.
9 New Section 1(tt), Rule I, Book V, Rules to Implement Ihe Labor Code, as amended by Department Oder No. 4003, Series
of 2003, [Feb. 17.2003], as further added through the amendment introduced by Section 2, Department Order No. 40M 5,

J9JC9B0M
 412 Bar Reviewer o n labor Law

These modes are discussed hereunder in seriatim.

a.
REQUEST FOR SEBA CERTIFICATION

L N EW M O D E O F D E T E R M IN IN G SEBA.
Department Order No. 40-1-15, Series of 2015,1 has expressly repealed the
entire set o f Rules* 12applicable to *Voluntary Recognition” in die Labor Code’s
Implementing Rales on Book V and replaced it with the vfreshly-minted mode o f
securing the status of a SEBA through a "Requestfor SEBA Certification” or simply
*'Request. ”

2. JU STIFICATIO N FO R T H E R EPEA L.
It is an iron-dad rule that in an inter-union or certification/representation
dispute, the employer is a mere bystander and should never be considered a party
thereto; it has no concomitant right to oppose in any way the petition for
certification election (PCE).3 This rule holds true irrespective o f whether the PCE
is filed by the employer or by a legitimate labor organization.4 I f ever one may call
it as participation at all, the employer’s role in such proceedings is limited to only two
(2) matters, to wit.
(1) To be notified or informed o f the filing o f the PCE; and
(2) To submit the list of employees during the pre-election conference,
should the Med-Arbiter act favorably on the PCE.5
Being the sole and exclusive concern and domain o f the employees,6 the
previous mode o f allowing the employer to extend “voluntary recognition” 7 to
enable a union to become a SEBA is a patently incongruous and self-contradictory
rule that runs diametrically contrary to die autonomous process o f choosing the
SEBA. For by so allowing the employer to extend tlvohmtasy recognition”to a union, it

Seriesof2015 [September07, 2015J, enffledfurtherAmemfiq DepartmentOder No.40, Seriesof2003,Amending(he

ImpJemertingRiiiesandReguIaSonsofBookVoff>eLaborCodecfEhePtil^jpines.asArnerxJect'
1 lssuedonSepten*er07,2015.
2 Pafcuiafty8sRuleVU[VotuntaryRecogniSon], BookV, RulestoImplement(heLaborCode, as amendedbyDepartment
OnierNo.4003, Seriestrf2003, [Feb. 17,2003J.Thisprovisicnhasbeenrepealedandreptacsdtsyanewprovisionentjfled,
•REQUESTFORS01HANDEXCLUSIVEBARGAININGAGENT(SEBA) CERnFICATKMT, pusuanttohe amendment
introducedbySecfion3, DejatnentOuterMl 40+15, Seriesof 2015 (September07,20151, enfSedTutor Anwrfng
DepartnrtentOcderNo;40,Seifes€t2003.AmendSngthelmplBmenflrigRutesandRegtteBonsofBookVoftheLal)orCo<te
oftePWpphes, asAmended.*
3 Arfde271 [258^ (EnployerasBystanria),LaborCode.
4 kL
5 tt
6 TheHeritageHotelMardav.SeordatyofLaborandEnttph^menl.GB. No. 172132,Ju^23,2014.
1 As defined under tie previous Rides, "voEurtaiy recognSorf refers to Ihe process by wtuch a tegifrnae labor union is
vatotartyreoognizedbytheenvIoverastieexctusvebargainiingrepresenlaSveoragentinabaigainingunaandrepoited
assuchv»th(heRegional Office. (SeeSecfion2, RuleVII, BookVof IheRulesto Implementthelata Code. (SeeSecfion
1tbbbj, FhjJeI, BookV, furies toImplementtheLaborCodo, asamendedbyDepartmentOnfer No. 40-03, Series of2003,
[Feb. 17,2003]).

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 Chapter . Five 413
LABOR RELATIONS

is, in a way, no longer die employees but die employer that determines and
designates die SEBA when the latter is not supposed to have any iota o f role in
such determination and designation.
Although the 2015 issuance123that repealed “voluntary recognition" failed to
explain the rationale behind it, the foregoing disquisition on the bystanderrole o f the
employer in die certification election process is the only logical rationale for such
repeal and its eventual , replacement by the mode o f filing a Request for SEBA
Certification by the union desiring to be certified as a SEBA, without need to secure
first die consent and voluntary recognition o f the employer. And under this new
rule, the D O LE Regional Director is duty-bound to issue such SEBA Certification
simply on the bads o f the requesting union’s compliance with die requirements.
3. W H E R E FIL E D .
Any legitimate labor organization may file a Requestin the D O LE Regional
Office which issued to it its Certificate of Registration1 o r Certificate of Creation of
CharteredLocal,9 as the case may be.4
4. D O C UM EN TARY R E Q U IR E M E N T S F O R T H E REQ U EST.
The Request should indicate:
a. The name and address o f the requesting legitimate labor organization;
b. The name and address o f the company where it operates;
c. The bargaining unit sought to be represented;
d. The approximate number o f employees in the bargaining unit; and
e. I h e statement o f the existence/non-existence o f other labor
organization/CBAS

The Certificate of Registration as duly certified by die president o f the

requesting union or- Certificate of Creation of Chartered Local as duly certified by the
president o f die federation o f die local chapter/chartered local is required to be
attached to die Request.6

5. A C T IO N O N T H E R EQ U EST .

Within one (1) day from the submission o f die Request, the D O L E
Regional Director should:

1 DepmmertOrderbb.4(M45,Seriesof2015,IssuedonSeptenter07,2015.
2 h hecaseofanindependent^registeredunion.
3 hhec8seofaiocalchapterachartB(BdlocaL
4 Secfion1, RuleVII, BookV, Rulesto tnnplemenlffn LaborCode, as amendedby DepartmentOrderNo. 4(V03. Series of
2003, [Feb. 17,200%andasfudheramended bySection3, DepartmentOder No.404-15, Seriesof2015{September07,
2015J, en8Sed Turther Amending Department Order No. 40, Series of 2003, Amending the Implementing Rifes and
RegtMons of Book V of the Labor Code of the Phfippihes, as Amended.' Other terms used synonymous!/ and
hterchangeabtywflh'charteredbearare focalchapter*,focaKchapter*, focaPcr'chapter.”
5 Secdon2, RuleVII, Ibid.

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 414 Bar. reviewer o n La bo r Law

a. Determine whether the request is compliant with the documentary

requirements as above enumerated1 and whether the bargaining unit
sought to be represented is organized or not; and
b. Request a copy of the payroll for purposes o f SEBA certification.2*

If he/she finds it deficient, the DOLE Regional Director should advise

die requesting union or local chapter/chartered local to comply within ten (10)
days from notice. Failure to comply within the prescribed period shall be deemed
withdrawal o f the Request?

6. T H R E E SCENARIOS IN VO LVIN G A R E Q U E S T F O R
CERTIFICA TION .

There are three (3) scenarios conceived under the Rules on this mode,
namely:

(1) Request for certification in u norganized establishment with only

r n f1^ legitimate union:
(2) Request for certification in u norganized establishment with more
than one fll legitimate labor organization: and
(3) Request for certification in organized establishment

The foregoing scenarios are discussed below.

6.1. .FiftSTSCENARIO: Request for certification in U N O R G A N IZ E D

establishm ent with only one (1) legitim ate union,

a. Validation process.
If the DOLE Regional Director finds the establishment unorganized
with only one (l) legitimate labor organization in existence therein, he/she
should call a conference within five (5) working days for the submission o f the
following:

1. The names o f employees in the covered bargaining unit who signify

their support for the SEBA certification, provided that said employees
comprise at least majority o f the number o f employees in the covered
bargaining unit; and
2. Certification under oath by the president o f the requesting union or
local chapter/chartered local that all documents submitted are true and
correct based on his/her personal knowledge.4
The submission shall be presumed to be true and correct unless contested
under oath by any member of the bargaining unit during the validation conference.

1 Refieni)ngto0m(toaBnenta(yrBquaeRientsinenGonednSec6on2,RuleVntrl]id.
2 Rxsuant to Section4 [REQUEST FORCERTIFICATION IN UNORGANIZED ESTABLISHMENTWITH ONLY ONE (1)
LEGITIMATEUNION;VALIDATIONPROCEEDINGS]ofRuleVII, Ibid.. (Section3. RuleVII. Ibid.).
2 Id.
4 Section4. RuleVII, Ibid.

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 C ha pter Five 415
LABOR R ELA TIO N S

For this purpose, the em ployer o r any representative o f the em ployer shall not
be deem ed a party-in-interest b u t only as a bystander to the process o f
certification.1
If the requesting union o r local chapter/chartered local fails to complete
the requirements for SEBA certification during the conference, the Request should
be referred to the Election Officer for the conduct o f certification election.2
b. When SEBA Certification should be issued.
I f the D O LE Regional Director finds the requirements complete, he/she
should issue, during the conference, a Certification as SEBA to the requesting union,
granting the tights and privileges o f an exclusive bargaining agent o f all the
employees in the covered bargaining unit3

The D O LE Regional Director should cause the posting o f die SEBA

Certification for 15 consecutive days in at least 2 conspicuous places in the
establishment or coveted bargaining unit4
c. E ffect o f certification.
U pon the issuance o f the Certification as SEBA, the certified union or local
chapter/chartered local shall enjoy all the rights and privileges o f an exclusive
bargaining agent o f all die employees in die covered CBU.5

d. Certification year bar rule.

The issuance o f the SEBA Certification bars the filing o f a petition for
certification election (PCE) by any labor organization for a period o f one (1) year
from the date of its issuance. It is only upon the expiration o f this 1-year period
that any other legitimate labor organization may file a PCE in the same CBU
represented by the certified SEBA for purposes o f challenging the majority status
of the certified SEBA, unless a CBA between the employer and the certified SEBA
has already been executed and registered with the Regional Office.6

6.2. SECOND SCEN A RIO: R equest for certification in U N O R G A N IZ E D

establishm ent w ith more th a n one (11 legitim ate labor organization.

If the D O LE Regional Director finds the establishment unorganised with

mote than one (1) legitimate labor organization, h e/she should refer die same to

» a.
2 Id, pursuanttoRule !Xof}veRules.
2 Sec6on4.URufeVH.BnL
4 U
5 Section42, RideVII, Ibii
6 hL,inacoonlanoewShnuleXVElof8ieRides.ltmustbenoted&iataAeroe(£Sca6on,anemfA)yeris(Bi|ifledtobaQasue9i
flieceiffied SEBAfora reasonable ^.vvhicb isusua^oneyear,inIheabsenceol^jmisualdrunistances.*Thecerfied
&BA Ibr(hat periodis ondtswely presumed torepresent fte m$rfy of the employees h DieCBU; Otispresumption,
however, becomesrebuttablealtersuchperiod. Buti Hie SEBAlosesitsirejorfysfending becaused (heoommtssionof
HP by the employer against it, the SEBAcan legaty insist on its being such even ^ter the lapse o( the 1-year period,
vfflwipnjurfice tofte employerbeiigprosecutedf o r UIPad

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 4 i6 BAR REVIEWER ON LABOR LAW

die Election Officer for the conduct of a certification election1*in accordance with
die Rules}

6.3. THIRD SCENARIO: Request for certification in O RG AN IZED

establishment.

If the Regional Director finds the establishment organized, he/she should

refer the same to the Med-Arbitcr (Mediator-Arbiter) for the determination of the
propriety of conducting a certification election.3

7. CONDUCT OF C ER T IFIC A TIO N E L E C T IO N U N D E R T H IS

MODE.

It is clear that under the three (3) scenarios cited above, the 2nd and 3rd
clearly involve the conduct of certification election. It is only in the 1st that the
conduct of certification election is not the order o f the day; there will be
certification election only when the requesting union or local chapter/chartered
local Jails to complete the requirements for SEBA certification during the
conference, in which event, die DOLE Regional Director shall refer the Request
direedy to the Election Officer, not to the Med-Arbiter (Mediator-Arbiter),4 for the
conduct of certification election.5

b.
CERTIFICATION ELECTION

1. D E FIN IT IO N AND N ATURE.

"Certification election” refers to the process o f determining through secret

ballot the SEBA of the employees in an appropriate CBU for purposes o f collective
bargaining with the employer. A certification election is conducted only upon the
order of the Med-Arbiter of the BLR.6

Certification election is the most democratic method o f determining the

choice of the employees o f their bargaining representative.7 It is held to ensure that
the employees are properly represented in the exercise o f their right to collective
bargaining widi their employer.8 N o obstacle must be placed to the holding o f a
certification election for it is the statutory policy that it should not be

' Section 5, Rule VII, bid.

7 Refening to Rute IX of these Rules.
J Section 6, Rule Vll, Ibid, n accordance wifi Rules VIII and IX of the Rules.
8 It is significant to note that it is the Mediator-Arbiter wtio has original jurisdiction over inter-union or certification
elec&ori/representabon disputes. (See Aride 232 [2261, Labor Code). The Election Officer rrereiy conducts the certification
election
5 Section 4, Rule Vll, in relation and pursuant to Rule IX of the Rules.
6 Section 1 [h], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 4603, Series of
2003, Feb. 17.20031
' PMippre Airfnes Employees' Association v. Femer-Cafleja, G.R. No. 76673, June 22,1988.
8 FOfTAF v. Nonet. G.R. No. L-41937, July 6,1976; CCUJ v. Nonet, G.R. No. 1-56902, Sept 21,1982.

J9JC9B0M
 Chapter Five 417
LABOR. RELATIONS

circumvented.1 It is not a litigation proceeding in the sense in which this term is

commonly understood. It is a mere investigation of a non-adversary fact-finding
character in which the DOLE plays the part of a disinterested investigator seeking
merely to ascertain the desires o f the employees as to the matter o f determining
which labor organization will represent the employees in their collective bargaining
with the employer.2 It is not therefore bound by the technical rules o f evidence.3 In
case of doubt, the PCE should be resolved in favor of the holding o f a certification
election.4

2. PARTIES T H A T MAY F IL E A PCE.

A PCE may be filed by:

(1) Any legitim ate labor organization, including:

(a) A national union or federation that has issued a charter certificate
to its local chapter/chartered local. The former is filing the PCE
for and on behalf o f the latter; or
(b) The local chapter/chartered local itself which has been issued a
charter certificate by the national union or federation;5 or
(c) An independently registered union.
(2) An employer, when requested to bargain collectively in a bargaining
unit where no registered CBA exists.67

a. On legitimacy requirement.
In Piega Hut,1 it was held that the Labor Code requires that in both
organised and unorganised establishments, a PCE must be filed by a legitimate labor
organization. The acquisition o f rights by any union or labor organization,
particularly the right to file a PCE, first and foremost, depends on whether or not
the labor organization has attained the status o f a legitimate labor organization.8

' Trade Unions of the Phlippines and Allied Services W ald Federafiai of Trade Unions [TUPAS-WFRJ] v. Laguesma, G.R.
No. 102350, June 30,1994.
2 The Heritage Hotel Manila v. Secretary of Labor and Employment, G R No. 172132, July 23,2014.
3 Associated Labor Unions v. Ferrer-Calleja, G R No. 82260, July 19,1989.
4 National Federation of Labor v. The Secretary of Labor.GR No. 104556, March 9,1998.
5 Articles 241 [234-A], 268 (256) and 269 (257), Labor Code; See also Section 1, Rule VIII, Book V, Rules to Implement the
Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30,2008J, issued pursuant to FLA No.
9481. and as further amended by Section 4, Department Order No. 40-M5, Series of 2015 (September 07,2015], entitled
•Further Amending Department Order No. 40, Series of 2003, Amending the Implementing Rules aid Regulations of Book V
of the Labor Code of the Phjppines, as Amended’
6 Article 27C [258], Labor Code, See also Section 1, Rule VIII, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40+-03. Series of 2008 [October 30,2008], issued pursuant to R A No. 9481, and as inher
amended by Section 4, Department Order No. 40+15, Series of 2015 (September 07,2015], Ibid.
7 Progress.veDevelopmentCorp-PizzaHutv.Laguesma,GRNo.115077,April18,1997,271 SCRA593.
s Tagaytay Highlands International Golf Club Inc. v. Tagaytay Highlands Employees UniomPGTWO, G R No. 142000, Jan
22,2003

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 418 Bar Reviewer on Labor Law

In cases where the petition is filed by a national union or federation in

letter (b) above, it shall not be required to disclose the names of the local
chapter/chartered local’s officers and members.1 It shall attach to the PCE the
charter certificate it issued to the local chapter/chartered local.2 Needless to state,
the national union or federation, by so filing, is acting as die agent of the local
chapter/chartered local which, for all legal intents and purposes, is considered the
principal. It must be noted that a union can file a PCE even during the pendency of
its registration. This was underscored too clearly in the case of U.E. Automotive
Employees v. Noriel;3 where it was ruled that a union’s right to file die petition is
guaranteed, even pending the registration process, for as long as no fatal defect
exists in its application for registration.

b. When employer may file the PCE.

When requested to bargain collectively, an employer may petition the
BLR for a certification election. If there is no existing certified SEBA in the unit,
the Med-Arbiter of the BLR shall, after hearing, order a certification election.4 All
certification cases shall be decided within twenty (20) working days. The BLR shall
conduct a certification election within rwenty (20) days in accordance with the rules
and regulations prescribed by the DOLE Secretary.5

c. Role o f employer as bystander.

In all cases, whether die PCE is filed by an employer or a legitimate labor
organization, the employer shall not be considered a party diereto widi a
concomitant right to oppose the PCE. The employer’s participation in such
proceedings shall be limited to:

(1) being notified or informed o f petidons of such nature; and

(2) submitting the list of employees during the pre-election conference
should the Med-Arbiter (Mediator-Arbiter) act favorably on the
petition.6

3. W HERE T O FIL E T H E PCE.

A PCE should be filed with the D O LE Regional Office which issued the
petitioning union's certificate of registration or certificate of creation of chartered

1 See Arfdes 268 (2561 and 2591257], as amended by Secfioos 23 and 24, RA. No. 6715. March 21.1989 and Section 11,
R A No. 9481, which lapsed into law on May 25,2007 and became effective on June 14,2007; As renumbered pursuant to
Section 5, R A No. 10151, June 21,2011 and DOLE Department Advisoty No. 01, Series of 2015 (Renumbering of the
Labor Code of the PhEppines, as Amended), issued on July 21,2015.
2 Articles 268 [256] and 269 [257], Labor Code.
3 G JlNo. L-44350, Nov. 25,1976,74 SCRA72.
4 Artide 270 [258], Labor Code.
s Id.
6 Section 1, Rule VIS, Book V, Rules to Implement the lAbor Code, as amended by Department Order No. 40-F-03. Series of
2008 [October 30,2008], issued pursuant to R A No. 9481, and as further amended by Section 4, Department Order No
404-15, Series of 2015 [September 07,2015], bid.

J9JC9B0M
 Chapter Five 419
LABOR RELATIONS

local.1 The PCE shall be heard and resolved by the Med-Arbiter (Mediator-
Arbiter).23

4. ON-LINE FILING OF PCE.

The Implementing Rules, as amended, now provide that at the option o f the
petitioner, a PCE and its supporting documents may be filed on-line,1 that is,
through the internet The same Rules, however, do not provide the internet link to
any website where the on-line filing may be made.45

5. LABOR OFFICIALS INVOLVED IN ELECTIONS.

a. M ediator-Arbiter hears and resolves PCEs.
The PCE is heard and resolved by the Mediator-Arbitcrs (or Med-Arbiter,
as this term is used in the Labor Code).6
b. E lection Officer.
The actual certification election is conducted by the “Election Officer1’ who
is an officer o f the BLR or the Labor Relations Division in die DOLE Regional
Office authorized to conduct:

(1) Certification, consent, run-off or re-run elections;

(2) Elections of union officers; and
(3) Other forms of elections and referenda.7

6 . CERTIFICATION ELECTIO N IN TWO (2) KINDS OF

ESTABLISHMENTS.
Generally, certification election may be conducted in two (2) kinds of
establishments, namely:

(a) Unorganised establishment; and

(b) Organised establishment.

The first above is provided in Article 269 [257 J; while the second, under
Article 268 [256].

1 Section 2, Rule VIII, Book V, Rules to Implement Ihe Labor Code, as amended by Department Older No. 4003, Series of
2003, [Feb. 17,2003], aid as further amended by Secfion 5, Department Order No 40M 5, Series of 2015 [September 07,
2015], ensiled 'Further Amending Department Order No. 40, Series of 2003, Amending toe Implementing Rules and
Regulations of Book V of the Labor Code of the Philippines, as Amended.'
2 Id.
3 Id.
4 The website address of toe Bureau of Labor Relations is htlpM.dole.gcv.ph/. However, a search cf this website indicates
that there is no webpage therein where onTne fTng may be made. Last accessed: October 09,2016.
5 As this term is used in the Implementing Rules of the Labor Code.
6 Section 2, Rule VUI, Book V, Rules to Implement toe Labor Code, as amended by Department Order No. 4003, Series of
2003, [Feb. 17,2003] and as further amended by Section 5, Department Order Na 401-15, Series cf 2015 [September 07,
2015}.
1 Section 1 (oj. Rule I. and Sections 2-5, Rule XII, Book V, Ibid.

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 420 Bar reviewer on Labor Law

An "organised establishment” refers to an enterprise where there exists a

SEBA,1 regardless of whether a CBA has been concluded or not by such SEBA
with the employer.

An "unorganised establishment” is a firm or company where there is no

certified SEBA.2Therefore, an establishment may still be considered unorganized:

(1) Even if there are several unions in existence in one CBU34for as long
as not one o f them is duly certified as SEBA.

(2) Even if one CBU has a certified SEBA but^the other CBUs do not
have, hence, only the former will be considered organised but the latter
shall remain unorganised.

The case o f Lepanto Consolidated Mining Company v. The Lepanto Capata^

Union,* best illustrates the situation where the supervisory employees called
"capatases” were historically been members o f the rank-and-file union (Lepanto
Employees Union (LEU)], the exclusive bargaining agent o f all rank-and-file
employees of petitioner’s Mine Division. In giving due course to their PCE, it was
declared that the capatcqes are not rank-and-file employees; hence, they could form
their own union. They were performing functions totally different from those
performed by the rank-and-file employees. T he bargaining unit sought to be
represented by the appellee are the capatas employees o f die appellant There is no
other labor organization o f capatases within the employer unit except herein
appellant. Thus, appellant is an u n organized establishment in so far as the
bargaining unit o f capataqs is concerned.

b-i.
CERTIFICATION ELECTION
IN UNORGANIZED ESTABLISHMENTS

1. REQUISITES.

In cases involving a PCE filed by a legitimate labor organization in an

establishment where there is no certified SEBA, hence, unorganised, Article 269
[257]5 is clear that the Med-Arbiter should automatically conduct a certification
election upon the filing o f such PCE.

The conditions and limitations that are required to be observed in the

filing of PCEs in organised establishments [infra] do not apply to certification
elections in unorgrnised establishments. The obvious rationale behind the law is to

1 SecSon1 [IJ. RuEet, BookV, RulestotmptementtheLatxrCocte, as anerxfed by DepartmentOnler Na 4003, Seriesof

2003,(Feb. 17,2003).
2 A rt*269(257), LaborCode.
3 CofiecfiveBargaWig UnS(CBU).
4 &R. No. 157086,Feb. 18,2013.

J9JC9B0M
 C ha pter Five 421 *
LABOR RELATIONS

make it easy for employees to self-organize - a policy which is enunciated in the

Constitution and labor laws.

b-li.
CERTIFICATION ELECTION
IN ORGANIZED ESTABLISHMENTS

1. R E Q U ISIT E S.

To ascertain the will o f the employees in the appropriate CBU, the Med-
Atbiter, under Article 268 [256],1is required to automatically order the conduct o f a
certification election by secret ballot h ra n organised establishment as soon as the
following requisites are fully met:

(1 ) That a PC E questioning the majority status o f the incumbent

bargaining agent is filed before the Med-Arbiter within die 60-day
freedom period;
(2) That such PC E is verified; and
(3) That the PCE is supported by the written consent o f at least twenty-
five percent (25%) o f all the employees in the CBU.2

L L FIRST REQUISITE: F IL IN G O F P C E W IT H IN T H E 60-DAY

F R E E D O M P E R IO D .

It is only during the 60-day freedom period that a PCE may be filed by a
challenging union. It cannot be a day before or after this period. If it is filed a day
earlier, then it is considered prematurely filed; if it is a day after, then it is considered
belatedly filed. The 60-day period is strictly observed in determining the validity o f
the PCE.

1.2. SECOND REQUISITE: T H E PC E MUST B E V E R IF IE D .

Per Implementing Rules? the PCE is required to be in writing and verified

under oath by any o f the following:

(1) By the president of petitioning labor organization, if filed by the

independent union or local chapter/chartered local,**4
(2) By the president or duly authorized representative o f the federation or
national union, if filed by a federation or national union in behalf o f its
local chapter o r affiliate;5 or

' Artkde268 p561en&aed'Representa6onfssueinOrganizedEstabG^vnents.a

* TradeUnionsofthe PhEpp'nesandAEedSendeesWaU FederafionofTradeUnions[TUPAS-WFTU]v. Laguesma, G.R
No. 102350,June30,1934.
3 Sec6on4,Ru*eV!!l,BookVl fetes toImpfementthelaiw W e, asamendedbyDepatmertOrderNo.4W-03,Seffes of

J9JC9B0M
 422 bar Reviewer on labor law

(3) By the president or any corporate officer who is authorized by the

Board of Directors, if filed by the employer (owner).1

The minimum number o f at least 25% of the employees in the CBU

mentioned in the law2 need not verify the PCE. What is required is merely to. attach
to the verified PCE the signatures o f said number of employees.

1.3. THIRD REQUISITE : T H E PCE SH OU LD BE SU PPO R T E D BY

W RITTEN CON SENT OF AT LEAST 25% O F ALL E M PLO Y EES
IN T H E CBU.

a. Purpose o f the 25% written support.

'Hie reason behind the 25% requirement is to ensure that the petitioning
union has a substantial interest in the representation proceedings and that a
considerable number of workers desire their representation by the said petitioning
union for collective bargaining purposes. Hence, it becomes mandatory' for the
Med Arbiter to order the holding o f the certification election upon showing that
25% of the workers in the bargaining unit signify their support to the PCE.3

b. 25% written consent not strictly enforced.

'Ihc 25% written consent requirement4 is relevant if it becomes

mandator)' to hold a certification election. In all other instances, discretion should
ordinarily be exercised in favor of holding a certification election.5 This means that
the 25% requirement may not be strictly enforced. Compliance therewith need not
be established with absolute certainty. Thus, even if this statutory requirement has
not been strictly complied with, the Med-Arbiter is still empowered to order the
conduct of the certification election for the purpose of ascertaining which of the
contending labor organizations should be chosen as the exclusive SEBA.6 It is a
mere technicality which should be employed in determining the true will o f the
workers mstcad of frustrating it. All doubts as to the number o f employees actually
supporting the holding of a certification election should therefore be resolved by
going through such procedure. It is judicially settled that a certification election is
die most effective and expeditious means of determining which labor organization
can truly represent the working force in the appropriate CBU.7

1 Id
7 Article 258 [256] entitled ‘Representation Issue in Organized Estabfishments.’
3 PWppne Association of Free Labor Unions (September Convention) v. Ferrer-Calteja, G R No. 79347, Jan. 26,1989;
Samahang Manggagawa ng Pacific MBs, Inc. v. Noriel. G R No. L-56588, Jan. 17,1985,134SCRA152.
* Article 269 [257], Labor Code; Atlas Free Workers Uobn v. Noriel, G R No. L-51905. May 26,1981.104 SCRA 565; FFW v.
NoneL G R. Nos. L-47182-83, Ocl 30.1978,86 SCRA 132.
5 National tones and A!«d Workers Union [NAMAWU4JIF] v. Luna, G.R. No. 146722, June 15,1978,83 SCRA 607.
6 California Manufacturing Corporation v. liguesma, G R No. 97020, June 8,1992; Eastland Manufacturing Company, Inc. v.
Noriel, No 145528, Feb. 10.1982, Adas Free Workers UniooPSSUJ Local v. Noriel, G R No. L-51905, May 26,1981.
7 Gnental In Can LaDor Union v. Secretary of Labor and Employment G.R. No. 116751, Aug. 28,1998,294 SCRA 640;
Consolidated Farms. Inc. II v. Noriel, G.R. No. L47752, July 31,1978,84 SCRA 469,472; Philippine Association of Free
Labor Unons v. BLR. G R No. L42115, Jan. 37.1976,69 SCRA 132

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 Chatter Five 423
LABOR RELATIONS
b - iii.

DENIAL OF THE PCE

1. G RO UN DS.

The Med-Arbitcr may dismiss the PCE on any o f the following grounds:

(a) The petitioning union or national union or federation is not listed in

the D O LE’S registry o f legitimate labor unions or that its registration
certificate has been cancelled with finality;1

(b) Failure of a local chapter/chartered local or national union/federation

to submit a duly issued Charter Certificate upon filing o f the PCE;2

(f) In an organised establishment, the failure to submit the 25% consent

signature requirement to support the filing o f the PCE;3

(g) Non-appearance of the petitioner for two (2) consecutive scheduled

conferences before the Med-Arbitcr despite due notice;4 and

(h) Absence o f employer-employee relationship between all the members

of the petitioning union and the establishment where the proposed
CBU is sought to be represented.5

(i) Violation o f the various Bar Rules [infra].

b -iv .

BAR RULES

1. W H E N T O FIL E PCE; E X C E PTIO N S.

In the absence of a CBA duly registered in accordance with Article 237

[231]6 of the Labor Code, a petition for certification election (PCE) may, as a
general rule, be filed at any time7 except when it is prohibited under any o f the
following bar rules:

(1) Contract bar rule;

(2) Statutoty bar rule;
(3) Certificationyear bar rule;

1 Section 14(a), Rule VIII (Certification Becticn], Book V of the Rules to Implement the Labor Code, as amended by
Department Order No. 4CFF-03, Senes of 2008 [October 30,2003]. See Section 11, paragraph II, Implementing Rules of
Book V, Rule XI, as amended by D.O. No. 9; Samahanngmga Manggagawa saSammaLakassalndustriyangKapafrang
Hafigi ng Alyansa (SAfvMA UKHA) v. Samma Corporation, G.R. No. 167141, March 13,2009.
2 Section 14(b), Rule VIII (Certification Election], Book V of the Rules to Implement the Labor Code, bid.
3 Section 14(f), Rule VIII, bid.
4 Section 14(g), Rule VIII, Ibid.
5 Section 14(h), Rule VIII, Ibid.
6 Article 237 [231] entitled ’Registry of Unions and Fife of Collective Bargaining Agreements.’
1 Section 3, Rule VIII, Book V, Rules b Implement the Labor Code.

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 424 BAR REVIEWER ON LABOR LAW

(4) Negotiations bat rule; or

These aie discussed in seriatim below.

I.
Contract Bar Rule

L REGISTERED CBA CANNOT BE DISTURBED.

Under this rule, the existence of the CBA, the contract referred to therein,
bars the filing of a PCE. Once a CBA is duly registered and validly subsisting no
PCE or any other action should be entertained that may disturb die administration
of the duly registered existing CBA.1 Neither party should terminate nor modify
such agreement during its lifetime. Inter-union electoral contests are therefore not
allowed2

2. DURATION OF T H E CONTRACT BAR.

For the entire 5-vear lifetime of the CBA, no PCE questioning the
majority status of the incumbent SEBA shall be entertained and no certification
election shall be conducted by the DOLE outside of the 60-day freedom period
immediately before the date of expiry of such five-year term of the CBA.

3. PURPOSE OF RULE.

In more specific terms, the reasons for this rule are as follows:

(1) Certification election may only be entertained within the 60-day

freedom period. Any PCE filed before or after the 60-day freedom
period should be dismissed outright3

(2) When there exists a CBA, it is the duty of both parties to keep the
status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day freedom
period and/ or until a new agreement is reached by the parties.4

(3) At the expiration of die 60-day freedom period, the employer should
continue to recognize the majority status o f the incumbent bargaining

1 Section 1, fte V L I, Book V, Rules to Implem ents Labw &de, as amended by D epatnert0nierN a40f-<B ,Series of
2008 {October 30,2008), issued pasuant to R A to . 9481, and as briber amended by Sedim 4, Department Order Na
40+15, Series of2015(Septen*er07,2015).
7 FoarrtexLaborUnionv.Noriel.GJR.No.L-42349.Aug. 17.1976.
3 SecBon 3 Jdl, Ride V/1I1, Book V. Rules to tmptement the Labor Code, as amended by Department Order No. 40-03. Series of
2003. (Feb. 17,2003); TUPASv. kicking,G.R. No. L-46499, Aug. 19,1982
4 Article 264 (2531, Labor Code.

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 C h a p t e r f iv e 425
tABOR RELATIONS

agent where no PCE challenging such majority status is filed by any

other union.1

4. EXCEPTIONS.
The contract bear rule admits of several exceptions where a PCE may be
validly filed

(1) During die 60-day freedom period immediately prior to the expiry
date o f a CBA.
(2) When die CBA is not registered with the BLR or any of die DOLE
Regional Offices.
(3) When the CBA, although registered, contains provisions lower than
the standards fixed by law2 or illegalperse clauses.34*
(4) When the documents supporting the CBA's registration are falsified,
fraudulent or tainted with misrepresentation.*
(5) When the CBA is not complete as it does not contain any o f the
mandatory provisions which the law requires. Such kind of agreement
cannot promote industrial peace as it leaves out matters which the
parties should have stipulated.3
(6) When the CBA was extended during its term as when it was
negotiated and entered into prior to the 60-day freedom period. The
agreement in this case is deemed hastily entered into in order to
frustrate the will o f'th e employees in choosing their bargaining
representative.6
(7) When there is a sch ism in the union resulting in an industrial dispute
wherein the CBA can no longer foster industrial peace. The conduct
of a certification election in such a situation becomes imperative to
clear any doubt as to the real and legitimate representative o f the
employees.7

2 SeeoUpn»^QnofSect)on4l Ride)Q/l.BookV>FhilestolmplementffieLabarCod^asatnendedbyAr6cle1,De(»artne(tt
Order N a 09, Series of 1997 (21 June 19971
1 See a United Stales ease enffled: Paragon Prods. G xp, 134 NLRB 662,66607 (1961). For example, a contract with an
Segal Twkargo* clause wi3 not bar an eleefoo. A “botargo'clause fe one prattting an employer tom conducbg
tx sh es sv^ so m eo lh erp efsm vvftv^ th e u i^ h asa m a yh aw e a& p itfeS u clitlau s eb an B e g altjn b irlab o r
practice raiderNLRA Secfion 8(e). A union vvg viotaSs the prottbrSon in section 8(bX4?W agacna ooeccing an employer to
tease dohg business with any other person* if iuses strikes or any other pressure to face an employerto accept Bfcfype
ofdause.
4 See oldpcoristo of Secfim4,Rute XVI, Book V.RulestotnTptement the Latxr Code, as amendedby Aifttel.O epartm ert
Order No. 09, Series of 1997 (21 June 1997].
s BuMod ng Saubg Transitv. Casafla, & R . No. L-8049, May9,1956,99 PWL16.
« Associated Trade Union v.N orie),G R No. 148367, Jan. 16.1979.
1 In Bie Mater of Peftion for Direct CertScafon a Certfcsfion Section. Firestone Tre and Rubber Company Employees

(Mon v. EsfteBa, G.R. Nos. (.45513-14, Jan. 6,1976,81SCRA 49, where it was held: In lie case at bar, S is doubtful if

J9JC9B0M
 426 Bar reviewer o n La bo r Law

(8) When there is an automatic renewal provision in the CBA but prior to
the date when such automatic renewal became effective, the employer
seasonably filed a manifestation with the BLR of its intention to
terminate the said agreement if and when it is established that the
SEBA does not represent anymore the majority of the workers in the
bargaining unit1
(9) When the CBA does not foster industrial stability anymore, such as
where the identity of the representative is in doubt since die employer
extended direct recognition2 to the uniop and concluded a CBA
therewith less than one (1) year from the time a certification election
was conducted where die “no union” vote won. Any stability derived
from such contract must be subordinated to the employees’ freedom
of choice because it does not establish the kind o f industrial peace
contemplated by law. Such situation obtains in a case where the
company entered into a CBA with the union when its status as
exclusive bargaining agent of the employees has not been established
yet.5
(10) Where the nature of die operation substantially changes between the
execution of the CBA and die filing o f the PCE. Such changes
include (j) a merger or consolidation o f two or more operations
creating a new operation with major personnel changes and (u) a
resumption of operations after an indefinite period o f dosing, with
new employees. However, a change in the number of employees due
to a relocation does not affect the contract bar rule.
(11) Where die CBA is executed before any employees are hired.4

S. APPLICABILITY OF THE CONTRACT BAR RULE IN CASES OF

PREMATURELY NEGOTIATED AND CONCLUDED CBAs.

a. Premature renegotiation and conclusion o f CBA.

A CBA is said to have been renegotiated and conduded prematurely if the

same has been done by the employer and the incumbent union which has yet to be
re-certified as the SEBA, prior to the advent of the 60-day freedom period or
during die pendency of a PCE filed by rival union/ s. It is premature in the sense
that it should have been negotiated and conduded only when the union has already
been re-certified as SEBA.

tagartng unit, n view of the tact lhat a substanSal number of he employees herein have resigned ta n ALU and joined
peffonerFB j.A tanyrate.B & hanettxtutirustbefin^d^B m iK d^ffleam daceiQ icataetecSoa*
1 PLOTEmployees'Unionv.Phfypine LongDistanceTelephoneCompany,GA No.L-8138,Aug.20,1955.
* SmustbenoeedSiaTVoluntaryReccgrdtol'asainotleofde^iafiigaSEBAtiasabBadybeenrepeafedandr^ptacedby
the mode known as ‘Request for SEBA CertScafion; per Department Older No. 40+15, Series of 2015, issued on
Septonber07,2D15.
3 Samahang Manggagawa sa Peimex ^ -P ilU -T U C P ] v. Secretary of Labor, G.R. No. 107792, March 2,1988.
4 E^^apre+uraagreernentin Ehecons&ixaSon’nckistiy.

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 C h a p t e r f iv e 427
LABORRELATIONS

b. E ffect on prematurely conduded CBA o f PCE Bled by rival

union/s.
The rule, however, is significantly different if there is a PCE filed by rival
union/s during the freedom period. In this situation, the CBA renegotiated and
concluded prematurely cannot be invoked as a valid bar, under the contract bar
rule, against die holding of a certification election. Indeed, a prematurely
concluded CBA, even if ratified unanimously or by a majority of the employees of
the collective bargaining unit (CBU), cannot deprive aval union/s o f the right to be
certified as the new SEBA.1

c. E ffect i f no PCE is Bled b y rival union/s during freedom period.

The validity o f a CBA renegotiated and concluded by the employer and

the existing SEBA before the arrival o f the 60-day freedom period and even during
such period is unassailable if no PCE is filed by rival union/s. The employer and
the existing SEBA can start their renegotiation for a renewal o f die CBA and
accordingly conclude and register it at any time before or during the 60-day
freedom period. The fret of early renegotiation and conclusion alone will not in any
way invalidate die CBA.

II.
Statutory Bar Rule

t RECKONING OF 1-YEAR PERIOD.

The Labor Code does not contain any provision on this rule but die Rules
to Implement the Labor Code1 embody a rule that bars the filing o f a PCE within a
period of one (1) year from die date of a valid conduct of a certification, consent,
run-off or rc-run3 election where no appeal on the results thereof was made.4 If
there was such an appeal from the order o f the Med-Arbitet, the running of die
one-year period is deemed suspended until the decision on the appeal has become
final and executory.5

This is called the statutory bar rule which finds its roots from a similar
rule in the United States.Thus, an election cannot be held in any bargaining unit in

1 Associatedl^b a Unions(ALU]v.Cal^a,G il No.82260, 19,1%9.

* Secfon^a), RuleVIII, BookV.Rutestotntdementhe Latxr&xte,asamendedbyDepaAnertOrderNo.4(H)3,Seriesof
2003,(Feb. 17,20031.
3 Sec^1(tQ,Rule I, BookV, Rulesto ImplementtheLabaCode,asamendedbyDepartmertOrderNa 4003,Series
of2003,[Feb. 17,2003],andas addedOmighOieamendmectinttxtuced tv SecSon2, DepartmentOrderNo.40-1-
15, Seriesof2015(Septenter07,2015].
4 Section 14(d), Rule ViH [Coficafion BeCBon], Book V of the Rubs to Implement Die tabor Code, ss amended by
D eparts OrderNo.40f4)3,Seriesof2008[October30,2008).
5 Section3(a),RuleVin.BookV.RLriesto iplernentthe Laba Code,asamendedlq'DepartmentOrderNa4tM)3,Series of
2003,[Feb. 17,2003).

J9JC9B0M
 428 Bar Reviewer on Labor Law

w h ic h a final a n d valid ele c tio n w a s c o n c lu d e d w ith in th e p r e c e d in g 1 2 -m o n th

p e rio d .1

2. T H E 1 -Y E A R P E R I O D M A Y E I T H E R B E A "STATU TO RYBAR” O R
"CERTIFICATION YEAR BAR.”
T h is 1-year b a r m ay b e d e n o m in a te d e ith e r as a "statutory bar” or
"certification year bar” d e p e n d in g o n w h e th e r o r n o t a S E B A h a s b e e n c e rtifie d
as su c h in th e certific a tio n , c o n s e n t, r u n - o f f o r r e -ru n e le c tio n . I f th e re w as n o n e ,
th e n , it is called th e "statutory b a r if th e re w as, th e n , it is d e n o m in a te d as th e
"certificationyear”bar. S im ply s ta te d , if a S E B A is c e rtifie d , th e n a n o th e r b a r ru le is
se t in to m o tio n , i.e., th e certification year bar r u l e d is c u s s e d b e lo w .

3 . T H E 1 -Y E A R P E R I O D , H O W R E C K O N E D .

T h e 1-year p e rio d fo r "statutory bar”b e g in s to ru n o n th e a c t u a l d a t e o f

th e p rio r e lectio n , n o t fro m th e d a te th e S E B A w a s c e rtifie d ,2 w h ic h is th e
rec k o n in g d a te fo r a n o th e r rule - th e "certificationyear bar." I f th e p r io r e le c tio n
re su lts in a v o te for ‘N o Union, ” th e o n e -y e a r p e rio d ru n s fro m th e d a te o f th a t
e lectio n .3

4. I N A P P L I C A B I L I T Y T O R E - R U N O R R U N - O F F E L E C T I O N .

I n situ a tio n s w h e re d ie c o n d u c t o f a re-run o r run-off e le c tio n 4 becom es

necessa ry , d ie s t a tu t o r y b a r r u le d o e s n o t p re c lu d e it n o r a p p ly th e r e to s in c e it is
re q u ire d to b e d o n e a n d a c c o m p lis h e d w ith in a c e r ta in p e r io d a fte r th e failed
certific a tio n ele c tio n , w h ic h p e rio d in c id e n ta lly falls w ith in o n e (1) y e a r th e re a fte r.

T hus, a re-run ele c tio n s h o u ld b e h eld :

(1) In case o f a tie, w ith in te n (10) d ay s a f te r th e p o s tin g o f th e n o tic e o f

re -ru n e le ctio n ;5
(2) I n case o f failure of election, w ith in six (6) m o n th s f ro m d a te o f
d e c la ra tio n o f failure o f e le c tio n .6

A nd a run-off ele c tio n is re q u ire d to b e c o n d u c te d w ith in te n (10) d a y s

f ro m th e c lo se o f th e e le c tio n p ro c e e d in g s b e tw e e n th e la b o r u n io n s re c e iv in g th e
tw o (2) h ig h e s t n u m b e r o f v o te s , i f th e r e a re n o o b je c tio n s o r c h a lle n g e s w h ic h , if
su stain ed , c a n m aterially a lte r th e re su lts .

' 199 See 29 U.S.C. A7159(cX3).

2 See Robertson Bros. Oep't Store, Inc., 95 NLRB 271,273 (1951); see also Cohn-RalFMarx C o, 86 NLRB 101 n. 1 (1949).
3 See Bendix Corp., 179 NLRB 140 (1969).
4 See Robertson Bros. Dept Store, Inc., 95 NLRB 271,273 (1951); see also CohrvRalFMarx Co, 86 NLRB 101 n. 1 (1949).
5 New Section 18, Rule IX, Book V, Rules to Implement the Labor Code, as previous!/ amended by Department Order No.
40-03, Series of 2003, (Feb. 17, 2003), and as added by Section 16, Department Order No. 40-1-15, Senes of 2015
(September 07,2015).
6 Ibis provision entitled 'Effect of failure of election' should new be denominated as Section 19, Rule IX, Book v. Rules to
Implement the Labor Code, by virtue of the re-numbering ordered by Section 17, Department Order No. 40-H5 Series of
2015 (September 07,2015|

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 Chapter Five 429
LABOR RELATIONS

III.
Certification Year Bar Rule

1. C E R T IF IC A T IO N Y E A R - T H E P E R IO D W H E N T H E CBA
N E G O T IA T IO N M U ST C O M M E N C E A F T E R A U N IO N H A S B E E N
C E R T IF IE D AS S E B A .

A lth o u g h th e L a b o r C o d e d o e s n o t c o n ta in a n y p r o v is io n o n w h e n th e
C B A n e g o tia tio n p r o c e s s s h o u ld s ta r t a f te r a u n io n is d u ly c e rtifie d as th e S E B A o f
th e e m p lo y e e s it se ek s to r e p re s e n t in a g iv e n b a rg a in in g u n it, th e r e is, h o w e v e r,
th is p r o v is io n in th e Rules to Implement the Labor Code1 w h e n th e M e d -A rb ite r
(M e d ia to r-A rb ite r) m ay d ism is s th e P C E i f th e sa m e is file d w ith in o n e (1) y ear
r e c k o n e d a n d c o u n te d :

(1) F ro m th e d a te th e SEBA Certification is is s u e d by th e D O L E

R e g io n a l D ir e c to r in c a se s o f Requestfor SEBA Certification filed in a n
u n o rg a n iz e d e s ta b lis h m e n t w ith o n ly one (1) le g itim a te la b o r
o rg a n iz a tio n ;2 o r
(2) F ro m th e d a te o f is s u a n c e o f c e rtific a tio n as S E B A a n d n o t fro m th e
d a te o f th e c o n d u c t o f v a lid c e r tific a tio n , c o n s e n t, r u n - o f f o r r e ­
r u n 3 e le c tio n .4

N o te m u s t b e m a d e th a t N o . 1 a b o v e re p e a le d a n d re p la c e d “ V o l u n t a r y
R e c o g n i t i o n ” a s a m o d e o f d e s ig n a tin g a S E B A 56p e r Department Order No. 40-1-15,
Series of 2015.6 P re v io u sly , t h e 1 -y c a r p e r io d is r e c k o n e d f r o m th e d a te o f r e c o rd in g
o f t h e V o lu n ta ry R e c o g n itio n . H o w e v e r , u n d e r th is n e w m o d e , th e sa m e p e rio d is
c o u n te d f ro m th e iss u a n c e o f t h e S E B A c e rtific a tio n w h ic h sh a ll h a v e th e e ffe c t o f
b a r rin g th e filin g o f a P C E b y a n y la b o r o r g a n iz a tio n . I t is o n ly u p o n e x p ira tio n o f
th is 1 -y e a r p e r io d th a t an y le g itim a te la b o r o rg a n iz a tio n m a y file a P C E in th e sa m e
c o lle c tiv e b a rg a in in g u n it (C B U ) re p re s e n te d b y th e c e rtifie d S E B A , u n le s s a C B A
b e tw e e n th e e m p lo y e r a n d th e c e r tifie d S E B A w a s e x e c u te d a n d re g is te re d w ith th e
D O L E R e g io n a l O ffic e .7

N o t e m u s t lik ew ise b e m a d e o f N o . 2 a b o v e w h e r e a d is tin c tio n sh o u ld b e

m ade b e tw e e n th e r e c k o n in g o f th e 1 -y e a r s t a t u t o r y bar and th e 1 -year

1 Section 14(d), Rule VIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03,
Series of 2008 [October 30,2008],
2 Section 4 2 , Rule VII, DepartmentOrder No. 40+15, Series of 2015 [September C7,2015].
3 "Rerun election* is a newly introduced mode of selecting or choosing a SEBA
* See Section 14{d), Rule VIII, Book V, Rules to Implement the Labor Code, as amended by Department Older No. 4 0 f-03,
Series of 2008 [October 30,2008],
5 Particularly its Rule VII [Voluntary Recognition], Book V, Rules to Implement the Labor Code, as amended by Department
Older No. 4003, Series of 2003, fe b . 17,2003],
6 Issued on September 07,2015.
7 See Section 4 2 , Rule VII, Department Order No. 40-1-15, Series of 2015 [September 07,2015], entitled 'Further Amending
Department Order No. 40, Series of 2003, Amending the Implementing Rules and Regulations of Book V of ttie Labor Code
of the Philippines, as Amended.'

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 430 Bar reviewer on Labor Law

c e r tif ic a tio n y e a r b a r . T h e 1-year p e rio d in th e former s h o u ld b e c o u n te d f ro m th e

d a te o f th e ele c tio n ; w h ile th e 1-year p e r io d in th e latter s h o u ld b e fro m th e d a te o f
c e rtificatio n o f d ie S E B A . T h e u n io n w ill b e d e p r iv e d o f its e n tid e m e n t to th e
critical o n e (1) y ear as a certified S E B A i f th is p e r io d is r e c k o n e d fro m th e a c tu a l
d a te w h en th e c e rtific a tio n , c o n s e n t, r u n - o f f o r r e -r u n e le c tio n w a s c o n d u c te d . T h e
u n io n certain ly is e n tid e d to a full tw elv e (12) m o n th s as S E B A . U n til th e
c e rtificatio n is m a d e in its fav o r, its s ta tu s a s S E B A is n o t d e fin ite .

T h is ru le is b e tte r k n o w n a s th e certification year b a r r u l e 1 w h ic h is

sim ilar to th e “ c e r t i f i c a t i o n y e a r ” r u l e 2 in t h e U n ite d S ta te s w h e r e it is p r o v id e d
th at the c o lle c d v e b arg am in g n e g o tia tio n s b e tw e e n th e e m p lo y e r a n d th e S E B A
sh o u ld begin w id iin tw elv e (12) m o n d is fo llo w in g th e c e rtific a tio n o f th e la tte r as
S E B A . T h is rule th u s p re v e n ts th e h o ld in g o f a n e w c e rtific a tio n e le c tio n u n til d ie
p arties h ave h a d o n e y ear to b a rg a in .3

2. E F F E C T O F F A I L U R E T O C O M M E N C E C B A N E G O T I A T I O N
W I T H I N T H E 1 -Y E A R P E R I O D .

I f th e S E B A fails to c o m m e n c e th e c o lle c tiv e b a rg a in in g p r o c e s s w ith in

said p e rio d , its b e in g d ie S E B A m ay b e q u e s tio n e d b y a n o th e r u n io n th r o u g h th e
filing o f a new P C F ..4 TTiis is best illu s tra te d by th e c ase of KAMPTL-
KATIPUNAN v. Trajano,5 w h e re d ie SEBA failed to in itia te th e c o lle c tiv e
b argain in g p ro c e s s w ith in a p e rio d o f m o re d ia n 4 y e a rs th e re b y e n a b lin g a n o th e r
u n io n to file a n e w p e titio n fo r c e rtific a tio n e le c tio n .6

3. I N T E R R U P T I O N O F T H E R U N N I N G O F T H E 1 - Y E A R P E R I O D .

W h e re a n a p p e a l h as b e e n file d f ro m th e o r d e r o f th e M e d -A r b ite r
certifying th e resu lts o f th e e le c tio n , th e r u n n in g o f th e o n e (1) y ear p e r io d is

1 Section 14(d), Rule VIII (Certification Election], Book V of the Rules to Implement the labor Code, as amended by
Department Order No. 40T-03, Series of 2008 [October 30,2008].
7 This is also known as the 'irrebuttable Presumption of Majority Support* Rule. The United States Supreme Court approved
the ‘Certification Year Rule' in Brooks v. NLRB, 348 U.S. 96 (1954),
3 48 Am Jur 2d 991. In the same case of Brooks v. NLRB, 348 U.S. 96 (1954), the Supreme Court held that, absent any
unusual circumstances such as defunctness or schism, an employer has a duty to bargain with the union certified as the
bargaining agent for his employees for one year from the date of cerfificatjon.
4 Although in (he United Stales, what is allowed to be filed is a petition for decertification election and not a petition for
certification election by another union. For a more extensive discussion of Decertification Bectionl, please see the Notes and
Comments on Artide 267 [255], particularly, wider the topic of 'IX. DECERTIFICATION', infra).
5 Kaisahan ng Manggagawang Pflipno [KAMPIL-KATIPUNAN] v. Trajano, G il. No. 75810, Sept 9,1991,201 SCRA453.
6 The stark, incootrovertibte fact in this case is that from February 27,1981 - when National Federation of Labor Unions
(NAFLU) was proclaimed the exclusive bargaining representative of at VIRON employees - to Apd 11,1985 - when
KAMPIL filed its petition for certifcation election or a period of more han 4 years, no CBA was ever executed and no
deadlock ever arose from negotiations between NAFLU and VIRON resulting in concitiation proceecfngs or the fling of a
vaSd strike notice.

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 C hapter Five 431
LABOR. RELATIONS

deem ed suspended u n til th e d e c is io n on th e appeal has becom e fin a l a n d

e x e c u to r y .1

IV.
Negotiations Bar Rule

1. T H E C B A N E G O T I A T I O N S H O U L D B E V A L I D L Y C O M M E N C E D
W IT H IN T H E R E Q U IR E D P E R IO D .

U n d e r th is ru le ,2 n o P C E s h o u ld b e e n te r ta in e d f r o m th e m o m e n t th e
S E B A a n d th e e m p lo y e r h a v e c o m m e n c e d a n d s u s ta in e d n e g o tia tio n s in g o o d faith
in a c c o r d a n c e w ith A rtic le 261 [2 5 0 ]3 o f th e L a b o r C o d e w ith in th e p e r io d o f o n e
(1) y e a r4 f r o m th e d a te o f a v a lid c e rtific a tio n , c o n s e n t, r u n - o f f o r re-run e le c tio n 5
SEBA Certification b y th e D O L E
o r fro m th e d a te o f is s u a n c e o f th e R e g io n a l
D ir e c to r in c a s e s o f Bequest for SEBA Certification,67w h ic h r e p la c e d th e m ode o f
“Voluntary Recognition. 'n
2 . O N C E N E G O T I A T I O N C O M M E N C E S , T H E R E IS N O M O R E
P E R IO D O F L IM IT A T IO N T O R E C K O N W IT H .

O n c e th e C B A n e g o tia tio n s h a v e c o m m e n c e d a n d w h ile th e p a rtie s a re

e n g a g e d in th is p r o c e s s , n o c h a lle n g in g u n io n is a llo w e d to file a P C E th a t w o u ld
d is tu r b th e n e g o tia tio n p r o c e s s a n d u n d u ly d e la y , p r e e m p t o r fo re s ta ll th e p r o m p t
a n d tim ely c o n c lu s io n th e re o f.

I t m u s t b e n o te d th a t th e r e is n o la w o r ru le th a t im p o s e s a tim e lim ita tio n

o r c a p as to w h e n th e p a rtie s s h o u ld n e g o tia te a n d c o n c lu d e a C B A . T h e p a rtie s
h a v e all th e fre e d o m a n d leew ay to n e g o tia te th e C B A ’s te r m s a n d c o n d itio n s
w ith o u t b e in g c o n s tra in e d by a n y tim e re s tric tio n . I n o d ie r w o r d s , th e n e g o tia tio n
p ro c e s s m a y la st fo r d ay s, w e e k s , m o n th s , e v e n y e a rs, a n d d u rin g th e e n tire
d u r a tio n th e r e o f, n o P C E m ay b e file d b y a n y c h a lle n g in g u n i o n / s .

1 Section 3 {a]. Rule VIII, Book V, Rules to frnplement Labor Code, as amended by Dep^tmentOrder No. 40-03, Series of
2003, [Feb. 17,2003],
2 As prwided in Section 3(b), Rule VIII, Book V, Rules to Implement fie Labor Coce, as amended by Department Order No.
404)3, Series of 2003, [Feb. 17,2003).
3 Axticte 261 [250] enStfed *Proc©dure n Co8ec6ve Bargaining.’
4 Denominated as tie ‘certification year bar*
5 Section 14(e), Rule VIII [Certification Becfion], Book V of fie Rules b Implement the Labor Code, as amended by
Department Order No. 40-F-03, Series of 2008 [October 30,2008).
6 Only when fiis Requests Red it an unorganized estabSshment w ifi only one (1i legitimate labor organization wil a SEBA
Certification will be issued by fhe DOLE Regional Director. If fie Request is made in an unorganized estabTshment wifi two
or more legitimate organizations or when (he same is made in an organized estabtshmenf it is the Mediator-Arbiter who has
jurisdiction and power b issue fie SEBA Certification.
7 As provided in Section 4 2 , Rule VII, Department Order No. 404-15, Series of 2015 [September 07,2015). As earter pointed
out, this is a new remedy that repealed and replaced voluntary recognition as a mode of selecting a SEBA. The SEBA
certification shall bar the fifing of a petition for certification election by any labor organization for a period of one (1) year from
the date of ib issuance. Upon expiration of tto 1-year period, any legitimate labor organization may fie a petition for
certification election in the same bargaining unit represented by the certified labor organization, unless a CEA between fie
employer and the certified labor organization was executed and registered with fie Regional Office.

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 432 Bar reviewer on Labor Law

V.
Bargaining Deadlock Bar Rule

1. C B A D E A D L O C K , M E A N I N G .

“Collective bargaining deadlock” re fe rs to a situ a tio n w h e re th e re is a fa ilu re in

the co llectiv e b arg ain in g n e g o tia tio n s b e tw e e n th e SEBA and th e e m p lo y e r
resultin g in a n impasse o r sta le m a te .1 T h is h a p p e n s w h e n , d e s p ite th e ir e f f o r ts a t
barg ain in g in g o o d faith , th e p arties h a v e faile d to re so lv e th e issues a n d it a p p e a rs
th at th e re arc n o o th e r d efin ite o p tio n s o r p la n s in sig h t to b re a k th e s ta n d o ff .
Sim ply s ta te d , th e re is a d ead lo ck w h e n th e r e is a c o m p le te b lo c k in g o r s to p p a g e in
th e n e g o tia tio n re su ltin g fro m th e a c tio n o f e q u a l a n d o p p o s in g fo rc e s.2

2. A S A BAJR, T H E R E M U S T B E A D E A D L O C K I N T H E C B A
N E G O T IA T IO N .
i.
U n d e r this ru le, a P C E m ay n o t b e e n te rta in e d w h e n a b a rg a in in g
d e a d lo c k to w liich a n in c u m b e n t S E B A is a p a rty has been s u b m itte d to
co n ciliatio n , c o m p u ls o ry o r v o lu n ta ry a rb itra tio n o r h a s b e c o m e th e s u b je c t o f a
valid n o tic e o f strik e o r lo c k o u t.3

3 . R U L E A P P L I E S E V E N I F T H E R E IS N O A C T U A L D E A D L O C K , I F
T H E C IR C U M S T A N C E S A R E S IM IL A R T O A D E A D L O C K .

D ie bargaining deadlock bar ru le w a s a p p lie d in Capitol Medical Center v.

laguesma* e v e n if n o actual C B A d e a d lo c k o c c u r r e d in th is case . A f te r b e in g
certified as th e S E B A o f the ra n k -a n d -file e m p lo y e e s o f r e s p o n d e n t C a p ito l
M edical C e n te r (C M C ), p n v a te r e s p o n d e n t u n io n , C M C E A -A F W ,5 s u b m itte d its
C B A p ro p o s a ls b u t C M C refused to n e g o tia te a C B A , ra isin g a s a n iss u e , th e
legitim acy o f C M C E A -A F W . B e cau se o f th is, C M C E A -A F W sta g e d a strik e o v e r
w hich th e D O L E S e cretary assu m ed ju ris d ic tio n a n d is s u e d an o r d e r c e rtify in g th e I I'
II
sam e to th e N L R C fo r co m p u lso ry a r b itra tio n w h e r e th e said case w a s still p e n d in g
I
at th e tim e th e d e c is io n in d u s case w as r e n d e re d .

A fte r m o re th a n o n e year o f n o t h a v in g a n y C B A n e g o tia tio n b e c a u s e o f

l
d ie p e n d e n c y o f d ie said certified c a se b e f o r e th e N L R C , a n o th e r u n io n , h e r e in
p e titio n e r C M C -A C E -U F S W ,6 filed a p e titio n fo r c e rtific a tio n e le c tio n a m o n g th e
regu lar ra n k -a n d -file e m p lo y ees o f r e s p o n d e n t C M C , c itin g as o n e o f th e g r o u n d s ,

' San Mgue) Corporation v. NLRC, G.R No. 99266, March 2,1999; Tayag & P. F. Jardniano, Dictionary of Philippine Labor
Ternis, p 36; Appendix 2 [OefVttion of Terms], NCMB Primer on Strke, Picketing and Lockout 2nd Edition, December
1995.
2 Capitol Medical Center Alliance of Concerned Empbyees-Unified Filipino Service Workers v. laguesma, G.R. No. 118915,
Feb. 4,1997,267 SCRA 503,513. I
3 Section 14(e), Rule VIII, Book V, Rules to implement Die Labor Code, as amended by Department Order No. 40-F-03, ; i
Series of 2008 [October 30.2008], i .■
* Capitol Medical Center AIiar.ce of Concerned Employees v. Hon. Laguesma, G.R. No. 118915, Feb. 4.1997.
5 Capitol Medical Center Employees Association-Alliance of Filipino Workers (CMCEA-AFW).
s Capitol Medical Center Alliance ol Concerned Employees-Unified Filipino Service Workers (CMC-ACE-UFSW).
i ..
. »
I

U idb.

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LABOR. RELATIONS

th e fa c t th a t m o r e th a n 12 m o n t h s h a v e e la p s e d s in c e th e la s t c e rtific a tio n e le c tio n

w a s h e ld w h e re r e s p o n d e n t C M C E A - A F W w a s v o t e d a s t h e S E B A a n d yet, th e re
has been no CBA n e g o tia tio n or b a rg a in in g d e a d lo c k b e tw e e n resp o n d en t
C M C E A -A F W a n d r e s p o n d e n t C M C th a t c o u ld e ffe c tiv e ly b a r its filing o f th e
p e titio n .

T h e S u p re m e C o u r t, u n c o n v in c e d o f th is a r g u m e n t, ru le d th a t a lth o u g h
th e r e w as no b a r g a in in g d e a d lo c k b e tw e e n resp o n d e n t C M C E A -A F W and
r e s p o n d e n t C M C b e f o r e th e filin g by p e titio n e r C M C - A C E -U F S W o f th e p e titio n
fo r c e r tific a tio n e le c tio n w h ic h h a d b e e n s u b m itte d t o c o n c ilia tio n o r h a d b e c o m e
th e s u b je c t o f a v a lid n o tic e o f strik e o r lo c k o u t, w h a t h a p p e n e d i n t h i s c a s e is
w o r s e t h a n a b a r g a i n i n g d e a d l o c k f o r C M C e m p l o y e d a ll le g a l m e a n s to
b lo c k th e c e rtific a tio n o f re s p o n d e n t C M C E A -A F W a s th e b a rg a in in g a g e n t
o f t h e r a n k - a n d - f i l e e m p l o y e e s a n d u s e i t as its le v e r a g e f o r its fa ilu re to b a rg a in
th e re w ith . T h u s , it c a n o n ly b e c o n c lu d e d th a t C M C w a s u n w illin g to n e g o tia te a n d
re a c h a n a g r e e m e n t w ith r e s p o n d e n t C M C E A -A F W . R e s p o n d e n t C M C h as n o t at
any in s ta n c e s h o w n w illin g n e ss to d is c u s s th e e c o n o m ic p r o p o s a ls g iv e n by
r e s p o n d e n t C M C E A -A F W . I f t h e la w p r o s c r ib e s t h e c o n d u c t o f a c e rtific a tio n
e le c tio n w hen th e r e is a b a rg a in in g d e a d lo c k s u b m itte d to c o n c ilia tio n or
a rb itra tio n , w ith m o r e re a s o n s h o u ld it n o t b e c o n d u c t e d if, d e s p ite a tte m p ts to
b r in g a n e m p lo y e r to th e n e g o tia tio n ta b le b y th e c e r d f ie d b a rg a in in g a g e n t, th e re
w a s “ n o re a s o n a b le e f f o r t in g o o d faith ” o n th e e m p lo y e r to b a r g a in collectively.

I t is th u s o n ly ju s t a n d e q u ita b le th a t th e c ir c u m s ta n c e s in th is c a s e s h o u ld
b e c o n s id e re d as s im ila r in n a tu r e to a “ b a rg a in in g d e a d lo c k ” w h e n n o c e rtific a tio n
e le c tio n c o u ld b e h e ld . T h is is a ls o to m a k e s u re th a t n o f lo o d g a te s w ill b e o p e n e d
f o r th e c ir c u m v e n tio n o f th e la w b y u n s c r u p u lo u s e m p lo y e r s to p r e v e n t any
c e rtifie d b a rg a in in g a g e n t f ro m n e g o tia tin g a C B A . T h u s , Section 3, Rule V, Rook V
o f th e L a b o r C o d e ’s Implementing Rules1 s h o u ld b e in te r p r e te d liberally so as to
in c lu d e a c irc u m s ta n c e , eg., w h e r e a C B A c o u ld n o t b e c o n c lu d e d d u e to th e failu re
o f o n e p a rty to w illin g ly p e r f o r m its d u ty to b a rg a in c o lle c tiv e ly .

4. W H E N T H E R U L E D O E S N O T APPLY.

T h e c ase o f KAMPILrKATIPUNAN v. Trajano,2 illu s tra te s th e classic

s itu a tio n w h e re th e bargaining deadlock bar ru le w a s n o t a p p lie d . O n F e b r u a r y 2 7 ,
1981, th e B L R d e c la re d N A F L U 3 as th e e x c lu siv e b a r g a in in g re p re s e n ta tiv e o f all

' This provision reads: ‘SEC. 3. When to file.— In the absence of a cofecSvebangarng agreement submitted in accordance
wlh Article 237 [231] of the Code, a petition for certification election may be Sed at any time. However, no certification
election may be held withii one year from the date of issuance of declaration of a final certficafion election result Neither
may a representation question be entertained if, before the Ring of a petition for certification election, a bargainng deadlock
to which an incumbent or certified bargaining agert is a party had been submitted koconcSatioo or arbitration or had become
fie subject of a vafd notice of strive or lockout If a collective bargaining agreement has been duly registered in accordance
with ArBde 237 (231) of the Code, a petition for cer®cation election or a motion fcr inteiveneon can orVy be entertained within
sixty (60) days prior to the expiry date of such agreement’
7 Kaisahan ng fvtenggag2wang PiSp'mo [KAMPIL-KATTPUNAN] v. Trajano, G.R No. 75810, Sept 9,1991,201 SCRA 453.
3 National Federation of Labor Unions (NAFLU).

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 434 Bar reviewer on Labor Law

ra n k -a n d -file e m p lo y ees o f V iro n G a r m e n ts M a n u fa c tu rin g C o ., In c . (V IR O N ).

M o re th an fo u r (4) y ears th e re a fte r, o r o n A p r il 11, 1 9 8 5 , a n o th e r u n io n , th e
Kaisahan ng Manggagawang Pilipino KAMPIL-Katipunan file d w ith th e B L R a P C E
a m o n g th e e m p lo y ees o f V IR O N . T h e p e titio n c o u n te d th e s u p p o r t o f m o re th a n
th irty p e rc e n t (30% ) o f th e w o rk e rs a t V I R O N . N A F L U o p p o s e d th e p e titio n
c o n te n d in g th a t a t th e tim e the p e titio n w a s filed o n A p ril 1 1 , 1 9 8 5 , it w a s in
p ro c e s s o f co llectiv e b arg ain in g w ith V I R O N ; th a t th e re w a s in fa c t a d e a d lo c k in
th e n e g o tia tio n s w h ich h a d p r o m p te d it to file a n o tic e o f strik e ; a n d th a t th e se
c irc u m sta n c e s c o n s titu te d a b ar to th e P C E in a c c o rd a n c e w ith Section 3, Rule V,
Book V o f th e L a b o r C o d e ’s Implementing Rules}

T h e S u p re m e C o u rt, h o w e v e r, d id n o t a p p ly th e bargaining deadlock bar rule

b e c a u s e o f d ie follow ing:

(1) P rio r to th e filing of- th e P C E in th is c a s e , th e r e w a s n o su c h

“ b arg a in in g d e a d lo c k ... (w hich) h a d b e e n su b m itte d to c o n c ilia tio n o r a rb itra tio n
o r h a d b e c o m e d ie su b je ct o f a v alid n o tic e o f strik e o r lo c k o u t.” T o b e su re , th e re
a re, in th e re c o rd , asse rtio n s by N A F L U th a t its a tte m p ts to b rin g V I R O N to th e
n e g o tia tio n tab le h ad b e e n u n su c c e ss fu l b e c a u s e o f th e la tte r's re c a lc itra n c e a n d
u n fu lfilled p ro m ise s to b arg ain co llectiv ely ; b u t th e re is n o p r o o f th a t it h a d ta k e n
an y a c tio n to legally c o e rc e V IR O N to c o m p ly w ith its s ta tu to r y d u ty to b a rg a in
collectively. It c o u ld h av e ch arg ed V I R O N w ith u n fa ir la b o r p ra c tic e , b u t it d id n o t.
I t c o u ld h a v e g o n e o n a leg itim ate strik e in p r o te s t a g a in s t V I R O N ’s re fu s a l to
b a rg a in collectively a n d c o m p e l it to d o s o , b u t it d id n o t.

(2) T h e stark, in c o n tro v e rtib le f a c t is th a t fro m F e b r u a ry 2 7 ,1 9 8 1 - w h e n

N A F L U w as p ro c la im e d th e ex clu siv e b a rg a in in g r e p re s e n ta tiv e o f all V I R O N
em p lo y e e s - to A p ril 11, 1985 - w h e n K A M P IL filed its P C E o r a p e r io d o f m o re
th a n 4 y ears, n o C B A w as e v e r e x e c u te d a n d n o d e a d lo c k e v e r a ro s e fro m
n e g o tia tio n s b e tw e e n N A F L U a n d V I R O N re su ltin g in c o n c ilia tio n p r o c e e d in g s o r
d ie filing o f a valid strik e n o tice.

5. CAPITOL D I S T I N G U I S H E D FROM KAISAHAN.

Capitol Medical Center is s trik in g ly d if fe r e n t f ro m Kaisahan in th a t in th e
fo rm e r, th e re w as p r o o f th a t th e c e rtifie d S E B A h a d ta k e n a n a c tio n to legally
c o e rc e th e e m p lo y e r to c o m p ly w ith its s ta tu to r y d u ty to b a rg a in c o llectiv ely ,
ch a rg in g d ie em p lo y er w ith u n fa ir la b o r p ra c tic e a n d c o n d u c tin g a s trik e in p r o te s t
ag a in st th e e m p lo y e r’s refu sal to b arg ain . I t is th u s o n ly ju s t a n d e q u ita b le th a t th e
c irc u m sta n c e s th erein sh o u ld b e c o n s id e re d as sim ilar in n a tu r e to a “bargaining
deadlock" vAven n o c e rtificatio n e le c tio n c o u ld b e h e ld . I n th e la tte r c a s e , th e r e w as
n o p r o o f th a t fo r m o re th a n 4 y ears, th e b a rg a in in g a g e n t h a d ta k e n an y a c tio n to
legally c o e rc e th e e m p lo y e r to c o m p ly w ith its s ta tu to ry d u ty to b a rg a in collectiv ely .

Supra.

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LABOR RELATIONS

b-v.
THE DOUBLE MAJORITY RULE

1. P U R P O S E O F T H E R U L E .

T h e p r o c e s s o f c e r tific a tio n e le c tio n r e q u ire s th e a p p lic a tio n o f th e d o u b le

m a jo rity ru le fo r th e fo llo w in g tw in p u rp o s e s :

(1) T o h a v e a v alid c e rtific a tio n e le c tio n ; a n d

(2) T o d e c la re th e w in n in g u n io n th a t w ill b e c e rtifie d as S E B A .

2. F IR ST MAJORITY: T O B E A V A L ID C E R T I F I C A T I O N E L E C T I O N ,
A T L E A S T A M A JO R IT Y O F A L L E L I G IB L E V O T E R S I N T H E
B A R G A IN IN G U N IT S H O U L D H A V E C A ST T H E I R V O T E S .

T h e firs t m a jo rity is e s s e n tia l to v a lid a te th e c e rtific a tio n e le c tio n p ro c e s s

itself. A c c o r d in g to A rtic le 2 6 8 [256], in o r d e r to h a v e a v alid c e rtific a tio n e le c tio n ,
it is r e q u ire d th a t a t l e a s t a m a j o r it y o f a ll e l i g i b l e v o t e r s i n t h e b a r g a i n i n g u n i t
m u s t h a v e c a s t t h e i r v o t e s .*1 I f le ss th a n s u c h m a jo rity h a v e c a s t th e ir v o te s , th e
c e rtific a tio n e le c tio n p r o c e s s its e lf is n o t v alid a n d , th e r e fo r e , n o t o n e o f th e
c o n te n d in g u n io n s th e re in , e v e n i f c h o s e n b y th e m a jo rity o f th e v o te s c a s t, c a n b e
c e rtifie d as d ie S E B A to r e p r e s e n t th e C B U .

3. SECOND MAJORITY: M A J O R I T Y V O T E O F T H E V A L ID V O T E S
CA ST R E Q U IR E D IN O R D E R T O B E C H O S E N AS T H E SEB A .

A f te r e s ta b lis h in g th e v a lid ity o f th e c e rtific a tio n e le c tio n p r o c e s s itse lf,

th e n e x t p o i n t to a s c e rta in a n d e s ta b lis h is w h e th e r th e p e titio n in g u n io n , in a single-
union c o n te s t, o r a n y o f th e u n io n s , in a multi-union e le c tio n , h a s g a rn e re d th e
m a j o r it y o f t h e v a l i d v o te s c a s t .

U n d e r th e sa m e A rtic le 2 6 8 [256], it is r e q u ire d th a t o n ly “the labor

union receiving the majority o f the valid votes cast shall be certified as the
exclusive bargaining agent o f all the workers in the unit” a n d u n d e r A rtic le
267 [255], it is lik e w ise p r o v id e d th a t th e la b o r o rg a n iz a tio n d e s ig n a te d o r se le c te d
by d ie m a jo rity o f th e e m p lo y e e s in an a p p r o p ria te CBU is th e ex c lu siv e
re p re s e n ta tiv e o f th e e m p lo y e e s in su c h u n it f o r p u r p o s e s o f c o lle c tiv e b a rg a in in g .2

4. H O W T O R E C K O N T H E D O U B L E M A JO R IT Y .

T o illu s tra te th e p r o p e r r e c k o n in g o f th e d o u b le m a jo rity , in a b a rg a in in g

u n it fo r e x a m p le c o m p o s e d o f 100 e m p lo y e e s , th e firs t th in g to d e te rm in e is h o w
m a n y v o te s s h o u ld b e validly c a s t in o r d e r to h a v e a v alid p r o c e s s o f c e rtific a tio n
e le c tio n . T h e s e c o n d th in g to a s c e rta in is h o w m a n y v o te s s h o u ld a c o n te n d in g

’ Article 268 (256), Labor Code; Samahan ng Manggagawa sa Pacific Plastic v. Laguesma, G.R. No. 111245, Jan. 31,1997.
1 Isaac Penal v. United EmployeesWelfare Association, GR. No. L-9831, Oct 30,1957

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 436 . Bar Reviewer on Labor Law

u n io n g a rn e r in o rd e r to b e d e c la re d w in n e r a n d th u s b e p ro c la im e d as d ie S E B A
o f all th e em p lo y e e s in th e C B U .

F o llo w in g th e ru le e n u n c ia te d in A rtic le 2 6 8 [256], in o r d e r to h a v e a v alid

c e rtific a tio n e le c tio n p ro c e ss , m a jo rity o f th e 100 e m p lo y e e s o r a t le a s t 51
em p lo y e e s sh o u ld validly c a s t th e ir v o te s. I n o r d e r to w in th e e le c tio n , a c o n te n d in g
u n io n sh o u ld b e ab le to g a m e r th e m a jo rity o f th e v a lid v o te s c a st. S o , i f o n ly 51
e m p lo y ees c a s t th e ir v o te s , th e m a jo rity th e r e o f o r, a t le a s t, 26 e m p lo y e e s s h o u ld
v o te fo r th e w in n in g u n io n . T h is illu s tra tio n is n e c e ssa ry to d isp e l th e n o tio n th a t in
a b arg ain in g u n it c o m p o s e d o f 100 e m p lo y e e s , a t le a s t 51 e m p lo y e e s s h o u ld v o te
fo r th e w in n in g u n io n . A s clearly s h o w n in this illu s tra tio n , a v o te o f 26 w o u ld
su ffic e in o r d e r to b e c e rtifie d as th e S E B A .

5. IL L U S T R A T IV E C O M P U T A T IO N .

T o illu strate th e p ro p e r r e c k o n in g o f th e d o u b le m a jo rity , in a b a rg a in in g

u n it c o m p o s e d o f 100 e m p lo y e e s, th e first M A J O R IT Y to d e te r m in e is h o w m a n y
v o te s sh o u ld b e validly c a s t in o r d e r to h a v e a v alid p r o c e s s o f c e rtific a tio n e le c tio n .
The second M A JO R IT Y to a sc e rta in is h o w m a n y v o te s s h o u ld a c o n te n d in g u n io n
g a m e r in o r d e r to b e d e c la re d w in n e r a n d th u s b e p ro c la im e d as d ie S E B A o f all
th e e m p lo y ees in th e C B U .

F o llo w in g th e d o u b le m a jo rity ru le e n u n c ia te d in A rtic le 2 6 8 [256], in

o r d e r to h a v e a valid certific a tio n e le c tio n p ro c e ss , m a jo rity o f d ie 100 e m p lo y e e s
o r a t least 51 em p lo y e e s sh o u ld validly c a s t th e ir v o te s (F IR S T M A JO R IT Y ).

In o r d e r to w in th e e le c tio n , a c o n te n d in g u n io n s h o u ld b e ab le to g a m e r
th e m ajo rity o f th e valid v o te s cast. S o , i f o n ly 51 e m p lo y e e s c a s t d ie ir v o te s , th e
m ajority th e r e o f o r, a t least, 26 e m p lo y e e s sh o u ld v o te fo r d ie w in n in g u n io n
(S E C O N D M A JO R IT Y ).

T h is illu stra tio n is n ec e ssa ry to d isp e l d ie n o tio n th a t in a b a rg a in in g u n it

c o m p o s e d o f 100 em p lo y e e s, a t le a st 51 e m p lo y e e s s h o u ld v o te f o r th e w in n in g
u n io n in o r d e r to b e p ro c la im e d th e S E B A . A s clearly s h o w n in th is illu stra tio n , th e
m in im u m v o te o f 26 w o u ld su ffice to b e c e rtifie d as su c h .

6. ‘N O UNION”A L W A Y S A C H O IC E .

I t is a b asic p rin c ip le in la b o r re la tio n s th a t th e rig h t to jo in a u n io n h a s

th e c o n c o m ita n t rig h t n o t to jo in o n e . I t is o n th is b a s is th a t “No Union”is alw ays a
c h o ic e in all c e rtific a tio n electio n s.

single-union e le c tio n , o r an y o f
In th e e v e n t th a t th e p e titio n in g u n io n , in a
th e p a rtic ip a tin g u n io n s, in amulti-union c o n te s t, fails to m u s te r th e m a jo rity o f th e
valid v o tes c a s t a n d th e ‘No Union” c h o ic e w in s, n o S E B A shall b e p ro c la im e d a n d
n o n e w P C E can b e filed w ith in o n e (1) y e a r fro m th e c o n d u c t o f th e c e rtific a tio n
e le c tio n p u rs u a n t to th e o n e -y e a r Statutory Bar Rule.

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LABOR RELATIONS

b-vi.
CHALLENGING OF VOTES AND PROTEST

1. E L I G I B L E V O T E R S .
“Eligible voter” re fe rs to a v o te r b e lo n g in g to th e a p p r o p r ia te C B U th a t is
th e s u b je c t o f a p e titio n fo r c e r tific a tio n , c o n s e n t, r u n - o f f o r r e -r u n e le c tio n .1 A ll
e m p lo y e e s w h o a re m e m b e r s o f th e a p p r o p r ia te C B U th r e e (3) m o n th s p r io r to th e
filing o f t h e p e t i t i o n / r e q u e s t sh a ll b e e lig ib le to v o te .2
2. E L I G I B I L I T Y O F D I S M I S S E D E M P L O Y E E S T O V O T E .
A n e m p lo y e e w h o h a s b e e n d is m is s e d f r o m w o r k b u t h a s c o n te s te d th e
legality o f t h e d is m is s a l in a f o r u m o f a p p r o p r ia te ju n s d ic tio n a t th e tim e o f th e
is s u a n c e o f t h e o r d e r f o r th e c o n d u c t o f a c e rtific a tio n e le c tio n sh a ll b e c o n s id e r e d
a q u a lifie d v o te r , u n le s s h i s / h e r d ism is sa l w a s d e c la re d valid in a final ju d g m e n t a t
th e tim e o f th e c o n d u c t o f th e c e rtific a tio n e le c tio n .345
I n th e c a s e o f Yokohama Tire* th e p e titio n e r p o s its th a t “ e m p lo y e e s w h o
h a v e q u it o r h a v e b e e n d is m is s e d f o r ju s t c a u s e s p r io r to th e d a te o f th e
c e rtific a tio n e le c tio n a re e x c lu d e d f ro m p a rtic ip a tin g in th e c e rtific a tio n
e le c tio n .” In d is a g re e in g to th is p o s tu la tio n , th e S u p re m e C o u r t, c itin g th e
Implementing Rules? r u le d th a t d is m is s e d e m p lo y e e s a re a llo w e d to v o te d u r in g th e
c e rtific a tio n e le c tio n i f th e c a s e s th ey file d c o n te s tin g th e ir d ism is sa l a re still
p e n d in g a t th e tim e o f th e e le c tio n . T h u s , w ith o u t a fin al ju d g m e n t d e c la rin g th e
legality o f th e ir d ism is sa l, d ism is se d e m p lo y e e s a re elig ib le o r q u a lifie d v o te rs .
I n d e e d , it is n o w w e ll-s c td e d th a t e m p lo y e e s w h o h a v e b e e n im p ro p e rly
laid o f f b u t w h o h a v e a p r e s e n t, u n a b a n d o n e d rig h t to o r e x p e c ta tio n o f r e ­
e m p lo y m e n t, a re elig ib le to v o te in c e rtific a tio n e le c tio n s .6 T h u s , a n d to re p e a t, i f
th e d ism is sa l is u n d e r q u e s tio n w h e re b y a c a s e o f i l l e g a l d i s m i s s a l a n d / o r u n f a i r
l a b o r p r a c t i c e w a s filed , th e e m p lo y e e s c o n c e r n e d c o u ld still q u alify to v o te in th e
e le c tio n s .7
3. V E N U E O F T H E E L E C T IO N .
W h ile th e p o s tin g o f th e n o tic e o f th e c e rtific a tio n e le c tio n is e x p re ss ly
re q u ire d to b e m a d e in a t le a st tw o (2) m o s t c o n s p ic u o u s p la c e s w ith in th e
c o m p a n y p re m is e s , th e r e is, h o w e v e r, n o p r o v is io n in th e la w n o r in th e Rules
w h ic h r e q u ire s th a t th e c e rtific a tio n e le c tio n b e c o n d u c te d w ith in th e c o m p a n y
p re m ise s . B e in g a p u re ly e m p lo y e e -a c tiv ity , th e e le c tio n s h o u ld , as a g e n e ra l ru le,

1 Secfion 1[q], Rule I, Book V, Rules to Implement the Labor Code, as amended ^Department Oder No. 40-F-03, Series of
2008 [Oct 30.2008],
2 Section 6 (formerly Section 5], Rule IX. Book V, Rules to Implement the Labor Code, as amended by Department Order No.
40-F-03, Series of 2008 [Oct 30,2008], and as further amended and renumbered by Secfion 10, Department Order No. 40-
U 5. Series of 2015 [September 07.2015J.
3 Id.
4 Yokohama Tire Phiippines, Inc. v. Yokohama Employees Union, G R No. 159553, Dec. 10,2007.
5 Particularly, Section 5, Rule IX of Book V of the Rules to Implement the Labor Code.
6 Philippine Fruits and Vegetable Industries, Inc. v. Hon. Ruben D. Tones, G.R No. 92391. July 3,1992, citing Rothenberg on
Labor Relations, p. 546.
7 Samahang Manggagawa ng Via Mare v. Noriel. G R No. L-52169, Jure 30,1980,98 SCRA 507.

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 438 Bar Reviewer on Labor Law

necessarily b e h eld in th e place o f e m p lo y m e n t o f th e e m p lo y e e s . H o ld in g th e

e le c tio n o f f p re m ise s c o n tro lle d by th e e m p lo y e r m ay b e ju stifie d s u c h as w h e n th e
e m p lo y e r u n re a so n a b ly refu ses to m a k e its w o rk p re m is e s a v a ilab le fo r th a t
p u rp o s e o r h a s s h o w n e x tre m e a n ti-u n io n bias. In th is e v e n tu a lity , th e E le c tio n
O ffic e r m ay ex ercise h i s / h e r s o u n d d is c re tio n o v e r d ie s e le c tio n o f th e e le c tio n
site. T h e c o n te n d in g u n io n s , fo r th e ir p a r t, m ay m u tu a lly a g re e o n th e v e n u e o f th e
e le c tio n .1
4. E L E C T I O N C A M P A I G N .
The titles d o n o t e m b o d y a sin g le p ro v is io n re g u la tin g e le c tio n c a m p a ig n s
th a t m ay b e w a g e d by th e c a n d id a te -u n io n s . N o t b e in g e n c u m b e r e d b y an y
lim ita tio n in th e law a n d u n less th e c o n trary ' is m u tu a lly a g re e d u p o n b y th e
c o n te n d in g u n io n s, c a m p a ig n in g m a y be done up to th e v e ry day o f th e
r e p re s e n ta tio n ele c tio n itself. In o th e r ju ris d ic tio n s, h o w e v e r , c a m p a ig n in g m a y b e
validly p r o h ib ite d in “no-tlection hearing yone" w ith th e p r o v is o th a t it d o e s n o t ta k e
p la c e w h ile e m p lo y e e s a re sta n d in g in lin e to v o te a n d d o e s n o t “ su b sta n tia lly
im p a ir e m p lo y e e ’s fair c h o ic e .”2
T h a t th e e m p lo y e r is n o t a llo w e d to w ag e a n y c a m p a ig n a g a in s t th e
h o ld in g o f d ie c e rtific a tio n electio n o r fo r o r a g a in s t an y o f th e c o n te n d in g u n io n s ,
is b e y o n d cavil, it b e in g se td e d th a t th e e m p lo y e r is a b y s ta n d e r in s u c h e le c to ra l
e x ercise3 a n d s u c h a c t w ell c o n s titu te s U L P .4 T h u s , th e a c t o f th e e m p lo y e r in
d istrib u tin g a n ti-u n io n p a ra p h e rn a lia to e m p lo y e e s o n t h e d a y o f th e e le c tio n is h e ld
to in te rfe re w id i e m p lo y e e ’s free c h o ic e , a n d s u c h o b je c tio n a b le c o n d u c t m a y b e
th e b asis fo r se ttin g a sid e th e e le c tio n .5
5. S E C R E C Y A N D S A N C T IT Y O F B A L L O T S .
T o e n s u re secre cy o f th e b a llo t, th e E le c tio n O f fic e r, to g e th e r w ith th e
a u th o riz e d re p re se n ta tiv e s o f th e c o n te n d in g u n io n s sh a ll, b e f o re th e s ta rt o f th e
ac tu a l v o tin g , in s p e c t th e p o llin g p lace, th e b a llo t b o x e s a n d th e p o llin g b o o th s .6
N o d e v ice th a t c o u ld re c o rd o r id e n tify th e v o te r o r o th e rw is e u n d e r m in e
th e secre cy a n d sa n ctity o f th e b allo t sh all b e a llo w e d w ith in th e p re m ise s , e x c e p t
th o s e d ev ices b r o u g h t in by th e E le c tio n O ffic e r. A n y o th e r d e v ic e f o u n d w ith in

1 A case in point is Confederation of Citizens Labor Unions v. Nooel, G.R. No. L-5690Z Sept 21,1982,116 SCRA 694. On
November 6,1980, three (3) election supervisors from the Mnistry of Labor and Employment arrived al around 7 o'clock in
the morning near the Redson Textile compound but they were not akwed by the security guard to enter the company
premises in spite of the heavy rail. So, after consulting through the phone with their chid, the said election supervisors
decided to hold the certification election ‘outside the premises of the company in a small sfexe outside of the annex building.’
They used as baOot box 'an improvised carton box.” The union representatives cSd not object to the improvised pofSng place
and ballot box.
7 See New York Rehabilitation Management Care. LLC v. NLRB, 506 F.3d 1070 (D.C. Cir. 2007); Ovemite Transport Co. v.
NLRB, 140 F.3d 259 (O.C.Cf. 1998)
3 Per Artde 271 (258-A), Labor Code
* Under Artide 259(a) [248(a)), Labor Code
5 2 Sisters Food Group, he. and United Food and Commeroal Workers International Union, Local 1167.357 NLRB 168, Dec.
29,2011.
6 Section 8, fformerfy Section 7], Rule IX. Book V, Rules to Implement the Labor Code, as amended by Department Order No.
40-03, Series of 2003, (Feb 17,2003), and as further amended and renumbered by Section 12, Department Order No. 404-
15, Series of 2015 (September 07,2015], Ibid.

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LABOR RELATIONS

th e p re m ise s shall b e c o n f is c a te d b y th e E le c tio n O f f ic e r a n d r e tu rn e d to its o w n e r

o n ly a f te r th e c o n d u c t o f th e c e r tific a tio n e le c tio n .1
6. P R E P A R A T IO N O F B A L L O T S .
T h e E le c tio n O f fic e r is r e q u ire d to p r e p a re th e b a llo ts in E n g lis h a n d
F ilip in o o r th e lo cal d ia le c t. T h e n u m b e r o f b a llo ts s h o u ld c o r r e s p o n d to th e
n u m b e r o f v o te rs in th e b a rg a in in g u n it p lu s a re a s o n a b le n u m b e r o f e x tra b a llo ts
f o r c o n tin g e n c ie s . A ll b a llo ts sh a ll b e sig n e d a t th e b a c k by th e E le c tio n O f f ic e r a n d
a n a u th o r iz e d r e p re s e n ta tiv e e a c h o f th e c o n te n d in g u n io n s . A p a rty w h o re fu s e s o r
fails to sig n th e b a llo ts w a iv e s its rig h t to d o s o a n d th e E le c tio n O f fic e r sh a ll e n te r
th e fa c t o f refu sa l o r fa ilu re a n d th e r e a s o n th e r e f o r in th e r e c o r d s o f th e c ase.2 I t
m u s t b e n o te d th a t, b y v irtu e o f t h e "Employer as bystander" ru le , th e e m p lo y e r h a s
n o rig h t to sig n th e b a llo ts .
7. C A S T IN G O F V O T E S .
T h e v o te r m u s t p u t a c r o s s (x) o r a c h e c k ( /) m a r k in th e s q u a re o p p o s ite
th e n a m e o f th e c h o s e n u n io n o r "No Union" i f h e / s h e d o e s n o t w a n t to b e
re p re s e n te d b y an y u n io n . I f th e v o te r in a d v e r te n tly sp o ils a b a llo t, h e / s h e shall
r e tu r n it to th e E le c tio n O f f ic e r w h o sh a ll d e s tro y it a n d g iv e h i m / h e r a n o th e r
b a llo t.3 A n y m e m b e r o f th e C B U w h o is u n in te n tio n a lly o m itte d in th e m a s te r list
o f v o te r s m a y b e a llo w e d to v o te i f b o th p a rtie s a g re e ; o th e r w is e , h e / s h e w ill b e
a llo w e d to v o te b u t h i s / h e r b a llo t s h o u ld b e s e g re g a te d .456
8. C H A L L E N G I N G O F V O T E S .
a. Grounds.
T h e fo llo w in g p r o v is io n o f th e Rules to Implement the Labor Code c o n ta in s
th e g ro u n d s fo r c h a lle n g in g o f v o te s b u t su rp risin g ly , it h a s b e e n o r d e re d d e le te d b y
v irtu e o f Department Order No. 40-F-03, Series of2008}
“ A n authorized representative o f any o f the contending
unions and the e m p lo y e r may challenge a vote befo re it is deposited in
the ballot box only on any o f the follow ing grounds:

(a) T h at there is no em ployer-em ployee relationship betw een

the voter and the em ployer, or
(b) T h a t th e v o ter is n o t a m em ber o f the appropriate
bargaining u nit which petitioner seeks to represent.”4

' Id.
2 Section 8, Rule IX, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of
2008101 30,2008].
3 Section 10, (formerly Section 9], Rule IX Book V. Rules to Implement the Labor Code, as amended by Department Order
No. 4003, Series of 2003, [Feb. 17,2003|. and as further amended and renumbered by Section 13, Department Order No.
40-M5, Series of 2015 [September 07,2015], Ibid.
4 Id.
5 Issued on October 30,2008. The amendatory provision deleting tiis section states: ‘Section 10, Rule IX is hereby deleted.'
And Section 11 of Rule IX has been amended and renumbered n this wise. ‘Section 11, Rule IX is hereby amended and
renumbered as Section 10 under Rule IX to read as folows: Section 10. Procedure in the chalenge of votes.-xw " (See
quoted provision of this section below).
6 Section 10, Rule IX Book V. Ibid

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 440 Bar Reviewer on Labor Law

W h ile th e said d e letio n is u n d e r s ta n d a b le c o n s id e rin g th a t a n y c h a lle n g e

th a t c o n c e rn s th e q u a lific atio n a n d eligibility o f th e v o te r s c a n n o lo n g e r b e d o n e a t
th e tim e o f th e ele c tio n itse lf b u t d u r in g th e p r e -e le c tio n c o n f e r e n c e ,1*th e v a lid ity o f
th e tw o (2) g ro u n d s a fo re -m e n tio n e d h a s n o t b e e n r e n d e r e d n u g a to ry b y s u c h
d e letio n . N o t o n ly are th ey p r o p e r to b e ra ise d in so c h a lle n g in g th e eligibility o f th e
v o te r c o n c e rn e d b u t th e ir c o n tin u e d v alid ity is r e c o g n k e d in th e a m e n d a to r y Rules
w h ich m ake ex p re ss re fe re n c e to th e sa m e g ro u n d s in re g a rd to re so lv in g “ on-the-
spot questions. [See discussion below on this topic]. T h is o n ly s h o w s th a t th e 2
g ro u n d s m e n tio n e d th e re in rem ain v alid d e s p ite said s e c tio n ’s d e le tio n .

M o re o v e r, th e d e letio n o f th is se c tio n is o b v io u sly p r o p e r in s o f a r a s th e

right g ra n te d to th e e m p lo y e r to a s s e rt a c h a lle n g e is c o n c e r n e d . T h is is p u r s u a n t
to th e sam e ''Employer as Bystander" ru le.
b. Procedure in challenging o f votes.
The p ro c e d u re in die c h a lle n g in g o f v o te s has been rc -c ra f te d in
Department OrderNo. 40-F-03, Series of2008,3 as follow s:

“S ectio n 10. Procedure in the challenge o f votes. - T he

ballot o f the voter who has b een p ro p e rly c h a lle n g e d d u r in g th e
P R E -E L E C T IO N C O N FEREN CES, shall be placed in an
envelope which shall be sealed by the Election O fficer in the presence
o f the voter and the representatives o f the contending unions. T he
Election O fficer shall indicate o n the envelope th e voter's nam e, the
union challenging the voter, and the ground fo r th e challenge. T h e
sealed envelope shall then be signed by th e E lection O ffice r and the
representatives o f the contending unions. T h e E lectio n O fficer shall
note all challenges in the m inutes o f the election proceedings an d shall
have custody o f all envelopes containing the challenged votes. T h e
envelopes shall be opened an d the question o f eligibility shall b e passed
upon BY T H E M E D IA T O R -A R B IT E R only if the nu m b er o f
segregated votes will materially alter the results o f the election.” 4

c. On-the-spot questions.
T h e E le c tio n O ffic e r shall ru le o n a n y on-the-spot q u e s t i o n re la tin g to
a n d raised d u rin g th e c o n d u c t o f th e e le c tio n . I n n o case , h o w e v e r, sh a ll th e

' See Section 10, Department Order No. 40-F-03, Series of 2008 [OcL 30, 2008], its entire provision is quoted befcw.
(Previously numbered Section 11, Rule IX, Book V, but ordered renumbered under this Department Order No. 40-F-03,
Series of 2008). Further, it was hdd h Acoje Workers' Union v. NAMAWU, G R No. 1-18848, April 23,1953, 7 SCRA 730,
that the proper time to question the fist of qualified voters is during the preelection conference. It can no longer be contested
during the actual caonduct of the certification Section.
7 Section 11 (formerly Section 12), Rule IX, Bock V, Rules to Implement the Labor Code, as amended by Department Order
No. 40-03. Series erf 2003, [Feb. 17,2003], and as re-numbered by Department Order No. 40-F-03, Series of 2008 [Oct 30.
2008].
3 Issued on October 30,2008.
* Previously numbered Section 11, Rule IX, Book V, but ordered renumbered under Department Order No. 40-F-03, Series of
2008 [Oct 30,2008] Underscoring supplied.

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LABOR RELATIONS

E le c tio n O f fic e r ru le o n a n y o f t h e g r o u n d s f o r c h a l l e n g e sp e c ifie d in th e

im m e d ia te ly p r e c e d in g S e c t i o n 10 q u o te d a b o v e 1 b e c a u s e th e a u th o r ity to ru le o n
su c h g ro u n d s fo r c h a lle n g e is v e s te d in th e M e d ia to r- A r b ite r .2034*

d. N otable changes in the Rules.

B a se d o n th e fo re g o in g d is q u is itio n o n th e a m e n d m e n ts , d e le tio n s a n d
c h a n g e s in th e Rules, it is d e a r th a t:

(1) T h e c h a lle n g e to th e v o te r s h o u ld b e m a d e a n d a s s e r te d “ d u r i n g t h e
P R E - E L E C T I O N C O N F E R E N C E S ” a n d n o t d u rin g th e e le c tio n
p r o p e r w h ic h w a s w h a t w a s p ro v id e d in th e o ld Rules, i.e., th a t th e
c h a lle n g e b e m a d e r ig h t “before [the ballot] is deposited in the ballot box. ' 8
(2) A f te r b e in g c h a lle n g e d d u r in g th e pre-election c o n feren ces, d ie
c h a lle n g e d v o te r w ill still b e a llo w e d to v o te in th e e le c tio n , a lth o u g h ,
a t th e tim e h e / s h e c a sts h i s / h e r b a llo t. it sh a ll b e p la c e d in a n
e n v e lo p e w h ic h sh a ll b e se a le d by th e E le c tio n O f f ic e r in th e p re s e n c e
o f d ie v o t e r a n d t h e re p re s e n ta tiv e s o f th e c o n te n d in g u n io n s . T h e
E le c tio n O f f ic e r sh a ll th e n fo llo w th e p r o c e d u r a l s te p s in p r o c e s s in g
c h a lle n g e d v o te s laid d o w n in S e c tio n 10 o f R u le I X , as q u o te d a b o v e .

(3) T h e g r o u n d s f o r c h a lle n g in g a v o te re m a in th e s a m e , n am ely : (a) th a t

th e re is n o e m p lo y e r-e m p lo y e e r e la tio n s h ip b e tw e e n th e v o te r a n d th e
e m p lo y e r; o r (b) th a t th e v o te r is n o t a m e m b e r o f th e a p p r o p ria te
b a rg a in in g u n it w h ic h p e titio n e r se ek s to r e p r e s e n t ”

(4 ) T h e E le c tio n O f fic e r, in n o c a s e , h a s a u th o r ity t o ru le o n questions

o f voter eligibility (re fe rrin g to th e sa id 2 g r o u n d s ) , h i s / h e r r o le b e in g
c o n f in e d o n ly to ta k in g ‘‘n o te o f all c h a lle n g e s in th e m in u te s o f d ie
e le c tio n p r o c e e d in g s ” and to “have c u s to d y of all e n v e lo p e s
c o n ta in in g th e c h a lle n g e d v o te s .”

(5) I t is th e M e d ia to r- A r b ite r w h o h a s th e a u th o r ity to ru le o n su c h

questions o f voter eligibility.*
(6) T h e E le c tio n O f f ic e r sh all ru le o n an y on-the-spot q u e s tio n re la tin g to
a n d ra ise d d u r in g th e c o n d u c t o f th e e le c tio n .

1 Section 11 (foanerty Section 12), Rule IX, Book V, Rules to Implement tie Labor Code, as amended by Department Order
No. 40-03. Series of 2003, (Feb. 17.2003], and as re-numbered by Department Older No. 40-F-03, Series of 2008 [Oct 30,
2008). Note that reference to "Section 10* in this prevision is no longer accurate since this 2008 Department Order No. 40-F-
03 has deleted said Section 10 and has renumbered Section 11 to Section 10.
7 See Section 10 which was previously numbered Section 11, Rule IX, Book V, and renumbered under Department Order
No. 40-F-03. Series of 2008 [Oct 30,2008].
3 As previously provided, in Section 10, Rule IX, Book V of he Implementing Rules, that is: ’An authorized representative of
any erf he contending unions and the employer may challenge a vote before it is deposited n the ballot box xxx*
4 But the envelopes shall be opened and the question of efigbdity shall be passed upon by the Medator-Arbter onty if the
number of segregated votes w i materialy alter the results of the election

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 442 Ba r . R e v ie w e r , o n L a b o r La w

9. PROTEST.
a. Requisites for valid invocation o f protest.

T h e fo llo w in g re q u ire m e n ts , as a m a tte r o f p r o c e d u r e , m u s t b e c o m p lie d

w ith in o r d e r th a t a p r o te s t w o u ld p r o s p e r , to wit
(1) A n y p a r ty - in - in te r e s t m ay file a p r o te s t w ith th e E le c tio n O f fic e r
based on “any issue arisingfrom [th e c e rtific a tio n e le c tio n ’s] conduct orfrom
its results.’* S u ch p ro te s t sh a ll b e r e c o r d e d in th e m in u te s o f th e
ele c tio n p ro c eed in g s. P ro te s ts n o t so ra ise d im m e d ia te ly a f te r th e l a s t
b a llo t cast a re d e e m e d w a iv e d .12

(2) G e n e r a l r e s e r v a tio n to file a p r o te s t shall b e p r o h ib ite d . T h e

p ro te stin g p arty sh o u ld s p e c if y th e g r o u n d s fo r p ro te s t.3

(3) T ire p ro te s tin g p arty m u s t formalize its p r o te s t w ith th e M e d ia to r-

A rb ite r, w ith s p e c ific g ro u n d s , a rg u m e n ts a n d e v id e n c e , w ith in five
(5) days a fte r th e c lo s e o f t h e e l e c t i o n p r o c e e d i n g s . I f n o t r e c o r d e d
in th e m in u te s an d fo rm a liz e d w ith in th e p re s c rib e d p e r io d , th e
p r o te s t sh o u ld b e d e e m e d d r o p p e d 4 o r w a iv e d .5

b. Meaning o f “party-in-interest.”
It m u s t b e n o te d th at o n ly a 1'party-in-interest” o r m o re a p p ro p ria te ly , a
“union-in-interest" c an file a p ro test. F o r lack o f p e rso n a lity , it c a n n o t th e r e fo r e b e
filed by:

(1) a la b o r u n io n w h ic h is n o t a p a rtic ip a n t in th e c e rtific a tio n e le c tio n .6

(2) a u n io n w h ic h has d isa ffilia te d f ro m its m o th e r fe d e ra tio n a n d w h ic h
h a s n o in d e p e n d e n t re g is tra tio n .7
(3) a n em p lo y e r, b ein g legally tr e a te d m e re ly as b y s ta n d e r.8

c. Meaning o f “close o f the election proceedings. ”

T h e p h ra se "close of the election proceedings” as u se d in th e p e r tin e n t

Implementing Rules, re fe rs to th a t p e rio d f ro m th e c lo s in g of th e p o lls to th e c o u n tin g
a n d ta b u la tio n o f th e v o te s , as it c o u ld n o t h a v e b e e n th e in te n tio n o f th e
Implementing Rules to in c lu d e in th e te rm "dose of the electionproceedings", th e p e r io d fo r
th e final d e te rm in a tio n o f th e c h a llen g ed v o te s a n d th e c a n v a s s th e r e o f, w h ic h m ay

1 Section 19, Ri/e VIII, Book V. Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of
2003, Feb. 17,2003],
7 Secfion 13, Riie VIII, Book V. Rules to Impfement the Labor Code, as previously amended and re-ruBTibered as SecSon 12
^xmeriy Section 13] by Department Order No. 4003, Series of 2003, [Feb. 17,2003],
3 Id.
4 Id.
5 See Samahan Ng Manggagawa Sa Pacific Plastic v. Laguesma, G.R. No. 111245. Jan. 31,1997.
• GOP-CCP Workers Union v. CIR, G R No. L-33015, Sept 10,1979,93 SCRA116.
3 Reyes v. Opte, G.R. No. L-48192, March 30,1979,89 SCRA 279.
» See Article 271 [258-A], Labor Code.

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 Chapter. Five 443
LABOR RELATIONS

ta k e a v e ry lo n g p e r io d . T h u s , i f a p r o te s t c a n b e fo rm a liz e d w ith in fiv e (5) d a y s

a f te r a fin a l d e te r m in a tio n a n d c a n v a s s o f th e c h a lle n g e d v o te s h a v e b e e n m a d e , it
w o u ld r e s u lt in a n u n d u e d e la y in th e a f fir m a tio n o : th e e m p lo y e e s ' e x p re s s e d
c h o ic e o f a b a rg a in in g r e p r e s e n ta tiv e .1

T h u s , in Philippine Fruits and Vegetable Industries, Inc. v. Hon. Ruben D. Torres,2

th e p e titio n e r ’s p r o te s t w a s d e c la re d file d o u t o f tim e b e c a u s e a f te r filing a
m a n if e s ta tio n o f p ro te s t o n D e c e m b e r 16 , 1 9 8 8 , th e e l e c t i o n d a y , it o n ly
fo rm a liz e d t h e sa m e o n F e b r u a r y 2 0 ,1 9 8 9 , o r m o r e th a n tw o (2) m o n th s a f te r th e
close o f the election proceedings (/.?., D e c e m b e r 16, 1988). D e c la r e d n o t
p e rs u a s iv e w as p e titio n e r 's fo llo w in g a r g u m e n ts : (l) th a t th e te r m “election
proceedings” in c lu d e s n o t o n ly th e c a s tin g o f v o te s b u t n e c e ssa rily in c lu d e s th e
c a n v a s s in g a n d a p p r e c ia tio n o f v o te s c a st; (2) th a t c o n s e q u e n tly , c o n s id e rin g th a t
th e c a n v a s s in g a n d a p p re c ia tio n o f all th e v o te s c a s : w e re te r m in a te d o n ly o n
F e b r u a r y 1 6 , 1989, it w a s o n ly th e n th a t th e election proceedings a re d e e m e d c lo s e d ;
a n d (3) th a t w h e n th e fo rm a l p r o te s t w a s file d o n F e b r u a r y 2 0 , 1989, th e fiv e -d a y
p e r io d w ith in w h ic h to file th e fo rm a l p r o t e s t still su b s is te d a n d its p r o te s t w a s
th e r e fo r e fo rm a liz e d w ith in th e re g le m e n ta ry p e rio d .

d. When 5-day period treated as were technicality.

T h e 5 -d ay p e r io d is g e n e ra lly stric tly o b s e rv e d . H o w e v e r, in th e c a s e o f
National Federation of Labor v. The Secretary of Labor,3 it w as h e ld th a t w h e re a
su b s ta n tia l n u m b e r o f w o rk e rs w e re d is e n fr a n c h is e d sin c e th ey w e r e n o t n o tifie d o f
th e d a te o f th e c e rtific a tio n e le c tio n , c o u p le d w ith th e fact th a t th e r e p o r t o f tire
M e d -A rb ite r c o n f irm e d to b e tr u e th e a lle g a tio n s o f fra u d a n d irregularities, th e 5-
day p e r io d sh o u ld b e tre a te d as a m e re te c h n ic a lity w in c h m u s t n o t be a llo w e d to
p re v a il o v e r th e w o r k e rs ’ w elfare. A s th e S u p re m e C o u r t s tre s s e d in L V N Pictures,
Inc. v. Phil Musicians Guild,4 it is e s se n tia l th a t th e e m p lo y e e s m u s t b e a c c o r d e d a n
o p p o r tu n ity to freely a n d in tellig en tly d e te r m in e w h ic h la b o r o rg a n iz a tio n s h o u ld
a c t in th e ir b eh alf.

10. C H A L L E N G IN G O F V O T E S VS. P R O T E S T .

T h e re m e d y o f challenging o f votes is d if f e r e n t fro m p ro te sts th a t:

(1) In th e former., th e g r o u n d s th a t m a y b e in v o k e d c o n c e r n v o te r
e l i g ib ility ,5 h e n c e , a re s u b s ta n tiv e in n a tu r e ; w h ile in th e latter, th e

1 Philippine Fruits and Vegetable Industries, he. v. Hon. Ruben D. Torres, G.R. No. 92391, July 3,1992.
2 Id.
3 GR . No. 104556, Mach 9.1998,287 SCRA 599,607.
4 G.R. Nos. L-12582 and L-12598, Jan. 28,1961,1 SCRA 132.
5 Refenhg to the fbflov.ing 2 grounds: (a) That there is no employer-employee relationship between the voter and the
employee or (b) That the voter is not a member of the appropriate bargaining uni which petitioner seeks to represent (See
Section 10, Rule IX, Bock V, Rules to Implement the Labor Code, as amended oy Department Order No. 40-03, Series of
2003, [Feb. 17,2003],

J9JC9B0M
 444 Bar reviewer on Labor Law

g ro u n d s th a t m ay b e a s s e rte d in v o lv e th e c o n d u c t a n d m e c h a n i c s
o f th e ele c tio n , th u s, a re p r o c e d u r a l in c h a ra c te r.

(2) The former sh o u ld be ra ise d d u r in g th e p re -e le c tio n c o n f e r e n c e s b u t

n o t d u rin g th e ele c tio n p r o p e r; w h ile th e latter s h o u ld b e ra is e d a n d
re c o rd e d in th e m in u te s d u r in g th e e le c tio n p r o p e r a n d fo rm a liz e d
w ith th e M e d ia to r-A rb ite r w ith in fiv e (5) d a y s a fte r th e c lo s e o f th e
ele c tio n p ro ceed in g s.

11. S P O I L E D B A L L O T S .

;!'Spoiled ballot" refe rs to a b a llo t th a t is to m , d e fa c e d , o r c o n ta in s m a rk in g s

w hich can lead a n o th e r to d e a d y id e n tify th e v o te r w h o c a s ts s u c h v o te .1 S p o ile d
ballots are n o t re c k o n e d to d e te rm in e m a jo rity . T h e e a rlie r ru lin g in Allied Workers
v. CIR.2 th a t sp o ile d b a llo ts sh o u ld b e c o u n te d to d e te r m in e th e m a jo rity d o e s n o t
p o ssess any rele v a n c e a n y m o re , a c c o rd in g to PAFLU v. BLR.3

12. A B S T E N T I O N .

“Abstention" refe rs to a b la n k o r u n fille d b a llo t v alid ly c a s t b y a n eligible

v o ter. It is n o t c o n s id e re d as a n e g a tiv e v o te . H o w e v e r , it shall b e c o n s id e re d a
valid v o te fo r p u r p o s e s o f d e te rm in in g a v alid e le c tio n .4

13. C O N D U C T O F E L E C T I O N A N D C A N V A S S O F V O T E S .

a. Opening and closing o f precincts.

T h e ele c tio n p re c in c ts sh o u ld o p e n a n d c lo s e o n th e d a te a n d tim e a g re e d
u p o n d u rin g th e p re -e le c tio n c o n fe re n c e . T h e o p e n in g a n d c a n v a ss o f v o te s s h o u ld
p ro c e e d im m e d ia te ly a fte r th e p re c in c ts h a v e d o s e d . F a ilu re o f a n y p a rty o r th e
em p lo y e r or h is /h e r/th e ir r e p re s e n ta tiv c /s to appear d u rin g th e e le c tio n
p ro c e e d in g s s h o u ld b e c o n s id e re d as a w a iv e r to b e p r e s e n t a n d to q u e s tio n th e
c o n d u c t th e re o f.5

b. Canvassing o f votes.

T h e v o te s s h o u ld b e c o u n te d a n d ta b u la te d b y th e E le c tio n O f f ic e r in th e
p re se n c e o f th e re p re se n ta tiv e s o f th e c o n te n d in g u n io n s . U p o n c o m p le tio n o f d ie
canvass, th e E le c tio n O ffic e r is re q u ire d to g iv e e a c h r e p re s e n ta tiv e a c o p y o f th e

1 New Section 1(ww), Rule I, Book V, Rules b Implement the Labor Code, as amended by Department Order No. 4(H)3,
Senes of 2003, [Feb. 17.2003].
7 AKed Worker, Association of be PhSppines v. CIR, G.R. Nos. L-22580 and L-22950. June 6,1967,20 SCRA 364.
3 PAFlUv Bureau of labor Relations, G.R No. 143760, Aug. 21,1976.
4 New Section 1(a), Rule I, Book V, Rules b Implement the Labor Code, as amended by Department Order No. 4003, Senes
of 2003. |Feb. 17.2003], and as further added through the amendment introduced by Section 2, Department Order No. 40-I-
15, Senes of 2015 [September 07,2015], entitled 'Further Amending Department Order No. 40, Series of 2003, Amending
the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.’
5 Section 14 [formerly Section 15], Rule IX, Book V, Rules to Implement IheLabor Code, as amended by Department Order
No 40-03. Series of 2003, [Feb. 17,2003],

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LABOR RELATIONS

m in u te s o f th e e le c tio n p r o c e e d in g s a n d re s u lts o f th e e le c tio n . T h e b a llo ts a n d th e

tally s h e e ts sh a ll b e se a le d in a n e n v e lo p e a n d sig n e d b y th e E le c tio n O f f ic e r a n d
th e r e p re s e n ta tiv e s o f th e c o n te n d in g u n io n s a n d tr a n s m itte d to th e M e d -A r b ite r ,
to g e th e r w ith th e m in u te s a n d re su lts o f th e e le c tio n w ith in tw e n ty - fo u r (2 4 ) h o u r s
fro m th e c o m p le tio n o f th e c a n v a s s. W h e r e th e e le c tio n is c o n d u c te d in m o r e th a n
o n e re g io n , c o n s o lid a tio n o f re su lts s h o u ld b e m a d e w ith in fifte e n (15) d a y s f ro m
th e c o n d u c t th e r e o f .1

C.
CONSENT ELECTION
1. D E F I N I T I O N .

“Consent election" re fe rs to tire p r o c e s s , v o lu n ta rily a n d m u tu a lly a g re e d

u p o n b y th e c o n te n d in g u n io n s , o f d e te r m in in g th r o u g h s e c re t b a llo t th e S H B A o f
th e e m p lo y e e s in a n a p p r o p r ia te C B U fo r p u r p o s e s o f c o lle c tiv e b a rg a in in g w ith
th e e m p lo y e r. I t is c o n d u c te d w ith o r w ith o u t th e in te r v e n tio n o f th e D O L E .2

2. C O N S E N T E L E C T I O N V S. C E R T I F I C A T I O N E L E C T I O N .

Consent e le c tio n is b u t a f o rm of certification e le c tio n . T h e y m ay be

d is tin g u is h e d f r o m e a c h o t h e r in th e fo llo w in g m a n n e r
(1) T h e former is h e ld u p o n th e m u tu a l a g r e e m e n t o f th e c o n te n d in g
u n io n s ; w h ile th e latter d o e s n o t r e q u ire th e m u tu a l c o n s e n t o f th e p a rtie s a s it is
c o n d u c te d u p o n th e o r d e r o f th e M e d -A r b ite r (M e d ia to r-A rb ite r).3
(2) T h e former m a y b e c o n d u c te d w ith o r w ith o u t th e c o n tr o l a n d
s u p e rv is io n o f th e D O L E ; w h ile th e latter is alw ay s c o n d u c te d u n d e r th e c o n tr o l
a n d s u p e rv is io n o f th e D O L E .4
(3) T h e former is b e in g c o n d u c te d as a v o lu n ta ry m o d e o f re so lv in g la b o r
d is p u te ; w h ile th e latter, a lth o u g h n o n -a d v e rs a ria l, is a c o m p u ls o r y m e th o d o f
a d ju d ic a tin g a la b o r d is p u te .
(4) T h e former is g iv e n th e h ig h e s t p rio rity ; w h ile th e latter is re s o r te d to
o n ly w h e n th e c o n te n d in g u n io n s fail o r re fu s e to s u b m it th e ir re p re s e n ta tio n
d is p u te th r o u g h th e former.5 T h is is so b e c a u s e u n d e r th e Implementing Rules, as
amended,6 e v e n in c a s e s w h e r e a P C E is file d , th e M e d -A r b ite r (M e d ia to r-A rb ite r),
d u rin g th e p re lim in a ry c o n f e r e n c e a n d h e a rin g th e r e o n , is ta s k e d to d e te rm in e th e
"possibility of a consent election. ” I t is o n ly w h e n th e c o n te n d in g u n io n s fail to ag re e to
th e c o n d u c t o f a c o n s e n t e le c tio n d u rin g tire p re lim in a ry c o n f e r e n c e th a t th e M e d -

' Section 13 fformerfy Secfion 14], Rule IX. Book V, Ibid.

2 Section 1 (h], Rule I, Book V, Rules to Implement the labor Code, as amended by Department Oder No. 4003, Series of
2003, (Feb. 17,2003]; Algire v. De Mesa, G.R. No. 97622, Oct 19,1994,237 SCRA 647.
3 See Section 1Jh], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 4003, Series
of 2003, [Feb. 17,2003).
4 Id.
5 Section 3, FWe VIII, Book V, Rules to Implement the Labor Code.
6 Section 9, Rule VIII, Book V, Rules to Implement the Labor Code, as amended bv Department Order No. 40-03, Series of
2003. (Feb. 17,2003],

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 446 Bar Reviewer on labor Law

A rb ite r (M e d iato r-A rb iter) will p r o c e e d w ith th e p r o c e s s o f c e rtific a tio n e le c tio n b y

c o n d u c tin g as m an y h e a rin g s as h e m a y d e e m n e c e s sa ry u p to its a c tu a l h o ld in g .
B u t in n o case shall th e c o n d u c t o f th e c e rtific a tio n e le c tio n e x c e e d 15 day s f ro m
th e d ate o f th e sc h e d u le d p re lim in a ry c o n f e r e n c e /h e a r in g a f te r w h ic h tim e , th e
P C E is c o n s id e re d su b m itte d fo r d e c is io n .1
(5) T h e former n ecessarily in v o lv e s a t le a st tw o (2) o r m o r e c o n te n d in g
u n io n s; w hile th e latter m ay only in v o lv e o n e (1) p e titio n e r u n io n .
(6) T h e former m ay b e c o n d u c te d in th e c o u r s e o f th e p r o c e e d in g in th e
latter o r d u rin g its p e n d en cy .
d.
RUN-OFF ELECTION
1. E L E M E N T S .

A "run-offelection"m ay o n ly b e c o n d u c te d u n d e r th e fo llo w in g e le m e n ts:

(a) T h e re are th re e (3) o r m o re u n io n s c o m p e tin g in a c e rtific a tio n o r

c o n s e n t electio n ;
(b) N o n e o f th e c o n te n d in g u n io n s g a rn e re d th e m a jo rity o f th e valid
v o tes cast;
(c) B u t th e to tal n u m b e r o f v o te s fo r all c o n te n d in g u n io n s , if a d d e d , is at
least fifty p e rc e n t (50% ) o f th e n u m b e r o f v a lid v o te s cast;
(d) I f the a b o v e th re e (3) e le m e n ts a re p r e s e n t, a run-off election w ill be
c o n d u c te d b e tw e e n th e la b o r u n io n s re c e iv in g th e tw o (2) h ig h e s t
n u m b e r o f v o te s in s u c h c e rtific a tio n e le c tio n o r c o n s e n t e le c tio n .2
T h e th ird u n io n a n d th e o th e r s , if an y , w ill n o lo n g e r b e allo w e d to
p a rtic ip a te in s u c h e le c tio n . A n d fo r o b v io u s re a s o n , th e c h o ic e o f “No
Union" sh o u ld n o lo n g e r b e in c lu d e d in th e r u n - o f f ele c tio n .3

2. W H E N T O B E C O N D U C T E D .

I f th e a b o v e c o n d itio n s th a t ju stify th e c o n d u c t o f a r u n - o f f e le c tio n arc

p re s e n t a n d th e re a re n o o b je c tio n s o r c h a lle n g e s w h ic h , i f s u s ta in e d , c a n m a terially
a lte r th e electio n resu lts, th e E le c tio n O f fic e r s h o u ld motuproprio c o n d u c t a ru n -o ff
e le c tio n w ith in te n (10) day s fro m th e c lo s e o f th e e le c tio n p r o c e e d in g b e tw e e n th e
la b o r u n io n s receiving th e tw o h ig h e s t n u m b e r o f v o te s .4

3. IL L U S T R A T IO N .

T o illu strate, in a c e rtific a tio n e le c tio n in v o lv in g f o u r (4) u n io n s , nam ely:

U n io n A , U n io n B, U n io n C , a n d U n i o n D , w h e re th e re a rc 100 eligible v o te rs
w h o validly ca st th eir v o te s , a n d th e v o te s th e y e a c h g a rn e re d a re as follow s: U n i o n

1 Section 11, Rule VIII. Book V, Ibid.

2 Article 268 (256), Labor Code, Section 1 [ss], Rule I, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-03, Series of 2003, [Feb. 17,2003].
3 Id.
4 Section 1, Rule X, Book V, Ibid

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LABOR RELATIONS

A - 35; U n io n B - 25; U n io n C- 10; U n i o n D - 15; a n d N o U n i o n - 1 5 , a r u n ­

o f f e le c tio n m a y b e c o n d u c te d b e tw e e n U n i o n A a n d U n i o n B b e c a u s e :

(1) N o t o n e o f th e u n io n s m u s te r e d th e m a jo rity v o te o f 51 v o te s b u t
U n i o n A a n d U n i o n B g o t th e firs t tw o h ig h e s t n u m b e r o f v o te s ;

(2) I f all th e v o te s f o r th e c o n te n d in g u n io n s a re a d d e d u p , it w ill re s u lt in

a t le a s t 5 0 % o f th e v a lid v o te s c a s t ( U n i o n A - 3 5 ; U n i o n B - 25;
U n i o n C - 10; U n i o n D - 15 f o r a to ta l o f 85 o r 8 5 % ); a n d

(3) T h e r e are no o b je c tio n s or c h a lle n g e s w h ic h , i f s u s ta in e d , c a n

m a te ria lly a lte r th e r e s u lts o f th e e le c tio n .

e.
RE-RUN ELECTION

1. B E L A T E D E N U N C I A T I O N O F R U L E O N R E - R U N E L E C T I O N S .

T h is m o d e o f c h o o s in g th e S E B A is n o t e x p re ss ly p r o v id e d in th e L a b o r
C o d e n o r in th e o rig in a l r e n d e r in g o f its im p le m e n tin g ru les. I t w a s o n ly in 2 0 1 5
th a t a n is s u a n c e o f th e D O L E S e c re ta ry h a s in tr o d u c e d th is te r m f o r th e firs t tim e
a s a n a m e n d m e n t to th e R ules to Implement the Labor Code a n d d e f in e s it as fo llo w s:

‘“Re-run election’ refers to an election con d u cted to b re a k a tie

betw een co n ten d in g un io n s, including betw een ‘no u n io n’ and on e o f the
unions. It shall likewise refe r to an election co n d u cted after a fa ilu re o f
e le c tio n has been declared by the Election O ffice r a n d /o r affirm ed by
the M ediator-A rbiter.” 1

2. G R O U N D S C IT E D IN T H E R U L E S F O R R E -R U N E L E C T IO N .

B a s e d o n th e a b o v e - q u o te d R ule, th e re a re tw o (2) s itu a tio n s th a t ju stify

t h e c o n d u c t o f a r e - r u n e le c tio n , to wit.
(1) T o b re a k a tie; o r
(2) T o c u re a fa ilu re o f e le c tio n .

3. A T H IR D G R O U N D B A S E D O N JU R IS P R U D E N C E .

A re -r u n e le c tio n is o b v io u s ly in th e n a tu r e o f a c o r re c tiv e a c tio n m e a n t to

c u r e a se rio u s ly d e fe c tiv e a n d d is to r te d c e rtific a tio n e le c tio n . C o n s e q u e n tly , a 3 rd
g r o u n d th a t m a y b e c ite d as w o u ld justify' th e c o n d u c t o f a fa ir re -r u n e le c tio n is
w h e n t h e c e rtific a tio n , c o n s e n t o r r u n - o f f e le c tio n h a s b e e n in v a lid a te d o r n u llifie d
d u e to c e r ta in s e rio u s irre g u la ritie s th a t h a v e b e e n c o m m itte d d u r in g th e c o n d u c t
th e r e o f, s u c h as, inter alia, d is e n fr a n c h is e m e n t o f th e v o te rs , la c k o f se c re c y in th e
v o tin g , fra u d o r b rib e ry o r a c ts o f te rro ris m , fo rc e , th r e a t a n d in tim id a tio n
e m p lo y e d b y an y o f th e c o n te n d in g u n io n s o r d ie e m p lo y e r. S u c h in v a lid a tio n

' Underscoring supplied; New Section 1(tt), Rule I, Book V. Rules to Implement the Labor Code, as a-nended by Deponent
Order No. 40-03, Senes of 2003, (Feb. 17,2003],

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 448 Bar Reviewer on Labor Law

w o u ld n e c e ssita te th e c o n d u c t o f a r e -ru n e le c tio n a m o n g th e c o n te n d in g u n io n s to

d e te rm in e th e tru e w ill a n d d esire o f th e e m p lo y e e s -e le c to ra tc .1*

P h ilip p in e ju ris p ru d e n c e h a s n o t e x actly d e n o m in a te d th e h o ld in g o f

a n o th e r c e rtific a tio n ele c tio n a f te r th e in v a lid a tio n o f th e firs t as “'re-run” e le c tio n
b u t th e sa m e m ay w ell b e d e e m e d th e c o r r e c t te rm in o lo g y to d e s c rib e it. T w o c a s e s
m ay be c ited as g o o d e x am p les o f c a se s w h e r e "re-run”e le c tio n w as o rd e re d , to nit
(1) Confederation ofCitizens Labor Unions v. Nonet? a n d
(2) National Federation ofLabor v. The Secretary ofLabor.34
V
In o rd e rin g a n o th e r r u n -o f f e le c tio n in C a s e N o . 1 {Confederation) above,
th e H ig h C o u r t ra tio c in a te d :

“W e hold that the certification election is in v a lid because o f

certain irre g u la ritie s such as that (1) the w orkers o n the night shift
(ten p.m. to six a.m.) and som e o f those in the aftern o o n shift w ere n o t
able to vote, so much so that o u t o f 1,010 voters only 692 voted and
about 318 failed to vote (p. 88, Rollo); (2) the secrecy o f the ballot was
not safeguarded; (3) the election supervisors w ere rem iss in their duties
and were apparendy ‘intimidated’ by a u n ion representative, an d (4) the
participating unions were overzealous in w ooing the em ployees to vote
in their favor by resorting to such tactics as giving free tricycle rides and
T-shirts.
“'I h e purpose o f a certification election is to give the
employees ‘true representation in their collective bargaining with an
em ployer’ (51 C.J.S. 969). T hat purpose was n o t achieved in the run-off
election because many employees o r u n ion m em bers were n o t able to
vote and the employer, through apathy or deliberate intent, did no t
render assistance in the holding o f the election.”

In th e sa m e v ein , d ie re -ru n e le c tio n in C a s e N o . 2 {National Federation of

labor) a b o v e, w as o r d e re d by th e C o u rt o n th e b a sis o f th e fo llo w in g r a tio c in a tio n :

“T h e complaint in this case was that a num ber o f em ployees

were not able to cast their votes because they were not properly
notified o f the d a te They could n o t therefore have filed their protests
within five (5) days. At all events, the Solicitor G eneral states that the
protests were n o t filed within five (5) days, and is a m ere technicality
which should n ot be allowed to prevail over th e w orkers’ welfare. As
this C ourt stressed in Ll^N Pictures, Inc. v. Phil Musicians Guild* it is
essential that the employees m ust be accorded an o pportunity to freely
and intelligently determine which labor organization shall act in their
behalf. I h e w orkers in this case were denied this opportunity. N o t only
were a substantial num ber o f th em disfranchised, there w ere, in

1 See Confederafon of Citizens Labor Unions v. Noriel, G.R. No. L-56902. September 21,1982,116 f>CRA 694.
7 GR. No. L-56902. Sept 21,1932,116 SCRA 694.
3 GR.No. 104556, March 9,1998,287 SCRA 599,607.
4 1 SCRA 132(1961).

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 ch apter Five 449
LABOR RELATIONS

addition, allegations o f frau d and o th e r irregularities w hich p u t in

question the integrity o f th e election. W orkers w ro te letters an d m ade
com plaints p ro testin g the c o n d u c t o f the election. T h e R eport o f M ed-
A rbiter Pura w h o investigated these allegations fo u n d the allegations o f
fraud an d irregularities to b e true.

“ In o n e case1 this C o u rt invalidated a certification election

u p o n a show ing o f d isfran ch isem en t, lack o f secrecy in the voting and
briber)’. W e hold the sam e in this case. T h e w o rk ers’ right to self­
organization as en sh rin ed in b o th th e C o n stitu tio n and L ab o r C ode
w ould be ren d ered n u gatory if their right to ch o o se their collective
bargaining representative w ere denied. Indeed, the policy o f the L abor
C o d e favors th e h o ld in g o f a certification election as th e m o st
conclusive way o f ch o o sin g th e labor organization to represent w orkers
in a collective bargaining u n i t In case o f do u b t, the d o u b t should be
resolved in favor o f th e h o ld in g o f a certification election.”

4. V A R IO U S S IT U A T IO N S W H E R E A T I E M A Y O C C U R .

B a se d o n th e a b o v e - q u o te d p r o v is io n o f th e Implementing Rules, th e tic

c o n te m p la te d th e re in w h ic h w o u ld ju s tify th e h o ld in g o f a r e - r u n e le c tio n m ay
o c c u r in an y o f th e fo llo w in g s c e n a rio s :

(1) A t le ast 2 u n io n s a re in v o lv e d a n d a tie in th e v o te s o c c u rre d :

(a) B e tw e e n th e 2 c o n te n d in g u n io n s a n d th e “No Union’’1 c h o ic e d id

n o t g a m e r th e m a jo rity ; o r
(b) B e tw e e n 1 o f th e 2 u n io n s a n d th e ‘No Union"c h o ic e .
(2) A t le ast 3 u n io n s a r e in v o lv e d a n d a tie in th e v o te s o c c u rre d :

(a) B e tw e e n a n d a m o n g 2 o r m o r e o r all o f th e c o n te n d in g u n io n s a n d
th e ‘No Union”choke d id n o t m u s te r th e m a jo rity ; o r
(b) B e tw e e n a n d a m o n g 1 o r m o r e o f th e c o n te n d in g u n io n s a n d th e
‘No Union”choke.

(3) A tie in th e v o te s o c c u r r e d b e tw e e n th e 2 u n io n s in v o lv e d in a run-off

e lectio n .

I t b e a rs stre s s in g th a t i f th e ‘No Union” c h o ic e g a rn e rs t h e m a jo rity o f d ie

v o te s a n d th u s w in s th e c e r tific a tio n o r c o n s e n t e le c tio n , a tie b e tw e e n a n d a m o n g
th e c o n te n d in g u n io n s w ill n o lo n g e r m a tte r . T h is m e a n s th a t th e e m p lo y e e s in th e
C B U d o n o t w a n t a n y S E B A to r e p r e s e n t th e m . C o n s e q u e n d y , n o C B A n e g o tia tio n
w ill tra n s p ire . *7

' Citing Confederation of Citizens Labor Unions v. Nonet G.R. No. L-56902. September21,1982,116 SCRA 694.
7 It must be stressed that the ‘No Union’ choice is always one of the choices in al certification elections, with the sole
exception of run-off elections, for obvious reason.

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 450 Bar Reviewer on Labor Law

In an y o f d ie th re e (3) situ a tio n s m e n tio n e d a n d d isc u sse d a b o v e , th e

E le c u o n O ffic e r sh o u ld im m ed iately n o tify th e p a rtie s o f a re -ru n e le c tio n . T h e
E le c tio n O ffic e r sh o u ld cause th e p o s tin g o f th e n o tic e o f re -ru n e le c tio n w ith in
five (5) day s fro m d ie c e rtificatio n , c o n s e n t o r r u n - o f f e le c tio n . T h e re -r u n e le c tio n
shall be c o n d u c te d w ith in ten (10) d a y s a f te r th e p o s tin g o f n o tic e .1

T h e c h o ice receiv in g th e h ig h e s t v o te s c a s t d u rin g th e re -ru n e le c tio n shall

be d e clared d ie w in n e r a n d shall b e c e rtifie d a s d ie S E B A a c c o rd in g ly .2

5. R U L E I N C A S E O F F A I L U R E O F E L E C T I O N .

In failure o f electio n , th e n u m b e r o f v o te s c a s t in th e c e rtific a tio n o r

c o n s e n t e le c tio n is less than the majority of the number of eligible voters a n d th e r e a re n o
c h a llen g ed v o te s th a t c o u ld m a terially c h a n g e th e re su lts o f th e e le c tio n .3 F o r
ex am p le, in a C B U c o m p o s e d o f 1 0 0 e m p lo y e e s , th e m a jo rity o f 100, w h ic h is 51,
sh o u ld p a rtic ip a te in th e e le ctio n ; o d ie rw is e , i f less th a n 51 e m p lo y e e s h a v e
p a rtic ip a te d , th e re is a failure o f e le c tio n .

A failu re o f e le c tio n shall n o t b a r th e filing o f a m o tio n fo r th e im m e d ia te

h o ld in g o f a n o th e r certification o r consent election, n o w to b e ca lle d re-run e le c tio n ,
w ith in six (6) m o n d is fro m th e d a te o f d e c la ra tio n o f failu re o f e le c tio n .4

6. R U N - O F F E L E C T I O N V S . R E - R U N E L E C T I O N .

T h e s e tw o k in d s o f e le c tio n m a y b e d is tin g u is h e d f ro m e a c h o th e r in th a t
a r u n -o f f ele c tio n is u su a lly re q u ire d i f n o c h o ic e o n th e b a llo t re c e iv e s a m a jo rity o f
valid v o te s c a s t in a n ele c tio n in v o lv in g 3 o r m o re la b o r o r g a n iz a tio n s , p r o v id e d
th a t the to ta l n u m b e r o f v o te s fo r all c o n te n d in g u n io n s is a t le a s t 5 0 % o f th e
n u m b e r o f v alid v o te s ca st.5 C o n s e q u e n tly , t h e r u n - o f f e le c tio n w ill b e c o n d u c te d
b e tw e e n th e 2 c h o ic e s receiv in g th e h ig h e s t n u m b e r o f v o te s a n d th e o n e re c e iv in g
d ie n e x t h ig h e s t v o te n u m b e r. In c e rta in e x c e p tio n a l c a s e s, h o w e v e r, w h e r e all th e 3
o r m o re o r all th e c h o ic e s receive th e s a m e n u m b e r o f v o te s - n o r u n - o f f e le c tio n
sh o u ld b e c o n d u c te d ; th e “ in c o n c lu s iv e ” e le c tio n s h o u ld b e d e c la re d a n u llity a n d a
re -ru n ele c tio n sh o u ld b e h eld in ste a d .

' New Section 18, Rule IX, Book V. Rules to Implement the Labor Code, as previously amended by Department Oder No.
4(M)3, Series of 2003, [FeO. 17.2003).
2 Id
3 Section 16 pormerty Section 17), Rule IX, Book V, Rules to Implement the Labor Code, as amended by Department Order
No 40-03, Series of 2003, [Feb. 17,2003), and as renumbered by Department Order No. 40-F-03, Series of 2008 [Oct 30,
2008)
* This provision entJed ‘Effect of failure of election- should now be denominated as Section 19, Rule IX, Book V, Rules to
implement the Labor Code, by virtue o! the renumbering ordered by Section 17, Depatment Order No. 40-1-15, Series of
2015 [September07,2015]
5 Article 268 [256), Labor Code; Section 1 [ss]. Rule I, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-03, Series of 2003, [Feb. 17,2003).

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 C hapter five 451
LABOR RELATIONS

D.
RIGHTS OF LABOR ORGANIZATIONS

1. R IG H T S U N D E R T H E L A B O R C O D E .

T h e L a b o r C o d e e n u m e r a te s th e fo llo w in g rig h ts o f le g itim a te la b o r

organizations:

“Article 251 [242], Rights o f Legitimate Labor Organisations. - A

legitimate labor organization shall have the right:
(a) To act as the representative of its members for the
purpose of collective bargaining;
(b) To be certified as the exclusive representative of all the
employees in an appropriate bargaining unit for purposes
of collective bargaining
(c) To be furnished by the employer, upon written request,
with its annual audited financial statements, including the
balance sheet and the profit and loss statement, within
thirty (30) calendar days from the date of receipt of the
request, after the union has been duly recognized1 by the
employer or certified as the sole and exclusive bargaining
representative of the employees in the bargaining unit, or
within sixty (60) calendar days before the expiration of
the existing collective bargaining agreement, or during the
collective bargaining negotiation;
(d) To own property, real or personal, for the use and benefit
of the labor organization and its members;
(e) To sue and be sued in its registered name; and
(f) To undertake all other activities designed to benefit the
organization and its members, including cooperative,
housing, welfare and other projects not contrary to law.
“Notwithstanding any provision of a general or special law to
the contrary, the income and the properties of legitimate labor
organizations, including grants, endowments, gifts, donations and
contributions they may receive from fraternal and similar organizations,
local or foreign, which are actually, directly and exclusively used for
their lawful purposes, shall be free from taxes, duties and other
assessments. The exemptions provided herein may be withdrawn only
by a special law expressly repealing this provision.”2 •

1 Voluntary recognSoo as a mode of designafing a SEBA has been repealed and replaced by the latest mode of Requesting
fa SEBA Certification as proofed in Section 4.2.. Rule VII, Department Older No. 40-M 5, Series of 2015 (September 07,
20151
2 As amended by Section 17.R A N o.6715, March 21,1989: As renumbered pursuant to Section 5, R A No. 10151. June
21,2011 and DOLE Department Advisory No. 01, Series of 2015 (Renumbering of (he Labor Code of Ihe Phiipp'nes, as
Amended), issued on Jufy 21,2015.

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 452 Ba r r e v ie w e r o n La b o r law

2. TOPICS UNDER T H E SYLLABUS.

The 2019 Syllabus prescribes only the following two (2) subject matters
under this topic of "RIGHTS OF LABOR ORGANIZATIONS”:

1. CHECK OFF, ASSESSMENTS, AND AGENCY FEES; and

2. COLLECTIVE BARGAINING.
These ate discussed below in seriatim.

1.
CHECK-OFF, ASSESSMENTS, AND AGENCY FEES
a.
CHECK-OFF

1. CHECK-OFF, MEANING.

Broadly, the term " check-off’ means a method of deducting by the

employer from the employee’s pay at prescribed periods, any amount due for fees,
fines or assessments.1Stricdy speaking, “check-off’is a process or device whereby the
employer, on agreement with the union certified as the SEBA, or on prior
authotizadon from its employees, deducts union dues or agency fees from the
latter’s wages and remits them directly to the union.2

2. RIGHT TO CHECK-OFF, AVAILABLE ONLY TO THE SEBA.

The right to check off of union dues or agency fees as above-described is
available only to die SEBA The minority union, not being the collective bargaining
agent, has no such right. The employer therefore is not under any legal obligation
to check-off any union dues and assessments for the minority union.

3. TWO (2) KINDS OF CHECK-OFF.

Based on die above legal description of this term, “check-off’ may thus
refer to two (2) things, to w it

(1) Collection of union dues, sptdal assessments and fees (such as attorney’s
fees, negotiation fees or any other extraordinary fees)3 by die SEBA
from its members; and

1 A L Ammen Transportation Co., Inc. v. Bed Transportation Employees Mutual Association, G A No. 1-4941, M j 25,
t9S2.91Phl.649.
2 Gabriel v. The H m Secretary r f b t o arid Enpkymefit. G il N a 115949, March 16,2000.
’ See paragraph (o) of Artde 250 [2411 Labor Code wtuch provides: ‘Other lhan far mandatory ac&rfies under tie Code, no
special assessment, attorneys fees, negodafion fees or any other eidbaonBnary fees may be checked offfrom m y amount
due b an enployee vwffwut an M M d u d written authorization duly signed by the enpbyee. The auffwiza&n should
spetifeafly state tie amount, purpose and benefidaiy of Ihe deduction.'

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 C h a pt er Five 453
LABORRELATIONS

(2) Collection o f agnty fees from non-members o f the SEBA but covered
by and included in the collective bargaining unit (CBU) who accept the
benefits provided in the Collective Bargaining Agreement (CBA).
4. PRINCIPAL D ISTIN CTIO N .

The firef kind mentioned above requires for its validity, the execution by
the employees of individual written authorization which should specifically state the
amount, purpose and beneficiary o f the deduction;1 but the second kind does not
require any such authorization since the law2 itself recognizes and allows it upon
the non-SEBA member’s acceptance o f benefits resulting from the CBA.3

5. CHECK-OFF O F AGENCY FEES FROM NON-M EM BERS O F SEBA.

In case a CBA is successfully negotiated and concluded by the SEBA,

check-off from non-members thereof who accept the benefits flowing from the
CBA is authorized under paragraph [e] of Article 259 [248] o f the Labor Code.
Thus, such non-members may be assessed a reasonable agency fee equivalent to the
dues and other fees paid by members o f the SEBA The individual written
authorization required under the law4 is not necessary to effect such check-off.

6. SOME PRINCIPLES O N CHECK-OFF.

• System o f check-off primarily for the benefit of the SEBA and only indirectly
for the individual employees.5
• Check-off is obligatory on the part of employer.6
• Check-off, although an extra burden to the employer, is allowed by law.7
• Employer has the obligation to remit directly to the union whatever it has
checked-off. This is so because the right to union dues deducted pursuant to a
check off pertains to the local union which continues to represent the
employees under the terms of a CBA, and not to the mother union from
which it has disaffiliated.8

1 bid.
2 See3dsentenmdhe3^entenmparagraph ofM je 259 E248]ofIheLaborCoda
1 Hd/Cross of DawoCoSege^ h a v.Joaqufn, G il No. 110007.0ct 18,1996,263 SCRA358; 33tPW L680.
4 Para^aphfcjofAifide250E241]ofSielnborCodewbichprow}es:mAi&ie2SOp41).RSg^tsandCon(£5onsofMennberstup
hald)ixO igarizaSm --1hefbO oM ^areterigtbandoondB om da)eR tbe^hahboroigadzaG on: x w (o )0 h e r
ban for mandatory acSvSes under f a Code, no special assessments, attorney's tees, negofeSon tees a any tite r
0<!raor&iaiyfeesmaybedieci^o8^anyanTXint(tobanenvbyeew3)6uanh(Minlw%enauho(izafim(luly
signedfaytteenfiioyeeLTtieaufiorizaSonshoiddspecilicaSirs&etheamounipunposemtdbeneficiaqrofthetfeducSon.*
5 G aM etv.TheHm SecrefeiydLabo and Employment G R N o 115949. March 16,2000.384 P h i 797,804; Holy Cross
of DavaoCofege, Inc. v. Joaquin, supra; ABS-CBN Superiors Employees Union M entos v. AB5C8N Broadcasting
C op. G il No. 106518, Match 11,1999.
5 Id.; See paragraphs fe], [n] and fo] of Article 250 [241) on check-off of union dues and special assessments and paragraph
(e) of Artide259 [24^ of (he Labor Code on agency fees.
7 A L Ammen Transportation Co. Ina v. Biooi Transportation Employees Mitual Association, G A No. L-4941, July 25,
1952,91 Phi. 649.
* M c h e l labor Union v. BLR, GR No. L-45824, June 19,1985.

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 454 Bar Re v ie w e r o n La b o r Law

• SEBA has the obligation to infotm the employer o f the names of employees
subject of the check-off and the particulars of the deductions to be made.1
• Employer is not liable to pay to the SEBA for unchecked-off union dues and
assessments.2

b.
ASSESSMENTS

1. RIGHT OF UNION TO COLLECT DUES AND ASSESSMENTS.

All unions ate authorized to collect reasonable amounts oB

1. membership fees;
2. union dues;
3. assessments;
4. fines;
3. contributions for labor education and research, mutual death and
hospitalizadon benefits, welfare fund, strike fund and credit and
cooperadve undertakings;3 and
6. agency fees.4

2. REQUISITES FOR VALIDITY OF U N IO N DUES AND SPECIAL

ASSESSMENTS.

Tire following requisites must concur in order for union dues and special
assessments for the union’s incidental expenses, attorney’s fees and representation
expenses to be valid, namely:

(a) Authorization by a written resolution of the majority of all the

members at a general membership meeting duly called for the
purpose;
(b) Secretary’s record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the
employees concerned.5

3. ASSESSMENT FOR ATTORNEY’S FEES, NEGOTIATION FEES

AND SIMILAR CHARGES.

As far as attorney’s fees, negotiation fees or similar charges ate concerned,

the rule is that no such fees and charges of any kind arising from the negotiation or

1 Holy&DSsofDwaoCo0ege.Incv.Joaquh6Jl Not 110007,Oct 18,1996,263 SCRA358; 331PHL680L

2 Id.
1 Articles 250(o) (241(o)] and 292(a) (2 7 7 (4 M L; SecGon 1, Rule XIII, Book V, Rides to Implement h e Labor Code, as
amended by DepartmentOrder No.4003, Seriesof 2003, (Feb. 17,2003].
< Article 259(e) (248(e)], Labor Code.
s Article 241[o], Labor Code; Gabriel v. The Hon Seae&y of Labor and Enjoyment, supra, AB&CGN Supavisors
Enfi^UnknMemberav.AB&CBNGioadcasSngCoq).,supra.

J9JC9B0M
 Chapter five 455
LABOR RELATIONS

conclusion of the C6A shall be imposed on any individual member o f the

contracting union. Such fees and charges may be charged only against the union
funds in an amount to be agreed upon by the parties. Any contract, agreement or
arrangement o f any sort to die contrary is deemed null and void.1 Qeady, what is
prohibited is the payment o f attorney’s fees, negotiation fees or similar charges
when it is effected through forced contributions from the workers from their own
funds as distinguished from the union funds.2

4. INDIVIDUAL W RITTEN A U TH O RIZA TIO N , W H E N REQ U IRED.

The law strictly prohibits the check-off from any amount due an
employee who is a member o f die union, o f any union dues, special assessment,
attorney’s fees, negotiation fees or any other extraordinary fees other than for
mandatory activities under the Labor Code, without the individual written
authorization duly signed by die employee. Such authorization must specifically
state the amount, purpose and beneficiary o f the deduction.3 The purpose o f the
individual written authorization is to protect the employees from unwarranted
practices that diminish their compensation without their knowledge or consent4

5. INDIVIDUAL W RITTEN A U TH O RIZA TIO N , W H EN N O T

REQ U IRED.

In the following cases, individual written authorisation is not required:

a) Assessment from non-members o f the SEBA o f “agnpf fees” which

should be equivalent to the dues and other fees paid by members of
the SEBA, if such non-members accept the benefits under the CBA.S
b) Deductions for fees for mandatory activities such as labor relations
seminars and labor education activities.4
c) Check-off for union service fees authorized by law.7
d) Deductions for withholding tax mandated under the National Internal
Revenue Code (NIRC).
e) Deductions for withholding of wages because o f employee’s debt to
the employer which is already due.8
f) Deductions made pursuant to a judgment against the worker under
circumstances where the wages may be the subject o f attachment or

' SeeA rtfe241 hreiaSontopafagraph|b]ofArtfe222oflheLalxxCode.

2 Gdnielv.TheHon. Secretaiyof Lnborand Emptayment,supia; Vengoov.T(a|ano;GJ%.No.74453, May 5 ,1989;Stelar
Industrial Savices, he. v. NIRC. G J l No. 117418, Jan. 24.1996,252 SCRA 323; PaSacd v. Ferrer-Caiieja, G J l No.
85333, Feb.26,1990,182 SCRA 710.
3 Article241(oklaborCode.
4 GaNadoresv.Tr$ano,GR. No. 70067,Sept 15,1986,144 SCRA 138.
3 A rt*2 5 9 (e ) (248(e)!, LaborCode.
• Article 241(0], Ibid.
1 RCPIv.SeaetarydLaba, G J l N a 77959, J a a 9.1989.

3 A r t * 1706, C M Code.

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 456 Bar R eviewer on Labor Law

execution but only for debts incurred for food, clothing, shelter and
medical attendance.1
g) Deductions from wages ordered by the court.
h) Deductions a u th o re d by law such as for premiums for PhilHealth,
social security, Pag-IBIG, employees’ compensation and the like.
6. M I N O R I T Y U N I O N H A S N O R I G H T T O D E M A N D C H E C K - O F F
F R O M IT S M E M B E R S .

The obligation on the part of the employer to undertake the duty to

check-off union dues and special assessments holds and-applics only to the SEBA
and not to any other union/s (called 'Minority Union/s’). This is clear from die
manner by which the Supreme Court described check-off in the case of Holy Cross
of Davao College, Inc. v. Joaquin,2 that it is on the basis o f the agreement with the
union which is recognized as the proper bargaining representative that the
employer is obligated to perform its task of checking off union dues or agency fees.
When stipulated in a CBA, or authorized in writing by the employees concerned -
the Labor Code and its Implementing Rules recognize it to be the duty of the
employer to deduct sums equivalent to the amount o f union dues from the
employees’ wages for direct remittance to the union, in order to facilitate the
collection of funds vital to the role of the union as representative of the employees
in the bargaining unit if not indeed to its very existence.

7. S O M E P R I N C I P L E S O N U N I O N D U E S A N D A S S E S S M E N T S .

■ Check-off for a special assessment is not valid after the withdrawal o f die
individual written authorizations.3
■ Unlike in authorization for union dues and assessments, disauthori^ation does
not require that it be written individually. The fact that the disaudiorizations
were collective in form consisting of randomly procured signatures and under
loose sheets of paper, is of no moment for the simple reason that die
documents containing the disauthorizations have the signatures of the union
members. Such retractions were valid. There is nothing in the law which
requires that the disauthorizations must be in individual form.4
■ The right of the incumbent SEBA to check off and to collect dues is not
affected by the pendency of a representation case or an intra-union dispute.56
* Approval of the union dues and assessments by die majority of all the
members of the union is required.5 The Labor Code7 and the Rules to

1 Article 1708, Ibid.

7 G R No. 110007, Oct 18,1996,263 SCRA 358; 331 Phil. 680.
3 Palacd v. Fare-Cafleja, G R No. 85333, Feb. 26,1990,182 SCRA 710-711.
4 Palacolv Fetrer-Cafleja, [supra.
5 See old provision of Section 1, Rule XVIII, Book V, Rules to Implement the Labor Code, as amended by Article 1,
Department Order No. 09, Series of 1997 [21 June 1997.
6 Stellar Industrial Services, Inc. v. NLRC, G.R. No. 117418, Jan. 24,1996,252 SCRA 323; Palacol v. Cafleja, etc., supra.
1 Article 241 [n] thereof.

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 C hapter Five 457
LABOR RELATIONS
Implement the Labor Code1 disallow a deduction for special assessment which
was passed by a mere board resolution o f the directors, and not by the
majority o f all the members o f the union.

C.
AGENCY FEES
1. LEGAL BASIS.
The concept o f agency fees is provided for under the 3rd sentence of
paragraph [e] o f Article 259 [248]2 o f the Labor Code which pertinently states:
“(e) xxx Employees of an appropriate bargaining unit who are
not members of the recognized collective bargaining agent may be
assessed a reasonable fee equivalent to the dues and other fees paid by
members of the recognized collective bargaining agent, if such non­
union members accept the benefits under die collective bargaining
agreement Provided, that the individual authorization required under
Article 250 [241], paragraph (o) of this Code shall not apply to the non­
members of the recognized collective bargaining agent[.]"
2. N A T U R E O F A G E N C Y F E E S .

The SEBA which successfully negotiated the CBA with the employer is
given the right to collect a reasonable fee called “agency fee” from its non­
members - who are employees covered by the collective bargaining unit (CBU)
being represented by the SEBA - in case they accept the benefits under the CBA.
It is called "agencyfees” because by availing o f the benefits of the CBA, they, in
effect, recognize and accept the SEBA as their “agent” as well.
To clarify, “non-SEBA members” refer to members o f the minority union/s
who lost in the certification election where the SEBA was certified as such. Simply
put, they are members of union/s other than the union certified as SEBA in the
same CBU.
According to Hoty Cross of Davao College, Inc. v. Joaquin? payment by non-
SEBA members of agency fees to the certified SEBA which successfully negotiated
the CBA in an amount equivalent to the union dues and fees being paid by its
members is recognized under the law / The non-SEBA members’ acceptance of
benefits resulting from the CBA justifies the deduction of agency fees from their
pay and the SEBA’s entitlement thereto.

3. C H E C K -O F F O F A G E N C Y F E E S .

‘Check-off” of agency fees is a process or device whereby die employer,

upon agreement with the SEBA, deducts agency fees from die wages o f non-

' Section 13 (a]. Rule VIII, Book III thereof.

2 Article 259 [248] is entitled **Unfaff Labor Practices of Empfcryers ’
J G R No. 110007, Oct 18,1996,263 SCRA 358; 331 P hi 680,692
* See the earlier quoted pertinent provision of Article 259(e) [248(e)] of the Labor Code

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 BAR REVIEWER ON LABOR LAW
458

SEBA members who avail o f the benefits from the CBA and remits diem direcdy
to die SEBA.1 It is the duty o f the employer to deduct or “check-off’ die sum
equivalent to the amount o f agency fees from the non-SEBA members' wages.

4. A N ON -SEBA M EM BER HAS R IG H T T O A CC EPT O R N O T T H E

B EN E FIT S O F CBA.

There is no law that compels a non-SEBA member to accept the benefits

provided in the CBA. He has the freedom to choose between accepting and
rejecting the CBA itself or the benefits flowing therefrom. Consequendy, i f a non-
SEBA member does not accept or refuses to avail o f th£ CBA-based benefits, he is
not under any obligation to pay die "agencyfees” to the SEBA since, in effect, he
does not recognize the status of the SEBA as his agent.

5. LIM ITA TION O N T H E A M O U N T O F A G EN CY FE E .

The SEBA cannot capriciously fix the amount of agency fees it may
collect from its non-members. Article 259(e) (248(e)] o f the Labor Code expressly
sets forth the limitation in fixing the amount o f the agency fees, thus:

(1) It should be reasonable in amount; and

(2) It should be equivalent to the dues and other fees paid by members
o f the SEBA.1

Thus, any agency fee collected in excess o f this limitation is a nullity.

6. N ON-SEBA MEMBERS N E E D N O T B E C O M E M EM BERS O F

SEBA

The employees who are not members o f the certified SEBA which
successfully concluded the CBA are not required to become members o f die latter.
Their acceptance of the benefits flowing from the CBA and their act o f paying the
agency fees do not make them members thereof.

7. ACCRUAL O F R IG H T OF SEBA T O D E M A N D C H EC K -O FF O F
AGENCY FEES.

The right o f the SEBA to demand from the employer die check-off o f
agency fees accrues from the moment the non-SEBA member accepts and receives
the benefits from the CBA. This is the operative fact that would trigger such
liability on the part o f such non-SEBA member.4*

< Gdxidv.lheHmSeaetaiyofLaborandEniploymenlGAto.11SS49lMa(Ch16,2000.
* Odf^Acadervv.Dd^ArarieniyEnployeesUreon.GRNo. 170112,A pi30,2008.
) See atoSecfim 4 .1 ^ XXV. BookV .( ^ to Irnplememfire Laba Code, as amended byDepartment Order No. 4&03.
Safesof2003,(Feb. 17,20031-

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 C h apter f iv e 459
L A B O R R E LA TIO N S

8. N O IN D IV ID U A L W R IT T E N A U T H O R IZ A T IO N BY N O N -S E B A
M E M B E R S R E Q U IR E D T O C H E C K -O F F .

T o effect the check-off o f agency fees, no individual written authorization

from die non-SEBA members who accept the benefits from die CBA is
necessary.1

9. T H E N O N -S E B A M E M B E R S W H O PAY A G EN CY F E E S T O T H E
SEBA R E M A IN LIA BLE T O PAY U N IO N D U E S T O T H E IR O W N
U N IO N .

The fact that the non-SEBA members who are members o f the minority
union are paying agency fees to the SEBA does not free them from their obligation
as members to continue paying their union dues and special assessments to their
own union. There is no law that puts a stop to such obligation simply because their
union failed to be certified as the SEBA. Union dues are required for the continued
existence and viability o f their union. Hence, they are obligated to pay two (2) kinds
o f dues:

(1) Union dues and special assessments to their own union; and
(2) Agency fee to the SEBA.
This is clear from a reading o f Article 250 (241]2 which does not qualify
that the right to collect union dues and assessments, on the part o f the union, and
the obligation to pay the same, on the part o f its members, are extinguished the
moment the union is unsuccessful in its quest to become the SEBA o f the
employees in the bargaining unit where it seeks to operate.
But to iterate, the minority union collecting union dues and assessments
from its members does not have the right to ask die employer to check-off the
same from its members’ wages. Such right exclusively belongs to the SEBA.

2.
COLLECTIVE BARGAINING
a.
DUTY TO BARGAIN COLLECTIVELY

L C O N ST IT U T IO N A L F O U N D A T IO N .

The right o f all workers to collecdve bargaining is a right duly guaranteed

under the Constitution. Thus, it is expressly provided in Section 3, Article XIII
thereof that the State, among others, shall guarantee the rights o f all workers to
collective bargaining and negotiations.

1 Del P3arAcademyv. OdP8arAcademyEmployeesUrion, Gi?. No. 170112, April30.2008.

J andCaxtteot Members^ina LabaOfgarazaSon.'

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 460 bar Reviewer on Labor Law

2. LEGAL BASES.

The above-stated constitutional mandate is implemented through Articles

261 [250] to 264 [253] and Article 259 [248] of the Labor Code,1 the provisions of
which are discussed below.

2. M EANING OF DUTY TO BARGAIN CO LLECTIV ELY .

The “duty to bargain collectively'' means the performance of a mutual

obligation to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to wages, hours o f work and all
other terms and conditions of employment, including proposals for adjusting any
grievances or questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but such duty docs not
compel any party to agree to a proposal or to make any concession.2

The duty does not compel any party to agree blindly to a proposal
nor to make concession. While the law imposes on both the employer and the
bargaining union the mutual duty to bargain collectively, the employer is not under
any legal obligation to initiate collective bargaining negotiations.3

3. EMPLOYER’S DUTY T O BARGAIN EXISTS O NLY W IT H SEBA.

The duty to bargain collectively does not exist when the majority status of
the employees’ representative is not established. The employer has no such duty to
bargain with the individual workers or with the minority union.45 In Philippine
Diamond Hotel v. Manila Diamond Hotel Employees Union,s it was held that since the
respondent union is not die exclusive representative of die majority of the
employees of petitioner, it could not demand from petitioner the right to bargain
collectively in their behalf. Petitioner’s refusal, therefore, to bargain collectively
with respondent union cannot be considered ULP.

4. U LTIM ATE GOAL IS TO C O N C LU D E A CBA.

Obviously, the ultimate purpose of collective bargaining is to reach an

agreement resulting in a contract binding on the parties; but the failure to reach an
agreement after negotiations continued for a reasonable penod does not establish a
lack of good faith. The statutes invite and contemplate a collective bargaining

1 These articles are denominated as follows: Artide 261 [250] - Procedure in Collective Bargaining; Article 262 [251] - Duty
to Bargain CoHecfivety in the Absence of Collective Bargaining Agreements; Article 263 [252] - Meaning of Duty to Bargain
Collectively; Article 264 [253] - Duty to Bargain Collectively When There Exists a Collective Bargaining Agreement and
Artide 259 [248] • Unfair Labor Practices of Employers.
2 Article 252, Labor Code; Kiok Loy v. NLRC, G.R No. 54334, Jan. 22,1986,141 SCRA179; United Employees Union v.
Nobel, G.R. No. L-40810, Oct 3,1975,67 SCRA 267; Isaac Peral Bowing Alley v. United Employees Welfare Association,
G R No. L-9831, Oct 30,1957,102 Phil. 219.
3 Kiok Loy v. NLRC, supra.
4 Lakas ng Manggagawang Makabayan v. Marcelo Enterprises, G.R. No. L-38258, Nov. 19,1982.
5 Phifypine Diamond Hotel and Resort, Inc. (Mania Diamond Hotel] v. Manila Diamond Hotel Employees Union, G.R. No.
158075, June 30,2006.

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 C hapter Five 461
LABOR RfcLATIONS

contract, but they do not compel one. The duty to bargain does not mclude the
obligation to reach an agreement.1

5. B A R G A IN IN G , N O T E Q U I V A L E N T T O A D V E R S A R IA L
L IT IG A T IO N .

The High Court set the tone o f what collective bargaining negotiations
mean in Caltex Refinery Employees Association [CREA] i>. Brillanles.2 It said that
bargaining is not equivalent to an adversarial litigation where rights and obligations
are delineated and remedies applied. It is simply a process o f finding a reasonable
solution to a conflict and harmonizing opposite positions into a fair and reasonable
compromise.

6. V I O L A T I O N O F T H E D U T Y T O B A R G A IN C O L L E C T IV E L Y .

The duty to bargain collectively may well constitute ULP if violated by an

employer, under Article 259(g) [248(g)],3 or by a labor organization, under Article
260(c) [249(c)]4 o f the Labor Code.

7. K IN D S O F C O L L E C T IV E B A R G A IN IN G .

The Ibiles to Implement the Labor Codo ns amended,5 enunciate two (2) kinds
o f collective bargaining, namely:

(1) Single-enterprise bargaining involving a CBA negotiation between one

certified SEBA and one employer; and
(2) Multi-employer bargaining involving a CBA negotiation between and
among several certified SEBAs and employers.6

In N o. 1 above, any certified SEBA may demand negotiations with the

employer regarding the terms and conditions of employment o f employees in the
bargaining unit it represents.7 The SEBA should submit such intention in writing to
the employer together with its proposals for collective bargaining. The SEBA and
the employer may adopt such procedures and processes they may deem appropriate
and necessary for the early termination and conclusion o f their negotiations. They
should name their respective representatives to the negotiations, schedule the
number and frequency o f the meetings, and agree on the wages, benefits and other

1 Union of Ripro Enptoyees-Drug, Food and Allied Industries Unions-Kilusang Mayo Uno [UFE-DFA-KMJ] v. Nestle
Philippines, he., G.R. Nos. 158930-31, March 3,2008.
2 G R No. 123782. Sept 16,1997,279 SCRA 218,236,243-244.
3 Paragraph (g) of Article 259 [248] states: “(g) To violate tie duty to bargain collectively as prescribed by this Code[.]"
* Paragraph (c) of Artide 260 [249] provides: *(c) To violate the duty, or refuse to bargain collectively with the employer,
provided it is the representative cf the employees!!
5 Sections 3 and 5, Rule XVI, Book V, Rules to Implement the Labor Code, as amended by Department Oder No. 40-03,
Series of 2003, fe b . 17,20031.
* Id.
7 Section 3, Rule XVI, Book V, Ibid.

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 462 Bar Reviewer on Labor Law

terms and conditions of employment for all the employees covered in die
bargaining unit.1

In No. 2 above, any legitimate labor unions and employers may agree in
writing to come together for the purpose of collective bargaining, provided:

(a) Only legitimate labor unions which are incumbent SEBAs may
participate and negotiate in multi-employer bargaining;
(b) Only employers with counterpart legitimate labor unions which are
incumbent SEBAs may participate and negotiate in multi-employer
bargaining; and
(c) Only those legitimate labor unions that pertain to employer units
which consent to multi-employer bargaining may participate in multi­
employer bargaining.2

8. T W O (2) S I T U A T I O N S C O N T E M P L A T E D .

The duty to bargain collectively involves two (2) situations, namely:

1. Duty to hargain collectively in t h e a b s e n c e o f a C B A ;34a n d

2. Duty to bargain collectively w h e n t h e r e is a n e x i s t i n g C B A /

b.
DUTY TO BARGAIN COLLECTIVELY
IN THE ABSENCE OF CBA

1. H O W D U T Y S H O U L D B E D I S C H A R G E D .

The duty to bargain collectively when there has yet been no CBA in the
collective bargaining unit (CBU) where the SEBA seeks to operate should be
complied with in the following order: First, in accordance with any agreement or
voluntary arrangement providing for a more expeditious manner o f collective
bargaining; and secondly, in its absence, in accordance with the provisions o f the
Labor Code, referring to Article 261 [250] thereof which lays down the procedure
in collective bargaining.5

2. R A T I O N A L E .

Clearly, die law gives utmost premium and extends due respect to the
voluntary arrangement between the parries on how they will discharge their
respective duties to bargain collectively before resort to the procedure laid down in

1 Section 4, Rule XVI, Book V, Ibid.

2 Section 5, Rule XVI, Book V, Ibid
3 As presided in Article 262 [251J of the Labor Code
4 As provided in Article 264 [253] of the Labor Code
5 Article 262 [251}, Labor Code.

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 C hapter five 463
LABOR RELATIONS

the Labor Code may be made. In other words, it is only when there is no such
voluntary arrangement that the procedure laid down in Article 261 [250] o f the
Labor Code should be followed.

C.
DUTY TO BARGAIN COLLECTIVELY
WHEN THERE EXISTS A CBA

1. C O N C E P T .

Under die Labor Code,1 when there is a CBA, the duty to bargain
collectively shall mean that neither party shall terminate nor modify such agreement
during its lifetime. However, either party can serve a written notice to terminate or
modify die agreement at least sixty (60) days poor to its expiration date. It shall be
the duty o f both parties to keep the status quo and to continue in full force and
effect the terms and conditions o f the existing agreement during the 60-day period
and/or until a new agreement is reached by die parries.2

2 . 60-DAY F R E E D O M P E R IO D .

Article 264 [253] clearly states that “(w)hen there is an existing CBA, the
parties thereto are bound to observe the terms and conditions therein set forth
until its expiration. Neither party is allowed to terminate nor modify such
agreement during its lifetime. The only time the parties are allowed to terminate or
modify the agreement is within the period o f at least sixty (60) days prior to its
expiration date by serving a notice to that effect.” This last 60-day period o f the 5-
year lifetime o f the CBA immediately preceding its expiration is called the “freedom
period.’' It is denominated as such because it is the only time when the law allows
the parties to freely serve a notice to terminate, alter o r modify the existing CBA. It
is also the time when die majority status o f die SEBA3 may be challenged by
another union by filing the appropriate petition for certification election (PCE).4

The twin Picop Resources cases5 best illustrate the significance o f the
freedom period. Here, the collective bargaining agent, Nagkahiusang Mamumuo sa
PRI-Southem Philippines Federation of Labor [NAMAPRI-SPFL], had a CBA
with petitioner company for a period of 5 years from May 22, 1995 until May 22,
2000. O n two occasions, said union, pursuant to the union security clause
(maintenance of membership) in die CBA, demanded from petitioner company to
terminate the employment o f respondents due to dieir acts o f disloyalty' to die
union consisting in dieir signing of an “authorization letter to file a petition for
certification election” by another union (Federation o f Free Workers [FFW]) prior

1 Article 264 [253], Ibid.

2 Id.
3 SERA means ‘Sole and Exclusive Bargainina Agent'
* MRR Yard Crew v. PNR, G.R. No. L-33621. July 26.1976.
5 Refemng to the 2010 case of Picop Resources Inc (PRI)v TaAeca GR No 160328,Aug 9,2010. and the 2011 case of
Picop Resources, Inc. (PRI) v. Dequilla, G.R. No. 172666, Dec. 7,2011.

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 464 Bar Reviewer on Labor Law

to the 60-day freedom period. Petitioner company terminated respondents’

employment on die basis of said demand of the union. In holding that the
termination pursuant to the union security clause was illegal, the Supreme Court
pointed out that while they signed such “authorization letter” outside the 60-day
freedom period, they actually filed the “Petition for Certification Election” widvin
the freedom period. As per records, it was clear that the actual Petition for
Ccrtificarion Election of FFW was filed only on May 18, 2000. Thus, it was within
the ambit of the freedom period which commenced from M arch 21, 2000 until
May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition fot
certification election outside the 60-day freedom penod. -This is not the situation
in this case. If at all, the signing of the authorisation to file a certification election was
merely preparatory to the filing of the petition for certification election, or an
exercise of respondents’ right to self-organization. The mere signing of the
authorization in support of the Petition for Certification Election o f FFW on
March 19, 20 and 21, or before the “freedom period,” is not sufficient ground to
terminate the employment of respondents inasmuch as the petition itself was
actually filed during die freedom period. Nothing in the records would show that
respondents failed to maintain their membership in good standing in the union.
Respondents did not resign or withdraw their membership from the union to
which they belong. Respondents continued to pay their union dues and never
joined the FFW.1

3. AUTOMATIC RENEW AL CLAUSE.

Pending the renewal of the CBA and while they are negotiating its
renewal, die parties are bound to keep the status quo and to treat the terms and
conditions embodied therein still in full force and effect not only during the 60-day
freedom period but until a new agreement is negotiated and ultimately concluded
and reached by the parties. This principle is otherwise known as the “automatic
renewal clause”which, being mandated by law, is deemed incorporated in all CBAs.2

For its part, the employer cannot discontinue the grant o f the benefits
embodied in the CBA which just expired as it is duty-bound to maintain the status
quo by continuing to give the same benefits until a renewed CBA is reached by the
parties. On the part of the union, it has to observe and continue to abide by its
undertakings and commitments under the expired CBA until the same is renewed.

For example, the union security clause must continue to be in effect even
after the expiration of the CBA; otherwise, there would be a gap during which no

1 See also National Congress of Unions in tie Sugar Industry of the Philippines {NACUSIP>-TUCP v. Ferrer-Calleja, G.R No.
89609, Jan. 27,1992.
2 Article 264 [253], Labor Code; New Pacific Timber & Supply Co., Inc. v. NLRC, G.R No. 124224, March 17,2000.328
SCRA 404; Pier 8 Amastre & Stevedoring Services, Inc. v. Roldan-Confesor, G.R No. 110854, Feb. 13,1995,241 SCRA
294, Union of Fifipro Employees v. NLRC, G.R No. 91025, Dec. 19,1990.

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 C hapter Five 465
UBOR. RELATIONS
agreement would govern from the time the old agreement expired to the time a
new agreement is concluded by the parties.1

4. K IO K L O Y D O C T R IN E .

This doctrine is based on the ruling in Kiok Loy v. NLRC,2 where the
petitioner, Sweden Ice Cream Plant, refused to submit any counter-proposal to the
CBA proposed by its employees’ certified SEBA. The High Court ruled that the
employer had thereby lost its right to bargain the terms and conditions o f the CBA.
Consequently, all the terms and conditions o f the CBA as proposed by the SEBA
are deemed approved and accepted lock, stock and barrel (LSB) by the erring
employer.

The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad
faith consisting of the employer’s refusal to bargain with the SEBA by ignoring all
notices for negotiations and requests for counter-proposals made to the former by
the latter. Such refusal to send its counter-proposals to the SEBA’s proposals and
to bargain on the economic terms of the CBA constitutes an unfair labor practice
(ULP) under Article 259(g) [248(g)]3 o f the Labor Code.45

5. O T H E R CASES A F T E R K IO K LO Y .

The ruling that the CBA proposed by the SEBA may be adopted as the
new CBA if the employer unjustifiably and in bad faith refused to counter-propose
and negotiate its terms and conditions has been reiterated in the following cases:

1. Divine Word Unitvrsity of Tacloban v. Secretary of Labor and Employment,s

where the university refused to perform its duty to bargain collectively;
hence, the High Tribunal upheld the unilateral imposition on the
university o f the CBA proposed by the Divine Word University'
Employees Union.
2. General Milling Corporation v. CA,6 where the Supreme Court imposed on
the employer the draft CBA proposed by the SEBA for the last two (2)
years commencing from the expiration o f the 3-year term o f the
original CBA. This was because o f the employer’s refusal to counter­
propose to the SEBA’s proposals which was declared as a ULP act
under Article 259(g) [248^)]7 o f the Labor Code.

' Vdtarv. Inciong, G.R. Nos. L-50283-64, April 20,1983,121 SCRA 444.
2 G-R.No. L-54334, Jan. 22,1986,141 SCRA 179,188.
3 _{g) To violate the duty to bargahcolectivefy as presented by this Codef.f
4 General Mating Corporation v. CA, G.R. No. 146728, Feb. 11,2004).
5 G.R. No. 91915, Sept 11,1992,213 SCRA 759.
6 G.R No. 146728, Feb.11,2004.
' (g) To violate the duty to bargain co5edvely as preserved by ttisCo0e(.f

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 466 Bar Reviewer on u bo r Law

6. SOME PRINCIPLES.

• If unchallenged during the 60-day freedom period, the majority status of

the existing SEBA is deemed uninterrupted and continuing and thus
should be respected by the employer. A PCE challenging the majority
status of the existing SEBA should be filed within - and not before or after - the
60-day freedom period. Upon the expiration o f the said period and no PCE is
filed by a challenging union, die employer is duty-bound to continue its
recognition of the majority status o f the incumbent SEBA.1
• All the terms and conditions o f the CBA arc'-deem cd autom atically
renewed. The law does not provide for any exception or qualification on
which economic provisions of the existing CBA arc to retain their continuing
force and effect. Therefore, the automatic renewal o f the CBA’s provisions
must be understood as encompassing all the terms and conditions thereof.2

d.

COLLECTIVE BARGAINING AGREEMENT (CBA)

1. D E F IN IT IO N .

A "Collective Bargaining Agreement" or "CBA” for short, refers to die

negotiated contract between a duly certified SEBA3 of workers and the employer
incorporating the agreement reached after negotiations with respect to wages,
hours of work and all other terms and conditions o f employment in the appropriate
bargaining unit, including mandatory provisions for grievances and arbitration
machineries.4 It may be executed not only upon the request of the SEBA but also
by the employer.5

2. PRIMARY PURPOSE.

The primary purpose of a CBA is the stabilization of labor-management

relations in order to create a climate of sound and stable industrial peace.6

3. T H E LAW B ET W E E N T H E PARTIES.

The CBA embodies all the agreements reached after negotiations between
the employer and the SEBA with respect to die terms and conditions of their
employment relationship.7 Consequendv, from the moment it is perfected and

1 Article 268(256], Labor Code.

2 Faculty Association of Mapua Institute of Tecrinotogy v. Hon. CA, G.R No. 164060, June 15,2007.
3 SEBA means “Sole and Exduswe Bargaining Agent’
4 Section 1 f], Rule II, NCMB Revised Procedure! Guidelines in the Conduct of Voluntary Arbitration Proceedngs [Oct 15,
2004], See Wesleyan University-Phfippines v. Wesleyan Unr/ersity-Phiippines Faculty and Staff Association, G.R. No.
181806, March 12,2014; Philippine Journalists, Inc. v. Journal Employees Union (JEU), G.R. No. 192601, June 03,2013.
5 National Union of Workers in Hotel Restaurant and Allied Industries (NUWHRAIN-APL-IUF), Philippine Plaza Chapter v.
PWppoe Plaza Holdings, Inc., G.R. No. 177524,July 23,2014.
« Rivera v. Espiritu, supra; Kiok Loy v. NLRC.No. L-54334, January 22,1986,141 SCRA179.195.
7 Pantranco North Express, Inc. v. NLRC, G.R. No. 95940, July 24,1996,259 SCRA161.

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during its lifetime, it is considered the law between the parties1 and as such, they are
bound not only to the fulfillment o f what has been expressly stipulated but also to
all consequences which, according to their nature, may be in keeping with good
faith2 and the mandate o f the law.3 B eing the law betw een die parties, any
violation thereof can be su b ject o f redress in co u rt.4

4. GRANT O F R IG H T T O S E L F -G O V E R N M E N T ,

The CBA is no doubt the ultimate expression o f die common intention o f

the employer and the employees at having their own self-government In so
enacting the CBA, they are, in effect, exercising quasi-legislative authority as they
craft its terms meant at improving the standards set by law in relation to their
rights, welfare and benefits. The terms o f the CBA, in reality, constitute the
governing law crafted and enacted by them. Resultandy, the law's provisions
affecting their rights, welfare and benefits will no longer be the controlling tenets
but those o f the CBA’s unless, o f course, there is, as between them, serious
disparity and inconsistency that may harm the employees or operate to their
disadvantage, in which event, it is the law’s provisions, and not the CBA’s which
shall prevail.

5. L IM IT A T IO N O F M A N A G E M E N T R IG H T S A N D PRERO G A TIV ES.

A CBA is not simply a document by which the union and the employees
have imposed upon management express restrictions over its otherwise absolute
right to manage the enterprise. While regulating or restraining the exercise o f
management functions, the CBA does not oust management from the performance
of these functions. It is a well-entrenched principle m labor law as regards the
exercise by the employer of its management rights and prerogatives that “ the power
to grant benefits over and beyond the minimum standards o f law or the Labor
Code for that matter belongs to the employer.” More specifically, matters of salary
increases are part of management prerogatives.5 According to this principle, even if
the law is solicitous of the welfare of die employees, it must also protect the right
of the employer to exercise what clearly are management prerogatives.6

Following this principle, petitioner in Dolt Philippines7 claims diat being the
employer, it has the right to determine whether it will grant a ‘free meal” benefit to
its employees and, if so, under what conditions. It contends that to see it otherwise
would amount to an impairment o f its rights as an employer. The Supreme Court,

1 Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines (SMTFMUWP) v. NLRC, G.R. No.
113856, Sept. 7,1998; MaicopperMn'ng Oxporatxxiv. NLRC, G.R. No. 103525, March 29,1996,255 SCRA322.
2 Goya, Inc v. Goya, Inc. Employees UnicxvFFW, G.R. No. 170054, Jai. 21,2013.
1 Supreme Steel Corporation v. Nagkakasang Manggagawa ng Supreme Independent Union (NMS-IND-APL), G il No.
185556, March 28,2011, citing Endico v. Quantum Foods Distribution Center, G.R. No. 161615, January 30,2009.
4 FacultyAssociation of Mapua Institute of Technology v. Hon. CA, G.R. No. 164060, June 15,2007.
5 Mania Electa Company v.Qui$umbing,G.R. No. 127598, Feb. 22,2000.
6 Abbot Laboratories Phis., Inc. v. NLRC, G.R. No. L-76959, Oct 12,1987,154 SCRA 713.
7 Dole Philippines, Inc. v. Pawis ng Makabayang ObreruNFL pAMAO-NFL], G.R Ho. 146650, Jan. 13.2003.

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however, disagreed. It held that the exercise of management prerogatives is not

unlimited. It is subject to the limitations found in the law, in the CBA or in the
general principles of fair play and justice. This situation constitutes one of the
limitations. The CBA is the norm of conduct between petitioner and private
respondent and compliance therewith is mandated by the express policy of the
law.1

6. CBA N OT AN ORDINARY CON TRA CT.

While the CBA constitutes the law between the parties, it is not, however,
an ordinary contract to which the principles of law governing ordinary contracts
apply.2 A CBA, as a labor contract within the contemplation of Article 1700 of the
Civil Code which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest; thus, it must yield to the
common good.3

7. DOUBTS OR AM BIGUITIES IN T H E CBA, H OW RESOLVED.

Compliance with the CBA is mandated under the policy to give

protection to labor. As a labor contract within the contemplation o f Article 1700
of the Civil Code, it must be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon it,
giving due consideration to the context in which it is negotiated and purpose which
it is intended to serve.4

As a contract and the governing law between the parties, the general rules
of statutory construction apply in the interpretation of its provisions.5 Thus, if die
terms of the CBA are plain, clear and leave no doubt on the intention of the
contracting parties, the literal meaning o f its stipulations, as they appear on the face
of the contract, shall prevail.6 Contracts which are not ambiguous are to be
interpreted according to their literal meaning and not beyond their obvious
intendment.7 Only when the words used are ambiguous and doubtful or leading to
several interpretations o f die parties’ agreement diat a resort to interpretation and
construction is called for.8 And in making such construction, it is well-settled that

1 See alsoE.Razon, Inc. v. Secretary of Laborand Employment G R No. 85867, May 13,1993,222 SCRA1.
2 Davao Integrated Port Stevedoring v. Abarquez, G.R No. 102132. March 19,1993.
3 Cirtek Employees LabaUn'txvFFWv. Cirtek Electronics, h e, G.R No. 190515, Ncv. 15,2010.
' Cirtek Employees Labor Union-FFW v. Cirtek Electronics, Inc, Ibid.; Pantranco North Express, Inc. v. NLRC, G.R No.
95940. July 24,1996; Davao Integrated Pat Stevedoring Services v. Abarguez, G.R No. 102132, March 19,1993.
5 National Union of Workers in Hotel Restaurant and AJfed Industries (NUWHRAIN-APL-IUF), Philippine Plaza Chapter v.
Philppne Plaza HoWi^s, Inc, G R No. 177524, July 23.2014.
6 Article 1370, Civil Code; University of Santo Tomas Faculty Union v. University of Santo Tomas, G.R No. 203957, July 30,
2014; PMppine Journalists, Inc. v. Journal Employees Union (JEU), G R No. 192601, June 03,2013.
7 iWidanao Steel Corporation v. Minsteel Free Workers Organization [MINFREWCFNFl] Cagayan de Oto, G.R. No. 130693,
March 4,2004, Plastic Town Center Corporation v. NLRC, G.R No. 81176, April 19,1989.
8 United Kjmberty-Clark Employees Urion-PMippre Transport General Workers' Organization (UKCEU-PTGWO) v.
Kjmberty-Oark Philippines, Inc, supra; Honda Phlippines, Inc. v. Samahan ng Malayang Manggagawa sa Honda, GR. No.
145561 June 15,2005.499 Phil. 174.180

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the contemporaneous and subsequent conduct of the parties may be taken into
account.1

If there is doubt in the interpretation o f the provision o f the CBA, it

should be resolved in favor o f labor,2 as this is mandated by no less than the
constitution.3 Additionally, it is well-setded that in resolving any such doubt or
ambiguity, the following provisions o f law should be applied:

(1) Article 1702 o f the Civil Code which provides that all labor legislation
and labor contracts should be construed in favor o f the safety and
decent living for the laborer, and
(2) Article 4 o f the Labor Code which states that all doubts should be
resolved in favor o f labor.4

(NOTE: See extensive discussion of this topic in Chapter One [General

Provisions] under the topic of “B. CONSTRUCTION IN FAVOR OF LABOR”).
8. B IN D IN G E F F E C T O F CBA.

Ratification o f the CBA by majority o f all the workers in the bargaining

unit makes the same binding on all employees therein.5 A CBA gives rise to valid
enforceable contractual relations against the union members, in matters that affect
them individually, and against the union itself, in matters that affect the entire
membership in generaL A person who is an employee and at the same time a union
member, is bound by the CBA, in both capacities as such. This is so because the
CBA is a joint and several contract o f the members o f the union entered into by
the union as their agent6

9. AUTOM ATIC IN C O R P O R A T IO N CLAUSE - LAW IS PR ESU M ED

PART O F T H E CBA.

It is well-settled that existing laws and pertinent jurisprudence

automatically form part o f a valid contract. There is therefore no need for the

’ Caltex Regular Employees, etc. v. Caltex [Phils.], Inc., G.R. No. 111359, Aug. *5,1995: Universal TexSe M!s v. NLRC,
G il No. 87245, Apri 6,1990,184 SCRA 273.
2 Wesleyan Urwersity-PMippines v. Wesleyan University-Ptiilippines Faculty and Staff Association, G.R. No. 181805, March
12, 2014; Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union (NMS-IND-APL),
G.R. No. 185556, March 28,2011,645 SCRA 501,521; Faculty Association of Mapua Institute of Technology jFAMIT] v.
CA, G.R No. 164060, June 15,2007,524 SCRA 709,717.
3 Arfde II. Section 18 of the Constitution provides: ‘Section 18. The State affimns labor as a primary sodai economic force. It
shall protect tie rights of workers and promote their welfare.’
* Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union - KAMAPI, G.R. No. 156098, June 27,2005:
Plastic Town Center Corporation v. NLRC, G.R. No. 81176, April 19.1989.
s Artide 237 [231], Labor Code.
6 Manalang v. Artex Development Co., Inc., G il No. L-20432, Oct 30,1967,21 SCRA 561.

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 470 Bar reviewer on Labor Law

parties to copy or reiterate them in the CBA nor to make any express reference
thereto. They are all presumed to be part o f the contract.1

10. STANDARD STIPULATIONS IN A CBA.

Generally, the stipulations in a CBA may be classified into two (2),

namely;

(1) Non-economic or political; and

(2) Economic or non-political.

The first one covers the following provisions that the parties to a CBA
usually stipulate: (a) Coverage or Scope o f the Agreement; (b) Exclusions; (c)
Rights and Responsibilities of Parties; (d) Union Security Arrangement; (e) Job
Security (Security of Tenure); (f) Management Rights and Prerogatives; (g)
Company Rules and Regulations; (h) Discipline o f Employees; (i) Union Dues and
Special Assessments; (j) Agency Fee; (k) Check-Off; (1) Grievance Machinery; (m)
Voluntary Arbitration; (n) Labor-Management Council (LMQ; (o) No-Strike, No-
Lockout, (p) Waiver and Completeness of Agreement; and (q) Duration and
Effectivity of Agreement.

The second includes; (a) Wage Increases; (b) Allowances; (c) Premiums for
Work on Rest Days, Holidays, etc.; (d) Meal, Rice and other Subsidies; (e) Leave
Benefits; (f) Union Leave; (g) Uniforms; (h) Union Office; (i) Promotions; (j)
Bonuses; (k) Insurance; (1) Hospitalization; (m) Retirement; (n) Excursion; and (o)
Others which have monetary values.

11. T H R E E (3) CATEGORIES O F CBA SUBJECTS.

The subjects of CBAs may be classified into three (3) categories, namely:
(a) Mandatory; (b) Permissive or voluntary; and (c) Illegal.

a. Mandatory Subjects.

Mandatory subjects of the CBA are those that the parties are compulsorily
required to bargain if either party has made a proposal thereon. Thus, an employer
may not introduce any changes in the mandatory bargaining subjects without
providing the SEBA prior notice of such proposed changes and affording it o f the
opportunity to bargain thereover. Neither the employer nor the SEBA can refuse
to bargain over mandatory subjects of bargaining.

It bears emphasizing, however, that despite their being mandatory, the

parties need not arrive at an agreement thereon through negotiations alone; what is
simply required is that they should bargain in good faith on the proposals although
a deadlock may ultimately result therefrom. And if the deadlock remains

1 Lakas ng Manggagawang Makabayan [LM4] v. Abiera. G.R. No. L-29474, Dec. 19.1970; Liberation Steamship Co., Inc. v.
CIR G R No. L-25389, June 27,1968; Davao Integrated Port Stevedoring Services v. Abarquez, G R No. 102132, March
19,1993,220 SCRA197,204.

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unresolved, the parties may resort to such concerted activities as a strike, on the
part o f the SEBA, or lock-out, on the part o f the employer.1

Considered mandatory are proposals concerning the terms and conditions

o f employment. Examples of mandatory subjects are wages (all forms o f wages),
hours o f work,2 meal time,3 time breaks/ overtime and other premiums,5
commissions,6 shift differentials,7 paid holidays,8 incentive pays,9 paid leaves of
absence,10 fringe benefits,11 separation/severance pay,12 pensions13 and retirement
benefits,14 work schedules,15 probationary period,16 grievance procedure,17
arbitration,18 labor-management council (LMC),19 no-strike, no-lockout clause,20
union security clause,21 inter alia.

In addition to the foregoing, the CBA is mandatorily required by special

laws to embody certain stipulations, such as the following:

1. D rug-free w orkplace policy. - Under R.A. No. 916522 and its

Implementing Rules and Regulationsj23 it is explicitly required that a provision on drug-

1 See Article 278 [253], of the Labor Code, which provides, in its parapraph (c), as follows: '(c) In case of bargaining
deadlocks, (tie duly certified or recognized bargaining agent may file a notice of strire or the employer may file a notice of
lockout with he hfciistry at least 30 days before the rtended date thereof. xxx'
1 Tmken Roter Bearing Co., 70 NLRB 500 (1946).
J Id.
« Id.
* ML
* The Register-Guard, 339 NLRB 353 (2003).
1 Smith Cabinet Mfg. Co, 147 M R B 1506 (1964).
» Singer Mfg. Co., 24 NLRB 444 (1940).
» Ubby, McNeia & Ubby. 65 NLRB 873 (1946).
10 Such as service incentive leave, vacation leave, paternity leave, maternity leave, solo parents' leave, etc.
« W.W. Cross & Co. v. NLRB, 174 F2d 875 (1** Cir. 1949); Larry Geweke Ford, 344 NLRB 628 (2005).
« Adams DaVy. Inc., 137 NLRB 815 (1962).
° Pensions for active workers are mandatory but benefits for retirees are permissive. (Allied Chemical & AScafi Workers Local 1
v. Pittsburgh Plate Glass Co., 404 U.S. 157 (1971®.
« H
« Tmken Roter Bearing Co., 70 NLRB 500 (1946).
« Article 296 [281], Labor Code.
« Article 273 (260], Id.; Hughes Tool Co. v. NLRB, 147 F.2d 69 (5th Cir. 1945).
« Article 274 [261], Id.; NLRB v. Montgomery Ward & Co, 133 F2d676 (9th Cir. 1943).
» Article 267 (255], Labor Code.
» Article 278 (263], Id.
* Article 259(e) (248(e)], Id.
n Otherwise known as the 'Comprehensive Dangerous Drugs Act of 2002" which was approved on June 7, 2002. It is
provided h its Section 49: lab o r Organizations and he Private Seda. — AS labor unions, federations, associations; a
organizations in cooperation wifli the respective private sector partners shall include in their cotectve bargaining a any
similar agreements, joint continuing programs and information campaigns fa the laborers similar to the programs provided
under Section 47 of the Act w ih the end in view of achieving a drog-free workplace.
*!t shall be required that the workplace drug abuse prevention policies and programs be included as part of the Collective
Bargaining Agreement (CBA) *
a The Implementing Rules and Regulations provide as fotows: ‘Section 49. Labor Organizations and the Private Seda. - All
labor unions, federations, associations, a organizations in cooperation with the respective private sector partners sha!
include in their collective bargaining a any similar agreements, joint continuing programs and information campaigns for the

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free workplace be included in the CBA.123Pursuant thereto, DOLE Department Order

No. 53-03, Series of 2003} promulgated the Guidelines for the Implementation of a Drug-
Free Workplace Policies and Programs for the Private Sector which requires that in
organized establishments, the drug-free workplace policies and programs should be
included as part of the CBA.

2. H IY /A ID S education and inform ation program . - The 1999 Pules

and Regulations Implementing IL4. No. 8504} require that “(t)he quality o f the
HIV/AIDS education and information program shall be under the Collective
Bargaining Agreement xxx.”4 This workplace HIV/AIDS education and
information program for all workers is required to b e ‘'developed, implemented,
evaluated and funded by the employer. Further, AIDS education is mandated
thereunder to be integrated in the orientation, training, continuing education and
other human resource development programs o f employees and employers in all
private offices.

b. Permissive or Voluntary Sub jects.

Permissive or voluntary subjects of bargaining are those that are non­

mandatory in the sense that they are not direedy related to the work being
performed by the employees in the bargaining unit. These subjects are not related
to wages, hours of work and other terms and conditions of employment Being
permissive and non-mandatory, the parties may agree to engage in bargaining over
these subjects but they are not in any way required to so bargain under compulsion
of law. These subjects may be proposed by either party, but neither of them can
insist upon their acceptance as condition for executing and concluding the CBA.
Any of the parties, therefore, can refuse to negotiate them without getting into any
legal complication such as being charged for ULP. These subjects cannot likewise
be die subject of a bargaining deadlock which may be cited as valid and lawful
ground for the conduct of a strike by the SEBA or lockout by the employer. But
once the parties choose to negotiate permissive subjects, any agreement reached
thereon is enforceable. Moreover, the fact that a permissive subject is included in
one CBA does not make negotiations over diat subject mandatory during the next
CBA negotiations.5

That a certain subject is mandatory and not permissive or vice-versa is a

dun gray line issue that may present legal complications. A threshold may be cited
in that subjects which have an insignificant beating on the employment
relationship are most likely permissive. The danger of not making a clear-cut

laborers similar to the programs provided under Section 47 of this Act with the end in view of achieving a drug free
writptace.'
' See Section 49, Article VI [Participation of the Private and Labor Sectors in the Enforcement of this Ad] thereof.
2 Issued on August 14,2003 by DOLE Secretary PaSricia A. Santo Tomas.
3 Otherwise known as the Ttiifippine AIDS Prevention and ConJot Ad of 1998.“ It was issued on April 13,1999.
4 Section 15. Rule II thereof.
5 Printing Pressmen Local 252 (Columbus) (RW. Page Corp.). 219 NLRB 268 (1975).

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LABOR. RELATIONS

distinction between these two lies in the possibility that if the employer declines to
bargain over a subject which turns out to be mandatory rather than permissive,
then the SEBA may have sufficient ground to initiate a ULP complaint for the
perceived undue refusal o f the employer to negotiate the CBA.

Examples o f this kind o f subjects, inter alia, are (1) the ground rules that
the parties should observe in the course o f the parties’ negotiations;1 (2) selection
o f the composition o f the management and union panels who will negotiate the
CBA;2 (3) SEBA’s insistence on bargaining for a unit larger than is covered by its
certification;3 (4) determination o f the products to be manufactured; (5) general
business practices; (6) internal union matters,4 such as determining the amount o f
union dues and agency fees, amendments to the union constitution and by-laws,
changes in the rules governing election o f officers, etc.; and (7) basic capital
investment decisions which are based on factors other than labor costs.5

c. Illeg al Subjects.

Illegal or prohibited subjects are those that cannot be made subject o f the
collective bargaining negotiations because doing so would run afoul of the law.
Being violative of the law, the parties are prohibited no: only to negotiate them but
to actually stipulate and incorporate them into a CBA, this notwithstanding their
mutual agreement to so make them part o f the CBA. And if they are stipulated in a
CBA, they arc void and unenforceable. Further, the parties cannot invoke them to
declare a deadlock which may be cited as a ground to support a strike or lockout.
And in case a strike or lockout is conducted based on such ground, the same
should be declared patently illegal.

Examples o f illegal subjects are those that provide for benefits that are
less than the minimum standards set by law; discrimination against certain
employees based on sex, sexual preference and orientation, race, marital status,
disability, age and religion;6 issues beyond the scope o f the appropriate bargaining
unit; yellow dog conditions;7 and other acts considered as ULPs under the law.

12. B E N E FIT S FR O M T H E CBA A ND T H E LAW, SEPARATE AND

D IST IN C T FR O M EACH O T H E R .

Benefits derived from law, on the one hand, and those from the CBA or
company policy or practice, on the other, are separate and distinct kom each other
unless otherwise provided by the law or agreement or policy or practice granting

1 American Medical Response, 346 NLRB 1004 (2006); Vatguard Fire & Security Systems, 345 NLRB 1016 (2005).
7 General Electric Co., 173 NLRB 253 (1968).
1 Douds v. Longshoremen (ILA), 241 F.2d 278 (2d Cir. 1957).
4 Universal O i FYoduds Co. v. NLRB, 445 F.2d 155 (7th Cir. 1971).
5 First National Maintenance Corp. v. NLRB. 452 U.S. 666 (1981).
‘ Hughes Tod Co., 147 NLRB 1573 (1964).
7 Artide 259(b) [248(b)], Labor Code.

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 474 Bar reviewer on La bo r Law

them.1Workers are allowed to negotiate wage increases separately from and

in addition to legislated wage increases.

It is provided under Article 125 o f die Labor Code diat no wage order
should be construed to prevent workers in particular firms .or enterprises or
industries from bargaining for higher wages with dieir respective employers. This is
usually the case because all CBA negotiations are conducted with the end in view of
effecting improvements and upward changes in wages and other benefits over and
above the rates set by law. Obviously, the parties do not sit down and negotiate a
CBA for die purpose of reducing existing wages and benefits below die minimum
standards fixed and mandated by law.

Parties may validly agree in the CBA to reduce w ages and benefits
of employees provided such reduction does not go below the m inim um
standards. While the proscription is clear that the parties to the CBA arc not
allowed to stipulate on wages and benefits below the minimum rates or standards
set by law, they are not, however, precluded from negotiating and agreeing to their
reduction for as long as they do not result in being reduced to the level below the
legal minimum rates and standards.

In the case of Insular Hotel,2 it was argued by petitioner union that

reducing wages and benefits runs contrary to Article 10034of the Labor Code which
enunciates the non-diminution of benefits principle. The Supreme Court, however,
ruled that even assuming arguendo that Article 100 applies to the case at bar,
respondent hotel, following Rivera* is correct that this principle docs not prohibit a
union from offering and agreeing to reduce wages and benefits o f the employees.
This is so because the CBA is the end-product o f negotiations by the employer and
the SEBA not only with respect to wages, hours o f work but to “all other term s
and conditions of em ploym ent”5 As such, the parties are free to enter into any
stipulation that is permissible under the law. And in construing a CBA, the courts
must be practical and realistic and give due consideration to the context in which it
is negotiated and the purpose which it is intended to serve.6

It must be emphasized that the parties to a CBA are not allowed to

stipulate below the minimum standards provided under the law. Entering into a
CBA which contains terms and conditions o f employment below legally mandated
minimum standards will not, despite its registration, constitute a bar to the conduct
o f a certification election should another union challenge the majority status o f the

' Meycauayan Colleges v.Drilon,G.R. No. 81144, May 7,1990.

2 Insular Hotel Employees UmocvNFl v. Waterfront Insular Hotel Davao, G.R. Nos. 174040-41. Sept 22,2010.
3 It provides as follows: ‘Article 100. Prohbition against elimination or diminiition of benefits. - Nothing in this Book shall be
construed to elminate a n any way diminish supplements, or other employee benefits being enjoyed at the time of
promulgation of this Code.’
4 Rivera v. Espritu. G.R. No. 135547. Jan. 23.2002.
5 Id.
6 Id ; See also Octavio v PhiSppine Long Distance Telephone Company, G R No.175492, Feb. 27,2013.

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SEBA which negotiated it. Previously, entering into a CBA providing benefits
below the minimum standards set by law is one o f the grounds for cancellation of
union registration under paragraph (f) of Article 247 [239] o f the Labor Code. This
ground, however, has been deleted by the amendatory provision o f R.A. No. 9481,
which took effect on June 14, 2007.

13. EM PLO Y EES E N T IT L E D T O CBA B E N E F IT S .

Who are entitled to the benefits flowing from the CBA? This question
continues to bedevil the courts as it is raised in many cases to this day. Based on
jurisprudence, the following are entitled to the benefits stipulated in the CBA:

(1) Members o f the SEBA;

(2) Non-SEBA members but are covered by the collective bargaining
unit (CBU);1
(3) Members of the minority union/s who paid agency fees to the SEBA;2
and
(4) New employees hired after the conclusion o f the CBA and during its
effectivity or even after its expiration.34

14. E N T IT L E M E N T O F EX C L U D E D E M PLO Y EES.

Are employees excluded from the collective bargaining unit (CBU), like
confidential employees or managerial employees or supervisory employees, in the
case of rank-and-file CBU, or vice-versa, entitled to the benefits flowing from the
CBA?

The answer is in the negative. But two exceptions may be cited, to wit.

(1) When the CBA benefits are granted to managerial employees by

reason o f company policy or company practice;
(2) When adjustments are made to avoid distortion in the levels o f wages
or benefits.

In the first, in order to make it an enforceable and demandable right, there

should be evidence o f existence o f such policy or practice; otherwise, die absence
thereof would not justify any claim or demand therefor. For example, in the 2018
case o f SIT A v. Huligatigaf Respondent Huliganga was a managerial employee of
SITA and, as such, he is not entided to retirement benefits exclusively granted to
the rank-and-file employees under the CBA. It must be remembered that under
Article 255 [245] o f the Labor Code, managerial employees arc not eligible to join,
assist or form any labor organization. To be entided to the benefits under the CBA,

1 New Pacific Timber & Suppty Co, Inc. v. NLRC, G.R. No. 124224, March 17,2000,328 SCRA 404.
3 See Arttie 259(e) 1246(e)], Labor Code.
3 ibid.
4 Sodete Internationale de Telecommunications Aeronautjques (SITA) v. HuSganga. G.R. No. 215504, Aug. 20,2018.

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 476 Bar Re v ie w e r o n La b o r Law

the employees must be members o f the bargaining unit, but not necessarily o f the
labor organization designated as the bargaining agent

The same ruling was made in another 2018 case, Mania Hotel Corporation v.
Rosita De Leon,1where respondent, a managerial employee, was compulsorily retired
under the retirement plan in the rank-and-file CBA which prescribes that an
employee's retirement is compulsory when he o r she reaches the age o f 60 o r has
rendered 20 years of service, whichever comes first. Respondent D e Leon was only
57 at the time she was compulsorily retired but had already rendered 34 years o f
service as Assistant Credit and Collection Manager/Acting General Cashier. As
managerial employee, she is not covered by the CBA. There is nothing in
petitioner’s submissions showing that respondent had assented to be covered by
the CBA's retirement provisions. Thus, in the absence o f an agreement to the
contrary, managerial employees cannot be allowed to share in the concessions
obtained by the labor union through collective negotiation. Otherwise, they would
be exposed to the temptation of colluding with the union during the negotiations
to the detriment of the employer. Accordingly, the fact that respondent had
rendered more than 20 years of service to petitioner will not justify the latter's act
of compulsorily retiring her at age 57, absent proof that she agreed to be covered
by the CBA's retirement clause.

In the second^ certain economic benefits may be voluntarily extended to

excluded employees such as increases in wages and other monetary benefits
because a CBA was concluded with the rank-and-file employees. But if so given,
the same cannot, strictly speaking, be considered as having been based on the CBA
but simply as adjustments to prevent distortion in the levels o f wages and benefits
among die employees included in the CBU, in particular, and all the employees of
die establishment, in general Such increases in wages and benefits may not
necessarily be equal to or higher than what the CBA provides. In this case, not
being based on the CBA, the employer can implement such increases based on ire
exclusive right and prerogative to determine how much the same should be.

15. CBA DEADLOCK.

A "deadlock" is defined as the "counteraction o f things producing entire

stoppage: a state of inaction or o f neutralization caused by die opposition o f
persons or o f factions (as in government or a voting body): standstill”2 There is a
deadlock when there is a “complete blocking or stoppage resulting from the action
o f equal and opposed forces; as, the deadlock o f a jury or legislature.”3 The word is
synonymous with the word imposed which, within the meaning o f the American

1 GA No.219774,JuV23,2018.
1 DivheWon)UnivEis^c<TaclobanvSecreteiyo(L^baandErnploy7iiert.GJR No.91915.Sept 11,1991
1 id.,CitingWebster NewTwentiesCerturyDctjonsvy.2ndEd., p.485.

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 C h a t t e r f iv e 477
LA BO R R ELA TIO N S

federal labor laws, “presupposes reasonable effort at good faith bargaining which,
despite noble intentions, does not conclude in agreement between the parties/’1

Thusly, there is a deadlock in collective bargaining where there is a failure

in the collective bargaining negotiations between die SEBA and the employer
resulting in an impasse or stalemate on all o r some o f die issues subject o f the
negotiation.2 Despite their efforts at bargaining in good faith, the parties have failed
to resolve the issues and it appears that there are no other definite options or plans
in sight to break i t Simply stated, there is a deadlock when there is a complete
blocking o r stoppage in die negotiation resulting from the action o f equal and
opposing forces.3

Either o f die parties in the CBA negotiation - die SEBA o r the employer
- may declare a deadlock. There is no law that mandates that only the SEBA o r the
employer alone may declare a deadlock. Such declaration, in fact, may be made
separately or joindy by the parties and either expressly o r impliedly. The filing o f a
notice o f strike by the SEBA or notice o f lockout by the employer, signals die
formal declaration o f a CBA deadlock - one o f only two (2) grounds allowed under
the law4 that may be invoked in such notice, the other being ULP committed either
by the employer5 or the SEBA.6

In the 2014 case o f Pilipinas Shell Petroleum Corporation? it was stipulated in

Item 8 o f the Ground Rules o f die CBA negotiation that a “d ead lo c k c an only be
declared upon m utual consent o f b o th parties.” Because die parties have not
agreed on the issue o f wage increase, there was a complete steppage o f the on­
going negotiations between the parties and the union consequently filed a Notice o f
Strike. Petitioner union contends that despite the said stoppage, there could have
been no deadlock between the parties as the union had not given its consent to it,
pursuant to said Item 8 o f the Ground Rules governing die parties' negotiations
which required mutual consent for a declaration o f deadlock. The Supreme Court,
however, disagreed. Under the circumstances o f this rase, a mutual declaration
would neither add to nor subtract from the reality o f the deadlock then existing
between die parties. Thus, die absence o f the parties' mutual declaration o f
deadlock does not mean that there was no deadlock. The union’s reliance on item 8
o f the ground rules governing the parties' negotiations which required mutual
consent for a declaration o f deadlock was reduced to irrelevance by the actual frets.
Contrafactum non valet argmentum. There is no argument against frets.

1 kl, effingMLRB.v. Boicrolt.635FJM492(1981).

1 SanMguelCaporaijonv.tai^C, G il Na99266,March2.1999.
1 CaplMMe(ficalCenterAganoeofQonoemedBmtft)yiBe&UniBedFitptnoSengceWortteisv.Uguesnnei,supia.
4 SteAifcle276(c)(263($labofCoda
5 SeeArti^^p^taborCodeataSed'UnCatrLabarnacSbesofBnptoyeisJ'
* SeeAf€idn260f249I,iaborCodeenaOed<Un£airLaborBacScescrLsftxrOi9anizaSori&*
1 Tab^aoShe9Reli^ErnployeesAsscriafaiv.P^phasSh^PetrolamCoqx)iaion,GJlNa 170007,Apri07,2014.

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 47» Bar Reviewer o n Labor Law

Rights of Parties in Case of Deadlock.

In case of a deadlock in the initial negotiation or re-negotiation or renewal

of the CBA, the law provides that the parties may exercise their respective rights
under the Labor Code1which include die following:

(1) Submission of the deadlocked issue to conciliation and mediation by

die NCMB.23 This means that the deadlock may be taken cognizance
of motu proprio by the NCMB or through the filing o f a notice of
strike by the union o r notice of lockout by the employer or notice of
preventive mediation by any of the parties^
(2) Declaration and actual staging of a strike by the union or lockout by
the employer.4
(3) Referral of case to compulsory or voluntary arbitration.
(4) In case of industries indispensable to. the national interest, filing of
petition for assumption of jurisdiction over the labor dispute or
certification thereof to the NLRC for compulsory arbitration.

e.
THE COLLECTIVE BARGAINING PROCESS

1. ESSENTIAL R EQ U ISITES O F C O LLEC TIV E BARGAINING.

Prior to any collective bargaining negotiations between the employer and

die SEBA, the following requisites must first be satisfied:

1. Employer-employee relationship must exist between die employer and

the members of the bargaining unit being represented by the SEBA.S

2. The majonty status o f the SEBA must be duly established through any
of the modes sanctioned by law such as SEBA Certification (which
replaced the mode of ‘Voluntary Recognition’),6 or certification, consent,
run-off or re-run election.7 Proof o f the majority status of the union
demanding negotiation should be clearly established; otherwise, the
employer has no obligation to engage in collective bargaining
negotiations with it and it has the right to refuse to negotiate until
such official proof is presented.8

' Article 265 [253-A], Labor Code; Section 2, Rule IX, BookV, Rules to Implement Uielabor Code.
3 National CoocSation and Mediation Board (NCfv®).
3 Artde 261(c) [250(c)]. Labor Code.
4 G.R No. 91915, Sept 11,1992,213 SCRA 759,912-913.
5 Allied Free Workers Union v. Compania Maritima, G R No. 1-22951, Jan. 31,1967.
6 See Section 4 2 , Rule VII, Department Order No. 40-M 5. Series of 2015 (September 07,2015].
7 See Aitides 267 [255| to 270 [258], Labor Code.
1 Lakas ng Manggagawang Makabayan v. Marcelo Enterprises, G.R No. L-38258, Nov. 19,1982,118 SCRA 422.

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LABOR RELATIONS

3. The bargaining unit being sought to be represented by the SEBA

should be validly constituted and established in accordance with law.

4. There should be a lawful written demand to bargain and a clear

statement o f die proposals by one party to negotiate an agreement and
the equivalent counter-proposals thereto by the odicr party before the
collective bargaining negotiations process may validly commence.1

2. C O L L EC T IV E BARGAINING P R O C E D U R E IN A R T IC L E 261 [250],

MANDATORY.

Under Article 261 [250]2 The Supreme Court, in earlier cases,3 held that
the failure o f a party to reply to the written notice containing a statement o f CBA
proposals served by the other party within the period o f ten (10) calendar days
mentioned in Article 261 [250].4 does not constitute refusal to bargain which is an
unfair labor practice (ULP) of the party concerned. This period was considered
merely procedural in nature and therefore not mandatory.

Recendy, however, there has been a shift in the interpretation of Article

261 [250]. According to General Millingf the procedure in collective bargaining
prescribed under the said provision is m andatory because o f the basic interest of
the State in ensuring lasting industrial peace. It underscored the fact that the other
party upon whom the written notice containing the proposals was served is
mandatorily required under the law to “make a reply thereto not later than ten (10)
calendar daysfrom receipt of such notice.” Consequendy, in declaring the employer in this
case guilty o f ULP under Article 259(g) [248(g)] o f the Labor Code, the High Court
construed its failure to make a timely reply to the proposals presented by the union
as being indicative of its bad faith and utter lack o f interest in bargaining with the
union. Its excuse that it felt that the union no longer represented the workers was
held to be mainly dilatory as it turned out to be utterly baseless.

In Cokgio de San Juan de Letran,6 petitioner school was declared to have

violated Article 261 [250] and to have acted in bad faith because o f its failure to
make a timely reply to the proposals presented by the union. More than a month
had elapsed after the proposals were submitted by the union and yet petitioner still
had not made any counter-proposals. This inaction on the part of petitioner
prompted the union to file its second notice o f strike. Petitioner could only offer a
feeble explanation that its Board o f Trustees had not yet convened to discuss the
matter as its excuse for failing to file its reply. Its refusal to make a counter­
proposal shows a lack of sincere desire to negotiate, rendering it guilty of ULP.

Article 261 [250], Labor Code; Kiok Loy v. NLRC, G .R No. L-54334, Jan. 22,1986.
Article 261 [250] is entiled “Procedure in Coliedive Bargaining.’
Such as the mling in National Union of Restaurant Workers v. CIR G il No. L-20044, April 30,1964,10 SCRA 843.
Artide 261 [250] is entitled “Procedure in Coliedive Bargaining.'
General M ing Corporation v. CA, G.R No. 146728, Feb. 11,2004.
Cotegio de San Juan de Letran v. Association of Employees and Faculty of Letran, G .R No. 141471, SepL 18,2000.

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 480 Ba r Re v ie w e r o n l a b o r La w

The same holding was made in the earlier case o f Kick hoy v. NUR.C,1
where the company’s refusal to make any counter-proposal to the union’s proposed
CBA was declared as an indication o f bad faith. Where the employer did not even
bother to submit an answer to die bargaining proposals o f the union, there is a
clear evasion of the duty to bargain collectively.2

3. STEPS IN T H E C O LLEC TIV E BARG AIN IN G PROCESS

A. PRELIMINARY PROCESS.

The first step in the bargaining process involve? the act o f a party desiring
to negotiate an agreement, of serving a written notice upon the other party with a
statement of its proposals. The other party is required to make a reply thereto not
later than ten (10) calendar days from receipt o f such notice. It must be noted that
although in almost all cases, the negotiation process is initiated by the SEBA,
Article 261 (250) does not foreclose die right o f the employer to initiate i t The
provision uses the word “ party' which may refer either to the employer or the
SEBA.3

B. NEGOTIATION

This involves the process o f meeting, n ot later than ten (10) calendar days
from die date of request for conference, o f the representatives o f die employer and
the SEBA, for the purpose o f discussing and adjusting their differences, if any, with
the end in view o f concluding an agreement on the terms and conditions o f their
employment relationship. Negotiation may be conducted with die intervention of
the government through the Condliators-Mediators o f the NCMB, in case any
dispute arising therefrom is not setded by the parties among themselves.4

G SIGNING AND EXECUTION

This involves the signing and execution o f a written document, ordinarily

denominated as “CBA” or simply as “Agreement” by the management and SEBA
negotiating panels after a series o f negotiations. The document embodies all the
agreements reached by them on each and every issue raised and resolved during the
negotiation process. At this point, although the panel representatives o f both
management and die SEBA have affixed their signatures on each and every page o f
the CBA and the same have been notarized by a Notary Public, it cannot as yet be
considered as having taken effect since there are still certain mandatory legal
processes that need to be complied with, such as the publication, ratification and
registration processes, as discussed below.

* GRNo.54334,Jan.22,1986.141SCRA179.186.
1 SeeafcoTheBradmanCo., Inc.v. CtR, &R Nos. 1-24134-35, Jdy21.1977.78 SCRA10.15.
1 ffoerav.Espitu,G.R.No. 135547,Jan.23,2002.
4 ArtSctes261(250],262(251)aid263(252llW.

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 C ha pter . Fiv e 481
L A B O R R ELA TIO N S

D. PUBLICATION.

This involves die posting o f a copy o f the newly concluded CBA in at

least two (2) conspicuous places in the workplace, at least five (5) days prior to the
ratification thereof by all the employees comprising the bargaining unit.1

E . RATIFICATION.

This involves the act o f ratifying in writing the newly concluded CBA by
at least the majority, not o f die members o f the SEBA which negotiated it, but o f
all the employees covered by and included in the bargaining u n it2

F. REGISTRATION.

This pertains to the registration o f die duly ratified CBA with the BLR or
the D O LE Regional Office by submitting five (5) copies thereof together with the
other documentary requirements and paying the required registration fee.3

G. JO IN T ADMINISTRATION.
This involves the joint administration o f the CBA by the employer and
the SEBA during the entire lifetime thereof which is set by law at five (5) years.4

H . INTERPRETATION AND APPLICATION.

This concerns the interpretation, application, implementation and

enforcement o f the stipulations embodied in the CBA to give effect thereto.

4. BASIC P R IN C IP L E S IN CBA N E G O T IA T IO N S .

a. Parties must act in good faith.5

b. Employer and employees should stand on equal footing.6
c. The parties have the power to fix the terms and conditions o f their
employment relationship.7
d. The employer has the obligation to make available such up-to-date
financial information on the economic situation o f the undertaking which is
normally submitted to relevant government agencies as is material and necessary
for meaningful negotiations.8

Mde 237{231). Ibid.

W .
m.
Arfcte265 E253-AJ, M .
West KartfordEduction Assoctationv. OeCourcy, 162 Cona 566.296 A^d 526 {1972h reprinted inSmtti, Effwanis, and
Clark,op.ctL.p. 521.
Royal Inter-OceanLines, tnc.v.ClR GR No. L-11745, Oct 31,1960.
Article1306, Civi Code; Man9aFasHons, Inc.v. NLRC, GJRNo. 117878, Mov. 1996.
Section2, RuleXVI, BookV, RidestoImplementthe labor Code, as amendedby Oqartfnera OrderNo. 4003, Seriesof
2003,feb. 17,2003}.

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 482 Baa. Re v ie w e r o n l a s o r law

e. Refusal of employer to furnish financial statements is ULP only when

file request is made in writing as required in Article 251(c) [242(c)]; i f n o t in writing
management cannot be held liable for ULP.1
f. A proposal not embodied in the CBA is not part thereof. Only
stipulations embodied in the CBA should be binding on the parties thereto.2
g. The minutes o f die CBA negotiation meetings are n o t part o f the
CBA.3
h. Making a promise during the CBA negotiations is n o t an indication o f
bad faith. As held in Top Form,4 because the proposal was never embodied in the
CBA, the promise has remained just that, a promise, the implementation o f which
cannot be validly demanded under the law.
L Adamant stance resulting in an impasse is not an indicium o f bad faith.5
j. Parties have no obligation to precipitately agree to the proposals o f each
other.6
k. Refusal of a party to sign the fully-concluded CBA is ULP.7
l. No meeting o f the minds, no CBA to speak of. For as long as there is
no meeting of the minds between the employer and die union, there can be no
CBA that may be said to have been concluded.8

m. Allegations of bad faith are wiped out with the signing o f the CBA.
With the execution of the CBA, bad faith bargaining generally can no longer be
imputed upon any o f the parties thereto. All provisions in the CBA ate supposed to
have been jointly and voluntarily incorporated therein by the parties. The CBA is
proof enough that the company exerted reasonable effort at good faith bargaining.9
However, in Standard Chartered Bank,® it was held that such signing o f file CBA
does not operate to estop the parties from raising charges for ULP against each
other. The approval of the CBA and the release o f the signing bonus do not
necessarily mean that the union has waived its claim for ULP against the employer,
or vice-versa, during the past negotiations.

’ StandacdGarteredBankEmployeesUnm[NUBE]v.Corfesa,GR No.114974.Jine 16,2004.

* SamahangM^agaswsaTop(^Manukiiring^Med WorkerofIhePfri^ppiriespMIFNWiWPIv.NLRC.GJl No.
113856,Sept7.1998.
1 As held in Samahang Manggagawa sa Top Form Manufacturing-United Workers of he PWppines fSMTFMUWP] v.
NLRC.GRNo. 113856,Sept 7,1998.
* U.
5 Id.;DivineWordUwerstyofTadobanv. SecretaryofLalxxarxi EmploymentGRNo.91915,Sept 11,1992.
* Union of Hjpfo BnptyeesQng, Food and ASed hdusfties Umons-Kteang Mayo Uho [tf&DFA-KMU] v. Nestte
PI%hes,hc,GRNos.15893(W1.Marth3.2008.
7 Ro«hvayBcpfessv.Genei3lTeanister.320F2d.859.
* SeeiW rs^ of9ielmrnacu!a1eConcepcion,Inc.v. TheHon. SOLE, G.R. No. 146291,Jan. 23,2002.
* SamahangManggagarasaTopFomktentojrinj4JnitedWo(kereri8iePliWJines(SMn:MtM/Plv.taRC,GR No.
113856,SepL7,1998.
w SandardCharteredBankEnployeesUnion(NUBEJv. Ccnfesor, G.R No. 114974,June16,2004.

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LA BO R R ELA TIO N S

E.
UNFAIR LABOR PRACTICES
mM
1.
NATURE, ASPECTS

1 W H E N A N A C T C O N S T IT U T E S ULP.

A t the outset, it must be clarified that n o t all unfair acts constitute ULPs.
While an act or decision o f an employer o r a union may be unfair, certainly not
every unfair act or decision thereof may constitute ULP as defined and enumerated
under Articles 259 [248]1 and 260 [249]2 o f die Labor Code.3

The act complained o f as ULP must have a proximate and causal

connecdoo with the following:

1. Exercise o f die right to self-organization;

2. Exercise o f the right to collective bargaining; or
3. Compliance with CBA.

Sans this connection, the unfair acts do not fall within the technical
signification o f the term “unfair laborpractice. *4

2. T H E O N LY U L P W H IC H MAY O R MAY N O T B E R EL A TE D T O
T H E E X ER C ISE O F T H E A BO VE R IG H T S.

The only ULP which is the exception as it may o r may n o t relate to the
exercise of the right to self-organization and collective bargaining is the act
described under paragraph (f) of Article 259 [24S], i>., to dismiss, discharge or
otherwise prejudice or discriminate against an employee for having given or being
about to give testimony under the Labor Code.5

3. LABOR C O D E PR O V ISIO N S O N U LP.

There ate only five (5) articles in die Labor Code related to ULP, to wit

1) Article 258 [247] which describes the concept o f ULPs and prescribes
the procedure for their prosecution;
2) Article 259 [248] which enumerates the ULPs that may be committed
by employers;

1 Article259[248] - UnfairLabofPrac5cesofEmployers.
2 Article260f249] - UnfairLaborPracficesofLabor Organizations-
3 Galaxie SteelWorkers Union GSWU-NAflU-KMUJv. NLRC, G.R. No. 165757, Oct 17,2006.
4 AlfiedBartMngCorporaSonV.CA.G.R.Na144412, Nov. 18,2003;SeeaboTirt^naPagkalcaisang ManggagawasaAsia
Braveiyv. AsiaBrewery, tot, GA No. 162025.Aug. 3,2010.
5 PhfcomEmployeesUnionv. RtfppneQobalCommunicatwis. G.R No. 144315,July 17,2006.

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 484 Bar . r e v ie w e r o n La b o r Law

3) Article 260 [249] which enumerates the ULPs that may be committed
by labor organizations;
4) Article 274 [261] which considers violations o f the CBA as no longer
ULPs unless the same are gross in character which means flagrant
and/or malicious refusal to comply with the economic provisions
thereof
5) Article 278(c) [263(c)] which refers to union-busting, a form ofU L P,
involving the dismissal from employment o f union officers duly
elected in accordance with die union constitution and by-laws, where
die existence o f the union is threatened thereby.

4. PARTIES W H O /W H IC H MAY C O M M IT U LP.

A ULP may be committed by an employer or by a labor organization.

Article 259 [248] describes the ULPs that may be committed by the employer;
while Article 260 [249] enumerates those which may be committed by the labor
organization.

O n the part o f the employe^ only the officers and agents o f corporations,
associations or partnerships who have actually participated in or authorized or
ratified ULPs are criminally liable.1

O n the part o f the union, only die officers, members o f governing boards,
representatives or agents or members o f labor associations or organizations who
have actually participated in or authorized o r ratified the ULPs are criminally
liable.2

5. ELEM EN TS O F ULP.

Before an employer or labor organization may be said to have committed

ULP, die following elements must concur.

1) There should exist an employer-employee relationship between the

offended party and die offender, and
2) The act complained o f must be expressly mentioned and defined in
the Labor Code as a ULP.

Absent one o f the elements aforementioned will not make the act a ULP.

The first requisite is necessary because ULP may only be committed in

connection with die right to self-organization and collective bargaining by
employees. Necessarily, there must be an employment relationship in order for the
organizational right to be validly and lawfully invoked.

1 Article259(24^,LaborCode.
1 Aitide260(249), Ibid.

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 C h a p t e r F iv e 485
L A BO R R ELA TIO N S

The second requisite should be present since the Labor Code itself
requires that the ULP be “expressly defined by this Code.” If an act is not covered
by any o f the ULPs expressly mentioned in the law, it cannot be so deemed a ULP
act

6. ASPECTS O F U LP.

Under Article 258 [247], a ULP has two (2) aspects, namely:

1) Civil aspect; and

2) C rim inal aspect

The civil aspect o f ULP includes claims for actual, moral and exemplary
damages, attorney’s fees and other affirmative reliefs.1 Generally, these civil claims
should be asserted in the labor case before the Labor Arbiters who have original
and exclusive jurisdiction over ULP cases.2 H ie crim inal aspect, on the other
hand, can only be asserted before the regular courts.

7. B U R D E N O F PR O O F.

In ULP cases against employers, it is the union which has the burden to
present substantial evidence to support its allegation o f ULP committed by the
employer.3 In ULP cases against labor organizations, the burden o f proof rests on
the employer.

2.
ULP BY EMPLOYERS

1. SPE C IFIC U LP ACTS BY E M PLO Y ERS.

Article 259 [248] o f the Labor Code enumerates the ULPs that may be
committed by employers, to wit

"Article 259 [248). Unfair Labor Praetias o f Employers. - It shall be

unlawful for an employer to commit any of the fallowing unfair labor
practices:

(a) To interfere with, restrain or coerce employees in the exercise of

their right to self-organization;
(b) To require as a condition o f employment that a person or an
employee shall not join a labor organization or shall withdraw from
one to which he belongs;
(c) To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization;

1 SeeArticle258[247], tad.
1 UnderAtfde224(217], tad.
1 SchetingEnployeesl^Unim[SaU]v.Scftenng PloughCapotaSoaGJINa 142506,Feb. 17,2005.

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 486 Bar. Reviewer on Labor Law

(d) To initiate, dominate, assist or otherwise interfere with the

formation or administration of any labor organization, including the
giving of financial or other support to it or its organizers or
supporters;
(e) To discriminate in regard to wages, hours of work and other terms
and conditions of employment in order to encourage or discourage
membership in any labor organization. Nothing in this Code or in
any other law shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for
employment, except those employees who are already members of
another union at the time of the signing of the collective bargaining
agreement Employees of an appropriate bargaining unit who are
not members of the recognized collective bargaining agent may be
assessed a reasonable fee equivalent to die dues and other fees paid
by members of the recognized collective bargaining agent, if such
non-union members accept the benefits under the collective
bargaining agreement Provided, that the individual authorization
required under Article 251 [242], paragraph (o) of this Code shall
not apply to the non-members of the recognized collective
bargaining agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony
under this Code;
(g) To violate the duty to bargain collectively as prescribed by this
Code;
(h) To pay negotiation or attorney’s fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining
or any other dispute; or
(l) To violate a collective bargaining agreement
“The provisions of the preceding paragraph notwithstanding, only the
officers and agents of corporations, associations or partnerships who have
actually participated in, authorized or ratified unfair labor practices shall be
held criminally liable.”1
2. O RD ER O F TOPICAL PR ESE N TA T IO N .

For orderly presentation, the topics discussed in this section are as

follows:

I. INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES

IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
II. YELLOW DOG CONTRACT
III. CONTRACTING OUT OF SERVICES AND FUNCTIONS
IV. COMPANY UNION

1 As amended Dy Bates PambansaBsang 130, Aug. 21,1981.

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V. THREE SEPARATE CONCEPTS TREATED IN PARAGRAPH (E),

ARTICLE 259 [248]
VI. FILING OF CHARGES OR GIVING OF TESTIMONY
VII. CBA-RELATED ULPs

INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES IN

THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION

1. T H E IN SULA R L IFE D O C T R IN E : T E S T T O D E T E R M IN E
IN T E R F E R E N C E , R E ST R A IN T O R C O E R C IO N .

The terms “ interfere“restrain and “ coerce” in paragraph (a) o f Article 259

[248] arc very broad and expansive diat any act of management that reasonably
tends to have an influence or effect on the exercise by the employees o f their right
to self-organization may fall within their meaning and coverage.

According to the leading case o f Insular Life! the test o f the employer’s
interference with, restraint or coercion o f employees within the meaning of the law is
whether the employer has engaged in conduct which may reasonably tend to
interfere with the free exercise o f the employees’ twin rights to self-organization
and collective bargaining. It is not necessary that there be direct evidence that any
employee was in fact restrained, intimidated or coerced by the statements or threats
o f the employer, what matters is that there is a reasonable inference that the anti­
union conduct o f the employer does have an adverse effect on the exercise o f said
rights.

The significant point to consider, for a charge o f ULP to prosper, is that it

must be shown that the employer’s act was motivated by ill will, bad faith or fraud,
or was oppressive to labor, or done in a manner contrary to morals, good customs,
or public policy, and, o f course, that social humiliation, wounded feelings or grave
anxiety resulted therefrom.2 It bears emphasis, however, that according to
jurisprudence, basic is the principle that good faith is presumed and he who alleges
bad faith has the duty to prove it. By imputing bad faith to the actuations o f the
employer, the employee has the burden o f proof to present substantial evidence to
support the allegation o f ULP. Should he fail to discharge this burden, Iris bare
allegations deserve no credit.3

In accordance with the Insular Life test, the following acts of petitioners in
T & H Shopfitters!' were declared as “all reek[mg] o f interference on the part of *34

' Insular Life Assurance Co., Ltd., Enployees Associations Insular Life Assurance Co., G R No. L-25291, Jan. 30,1971.
} Tunay na Pagkakasa ng Manggagawa sa Asia Brewery v. Asia Brewery, Inc., [G.R. No. 162025, August 3,2010.
3 Cutii v. Eastern Tetecommunications FWppnes, Inc., G.R. No. 165331, Feb. 9,2011.
4 T & H Shopfitters CorpTGh Queen Corp. v. T & H Shopfitters Corp., G.R. No. 191714, Feb. 26,2014.

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petitioners,” namely: (1) sponsoring a field trip to Zambales for its employees, to
the exclusion of union members, a day before the scheduled certification election;
(2) the active campaign by the sales officer o f petitioners against the union
prevailing as a bargaining agent during the field trip; (3) escorting its employees
after the field trip to the polling center; (4) the continuous liiring'of sub-contractors
performing respondents’ functions; (5) assigning union members to the Cabangan
site to work as grass cutters; and (6) the enforcement of work on a rotational basis
for union members. In declaring petitioners guilty of ULP, the Court held that
indubitably, the above various acts of petitioners, taken together, reasonably
support an inference that, indeed, such were all orchestrated to restrict
respondents’ free exercise of their right to self-organization. Petitioners’ undisputed
actions prior and immediately before the scheduled certification election, while
seemingly innocuous, unduly meddled in the affairs o f its employees in selecting
their exclusive bargaining representative.

2. TOTALITY OF CONDUCT D O C T R IN E .

In ascertaining whether the act of die employer constitutes interference with,

restraint or coercion of the employees’ exercise of their right to self-organization and
collective bargaining, the “totality of conduct doctrine” may be applied. Because o f its
nature and consequences, a finding of ULP should not be made based alone on the
cited ULP act considered in isolation but should be viewed on the basis of the
employer's act outside of the bigger context of the accompanying labor relations
situation. Any perceived act of interference must be examined in terms of the act's
inherent import and effects, in light of the surrounding circumstances, and weighed
on the basis of the totality of the conduct of die entity charged.

The totality of conduct doctrine means that expressions of opinion by an

employer, though innocent in themselves, may be held to constitute ULP because
of the circumstances under which they were uttered, the history o f the particular
employer’s labor relations or anti-union bias or because o f their connection with an
established collateral plan o f coercion or interference. An expression which may be
permissibly uttered by one employer might, in die mouth o f a more hostile
employer, be deemed improper and consequendy actionable as a ULP .1 The past
conduct of the employer and like considerations, coupled with an intimate
connection between the employer’s action and the union affiliation or activities o f
the particular employee or employees taken as a whole, may raise a suspicion as to
the motivation for the employer’s conduct. The failure o f the employer to ascribe a
valid reason therefor may justify an inference that his unexplained conduct in
respect of the particular employee or employees was inspired by the latter’s union
membership and activities.2* 7

' S am aten ng M anggagawa sa BandoTnuLM LC v. N IR C , G.R. N o. 126195, July 1 7 ,1 99 7 ,2 7 5 SCRA 633.

7 Royal Undergarm ent C orporation d the P hilippines v. C IR , G.R. N o. L-39040, June 6 ,1 9 90 .
L •;
r.
;£
\ k

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 C hapter Five 489
l a b o r r e l a t io n s

In Carmelcraft} petitioner company invoked as reason to justify the

cessation o f its operations the fact that it sustained losses in the small amount o f
P I,603.88 as o f December 31, 1986. There is no report, however, o f its operations
during the period after that date, that is, during the succeeding seven and a half
months before it decided to close its business. Significantly, the company is
capitalized at P3 million. Considering such a substantial investment, a loss o f the
paltry sum o f less than P2,000.00 could hardly be considered serious enough to call
for the closure o f the company. This justification is hardly credible; in fact, it is
preposterous when viewed in the light o f the other relevant circumstances. The real
reason for the decision of the petitioners to cease operations was the establishment
o f respondent Carmelcraft Employees Union. It was apparendy unwelcome to the
corporation which would rather shut down than deal with the union. The company
had in fact suggested diat it might decide not to close the business if die employees
were to affiliate with another union which the management preferred. The act o f
the petitioners was ULP prohibited by law.

In General Milling? the Supreme Court considered the act of die employer
in presenting the letters from February to June 1993, by 13 union members
signifying their resignation from the union clearly indicative o f the employer’s
pressure on its employees. The records show that the employer presented these
letters to prove that the union no longer enjoyed the support o f the workers. The
fact that the resignations of the union members occurred during the pendency o f
the case before the Labor Arbiter shows the employer’s desperate attempt to cast
doubt on the legitimate status o f the union. The ill-timed letters of resignation from
die union members indicate that the employer had interfered with the right o f its
employees to self-organization. Because o f such act, the employer was declared
guilty o f ULP.

In Hacienda Fatima,3 the Court upheld die factual findings of the NLRC
and the CA diat from the employer’s refusal to bargain to its acts o f economic
inducements resulting in the promotion of those who withdrew from the union,
the use o f armed guards to prevent the organizers to come in, and the dismissal o f
union officials and members, one cannot but conclude that the employer did not
want a union in its hacienda - a clear interference in the right o f the workers to self­
organization. Hence, the employer was declared guilty o f ULP.

3. JU R ISPR U D EN T IA L L Y D EC LA R ED ACTS O F U LP IN V O LV IN G
E M PL O Y E R ’S IN T E R F E R E N C E , R ESTR A IN T O R C O E R C IO N .

Certain specific acts have been jurisprudentially declared as ULP in a

number o f cases which invariably involve interference, restraint or coercion by die
employer. These acts may be generally classified as follows:*23

' C arm eicraft C orporation v . NLRC, G il Nos. 90634-35, June 6 ,1 9 9 0 ,1 8 6 SCRA 393.
2 G enera! M iring C orporation v . CA, G .R. N o. 146728, Feb. 11,2004.
3 H acienda Fatim a v. N ational Federation o f Sugarcane W orkers - Food and G eneral Trade. G .R . No. 149440, J a n 28,2 00 3 .

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(1) Dismissals;
(2) Threats;
(3) Questioning and interrogation;
(4) Offers and Promises;
(5) Espionage and surveillance;
(6) Interference in intra-union affairs;
(7) Other forms of interference, restraint or coercion.

3.1. DISMISSALS.

Dismissals that are occasioned by employer’s interference, restraint or

coercion are always ULP.1 The following acts involving dismissal of employees
have been judicially declared ULPs:

(a) Dismissal of employees after they have organized their union and
about to start with the effort at having it certified as their SEBA .2
Consequently, to dismiss union members in order to ensure tire defeat
of the union in the certification election is ULP .34

(b) Dismissal of union officers which threatens the existence o f the union
4
constitutes union-busting, an act o f ULP.

(c) Dismissing the union officers and members on the ground of losses
about two years after it has allegedly sustained them and after the
dismissed officers and members became more militant when they
demanded improvement in their working conditions.5
(d) Effecting discriminator)' dismissal where only unionists were
permanently dismissed, even where business conditions justified a lay­
off of die employees.6
(e) The mass lay-off or dismissal o f 65 employees due to retrenchment
absent any losses or financial reverses. This kind of retrenchment
constitutes a lame excuse and a veritable smokescreen of the
employer’s scheme to bust the union and thus unduly disturb the
employment tenure of the employees concerned .7

1 LitexE m ptoyeesA ssodationv. C R G.R. N o. L-39154, SepL 9.1 9 82 .

7 Samahan ng M anggagawa sa B andoTnolM LC v. N LRC, G .R . N o. 126195, J iiy 17,1997.
3 Samahang M anggagawa ng V ia M are v . N oriel, G.R. N o. L-52169, June 3 0,1 9 8 0 ,9 8 SCRA 507.
4 See A rticle 278 (263(e)] w hich pertinently provides in p a rt *xxx Il]n case o f dism issal from em ploym ent o f union o fice rs duly
elected in accordance w ith the union constitution and by-law s, w hich m ay constitute union busting, w here the existence o f
ffie union is threatened, the 15-day coofng-off period s h a l n et apply and the union m ay take action im m ediately.’ S ee also
Colegio de San Juan de le tra n v. Association o f Em ployees and Faculty o f Letran, G .R . N o. 141471, S e p t 18,2000.
5 Oceanic A ir Products, Inc. v. CIR, G .R. No. L-18704, Jan. 3 1,1963.
6 San fi^ u e l C orporation v . NLRC, G .R No. 108001, M arch 15,1996.
7 People's Bank and Trust C o. v. P eople's Bank and T rust C o. Em ployees U nion, G .R . N o. L-39603, Jan. 13,1976.

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(f) Dismissal occasioned by the refusal of the employees to give up their

union membership, which dismissal was under the pretext o f
retrenchment due to reduced dollar allocations.1
(g) Dismissal of an employee because of his act of soliciting signatures for
the purpose of forming a union .2
(h) Dismissal o f employees because of their refusal to resign from their
union and to join the union favorable tc the employer, the latter’s
formation having been aided and abetted by the company .3
(i) Dismissal o f employees because o f their act of engaging in valid and
legal concerted union activities.4
(j) Dismissal occasioned by the implausible and unproved allegation of
overpricing o f needles the employee was ordered to buy and for
alleged tampering o f receipts.5
(k) Dismissal of an employee who had worked for 19 years because he
had filed money claims against the employer.6
(l) Terminating teachers who have attained permanent status because o f
the employer’s apprehension that there might be a future strike in the
school. This is an unwarranted interference with the rights o f workers
to self-organization and to engage in concerted activities.

3.2. T H R EA TS.

The mere issuance of a threat by the employer, even if not actualized, may
already constitute ULP. Examples are as follows:

(a) Threatening employees with loss o f jobs or benefits or promotional

opportunities if they join or vote for a union or engage in protected
concerted activity.7
(b) Threatening to close die plant if employees select a union to represent
them 8or to discourage union activity or support.9
(c) Stating to employees that union bargammg is futile or a strike is
inevitable.10

« M anila P e n d C o. v. C R , G .R . No. 1-16903, A ug. 3 1 ,1 9 6 5 ,1 4 SCRA 955.

2 Judric C a rving C orporation v . In c io n g .G R N o. 1-51494, Aug 1 9,1 98 2 ,1 1 5 SCRA 887.
3 P rogressive D evelopm ent C orporation v. C IR G A . N o. L-39546, Nov. 2 4,1 97 7 , ft ) SCRA 434.
* RepubSc S avings B m k v. C IR , G .R. No. L-20303, Sept. 2 7.1 96 7 ,2 1 SCRA 226.
5 Kapisanan ng M anggagawa sa Cam ara Shoes v C am ara Shoes, G .R . No. L-50985, Jan. 30,1 98 2 .
6 S ibal v . N otre Dam e o f G reater M ania, G .R No. 75093, Feb. 2 3,1990.
7 See *Em ployerAJnion R ights and O bligations,’ U nited S lates’ N ational Labor R elations Board (N LR B), at
h lp s i/A w w jilrb .g o v/^h ts-w e -p ro te ct/e m p io ye fm o rM ig h ts-a rxkb ig a tio n s, Last accessed: O ctober 0 9,2016.
8 Id.
9 M ackinac C enter for P ublic P olicy, 'T h e N ational Labor R elations Board and ’U n fa f Labor P ractices’ , by R obert P. Hunter.
» Id.

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(d) Threatening the union recruiter with bodily harm when he refused to
yield the demand of the employer to surrender the union affiliation
forms.1

3.3. Q U ESTION IN G AND IN T ER R O G A T IN G EM PLO Y EES.

The act may also amount to ULP even if it is merely in the form o f a
question. The following acts well constitute ULP under this classification:

(a) Interrogating its employees in connection with their membership in

the union or their union activities which hampers their exercise o f free
choice.2
(b) Questioning employees about their union sympathies or activities in
circumstances that tend to interfere with, restrain or coerce employees
in the exercise of their rights would be treated as ULP .3

3.4. OFFERS AND PROMISES.

The employer’s act of making an offer or promise of certain favors or

benefits may also constitute as ULP. The following are illustrative o f this kind:
(a) Promising or implementing employee wage increases to discourage
their union activity or support 4
(b) Offer of reinstatement and attempt to “ bribi' the strikers with
“comfortable c o t s “free coffee and occasional movies',' “overtime pay” for work
performed in excess o f 8 hours and offer o f “arrangements" for their
families so they would abandon the strike and return to work,
constitute strike-breaking which is a ULP .5
(c) Offer of Christmas bonus to all “loyal' employees made shortly after
the request by the union to bargain; wage increase given for the
purpose of mollifying employees after the employer has refused to
bargain with the union or to induce strikers to return to work;
employer’s promise of benefits in return for the striking employees’
abandonment of their strike; and the employer’s statement made about
6 weeks after the strike started, to a group o f strikers in a restaurant
that if the strikers returned to work, new benefits such as
hospitalization, accident insurance, profit-sharing and a new building
to work in, will be given to them .6

' Velez v. PAV W atchm en's U nion, G .R. No. L-12639, A pril 2 7,1 96 0 ,1 0 7 P h i 689.
2 Sooty’s Departm ent Store v. MicaSer. G R . No. L-8116, A ug. 25,1956.
3 Id.
* Mackinac Center kx P ublic P olicy, T h e National Labor R elations Board and 'U n fa ir la b o r P ra ctices*, by R obert P. H unter
5 Insular Life Assurance C o., L td , Em ployees Association v. Insular Life A ssurance C o. G .R. N o. L-25291, Jan. 3 0,1 97 1 .
6 Id

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 C hapter. Five 493
LABOR. RELATIONS

(d) Announcement by the employer of benefits prior to the conduct of a

certification election, intended to induce the employees to vote against
the union .1

3.5. ESPIO N A G E A ND SU RV EILLA N C E.

The act o f spying and surveilling o f employees to determine their

involvement and participation in union organizing, formation and concerted
activities is ULP. Examples are as follows:

(a) When management conducts espionage or surveillance o f dte meetings

and activities o f the union. It is illegal since it shows the opposition o f
die employer to the existence o f the union, and die furtive nature of
his activity tends to demonstrate spectacularly the state of his anxiety.2

(c) Requesting employees to report on die union activity o f others .34

3.6. IN T E R F E R E N C E IN IN T R A -U N IO N D IS P U T E .

The act of management in meddling with purely internal concerns, issues

and affairs of the union is ULP. For example, petitioners, in De la Salle University*
were declared liable for ULP for which they were ordered to pay respondent union
nominal damages in the amount o f P250,000 and attorney's fees in the amount o f
P50,000 because of their act o f temporarily doing the following at the height of an
intra-union dispute involving the election o f officers o f respondent union:

(1) Establishing a savings account for the union where all collected union
dues and agency fees will be deposited and held in trust; and
(2) Discontinuing normal relations with any group within the union
including the incumbent set o f officers.

The said act of petitioners was precipitated by the request o f one of the
contending groups in respondent union for them “ to please put on escrow all
union dues/agency fees and whatever money considerations deducted from salaries
o f concerned co-academic personnel until such time that an election o f union
officials has been scheduled and subsequent elections has been held.” Petitioners’
act described above drew respondent union to file a complaint against them for
ULP, claiming that they unduly interfered with its internal affairs and discriminated
against its members. The Supreme Court agreed with respondent union’s
contention. It thus found the said act of petitioners constitutive o f interference, an
unfair labor practice, because at the time they adopted said action, a valid and
existing CBA had been entered into by the parties. It thus behooved petitioners to

1 R e Louisiana P lastics, Inc. 173 NLRB N o. 2 18; NLRB v. Exchange Parts C o., 375 U. S. 405.
> V 51A C JS S ec. 382, p. 278.
3 M ackinac C enter for P ub ic P ofcy, T ie N ational Labor R elations Board and 'U n fa ir Labor P ractices'*, by R obert P. H unter,
published on Aug. 24,1999, online version a t httpsyAvvvw m ackinac.org/2317; Last accessed: February 14,2017.
4 D e la S afe U niversity v. D e la S ale U rw e rsity Em ployees A ssociation, G .R N o. 177283, A p ril 7,2 0 09 .

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observe the terms and conditions thereof beating on union dues and
representation. It is axiomatic in labor relations that a CBA entered into by a
legitimate labor organization and an employer becomes the law between the parties,
compliance with which is mandated by express policy o f the law.

In Ren Transport Corp. v. NLRC,1 petitioner’s failure to remit the union

dues it has checked-off to private respondent union, SMART,2 the incumbent
SEBA, was declared an act of interference with the exercise of the employees' right
to self-organize and therefore ULP under Article 259(a) [248(a)].3 The failure to
remit the union dues to SMART because o f the disaffiliation by some o f its
members who organized another union, RTEA ,4 and the voluntary recognition
extended to RTEA, were clear indications o f interference with the employees' right
to self-organization. These acts were ill-timed in view o f the existence of a labor
controversy over membership in the union. Such supposed disaffiliation and
voluntary recognition of RTEA are but a lame excuse that cannot validate diose
acts.

But the foregoing cases should be contrasted with the earlier case o f
Arellano University,5 where the act of the university in withholding the union dues
and death benefits was not considered ULP because it was made upon the request
of union members in the light of their gripes against the union and its officers. Tire
university even deposited the amounts corresponding to the union dues and death
benefits with the DOLE where the parties could settle the issues among
themselves. The university, therefore, cannot be faulted for ULP as it in good faith
merely heeded the request of union members.

3.7. O T H E R FORMS OF IN T E R F E R E N C E , R ESTR A IN T OR

CO ERCIO N C O N STITU TIN G ULP.

There are other forms of ULP by means o f interference, restraint or

coercion, such as the following:
(a) Indirectly forcing the employees to join another labor union as a
condition for their re-admission for participating in a strike.6
(b) Instructing an employee not to affiliate or join a union .7
(c) Refusal of the employer to reinstate strikers who voluntarily and
unconditionally offered to return to work but did not accept the new

' G R Nos. 188020 & 1882532. June 27,2016.

2 Samahan ng M anggagawa sa Ren Transport (SMART).
3 This was cited by tie Supreme C ourt in this decision as A rticle 258 (a) and not A rticle 259(a) w hich is the renum bering
m ade by the DOLE Secretary h her Departm ent A dvisory No. 01, S eries o f 2015 (R enum bering of the Labor C ode o f the
P hilippines, as Am ended), issued on July 21,2015.
4 Ren Transport Em ployees Association (RTEA).
5 A rellano U niversity Em ployees and W orkers Union v. CA, G .R . N o. 139940. S e p t 19,2006.
6 M adeod & Com pany o f the P hils, v. P rogressf/e Federation o f Labor, G R. No. L-7887, M ay 3 1,1955.
r V sayan Stevedores v . CIR, G .R. No. L-21696, Feb. 2 5 ,1 9 6 7 ,1 9 SCRA 426.

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LABOR. RELATIONS

discriminatory conditions imposed against them because o f their

union membership or activities.1
(d) The act o f the purchasers of a business establishment in replacing the
union members who were negotiating a CBA with the former owner
at the time o f the sale.2
(e) The grant o f concessions and privileges during the pendency o f a
certification election case to members o f one o f the unions
participating therein .3
(f) Suspending union officers who attended the hearing in the petition
for certification election they filed/
(g) Ceasing operation due to the establishment of the union .5
(h) Simulated sale in bad faith o f business resorted to in order to get rid
o f the employees who were members o f the union .6
(i) Engaging in capital reduction to camouflage the fact that it had been
making profit, in order for it to be able to effectuate the mass lay-off
of union members .7
(j) The retrenchment of employees who belong to a particular union,
with no satisfactory justification why said employees were singled
out .8
(k) Asking the employees to disclose the names of the members o f the
union .9
(l) Putting on "rotation" only the alleged members of the union .10
(m) Compelling employees to sign an instrument indicating that the
employer observed die labor standards provisions of the law when he
might have not, together with the act of terminating or coercing
those who refuse to cooperate with the employer’s scheme."
(n) The cessation of a company’s operations shordy after the
organization of a labor union and die resumption o f business barely a
month after, gives credence to the employees’ claim diat the closure
was meant to discourage union membership and to interfere in union
activities.12
(o) Provoking the union officers into a fight by two recendy hired
employees pursuant to a strategy of the company designed to provide

t C rom w ell C om m ercial Em ployees and Laborers U nion v. C IR , G .R No. L-19778, S e p t 30,1964.
2 Na$onal Labor U nion v. C IR G R N o. L-31276, S e p t 9 ,1 9 82 .
3 P hilippine C harity Sweepstakes O ffice v. The A ssodafion o f Sw eepstakes S ta ff P ersonnel, G R No. L-27546, Ju ly 16,1982.
4 O ceanic Pharm acal Em ployees U nion v. In d o ng , G R No. L-50568, N o /. 7 ,1 9 7 9 .
5 C afm ekxaft C orporation v. N LRC, G R Nos. 90634-35, June 6 ,1 9 90 .
6 M oncada B ijon Factory v. C IR , G R No. L-18065, M arch 30,1962.
7 M adrigal & C o.. Inc. v. Zam ora, G .R . No. L-48237, June 3 0 ,1 9 8 7 ,1 5 1 SCRA 355.
6 Bataan S hipyard and E ngineering C o., Inc. v . N LRC, G .R N o. 78604, M ay 9 ,1 9 8 8 .
9 Sam ahan ng M anggagawa sa Bandofoo-LM LC v. NLRC, G R No. 126195, Ju ly 1 7,1 99 7 ,2 7 5 SCRA 633.
10 Sam ahan ng M anggagawa sa B andofino-LM C v. NLRC, supra.
11 M abeza v. NLRC G .R N o. 118506, A p ri 18,1997,271 SCRA 670.
12 M e-Shum C orporation v. M e-Shum W orkers U nion - FSM, G .R N o. 156292, Jan. 11,2005.

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an apparently lawful cause for their dismissal. The dismissed

employees have not figured in similar incidents before or violated
company rules in their many years with the company.*
1
(p) Transferring, laying off or assigning employees more difficult work or
tasks, or otherwise punishing them because they engaged in
organizing and funning a union .2

II.
YELLOW DOG CONTRACT v

1. GENERAL DESCRIPTION OF A YELLOW DOG CONTRACT.

Paragraph [b]3 of Article 259 [248] describes what is commonly known as
“yellow dog contract." It is one which exacts from workers as a condition of
employment that they shall not join or belong to a labor organization, or attempt to
organize one during their period o f employment or that they shall withdraw
therefrom in case diey are already members o f a labor organization.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member o f a labor
organization;
(2) A promise by the employee that he will not join a union; and
(3) A promise by the employee that upon joining a labor organization, he
will quit his employment.

The act of the employer in imposing such a condition constitutes ULP

under Article 259(b) [248(b)] of the Labor Code. Such stipulation in the contract is
null and void.

III.
CONTRACTING OUT OF SERVICES AND FUNCTIONS

1. GENERAL RULE.

Paragraph [c]4of Article 259 [248] describes when the act o f the employer
of contracting out of services or functions being performed by SEBA members is
considered ULP.

' Visayan B cyd e M anufacturing C o , Inc. v. National Labor U nion and C1R, G .R. No. L-19997, M ay 1 9 .1 9 6 5 ,1 4 SCRA 5.
1 T & H S hopfitlers C orp/G in Queen Corp v. T & H S hopfitters C orp. G .R . No 191714, Feb. 2 6,2014. .
3 ‘ (b) To require as a condition o f em ploym ent that a person or an em ployee sh a l not jo in a la bo r organization o r shall
w ithdraw from one to w hich he b ekxigs(.r
4 "(c) To contract out services o r functions being perform ed by union m em bers when such w il interfere w ith, restrain o r coerce
em ptayees in the exercise o f their rights to seff<yg3nizatjon[ p

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As a general rule, the act o f an employer in having work or certain

services or functions being performed by SEBA members contracted out is not per
se ULP. This is so because contracting-out of a job, work or service is clearly an
exercise by the employer o f its business judgment and its inherent management
rights and prerogatives. Hiring o f workers is within the employer’s inherent
freedom to regulate its business and is a valid exercise o f its management
prerogative subject only to special laws and agreements on the matter and the fair
standards of justice. The employer cannot be denied the faculty o f promoting
efficiency and attaining economy by a study of what units are essential for its
operation. It has the ultimate right to determine whether services should be
performed by its personnel or contracted to outside agencies.1

2. W HEN CONTRACTING-OUT BECOMES ULP.

It is only when the contracting out o f a job, work or service being

performed by SEBA members will interfere with, restrain or coerce employees in
the exercise of their right to self-organization that it shall constitute ULP.23Thus, it
is not ULP to contract out work for reasons o f business decline, inadequacy of
facilities and equipment, reduction o f cost and similar reasonable grounds. The
court usually refuses to substitute its judgment for that o f the business decision of
the employer in ascertaining the validity or legality o f the motivation for the
contracting out of services.

In Shell Oilp the Court ruled that the contracting out o f security services
to an outside private security agency to undertake the work of the company security
guards who were re-assigned to other sections of the company, is violative o f the
existing CBA. It could have been purely an exercise o f management prerogative on
the part of the company if it were not bound by what was stipulated in the CBA to
continue to maintain a security guard section at least during the lifetime o f the
agreement.

Another instance where the employer was declared guilty o f ULP

consequent to contracting out o f services is Digital Telecommunications.4 In this case,
petitioner closed Digiscrv, a department o f the company, to outsource its call
center operation. While losses may have been a valid reason to close down its
operations in the light o f the decline in the volume o f transaction of operator-
assisted call services as supported by Financial Statements for the years 2003 and
2004, during which Digiserv incurred a deficit of P163,624.00 and P164,055.00,
respectively, it was, however, made in bad faith. In declaring petitioner guilty of
ULP, the Supreme Court stated that the closure of Digiserv was made after the
DOLE Secretary had issued the first assumption order to enjoin an impending

1 M ania E lectric Com pany v. Q uisum bing, G .R . N o. 127598, Jan. 27,1999.

i A rticle 2259(c) (248(c)], Labor C ode; Section 6 (f], D epartm ent O rder No. 18-02. S eries o f 2002, [Feb. 21,2002).
3 S hell OS W orirers Union v. Shed O i Com pany o f the P hfppines,LW .,G .R N o. 1-28607, M a y 3 1 ,1971,39 SCRA 276,292.
4 D igital Telecom m unications P hilp p in e s, Inc. v . D igitel Em ployees U nion (D EU ), G R N os. 1849034) 4 , O ct 1 0 ,2 0 1 2

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strike. When Digiserv effected the dismissal o f the affected employees, the union
filed another notice of strike. Significandy, the DOLE Secretary ordered that the
second notice of strike be subsumed by the previous assumption order. Thus, it
was held that bad faith was manifested by the timing o f the closure of Digiserv and
the rehiring of some employees to Interactive Technology Solutions, Inc. (I-tech), a
corporate arm of Digitel. The assumption order directs employees to return to
work and the employer to reinstate the employees. The existence o f the assumption
order should have prompted Digitel to observe the status quo. Instead, Digitel
proceeded to close down Digiserv. The DOLE Secretary had to subsume the
second notice of strike in the assumption order. This order notwithstanding,
Digitel proceeded to dismiss the employees.

The timing of the creation o f I-tech is dubious. It was incorporated on 18

January 2005 while the labor dispute within Digitel was pending. I-tech’s primary
purpose was to provide call center/customer contact service, the same service
provided by Digiserv'. It conducts its business inside the Digitel office at 110 E.
Rodrigue^ Jr. Avenue, Bagumbayan, Quezon City. The former head of Digiserv, Ms.
Teresa Taniega, is also an officer of I-tech. Thus, when Digiserv was closed down,
some of the employees, presumably non-union members, were rehired by I-tech.
Thus, die closure of Digiserv pending the existence o f an assumption order
coupled with the creation of a new corporation performing similar functions as
Digiserv leaves no iota of doubt that the target of the closure are the union
member-employees. These factual circumstances prove that Digitel terminated the
services o f the affected employees to defeat their security of tenure. The
termination of service was not a valid retrenchment; it was an illegal dismissal of
employees. The Supreme Court ruled that the closure o f Digiserv to outsource its
operations to I-tech constitutes ULP under Article 259(c) [248(c)] of the Labor
Code. At the height of the labor dispute, occasioned by Digitel’s reluctance to
negotiate with the Union, I-tech was formed to provide, as it did provide, the same
services performed by Digiserv, the Union members’ nominal employer.

The principal issue in BPIEU-Davao Gty-FUBU v. BPI,*1is whether or not

the act of respondent BPI to outsource the cashiering, distribution and
bookkeeping functions to BPI Operations Management Corporation (BOMQ is in
conformity with the law and the existing CBA. Particularly in dispute is the validity
of the transfer of twelve (12) former FEBTC employees to BOMC, instead of
being absorbed in BPI after the corporate merger. Petitioner union claims that a
union shop agreement is stipulated in the existing CBA. It is unfair labor practice
for employer to outsource the positions in the existing bargaining unit, citing the
case of Shell Oil}

’ BPI Em ployees Union-Davao C ity -FUBU (BPIEU-Davao Crty-FUBU) v . Bank o f the PhiSppine islands (BPI), G .R . No.
174912, July 24,2013.
1 S hell O il W ofkefs Union v. Shell 01 Com pany o l the P hilippines, L td ., G R No. L-28607, M ay 3 1 ,1 9 7 1 ,3 9 SCRA 2 76 ,29 2 .

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A finding o f ULP necessarily requires the alleging party to prove it with

substantial evidence. Unfortunately, the union failed to discharge this burden.
Consequently, in ruling that respondent BPI did not commit ULP, the Supreme
Court cited die following ratiocinations:
(1 ) The union’s reliance on the Shell Oil case is misplaced. The rule now is
covered by Article 274 [261]1 o f the Labor Code. Clearly, only gross violations of
the econom ic provisions o f the CBA are treated as ULP. Otherwise, they are mere
grievances. In the present case, the alleged violation o f die union shop agreement
in the CBA, even assuming it was malicious and flagrant, is not a violation of an
economic provision in the agreement.
(2) The provisions relied upon by the union were those articles referring
to the recognition o f die union as the sole and exclusive bargaining representative
of all rank-and-file employees, as well as the articles on union security, specifically,
the maintenance o f membership in good standing as a condition for continued
employment and the union shop clause. It failed to take into consideration its
recognition of the bank’s exclusive rights and prerogatives, likewise provided in the
CBA, which included the hiring o f employees, promotions, transfers, and
dismissals for just cause and the maintenance o f order, discipline and efficiency in
its operations.
(3) The union, however, insists that jobs being outsourced to BOMC were
included in the existing bargaining unit, thus, resulting in a reduction of a number
of positions in such unit. The reduction interfered with the employees’ right to self­
organization because the power o f a union primarily depends on its strength in
number. It is incomprehensible how the “reduction o f positions in the collective
bargaining unit” interferes with the employees’ right to self-organization because
the employees themselves were neither transferred nor dismissed from the service.
BPI stresses that not a single employee or union member was or would be
dislocated or terminated from their employment as a result o f the Service
Agreement Neither had it resulted in any diminution o f salaries and benefits nor
led to any reduction o f union membership. As far as the twelve (12) former
FEBTC employees are concerned, the union failed to substantially prove that their
transfer, made to complete BOMC’s service complement, was motivated by ill will,
anti-unionism or bad faith so as to affect or interfere with the employees’ right to
self-organization.
(4) It is to be emphasized that contracting out o f services is not illegal perse.
It is an exercise o f business judgment or management prerogative. Absent proof
that the management acted in a malicious or arbitrary manner, die Court will not
interfere with the exercise of judgment by an employer. In this case, bad faith

' A rticle 274 [261] is entitled ‘ Jurisdiction o f V oluntary A rb itra to rs a Panel o f V oluntary A rbitrators’ w here it s provided
p e rin e n fy as follow s: "xxx A ccordingly, vio lation s o f a C dlectrve B argaining A greem ent except Ihose w hich are gross in
character, shall no longer be treated as u nfa ir labor practice and sh a t be resolved as grievances under the C ollective
B argaining A greem ent F a purposes o f this a rticle , gross vio lation s o f C ollective Bargaining Agreem ent sh a t m ean flagrant
andfor m afcious refusal to com ply w ith the econom ic provisions o f such agreem ent’

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cannot be attributed to BPI because its actions were authorized by CBP Circular
No. 1388, Series of 1993 issued by the Monetary Board of the then Central Bank of
the Philippines (now Bangko Sentral ng Pilipinas).

IV.
COMPANY UNION

1. COMPANY IN ITIA TED , D O M IN A TE D OR ASSISTED U N IO N .

Paragraph [d]1 of Article 259 [248] considers it a ULP to initiate,

dominate, assist or otherwise interfere with the formation or administration o f any
labor organization, including the giving of financial or other support to it or its
organizers or supporters. Such union is called “company union” as its formation,
function or administration has been assisted by any act of the employer defined as
ULP under the Labor Code.2

2. A PREJUDICIAL Q U ESTIO N .

While generally, the pendency of a ULP case filed against a labor

organization participating in the certification election does not stay the holding
thereof,3 however, the pendency of a formal charge of company domination against
one of the unions which is participating in the certification election is a prejudicial
question that bars the holding thereof until its final resolution .4

3. SUSPENSION OF CBA FOR A LON G PERIOD .

If warranted by circumstances, a CBA may be suspended for more than

the usual 5-year lifetime thereof. During the period of suspension, the parties may
mutually agree that the SEBA’s status shall continue to be recognized as such. The
question is, does this prolonged recognition tantamount to making the SEBA
company-dominated? This poser was answered in the negative in Rivera v. Espiritu,5
where the CBA between the management of Philippine Airlines (PAL) and the
SEBA, Philippine Airlines Employees Association (PALEA), with expiry date of
September 30,2000, was mutually agreed by die parties to be suspended until 2008,
to prevent the closure of PAL because of severe financial losses. It was accordingly
stipulated in the agreement of suspension that:

“a. PAL shall continue recognizing PALEA as the duly

ccrtified-bargaining agent of the regular rank-and-file ground employees
of the Company;”

' ’ (d) To initiate, dom inate, assist o r otherw ise interfere w ith the form ation or adm inistration o f any la bo r organization, including
the giving o f financial o r other support to it o r te organizers o r supporters! f
2 A rticle 212(i), Labor Code; Secfion 1 (k]. Rule I, Book V , R ules to Im plem ent the Labor Code.
3 Barrera v. C IR , G .R . No. L-32853, S e p t 25.1 98 1 .1 0 7 SCRA 596.
4 United CMC W orkers Union v. Bureau o f Labor R elations, G .R . N o. 1-51337, M arch 2 2,1984.
5 G R No. 135547, Jan. 23,2002.

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Petitioners allege that the 10-year suspension o f the CBA under the PAL-
PALEA agreement virtually installed PALEA as a company union for said period,
amounting to ULP, in violation o f Article 265 [253-A] o f the Labor Code
mandating that a SEBA serves for five years only. The Supreme Court, however,
disagreed and pronounced that the PAL-PALEA agreement dated September 27,
1998, is a valid exercise o f the freedom to contract. Under the principle of
inviolability o f contracts guaranteed by die Constitution, the contract must be
upheld.”

4. ILLU STR A TIV E CASES O F COM PAN Y U N IO N .

In Kapisanan v. Hamilton} there were two unions existing in the company,

namely: Kapisanan ng mga Manggagawa ngAlak (NAFLU), and respondent Hamilton
Workers' Union, (Workers' Union). The company preferred the latter union over
the former. It asked the president o f the former to dissolve NAFLU and when he
refused, he was dismissed. Subsequendy, some members o f NAFLU resigned
therefrom and joined the Workers' Union because otherwise they would be
dismissed by the company and those who remained affiliated with NAFLU were
allowed to work only two (2) days a week. Later, 52 employees who were members
of NAFLU were also terminated for refusing to join die Workers’ Union. Because
of these circumstances, the Supreme Court declared that the Workers’ Union is a
company union.

In Oceanic A ir Products v. CIR} several employees were forced by company

officers to join a union. No member of the union had been dismissed despite the
implementation of a retrenchment policy which resulted in the dismissal o f other
employees who were officers and members o f another union. After die dismissals,
the company hired several laborers. All these circumstances indicate that die union
is company-dominated.

In Philippine American Cigar v. Philippine American Cigar and Cigarette

Manufacturing Co.? it was pronounced that one indication diat die union is
company-dominated is the act of the employer in secunng authorization cards from
employees and by immediately granting the union exclusive recognition as a
bargaining agent and entering into a contract dierewith although it was not the duly
authorized representative o f the employees. Another is when the union approached
management rather than the employees in getting the union organized and
management extended the requested assistance to the union. The acts o f the
company in soliciting membership and allowing union activities to be held during
working time and coercing employees to join the union under threat of dismissal or
demotion are clear indicia of company domination.*3

' Kapisanan Ng M ga M anggagawa Ng A lak v. H am ilton D istille ty C om pany, G .R . N o. 1-18112, O c t 3 0 ,1 9 6 2 ,6 SCRA 367.
J G il N o. 18704, Jan. 3 1 ,1 9 6 3 ,7 SCRA 208.
3 P hilippine A m erican C igar and C igarette Factory W orkers Independent U nion v P hifppine Am erican C igar and C igarette
M anufacturing C o., G .R. N o. 1-18364, Feb. 2 8 .1 9 6 3 ,7 SCRA 375.

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In Davao Fret Workers Front v. CIR,1 die following acts o f respondent

employer, 7-UP Bottling Company of the Philippines at its Davao branch, were
cited as indicia that the union was company-dominated: It refused to bargain with
petitioner union; it interfered widi and coerced its members to vote for its hand­
picked candidate as president of petitioner union; it required the members of
petitioner union to join the Seven-Up Employees Association, a newly organized
labor union obviously sponsored and favored by it widi which it immediately
executed a CBA granting the members of such new union fringe benefits while
refusing to bargain with petitioner union regarding the renewal of their just-expired
contract and instead foisting upon petitioner union its unilateral version of a CBA;
and it tiled a notice of lock-out and refused entry to members o f petitioner union
when the latter refused to accept its unilateral contract version. These union-
busting and discriminatory acts led petitioner union justifiably to declare a strike
against respondents’ unfair labor practices.

V.
THREE (3) SEPARATE LEGAL CONCEPTS
TREATED IN PARAGRAPH (E), ARTICLE 259 [248]

1. T H R E E SEN TEN C ES, T H R E E SEPARATE C O N C E PT S.

Paragraph (e) of Article 259 [248] states:

“(e) To discriminate in regard to wages, hours of work and

other terms and conditions of employment in order to encourage or
discourage membership in any labor organization. Nothing in this Code
or in any other law shall stop the parries from requiring membership in
a recognized collective bargaining agent as a condition for employment,
except those employees who arc already members of another union at
the rime of the signing of the collective bargaining agreement.
Employees of an appropriate bargaining unit who are not members of
die recognized collective bargaining agent may be assessed a reasonable
fee equivalent to the dues and other fees paid by members of the
recognized collective bargaining agent, if such non-union members
accept the benefits under the collective bargaining agreement Provided,
diat the individual authorization required under Article 250 [241],
paragraph (o) of this Code shall not apply to the non-members of the
recognized collective bargaining agent[.]”

The three (3) sentences comprising above paragraph [e] treat of three (3)
separate labor law concepts,2 to wit.

' G .R. No. L-29356, O ct. 3 1,1 97 4 ,6 0 SCRA 408.

2 A rticle 259(e) [248(e)] o f Die Labor Code is substantially based on a U.S. law (S ee N ational Labor R elations A c t 29 U .S.
Code § 158 - U nfair labor practices, Sec. 8(a) (3) thereof).

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1. D iscrim ination. - This is found in the first sentence thereof which

considers as ULP, to discriminate in regard to wages, hours o f work
and other terms and conditions o f employment in order to encourage
or discourage membership in any labor organization.

2. U nion security clause. - This is embodied in the second sentence

thereof which states that “ (n)othing in this Code or in any other law
shall stop the parties from requiring membership in a recognized
collective bargaining agent as a condition for employment, except those
employees who are already members o f another union at the time o f
the signing of the collective bargaining agreement.”

3. Agency fee. - This is described in the third sentence thereof in that

“(e)mployees o f an appropriate bargaining unit who are not members
o f the recognized collective bargaining agent may be assessed a
reasonable fee equivalent to the dues and other fees paid by members
o f the recognized collective bargaining agent, if such non-union
members accept the benefits under the collective bargaining agreement,
provided, that the individual authorization required under Article 251
[242], paragraph (0) o f this Code shall not apply to the non-members of
the recognized collective bargaining agent”

Except for Agtnty Fee which has been earlier discussed under the topic
“ D. RIG H TS O F LABOR O R G A N IZ A T IO N S ,” the first two of the above
concepts are discussed in details below.

V-1.
DISCRIMINATION

1. C O N C EPT .

Discrimination has been defined as the failure to treat all persons equally
when no reasonable distinction can be found between those favored and those not
favored.1 There is discrimination only when one is denied privileges which arc
granted to others under similar conditions and circumstances.2Thus, before a claim
for discrimination can prosper, it must be established that first, there is no
reasonable distinction or classification that can be obtained between persons
belonging to the same class; and, second, persons belonging to the same class have
not been treated alike.3 It must be stressed, however, that discrimination perse is not

1 Black's Law D ictjo rn ry, 6th E dition, p. 467; S ugue v. Trium ph International (P h ils ), Inc., G .R . N os. 164604 & 164784, Jan
30,2009; P ottuguez v. G SIS Fam ily Bank (Com savings B ank], G R N o. 169570, M arch 2 ,2 0 0 7 . citing P hilippine Am erican
lie G en. Insurance Co. v. G ram aje, G R N o. 156963, New. 1 1 ,2 0 0 4 ,4 4 2 SCRA 274,284-285.
2 Cattex [P h iip p ine s], Inc. v. P hiippine Labor O rganization, G R N o. L-5206, A pril 2 9 ,1 9 5 3 ,9 2 P h i. 1014.
2 W ise and C o.. Inc v W ise and C o., Inc. Em ployees U nkxvN A TU , G R No. 87672, O c t 1 3 ,1 98 9 ,1 7 8 SCRA 536,539.

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unlawful. Further, there can be no discrimination where the employees concerned

are not similarly situated.1

2. DISCRIM INATION AND CLASSIFICATION, D IS T IN G U IS H E D .

Discrimination should be distinguished from classification. While

discrimination is considered ULP, classification is not because it merely
differentiates the employees in accordance with their respective jobs and accords
them the appropriate levels of pay or benefits due them by reason thereof.

3. COVERAGE OF PR O H IB IT IO N .

What is prohibited as ULP under the law is to discriminate in regard to

wages, hours of work, and other terms and conditions of employment in order to
encourage or discourage membership in any labor organization.2

In the following cases, the employer was declared guilty of discrimination:

(1) Manila Pencil? where it was ruled that even assuming that business
conditions justify the dismissal of employees, it is ULP o f the employer to dismiss
permanendy only union members and not non-unionists.

(2) Manila Railroad? where the non-regularization o f long-time employees

because of dicir affiliation with the union while new employees were immediately
regularized was declared an act of discrimination.

(3) AHS/Philippines? where the employer transferred the union president

from die main office in Manila to Cebu at the time when the union was still being
organized. It was held that the uneven application of its marketing plan resulting in
the said transfer of the union president is patendy an act o f discrimination
constitutive of ULP.

4. DISMISSING ONLY A FEW BUT N O T ALL O F T H E ERR A N T

EMPLOYEES, E FFEC T .

Employees have no right to continue working upon their own terms while
rejecting the standards desired by their employer. It is not ULP for the employer to
dismiss employees who engage in slowdown. This holds true even if the employer
dismissed only some of the employees who participated in the slowdown where
such dismissal is made to serve as an example to stop the slowdown and not for
discriminatory reasons.6

Id.
A rticle 259(e) (248(e)], Labor Code.
ManSa P end C o , Inc. v. C IR , G il No. L-16903, Aug. 3 1 .1 9 6 5 ,1 4 S C R A 955.
M ania Railroad Co v. Kapisanan ng mga M anggagawa sa M ania R ailroad C o , G .R . N o. L-19728, July 30,1964.
AHS/PhSpphes Em ployees Union v. NLRC, G .R No. 73721, M arch 30,1987.
48 Am Jur 2d 937.

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5. D IS C R IM IN A T IO N IN G R A N T O F BONUS.

In Philippine Blooming Mills} a case decided by the NLRC, the employer

reserved its right under the CBA to grant better bonus to those who are
exceptionally good or efficient. It was held that it is not discriminatory or ULP for
said employer to give such bonus to non-union members, it being clear that many
union members were also given the bonus and it was purely a valid exercise of
management prerogative.

But in Manila Hotel} it was enunciated that there was unjust discrimination
when management departed from its previous practice o f dividing equally to all
employees certain percentage o f its net profit as Christmas bonus - giving only to
its employees in the operation where there was no union and not giving any to its
unionized departments.

V-2.
UNION SEC U R ITY CLAUSE

1 . COV ERA GE AND E X C E P T IO N S .

The stipulation in a CBA based on the second sentence o f paragraph [e] o f
Article 259 [248J, commonly known as the "union security clause”, allows the parties
thereto - the employer and die SEBA - to enter into an agreement compulsorily
requiring membership o f the covered employees in the SEBA which successfully
negotiated the CBA, as a condition for their continued employment The only
exceptions to this rule where compulsory membership in the SEBA cannot be
enforced are as follows:

1) Religious objectors referring to employees who, at the time the union

security agreement takes effect, are bona-fide members o f religious
organizations which prohibit their members from joining labor unions
on religious grounds ;3
2) Employees already in the service and already members o f a union
other than the SEBA at the time the union security agreement took
effect;4
3) Confidential employees who arc excluded from the rank-and-file or
supervisory bargaining unit,5
4) Supervisory employees who are excluded from becoming members o f
the rank-and-file union and vice-versa.;6and12345

1 P hilippine 8 hom ing M ils Em ployees O rganization P A F L U ] v. P hilippine Bloom ing M ils C o., In c , NLRC Case N o. R B-IV-
2 95 1 7 5.Ju ne 4 .1 9 76 .
2 M anila H otel C o. v. Pines H otel Em ployees A ssociation, G .R N o. L-30818, S ept 28,1972.
3 V ictcriano v. EfizaW e Rope W orkers’ U nion. G R N o. L-25246, S e p t 1 2.1974,59 SCRA 5 4.6 8.
4 A rticle 259(e) (248(e)], Labor C ode; Freem an S hirt M anufacturing Co. v. C IR G R N o. L-16561, Jan. 28,1961.
5 M etrolab Industries, Inc. v . C onfesor, G R N o. 108855, Feb. 2 8.1 99 6 ,2 5 4 SCRA 182.197.
4 A rocle 255 [245], Labor Code.

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5) Employees excluded from the coverage of the union security clause

per express mutual agreement o f the parties as stipulated in the CBA.1

1 PURPOSE.

The purpose of a union security arrangement is, as the term “union security”
signifies, to guarantee the continued existence o f the SEBA through enforced
membership for the benefit of the workers.2 The employer under this clause
recognizes that the membership o f employees in the SEBA which negotiated the
CBA should be maintained and continued as a condition for and retention of
employment The obvious purpose is to safeguard and ensure the union’s
continued existence and to strengthen and protect it from the fickleness or perfidy
of its own members. Without this clause, the existence of the SEBA is always
subject to uncertainty as its members may resign anytime resulting in the
decimation o f its ranks. The SEBA becomes gradually weakened and increasingly
vulnerable to company machinations. In this security clause therefore lies the
strength of the SEBA during the administration and enforcement of the CBA; it is
this clause that provides labor with substantial power in collective bargaining.34

3. N OT VIOLATIVE OF C O N ST IT U T IO N .
A union security clause in a CBA is not a violation or a restriction o f the
employee’s right to freedom of associadon guaranteed by the Consdtuuon. It is
unsurprising that significant provisions on labor protection of the 1987
Constitution are found in Article XIII on Social Justice. The constitutional
guarantee given the right to form unions and the State policy to promote unionism
have social justice considerations. In People's Industrial* it was recognized that
“PJabor, being the weaker in economic power and resources than capital, deserves
protection that is actually substantial and material.”

The rationale for upholding the validity o f a union security clause in a

CBA, even if it impinges upon the individual employee’s right or freedom of
association, is not to protect the union for the union’s sake. Laws and
jurisprudence promote unionism and afford certain protections to the certified
SEBA in a unionized company because a strong and effective union presumably
benefits all employees in die bargaining u nit since such a union would be in a
better position to demand improved benefits and conditions of work from the
employer. This is the rationale behind the State policy to promote unionism
declared in the Constitution. Nonetheless, setded jurisprudence has already swung
the balance in favor of unionism, in recognition o f the fact that ultimately the

1 Bank c f the P fflp p h e Islands v. BP1 Em ployees U nion-D avao C hap ter-fe d era tio n o f Unions in BPI U nibank, G .R . No.
164301, Aug. 10,2010.
2 Id; Pbop Resources, Inc. (PR I) v. D equfo, G.R. N o. 172666, Dec. 7,2 0 11 .
3 C alex R efinery Em ployees Association [CREA] v . M a n te s , G .R . N o. .123782, S e p t 1 6 ,1 99 7 ,2 7 9 SCRA 218,236.
4 People's industrial and Com m ercial Em ployees and W orkers O rganization v . P eople’s Industrial and C om m ercial
Corporation, G .R . N o. L-37687, M a r* 15,1982,112 SCRA 440 ,45 5 .

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individual employee will be benefited by that policy. In the hierarchy o f

constitutional values, the right to abstain from joining a labor organization is
subordinate to the policy of encouraging unionism as an instrument of social
justice.1

4. VARIOUS FORM S O F U N IO N SECU R ITY A R R A N G EM EN T S.

Generally, a union security clause may take the form of:

1. Closed shop agreement;

2. Maintenance o f membership agreement;
3. Union shop agreement;
4. Modified union shop agreement;
5. Exclusive bargaining agreement;
6. Bargaining for members only agreement;
7. Agency shop agreement; or
8. Preferential luring agreement.

The above classification admits o f certain modified types which the

parties may agree upon in the CBA depending on die peculiar requirements o f die
situation o f the parties thereto.

4.1. C LO SED -SH O P A G R E E M E N T .

A “closed-shop ” arrangement may be defined as a scheme in which, by

agreement between the employer and its employees or their representatives, no
person is allowed to be employed in any departments of the enterprise unless
he/she is, becomes and, for the duration o f the agreement, remains a member in
good standing of a SEBA entirely comprised o f or o f which the employees in
interest are a part.2

Basically, this kind of agreement stipulates the undertaking by the

employer not to hire or employ any person who is not a member of the SEBA.
Once employed, it is required that the said person should remain a member o f the
SEBA in good standing as a condition for his/her continued employment, at least
during the whole duration of the CBA. This requirement for employees to become
members o f the SEBA as a condition for their continued employment redounds to
their benefit and advantage because by holding out to loyal members a promise o f
employment in the closed shop, the union wields group solidarity. In fact, it is said
that “the closed shop contract is the most priced achievement of unionism." It adds
membership and compulsory dues.3

’ Bank o f the F W ppine islands v. BPI Em ployees U niorvD avao C hapter-Federation o f U nions in BPI U nibank, G .R . No.
164301, A ug. 10,2010.
3 Del M onte P hilippines, Inc. v . S aldivar. G .R. N o. 158620, O c t 11,2006.
3 M ania M andarin Em ployees U nion v. NLRC, G .R . N o. 76989, S e p t 2 9,1987.

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4.2. M A IN TEN AN CE OF M EM B ERSH IP A G R E E M E N T .

There is maintenance of membership arrangement when employees who

are SEBA members as of the effective date of die agreement, or who thereafter
become its members, must maintain their union membership as a condition for
their continued employment until they are promoted or transferred out of the
bargaining unit, or the agreement is terminated.*
1 Its role is to protect the SEBA’s
current membership. By its express terms, it covers and renders continued union
membership compulsory for: (1) those who were already SEBA members at the
time the CBA was signed; and (2) the newly-hired ..employees who will become
regular during the lifetime of the CBA.

This form of union security clause is considered the mildest because it

does not require non-members of the SEBA to join the latter but simply stipulates
that those who are its members at the time of the execution of the CBA and those
who may, after its execution, on their own, voluntarily join it, should maintain their
membership in good standing therein for the whole duration o f the CBA as a
condition for their continued employment until they are promoted or transferred
out of the bargaining unit or the agreement is terminated. Simply put, employees
who are not members of the SEBA at the time o f the execution of the CBA are
not, in any manner, required to become its members. Employees hired after the
execution of the CBA are likewise not duty-bound to join it. They may or may not
join it.2

4.3. U N IO N SH O P A G R EEM EN T.

There is union shop arrangement when all new regular employees are
required to join the SEBA within a certain period as a condition for their continued
employment.3 Its role is to compel membership o f those who are not yet SEBA
members. Under this scheme, the employer is given the freedom to hire and
employ any person who is not a member o f the SEBA. Once such person
becomes an employee, he is required to become a member o f the SEBA and to
remain as such member in good standing for the whole duration of the cffectivity
of the CBA as a condition for his continued employment.

4.4. M O D IFIED U N IO N SH O P A G R E E M E N T .

Employees under this arrangement who are not SEBA members at the
time of the signing or execution of the CBA are not required to join it. However,
any and all workers hired or employed after the signing or execution of the CBA
are required to join the SEBA.

1 Picop Resources. Inc. (PRI) v D equila, G R. N o. 172666, D ec. 7,2 0 11 .

1 See Alabang C ountry Club. Inc. v. NLRC. G iR. No. 170287, Feb. 14.2003.
5 Rcop R esources. Inc. (P R l) v. Taneca, G.R. N o. 160828, A ug. 9 ,2 0 10 .

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4.5. EXCLUSIVE B A RG AIN IN G A G E N T A G R E E M E N T .

The union which negotiated and concluded the CBA with management is
considered and recognized as the SEBA of all the employees covered by the
bargaining unit, irrespective o f whether they be members or not of the SEBA.

4.6. BA R G A IN IN G FO R M EM B ERS O NLY A G R E E M E N T .

Under this arrangement, the union which negotiated and concluded the
CBA with management is recognized as the SEBA only for its own members .* 1 This
kind of union security is not allowed in our jurisdiction since the SEBA is required
to represent not only its members but all the employees covered by the collective
bargaining unit (CBU) where such SEBA operates and which it represents.

4.7. AGENCY SH O P A G R E E M E N T .

Under this scheme, there is no requirement for non-members o f the

SEBA to become its members. However, it is required that such non-SEBA
members should pay to the SEBA an agency fee as a condition for their continued
employment. The third sentence o f Article 259(e) [248(c)] o f the Labor Code
validates this arrangement

4.8. P R E F E R E N T IA L H IR IN G A G R E E M E N T .

It is the principal feature o f this arrangement that the employer gives

preference in hiring to the members o f the SEBA under equal circumstances and
qualifications. Once hired or employed, they are required to maintain their
membership in good standing in the SEBA for the entire duration of the CBA as a
condition for their continued employment.

5. E F F E C T O F U N IO N SECU R ITY CLAUSE O N N O N -SE B A

M EM BERS.

a. Union security applies only to m em bers o f the SEBA.

The principles applicable to union security discussed in this section

apply only to the members o f the SEBA. Other unions in existence in a given
bargaining unit which is being represented by a duly certified SEBA cannot invoke
these union security principles. The reason is that union security is a stipulation in a
CBA; hence, it can only be invoked by the union which is a party thereto and this
could only refer to the SEBA and to no other union/s.

b. N ew ly-hired em ployees can b e com pelled to join the SEBA.

As far as newly-hired employees are concerned, they can, under a union

sccunty arrangement,2 be compulsorily required, within a certain period, to join the

1 R othenberg on Labor R elations, pag e 410.

1 Such as in “union stx3p' w tien a!l new regular em pkiyees are required to jo in the union w ith n a oertain period as a condition
for (heir continued em ploym ent

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SEBA after attaining regularity o f employment.1 The other union/s existing and
operating in the bargaining unit where the SEBA operates and which it represents,
not being entitled to the assurance of union security under die CBA, cannot
compel newly-hired employees to join them; only the SEBA can impose such
compulsory membership. Should these new entrants fail to join the SEBA, the
SEBA can recommend to management their termination from employment for
violation of the union security provision in the CBA.

c. M embers o f minority union cannot b e com pelled to join SEBA.

For purposes of enforcement of the union security clause and the

determination of validity of termination based on violation thereof, a distinction
should be made between the members of the SEBA and the non-members thereof
who are members of the defeated minority union/s as reckoned at the time of the
signing of the CBA. This differentiation is necessary because Article 259(e) [248(e)]
of die Labor Code expressly exempts old employees who arc already members of
union/s other than the SEBA at the time of the signing o f the CBA, from being
included in the coverage of the union security clause.2 The second sentence of
paragraph (c) of this article is clear in its exception, thus:

“xxx Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees who
are already members of another union at the time of the signing
of the collective bargaining agreement.”3

The union security clause therefore does not cover employees who are
members of the union/s 4other than the SEBA .5 N ot being so covered, they cannot
be dismissed for violation of said clause.6Indeed, with respect to employees already
working at the time a CBA is made, their discharge for failure to affiliate or
maintain union membership always retains a coercive character inimical to the
individual worker’s freedom to join unions o f his choice, and for this reason, it has
been viewed with disfavor, contracts providing it being restrictively interpreted .7

d. A contrary stipulation cannot prevail over clear language o f law.

Even if there is a stipulation to the effect that the members o f the

minority union/s must become members o f the SEBA after the signing of the
CBA, the same cannot bind them and thus must be declared null and void.

’ As discussed in General M in g C a p . v. C asio, G R N o. 149552, M atch 10,2010.

1 BPI v. BP1 Em ployees UnkxvDavao C hapter-Federation o f U nions in BPI U nbank, G R N o. 164301, A ug. 10,2010.
5 Em phasis suppled.
* Calied ‘ m inority union/s.**
5 O therwise called 'm ajority union."
‘ Confederated Sons o f Labor v. Anakan Lum ber C o., U nited W a lte rs ' U nion and CIR, G R . N o. L-12503, A p ril 29,1960.
1 Resolution dated M atch 29,1962 on petitioners' M otions fa R econsideration in San C arlos M Jing C o. v. C IR , G .R . Nos. L-
15453 a id 1-15723, M arch 1 7 ,1 9 6 1 ,1 SCRA 734.

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In Freeman,1a case decided prior to the advent o f the Labor Code, under
the regime o f R~A. No. 875,2 from which the present provision in Article 259(e)
[248(e)] traces its roots, it was held that the union security clause should apply only
to persons to be hired or to employees who are not yet members o f any labor
organization at the time of the signing o f the CBA. It is inapplicable to those
already in the service who are members o f another union. T o hold otherwise, i.e.,
that the employees in a company who are members of a minority union may be
compelled to disaffiliate from dieir union and join the SEBA, would render
nugatory the right of all employees to self-organization and to form, join or assist
labor organizations of their own choosing, a right guaranteed under the law3 and
the Constitution .4

Citing Freeman, it was held in Talim,s that a closed-shop clause in a CBA

does not apply to persons belonging to another labor union already hired but is
effective only upon those yet to be hired, and that a dismissal of die former for
refusing to comply with the closed-shop contract is unlawful. The dismissal
therefore by the petitioner company, upon demand by the other petitioner, the
Talim Quarry Labor Union, o f the 13 employees, or laborers, respondents herein,
for refusing to become members of die Talim Q uany Labor Union, as required by
the union-shop contract, is illegal.6

e. Non-SEBA m em bers can resign from their unions to join SEBA

at any tim e during the lifetim e o f CBA.

While SEBA members are not allowed to resign, leave or dissociate

themselves therefrom as this may result in their expulsion and the ultimate
termination o f their employment upon the recommendation of the SEBA, the
same cannot be said o f members o f die minority union/s existing in the same
bargaining unit where the SEBA operates, since they can resign from their union/s
at any time during the lifetime o f the CBA, to join the SEBA, without transgressing
the union security clause in the CBA that may result in then dismissal from
employment. The reason is that by joining the SEBA, the avowed objective o f die
law is attained since as a result o f such membership migration to the SEBA, its
continued existence is further strengthened and amply assured.

f N on-retroactivity o f union security clause.

As a general rule, a union security provision such as a closed shop

agreement requiring all employees to join the SEBA is not valid.7 Hence, such a

Freem an S hirt M anufacturing C o. v . C IR , G .R . No. L-16561, Jan. 2 8 ,1 9 6 1 ,1 SCRA 353.

O therw ise know n as the Industrial Peace A c t
See S ection 3 o f the old R epublic A ct No. 875.
A rticle III, Section 1 [6 ], 1935 C onstitution.
T a fm Q uany C o., h c -.v . B artota, G R N o . 1-15768, A pril 2 9 ,1 9 6 1 ,1 SCRA 130.
See also N ational Labor U nion v. dp Venetian Blind C o., G .R . No. L-15827, M ay 3 1,1 96 1 .
Sta. C e d ta S aw m ills v . C IR G .R N os. 1-19273-74, Feb. 2 9 .1 9 6 4 ,1 0 SCPA 433.

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 512 Bar reviewer on Labor Law

stipulation in a CBA cannot be given retroactive effect as to cover and bind

employees who are not members of any labor organization at the time o f die
effecdvity of the CBA.

Guijam v. C7R,1 has expounded on the non-retroacrive application o f a

union security clause such as closed-shop to employees already in die service at the
time of the CBA’s effecdvity. The authoritative doctrine that a closed-shop
provision in a CBA is not to be given a retroactive effect so as to preclude its being
applied to employees already in the service is traceable to the leading case of
Confederated Sons of Labor.2 Thereafter, in Hamilton Dislilleiy Company,1 the Court
minced no words in characterizing a stipulation that would allow a dismissal of
those already employed as "null and void. Nothing can be clearer, therefore, than
that the Court looks with disfavor a provision of this character being utilized as an
excuse for the termination of employment. To complete the picture, mention
should be made of Elegance,5where the Court harked back to Freeman,6 to stress the
point of non-retroactivity.7

g. Exception to the non-retroactivity rule.

The exception to the non-retroactivity rule is when diere exists a valid
union security clause requiring compulsory membership in the SEBA, in which
case, an employee who is not a member of any labor organization at the time o f the
effecdvity of the CBA may be compelled to join it and his refusal to so join will
justify his dismissal. This is clear from Juat* which involved the dismissal of
petitioner, a long-standing employee o f respondent Bulaklak Publications, for Ids
refusal to join the SEBA, under the following closed-shop stipulation in die CBA:

"All employees and/or workers who on January 1, 1960 arc members

of the Union in good standing in accordance with its Constitution and
By-Laws and all members who become members after that date shall,
as a condition of employment, maintain their membership in the Union
for die duration of this Agreement All employees and/or workers
who on January h 1961 are not yet members of the Union shall, as
a condition of maintaining their employment, become members
of such union."9

In affirming the validity o f the dismissal o f petitioner Juat based on the

above-quoted CBA stipulation, the High Court dted Freeman10and Findlay,l where it

G R Nos. L-28791-93, Aug. 2 7,1973.

Confederated Sons o f Labor v . A nakan Lum ber C o., G il N o. L-12503, A pril 2 9 ,1 9 6 0 ,1 0 7 P h il. 915.
Kapisanan Ng Mga M angagagawa Ng Alak v . H am iton D tsfile ry C om pany, G il N o. L-18112, O c t 3 0 ,1 9 6 2 ,6 SCRA 367.
See also Findlay MHar Tm ber C o. v . P h i. Land-A ir-S ea Labor U nion, G R N os. L-18217 and L-18222, SepL 2 9,1962.
Elegance, in c. v. CIR, G R No. L-24096, A pril 2 0,1 9 7 1 ,3 8 SCRA 382.
Freeman S hirt M anufacturing C o. v. C IR , G R No. L-16561, Jan. 2 8,1 96 1 ,1 SCRA 353.
See also Big Five Products W orkers U nkxvCLP v. C IR , G R N o. L-17600, Ju ly 3 1 ,1 9 6 3 .
Juat v. C IR Bulaklak P ublications and E vangelista, G .R N o. L-20764, N w . 2 8 ,1 9 6 5 ,1 5 SC R A 391 (En Banc).
Underscoring suppled.
w Supra.

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 C hapter Five 513
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was pronounced that as a settled doctrine, the closed-shop proviso of a CBA

entered into between an employer and a duly authorized labor union applies, and
should be applied, to old employees o r workers who are non-members o f any labor
union at the time the CBA was entered into. In other words, the old employees or
workers can be obliged by his employer to join the labor union which had entered
into a CBA that provides for a closed-shop as a condition for his continuance in his
employment, otherwise, his refusal to join the contracting labor union would
constitute a justifiable basis for his dismissal.

Although Juat, Freeman and Findlay were decided before the Labor Code’s
effectivity ,12 the principle laid down therein, insofar as this point of law is
concerned, still applies to the present situation. This is so because these cases were
decided under the regime of R A . No. 875,3 from which the present-day provision
in Article 259(e) [248(e)] traces its origin. Thus, the prohibition in the second
sentence 4 of paragraph (e) o f Article 259 [248] expressly exempts from being
included in the coverage o f the union security clause, only die old employees who
are already members of union/s other than the SEBA at the time o f die signing o f
the CBA, but not those who are not yet members of any union.

V-2-A.
DISMISSAL DUE TO VIOLATION OF UNION SECURITY CLAUSE

1. T E R M IN A T IO N OF E M P L O Y M E N T D U E TO V IO L A T IO N OF
U N IO N SECU RITY CLAUSE, A JU ST CAUSE.

It is now well-setded that violation o f a union security clause is considered

a just cause to terminate employment.5 This rule has, once again, been reiterated in
the case of Alabang Country Club, Inc. v. NLRC.6 Termination of employment by
virtue o f a union security clause embodied in a CBA strengthens the union and
prevents disunity in the bargaining unit within the duration of the CBA. By
preventing member disaffiliation with the threat of expulsion from the union and
the consequent termination o f employment, die SEBA gains more numbers and
strengthens its position as against other unions which may want to claim majority
representation .7

1 F indlay M le r I n t e r C o. v . P LA S LU .G .R . N os. L-18217 & L-18222, S e p t 29,1952.

2 T h e L a b a C o d e w a s p n D m u 1 g a ie d a n d e n a d e d 3 sP D .N o .4 4 2 b yP re sid e n tF e fd in a n d E M a rco s o n M a y1 ,1 9 7 4 . Itto o k
e ffe ct on N ovem ber 1 ,1 9 7 4 - s ir m onths a fte r its prom ulgation. (See A rticle 2, P.D. N o. 442).
3 O therw ise to w n as the Industrial Peace A c t
* ‘xxx N othing in this C ode o r h any o th e r la w shaS stop the parlies from requiring m em bershp in a recognized collective
bargaining agent as a condition fo r em ploym ent except th o s e e m ployees w ho are a lre a d y m em bers o f a no the r u n io n
a t th e tim e o f th e s ig n in g o f th e c o lle c tiv e b a rg a in in g a g re e m e n t'
5 P icop R esources, Inc. (PR I) v . D equlla, G .R . N o. 172666, D ec. 7 ,2 0 11 .
• G .R . N o. 170287, Feb. 14,2008.
2 Id.

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2. DISMISSAL MUST BE EXPRESSLY PR O V ID ED AS PENALTY.

While dismissal may be effected as a consequence of a breach o f the

union security clause, the general rule that should prevail is that this clause should
be strictly construed against the existence of the right to dismiss. In other words, if
there is doubt as to whether termination of employment is the penalty for its
violation, the doubt should be resolved against the dismissal of die violating
employee and in favor of upholding Iris right to employment. ’Hie clause cannot be
unduly extended beyond the explicit coverage o f its terms. Hence, it should not be
deemed to authorize by implication the dismissal of employees before the agreement
thereon was made.* 1
Violation of die union security clause, to be a valid basis for terminating
an employment, must be expressly stated therein that such is its consequence. A
dismissal founded on this clause which does not explicitly authorize it for its
violation constitutes ULP.

The leading case in this regard is Confederated Sons of Labor v. Anakan

Lumber Co? Forty-five members of respondent United Workers’ Union joined
another union, herein petitioner, and were thus dismissed for violation of the
following union security' clause:

“That the UNION shall have the exclusive right, and

privilege to supply the COMPANY with such laborers, employees
and workers as are necessary in the logging, mechanical, sawmill,
office, logponds, motor pools, security guards and all departments in its
many phases of operations, excepting such positions which are highly
technical and confidential in character and/or such positions which
carry the exercise of authority in the interest of the COMPANY which
exercise is not merely clerical or routinary within the contemplation of
the law, and that the COMPANY agrees to employ or hire in any of
its departments only such person or persons who arc members of
the UNION.”

Respondents maintain that since respondent union is thus given "the

exclusive nght and pnvilege to supply the company with such laborers, employees
and workers are as necessary" for the activities specified in the said provision and
the company had agreed "to employ or hire in any o f its departments only such
persons who are members of the union," it follows that such laborers, employees
and workers of the company as may cease to be members of the respondent union
must be expelled from the company. Upon mature deliberation, however, the
Supreme Court opined that respondents’ pretense cannot be sustained, thus:

“In order that an employer may be deemed bound,

under a collective bargaining agreement, to dismiss employees

• San C a te tilin g Co v. C IR , G.R. Nos. L-15453 and L-15723, M anh 1 7 .1 9 6 1 ,1 SCRA 734.
1 Confederated Sons of Labor v. Anakan Lum ber C o , U nited W orkers' U nion and C IR , G .R N o. L-12503, A p i 29,1 96 0 .

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for non-union membership, the stipulation to this effect must be

so clear and unequivocal as to leave no room for doubt thereon.
An undertaking of this nature is so harsh that it must be strictly
construed, and doubts must be resolved against the existence of
‘closed shop.’ Referring parucularly to the above-quoted Article II, we
note that the same establishes the exclusive right of respondent union
to ‘supply’ laborers etc., and limits the authority of the company to
‘employ or hire’ them. In other words, it requires that the laborers,
employees and workers hired or employed by the company be
members of respondent union at the time of the commencement of the
employer-employee relation. Membership in respondent union is not a
condition for the continuation of said relation or for the retention of a
laborer or employee engaged cither before said agreement or while he
was a member of said union.”1

This ruling in Confederated Sons of Labor has been followed and adhered to
in so many cases decided thereafter, some of them are as follows:

(1 ) San Carlos Milling Co. v. CIR,2 where, based on the union shop
stipulation in the CBA, it was declared that it was ULP to dismiss respondent
Sinforoso Kyamko based on the recommendation o f die union which earlier
expelled him, together with others, for committing an act o f disloyalty when he
joined another union. It was pronounced that “ [u]nion shop, as w ith close, shop
provisions, should be strictly construed against the existence of union shop.
Som etim es harsh and onerous, such provisions sh o u ld no t be extended
beyond the explicit coverage of their term s, and will n o t be deem ed to
authorize by im plication th e dism issal of employees already w orking before
the agreem ent was m ade.”

(2) ICAWO v. Central A^ucarera de Pilar,3 where petitioners, who were

long-time employees of respondent company, were dismissed for violation o f the
union shop clause when they created a new union, herein petitioner ICAWO 4while
the CBA between respondent company and respondent union, CAPAWA,5 was
still effective. The Supreme Court, citing Confederated Sons of Labor, declared the
dismissal illegal because there is absolutely nothing in the said clause to show that it
was the intention of the parties that the non-membership of existing employees will
cause their dismissal. There is, likewise, no requirement whatsoever on union
members to remain as such under pain of being dismissed. Confederated Sons of Labor
requires that there should be a clear and unequivocal statement diat the loss of the
status o f a member of good standing in the union is a cause for dismissal.

U nderscoring supplied.
G R Nos. L-15453 and L-15723, M arch 17.1951 1 SC R A734
ln du stria l< rim m e rd a l-A g ricultura l W orkers O rganization v. C entral Azucarera de P ia r, G R N o. 1-17422, Feb. 28,1962.
Industrial-C orTYneraaLAgnajtturel W orkers O rg a n iz e (ICAW O ).
A llied W orkers’ A ssodatkxvC A P A W A

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3. GROUNDS FOR T ER M IN A T IO N D U E T O V IO L A T IO N O F U N IO N
SECURITY CLAUSE.

But in cases where termination o f employment is expressly stipulated

therein as the end-result of such refusal to join the SEBA or loss o f membership
status, the SEBA has to back up its recommendation to the employer to terminate
a member-employee’s employment with just and valid grounds. There are no
standard grounds, however, prescribed in the law. They vary from CBA to CBA.
However, there are basically three (3) common grounds that are usually invoked by
the SEBA to justify termination of employment, to wit

(1) Refusal to become members o f the SEBA of:

a) employees who are neither members o f the SEBA nor of any other
union/s at the time of the signing of the CBA; or
b) future, newly-hired employees upon their regularization;
(2) Resignation by its existing members;
(3) Expulsion on the following grounds:
a) Disloyalty to the SEBA;
b) Commission of any act/s inimical to the interest o f the SEBA;
c) Refusal to pay union dues and other assessments;
d) Commission or convicdon of a felony, offense or crime as defined
by the Revised Penal Code or any special laws against any union
officer or member in relation to activities for and in behalf o f the
SEBA;
e) Organizing and/or joining another labor organization claiming
jurisdiction similar to that of the SEBA or affiliating with a labor
federation without its approval;
f) Involvement in any violation o f the union security agreement or
the SEBA's Constitution and By-Laws; or
g) Participation in a ULP or any derogatory act against the SEBA or
any of its officers or members.1
In case of expulsion of a member or officer, it is required that the norms
of due process should be observed prior to effecting it. I f the expulsion is attended
by arbitrary ground or process, it may be considered a ULP o f the union. This is so
because a member of a SEBA may be expelled only for a valid cause and by
following die procedure oudined in its constitution and by-laws.2

1 See forinstance the cases o f Ranee v. NLRC, (G .R. N o. 68147, June 3 0,1 98 8 ], and C arino v . N LRC, [G il N o. 91086, May
8,1990,185 S C R A 177], w here the provisions thereon are quoted in the body o f the decision.
2 Kapisanan ng mga M anggagawa sa M anila R ailroad C o. v. Bugay, G il N o. L-9327, M arch 3 0,1 95 7 .

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V-2-B.
DUE PROCESS IN TERMINATION DUE TO
VIOLATION OF UNION SECURITY CLAUSE

1. R E Q U ISIT E S F O R T E R M IN A T IO N .

Alabang Country Clubx has enunciated the following requisites that the
employer should determine, prove and comply with prior to terminating the
employment o f an employee by virtue o f the enforcement o f the union security
clause:

( 1) The union security clause is applicable;

(2) The SEBA is requesting for the enforcement o f such clause; and
(3) There is sufficient evidence to support the SEBA’s decision to expel
die employee from membership.

Once the foregoing requisites are present, the ensuing termination is

considered ajust cause. The best illustrative case where the above three (3) requisites
are present is Inguillo v. First Philippine Scales, Inc.2 Petitioners and several FPSI
employees, during the effectivity o f the CBA between FPSI and First Philippine
Scales Industries Labor Union (FPSILU), joined another union, the Nagkakaisang
Lakas ng Manggagawa (NLM), which was affiliated with a federation called
KATIPUNAN (NLM-KATIPUNAN). Because o f this, they were expelled by
FPSILU for disloyalty. In upholding the validity o f their dismissal, the Supreme
Court noted that the three (3) requisites mentioned in Alabang Country Club were
present, thus:

First. Respondent FPSI was justified in applying the Union Security

Clause, as it was a valid provision in the CBA, the existence and validity o f which
was not questioned by either party. Moreover, petitioners were among the 93
employees who affixed their signatures to the document that ratified the CBA.
They cannot now turn their back and deny knowledge o f such provision.

Second. FPSILU acted on its prerogative to recommend to FPSI the

dismissal of its members who failed to maintain their membership therewith. Aside
from joining another rival union, FPSILU cited other grounds committed by
petitioners and the other employees which tend to prejudice FPSI’s interests, it.,
dereliction o f duty - by failing to call periodic membership meetings and to give
financial reports; depositing union funds in the names o f Grutas and former Vice-
President Yolanda Tapang, instead o f in the name o f FPSILU care o f the President;
causing damage to FPSI by deliberately slowing down production, preventing the
union from even attempting to ask for an increase in benefits from the former, and

' AJaOang C ountry C lub. h e . v . NLRC. G R N o. 170287, Feb. 14,2008.

J G.R. N o. 165407, June 5 ,2 0 0 9 ,5 8 8 SCRA 471.

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poisoning the minds of the rest o f the members of the union so that they would be
enticed to join the rival union.

Third. FPSILU's decision to ask for tire termination of the employees in

the "Petisyon" was justified and supported by the evidence on record. Petitioners
Inguillo and Bergante were indisputably former members' o f FPSILU. In fact,
Inguillo was the Secretary of Finance, the underlying reason why his salary was
garnished to satisfy the judgment o f the Med-Arbiter who ordered NLM-
KATIPUNAN to return the union dues it erroneously collected from the
employees. Their then affiliation with FPSILU was also clearly shown by their
signatures in the document which ratified the CBA. Without a doubt, they
committed acts of disloyalty to the union when they failed not only to maintain
their membership but also disaffiliated from i t They abandoned FPSILU and even
joined another union which works against the former’s interests. This is evident
from the intra-union dispute filed by NLM-KATIPUNAN against FPSILU. Once
affiliated with NLM-KATIPUNAN, Inguillo and Bergante proceeded to recruit
other employees to disaffiliate from FPSILU and even collected onion dues from
them.

A case illustrative of lack of compliance with one o f the requisites is the

2010 case of Picop Resources, Inc. (PR1) v. Taneca} where the termination o f
employment of respondents was declared illegal because of non-compliance with
the third requisite mentioned in Ala bang Country Club. While there was compliance
with the first and second requisites as there was a valid provision on maintenance of
membership as union security clause in the CBA and in two (2) occasions, the
collective bargaining agent (Nagkahiusang Mamumuo sa PRl-Southem Philippines
Federation of Labor [NAMAPRI-SPFL]) demanded from petitioner Picop
Resources, Inc. (PRT) to terminate the employment o f respondents due to their acts
of disloyalty to the union, however, the third requisite was not present. The alleged
acts of disloyalty consist in their signing of an “ authorization letter to file a
petition for certification election” by another union (Federation of Free Workers
[FFW]). However, it was established that while they signed such “authorization
letter” outside the 60-day freedom period, they actually filed the “Petition for
Certification Election” within the freedom period. As per records, it was clear that
the actual Petition for Certification Election of FFW was filed only on May 18,
2000. Thus, it was within the ambit of the freedom period which commenced from
March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the
filing of a petition for certification election outside the 60-day freedom period. This
is not the situation in this case. If at all, the signing o f the authorization to file a
certification election was merely preparatory to the filing o f the petition for
certification election, or an exercise of respondents’ right to self-organization. The
mere signing of the authorization in support of the Petition for Certification
Election of FFW on March 19, 20 and 21, or before the “freedom period,” is not

i G .R. No. 160828. A ug. 9,2010.

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sufficient ground to terminate the employment o f respondents inasmuch as die

petition itself was actually filed during the freedom period. Nothing in the records
would show that respondents failed to maintain their membership in good standing
in the union. Respondents did not resign or withdraw their membership from the
union to which they belong. Respondents continued to pay their union dues and
never joined the FFW.

The above Picop ruling was reiterated in another case involving the same
company, the 2011 case o f Picop Resources, Inc. (PRI) v. Dequilla? involving the same
incident and factual setting. Quoting extensively its earlier 2010 ruling in Picop, it
was emphasized in this case that the records are bereft o f proof o f any
contemporaneous acts o f resignation or withdrawal o f union membership or non­
payment o f union dues on the part o f the private respondents. Neither is there
proof that private respondents joined FFW. The fact is, private respondents
remained in good standing with their union, NAMAPRI-SPFL, a point which was
already settled in said earlier 2010 case o f Picop}

2. E M PL O Y E R ’S O B L IG A T IO N T O T E R M IN A T E E M P L O Y M E N T O F
E R R A N T M EM B ER S U P O N D EM A N D BY SEBA.

To avoid the possibility of incurring liability for breaching the union

security clause o f the CBA and to protect its own interests, the only sensible option
left to an employer, upon its receipt o f a demand from the union for the dismissal
of the employees whom it accused o f committing acts o f disloyalty, is to conduct
its own inquiry on the factual and legal bases of such demand in order to satisfy
itself that there indeed exist sufficient bases to dismiss them. Thus, the act of the
employer, in Manila Hotel Pavilion? of issuing notices requiring the 36 employees to
submit their explanations to the charges against them lodged by the SEBA is the
reasonable and logical first step in a fair investigation. It is important to note that
in this case, the Hotel did not take further steps to terminate the 36
employees. Instead, it arranged for reconciliatory conferences between the
contending unions in order to avert the possibility o f dismissing the 36 employees
for violation of the union security clause o f the CBA.

In Del Monte? respondent T im bal’s expulsion from ALU was premised

on the ground of disloyalty to the union which, under Section 4[3], Article II o f the
CBA, also stands as a ground for her dismissal from petitioner Del Monte. Indeed,
Section 5, Article II of the CBA enjoins Del Monte to dismiss from employment
those employees expelled from ALU for disloyalty, albeit with the qualification that
it should be “in accordance with law.” Article 294 [279] o f the Labor Code applies1*34

1 G .R . No. 172566, D ec. 7 ,2 0 1 1 .

1 Supra; See also G eneral M in g C orp. v . C asio, G .R. No. 149552, M arch 10,2 01 0 , w hich also fllustrates the situation w here
fie 3rd requisite prescribed r» AJabang C ountry Club is a bsen t
3 N U W H R A IN -M an ila H otel P a v fa i C hapter v. NLRC, G R. N o. 179402, S e p t 3 0,2 00 8 .
4 Del M onte P hilippines, Inc. v .S a k fv a r and T m b a l,G .R N o. 158620, O c t 1 :,2 0 0 6 .

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both to dismissals based on die just or authom ed causes under the law or on the
union security clause of die CBA. Hence, in the matter of determining whether a
valid cause exists for termination, whether under Tide I,1 Book Six2 o f the Labor
Code or under a valid CBA, substantive due process must be observed as a means
of ensuring that the security of tenure o f the employees is not infringed.

In die case of Cariiio v. NLRC,3 where petitioner (former president o f the

union) was dismissed the next day after receipt by respondent company o f the
letter from the SEBA recommending his termination due to petitioner’s expulsion
dierefrom, the Supreme Court pronounced that while the company, under a
maintenance of membership provision of the CBA, is bound to dismiss any
employee expelled by die SEBA for disloyalty upon its written request, this
undertaking should not be done hastily and summarily. The company is said to
have acted in bad faith in dismissing a worker if it does not afford him the benefit
of a hearing. The right of an employee to be informed o f the charges against him
and to a reasonable opportunity to present his side in a controversy with either the
company or his own union is not wiped away by a union security clause or a union
shop clause in a CBA. An employee is entided to be protected not only from a
company which disregards his rights but also from his own union, the leadership of
which could yield to die temptation o f swift and arbitrary expulsion from
membership and dismissal from his job.4

In Ranee v. NLRC,3where die employer has acted with scandalous haste in

dismissing 125 employees who were expelled from the union because o f alleged
disloyalty but were never accorded due process, both the employer and the union
were declared guilty of ULP and ordered joindy and severally to pay the employees’
backwages.**46

In M. Greenfield,1 petitioners were union officers who were expelled by the

federation (ULGWP) for allegedly committing acts o f disloyalty an d /o r inimical to
the interest of the federation and in violation o f its constitution and by-laws. Upon
demand of the federation, the company terminated petitioners without conducting
a separate and independent investigation. Respondent company did not inquire into
the cause of the expulsion and whether or not the federation had sufficient grounds
to effect the same. Relying merely upon the federation’s allegations, respondent
company terminated petitioners from employment when a separate inquiry could

’ Entitled 'TermnaSon of Employment‘

1 Entitled'Post Employment’
1 G.R. No 91086. May 8,1990,185 SCRA177.
4 See also liberty Cotton Mils Workers Unon v. Liberty Cotton Mils, G.R No. L-33937, Sept 4,1975, 66 SCRA 512;
Bnabagarvlsabeta Sugar Co., Inc [BISCOM] v. Philippine Association of Free Labor Unions [PAFLU], G R No. L-18782,
Aug. 29,1963,8 SCRA 700; Sanyo Phippines Workers Union - PSSLU v. Canizares, G R No. 101619, July 8,1992,211
SCRA 361
J GR. No 68147, June 30.1938
1 See also Manila Cordage Co. v. CIR, G.R. No. L-27079, Aug. 31,1977,78 SCRA 398.
1 M&yang Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) v. Ramos, G R No. 113907, Feb. 28,2000.

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have revealed if the federation had acted arbitrarily and capriciously in expelling the
union officers. Respondent company’s allegation that petitioners were accorded
due process is belied by the termination letters received by the petitioners which
state that the dismissal shall be immediately effective.1

Respondent employer, in Tropical Hut,2*sent a letter to petitioners advising

them of die SEBA’s recommendation for their dismissal and at the same time
giving them 48 hours within which to comment thereon. When petitioners failed to
do so, respondent company immediately suspended them and thereafter effected
their dismissal. According to the Supreme Court, this act of respondent employer is
certainly not in fulfillment o f the mandate o f due process which is to afford the
employees to be dismissed an opportunity to be heard. An employer can be
adjudged guilty o f ULP for having dismissed its employees in line with a closed
shop provision if they were not given a proper hearing.

3. A N EX PE L LE D U N IO N M EM BER C A N N O T B E DISM ISSED BY

EM PLOY ER W IT H O U T U N IO N ’S R E C O M M E N D A T IO N T O
T H A T E FFE C T .

An employee expelled by the union cannot be dismissed by the employer

on the ground o f violation o f the union security clause without the appropriate
recommendation o f the union to that effect. The fact o f union expulsion alone
would not be a sufficient justification for the employer to dismiss the expelled
employee; the employer should wait for the union recommendation before he
could act thereon.

The 3 respondents in M. D. Transit v. dc Gunman,1 were expelled by their

union and subsequently dismissed by petitioners4 due: 1) to their absence from
work for 4 consecutive days, in violation o f their CBA; and 2) to a communication
of the union to the petitioners, marked as Exhibit 5, urging them to dismiss the
respondents pursuant to the closed shop stipulation in said CBA, in view of their
expulsion from the union. In holding the expulsion by the union and the
subsequent dismissal from employment by petitioners illegal, the High Court
pronounced that it was established by evidence that respondents were dismissed by
petitioners before the latter had even received the aforementioned Exhibit 5. In
fact, the record abundantly showed that respondents were not allowed by agents of
petitioners to enter its premises or work for the petitioners since N ovem ber 9,
1958, despite the fact that said communication o f the union was not written and
sent until N ovem ber 10,1958. The dismissal could not have been made, therefore,
in pursuance either of the request contained in said communication or o f the
closed shop provision of the CBA. Moreover, the lower court found, and this was

1 See aiso Bnabagarvlsabda Sugar Co., Inc. jBISCOM] v. Phipp'ne Association of Free Labor Unions [PAFLU], G.R No. L-
18782, Aug. 29,1953,8 SCRA 700.
1 Tropical Hut Empoyees' Union • CGW v. Tropical Hut Food Martcet Inc., G.R. No. L-43495-99, Jan. 20,1990.
1 G.R. No. L-18810, April 23,1963,7 SCRA 726.
4 Petitioners are M ) Transits Taxi Co. Inc., and CAM Transportation Co.

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amply supported by the evidence or record - that respondents’ suspension by the

president of the union, and their subsequent expulsion by its Board o f Directors,
were due to the charges proferred by respondents against the officers o f the union,
which led to the discovery by the D O LE of the alleged shortage in its mutual aid
fund of over P22.000.00, and the reference of the case to the City Fiscal of Quezon
City. Thus, both the union and petitioners were guilty o f ULP.

4. M EANING OF “IND EPEN D EN T AND SEPARATE H EA RIN G ” IN

T ER M IN A TIO N BASED O N U N IO N SECURITY CLAUSE.

The use of the phrase "independent and separate hearing” in connection with
the due process required in termination grounded on violation o f the union security
clause means that the employer is not duty-bound to immediately implement the
recommendation to terminate made by the SEBA; it has to conduct its own hearing
independent and separate from any hearing as may have earlier been conducted by
the SEBA. As held in M. Greenfield,:*

“While respondent company may validly dismiss the

employees expelled by the union for disloyalty under the union security
clause of die collective bargaining agreement upon the recommendation
by the union, this dismissal should not be done hastily and summarily
thereby eroding die employees’ right to due process, self-organization
and security of tenure. The enforcement of union security clauses is
authorized by law provided such enforcement is not characterized by
arbitrariness and always with due process. Even on the assumption that
the federation had valid grounds to expel the union officers, due
process requires that these union officers be accorded a separate
hearing by respondent company.”12

The twin requirements o f notice and hearing constitute the essential

elements of procedural due process. The law requires the employer to furnish the
employee sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) a written notice apprising the employee of
die particular acts or omissions for which his dismissal is sought in order to afford
him an opportunity to be heard and to defend himself with the assistance of
counsel, if he desires, and (2) a subsequent notice informing the employee o f the
employer’s decision to dismiss him. This procedure is mandatory and its absence
taints the dismissal with illegality.34

In the same case of A labang Country Club* the question was asked whether
respondents Pizarro, Braza, and Castucras were accorded due process before their
employments were terminated. In ruling that the Club, their employer, substantially
complied with the due process requirements before it dismissed them, the Supreme

1 Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos, G.R No. 113907, Feb. 28’, 2000.
1 Emphasis suppEed.
i Easycall Communications Phils., Inc. v. King, G.R. No. 145901, Dec. 15,2005,478 SCRA102,113-114.
4 Alabang Country Dub, be. v. NLRC, G.R. No. 170287, Feb. 14,2008.

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Court ratiocinated that the CA and the 3 respondents erred in relying on the said
case o f M. Greenfield where the members were expelled from the SEBA and were
immediately dismissed from the company without affording them any semblance of
due process. Both the unioa and the company did not conduct administrative
hearings to give the employees a chance to explain themselves. In the present case,
the Club has substantially complied with due process. The 3 respondents were
notified that their dismissal was being requested by the SEBA and their
explanations were heard. Then, the Club, through its President, conferred with
said respondents during the last week o f O ctober 2001. The 3 respondents were
dismissed only after the Club reviewed and considered the documents submitted by
the SEBA vis-a-vis the written explanations submitted by said respondents. Under
these circumstances, it is clear that the Club had afforded the 3 respondents
reasonable opportunity to be heard and defend themselves.

5. U N IO N D U E PROCESS VS. E M P L O Y E R D U E PROCESS.

In most cases where the termination o f employment based on violation of

the union security clause was declared illegal because the employer approved the
dismissal recommendation o f the SEBA without affording due process to the
expelled member, it is the employer’s contention that there is no more need to
afford procedural due process to die employee because die same has already been
given to and complied with by the SEBA prior to his expulsion. In other words,
what the employer normally does is to simply adopt as its own, die due process
observed by the SEBA prior to the expulsion. This contention of the employer is
o f course erroneous as it is oblivious o f the legal distinction between the required
due process that should be afforded by the SEBA prior to expulsion and the due
process required under the law to be observed by the employer prior to termination
of employment.

The distinction is not hard to comprehend. The due process required to

be observed by the union prior to its member’s expulsion concerns the
term ination o f his m em bership w ith th e union; while the due process that must
be complied with by the employer pertains to the term ination of his em ploym ent
with the em ployer. The purpose being distinct from each other, it is complete
error on the part o f the employer to adopt as its own due process what has been
earlier afforded by the SEBA to the erring employee without conducting its own
independent and separate due process.

Thus, in declaring the illegality o f the dismissal o f petitioner in Carino v.

NLRC,2 the Supreme Court noted in regard to the involvement of the company in
his dismissal, that the company, upon being formally advised in writing o f the
expulsion of petitioner Carino from the union, in turn, did not afford due process
to him; instead, it immediately proceeded to issue a dismissal letter to petitioner*1

1 G R No. 113907, Feb. 28,2000.

1 G R No. 91086, May 8.1990,185 SCRA177.

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Cariiio, the termination being made effective the very next day. The company
should have given peudoner Carino an opportunity to explain his side o f the
controversy with the union. Notwithstanding the union security clause in the CBA,
die company should have reasonably satisfied itself by its own inquiry that the
union had not been merely acting arbitrarily 2nd capriciously in impeaching and
expelling petitioner Carino. Had die company taken the trouble to investigate the
acts and proceedings of the union, it could have very easily determined that the
union had acted arbitrarily in impeaching and expelling from its ranks petitioner
Carino. The company offered the excuse that the union had threatened to go on
strike if its request had not been forthwith granted. 'Assuming that such a threat
had in fact been made, if a strike was in fact subsequendy called because the
company had insisted on conducting its own inquiry, the Court could have declared
that strike illegal. The Court likewise ignored the company’s further plea that for it
to inquire into the lawfulness o f the acts o f the union in this regard could have
constituted interference in die administration of the affairs of the union.

In Ranee v. NLRC,1where some members o f the union were dismissed for

violation of the union security clause consisting in their alleged act o f seeking help
from anodier federation at the time that they were being temporarily laid off from
work, it was held that such act cannot constitute disloyalty as contemplated in the
CBA. At most, it was an act o f self-preservation o f workers who, driven to
desperation, found shelter in the other federation which took the cudgels for them.
The dismissed union members were denied due process when they were dismissed
for disloyalty to the union based on the union security clause in the CBA. There
was no impartial tribunal or body vested with authority to conduct disciplinary-
proceeding under die constitution and by-laws and the expelled union members
were not furnished any notice o f the charge of disloyalty against them, nor timely
notice of the heanng thereon. Petitioners had no idea that they were charged with
disloyalty'. Those who came were not only threatened with persecution but also
made to write the answers to questions as dictated to them by the union and the
company representatives. The Board o f Directors o f the union acted as prosecutor,
mvestigator and judge at die same time. The proceedings have been a farce. The
absence of a hill blown investigation of the expelled members o f the union by an
impartial body provided no basis for the union’s accusation of disloyalty.
Employees are entided to due process before they may be expelled from the union
on charge of disloyalty. The scandalous haste with which respondent corporation
dismissed 125 employees lent credence to the claim that there was connivance
between respondent corporation and respondent union. It is evident that private
respondents were in bad faidi in dismissing petitioners. They are guilty o f unfair
labor practice.

1 G.R No. 68147, June 30.1988.

I
I

*..I
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The case o f General Milling Corp. v. Casio} also illustrates the situation
where petitioner GMC dismissed respondents, Casio, et al.} on the basis o f the
recommendation of its officers, Pino, et aL, *23 who are also respondents in this case.4
They were originally expelled on the basis of the finding that they have committed
“acts inimical to the interest o f the union” in violation of the union security clause.5
In justifying its act of immediately ordering the dismissal o f Casio, et al. solely on the
basis o f the recommendation of Pino, et al, and without affording them due
process, petitioner GMC asserted the following defense:

(1) As an employer, its only duty was to ascertain that the union, IBM-
Local 31, accorded Casio, et al due process; and, it is its finding that the union did
give Casio, et al the opportunity to answer the charges against them, but they
refused to avail themselves o f such opportunity.

(2) The acts of Pino, et al as officers and hoard members of the union, in
expelling Casio, et al from the union, enjoy the presumption o f regularity in the
performance o f official duties.

The Supreme Court, however, debunked said arguments and found that
petitioner GMC has illegally dismissed Casio, et al because not only did GMC fail to
make a determination of the sufficiency o f evidence to support the decision o f the
union to expel Casio, et al, but also to accord the expelled union members
procedural due process, Le., notice and hearing, prior to the termination of their
employment. It thus concluded that the 3td requisite6 prescribed in A labang Country
Club is absent.7 More particularly, the foregoing 2 arguments were expounded as
follows:

On N o. 1 above, this argument was declared to have no basis because

petitioner GMC failed to discharge the onus of proving that the dismissal o f Casio, et
al was not illegal.8 Irrcfragably, GMC cannot dispense with the requirements o f
notice and hearing before dismissing Casio, et al even when said dismissal is

' General Mling Corp. v. Casio, G R No. 149552, March 10,2010.

2 Casio, et al. were regular employees of GMC. Casio was elected IBMLocal 31 President for a ftree-year term in June 1991,
while his corespondents were union shop stewards.
1 Respondents VigSio Rno. et al.. were officers and board members of IBM-Local 31.
4 It must be noted that the union, Iferw at BuHod ng Mangagawa {lBM>4joca 31 Chapter (Local 31), the sole and exclusive
bargaining agent of Ihe rank-and-fiie employees of petitioner GMC in LapiHapu City, was not impleaded as a party in this
case.
5 in Ihe present case, fie CBA between peSConer GMC and BMLocal 31 richded a maintenance of membership and closed
shop clause as can be gleaned from Sections 3 and 6 of Article II. IBM-Local 31, where the union, by written request, can
ask GMC to terminate Ihe employment of the employee/worker who faied to maintain its good standing as a union member.
* AJabang Country Club prescribes the fotiewing requisites: (1) The union security clause is appicable; (2) The SEBA is
requesting for the enforcement of such clause; and (3) There is sufficient evidence to support the SEBA's decision to expel
the employee from membership.
7 It is undisputed that IBMLocal 31, through Gabiana, the IBM Regional Director fa Visayas and Mndanao, twice requested
GMC, in the letters dated March 10 and 19,1992, to terminate the employment of Casio, et a l as a necessary consequence
of their expulsion from the union. It is the third requisite - that (here is sufficient evidence to support the decision of IBMLocal
31 to expel Cash, et aL - which appears to be lacking in fhis case.
' Cifing Great Soubem Maritime Services Corporation, v. Acute, G.R. No. 14D189. Feb. 28,2005,492 Phi. 518,530-531.

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pursuant to the closed shop provision in the CBA. The rights o f an employee to be
informed of the charges against him and to reasonable opportunity to present his
side in a controversy with either the company or his own union are not wiped away
by a union security clause or a union shop clause in a CBA. An employee is entided
to be protected not only from a company which disregards bis rights but also from
his own union, the leadership of which could yield to the temptation o f swift and
arbitrary expulsion from membership and hence dismissal from his job.1 In the case
at bar, Casio, el al. did not receive any other communication from GMC, except the
written notice of termination dated March 24, 1992. GMC, by its own admission,
did not conduct a separate and independent mvestigation to determine the
sufficiency of the evidence supporting the expulsion of Casio, et al. by IBP-Local 31.
It straight away acceded to the demand of IBP-Local 31 to dismiss Casio, et a l 2*

On No. 2 above, it was declared that contrary to the position of GMC,

the acts of Pino, et al as officers and board members o f IBM-Local 31, in expelling
Casio, ei al from the union, do not enjoy the presumption o f regularity in the
performance of official duties, because the presumption applies only to public
officers from the highest to the lowest in the service o f the Government,
departments, bureaus, offices, an d /o r its political subdivisions.

6. RULE ON LIABILITY FO R R E IN S T A T E M E N T , BACKWAGES AND

DAMAGES.

The latest rule is that good faith will not exonerate the employer and the
SEBA from liability for reinstatement, bachvages and damages, in case the
dismissal based on violation of the union security clause is declared illegal.

In the earlier cases o f Zip Venetian Blind? and Soriano,45the Supreme Court
affirmed the disallowance of backwages or ‘financialassistance” where the employer
acted in good faith in dismissing the employees on the basis o f a closed-shop
agreement, even if the dismissal was held illegal. However, in more recent cases,
like DelMontP and Olvidop it was ruled that the doctrine laid down in said 1961 case
of Zip Venetian Blind and 1989 case o f Soriano is inconsistent with Article 294 [279]
of the Labor Code, as amended by R.A. No. 6715, which took effect on March 21,
1989 - just five (5) days after Soriano was promulgated. This is so because it is now
provided in the Labor Code diat “ [a]n employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss o f seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other

1 Cifing Cano v. NLRC, G R No. 91086, May 8,1990,185 SCRA177,189.

1 The records of It,is case are absolutely bereft of any supporting evidence to substantiate tie bare alegatkxi of GMC fiat
Casio, et al. were accorded due process by IBM-Local 31.
1 National Labor Union v. Z*> Venetian Bind, G R. Nos. L-15827-28, May 31.1951,2 SCRA 509,112 Phil. 407.
4 Sorianov A6enza.GR N o.68619,March 16.1989,171 SCRA284
5 Del Monte Phdipprnes. Inc. v. Saldwar, G.R. No. 158620, Oct 11.2006
« Ovido v. CA, G R Nos. 14116667, Oct 15.2007.

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benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time o f his actual reinstatement”

Thus, where reinstatement is adjudged, the award of backwages and

other benefits continues beyond the date of the Labor Arbiter’s decision ordering
the reinstatement and extends up to the time said order of reinstatement is actually
carried o u t R.A. No. 6715 effectively mitigated previous jurisprudence which had
limited the extent to which illegally dismissed employees could claim for
backwages.1

The fact, therefore, that there has been a finding of illegality o f dismissal
will result in declaring the employer and the union liable for all the reliefs provided
in Article 294 [279]. Thus, in both the 2010 case of Picop Resources, Inc. (PRI) v.
Taiieca} and 2011 case of Picop Resources, ltic. (PRI) v. Dequilla,1 involving the same
incident and factual setting, respondents who were found to have been illegally
dismissed pursuant to the union security clause in the CBA were granted the twin
reliefs o f full backwages and reinstatement or, if no longer viable, separation pay
equivalent to one month salary for every year of service in lieu thereof. Moreover,
respondents, having been compelled to litigate in order to seek redress for their
illegal dismissal, were awarded- attorney’s fees equivalent to 10% of the total
monetary award. It is thus well-settled that the employer is liable for reinstatement
and the payment of backwages if it has acted in bad faith in effecting the dismissal
o f the employees based on the union security clause in the CBA.4

7. SOLIDARY LIABILITY O F E M PL O Y E R AND U N IO N .

The nature of the liability o f the employer and the union for
reinstatement, backwages, damages and other monetary claims in cases of illegal
dismissal arising from purported violation o f the union security clause is solidary or
joint and several. To illustrate, both the respondent employer and respondent
union were adjudged guilty of ULP in the case o f Ri^al Labor Union v. Ri^al Cement
Co.,5 when the union requested the dismissal o f 15 employees and the employer
acceded by effecting the dismissal on the ground that the said employees formed
another union. The union security clause in the CBA, however, merely provided for
a limited closed shop which did not justify the dismissal. Consequently, respondent
company and union were ordered to reinstate petitioners, and pay jointly and
severally, their backwages from the date o f their dismissal until they were
reinstated.6

As explained in Ferrer v. NLRC, G R No. 100898, July 5,1993,224 SCRA 410,418.

G.R No. 160828, Aug. 9,2010.
G R No. 172666, Dec. 7,2011.
LSerty Cotton Mils Workers Union v. Uberty Cotton Mils, G.R No 1-33987, Sept 4,1975,66 SCRA 512.
G.R. No. L-19779, July 30,1966.
See also Manila Cordage Company v. CIR, G.R Nos. L-27079 and L-27080, Aug. 31,1977

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8. DISTINCTIVE A PPLICA TION O F SOLIDARY LIABILITY.

a. On reinstatement.
There is no question that, as far as reinstatement is concerned, only the
employer can comply therewith and not die union. Hence, the employer is solely
liable therefor and the joint and solidary principle cannot be applied thereto.
b. On separation pay in lieu o f reinstatem ent.
However, in the event that reinstatement is no longer feasible, practicable
or possible, separation pay is granted in lieu thereof.1 In this case, the otherwise
non-monetary reinstatement is converted23into a monetary award; hence, being this
time monetary in nature, the union may be held solidarily liable with the employer
therefor.
c. On backw ages and dam ages.
As far as backwages and damages are concerned, since they are both
monetary in character, die employer and die union may be held solidarily liable for
payment thereof.
VI.
FILING OF CHARGES OR GIVING OF TESTIM O N Y

1. CONCEPT.
Under paragraph [f]5 of Article 259 [248] of the Labor Code, it is an unfair
labor practice for an employer to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or being about to give testimony
under the Labor Code.4
2. T H E ONLY EX C EPTIO N A L ULP.
Jurisprudence is entrenched that Article 259(f) [248(f)] is the only kind of
ULP that need not be related to or connected with the exercise by the employees of
their right to self-organization and collective bargaining5 or observance o f a CBA.6
3. MEANING OF “HAVING GIVEN OR B E IN G ABO U T TO GIVE
TESTIMONY UNDER [T H E LABORJ CODE. ”
The qualifying phrase "having given or being about to give testimony under [the
Labor] Code,” despite its clear language, should not be confined merely to the act of
die employee in actually testifying or offering his testimony in a labor case, whether

1 General M ing Corp. v. Case, G.R. No. 149552. M an* 10.2010.

2 Ths is tie holding in Session Delights Ice Cream and Fast Foods v. CA (Sixth Division), G il No. 172149, Feb. 8,2010.
3 *(0 To tfemiss. dscha^e cr oJierwse prejudice or discriminate against an employee for having given or being about to give
testimony under his Coded
* See ^so Section 13(d], Rule XII. Book III. Ftules to Implement tr>e Labor Code.
5 See Pepsi-Cola Philippines. Inc. v. Molon, G.R No. 175002, Feb. 18,2013; Bisig Manggagawa sa Tiyco v. NLRC, G R No.
151309, Oct 15,2008.
‘ Philcom Employees Union v. Philippine Global Communications, G.R No. 144315, July 17,2006; Pepsi-Cda PhSpp'nes,
Inc v Molon, G.R No. 175002, Feb. 18,2013.

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LABOR RELATIONS

as a party-in-interest therein or as a witness for himself, for a co-employee, for a

union, for the government or for a third party.
What is material to consider is the fact that the sanction imposed on the
employee that constitutes ULP, such as dismissal or discharge, or the prejudice or
discrimination perpetrated against him that likewise amounts to ULP, was
occasioned by his act of filing a complaint against the employer or of participating
in any labor case, regardless of its nature and extent and in whatever capacity or
purpose the same may have been made by him.
In Itogon-Suyoc} it was declared that ULP was committed by the employer
when it dismissed the worker who had testified in the hearing of a certification
election case despite its prior request for him not to testify in the said proceeding
accompanied with a promise o f being reinstated if he followed the request.2
An example of a ULP involving the filing of a complaint is the case o f
Philippine American Cigar} The extremely unique nature of this case consists in the
fact that the person dismissed by respondent company was not the employee who
filed the case for ULP but his brother. Despite this unorthodox situation, the High
Court ruled that the company was guilty o f ULP. Although the law4 would seem to
refer only to the dismissal of the one who filed charges against the company as
constituting ULP, the legislative intent is to assure absolute freedom o f the
employees to establish labor organizations and unions as well as to proffer charges
for violation of labor laws.
If the dismissal o f an employee due to the filing by him o f said charges
would be and is an undue restraint upon said freedom, the dismissal o f his brother
owing to the non-withdrawal o f the charges of the former would be and constitute
as much, in fact a greater and more effective, restraint upon the same freedom.
What is prohibited to be done directly shall not be allowed to be accomplished
indireedy.5
Decisions in the United States abound where similar dismissals o f
employees on account of union activities of relatives were declared constitutive o f
ULP. For instance, the dismissal o f a brother,6 or o f an employee, because o f the
union activities o f his wife,7 or of a female employee, due to the union activities o f
her husband,8 was declared ULP.9

Itogon-Suyoc Mnes, Inc. v. BaWo, G.R. No. L-17739, Dec. 24,1964.

See also National Fastener Corporation v. CIR G.R. No. L-15834, Jan. 20,1961.
Philippine American Cigar and Cigarette Factory Workers Independent Union v. Ptolpphe American Cigar and Cigarette
Manufacturing Co., G.R No. L-18364. Feb. 28,1963.
Section 4{a] 5 of RA. No. 875, n w Article 259(0 W ) l of the Labor Coce.
The Supreme Court disposed of this case by dedaring respondent PhJppine American Cigar & Cigarette Manufacturing
Co, Inc, guilty of ULP and ordering said respondent to reinstate he brother [Apolonio San Jose],
Id., citing In the Matter of Ouidnck Dye Worts, Inc. and Federation of Dyers, Rnishers, Printers and Bleachers of America (2
NLRB 963).
Id, citing In the Matter of Ford Motor Company and H.C. McGarity, 26 NLRB, p. 322.
Id, citing Union Asbestos & Rubber Co. and United Textile Worters of America, AFL, 98 NLRB p. 1055.
Id, citing Teleris wort on Labor Disputes and CoJective Bargaining (Vol. 2, p. 859).

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4. ULP ACT N E E D N O T INVOLVE DISMISSAL.

The act of reprisal contemplated under this provision is not limited to the
dismissal or discharge of an employee.1Any other act, short o f dismissal, but which
tantamount to discrimination or prejudice against an employee by reason o f his
filing a labor complaint, or for his being a prospective witness*in a labor case or for
actually testifying or participating therein may also be considered ULP.
Thus, the terms “discrim ination” and “prejudice” in the context of
ULP under this particular provision of. the Labor Code, relate to the employee’s
having given or being about to give testimony under the Labor Code23and the
employer’s retaliatory act may take various forms, such as transferring the employee
to a demeaning position or assigning him with more difficult work tasks, or
otherwise punishing him because he has filed ULP or other charges against it or he
has participated in the prosecution/defense o f a labor case, either as a party-in­
interest thereto or a witness therein.
VII.
CBA-RELATED ULPs

1. T H R E E (3) C B A - R E L A T E D U L P s .

Article 259 [248] enunciates tliree (3) CBA-related ULPs, to wit

1) To violate die duty to bargain collectively as prescribed in the Labor

Code.1
2) To pay negotiation or attorney’s fees to the union or its officers or
agents as part of the settlement o f any issue in collective bargaining or
any odier dispute.4
3) I'o violate a CBA.5

Vll-A.
VIOLATION OF THE DUTY TO BARGAIN COLLECTIVELY

(NOTE: The topic of “Duty to Bargain C ollectiveiy” is earlier discussed under "D . R IG H T S O F
L A B O R O R G A N IZ A T IO N S ", s u p ra . Only the ULP aspect thereof is discussed hereunder).

1. DUTY TO BARGAIN COLLECTIVELY.

The duty to bargain collectively devolves upon both the employer and the
SEBA.1 As described in the law, the duty to bargain collectively means the

’ The terms ‘dismissar and ’discharge’ have the same meaning. (See US Legal at USLegal.com:
httpj/definitkxis.usiegal com/d/cfectiarge/; Last accessed: January 12.2017
2 Great Pacific Life Employees Union v Great Pacific Life Assurance Corporation, G.R. No. 126717, Feb. 11,1999.
3 Paragraph (g) of Article 259 [248] of the Labor Code which provides: ’(g) To violate the duty to bargah collectively as
prescribed by this Code[.f
* Paragraph^) of Article 2159 [246] of Sielaba Code which states:‘(h) To pay negotiate or attorney's fees to the union or is
officers or agents as part of the settlement of ary issue in collective bargaining or any other disputed
5 Paragraph (i) of Article 259 [246] of the Labor Code which provides: ’(i) To violate a colective bargaining agreement’

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LABOR RELATIONS

performance of a mutual obligation to meet and convene prompdy and

expeditiously in good faith for the purpose o f negotiating an agreement with
respect to wages, hours of work and all other terms and conditions o f employment,
including proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements, if requested by
either party; but such duty does not compel any party to make any concession.*12 In
the absence of an agreement or other voluntary arrangement providing for a more
expeditious manner o f collective bargaining, it is the duty o f die employer and the
representatives of the employees to bargain collectvcly in accordance with the
provisions of the Labor Code.3

When there is a CBA, the duty to bargain collectively also means that
neither party should terminate nor modify such agreement during its lifetime.
However, either party can serve a written notice to terminate or modify the
agreement at least sixty (60) days prior to its expiration date which, under the law, is
considered the freedom period within which either party can validly terminate the
CBA. It is the duty o f both parties to keep the status quo and to continue in hill
force and effect the terms and conditions o f the existing agreement during the 60-
day period and/ or until a new agreement is reached by the parties.4

2. F A IL U R E O R R E F U S A L T O G IV E C O U N T E R -P R O P O S A L S .

The failure of the employer to submit its counter-proposals to the

demands of the SEBA does not, by itself, constitute refusal to bargain as would
amount to ULP.567However, it is different if the employer refuses to submit an
answer or reply to the written bargaining proposals o f the SEBA. In this case,
unfair labor practice is committed. While the law does not compel the parties to
reach an agreement, it does contemplate that both parties will approach the
negotiation with an open mind and make a reasonable effort to reach a common
ground of agreement.4

In the case of General Milling1 the Supreme Court found the petitioner
guilty of ULP under Article 259(g) [248(g)] for refusing to send a counter-proposal
to the SEBA and to bargain anew on the economic terms o f the CBA. The
employer anchored its refusal to bargain with and recognize the union on several
letters received by the former regarding the withdrawal of the workers' membership
from the union. This defense was rejected by the Supreme Court, saying that the

’ See Articles 259(g) [243(g)] and 250(c) [249(c)], respectively, of the Labor Code.
1 Article 263 [2521, Labor Code; Bizalde Rope Factory, Inc. v. CIR, G.R. No. L-' 6419, May 30,1963,8 SCRA 67.
1 Articte 262 [251], Labor Code. This articie traces its roots from a U.S. law (See National Labor Rdatioos Act, 29 U.S. Code §
158 - Unfair labor practices, Sec. 8{a) (5) thereof).
< Article 264 [253], Ibid.
* Phiippine Marine Radio Officers Association v. CIR, G.R. Nos. L-10095 and L-10115. Oct 31.1957,102 Phil 373.
6 KiokLoyv. NLRC, GR . No. 54334, Jan. 22,1986.
7 General Milling Corporation v.CA, G.R No. 146728, Feb. 11,2004.

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 532 Bar reviewer on Labor Law

employer had devised a flimsy excuse by attacking the existence of the union and
the status of the union's membership to prevent any negotiation.

Similarly, in the earlier case o f Coltgio dt San Juan de Letran} the petitioner
school was declared guilty of ULP when it failed to make a timely reply to the
proposals of the SEBA more than a month after the same were submitted to it. In
explaining its failure to reply, the school merely offered the feeble excuse that its
Board of Trustees had not yet convened to discuss the matter. Clearly, its actuation
showed a lack of sincere desire to negotiate the CBA thereby rendering it guilty of
ULP.

In the 2016 case of Ren Transport Corp. v. NLKC,*2 petitioner was declared
to have violated its duty to bargain collectively with private respondent union
SMART,3 the incumbent bargaining agent, because o f its refusal to submit to the
latter its CBA counter-proposals on the basis of its position that it has ceased to be
die exclusive bargaining agent of the rank-and-file employees by reason o f the
disaffiliation of the majority of its members. In so declaring petitioner guilty of
ULP, the Court noted that it had a duty to bargain collectively with SMART. Under
264 [253]4 in relation to Article 268 [256]5 o f the Labor Code, it is during the
freedom period - or the last 60 days before the expiration o f the CBA - when
another union may challenge the majority status o f the bargaining agent through
the filing of a petition for a certification election. I f there is no such petition filed
during die freedom period, then the employer “shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for
certification election is filed.” In the present case, the facts are not up for debate.
No petition for certification election challenging the majority status o f SMART was
filed during the freedom period, which was from November 1 to December 31,
2004 - the 60-day period prior to the expiration o f the five-year CBA. SMART
therefore remained the exclusive bargaining agent o f the rank-and-file employees.

3. F A IL U R E O F E M P L O Y E R T O P R O V ID E U P D A T E D F IN A N C IA L
IN F O R M A T IO N , W H E N U L P .

During and in the course of the CBA negotiations, the SEBA has the
right to request from the employer, copies of the annual audited financial
statements, including the balance sheet and the profit and loss statement.6 The
employer is duty-bound to make available such up-to-date financial information on

' Colegio de San Juan de Letran v. Association of Employees and Faculty of Letran, G.R. No. 141471. Sept. 18,2000.
2 G.R. Nos 188020 & 1882532, June 27,2016.
3 SamahanngManggagavasa Ren Transport (SMART).
4 Arbcie 264 [253] is enSJed tXity to Bargain Colectrvety 'Mien There Exists a Cofiectve Bargaining Agreement ‘ This was
cited by fie Supreme Court in this decision as Article 263 and not Article 264 which is Ihe renumbefiig made by Hie DOLE
Secretary in her Department Advisory No. 01, Series of 2015 (Renumbering of the Labor Code of (he Philippines, as
Amended), issued on July 21,2015.
3 Article 268 [256] b entjfled ‘Representation Issue in Organized EstabEshments.*
4 Article 251(c) {242(c)], Labor Code.

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LABOR. RELATIONS

the economic situation o f its establishment which is normally submitted to relevant

government agencies that is material and necessary for a meaningful negotiation.1

In cases where the disclosure o f some of the information would prejudice

the employer’s business, its communication may be made conditioned upon a
commitment of the union that it would be regarded as confidential to the extent
required.2 The employer, upon receipt o f the written request for copies of the
financial statements, has thirty' (30) calendar days from receipt thereof within which
to furnish the union therewith.3

It bears emphasis, however, that the refusal of the employer to furnish the
requested information is not ULP if the SEBA failed to put its request in writing as
required in Article 251(c) [242(c)]4 o f the Labor Code.5

4. U N IL A T E R A L C H A N G E S I N W A G E S A N D T E R M S A N D
C O N D IT IO N S O F E M P L O Y M E N T IN T H E C O U R S E O F T H E C B A
N E G O T IA T IO N S .

It is considered a failure and refusal to bargain in good faith if an

employer, without first negotiating with the union, unilaterally makes changes in
wages, hours of work and other terms and conditions of work that are the subject
o f the on-going CBA negotiation. But the situation is different once the employer
has given the SEBA the opportunity to negotiate over a set o f proposals and there
has been a deadlock, in which case, the employer has the liberty to unilaterally
implement its proposals. The law certainly does not intend to impose an embargo
upon the employer from introducing improvements in its employees’ benefits until
the CBA is concluded with the SEBA.

5. I N T E R F E R E N C E I N C H O I C E O F U N I O N B A R G A IN IN G P A N E L .

If an employer interferes in the selection of the union’s negotiators or

coerces the union to exclude from its panel o f negotiators, a representative of the
union, and if it can be inferred that the employer adopted the said act to yield
adverse effects on the free exercise o f the right to self-organization or on the right
to collective bargaining o f the employees, a ULP under Article 259(a) [248(a)], in
relation to, Article 253 [243]6 of the Labor Code, is committed.

1 See Section 2, Rule XVI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03. Series
of 2003, (February 17.2003].
1 Id.
1 Article 251(c) [242(c)]. Labor Code.
* Paragraph (c) of this article provides as follows: '(c) To be furnished by Ihe employer, upon written request with its annual
audited financial statements, including the balance sheet and the profit and loss statement within thirty (30) calendar days
from the date of receipt of the request after the union has been duV recognized by the employer or certified as the sole and
exclusive bargaining representative of the employees in he bargaining unit or within sixty (60) calendar days before the
expiration of the existing cotecfive bargaining agreement or during the collective bargaining negotiation!!
5 Standard Chartered Bank Employees Union [NUBE] v. Confesor, G il No. 114974, June 16,2004.
6 This provision states: ‘Article 253 [243]. Coverage and employees’ right to seif-organization. All persons employed in
commerdaf, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether

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 534 Bar Reviewer on Labor Law

Thus, an employer’s personal objection to one or more of the union's

representatives does not ordinarily justify ltis refusal to negotiate. This is so because
both the employer and the SEBA have the freedom and right to designate
whomever they respectively choose and designate to represent them at the
bargaining table. The law does not allow cither or both parties to refuse to bargain
with each other by reason of perceived or actual conflicts between their
representatives. Thus, the right to choose its representatives at such discussions
must be left to the discretion of the SEBA and not to the whim o f management*1*

However, in the case of Standard Chartered Bank} the act of the bank’s
Human Resource Manager in suggesting the exclusion o f the federation president
from the negotiating panel was not considered a ULP. It is not an anti-union
conduct from which it can be inferred that the bank consciously adopted such act
to yield adverse effects on the free exercise of the right to self-organization and
collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and simultaneously
with the manager’s suggestion that the bank lawyers be excluded from its
negotiating panel as well. The records show that after the initiation o f the collective
bargaining process, with the inclusion of the federation president in the union’s
negotiating panel, the negotiations pushed through. If at all, the suggestion should
be construed as part of the normal relations and innocent communications that arc
all part of the friendly relations between the union and the bank.

6. EM PLOYER’S ACT OF N E G O T IA T IN G W ITH U N IO N M EM BERS

INDIVIDUALLY, A ULP.

To negotiate or attempt to negotiate with individual workers rather than

with the SEBA is ULP. For instance, the act of the employer in notifying absent
employees individually during a strike following unproductive efforts at collective
bargaining that the plant would be operated the next day and that their jobs were
open for them should they want to come in has been held to be a ULP, an active
interference with the right of collective bargaining through dealing with the
employees individually instead of through their collective bargaining
representative.3

In Insular Life,* respondent company through its president, sent two (2)
sets of letters to the individual strikers during the strike. The first contained

operating Jor profit or not. sha! have the right to seff-organization and to form, join, or assist labor organizations of ther cxvn
choosing for purposes of colleciwe bargaining. Ambulant, intermittent and ftjnerant workers, seif-employed people, rural
workers and those without any definite employers may form tabor organizafions for their mutual aid and protection.' (As
amended by Bates Pambansa Biiang 70, May 1,1980).
1 Ft Jackson Laundry Facirty, AfSIMR Dec. No. 242 (1972).
1 Standard Chartered Bank Employees Union [NU8E] v. Confescr, G.R.No.114974, June 16,2004.
3 31 Am. Jur. 563, rating NLRB v. Montgomery Ward & Co. [CA 9th] 133 F2d 676,146 ALR1045.
* Insular Life Assurance Co., Ltd., Employees Assotiafion-NATU v. Insular Life Assurance Co., Ltd., G.R. No. L-25291, Jan.
30,1971,37 SCRA244.

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LABOR. RELATIONS

promises o f benefits to the employees in order to entice them to return to work;

while the second contained threats to obtain replacements for the striking employees
in the event they do not report for work on June 2, 1958. The respondents
contend that the sending of the letters constituted a legitimate exercise of their
freedom of speech. The Supreme Court, however, disagreed. The said letters were
directed to the striking employees individually - by registered special delivery mail at
that - without being coursed through the unions which were representing the
employees in the collective bargaining. Moreover, the sending o f these letters is not
protected by the free speech provisions of the Constitution. The free speech
protection under the Constitution is inapplicable where the expression of opinion
by the employer or his agent contains a promise of benefit or threats or reprisal1

Indeed, it is ULP for an employer operating under a CBA to negotiate or

to attempt to negotiate with his employees individually in connection with changes
therein. And the basis o f the prohibition regarding individual bargaining with the
strikers is that although the union is on strike, the employer is still under obligation
to bargain with the union as the employees’ bargaining representative.2* Such
actions are illegal as constituting unwarranted acts o f interference. Thus, the act o f
a company president in writing letters to the strikers, urging their return to work on
terms inconsistent with their union membership, constitutes interference with the
exercise o f his employees' right to collective bargaining.-5

7. B A R G A IN IN G I N B E H A L F O F IT S M E M B E R S O N L Y .

Respondent union in Philippine Diamond Hotel,4 insists that it could validly

bargain in behalf o f “its members, ” only, relying on paragraph (a) o f Article 251 [242]5
o f the Labor Code. It was, however, pronounced that respondent’s reliance on said
article, a general provision on the rights of legitimate labor organizations, is
misplaced for not every legitimate labor organization possesses the rights
mentioned therein. Article 251(a) [242(a)] must be read in relation to Article 267
[255].6 Thus, on respondent’s contendon that it was bargaining in behalf only o f its
members, the appellate court, affirming the NLRC’s observation that the same
would only “fragment the employees” of petitioner, held that “what [respondent]
will be achieving is to divide the employees, more particularly, the rank-and-file
employees o f [petitioner] ... the other workers who are not members are at a serious
disadvantage, because if the same shall be allowed, employees who are non-union

1 Citing 31 Am. Jur. 544; NLRB v. Ctearfidd Cheese Co., Inc, 213 F2d 70; NLRB v. Goigy Co., 211 F2d 533,35 ALR 2d 422
1 Cifing Meto Ftwto Supply Corporation v. Natiooal Labor Relations Board, 321 U.S 332.
1 Citing Lighter Publishing, CCA 7th, 133 F2d 621.
4 PWipp'ne Diamond Hotel and Resort, Inc. [Mania Diamond Hotel] v. Manila Diamond Hotel Employees Union, G.R No.
158075, June 30.2006.
5 It provides as follows: 'Article 251 [242J. Right of legitimate labor o^anizations. - A legitimate labor organization shall have Ihe
right (a) To act as representaSve of its members for the pupose of coiective bargamng. Xxx’
4 It states: ‘Article 267 [255]. Exduswe bargaining representation and wrirers’ participation in policy and deosiornnaking. The
tabor organization designated or selected by the majority of tie employees in an appropriate coGectve bargaining unit shad
be the exclusive representative of the emplc^ees h such unit for the purpose of ooflectr/e bargain'ng. xxx*

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 536 Bar reviewer on Labor Law

members will be economically impaired and will not be able to negotiate their
terms and conditions of work, thus defeating the very essence and reason of
collective bargaining which is an effective safeguard against the evil schemes of
employers in terms and conditions of work.” Petitioner’s refusal to bargain then
with respondent union cannot be considered an unfair labor practice to justify the
staging of the strike.1*

8. S U R F A C E B A R G A I N I N G .

“Surface bargaining" is defined as “going through the motions of negotiating”

without any legal intent to reach an agreement. It is'*a form o f ULP that may only
be committed by the employer. According to Standard Chartered Bank} it involves
die question of whether an employer’s conduct demonstrates an unwillingness to
bargain in good faith or is merely hard bargaining. There can be no surface
bargaining, absent any evidence that management had done acts, both at and away
from the bargaining table, which tend to show that it did not want to reach an
agreement with the union or to settle the differences between it and the union.
Here, admittedly, the parties were not able to agree and thus reached a deadlock.
However, it must be emphasized that the duty to bargain “does not compel either
party to agree to a proposal or require the making o f a concession.” Hence, the
parties’ failure to agree does not amount to ULP under Article 259(g) [248(g)].3*

9. B L U E -S K Y B A R G A I N I N G .

“Blue-sky bargaining” means making exaggerated or unreasonable

proposals.* This is a kind of ULP which can only be committed by a SEBA.

In the same Standard Chartered Bank case, the minutes of the meeting show
that the SEBA based its economic proposals on data o f rank-and-file employees
and the prevailing economic benefits received by bank employees from other
foreign banks doing business in the Philippines and other branches of the bank in
the Asian region. Hence, it cannot be said that die union was guilty o f ULP for
blue-sky bargaining.

10. B O U L W A R IS M .

Boulwarism is a negotiation tactic named after the former vice president

of General Electric, Lemuel Boulware, who pioneered this strategy.5 It is a labor
law principle in which management opens the negotiation with a generous offer

1 Id.
1 Standard Chartered Bank Employees Union [NU8E] v. Confesor, G.R No. 114974, June 16,2004.
1 See also National Union of Restaurant Workers [PTl)C] v. CIR, G R No. L-20044, April 30,1964.
* ArthurA.SJoaneandFredWitney1LaborRelatjons,7T*Editjoo 1991,p. 195.
5 When faced with a strfre,Boutoe is famous fa telSng the International Union of Electicaf Workers (1UEW) at Ihe onset of
negotiations fiat the company had already evaluated he workers’ needs and was putting forth its "first, last and best offer*
on Ihe table.

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 C hapter five 537
l a b o r r e l a t io n s

that is not meant to be negotiated.*1*In other words, it is an offer which is ultimate

and to which no further revisions will be made. This “take it or leave it’* offer or
counter-offer does not constitute proper collective bargaining not only within the
contemplation o f United States laws but also under Philippine law.3 It is considered
ULP4 as essentially, no labor negotiation has taken place.5

11. C L O S U R E O F E S T A B L IS H M E N T IN B A D F A IT H .

In holding that petitioner is liable for ULP and illegal dismissal, it was
pronounced in St. John Colleges67that the timing of, and the reasons for, the closure
of the high school department and its reopening after only one year from the time
it was closed down, show that the closure was done in bad faith for the purpose of
circumventing the union’s right to collective bargaining and its members’ right to
security o f tenure. Petitioner SJCI undermined the Labor Code’s system of dispute
resolution by closing down its high school department while the 1997 CBA
negotiations deadlock issues were pending resolution before the D O LE Secretary.
The closure was done in bad faith for the purpose of defeating the union’s right to
collective bargaining. Besides, as found by the NLRC, the alleged illegality and
excessiveness o f the union’s demands were not sufticiently proved by petitioner
SJCI. Even on the assumption that the union’s demands were illegal or excessive,
petitioner SJCI’s remedy was to await the resolution by the D O LE Secretary and to
file a ULP case against the union. However, SJCI did not have the power to take
matters into its own hands by closing down its high school department in order to
get rid of the union.
In Purefoods Corp.,1 the closure o f petitioner’s Sto. Tomas farm was
declared to have been made in bad faith. Badges o f bad faith are evident from the
following acts o f the petitioner it unjustifiably refused to recogni2e the Sto. Tomas
Free Workers Union’s (STFWU’s) and the other unions’ affiliation with Purefoods
Unified Labor Organization (PULO); it concluded a new CBA with another union
in another farm during the agreed indefinite suspension of the collective bargaining
negotiations; it surreptitiously transferred aod continued its business in a less
hostile environment; and it suddenly terminated the STFWU members but retained
and brought the non-members to its Malvar farm. Petitioner presented no evidence
to support its contention that it was incurring losses or that the subject farm’s lease
agreement was pre-terminated. Ineluctably, the closure o f the Sto. Tomas farm

' See BusinessOctjonary.com at ht^7/www±)usinessdictkxiary.oom/definitkxL/BouhArarismiitrnt; Last accessed: January 29,

2017.
1 General Hectic Co., 150 NLRB 192 (1964); Saginaw Township Board of Education, Michigan Employment Relations
Commission Lab. Op. 127 (1970), reprinted in Smith, Edwards, and Clark, op. d t, p. 544.
J PhJppine National Railways v. Union de Maqurestas, G.R. No. L-32630, Apri 10,1979.
* The National Labor Relations Board (NLRB) of the United States has dedared Boulwarism as a ULP, as i is in violation of
the Wagner Act and Ihe National Labor RelaSons Act, partkxilafly a breach c# the duty to bargain in good faith.
5 See BusinessDicfionay.com, supra. See also USLegal.com at httpJ/rtefrifions.usJega!.(X)rn1vboutwansnV where the
outcome of this method was described as not having a real negotiation.
1 SL John Colleges, Inc. v. S t John Academy Faculty and Employees Union, G.R. No. 167892, Oct 27,2006.
7 Purefoods Corp. v. Nagkakaisang Samahang Manggagawa ng Purefoods Rank-and-File, G.R. No. 150896, Aug. 28,2008.

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 538 Bar Reviewer on Labor Law

circumvented the labor organization’s right to collective bargaining and violated its
members’ right to security of tenure. The sudden termination o f the STFWU
members is tainted with ULP because it was done to interfere with, restrain or
coerce its employees in the exercise of their right to self-organization. Thus, the
petitioner company was held liable for the payment of moral and exemplary
damages of P500,000.00 to the illegally dismissed STFWU members.

Vll-B.
PAYMENT OF NEGOTIATION FEES OR ATTO R NEY’S FEES

1. WHEN PAYMENT CONSIDERED ULP.

Article 259(h) [248(h)) of the Labor Code considers as ULP, die act o f the
employer in paying negotiation fees or attorney’s fees to the SEBA or its officers or
agents as part of the settlement of any issue in collective bargaining or any other
dispute.
2. FEES SHOULD BE PAID FROM UNION FUNDS.
Article 228(b) [222(b)]*1 requires that such attorney’s fees, negotiation fees
or similar charges should be paid from the union funds. These fees cannot be
collected from the employees individually.2
3. COUNTERPART PROVISION IN ARTICLE 260(e) [249(e)].
On the part of die union, asking for or accepting attorney’s fees or
negotiation fees from die employer as part o f the setdement o f any issue in
collective bargaining or any other dispute is considered ULP under Article 260(e)
[249(e)]34of the Labor Code.

Vll-C.
VIOLATION O F T H E C B A

1. SIMPLE VIOLATION OF CBA NO LONGER ULP.

Article 259(i) [248(i)] of the Labor Code should be read in relation to
Article 274 [261] thereof. Under die latter article, as amended/ violations o f a CBA,

' Article 228 [222]. Appearances and Fees.-xxx

(b) No attorney's fees, negotiation fees or similar charges of any kind arising fa n any colective bargainng agreement shal
be imposed on any individual member of the contracting union: Provided, however, that attorney's fees may be charged
against union fends in an amount to be agreed upon by the parties. Any contract agreement or arrangement of any sort to
the contrary shal be nul and vend.
1 Pacific Banking Corporation v. Clave. G.R. No. 56965. March 7,1984.
3 "Article 260 [249). Unfair Labor Practices ol Labor Organizations. - it shal be unfair labor practice for a labor organization, its
officers, agents or representatives:
XXX
■(e) To ask for a accept negotiation or attorney's fees from employers as part of the settlement of any issue n colectjve
bargahtog or any other disputed
4 As amended by R A No. 6715.

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 C hapter Five 5 39
LABOR RELATIONS

except those which are gross in character, are no longer considered as ULPs but
merely as grievances that must be resolved through the grievance machinery
provided in the CBA. Gross violation o f CBA means flagrant and/or malicious
refusal to comply with its economic provisions.1

2. ONLY GROSS VIOLATION IS ULP.

In other words, (1) ordinary violations of a CBA which involve non­
economic provisions thereof; (2) violations o f its non-economic provisions, even if
gross in nature; or (3) violations of its economic provisions which are not gross in
character, are no longer treated as ULP. Consequendy, diey should be resolved as
ordinary grievances properly cognizable under the grievance machinery and
voluntary arbitration clause of a CBA.

To emphasize, only gross violation of a CBA, as defined in Article 274

[261], is considered ULP, in which case, the jurisdiction thereover belongs to the
Labor Arbiter under Article 224(a) [217(a)] of the Labor Code. If not gross in
nature, the same shall be treated as a grievable issue propedy to be adjudicated
under die Grievance Machinery2 and, if unresolved, dirough the process o f
voluntary arbitration.3 This is clearly based on the legislative intendment o f the
framers of R.A. No. 6715.4 Thus, the purpose o f the amendatory provision
distinguishing "gross” from ordinary violation of the CBA is “ to give an expanded
jurisdiction to Voluntary Arbitrators so that any violation o f the CBA, if not gross,
will be subject to arbitration radier than industrial strike.”5 Consequendy, as a mere
grievable issue, non-gross violation o f the CBA will be resolved more speedily
through the grievance machinery and voluntary arbitration which have proven to
be very effective modes o f settling labor disputes. If not so treated as a grievable
issue but as a ULP act, parties arc expected to resort to the filing o f complaints for
ULP before Labor Arbiters or the filing o f notices o f strike or lockout before the
NCMB based on the ground o f ULP and subsequendy, if unresolved dirough the
conciliation and mediation mechanisms of said agency, the same will lead to the
staging o f strikes or lockouts whose effects are obviously grievous and deleterious
to the interest of both the employer and the employees.

An example o f a violation o f the CBA which has not been declared gross
in nature and, therefore, not a ULP, is die violation o f a grievance machinery by an
employer. This was the ruling in San Miguel Foods.6 This is so because the grievance
machinery provision in the CBA is not an economic provision, hence, the Labor
Arbiter has no jurisdiction to decide the issue of such violation. However, in the
same case, violation of the job security provision o f the CBA, specifically the

1 Right Attendants and Stewards Assodatkxi of the Philippines v. Philippine Airlines. Inc., G.R No. 178083, July 22,2008.
2 Under Article 273 (260], Labor Code.
1 Under Article 274 [2611. Ibid.
4 It took effect on March 21,1989.
5 See Record of the Senate, Volume I, No. 165. p. 5741 re Committee Amendments to on Senate Bill No. 530.
4 San Miguel Foods, Inc. v. San Miguel Corporation Employees Union - PTWGC, G.R No. 168569, Oct 5,2007.

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 540 Bar Reviewer on Labor Law

seniority rule therein provided while, at first blush, may appear to be non-economic
in nature, has nonetheless been declared therein as being gross in character. The
union in this case charged the employer (SMFI) for ULP because it has “appointed
less senior employees to positions at its Finance Department, consequently
intentionally bypassing more senior employees who are deserving o f said
appointment.” Following a liberal construction o f Article 274 [261] o f the Labor
Code, the Supreme Court ruled that the job security issue is economic in nature
since the seniority rule in the promotion of employees has a bearing on salaries and
benefits. Hence, it may not be seriously disputed that the afore-said charge is a
gross or flagrant violation of the seniority rule under the CBA, a ULP act over
which the Labor Arbiter has jurisdiction.

3.
ULP BY LABOR ORGANIZATIONS

1. ULPs OF LABOR ORGANIZATIONS.

Article 260 [249] of the Labor Code enumerates the following ULPs
that may be committed by labor organizations:

“Article 260 [249]. Unfair Labor Practices of Labor Organisations. - It shall

be unfair labor practice for a labor organization, its officers, agents or
representatives:

(a) To restrain or coerce employees in the exercise of their right to self­

organization. However, a labor organization shall have the right to
prescribe its own rules with respect to the acquisition or retention
of membership;
(b) To cause or attempt to cause an employer to discriminate against an
employee, including discrimination against an employee with respect
to whom membership in such organization has been denied or to
terminate an employee on any ground other than the usual terms
and conditions under which membership or continuation of
membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or agree
to pay or deliver any money or other things of value, in the nature
of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations;
(e) To ask for or accept negotiation or attorney’s fees from employers
as part of the settlement of any issue in collective bargaining or any
other dispute; or
(f) To violate a collective bargaining agreement

“The provisions of the preceding paragraph notwithstanding, only the

officers, members of governing boards, representatives or agents or members

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of labor associations or organizations who have actually participated in,

authorized or ratified unfair labor practices shall be held criminally liable.”1

2. ORDER OF TOPICAL PRESENTATION.

The major topics discussed in this section are as follows:

I. R ESTRAINT AND COERCIO N OF E M P .O Y E E S IN THE EXERCISE O F

TH EIR RIGHT TO SELF-ORGANIZATION
II. DISCRIMINATION
III. VIOLATION OF D UTY OF UNION TO BARGAIN COLLECTIVELY
IV. FEATHERBEDDING LAW
V. DEMAND OR ACCEPTANCE OF NEGOTIATION FEES OR
A TTO RNEY’S FEES
VI. VIOLATION OF THE CBA

R ESTRAINT AND C O ERCIO N O F EMPLOYEES

IN THE EXERCISE OF TH EIR R IG HT TO SELF-O RG ANIZATION

1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR

COERCE EMPLOYEES IN THEIR RIGHT TO SELF-ORGANIZE.

Under paragraph (a) of Article 260 [249],2 it is ULP for a labor

organization, its officers, agents or representatives, to restrain or coerce employees
in the exercise o f their right to self-organization. Compared to similar provision o f
paragraph (a) of Article 259 [248],3 notably lacking is the use of the word “interfere
in the exercise of the employees’ right to self-orginize. The significance in the
omission of this term lies in the grant o f unrestricted license to the labor
organization, its officers, agents or representatives to interfere with the exercise by
the employees of their right to self-organization. Such interference is not unlawful
since without it, no labor organization can be formed as the act of recruiting and
convincing the employees to join it is definitely an act of interference. It becomes
unlawful within the context o f paragraph [a] o f Article 260 [249] only when it
amounts to restraint or coercion which is expressly prohibited thereunder.

1 As amended by Bates PambansaBilang 130, Aug.21,1981.

J Arfcfe 260(a) [249(a)] of the Labor Code provides: '(a) To restrain or coerce employees in the exercise of their right to seff-
organization. However, a labor organization shall have tie right to prescribe its own rules with respect to the acquisition or
retention of membership!.)"
J "Artide 259 [243]. Unfair Labor Pracfices of Employers. - It shaft be untawfir for an employer to commit any of the following
unfair labor practices:
'(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization] r

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 542 Bar reviewer on Labor Law

2. A U N IO N CANNOT PUNISH EM PLO Y EES W H O D ISAG REE W IT H

ITS POLICIES OR VIOLATE ITS RULES.

It is ULP for a union to restrain or coerce any employee in the exercise of

his organization rights. He may or may not join a union. He cannot be coerced into
joining a union nor be restrained from joining one. Any coercion or restraint
constitutes ULP.

Once a member of the union, he cannot be punished purely on the basis

of his act of disagreeing with certain policies o f the union against which he feels
strongly. True it is that a union, pursuant to its broad rule-making power in respect
to the acquisition, retention or loss o f membership, can prescribe certain penalties
for the violation thereof, which may range from fines, suspension or expulsion
from membership; however, as a matter o f general rule, these sanctions are only
internal in application for the proper governance and administration o f the union’s
activities and affairs. Most certainly, such act of breaking union policies and rules,
or refusing to comply with the penalties imposed, or voluntarily accepting the
sanctions meted, cannot be used as justification for the eventual dismissal o f the
employee from employment; otherwise, such will constitute ULP o f the union
since it, in effect, would have coercive and restraining adverse effect on the affected
employee’s organizational rights.

A union member, to cite an extreme example, who organizes another

union and initiates the filing of a petition for certification election may, based on
the rules of the union, be expelled from membership in the union but such
expulsion cannot result in giving power to the union to recommend the firing of
the errant member from his job or from harming in any way his status as an
employee. Beyond die imposition of sanctions, the union cannot do anything to
secure the termination of the employee from his employment. Any attempt o f the
union in further endangenng the employment status of the employee would be
tantamount to ULP.

Even if there is an existing union secunty clause in the CBA, the dismissal
from employment of die errant employee is not the automatic consequence o f his
violation as a union member of union policies and rules. Expulsion from the union
would not ipso facto nor ipso jure lead to expulsion from the job. For there should
foremost be compliance with the pre-requisites: First, it must be clearly shown that
the act committed by the employee against the union also constitutes a violation of
such clause; and second, that under such clause, the union is granted the power to
recommend to the employer die errant employee’s termination of employment and
the employer has agreed to effect it after compliance with due process per the
Alabang Country Club doctnne.1 The mere existence of such clause in the CBA is no

1 The case o( Aiabang Country CM), Inc v NLRC, G R No. 170287, Feb. 14,2008, has enunciated the foOowirg requisites
that the employer should determine, prove and comply with prior to terminating the employment of an employee by virtue of
the enforcement of the union security clause: (1) The union security clause is applicable; (2) The SEBA is requesting for the

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LABOR RELATIONS

fool-proof assurance that termination is the immediate consequence and direct

result for its violation. As held in a catena o f cases, a dismissal based on a union
security clause which does not expressly authorize it for its violation constitutes
ULP.*1

3. R IG H T TO PR ESC R IB E OW N RULES O N A C Q U ISIT IO N ,

R E T E N T IO N O R LOSS O F M E M B E R SH IP.

Under the same provision, a labor organization is granted “the right to

prescribe its own rules with respect to the acquisition or retention o f
membership.” Although not expressly mentioned in the law, it is equally the right
of the union to prescribe in the same rules with respect to the loss of membership
therein through various modes allowed by law, such as resignation, expulsion or
impeachment. These rules are normally embodied in the Constitution and By-Laws
o f the labor organization. Pursuant to this right, the labor organization can
prescribe the proper qualifications for membership as well as the rules and
regulations to be followed by its members in order to retain their membership in
good standing therein.

4. IN T E R N A L RULES U N D E R T H E C O N S T IT U T IO N AND BY-LAWS.

The internal rules prescribed in the union’s Constitution and By-Laws

should be strictly observed in all matters involving union affairs. Failure to so
comply therewith may amount to ULP. The 2016 case o f Mendoza v. MIWEU,2
illustrates this situation. The respondents, who are all officers o f the union, were
charged for ULP by one o f its members, petitioner Mendoza, because they have
twice successively suspended him for 30 days each for his first 2 offenses for not
paying the required union dues, and subsequently expelled him for his 3rd similar
offense o f non-payment o f union dues. The Supreme Court declared respondents
"guilty o f unfair labor practices under Article 260 [249] (a) and (b) - that is,
violation o f petitioner's right to self-organization, unlawful discrimination, and
illegal termination of his union membership” because “ [a]s members of the
governing board o f MWEU, respondents are presumed to know, observe, and
apply the union’s constitution and by-laws. Thus, their repeated violations thereof
and their disregard o f petitioner's rights as a union member - their inaction on his
two appeals which resulted in his suspension, disqualification from running as
MWEU officer, and subsequent expulsion without being accorded the full benefits
o f due process - connote willfulness and bad faith, a gross disregard o f his rights

enforcement of such clause; and (3) There is sufficient evidence to support fie SEBA's decision to expel the employee from
membership.
1 See Confederated Sons of Labor v. Anakan Lumber Co., United Workers’ Union and CIR, G R No. 1-12503, Apri 29,1960;
San Carlos Miling Co. v. CIR, G R Nos. 1-15453 and L-15723, March 17,1961; Irxiustnal-Commerciat-Agricuttiiral Workers
Organization (ICAWO) v. Central Azucarera de Pilar, G R No. L-17422, Feb. 28 1962.
2 Allan M. Mendoza v. Officers of Manila Water Employees Union (MA/EU), G R No. 201595, Jan. 25,2016.

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 544 Bar reviewer on Labor Law

thus causing untold suffering, oppression and, ultimately, ostracism from

MWEU.”«

The failure of ordinary union members to observe internal rules would

justify their expulsion. Baptista v. Villanueva*1 is an example of this situation.
Petitioners here were former union members of Radio Philippines Network
Employees Union (RPNEU), a legitimate labor organization and the sole and
exclusive bargaining agent of the rank-and-file employees of Radio Philippines
Network (RPN), a government-sequestered corporation involved in commercial
radio and television broadcasting affairs; while herein respondents were the union’s
elected officers and members. Petitioners were among those who were expelled by
RPNEU, and ultimately dismissed by their employer upon the recommendation of
RPNEU, for violating a provision in its constitution and by-laws3 when they filed a
suit calling for the impeachment o f the officers and members of the Executive
Board of RPNEU and various petitions for audit covering the period from 2000 to
2004 before the DOLE, without first resorting to and exhausting all internal
remedies available under said constitution and by-laws. Because of their expulsion,
petitioners charged respondents of ULP under paragraphs (a) and (b) of Article 260
[249] of the Labor Code. The Supreme Court upheld the validity of petitioners’
expulsion and the dismissal of their ULP accusation because they failed to comply
with the express mandate of RPNEU’s constitution and by-laws that before a
party is allowed to seek the intervention o f the court, it is a pre-condition
that he should have availed o f all the internal rem edies w ithin the
organization. Petitioners have violated this mandate when they filed petitions for
impeachment against their union officers and for audit before the DOLE without
first exhausting all internal remedies available within their organization. This act is a
ground for expulsion from union membership. Thus, petitioners’ expulsion from
the union was not a deliberate attempt to curtail or restrict their right to organize,
but was triggered by the commission of an act, expressly sanctioned by the union’s
constitution and by-laws.

II.
DISCRIMINATION

1. CONCEFr.

Paragraph (b) of Article 260 [249] enunciates the discrimination

perpetrated by a labor organization as ULP, to wit.

“Article 260 [249]. Unfair Labor Practices of Labor

Organizations. - It shall be unfair labor practice for a labor
organization, its officers, agents or representatives:
xxx

' See also M.D Traisit v. de Guzman. G R. No L-18810, Apn) 23.1953,7 SCRA 726.
1 G.R. No. 194709.Juty31.2013.
1 ParticularV. Section 2.5 of Artide IX thereof.

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LABOR RELATIONS

“(b) To cause or attempt to cause an employer to discriminate

against an employee, including discrimination against an employee with
respect to whom membership in such organization has been denied or
to terminate an employee on any ground other than the usual terms and
conditions under which membership or continuation of membership is
made available to other members[.]”

2. KINDS OF DISCRIMINATION.
There are three (3) kinds of discrimination that a union may commit
under said article, thus:

(1) The act of the union to cause or attempt to cause an employer to

discriminate against an employee, in general, irrespeenve o f whether
he or she is a member or non-member o f the union.

(2) The discriminatory act o f die union against an employee “w ith

respect to w hom m em bership in such organization has been
denied.”

(3) The discriminatory act of the union against an employee whose

membership therein has been term in ated based “on any ground
other th an the usual term s a n d conditions under w hich
m em bership or continuation of m em bership is m ade available to
other m em b ers.”

2.1. FIR ST KIND OF UNION DISCRIMINATION.

It is the basic characteristic o f the first kind o f union discrimination
mentioned above that the union’s act which constitutes ULP consists in inducing
or instigating the employer to commit discrimination against an employee who may
or may not be its member. The purpose is to encourage or discourage union
membership. An example is the act of the union in convincing an employer to
penalize employees who engage in anti-union activities.

The intent and initiative to discriminate should not emanate from die
employer but from the union, its officers, agents or representatives. In fact, the
employer need not be shown to have actually acted on such inducement or
instigation o f the union in order to hold the latter liable for ULP. If it is shown diat
the employer has yielded and acquiesced to the inducement and instigation o f the
union by actually committing the act o f discrimination, it may be held liable for
ULP not under Article 260(b) [249(b)], which exclusively speaks o f a ULP
committed by a labor organization, but under Article 259(e) [248(e)],1 which is the
counterpart provision for employer ULP insofar as the charge of discriminauon is
concerned. That Article 259(e) [248(e)] is the law violated by reason of such

1 Paragraph (e) pertinently states: ‘(e) To discriminate in regard to wages, hours of work and other terms and conditions of
employment h order to encourage or discourage membership in any tabor organization. Xxx*

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 546 Bar Reviewer on Labor Law

discriminatory action of the employer consequent to the union’s inducement or

instigation is clear from a reading o f the U.S. law*
1 from which this provision of
Article 260(b) [249(b)] was patterned and copied.

2.2. SECOND AND THIRD KINDS O F U N IO N D IS O U M IN A T IO N .

The discriminatory ULP act under the 2nd and 3rd kinds o f discrimination
mentioned above is perpetrated by the union itself against an employee whose
membership therewith has been cither (1) denied by the union; or (2) term inated
by the union.2

The first involves an employee who has not become a member o f the
union because his membership therein has been dismminatonbj denied by the union;
while the second refers to the case o f an employee who is already a member o f the
union but whose membership therein is discriminatorily terminated based “on any
ground other than the usual terms and conditions under which membership or
continuation of membership is made available to other members.”

It is noteworthy to clarify that the phrase in Article 260(b) [249(b)] that

states: “ ...to terminate an employee on any ground other than the usual terms
and conditions under which membership or continuation of membership is made
available to other members.” should not be construed as referring to the
termination of employment by the employer as may be instigated or
recommended by the union but to the term ination o f m em bership of a m em ber
from the union. Using “employee” instead of “ m em ber” in the provision seems
to suggest, nay, connote that it is the “employm ent” rather than the
“m em bership” in die union which is being terminated. This provision should
have been stated more appropriately in this manner: “...to term inate a [member]
on any ground other than the usual terms and conditions under which membership
or continuation of membership is made available to other members.”

3. E X C EPTIO N - U N IO N SECU RITY CLAUSE IN T H E CBA, N O T

DISCRIMINATORY.

Excepted from the coverage o f this kind of discriminatory ULP is the

unioQ security provision of a CBA - a product of mutual agreement by the
employer and the SEBA. The law, particularly, Article 259(e) [248(e)], allows a
union which has been designated as SEBA, to bargain collectively for a contract
that permits it to cause an employer to discharge employees who fail to join or
maintain membership in good standing therein as a condition for continued
employment. This certainly is an exception to the general rule that unions may not
cause or attempt to cause an employer to discriminate against (or in favor of)

1 See the N ational Labor ReiaSons A d , 29 U.S. C ode § 158. P hilippine laws had consistenty adopted the sa d le ga l concept
o( Ibis k ix l o f ULP. The firs t law is R A No. 875, otherw ise kn o w i as T h e Industrial Peace A c f w hich w as enacted on June
17,1953, (See its Section 4(b)(2)].
1 Id.

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LABOR. RELATIONS

employees on union-related grounds. However, if the employee discharged on the

basis o f the recommendation o f a union is a religious objector, hence, exempted
from the coverage of any form of union security clause, the same may be
considered ULP o f die labor organization so recommending.*1

4. EXAMPLES.
May be cited as examples of this ULP are the following acts o f the union
o f causing or attempting to cause an employer

(1) to demote an employee who incurs the union's hostility.

(2) to take action against an employee for a reason that is arbitrary,

discriminator)' or in bad faidi.

(3) to tie seniority to union membership.

(4) to change an employee's wages, hours, or other terms and conditions

o f employment for the worse because he did somedung to incur
union’s hostility, such as opposing a candidate it favors in a union
election.

(5) to discharge an employee:

. (a) for a reason other than his failure to pay periodic dues or initiation
fees under a union-security agreement or “on any ground other
than the usual terms and conditions under which membership or
continuation of membership is made available to other members.”
(b) under a union-security agreement where the union did not afford
the employee due process pnor to his expulsion and before
securing his discharge.
(c) for failure to pay a union fine.
(d) because he disagreed with union policy.

III.
VIOLATION OF DUTY OF UNION TO BARGAIN COLLECTIVELY

1. CONCEPT.
Paragraph (c) o f Article 260 [249]2 provides that it is ULP for a SEBA:

“(c) To violate the duty, or refuse to bargain collectively with

the employer, provided it is the representative of the cmployccs[.|”

1 See, fo r instance, Lakas ng M anggagawang M akabayan [LM M ] v . A biera, G.P.. N o. L-29474, Dec. 19.1970.
1 A rticle 260(a) (249(a)] o f th e Labor Code traces its roots from a U.S. law w hich provides that it strait be U LP fo r a labor
organization o r its agents to refuse to bargain coflectivefy w ith an em ployer, provided it is toe representative o f his
em ployees subject to the provisions o f section 159(a) o f this tifle l f (See N ational Labor R elations A ct, 29 U.S. C ode § 158 -
U nfair la bo r practices, S ec. 8[b) 3] thereof).

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This is the counterpart provision o f Article 259(g) [248(g)] in regard to the

violation by the employer of its duty to bargain collectively.

2. PURPOSE.

The purpose of the law in imposing it as a duty on the part o f the SEBA
to bargain collectively is to ensure that it will negotiate with management in good
faith in order for them to conclude a mutually beneficial agreement on the terms
and conditions of their employment relationship.

3. REQUISITES. v

The requisites before a union may be held liable for ULP are as follows:

(1) The union is a duly certified SEBA; and

(2) It commits any o f the following:
(a) It violates the duty to bargain collectively; or
(b) It refuses to bargain collectively with the employer.

3.1. FIRST REQUISITE: T H E U N IO N IS A DULY C E R T IF IE D SEBA.

At the outset, it is important to stress that the employer is not in any way
obligated to collectively bargain with a non-SEBA. It has every right to fend off any
effort on the part of a union to negotiate a CBA before it is certified as SEBA
through appropriate certification election proceedings.1

On the other hand, a non-SEBA cannot commit ULP under this

paragraph (c) of Article 260 [249]. This is so because a non-SEBA has no duty to
collectively bargain with the employer; only a SEBA has that duty. Once certified as
SEBA, it must engage in collective bargaining with the employer since this is the
very raison d'etre of the right to self-organization - to enable workers to bargain in a
collective fashion with their employer. And under the Qrtification Year Bar Rule, it
has one (1) year from being certified as SEBA to initiate and commence the CBA
negotiation with the employer.

3.2. SECOND R EQ U ISITE: T H E SEBA COM M ITS ANY O F T H E

FOLLOWING: ffl IT VIOLATES T H E DUTY T O BARGAIN
COLLECTIVELY: OR (2) IT REFUSES T O BARGAIN
COLLECTIVELY W ITH T H E EM PLOY ER.

(1) Violation o f the duty to bargain collectively.

As a duly certified SEBA, the union has the duty and responsibility to
represent all the employees in the collective bargaining unit (CBU) equally and
fairly, irrespective of whether they are its members or not. This is the so-called
"duty of fair representation” which involves the fundamental 'duty to bargain
collectively for and on behalf o f all the CBU-covered employees. The SEBA 1

1 Lakasng M anggagawang MaXabayan v. M arceto E nterprises, G .R . N o. L-38258, N cv. 1 9,1 98 2 ,1 1 8 S C R A 425.

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LABOR RELATIONS

should discharge this duty by equally representing everyone in the CBU, handling
cases and resolving issues fairly, processing grievances consistently, and observing
due process at all times. If the SEBA violates this duty, it may be charged for ULP
by any aggrieved CBU-covered employee.

(2) R efusal to bargain collectively with the em ployer.

The act o f refusing to discharge the duty to bargain collectively with the
employer includes wide-ranging scenarios. May be cited as an example is when the
SEBA restrains or coerces the employer in its choice o f its representative/s to the
collective bargaining negotiations by refusing to bargain with the representative/s it
has designated for that purpose and insisting on dealing only with a particular
management representadve/s. The employer certainly has the sole and exclusive
right to choose the person/s it shall designate as its representative/s at the
negotiating table and the SEBA cannot be allowed to meddle in any manner in that
choice. It may further be illustrated by a situation where the SEBA refuses to
engage in good-faith collective bargaining by coming to the bargaining table or
listening to any o f the employer's proposals or worse, when it unduly engages in
strikes, boycotts or other concerted coercive actions that transgress its duty to
bargain collectively.

IV.
FEATHERBEDDING LAW

1. CONCEPT.
Paragraph (d) o f Article 260 [249] considers the following act as ULP:

“(d) To cause or attempt to cause an employer to pay or

deliver or agree to pay or deliver any money or other things of value, in
the nature of an exaction, for services which arc not performed or not
to be performed, including the demand for fee for union
negptiations[.]”

This is the 'featherbedding'* provision in the Labor Code which was

patterned after a similar provision in the Taft-Hartley Act.2 “Featherbedding” or *1

1 E tym ologically, the term ’featherbedding' orig in ally referred to any person w ho is pam pered, coddled, o r excessively
rew arded. The teim originated n the use o f feathers to fill m attresses in beds, providing fo r m ore com fort. The m odem use o f
the term n the labor relations setting began in h e U nited States railroad industry, w hich used feathered m attresses in
sleeping cars. R ailw ay la bo r unions, confronted w ih changing technology w hich led to w idespread unem ploym ent sought to
preserve jobs by negotiating contracts w hich required em ployers to com pensate w rite rs to do tittle o r no w r it o r w hich
required com plex and tim econsum ing w ork rules so as to generate a fu l day’s w orit fo r an em ployee w ho o he rw ise w ould
not rem ain em ployed. (M em am -W ebker's D ictionary c f Law, 1“ e d „ M em am -W ebster, In c , 1996. ISBN 0-87779-604-1,
V isit also the Know ledge Encyclopedia a t h tlp y/w w w .refererxreforbusiness.axTvfew w iedge/ F eatherbeddinghtm l; Last
visited: Jan. 3 0,2 01 7 ).
1 It s the Labor M anagem ent R elations A ct o f 1947, bette r known as h e 'T a ft-H a rtle y A ct,’ w hich w as enacted on June 23.
1347. It am ended h e N ational Labor R elations A ct, 29 U .S . Code § 158 - U n fa ir labor practices, S ec. 8 [b ] [6 ] thereof, w hich
states: to cause o r attem pt to cause an em ployer to p ay o r d eliver o r agree to pay a deliver any m oney o r other thing o f
value, in the nature o f an exaction, fo r services w hich are not perform ed a not to be perform edi r

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"make-work" refers to the practice, caused and induced by a union, o f hiring more
workers than are needed to perform a given work, job or task or to adopt work
procedures which is evidently senseless, wasteful, inefficient and without legitimate
justifications since it is meant purely for the purpose of employing additional
workers than are necessary. This is resorted to by the union’as a response to the
laying-off of workers occasioned by their obsolescence because o f the introduction
of machines, robots1 or new and innovative technological changes and
improvements in the workplace or as required by minimum health and safety-
standards, among other reasons. Its purpose is to unduly secure the jobs o f the
workers. Because of these lay-offs, the unions are constrained to resort to some
featherbedding practices. Accordingly, they usually request that the technological
changes be introduced gradually, or not at all, or that a minimum number of
personnel be retained despite such changes. They resort to some ways and methods
of retaining workers even though there may be little work left for them to do and
perform. It therefore unnecessarily maintains or increases the number of employees
used or the amount of time consumed to work on a specific job, work or
undertaking. By so increasing the demand for workers, featherbedding obviously
keeps wages higher.2

2. REQUISITES.
The requisites for featherbedding are as follows:

(1) The labor organization, its officers, agents or representatives have

caused or attempted to cause an employer either.
(a) to pay or agree to pay any money, including the demand for fee
for union negotiations; or
(b) to deliver or agree to deliver any things o f value;
(2) Such demand for payment o f money or delivery o f things of value is
in the nature of an exaction; and
(3) The services contemplated in exchange for the exaction are not
actually performed or will not be performed.

On No. 1 above, it is important that the effort at securing payment of

sums of money or delivery of goods or things o f value, emanates from and is
initiated by the union.

1 Teatherbedd'ng" is the insistence by unions on em ploym ent o f unnecessary w orkers, /.e „ dem anding paym ent fo r w ork no
longer perform ed by workers because c f m achines o r robots. Featherbedding dram atically increases tabor costs and
decreases productivity. (See Labor Law G lossary, M att A ustn la b o r Law, https7A natlausiinlaboriav/cxxrA abor-law -
diefionary/; Last accessed: O ctober 09,2016).
2 It m ust be noted that Section 8(b)(6) c f the T aft-H artey A ct has outlawed featherbeddng arrangem ents w hch s a ULP ot
the union making the dem and fo r paym ent o f w ages fo r services which are not perform ed a n o t to be perform ed. However,
Ihe prohibitions against featherbedding under th is section are m ade applicable o nly to paym ents for w orkers not to work
C onsequently, Ihe agreem ent prescribing m inim um num ber o f w orkers to be hired and m aintained and other "m ake-w ork'
arrangem ents a e considered valid and legal, notw ithstanding the provision o f this section

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LABOR RELATIONS
On N o. 2 above, the act o f the employer in paying the money or
delivering the things of value demanded by the union, is against its will and is,
therefore, as the law states, “in the nature of exaction” by the union. “Exaction ”, as a
legal term, means an excessive or harsh demand of a reward or fee for an official
service performed in the normal course o f duty. It is taking more fee or pay for the
services than what the law allows, under color o f one’s official authority.1 While it
is a form o f extortion,2 it should, however, be differentiated from “extortion” in that,
in “extortion," the union extorts more than its due when something is due; in
“exaction,” the union.exacts what is not due when there is nothing due to it.3

O n N o. 3 above, although the employer agrees to pay money or deliver

things of value, die employees to whom such payment and delivery are made will
not actually do or perform the contemplated services. Being an exaction, no
services would be rendered in exchange for the money paid or things of value
delivered.

3. DEMAND FOR PAYMENT OF STANDBY SERVICES.

A union commits ULP under this provision by causing or attempting to

cause an employer to pay or agree to pay for standby services. Payments for
“standing-by, ” or for the substantial equivalent o f “standing-by, ” are not payments for
“servicesperformed" within the meaning o f the law. When an employer receives a bona-
fide offer o f competent performance o f relevant services, it remains for the
employer, through free and fair negotiation, to determine whcdier such offer
should be accepted and what compensation should be paid for the work done.4

It is an exaction which constitutes ULP within the meaning o f this law for
a union to demand of the employer for a contract calling for payment o f
compensation for the presence o f one of its members at a jobsite when no
unionist’s work is being done therein, and when the employer indicated that it had
no need for such labor, the union staged a strike to make the employer respond to
such demand. The demand herein is considered not a bona-fide offer o f competent
performance of relevant services.5

A union’s demand that a theater corporation employ maintenance men at

its theater is also an arguable violation o f the anti-featherbedding provision of the

1 M eaning o f 'e x a c tin ’ per U S legal.com found a t htlpy/defrifions.iK legaLoonV e/exac6on/. Last visited: June 3 0,2 01 6 . N ote
th a t *[t]h e act o f exacting m oney o r the sum exacted is also called e xa ctio n .' See also TheLaw O ictionary.C om a t
h ttp y^la w id ictio n a ry.a g /e xa ctio n f, Last accessed: June 3 0,2 01 6 .
2 See Y ou rD ctio n ay.co m a t h tp J/w vvw .yoofdcticnaiy.cofTV exadon. Last visited : June 30,2016.
1 S ee U SLegal.com a t ht^)y/defin® onsjU siegaU xyntefexaction/. Last visited : June 30, 2016 The FreeD idionaiy.com a t
httpA tegakrctionary.theheedxakxiary cofn /e xa ctxxi, distinguished these tw o term s, thus: ‘ EXACTIO N, to rts. A wdlful w rong
done b y an o fficer, o r by one who, under color o ( his o ffice , takes m ore fee a pay fa his services than w hat tie law allow s.
Betw een extortion and exaction there is this d ifference; th a t n the form er case tne officer extorts m ore than h s due, when
som ething is due to him ; in the latter, he exacts w hat is n ot h is due, w hen there is nothing due to hm . W ishard; C o. L it 3 6 8 .'
Last accessed: June 30.2016.
« NLRB v . G am ble E nterprises, Inc., 345 US 117 97 L Ed 8 6 4 ,7 3 S C t 560.
5 International Brotherhood o f Teansters, etc., 212 NLRB 9 68 ,19 7 4 CCH NLRB 26867,87 BNA LR R M 1101.

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law where maintenance men employed at other theaters under union compulsion
did little or no actual work but were merely present on the premises during working
hours.1

4. DEM AND FO R PAYMENT OF M ADE WORK.

Where work is actually done by an employee with the employer’s consent,

the union’s demand that the employee be compensated for time spent in doing the
work does not violate the anti-featherbedding law.2 The law leaves to collective
bargaining the determination o f what work, if any, including botui-fide “m ade
work, ” shall be included as compensable services and" what rate o f compensation
shall be paid for it.3

A musicians’ union has been held not to have violated the anti­
featherbedding provision by refusing to permit a union band to perform at the
opening game of the baseball season, refusing to permit a union organist to play at
the home games, and picketing the baseball stadium, in order to force the owner of
the baseball team to hire a union band to play at all weekend home games; or by
refusing to give its consent to appearances of travelling bands in a theater unless
the theater manager also employs a local orchestra in connection with certain
programs where the local orchestra is to perform actual and not token services,
even though the theater manager does not need or want to employ the local
orchestra.4 Similarly, a printers’ union does not violate the anti-featherbedding
provision by securing payment of wages to printers from newspapers for setting
"bogus” - duplicate forms for local advertisements although the newspaper already
has cardboard matrices to be used as molds for metal casting from which to print
the same advertisements - even though the "bogus" is ordinarily not used but is
melted down immediately.5

5. DEM AND FO R PAYMENT OF W ORK ALREADY C O M PEN SA TED .

The anti-featherbedding provision has been held not to bar a union from
demanding payment for work for which the employer has already paid another
person. Hence, a union has been held not guilty of ULP in demanding payment to
it of an amount equal to the wages paid by the employer to a non-union employee
for work to which the union’s members were entitled. If the work is actually done
by employees, there can be no conflict with the anti-featherbedding provision,

1 Consolidated Theaters, Inc. v. Theatrical Stage Employees Union, 69 Cal 2d 713,73 Cat Rptr 213,447 P2d 325.
2 NLRB v. Gamble Enterprises, Inc., 345 US 117,971Ed 854,73 SC t 560; American Newspaper Pubishers Association v.
NLRB, 345 US 100,97 L Ed 852,73 S Ct 552,31 ALR2d 497.
3 American Newspaper Publishers Association v. NLRB, 345 US 100,97 L Ed 852,73 S a 552,31 ALR2d 497.
4 Musicians Union v. Superior Court of Alameda County. 69 Cal 2d 695,73 Cal Rptr 201,447 P2d 313; NLRB v. G entle
Enterprises, Inc., 345 US 117,97 L Ed 864.73 S Ct 560.
3 American Newspaper Publishers Assocanon v NLRB. 345 US 100.97 L Ed 852,73 S Ct 552,31 ALR2d 497.

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LABOR RELATIONS

regardless of whether or not the persons receiving payment are the ones who
performed the work.1

V.
DEM A N D OR ACCEPTAN C E OF
NEG OTIATION FEES O R ATTO RNEY’S FEES

1. C O N C EPT .

Under Paragraph (e) o f Article 260 [249], it is ULP for a labor

organization, its officers, agents or representatives:

“(e) To ask for or accept negotiation or attorney’s fees from

employers as part of the settlement of any issue in collective bargaining
or any other dispute[.]”

2. C O U N T E R PA R T PR O V ISIO N .

This is the counterpart provision of Article 259(h) [248(h)] regarding the

payment, on the part o f the employer, o f negotiation fees or attorney’s fees to the
union or its officers or agents as part of the settlement of any issue in collective
bargaining or any other dispute.

3. RATIO NA LE B E H IN D T H E P R O H IB IT IO N .

The reason for this policy o f the law is to prevent undue influence by the
employer on the independence of the union in its decision-making over any issues
it may have with the former. Moreover, it is possible that the matter o f fixing the
amount of negotiation fees or attorney’s fees alone would present a problem much
complicated than the more substantive issues involving the terms and conditions of
employment and the rights, benefits or welfare o f the workers.

4. REQ U ISITES.

Following are the requisites to hold a union liable for ULP based on this
particular ground:

(1) The union or any of its officers, agents or representatives commit

either of the following acts:
(a) to ask for negotiation fees or attorney’s fees; or
(b) to accep t negotiation fees or attorney’s fees;
(2) The negotiation fees or attorney’s fees are demanded from, or given
by, the employer as part o f the settlement o f any issues related to:
(a) collective bargaining; or
(b) any other dispute.

On N o. 1 above, there are 2 situations contemplated therein, namely:

Rabouinv. NLRB [CA2] 195 F2d 906.

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(a) When the union, its officers, agents or representatives are held guilty
of ULP from the very moment they “ ask” for negotiation fees or
attorney’s fees from the employer. Under this situation, there is no
need to prove that the employer has succumbed and given in to the
union’s demand.

(b) When the union, its officers, agents or representatives are held guilty
of ULP even if they have not asked or demanded from the employer
the payment to them o f negotiation fees or attorney’s fees for as long
as there is evidence that they have “accepted” negotiation fees or
attorney’s fees from the employer.

On N o. 2 above, in order to be held guilty o f ULP, there is a need to

prove that the union has “asked for” or “accep ted ” the payment to it o f the
negotiation fees or attorney’s fees by the employer, as principal consideration for
the settlement of any issues affecting labor-management relations, or even if not a
principal consideration, as part of the settlement o f any such issues, chief o f which
are issues affecting collective bargaining.

VI.
VIOLATION OF T H E C B A

1. CONCEPT.
Paragraph (f) of Article 260 [249] considers as ULP for a labor
organization, its officers, agents or representatives to violate a CBA.

2. COUNTERPART PROVISION.
This is the counterpart provision o f Article 259(i) [248(i)] regarding the
employer’s act of violating a CBA. But it must be noted that under Article 274
[261] of the Labor Code, simple violation o f the CBA is generally considered no
longer a ULP but merely a grievable issue. It becomes ULP only if the violation is
gross in character which means that there is flagrant and/or malicious refusal to
comply with the economic (as distinguished from non-economic) stipulations in the
CBA. This principle applies not only to the employer but with equal force to the
labor organization as well.

F.
PEACEFUL CONCERTED ACTIVITIES

1. PROTECTED CONCERTED ACTIVITIES.

One of the most fundamental elements of a strike or picketing is its being
a “concerted” aedvity of the employees. If not “concerted” , an activity cannot
be characterized as a strike or picket. First and foremost among the most

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LABOR RELATIONS

significant guarantees in die Constitution is the assurance that is given by the State
to workers that “ [t]he State [shall] affirm labor as a primary social economic force
[and] protect the rights o f workers and promote their welfare.” 1 The twin rights to
strike and to picket certainly fall under the ambit o f protection o f this provision.

The second applies solely to picketing which, under the constitutional

guarantees, is considered part of the twin freedoms o f speech and of expression
provided in the Bill o f Rights.2

The third is the State’s guarantee to employees in both the public and
private sectors that their right to form unions shall not be abridged.3 Towards this
end, the State guarantees the rights of all workers to self-organization, then to
engage in collective bargaining and negotiations and should there be conflict, to
conduct peaceful concerted activities, including the right to strike in accordance
with law.4 Self-organization indeed is the key to a meaningful exercise o f the right
to concerted activities, without which, they will never be effective nor feasible.

2. EXISTENCE OF INDUSTRIAL OR LABOR DISPUTE.

The common justification for the conduct o f concerted activities, on the
part of the workers, and lockout, on the part of the employer, is the existence o f an
industrial or labor dispute. As defined in law,5 the term industrial or labor dispute
includes any controversy concerning terms, tenure or conditions o f employment, or
concerning the association or representation of persons in negotiating, fixing,
maintaining, changing, or seeking to arrange terms or conditions o f employment,
regardless of whether the disputants stand in the proximate relation o f employer
and employee.6

1.
STRIKES
1. ORDER OF TOPICAL PRESENTATION.

The m ajor topics discussed in this section on STRIKES are as follow s:

I. NATURE AND C O N C EPT OF STRIKE

II. VARIOUS FORMS AND CLASSIFICATION OF STRIKES

1 Section 18. Article II [Dedaraticin of Prixiptes and State Po6des], 1987 Constitufor.
2 Section 4, Artide 111[B31 of flights] of Ihe 1987 Constitution po>ddes that “{nlo law sriafl be passed abridging the freedom of
speech, of expression, or of the press, or tie right of the people peaceably to assemble and petition the government fix
redress of grievances.*
1 Section 8. Article III [Ba of Rights], 1987 Constitution.
4 Section 3 (Labor), Aride XIII [Social Justice and Hunan Rights],1987 Constitution.
5 In legal parlance, an actual existing labor dispute subject of a notice of strike or lockout or a case of actual strike or lockout is
refened to as a “condiation case.* (Section 1 [3], Rule III, NCMB Manual of Procedures for Conciliation and Preventive
Mediation Cases).
' Article 219(0 O T , Labor Code, as amended by Section 4, R A No. 6715; No. 3, NCMB Primer on Strike, Picketing and
Lockout 2nd Edition, Dec. 1995; Toyota Motor Rife. Corp. Workers Association fTMPCWA] v. NLRC, G.R. Nos. 158786
8158789, Oct 19,2007.

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III. PROCEDURAL BUT MANDATORY REQUISITES FOR A VALID STRIKE

IV. UNION-BUSTING
V. STRIKES IN HOSPITALS, CLINICS AND MEDICAL INSTITUTIONS
VI. STRIKE IN THE GOVERNMENT SERVICE
VII. VARIOUS PROHIBITED ACTS PER LAW, RULES AND
JURISPRUDENCE
VIII. LIABILITY RESULTING FROM THE CONDUCT OF STRIKE
A. LIABILITY FOR ILLEGAL STRIKE
B. LIABILITY FOR DEFIANCE OF ASSUMPTION/CERTIFICATION
ORDER OR RETURN-TO-WORK ORDER

I.
NATURE AND CONCEPT OF STRIKE

1. NATURE AND CO N C EPT O F STRIKE.

Strike is the most preeminent o f die economic weapons of workers which

they unsheathe to force management to agree to an equitable sharing o f the joint
product of labor and capital. Undeniably, strikes exert some disquieting effects not
only on the relationship between labor and management but also on the general
peace aad progress of society. O ur laws thus regulate their exercise within reason
by balancing the interests of labor and management together with the overarching
public interest.*1

2. DEFINITION.
“Strike’ means any temporary stoppage of work by the concerted action
of the employees as a result of an industrial or labor dispute.2

3. ELEMENTS.
Based on this definition, the following are die elements o f a strike:

(1) Temporary stoppage of work by the employees;

(2) Through their concerted action: and
(2) Occasioned by an industrial or labor dispute.

4. LAWMAY PROHIBIT STRIKE BUT NOT RIGHT TO SELF­

ORGANIZATION.
Pursuant to the mandate of the 1987 Constitution,3 the right to self­
organization is guaranteed to all kinds of workers, both in the private and public
sectors. However, a law may be passed prohibiting selected sectors o f labor from

' Lapanday Walters Union v. NLRC, G.R. Nos. 95494-97, Sept 07,1995.
1 Article 219(o) [212(o)|, Labor Code, as amended by Section 4, RA. No. 6715.
J Particularly Section 3, Arbde XIII thereof.

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LABOR RELATIONS

resorting to strikes. This is so because the right to strike is specifically made subject
to limitation by law.*1 For instance, while private sector employees are allowed to
stage a strike under Article 278 [263] o f the Labor Code, government sector
employees, although allowed to self-organize, are prohibited from declaring or
conducting a strike.2 The rationale behind this absolute prohibition is that the terms
and conditions o f employment in the government service, including any political
subdivision or instrumentality diereof and government-owned an d /o r controlled
corporations with original charters, are governed by Civil Service Law, rules and
regulations. Consequently, they cannot use strike to secure changes in such terms
and conditions.3

II.
VARIOUS FORMS AND CLASSIFICATION OF STRIKES

1. STRIKE, A COMPREHENSIVE TERM.

The term “strike is a very broad and comprehensive term. It encompasses
not only concerted work stoppages but also slowdowns, mass leaves, overtime
boycott, sitdowns, attempts to damage, destroy or sabotage plant equipment and
facilities, and similar activities.4 It is axiomatic, therefore, that the fact that the
conventional term “strike” was not used by the striking employees to describe their
common course o f action is inconsequential since the substance o f the situation,
and not its appearance, is deemed controlling.5

2. CLASSIFICATION OF STRIKES.
A strike may be classified:

1. A s to nature:
a. Legal strike - one called for a valid purpose and conducted through
means allowed by law.6
b. Illegal strike - one staged for a purpose not recognized by law or, if for
a valid purpose, it is conducted through means not sanctioned by
law.7
c Economic strike - one declared to demand higher wages, overtime pay,
holiday pay, vacation pay, etc.8 It is declared for the purpose o f
forcing wage or other concessions from the employer which he is not

' See 2ndparagraph of said Section 3.

i Jacinto v. CA, G.R. No. 124540, Nov. 14,1997,281SCRA 657.
1 Secfion 4, Rute HI. tmplementing Rules and Regutations of Executive Ot}«- No 180 to Govern toe Exercise of tie Right of
Government Employees to Seff-Organization; Article 291 [276], labor Code
4 Section 2, P. D. No. 823, as amended; Solidbank Corporation v. Gamier, G.R. Nos, 159460 & 159461, Nov. 15,2010.
5 Gesite v. CA, G.R. Nos. 123562-65, Nw. 25,2004.
s No. 2, NCM8 Primer on Strke, Picketing and Lockout 2nd Edition, December 1995.

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 558 Bar Review er on Lasor U w

required by law to grant.1 It is a strike which arose out o f a bargaining

deadlock in the CBA negotiations.2
d. Unfair labor practic( (U L P ) or political strike - one called to protest
against die employer’s ULPs enumerated in Article 259 [248] o f the
Labor Code, including gross violation of the CBA under Article 274
[261] and union-busting under Article 278(c) [263(c)] o f the Labor
Code.3
e. Slowdown strike - one staged where the workers do not quit their work
but merely slacked or reduced their normal.work output.4
f. Wildcat strike - one declared and staged without the majority approval
of the certified bargaining agent.s It is a spontaneous or
unannounced illegal concerted action by a section or group o f
employees without the sanction or audiorization of the union or in
violation of the union’s constitution and by-laws6 or without
following the proper procedure for striking such as majority approval
of die union members through appropriate union balloting7 It is also
called an "outlawstrike"or "quickiestrike.'*
g. Sit-down strike - one where the workers stop working but do not leave
their place of work.9
2. As to coverage:
a. General strike - one which covers and extends over a whole province
or country. In this kind o f strike, the employees o f various companies
and industries cease to work in sympathy with striking workers of
another company. It is also resorted to for the purpose of putting
pressure on die government to enact certain labor-related measures
such as mandated wage increases or to cease from implementing a
law which workers consider mimical to their interest. It is also
mounted for purposes of paralyzing or crippling the entire economic
dispensation.
b . Particular strike - one which covers a particular establishment or
employer or one industry involving one union or federation.
3. As to purpose:
a. Economic strike.®

Id.; Ccnsoidated Labor Association of the Phippines v. Marsman & Co., G.R. Nos. 1-17038 and L-17057, Juf/31,1964.
NUWHRANAPL-IUF Dusit Hotel N tto Chapter v. The Hon . CA, G.R. Nos. 163942 aid 166295, Nw. 11,2008.
No. 2, NCMB Primer on Strke, Picketing and Lockout 2nd Edition, December 1995.
Id.; Fadriquetan v. Monterey Foods Corporation, G.R. Nos. 173409 & 178434, June 8,2011.
Id.
No. 5, Policy Instructions No. 46.
Business Dictionaiy.com at htyAwvwbusinessdictionary corM Last accessed; Feb. 14,2017.
Business Dicfonary.com, supra.
G&STransport Corp. v. Infante, G Jl No. 160303, Sepl 13.2007.
• Supra

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 C hapter. Five 559
LABOR RELATIONS

b. Unfair laborpractice strike or political strike.*

4. A s to the nature o f the strikerd action:
a. Partial strike - one which consists of unannounced work stoppages,
such as slowdowns, walkouts or unauthorized extension o f rest
periods.
b. Sit-down strike}
c. Slowdown strike}
5. A s to the extent o f the interest o f strikers:
a. Primary strike - refers to a strike conducted by the workers against their
employer, involving a labor dispute directly affecting them.
b. Secondary strike - refers to a strike staged by the workers of an employer
involving an issue which does not directly concern or affect their
relationship but rather, by some circumstances, affects the workers,
such as when the employer persists to deal with a third person against
whom the workers have an existing grievance. Workers stage this kind
o f strike to secure the economic assistance of their employer to force
the third person to yield to the union on the issues involving it and said
third person.
c. Sympathy strike - refers to a strike where the strikers have no demands or
gnevances or Labor dispute o f their own against their employer but
nonetheless stage the strike for the purpose of aiding, direedy or
indirccdy, other strikers in other establishments or companies, without
necessarily having any direct relation to the advancement of the strikers’
interest. This is patendy an illegal strike.4 An example o f a sympathy
strike is the “wetga ng beyan" where workers refuse to render work to join
a general strike which does not involve a labor or industrial dispute
between the strikers and the employer struck against but it is staged in
pursuit of certain ends, such as reduction in the electric power rates,
increase in the legislated wages, etc.

3. LATEST CASE LAW ON FORMS OF STRIKE.

a. Sporting o f closely cropped hair or cleanly shaven heads.

The sporting by the workers o f closely cropped hair or cleanly shaven

heads after their union filed a notice o f strike as a result o f a CBA deadlock was
considered a form o f illegal strike in Dusit Hotel N ikko} The union’s concerted
violation o f the Hotel’s Grooming Standards which resulted in the temporary

Supra.
Supra.
Supra.
Dee C. Oman & Sons, Inc. v. Kaisahan ng mga Manggagawa sa Kahoy sa Ffpiias, G il No. L-8149,99 Phi. 1050.
National Union otWorivers n (he Hold, Restaurant and Allied Industries [NUWHRAIN-APL-WF] Dus* Hotel Nkko Chapter v.
The Hon. CA, G il Nos. 163942 aid 166295, Nw. 11,2008.

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 560 Bar reviewer on Labor Law

cessation and disruption of the Hotel’s operations is an unprotected act and should
be considered as an illegal strike.

b. Slowdown strike.

Work slowdown is a “.strike on the installment plan, ” a willful reduction in the

rate of work by tire concerted action of the workers for the purpose o f restricting
the output of the employer, in relation to a labor dispute. It is an activity by which
workers, without a complete stoppage o f work, retard production or their
performance of duties and functions to compel management to grant their
demands. Such a slowdown is generally condemned'as inhercndy illicit and
unjustifiable because while the employees “continue to work and remain at their
positions and accept the 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 employer’s damage, to do other work.” In other words,
they “work on their own terms.”1 Simply described, unlike other forms of strike,
the employees involved in a slowdown strike do not walk out o f their jobs to hurt
die company. They need only to stop work or reduce the rate o f their work while
generally remaining in their assigned posts.2

c. Mass leave.

The term "mass leave” has been left undefined by the Labor Code. Plainly,
die legislature intended that the term’s ordinary' sense be used. "Mass’’\s defined as
“participated in, attended by, or affecting a large number of individuals; having a
large-scale character,” while the term "leave” is defined as “an authorized absence or
vacation from duty or employment usually with pay.”3Thus, the phrase "mass leave”
may refer to a simultaneous availment of authorized leave benefits by a large
number of employees in a company. Simply put, a mass leave involves a large
number of people or workers.

The above definition of "mass leave” was cited in Naranjo,* as basis in

holding that the leaves of absence o f petitioners do not constitute “mass leave”
equivalent to a strike. Here, petitioners, numbering a total o f five (5), together with
two (2) other employees, were all absent for various personal reasons on
November 7, 2006 which happened to be the birthday o f respondent Carina Motol,
respondent Biomedica’s President. De Guzman was allegedly absent due to loose
bowel movement, Pimentel for an ophthalmology check-up, Bardaje due to
migraine, Cruz for not feeling well, and Naranjo because he had to attend a
meeting at his child’s school. Notably, these are the same employees who filed a
letter-complaint to the DOLE against Biomedica for lack of salary' increases, failure
to remit SSS and Pag-IBIG contributions, and violation o f the minimum wage law,

’ InterphilLaboratoriesEmpkiyeesUnion-fFWv.InterphlLaboratories,Inc.,GJLNo. 142824,Dec. 19,2001.

2 Fadriquelan v. Monterey Foods Corporation, G.R. Nos. 178409 & 178434, June 8,2011.
3 Webster’s Third N en International Dictionary [1981],
* Naranjo v. 8ioinedica Health Care, Inc., G.R No 193789, Sept 19,2012.

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LABOR RELATIONS

among other grievances. Later that day, petitioners reported for work after
receiving text messages for them to proceed to Biomcdica. They were, however,
refused entry and told to start looking for another workplace. The next day,
November 8, 2006, petitioners allegedly came in for work but were not allowed to
enter the premises. Motol purportedly informed petitioners, using foul language, to
just find other employment. They were all subsequently dismissed for conducting a
strike through mass leaves.

The Supreme Court, however, held that there was no mass leave as to
amount to a strike because only 5 employees arc absent. Moreover, the absence of
petitioners cannot be considered a strike as this term is understood in law.12In no
way can the absence of 5 employees be considered as “concerted” which is defined
as “mutually contrived or planned” or “performed in unison.” The 5 petitioners
went on leave for various reasons and were in different olaces on November 7,
2006 to attend to their personal needs or affairs. They did not go to the company
premises to petition Biomedica for their grievance. To demonstrate dicir good faith
in availing dieir leaves, petitioners reported for work and were at the company
premises in the afternoon after they received text messages asking them to do so.
This shows that there was N O intent to go on strike. Moreover, Biomedica did not
prove that the individual absences can be considered as ‘temporary stoppage of
work.’ Biomedica’s allegation that the mass leave ‘paralyzed the company operation
on that day’ has remained unproved. It is erroneous therefore to liken the alleged
mass leave to an illegal strike much less to terminate petitioners’ services for it.”
d. Overtime boycott.
Overtime boycott consists in the act o f the workers in refusing to render
overtime work in violation of the CBA; it is resorted to as a means to coerce the
employer to yield to their demands. The case o f Interpbil Laboratories2 has declared
this as a form o f illegal strike.
e. Boycott o f products or sendees.
Another form o f strike is boycott o f products or services o f the employer.
This involves the concerted refusal to patronize an employer’s goods or services
and to persuade others to a like refusal.34 An example is Sukothaip where tire
individual respondents were shown to have intimidated and harassed a considerable
number o f customers to turn them away and discourage them from patronizing the
restaurant of petitioner; waving their arms and shouting at the passersby, “Hurng
kayong pumasok sa Sukhothai!" and “Nilagyan na namin ng lason ang pagkain dyan!" and
numerous other statements made to discredit the reputation of the establishment
thereby effectively preventing the entry o f customers.

1 A it 219{o) [212(o)]. of fie Labor Code defiles a sbfte as 'any temporary stoppage of work by the concerted action of
employees as a result of any industrial or labor dispute.’
2 Interphil Laboratories Employees UniorvffW v. InterpM Laboratories, Inc., G.R. No. 142824, Dec. 19,2001.
3 Haw at Buklod ng Manggagawa pBM]v.NLRC, G R No. 91980, June 27,1991,198 SCRA 586.
4 Sukotfia Cuisine and Restaurants CA.G.R. No. 150437, July 17,2006.

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III.
PROCEDURAL BUT MANDATORY REQUISITES
FOR A VALID STRIKE

1. REQUISITES FOR A VALID STRIKE.

Because of its potential adverse consequences to the striking workers, the

employer and the community, a strike enjoys recognition and respect only when it
complies with the conditions laid down by law1 and pertinent prevailing
jurisprudence. Following are the procedural but mandatory requisites for a valid
and legal strike:

First requisite - It must be based on any or both o f the following two (2)
exclusive grounds:

(1) Unfair labor practice (ULP) of die employer;2

(2) Collective bargaining deadlock (CBD).
Second requisite - A notice of strike must be filed with the NCMB-
DOLE;3
Third requisite - A notice must be served to the NCMB-DOLE at least
twenty-four (24) hours prior to the taking o f the strike vote by secret balloting,
informing said office of the decision to conduct a strike vote, and the date, place,
and time thereof and asking it to supervise the taking o f the strike vote;
Fourth requisite - A strike vote must be taken where a majority o f the
members of the union obtained by secret ballot in a meeting called for the purpose
must approve it;
Fifth requisite - A strike vote report should be submitted to the NCMB-
DOLE at least seven (7) days before the intended date o f the strike;
Sixth requisite - Except in cases of union-busting, observance o f the
cooling-off period of 15 days, in case of ULP of the employer, or 30 days, in case
of CBD, reckoned from the filing o f the notice of strike (per 2nd requisite above);
and
Seventh requisite - The 7-day waiting period or strike ban reckoned after
the submission of the strike vote report to the NCMB-DOLE (per 5th requisite
above) should be fully observed in all cases.

All the foregoing requisites, although procedural in nature, are mandatory

and failure of a union or employer to comply therewith would render a strike or
lockout illegal.1

1 Artjde 278 (2631, Labor Code; Libongcogon v. Phimco industries, Inc, G.R. No. 203332, June 18,2014.
1 See Article 259 [248| for ULPs of employers, Article 274 [261] which makes gross violation of a CBA a ULP act and Article
278(c) (263(c)) for unkxvbusting
3 National ConaSation and Mediation Board (NCM3) cf the Department of Labor and Employment (DOLE).

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LABOR RELATIONS

2. O N T H E p r REQ U ISITE: E X IS T E N C E O F VALID AND FACTUAL

G R O U N D /S .

The law recognizes only two (2) grounds in support o f a valid strike, w

(1) Unfair labor practice (ULP or Political Strike)] an d /o r

(2) Collective bargaining deadlock (Economic Strike)}

N o other grounds may be invoked in a notice o f strike. A strike not

based on any of the two (2) grounds discussed above is illegal.3 Therefore, the
following arc not valid grounds:

(a) Violations of CBAs;

(b) Inter-union and internal union disputes;
(c) Issues brought to voluntary or compulsory arbitration;
(d) Legislated wage orders; and
(e) Labor standard cases.4

3. O N 2*0 REQ U ISITE: F IL IN G O F A N O T IC E O F STRIK E W IT H

N C M B -D O LE .

A “notice of strike” refers to the notification filed by a duly registered labor

union with the NCMB-DOLE, informing the latter o f its intention to go on strike
because o f the alleged commission by the employer o f ULP or because of a
deadlock in the collective bargaining negotiations.5

The notice should state, among others, the names and addresses o f the
employer and the union involved, die nature o f die industry to wliich die employer
belongs, the number o f union members and workers in the bargaining unit, and
such other relevant data as may facilitate the setdement o f the dispute, such as a
brief statement or enumeration of all pending labor disputes involving the same
parties.

4. O N 3 rd REQ U ISITE: SERV IC E O F A 24-H O U R PR IO R N O T IC E T O

T H E N C M B -D O L E T O IN F O R M IT O F T H E C O N D U C T O F A
STRIKE V O T E BY S E C R E T BALLOTIN G.

This third requisite requires that a 24-hour notice be served to the

NCMB-DOLE prior to the taking o f die strike vote by secret balloting, informing
it o f the union’s decision to conduct a strike vote, as well as die date, place, and
rime thereof. This requisite was enunciated in CapitolMedical Center, Inc. v. NLRC61
23456

1 Ptimco industries, Inc. v. Phimco Industries Labor Association [PILA], G.R. No. 170830, Aug. 11,2010.
2 See also Section 5, Rule XXII, Book V, Rules to Implement tne Latxx Code, as amended by Department Order No 40-03,
Series 0(2003, Feb. 17,2003.
3 San Miguel Corporation v. NLRC, G.R No. 99266, Mardi 2,1999.
4 Article 278(b) [263(b)], Labor Code; See also Section 5, Rule XXII, Book V, Rules to Implement trie Labor Code.
5 Section 1 (18), Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases
6 G R No. 147080, April 26,2005.

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 564 Bar Reviewer on labor Law

The purposes o f this notice requirement are as follows:

(a) To inform the NCMB o f the intent of the union to conduct a strike
vote;
(b) To give the NCMB ample time to decide on whether or not there is a
need to supervise the conduct o f the strike vote to prevent any acts of
violence and/or irregularities attendant thereto; and
(c) Should the NCMB decide on its own initiative or upon the request of
an interested party, including the employer; to supervise the strike vote, to
give it ample time to prepare for the deployment o f the requisite
personnel, including peace officers if need be.
5. ON 4™ REQUISITE: C O N D U C T O F A STRIKE V O TE.
It is a requirement that no labor organization shall declare a strike without
the necessary strike vote first having been obtained and reported to the NCMB-
DOLE. A decision to declare a strike must be approved by a majority of the total
union mem bership in the bargaining unit concerned, obtained by secret ballot in
meetings or referenda called for that purpose. This process is called “strike rote
balloting . M
The purpose of a strike vote is to ensure that the decision to strike
broadly rests with the majority of the union members in general and not with a
mere minority thereof. At the same time, it is meant to discourage wildcat strikes,
union bossism and eVen corruption.23
6. O N 5™ REQUISITE: SUBM ISSION O F T H E STRIKE VOTE
REPORT TO T H E N CM B-D O LE.
In every case of strike vote, the union is required to furnish a report on
the results of the voting to the NCMB-DOLE. Its submission is meant to ensure
that a stnke vote was indeed taken and in the event that the report is false, to afford
the members an opportunity to take the appropriate remedy before it is too late.J It
is a fact, for instance, that many disastrous strikes have been staged based merely
on the insistence of minority groups within the union. The submission o f the
report gives assurance that a strike vote has been taken and that, if the report
concerning it is false, the majority of the members can take appropriate remedy
before it is too late.4
A strike vote should be reported at least seven (7) days before the actual
staging of the intended strike/lockout, subject to the observance of the cooling-off
periods provided under the law.5 The failure of the union to prove that it obtained

' See Section 1 fwwj, Ruie I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03,
Series of 2003. [Feb. 17,20031-
} No. 12, NCkfi Primer on Strike, PickeSng and Lockout, 2ndEdition, December 1995.
3 No. 13, NCh© Primer on Strke, PidceSog and Lockout, 2nd Edition, December 1995.
4 National Federation of Sugar Workers (NFSW) v. Ovejera, G.R. No. L-59743, May 31,1982.
5 Artide 278(f) [263(f)], Labor Code; Section 5, Rule XXII, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 4003, Series of 2003, [Feb. 17,2003).

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LABOR RELATIONS

the required strike vote among its members and that the results thereof were
submitted to the NCMB would render the strike illegal.1
7. ON 6th REQ U ISITE: O BSER V A N C E O F T H E C O O L IN G -O F F
P E R IO D .

The cooling-off periods before a strike may be conducted arc as follows:

(1) In case of bargaining deadlock, the cooling-off period is thirty (30) days;
(2) In case of unfair labor practice, the cooling-off period is fifteen (15)
days.2
The exception to the rule on observance of the cooling-off penod is in
cases o f union-busting which is considered an unfair labor practice where the said
15-day cooling-off period may be disregarded completely.
In requiring the cooling-off period, the avowed intent o f the law is to
provide an opportunity for mediation and conciliation by the NCMB-DOLE. It is
designed to afford die parties the opportunity to amicably resolve the dispute with
the assistance o f the Conciliators-Mcdiators o f the NCMB-DOLE.3*

8. ON 7th REQ U ISITE: O BSERVA NCE O F T H E 7-DAY W A ITING

P E R IO D O R STRIK E BAN.

After the taking o f the strike vote, the union, in every case, should
furnish the NCMB-DOLE, the results o f the voting at least seven (7) days before
the actual staging of the intended strike or lockout, subject to the cooling-off
periods provided dierein/
The cooling-off period and the 7-day waiting period or strike ban after the
submission of the strike vote report, are meant to be, and should be deemed, both
m andatory.5 It would indeed be self-defeating for the law to imperatively require
the filing of a strike notice and strike vote report without at the same time making
die prescribed waiting periods mandatory.6
a. Purpose o f the 7-day waiting p erio d or strike ban.

'Die Supreme Court has elucidated on the purpose o f the 7-day waiting
period or strike ban in the leading case o f NFS IP v. Ovcjtra? It declared herein that

• Pinero v. NLRC.GJl No. 149610, Aug. 20,2004.

2 Article 278(c) [263(c)l Labor Code; Section 7, Ride XXII, Book V, Rules to Implement the Labor Code, as amended by
Article 1. Department Order No. 40-03, Series of 2003 [February 17,2003); No. 6, NCMB Primer on Strfce, Picketjng and
Lockout 2nd Erfijon, December 1995; Section 5, Rule IV, NCMB Manual of Procedures for Condtatioo and Preventive
Mediation Cases; No. 3, Guideines Governing Labor Relations.
3 No.14, NCMB Primer on Strike, Picketing and Lockout 2nd Edition, December 1995; National Federation of Sugar Woikers
(NFSW) v. Ovejera, G R No. L-59743, May 31,1982.
* No. 6, NCk© Pmier on Strike, Picketing and Lockout 2nd Edition, December 1995.
5 CCBPI Post™ Workers Union v. NLRC, G R No. 114521, Nov. 27,1998.
6 See also CCBPI Postmix Workers Union v. NLRC, G.R No. 114521, Nov. 27,1998: Coca-Cola Bottlers Phils, Inc. v. NLRC,
GR. No. 123491, Nov. 27,1998,299 SCRA410; Gold City Integrated Port Service, Inc. v. NLRC, supra.
' NationalFederationofSugarWorkers(NFSW)v.Ovejera,GRNo.L-59743,May31,1982.

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 566 Bar Reviewer on Labor Law

the seven (7) day waiting period is intended to give the NCMB-DOLE an
opportunity to verify whether the projected strike really carries the imprimatur o f the
majority of the union members. The need for an assurance that majority o f the
union members support the strike cannot be gainsaid. Stake is usually the last
weapon of labor to compel capital to concede to its bargaining demands or to
defend itself against unfair labor practices o f management. It is a weapon that can
either breathe life to or destroy the union and its members in their struggle with
management for a more equitable due of their labors. The decision to wield the
weapon of strike must therefore rest on a rational basis, free from emotionalism,
unswayed by the tempers and tantrums of a few hotheads, and finnly focused on
the legitimate interest of the union which should not, however, be antithetical to
the public welfare. Thus, our laws require the decision to strike to be the consensus
of the majority for while the majority is not infallible, still, it is the best hedge
against haste and error. In addition, a majority vote assures the union that it will go
to war against management with the strength derived from unity and, hence, with
better chance to succeed.1

b. Waitingperiod/strike ban vs. cooling-off period.

The 7-day waiting period or strike ban is a distinct and separate

requirement from the 15-day or 30-day cooling-off period prescribed by law. The
latter cannot be substituted for the former. This is clear from the provision o f
Article 278(f) [263(f)] which states that the 7-day requirement is “subject to the
cooling-off period herein provided.”2

The cooling-off period, on the one hand, is counted from the time o f the
filing of the notice of strike up to the intended or actual staging thereof. In case o f
ULP, the cooling-off period is 15 days; and in case of collective bargaining
deadlock, such period is 30 days. The 7-day waiting period strike ban, on the odier
hand, is reckoned from the time the strike vote report is submitted to the NCMB-
DOLE. Consequendy, a strike is illegal for failure to comply widi the prescribed
mandatory cooling-off period and die 7-day waiting period or strike ban after the
submission o f the report on the strike/lockout vote.3

c. Effect on reckoning o f 7-day waiting period i f strike vote is taken

and reported within cooling-off period.

It must be stressed that the requirements of cooling-off period and 7-day

waiting period or strike ban must both be complied with, although the labor union
may take a strike vote and report the same to the NCMB-DOLE within the
statutory cooling-off period. In this case, the 7-day waiting period or strike ban

1 See also Pti'mco Industries, Inc. v P lm o Industries labor Association [PILA|, G.R No. 170830, Aug. 11,2010; Lapanday
Waters Union v. NIRC, G R Nos. 95494-97, Sept 07,1995,248 SCRA95; No. 15, NCMB Primer on Strike, Picketing aid
Lockout 2nd Edition, December 1995.
2 Samahang Manggagawa sa Sulpido L'nes, Inc. - NAFIU v. Sulpicb Lines, Inc., G R No. 140992, March 25,2004.
3 Union of Flipro Employees v. Nestle Philippines, Inc., G R No. 88710-13, Dec. 19,1990.

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should be counted not from the date o f submission o f die report but “from the
day follow ing the expiration o f the coolin g -off p erio d .’* A contrary view
where bodi periods are not observed in dieir respective full duration would
certainly defeat and render nugatory the_ salutary purposes behind the distinct
requirements o f cooling-off period and the waiting period or strike ban.

Jurisprudence plainly enunciates that “ the language of the law leaves no

room for doubt that the cooling-off period and the seven-day strike b an after
the strike-vote report w ere in te n d e d to be m andatory” and therefore should be
observed separately and fully. This rule was stressed in Gold City} and reiterated in
Sulpicio Lines?

Moreover, the NCMB Primer on Strike, Picketing and Lockout is very clear
on this point, thus:

“In the event the result of the strike/lockout vote ballot is

filed within the cooling-off period, the 7-day requirement shall be
counted from the day following the expiration of the cooling off
period.”5

In other words, the seven (7) days should be added to the cooling-off
period of fifteen (15) days, in case o f ULP, or thirty (30) days, in case of collective
bargaining deadlock and it is only after the lapse of the total number of days after
adding the two (2) periods that the strike/lockout may be lawfully and validly
staged.

For example: the notice o f strike grounded on ULP was filed by the union
on M arch 1, 2017 and the strike vote was taken on M arch 5, 2017 and its result
was reported to the NCM B-DOLE, two (2) days thereafter or on M arch 7, 2017 -
all done within the 15-day cooling-off period. As to the issue o f when the strike
may validly be mounted, the answer should be only on M arch 24, 2017 or any day
thereafter but not before this date. The reason is that since ULP is the ground
cited in the notice of strike, the cooling off period is fifteen (15) days that should
be reckoned kora M arch 1, 2017 until M arch 16, 2017. To be added to this is the
seven (7) days of waiting period which will lapse on M arch 23, 2017. The union,
therefore, can validly strike not on the last day when the 7 days expired, that is,
M arch 23, 2017, but only a day thereafter or on M arch 24, 2017, or on any day
after this date.

The Supreme Court had the chance to scrutinize the validity o f a strike
based on the reckoning of both the cooling-off and strike ban periods in the 2010*345

’ In accordance with No. 6, NCM B P r im on S trike , P icketing and Lockout. 2nd Edition, December 1995, infra.
* God City Integrated Port Service, Inc. v. NLRC, G.R. No. 103560, July 6.1995.
3 Samahang Manggagawa sa Sulpicio Lines, Inc. - NAFLU v. Sulpicio Lines, Inc., G.R. No. 140992, March 25.2004.
4 2nd Edition, December 1995.
5 No. 6 thereof; linderscomg supplied.

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case of Phimco Industries.' In holding that the respondents fully satisfied the legal
procedural requisites, the Court noted that it was on M arch 9, 1995 that
respondent PULA filed with the NCMB, a Notice of Strike on the ground of
bargaining deadlock. Consequently, the 30-day cooling-off period would have
lapsed on April 8,1995. Seven (7) days after M arch 9,1995, or on M arch 16,1995,
PILA conducted a strike vote; a majority o f the union members voted for a strike
as its response to the bargaining impasse. O n M arch 17,1995, or well within the
30-day cooling-off period, PILA filed die stoke vote results with the NCMB.
Thirty-five (35) days later, or on April 21,1995, PILA staged a strike. Based on the
above-quoted rule in die NCAIB Primer, the strike could only be validly staged
starting from April 16,1995 and onwards, it., after the lapse o f seven (7) days from
April 8,1995. Hence, since die actual strike was launched way after April 16,1995
or only after five (5) days diercafter, or on April 21, 1995,2 there was clearly full
compliance widi the mandator)' requisites.

d. Rundown o f certain b asic principles.

• A stoke mounted on the same day the notice o f strike is filed*1*3 or the
stoke vote report is submitted to the NCMB-DOLE4 is illegal.
• Deficiency of even one (1) day, held fatal.5
• One-day strike without complying with the 7-day strike ban, held
illegal.6

IV.
UNION-BUSTING

1. ELEM EN TS OF U N IO N -B U ST IN G .

To constitute union-busting under Article 278(c) [263(c)], there must be:

(1) A dismissal from employment o f union officers duly elected in

accordance with the u n io n ’s constitution and by-laws: and
(2) The existence of the union is threatened by such dismissal.

Accordingly, the following dismissals do not constitute union-busting:

4 Phimco Industries, Inc. v. Phimoo Industries Labor Association (PILA). GJL No. 170830, Aug. 11,2010.
1 It bears noting that in the natation cf facts in tie decision rendered in this case, Hie date of‘April 21,1995’ was referred to
as Ihe date when 'PILA staged a strke.* However, in the opinion part of the decision Ihere'n, i was statedJhat tie actual
strire was launched only on Apri 25,1995' It appears that the correct date ts Apri 21.1995, considering that in tie same
decision. Ihe factual antecedents referred to a certain document marked as 'Exhfcrt 14* which is the Clearance issued by ffie
Punong Barangay and Barangay Secretary, and it was stated therein that the strtre conducted was from "Apl 21 to July 7,
1995, thus: "6. Clearance issued by Punong Barangay Mario 0 . dela Rosa and Barangay Secretary Pascual Gesmundo, Jr.
that the strike from. April 21 to July 7.1995 ’was conducted in an orderly manner with no complaints fSedf.f
1 Pifipho Telephone Corp. v. Pitpno Telephone Employees Association [PILTEA], G R No. 150058, June 22,2007.
4 National Union of Workers n the Hotel, Restaurant and Alied Industries [NUWHRAIN-APL-IUF] Dust Hotel Nfcko Chapter v.
The Honorable CA. G.R. Nos. 153942 and 156295, Nov. 11,2008.
5 CC8PI Postmor Workers Union v NLRC. G.R. No. 114521, Nov. 27,1998.
5 Samahang Manggagawa sa Su'pco Lines, Inc. - MAFLU v. Sup'cio Lines, Inc., G.R. No. 140992, March 25,2004.

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LABOR RELATIONS

(a) Dismissal of union officers duly elected in accordance with the

constitution and by-laws but the same does not threaten the existence
of the union; and
(b) Dismissal o f union officers not elected in accordance with the union’s
constitution and by-laws;
(c) Dismissal o f appointive union officers; and
(d) Dismissal o f ordinary union members.

2. U N IO N -B U ST IN G , A FO RM O F U LP.

The act o f union-busting by an employer is an unfair labor practice which

may be invoked as a valid ground for a strike.1

3. DISMISSAL O F U N IO N O FFIC ER S, A P R E -R E Q U IS IT E .

If there is no dismissal to speak of, there can be no union-busting, as held

in Pilipino Telephone Corp. v. PILTEA,2 where the second notice o f strike filed by the
union merely assailed the “masspromotion” o f its officers and members during the
CBA negotiations. Surely, promotion is different from dismissal. A promotion
which is manifestly beneficial to an employee should not give rise to a gratuitous
speculation that it was made to deprive the union o f the membership o f the
benefited employee.3

But if there is dismissal, even if only one union officer is involved, it will
nonetheless constitute union-busting. For instance, in Colegio de San Juan de Letran,4
the dismissal of the union president for insubordination was held as constitutive of
union-busting because it has interfered with her right to self-organization. While
admittedly, management has the right and prerogative to discipline its employees
for insubordination but when the exercise o f such right and prerogative tends to
interfere with the employees’ right to self-organization, it amounts to union-busting
and is therefore a prohibited act Her dismissal was cleady designed to frustrate the
union in its desire to forge a new CBA with the school that is reflective o f the true
wishes and aspirations of the union members. Her dismissal for alleged
insubordination was merely a subterfuge to get rid o f her which smacks o f a pre­
conceived plan to oust her from the premises o f the school. It has the effect of
busting the union as it stripped it o f its strong-willed leadership.5

In Pepsi-Cola Philippines, Inc. v. Molon,6 petitioner was charged for union-

busting when it terminated several officers and members o f LEPCEU-ALU,7 due
to retrenchment under a Corporate Rightsizing Program. The respondents claimed

Zantoanga Wood Products, Inc. v. NLRC, G R No. 82088, Oct 13,1989.

Pifpino Telephone Corp. v. PiSpino Telephone Employees Association [PITEA], G il No. 160058, June 22,2007.
Bulletin Publishing Corporation v. Sanchez, G R No. 1-74425, Oct 7,1986,144 SCRA 628,641.
Colegio de San Juan de Letran v. Association of Employees and Faculty of Letran, G R No. 141471, Sept 18,2000.
Fight Attendants and Stewards Association of the Philippines v. Philippine Aklines, Inc., G.R No. 178083, July 22,2008.
G R No. 175002. Feb. 18,2013.
Leyte Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU.

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that Pepsi’s adoption of the retrenchment program was designed solely to bust
their union so that come freedom period, Pepsi’s company union, LEPCEU-
UOEF#49,1 which was also the incumbent bargaining union at that time - would
gamer the majority vote to retain its exclusive bargaining status. Hence, on July 23,
1999, LEPCEU-ALU went on strike. The Supreme Court, however, declared
petitioner Pepsi not guilty of union-busting because it acted in good faith.
Furthermore, the fact that Pepsi’s rightsizing program was implemented on a
company-wide basis dilutes respondents’ claim that Pepsi’s retrenchment scheme
was calculated to stymie their union activities, much less diminish their
constituency. Therefore, absent any perceived threat to LEPCEU-ALU’s existence
or a violation of respondents’ right to self- organization, Pepsi cannot be said to
have committed union busting or ULP in this case.2

4. INAPPLICABILITY OF C O O LIN G -O FF PE R IO D .

The 15-day cooling-off period applicable to cases where the ground

invoked is ULP does not apply in cases of union-busting; thus, “ the union may
take action immediately” after the strike vote is conducted and the results
thereof duly submitted to the NCMB. In other words, in case o f union-busting, the
law allows the complete disregard of the 15-day cooling-off period but the
requirement on the 7-day waiting period or strike ban, together with die other
requirements on the filing o f a notice o f strike, the conduct of a strike vote and the
submission of the results thereof to the NCMB-DOLE, should still be complied
with. Thus, the NCMB Primer on Strike, Picketing and Lockout34clearly states:

“In case of dismissal from employment of union officers

which may constitute union-busting, the time requirement for the
filing of the Notice of Strike shall be dispensed with but the strike
vote requirement being mandatory in character, shall “in every
case" be complied with.”*

The emphasis on the phrase “in every case?' is understandable,

considering the use of the same phrase in the law, Article 278(f) [263(f)], thus:

“In every case, the union or the employer shall furnish the
Ministry the results of the voting at least seven days before the
intended strike or lockout, subject to die cooling-off period herein
provided.”5

This view is highlighted in Sukotbai,6 where it was held that while the
language of the law leaves no room for doubt that the cooling-off period and the

1 Leyte PepsLCda Employees Union-Union de Obreros de Fiipinas #49 (UEPCEU-UOEF#49), the incumbent bargaining
union at the time of the sfrke.
2 See also Cabaobas v. Pepsi-Cola Products Phiipp'nes, Inc., G.R No. 176908, March 25.2015.
J See No. 6, NCM3 Primer on Strike, Picketing and Lockout 2ndEdition, December 1995; Kaics supplied.
4 Underscoring suppled.
5 Safe supplied.
* S iM ia i Cuisine and Restaurant v. CA, G.R. No. 150437, July 17,2006.

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seven-day waiting period or strike ban after the submission of die strike-vote report
to the NCMB were intended to be mandatory, however, in case o f union-busting,
where the existence o f the union is threatened, the 15-day cooling-off period
should be dispensed with. In sum, the other remaining requirements - notice of
strike, strike vote, strike vote report and seven-day waiting period or strike ban -
cannot be dispensed with.

V.
STRIKES IN HOSPITALS, CLINICS
AND MEDICAL INSTITUTIONS
1. D IF F E R E N T R U L E .

In line with the national concern for and the highest respect accorded to
the right o f patients to life and health, strikes and lockouts in hospitals, clinics and
similar medical institutions shall, to ever}' extent possible, be avoided and all serious
efforts, not only by labor and management but government as well, be exhausted to
substantially minimize, if not prevent, their adverse effects on such life and health,
through the exercise, however legitimate, by labor o f its right to strike and by
management to lockout1

2. R E Q U IR E M E N T FO R M IN IM U M O P E R A T IO N A L SERV IC E.

In labor disputes adversely affecting the continued operation o f such

hospitals, clinics or medical institutions, it shall be the duty of the striking union or
locking-out employer to provide and maintain an effective skeletal workforce of
medical and other health personnel whose movement and services shall be
unhampered and unrestricted as are necessary- ttrinsure the proper and adequate
protection of the life and health o f its patients, most especially emergency cases, for
the duration o f the strike or lockout.2 To operationalize34this, it is mandated that:

(a) The striking unioo or employer involved in the lockout is obliged to

maintain an effective skeletal force during the strike or lockout. The
movement o f the skeletal force shall be unhampered and unrestricted.
(b) The striking union or employer involved in the lockout shall ensure
proper and adequate protection o f the Efe and health of patients
particularly in emergency cases.*

3. M O T U P R O P R IO POWER OF DOLE SECRETARY.

In such cases, the D O LE Secretary may immediately assume, within
twenty four (24) hours from knowledge o f the occurrence o f such a strike or

1 Article 278(g) [263(g)], labor Code; Far Eastern Unversfy-Or. Nicanor Reyes Medical Foundation [FEU-NRMF] v. FEU-
NRf<f Employees Association-Alliance of Fffipino Workers [FEU-NRMFEA-ARV] G R No. 168362, Oct 12,2006.
2 Article 278(g) [263(g)], Labor Code; See Section 17, Rule XXII, Book V of the Rules to Implement the labor Code.
5 As prescribed under the Operational Guidelines of Department Order No. 40-603, Series of 2010, issued by DOLE
Secretary Rosainda DimapTs-Baldaz on February 24,2011.
4 See Section 4 ffiereof.

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 572 Bar Reviewer on Labor Law

lockout, jurisdiction over die same or certify it to the NLRC for compulsory
arbitration. For diis purpose, the contending parties are striedy enjoined to comply
widi such orders, prohibiuons and/or injunctions as are issued by die DOLE
Secretary or die NLRC, as the case may be, under pain o f immediate disciplinary7
action, including dismissal or loss of employment status or payment by the locking-
out employer of backwages, damages and odier affirmative relief, even criminal
prosecution against either or both o f them.1

VI.
STRIKE IN THE GOVERNMENT SERVICE

1. CLASSIFICATION O F G O V ER N M EN T S E C T O R EM PLOYEES.

For purposes of the exercise of the rights to self-organization and to

strike, the Labor Code classifies employees in the government sector as follows:

(1) Employees o f government-owned and/or controlled corporations

(GOCCs) organized under the Corporation Code (without original
charters) and are, therefore, covered by the Labor Code.2
(2) Employees of the government and its political subdivisions or
instrumentalities, including government-owned and/or controlled
corporations (GOCCs) organized with original charters and are,
therefore, covered by the Civil Service Law, rules and regulations.3
They are called civil service4 employees.

The government employees mentioned in N o. 1 above possess and enjoy

the rights to self-organization and to strike just like any employees in the private
sector; while those referred to in N o. 2 above possess and enjoy only the right to
self-organization but not the right to strike. They are thus absolutely prohibited
from conducting a strike for the purpose o f changing the terms and conditions of
their employment.5

2. JUSTIFICATION FOR ABSOLUTE P R O H IB IT IO N .

The justification behind this State policy is well articulated in the

following cases:

(1) Jacinto v. C/46 - Although the Constitution vests in the government

teachers the right to organize, to assemble peaceably and to petition

1 Axtide 278(g) [263(g)!. Labor Code.

* See Ariide 253 [244] of the Labor Code.
3 See Arfcte 291 [276] of the Labor Code.
4 The Civi Service encompasses a! brandies and agencies of he government, indudrig gevemment-ewned and'or
controfed corporators (GOCCs) wfti original charters. (Section 6, Chapter 2, Subside A, Tide I, Book V, Executive Order No.
292, otherwise known as the "Administrative Code of 1987,’ issued on July 25,1987).
s Section 4, Rule III, Implementing Rules and Regulations of Executive Order No. 180 to Govern Ihe Exercise of the Right of
Government Employees to Self-Organization; Article 291 [276], Labor Code.
* G R No. 124540, Nov. 14,1997.281 SCRA 657.

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LABOR RELATIONS

the government for a redress of grievances, there is no like express

provision granting them the right to stnke. Rather, the constitutional
grant o f die right to strike is restrained by the proviso that its exercise
shall be done in accordance with law.” 1 It is clear therefore that in
the absence o f a statute, public employees do not have the right to
engage in concerted work stoppages for any purpose.2*

(2) AGW v. Minister of Labor3 - The terms and conditions of employment

in the Government, including any political subdivision or
instrumentality thereof are governed by law, hence, government
workers cannot use the same weapons employed by the workers in
the private sector to secure concessions from their employers.
Subject to the minimum requirements o f wage laws and other labor
and welfare legislation, the terms and conditions of employment in
the unionized private sector are setded through the process o f
collective bargaining. In government employment, however, it is the
legislature and, where properly given delegated power, the
administrative heads o f government, which fix the terms .and
conditions o f employment. And this is effected through statutes or
administrative circulars, rules and regulations, not through collective
bargaining agreements.4

(3) SSSEA v. CAS - The remedy is for government employees, through

their unions or associations, to either petition the Congress for the
betterment of the terms and conditions of employment which are
within the ambit o f legislation or negotiate with the appropriate
government agencies for the improvement of those which are not
fixed by law. If there be any unresolved grievances, the dispute may
be referred to the Public Sector Labor-Management Council for
appropriate action. But employees in the civil service may not
resort to strikes, w alkouts and o th e r tem porary work stoppages,
like workers in the private sector, to pressure the G overnm ent
to accede to their dem ands. As now provided under Sec. 4, Rule III
of the Rules and Regulations to Govern the Exercise of the Right of
Government Employees to Self Organisation, which took effect after the
instant dispute arose, ‘[t]he terms and conditions of employment in
the government, including any political subdivision or instrumentality
thereof and government-owned and controlled corporations with

' Underscoring suppSed

J GSIS v. Kapsanan ng mga Manggagawa sa 6SIS, G.R. No. 170132, Dec. 6,2006.
5 Alliance of Government Workers v. Minister of Labor and Employment G.R. No. L-60403, Aug. 3,1983,124 SCRA1.
4 id.
5 Social Security System Employees Association (SSSEA) v. CA, G.R No. 85279, July 28,1989,175 SCRA 686.

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 574 Bar reviewer on Labor Law

original charters are governed by law and employees therein shall not
strike for the purpose of securing changes [thereto].’” 1

3. WHAT C ON STITUTES A STRIKE IN G O V ER N M E N T SERVICE.

A mass action or protest may actually be considered a strike if the

circumstances indicate diat the elements thereof are present. In holding that the
mass action or assembly staged by the petitioners in Jacinto v. Hon. CA2 was actually
a strike, the High Court emphasized that it resulted in the non-holding o f classes in
several public schools during the corresponding period. Petitioners further do not
dispute that the gncvances for which they sought redress concerned the alleged
failure of public authorities - essentially, their "employers’' - to fully and justly
implement certain laws and measures intended to benefit them materially, such as
the immediate release of P680 Million Secondary Education Fund (SEF), fringe
benefits of teachers under R.A. No. 6758;34 clothing allowance of P500.00 to
P i,000.00 per teacher under the General Appropriations Act of 1990; DMB Circular
904 and increase in minimum wage to P5.000.00 for teachers. And probably, to
clothe their action with permissible character, they also raised national issues such
as die removal of the U.S. bases and the repudiation of foreign debt.

In Bagalisan v. C/lJ it was held that die fact that the conventional term
"strike”was not used by the participants to describe their common course of action
was insignificant, since die substance of the situation, and not its appearance, was
deemed controlling. Further, it was held therein that employees in the public
service may not engage in strikes or in concerted and unauthorized stoppage of
work and that the right of government employees to organize is limited to the
formation of unions or associations, without including the right to strike.5

VII.
VARIOUS PROHIBITED ACTS PER LAW,
RULES AND JURISPRUDENCE

1. PR O H IB IT E D ACTS IN STRIKES.

The right to strike, while constitutionally recognized, is not without legal

constrictions.6 Based on the law, rules and jurisprudence, following is a rundown o f
the various acts diat are considered prohibited:

’ Id., Underscoring supplied.

2 G.R No. 124540. Nov 14.1997.
3 See Section 17 thereof This te n is otherwise known as the 'Compensation and PosSon Classification Act of 1989*
approved on August21.1989
4 G.R. No 124678, Jut/ 31.1997.
5 Ctong MPSTA v. Laguo. J r. G.R No 95445 Aug 6.1991.
5 Soiidbank Corporation v. Gamier, G.R Nos. 159460 & 159461, Nov. 15,2010

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1. D eclaring and staging a strike w ith o u t com plying w ith the

procedural b u t m andatory requisites.1 (NOTE: See discussion of (he
seven (7) requisites for a valid strike, supra).

2. D eclaring and staging a strike w ith o u t first having bargained

collectively.2

3. D eclaring and staging a strike based o n non-strikeable o r invalid

grounds. There arc only two (2) valid grounds, namely: (1) collective
bargaining deadlock; and (2) unfair labor practice. All other grounds
therefore are non-strikeable.3 More specifically, the following grounds
are non-strikeable and, therefore, invalid:
(a) Inter-union or intra-union disputes.
(b) Simple violation o f CBA which is now considered simply a grievable
issue. Only gross violation thereof is deemed ULP, which means
that there is flagrant and/or malicious refusal to comply with the
economic provisions thereof by the employer. Needlessly, it is only
when the violation is ^ /w that it may be cited as a ground in support
of a strike.4
(c) Violation of labor standards. Article 1285 of the Labor Code
provides the manner by which such issues may be adjudicated and
resolved.6
(d) Legislated wage orders (wage distortion). Under R.A. No. 6727,7 a
strike is illegal if based on alleged salary distortion. The legislative
intent is that solution to the problem o f wage distortions should be
sought by voluntary negotiation or arbitration, and not by strikes or
concerted activities by the employees. Consequently, a strike staged
based on this ground is illegal.8

4. D eclaring and staging a strike for unlaw ful purpose. This principle
applies even if the strikers had acted in good faith in staging it.9
Examples:

(a) A strike staged for the purpose o f unreasonably demanding the

dismissal of an employee like a factory foreman is illegal1

1 See Toyota Motor Phils. Ccxp. Workers Association v. NLRC, G.R. Nos. 158786 4158789 and 158798-99, Oct 19,2007.
1 See Aitide 278(c) (263(0)1, Labor Code.
1 No. 21, NCMB Primer on Strike, Picketing and Lockout 2nd Edition, December 1995.
4 See also Section 5, Rule XXII, Book V, Rules to Implement the Labor Code, as amended by Departmert Order No. 40-03,
Series of 2003, [Feb. 17,2003],
5 Artide 128 is entited "Vsitorial and Enforcement Pcwer.'
‘ Section 3. Rule V.NCM8Marual of Procedures for Conciliation and Preventive Mediation Cases
7 Otherwise known as the ‘Wage Rationalization Act"
* Jaw at Bukiod ng Manggagawa pBM] v. NLRC, G.R. No. 91980, June 27,1991,198 SCRA 586.
5 Filcon Manufacturing Corporation v. Lakas Manggagawa sa FfcorvLakas Manggagawa Labor Center IMF-LMLC], G.R.
No. 150166, July 26,2004.

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(b) A strike staged by a union to compel the employer to extend

recognition to it as the SEBA o f the employees in a bargaining unit
is illegal.12 A union can only become a SEBA through modes
allowed by law, such as Request for SEBA Certification (in
replacement of Voluntary Recognition)34or certification election and
its variations, such as consent election, run-off election or re-run
election.
(c) If a strike is declared for a trivial, unjust or unreasonable purpose or
if carried out through unlawful means, the law will not sanction it
and the court will declare it illegal.4 v
(d) A strike is illegal if staged without giving the employer reasonable
time to consider and act on the demands made by the union.5
(e) A strike is illegal if used as a means to circumvent valid contractual
commitments or judicial orders lawfully issued.6

5. Declaring and staging a strike in violation of the “n o strike, no

lockou t * clause in the CBA. This clause may be invoked by an
employer only when the strike is economic in nature or one which is
conducted to force wage or other concessions from the employer that
are not mandated to be granted by the law itself. It does not bar strikes
grounded on ULP.7

6. Declaring and staging a strike w ithout subm itting the issues to

the grievance machinery or voluntary arbitration prescribed in the
CBA or failing to exhaust the steps provided therein. 8

7. Declaring and staging a strike while conciliation and m ediation

proceedings are on-going a t the NCM B. The disregard of such
proceedings is a blatant violation o f the Rules to Implement the Labor
Code,9 which explicitly obliges the parties to bargain collectively in good
faith and prohibits them from impeding or disrupting the proceedings.10

8. Declaring and staging a strike based on issues already brought to

voluntary or compulsory arbitration. The rationale behind this

1 Luzon Marine Department Union v. Roldan, G.R No. L-2660, May 30,1950,86 Phil. 507.
2 Steel Corporation of the PhiEpp'nes v. SCP Employees Union, G.R Nos. 169829-30, April 16,2008.
3 ft must be noted, however, thk "Vokintary Recognition’ as a nxxle of designating a SEBA has atready been repealed and
replaced by the mode k rm i as 'Request for SEBA Certification,’ in accordance with Department Order No. 40-M5, Series
of 2015, issued on September 07,2015.
4 Luzon Marine Departnent Union v. Roldm, G A No. L-2660, May 30,1950,86 PM. 507.
5 Almeda v. CIR, GR. No. L-7425, July 21,1955.
6 ALPAP v. CIR G.R Nos. L-33705 8 L-35206, April 15,1977,76 SCRA 274.
7 Malayang Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) v. Ramos, G.R. No. 113907, Feb. 28,2000.
* Section 5, Rule XXII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 4003, Series of
2003, [Feb. 17,2003).Union of Ffipro Employees v. Nestle Philippines, Inc., G.R No. 88710-13, Dec. 19,1990.
5 Particularly, Section 6 (now Section 9], Book V, Rule XXII thereof.
« Filipino Pipe and Foundry Corporation v. NLRC, G.R. No. 115180, Nov. 16,1999.

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prohibition is that once jurisdiction over the labor dispute has been
properly acquired by competent authority, that jurisdiction should not
be interfered with by the application o f the coercive processes of a
strike or lockout*1Thus, a strike conducted during the pendency of the
compulsory arbitration proceedings on a labor dispute certified to the
NLRC by the D O L E Secretary for compulsory arbitration is illegal.2

9. D eclaring an d stag in g a strike d u rin g the pendency o f a case

involving the sam e g ro u n d /s cited in the notice of strike or
lockout. The reason is that once an issue has already been raised as a
ground in a labor proceeding before a competent labor tribunal, the
same can no longer be invoked as a ground to justify a strike or lockout.
Jurisdiction has already been acquired over said issue by the labor
tribunal which first took cognizance o f the case and the adjudication
and resolution thereof are necessarily vested in that tribunal to the
exclusion o f all others. A strike or lockout cannot be staged to pre­
empt or circumvent such adjudication and resolution.

10. D eclaring an d staging a strike in defiance of an assum ption or

certification or retum -to-w ork order. Under Article 278(g) [263(g)],
the Labor Secretary's assumption of jurisdiction over the labor dispute
or his certification thereof to the NLRC for compulsory arbitration .has
the effect o f automatically enjoining the intended or impending strike
or lockout and all striking or locked-out employees arc required to
immediately return to work and the employer should immediately
resume operations and readmit all workers under the same terms and
conditions before the strike or lockout The defiance by the union, its
officers and ordinary members, o f the Labor Secretary's
assumption/certification order or the retum-to-work order, makes the
strike illegal under the law and applicable jurisprudence as it constitutes
a valid ground for dismissal o f the defiant workers.

11. D eclaring an d staging a strike in violation of a tem porary

restraining order (TR O ) or an injunction order issued for the
purpose o f enjoining the union and/or its members from committing
illegal and prohibited acts in the course o f a strike, such as, among
others, the act o f obstructing the free ingress to or egress from the
company premises.3

12. D eclaring an d stag in g a strike after the conversion of the notice of

strike into a preventive m ediation case. After such conversion, the
notice of strike is deemed dropped from the dockets, as if no notice of

1 Telefunken Semiconductors Employees Union-FFWv.CA, G.R. Nos. 143013-14, Dec. 18,2000.

1 Ptii'ppine Diamond Hotel and Resort, he. v. ManSa Diamond Hotel Employees Urion, G.R No. 158075, June 30,2005.
* Association of Independent Unions r tie Riilpphes [AIUP] v. NLRC, GR. No. 123505, March 25,1959

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strike has been filed. Since there is no more notice o f strike to speak
about, any strike subsequendy staged by the union is deemed not to
have complied with the requirements of a valid strike.1

13. Declaring and staging a strike prohibited by law, such as the one
staged by employees performing governmental functions who, by law,
are not allowed to declare a strike or any concerted activity for the
purpose of changing die terms and conditions o f their employment.
Such terms and conditions of employment in the government,
including any political subdivision or instrumentality thereof and
government-owned and/or controlled corporations with original
charters, are governed by Civil Service Law, rules and regulations and
said employees are not allowed to strike for the purpose of securing
changes dierein.2 (NOTE: This is extensively discussed above under the
topic: “VI. STRIKE IN THE GOVERNMENT SERVICE").
14. Declaring and staging a strike by a m inority union.3 'This is so
because no labor dispute which will justify the conduct of a strike can
exist between the employer and a minority union. To permit the union’s
picketing activities would be to flaunt at the will of the majority.4

15. Declaring and staging a strike by an illegitim ate union. Under

Article 278(c) [263(c)], only a legitimate labor organization is entided to
file a notice o f strike on behalf o f its members. Absent a showing as to
the legitimate status o f the labor organization, the strike it conducted
would have to be considered as illegal.5

16. D eclaring and staging a strike in violation of the C om pany Code

of Discipline which prohibits the conduct o f illegal strikes or
concerted actions, as exemplified in the 2007 case of Toyota Motor}6
where the Supreme Court considered the protest rallies staged by
Toyota’s employees in front o f the offices of the Bureau o f Labor
Relations (BLR) and the Office of the D O LE Secretary in Intramuros,
Manila, as blatant violation of Section D, paragraph 6 of Toyota’s Code
of Conduct which prohibits "inciting orparticipating in riots, disorders, alleged
strikes or concerted actions detrimental to [Toyota’s] interest." The penalty for
the offense under the Company Rules is dismissal. The union and its
members are bound by such company rules, and the February 2001
mass actions and deliberate refusal to render regular and overtime work

1 No.18, NCMB Primer on Strke, Picketing and Lockout, 2nd Edition, December 1995.
2 Section 4, Rde III, Implementing Rules and Regulations of Executive Order No. 180 to Govern the Exercise of the Right of
Government Employees to SefOrganizafcn; Article 291 (276), labor Code.
1 Unted Restaurot's Employees & Labor Unoo-PAflU v.fotTes, G.R No. L-24993. Dec 18.1968,26SCRA 435.
4 United Restaurorts Employees & Labor UnavPAFLUv. Tones, G il No. L-24993, Dec 18,1968.26 SCRA 435.
* Stamford Marketing Cotp. v. Julian, G.R No. 145496, Feb. 24,2004.
1 Toyota Motor Phis. Cap Workers Association v NLRC G.R Nos. 1587868158789and 158/98 99, Oct 19,2007.

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on said days violated said rules. In sum, the February 2001 strikes and
walk-outs were illegal as these were in violation o f specific requirements
of the Labor Code and a company rule against illegal strikes or
concerted actions.

17. D eclaring and staging a strike by dism issed em ployees. Petitioner

union in the same Toyota case, also posits that strikes were not
committed on May 23 and 28, 2001 as the rallies held on said dates
could not be considered strikes as the participants were the dismissed
employees who were on payroll remsiatement. It concludes that there
was no work stoppage. In finding this contention as wanting in legal
basis, the High Court asserted that once the D O LE Secretary' assumes
jurisdiction over a labor dispute or certifies a case for compulsory
arbitration to the NLRC, the parties have to revert to the status quo ante
(the state of things as it was before). While it may be conceded that
there was no work disruption in the two Toyota plants, the fact still
remains that the union and its members picketed and performed
concerted actions in front o f the company premises. This is a patent
violation of the assumption o f jurisdiction and certification order of the
D O LE Secretary. While there are no work stoppages, the pickets and
concerted actions outside the plants conducted by the dismissed
employees have a demoralizing and even chilling effect on die workers
inside the plants and can be considered as veiled threats o f possible
trouble to the workers when they go out o f the company premises after
work and o f impending disruption o f operations to company officials
and even to customers in the days to come. The pictures presented by
Toyota undoubtedly show that the company officials and employees are
being intimidated and threatened by the strikers. In short, die union, by
its mass actions, has inflamed an already volatile situation, which was
explicidy proscribed by the D O LE Secretary’s order. The pickets,
therefore, on May 23 and 28,2001 were unlawful strikes.*1

18. D eclaring and staging p ro test rallies in front of governm ent

offices may constitute an illegal strike. Examples are:

(a Toyota Motor v. NLRC2 - The protest rallies staged by the union from
February 21 to 23, 2001 in front of the offices of the Bureau of
Labor Relations (BLR) and the D O LE Secretary in Intramuros,
Manila, in the guise that they were legitimate exercise o f their nght
to peaceably assemble and petition the government for redress of
grievances, have been declared not as protest actions but actually
strikes which are illegal for having been undertaken without

1 Id.
1 Toyota Motof Phis. Corp. Woikeis Association v. NLRC, G.R. Nos. 158786 &15S789 and 158798-99, Ocl 19,2007.

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 580 Bar reviewer on Labor Law

satisfying the mandatory pre-requisites for a valid strike under

Article 278 [263] o f the Labor Code.

(c) Solidbank v. Gamier1 - This is similar to Toyota where the protest

actions staged by the employees o f petitioner Solidbank in front of
the Office of the DOLE Secretary in Intramuros, Manila were
declared constitutive of illegal strike. In this case, there was a CBA
deadlock which was assumed by the DOLE Secretary. Subsequently,
the DOLE Secretary resolved all the issues submitted to him for his
resolution. Dissatisfied with the Secretary’s ruling, an overwhelming
majority of employees joined the “mass leave" and. “protest action ” at the
DOLE Secretary’s office while the bank’s provincial branches in
Cebu, Iloilo, Bacolod and Naga followed suit and “boycotted regular
work." The union members also picketed the bank’s Head Office in
Binondo and Paseo de Roxas branch. As a result o f the employees’
concerted actions, petitioner Solidbank’s business operations were
paralyzed. The High Court pronounced that the concerted mass
actions staged by respondents was a strike and not a legitimate
exercise of their right to express their dissatisfaction with the
Secretary’s resolution o f the economic issues in the deadlocked CBA
negotiations with petitioners. It must be stressed that the concerted
action of the respondents was not limited to the protest rally in front
of the DOLE Office on April 3, 2000. Respondent union had also
picketed the Head Office and Paseo de Roxas Branch. Considering
that these mass actions stemmed from a bargaining deadlock and an
order of assumption of jurisdiction had already been issued by the
Secretary of Labor to avert an impending strike, there is no doubt
that the concerted work of abandonment/boycott was the result o f a
labor dispute. All the elements o f strike are evident in the union-
instigated mass actions.

19. Declaring and staging Welga ng Bayan. Stoppage o f work due to

welga ng bayan is in the nature of a general strike and an extended
sympathy strike which are illegal since the striking employees have no
labor dispute with their employer but who, on a day they are
scheduled to work, refuse to work and instead join a welga ng bayan}

20. Declaring and staging a strike in b ad faith. A strike staged based

on ULP does not automatically carry the stigma o f illegality even if no
ULP was actually committed by the employer for as long as the
strikers believe in good faith that such ULP was indeed committed.
Indeed, the presumption of legality' prevails even if the allegation of

1 Sofidbank Corporation v. Gamier, G.R. Nos. 159460 & 159461. Nov. 15,2010.
1 Biflex Phils. Inc. Labor Union [NAFLU] v. Reflex Industrial and Manufacturing Corp., G.R. No. 155679, Dec. 19,2006.

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ULP is subsequently found to be untrue provided that the union and

its members believed in good faith in the truth o f such averment.1*

The claim o f good faith may be negated by the unique circumstances

obtaining in a case. The following arc examples o f bad faith strike:

(a) In The Peninsula Manila Hotel1 case, where the dismissal o f one o f
the officers of petitioner union which allegedly triggered the
wildcat strike was declared not a sufficient ground to justify the
strike. As the NLRC later found, the dismissal was legal and was
not a case of ULP but a mere exercise o f management prerogative
on discipline, the validity o f which could have been questioned
through the filing of an appropriate complaint and not through the
filing o f a notice o f strike or the holding of a strike. Evidently, to
repeat, appropnatc remedies under the Labor Code were available
to the striking employees and they had the option to either direedy
file a case for illegal dismissal in die office o f die Labor Arbiter or,
by agreement of the parties, to submit the case to die grievance
machinery of the CBA so that it may be subjected to voluntary
arbitration proceedings. Petitioners should have availed themselves
of these alternative remedies instead o f resorting to a drastic and
unlawful measure, specifically, holding a wildcat strike at the
expense of the Hotel whose operations were consequendy
disrupted for two days. N ot every claim of good faidi is justifiable,
and herein petitioners’ claim of good faith should not be
countenanced since their decision to go on strike was clearly
unwarranted.

(b) In Sulpido Lines34case, where the petitioner union claims that the
strike was legal for it was done in good faidi, having been staged in
response to what its officers and members honesdy perceived as
ULP or union-busting committed by the respondent company.
The Supreme Court, however, was unconvinced because it found
the accusation of union-busting bereft o f any proof. Scanning the
records very carefully failed to indicate any evidence to sustain
such charge. Hence, the strike was declared illegal, in the light o f
the ruling in Tin v. N LRC* that it is the union which has the
burden to present substantial evidence to support its allegation of
ULPs having been committed by management. The facts and the
evidence, however, did not establish even at least a rational basis

1 Maiayang Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) v. Rancs, G.R. No. 113907, Feb 28.2000.
1 NUWHRA1N - The Penreula Manila Chaptef(lntenm Union Junta) v NLRC, G.R. No. 125561. March06. 1998.
5 Samahang Manggagawa sa Sulpido Lines, (nc-NAFLU v. Sulpido Lines, Inc., GJT No. 140992, March 25,2004.
4 Tkiv. NLRC, G.R. No. 123276,Aug. 18,1997,277 SCRA 680,687

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why the union would wield a strike based on alleged ULPs it did
not even bother to substantiate during the conciliation
proceedings.

VIII.
LIABILITY RESULTING FROM THE CONDUCT OF'STRIKE

1. ORDER OF TOPICAL DISCUSSION.

The discussion of this topic is divided into the following sections:

A. LIABILITY FOR ILLEGAL STRIKE

B. LIABILITY FOR DEFIANCE OF ASSUMPTION/CERTIFICATION ORDER
OR RETURN-TO-WORK ORDER

A.
LIABILITY FOR ILLEGAL STRIKE

1. LIABILITY FOR PA RTICIPA TION IN LEGAL STRIKE.

As a general rule, the declaration or actual conduct of a strike does not

result in the severance of the employment relationship nor a renunciation thereof.
The employment relationship is merely suspended during the period of work
stoppage.1An employee who participates in a lawful strike is not deemed to have
abandoned his employment but is merely exercising his right to self-organization
precisely to protect his rights as an employee and/or to obtain better working
conditions.2 Such participation should not constitute sufficient ground for the
termination of liis employment even if a replacement has already been hired by the
employer during such lawful strike.3

2. LIABILITY FOR PA RTICIPA TION IN ILLEGAL STRIKE.

Even if the stake started as a lawful strike, if in the course thereof, illegal
acts are committed by the strikers, the strike becomes illegal and the participants in
the commission thereof become liable therefor and may thus be terminated. This
holds true whether the striker guilty o f committing illegal acts is an officer of the
union or an ordinary' member thereof. Thus, if the strike is legal at the beginning
and the officers or the ordinary members commit illegal acts during and in the
course of the strike, then they cannot evade personal and individual liability for said
acts.4

> Rex Taxicab Co. v.CIR, 40 O.G. 138,70 Phi 621.

2 No. 26, NCMB Primer on Strike, Picketing and Lockout 2nd Edition, December 1995.
J 311paragraph, Article 279(a) [264(a)], Labor Code.
4 Toyota MotorPhHs. Cocp. Workers Association v. NLRC, G.R. Nos. 158786 &158789and 158798-99,Oct 19,2007.

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a. Union officers an d ordinary m em bers, disdncdon in liability.

Having cited the general rule, the next question is who then should be
held liable for staging an illegal strike? Article 279(a) [264(a)!1 makes a distinction
between ordinary union members and officers as far as the effect o f illegal strike on
their employment status is concerned.

1. Union officers.

The mere finding or declaration o f illegality o f the strike will result in the
termination of all union officers who knowingly participated in the illegal strike.2
Unlike ordinary members, it is not required, for purposes o f termination, that the
officers should be proven to have committed illegal acts during the strike in order
to be held liable therefor.3 Otherwise stated, the services o f a participating union
officer may be terminated not only when he actually commits an illegal act during a
strike, but also if he knowingly participates in the conduct and staging o f an illegal
strike. This is the most logical consequence for knowingly participating in an illegal
strike.4

To illustrate how the "knowing partidpaiion" of union officers may be

ascertained and established, the following factors were taken into account in Abaria
v. NLRC,5 which led to the declaration that they knowingly participated in the
illegal strike:

(a) Their persistence in holding picketing activities despite the declaration

by die NCMB that their union was not duly registered as a legitimate
labor organization and notwithstanding die letter from the
federation’s6 legal counsel informing them that their acts constituted
disloyalty to the national federation; and
(b) Their filing o f the notice o f strike and conducting a sttike vote despite
the fact that their union has no legal personality to negotiate with their
employer7 for collective bargaining purposes.

2. Ordinary union m em bers.

The fate of ordinary union members is different Mere participation in an

illegal strike is not a sufficient ground to terminate their employment The mere

1 Artide 279(a) (264<3)] of the Labor Code, as amended, provides for the consequences of an llegal strtte to the partiqpating
writers: ‘xxxAny union officer vho knowhgly participates in llegal strite and any w riter a mien officer who knowingly
participates h the commission of illegal aas during a strite may be declared to hare lost his employment status: Provided,
That mere partidpafioo of a w riter in a lawful strke shall not constitute sufficient ground for termination of his employment,
even if a replacement had been hired by the employer during such lawful strite.’
7 Lapanday Workers Union v. NLRC, G.R. Nos. 95494-97, Sept 7,1995.
3 Phimco Industries, Inc. v. Phimco Industries Labor Association [PB_A], G.R. No. 170530, Aug. 11,2010.
4 Abaria v. NLRC. G.R. Nos. 154113,187778,187861 4196156, Dec. 7,2011.
5 G R. Nos. 154113.187778,187861 & 196156, Dec. 7,2011,661SCRA686.
6 The federation here is the National Federation of Labor which created by chartering he local chapter that staged the ilegal
strike.
1 Metro Cebu Community Hospital, Inc. (MCCHI), presently know as the Vfeayas Community Medical Center (VCMC).

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finding or declaration of illegality of a strike will not result in their termination. For
a union member to suffer the consequence of loss o f employment, it must be
shown by substantial evidence that he has knowingly participated in the commission
of illegal acts during the strike.1Obviously, the Labor Code protects ordinary union
members who participated in such an illegal strike from losing their jobs provided
that they did not commit illegal acts in the course thereof.2

b. Reason foe the distinction.

The reason for this distinction is that the union officers have the duty to
guide their members to respect the law. If instead of doing so, the officers urged
the members to violate the law and defy the duly constituted authorities, their
dismissal from the service is a just penalty or sanction for their unlawful act. Their
responsibility as main players in an illegal strike is greater than that of the ordinary
union members and, therefore, limiting the penalty of dismissal only to the former
for participating in an illegal strike is but in order.3

Ordinary union members should not be meted loss of employment on the

considerations of (1) compassion; (2) good faith; and (3) security of tenure
provisions under the Constitution.4 In Esso Philippines,5 it was explained that a
member is not responsible for the union’s illegal strike even if he voted for the
holding of a strike which became illegal.6

c. Some principles on illegality o f a strike.

■ Absent any showing that the employees are union officers, they
cannot be dismissed based solely on the declaration o f the illegality
of the strike.7
■ For purposes of identifying the union officers, the certifications as
to the names of the union officers issued by the Chief o f the Labor
Organization Division o f the Bureau of Labor Relations (BLR),
being public records, enjoy the presumption o f regularity and
deserve weight and probative value. Thus, in the absence o f a clear
and convincing evidence that said certifications are flawed, they
should be taken on their face value.8
* The fact that the employees are signatories to the CBA does not in
itself sufficiently establish their status as union officers during the
illegal strike. Neither were their active roles during the bargaining

1 Fadriquetan v. Monterey Foods Coqxxabon, G.R Nos. 178409 & 178434, June 8,2011.
1 G & S Transport Corp. v. Infante, G R No. 160303, Sept 13,2007.
5 SoBdbank Corporation v. Gamier, G R Nos. 159460 & 159461, Nov. 15,2010.
4 Id.
5 Esso Philippines, Inc. v. Malayang Manggagawa sa Esso (MME), G R No. L-36545, Jan. 26,1977,75 SCRA 73,90.
! See Toyota Motor Ptifts. Corp. WortereAssocafonfTMPOAfAlv.NLRC, supra
7 Gold City Integrated Port Service, Inc. v. NLRC, G R No. 103560, JUy 6,1995,245 SCRA 627,637.
8 Coca-Cola Bofflers Phis, Inc. v. NLRC, G.R No. 123491, Nov. 27,1998,299 SCRA 410.

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negotiations be considered as evidence o f their being union

officers.1
■ Only the union officers du rin g the period o f illegal strike axe liable.2
If the employees acted as union officers after the strike, they may
not be held liable and, therefore, could not be terminated in their
capacity as such.3
■ Shop stewards are union officers,4 hence, they should be
terminated upon die declaration of die illegality o f die strike.5
■ Wholesale forfeiture o f employment status is not allowed. The mere
filing of charges against an employee for alleged illegal acts during a
strike does not by itself justify his dismissal. The charges must be
proved in an investigation duly called for that purpose, where the
employee should be given an opportunity to defend himself. This
holds true even if the alleged ground constitutes a criminal offense.6

3. LIABILITY FO R C O M M ISSIO N O F ILLEG A L ACTS.

a. Legality or illegality o f strike, im m aterial.

As far as liability for commission o f illegal acts during die strike is

concerned, the issue of legality or illegality o f the strike is irrelevant. As long as die
union officer or member commits an illegal act in the course o f the strike, be it
legal or illegal, his employment can be validly terminated.7

b. M eaning o f “illegal acts. ”

The term “illegal acts” under Article 279(a) [264(a)] may encompass a
number o f acts that violate existing labor or criminal laws, such as the following:

(1) Violation of Article 279(e) [264(e)] of the Labor Code which provides
that “[n]o person engaged in picketing shall commit any act of
violence, coercion or intimidation or obstruct the free ingress to or
egress from the employer’s premises for -awful purposes, or obstruct
public thoroughfares.”
(2) Commission of crimes and other unlawful acts in carrying out the
strike.8
(3) Violation o f any order, prohibition, o r injunction issued by the
DOLE Secretary or NLRC in connection with the assumption o f

' Id.
? Lapanday Workers Union v. NLRC, 248 SCRA 95.105.
3 Coca-Cola Bottlers Phils, Inc. v. NLRC, [supra.
* Sarta Rosa Coca-Cola Plant Employees Union v. Coca-Cola Boaters Phis., Inc., G.R Nos. 164302-03, Jan. 24,2007.
5 C. Alcantara & Sons, Inc. v. CA, G R No. 155109, Sept 29,2010.
6 Telefunken Semiconductors Employees Union-FFW v. SOLE. G.R. Nos. 122743 and 127215, Dec. 12,1997.
» Toyota Motor Phis. Corp. Workers Association [TMPCWA] v. NLRC, G R Nos. 158786 &158789, Oct 19,2007
8 National Brewery and Allied Industries Labor Union v. San Miguel Brewery, Inc., G R No. L -19017, Dec. 27,1963

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jurisdiction or certification order under Article 278(g) [263(g)] of the

Labor Code.1

This enumeration is not exclusive as jurisprudence abounds where the

term “illegal acts” has been interpreted and construed to cover other breaches of
existing laws. Some of the specific illegal acts that have'been passed upon and
declared as such by the Supreme Court are discussed below.

(1) Employment of unlawful m eans or com m ission of prohibited

acts or practices would make the strike illegal.2 For instance, although a strike
may have been legal at its commencement, however, when die strikers barricaded
the gates of the company’s plants and blocked the free ingress to and egress from
the company premises, the strike becomes illegal.3

(2) Employm ent of strike-breaker, scab or blackleg. The term “strike­

breaker," sometimes derogatorily called a scab, blackleg, or knobstick, may refer to any
of the following:

(a) A person who continues to work during a strike or refuses to join a

strike;
(b) A union member who refuses to strike or who returns to work before
a strike is ended or settied;
(c) A non-employee who is brought into the unionized facility to replace,
temporarily or pemianendy, a union member who chose to go on
strike;
(d) A person who obstructs, impedes or interferes by force, violence,
coercion, threats or intimidation with any peaceful picketing by
employees during any labor controversy affecting wages, hours or
conditions of work or in the exercise o f dieir right to self-organization
or collective bargaining.4

(3) “Crossing the picket line” is a term used to describe the act o f
working during a strike, whether by strike-breakers, management personnel, non-
unionized employees or members o f other unions not on strike. The use o f this
term is proper irrespective of whether it involves actually physically crossing a line
of picketing strikers.

(4) Use of force, violence, coercion, threats or intim idation and

similar acts in the course of a strike. Paragraph (b) of Article 279 [264] is clear in
its proscription that “ [n]o person shall obstruct, impede, or interfere with, by force,
violence, coercion, threats or intimidation, any peaceful picketing by employees

1 Toyota Motor Phils. Corp. Waters Association [TMPCWA] v. NLRC, G.R. Nos. 158786 and 158789, Oct. 19,2007.
1 Phimco Industries. Inc v. Phimco Industries Labor Assodation piLAJ. G R. No 170830, Aug. 11,2010.
J Toyota Motor Phis. Corp. Wcxkers Association v NLRC, G il Nos. 158786 8158789 and 158798-99, Oct 19,2007.
4 Artde 219(r) [212(f)], Labor Code; No. 38, NCM8 Puner on Strtre, Picketing and Lockout 2nd Edition, December 1995.

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during any labor controversy or in the exercise of the right to self-organi2ation or

collective bargaining, or shall aid or abet such obstruction or interference.”

(5) Use of barricades, blockades and obstructions. Article 279(e)

[264(e)],1 expressly provides that no person engaging in picketing shall obstruct the
free ingress to or egress from the employer’s premises for lawful purposes, or
obstruct public thoroughfares.2

(6) U se of slanderous, libelous and obscene language during the

strike is a prohibited act.3

5. SOM E PR IN C IPL E S O N ILLEG A L ACTS D U R IN G STRIKE.

8 Mere substantial evidence required to hold strikers guilty of commission o f

illegal acts.4
■ Liability for illegal acts should be determined on an individual basis. For this
purpose, the individual identity o f the union members who participated in
the commission of illegal acts may be proved thru affidavits and photographs.5
Simply referring to them as “strikers,” or “complainants in this case” is not
enough to justify their dismissal.6
■ Only members who are identified as having participated in the commission o f
illegal acts are liable. Those who did not participate should not be blamed
therefor.7
• To effectively hold ordinary union members liable, those who participated in
the commission of illegal acts must not only be identified but the specific
illegal acts they each committed should be described with particularity.8
■ The heated altercations and occasional blows exchanged in the picket line do
not affect or diminish the right to strike.9
■ Exchange of hot words in the picket line is not an illegal act that would
impede or diminish the right to strike.10
" If violence was committed by both employer and employees, the same cannot
be cited as a ground to declare the strike illegal.11
• Dismissal of the criminal case filed by reason o f the illegal acts committed in
the course of the strike does not extinguish liability under the Labor Code.1

1 As amended by Batas Pambansa Bflang 227 [Jtne 1.1982],

1 See Section 13, Rule XXII, Book V, Rules to Implement toe Labor Code, as amended by Department Order No. 40-03,
Series of 2003, Feb. 17,2003; See also Libongcogon v. Phimco Industries, Inc.. G.R. No. 203332, June 18,2014.
1 United Seamen's Union of toe Philippines v. Davao Shipowners Association, G R Nos. L-18778 8 L-18779, Aug. 31,1967.
4 Phimco Industries, Inc. v. Phimco Industries Labor Association piLAJ, G R No. 170830, Aua. 11,2010.
5 Id.
6 G & S Transport Coip. v. Infante, G R No. 160303, Sept 13,2007.
1 Phimco Industries, Inc. v. Phimco Industries Labor Association (PilA), supra
8 Sofidbank Corporation v. Gamier, G.R. No. 159460, Nov. 15,2010.
9 insular lie Assurance Co., Ltd. Employees Association v. The Insular Life Assurance Co. G R No. L-25291, Jan. 30,1971.
'8 id.
" Malayang Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) v. Ramos, G.R. No. 113907, Feb. 28,2000.

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 588 Bah Reviewer on Labor Law

B.
LIABILITY FOR DEFIANCE OF ASSUMPTION/CERTIFICATION ORDER
OR RETURN-TO-WORK ORDER

1. LIABILITY FOR ILLEGAL STRIKE VERSUS LIA BILITY FO R

D EFIA N CE OF A S S U M P T IO N /C E R T IF IC A T IO N O R D E R OR
RETURN-TO-W ORK O R D ER .

The liability of union officers and ordinary members for participating in a

strike which has been declared illegal, on the one hand, is different from their
liability when they defy a retum-to-work order issued in relation to the assumption
of jurisdiction by the DOLE Secretary of a labor dispute affecting the national
interest or certification thereof to the NLRC for compulsory arbitration, on the
other hand.

While the former makes a clear-cut distinction between the liability of

union officers and ordinary union members who participated in the illegal strike or
in die commission of illegal acts in the course thereof, in the latter, no such
distinction exists as the very act o f defiance of such order would result in the
termination of employment, irrespective o f whether the defiant worker is a union
officer or an ordinary union member. This is so because once the DOLE Secretary
assumes jurisdiction over a labor dispute or certifies it to the NLRC for
compulsory arbitration, such jurisdiction should not be interfered with by the
application of the coercive processes of a strike.

2. JUSTIFICATIONS FOR TERMINATING DEFIANT

WORKERS.
The following are the justifications:

1. A strike that is undertaken after the issuance by the DOLE Secretary

of an assumption or certification order becomes a prohibited
activity and thus illegal. The defiant striking union officers and
members, as a result, are deemed to have lost their employment
status for having knowingly participated in an illegal strike.
2. From the moment a worker defies a retum-to-work order, he is
deemed to have ab andoned his job.2
3. By so defying, the workers have forfeited their right to be
readm itted to w ork.3

' C Alcantara & Sens, Inc. v. CA. G.R. No. 155109, Sept 29.2010.
Article 278(g) (263(g)), Labor Code: Philppne Airlines, Inc. v. M antes, G.R No. 119360, Oct 10,1997,280 SCRA 515.
3 Steel Corporation of the Philippines v. SCP Employees Union, G.R. Nos. 169829-30, April 16,2008.

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LA.BOR REIATIO N S

3. ILLUSTRATIVE CASES.

There is a long chain o f cases where not only the union officers but the
ordinary union members who defied the assumption/certification order and/or
return-to-work order were considered as having lost their employment status. The
following may be cited:

(1) Samitnlo v. Tuico} where all the 44 defiant workers were declared to
have lost their employment status. While the employer, Asian
Transmission Corporation (ATQ, has manifested its willingness to
accept most o f the workers, and has in fact already done so, it has
balked at the demand o f the remaining workers to be also allowed to
return to work. Its reason is that these persons, instead of complying
with the retum-to-work order, as most o f the workers have done,
insisted on staging the restrained strike and defiantly picketed die
company premises to prevent the resumption o f operations. By so
doing, ATC submits, these strikers have forfeited their right to be
readmitted, having abandoned their positions, and so could be validly
replaced. The Court agreed with this position of ATC, thus: “In fact,
the petitioners argue in their pleadings that they were engaged only in
peaceful picketing, which would signify that they had not, on those
dates, returned to work as required and had decided instead to ignore
the said order. By their own acts, they are deem ed to have
abandoned their em ploym ent a n d can n o t now dem an d th e right
to return thereto by virtue of the very order they have defied.”12

(2) U F E v. N estle ,3 an assumed case involving petitioner Union o f Filipro

Employees and 70 union officers and a member. It was held in this
case that “a strike that is undertaken despite the issuance by the
Secretary of Labor of an assumption or certification order becomes a
prohibited activity and thus illegal, pursuant to the second paragraph
o f Article 279 [264] of the Labor Code, as amended. The union
officers and members, as a result, are deemed to have lost their
employment status for having knowingly participated in an illegal act.”
It was held here: “Thus, the NLRC correctly upheld the illegality of
the strikes and the corresponding dismissal o f the individual
complainants because of their “brazen disregard o f successive lawful
orders of then Labor Ministers Bias F. Ople, Augusto Sanchez and
Labor Secretary Franklin Drilon dated December 11,1985, January 30,
1986 and February 4, 1986, respectively, and the cavalier treatment of
the provisions of the Labor Code and the retum-to-work orders o f the

1 SarmientD v. The Hon. Judge Ortando R Tuico, G .R Nos. 75271-73 & L-77567, Jine 27,1988.
7 Emphasis suppSed. The foregoing holding was reaffirmed in the Supreme Courts Resolution dated Feboay 22,1989.
3 Union of FJ'pro Employees v. Nestle Philippines, Inc.; G.R Nos. 88710-13, Dec. 19,1990.

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 590 Bar reviewer on Labor Law

Minister (now Secretary) of Labor and Employment, or Articles 264

and 265 (now renumbered Arts. 278 [263] and 279 [264]) xxx.”
(3) Other relevant cases are:
(a) St. Scholaslicds College v. Torres,*
(b) Federation of Free Workers v. Inciong}
(c) Allied Banking Corporation v. NLRC;3
(d) National Federation of Labor v. NLRC;4
(e) De Ocampo v. NLRC;5
(f) Toyota Motor Phils. Corp. Workers Association [TMPGVA] v. NLRC;6
(g) Manila Hotel Employees Association v. Manila Hotel Corp.; and
(h) Philcom Employees Union v. Philippine Global Communications}*2
34567

' G R No. 100158, June 29,1992,210 SCRA 565. Al the defiant streets, both union officers and ordinary union members,
were al declared to have lost their employment status under the fbflowng rafodnatjon.
2 G R No. L-49983, Apri 20,1992. The Supreme Court, citing the same ruling in Union of Fifipro, declared al defiant workers
as having lost their employment status. Unrebutled evidence shows that the indwidual petitioners actvety participated in the
fiegal strife staged.*
3 G.R Nos. 116128 & 116461, July 12,1996,258 SCRA 724. On the basis of the ruings h tie SamrientD, Union of Fipro, St
SchotasSca's and Federation of Free Workers cases, the union officers and members who have participated it the said
Degaf actwity, were all deemed to have lost tie r employment state, as a result cf (heir defiance of the assumption a
certification order.
4 G R No. 113466, Dec. 15,1997,283SCRA275. It was alleged by petitioners that the dismissal of tte 141 workers isbased
solely on a prima fade finding that they committed various unlawful acts wtile staging t o strike, as certified by the City
Prosecutor’s Office. In affirming toe validity of the dismissal of all the 141 workers, it was held that this aSegation is not true.
The dismissal is principally based on their refusal to return to woik after the Secretary of Labor had assumed jurisdiction over
the case on March 11,1993. In fact, despite the efforts of PNP personnel through the District Commander to persuade the
workers to comply with the Retum-to-Work Order, the slice confirmed unfl March 29,1993 when tie workers dismantled
t o pickets. (See also People’s Industrial and Commercial Employees and Workers Organization (FFW) v. People's
Industrial and Commercial Corporation, G R No. 1-37687, March 15,1982,112 SCRA 440).
5 G R No. 101539, Sept 4,1992. This is a certified case to the NLRC. The total number of union officers and members
ordered dismissed in this case is 26. The Supreme Court, in affirming the NLRC's ruling that the strike staged on February 6,
1990 was ilegal, having been conducted in defiance of the certification order and consequently, re&ig that “the union
officers/members who participated in said strike committed prohbited acts (and therefore] are deemed to have lost their
status of employment,’ cited the abeve-quoted holding in the said case of Union of Fifipro, and further pronounced that
‘{ujnrebutted evidence shows that the individual petitioners defied the retum-to-work order of the Secretary of Labor issued
on February 15,1990. As a matter of fact it was only on February 23,1990 when the barricades were removed and the
mail gate of the company was opened. Hence, the termination of toe services of the individual petitioners is justified on this
ground alone.*
6 G R Nos. 158786 &158789 and 158798-99, Oct 19,2007. The Supreme Court, using as basis, pieties shewing the illegal
acts committed by (he strikers, declared as vafid toe dismissal of 92 ordinary union members who participated in the May 23
and 28, 2001 pickets and concerted actions n defiance of the certification order. These workers’ acts ii joining and
partidpating in toe May 23 and 28, 2001 rallies or pickets were patent violations of the April 10, 2001 assumption of
jurischctxxi/cettficatjoo Order issued by the DOLE Secretary, which presetted the commission of acs that might lead to the
■worsening of an already deteriorated situation.’ Art 278(g) [263(g)] is dear that strtrers who violate the
assumpSon/certification Order may suffer dism'rssaf from work. This was the situation in the May 23 and 28,2001 pickets and
concerted actions xxx.’
7 G.R. No. 154591, March 5,2007. The rule was reiterated here, thus: ‘Defiance of the assumption Oder ora retum-to work
order by a strSung employee, whether a union officer or a member, is an ilegal act and, therefore, a Valid ground for loss of
employment status.’ Consequently, this case was disposed by the High Court by affirming the CA decision ‘declaring the
strike conducted by (petitioner] M1EA on 10 February 1999 as illegal and, thus, resulting in the loss of employment status of
the union officers and members who participated in the said sU e.'

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4. P E R IO D O F D E F IA N C E , N O T M ATERIAL.

The length o f time within which the assumption or certification order or

retum-to-work order was deticd by the strikers is not significant in determining
their liability therefor. The following cases are illustrative o f this rule:

(a) University of San Agnstin Employees’ Union-FEW v. The CA,2 where the
period o f defiance was less than nine (9) hours, i.e., from 8:45 a.m . to
5:25 p.m . on September 19, 2003.

(b) Federation of Free Workers v. Inciong,3 where the period of defiance was
only nine (9) days.

(c) Samiento v. Tuico,4 where the period o f defiance was for five (5)
m onths.

5. SOM E PR IN C IP L E S O N D E F IA N C E .

* The assumption/certification order may be served at any time o f the day or

night5
■ N o practice of giving 24 h o u rs to strikers w ithin w hich to return to work.
There is no law or jurisprudence recognizing this practice.6
■ The defiant workers, besides being dismissed, may be subject to crim inal
prosecution as well.7
■ The defiant strikers could be validly replaced.12345678
* The refusal to acknow ledge receipt o f the assu m p tio n /certificatio n
orders and other processes is an apparent attempt to frustrate the ends o f
justice, hence, invalid. The union cannot be allowed to thwart the efficacy o f

1 G.R. No. 144315, July 17,2006. This is an assumed case. The Supreme Court ruled hat the failure of petitioner PEU's
officers and members to comply immediately with the DOLE Secrefaiys retum-towork orders dated 19 November and 28
November 1997 cannot be condoned. Defiance of the returretowrk orders of the Secretary constitutes a vaSd ground for
(Ssmissal. However, because the identities of the union officers and members were not known, the cfeposJve part of the
decision stated that the Secretary of Labor is directed to determine who amonc the Phtoom Employees Union officers
participated in the Sega! strtce, and who among the union members committed illegal acts or defied the retum-to-wak orders
of 19 November 1997 and 28 November 19977 The records of this case show that on 22 November 1997, Phiteom
pubfched h the Philpphe Daily Inquirer a notice to striding employees to return to work. These employees did not report
back to work but continued their mass action. In fact, they Hted ther picket lines only on 22 December 1997. Phfcom
formally notified twice these employees to explain n writing why they should not be dismissed for defying the retum-to-work
order. Philcom held administrative hearings on these disciplinary cases. Thereafter, Philcom dismissed these employees for
abandonment of work in defiance of the retum-to-work order.
2 G.R. No. 169632, March 28,2006.
3 G.R. No. L-49983, April 20,1992.
4 G.R. No. 75271-73, June 27,1988.
5 Telefunken Semiconductors Employees Union-FFWv. SOLE, G.R. Nos. 122743 and 127215, Dec. 12.1997.
6 University of San Agustin Employees’ Union-FFW v. The CA, G.R. No. 169632, March 28,2006.
7 San Juan de D ios E ducational Foundation Em ployees U nion - AFW v. San Juan de D os E ducational Foundation, Inc.
[H ospital), G .R . N o. 143341, M ay 28,2004.
8 Marcopper Mining Corporation v. Bnllantes, G.R. No. 119381, March 11,1996.

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 592 Bar Reviewer on Labor Law

the said orders issued in the national interest through the simple expediency of
refusing to acknowledge receipt thereof.1

2.
PICKETING
1. D EFIN IT IO N .

“ Picketing’ is a concerted activity o f workers consisting in peacefully

marching to and fro before an establishment involved in a labor dispute generally
accompanied by the carrying and display o f signs, placards and banners intended to
inform the public about the dispute.2

While workers have the right to peaceful picketing, no person engaged in

picketing is allowed to commit any act of violence, coercion or intimidation or to
obstruct the free ingress to or egress from the employer’s premises for lawful
purposes, or to obstruct public thoroughfares. In the same light, no person is
permitted to obstruct, impede or interfere with, by force, violence, coercion, threats
or intimidation, any peaceful picketing by workers during any labor controversy or
in the exercise of their right to self-organization or collective bargaining or shall aid
or abet such obstruction or interference. N o employer is allowed to use or employ
any person to commit such acts nor shall any person be employed for such
purpose.3

2. RIGHT TO PICKET PR O T E C T E D BY C O N S T IT U T IO N AND LAW.

The right to picket is part of the right guaranteed under the law “to
engage in concerted activities for purposes o f collective bargaining or for their
mutual benefit and protection.”4 This right is also duly guaranteed under the
freedom of speech principle in the Constitution.5

3. ABSENCE OF EM PLO Y M EN T R E L A T IO N S H IP B E T W E E N
PICKETERS AND EM PLOYER, E F F E C T .

Picketing, if peacefully carried out, cannot be prohibited even in the

absence of employer-employee relationship between the picketers and the employer
being picketed.4

4. LIM ITATION O N R IG H T T O PICKET.

It is important to stress that the right to peaceful picketing should be

exercised by the workers with due respect for the rights of others. Hence,

Navalev.CA. G R No. 109957, Feb. 20,1996,253 SCRA705.

Hawat BuWod ng Manggagawa pBM] v. NLRC, G R No. 91980, June 27,1995.
Sec. 13, Rule X>3I, Book V, Implementing Rules of Labor Code, as amended.
Malayan] Manggagawa sa Esso v. Esso Standard Eastern, Inc., G R No. L-24224, July 30,1965,14 SCRA 801.
De Leon v. National Labor Union, GR. No. L-7586, Jan. 30,1957.
PMppine Association of Free Labor Unions [PAFLU] v. Court of First Instance, G.R. No. L-49580, Jan. 17,1983.

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LABOR RELATIONS

commission by any picketing employee o f any act of violence, coercion or

intimidation is prohibited. Similarly, stationary picket and the use o f means like
placing o f objects to constitute permanent blockade or to effectively close points of
entry or exit in company premises are likewise not allowed by law.1 The strikers
staging the picket cannot also rightfully prevent employees of another company
which is not their employer, from getting in and out o f its rented premises since
this will violate the right of innocent bystanders.2_In fact, under the so-called
"Innocent Bystander Buie, ’’such employer is considered an "innocent bystander"w ho has
no employer-employee relationship with the picketing strikers and thus may file for
an injunctive relief with the regular courts to enjoin the conduct o f the picket The
NLRC has no jurisdiction to issue an injunction order in favor o f the innocent
bystander because of die absence o f such relationship.

5. USE O F FO U L LANGUAGE, E F F E C T .

In the event the picketers employ discourteous and impolite language in

their picket, such may not result in, or give rise to, libel or action for damages.3

6. IN A PPLIC A BILITY O F M ANDATORY R EQ U ISIT E S F O R STRIKE.

'Ihe procedural but mandatory requisites tha: must be complied with

before a valid strike may be staged are not applicable to picketing. The only
requirement to make picketing valid and legal is that it should be peacefully
conducted. This is articulated in the provision of paragraph (c) of Article 279 [264]
o f the Labor Code in this wise:

“(e) No person engaged in picketing shall commit any act of

violence, coercion or intimidatioa or obstruct the free ingress to or
egress from the employer’s premises for lawful purposes, or obstruct
public thoroughfares.”

7. D IS T IN C T IO N B E T W E E N STRIK E A ND PIC K ET IN G .

To strike is to withhold or to stop w'ork by the concerted action o f die

employees as a result o f an industrial or labor dispute. The work stoppage may be
accompanied by picketing by the striking employees outside o f the company
compound. While a strike focuses on stoppage of work, picketing focuses on
publicizing the labor dispute and its incidents to inform the public of what is
happening in the company struck against A picket simply means to march to and
from the employer’s premises, usually accompanied by the display o f placards and
other signs making known the facts involved in a labor dispute. It is a strike
activity separate and different from the actual stoppage o f work.

1 Section 11. Rule XIII, Book V, Rules to Implement toe labor Code; No. 16. Guidelnes Governing Labor Relations.
J Lwayway Publications, Inc. v. Permanent Concrete Workers Union, G R No. L-25003, Oct 23,1981.
3 PMppre Commercial and Industial Bank v. Phlnabank Employees Association, G R No. 1-29630, July 2,1981.

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 594 Bar reviewer on Labor. Law

According to Pbimco Industries, Inc. v. Phimco Industries Labor Association

(PILA)} while the right of employees to publicize their dispute falls within the
protection of freedom of expression and the right to peaceably assemble to air
grievances, these rights are by no means absolute. Protected picketing does not
extend to blocking ingress to and egress from the company premises. That the
picket was moving, was peaceful and was not attended by actual violence may not
free it from taints of illegality if the picket effectively blocked entry to and exit from
the company premises.

8. APPLICATION OF TOTALITY OF CIRCUM STANCES D O C T R IN E .

In distinguishing between a picket and a strike, the totality o f the

circumstances obtaining in a case should be taken into account. For instance,
petitioners in Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils.,
Inc.} contend that what they conducted was a mere picketing and not a strike. In
disagreeing to this contention, the High Court emphasized that it is not an issue in
this case that there was a labor dispute between die parties as petitioners had
notified the respondent of their intention to stage a strike, and not merely to
picket. Petitioners’ insistence to stage a strike is evident in the fact that an
amended notice of strike was filed even as respondent moved to dismiss the first
notice. The basic elements of a strike arc present in this case: 106 members of
petitioner Union, whose respective applications for leave o f absence on September
21,1999 were disapproved, opted not to report for work on said date, and gathered
in front of the company premises to hold a mass protest action. Petitioners
deliberately absented themselves and instead wore red ribbons and carried placards
with slogans such as: ‘YES KAMI SA STRIKE, ” ‘PROTESTA KAMI, ” “SAHOD,
KARAPATAN NG MANGGAGA WA IPAGLABAN,” “CBA-WAG
BABOY1N," "STOP UNION BUSTING. ’’They marched to and fro in front of the
company’s premises during working hours. Thus, petitioners engaged in a
concerted activity which already affected the company’s operations. The mass
concerted activity obviously constitutes a strike. Moreover, the bare fact that
petitioners were given a Mayor's permit is not conclusive evidence that their
action/activity did not amount to a strike. The Mayor’s description o f what
activities petitioners were allowed to conduct is inconsequential. To repeat, what is
definitive of whether the action staged by petitioners is a strike and not merely a
picket is the totality of the circumstances surrounding the situation.

Petitioner union in another case, Leyte Geothermal Power Progressive Employees

Union-ALU-TUCP v. Philippine National Oil Company - Energy Development
Corporation} contends that there was no stoppage o f work; hence, they did not
strike. Euphemistically, petitioner union avers that it “ only engaged in picketing,”
and maintains that “without any work stoppage, [its officers and members] onlyi

< G R No. 170830, Aug. 11,2010.

i G R Nos. 164302-03, Jan. 24,2007.
i GRN ol 170351. March 30,2011.

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 C hapter five 595
LABOR RELATIONS

engaged m xxx protest activity.” The Supreme Court, however, ruled that it was a
strike and not picketing or protest activity that petitioner union staged. It found the
following circumstances in support o f such finding:

(1) Petitioner union filed a Notice o f Strike on December 28, 1998 with
the D O L E grounded on respondent’s purported unfair labor practices, “refusal
to bargain collectively, union busting and mass termination.” O n even date,
petitioner Union declared and staged a strike.

(2) The DOLE Secretary intervened and issued a Retum-to-Work Order

dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory
arbitration. The Order indicated the following facts: (1) filing o f the notice of
strike; (2) staging of the strike and taking control over respondent’s facilities o f its
Leyte Geothermal Project on the same day petitioner union filed the notice of
strike; (3) attempts by die NCMB to forge a mutually acceptable solution proved
futile; (4) in the meantime, the strike continued widi no settlement in sight, placing
in jeopardy the supply of much needed power supply in the Luzon and Visayas
grids.

(3) Petitioner union itself, in its pleadings, used the word "strike. ”

(4) Petitioner union’s asseverations are belied by die factual findings of

the NLRC, as affirmed by the CA, thus: “The failure to comply with the mandatory
requisites for the conduct of strike is both admitted and clearly shown on record.
Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off
period was not observed and that the 7-day strike ban after the submission o f the
strike vote was not complied with since there was no strike vote taken.”

In fine, petitioner union’s bare contention that it did not hold a strike
cannot trump the factual findings o f the NLRC that petitioner union indeed struck
against respondent. In fact, and more importandy, petitioner union failed to
comply with the requirements set by law prior to holding a strike.

9. PIC K E T IN G A M O U N T IN G T O N U ISA N C E , ILLEGAL.

A picketing which is conducted as to amount to a nuisance is unlawful. It

is thus an act of nuisance where the obstruction to the free use o f property
substantially interferes with the comfortable enjoyment o f life or property or where
the picketing constitutes an unlawfid obstruction to the free passage or use, in the
customary manner, of a street.*1

10. O B ST R U C T IO N O F P O IN T S OF IN G RESS A ND EGRESS.

Peaceful moving picket may constitute obstruction o f the points of

ingress and egress which would make the strike illegal. In the same case of Phimco2

1 31 Am. Jur. § 248, p. 955.

1 Rm co Industries, Inc. v. Phrnco Industries Labor Association (PILA), G.R. No. 170830, Aug. 11,2010.

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 596 bar r e v ie w e r o n La b o r l aw

it was held that a peaceful moving picket may still be declared illegal if it obstructed
the ingress to and egress from the company premises. As shown by die testimonies
o f witnesses which were validated by the photographs taken o f the strike area,
while the picket was moving, it was maintained so close to the company gates that it
virtually constituted an obstruction, especially when the strikers joined hands or
were moving in circles, hand-to-shoulder, as shown by the photographs, that, for
all intents and purposes, blocked the free ingress to and egress from the company
premises. In fact, on closer examination, it could be seen that the respondents were
conducting the picket right a t the company gates. The obstructive nature o f the picket was
aggravated by the placement of benches, with strikers standing on top, directly in front
of the open wing of the company gates, clearly obstructing the entry and exit points o f the
company compound.

With a virtual human blockade and real physical obstructions,1it was pure
conjecture on the part of the NLRC to say that “ [tjhe non-strikers and their
vehicles were xxx free to get in and out o f the company compound undisturbed by
the picket line.” Notably, aside from non-strikers who wished to report for work,
company vehicles likewise could not enter and get out o f the factory because o f the
picket and the physical obstructions the respondents installed. The blockade went
to the point of causing the build-up o f traffic in the immediate vicinity o f the strike
area, as shown by photographs. This, by itself, renders the picket a prohibited
activity. Pickets may not aggressively interfere with the right o f peaceful ingress to
and egress from the employer’s shop or obstruct public thoroughfares; picketing is
not peaceful where the sidewalk or entrance to a place o f business is obstructed by
picketers parading around in a circle or lying on the sidewalk What the records
revealed belies die NLRC observation that “the evidence xxx tends to show that
what respondents actually did was walking o r patrolling to and fro within the
company vicinity and by word of mouth, banner or placard, informing die public
concerning the dispute.”

The “peaceful moving picket” that die NLRC noted was based apparently
on the certifications issued by the Mayor and others2 which were presented in
evidence by the respondents to prove that the picket was “peaceful.” The baas
thereof was the fret that there was absence o f violence during the strike. But the
obstruction o f the entry and exit points o f the company premises caused by the
respondents’ picket was by no means a “petty blocking act” or an “insignificant
obstructive act.” While the picket was moving, the movement was in circles, very
close to the gates, with the strikers in a hand-to-shoulder formation without a break
in their ranks, thus preventing non-striking workers and vehicles from coming in
and getting out. Supported by actual blocking benches and obstructions, what the
union demonstrated was a very persuasive and quiedy intimidating strategy whose
chief aim was to paralyze the operations o f the company, not solely by the work

1 Benchesand makeM strictures txtt outsideandinsidettegalm

2 IssuedbyMayordebsReyes. Fr Adevso.Fr.FaustoandBarangaySecretatyGesmunda

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 C h a p t e r F ive 597
LABOR. RELA TIO N S

stoppage o f the participating workers, but by excluding the company officials and
non-striking employees from access to and exit from the company premises. No
doubt, the strike caused the company , operations considerable damage, as the
NLRC itself recognized when it ruled out the reinstatement o f the dismissed
strikers.

3.
LOCKOUTS
L D E FIN IT IO N .

“Lockout’ means the temporary refusal o f an employer to furnish work to

its employees as a result o f an industrial or labor dispute.1

2. ELEM EN TS.

Based on this definition, the following are the elements o f lockout:

(1) Temporary refusal to furnish work by the employer, and

(2) Occasioned by an industrial or labor dispute.

The word ,{Umporaty" is highlighted because if the refusal o f the employer

to provide work to his employees is permanent, it would already amount to
termination o f employment due to closure o f the establishment, the consequences
and ramifications o f which will be totally different from lockout, to wit:

(a) Since it is already in the nature o f closure o f die establishment, the

result is the termination o f employment o f die locked-out employees;
(b) The validity o f the employer’s closure action, being permanent, will
be measured no longer on the basis o f its compliance with die
requisites for a valid lockout but on die basis o f its compliance with
the requisites for a valid closure; and
(c) The affected employees would be entitled to the separation benefits
in accordance with Article 298 [283], particularly, those provided for
closure.

3. VARIOUS FORMS O F LOCKOUT.

Lockout consists o f shutdowns, mass retrenchment and dismissals

initiated by the employer.2 It, however, may take other forms such as the
employer’s act o f excluding employees who are union members.3

4. REQUISITES FOR A VALID LOCKOUT.

To be valid, a lockout should comply with the following requisites:

1 Aride 219(p) (212(p)], Labor Code, asamended by Section4, RA No. 6715; Rural Bankof AJaminosEmployees Union
(RBAeUlv.NLRC.Gil Nos. 100342-44.OcL29.1999.
* Sec6on3.P.D.No.823,asamenctedbyPD.No.849.
> ComplexQedroncsEmployeesAssodafion[CEEA|,etc.v. MRC, GR. No. 121315.July19.1999.

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 598 BAR REVIEWER ON LABOR LAW

F irst requisite - It must be based on any or both o f the following two (2)
exdusive grounds:

(1) Unfair labor practice (ULP) o f die labor organization;*1

(2) Collective bargaining deadlock (CBD). ,

Second requisite - A notice o f lockout must be filed with die NCMB-

DOLE;

Third requisite - A notice must be served to the NCMB-DOLE at least

twenty-four (24) hours prior to die taking o f die lockout vote by secret balloting,
informing said office of the decision to conduct a lockout vote, and the date, place,
and time thereof and asking it to supervise the taking o f the lockout vote;

Fourth requisite - A lockout vote must be taken where a majority o f die

members o f the Board of Directors o f the corporation or association or o f the
partners in a partnership, obtained by secret ballot in a meeting called for the
purpose, must approve it;

Fifth requisite - A lockout vote report should be submitted to the

NCMB-DOLE at least seven (7) days before the intended date o f the lockout;
Sixth requisite - Observance o f the cooling-off period of 15 days, in
case of ULP of the labor organization, or 30 days, in case o f CBD, reckoned from
the date of filing of the notice of lockout (per 2nd requisite above); and
Seventh requisite - The 7-day waiting period reckoned after the
submission o f the lockout vote report to the NCMB-DOLE (per 5* requisite
above) should be fully complied with in all cases.

5. CO N SEQ U EN CES O F ILLEGALITY O F LOCK OU T

a. R eliefs available to illegally locked-out em ployees.

In case o f an illegal lockout, any worker whose employment has been
terminated as a consequence thereof shall be reinstated with payment o f full
backwages and other benefits.2

b. E ffect when both parties have acted in pari delicto.

If both parties have acted in pari delicto in that the employer is guilty of
illegal lockout and the union is culpable for illegal strike, the dismissal o f the
striking employees is unwarranted and their reinstatement should be ordered as a
matter of course. This doctrine in labor cases is not a novel concept. It has been

* SeeArtide260[249]lbrULPsoflaborofganizatjons..
1 3dp3fagraph,Arficte279(a}(264{a}lJLnborCode;No. 28. GuklefinesGoverningLator Reiatians.

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LABOR RELATIONS

applied in many cases,1 the latest o f which is die 2011 case o f Automotive Engine.2
Both parties here filed charges against each other, blaming the other party for
violating labor laws. Petitioner AER filed a complaint against respondent Unyon
and its 18 members for illegal concerted activities. It likewise suspended 7 union
members who tested positive for illegal drugs. On the other hand, Unyon filed a
countercharge accusing AER o f u n f a ir labor practice, illegal suspension and illegal
dismissal In other words, AER claims that Unyon was guilty o f staging an illegal
strike while Unyon claims that AER committed an illegal lockout Consequently,
since both AER and Unyon are at fault or in pari delicto, it was ruled that they should
be restored to their respective positions prior to the illegal strike and illegal lockout
Nonetheless, if reinstatement is no longer feasible, the concerned employees should
be given separation pay up to the date set for the return o f the complaining
employees in lieu o f reinstatement.3

4.
A S S U M P T IO N O F J U R IS D IC T IO N
BY TH E D O LE SEC R ETA R Y

L ORDER O F TO PICA L DISCUSSION.

The discussion o f this topic is divided into the following sections:

L TWO (2) OPTIONS OF DOLE SECRETARY

II. ASSUMPTION OF JURISDICTION .
III. CERTIFICATION OF LABOR DISPUTE TO NLRC FOR COMPULSORY
ARBITRATION
IV. RETURN-TO-WORK ORDER

I.
TWO (2) OPTIONS OF DOLE SECRETARY

t D O LE SECRETARY HAS W IDE D ISCRETIO N .

Article 278(g) [263(g)] provides that when in the opinion o f die DOLE
Secretary, die labor dispute causes o r w ill likely to cause a strike o r lockout in
an industry indispensable to the national interest, he is empowered to do either
o f two (2) tilings;

1 Ptfipptas Inter-fashion, Inc. v. NLRC, GR No. U69847, Oct 18,1882,117 SCRA 659; PK&pphe Aifnes, he. v.
Mantes, OR No. 119360. Oct 10,1937,280 SCRA515; fastCiy H e ** Trcnspcfefcn Co, h t v. TheHoaSeaetaiy
Confesor.GJlNo. 106316, May5,1997.
2 Automoftie BiglrieRetxiideis, tncx(AB%)v. ProgresSxxig Unyonng mgaManggagawasa AER, GJ%. No. 160138, JuV 13.
2011.
1 See alsofie Resdufon dated January 15,2013 on tie Motor for Pafel Recorsideraticn fled byProgreskong UnyonNg
Mga Manggagawa Sa AER fUnyot] which questioned (he Supreme Coufs July 13,2011 decision insofar as it fated to
awardbadiwagestofowteen(14)otitsmembers.

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 6oo Bar reviewer on Labor Law

(1) He may assume jurisdiction over the labor dispute and decide it
himself; or
(2) He may certify it to the NLRC for compulsory arbitration, in which
case, it will be the NLRC which shall hear and decide it.1

This law is unique in the sense that the very “opinion” of the DOLE
Secretary is conferred with the force and effect of a law. Notably, there are no
criteria set by the law on when the DOLE Secretary should assume jurisdiction
over a labor dispute or when he should certify it to the NLRC for compulsory
arbitration. The choice is obviously discretionary and his alone to determine.

2. VARIATIONS IN T H E O PT IO N S.

Having the two (2) options above, the DOLE Secretary may do the
following variations thereof:

(a) Assume jurisdiction over a labor dispute and at the same time certify it
to the NLRC for compulsory arbitration. This is illustrated by the case of
PASVTL/Pasatal Liner,2 where, on 21 February 1995, upon petition of private
respondent PASVIL, then DOLE Secretary Ma. Nieves R. Confesor, pursuant to
Article 278(g) [263(g)] of the Labor Code, assum ed jurisdiction over the dispute
and certified it to public respondent N LR C for com pulsory arbitration.

(b) Initially assume jurisdiction over a labor dispute and later, on a

different date, certify the same labor dispute to the NLRC for compulsory
arbitration. The case of Sulpicio LineP best exemplifies this situation. On M arch 1,
1994, petitioner union filed with the NCMB, a notice of strike due to collective
bargaining deadlock On March 23, 1994, the DOLE Secretary issued an Order
assum ing jurisdiction over the labor dispute pursuant to Article 278(g) [263(g)]
of the Labor Co. Meanwhile, on May 20, 1994, petitioner union filed with the
NCMB a second notice of strike alleging that respondent company committed
acts constituting ULP amounting to union busting. Provoked by respondent
company’s alleged unfair labor practice/s, petitioner union immediately conducted
a strike vote. Titus, on May 20,1994, about 9:30 o’clock in die morning, 167 rank-
and-file employees, officers and members of petitioner, did not report for work
and instead gathered in front of Pier 12, North Harbor at Manila. As a remedial
measure, the DOLE Secretary issued an O rder dated May 20, 1994 directing the
striking employees to return to work; and certifying the labor dispute to the
NLRC for compulsory arbitration. On Septem ber 29, 1995, the NLRC issued a
Resolution declaring the strike o f petitioner’s officers and members illegal, with
notice to respondent of the option to terminate their (petitioner’s officers)
employment.

1 See also Artide 278(i) [263(0], Labor Code.

2 PASVIL/Pasaial Liner, ha Workers Union - NAFLU v. NLRC, G.R. No. 124823. July 28,1999.
1 Samahang Manggagava sa Sdpdo Lines, Inc. - NAFLU v. Sulpcio Lines, Inc., G.R No. 140992, March 25,2004.

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II.
ASSUMPTION OF JURISDICTION

1. A PO L IC E PO W ER M EA SURE.

The power to issue an assumption order is an extraordinary authority

granted to the D O LE Secretary, the exercise of which should be strictly limited to
national interest cases.1 It is in the n a tu r e o f a p o lic e p o w e r m e a s u re .2 T h is is done
for the promotion of the common good considering that a prolonged strike or
lockout can be inimical to the national economy. The D O LE Secretary is mandated
to act to maintain industrial peace. Thus, his assuming jurisdiction over a labor
dispute or his certification thereof to the NLRC for compulsory arbitration is not
intended to impede the workers’ right to strike but to obtain a speedy settlement o f
the dispute.3

2. PO W ER O F T H E P R E S ID E N T O V E R N A T IO N A L IN T E R E S T
CASES.

Notwithstanding the power granted to the D O LE Secretary to assume

jurisdiction over national interest labor disputes or to certify them to die NLRC
for compulsory arbitration, the President of the Philippines shall not be precluded
from doing any o f the following:

(1) to determine the industries that, in his opinion, are indispensable to

the national interest; or
(2) to intervene at any time and assume jurisdiction over any such labor
dispute in order to settle or terminate i t 4

Unlike his alter ego, the D O LE Secretary, the President, while possessed o f
the power of assumption, has no similar power to “certify the [labor dispute] to
the C om m ission [NLRC] for com pulsory arbitration,” this power being
granted solely to the DOLE Secretary. His role is confined to assuming jurisdiction
dicreover, thus: “ [T]he President of the Philippines shall not be precluded from
determining the industries that, in his opinion, are indispensable to the national
interest, and from intervening at any time and assum ing jurisdiction over any
such labor dispute in order to settle or term inate the sam e.”5

1 No. 22, Gu'riefnes Gwem'ng labor Relations.

J *Potice power* has been defined as the power inherent in a government to enact laws, within constrtutiooal rnvts. to promote
the order, safely, health, morals and general welfare of society. The polce power, together with the power of eminent
domain and the power of taxation, is an inherent power of government and does not need to be expressly conferred by the
Constitution (Trans-Asia Shipp'ng Lines, Inc. - Unlicensed Crews Employees Union - Associated Labor Unions [TASLI-
ALU] v. CA, G.R No. 145428, July 7,2004; Mania Diamond Hotel Employees' Union v. CA, G.R. No. 140518, Dec. 16,
2004,447 SCRA 97).
5 See PhiSread Workers Union [PTWU] v. Confesor, G.R No. 117169. March 12,1997,269 SCRA 293.
1 Article 278(g) [263(g)], Labor Code; No.30, NCh© Primer on Strfce, PSdrefinq and Lockout 2nd Edition, December 1995.
s Id.; id.

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 602 Bar Reviewer on Labor Law

The President, when he intervenes, may thus personally assume

jurisdiction over the labor dispute and decide it himself or, in the alternative, he
may create a body to discharge his mandate under the law. The best example of
Presidential intervention involves the labor dispute between Philippine Airlines
(PAL) and Philippine Airlines Employees Association (PALEA) in 1998 which
resulted in a strike, where former President Joseph E. Estrada intervened by issuing
Administrative Order No. 16 creating an Inter-Agency Task Force to aid PAL and its
employees in solving the problem. The Task Force was composed o f the
Departments of Finance, Labor and Employment, Foreign Affairs, Transportation
and Communication, and Tourism, together with the Secunties and Exchange
Commission (SEC). Former Secretary of Finance Edgardo Espiritu, was designated
chairman of the Task Force. It was “empowered to summon all parties concerned
for conciliation [and] mediation [for] the purpose of arriving at a total and complete
solution of the problem.” Conciliation meetings were then held between PAL
management and the three unions representing the airline’s employees, with the
Task Force as mediator. This resulted in the forging of an agreement which
suspended the CBA for a decade.1

3. GRANT OF POW ER FOR T H E P R O T E C T IO N O F STATE, N O T O F

LABOR N O R OF EM PLOYER.

Having been enacted pursuant to the police power of the State, Article
278(g) [263(g)] requires that the powers thereunder be exercised only in labor
disputes involving industries indispensable to the national interest.2 This is in
keeping with the rationale that any work stoppage or slowdown in a particular
industry can be inimical to the national economy. It is clear therefore that said
article was not written to protect labor from the excesses of management, nor was
it written to ease management from expenses, which it normally incurs during a
work stoppage or slowdown. It is an error to view the assumption order o f the
DOLE Secretary as a measure to protect the striking workers from any retaliatory
action from the employer because this law was written as a means to be used by the
State to protect itself from an emergency or crisis. It is not for labor, nor is it for
management3

4. GRANT OF POW ER N O T V IOLA TIVE O F R IG H T TO STRIKE.

The grant of assumption/certification power under Article 278(g) [263(g)]

clearly does not interfere with the workers’ right to strike but merely regulates it,
when in the exercise o f such right, national interests will be affected. The rights

1 See Rivera v. Espiritu, G.R. No. 135547, Jan. 23, 2002; Fight Attendants and Stewards Association of the Philippines
(FASAP| v. Philippine Airlines, Inc., G.R No. 178083, July 22,2008 and Resolution on the First Motion for Reconsideration
therer dated Oct 2,2009.
1 Phtfppme School ol Busness Admnistraten-Mania v. None), G.R. No. 1-80648, Aug. 15, ‘988,164 SCRA 402; Sarmerto
v. Tuico, G.R. Nos. 75271-73, June 27, 1988, 162 SCRA 676; Phlipp'ne Airlines, Inc. v. Secretary of Labor and
Employment, G.R. No. 88210, Jan. 23,1991,193 SCRA 223.
3 Mania Diamond Hotel Employees' Union v. CA, G.R. No. 140518, Dec. 16,2004.

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LABOR RELATIONS

granted by the Constitution are not absolute. They are still subject to control and
limitation to ensure that they arc not exercised arbitrarily. The interests o f both the
employers and employees are intended to be protected and not one o f them is
given undue preference.1*

5. IN D U S T R IE S IN D ISPE N SA B L E T O N A T IO N A L IN T E R E S T .

The determination o f specific industries indispensable to the national

interest is left to the discretion o f the DOLE Secretary. Past issuances o f the
DOLE Secretary' have not made nor attempted to mention specifically what the
industries indispensable to the national interest are. It was only in Department Order
No. 40-H-13, Series of 2013,1 that an enumeration is made of such industries. Section
2 thereof added a new Section 16 to Rule XXII, Book V o f the Omnibus Rules
Implementing the Labor Code, as amended,345to read as follows:

“ Section 16. Industries Indispensable to the National

Interest. —F o r the guidance o f the w orkers and em ployers in the filing
of petition for assu m p tio n of jurisdiction, the follow ing
industries/services are hereby recognized as deem ed indispensable to
th e national interest:

a. H ospital secto r,
b. Electric p o w e r industry,
c W ater supply services, to exclude small w ater supply
services such as b o ttling and refilling stations;
d. A ir traffic control; and
e. Such o th er industries as may be recom m ended by the
N ational T ripartite Industrial Peace Council ( T IP Q .”

Obviously, the above enumeration is not exclusive as other companies or

firms or industries may be considered indispensable to the national interest based
on the appreciation and discretion o f the D O LE Secretary, or as may be
recommended by TIPC, or because they have already been judicially adjudged as
being indispensable to the national interest. Examples are:

(1) PSBA v. Noriel* where the Court has declared that the administration
of a school is of national interest because “xxx [it] is engaged in the promotion o f
the physical, intellectual and emotional well-being o f the country's youth.” Work
stoppage at a school unduly prejudices the students and entails great loss to all
concerned in terms o f time, effort and money.s

1 Philtread W aters Uniai (PTWUJ v. Confesor, supra.

1 Issued by DOLE Secretary Rosafinda Dimapirts-Baldoz on October 21,2013.
3 Rule XXII [ConaTabon, Strides and Lockouts!, Book V of the Rules to Implement the labor Code has been the subject of
several amendments such as the ones introduced by Department Order No. 4C. Series of 2003, Department Order No 40-
G03, Series of 2010 (March 29,2010), and Department Order No. 40+U 3, Seres of 2013 [October 21,2013],
4 Phffippne School of Business Administration v. Noriel, G.R. No. 80648, Aug. 15,1988,164 SCRA 402.
5 See Concurring Opinion of Mr. Justice Artemio Panganban in Phimco Industries, Inc. v. BriBantes, G.R. No 120751, March
17,1999,304 SCRA 747.

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 604 Bar Reviewer on Labor Law

(2) Sarmitnto v. Tuico? where an enterprise exporting 90% o f its production

and generating more than $12 million dollars per year was declared to be of
national interest. Any disruption o f operations would have caused the delay o f
shipments of export consisting of finished products previously committed to
customers abroad, a delay that would have hampered the Economic recovery
program pursued by the government.2
(3) International Pharmaceuticals, Inc. v. Secretary of Labor? where the
manufacture of drugs and pharmaceuticals has been declared to be of national
interest.
(4) Philippine Airlines, Inc. v. Secretary of Labor and Employment? where the
operation of an airline that services domestic routes has been deemed to be imbued
with national interest.
(5) Philtread Workers Union (PTWU) v. Confessor? where the company was
considered to be indispensable to the national interest because it was responsible
for 22% of the tire production in the Philippines, and work disruption would have
not only aggravated the already worsening unemployment situation but also
discouraged foreign and domestic entrepreneurs from further investing in the
country.

6. ASSUMPTION AM OU NTIN G T O GRAVE ABUSE O F D IS C R E T IO N .

Needlessly, the assumption of labor dispute in an industry which is not

“indispensable to the national interest” amounts to grave abuse o f discretion. For
instance, it was declared that a match factory, like the petitioner in Phimco Industries?
though of value, can scarcely be considered as an industry “indispensable to the
national interest’ as it cannot be in the same category as “generation or distribution
of energy, or those undertaken by banks, hospitals, and export-oriented industries.”
Thus, it was declared here that the DOLE Secretary' acted with grave abuse of
discretion in assuming jurisdiction over the labor dispute in this case without any
showing that the petitioner was engaged in an industry indispensable to the national
interest.

Likewise, in GTE Directories? the Supreme Court declared the DOLE

Secretary to be without jurisdiction to take over a labor dispute involving a
company that produced telephone directories since the production and publication
of telephone directories, which is the principal activity o f petitioner GTE, can
scarcely be described as an industry affecting the national interest G TE is a
publishing firm chiefly dependent on the marketing and sale o f advertising space*5

• G R No. 75271-73, June 27,1988,162 SCRA 676,683-684.

J See Concurring Opinion of Mr. Justice Artenio Panganiban in Phimco Industries, Inc. v. Britlantes. supra.
> G.R. Nos. 92981-S3, Jan. 9,1992,205 SCRA 59,62.
« G.R. No. 88210, Jan 23,1991,193 SCRA 223,226.
s G.R. No. 117169, March 12,1997,269 SCRA 393,400-401.
5 Id.
t GTE Drectories Corporation v. Sanchez, G.R. No. 76219, May 27,1991,197 SCRA 452,470471.

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 C hapter Five 605
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for its not inconsiderable revenues. Its services, while o f value, cannot be deemed
to be in the same category o f such essential activities as “the generation or
distribution o f energy” or those undertaken by “banks, hospitals, and export-
oriented industries.” It cannot be regarded as playing as vital a role in
communication as other mass media.”

7. P R IO R N O T IC E A N D H E A R IN G , N O T R E Q U IR E D .

It is well-established that the normal due process requisite of prior notice

and hearing is not required to be complied with before the D O LE Secretary may
issue die assumption or certification order. Petitioner, in Capitol Medical Center
maintains that the D O LE Secretary cannot exercise his powers under Article 278(g)
[263(g)] without observing the requirements o f due process. Citing Magnolia Poultry,*2
the Supreme Court held that the discretion to assume jurisdiction may be exercised
by the D O LE Secretary without the necessity of prior notice or hearing given to
any of die parties. The rationale for his primary assumption o f junsdiction can
justifiably rest on his own consideration o f die exigency o f die situation in relation
to the national interest.3

8. D O L E SECRETARY MAY ASSUME JU R IS D IC T IO N E V E N IN T H E

A BSEN CE O F FORM AL D E C L A R A TIO N O F CBA DEA DLO CK .

In national interest cases involving unresolved issues in the CBA

negotiations, the DOLE Secretary is not precluded from assuming jurisdiction over
the labor dispute or certifying it to the NLRC for compulsory arbitration even in
the absence of formal declaration o f deadlock by either or both o f die parties. This
was the holding in Pilipinas Shell Petroleum Corporation.4 In this case, the labor dispute
between the union and the company concerns unresolved matters related to their
negotiations for a new CBA. The power of the D O LE Secretary to assume
jurisdiction over this dispute includes and extends to all questions and
controversies arising from the said dispute, such as, but not limited to, the union’s
allegation o f bad faith bargaining. It also includes and extends to the various
unresolved provisions of the new CBA such as compensation, particularly the
matter of annual wage increase or yearly lump sum payment in lieu of such wage
increase, w hether or n o t there w as deadlock in the negotiations.

As there is already an existing controversy on the matter o f wage increase,

die DOLE Secretary need not wait for a deadlock in the negotiations to take
cognizance o f the matter. That is the significance o f the power of the DOLE
Secretary under Article 278(g) [263(g)] to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry'’ indispensable to the

’ Capitol Medical Center, Inc. v. Trajano, G .R No. 155690, June 30,2005.

1 Magnola Poultry Employees Union v. Sanchez, G.R Nos. 76227-28, Nov. 5,1986, Mnute Resolution.
3 See also No. 30, NCMBPrimeroo Slice, Picketing and Lockout, 2nd Edition. December 1995.
4 Tabangao She! Refinery Employees Association v. PiSpnas Shefl Petroleum Corporation, G R No. 170007, Apnl 07,2014.

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 6o6 Bar Reviewer on La bo r Law

national interest.1 Everything considered, therefore, the DOLE Secretary

committed no abuse of discretion when she assumed jurisdiction over the labor
dispute of the union and die company.

9. ASSUMPTION OR C ER TIFIC A TIO N IS VALID E V E N IF M ADE

BEFORE CONDUCT OF STRIKE OR LOCKOUT. '

The assumption or certification power may be exercised by the DOLE

Secretary even before the actual staging of a strike or lockout since Article 278(g)
[263(g)] does not require die existence of a strike or lockout but only of a labor
dispute involving national interest, at the time o f such assumption or certification.2
It is an extraordinary authority strictly limited to national interest cases and granted
to the President or to the DOLE Secretary, “winch can justifiably rest on his own
consideration of the exigency of the situation in relation to the national interest.”3

10. EFFECT ON STRIKE OR LOCKOUT.

The assumption of jurisdiction or certification to the NLRC of a labor

dispute has the following effects;

(1) On intended or im pending strike or lockout. - Upon

assumption/certification, the intended or impending strike or lockout is
automatically enjoined, notwithstanding the filing of any motion for
reconsideration of the assumption/certification order or the non-resolution o f any
such motion which may have been duly submitted to the Office of the DOLE
Secretary.4
(2) On actual strike or lockout. - If a work stoppage has already taken
place at the time of the assumption/certification, all striking or locked-out
employees shall immediately return to work and the employer shall immediately
resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout.5
(3) On cases already filed or may be Filed. - All cases between the same
parties, except where the assumption/certification order specifies otherwise,
including the issues submitted for arbitration which are already filed or may be filed
and are relevant to or arc proper incidents o f the certified case, are considered
subsumed or absorbed by the assumed/certified case.6

’ See also Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary o( the Department of Labor aid
Employment, G.R. No. 167401, July 5,2010.
2 Government insurance System Employees Association v. CIR, G.R. No. L-18734, Dec. 30,1961.
5 No. 30, NCM8 Primer on StrJce, Picke6ng and Lockout, 2nd Edition, December 1995.
4 Adopted from Section 3 [a], Rule VIII, 2011 NLRC Rules of Procedure; See also No. 31, NCMB Primer on Strike, Picketing
and Lockout 2nd Edition, December 1995.
5 See Section 3 [a]. Rule VIII, 2011 NLRC Rules of Procedure.
6 11 paragraph, Section 3 (bj. Rule VIII, Ibid.; Phlippine Federation of Petroteum Workers [PFPW] v. CIR, 37 SCRA 711;
International Pharmaoeuticals, Inc. v. Secretary of Labor and Associated Labor Union [ALU], G.R. No. 92981-63, Jan. 9,
1992; St Scholastica’s College v. Tones, G R No. 100158, June 29,1992.

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(4) O n oth er pen d in g cases. - The parties to an assumcd/cettified case,

under pain of contempt, are required to inform their counsels and the DOLE
Secretary/NLRC Division concerned, as the case may be, of all pending cases that
are related or incident to the assumed/certified case before it.1

11. LIA BILITY FO R D E F IA N C E O F A S S U M P T IO N /C E R T IF IC A T IO N

O R D E R O R R E T U R N -T O -W O R K O R D E R .

(NOTE: This is discussed under the topic of "B. LIABILITY FOR DEFIANCE OF
ASSUMPTION/CERTIFICATION ORDER OR RETURN-TO-WORK ORDER", supra).

12. SU BM ISSIO N O F N A T IO N A L IN T E R E S T D IS P U T E T O
V O LU N TA R Y A R B IT R A T IO N MAY BE M A D E AT ANY T IM E .
\ .
Before or at any stage o f the compulsory arbitration process, the parties
. .
may, by mutual agreement, decide to bring the matter for resolution before an
accredited Voluntary Arbitrator or Panel o f Voluntary Arbitrators of their own
choice, in which case, the notice is deemed automatically withdrawn and dropped
from the docket.2 Although Article 278(h) [263(h)] mentions only “compulsory
arbitration procest' thereby giving the impression that voluntary arbitration may only
be resorted to if the labor dispute is pending with o r certified to the NLRC for
such purpose, there is no tiling, however, that can prevent the parties from mutually
agreeing that the labor dispute be submitted for voluntary arbitration, even if the
same is pending with the DOLE Secretary, in case he assumes jurisdiction over the
labor dispute, or while the case is still being conciliated before the NCMB. This
provision recognizes and breathes life to the constitutional principle o f giving the
highest preference to the use of voluntary modes to settle labor disputes.3
i
in.
CERTIFICATION OF LABOR DISPUTE TO NLRC
FOR COMPULSORY ARBITRATION
|

1. A N O T H E R O P T IO N .
The other option of certification of the labor dispute to the NLRC,
instead of directly assuming jurisdiction thereover, simply means that it is now the
NLRC which shall hear and decide the labor dispute so certified to it in the exercise
of its original jurisdiction. This dispute will then be known technically as a “certified
labor dispute."* The NLRC has its own rules on how it will hear and decide them.

1 See 2ndparagraph oiSecSon 3 [bj, Rule VIII of the 2011 NLRC Rules ^Procedure. See also Bagong Bayan Corporation
Realty Investors and Developers v. Opte. G.R. No. 73334, Dec. 8,1986.
2 Article 278(h) [263(h)], labor Code; No. 20, NCMB Primer on Strike, Picketing and Lockout, 2nd Edition, December 1995.
5 Section 3, Article XIII of the Constitution pertinently provides that "(f)he Stale shal promote the principle of shared
responsibility between workers and employers and the preferential use of voluntary modes'm setting disputes, hducfng
condiation, and shall enforce their mutual compliance therewith to foster industrial peace.'
4 The cases certified to the Commission (NLRC) for compulsory arbitration under Article 278(g) [263(g)l of the Labor Code are
technically called 'certified labor disputes * (See Section 2, Rule VIII, 2011 NLRC Rules of Procedure).

'
\
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2. NLRC CANNOT AMEND D O L E SECRETARY’S O R D E R .

The fundamental rule is that the NLRC cannot amend the terms o f the
DOLE Secretary’s certification order. The NLRC, when sitting in a compulsory
arbitration case certified to it by the DOLE Secretary, is not taking the role o f a
judicial court but as an administrative body charged with the duty to implement the
order of the DOLE Secretary'. As the implementing body, its authority docs not
include the power to amend the Secretary’s order.1 Having been certified to the
NLRC, it becomes the proper forum for the full and complete settlement or
adjudication of all labor disputes between the parties,^ as well as issues that are
relevant to or incidents of the certified case.2
3. NLRC’S BROAD AUTHORITY T O D E C ID E C E R T IF IE D CASES.
Significantly, the above-described effects of certification to the NLRC are
similar to those in assumed cases in the sense that the authority7 o f the NLRC to
decide all issues related to the certified case is also broad enough as to include cases
over which the law grants original and exclusive jurisdiction to the Labor Arbiter.
In Sulpicio LJnes,3 the labor dispute was certified to the NLRC by die
DOLE Secretary for compulsory arbitration. The petitioner contends that the
Labor Arbiter, not the NLRC, should have taken cognizance o f the complaint for
“illegal strike/clearance for termination” filed by the respondent. The Supreme
Court, in disagreeing with this proposition, cited the cases o f International
Pharmaceuticals* and PASVLL/Pascual Liner,5 where it was held that in the same
manner that the DOLE Secretary is granted under Article 278(g) [263(g)] the
authority to assume jurisdiction over a labor dispute, necessarily this authority must
include and extend to all questions and controversies arising therefrom, including
cases over which the Labor Arbiter has exclusive jurisdiction. When the DOLE
Secretary certifies a labor dispute to the NLRC for compulsory arbitration, the
latter is concomitantly empowered to resolve all questions and controversies arising
therefrom, including cases otherwise belonging originally and exclusively to die
Labor Arbiter.
IV.
RETURN-TO-W ORK O RDER

1. RETURN-TO-W ORK O RD ER, ALWAYS A STATUTORY PART OF

ASSUMPTION OR C ER T IFIC A TIO N O R D ER .

It is clear under Article 278(g) [263(g)], that the moment the DOLE
Secretary assumes jurisdiction over a labor dispute involving national interest or
certifies it to the NLRC for compulsory arbitration, such assumption or

' University of Santo Tomasv. NLRC, G.R. No. 89920, Oct 18,1990.
: Marcopper Mning Corporation v. BriSantes, G.R. No. 119381, March 11,1996,254 SCRA 595,600.
3 Samahang Manggagawa sa Sulpicio Lines, Inc. - NAFLU v. Sulpicio Lines, Inc., G.R. No. 140992, March 25,2004.
4 Mentation^ Pharmaceuticals, Inc. v. Secretary oi Latior and Employment, G.R. Nos. 92981-83, Jan 9.1992.
J PASVIL/Pascual Liner. Inc. Workers Unm-NAFLU v. NLRC, G R No. 124823, July 28.1999,311 SCRA 444,451452.

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certification has the effect o f automatically enjoining the intended or impending

strike. Simply stated, assumption o f jurisdiction over a labor dispute, or the
certification of the same to the NLRC for compulsory arbitration, always co-exists
with an order for workers to return to work immediately and for employers to
readmit all o f them under the same terms and conditions prevailing before the
strike or lockout.1

The return-to-work order is a valid statutory part and parcel o f the

assumption and certification orders2 given the predictable prejudice a strike or
lockout could cause not only to the parties but more especially to the national
interest. Stated otherwise, the assumption of jurisdiction an d /o r the certification to
the NLRC has the effect of automatically enjoining the strike or lockout, whether
actual or intended, even if the same has not been categorically stated or docs not
appear in the assumption or certification order.3

It is thus not necessary for the DOLE Secretary to issue another order
directing the strikers to return to work. The mere issuance of an assumption or
certification order automatically carries with it a retum-to-work order, even if the
directive to return to work is not expressly stated therein.4 It is error therefore for
striking workers to continue with their strike alleging absence o f a return-to-work
order since Article 278(g) [263(g)] is clear that once an assumption/certification
order is issued, strikes are enjoined or, if one has already taken place, all strikers
should immediately return to work.5 Regardless o f their motives or the validity o f
their claims, the striking workers must cease and/or desist from any and all acts
that tend to undermine this authority of the D O LE Secretary once an
assumption/certification order is issued. They cannot, for instance, ignore return-
to-work orders, citing unfair labor practices on the part o f the company to justify
their action.6

2. IN STA N CES W H E N R ET U R N -T O -W O R K O R D E R IS ISSUED

SEPARATELY FRO M A S S U M P T IO N /C E R T IF IC A T IO N O R D ER .

Although deemed statutory part and parcel7 of an

assumption/certification order, there are instances where the retum-to-work order
is issued separately from the former,

(a) When at the time the assumption/certification order was issued, no

strike has yet been conducted by the union, hence, at that point, there
are no strikers yet who must be ordered to return to work. But if

University of San Agustin Employees' Un'ion-FFW v. The CA, G.R. No. 169632, March 28,2006.
Sarmiento v. Tu'co, G il Nos. 75271-73, June 27,1988.
No. 32, NCMB Primer on Strike, Picketing and Lockout 2nd Edition, December 1995.
Steel Corporation of the Philippines v. SCP Employees Union, G.R. Nos. 169829-30, April 16,2008.
Id.
Manila Hotel Employees Association v. Manila Hotel Corp., G.R. No. 154591, March 5,2007.
Samiento v. Tiico, G.R. No. 75271-73, June 27,1988,162 SCRA 676,684.

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subsequently, a strike is mounted by the union, a retum-to-work order

should be issued pursuant to the earlier assumption/certification
order.1
(b) When at the time the assumption/certification order was issued, there
was already an on-going strike but the issuance of*a separate retum-to-
work order is necessary in order to emphasize the need for the strikers
to lift their picket and return immediately to work.2
(c) When another retum-to-work order is issued in the light o f the
defiance by the strikers o f the first retum-to-worker order.3
(d) When a retum-to-work order is issued because the union filed a
second notice of stnkc and actually conducted a strike after the DOLE
Secretary earlier issued an assumption/certification order on the first
notice of strike.4

3. ACTUAL R EIN STA TEM EN T IS T H E N O R M T O IM P L E M E N T

RETURN-TO-W ORK ORDER; PAYROLL R E IN S T A T E M E N T ,
W H EN PROPER.

a. General rule Is actual reinstatem ent.

As a general rule, the concept of retum-to-work under Article 278(g)

[263(g)] contemplates actual reinstatement and not payroll reinstatement. This is in
accordance with die mteni and spirit of tins article.5 The purpose of the law is to
bring back the workers to their original work under the same terms and conditions
prevailing before die strike or lockout.6 Payroll reinstatement, being temporary in

1 An example is the case of Marcopper Mnna Corporation v. Briilantes, G R No 119381,March 11.1995.

2 An example is the case of National Federation of Labor v. NLRC, G R No. 1U466, Dec. 15,1997,263 SCRA 275, where
the DOLE Seaetaiy, on March 11,1993, assumed jurisdiction over the dispute pursuant to a petition of NFL filed on January
29,1993. He Ekewise separately issued a Ftetom-to-VM Order to take effect within 24 hours from receipt thereof.
3 See PASVtUPascual Liner, Inc. Workers Union - NAFUJ v. NLRC, G.R. No. 124823, July 28,1999 where notwithstanding
receipt of the first retum-to-worker order, DOLE Seaetaiy Confesor found that petitioner union continued to picket and
barricade PASVIL's premises thereby preventing the workers wanting to report back to wok from entemg the premises.
Resultanfiy, on 24 February 1995 she reiterated her directive in the previous retum-to-work order and deputized the Station
Commander of the Nwafches Police Station to assist in the orderly and peaceful enforcement of her order including the
removal cf at forms of obstruction and barricades to ensure free ingress to or egress from toe premises of PASVIL. See
also San Juan De Dios Educational Foundation Employees Union-Afence of Filipino Workers v. San Juan De Dios
Educational Foundation, Inc., G.R. No. 143341, May 28,2004,430 SCRA 193, where the then DOLE Seaetaiy Ma. Nieves
R. Confesor had to issue another retunvtowork order because the strkers defied the first retunvtowoik order issued when
she certified toe case to the NLRC fa compulsory arbitration.
* See Pfipina Telephone Cap. v. Pifp'no Telephone Employees Assodafon plLTEA], G R No. 160058, June 22,2007,
where, on July 13,1998, respondent union filed the first Notice of Strike and on August 14,1998, the DOLE Seaetaiy
assumed jurisdiction ova the laba dispute raised h this first Notice of Strike. On September 4,1998, toe union filed a
second Notice of Strike and on the same day conducted a strike. On September 9,1998, the DOLE Seaetaiy directed the
striking union officers and members to return to work within twenty-four (24) hours from receipt of the Order and for the
Company to accept ail strkers unda the same terms and conditions of employment prior to the sfrfke. The union and its
members complied.
s National Union of Workers in the Hotel, Restaurant and Allied industries (NUWHRAIN-APL-IUF] Dusit Hotel Nkko Chapter v.
The Honorable CA, G.R. Nos. 163942 and 166295, Nov. 11.2008.
‘ Manila Diamond Hotel Employees- Union v. The Hon. CA, G R No 140518. Dec 16.2004.

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nature, is certainly not appropriate to implement a retum-to-work order which is in

the nature o f a permanent relief. Moreover, there appears to be no legal basis for
such payroll reinstatement since the Labor Code contains only one provision1
mandating payroll reinstatement but this has nothing to do with the return to work
o f strikers or locked-out employees consequent to the assumption or certification
by the D O LE Secretary in national interest cases.

b. Special circum stances ju stify payroll reinstatem ent.

As with most rules, however, the actual reinstatem ent rule in Article
278(g) [263(g)] is subject to exceptions.2 Consequently, there are a number o f cases
where, instead of actual reinstatement, payroll reinstatement was ordered by the
High Court to implement the retum-to-work order in national interest cases. But
such departure from the norm may only be justified in case o f existence o f certain
special circum stances that render actual reinstatement impracticable or otherwise
not conducive to attaining the purposes o f the law.3 This is best exemplified by the
1990 case of University of Sto. Tomas v. NLRC,4 where, by reason of the special
circumstance that at the time the teachers were ordered to return to work by reason
of the DOLE Secretary’s certification of the labor dispute to the NLRC for
compulsory arbitration,5 they could not be given back their academic assignments
since the retum-to-work order o f the DOLE Secretary was issued in the middle o f
the first semester of the academic year. The NLRC, to which the labor dispute was
certified, was therefore faced with a situation where the striking teachers were
entitled to a retum-to-work order, but the university could not immediately
reinstate them since it would be impracticable and detrimental to the students to
change teachers at that point. Thus, the Supreme Court declared:

“It was error for the NLRC to order the alternative remedies
of payroll reinstatement or actual reinstatement. However, the order did
not amount to grave abuse of discretion. Such error is merely an error of
judgment which is not corrcctiblc by a special civil action for certiorari.
The NLRC was only trying its best to work out a satisfactory ad hoc
solution to a festering and serious problem. In the light of our rulings on
the impropriety of the substantially equivalent academic assignments and
the need to defer the changes of teachers until the end of the first
semester, the payroll reinstatement will actually minimize the petitioner’s
problems in the payment of full backwages.

1 See Article 229 [223] of the Labor Code which dwells only with remstatement of employees whose dsmissal has been
declared ilegal by Ihe Labor Arbiter and whose employer has appealed the Labor Arbiter's decision to the NLRC. Pending
appeal, the iHegafy dismissed employees are mandatorily required to be retostated ettier actualy, that is, to their former
positions a merely in the payrol, at the option of the employer.
2 National Union of Workers in the Hotel, Restaurant and Alied Industries [NUWHRA1N-APL-IUF] CXjsit Hotel Nlrko Chapter v.
The Honorable CA, G R Nos. 163942 and 166295, Nov. 11,2008.
1 Mania Diamond Hotel Employees' Union v. The Hon. CA, G.R. No. 140518, Dec.' 6,2004.
4 G R No. 89920, Oct 18,1990,190 SCRA 758.
5 Eaxf«r bo the issuance of ff>is certificafion order, tf>e DOLE Secrelaiy issued an ofder suspending the effects of termination
which likewise ordered the reinstatement of the same dismissed teachers to their previous positions.

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xxx

“Although we pronounce that the dismissed faculty members

must be actually reinstated while the labor dispute is being resolved, we
have to take into account the fact that at this time, the first semester for
school-year 1990-1991 is about to end. To change the facility members
around the dme of final examinations would adversely affect and
prejudice the students whose welfare and interest we consider to be of
primordial importance and for whom both the University and the faculty
union must subordinate their claims and desires. This Court therefore
resolves that the actual reinstatement of the non-reinstated faculty
members, pending resolution of the labor controversy before the NLRC,
may take effect at the start of the second semester of the schoolyear
1990-1991 but not later. With this arrangement, the petitioner's
reasoning that it will be violating contracts with the faculty members
who took over the dismissed professors' teaching loads becomes moot
considering that, as it alleges in its petition, it operates on a scmestral
basis.”

Following the above special circum stances rule, payroll reinstatement,

in lieu of actual reinstatement to implement a return-to-work order consequent to
the DOLE Secretary’s assumption order, was also given judicial imprimatur in the
2005 case of University of Immaculate Concepcion, Inc. v. The Hon. Secretary of Labor,1
under the following ratiocination:

“With respect to the Secretary’s Order allowing payroll

reinstatement instead of actual reinstatement for the individual
respondents herein, an amendment to the previous Orders issued by her
office, the same is usually not allowed. Article 263(g) of the Labor Code
aforementioned states that all workers must immediately return to work
and all employers must readmit all of them under the same terms and
conditions prevailing before the strike or lockout The phrase under the
same terms and conditions makes it clear that the norm is actual
reinstatement. TTiis is consistent widi the idea that any work stoppage or
slowdown in that particular industry can be detrimental to the national
interest

“In ordering payroll reinstatement in lieu of actual

reinstatement, dien Acting Secretary of Labor Jose S. Brillantes said:

‘Ancnt the Unions Motion, we find that superseding

circumstances would not warrant the physical reinstatement of
the twelve (\2\ terminated employees. Hence, they arc hereby
ordered placed under payroll reinstatement until the validity of
their termination is finally resolved.1

“As an exception to the rule, payroll reinstatement must

rest on special circumstances that render actual reinstatement

1 G.R. No. 151379, Jan. 14,2005.

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LABOR RELATIONS

impracticable or otherwise not conducive to attaining the purposes

of the law.

“The superseding circumstances mentioned by the Acting

Secretary of Labor no doubt refer to the final decision of the panel of
arbitrators as to the confidential nature of the positions of the twelve
private respondents, thereby rendering their actual and physical
reinstatement impracticable and more likely to exacerbate the situation.
The payroll reinstatement in lieu of actual reinstatement ordered
in these cases, therefore, appears justified as an exception to the
rule until the validity of their termination is finally resolved. This
Court sees no grave abuse of discretion on the part of the Acting
Secretary of Labor in ordering the same. Furthermore, the issue has
not been raised by any party in this case.”12

The peculiar circumstances obtaining in the 2008 case of Dusit Hotel

Nikko} likewise validated the DOLE Secretary’s decision to order payroll
reinstatement instead o f actual reinstatement. It is obviously impracticable for die
hotel to actually reinstate the employees who shaved their heads or cropped their
hair34in the light o f the deadlock in the CBA negotiations which led the union to
file a notice of strike, because this was exaedy the reason why they were prevented
from working in the first place. Further, as with most labor disputes which have
resulted in strikes, there is mutual antagonism, enmity, and animosity between the
union and management. Payroll reinstatement, most especially in this case, would
have been the only avenue where further incidents and damages could be
avoided. The D O LE Secretary surely meant only to ensure industrial peace as she
assumed jurisdiction over the labor dispute. In the absence o f a clear showing of
grave abuse o f discretion on her part, the Court is not ready to substitute its own
findings to those made by the D O LE Secretary.

However, if no such special circumstances exist in a given case, die

general rule of actual reinstatement should be affirmed and applied. Thus, in the
2004 case of Manila Diamond Hotel* the act o f the D O LE Secretary in ordenng
payroll reinstatement o f the workers in lieu o f actual reinstatement was declared as
constituting grave abuse of discretion amounting to lack or excess o f jurisdiction.
In justifying this ruling, the High Tribunal pointed out the factual distinction
between this case and the 1990 case o f UST.S Thus, unlike in the UST case where
the special circumstance that the teachers ordered to return to work could not be
given back their academic assignments since the refurn-to-work order o f the
DOLE Secretary was issued in the middle o f the first semester of die academic

1 Undeiscoring suppSed.
2 Nafonal Union ofWorkers h the Hotel, Restauant and ASled Industries [NUWHRA/T4-APL-IUF] Dusit Hotel Nkko Chapter v.
The Honorable CA G.R. Nos. 163942 and 166295, Nov. 11,2008.
5 The Supreme Court declared in this case fiat the ad of the employees in sporting bald heads and dosefy cropped hair s a
formofilegal strfce.
4 Mania Diamond Hotel Employees’ Union v. The Hon. CA G.R. No. 140518, Dec. 16,2004.
5 University of Sto. Tomas v. NLRC, G R No. 89920, Oct 18,1990,190 SCRA 758.

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year, there was no showing, in this case, that the facts called for payroll
reinstatement as an alternative remedy. The strained relationship between the striking
employees and management is no reason for payroll reinstatement in lieu o f actual
reinstatement. The petitioner union correctly pointed out that labor disputes
naturally involve strained relations between labor and management, and that in
most strikes, the relations between the strikers and the non-strikers will similarly be
tense. Bitter labor disputes always leave an aftermath o f strong emotions and
unpleasant situations. Nevertheless, the government must still perform its function
and apply the law, especially if national interest is involved. Indeed, the "great breadth
oj discretion” by the DOLE Secretary once he assumes jurisdiction over a labor
dispute is recognized. However, payroll reinstatement in lieu o f actual
reinstatement is a departure from the rule and there must be a showing o f special
circumstances rendering actual reinstatement impracticable, as in the UST case
aforementioned, or otherwise not conducive to attaining the purpose o f the law in
providing for assumption of jurisdiction by the DOLE Secretary' in a labor dispute
that affects the national interest. None appears to have been established in this
case.

4. SOME PRINCIPLES.
a. Retum-to-work order is compulsory in character an d not
offensive to involuntary' servitude. Returning to work on the part of
the worker is not a matter of option or voluntariness but o f obligation.1
It must be discharged as a duty even against the worker’s will. The
worker must return to his job together with his co-workers so that the
operation of the company can be resumed and it can continue serving
the public and promoting its interest.2 This is the real reason such
return can be compelled. So imperative is the order in fact that it is not
even considered violative o f the constitutional right against involuntary
servitude.34A retum-to-work order is immediately executory in character
and should be strictly complied with by the parties even during the
pendency of any motion or petition questioning its validity in order to
maintain the status quo while the determination is being m ade/ The
obligation so imposed must be discharged as a duty more than as a right
that may be waived. While the workers may choose not to obey, they
do so at the risk of severing their relationship with their employer.5
b. Retum-to-work o rd er is a limitation on em ployer’s exercise of
management prerogatives. Article 278(g) [263(g)] constitutes a
limitation or exception to the management prerogative o f hiring, firing,
transfer, demotion and promotion of employees. And to the extent that

1 Marcopper lAYng Cotporatioo v. Mantes, G.R. No. 119381, March 11.1995.

* Sarmientov. Tuico, G.R. Nos. 75271-73, June 27.1988,162 SCRA 676.
J Kaisahan ng Mga Manggagawa sa Kahoy sa Pilipinas v. Gotamco Saw Mil, G.R. No. L-1573, March 29,1948.
4 Samentov Tuico, G.R Nos 75271-73, June 27,1988; No. 23, Guidelines Gweming Labor Reiatiorts.
s Asian Transrrtsson Corporation v. NLRC.G.R. No. 88725, Nov. 22,1989.

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LABOR RELATIONS

this article calls for the readmission of all workers under the same terms
and conditions prevailing before the strike, the employer is restricted
from exercising its generally unbounded right to transfer or reassign its
employees.1
c. Issue of legality of strike, im m aterial in enforcing retum -to-w ork
order. The brazen disregard o f the retum-to-work order o f the DOLE
Secretary would render the strike illegal.23 Where the retum-to-work
order is issued pending the determination o f the legality of the strike, it
is not correct to say that it may be enforced only if the strike is legal and
may be disregarded if the strike is illegal. Precisely, said the Supreme
Court in Asian Transmission Corporation v. NLKC,1 the purpose o f the
retum-to-work order is to maintain the status quo while the
determination is being made. Otherwise, the workers who contend that
the strike is legal can refuse to return to their work and use a standstill
in the company operations while retaining the positions they refuse to
discharge or allow management to fill. Worse, they will also claim
payment for work not done on the ground that they are still legally
employed although actually engaged in activities inimical to their
employer’s interest.4
d. N on-w aiver of dem ands u p o n voluntary return to w ork. The act o f
the strikers in voluntarily returning to work does not result in the
waiver of their original demands. Such act o f returning to work only
means that they desisted from the strike which desistance is a personal
act of the strikers and cannot be used against the union and interpreted
as a waiver by it o f its original demands for which the strike was
adopted as a weapon.5
e. N on-w aiver by em ployer of illegality of strike. In the same breadth,
a retum-to-work order does not generally have the effect o f rendering
as moot and academic the issue o f the illegality o f the strike.6 However,
according to Trans-Asia Shipping Lines,7 an employer may be considered
to have waived its right to proceed against die striking employees for
alleged commission o f illegal acts during the strike when, during a
conference before the Chairman of the NLRC, it agreed to reinstate
them and comply hilly with the retum-to-work order issued by the
DOLE Secretary.8

1 Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union v. CA, G.R No. 145428, July 7,2004.
2 Union of Fiipro Emptaycesv. Nesfle Philippines, Inc., G.R. No. 88710-13, Dec. 19,1990.
3 G.R. No. 88725, Nw. 22,1989.
4 See also St Scbotastica's College v. Torres, G.R No. 100158, June 29,1992.
5 BsayaLarxlTranspOftationCo.,ta.v.C!RG.RNo.L-10114,Nov.26,1957,102PM .438.
5 Insurefco Papef Pulp & Project Workers Union v. Insular Sugar Refining Corp., G R. Nos 1-7594 and L-7596, Sept 8.1954.
7 Trans-Asia Slipping Lines, Inc. - Unfcensed Crews Employees Union v. CA, G.R. No 145428, July 7,2004.
8 See also Reformist Urwn of RB. Lner, Inc. v. NLKC, G.R No 120482 Jai 27.1997,266 SCRA 713.

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 6l6 Bar. reviewer, on Labor. Law

f. Extension of retum -to-w ork order an d the adm ission of all

striking workers by the com pany, cannot in any way be considered a
waiver that the union officers can use to negate liability for their illegal
actions of defying the Erst retum-to-work order and for commission of
illegal acts in the course of the strike. This holds true especially in a
case like Triumph International} where the company conditioned its
acceptance of the returning strikers “without prejudice to whatever legal
action it may take against those who committed illegal acts.” Moreover,
the extension of the retum-to-work in tltis case was made upon request
of die union and the DOLE to accommo'date employees who were in
the provinces who were not notified, and those who were sick,
g. Motion for reconsideration has no effect the im m ediately
executory nature of a retum -to-w ork order. The reason for this rule
is that a retum-to-work order is immediately effective and executory
notwithstanding the filing of a motion for reconsideration.*
12 It must be
strictly complied with even during the pendency o f any petition
questioning its validity.3To say that the effectivity of the retum-to-work
order must wait affirmance in a motion for reconsideration is not only
to emasculate it but indeed to defeat its import, for by then, the
deadline fixed for the retum-to-work would, in the ordinary course,
have already passed and, hence, can no longer be affirmed insofar as the
time element is concerned .45 After all, the assumption and/or
certification order is issued in the exercise o f the DOLE Secretary’s
compulsive power o f arbitration and, until set aside, must therefore be
immediately complied with.s Thus, the contention o f the strikers that
they honestly believed that the filing of a motion for reconsideration of
the order issued by the DOLE Secretary entitled them to participate in
a strike cannot be sustained.6

5.
INJUNCTIONS

1. PR O H IB IT IO N O N IN JU N C T IO N A GAINST STRIKES AND

LOCKOUTS; EXCEPTION S.

As a general rule, strikes and lockouts that are validly declared enjoy the
protection of the law and cannot be enjoined unless illegal acts are committed or

’ Bagong Pagkakaisa ng M anggagawa ng Trium ph International v . SO LE, G R N os. 167401 and 167407, July 5 ,2 0 10 .
1 T e lk n k e n Sem iconductors Em ployees U nion-FFW v. S ecretary o f Labor and Em ploym ent, G R N os. 122743 and 127215,
D ec 12,1997,283 S C R A 145; S t S d x fe sfca ’s C ollege v . T o rre s, G R No. 100158, June 2 9,1992.
1 Ph3com Em ployees U nion v. P tiTpp'ne G lobal C om m unications, G R No. 144315, Ju ly 1 7 ,2 0 0 6 .'
4 Philippine A iifn e s Em ployees Association v . P h ffip p iie A irfines, Inc., G .R . No. L-32740, M a ch 31,1971.
5 S t S chdasfca's C ollege v. Torres, supra.
6 M anila Hotel Em ployees A ssodaboo v. t^a n la H otel C orp., G R N o. 154591, M arch 5 ,2 0 07 .

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threatened to be committed in the course thereof. This policy applies even if the
strike appears to be illegal in nature. The rationale for this policy is the protection
extended to the right to strike under the Constitution and the law. It is basically
treated as a weapon that the law guarantees to employees for the advancement of
their interest and for their protection .1

However, in some cases, injunctions issued to enjoin the conduct o f the

strike itself and not only the commission o f illegal or prohibited acts in the course
thereof, were held to be valid. For instance, in San Miguei Corporation v. NLRC,2 the
Supreme Court ruled that injunction may be issued not only against the
commission o f illegal acts in the course o f the strike but against the strike itself. In
this case, the notice o f strike filed by the union has been converted into a preventive
mediation case. Having been so converted, a strike can no longer be staged based on
said notice. Upon such conversion, the legal effect is that there is no more notice of
strike to speak of. When the NCMB ordered the preventive mediation, the union
had diereupon lost the notice o f strike it had filed. However, the NCMB which
effected the conversion has, under the law, no coercive powers of injunction.
Consequendy, petitioner company in the instant case sought recourse from the
NLRC. The NLRC, however, issued a TRO only for the free ingress to and egress
from pedtioner’s plants, but did not enjoin the conduct o f the unlawful strike itself.
It ignored the fatal lack o f notice o f strike consequent to the conversion thereof
into a preventive mediation case. Article 279(a) [264(a)] of the Labor Code
explicitly states that a declaration o f strike widiout first having filed the required
notice is a prohibited activity, which may be prevented through an injunction in
accordance with Article 266 [254] o f the same Code. Clearly, public respondent
should have granted the injunctive relief to prevent die grave damage brought
about by the unlawful strike.3

In the earlier case of San Miguel Corporation v. NLRC,4 where die same
issue of NLRC’s duty to enjoin an unlawful strike was raised, the Supreme Court
ruled that the NLRC committed grave abuse o f discretion when it denied the
petition for injunction to restrain the union from declaring a strike based on non-
strikeablc grounds.

In IBM v. NLRC,5 it was held that it is the ‘legal duty and obligation” of
the NLRC to enjoin a partial strike staged in violation of the law. Failure to
prompdy issue an injunction by the NLRC was likewise held therein to be an abuse
o f discretion.

1 C atex R e fra y Em ployees A ssociation [P A FLU ] v . Lucero, G R No. L-15338, A pril 2 8 ,1 9 6 2 ,4 S C R A 1196.
J G R No. 119293, June 1 0,2003.
1 See also PAL v . M o n , G .R. N o. 88210, Jan. 2 3 ,1 9 9 1 ,1 9 3 SCRA 223.
4 G R No. 99266, M arch 2 ,1 9 9 9 ,3 0 4 SCRA 1.
5 to a t BukJod ng M anggagaw a [IBM ] v . N LRC, G R N o. 91980, June 2 7,1 99 1 ,1 9 8 SCRA 586.

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 6i8 Bar reviewer on Labor Iaw

In bulletin Publishing v. Sanchr.£,* an injunction was allowed against the strike

which was staged to compel the employer to ignore the law. The reason is that
when trade unionism and strikes are used in violation o f the law, misuse thereof
can be the subject of judicial intervention.

2. REGULAR COURTS ARE PR O H IB IT E D FROM ISSUING

IN JU N C T IO N AGAINST STRIKES OR LOCKOUT.

It bears stressing that all the cases cited above involve the issuance of
restraining order or injunction by the NLRC pursuant to the exercise o f its
injunctive power. In contrast, regular courts are absolutely prohibited to grant
any injunctive relief in cases of strikes or lockouts.

The Supreme Court has cited in ALU-TUCP v. Borrowed1*the justifications

for this absolute prohibition:

(1) Courts of law have no jurisdiction to act on labor cases or any

incidents arising therefrom. This is basic and elementary. Jurisdiction to try and
adjudicate such cases pertains exclusively to the proper labor officials o f the
Department of Labor, particularly the Labor Arbiter under Article 224 [217] o f the
Labor Code.

(2) Well-established jurisprudence is to die effect that regular courts have

no jurisdiction. The following cases may be cited Silva Pipe v. Filipino Pipe,34National
Garments v. Caluagf and a host of other decided cases.5

(3) The reason for such exclusive jurisdiction is that since picketing and
strikes may be mere incidents or consequences of a ULP, it is but proper that a writ
of injunction prayed for in connection with the labor dispute originate from the
[labor] court having jurisdiction over the main case inasmuch as it is that [labor]
court that has cognizance of all relevant facts.6

(4) The respondent judge cannot enjoin acts carried out as a consequence
of the strike without unavoidably ruling on the legality of the strike itself. (“The
strike can continue. It does not mean that this Court has ruled on the legality or
illegality of die said strike.”)

3. IN JU N C T IO N IN PICK ETIN G CASES.

As a general rule, injunction cannot be issued against the conduct of

picketing by the workers. Under our constitutional set up, picketing is considered

1 G .R. No. 74425, O ct 7.1986.

1 Associated Labor Unions (ALU-TUCP) v. Hon. B orroneo and Befyca C orporation, G .R No. 75736, Sept. 29.1988.
1 Silva Pipe W orkers Union NATU v . F iip in o Pipe & Foundry C orporation, G .R N o. 33910, A ug. 19,1988.
4 National G arm ents and Textile W orkers' Union-PAFLU v . H on H eim ogenes C aluag, G .R N o. L -9 1 0 4,99 PM . 1067 (1956).
5 Citing PAFLU v. Tan, 99 P hil. 854; P hii. C om m unications, E lectronic and E lectricity W orkers Federation v. N oiasco. G .R No.
1-24984, July 29,1968.
8 Citing E rlanger and Gafmger, Inc. v. Erianger and G alnger Em ployees A ssociatjon-N A TU , supra.

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part of the freedom of speech duly guaranteed by the Constitution .1 However,

excepted from this legal proscription arc die following situations:

(1) Where picketing is carried out through the use o f illegal means;2
(2) Where picketing involves the use of violence and other illegal acts;3
(3) Where picketing affects the rights o f third parties and injunction
becomes necessary to protect such rights.4

4. IN N O C E N T BYSTANDER RULE.

In situations where the picket affects not only the employer but also the
business operations o f other establishments owned by third parties, an injunction
may be secured by the latter from the regular courts to enjoin the picket. Picketing
strikers cannot prevent employees o f other companies from using the same
premises being picketed. A picketing labor union has no right to prevent employees
of another company which is not their employer, from getting in and out o f its
rented premises; odierwise, it will be held liable for damages for its acts against an
innocent bystander.5

Under the “Innocent Bystander Rule, ” the third-party employers or “innocent

bystanders” who have no employer-employee relationslup with the picketing strikers,
may apply for injunction with the regular courts to enjoin the conduct o f the
picket. Because of the absence o f such employer-employee relationship, the NLRC
cannot entertain such application for injunction from “innocent bystanders.”

1 M ortera v. C IR , G .R . No. L-1340, O ct 1 3 ,1 9 4 7 ,7 9 P hil. 345.

1 Id.
3 PAFLU v . B arot, G .R. No. 1-9281, S ep t 2 8 ,1 9 5 6 ,9 9 P h i 1008; C altex F ilipin o M anagers and S upervisors A ssociation v.
C IR , G .R . N os. L-30632-33, A p ril1 1 ,1 972,44 SCRA 350.
4 PAFLU v . C lo rib e l, G R No. L-25878, M arch 2 8 ,1 9 6 9 ,2 7 SCRA 465.
5 Philcom Em ployees Union v. P hilippine G lobal C om m unications, G .R No. 144315, Ju ly 1 7,2 00 6 ; Liw ayw ay P ublications,
Inc. v . Perm anent C oncrete W orkers U nion, G .R . N o. L-25003, O c t 2 3,1 98 1 ,1 9 5 P h i. 51.

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Chapter Six
POST-EMPLOYMENT

TOPICS PER SYLLABUS

VI.
POST-EMPLOYMENT

A. Employer-employee relationship
1. Tests to determine existence
2. Kinds of employment
a. Regular
b. Casual
c. Probationary
d. Project
e. Seasonal
f. Fixed-term
g. Security guards1
h. Floating status2
3. Legitimate subcontracting vs. labor-only contracting
a. Elements
b. Trilateral relationship
c. Solidary liability
B. Termination by employer
1. Just causes
2. Authorized causes
3. Due process
a. Twin-notice requirement
b. Hearing
C. Termination by employee
1. Resignation versus constructive dismissal
D. Preventive Suspension
E. Reliefs from illegal dismissal*7

1 The inclusion of this topic under in s classification m ay not be proper since there is no such kind o( em ploym ent as 'se cu rity
guards.’
7 The topic o f to a tn g status’ is likew ise m isplaced lo r the sam e reason as that o f ’ security g ua 'd s."

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 C hapter . Six 621
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F. Money claims arising from employer-employee relationship

G. Retirement

A.
EMPLOYER-EMPLOYEE RELATIONSHIP

1.
TESTS TO DETERMINE EXISTENCE
OF EMPLOYER-EMPLOYEE RELATIONSHIP

1. FO U R -FO LD T EST .

1) Selection and engagement o f the employee;

2) Payment o f wages or salaries;
3) Exercise of die power o f dismissal; or
4) Exercise of the power to control the employee’s conduct.1

N o. 4 above, or the so-called "control test" or "Means-and-Method Control

Test”is the controlling test. It addresses the issue o f whether the employer controls
or has reserved the right to control the employee not only as to the result o f the
work to be done but also as to the m eans and m ethods by which the same is to
be accomplished.2 Stated otherwise, an employer-employee relationship exists
where the person for whom the services are performed reserved the right to
control not only the end or result to be achieved but also the m eans and
m ethods to be used in reaching such end .3 Absent the power to control the
employee with respect to the m eans and m ethods by which his work was to be
accomplished will only mean that there is no employer-employee relationship
between the parties to speak of .45The element of control is absent where a person
who works for another does so more or less at his own pleasure and is not subject
to definite hours or conditions of work and, in turn, is compensated according to
the result o f his efforts and not as to the amount thereof. Consequently, there is in
this situation no employer-employee relationship .3

It should be borne in mind that the power of control refers merely to the
existence of the power and not to the actual exercise thereof. It is not essential for
the employer to actually supervise the performance of dudes o f the employee; it is
enough that the former has a right to wield the power.6 To operate against the

' fW p p in e G tobai C om m unications, h e . v. De V era, G R N o. 157214, June 7 ,2 0 05 .

2 GaJego v. Bayer P hiippines, h e ., G R N o. 179807, Ju ly 3 1,2 00 9 ,5 9 4 SCRA 736.
3 A urora Land P rojects C o lo ra tio n v . NLRC, G .R. N o. 114733, Jan. 02,1997; T u v. NLRC, G .R. No. 95845. Feb. 2 1,1 99 6 .
4 C a b £ te n P a stu ta n N e g rito L a b a A ss o d a tio n v .N L R C ,G R N o .1 0 6 1 0 8 .F e b .2 3 ,1 9 9 5 .
5 Encyclopedia B ritannica [P hils.], h e . v. N LRC, G R N o. 87098, New. 4,1996.
6 M endioia v. CA, G R No. 159333, July 31,2 00 6 ; S SS v . CA, G .R. No. 100388, Dec. * 4,2000.

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 6 22 Bar Reviewer on Labor Law

employer, the power o f control need not have been actually exercised. P roof o f the
existence of such power is enough.1 Certainly, the employer wields control when it
has the power to hire or dismiss as well as to check on the progress and the quality
of work o f the laborers.2

2. FRANCISCO D OCTRINE: 2-T IE R E D TEST.

While the control test may be the most important index to determine the
existence of the employer-employee relationship, however, in certain cases, the
control test is not sufficient to give a complete picture o f the relationship between
die parties, owing to the complexity of such a relationship where several positions
have been held by the worker. There are instances when, aside from the
employer’s power to control the employee with respect to the means and methods
by which die work is to be accomplished, economic realities o f the employment
relations help provide a comprehensive analysis of the true classification o f the
individual, whether as employee, independent contractor, corporate officer or some
other capacity.

Recent jurisprudence adds another test, applied in conjunction with the

control test; in determining the existence o f employment relations.34
5This is the
two-tiered test enunciated in the 2006 case of Francisco v. NLRC,* which involves
an inquiry' into the following:

(1) The putative employer’s power to control the employee with respect
to the means and methods by which the work is to be accomplished
[control test]-, and
(2) The underlying economic realities o f the activity or relationship
[econom ic reality test]}

As earlier pointed out, employment relationship under die control test is

determined by asking whether “the person for whom the services are performed
reserves the right to control not only the end [to be] achieved but also the m anner
and means [to be used in reaching such] end .”6 The broader econom ic reality
test calls for the determination of the nature of the relationship based on the
circumstances of the whole economic activity.7 Under this test, the proper standard

' V noya v. NLRC, G il No. 126586, Feb. 2 ,2 0 00 ,3 2 4 S C R A469

7 Pamplona P lantation Com pany. Inc., v . T n g h l, G .R . No. 159121, Feb. 3,2005.
3 See the dissenting opinion o f M r. Justice A rturo B rion in the 2013 case o f R e: R equest o f (R e t) C h ief Justice A rtem io V.
Panganiban fo r R frC om putation o f his Creditable S ervice fo r the Purpose o f Re-C om puting h is R etirem ent B enefits, A M.
No. 10-9-15-SC, Feb. 12,2013 where this 2-tiered te st is extensively discussed.
4 G.R. No. 170087, A ug. 31,2006.
5 Id.
6 Id.
' These circum stances are as fotow s: (.1) The extent to w hich the services perform ed are a i htegraf p art o f tie em ployer’s
business; (2) The extent o f the worker’s investm ent i i equipm ent and fa cilitie s; (3) The nature and degree o f control
exercised by the em ployer (4) The w orker's opportunity fo r p ro fit and loss; (5) The am ount o f in itiative , s k il, judgm ent or
foresight required fo r the success o f h e daim ed independent enterprise; (6) The perm anency and duration o f the

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POST-EMPLOYMENT

o f economic dependence is whether the worker is dependent on the alleged employerfor

his continued employment in that line of business} In the United States, the touchstone o f
economic reality in analyzing possible employment relationships for purposes of
the Federal Labor Standards Act is d ependency .2 By analogy, the benchmark o f
economic reality in analyzing possible employment relationships for purposes of
the Labor Code ought to be the economic dependence o f the worker on his
employer.

This tw o-tiered test provides a framework o f analysis which would take

into consideration the totality o f circumstances surrounding the true nature o f the
relationship between the parties. This is especially appropriate in a case where there
is no written agreement or terms o f reference to base the relationship on and there
exists a complexity in the relationship based on the various positions and
responsibilities given to the worker over the period o f the latter’s employment.

Applying this two-tiered test, the Court ruled that petitioner Angelina
Francisco in the case o f 'Francisco, was an employee o f private respondent Kasei
Corporation, where she simultaneously held several positions because she was
under the direct control and supervision o f Seiji Kamura, the corporation’s
Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager
and Corporate Secretary, with substantially the same job functions, that is,
rendering accounting and tax services to the company and performing functions
necessary and desirable for the proper operation o f the corporation, such as
securing business permits and other licenses over an indefinite period of
engagement. Under the broader econom ic reality test, the petitioner can likewise
be said to be an employee o f respondent corporation because she had served the
company for six years before her dismissal, receiving check vouchers indicating her
salarics/wages, benefits, 13lh month pay, bonuses and allowances, as well as
deductions and Social Security contributions from August 1,1999 to December 18,
2000. When petitioner was designated General Manager, respondent corporation
made a report to the SSS. Petitioner’s membership in the SSS as manifested by a
copy of the SSS specimen signature card which was signed by the President of
Kasei Corporation and the inclusion of her name in the on-line inquiry system of
die SSS evinces the existence o f an employer-employee relationship between
petitioner and respondent corporation.

Based on the foregoing, it is clear that the two-ticred test gives a complete
picture o f the relationship between the parties. Aside from the employer’s power to
control the employee, an inquiry into the economic realities o f the relationship
helps provide a comprehensive analysis of the true classification o f the individual,12

retationshp betw een the w o fker and the em ployer, and (7) The degree o f dependency o f the w o ike r upon the em ployer for
his continued em ploym ent in th a tE n e o f business. (P er Francisco v . NLRC, Ibid.).
1 H afferty v. Putse Drug C om pany, 821 F id 261 (5th Os. 1987).
2 W eisel v. S ingapore Jo in t V e n tre , Inc., 602 F 2 d . 1185 (5 ti C ir. 1979).

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 624 Bar Reviewer on Labor Law

whether as employee, independent contractor, corporate officer or some other

capacity.

Following die broader economic reality test, the Supreme Court found
petitioner in Orosco} who is a columnist in the Philippine Daily Inquirer (PDI), not
an employee of PDI but an independent contractor. Petitioner’s main occupation is
not as a columnist for respondent but as a women’s rights advocate working m
various women’s organizations. Likewise, she herself admits that she also
contributes articles to other publications. Thus, it cannot be said that petitioner was
dependent on respondent PDI for her continued employment in respondent’s line
of business. The inevitable conclusion is that petitioner was not respondent PD I’s
employee but an independent contractor, engaged to do independent work.

3. SOME PRIN CIPLES ON EM PLO Y ER-EM PLO Y EE

RELATIONSHIP.

a) There is no uniform test prescribed by law or jurisprudence to

determine the existence of employer-employee relationship .2

b) The existence of the employer-employee relationship is essential in

that it comprises as the jurisdictional basis for recovery under the law.
Only cases arising from said relationship are cognizable by the labor
courts.3

c) The relationship o f employer and employee is contractual in nature. It

may be an oral or written contract A written contract is not necessary
for the creation and validity o f the relationship.4

d) Stipulation in a contract is not controlling in determining existence of

the relationship. The employment status o f a person is defined and
prescribed by law and not by what die parties say it should be .5

e) The mode of paying the salary or compensation of a worker does not

preclude existence o f employer-employee relationship. Thus, payment
by commission6or on a piece-rate basis7 or on a “no work, no pa/ ’ 8
basis does not affect existence of employment relationship.

f) Retainer fee arrangement does not give rise to employment

relationship.9

’ Orozco v. The Fifth D ivision o( the Honorable C ourt o f Appeals. G .R . No. 155207, A ug. 13.2008.
3 Caurdanetaan Piece W oricers Union v. Laguesm a, G .R. No. 113542. Feb. 2 4 .1 9 9 8 ,2 8 6 SCRA 401,425.
3 M adrigal Shipping Co. v. M elad, G .R Nos. 1-17362 & L-17367-69, Feb. 2 8 ,1963.7 SCRA 330.
4 Com pania M a rtin a v. Em esta Cabagnot Vda. D e H io, G.R. N o. 1-10575 A pril 2 9,1 66 0 ,1 0 7 P h i. 873
5 Chavez v. NLRC. G .R N o. 146530, Jan. 17,2005.
6 Lazaro v.S o d a l Security Com m ission, G .R. N o. 138254, July 30,2004.
7 Lam bo v. NLRC, G.R. No. 111042, O ct 2 6,1 99 9 ,3 1 7 SCRA 420.
8 CRC A gricultural Tracing v. NLRC. G .R. No. 177664. Dec. 23,2009.
9 PhSippine G lobal Com m unications, tnc. v. De V era, G .R. No. 157214, June 7 ,2 0 05 .

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POST-EMPLOYMENT

2.
KINDS OF EMPLOYMENT

1. CLA SSIFICA TION O F E M PL O Y E ES.

There are five (5) classifications o f employees1 and Article 295 [280]2
provides for four (4) o f them ,3 to wit

(a) Regular employees or those who have been engaged to perform

activities which arc usually necessary or desirable in the usual
business or trade o f the employer,
(b) P roject employees or those whose employment has been fixed for a
specific project or undertaking, the conpleuon or termination o f
which has been determined at the time o f the engagement o f the
employee;
(c) Seasonal employees or those who work or perform services which
are seasonal in nature, and the employment is for the duration of the
season; and
(d) Casual employees or those who are not regular, project, or seasonal
employees.4

A fifth one, fixed-term employees, must be added to the above

enumeration .5 This, however, is not provided in the Labor Code but recognized
only in jurisprudence .6

a.
REGULAR EMPLOYMENT

1 . LEGAL BASIS.
Article 295 [280] of the Labor Code states:

Article 295 [280]. Regular and Casual Employment. - The provisions

of written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific projeci or
undertaking the completion or termination of which has been determined

' G M 4 N etw ork, Inc. v . P abriga, G .R N o. 176419. N w . 2 7,2 01 3 .

2 A rtid e 295 (280] - R egular and C asual Em ploym enL
3 A s expressly recognized by the High C o urt'm Leyle G eotherm al Pow er P rogressive Em ployees Union-ALU-TUCP v.
P hilippine N ational 03 C o m pa n y-E n e rgy D evelopm ent C orporation, G .R . No. 170351, M arch 30.2011.
4 See also Benares v. Pancho, G .R . N o. 151827, A pril 2 9,2 00 5 ; VHIa v. NLRC. G .R 117043, Jan. 14,1998
3 A sia W orld R ecruitm ent, he. v . NLRC, G A N o. 113363, A ug. 2 4,1 99 9 ,3 7 1 P hi.. 745,755-756.
6 Innodata K now ledge S ervices, Inc. v . Inting, G .R N o. 211892, D ec. 06,2 01 7 .

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 626 bar Reviewer on Labor Law

at the time of the engagement of die employee or where the work or

service to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: Provided, That any employee who has rendered
at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity
exists.1

'Hie article’s title is a misnomer as it speaks'-only o f two (2) kinds of

employment - regular -and casual - when in fact it enunciates two (2) more kinds of
employment, namely: project and seasonal.

Article 295 [280] is composed o f two (2) paragraphs. Its first paragraph
answers the question of who are regular employees.2 Once it is established that the
employees are regular under the first paragraph, there is no more need to dwell
further on die question of whether or not they have rendered one (1) year of
service under the second paragraph thereof for purposes o f determining regularity of
employment.3 This is so because the second paragraph o f the article demarcates in
unequivocal terms that all other employees who do not fall under the definitions in
the first paragraph of regular, project and seasonal employees, are deemed casual
employees. Not qualifying under any o f the kinds of employees covered by the first
paragraph would necessarily mean that one is a casual employee under the second
paragraph thereof.4

Based on Article 295 [280], the law determines the nature o f the
employment, regardless of any agreement expressing otherwise. The supremacy of
the law over the nomenclature of the contract and its pacts and conditions is to
bring life to the policy enshrined in the Constitution to afford full protection to
labor. Thus, labor contracts are placed on a higher plane than ordinary contracts
since these are imbued with public interest and, therefore, subject to the police
power of the State.5

2. DEFAULT EM PLOYM ENT.

At the outset, it bears to emphasize that the default employment in our

jurisdiction is regular em ploym ent This means that an employee is deemed
regular under the following circumstances:

a) By nature of work - When the employee has been engaged to

perform activities which are usually necessary or desirable in the usual

1 As renum bered pursuant to Section 5, R A . No. 10151. June 21,2011.

2 Leyte G eoJierm al P oser Progresswe Em ployees L to vA L U -T U C P v. P hilippine N ational 01 C om pany - Energy
D e/etopm ent C orporation. G R No. 170351, M arch 30,2011.
3 San M guel C orporation v. NLRC, G.R. No. 125606, O ct 7 ,1 9 98 .
4 Pier 8 A rrastre & Stevedoring S ervices, Inc. v. B odoL G R No. 173849. S ept 28,2007.
5 lanodata Knowledge S ervices, Inc v. Inting, G .R. N o. 211892, Dec. 06,2017.

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 C hapter Six 6 27
POST-EMPLOYMENT

business or trade o f the employer1 or simply, that the employee’s job,

work or service is directly related to the principal business o f the
employer.

b) By period of service - When the employee is allowed to work beyond

the agreed period o f probationary, project, seasonal, casual, or fixed-
term employment, irrespective of whether it is just one day or more
after the lapse o f such period.

c) N o definitive description o f kind of em ploym ent - When there is

no definite kind of employment agreed upon by the employer and the
employee.

d) A bsence o f w ritten co n tract - When there is no written employment

contract prescribing other kinds of employment. There should be a
written contract o f employment if the employer and employee
mutually agree on such kind o f employment as probationary, casual,
seasonal, project or fixed-term.

Simply stated, if there is reasonable doubt as to the status o f employment,

the default employment should always be regular. This is so because it is the law
itself which presumes such regularity o f employment; thus, it follows that an
employee is deemed regular by operation o f law the moment the facts in a given
case establish any of the foregoing circumstances.2

3. SO M E PR IN C IPL E S O N R EG U LA R E M PL O Y M E N T .

a. Written or oral agreement is immaterial *0 determine regularity of

employment. The phrase ‘ihe provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties" in Article
295 [280] simply means that irrespective o f any written or oral
agreement stating that the employment is r.ot regular, once the fact is
established that the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade
of the employer, his employment is regular by reason o f its nature.3
b. The phrase “ to perform activities w hich arc usually necessary or
desirable in the usual business or trade o f the em ployer” includes
performance o f peripheral jobs indirectly related to the principal
business o f employer.4

c. However, there is a need to execute a written employment contract if

the intention is to stipulate on such other kinds o f employment such

’ A rid e 295 [280], Labor C ode; P aguio v. NLRC, G .R . N o. 147816, M ay 9,2003.

2 Servidad v. N LRC, Innodata P hilippines, Inc. G .R No. 128682, M arch 18,1999.
3 A ssociation o f Trade U nions [ATU ] v. A rietta, G .R No. 100518, Jan. 24,2000.
4 Rom ares v. NLRC and P im ioo Foods C orporation, G .R No. 122327, Aug. 1 9 ,19S8.

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 628 Bar Reviewer on Labor Law

as probationary, project, seasonal, casual or fixed-term, as the case may

be, because the absence thereof will make the relationship that of
regular employment. It is only by proving the terms and conditions of
the contract that the general presumption that the relationship is
regular in nature would be effectively dispelled. Jurisprudence abounds
where the non-presentation o f the written contract was held as
evidence that the status of employment is not what it purports to be,
that is, probationary, project, seasonal, casual or fixed-term but regular
employment.

d. 'Ihe doctrine of adhesion1 applies to employment contracts.2 It must

be emphasized, however, that the rule on the interpretation or
construction of contracts of adhesion does not apply when the
stipulations contained in a contract are not obscure or ambiguous.34
Besides, a contract of adhesion is not prohibited perse}

e. No declaration or appointment paper necessary to make one a regular

employee.5

f. Fixed-period employment is the exception to the rule that an

employee becomes regular by reason of nature of work or period of
employment67because in fixed-period employment, these factors are
nor decisive indicators of regularity o f employment. The decisive
determinant is die day certain agreed upon by the parties for the
commencement and termination o f their employment relationship, a
day certain being understood to be “ that which must necessarily come,
although it may not be known when.”1

g. The act of hiring and re-hiring the employees over a period o f time
without considering them as regular employees proves bad faith on the
pan of the employer.8

h. Manner and method of payment of wage or salary is immaterial to the

issue of whedier the employee is regular or not.9

1 A rtide 1377 o f trie C f^ Code provides: ‘The interpretation of obscure w ords o r sfipulations in a contract shaH n ot fa vo r the
party vh o caused the obscurity.’ (See Servidad v. N LRC, G R N o. 128682, M arch 1 8,1999).
1 R ow el Industrial C orp. v . Hon. C A, G R No. 167714, M a th 7 ,2 0 07 ; V S anuw a v . N LRC, G R N o. 127448, Sept. 10,1998.
3 le ve riza v . Interm ediate A ppellate C ourt, G R N o. L-66614, Jan. 2 5,1 98 8 ,1 5 7 SC R A 283.
4 R izal Com m ercial Banking C orporation v. CA. G R N o. 133107,25 M arch 1999.
5 P hilips Sem iocnductors (Phiis.), Inc. v . Fadriquela, G R N o. 141717,A p ri 1 4,2 00 4 ; D eLeon v . NLRC, G R N o .70705, A ug.
21,1989,176 SCRA 615.
5 B rent School, Inc. v. Zam ora, G R No. 48494, Feb. 5 ,1 9 90 .
7 Pantranco North Express, Inc. v. NLRC, G R . N o. 106654, D ec. 16,1994; B rent S ch oo l Inc. v. Zanjora, G R N o. 48494,
Feb. 5,1990.
« Bustam antev. N LR C .G .R . No. 111651, March 15,1996.
« Columbus P hiipp'nes Bus Corporation v. NLRC. G .R . Nos. 114858-59, S e p t 7 ,2 0 0 1 ; Lam bo v. NLRC, G .R N o. 111042,
O ct 26,1999; VilJuga v . NLRC. G .R . No. 75038, A ug. 23,1 99 3 .2 2 5 SCRA 537.

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b.
CASUAL EMPLOYMENT

1. M E A N IN G O F CASUAL E M PL O Y M E N T .

As earlier discussed, casual employment is provided for under the second

paragraph of Article 295 [280] o f the Labor Code. There is casual employment
where an employee is engaged to perform a job, work or service which is merely
incidental to the principal business of the employer, and such job, work or service
is for a definite period made known to the employee at the time of engagement.1*

'The case o f Capule v. NLRC, Yakult Philippines, Inc.} best illustrates casual
employment. Private respondent company is engaged in the manufacture o f
cultured milk which is sold under the brand name 'Yakult. ” Petitioners were hired
to cut cogon grass and weeds at the back o f the factory building used by private
respondents. They were not required to work on fixed schedule and they worked
on any day of the week on their own discreuon and convenience. The services of
the petitioners were terminated by the private respondent on July 13, 1987. Thus,
petitioners filed a complaint for illegal dismissal with the NLRC.

O n die issue of whether petitioners are casual or regular employees of

private respondent company, the Solicitor General opined that the cutting o f the
cogon grass at the back portion of the building o f private respondents may be
considered to be usually necessary or desirable in the usual business or trade o f
private respondent. The Supreme Court, however, disagreed. The usual business or
trade o f private respondents is the manufacture o f cultured milk. 'The cutting of the
cogon grasses in the premises of its factory is hardly necessary or desirable in the
usual business of the private respondents. Indeed, it is alien thereto. Thus,
petitioners are casual employees who cannot be considered regular employees
under Article 295 [280] of the Labor Code. Nevertheless, they may be considered
regular employees if they have rendered service for at ieast one (1) year.

2. SOM E PR IN C IPLE S O N CASUAL E M PL O Y M E N T .

a. Casual employee becomes regular after one (1) year of service by operation o f
law.3
b. No regular appointment papers necessary for a casual employee to become
regular.4
c. The one (1) year period should be reckoned from the hiring date.5
d. Repeated rehiring of a casual employee makes him a regular employee.1

’ A rticle 295 [280], Labor C ode; Section 5 [b], R ule I. Book V I, R ules to Im plem ent the Labor C ode, as am ended by A rticle IV ,
D epartm ent O rder N o. 10, S eries o f 1997; C onti v. N LRC. G R N o. 119253, A p-il 10.1997,271 SCRA 114.
* G R No. 90653, New. 12,1990.
3 S ection 5 [b |, Rule I, Book V I. R ules to In cle m e n t the Labor C ode.
4 Kim berty v. D rikxi, G R Nos. 77629 and 78791, M ay 9 .1 9 9 0 ; K ay P roducts, Inc. v. CA, G R N o. 162472, July 2 8,2005.
5 K im berty-C tark [P h ils.], Inc. v. S ecretary o f Labor, G .R . No. 156668, Nov. 23,2 00 7 .

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 6 30 Bar Reviewer on Labor Law

e. The wages and benefits of a casual employee whose status is converted into
regular employment should not be diminished.*2

C.
PROBATIONARY EMPLOYMENT

1. LEGAL BASIS.

Article 296 [281], Labor Code provides:

“Article 296 [281]. Probationer^ Employment. - Probationary

employment shall not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been
engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his
engagement An employee who is allowed to work after a probationary
period shall be considered a regular employee.”

2. NATURE OF PROBATIONARY EM PL O Y M E N T .

Regardless of the kind of employment arrangement between the parties, an

employer has the right to put a newly-hired employee under a probationary period or it
may choose not to do so, as part and parcel of its power to hire. If the employer puts
the employee under probationary employment, the employee would then be given a
certain period of time within which to prove that he deserves to be regularized.
Throughout such probationary period, he will be under constant observation,
evaluation and trial by the employer during which the employer shall determine
whether or not he is qualified for permanent employment During the probationary
period, the employer is given the opportunity to observe the skill, competence,
attitude and fitness of the probationary employee while the latter seeks to prove to
the employer that he has the qualifications to meet the reasonable standards for
permanent employment.3

3. PROBATIONARY PERIOD, H O W R EC K O N E D AND C O M PU T E D .

The Court has prescribed a simple, easy way of reckoning the

probationary penod. Thus, if the period is six (6) months, it shall be reckoned ‘from
the date of appointment up to the same calendar date of the 6* monthfollowing. " 4 This means
that if a probationary employee is hired on January 1, his probationary period
expires on July 1 which is the same calendar date of the 6th month following the date of
appointment.

'■ Tan v. Lagram a, G .R. No. 151228, Aug. 15,2002; R om ans v. N LRC, G R . No. 122327, Aug. 19.1998.
2 P h ilp p re Am erican M anagem ent Association, v .C lR , G .R No. 1-37206, A pril 15,1988.
3 De la C ruz, J r. v. N LRC, G .R . N o. 145417, D ec. 1 1 .2 0 0 3 .
4 C ebu R oyal P la n t [SM C ] v . D eputy M inister o f L ab o r, G .R . N o. L-58639, A ug. 12, 1987; Cats P ou ltjy Supply
Corporation v . Roco, G R N o. 150660, July 30,2002.

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POST-EMPLOYMENT

4. PROB A TIO N A R Y VS. F IX E D -T E R M .

The distinction between probationary employment and fixed-term

employment lies in the intention o f the employer and employee. Both
employments involve fixed period in terms o f duration of employment. However,
in probationary' employment, the parties mutually intend to make their
relationship regular after the lapse of the period; while in fixed-term employment,
no such intendon exists and the relationslrip automatically terminates at the
expiration o f the period.

5. PROBA TION ARY P E R IO D C A N N O T BE STIPU LA TED W IT H IN

FIX E D -T E R M E M P L O Y M E N T .

It must be noted that a probationary period cannot be stipulated within

the fixed period of em ployment1 The cases in point arc Villanueva v. NLRC2 and
Servidad v. NLRC,34where the one (1) year employment contracts the employees
executed with their employer, Innodata Philippines, Inc., provided that the first six (6)
months thereof is probationary during which the employer can terminate the
employee’s services by serving written notice to that effect and such termination shall be
immediate, or at whatever date within the six-month period as the employer may
determine. After working for six (6) months, the employee was made to sign a 3-month
probationary employment and later, an extended 3-month probationary employment
good until the end o f the 1-year fixed-term. At the lapse of the 1-year, the employee
was dismissed from the service on the ground of alleged termination of contract o f
employment The High Court declared the employees in Villanueva and Servidad as
regular employees and struck down the employment contracts containing the afore-
quoted stipulation for being “devious, but crude, attempts to circumvent [the
employee’s] right to security o f tenure xxx.”

In the subsequent 2006 case of Innodata Philippines, Inc. v. Quejada-Lopetf

involving the same employer, petitioner herein, it was averred by Innodata that the
present employment contracts it entered into with respondents no longer contain the
so-called “double-bladed" provision previously found objectionable in Villanueva and
Servidad The Supreme Court, however, observed that in a feeble attempt to conform to
the earlier rulings in Villanueva and Servidad, petitioner has reworded its present
employment contracts but a close scrutiny thereof shows that the double-bladed
scheme to block the acquisition of tenurial security still exists. As pronounced in
Servidad: “If the contract was really for a fixed term, the [employer] should not have
been given the discretion to dismiss the [employee] during the one year period of
employmentfor reasons other than thejust and authorised causes under the Labor Code. Settled is
the rule that an employer can terminate the services of an employee only for valid and

1 V ffla m a v. NLRC, G . R. N o. 127448, S ep t 1 0,1 99 8 ,3 5 6 P M . 638; Servidad v . NLRC, G.R. N o. 128682, M a rti 18.1999,
305 SCRA 4 9 ,5 5 ; 364 P hil. 518; Innodata P hfpptnes, Inc. v. Q uejada4.opez, G .R No. 162839, O ct 12,2006.
2 V illanueva v. NLRC, G.R. N o. 127448, SepL 10,1 99 8 ,3 5 6 P h i. 638.
3 Servidad v . NLRC, G .R No. 128682, M arch 18,1 99 9 ,3 0 5 SCRA 4 9 ,5 5 ; 364 P hil. 518.
4 G R No. 162839, O ct 12,2006.

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 632 Bar. Reviewer on Labor Law

just causes which must be shown by clear and convincing evidence. Xxx The language
of the contract in dispute is truly a double-bladed scheme to block the acquisition of the
employee of tenurial security. Thereunder, [the employer] has two options. It can
terminate the employee by reason of expiration of contract, or it may use ‘failure to
meet work standards’ as the ground for the employee’s dismissal. In either case, the
tenor of the contract jeopardizes the right of the worker to security of tenure
guaranteed by the Constitution.”

6. IT CANNOT BE STIPULATED THAT AFTER H U R D LIN G

PROBATIONARY PERIOD, T H E EMPLOYEE DOES N O T BECOM E
REGULAR BUT MERELY A PROJECT EMPLOYEE.

The 2014 case of MaUcdem and Flons v. Manilas Industrial Corp.} is unique.
Petitioners Malicdem and Flores were repetitively hired by respondent Manilas as
extruder operators from 2006 until their termination in 2011 and 2010, respectively.* 2
Their employment contracts were for a period of 1 year. Every year, they would sign a
Resignation/Quitclaim in favor of Manilas a day after their contracts ended, and then
sign another contract for 1 year. Both claimed to have been illegally dismissed. Manilas
countered that their contracts showed that they were fixed-term employees for a
specific undertaking which was to work on a particular order of a customer for a
specific period. Their severance from employment was due to the expiration o f their
contracts.

In declaring petitioners as regular employees, the Court noted that the 2008
employment contracts, denominated as “Project Employment Agreement,” contain a
stipulated probationary period of 6 months from its commencement. It was provided
therein that in the event that they would be able to comply with the company’s
standards and criteria within such period, diey shall be reclassified as project employees
with respect to the remaining period of the effectivity of the contract. The Court
considered this stipulation invalid because under Article 296 [281], “an employee who is
allowed to work after a probationary period shall be considered a regular employee.”
When an employer renews a contract of employment after the lapse o f the 6-month
probationary period, the employee thereby becomes a regular employee.

7. SOME PRIN CIPLES ON PROBATIONARY EM PL O Y M E N T .

• The probationary period may be extended but only when the employee agrees
to such extension. Absent such agreement would make the extension invalid,
hence, the employee would be considered as having become a regular
employee after the lapse of the original probationary period.3

' G R No. 204406. Feb. 26.2014.

2 On Decem ber 16,2010, Flores w as toW not to report tor work anym ore after ben g asked to sign a paper by M anilas' HR
Head to the effect that he acknowledged (he com pletion o f his contractual stains. On February 1 ,2 0 11 , M afcdem w as also
term inated after signing a sim ilar docum ent
3 D ust Hotel N ikkov.G atbonton,G .R No. 161654. M ay 5,2006

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 C h a p t e r S ix 633
P O S T -E M P L O Y M E N T

An employee who is allowed to work even for a day after the probationary
period is considered a regular employee.1
• Employment is deemed regular if the employment contract has no stipulation
on probationary period.2
• Employee is deemed regular absent any written contract to prove probationary
employment.3 A verbal contract of probationary employment is invalid, hence,
the employee is deemed a regular employee.
• Repetitive rehiring of a probationary employee means he has become a regular
employee.4
• Regular workers o f previous owner of business may be lured as probationary
employees of new owner.5
• Probationary employment cannot be ad infinitum.6

8. T E R M IN A T IO N O F PR OBA TION ARY E M P L O Y M E N T .

a. Security o f tenure o f probationary em ployees.

Within the limited 6-month probationary period, probationary employees

are entitled to security o f tenure notwithstanding their limited tenure and non­
permanent status.7 Hence, during their probationary employment, they cannot be
dismissed except under any o f the following three (3) grounds:

1. For a just cause; or

2. For authorized cause; or
3. When the probationary employee fails to qualify as a regular employee
in accordance with reasonable standards made known by the employer
to the employee at the start o f the employment.8

b. Requisites o f the ground offailure to qualify as a regular employee.

Valid severance o f the probationary employer-employee relationship outside

of the just and authorized causes presupposes that the employer had accomplished the
following things:9

' A rticle 296 (281], Labor C ode; PtuTpphe N ational Bank v. Cabansag, G .R. N o. 157010, June 2 1,2 00 5 .
2 ATC1 O verseas C orporation v . C A, G .R . N o. 143949, Aug. 9 .2 0 01 .
2 San M g ue l C orp. v . Del R osario, G .R N os. 168194 and 168603, Dec. 13,2005
< O cta via no . v. N LR C , G .R . No 88636, O ct. 3 .1 9 9 1 .
s E spina v . H o a C A, G R N o. 164582, M arch 2 8,2007.
6 V oyeu r V isage S tu dio , In c. v. C A , G .R . N o. 144939, M arch 1 8,2 00 5 .
1 P hilippine D aily Inquirer, Inc. v. M agtibay, Jr., G .R No. 164532, July 24,2007.
8 S ections 2 [b ] and 6 [c]. R ule I, Book V I, R ules to Im plem ent die Labor C ode, as am endeo. S ee also C athay P acific A irw ays,
Ltd. v. M arin, G .R N o. 148931, S e p t 12,2006
9 See the D issenting O pinion o f M r. Justice A rturo Brion in Ihe En Banc R esolution dated A p ril 2 2,2 01 4 on the M orion fa
R econsideratioo filed by respondent A lcaraz in the case o f A bbott Laboratories P fnfippi' es v P earte Ann F. AJcaraz. G R.
N o. 192571. The o rig h a l decision w as prom ulgated on July 23,2013.

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 634 Bar. Reviewer on Labor Law

1) The employer must communicate to the employee that he is being hired

on a probationary basis;
2) The employer must convey to the probationary employee the reasonable
standards to qualify for regularization;
3) The probationary status of the newly-hired employee must be
communicated to him prior to the commencement of his employment;
4) The employer must convey these reasonable standards at the start o f the
probationary employee’s engagement and not in the course thereof or
towards its end; otherwise he becomes a regular employee from day one
of his employment1 v
5) The employer must evaluate the performance of the probationary
employee in relation to the duly communicated reasonable standards; and
6) The employee fails to comply with these reasonable standards before the
completion of the probationary period.*2

These cumulative requirements are demanded from the employer itself and
cannot be supplied for him by law. These requirements, too, should serve to dispel the
wrong notion that a probationary employee enjoys lesser rights than a regular employee
under the Labor Code.

c. Procedural due process.

Procedural due process required in the case of the first and second
grounds above arc those provided for jus! cause and authorised cause terminations,
respectively.

Due process for the third ground is different and unique in the sense that
it requires simply the service of a w ritten notice of term ination,3 not verbal,4
informing the probationary employee of the termination o f his probationary
employment and attaching thereto the result of the performance evaluation
conducted on him. As clearly pointed out above, it is a fundamental requirement
that the reasonable standards expected o f the employee during his probationary
employment was made known to him at the time of his engagement.5 Necessarily,
at the termination thereof, the supposed performance evaluation should be
presented to him. As a matter of due process, an employee has the right to know
whether he has met the standards for which his performance was evaluated. Should
he fail, he also has the right to know the reasons therefor.6

’ Tam son's Enterprises, Inc. v. CA, G .R . No. 192881, N ov. 16,2011.

J Id.
3 C d eg b del S anfeim o Rosario v. R ojo, G R No. 170388, S e p t 0 4,2 01 3 .
4 Tam son's Enterprises, h e . v. CA, G il No. 192881, N ov. 1 6,2 01 1 ,6 6 0 SCRA 374.
5 P hilippine D aily Inquirer, Inc. v. M agfibay, Jr., G.R. No. 164532, July 24,2007.
6 C olegio del Santisim o Rosario v. R ojo, G .R. No. 170388, S e p t 0 4,2013.

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d. Som e principles on term ination o f em ploym ent o f probationary

em ployees.
1. Termination to be valid must be done prior to lapse o f probationary
period.1
2. Termination a day o r a few days after lapse o f probationary period
cannot be done without due process as he has already become a
regular employee by that time.2
3. Peremptory and arbitrary termination o f probationary employees is
not allowed.3
4. N o obligation to pay unexpired portion in case o f valid termination
prior to lapse o f probationary period.4
5. Agabon doctrine5 applies if dismissal o f probationary employee for
a just cause is without due process. Thus, the termination is
considered legal but the employee will be awarded an indemnity in
the form of nominal damages of P30.000.00.6
6. Jaka doctrine7 applies if dismissal o f probationary employee for an
authorized cause is without due process. The amount o f indemnity
is higher P50,000.00.

d.
PROJECT EMPLOYMENT

1. C O N C E PT .

Project employees are those hired:

1) for a specific project or undertaking; and

2) the completion or termination of such project has been determined
at the time of their engagement.8

2. TW O (2) CATEGO RIES O F P R O JE C T EM PLO Y EES.

In order to safeguard the rights o f workers against the arbitrary use of the
word “project” to prevent employees from attaining the status of regular
employees, employers claiming that their workers are project employees should not

' Pasam ba v. NLRC, G .R . N o. 168421. June 8 ,2 0 0 7 .

2 San M iguel C a p . v. D el R osario. G .R. Nos. 168194 and 168603, Dec. 13,2006.
3 C ebu M a in e B each R e so rt v . N LR C , G .R . N o. 143252, O c t 2 3, 2003.
4 international C athofc M gration Com m ission v . N LRC, G R N o. 72222, Jan. 30 1989.
5 A gabon v. NLRC, G .R N o. 158693, N ov. 1 7,2 00 4 .
6 A benleen C ourt, Inc. v . A gustin, Jr., G R . N o. 149371, A p ril 13,2005.
7 Jaka Food P rocessing C orporation v.P a co t,G .R . 151378. M arch 28,2005.
8 A rticle 295 [280|, Labor C ode; Section 5 [a], R ule I, Book V I, R ules to Im plem ent the Labor C ode, as am ended by A rticle IV ,
D epartm ert O rder No. 10, S eries o f 1997; S aberola v . S uarez, G .R N o. 151227, July 14.2008.

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 636 Bar. reviewer on Labor Law

only prove that the duration and scope of the employment was specified at the time thy were
engaged, but also that there was indeed a “project.” 1

The two (2) categories of project employees on the basis of “ project” for
which they have been engaged to perform are as follows:

(1) A particular job or undertaking that is within the regular or usual

business of the employer com pany, b u t which is distinct and
separate, and identifiable as such, from the other undertakings
of the company; or
(2) A particular job or undertaking that is not w ithin the regular
business of the corporation.2
Elucidating on the foregoing, the Court pronounced in the landmark en
banc decision in ALU-TUCP v. NLR.C3
“xxx [A]s is evident from the provisions of Article 280 (now 295)
of the Labor Code, quoted earlier, the principal test for determining
whether particular employees are properly characterized as ‘project
employees’ as distinguished from ‘regular employees,’ is whether or not
the ‘project employees’ were assigned to carry out a ‘specific project or
undertaking,’ the duration (and scope) of which were specified at
the time the employees were engaged for that project.
“In the realm of business and industry, we note that ‘project’ could
refer to one or the other of at least two (2) distinguishable types of
activities. Firstly, a project could refer to a particular job or
undertaking that is within the regular or usual business o f the
employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or determinable
times. The typical example of this first type of project is a particular
construction job or project of a construction company. A construction
company ordinarily carries out two or more [distinct] identifiable
construction projects: e.g., a twenty-five-storey hotel in Makati; a
residential condominium building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of
one of these separate projects, the scope and durauon of which has been
determined and made known to the employees at the time of
employment, arc properly treated as ‘project employees,’ and their
services may be lawfully terminated at completion of the project.
“The term ‘project’ could also refer to, secondly, a particular job
or undertaking that is not within the regular business of the corporation.
Such a job or undertaking must also be idcntifiably separate and distinct
from the ordinary or regular business operations of the employer. The

1 G W N etw ork Inc. v. P abriga, G .R . No. 176419. New. 27,2013.

2 ALU-TUCP v. NLRC, G .R . N o. 109902, Aug. 2 .1 9 94 . Leyte G eotherm al Pow er P rogressive Em ployees Union-ALU -TU C P
v. PM ippine N ational O il C om pany - Energy D evelopm ent C orporation, G .R . N o. 170351, M arch 30,2011
2 G.R. No. 109902, A ug. 2 ,1 9 9 4 ,2 3 4 SCRA 678,684-686.

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 Chapter six 637
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job or undertaking also begins and ends at determined or determinable

times.1*

Brief examples of what may or may not be considered identifiably distinct

from the business o f the employer are in order.

In PLOT v. Ylagan} the Court held that accounting duties were not shown as
distinct, separate and identifiable from the usual undertakings of therein petitioner
PLDT. Although essentially a telephone company, PIJDT maintains its own accounting
department to which respondent was assigned. This was one o f the reasons why the
Court held that respondent in said case was not a project employee.

On the other hand, in San Miguel Corporation v. NLRC,3 respondent was hired
to repair furnaces, which are needed by San Miguel Corporation to manufacture glass,
an integral component of its packaging and manufacturing business. The Court, finding
diat respondent is a project employee, explained diat San Miguel Corporation is not
engaged in the business o f repairing furnaces. Although die activity was necessary to
enable petitioner to continue manufacturing glass, the necessity for such repairs arose
only when a particular furnace reached the end of its life or operating cycle. Respondent
therein was therefore validly considered a project employee.4

In GMA Network, Inc. v. Pabriga,5 respondents were hired and assigned by

petitioner to the following tasks (1) Manning o f Technical Operations Center,6 (2)
Acting as Transmitter/VTR men;7 (3) Acting as Maintenance staff,8 and (4) Acting as
Cameramen. These jobs and undertakings, according to the Supreme Court, are clearly
within the regular or usual business of the employer company and are not identifiably
distinct or separate from the other undertakings of the company. There is no denying
that the manning of the operations center to air commercials, acting as
transmitter/VTR men, maintaining the equipment, and acting as cameramen are not
undertakings separate or distinct from die business o f a broadcasting company.
Petitioner’s allegation diat respondents were merely substitutes or what they call pinch-
hitters (which means diat they were employed to take die place o f regular employees of
petitioner who were absent or on leave) does not change the fact that their jobs cannot
be considered projects within the purview of the law. Every industry, even public
offices, has to deal with securing substitutes for employees who are absent or on leave.

’ Em phasis supplied. ALU -TU C P, supra. See also M agcalas v . NLRC, G R N o. 100333, M arch 13,1997.
7 G R N o. 155645, New. 2 4 ,2 0 0 6 ,5 0 8 SCRA 3 1 ; 537 P h i 840.
3 357 P h i. 954 (1998).
4 GM A N etw ork, h e . v . P abriga, G .R . N o. 176419, N w . 27,2 01 3 .
5 G R No. 176419, Nov. 2 7,2013.
6 Perform ing fie follow ing functions: (a) R esponsible for the airing o f local com m ercials; and (b) LoggingTmonrtoring o f national
com m ercials (sa tellite).
7 PerformsTg the foOcwhg functions: (a) P repare tapes fo r local airing; (b) A ctual airing o f com m ercials; (c) R ugging o f station
prom o; (d) Logging of transm itter reading; and (e) In case of pow er failure, sta rt up generator se t to resum e program .
3 P erform ing th e follow ing functions: (a) C hecking o f equipm ent; (b) W arm ing up o f generator; (c) F lin g o f o f, fuel, and w ater
in ra d a to r.

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 638 BA.RREVIEWER ON UBOR UW

Such tasks, whether performed by the usual employee or by a substitute, cannot be

considered separate and distinct from the other undertakings of the company.1

3. LITMUS TEST OF PROJECT E M PLO Y M EN T.

Tire litmus test of project employment, as distinguished from regular

employment, is whether or not tire project employees were assigned to carry out a
specific project or undertaking, the duration and scope of w hich were
specified at die time the employees were engaged for that project.2 A true
project employee should be assigned to a project which begins and ends at
determined or determinable um es and be informed thereof at the tim e of
hiring.3

The 2017 case of Innodata Knowledge Services, Inc. v. Inting,4 best illustrates the
litmus test. Records disclose that respondents who are lawyers or law graduates,
signed employment contracts with petitioner IKSI5 specifically indicating the
Content Supply Chain Project, also known as the ACT Project, as the project for
winch they were being hired, which was expected to be completed after a
maximum of five (5) years. However, sometime in November 2008, IKSI required
respondents to work on another project called "Bloomberg," which was not included
in the onginal contracts that they signed and without entering into a new project
employment contracts. Such fact was never refuted by IKSI. During that dmc,
respondents were required to read and review decided cases in the United States of
America and they were no longer called Senior or Junior Reviewers, but referred to
as Case Classifiers. Respondents initially opposed working on said project but
eventually agreed, in fear of losing their employment altogether. Months later, they
were again required to work on the ACT Project and reverted to their previous
designation as Document Reviewers.

In holding that respondents have already become regular employees by

petitioner’s act of assigning them, even for a short moment, to another project, the
Court ratiocinated, thus:

“Here, wliile IKSI was able to show the presence of a specific

project, the ACT Project, in the contract and the alleged duration of the
same, it failed to prove, however, that respondents were in reality made
to work only for that specific project indicated in their employment

' GMA N e to txk, Inc. v. P abriga, G il No. 176419. N ov. 27.2 01 3 .

2 A rticle 295 (280J. Labor C ode; Om ni Hauling S ervices, he. v . B ernardo B on, G il N o. 199388, S e p t 03,2014.
3 Goma v. Pam plona P lantation, Incorporated, G .R N o. 160905, JiJy 4 ,2 0 08 .
4 Innodata Knowledge S ervices, Inc. v. Inting, G .R . N o. 211892, D ec. 0 6,2 01 7 .
5 P etitioner Innodata Knowledge Services, h a (IK S I) is a com pany engaged in data processing, encoding, indexing,
abstracting, typesetting, im aging, and other processes h the capture, conversion, and storage o f data and h form atjen. A t
one tim e, A pplied Com puter Technologies (AC T), a com pany based in the U nited S tates o f Am erica, hired IK S I to review
various litigation docum ents. Due to the nature o f the jo b , A C T required IK S I to hire law yers, o r a t least, law graduates, to
review various litigation docum ents, classify said docum ents into the p re served categories, and ensure h a t outputs are
delvered on tm e . For tb s purpose. IKSI engaged the services o f respondents as senior and ju n io r review ers w ith a contract
duration of five (5) years.

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 Chafter Six 639
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documents and that it adequately informed them of the duration and

scope of said project at the time their services were engaged. It is well
settled that a party alleging a critical fact must support his allegation
with substantial evidence, as allegation is not evidence. The fact is IKSI
actually hired respondents to work, not only on the ACT Project, but
on other similar projects such as the Bloomberg Project When
respondents were required to work on the Bloomberg project,
without signing a new contract for that purpose, it was already
outside of the scope of the particular undertaking for which they
were hired; it was beyond the scope of their employment
contracts. The fact that the same happened only once is
inconsequential. What matters is that IKSI required respondents
to work on a project which was separate and distinct from the one
they had signed up for. This act by IKSI indubitably brought
respondents outside the realm of the project employees category.”

4. PROJECT E M PL O Y M E N T VS. F IX E D -T E R M E M PL O Y M E N T .

Project employment and fixed-term employment are not the same and
thus cannot be interchangeably characterized.1 While the former requires a
particular project, the duration o f a fixed-term employment agreed upon by the
parties may be any day certain, which is understood to be "that which must necessarily
come although it may not be known when." The decisive determinant in fixed-term
employment is not the activity that the employee is called upon to perform but the
day certain agreed upon by the parties for the commencement and termination of the
employment relationship.2

Consequently, project employment contracts should not be ambiguous as

would in effect result in the alternative availment o f project employment and
employment for a fixed term so as to preclude the regularization of the project
employees’ status. Any ambiguity in said contracts must be resolved against the
company, especially because under Article 1702 of the Civil Code, in case o f doubt,
all labor contracts shall be construed in favor o f the worker.3

5. PR O JEC T E M PL O Y M E N T VS. REGULAR E M PL O Y M E N T .

Regular employment is inconsistent with project employment. In other

words, a regular employee cannot be at the same time a project employee.4

1. The services o f project employees are coterminous with the project or

any phase thereof and may be terminated upon the end or completion of the
project or phase thereof for which they were hired. Regular employees, in contrast,
enjoy security of tenure and are legally entitled to remain in the service o f their
employer and to hold on to their work or position until their services are

' Innodata Know ledge S ervices, Inc. v. Inting, G .R . N o. 211892, D ec. 06.2017.
2 Innodata Know ledge S ervices, Inc. v. Inting, supra; G M 4 N etw ork, Inc. v. P abriga, supra.
3 id.
4 M agcalas v . NLRC, G .R. No. 100333, M arch 1 3,1 99 7 ,2 6 9 SCRA 453,468

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 640 Bar reviewer on Labor Law

terminated by any of the modes o f termination of service recognized under the

Labor Code.1

2. Due process likewise varies. In case of project employment, if the

termination is brought about by the completion of the project or any phase thereof,
due process is complied with even if no prior notice of termination is served. For
termination of regular employment, the due process required would necessarily
depend on the ground cited. If the termination is for just cause, due process
applicable to Article 297 [282] terminations applies. If due to authorized cause, due
process applicable to Articles 298 [283] and 299 [284] terminations should be
followed. •

6. “WORK PO OL” PRINCIPLE.

As a general rule, employers may or may not form a “work pool. ” A “work
pool" refers to a group of workers from which an employer like a construction
company draws the workers it deploys or assigns to its various projects or any
phase/s thereof. Members of a "work pool” may consist of:

1. Nonprojecl employees or employees for an indefinite period. If they are

employed in a particular project, the completion o f the project or of
any phase thereof will not mean severance of employer-employee
relationship.

2. Project employees. These workers in the work pool who are employed
in a particular project or in any phase thereof are considered as such if
they arc free to leave anytime and offer their services to other
employers.2

Mere membership in a “work pool” does not result in the workers’

becoming regular employees by reason o f that fact alone.3 However, under
established jurisprudence, a project employee who is a member of a “work pool,"
may attain regular status as a project employee. This kind of employee is known as
“regular project em ployee. ”

7. INDICATORS OF PROJECT E M PL O Y M E N T .

Either one or more of the following circumstances, among others, may be

considered as indicator/s that an employee is a project employee:

1. The duration of the spedfic/idcntified undertaking for which the

worker is engaged is reasonably determinable.

1 MEennium E rectors C o ip o ra to iv .M a g ^ a n e s .G R N o. 1 & 4362,N w . 15.2010.

3 Under P olicy Instructions No. 20; Raycor Aircontrol S ystem s. Inc. v . NLRC, G . R . N o. 114290, S e p t 9 .1 9 96 .
3 Abesco C onstruction and Developm ent Corp. v. R a rrire z, G.R. N o. 141168. A pril 10.2006.

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 Chapter. Six 641
POST-EMPLOYMENT

2. Such duration, as well as the specific work/service to be performed,

are defined in an employment agreement and is made clear to the
employee at the time o f hiring.
3. The work/service performed by the employee is in connection with
the particular project or undertaking for which he is engaged.
4. The employee, while not employed and awaiting engagement, is free to
offer his services to any other employer.
5. The termination o f his employment in the particular
project/undertaking is reported to the Regional Office o f the
Department of Labor and Employment having jurisdiction over the
workplace, within thirty (30) days following the date o f his separation
from work, using the prescribed form on employees’ terminations or
dismissals or suspensions.
6. An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most
construction companies.1

8. SOM E PR IN C IPL E S O N T H E IN D ICA TO R S.

A. O n the FIR ST indicator.

1. For purposes of determining duration, h e re must be a “day certain” in

the project employment contract, the absence of which means
employee is a regular employee, 'lhis is so because a project employee
is assigned to a project which begins and ends at determined or
determinable times.2

2. Although the employment contract may not state a particular date but
if it did specify that the termination of the parties’ employment
relationship was to be on a “day certain” - the day when the phase of
work would be completed - the employee cannot be considered to
have been a regular employee. He is a project employee.3

3. The “duration of die project” provided in die contract o f project

employment should not pertain to the duration of the employment
contract but to the duration o f the specific project or undertaking
which must be reasonably determinable at die time o f hiring o f the
project employee.4

4. The length o f service of a project employee is not the controlling test

of employment tenure but whether or not the employment has been

' S ection 2 2 , D epartm ent O rder No. 19, S eries o f 1993.

2 D a cu ita lv .L M .C a m u sE n g 'n e e m g C o fp .l G R N o . 176748,S e p tl,2010
3 Fifipfnas P re fa b rica te d Building S ystem s [F isyste m s], Inc v. Puente, G.R. No 153332, M arch 1 8,2005,453 SCRA 820.
4 Innodata Knowledge S ervices, Inc. v. In th g , G .R . No. 211892, Dec. 0 6 ,2 0 17.

J9JC9B0M
 642 Ba.r Reviewer, on Labor Law

fixed for a specific project or undertaking the completion or

termination of which has been determined at the time o f die
engagement of the employee.1The simple fact that the employment as
project employees has gone beyond one (1) year does not detract
from, or legally dissolve, their status as project employees. The fact
diat the employees worked for the employer under different project
employment contracts for several years cannot be made a basis to
consider them as regular employees, for they remain project
employees regardless of the number of projects in which they have
worked.2

5. One may start as a project employee but he may later become a regular
employee if his services were extended indefinitely.3

B. On the SECOND Indicator

1. A written project employment contract is an indispensable requirement.

In die cases where die Supreme Court ruled that die project
employees like construction workers have retained their status as
project employees despite their repeated rehiring, the employers were
able to produce written employment contracts clearly stipulating that
the workers’ employment was coterminous4 with the project and that
they were notified of the scope and duration of the project at the time
of dieir engagement as project employees.5
2. Failure to present contract o f project employment means that
employee is regular. This is so because such a contract, while not
conferring regular status by itself, is evidence that the employee was
informed of die duration and scope of his work and his status as
project employees.6
3. Project employees should be informed of their status as well as the
duration and other details of their engagement as such right at the
inception of the employment relationship. The employees should have
knowing consent to being engaged as project employees and this must
be stipulated in no uncertain terms in the project employment
contract.7

1 Concrete S olutions, Inc. v. Cabusas, G R No. 177812, June 19,2013.

2 D a c u ta lv .L M Cam us Engineering C o rp .,G J l No. 176748, SepL 1,2010.
3 Pasos v. P tidppine N ational Construction C orporation, G .R N o. 192394, July 0 3,2013.
* Som etim es speiled as 'co te rm in u s' as in Concrete S olutions, Inc. v . C abusas, supra
5 Hanjn Heavy Industries and Constmcfai Co, Ltd. v. Ib a te z, G.R. No. 170181, June 26,2008.
6 Omm Hauling S ervices. Inc. v. Bernardo Bon, G .R No. 199388, S ep t 0 3.2 01 4 .
7 Caram ol v. NLRC, G .R. No. 102973, Aug. 24,1993.

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 Chapter Six 643
POST-EMPLOYMENT

4. Repeated renewals of pro forma employment contracts, an indication o f

regular and not project employment.1
5. A contract of employment on a "project-to-projecl' basis is valid provided
that “the period was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure brought to bear
upon the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more o r less equal terras with no
moral dominance whatever being exercised by the former xxx.”2

C. O n the T H IR D indicator.

1. In order to be considered a project employee, the work or service he

would perform should be connected with and related to the project or
undertaking specified in the contract o f employment for which he was
engaged. Assigning him to another projec: or undertaking not in any
way connected with or related to the project or undertaking
particularly contemplated in the contract o f employment would make
him regular and not project employee.3
2. 'Work pool principle" applies. (NOTE: See separate discussion on this principle
above).
D. O n the F O U R T H indicator.

1. A project employee may acquire the status o f a regular employee when

the following factors concur
(a) There is a continuous (as opposed to intermittent) rehiting o f the
project employee even after cessation o f a project for the same
tasks or nature of tasks; and
(b) The tasks performed by the alleged "project employee" are vital,
necessary and indispensable to the usual business or trade o f the
employer.4
2. Intervals in tire employees’ employment contracts are significant in
that they would bolster the company’s position that, indeed, they are
project employees5

E. On the F IF T H indicator.

1. Report to DOLE on termination of pro ect employees is required.

Accordingly, instead o f the notice of termination to die affected

1 Gtory PhiSppines. Inc. v. V ergara, G .R No. 176627, A ug. 24,2007.

* S alinasv. N IR C . G .R . No. 114671, N ov. 2 4,1 99 9 ; C a a n o lv . N IR C . G .R. N o. 1C2973, Aug. 2 4,1993.
3 Cocomangas Hotel Beacti Resort v. Vsca, G.R. No. 167045, Aug. 29,2008.
* M a ra g u o o U f v N LRC, G .R . N o. 120969, Jan. 22,1998; See aiso tm txrido v . N IR C , G R No. 114734, M arch 3 1,2000.
5 Caseres v. U niversal R ob'na S ugar K ffn g C orp. [URSUM CO ], G .R . No. 159343, S ep t 28,2007.

J9JC9B0M
 644 Bah Reviewer o n Labor Law

project employees upon completion o f the project _or any phase

thereof, the law merely requires that the employer should render a
report to the DOLE on the termination o f their project employment.1

2. The report should be made within thirty (30) day? following the date
of the project employee’s separation from work, using the prescribed
form on employees’ terminations or dismissals or suspensions.

P. O n the SIXTH indicator.

1. Completion bonus is a practice in the construction industry which has

been adopted by other industries.

2. Department OrderNo. 19, Series of 1993, provides that in the absence of

an undertaking that the completion bonus will be paid to the
employee, the employee may be considered a non-projcct employee,
hence, regular.

3. The amount of the pro-rata completion bonus may be based on the

industry practice which is at least the employee's one-half (V*) month
salary for every 12 months o f service.2

9. T E R M IN A T IO N O F P R O JE C T E M P L O Y M E N T .

1) Project employees enjoy security o f tenure only during die term of

their project employment.3
2) If the project or the phase thereof in which the project employee is
working has not yet been completed and his services are terminated
without just or authorized cause and there is no showing that his
services are unsatisfactory, such termination is considered illegal, hence,
the project employee is entided to reinstatement to his former position
or substantially equivalent position. If die reinstatement is no longer
possible, the employee is entided to his salaries for the unexpired
portion o f the project employment agreement4
3) Project employees are not, by law, entided to separation pay if their
services are terminated as a result o f the completion of the project or
any phase thereof in which they are employed. The reason is that their
services are deemed coterminous with the project or phase thereof.3
4) Project employees have presumably become regular employees if they
are allowed to work beyond the completion o f the project or any phase
thereof to which they were assigned or after the “d a y c e r t a i n " which they

1 GMA Network, Inc.v. Pabnga,G.R No. 176419, Nov. 27,2013.

2 SeeSec&m3.4.orOepartmentOnierNo. l9,Series<tf1993.
3 Tomas Lao Construction, v. NLRC, G.R. No. 116781, Sept 5,1997.
* R p tes Prefabricated Building Systems [RsystemsJ, Inc. v. Puente, G.R No. 153832, March 18,2005

s Section 3 2 , Department Order N o . 19, Series of 1993; Satercla v. Suarez, G J l No. 151227, July 14.2008.

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 C h a p t e r S ix 645
P O S T -E M P L O Y M E N T

and their employer have mutually agreed for its completion. Having
become regular employees, they can no longer be terminated on the
basis o f the completion o f die project or any phase thereof to which
they were deployed1 but only for just or authorized cause, the absence
o f which will make their termination illegal.2
5) Advance notice o f termination o f project employment is not required,3
hence, failure to serve it upon completion o f the project would not
violate procedural due process. Consequently, the Agaboa doctrine is
not applicable thereto.4
6) Burden o f proof in terminadon o f project employment rests on the
employer.5

e.
SEASONAL EMPLOYMENT

1. CO N CEPT.

A “seasonal employed is one whose work or service to be performed is

seasonal in nature and the employment is for the duration o f the season.6

2. REGULAR SEASONAL EM PLOYM ENT.

Seasonal employees may attain regularity in their employment as such,

Once they attained such regularity, they are property to be called "repplar seasonal
employees.”
R egular seasonal workers are called to work from time to time, mostly
during certain season. The nature o f their relationship with the employer is such
that during off-season, they are temporarily laid off but they are re-employed
during the season or when their services may be needed. They are not, strictly
speaking, separated &om die service but are merely considered as on leave o f
absence without pay until they are re-employed. Their employment relationship is
never severed but only suspended. As such, they can be considered as being in the
regular employment o f the employer.7

3. REQ U ISITES FO R REGULAR SEASONAL EM PLOYM ENT.

The requisites in order that a seasonal employee may be deemed to have

attained regularity o f employment are as follows:

1 SeeDacuBa)v. LM. Camus Engineering Cap., GJl (to. 176748. Sept. 1,2010.
* btnod3taKhowledgeSennoesklnc.v.lnfing.Gi^Not.21189^lOec.06,2017.
3 Ciocov.C.E CocsfcucficnCaporaijcn,GJl No,156743,Sept8,2004.
* DM Consult. Inc.v. Gobres, GK. Na 169170. Aug. 8.2010.
5 SomhemCo^>ati>OevEtopnientandConstiucikn.kic.GJl.No. 1215^,Oct 16.1997.280SCRASS3.
* 295 PMj, LaborCode; SecSon5, RifleI, BookVIof 9ieRuiestotmplefneritf« LaborCode.
1 Ab3S0bv.NLRC.GAfa 118475, Nov.29,2000.

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 646 Bar reviewer on labor Law

1) The seasonal employee should perform work or services that are

seasonal in nature; and
2) They must have also been employed for more than one (1) season.

Both requisites should concur in order that die employee may be

classified as regular seasonal employee. If the seasonal worker is engaged only
for the duration of one (1) season, dien, he does not attain regularity of
employment as a seasonal worker.1

In Hacienda Fatima,2 the fact that the workers repeatedly worked as

sugarcane workers for their employer for several years' is not denied by the latter.
Evidently, they were employed therein for more than one (1) season; therefore, the
general rule of regular employment is applicable. This is so because although the
employer had shown that the workers performed work that was seasonal in nature,
the former failed to prove that the latter worked only for the duration of one (1)
particular season; hence, they are regular seasonal employees.

f.
FIXED-TERM EMPLOYMENT

1. REQUISITES.

Fixed-term employment is not found in the Labor Code but only created
and recognized by jurisprudence.3 While die Supreme Court has recognized the
validity of fixed-term employment contracts, it has consistendy held diat this is the
exception rather than the general rule.4 Venly, a fixed-term employment is valid only
under certain circumstances.5

The two (2) requisites or criteria for die validity o f a fixed-term contract
of employment arc as follows:

1. The fixed period of employment was knowingly and voluntarily agreed

upon by the parties, without any force, duress or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating lus consent,
or
2. It sadsfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance
whatever being exercised by the former on the latter.6

1 H acienda Fatim a v . N ational Federation o t S ugarcane W o rkers, G .R . N o. 149440, Ja n . 2 8 ,2 0 0 3 .

3 Id .
3 Innodata Knowledge S ervices, Inc. v. Inting, G .R . N o. 211892, Dec. 0 6 ,2 0 1 1.
4 San MigueJ Corporation v. Teodosio. G.FL No 163033. O ct. 2 ,2009
5 As enunciated in the leading case o f Brent School, h e . v. Zam ora and Alegre, G .R . N o. 48494, Feb. 5,1 9 90 .
* Labayog v. M Y . San B iscuits, h e ., G .R No. 148102, Ju ly 11,2006.

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 Chapter Six 647
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If any o f the foregoing criteria is not present, the fixed-term contract o f

employment should be struck down for being illegal.1

2. V ALID ITY O F FIX E D -T E R M E M P L O Y M E N T N O T A E F E C T E D BY

N ATURE OF W ORK

The fact that an employee is engaged to perform activities that are usually
necessary or desirable in the usual trade or business o f the employer does not
preclude the fixing of employment for a definite period.2 It does not necessarily
follow that where the duties o f the employee consist o f activities usually necessary
or desirable in the usual business or trade o f the employer, the parties are forbidden
from agreeing on a period o f time for the performance o f such activities. There is
nothing essentially contradictory between a definite period of employment and the
nature o f the employee’s duties.3

Thus, it was ruled in Philippine Village Hotel v. NLRC,4 that the fact that
private respondents were required to render services necessary or desirable in the
operation o f petitioner’s business for the duration o f the one-month dry-run
operation period, did not in any way impair the validity o f their contracts o f
employment which specifically stipulated that their employment was only for one
(1) month:5

3. O N C E AN EM PL O Y E E B EC O M ES REGULAR, IT C A N N O T BE
C IR C U M V E N T E D BY FIX E D -T E R M E M PL O Y M E N T .

Once employees become regular employees, they are entitled to security

o f tenure which may not be circumvented by mere stipulation in a subsequent
contract that their employment is one with a fixed period. While the Supreme
Court has upheld the legality o f fixed-term employment, where from the
circumstances it is apparent that the periods have been imposed to preclude
acquisition o f tenurial security by the employee, they should be struck down or
disregarded as contrary to public policy and morals.6

4. BY C H O IC E , AN EM PLOYEE CAN BE A REGULAR EM PLOYEE

W IT H A FIXED-TERM CONTRACT.

In Fuji v. Espiritu, 7 the right o f a regular employee to opt to have a fixed-term

contract has been given judicial imprimatur. It is therefore not a legal impossibility that an
employee can be a regular employee with a fixed-term contract Thus, it was
elucidated:

1 P ure F oods C o rp o ration v . N LR C , G .R . N o. 1 22563, D ec. 1 2 ,1 9 9 7 ,2 8 3 S C R A 133.

2 C aparoso v. CA, G .R N o. 155505, Feb. 15,2007.
3 Pang Iria n v. G eneral M lfn g C orporation, G R N o. 149329, J d y 1 2,2004; See also AM A C om puter C ollege, Paranaque, v.
A ustria, G .R . N o. 164078, N ov. 23,2 00 7 ; Fabeia v. S an M guel C orporation, G .R N o. 150658, Feb. 9 ,2 0 07 .
4 G R No. 105033, Feb. 28,1994.
5 See also P antranoo North Express, Inc. v. NLRC, G .R . N o. 106654, Dec. 16,1994.
5 M a nia W a ter C o., Inc. v . Pena, G R No. 158255, Ju ly 8 ,2 0 04 .
7 F uji Television N etw ork, Inc. v. A rlene S. E spiritu, G R N os. 204944-45, D ec. 0 3,2 01 4 .

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 648 Bar reviewer on Labor Law

“Adcne’s contract indicating a fixed term did not automatically

mean that she could never be a regular employee. This is precisely what
Article 295 [280] seeks to avoid. The ruling in Brvnt remains as the exception
cither than die general rule.

“Further, an employee can be a regular employee with a

fixed-term contract. The law does not preclude the possibility that a
regular employee may opt to have a fixed-term contract for valid
reasons. This was recognized in Brent: For as long as it was the
employee who requested, or bargained, that the contract have a
‘definite date o f termination, ’ or that the fixed-term contract be freely
entered into by the employer and the employee, then the validity of
the fixed-term contract will be upheld.”1

5. SOME PR IN CIPLES ON FIX E D -T E R M E M PL O Y M E N T .

(1) In a valid fixed-period employment, lack of notice o f termination is of no

consequence because when the contract specifies the period of its duration,
it terminates on the expiration of such period.2 The expiration of the fixed
term contract simply caused the natural cessation of the fixed-term
employment.3

(2) Employee is deemed regular if contract failed to state the specific fixed
period of employment.4

(3) Charges for misconduct or other wrongful acts or omissions are relevant
only in termination prior to expiration o f the term. They are not relevant if
termination is due to expiration of fixed period.5

(4) Employees allowed to work beyond fixed term become regular employees.6

(5) Rendering work beyond one (1) year would result to regular employment.7

(6) Successive renewals of fixed-period contracts will result to tegular

employment.8

(7) 555 Doctrine - The scheme o f the employer in hiring workers on a

uniformly fixed 5-month basis and replacing them upon the expiration of
their contracts with other workers with the same employment status
circumvents their right to security o f tenure.9

' Underscoring suppled.

2 N w Sunrise Metal Construction v. Pia, G .R No. 171131, July 10,2007.
3 Fontena Brands Phils,. Inc. v. Largado. G.R. No. 205300, March 18,2015.
4 Poseidon Fishing v. NLRC, G .R. No. 168052, Feb. 20,2006.
5 A M Computer College, Paranaque, v. Austria, G.R. No. 164078, Nov. 23,2007.
6 Viem es v. NLRC, G.R. No. 108405, April 4 ,2 0 0 3 .
? Agusan del Norte Electric C o o p e ra te , Inc. v.Cagam pang and G a rz o n .G R No. 167627, O ct 10 2008.
8 Philips Sem iconductors [Phils.], Inc. v. Fadriquela, G .R. No. 141717, Apnt 1 4 ,2 00 4 .
9 Pure Foods Corporation v. N LRC, G.R. No. 122653, Dec. 1 2 ,1 9 9 7 ; Universal Robina Corp v Catapang, G R No.
164736, O ct 14,2005.

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 C hapter Six 649
POST-EMPLOYMENT

(8) Employment on a “day-to-day basisfor a temporary penod” will result to regular

employment as it is a contract which has the purpose of circumventing die
employee’s security o f tenure.1

(9) Employment on “as the need arises " basis may npen into regular employment.2

(10) Employment on a “por viaje” (per trip) basis may npen into regular
employment by reason o f their continuous hiring and performance o f tasks
necessary and desirable in the usual trade and business of the employer.3

(11) Termination prior to lapse o f fixed-term contract should be for a just or

authorized cause.4

(10) Liability for illegal dismissal o f fixed-term employee is only for salary for the
unexpired portion o f the fixed-term contract.5

6. FIX E D -T E R M E M P L O Y M E N T O F OFW s.

(1) OFWs can never acquire regular employment because they can only be
engaged on a fixed-term basis.6 Their employment contracts for indefinite
period are not valid.7 Their employment contracts cease upon expiration
thereof.8

(2) OFWs do not become regular employees by reason o f nature o f work.9

(3) Probationary employment o f OFWs is a misnomer.10

(4) Series o f rchiring o f OFWs cannot ripen into regular employment.11

(5) The CBA cannot override the terms and conditions prescribed by the
POEA under the Standard Employment Contract (SEC) for OFWs.12

(6) Hiring o f seafarer for overseas employment but assigning him to local vessel
does not affect his status as an OFW.u

(7) Seafarer hired for overseas deployment but later assigned to domestic
operations after the expiration o f his overseas contract ceases to be an OFW .1

' Coca-Cote Bottlers P his., Irxx v. De la Cruz, G .R No. 184977, Dec. 7,2009.
2 P h fp s Semiconductors [Phils.], In c v. Fadriquela, G .R. No. 141717, April 14,2004.
3 LynviFish'ng Enterprises, Inc. v.A riola, G i l No. 181974, Feb. 1,2012.
4 M edenilav. Philippine Veterans Bank, infra; G eorge Anderson v. NLRC, G.R. No. 111212, Jan. 22,1996.
5 New Sunrise Metal Construction v. P ia.G .R . No. 171131. July 10,2007.
6 See second 2002 Resolufon in f l a r e s v. NLRC, G.R. No. 110524, July 2 9,2 00 2 ,3 4 5 SCRA 306.
7 Pentagon International S hipping, Inc. v. A detantar, G .R . No. 157373, July 2 7 ,2 0 0 4
8 Ravagov. Esso Eastern Marine, Lid., supra; M Jaresv. NLRC, supra.
9 G u-M iro v. A dorable, G. R. No. 160952, Aug. 2 0 ,2 0 0 4 .
,0 G la re s v. NLRC, G.R. No. 110524, July 2 9,2 0 0 2 ,3 8 5 SCRA 306; See also De La Cruz v. Maersk Fiip'nas Crewing, Inc.,
G R N o . 172038, April 14,2008.
" Id
12 De La Cruz v. Maersk Fiijpinas Crewing, In c, G.R. No. 172038, A pri 14,2008.
13 OSM Shipping Philippines, Inc. v. NLRC, G.R. No. 138193, March 5,2003.

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 650 Bar Reviewer on Labor Law

g.
SECURITY GUARDS

1. NEW T O P IC

The topic of Security Guards is newly introduced ih the 2019 Syllabus.

There is no single provision in the Labor Code on security guards; hence, it is a
source of wonder for the Syllabus to consider this topic under “Kinds of Employment"
alongside such topics as regular, casual, probationary, project, seasonal and fixed-
terra employments. Perhaps, the reason for its inclusion therein is for the bar
candidate to be able to address the issue o f the employment status o f security
guards and other private security personnel in relation to their employer, the
security agency, and to the principal/client, to whom they have been assigned or
farmed out.

2. D EPA RTM EN T ORDER N O . 150, SERIES OF 2016.

In any case, there is one issuance on security guards which may be

relevant for purposes of preparing for the bar exams and that is, Department Order
No. ISO, Series of 2016, entided “Revised Guidelines Governing the Employment and
Working Conditions of Security Guards and other Private Security Personnel in the Private
Security Industry”issued by the DOLE Secretary on February 09, 2016.

More specifically, this Department Order was issued for the purpose of
ensuring compliance with mandated employment benefits and working conditions
for security guards and other private security personnel in the private security
industry. It applies to all private security, detective, investigative agencies or
operators, their principals or clients, and all companies employing security guards
and other private security personnel.12

Some of its salient provisions, insofar as the employment status o f

security guards and other private security personnel is concerned, are discussed
hereunder.

3. RELEVANT D E FIN IT IO N S.

The following are the terms that are pertinent to the employment status
of security guards:

"Security Guard!' refers to any person who offers or renders personal

service to watch or secure a residence, business establishment, building, compound,
any other area or property; or inspects, monitors, or performs body checks or
searches of individuals or baggage and other forms of security inspection.3 O n the
other hand, the term ' Private Security Personnel" is defined as referring to natural

1 Delos Santos v. Jebsen Maritime, Inc., G.R. No. 154185, Nov. 22,2005.
2 See introductory paragraph and Section 1, Department Order No. 150, Series of 2016.
3 Section 2(h), Department Order No. 150, Series c4 2016.

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 Chapter. Six 651
POST-EMPLOYMENT

persoQs, including private detectives, security consultants and security officers,

employed by private security agency or firm, to render security and/or detective
services.1

“Security Service Contractor (SSC)”is synonymous with “Private Security Agency

(PSA)" which refers to any person, association, partnership, firm, or private
corporation engaged in contracting, recruitment, training, furnishing, or posting o f
security guard and other private security personnel to individuals, corporations,
offices and organizations, whether private or public, for their security needs as the
Philippine National Police (PNP) may approve.2

“Principal” refers to any individual, company, cooperative, or

establishment, including government agencies and government-owned and
conttolled-corporadons, who or which puts out or farms out a security and/or
detective job, service, or work to a private Security Service Contractor (SSC).3

“Service Agreement” refers to the contract between the principal and the
SSC/PSA containing the terms and conditions governing the performance or
completion of security service, job, or work being farmed out for a definite or
predetermined period.4

"Trilateral Relationship" refers to die relationship in contracting or

subcontracting arrangement where there is a contract for a specific security job,
work, or service between the principal and the SSC/PSA, and a contract of
employment between the latter and its security guards. There are three (3) parties
involved in these arrangements: the principal who decides to farm out a security
job, work, or service to a security service contractor; the SSC/PSA who has the
capacity to independendy undertake the performance o f the security job, work, or
service; and the security guards and other private security personnel engaged by the
SSC/PSA to accomplish the security job, work, or service.5

"Solidaiy Liability" refers to the liability o f the principal, in the same

manner and extent that he/she is liable to his/her direct employees, to the extent
o f the work performed under die contract when the SSC/PSA fails to pay the
wages o f his/her employees, as provided for in Article 106 o f the Labor Code, as
amended.6

Noticeable from the foregoing definitions is that the important terms and
phrases defined in the said Department Order are all relevant to the contracting
arrangement involving the farming out by an SSC/PSA o f security guards and
other private security personnel to the principal/client. The usual issue that ripens

' Section 2(f), Id.

* Section 2(0, Id.
3 Section 2(e), Id.
* Section 2® , Id.
5 Section 2(m), Id.
5 Section 2(k), Id.

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 652 Bar Reviewer on Labor Law

into actual cases in courts involves the employment status of the security guards
and security personnel in relation to the principal/client. This is one of the crucial
issues that is sought to be clarified by this 2016 issuance.

4. CONTRACTUAL RELA TIO N SH IPS AMONG T H E 3 PARTIES.

The SSC/PSA is the direct employer of its security guards and other
private security personnel on duty detail to a principal/client under a Service
Agreement.1The principal, therefore, is not in any way the employer o f the security
guards and other private security personnel assigned or fanned out to it by the
SSC/PSA. In fact, in the trilateral arrangement, there is no contractual relationship
of whatsoever nature between the principal, on the one hand, and the security
guards and other private security personnel, on the other.

For simplicity’s sake, the contractual relationship between and among the
three (3) parties may be summed up as follows:

(1) Between principal/client and SSC/PSA - governed by the Security

Agreement;
(2) Between SSC/PSA and security guards and other private security
personnel - governed by the Em ploym ent Contract;
(3) Between principal/client and security guards and other private
security personnel - N O CONTRACTUAL R E L A T IO N SH IP

There is only one instance when the principal/client is treated, by

operauon of law, as an “indirect” employer of the security guards and other
private security personnel, that is, when the principal/client is held solidarily liable
with the SSC/PSA because die latter failed to pay the wages of its security guards
and odier private security personnel. Such solidary liability shall be to the extent of
the work performed by such security guards and other private security personnel
under the Service Agreement, in the same manner and extent that the principal is
liable to its direct employees.2

Other instances when the principal/client would be held solidarily liable

with the SSC/PSA, as if the former is a “direct" employer, are:

(1) When the SSC/PSA is found to be engaged in labor-only

contracting, die principal shall be joindy and solidarily liable with it
in die same manner that the principal is liable to employees direedy
hired by him/her.3

' Section 3.1, Id.

1 Section 9.1 (a), Id.; See also 2nd paragraph of Article 106, Labor Code.
3 Section 9.1(b), Id. (Note: There are tw> [2] letter (b) in the enumeration under Section 9.1.

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 C h a p t e r S ix 653
POST-EMPLOYMENT

(2) When the SSC/PSA is found to be an in-housc agency, the

principal shall be the direct employer o f the security guards and/or
other private security personnel deployed with it.1

5. E M PL O Y M E N T STATUS.

As far as the employment status o f the security guards and other private
security personnel vis-a-vis their direct employer, SSC/PSA, is concerned, they may
be hired under any o f the following:
(a) Probationary Em ploym ent. - The probationary period o f newly-
hired security guard and other private security personnel in die private security
industry shall not exceed six (6) months. While engaged on probationary basis, their
services may be terminated for failure to meet reasonable standards or criteria made
known by the SSC/PSA to the security guards and other private security personnel
at the time of their engagement or for any just cause contained in die probationary
contract.2
(b) Regular Em ploym ent. - Any security guard or odier private security
personnel who is allowed to work after the probationary period or in the absence
of a valid probationary contract shall be considered a regular employee. Security
guards and other private security personnel affected by repeated biring-ftring-rehiring
scheme for short periods of time, the aggregate duration of which is at least six (6)
mondis, shall be considered regular employees.3
(c) Governing Law on Status o f Em ploym ent. - Notwithstanding any
oral or written stipulations to the contrary, the employment contract between the
SSC/PSA and its security guards and other private security personnel shall be
governed by the provisions of Articles 2944 (formerly 2*79) and 295s (formerly 280)
of the Labor Code, as renumbered. The SSC/PSA shall provide his/her security
guards and other private security personnel a copy o f the employment contract
duly signed by die parties, which shall contain the terms and conditions of
employment required by law.6
h.
FLOATING STATUS

1. A N O T H E R N EW TO PIC.
Another new topic prescribed under the 2019 Syllabus is the so-called
“Floating Status" Doctrine. Also, this topic has been included in the enumeration
thereunder as one of the kinds o f employment. This may bring about confusion

Section 9.1(c), Id.

Section 3 2 , id.
Section 3.3, Id.
Entitled "S ecurity o f T e n u re "
Entitled "R egular and C asual E m plo ym e n t"
S ection5.1,ld Such as those p tw id ed by under Section 7 o f Department O rder 150.

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 654 Bar Riviewhr on Labor Law

since this doctrine, in no way, has anything to do widt the main topic of ‘’Kinds of
Employment. ”

2. LACK OF APPLICABLE PR O V ISIO N IN T H E LABOR C O D E.

At the outset, it bears reiterating that although placing an employee like a

security guard on ‘floating" status (or sometimes called temporary “off-detail” status)
is considered a temporary retrenchment measure, the Supreme Court, in Exocet v.
Serrano,1recognized the fact that there is similarly no provision in the Labor Code
which treats of a temporary retrenchment or lay-off. Neither is there any provision
which provides for its requisites or its duration. Nevertheless, since an employee
cannot be laid-off indefinitely, the Court has applied Article 3012 [286] of the Labor
Code by analogy to set the specific period of temporary lay-off to a maximum of
six (6) mondis. This provision states:

“.Article 301 [286]. When Employment Not Deemed Terminated. -

The bona-fide suspension of the operation of a business or undertaking
for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In
all such cases, die employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the resumption of
operations of his employer or from his relief from the military or civic
duty.”3

Clearly from the foregoing article, the concept o f ‘floating status" does not
find any direct connection or relation, except for the six (6)-month period provided
therein which has been held as the defining cut-off period that can be used as a
consonant basis in determining the reasonableness o f the length o f time when an
employee could be deprived of work under this doctrine.4

3. “FLOATING” STATUS D O C T R IN E AS A PPLIED T O SECURITY

GUARDS.

Applying Article 301 [286] by analog)', die Supreme Court has consistendy
recognized that security guards may be temporarily sidelined by their security
agency as their assignments primarily depend on the contracts entered into by the
latter with third parties.5This is called the ‘floating status"doctrine which is based on
and justified under the said article.4 This status, as applied to security guards, is the
period of time when security guards are in between assignments or when they are
made to wait after being relieved from a previous post until they are transferred to

’ Exocet Security and Allied Services Corporation v. Armando D. Serrano, G.R. No. 198538, S ep t 29,2014.
2 Referred to as 'Articte 292* in this case.
3 As rerwribered pursuant to Section 5, R A No. 10151, J u n e 2 1 ,2011.
< Valdez v. N lR C , G.R. No. 125028, Fed. 9,1998,286 SCRA 87,92.
5 Leopard Security and Investigation Agency v. Quitoy, G.R. No. 186344, Feb. 20,2013.
* Superstar Security Agency, Inc. v. NLRC, G i l No. 81493, April 3 ,1 9 90 ,1 8 4 SCRA 74.

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 Chapter Six 655
POST-EM PLOYM ENT

a new one.1 In security agency parlance, being placed “off-detail" or on ‘floating”

status means “waiting to be posted ’2

4. IN STA N C ES W H IC H JU STIFY A P P L IC A T IO N O F D O C T R IN E .

“Floating status” takes place under any o f the following circumstances:

(1) When the security agency’s clients decide not to renew their contracts
with the agency, resuiting in a situation where the available posts
under its existing contracts are less than the number o f guards in its
roster, or

(2) When contracts for security services stipulate that the client may
request the agency for the replacement o f the guards assigned to it
even for want of cause and there are no available posts under the
agency’s existing contracts to which the replaced security guards may
be placed.3

As far as N o. 2 above is concerned, the Supreme Court has recognized

the fact that clients o f the security agency have the right to request for the removal
of any o f the security guards supplied by the latter to the former without need to
justify the same.4 The reason for this is the lack of any employment relationship
between the security guards and the client.

Also, under N o. 2 above, a relief and transfer order may be issued by the
security agency to the security guard concerned in order to effect it. This order in
itself does not sever employment relationship between a security guard and his
agency. And the mere fact that the transfer would be inconvenient for the former
docs not by itself make the transfer illegal.5

5. APPLICA BILITY T O O T H E R EM PLO Y EES.

While the ‘floating status” rule is traditionally applicable to security guards

who are temporarily sidelined from duty while waiting tc be transferred or assigned
to a new post or client,6 Article 301 [286] has been applied as well to other
industries when, as a consequence o f the bona-fide suspension of the operation of a
business or undertaking, an employer is constrained to put employees on floating
status" for a period not exceeding six (6) months.7

Thus, it may also be applied to employees o f legitimate contractors or

subcontractors under a valid independent contracting or subcontracting

1 Safvatoza v. NLRC, G.R. No. 182086, New. 24,2010.

2 Tate! v. JLFP Investigation Security Agency, Inc., G R No. 206942, Feb. 25,2015.
3 Exocet Security and Allied Services Corporation v. Armando D. Serrano, G il . No. 196538, S ep t 29,2014.
4 S up e rsta fS e cu rityA g e n cy,ln c.v .N L R C a n d F ilo m e n a H e n n o sa ,G .R N o .8 1 4 9 3 .A p ril3 ,1 9 9 0 ,1 8 4 S C R A 74.
5 Nationwide Security and ARed Sendees Inc. v. VaMerama, G.R. No. 186614, Feb. 23,2011.
6 N ppon Housing Phil., Inc. v. Leynes, G J l No. 177816, Aug. 3,2011.
7 JPL Marketing Promotions v. CA, G il No. 151966, July 8,2005.

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 656 bar Reviewer on Labor Law

arrangement under Article 106 of the Labor Code. The same form o f dislocation
and displacement also affects their employees every time contracts o f services are
terminated by their clients or principals. In the meantime that the dislocated
employees are waiting for their next assignment, they may be placed on “off detail”
or ‘floating’ status following the same concept applicable to secyrity guards.

For example, in JPL Marketing Promotions v. CA,1 this principle was applied
to merchandisers hired by petitioner company which is engaged in the business of
recruitment and placement of workers. After they were notified o f the cancellation
of the contract of petitioner with a client where they were assigned and pending
their reassignment to other clients, the merchandisers are deemed to have been
placed under “floating status” for a period o f not exceeding six (6) months under
Article 301 [286]. Such notice, according to the Court, should not be treated as a
notice of termination but a mere note informing them o f the termination o f the
client’s service contract with petitioner company and their reassignment to other
clients. The 30-day notice rule under Article 298 [283] docs not therefore apply to
this case.

This was likewise applied to the case of:

(1) a bus dnver in Valdc? v. NLRC23who was placed on floating status

after the air-conditioning unit of the bus he was driving suffered a
mechanical breakdown; and
(2) a Property Manager in Nippon Housing Phil., Inc. v. Ltynes? pending her
assignment to another project for the same position.

6. SOME PRIN CIPLES O N “ FLO A TIN G STATUS” D O C T R IN E .

(1) When an employee like a security guard is placed on a 'floating” status, he is

not entided to any salary, financial benefit or financial assistance provided
by law during the 6-inonth period thereof.4
(2) As a general rule, floating status” beyond 6 months amounts to
illegal/constructive dismissal. This is so because ‘floating status” is not
equivalent to dismissal so long as such status does not continue beyond a
reasonable time which means six (6) months.5 After 6 months, the employee
should be recalled for work, or for a new assignment; otherwise, he is
deemed terminated.6

1 G R No. 151966, July 8,2005.

3 G R No. 125028, Feb. 9 ,1 9 98 .2 8 6 SCRA 87
3 G R No. 177816, Aug. 3.2011,655 SCRA 77
4 Pldov. NLRC, G .R No. 169812, Feb 23,2007
5 Leopard Security and Investigation Agency v. Quitoy, G.R. No. 186344, Feb. 20,2013.
6 Emeritus Securty and Mantsnance Systems. Inc. v D a iig .G R N o 204761. April 0 2 .2 0 1 4

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 Chapter Six 657
POST-EMPLOYMENT

(3) The security guard who refused to be re-assigned may be dismissed for
insubordination.1
(4) Multiple “floating status"am ount to constructive dismissal.2
(5) “Floating status” distinct from preventive suspension. In the case o f 'floating
sta tu s the employee is out o f work because his employer has no available
work or job to assign him to. He is thus left wi:h no choice but to wait for
at least six (6) months before he could claim having been constructively
dismissed, should his employer fail to assign him to any work or job within
said period. In the case o f preventive suspension, the employee is out o f
work because he has committed a wrongful act and his continued presence
in the company premises poses a serious and imminent threat to the life or
property of the employer or o f his co-workers. Without this kind of threat,
preventive suspension is not proper. Further, the period of preventive
suspension under the said provisions o f the Implementing Rules should not
exceed thirty (30) days.3
(6) A complaint filed before the lapse o f the 6-month period o f floating status is
premature, the employee not having been deemed constructively dismissed
at that point. Thus, a complaint filed twenty-nine (29) days after the security
guard was placed on floating status was declared as having been prematurely
filed.4
(7) However, the filing of a complaint for constrictive dismissal prior to the
lapse of the 6-month period o f “floating status" will not be held premature in
cases where the intent to terminate the employee is evident even prior to the
lapse of said period.
(8) No procedural due process is required before an employee is placed under
'floating status. ” The reason is that there is no termination o f employment to
speak of at that point.5

3.
LEGITIMATE SUBCONTRACTING VS.
LABOR-ONLY CONTRACTING
1. LEGAL BASES.

There are only four (4) provisions in the Labor Code which direedy
enunciate die rules on contractualization, to wit

1. Article 106 - Contractor or Subcontractor}

' A rtid e 2 9 7 (282). Termination by employer. A n employer m ay terminate an employment for a ny of the following causes: a)
Serious misconduct a w ilU disobedience by the employee of the lawful orders of his employer or representative in
connection with his worip xxx
* SaVaJoza v. NLRC. G R No. 182055. Ncv. 24.2010.
3 P idov. NLRC, G .R No. 169812, Feb. 23,2007.
4 SoGman S eaxity Services. Inc. v. CA, G .R No. 143215, July 11,2002.
s JA .T . General Services v. NLRC, G .R No. 148340, Jan. 26,2004

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 658 Bar reviewer on Labor Law

2. Article 107 - Indirect Employer,}

3. Article 108 - Posting of Bond? and
4. Article 109 - Solidary Liability.*

Department Order No. 174, Series o f 2017} is the prevailing

implementing rules and regulations o f the above articles. Subsequently,
Department CiradarNo. 01. Series of 2017} was issued to clarify the non-applicability
of Department Order No. 174, Series o f 2017, to BPO, KPO, LPO, IT
Infrastructure Outsourcing, Application Development, Hardware and/or Software
Support, Medical Transcription, Animation Services, Back Office
Operations/Support, and the construction industry. President Rodrigo Duterte
issued Executive Order No. 51, Series of 2018 on May 1, 2018 which seeks to
implement only one (Article 106) of the four articles of the Labor Code on
contractualization.7

2. CLARIFICATION O N USE O F TER M S.

The 2019 Syllabus* uses the term “subcontracting” instead o f

“contracting” which is the more appropriate term. T o avoid any confusion, there
is a distinction between these two terms, which the law itself, Article 106 o f the
Labor Code, makes, to wit
“Article 106. C o n tra cto r o r S u b c o n tr a c to r. - Whenever an employer
enters into a contract with another person for the performance of the
former’s work, the employees of the contractor and of the lattcPs
subcontractor, if any, shall be paid in accordance with the provisions
of this Code.

“In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work performed
under the contract, ui the same manner and extent that he is liable to
employees direedy employed by him.”

Based on the foregoing, the party which contracts with the principal is the
“contractor”; while the party which subcontracts with the contractor is called
“subcontractor.” “The term “contracting” , therefore, should be correlated to the1*3

’ ArticJe 106 - Contractor or Subcontractor

'• A /to e 107-Indirect Employer.
1 Article 108-Posting o f Bond.
4 Article 109-SolidaryLiability
i Issued by DO l E Secretary Srh/estre H. Bello III on March 16.2017.
» Issued by DOLE Secretary SJvestre H BePo HI on June 09.2017.
’ As shown in its title, thus 'Implementing Article 105 of the Labor Code c f the Philippines, As Amended, to Protect the Right
to Security o l Tenure of A l Workers Based on Social Justice in the 1987 Philippine C o ns tM o n."
3 The tide of the topic s *3 LEGITIMATE SUBCONTRACTING VS. LABOR-ONLY CONTRACTING.'

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“contractor”; while the word “ su bcontracting” should be used in relation to the

“subcontractor.”

However, under D.O. No. 174, the foregoing distinction is no longer

underscored in the definition o f terms. Thus, it appears now that the foregoing
terms may be used interchangeably for they are now defined as follows:
(1) “ C ontracting” or “ S ubcontracting” - refers to an arrangement
whereby a principal agrees to farm out to a contractor the
performance or completion o f a specific job or work within a definite
or predetermined period, regardless o f whether such job or work is to
be performed or completed within or outside the premises o f the
principal.1
(2) “C ontractor” - refers to any person or entity engaged in a legitimate
contracting or subcontracting arrangement providing services for a
specific job or undertaking farmed out by principal under a Service
Agreement.2
In the discussion below, only the terms “ co n tractin g ” and “contractor”
will be used for greater ease and convenience o f the reader.

a.
TRILATERAL RELATIONSHIP

1. T H R E E (3) PA RTIES IN V O LV ED .

"Trilateral relationship" refers to the relationship in a contracting

arrangement where there is (1) a Service C ontract for a specific job, work or
service between the principal and the contracto r, and (2) an E m ploym ent
Contract between the contractor and its em ployees. As the term “ trilateral”
coimotes, there are three (3) parties involved, to wit:

1) The “Principal” which refers to any natural or juridical entity,

whether an employer or not, who puts out or farms out a job or work
to a contractor,3
2) The “C ontractor” as defined above;4 and
3) The “C ontractor's E m ployee” which refers to the employee of the
contractor hired to perform or complete a job or work farmed out by
the principal pursuant to a Service A greem ent with the latter.5

1 S ec tion3[c],D epartm entO rdefN o.174,S eriesof2017.

2 Section 3[d), ibid.
3 Section 3 fi, Ibid.
4 Section 3[d], ibid., thus: (d) •Contractor’ - refers to any person or entity engaged h a legSmate contracting a subcontracting
arrangement providing services for a specific job o r undertaking fanned out by principal under a Service Ag reem ent
5 Section 3[e], Ibid.

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2. P R I N C I P A L .

Under Article 107 of the Labor Code, a "principal" is also referred to as an

"indirect employer. ” As defined therein, an “indirect employer” refers to any person,
partnership, association or corporadon who/which contracts with an independent
contractor for die performance of any work, job, task or service. The principal
therefore is not die direct employer o f the employees supplied by the Contractor
to the principal.

Within die context of a valid contracting arrangement, a "principal” or

"indirect employer”is also known as a “statutory employer”or, simply an “employer. '*

3. CONTRACTOR.

The “contractor” os "subcontractor” is the “direct employer” o f the employees it

supplies to the principal to perform die principal’s work, job, task or service.

4. CONTRACTOR’S EMPLOYEES.

The “contractor's employees” are direedy hired by the contractor as its

employees, hence, they have as between them, an employer-employee relationship.
They may thus become regular employees o f the contractor.

5. TWO KINDS O F CONTRACTS IN T R ILA TER A L R E L A T IO N S H IP .

In a trilateral relationship, there are only two (2) kinds o f contracts that
should be executed, to witi

(a) Service Agreement between the prin cipal and the contractor
containing the terms and conditions governing the performance or
completion of a specific job or work being farmed out by the former
to the latter for a definite or predetermined period.12 The Service
Agreement shall contain the following:

i. The specific description o f the job or work being subcontracted,

including its term or duration;
ii. The place or work and terms and conditions governing the
contracting arrangement, to include the agreed amount o f the
contracted job or work as well as the standard administrative fee of
not less than ten percent (10%) o f the total contract cost; and
iii. A provision on the issuance of the b o n d /s ,3 renewable every year.4

1 Baguio v NLRC, G R. Nos. 79004-08. O ct 4,1991,202 SCRA 465.

7 Section 3®. Ibid.
3 The term to o cT is d e fie d in Section 3(a), fcid.. thus: a) "Bond* - r^ e rs to the bond in d e r A rtd e 108 o f the Labor Cocie that
the prinapaJ may require from the contracts to be posted equal to the cost o f under contract*
* S e c b o o 11. Ibid.

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(b) E m ploym ent C o n tract between the contractor/subcontractoc and

its employees. Thus, notwithstanding any oral or written stipulations
to the contrary, the contract between the contractor/subcontractor
and its employees shall be governed by the provisions o f Articles 294
[279]1 and 295 [280]2 o f the Labor Code, as amended, including the
provisions on general labor standards. It shall include the following
stipulations:

t. The specific description of the job or work to be performed

by the employee; and

ii. The place o f work and terms and condition of employment,

including a statement o f the wage rate applicable to the
individual employee.

The contractor/subcontractor shall inform the employee o f

the foregoing stipulations in writing on or before the first day
o f h is/her employment.3

6. G O V E R N I N G L A W .

The E m ploym ent Contract is governed by die L abor Code; while die
Service Agreement is governed by the Civil Code.4

7. N O CON TRA CTU AL R E L A T IO N S H IP B E T W E E N P R IN C IP A L

A N D C O N T R A C TO R ’S E M PL O Y E ES.

It bears noting that there is N O employment contract or any other form

o f contract between the principal and the contractor’s employees. Hence, it is
correct to say that there is N O contractual relationship between them o f
whatsoever nature.

To emphasize, in legitimate contracting arrangement, there exists an

employer-employee relationship only between the contractor and its employees it
supplies to the principal.5 Thus, it is essential that contracts o f employment be
executed between the contractor and the contractual employees. There is, however,
no employer-employee relationship between the principal and the contractor’s
employees supplied by the contractor to the former. The contractor’s employees
remain its employees and do not become the employees of the principal by virtue
o f the contracting arrangement

Lest it be forgotten, there is one instance where, by operation of law, the

principal is treated as '‘indirect’' employer in case the contractor fails to pay die

’ Article 294 [279] is entitled ‘ Security of tenure.'

7 A rtide 295 [28C] is entitted ‘ Regular and Casual E m ptoym en f
3 Section 11, Ibid.
4 See Secrion 9 amd Section 5{b], respectively. Department Order No. 18-A, Series of 2011.
5 Section 5[a], Department O rder No. 18-A, Series o f 2011.

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wages of its employees supplied to the principal,1but only to the extent o f the work
performed under the contract, in the same manner and extent that he is liable to
employees directly employed by him.2

Moreover, it must be pointed out that in some specific instances where

the principal is held solidarity liable with the contractor, the' former, again by
operation of law, is treated as the "direct" employer o f the latter's employees
supplied to the former, such as, inter alia, when there is labor-only contracting or
when the contractor functions as an in-house agency or when certain illicit forms
of employment are committed. (NOTE: See discussion on separate topic of "Solidary Liability,"
infra).

8. EFFEC T OF T ER M IN A T IO N O F E M PL O Y M E N T .

The termination of the contractor's employee by the contractor prior to the

expiration of the Service Agreement shall be governed by Articles 297 [282],3*298
[283]* and 299 [284]5 of the Labor Code.6

In case the termination o f employment is caused by the pre-term ination

of the Service Agreement not due to authorioed causes under Article 298 [283],7 the
right of the contractor's employee to unpaid wages and other unpaid benefits,
including unremitted legal mandatory contributions, e.g., SSS, PhilHealth, Pag-
IBIG, ECC, shall be borne by the party at fault, without prejudice to the solidary
liability of the parties (principal and contractor) to the Service A g reem en t8

Where the termination results from the expiration of the Service

Agreement, or from the completion o f the phase o f the job or work for which the
employee is engaged, the latter may o p t to w ait for re-em ploym ent w ithin three
(31 months to resign and transfer to another contractor-em ployer. Failure o f
the contractor to provide new employment for the employee shall entide the latter
to payment of separation benefits as may be provided by law or the Service
Agreement, whichever is higher, without prejudice to his/her entidement to
completion bonuses or other emoluments, including retirement benefits whenever
applicable. The mere expiration of the Service A greem ent shall not be deemed as
a termination o f employment of the contractor's employees who are regular
employees of the latter-9

1 Baguio v. N IR C .G R Nos. 79004-08, O c t 4,1991; See Article 109, Labor Code; See also Section 13. Departm ent Order
No. 174, Senes o f 2017, which provides for soTriaiy obligation to pay unpaid w ages and other unpaid benefits under h e
Service Agreement, hduding unrerrited legal m andatory contributions, e g .. SSS, PhiHeafth, Pag-IBIG, ECC.
2 See 2 "1paragraph o fA rto e 106, Labor Code.
3 Articte 297 (2B2J, enfitled Tem iTjafibn byEnpJbyty.'
* Article 298 [283], (S )(M ‘C lc ^ o lE s ta b te }m n td rd R e d u < ± x i o f Personnel.'
5 Article 299 [284], enfitted ‘ Disease as Ground for T m in e d o a '
6 Section13, Departm entO rderNo. 174,Seriesof2017.
1 Article 298 (283], Closure of Establishment and Reduction o f Personnel. (See above for full text of this article's provisions).
8 Section 13, Department O d e r No. 174, Series of 2017.
» Id.

.d&..

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b.
ELEMENTS

1. O RD ER O F T O P IC A L D ISCU SSIO N .

The discussion of this topic is divided into the following sections:

I. LEGITIMATE JOB CONTRACTING ARRANGEMENT

II.LABOR-ONLY CONTRACTING ARRANGEMENT
III.
OTHER ILLICIT FORMS OF EMPLOYMENT
IV.EFFECTS OF LABOR-ONLY CONTRACTING AND ENGAGING IN
OTHER ILLICIT FORMS OF EMPLOYMENT
V. LEGITIMATE JOB CONTRACTING VS. LABOR-ONLY CONTRACTING

I.
LEGITIMATE JOB CONTRACTING ARRANGEMENT
1. ELEM EN TS.

The Labor Code does not define legitimate contracting arrangement.

However, under Department OrderNo. 174, Series of 2017. and relevant jurisprudence,
contracting shall only be allowed if all o f the following circumstances concur

(1) The contractor is engaged in a distinct and independent business and

undertakes to perform the job or work on its own responsibility,
according to its own m an n er an d m ethod:
(2) The contractor has substantial capital to carry out the job farmed
out by the principal on his account, m anner and m ethod,
investm ent in the form of tools, equipment, machinery and
supervision;
(3) In performing the work farmed out, the contractor is free from the
control a n d / or direction of the principal in all matters connected
with the performance o f the work except as to the result thereto;
and
(4) The Service A greem ent ensures compliance with all the rights and
benefits for all the employees o f the contractor under labor laws.1

Absence o f any o f the foregoing requisites makes the arrangement a

labor-only contracting arrangement2

' Section 8. D.O. No. 174, Series o f 2017; Alm eda v. Asahi Glass P hifpphes, In c , G .R. No. 177785, S e p t 3,2008; Acevedo
v. Advanstar Co., Inc., G.R. No. 157656, Nov. 11,2005.
2 P hilp p iie School o f Business Administration pSBAJ-Manila v. NLRC, G.R. No. 114143, Aug. 28,1996; T a te s v. California
Manufacturing Co., Inc., G R No. 80680, Jan. 2 6,1 989,169 SCRA 497.

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2. TESTS T O D E T E R M IN E E X IS T E N C E OF L E G IT IM A T E JOB
CONTRACTING A RRA NG EM EN T.

Based on the law and jurisprudence, to determine the existence or non­

existence of permissible or legitimate job contracting arrangement, the following
tests may be applied:
a) Right of control test;
b) Substantial capita! or investment test;
c) Direct relation toprincipal's business test; and
d) Legal rights and benefits compliance test.

Following these tests, many contractual relationships have been declared

as labor-only contracting arrangements because of their failure to hurdle the same.

2.1. R I G H T O F C O N T R O L T E S T .

The “Right of Control” test basically addresses the issue o f whether the
contractor’s m anner and m ethod o f performing the contracted job, work or
service are completely free from the control and direction o f the principal except
as to the result thereof. If the issue is answered in the affirmative, then this requisite
of legitimate contracting arrangement is fully satisfied.

In most cases, despite proof of substantial capital, the Court declared a

contractor as a labor-only contractor whenever it is established that the principal -
not the alleged legitimate contractor - actually controls the manner o f tire
employees' work.1 The control over the employees' performance o f the work is, as
the Court ruled in some cases, usually manifested through the power to hire, fire,
and pay die contractor's employees,2 die power to discipline the employees and
impose die corresponding penalty,3 and more importandy, die actual supervision of
die employees' performance.4

Illustrative cases:

In holding that the contractor has the right o f control in the 2018 case of
CBMI 'V. Asprecp the Court not only took cognizance of the stipulations in the
several Contracts of Services between the contractor (CBMI6) and Pizza Hut (PPI7)
which imposed upon die former the obligation to provide die latter the necessary
personnel to perform "kitchen, busing, nder/delivery, and sanitation services" as
well as the tools and equipment necessary for die rendition of such services but
most importandy, the following facts: The respondents’ employment contracts

1 Mago v. Sun Pcwier Manufacturing Limited, G.R. No. 210961, Jan. 24,2018.
2 Id., efing Coca-Cote BotSers Phis., he. v. Agito, G.R. No. 179546, Feb. 13,2009.
’ Id., tilin g Manila Water Co., Inc. v. Pena, G R No. 158255, July 8,2004.
« Id., titrig Phflppine ArSnes, Inc. v. Ugan, G.R. No. 146408, Feb. 29.2008.
5 Consolidated Building Maintenance, Inc. v. Asprec, Jr.. G R No. 217301. June 06,2018
6 Referring to job contractor Consolidated Building Maintenance, Inc. (CBMI).
7 Referring to principal Phifppine Pizza. Inc.-Pizza H u t (F5?!)-

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show that they were hired by CBMI. It was the latter who assigned respondents at
PPI's Marcos Highway Branch after they were briefed of company policies and
their duties. It is also CBMI who pays the respondents their salaries, and remits
premiums to PlulHcalth and Social Security System. The nature o f CBMI's
agreement with PPI requires the former to assign employees to perform specific
services for the latter. CBMI deploys employees already equipped o f the skills
based on the specific service demanded by PPI to be accomplished. Ultimately, the
training necessary to acquire the skills essential to perform the duties o f a rider for
Asprec, and as a team member for Batallcr, have been provided for by CBMI.
Simply, the manner in which respondents perform their task are all dictated by
CBMI, the sole concern o f PPI being the result, i.e.ywhat and how many items are
to be produced and where to deliver the same. Noteworthy, CBMI maintains the
sole power to determine respondents' place o f assignment and their transfer from
one work assignment to another. CBMI's manner o f deployment and its choice as
to who will be assigned for a specific task or location does not require the approval
or acceptance o f PPI. Moreover, it is evident from how this controversy unfolded
that CBMI maintains the power to discipline the respondents. All these, without
doubt indicate that CBMI possesses the power o f control over the respondents;
which in turn supports the conclusion that CBMI carries a business independent o f
PPI.1

In Digital Telecommunications v. DEU,2 besides the lack o f substantial

capitalization that indicates labor-only contracting, it was further held that Digitel
Service, Inc. (Digiserv), a non-profit enterprise engaged in call center servicing, was
a labor-only contractor o f petitioner Digitel because it does not exercise control
over the affected employees. The NLRC highlighted the fact that Digiserv shared
the same Human Resources, Accounting, Audit and Legal Departments with
Digitel which manifested that it was Digitel who exercised control over the
performance of the affected employees. The NLRC also relied on the letters o f
commendation, plaques o f appreciation and certification issued by Digitel to the
Customer Sendee Representatives as evidence of control.3

2.2. SUBSTANTIAL CAPITAL OR IN V E S T M E N T T E ST .

The "Substantial Capital or Investment” test seeks to address the issue o f

whether 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 o f its business.4 If the answer is in the afirmative, then this requisite o f
legitimate contracting arrangement is fully complied with.

' S e e a ls o M a g o v .S u n P o w e rM a n u fa d u n n g L im te d ,G ilN o .2 1 0 9 6 1 ,J a n .2 4 .2 0 1 8 .
2 Digital T e lecom m unications PhiBppines, Inc. v. Digitel E m ployees Union (DEU), G.R. Nos. 184903-04, O c t 10,2012.
3 S ee also Noricis Trading C orporation v. Buenavista, G.R. No. 182018, O c t 10,2012.
4 Manila Electric Company v. Benamrra, G JL No. 145271,July 14,2005.

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Department Order No. 174, Series of 2017 has now fixed the amount of
"substantial capital' as follows:
1. In the case of corporations, partnerships or cooperatives - paid-
up capital stocks/shares of at least Five Million Pesos
(P5,000,000.00); or
2. In the case of single proprietorship - a net worth of at least Five
Million Pesos (F5,000,000.00).**

Prior to this 2017 issuance, the threshold amount of substantial capital

was fixed at P3 Million as prescribed under Section 3[1] o f Department Order No. 18-
A, Senes of 2011 [Nov. 14,2011].

By clearly specifying the amount that constitutes “substantial capital, ” cases

in the past where this issue was raised should now be qualified by this new
issuance. Cases subsequent to the effectivity o f said Department Order No. 174
should take this specific amounts into account.

The Supreme Court had the occasion to rule on the validity o f such
threshold amount in the 2018 case of Mago v. Sun Power Manufacturing Limited.2 In
holding that the job contractor ([oberest) was a legitimate contractor, the Court
noted that while the records show that during the proceedings before the Labor
Arbiter, Jobcrest had only an authorized capital stock o f P8 Million, P2 Million of
which was subscribed, and a paid-up capital stock o f P500,000.00, however, as of
December 31, 2011, it had increased its paid-up capital to P8 Million, notably more
than the required P3 Million capital under DOLE Department Order No. 18-A,
Series of 2011

Further, the balance sheet submitted by Jobcrest for the year ending on
December 31, 2010 also reveals that its total assets for the year 2009 amounted to
PI 1,280,597.94, and P16,825,271.30 for the year 2010, which were comprised of
office funuture, fixtures and equipment, land, building, and motor vehicles, among
others. As of December 31, 2012, the total assets for the years 2011 and 2012 also
increased to P35,631,498.58 and P42,603,167.16, respectively.

Evidently, Jobcrest had substantial capital to perform the business process

services it provided its principal (Sunpower). It has its own office, to which the
petitioners admittedly reported to, possessed numerous assets for the conduct of its
business, and even continuously earned profit as a result. The Court can therefore
reasonably conclude from Jobcrcst's financial statements that it carried its own
business independent from and distinctly outside the control o f its principals.

1 Section 3[l], Department Order No. 174. Series o( 2017.

* G R .N o.210961.Jan 24,2018

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Per jurisprudence, “substantial capital” and “investment in tools,

equipment, implements, m achineries and work prem ises” should be treated
as two (2) distinct and separate factors in determining whether legitimate job
contracting arrangement exists in a certain case.1

Substantial capital alone, without investment in tools, equipment,

premises or machineries, well constitutes one incontrovertible proof that a
contractor is not engaged in labor-only contracting arrangement. In fact, once a
contractor has duly proved that it has substantial capitalization, it need not prove
that it has investment in tools, equipment, premises or machineries.

Thus, in Neri v. NLRC,2 having substantial capital in the amount o f Pi

Million fully subscribed and paid for and being a big firm which services, among
others, a university, an international bank, a big local bank, a hospital center,
government agencies, etc., undoubtedly indicate that it is a highly capitalized
venture and cannot be deemed engaged in labor-only contracting. It is a qualified
independent contractor. Further, it need not prove that it made investments in the
form of tools, equipment, machineries and work premises, among others. The law
docs not require both substantial capital and investment in such tools, equipment,
etc. This is clear from the use o f the conjunction 'hr" in the provision o f the fourth
(4lh) paragraph o f Article 106 o f the Labor Code. If the intention was to require the
contractor to prove that he has both capital and the requisite investment, then the
conjunction “and" should have been used. But having established that it has
substantial capital, it was no longer necessary for the labor contractor to further
adduce evidence to prove that it docs not fall within the purview o f ",labor-only”
contracting. There is even no need for it to refute petitioners’ contention that the
activities they perform are directly related to the principal business o f respondent
bank (FEBTC).3

In another case, Filipinos Synthetic v. NLRC,4 the Supreme Court ruled that
a contractor which is a going-concern duly registered with the Securities and
Exchange Commission (SEC) with substantial capitalization o f P i.6 Million,
P400,000.00 of which is actually subscribed, cannot be considered as engaged in
labor-only contracting being a highly capitalized venture.

In the following cases, both substantial capital and investment in tools,

equipment, etc. were complied with leading the Court to declare that the contractor
is a legitimate job contractor:

(a) IVack Wack v. NLRC,5 where it was sufficiently established by

indubitable evidence that Business Staffing and Management, Inc. (BSMI), a

' Neri v. NLRC, G R . Nos. 97008-09, July 2 3.1 99 3 ,2 2 4 S CRA 7171.

7 Neri v. NLRC, G R . Nos. 97008-09, July 2 3,1 99 3 ,2 2 4 S CRA 7171.
^ Id
4 R p in a s Synffietjc Fiber Corporation [FILSYN] v. NLRC, G .R No. 113347, June 14,1996.
s W ack-W ack Golf & C o u n ty Out) v. NLRC, G.R. No. 149793, A prt 15,2005.

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 668 Bar. reviewer on Labor Law

corporation engaged in the business as Management Service Consultant, is an

independent contractor engaged in the management o f projects, business
operations, functions, jobs and other kinds o f business ventures, and has sufficient
capital and resources to undertake its principal business. It had provided
management services to various industrial and commercial business establishments.
Its Articles of Incorporation proves its sufficient capitalization. Moreover, earlier,
the Labor Secretary, in one case,1 has recognized BSMI as an independent
contractor.

(b) Abella v. PLDT,2 where it was ruled that the security guards supplied
by People’s Security, Inc. (PSI) to PLDT are the employees o f PSI and not of
PLDT because PSI is a legitimate job contractor as shown by the following: (1) It is
a registered corporation duly licensed by the Philippine National Police to engage
in security business; (2) It has substantial capital and investment in the form of
guns, ammunitions, communication equipment, vehicles, office equipment like
computer, typewriters, photocopying machines, etc.; and (3) It is servicing clients
other than PLDT like PCEBank, Crown Triumph, and Philippine Cable, among
others.3

2.3. DIRECT RELA TION TO PR IN C IPA L ’S BUSINESS T E ST

The “Direct Relation to Principal’s Business” test seeks to address the issue of
whether the employees recruited, supplied or placed by a contractor are performing
activities which are directly related to the main business of the principal. If this
poser is answered in the affirmative, the contractor is deemed a labor-only
contractor and the employees become direct employees of the principal.
In the following cases, the contractor failed this test and was thus declared
as having engaged in labor-only contracting because its employees recruited,
supplied and placed to the principal were performing activities which are directly
related to the main business of the latter:
(1) Norkis v. Buenavista,45 where the contractor’s employees worked as
welders and machine operators engaged in the production o f steel crates which
were sent to Japan for use as containers o f motorcycles that are then sent back to
Norkis Trading. Their functions therefore arc directly related and vital to Norkis
Trading’s business of manufacturing o f Yamaha motorcycles.
(2) Mandaue Galleon v. Andales} where the contractor’s employees worked
as weavers, grinders, sanders and finishers that are directly related to petitioner's
principal business o f rattan furniture manufacturing. Where the contractor’s
employees are tasked to undertake activities usually necessary or desirable in the

’ in re Petition for Certification Election Among the Regular Rank-and-FSe Employees W orkers of ByrorvJackson (BJ)
Services International Incorporated, Federation of Free W orkers (FFW )-Byron Jackson Services Employees Chapter.
2 G R . No. 159469, June 8.2005.
3 See also Rhooe-Poulenc Agrochemicals Philippines, Inc. v. NLRC, G.R. Nos. 102633-35, Jan. 19,1993.
‘ Norkis Trading Corporation v. Buenavista, G.R. No. 182018, Oct. 10,2012.
5 Marxfaue Gateon Trade, Inc. v. Andales, G.R. No. 159668, M arch 7,2008.

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usual business or trade o f the principal, the contractor is considered as a labor-only

contractor and such employees are considered as regular employees of the
principal.
(3) Almeda v. Asahi,12where one o f the contractor’s employees served as a
quality controller, while the rest were glass cutters. The only excuse offered by
respondent - that petitioners’ services were required only when there was an
increase in the market’s demand with which respondent could not cope - only
proves even more that the services rendered by petitioners were indeed part of the
main business o f respondent. It would mean that petitioners supplemented the
regular workforce when the latter could not comply with the market’s demand;
necessarily therefore petitioners performed the same functions as the regular
workforce. Even respondent’s claim that petitioners’ services were required only
intermittently, depending on the market, deserves scant credit. The indispensability
of petitioners’ services was fortified by the length and continuity of their
performance, lasting for periods ranging from 3 to 11 years.
(4) San Miguel Corp. v. Aballa} where the contractor’s employees were
made to perform work directly related to petitioner’s aquaculture operations. The
nature o f their work in shrimp harvesting, receiving and packing formed an integral
part of the shrimp processing operations o f SMC. This also holds true with respect
to the other workers who were made to perform janitorial and messengerial
services the nature o f which has been jurisprudentially recognized and considered
as directly related to the principal business o f the employer.
(5) The Coca-Cola cases, namely:
Coca-Cola has, over the years, been involved in the issue of regularization
of contractor-supplied workers. Some o f the latest cases are as follows:
(a) Coca-Cola v. Agito,3*where the contractor’s employees worked in
petitioner as salesmen. In the Delivery Agreement between petitioner and the
contractor, it is stated that petitioner is engaged in the manufacture, distribution and
sale of softdrinks and other related products. The work o f respondents, constituting
distribution and sale of Coca-Cola products, is clearly indispensable to the principal
business o f petitioner. The Court also stressed that the repeated rehiiing o f those
salesmen bolstered the indispensability o f their work to the business o f CCBPI.
(b) Pacquing v. Coca-Cola Philippines, Inc.,* where the Court ruled that die
sales route helpers o f CCBPI were its regular employees. It was stated here that
sales route helpers "were part o f a complement o f three personnel comprised o f a
driver, a salesman and a regular route helper, for every delivery truck."5

1 Alm eda v. Asahi Glass Philippines, b e , G .R. No. 177785, S e p t 3,2008.

2 G R No. 149011, June 2 8,2 00 5 ; See also Digital Teiecom m unicafais Philippines, Inc. v. Digitei Employees Union (DEU),
G A Nos. 18490304, O c t 10,2012; Babas v. Lorenzo Shipping C a p , G .R No. 186091, D ec. 15,2010.
3 Coca-Cola B otttes Phils., Inc. v. Agito, G R No. 179546, Feb. 13,2009.
* G R No. 157966, Jan. 3 1 .2 00 8 ,5 4 3 SCRA 344.
s See also CCBPI v. N 0 W M .G R No. 176024, June 18,2007.

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(c) Quintanar v. Coca-Cola Bottlers, Philippines, Inc.} where the route helpers
were tasked to distribute CCBPI’s products and were likewise successively
transferred to agencies after having been initially employed by CCBPI. The Court
decreed therein that said helpers were regular employees o f CCBPI
notwithstanding the fact that they were transferred to agencies while working for
CCBPI.
(d) Lingat and Altoveros v. Coca-Cob Bottlers Phils., Inc.} plant driver and
forklift operator (Lingat), and segregator/mixer (Altoveros), respectively. The
Court, citing the above cases of Agito, Pacquing and Quintanar, ruled that
petitioners are regular employees o f CCBPI. The Court found analogy with Agito
since herein petitioners have worked for CCBPI since 1993 (Lingat) and 1996
(Altoveros) until the non-renewal o f their contracts in 2005. Aside from the fact
that their work involved the distribution and sale of the products of CCBPI, they
remained to be working for CCBPI despite having been transferred from one
agency to another. Hence, such repeated re-hiring of petitioners, and the
performance of the same tasks for CCBPI established the necessity and the
indispensability of their activities in its business. Citing Pacquing, it was held that it
would be absurd for the Court to hold the route helpers therein as regular
employees of CCBPI without giving the same status to its plant driver, including its
segregator of softdrinks, petitioners herein, whose work also had reasonable
connection to CCBPI’s business o f distribution and sale o f soft drinks and other
beverage products. And in the same vein as in Quintanar, the transfer o f petitioners
from one agency to another did not adversely affect their regular employment
status. Such was the case because they continued to perform the same tasks for
CCBPI even if they were placed under certain agencies, the last of which was
MDTC.
2.4. LEGAL RIGHTS AND B E N E F IT S CO M PLIA N CE T E S T .

Tire “Legal Bights and Benefits Compliance” test addresses the issue of
whether the Service Agreement between the principal and contractor assures the
employees o f the latter farmed out to the former of their entitlement to all labor
and occupational safety and health standards, free exercise of their right to self-
organization, security o f tenure, and social and welfare benefits.3 If answered in the
affirmatm, the contracting arrangement is deemed legitimate and permissible.

But the question is how should this element be articulated and reflected in
the Service Agreement? It would seem that a simple stipulation in the Agreement
on such compliance would suffice. Thus, in holding that the job contractor
(Jobcrest) was legitimate in the case of Mago} the Court pronounced that the
Service Contract Agreement between Jobcrest and the principal (Sunpower)*34

' G R No. 210565, June 28,2016,794 SCRA 654.

J G.R. No. 205688, Juty 04.2018.
3 ConsoWated Building Maintenance, Inc. v. Asprec, Jr.. G.R. No. 217301, June 0 6 ,2 0 18.
4 Mago v. Sun Power Manufecturing U nited. G iR No. 210961. Jan. 24.2018.

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complied with the statutory requirement of ensuring tire observance o f the

contractual employees' rights under the law when it provided specifically in its
paragraph 7 that Jobcrest is obligated to observe all laws, rules and regulations
pertaining to the employment o f its employees. This phrase undoubtedly suffices to
address the legal rights and benefits compliance test.

R ights of contractors’ em ployees.

All contractors/subcontractor's employees shall be entitled to security o f

tenure and all the rights and privileges as provided for in the Labor Code, as
amended, to include the following:

a) Safe and healthful working conditions;

b) Labor standards such as but not limited to service incentive leave, rest
days, overtime pay, holiday pay, 13th month pay, and separation pay;
c) Retirement benefits under the SSS or retirement plans o f die
contractor/subcontractor, d) Social security and welfare benefits; and
e) Self-organization, collective bargaining and peaceful concerted
activities including the right to strike.1

A finding o f violation o f the Rights of Contractor's Employees2 shall

render the principal the direct employer o f the employees o f die contractor or
subcontractor, pursuant to Article 109 o f the Labor Code, as amended.3 In other
words, the absence o f any o f these elements results in a finding that the
contractor is engaged in labor-only contracting.4

II.
LABOR-ONLY CONTRACTING ARRANGEMENT

1. A BSO LUTE A ND T O T A L P R O H IB IT IO N .

“Labor-only contracting” refers to an arrangement where the contractor

merely recruits, supplies or places workers to perform a job or work for a principal, and
the elements5 thereof [infra] are present.6 A labor-only contractor, therefore, is one who
enters into an agreement with the principal employer to act as the agent in the
recruitment, supply, or placement of workers for the latter.7 It is expressly

’ Section 10, Department O rder No. 174, S eriesof2017.

J PerSection 10, Id.
3 Section 12, Id.
4 Consotdated BuBding Maintenance, Inc. v. A s p re c ,J r.,G J l No. 217301 .June 06,2018.
5 A s enumerated in SecSon 5, b id .
G Section 3piJ, foid.
7 Lingat and Afioveros v. Coca-Cola Botflers Phifer kic^ G R No. 205688. Juty 04,2018.

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prohibited under Article 106 of the Labor Code.1 And in the latest Implementing
Rules, it is described as both “absolutely''2 nd “totally"prohibited under the law.2

2. ELEM ENTS.

Labor-only contracting has the following elements:

a) /. The contractor or subcontractor docs not have substantial capital,

or

i i The contractor or subcontractor does not have investments in the

form of tools, equipment, machineries, supervision and work
premises, among others,

and

iii. The contractor's or subcontractor's employees recruited and placed

are performing activities which are directly related to the main
business operation of the principal;

or
b) The contractor or subcontractor does not exercise the right to control
over the performance of the work of the employees.34

3. EFFEC T OF ABSENCE O F ANY O F T H E E L E M E N T S .

Note must be made of the words “and” and “or” above which are found in
the statement of the elements under D.O. No. 174, Series of 2017. Indeed, as held in
Aboiti^ Haulers,Kin order for one to be considered by law as a labor-only contractor,
all the elements above need not be present. If the contractor enters into an
arrangement characterized by any one of the foregoing elements, it would be a clear
case of labor-only contracting. The clear phrasing o f the elements supports this
interpretation. It is thus sufficient that only one of the elements mentioned above
be shown in order to declare a contractor as being engaged in labor-only
contracting.5

It is therefore not proper to heavily rely only on the contractor’s alleged

substantial capital in order to conclude that it was an independent labor contractor.
This is because the possession o f substantial capital is only one element. Labor-only
contracting exists when any o f the two elements is present.6 Thus, to determine

1 Teng v. Pahagac, G.R. No. 169704, New. 17,2010; Superior Packaging Corporation v. BaSagsay, G.R. No. 178909, O c t 10.
2012
3 Section 5, Department Order No. 174, Senes o f 2017
3 Id.; See Article 106, Labor Code; PhSppine Airines, Inc. v. Ligan, G.R. No. 146408, Feb. 2 9,2008; See also Ungat and
Atovems v. C o ca G d a Botters Phis., Inc. G.R. No. 205688, July 04,2018.
4 Abociz Haulers, Inc. v. Dmapatol, G .R No. 148619, S ept 19,2006.
5 Aliviadov. P ro cters Gamble Phils, Inc., G.R. No 160506, June 6,2011
6 Q uinanar v. C ocaG ola Betters, Philippines, Inc., G R. No. 210565, June 28,2016.

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whether a person or entity is indeed a legitimate labor contractor, it is necessary to

prove not only substantial capital or investment in tools, equipment, work
premises, among others, but also that the work o f the employee is directly related
to the work that the contractor is required to perform for die principal.1

4. T H E LAW PR ESU M ES LABOR-ONLY C O N T R A C T IN G .

The presumption under the law, although disputable, is diat the

contractor is engaged ui labor-only contracting.2 It devolves dierefore upon the
contractor to prove that he is not so engaged.3 It has tc overcome the burden of
proving that it is compliant with the requisites, such as substantial capital,
investment, tools and the like.4 Employees of the contractor, for their part, need
not prove that the contractor does not comply with die legal requirements.5

The D O LE Certificate o f Registration and License as private recruitment

and placement agency from the DOLE, while not conclusive evidence of the status
o f the contractor as a legitimate job contractor, prevent die legal presumption of it
being a mere Labor-only contractor from arising.6

The burden o f proof is shifted to the principal when it is the principal

which is claiming that the contractor is a legitimate contractor.7 It is thus
incumbent upon the principal, and not upon the contractor’s employees, to prove
that the contractor is an independent contractor.8

However, in Mago,9 the Court found that there is no such burden resting
on either the principal (Sunpower) or the job contractor (Jobcrest) because the
petitioners did not dispute that Jobcrest was a duly-registered contractor under
Section 11 o f DOLE Department Order No. 18-02, the regulation in force at the
time of petitioners' assignment to Sunpower. With such registration, there is no
operative presumption that Jobcrest is a labor-only contractor.10 Conversely, the
fact of registration with D O LE does not necessarily create a presumption that
Jobcrest is a legitimate and independent contractor The Court emphasizes,
however, that the D O LE Certificate of Registration issued in favor of Jobcrest is
presumed to have been issued in the regular performance o f official duty.11 Ia other
words, the DOLE officer who issued the certificate in favor o f Jobcrest is
presumed, unless proven otherwise, to have evaluated the application for

' Ungat and Aftoveros v. Coca-Cola Botiiere Phfe., Inc., G.R. No. 205688, July 0 4,2 01 8
2 Valencia v. Classique Vinyl Products Corporation, G R No. 206390, Jan. 30.2017.
3 Mago v. Sun Power Manufacturing Limited, G.R. No. 210961, Jan. 24,2018
4 Alps Transportation v. Rodriguez, G.R. No. 186732, June 13,2013
5 C o cfrC d a B o t e s Phis., Inc. v. Agito, G.R. No. 179546, Feb. 13.2009.
6 Valencia v. Classique Vinyl Products Corporation, supra.
7 Garden of Memories Park and Life Plan, Inc. v. NLRC, G.R No. 160278, Feb. 8 .2 0 1 2 .6 6 5 SCRA 293.306.
8 Mago v. Sun Power Manufacturing Limited, G.R. No. 210961, Jan. 24,2018
5 Id.
10 Id., citing De Castro V .C A .G .R . No. 204261, O ct 5,2016.
" Id.,citing Sasan, Sr. v. NLRC 4th Division, G R. No. 176240, O ct 17,2003

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registration in accordance with the applicable rules and regulations.1The petitioners

must overcome the presumption of regularity accorded to the official act of
DOLE, which is no less than the agency primarily tasked with the regulation o f job
contracting.2

III.
OTHER ILLICIT FORMS OF EMPLOYMENT

1. ADDITIONAL PR O H IB ITED A RR A N G EM EN TS.

In addition to labor-only contracting as described above,34 the same

Department Order No. 174, Series of 2017* declared the following as being prohibited
for being contrary to Law or public policy:

a) When the principal farms out work to a “C abo”. The term “ Cabo”
refers to a person or group o f persons or to a labor group which,
under the guise of a labor organization, cooperative or any entity,
supplies workers to an employer, with or without any monetary or
other consideration, whether in the capacity o f an agent o f the
employer or as an ostensible independent contractor.5
b) Contracting out of job or work through an “In-house Agency” . An
“In-house Agency” refers to a contractor which is owned, managed,
or controlled, directly or indireedy, by the principal or one where the
principal owns/represents any share o f stock, and which operates
solely or mainly for the principal.6
c) Contracting out of job or work through an “In-house Cooperative”
which merely supplies workers to the principal. A n “In-house
Cooperative” refers to a cooperative which is managed, or controlled
direedy or indireedy by the principal or one where the principal or any
of its officers owns/represents any equity or interest, and which
operates solely or mainly for the prindpaL7
d) Contracting out of a job or work by reason o f a strike or lockout,
whether actual or imminent.
e) Contracting out of a job or work being performed by union members
and such will interfere with, restrain or coerce employees in the

' Id., See DOLE DO No. 1M 2 , S erio n 12; Gafego v. Bayer PM 'ppines, Inc., G R No. 179807, July 31,2009.
2 M id e 106, Labor Code.
3 Per Section 5 of Department Order No. 174, Series o f 2017.
4 See Section 6 thereof.
5 Section 3(b), Ibid.
‘ Section 3(1), Ibid.
7 Section 3(g), Ibid

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exercise o f their rights to self-organization as provided in Article 259

[248]*1 of the Labor Code, as amended.
f) Requiring die contractor's employees to perform functions which are
currendy being performed by the regular employees of the principal.
g) Requiring die contractor's employees to sign, as a precondition to
employment or continued employment, an antedated resignation
letter; a blank payroll; a waiver o f labor standards including minimum
wages and social or welfare benefits; or a quitclaim releasing die
principal or contractor from liability as to payment o f future claims; or
require the employee to become member o f a cooperative.
h) Repeated hiring by the contractor o f employees under an employment
contract o f short duration.
i) Requiring employees under a contracting arrangement to sign a
contract fixing the period o f employment to a term shorter than the
term of the Service A greem ent, unless the contract is divisible into
phases for which substantially different skills are required and this is
made known to the employee at the time o f engagement.
j) Such odicr practices, schemes or employment arrangements designed
to circumvent the right of workers to security of tenure.

2. SAME E F F E C T AS LABOR-ONLY C O N T R A C T IN G .

The foregoing illicit acts do not constitute labor-only contracting but the
effect is similar to labor-only contracting in that the principal is deemed the direct
employer of die contractor's employees.2

IV.
EFFECTS OF LABOR-ONLY CONTRACTING
AND ENGAGING IN OTHER ILLICIT FORMS OF EMPLOYMENT

In die event diat there is a finding that the contractor has engaged in
labor-only contracting and other illicit forms o f employment arrangements, the
following are the effects:

1) The labor-only contractor will be treated as the agent or intermediary

o f die principal.5 Since the act o f an agent is the act o f the principal,
representations made by the labor-only contractor to die employees
will bind the principal.

’ Particular*/, paragraph (c) (hereof which provides: ‘ Article 259 [248], Unfair Labor Practices o f Employers. - It shall be
unlawful for an employer to com m it any of the fo b w in g unfair labor practices: xxx (c) To contract out services c r functions
being performed by union m embers when such w il interfere with, restrain or coerce employees'm the exercise o f their rights
tosef-organizationf.f
2 Section 7, bid.
1 Alps Transportation v Rodriguez. G. R. No 186732. June 13,2013.

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2) The principal will become the direct employer as if it direcdy

employed the workers supplied by the labor-only contractor to
undertake the contracted job or service.1 It will be responsible to them
for all their entitlements and benefits under labor laws. This is so
because a finding that a contractor is a labor-'only contractor is
equivalent to a declaration that there is an employer-employee
relationship between the principal and the workers of the labor-only
contractor.2

3) The principal and the labor-only contractor will be solidarity treated as

the employer. This means that the liability' of the labor-only contractor
will also be the liability o f the principal, with equal force and effect.

4) The employees supplied by the labor-only contractor will become the

regular employees o f the principal, subject to the classifications of
employees under Article 295 [280] of the Labor Code.3

V.
LEGITIMATE JOB CONTRACTING VS. LABOR-ONLY CONTRACTING

1. D ISTINCTIO NS.

The chief distinctions between legitimate job contracting, on the one

hand, and the prohibited labor-only contracting, on die other, may be summed up
as follows:

1) In the former, no employer-employee relationship exists between the

contractor’s employees and the principal; while in the latter, an
employer-employee relationship is created by law’ between the
principal and the employees supplied by the labor-only contractor.4
2) In the former, die principal is considered only an ‘'indirect employer, ” as
this term is understood under Article 107 of the Labor Code; while in
the latter, the principal is considered the “direct employer" of the
employees supplied by the labor-only contractor, in accordance with
the last paragraph of Article 106 of the Labor Code.5
3) In the former, the joint and several obligation of the principal and the
legitimate job contractor is only for a limited purpose, that is, to
ensure that die employees are paid their w'agcs. Odier than this
obligation of paying the wages, the principal is not responsible for any
claim made by die contractor’s employees; while in die latter; the

1 A it 106, Labor Code; Secfion 7, Department O rder No. 174, Series of 2017.
2 Aklanv. San M guel Corporation, G.R. No. 165537, Dec. 11,2008.
3 ManJa Electric Company v. Benamira, G.R. No. 145271, July 14,2005.
4 Aliviado v. Procter & Gamble Phils., Inc., G.R. No. 160506, May 9,2010
5 PCI Automation Center, Inc. v.N LR C , supra.

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principal becomes solidarity liable with the labor-only contractor to the

latter’s employees in the same maimer and extent that the principal is
liable to employees directly hired by him /her, as provided in Article
106 o f the Labor Code, as amended.1
4) In the former, the legitimate job contractor undertakes to perform a
specific job for the principal; while in the latter, the labor-only
contractor merely provides, supplies, recruits and places personnel to
work for the principal.2

2. T O T A L IT Y O F FACTS A ND CIRCU M STA NCES.

In order that a labor relationship can be categorized as legitimate job

contracting or as prohibited labor-only contracting, the totality of the facts and the
surrounding circumstances o f the relationship ought to be considered.3 For
instance, the express provision in the Agreement that the contractor was an
independent contractor and there would be no employer-employee relationship
between the contractor an d /o r its employees, on one hand, and the principal, on
the other hand, is not legally binding and conclusive as contractual provisions are
not valid determinants o f the existence of such relationship. For it is the totality o f
the facts and surrounding circumstances o f the case which is determinative o f the
parties’ relationship.4

3. LEG ITIM ACY T O B E RESO LVED O N A CASE-TO-CASE BASIS.

Every case is unique and has to be assessed on the basis o f its facts and o f
the features of the relationship in question. In other words, each case where the
issue o f whether or not permissible or legitimate job contracting exists must be
determined by its own facts and all the features of the relationship must be
considered.5

4. STIPU LA T IO N IN A G R E E M E N T .

One crucial issue usually raised in determining the legitimacy o f

contracting arrangements is the validity of die stipulanon in the Employment Contract
between the contractor and its employees as well as in the service Agreement between
the contractor and the principal that no employer-employee shall exist between the
employees o f the former supplied to the latter. However, such stipulation is not
given so much weight since the nature of the relationship between a principal and a
contractor as well as between a principal and the contractor’s employees supplied
to it by the contractor cannot be the subject of a stipulation in a contract. This is so

' Section 27, Department Order No. 18-A, Senes of 2011 [N w 14,2011]; C ocaC oia Bottlers Pints., Inc. v. Agfa), G.R. No.
179546, Feb. 13,2009.
2 PCI Automation Center, Inc. v.N LR C , supra.
3 A liln v.P e tro n Corporation, G.R. No. 177592, June 09,2014.
4 PhSppine Airfnes, Inc. v .U g a n .G K . No. 146408, Feb. 29,2008.
5 San M guel Corporation v. M 4ERC Integrated Services, Inc., O R . No. 144672, July 1C, 2003.

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because the existence o f an employer-employee relationship cannot be made

subject of an agreement or contract.*1

Thus, the contractual stipulation on the non-existence of an employer-

employee relationship between the principal and the personnel provided by the
labor-only contractor has no legal effect. While die parties may freely stipulate
terms and conditions of a contract, such contractual stipulations should not be
contrary to law, morals, good customs, public order or public policy. A contractual
stipulation to die contrary cannot override factual circumstances firmly establishing
the legal existence of an employer-employee relationship':2

The parties cannot dictate, by the mere expedient o f a unilateral

declaration in a contract, the character of its business, i.e., whether as a labor-only
contractor or job contractor, it being crucial that its character be measured in terms
of, and determined by, the criteria set by statute. Thus, notwithstanding that the
agreement or contract between the principal employer and the contractor states
that the latter is an "independent contractor” and that die workers lured by it "shall not,
in any manner and under any circumstances, be considered employees of the Company, and that
the Company has no control or supervision whatsoever over the conduct of the Contractor or any of
its workers in respect to how they accomplish their work or perform the Contractor’s obligations
under this Agreement,” the. contractor may still be considered a labor-only contractor.3

C.

SOLIDARY LIABILITY

1. W H EN PRIN CIPAL IS TREA TED AS D IR E C T EM PL O Y E R AND

THUS SOLI DARI LY LIABLE W ITH T H E C O N T R A C TO R .

An examination of die pertinent provisions o f the Labor Code and its

Implementing Rules enunciated in the latest Department Order No. 174, Series of2017,
indicates that under the following circumstances, a principal shall no longer be
treated as indirect but direct employer and therefore it shall be deemed solidarity
liable widi the contractor:

1) In case of violation of any provision of the Labor Code, including the

failure of the contractor to pay wages o f its employees supplied to the
principal;4
2) In case of labor-only contracting;5

' T ates v California Manufacturing C o . M e . G R. No 80680, Jan. 26,1 98 9 ,1 6 9 S C R A497.

1 Lakas sa Industriya ng Kapairang H algi ng Afyansa-Pnagbuklod ng M anggagawang Promo ng Burlingame v. Burlingame
Corporation, G R. No 162833 June 15.2007
3 De bs Santos v NLRC, G.R No 121327 Dec. 20.2001; See also B a te s v. Lorenzo Shipping Corp., G R No. 186091,
Dec. 15,2010; San M g u d Corporation v Semilano, G R No. 164257, July 5,2010.
* Section 3(k) and Secooo 9, Department Order No 174 Senes of 2017.
5 S ecfon5,ld.

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3) In case o f commission o f any o f the following acts prohibited under

Department Order No. 174'.
(a) In case of commission o f “ oth er illicit forms of em ploym ent
arrangem ents” under Section 61 thereof;
(b) In case of violation o f the “rights of c o n tracto r's or
subcon tracto r's em ployees” under Section 102 thereof;
(c) In case o f violation o f the “required contracts u n d er the R ule s”
mentioned in Secdon l l 3 thereof, referring to: [1] Employment
Contract between the contractor and its employee; and [2] Service
Agreement between the principal and the contractor,
4) In case the termination o f employment is caused by the pre­
termination o f the Service Agreement not due to authorized causes
under Article 298, the right o f the contractor's/subcontractor's
employee to unpaid wages and other unpaid benefits including
unremitted legal mandatory contributions, e.g., SSS, PhilHealth, Pag-
IBIG, ECC, shall be borne by the party at fault, without prejudice to
the solidary liability of the parties to die Service Agreement.4
5) In case the principal has contracted with a delisted contractor, in
which case, the principal shall be considered the direct employer o f all
employees under the Service Agreement pursuant to Articles 106 and
109 of the Labor Code, as amended.5
6) In case of non-compliance with legally mandated wage increases
wherein, under RA. No. 6727,6 the principal is also considered
solidarity liable with the contractor.

2. SOLIDARY LIABILITY O F PR IN C IPA L .

In legitimate job contracting arrangement, the term "solidary liability” shall

refer to the liability o f the principal, pursuant to the provisions o f two (2) articles
o f the Labor Code, namely:

(1) Article 106, regarding the liability o f the principal, in the same
manner and extent that h e/she is liable to his/her direct employees,
to the extent of the w ork perform ed u n d er the co n tract w hen
the contractor fails to pay the w ages o f h is /h e r em ployees.7
(2) Article 109, as direct employer together with the contractor for any

1 Entitled ‘ Other Elicit F o m s o f Employment Arrangements.*

2 Entitled “Rights o f Ckxitractor's/Subcontractor's Bmptoyees.’
3 Entitled‘ (Required Contracts under these Rules.*
4 Section 13 of Department Order No 174. entitled " tffe c to f T e rm ria tjo o of Em ptoym enl*
5 Section 26, Ibid., entitled ‘ Effects o f Cancellation of Regisfratjon.'
5 Otherwise known as the ‘W age Rationalization A c t-
’ Section 3[k], Department Order No. 174. Series of 2017.

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violation o f any provision o f the L abor Code.1

The solidary liability o f the principal under N o. 2 above should be

qualified in the sense that not all violations o f the provisions o f the Labor Code
and other social legislations by the contractor would make the principal “solidarity
liable" therefor. Such solidary liability o f the principal would only be “to the extent
of the work performed under the em ploym ent contract” , and should only
involve the violations connected to or related with the em ploym ent contract.
The solidary liability rule certainly does not cover such liabilities of the contractor
to its employees not in any way related to the “w ork perform ed under the
employment contract.” This is clear from Section 9 o f Department Order No. 174,
thus:

“Section 9. Solidary Liabibty. In the event of violation of any

provision of the Labor Code, including the failure to pay wages, there
exists a solidary liability on the part of the principal and the contractor
for purposes of enforcing the provisions of the Labor Code and other
social legislations, to the extent of the work performed under the
employment contract.”2*

In other words, once the job contractor, although legitimate, fails to pay
the wages of its employees supplied to the principal (2nd paragraph, Article 106) or
violates any of the provisions of die Labor Code (Article 109), the principal would
no longer be considered merely as an indirect employer but as direct employer for
the limited purpose of complying with the wage requirement or legal provisions
violated. Being by legal fiction the direct employer, the principal now becomes
solidarity liable with the legitimate contractor for die payment of wages and for
purposes of complying with die legal provisions violated.

It bears stressing that the status of the principal as indirect employer holds
true only in situations where die job contractor with which it is dealing is legitimate
and is fully compliant with the requirements o f the law and the implementing rules.
Odierwise, if the contractor is a labor-only contractor, then die principal will
never be considered an indirect but direct employer o f the contractor’s employees
supplied to it and the above discussion will not apply and thus would be solidarily
liable for all die claims for wages and benefits by the latter.

3. PE R T IN E N T JU R ISPR U D EN C E.

The phrase “to the extent o f the work perform ed under the contract,
in the same manner and extent that he is liable to employees directly
employed by him ” was explained in the case o f Rosewood Processing. Inc. v. NLRC.S
In this case, the security guards farmed out by the security agency to petitioner
were assigned to its other clients. Withal, fairness dictates that the petitioner should

' Id.
2 Underscoring supplied.
J G.R. No. 116476-84,21 May 1998,290 SCRA 408,427.

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not be held liable for wage differentials inclined while the security guards were
assigned to other companies. Under Articles 106, 107 and 109 of the Labor Code,
should the contractor fail to pay the wages of its employees in accordance with law,
the indirect employer (the petitioner in this case), is jointly and severally liable with
the contractor, but such responsibility should be understood to be limited to the
extent o f the work performed under the contract, in the same manner and extent
that he is liable to the employees directly employed by him. This liability of
petitioner covers the payment o f the workers' performance o f any work, task, job
or project. So long as the work, task, job or project has been performed for
petitioner's benefit or on its behalf, the liability accrues for such period even if, later
on, the employees are eventually transferred or reassigned elsewhere. To reiterate,
the principal’s (indirect employer's) liability to the contractor's employees extends
only to the period during which they were working for the petitioner, and the fact
that they were reassigned to another principal necessarily ends such responsibility.
The principal is made liable to his indirect employees because it can protect itself
from irresponsible contractors by withholding such sums and paying them directly
to the employees or by requiring a bond from the contractor for this purpose.

The said principle in Rosewood was reiterated ir. GS1S v. N LRC1 In this
case, DNL Security Agency, the direct employer of the private respondent security
guards which assigned them to petitioner GSIS office in Tacloban City, mformed
respondents in February 1993, that its service contract with petitioner was
terminated. This notwithstanding, D N L Security Agency instructed respondents to
continue reporting for work to petitioner. Respondents worked as instructed until
April 20,1993, but without receiving their wages; after wnich, they were terminated
from employment. The High Court ruled that petitioner's liability docs not cover
only the payment of respondents’ salary differential and 13th month pay during the
time they worked for petitioner but additionally, petitioner is solidanly liable with
D NL Security for respondents’ unpaid wages from February 1993 until April 20,
1993. While it is true that respondents continued working for petitioner after the
expiration of their contract, based on the instruction o f DNL Security, petitioner
did not object to such assignment and allowed respondents to render service. Thus,
petitioner impliedly approved the extension o f respondents’ services. Accordingly,
petitioner is bound by the provisions of the Labor Code on indirect
employment Petitioner cannot be allowed to deny its obligation to respondents
after it had benefited from their services. So long as the work, task, job, or project
has been performed for petitioner’s benefit or on its behalf, the liability accrues for
such sendees. The principal is made liable to its indirect employees because, after
all, it can protect itself from irresponsible contractors by withholding payment of
such sums that are due the employees and by paying the employees direedy, or by
requiring a bond from the contractor or subcontractor for this purpose.

1 G R No. 180045, N ov. 17,2010.

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4. RIGHT OF CONTRACTOR’S EM PLOYEES T O C O LLEC T

FROM E IT H E R OR BOTH T H E PR IN CIPA L OR
LEGITIMATE CONTRACTOR.

As held in Eparrva v. Liceo de Cagayan University gs far as the security ,l

guards are concerned, the actual source of die payment o f their wage differentials
and premium for holiday and rest day work does not matter as long as they are
paid. This is the import of pedtioner Eparwa’s and respondent LDCU’s solidary
liability. Creditors, such as the security guards, may collect from anyone o f the
solidary debtors. Solidary liability does not mean that,-as between themselves, two
solidary debtors are liable for only half o f the payment.

5 TO HOLD PRINCIPAL LIABLE, N O N E E D T O PR O V E

INSOLVENCY O F T H E JO B CONTRACTOR.

The second paragraph o f Article 106 o f the Labor Code states:

“In the event that the contractor or subcontractor fails to pay

the wages of his employees in accordance with this Code, xxx.”2

According to Development Bank of the Philippines v. NLRC,3 the term ‘fails ”

in the afore-quoted provision does not mean that it should be proven first that the
contractor is insolvent or is unwilling to pay. There is nothing in said provision
which justifies this argument. The rule is clear that in legitimate job contracting, the
principal is jointly and severally liable with the contractor to pay the wages o f the
latter’s employees.

As held in Del Rosario and Sons Logging Enterprises, Inc. v. NLRC,4 even in
situations where the principal has not paid adequately the contractor in accordance
wadi the law, the latter may not successfully exculpate itself by claiming that it has
no fault since what was paid by the principal was insufficient to defray the wages
and other legally-required benefits of its employees. As an employer, the
contractor/subcontractor is charged with knowledge of labor laws and the
adequacy of the compensation that it demands for contractual services is its main
concern and not any other’s.

6. LIABILITY OF PR IN CIPA L VIS-A-VIS A L EG IT IM A T E

CONTRACTOR D ISTIN G U ISH ED FROM ITS LIABILITY IN
RELATION T O A LABOR-ONLY C O N TRA C TO R .

Based on the foregoing disquisition, the liability of a principal vis-a-vis a

legitimate contractor is different from its liability in relation to a labor-only
contractor.

’ G.R. No. 150402, Nw. 28,2006.

J Emphasis supplied.
3 Eparwa Security and Janitorial Services, Inc. v. Liceo de Cagayan University (LDCU), G i l Nos. 100376-77, June 17,1994.
* G R. No L-64204, May 31,1985,136 SCRA 669.

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In legitim ate job contracting, the law creates an employer-employee

relationship between the principal and the employees supplied by the job
contractor for a lim ited purpose, i.e., to casure that the contractor’s employees arc
paid their wages. The principal becomes solidarity liable with the job contractor
only for the payment o f the employees’ w ages whenever the contractor fails to pay
the same. Other than this, the principal is not responsible for any claim made by
the contractual employees.1 O n the other hand, in labor-only contracting, the
statute creates an employer-employee relationship beeweea the principal and the
employees supplied by the labor-only contractor for a com prehensive purpose,
i.e., to prevent circumvention o f labor laws. Consequently, the labor-only
contractor is considered merely an agent o f the principal and the latter is
responsible to the employees o f the labor-only contractor as if such employees had
been directly employed by the principal. The principal therefore becomes solidarity
liable with the labor-only contractor for aU the rightful claims o f the employees.2

B.
TERMINATION BY EMPLOYER

1. T W O -FO L D D U E PROCESS R E Q U IR E M E N T 3

Dismissal o f employees requires the observance o f the two-fold due

process requisites, namely:

1. Substantive aspect which means that the dismissal must be for any o f
the following:
(a) Ju st causes; or
(b) A uthorized causes; and
2. P rocedural aspect which means that the procedure in the following
are observed:
(a) Statutory due process; and
(b) Contractual due process.

2. JUST CAUSES VS. A U T H O R IZ E D CAUSES.

A dismissal based on a fust cause means that the employee has

commuted a wrongful act or omission; while a dismissal based on an authorized
cause means that there exists a ground which the law itself allows or authorizes to
be invoked to jusufy the termination o f an employee even if he has not committed
any wrongful act or omission, such as installation of labor-saving devices,
redundancy, retrenchment, closure or cessation o f business operations4 or disease.1

1 San Mguel Corporation v. MAERC integrated Services, be., G.R. No. 144672, July 10,2003.
1 San f.^ue! Corporation v. MAERC Integrated Services, be. Id.
3 Relevant Provisions: Articles 292(b) (277(b)], 294 [279], 297 [282] and 298 [283], Labor Code.
4 Article 298 [283], Labor Code.

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3. ORDER OF TOPICAL DISCUSSION.

The discussion of the topic o f ‘Termination by Employer" is divided into the
following sections:

1. JUST CAUSES
I. SERIOUS MISCONDUCT
II. INSUBORDINATION OR WILLFUL DISOBEDIENCE OF LAWFUL
ORDERS
III. GROSS AND HABITUAL NEGLECT OF DUTIES
IV. ABANDONMENT OF W ORK
V. FRAUD
VI. WILLFUL BREACH OF TR U ST AND CONFIDENCE
VII. COMMISSION OF CRIM E OR OFFENSE
VIII. OTHER ANALOGOUS CAUSES

2. AUTHORIZED CAUSES

I. INSTALLATION OF LABOR-SAVING DEVICE

II. REDUNDANCY
III. RETRENCHMENT
III- A. REDUNDANCY VS. RETRENCHM ENT
IV. CLOSURE OR CESSATIO N OF BUSINESS O PERATIONS
IV- A. RETRENCHMENT VS. CLOSURE OF BUSINESS
V. DISEASE

3. DUE PROCESS
a. TWIN-NOTICE R EQ UIREM EN T
b. HEARING

1.
JUST CAUSES

L JUST CAUSES U N D ER T H E LABOR COD E.

The just causes in the Labor Code are found in the following provisions
thereof:

(1) Article 297 [282] - (Termination by the Employer) which provides for
the following grounds:

(a) Serious misconduct or willful disobedience by the employee of

the lawful orders o f his employer or representative in connection
with his work;

' Article 299 [284|, Ibid.

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(b) Gross and habitual neglect by the employee o f his duties;

(c) Fraud or willful breach by die employee o f the trust reposed in
him by his employer or duly authorized representative;
(d) Commission o f a crime or offense by die employee against die
person o f his employer or any immediate member of his family or
his duly authorized representatives; and
(e) O ther causes analogous to the foregoing.

(2) Article 279(a) [264(a)] - (Prohibited Activities) which provides for die
termination o f the following;

(a) Union officers who knowing participate in an illegal strike and

therefore deemed to have lost their employment status.
(b) Any employee, union officer or ordinal)' member who knowing
participates in the commission o f illegal acts during a strike
(irrespective o f whether the strike is legal or illegal), is also
deemed to have lost his employment status. (NOTE; This is discussed
under “V. LABOR RELATIONS”, particularly under the topic of “F. PEACEFUL
CONCERTED ACTIVITIES”, supra).

(3) Article 278(g) [263(g)] - (National Interest Cases) where strikers who
violate orders, prohibitions a n d /o r injunctions as are issued by the
D O LE Secretary or the NLRC, may be imposed immediate
disciplinary action, including dismissal or loss o f employment status.1
(NOTE: This is discussed under “V. LABOR RELATIONS”, particularly under the topic
of “F. PEACEFUL CONCERTED ACTIVITIES", supra).

(4) Article 259(e) [248(e)] - (Union Security Clause) where violation o f the
union security agreement in the CBA may result in termination of
employment. Under this clause, the bargaining union can demand
from the employer the dismissal o f an employee who commits a
breach o f union security arrangement, such as failure to join the union
or to maintain his membership in good standing therein. The same
union can also demand the dismissal o f a member who commits an act
o f disloyalty against it, such as when the member organizes a rival
union.2 (NOTE: This is discussed under “V. LABOR RELATIONS", particularly under
the topic o f “E. UNFAIR LABOR PRACTICES OF EMPLOYERS", supra).

2. JUST CAUSES U N D E R PREV A ILING JU R ISPR U D EN C E.

In addition to the just causes mentioned in the Labor Code, just causes
are also found in prevailing jurisprudence,3 some of which are as follows:

’ See also N o. 33, N C M 8 P rim er on S trke , P icketing and L ocko ut 2nd E dition, D ec. 1995
7 IngtrilTo v. R rst PhiSppine S cales, Inc^ G H . N o. 165407, June 5,2 0 09 .
3 Inguilto v. Fust PhiSppine S cales, In c , supra.

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1. Violation of Company Rules and Regulations or Code of Conduct or

Code of Discipline.1
2. Theft of property owned by a co-employee.2 as distinguished from
company-ownedproperty, which is considered serious misconduct
3. Incompetence, inefficiency or ineptitude.3
4. Failure to attain work quota.4
5. Failure to comply with weight standards o f employer.5
6. Attitude problem.67

3. DISMISSAL BASED ON COM PANY RULES ISIOT ILLEGAL.

If the ground cited is based on the Company Rules and Regulations or

Code of Conduct or Code of Discipline, it is to be expected that its exact
desenpnon and phraseology are not found in Article 297 [282] nor in any other
provisions of the Labor Code since the latter’s description o f the grounds is
couched in general terms.

In Sampaguita Auto Transport Corporation v. NLRC? the Supreme Court

pronounced diat the Court of Appeals erred in ruling that the dismissal o f private
respondent, a bus dnver of petitioner, was illegal because the “grounds upon which
petitioners based respondent’s termination from employment, pi%: *hindi lahat ng
schedule nailalabas,' [Jmabaha ang revenue ng bus, laging kasama an[gj asawa sa lyahe' and
‘maraming naririnig na kwento tungkol sa kanya, nag-uutos ng conductor para kumita sa hindi
magandang paraan[,}' xxx are not among those enumerated under Article 297 [282] of
the Labor Code as just causes for termination of employmenL” The irregularities or
infractions committed by private respondent in connection with his work as a bus
driver constitute serious misconduct or, at the very least, conduct analogous to
serious misconduct, under the above-cited Article 297 [282] o f the Labor Code.
The requirement in the company rules that: ‘3. to obey traffic rules and
regulations as well as the com pany policies. 4. to ensure the safety of the
riding public as well as the other vehicles and m otorist (sic)’ is so fundamental
and so umversal that any bus driver is expected to satisfy the requirement whether
or not he has been so informed.

4. JUST CAUSES U N D E R A RTIC LE 297 [282] O F T H E LABOR C O D E.

The grounds mentioned in Article 297 [282] shall be discussed herein in

seriatim.

1 Sampagusa Auto Transport Corporation v. NLRC, G R No. 197384, Jan. 30,2013.

7 John Hancock Life Insurance Corp. v. Davis, G.R No. 169549, Sept 3,2008.
3 Reyes-Rayef v. PhSppine luen Thai Holdings Corp., G R No. 174893, July 11,2011
* Aftng v. Feliciano, G R No. 185829, April 25,2012; Un v. NLRC, G.R. No. 118434, July 26,1996.
5 Yrasuegut v. Riipp'ne Ailines, Inc., G R No. 168081, Oct 17,2008.
6 ReyesRayel v. Philippine Luen Thai Holdings Corp. G R No. 174893, July 11,2012; Heavyiift Maria, Inc. v. The CA, G R
No. 154410, Oct. 20.2005.
7 GRNo. 197384, Jan 30,2013.

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I.
SERIO US M IS C O N D U C T1

1. R E Q U ISIT E S.

For misconduct or improper behavior to be a just cause for dismissal, the

following requisites must concur:
1. It must be serious:
2. It must relate to the performance o f the employee’s duties:
3. It must show that he has become unfit to continue working for the
employer,2 and
4. It must have been performed with wrongful in ten t34
The 2014 case of Imasin v. A Icon* added the 4th requisite above which, it
said, is “equally important and required.” All the above requisites must concur.5

2. SO M E PR IN C IPLE S O N SERIO U S M ISC O N D U C T.

• Serious misconduct implies that it must be o f such grave and aggravated
character and not merely trivial or unimportant.6
• Simple or minor misconduct would not justify the termination o f the services
o f an employee.7
• The charge for serious misconduct must not be a mere afterthought.8
• There must be a valid company rule or regulation violated.9
• Misconduct must relate to employee’s duties and must show his unfitness to
continue working for the employer.10
• Series of irrcgulanties, when put together, may constitute serious misconduct.11
• Acts destructive of the morale of co-cmployces constitute serious
misconduct.12
• Committing libel against an immediate superior constitutes serious
misconduct.13
• Possession or use of shabu or other drugs is a valid ground to terminate
employment1

1 Relevant provision: Artide 297(a) (282 (a)], Labor Code.

2 Yabutv. Manila Electric Company, G.R No. 190436, Jan. 16,2012.
3 T fe 4h requisite was added in knasen PhSppine Manufacturing Corporation v. AJcon, G.R No. 194884, Oct 22,2014.
4 Id.
5 Coca-Cola Bottlers, v. Kapisanan ng Malayang Manggagawa sa Coca-Cda-FFW, G.R. No. 148205, Feb. 28,2005.
• FWppine National Bank v. Velasco, G R No. 166096, Sept 11,2008.
7 Radio Communicafions of the PhiSpp’nes, Inc. v. NLRC, Gi?. No. 113178. July 5,1996.
s Coca-Cola Export Cap. v. Gacayan, G R No. 149483, Dec. 15,2010.
9 Naranjo v. Biomedca Health Care, Inc., G R No 193789, Sept 19,2012
tt Waterfront Cebu Ciy Casino Hotel, Inc. v. Mebrando Ledesma; G R No. 197556, March 25,2015.
" Quiambao v. Manila Electric Company, G R No. 171023, Dec. 18,2009.
« Citibank, NA v. NLRC, G R No. 159302, Feb. 6,2008.
13 Tcneda v. Toshba Infamafon Equipment [Phfc.], Inc., G R No. 165960, Feb. 8,2007.

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• Drug abuse inside the company’s premises and during working hours
constitutes serious misconduct The Court has taken judicial notice of scientific
findings that drug abuse can damage the mental faculties of the user.2
• To justify termination, the drug test must be conducted by authorized drug
testing center.3
• To be valid, both screening and confirmatory tests should be conducted prior
to termination.45 The screening test must be conducted first before the
confirmatory test.3
• Immorality, as a general rule, is not a just ground '-to terminate employment.
The exception is when such immoral conduct is prejudicial or detrimental to
the interest of the employer.6
• Immoral act committed beyond office hours is a valid ground to terminate
employment.7
• Sexual intercourse inside company premises constitutes serious misconduct.8
More so when it was done during working hours.9
• The act of a 30-year old lady teacher in falling in love with a 16-year old
student is not immoral.10
• An employee may commit serious misconduct when his letter-explanation uses
accusatory and inflammatory language.11
• Circulating e-mail message may give rise to the charge of serious misconduct if
its contents constitute a wrongful act.12
• Fighting is a ground for termination but only the instigator or aggressor and
not the victim who was constrained to defend himself should be dismissed.13
• Filing of criminal case by an employee does not indicate his innocence.14
• Challenging superiors to a fight is a just cause for termination.13
• Assaulting another employee is a just cause for termination.16

' Roquero v. PhJipphe Air Lines, Inc., G.R No. 152329, April 22,2003.
: Jose, Jr. v. Mctiaelmar Phils., Inc., G.R No. 169606, Nov. 27,2009.
3 Automotive Engine Rebuflders, Inc. (AER) v. Progressing Unyon ng mga Manggagawa sa AER G.R Nos. 160138 &
160192, Jiiy 13,2011.
4 Nacaguev.Sulpicio Lines, Inc., G.R No. 172589, Aug. 8,2010.
5 Plantation Bay Resort and Spa v. CXibrico, G.R No. 182216, Dec. 4,2009.
5 Santos, Jr. v. NLRC, G Jl No. 115795, March 6.1998,287 SCRA117.
I Navarro III v. Damasco, G.R No. 101875, July 14,1995.
3 Stanford Microsystems, Inc. v. NLRC, G.R. No. L-74187, Jan. 28,1988.
3 Echevema v. Venutek Medika. Inc., G.R No. 169231, Feb. 15,2007,544 Phil. 763,770.
’0 Ctuia-Qua v. Clave, GJl No. L-49549, Aug. 30,1990,189 SCRA 117.
" Nissan Motor Phils., Inc. v. Angelo, G.R No. 164181, SepL 14,2011.
o Punzal v. ETSI Technologies. Inc., G.R Nos. 170384-65, March 9,2007.
13 Garcia v. NLRC, G. R No. 116568, SepL 3,1999; Supreme Steel Pipe Corp. v. Bardaje, G.R. No. 170811, Apnl 24,2007.
II Flores v. NLRC, G.R No. 109362, May 15,1996,256 SCRA 735,
15 Luzon Stevedoring Corporation v. CIR, G R No. L-18683, Dec. 31,1965.
,s Haverton Shipping Ltd. v. NLRC, G.R. No. 65442, April 15,1985,135 SCRA 685.

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• Utterance o f obscene, insulting or offensive words constitutes serious

misconduct.1
• Disrespectful conduct is not serious misconduct if provoked by superior or
employer.2
• Gambling within company premises is a serious misconduct.3
• Instigating husband to maul her supervisor, a serious misconduct.4
• Rendering service to business rival is a just cause to terminate employment.5
• Selling products o f a competitor is a just cause for termination.6
• Organizing a credit union by employees in a bank is a serious m isconduct7
• Deceiving a customer for personal gain is a just cause for termination.8
• Contracting work in competition with employer constitutes serious
misconduct.9
• Employer need not suffer any damages resulting from a serious misconduct
committed by an employee against a customer.10
• Intoxication which interferes with the employee’s work constitutes serious
misconduct.11
• The act o f a teacher in pressuring a colleague to change the failing grade o f a
student is serious misconduct.12
• Sexual harassment is a just ground to dismiss.13
• Sleeping while on duty is a ground for termination.14
• Dismissal is too harsh a penalty for eating while at work.15
• Pilferage or theft of company-owned property is a just cause to terminate.16
• Theft o f funds or property not owned by employer is not a ground to
terminate.17

' Echevemav. Venutek Mecfika, Inc., G.R No. 169231, Feb. 15,2007.
} Golden Thread Knitting Industries v. NLRC, G.R. No. 119157, March 11,1999.
3 Oimafenta v. Secretary of Labor, G i l No. 83854, May 24,1989.
4 Galusv. Quality House, Inc., G R No. 156766, Aprfl 16,2009.
s ABSC8N Employees Union v. NLRC, GH. No. 111211, Juty 24,1997.276 SCRA 123.
6 Efeaide International [PWs.], Inc v. CA, G.R No. L-40553, Feb. 26,1981,103 SCRA 247.
7 Aboc v. Metropolian Bank and Trust Company, G.R Nos. 170542-43, Dec. 13,2010.
8 Barba and Gonzales v. Hon. CA, NLRC and Philippine Airlines, Inc., G.R No. 169731, March 28,2007.
8 Lopez v. NLRC, G.R No. 167385, Dec. 13.2005,477 SCRA 596,602.
» Panundto v. CAP Philippines, inc., G i l No. 161305, Feb. 9,2007.
« Sanyo Travel Corporation v. NLRC, G il No. 121449, Oct 2,1997.
0 PacHav. NLRC, G.R No. 114764, June13,1997,273 SCRA 457.
13 R A No. 7877; PhTppine Aeoius Automotive United Corporation v. NLRC, G.R No. 124617, April 28,2000.
14 Frst Dominion Resources Corp. v. Periaranda and Vidal, G.R No. 166616, Jan. 27.2006.
15 Tanduay DisHlery Labor Unon v. NLRC, G.R No. 73352, Dec. 06,1995.
16 Nagkakaisang Lakas ng Manggagawa sa KeSiin v. KeJiii PMippines Corp, G.R No. 171115, Aug. 9,2010
'7 Vilamor Golf Orb v. Pehid, G.R No. 166152, Oct 4,2005.

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• Act of falsification is a valid ground to terminate employment.1

• Punching-in of time cards o f other employees is a just cause for termination.2
• Circulating fake meal tickets is a just cause for termination.34
• Using employer’s property, equipment and personnel in*the personal business
or benefit of the employee is serious misconduct*

II.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LA W FU L O RD ER S5

1. REQUISITES.

One of the fundamental duties o f an employee is to obey all reasonable

rules, orders and instructions of the employer. In order to validly invoke this
ground, the following requisites must be complied with, to wit

1. The employee’s assailed conduct must have been willful or intentional,

the willfulness being characterized by a wrongful and perverse attitude;
and
2. The order violated must be based on a reasonable and lawful
company rule, regulation or policy and made known to the
employee and must pertain to the duties for which he has been
engaged to discharge.6

• Requisites for validity of com pany rules and regulations.

As far as the second requisite for insubordination or willful disobedience

is concerned, it is required that there should exist a rule, regulation or policy upon
which the order is based which must be:

1) lawful and reasonable;

2) sufficiendy known to the employee; and
3) in connection with the duties for which the employee has been
engaged to discharge.7

An order which is not based on a rule, regulation or policy which docs not
satisfy the foregoing three (3) requisites is not lawful and thus may not be invoked
as basis for terminating an employee on die ground o f insubordination. Needlessly,
absent any of the foregoing elements would make die refusal o f the employee to

1 Ramoran v. Jardine CMG Life Insurance Co., Inc., G.R No. 131943, Feb. 22,2000.
2 San Miguel Corporation v. NLRC, G.R. No. 82467, June 29,1989.
J Ibarrientos v. NLRC, G.R. No. 75277, Juty 31.1989.
4 Zenco Sales, Inc. v NLRC, G.R. No. 111110, Aug 2.1994; Jose A. Ibamentos v. NLRC, G.R. No. 75277, July 31,1989.
5 Relevant provision Article 297(a) 1282(a)). Labor Code.
6 The Coffee Bean and Tea Leaf Philppnes, Inc. v. Roffy P. Arenas, G.R. No. 208908, March 11,2015.
1 Ace Promotion and Marketing Corp v. Ursabia, G R No. 171703, Sept 22,2006.

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comply with the rule, regulation or policy justified and not constitutive o f “1w illful
disobedience’’ as would warrant the imposition of the penalty o f dismissal for such
refusal.

2. SO M E PR IN C IP L E S O N IN S U B O R D IN A T IO N .
• Employer has prerogative to formulate and implement company rules and
regulations or policies.1
• Company rules and regulations or policies are presumed valid until amended
or nullified. Until and unless the rules or orders are declared to be illegal or
improper by competent authority, the employees ignore or disobey them at
then peril.2
• Filing of a case questioning validity o f rules and policies does not prevent
employer from enforcing them.3
• Violation of a company policy which oftentimes has been relaxed in its
implementation or has been tolerated or acquiesced to by superiors cannot be
a valid ground to terminate.4 But laxity or leniency in the enforcement o f rules
and procedures is not an excuse for commission o f wrongful acts.5
• The employee’s transgressions cannot be mitiga:ed by the supposed approval
of his actions by his superiors.6
• Making false allegations in complaint does not constitute insubordination.7
• Failure to answer memo to explain constitutes willful disobedience.8
• Another notice is required in case o f termination on the ground of failure to
answer memo to explain.9
• Willfulness of conduct may be deduced from the manner the reply is written.10
• Refusal to undergo random drug testing constitutes both serious misconduct
and insubordination.11
• Making false allegations in a complaint filed with the NLRC does not
constitute insubordination.12
• Prolonged practice, not an excuse for commission o f wrongful acts.13

' AElem Cooperative, Inc v. Bandiota. Jr.. G.R No. 173489, Feb. 25,2013.
2 Beoguet Electric Cooperative v. Fianza. GJ?. No. March 9,2004.
2 Alcantara, Jr. v.CA. G.R. No. 143397, Aug 6.2002.
* Coca-Cola Bothers FWippnes, Inc. v. Vital, G.R. No. 154384, Sept 13,2004.
5 San Mguel Corporation v. NLRC, G.R Nos. 146121-22, April 16,2008.
8 Nfcant (Philippines) Corporation v. Sario, G R No. 197598, No/. 21,2012.
7 Petron Corp. v. NLRC. G.R. No. 154532. Oct 27,2006.
8 Ace Promotion and Marketing Corp. v. Ursabia, G.R No. 171703, Sept 22.20(6.
5 Id.
,0 ePatific Global Contact Center, Inc v. Cabansay, G.R. No. 167345, Nov. 23,2007.
11 Kakampi and Its Members v Kingsport Express and Logistic, G.R. No. 194813, Api 25,2012.
'2 Petron Corp. v NLRC and Chto C. Mantos, G.R No. 154532, Oct 27,2006.
13 Santos v. San Miguel Corporation, G R No. 149416, March 14.2003

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• Refusal to render overtime to meet production deadline constitutes

insubordination.1
• Refusal to comply with a lawful transfer constitutes insubordination.2
• Penalty for insubordination or willful disobedience ’should follow the
Reasonable Proportionality Rule?

111 .
GROSS AND HABITUAL NEGLECT OF D U TIES4
1. REQUISITES.
The following are the requisites:
(1) There must be negligence which is gross an d /o r habitual in character,
and
(2) It must be work-related as would make him unfit to work for his
employer.

2. SOME PR IN CIPLES ON GROSS A ND H ABITUA L N E G L E C T O F

DUTIES.

• Simple negligence is not sufficient to terminate employment.5

• The negligence must be gross in character which means absence of that
diligence that an ordinarily prudent man would use in his own affairs.6
• As a general rule, negligence must be both gross and habitual to be a valid
ground to dismiss.7
• Habituality may be disregarded if negligence is gross or the damage or loss is
substantial. 8“Habitual negligence” implies repeated failure to perform one’s
duties for a period o f time, depending upon the circumstances.9
• Negligence is a question of fact.10
• In the absence of any form of negligence, the dismissal is illegal.11
• Actual damage, loss or injury is not an essential requisite.12
• Higher degree of diligence is required in the banking industry.13

' R.B. Mchaet Press v. Gafit. GJL No. 153510. Feb. 13.2008.
2 San Miguel Corp. v. Ponb'llas, G.R. No. 155178, May 7,2008.
3 Gold City Integrated Port Services, Inc. v. NLRC, G R No. 86000, Sept 21,1990.
* Relevant provision: Article 297(b) [282(b)], Labor Code.
5 SL Luke's Medical Center, Inc. v. Notario, GA No. 152166, Od. 20.2010.
s Ctoezv. NLRC, G.R. No. 146530, Jan. 17,2005.
7 International School Manila v. International School Alliance of Educators (ISAE), G.R. No. 167286, Feb. 5,2014.
“ Fuentes v. NLRC, G.R. No. 75955, Ocl 28,1988; Associated Bank v. NLRC, G.R. No. 86023, June 29,1989.
5 Premiere Development Bank v. Mantal, G.R. No. 167716, March 23,2006,485 SCRA 234,239.
w School of the Holy Spirit of Quezon City v. Taguiam, G.R. No. 165565, July 14,2008.
>’ St LiAe's Medical Center, Inc. v. Notario, supra.
» Sec. 4343.01(21, Department of Labor Manual.
'3 Dycoco, Jr. v. Equitable PCI Bank (now Banco de Oro), G.R. No. 188271, Aug. 16,2010.

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• Gross negligence may result to loss o f trust and confidence.1

• N o negligence if the act alleged to be so is in accordance with standing
company practice.2
• N o negligence if the act is in accordance with management-sanctioned
deviations from the company policy.3
• Absences, if authorized, cannot be d ted as a ground to terminate
em ploym ent4
• Tardiness or absenteeism, if not habitual, cannot be cited as a ground to
terminate employment.5
• Tardiness or absenteeism, if habitual, may be cited as a ground to terminate
employment.6
• Tardiness or absenteeism, if habitual, may be tantamount to serious
m isconduct7
• Absences or tardiness due to emergency, ailment or fortuitous event arc
justified and may not be cited as just cause to terminate employment.8
• Mere allegation o f absences or tardiness is not sufficient; the burden of proof
is on the employer.9
• Unblemished record belies allegation o f gross and habitual neglect.10
• Unsatisfactory or poor performance, inefficiency and incompetence are
considered just causes for dismissal only if they amount to gross and habitual
neglect of duties.11

IV.
ABANDO NM ENT OF W O R K 12

1. C O N C E PT .

Abandonment is a form of neglect o f duty; hence, a just cause for

termination o f employment under Article 297(b) [282(b)] of the Labor Code.1

' Id.
2 Ramos v. BPI Farrit/ Savings Bank, Inc, G R No. 203186, Dec. 04,2013.
2 Uosa-Tan v. Silahis In t e r n a l Hotel. G R No. 77457. Feb. 5,1990,260 Phi. 166.
4 Oriental Mndoto Beciric Cooperative, Inc. v. NLRC, G R No. 111905, July 31,1995; Alias ConsoWated Mming and
Development Corporation v. NLRC, G R No. 75751, Oct 17,1990,190 SCRA 505.
5 Genuino Ice Company, Inc. v.Magpantay.G.R No. 147790, June 27.2006.
e Vafiao v. Hon. CA, GR. No. 146621, July 30,2004,435 SCRA 543; Phlippine Geothermal, Inc. v. NLRC, G R No. 106370.
Sept 8,1994; Sajonas v. NLRC, G R No. 49286, March 15,1990; Mania Electric Company v. NLRC, G R No. 114129,
OcL 24,1996.
7 Quiambaov. Mania Electric Company, G.R. No. 171023, Dec. 18,2009.
8 PLDTv.Teves.GRNo. 143511, Nov. 15,2010; Navarro v. Coca-Cola BotSers Phils., Inc., G.R No. 162583, June 8,2007.
3 Erector Advertising Sign Group, Inc. v. NLRC, G R No. 167218, July 2,2010.
10 Union Motor Corporation v. NLRC, G R No. 159738, Dec. 9,2004.
» Mranda v. Canreon, G R No. 143540, April 11,2003,401 SCRA 303,309.
12 Relevant Provision: Article 297(b) [282(b)], Labor Code.

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2. REQUISITES.

To constitute abandonment, two (2) elements must concux, namely:

1) The employee must have failed to report for work or must have been
absent without valid or justifiable reason: and
2) There must have been a clear intention on the part o f the employee to
sever the employer-employee relationship manifested by some overt
ac{.12

3. SOME PR IN CIPLES ON A B A N D O N M E N T . '

• Mere absence is not enough to constitute abandonment.3

• Clear intendon to sever employment relationship is necessary.4
• An employee who stopped working because of her mistaken belief that she has
been dismissed is not guilty o f abandonment.5
• Abandonment is a factual issue.6
• Employer has the burden of proof to prove abandonment.7
• There is no abandonment when it was the employer who prevented the
workers from reporting for work.8
• Due process in abandonment cases consists only o f the service o f two (2)
notices to the employee, «£.:
a. First notice directing the employee to explain why he should not be
declared as having abandoned Ids job; and
b. Second notice to inform him o f the employer’s decision to dismiss him on
the ground of abandonment.9
• No hearing is required to validly dismiss an employee for abandonment.10
• Notices in abandonment cases must be sent to employee’s last known address
per record of the company. The employer need not look for the employee’s
current whereabouts.11
• Service of the notices of abandonment of work after the six-month period of
“jfloating status" is not valid.1

1 Forever Security & Genera! Services v. Flores, G.R. No. 147961, Sept 7.2007.
2 CRC Agricultural Tracfing v. NLRC, G.R. No. 177664, Dec. 23,2009.
3 New Ever Marketing, Inc. v. CA, G.R. No. 140555, July 14,2005.
‘ CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23,2009.
3 Uniwide Sales Warehouse Qub v. NLRC, G.R. No. 154503, Feb. 29,2008.
* Premiere Development Bank v. NLRC, G.R. No. 114695, July 23,1998.
' Northwest Tourism Corp. v. Former Special Third Division of the Hon. CA, G.R. No. 150591; June 27,2005.
8 Pasig Cylinder Mfg., Corp. v. Roto, G.R. No. 173631, Sept. 8,2010.
s Kngsize Manufacturing Corporation v. NLRC, G.R. Nos. 110452-54, No/. 24,1994.
io Intertanz Container Lines, Inc. v. Bautista, G.R No. 187693, July 13,2010.
” Agabonv. NLRC, G.R No. 158693, No/. 17,2004.

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• Immediate filing of a complaint for illegal dismissal praying for reinstatement

negates abandonment.*2
• Lapse of time between dismissal and filing o f a case is not a material indication
of abandonment. Hence, lapse o f 2 years and 5 months3 or 20 months4 or 9
months5 or 8 months6 before filing the complaint for illegal dismissal is not an
indication o f abandonment. Under the law, the employee has a 4-year
prescriptive period within which to institute his action for illegal dismissal.7
• The fact that an employee filed a complaint for illegal dismissal is not by itself
sufficient indicator that he had no intention of deserting his employment if the
totality o f his antecedent acts palpably display the contrary.8
• Filing o f a case to pre-empt investigation o f the administrative case is
tantamount to abandonment.9
• When what is prayed for in the complaint is separation pay and not
reinstatement, the filing o f complaint does not negate abandonment.10
• It is abandonment when what is prayed for in the complaint is separation pay
and it was only in the position paper that reinstatement was prayed for.11
• Employment in another firm coinciding with the filing of complaint does not
indicate abandonment.12
• Offer o f reinstatement by employer during proceedings before Labor Arbiter
and refusal by employee does not indicate abandonment but more of a
symptom o f strained relations between the parties.13
• An employee may be absolved from the charge o f abandonment o f work but
adjudged guilty o f AWOL.14 These two grounds are separate and distinct from
each other.
• An employee who failed to report for work after the expiration o f the duly
approved leave o f absence is considered to have abandoned his job.15

' Mafg-on v. Equitable General Services, Inc., G.R No. 185269, June 29,2010.
2 Pasig Cythder MJg.. Corp. v. Rclo, G.R. No. 173631, Sept 8,2010.
J Reno Foods, Inc. v. NLRC. G.R No. 116462, Oct 18,1995,249 SCRA 379,387.
4 Angetesv.Femandez,GRNo.160213,Jan.30,2007.
1 NS Transport Services, Inc. v. Zeta, G.R No. 158499, April 4,2007.
6 Padiia Machine Shop v.Javigas.GR No. 175960, Feb. 19,2008.
2 Pare v. NLRC, G.R. No. 128957, Nov. 16,1999,
8 Phffippine Rural Reconstruction McwementJPRRM] v. Pulgar, G R No. 169227 July 5,2010
9 Interiranz Container Lines, Inc. and Tumbay v. Ma. Teresa Bautista, G.R. No. 187693, July 13,2010.
,0 Jo v. NLRC, G.R No. 121605, Feb. 2,2000; Bombase v. NLRC, G R No. 110839, June 30,1995,245 SCRA 496,500.
" CaSpayv.NLRC.G.RNo. 166411,Aug.3,2010.
19 NS Transport Services, Inc. v. Zeta, G R No. 158499, April 4,2007.
13 Hantex Trading Co., Inc. v. CA, G R No. 148241, Sept 27,2002.
14 Metro Transit Organization, Inc. v. NLRC, G.R. No. 119724, May 31,1999.
15 Ramov. Befeno.GR No. L-55629, July 39,1981,106 SCRA 221.

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An employee who failed to comply with the order for his reinstatement is
deemed to have abandoned his work.1
An employee who, after being transferred to a new assignment, did not report
for work anymore is deemed to have abandoned his job.2 .
An employee who deliberately absented from work without leave or
permission from his employer for the purpose of looking for a job elsewhere is
deemed to have abandoned his work.3
Absence to evade arrest is not a valid justification. .To do so would be to place
an imprimatur on the employee’s attempt to derail the normal course o f the
administration of justice.45
Employer’s insistence on commission of wrongful acts like estafa and/or
qualified theft by die employees negates the charge o f abandonment. Rather, it
strengthens the finding of peotioner’s discrimination, insensibility and
antagonism towards the employees which gave no choice to the latter except
to forego their employment.3

V.
FRAUD6

1. CORRELATION OF FRAUD AND LOSS O F T R U ST A ND

C O N FID EN C E.

Fraud is provided under paragraph (c) of Article 297 [282] o f the Labor
Code, dius: “(c) Fraud or willful breach by the employee o f the trust reposed in
him by his employer or duly authorized representative.”

Fraud is separate and distinct from the other ground provided in the same
paragraph, that is, loss of trust and confidence (willful breach by the employee of
the trust reposed in him by his employer or duly authorized representative).7
However, the commission of fraud by an employee against the employer will
necessarily result in the latter’s loss of trust and confidence in the former. O n the
other hand, the ground of willful breach by the employee o f the trust and
confidence reposed in him by the employer may not necessarily involve fraud but
some other acts that would similarly result in the loss o f such trust and confidence.

2. REQUISITES.

The following are the requisites of this ground:

' East Asiaticv. CIR G R No. 1-29068, Aug. 31,1971.40 SCRA 521.
* Castillo v. O R G.R. No. 1-26124 and 1-32725, May 29.1971.39 SCRA 75.
J Sandoval Shipyard v. Clave, G.R. No. 1-49875, Nov 21,1979,94 SCRA 472.
* Camua, Jr. v NLRC, G.R. No. 158731. Jan. 25,2007
5 Rom/s Freight Service v. Castro. G.R. No. 141637, June 8,2006. •
6 Relevant provision: Article 297(c) (282(c)), Labor Coce.
1 SandenAiconFWippinesv Rosales,GR.No. 169260 March23,2011.

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1) The employee has committed fraud, an intentional deception and used

dishonest methods for personal gain or to damage the employer, and
2) The fraud is work-related and rendered him unfit to work for his
employer.1

3. SOM E PR IN C IPI.E S O N FRAUD.

• Falsification constitutes not only serious m isconduct but fraud under the
Labor Code.2
• Failure to deposit collection constitutes fraud.3
• Lack of damage or losses is not necessary in fraud cases. The fact that the
employer did not suffer losses from the dishonesty o f the dismissed employee
because of its timely discovery does not excuse the latter from any culpability'.4
• Lack of misappropriation or shortage is immaterial in case of unauthorized
encashment of personal checks by teller and cashier.5
0 Restitution does not have absolutory effect.6

VI.
W ILLFUL BREACH OF TR U ST AND C O N FID EN C E7

1. R EQ U ISITES.
For the doctrine of loss o f trust and confidence to apply, the following
requisites must concur
(1) The employee holds a position o f trust and confidence;
(2) There exists an act justifying the loss o f trust and confidence,8 which
means that the act that betrays the employer’s trust must be real, i.e.,
founded on clearly established facts;9
(3) The employee’s breach o f the trust must be willful, Le., it was done
intentionally, knowingly and purposely, without justifiable excuse;10
and
(4) The act must be in relation to his work which would render him unfit

1 Esguetra v. Valle Verde County Club, G R No. 173012, June 13,2012.

7 Particularly, under Article 297(a) and (c) [282(a) and (c)), respec&vely, of the Labor Code; San Mguel Corporation v. NLRC,
G.R. No. 82467, June 29,1989; Manuel C. Felix v. Enertech Systems Industries, he., G.R No. 142007. March 28,2001.
3 AJdeguer & Co., hcAoalde Boutique v. Tomboc, G R No. 147633, July 28,2008.
4 Villanueva v. NIRC, G. R. No. 129413, July 27,1998; Diamond Motors Corporation v. CA, G R No. 151981, Dec. 1,2003.
5 Central Pangasinan Electric Cooperative, Inc. v. Macaraeg, G R No. 145800, Jan. 22,2003.
6 Gonzales v. NLRC and Pepsi-Coia Products, Phis., ha, G R No. 131653, March 26,2001.
1 Relevant provision: Article 297(c) (282(c)], Labor Code.
8 Baguio Central University v. GaSente, G R No. 188267, Dec. 02,2013.
8 Bristol Myers Squibb (Phis ). Inc. v. Baban, G.R. No. 167449, Dec. 17,2008,574 SCRA, 198,206.
10 Torres v. Rural Bank of San Juan, he., G.R. No. 184520, Maori 13,2013.

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to perform it.1

2. G UIDELINES.

As a safeguard against employers who indiscriminately use “loss of trust and

confidence” to justify arbitrary dismissal o f employees, the Court, in addition to the
above elements, imposes the following guidelines for the doctrine to apply:2

(1) The loss of confidence must not be simulated;

(2) It should not be used as a subterfuge for causes which are illegal,
improper or unjustified;
(3) It may not be arbitrarily asserted in tire face of overwhelming evidence
to the contrary; and
(4) It must be genuine, not a mere afterthought, to justify earlier action
taken in bad faith.3

The foregoing guidelines have been prescribed by the Supreme Court due
to the subjective nature of this ground which makes termination based on loss of
trust and confidence prone to abuse.4 The Court'has been very scrutinizing in cases
of dismissal based on loss of trust and confidence because the same can easily be
concocted by an abusive employer. Thus, when the breach of trust or loss o f
confidence theorized upon is not borne by clearly established facts, such dismissal
on the ground of loss o f trust and confidence cannot be countenanced.5 While an
employer is at liberty to dismiss an employee for loss o f trust and confidence, he
cannot use the same to feign what would otherwise be an illegal dismissal.67

A classic example of a case where the invocation of the doctrine of loss of

trust and confidence was not genuine but a mere afterthought is Manila jockey Club,
Inc. v. Trajano? The Court had unavoidably noted here that the invocation of loss of
trust and confidence as a ground for dismissing respondent Trajano was made
belatedly. In its position paper dated September 2, 1998, petitioner MJCI invoked
the grounds under paragraphs (a) and (b) of Article 297 [282] o f the Labor Code to
support its dismissal of Trajano, submitting then that the unauthorized cancellation
of the ticket constituted a serious violation o f company policy amounting to
dishonesty. The first time that MJCI invoked breach o f trust was in its motion for
reconsideration of the decision o f the NLRC. MJCI also thereafter urged the
ground of breach of trust in its petition for certiorari in the CA. Such a belated

' Note must be made tiat onfy the first 2 out of the 4 requisttes were ci!ed in Wesleyan Uavemity-PhiSppmes v. NcweSa
Reyes, G R No. 208321, July 30,2014, based on the lufng in M+W Zander Philippines, he. v. Enriquez, G R No. 169173,
June 5,2009,588 SCRA 590; See also PJ. Lhuifer, Inc. v. Flordefe Velayo, G.R. No. 198620, Nov. 12,2014.
7 Villanueva, Jr. v. NLRC, GR. No. 176893, June 13,2012.
1 Mania Jockey Club, bic. v. Aimee 0. Trajano, G.R. No. 160982, June 26,2013.
* Wah Yuen Restaurant v.Jayona,G.R No. 159448, Dec. 16,2005.
5 The CocaCota Export Cap. v. Gacayan, G R No. 149433, Dec 15,2010.
6 Concorde Hotel v. CA, G R No. 144089, Aug. 9,2001.
7 Mania Jockey Club, Inc. v. Aimee 0. Trajano, G R No. 160982, June 26,2013.

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invocation o f loss o f confidence broadly hints the ground as a mere afterthought to

buttress an otherwise baseless dismissal o f Trajano.

3. P O S IT IO N O F T R U S T A N D C O N F ID E N C E , M E A N IN G .

A "position o f trust and confidence"is one where a person is "entrusted with

confidence on delicate matters, ” such as the custody, handling, or care and protection o f
the employer’s money, assets or property.1 Loss of confidence, as a just cause for
dismissal, is never intended to provide employers with a blank check for
terminating their employees. Such a vague, all-encompassing pretext as loss of
confidence, if unqualifiedly given the seal o f approval by the Court, could readily
reduce to barren form the words o f the constitutional guarantee o f security of
tenure. Having this in mind, loss o f confidence should ideally apply only to cases
involving employees occupying positions o f trust and confidence or to those
situations where the employees are routinely charged with the care and custody of
the employer's money or property.2

The relationship o f employer and employee, especially where the latter has
access to the former's money or property, necessarily involves trust and
confidence.3 Where the rules laid down by the employer to protect its property are
violated by the very employee who is entrusted and expected to follow and
implement the rules, the employee may be validly dismissed from service.4

As firmly entrenched in jurisprudence, loss o f trust and confidence as a

just cause for termination o f employment is premised on die fact that an employee
concerned holds a position where greater trust is placed by management and from
whom greater fidelity to duty is correspondingly expected.5 The betrayal of this
trust is the essence of the offense for which an employee is penalized.6

4. T H R E E (3) CLASSES O F P O S IT IO N S OF TRU ST.

There are three (3) classes o f positions of trust:7

(1) Managerial positions;

(2) Supervisory positions; and
(3) Fiduciary rank-and-file positions.8
The first class consists o f m anagerial employees or those who, by the
nature o f their positions, are entrusted with confidential and delicate matters and
from whom greater fidelity to duty is correspondingly expected. Their primary duty

1 Suer Than Blue Joint Ventures Company v. Glyza Esteban, G R No. 192582, Aprt07,2014.
2 Piudential Guarantee and Assurance Employee Labor Union and VaJtota v. NLRC, G R No. 185335, June 13,2012.
3 Philippine Education Co., Inc. v. Union of Phlppcne Educafion Employees, G R No. L-13778. April 29,1960,107 Phil. 1003
4 Triumph International (Phils.), Inc. v. Apcstol and Oputenda, supra.
5 Sanden Aircon PhiTppines v. Rosales, G R No. 169260, March 23.2011.
6 Lynvi Fishing Enterprises, he. v. Ariola, G R No. 181974, Feb. 1,2012.
7 Abdv.Phtex Mining Coiporation.GR No. 178976, July 31,2009.
* Wesleyan Unversity-Philpphes v. Nowefta Reyes, G R No. 208321, July 30,2014.

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 700 Bar Reviewer o n La bo r Law

consists o f the management of the establishment in which they are employed or o f

a department or a subdivision thereof and to other officers o r members o f the
managerial staff.1
The second class consists o f supervisory employees who, in die interest
of the employer, effectively recommend such managerial actions the exercise of
which is not merely routinary or dedcal in nature but requires the use o f
independent judgment.23
The third class is comprised o f fiduciary rank-and-file employees, such
as cashiers, auditors, property custodians, or those whb, in the normal and routine
exercise of their functions, regularly handle significant amounts o f die employer’s
money or property.2 These employees, though rank-and-file, are routinely charged
with the custody, handling or care and protection o f the employer's money or
property,4 or entrusted with confidence on delicate matters,5*and are thus classified
as occupying positions o f trust and confidence.5
• Supervisory positions are also reposed w ith tru st a n d confidence.
Per jurisprudence, only die first and third classifications are generally
cited as positions of trust and confidence. There is, however, a need to include and
add the stm d classification of supervisory employees because while the Supreme
Court has always applied this doctrine to managerial employees,7 it is likewise well
established that supervisory personnel occupying positions o f responsibility and
thus reposed with trust and confidence may be dismissed based on die loss
thereof.8
For example, in A b o rts ». Golden T ri Bloc, Inc.? it was undisputed that at
the time o f his dismissal, petitioner was an Oudet Supervisor assigned to three (3)
Dunkin Donuts oudets located at San Roque, Cogeo and Super 8, Masinag, all in
Antipolo City. His position is no doubt supervisory in nature after having risen
from the ranks since the start o f his employment His position is unmistakably one
imbued with trust and confidence as he is charged with the delicate task o f
overseeing the operations and manpower o f three stores owned by respondent
GTBI. As a supervisor, a high degree o f honesty and responsibility, as compared
with ordinary rank-and-file employees, was required and expected o f him. The fact
that he was not charged with the custody o f the company's money o r property is
inconsequential because he belongs to the first class o f employees occupying
positions o f trust and not to the fiduciary rank-and-file class.

' Alvarezv. Golden Tri Boc. he., G Jl No. 202158, Sept 25,2013.
2 See Article 219{m) p i 2(m)l of the Labor Code.
3 Eric A kers v. Golden Tri Bloc, Inc., G Jl No. 202158, Sept 25,2013.
4 MarSnezv. Central Pangasiian Becbic Cooper^ve, tnc. {C€hPELC0>. G A . No. 192306,Jtdy 15.2013
3 Mayav.FmSoM Rubber Industries, h e, G R No. 184011,Sept 18,2013.
* PJ. UuSier, Inc. v. Ftadefe Vebyo. G J l No. 198620, Nov. 12,2014
2 GlobeWackay Cable and RafoCocporaBonv. NLRC, G R No.82511, March 3,1992.
• Aterez v. Golden Tri Boc, h e , G R No. 202158, Sept 25,2013.
« G R No. 202158, Sept 25.2013.

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 C h a pter Six 701
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• Two (2) kind s o f cank-aod-file em ployees.

For purposes o f the application o f this doctrine, the general classification

o f rank-and-file employees should further be classified into two (2), to wit

1) F id u c/a/y rank-and-file; and

2) Ordinary rank-and-file.

It is only in the 1st class above that this doctrine may be applied because,
as mentioned above, this is the 3td class o f positions reposed with trust and
confidence. It is, therefore, clear from the above disquisition that, insofar as the
doctrine o f trust and confidence is concerned, its application is limited to the three
(3) classes1 o f employees occupying positions o f trust and confidence, namely: (1)
managerial; (2) supervisory; and (tyjtduaaiy rank-and-file. Consistently, this doctrine
has not been applied in termination o f ordinary rank-and-file employees.2

The case o f Marina Port Services, Inc. v. NLRC,3 expounds:

“To be sure, every employee must enjoy some degree of trust

and confidence from the employer as that is one reason why he was
employed in the first place. One certainly does not employ a person he
distrusts. Indeed, even the lowly janitor must enjoy that trust and
confidence in some measure if only because he is the one who opens
the office in the morning and closes it at night and in this sense is
entrusted with the care or protection of the employer’s property. The
keys he holds are the symbol of that trust and confidence.
“By the same token, the security guard must also be
considered as enjoying die trust and confidence of his employer, whose
property he is safeguarding. Like the janitor, he has access to his
property. He too, is charged with its care and protection.
“Notably, however, and like the janitor again, he is entrusted
only with the physical task of protecting that property. The employer's
trust and confidence in him is limited to that ministerial function. He is
aot entrusted, in the Labor Arbiter's words, 'with the duties of
safekeeping and safeguarding company policies, management
instructions, and company secrets such as operadon devices.' He is not
privy to these confidential matters, which are shared only in the higher
echelons of management It is the persons on such levels who, because
they discharge these sensitive dudes, may be considered holding
positions of trust and confidence. The security guard4 does not belong
in such category.”*

1 Aseater pointedoul jurisprudencecitesonlytwoandnotJxeeclasses.

* Zenaida0. Mendotzav. HMSCrecfitCorporation.GA No. 187232.Apia 17,2013.
* G R No. 80962 Jan. 28.1991,193 SCRA420,426.
* Bui in NasjpitLumber Co. he. v. NLRC, GJl No. 1-54424, Aug. 31.1989 andCaftetev. NLRC. G R No. 130425, Sept 30,
1999, itwasheldhat a securityguard holdsa positionof trustandconfitexe andthus, hemaybe legalydismissedfor loss
aftrustandconfidence

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 702 Bar Reviewer ,o n Labor . U w

It must be emphasized that it is no t the job title but the actual work that
the employee performs which is material in determining the issue o f whether it is
reposed with trust and confidence.1 For instance, while an employee’s position was
denominated as Sales Clerk, the nature o f her work included inventory and
cashiering, a function that clearly falls within the sphere o f rank-and-file positions
imbued with trust and confidence. Given that she had in her care and custody the
store's property and funds, she is considered as a rank-and-file employee
occupying a position o f trust and confidence.2

5. SOME PRINCIPLES ON T H E DOCTRINE O F LOSS O F TRUST

AND CONFIDENCE.
• Factual evidence o f loss o f tru st m u st be established. The basis for the
dismissal must be deady and convincingly established but proof beyond
reasonable doubt is not necessary* to justify the loss as long as the employer
has reasonable ground to believe that the employee is responsible for the
misconduct and his participation therein renders him unworthy o f the trust
and confidence demanded o f his position.4
• Rules on term ination of m anagerial an d supervisory em ployees different
from those applicable to rank-and-file em ployees. As a general rule, the
doctrine of trust and confidence is restricted to managerial employees.5 This
means that the rules on termination o f employment applicable to managerial
or fiduciary employees are different from those involving ordinary employees
not holding positions of trust and confidence. In the latter case, mere
accusations by the employer will no t be sufficient.6 Thus, with respect to
rank-and-file personnel, loss o f trust and confidence as a ground for valid
dismissal requires proof o f involvem ent in the alleged events in question and
that mere uncorroborated assertions and accusations by the employer will not
be sufficient But as regards a m anagerial em ployee, die mere existence o f a
basis for believing that he has breached the trust o f his employer would suffice
for his dismissal7
• The loss o f trust and confidence m ust have som e basis and p roof beyond
reasonable doubt is not required. It is sufficient that there must only be some
basis for such loss o f confidence or that there is reasonable ground to believe
if not to entertain the moral conviction that the concerned employee is
responsible for the misconduct and that the nature o f his participation therein
rendered him absolutely unworthy o f trust and confidence demanded by his

1 Abdv.PMa^axporaSmsupta,c^BnstolMyesSqumpMs.llmv.B^su^
1 Bto Tim BbeJOTtVenlBBsCornpanyv.QyaiEsteban,GJl No. 192582,Apd07,2014
3 Alvarezv.GoWenTriBfoc, Inc. GR Mo.202158, Sept 25,2013.
* PJ. LhuSier Inc v. NaSorudLater Regions Comrission, G R No. 158758, Apri 29,2005.
5 TteCocoCola ExportCop. v. Gacayan. G R No. 149433, Dec. 15,2010.
3 LamsanTraifng, he. v.Leogarto.GJl No. 73245, Sept 30,1986
7 Alcantara v. H ie PNpphe Commercial and tndustial Bank, G R No. 151349, Oct 20,2010

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 C h a pt er Six 703
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position.1 It is thus a settled rale that the mete existence of a basis for
believing that a managerial employee has breached the trust of the employer
justifies dismissal.2 In termination for loss of trust and confidence, the fact
that the employerdidnot suffer lossesis ofnomoment3
• Employerhas burden ofproof4
• Dismal performance, poor work attitude, gross negligence and incompetence
of a managerial employee constitute sufficient grounds for dismissal due to
loss of trust and confidence.5
• Dismissal due tofett£ s h u t mismatch is not a valid ground to lose trust and
confidence.6
• Commandresponsibilityofmanagerial employeesis a ground to dismiss.7
• Confidential employee maybe dismissed for loss of trust and confidence.8
• Grant ofpromotions andbonuses negates loss of trust andconfidence.9
• Long years of service, absence of derogatory record and small amount
involved are deemed inconsequential insofar as loss of trust and confidence is
concerned.10
• D ropping o f crim inal charges o r acquittal in a crim inal case arising from the
sam e act does n o t affect the validity o f dismissal based o n loss o f trust and
co n fid en ce.11
• In termination for loss of trust and confidence, the fact that the employer did
not suffer losses is ofno moment12
• The fact that the amount of loss is insubstantial is inconsequential in dismissal
based onloss of trust andconfidence.13
• Full restitution does not absolve employee of offense which resulted in the
loss of trust and confidence.14
• Good faith of the employee dismissed for loss of trust and confidence is
inconsequential.15

1 DeJests v. Hon. Raul T. Aquino, G R . Nos. 164662 4165787, Feb. 18,2013.

1 Rayes4^v.PhEppreLumThaiHok&igsCap,GJlNo. 174893,JuV 11.20IZ
2 Angv.Pli^ppineNa6onal Bank, & R . No. 178762, June 16,2010.
< Fefixv.N LR C .G Jl No. 148256, Nov. 17,2004.
5 RayesRayeiv. P h fy'ro lju m Thai HokfingsGorp., G R No. 174893, Juty 11,2G12.
« W enshaSpaCenter.h&v. Yung,GRNo. 185122,Aug. 16,2010.
1 MuajeTuazon v. Wenpha C op, G R No. 162447, Dee. 27,2006.
2 PLOTv. Buna, G R N o. 143688, Aug. 17,2007.
2 EasycaBCommuniC39onsPhas^ln&v.Nng,GJ%.Na145901.Dec. 15,2005.
n Etadan,Jf.v.Su!pic»Lines,he.,G JlN o. 148410,Jan. 17,2005.
« MetroTfansftOrganizafion, Inc.v. CA, G R No. 142133, Nov. 19,2002.
« Ang v. PhSppine National Bank, G R . No. 178762, June 16,2010.
» P J. LhuSier, Inc v. Fkxdefiz Vetayo, G R No. 198620, Nov. 12.2014.
M Santos v. San Mguel C ap., G. R. No. 149416, Match 14,2003,447 P M 264.
» Baguio Central Urweisity v. Gafente, G R No. 188267, Dec. 02,2013.

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 704 Bar Reviewer on Labor Law

VII.
COMMISSION OF CRIME OR OFFENSE1
1. REQUISITES.

The following are the requisites for the valid invocation of this ground:

1) A crime or offense was committed by the employee;

2) It was committed against any of the following persons:
i) His employer,
ii) Any immediate member o f his employer^ family; or
iii) His employer’s duly authorized representative.

2. SOME PRIN CIPLES O N C O M M ISSIO N O F C R IM E O R O F F E N S E .

• Because of its gravity, work-relation is not necessary. Neither is it necessary to

show that the commission of the criminal act would render the employee unfit
to perform lus work for the employer.
• The phrase “immediate members of the Jamil/' refers to those persons having
family relations under Article 150 o f die Family Code, to wit
(1) Between husband and wife;
(2) Between parents and children;
(3) Among other ascendants and descendants; and
(4) Among brothers and sisters, whether o f the full or half-blood.23

3. ILLUSTRATIVE CASE.

The case of Torreda v. Toshiba* best illustrates this ground o f commission

of a crime against the person of a superior. Petitioner Torreda was employed by
respondent Toshiba as finance accountant under the Finance and Accounting
Department headed by Kazuo Kobayashi, Vice-President, and Teresita Sepulveda,
Finance Manager. Petitioner accused Sepulveda of committing robbery of P200.00
when the latter ordered rhe forcible openmg o f the former’s drawer. Petitioner was
later dismissed on the ground of grave slander committed against Sepulveda. His
charges against Sepulveda were found, after investigation, to be unsubstantiated.
Holding that the dismissal was for just cause, the Supreme Court ruled that the
NLRC did not err much less commit grave abuse o f its discretion when it based its
ruling on Article 297(a) [282(a)] of the Labor Code on its finding that petitioner
committed serious misconduct for falsely accusing his immediate superior o f
robber}'. The false attribution by petitioner of robbery (theft) against Sepulveda was
made in writing; patently then, petitioner committed libel, not grave slander against

1 Relevant provision. Arade 297(d) |282(o)j. Labor Code.

1 See Department Order No. 18 issued by the DOLE Secretaiy on May 18,1994, promulgating tie Rules and Regulations
Implementing R A No. 7858.
3 Jeffrey 0. Torreda v Toshiba Information Equipment [Phils.], Inc., G.R. No. 165960, Feb. 8,2007.

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Sepulveda. The malicious and public imputation in writing by one of a crime on

another is libel under Article 353, in relation to Article 355, of the Revised Penal
Code. There is abundant evidence on record showing that petitioner committed
libel against his immediate superior, Sepulveda, an act constituting serious
misconduct which warrants his dismissal from employment. Petitioner maliciously
and publicly imputed on Sepulveda the crime o f robbery o f P200.00. As gleaned
from his Complaint dated September 7, 1999, which he filed with the General
Administration, he knew that it was Delos Santos who opened his drawer and not
Sepulveda. Thus, by his own admission, petitioner was well aware that the robbery
charge against Sepulveda was a concoction, a mere fabrication with the sole
purpose of retaliating against Sepulveda’s previous acts.

VIII.
OTHER ANALOGOUS CAUSES1
1. ANALOGOUS CAUSES U N D E R ESTA B LISH E D JU R IS P R U D E N C E .

The following may be cited as analogous causes:

1) Violation o f company rules and regulations.2

2) Theft of property owned by a co-employee, as distinguished from
theft o f property owned by the employer.3
3) Incompetence, inefficiency or ineptitude.4
4) Failure to attain work quota.5
5) Failure to comply with weight standards o f employer.6
6) “A ttitude problem ” is analogous to loss o f trust and confidence.7

2.
AUTHORIZED CAUSES8
1. TWO (2) CLASSES.
'Hie authorized causes provided in the Labor Code may generally be
classified into two (2), namely:

1 Relevant provision: Article 297(e) [282(e)], Labor Code.

2 Sampaguiia Auto Transport Corporation v. NLRC, G.R No. 197384, Jan. 30,2013.
3 John Hancock Life Insurance Cap. v. Davis, G.R No. 169549, Sept 3,2008.
* International School ManHa v. International School Alliance of Educators (ISAE), G.R. No. 167286, Feb. 5,2014; Realda v.
New Age Graphics, Inc., G.R. No. 192190, April 25,2012.
5 Afting v. Fefidano, G A No. 185829, April 25,2012.
6 Yrasueguiv.F’hfiippcneAirfines,Inc.,GK.No. 168081,OcL 17,2008.
7 Reyes-Rayel v. Phiippine Luen Thai Holdings Cop., G.R No. 174893, July 11,2012; See also Heavyift Manila, inc. v. The
CA, G.R No. 154410, Oct 20,2005. However, in this case of Heavyfft, petitioners have not shown sufficiently dear and
onvincing evidence to justify respondent employee's terminatioo tor her altitude problem. The mere mention of negative
feedback from h a team members reganfing h a low performance ratng and h a work attitude is not proof of h a attitude
problem. Likewise, h a faiure to refote petitioners’ allegations of h a negative attitude does not amount to admission. See
also Navarro HI v. Damasco, G.R No. 101875, July 14,1995,246 SCRA 260,265.
8 Relevant Provisions: Articles 298 [283] and 299 ]284], Labor Code.

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 706 Bar Reviewer o n Labor Law

(1) Business-related causes. - Referring to the grounds specifically

mentioned in Article 298 [283], to wit
a) Installation of labor-saving device;
b) Redundancy;
c) Retrenchment;
d) Closure or cessation o f business operations N O T due to serious
business losses or financial reverses; and
e) Closure or cessadon o f business operations due to serious business
losses and financial reverses.
(2) H ealth-related causes. - Referring to ‘disease under Article 299
[284] o f the Labor Code.

2. USE O F M O D ER N N OM EN CLA TU R ES, IM M ATERIAL.

The demands and complexities o f modem business have spawned a

number o f schemes aimed at leaning out the operations o f business establishments.
While cutting cost by improving efficiencies and avoiding wastes remains the
primordial thrust, reduction of personnel is usually done as a matter o f last resort.
These modem schemes of reducing personnel are denominated quite differendy
from die nomenclatures used in die law. Terms like “moderms^rion”, "automation"
“computerisation", “reorganisation", “re-engneering", “streamBning", “downsi^ng’,
“rightsizing", “reconstructing" or “redesigning of operations" or similar modem
descriptions, are often used to label what traditionally and legally axe known as
installation o f labor-saving device, redundancy or retrenchment

From die standpoint o f the law, however, die validity o f these modem
thrusts and schemes should be measured o n the basis o f their compliance with the
requisites for authorized cause terminations. As pointed out above, the authorized
causes mentioned in Article 298 [283] are exclusive in nature and thus no other
grounds may be invoked in lieu or in substitution thereof.

For example, if termination o f employment is effected by reason of

“modernisation" “automation," or “computerisation," die requisites applicable to
installation o f labor-saving device an d /o r its twin ground o f redundancy should be
fully complied with.

If the reduction o f personnel is occasioned by “re-tngineering"

“streamlining" “reconstructing" or “redesigning" o f operations, the requisites o f either
redundancy or retrenchment should be satisfied. Thus, if die same is being
implemented because o f existence o f redundant positions, then the redundancy
requisites should be complied with; if it is done because o f existence o f substantial
losses or to prevent such losses, then what should apply are the retrenchment
requisites.3

3. COM MONALITY O F R EQ U ISITES.

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 C h a pter Six 707
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There are certain requisites that are common to the five (5) grounds in
Article 298 [283]. T o simplify die discussion, the following five (5) common
requisites are applicable to the said grounds:

1. There is g o o d faith in effecting the termination;

2. The termination is a matter o f last resort, there being no other option
available to the employer after resorting to cost-cutting measures;
3. Two (2) separate w ritten notices are served on b o th the affected
employee and the D O L E a t le a st one (1) m o n th prior to the
intended date o f termination;
4. Separation pay is paid to the affected employee, to ant
(a) I f based on (1) installation o f labor-saving device, or (2)
redundan cy . - O ne (1) month pay o r at least one (1) month pay
for every year o f service, whichever is higher, a fraction o f at least
six (6) m onths shall be considered as one (1) whole year.
(b) I f based on (1) retren ch m en t, or (2) closure N O T due serious
b u sin ess losses o r fin a n d a l reverses. - O ne (1) month pay o r at
least one-half (V2) month pay for every year o f service, whichever is
higher, a fraction o f at least six (6) m onths shall be considered as
one (1) whole year.
(c) I f closure is due ft) serious business losses or financial reverses,
N O separation pay is required to be paid.
(d) In case the CBA or company policy provides for a higher
separation pay, the same must be followed instead o f the one
provided in Article 298 [283].
5. F air a n d reasonable criteria in ascertaining what positions are to be
affected by the termination, such as, but n o t limited to: nature o f
work; status o f employment (whether casual, temporary or tegular);
experience; efficiency; seniority; dependability; adaptability; flexibility;
trainability; job performance; discipline; and attitude towards work.1
Failure to follow fu r and reasonable criteria in selecting who to
terminate would tender the termination invalid.2

4. R E Q U IS IT E S U N IQ U E T O EA C H O F T H E G R O U N D S.

Each o f the five grounds has its own unique requisite/s that distinguishes it
from the others. For instance, the requisite o f extreme business losses or financial
reverses is distinctively applicable to retrenchment in order for termination based
on this ground to be valid and legal. Termination due to redundancy does not
require existence o f losses or financial reverses to validate it. While losses or
reverses may be considered as a major factor in cases o f closure or cessation of
business operations, but their relevance is only in relation to the determination of

1 Qiffiv.EasternTetecoim inicatioosRflpphes, Inc.,G il No. 165381,Ftt. 9.2011.

2 UrnbertPavmlxDkersandJev^(^.v.Bnam ira,&RNa 170464,July12.2010.

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 708 Bar Reviewer on Labor Law

whether the employer is liable for separation pay or not. Consequently, if the
closure or cessation of business operations is due to serious business losses or
financial reverses, the employer is not liable to pay any separation pay.1

I.
INSTALLATION OF LABOR-SAVING DEVICE

1. ADDITIONAL REQ U ISITE U N IQ U E T O T H IS G R O U N D .

In addition to the five (5) common requisites above, the unique requisite
for this ground is that the purpose for such installation o f labor saving devicc/s
must be valid,2 such as to save on cost, enhance efficiency a n d other justifiable
economic reasons.

2. SOME RELEVANT PRINCIPLES.

• The installation of diese devices is a management prerogative and the courts

will not uiterfcre with its exercise in the absence of abuse o f discretion,
arbitrariness, or malice on the part of management.3
• Redundancy results from installation of labor-saving device. The
installation of labor-saving device will result in making the positions being held
by employees who will be adversely affected thereby redundant and
unnecessary.4
• Modernization program through introduction of high-speed machines is
valid.5
• Proof of losses is not required.

II.
REDUNDANCY

1. ADDITIONAL FACTORS U N IQ U E T O T H IS G R O U N D .

In addition to the five (5) common requisites earlier mentioned, any o f the
following factors must be present in order for redundancy to be a valid ground to
terminate employment:

(1) Where the services o f employees are in excess o f what is reasonably

demanded by the actual requirements o f the enterprise.6
(2) Where the position is superfluous because of a number of factors,
such as over-hiring o f workers, decreased volume of business,

' See North Davao Mning Corporation v. NLRC. G.R. No. 112546, March 13,1996,254 SCRA721.
3 Philippine Sheet Metal VM ers Union v. CIR, G il No. L-2028, April 28,1949,83 Phi. 453.
3 Magnda Daily Products Corporation v. NLRC, G R No. 114952, Jan. 29,1996,252 SCRA 483. ’
4 Soriano, Jr. v NLRC aid PLOT, G R No. 165594, April 23,2007.
s Abapov.CA,G.R. No. 142405, Sept 30,2004
6 N'ppon Housing Phi, Inc. v Leynes.G.R No 177816, Aug. 3,2011.

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 Chapter Six 709
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dropping o f a particular product line or service activity previously

manufactured or undertaken by the enterprise or phasing out of
service activity priorly undertaken by the business.1
(3) Where there is duplication o f work. Indeed, in any well-organized
business enterprise, it would be surprising to find duplication of work
and two (2) or more people doing the work o f one person.2
(4) Where it is validly resorted to as a cost-cutting measure and to
streamline operations so as to make them more viable.3

Time and again, it has been ruled that an employer has no legal obligation
to keep more employees than are necessary for the operation of its business.4 Thus,
the employer has the prerogative to implement reorganization and redundancy and
to adopt such measures as will promote greater efficiency, reduce overhead costs
and enhance prospects of economic gains, albeit always within the framework o f
existing laws.5 However, if there is no proof that the essential requisites for a valid
redundancy program as a ground for the termination o f the employee are present,
the termination should be declared illegal.6

2. SOM E PR IN C IP L E S O N RED U N D A N CY .
* 'Hie wisdom, soundness or characterization o f service as redundant by the
employer is not subject to review by labor authorities and the courts. The only
exception is when there is a showing that the same was done in violation o f
law or attended with arbitrary and malicious action.7
■ Burden of proof in redundancy rests on the employer.8
■ Evidence o f losses is not required.9
■ Elimination of undesirables, abusers and worst performers through
redundancy is not an indication of bad faidi.10
* The act of die employer in hiring replacements is not an indication o f bad
faidi if the positions have no similar job descriptions.11
■ Redundancy to save on labor costs is valid.12

* Redundancy resulting from use of high technology equipment is valid.13

1 Nppon Housing Phil.. Inc. v. Leynes, supra; AMA Computer Colege v. Garda. G R No. 166703, Apri 14.2008.
2 Caftex [Phis.], Inc. v. NLRC. G.R. No. 159641, Oct 15.2007.
3 Maya Farms Employees Organization v. NLRC, G R No. 106256, Dec. 28,1994.
4 Morales v. Metropolitan Bank and Trust Company, G R No. 182475, Nov. 21,2012.
5 Smart Communications, Inc. v. Astorga, G.R. No. 148132, Jan. 28,2008.
6 Lambert Pawnbrokers and Jewelry Corp. v. Bmamira, G R No. 170464, July 12,2010.
7 Smart Communications, Inc. v Astorga, G R No. 148132, Jan. 28,2008.
8 Coca-Cola Bottlers Phippines.lnc. v. Del Villar, G.R. No. 163091, Oct 6,2010.
9 Sebuguero v. NLRC, G.R No 115394, Sept. 27,1995; Esczrealv. NLRC, G.R No. 99359, Sept 2,1992,213 SCRA 472.
» Dole PhiTpphes, Inc. v. NLRC. G R No. 120009, Sept 13,2001.
« Santosv.CA.G.R.No 141947, July 5,2001.
« De Ocampo v. NLRC. G.R No. 101539, SepL 4,1992,213 SCRA 652.
13 Soriano, Jr. v. NLRC and PLDT.GR No 165594, April 23,2007.

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 7io Bar Reviewer on Labor Law

1 Abolition of positions or departments is valid.1

■ Reorganization through redundancy is valid.2
* Contracting out of abolished positions to independent contractors is valid.3
■ Hiring of casuals or contractual employees after redundancy is valid.4
■ Advertisement on hiring for new position similar to the alleged redundant
position is evidence that the position is not redundant.5
* Where two or more persons are performing the same work which may be
effectively accomplished by only one, the employer-.may terminate the excess
personnel and retain only one.6
■ Even if there is a seniority rule, such as the LIFO (Last In, First Out) rule, the
nature of work and experience o f the employees should still be taken into
account by the employer.7
■ The LIFO or FILO (First In, Last Out) rule has no basis in law.8
■ LIFO rule is not controlling as employer has the prerogative to choose who to
terminate.9

III.
R ETRENCHM ENT

1. R E T R E N C H M EN T , D E F IN E D .

Retrenchment has been defined as “the termination o f employment

initiated by the employer through no fault o f the employees and without prejudice
to the latter, resorted by management during periods o f business recession,
industrial depression, or seasonal fluctuations; or during lulls occasioned by lack of
work or orders, shortage of materials; or considerable reduction in the volume of
the employer’s business, conversion of the plant for a new production program or
the introduction of new methods or more efficient machinery, or o f automation.”10

1 San Mguel Corporation v. NLRC, G.R. No. 99266, March 2,1999; Panlranco North Express, Inc. v. NLRC, G.R. No.
106516, Sept 21,1999.
2 International Harvester Madeod, Inc. v. IAC, 149 SCRA 641 (1987); See also Dole Philippines, Inc. v. NLRC, G.R. No.
120009, Sept 13,2001.
1 Serrano v. NLRC, G.R. No. 117040, Jan. 27.2000.
4 Dole Philippines, Inc. v. NIRC, G R No. 120009, Sept 13,2001.
5 SPI Technologies, Inc. v. Victoria K.Mapua,GR No. 191154, Aprt 07,2014.
5 Wltshire File Co., Inc. v. NLRC, G.R No. 82249, Feb. 7,1991,193 SCRA 665; See also Becton Dickhson Phils.. Inc. v.
NLRC, G R Nos. 159969 & 160116, Nov. 15,2005,475 SCRA 123.
1 Maya Farms Employees Organization v. NIRC, G.R No. 106256, Dec. 28,1994.
* Asian Alcohol Corporation v. NLRC, G R No. 131108, March25,1999.
3 De la Sate University v. Deb Safe University Employees Association, G R No. 109002, April 12,2000.
10 Anabev. Asian Construction, G R No. 183233, Dec 23,2009.

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 Chapter Six 7 11
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2. A D D IT IO N A L R E Q U IS IT E U N IQ U E T O T H IS G RO U N D .

In addition to the five (5) common requisites mentioned earlier, the

unique requisite for this ground is that there should be proof o f actual losses or
possible imminent losses that would justify termination of employment. This is the
most singular distinctive requisite o f retrenchment. This, in fact, is the only
statutory ground in Article 298 [283] which requires this kind of proof. As stressed
earlier, the grounds o f installation o f labor-saving device and redundancy do not
impose this requirement. The other ground o f closure or cessation o f business
operations may be resorted to with or without losses.1

3. STANDARDS T O D E T E R M IN E VALIDITY O F LOSSES.

The general standards in terms o f which the act o f an employer in

retrenching or reducing the number o f its employees must be appraised are as
follows:

1) The losses expected should be substantial and not merely de minims or

insubstantial and inconsequential in extent.
2) The substantial loss apprehended must be reasonably imminent, as
such imminence can be perceived objectively and in good faith by the
employer.
3) Retrenchment must be reasonably necessary and likely to effectively
prevent the expected losses. The employer should have taken other
measures prior or parallel to retrenchment to forestall losses, it., cut
other costs than labor costs.
4) The alleged losses, if already realized, and the expected imminent
losses sought to be forestalled, must be proved by sufficient and
convincing evidence through presentation o f externally audited
financial statements.2
If above standards are present, the wisdom to retrench cannot be
questioned.34

4. "RETREN CH M EN T TO PREV EN T LOSSES, " M EA NIN G.

Article 298 [283] uses the phrase “retrenchment to prevent losses.” In its
ordinary connotation, this phrase means that retrenchment must be undertaken by
the employer before the losses anticipated are actually sustained or realized. The
Supreme Court, in a plethora of cases, has thus interpreted it to mean that the
employer need not keep all his employees until after its losses shall have
materialized/ This is never the intention o f the lawmaker. If such an intent were

1 Precision Bectron'cs Corporation v. NLRC, G.R. No. 85657, Oct 23,1989.

* Andrada v. NLRC. G.R. No. 173231, Dec. 28,2007.
J NDOGuJirie Plantations, Inc. v. NLRC, G.R. No. 110740, Aug. 9,2001.
4 TPt Philippines Cement Coqp. v. Cajucom Vll, GH. No. 149138, Feb. 28,2005.

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 712 Bar Reviewer on Labor Law

expressly written into the law, that law may well be vulnerable to constitutional
attack as unduly taking property from one man to be given to another.1

For instance, in Tatum v. N L R C ,2 petitioner Talam tried to negate the dire

financial picture besetting respondent company, TSFI, claiming that the very
financial statement cited by TSFI showed a net income of P298,725.00, referring to
the period ending on September 30, 2002. Such a claim, however, cannot erase the
fact that the company had suffered substantial accumulated losses o f P2,474,418.00
and retained earnings deficit of P7,424,250.00 for the period ending December 31,
2002. For a small company like TSFI (with only 2 0 'employees), the losses it
suffered were not merely de minimis m extent but were, at the time Talam was
dismissed, actual and with more losses reasonably imminent. Significandy, the
employer objectively and in good faith perceived the imminence o f more losses as
it was based on die report of its external auditor.

5. SO M E P R IN C IP L E S O N R E T R E N C H M E N T .

■ Article 298 [283] applies only to permanent retrenchment or lay-off.3

■ Cost-reduction or cost-saving measures prior to retrenchment are required.4
■ Retrenchment effected long after the business losses is not valid.5
* Profitable operations in the past do not affect the validity o f retrenchment.6
■ The fact that dicre has been economic or other crisis besetting a particular
sector or the country as a whole is not sufficient justification for
retrenchment.7
■ Employer bears the burden of proof to show business losses or financial
reverses.8
■ Best evidence of losses arc financial statements audited by independent
external auditors (not by internal auditors).9*
■ Best evidence of losses in a government-controlled corporation are financial
statements audited by COA.'°
* Period covered by financial statements is material.11
1 Income tax returns arc not valid proof o f losses since they are self-serving
documents.12

1 Asian Alcohol Corporation v. NLRC, G.R. No 131108, March 25,1999.

7 Talam v. NLRC, The Software Factory, Inc, etc, G R No. 175040, April 6,2010,617 SCRA 408.
3 Sebuguerov. NLRC. G.R. No. 115394, Sept. 27.1995
4 Lambert Pawnbrokers and Jewelry Corp v. Bnanva . G.R No 170464, July 12,2010.
5 Taggat Industries, Inc v. NLRC. G.R. No. 120971, March 10.1999.
6 Manatad v. Philippine Telegraph and Telephone Corp, G.R. No. 172363, March 7,2008.
’ Central Azucarera de la Cartota v. NLRC. G R No 100092. Dec 29,1995.251 SCRA 589.
8 Emco Plywood Corporation v. Abelgas, G R. No 148532 April 14,2004.
9 Composite Enterprises, Inc. v.Caparoso.G R No 159919. Aug 8.2007.
'« NDGGuthrie Plantations. Inc. v. NLRC G.R No 110740. Aug 9 2001.
" FASAP v. Philippine Artnes. Inc, G R No 178083. July 22.2008
» Cashiiro v. Stem Real Estate Inc, Rembrandt Hotel. G.R. No 162233. March 10,2006.

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POST-EM I'lOYM ENT

■ Mere affidavit on alleged losses is not sufficient.1

* Merc notice o f intention to implement a retrenchment program is not
sufficient.2
■ Rehabilitation receivership presupposes existence of losses.3 However, the fact
that the employer is undergoing rehabilitation receivership does not by itself
excuse it from submitting to the labor authorities copies of its externally
audited financial statements to prove the urgency, necessity and extent of its
retrenchment program.4
■ Audited financial statements should be presented before the Labor Arbiter or
the NLRC but not belatedly before the Court of Appeals or Supreme Court.5
■ Compulsory retirement to prevent further losses is valid.6
* Early Retirement Program (ERP) to prevent further losses and implemented
prior to retrenchment is valid.7
* Rotation o f work may be tantamount to constructive dismissal or
retrenchment.8
* Retrenchment due to liquidity problem is not valid.9
* Sharp drop in income is n o t a ground to justify retrenchment. A mere decline
in gross income cannot in any manner be considered as serious business
losses. It should be substantial, sustained and real.10
■ Litany o f woes, in the absence o f any solid evidence that they translated into
specific and substantial losses that would necessitate retrenchment, will not
suffice to justify retrenchment.11
* In an enterprise which has several branches nationwide, profitable operations
in some of them will not affect the validity o f the retrenchment if overall, the
financial condition thereof reflects losses.12
■ The progressive manner o f implementing the streamlining and downsizing of
operations resorted to by a construction company in order not to jeopardize
the completion of its projects is valid. Thus, several departments like the Civil
Works Division, Electro-mechanical Works Division and the Territorial

' Polymart Paper Industries, Inc v. NLRC, G R No. 118973, Aug, 12,1998.
2 Composite Enterprises, Inc.v.Caparoso.GR No. 159919, Aug.8,2007.
3 Ctaion Printing House, Inc. v. NLRC, G.R. No. 148372, June 27,2005.
< FASAP v. Philippine Airlines, Inc., G R No. 178083, July 22,2008.
s Id.
4 Lopez Sugar Corporation v. Federation of Free Workers, G.R. Nos. 75700-01, Aug. 30,1990.
1 Korean Air Co., Ltd. v. Yuson, G R No. 170369, June 16,2010.
8 Unicom Safety Glass, Inc. v. Basarte, G R No. 154689, No/. 25,2004.
5 Hernandez v. Phiippne Blooming Mills Co., NLRC-NCR Case No. 3-1223-83, July 26,1985.
10 Lambert Pawnbrokers and Jewelry Corp. v. Binamira, G.R. No. 170464, July 12.2010.
" Central Azucarera de la Cariota v. NLRC, G R. No. 100092, Dec 29,1995,251 SCRA 589,321 Phil. 989,997.
Manatad v. Philippine Telegraph and Telephone Corp., G R No. 172363, March 7,2008.

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 714 Bar Reviewer on Labor Law

Project Management Offices, among others, were abolished in the early part of
1996 and thereafter, the Structural Steel Division by the end o f year 1997.12

Ill-A.
REDUNDANCY VS. RETRENCHMENT *

1. N E E D F O R C L E A R - C U T D I S T I N C T I O N S .

Before leaving the topics o f redundancy and retrenchment, a clear-cut

distinction should be made between these terms since a• reading o f some decisions
of the High Court shows tint confusion continues to hound employers in
determining the proper term to be used to describe their personnel reduction
schemes. The improper use of the term will have far serious adverse effects in
terms of legal consequences as well as the amounts of separation pay involved.

For instance, in the case of AMA Computer College, Inc. v. Garcia} petitioner
itself apparently is confused as to the real reason why it terminated respondents as
it raised different grounds to justify their dismissal, i.e., before the Labor Arbiter, it
cited retrenchment; before the NLRC, it claimed redundancy; and before the Court
of Appeals, it averred both retrenchment and redundancy. The High Court
observed that although governed by the same provision of the Labor Code,
retrenchment and redundancy are two distinct grounds for termination arising from
different circumstances, thus, they are in no way interchangeable.

In AG & P i NL RC , 3 private respondent Atlantic Gulf and Pacific

Company of Manila, Inc.’s “redundancy program” was wrongly denominated as
such when it should have been precisely termed “retrenchment” because it is
primarily intended to prevent serious business losses.4

2. DISTINCTIONS.

Retrenchment and redundancy are two different concepts; they are not
synonymous; thus, diey should not be used interchangeably.5

“Redundancy’ exists when the services o f an employee are in excess of

what is required by an enterprise. “ Retrenchmenton the other hand, is resorted to
primarily to avoid or minimize business losses. Thus, a “ Redundancy Program,” while
denominated as such, is more precisely termed “retrenchment' if it was primarily
intended to prevent serious business losses.6

1 Id
2 GR. No 166703, April 14,2008.
J AG 8 P United Rank & File Association v. NLRC, G R. No. 108259, Nov. 29,1996,332 Phil. 937.
4 Morales v. Metropolitan Bank and Trust Company, G R No. 182475, Nw. 21,2012.
5 Arabitv Janfine Pacific Finance, Inc. (Formery M3 Finance), G R No. 181719, Apri 21,2014.
5 Aflantr Gulf and Pacific Company of Manila, he. [AG & P], v. NLRC, G R No. 127516, May 28,1999.

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 Chapter. Six 7 15
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Redundancy does not need to be always triggered by a decline in the

business. Primarily, employers resort to redundancy when the functions o f an
employee have already become superfluous, duplicitous or in excess o f what the
business requires. Thus, even if a business is doing well, an employer can still
validly dismiss an employee from the service due to redundancy if that employee’s
position has already become in excess of what the employer’s enterprise requires.1

In terms o f monetary consequence, the employer stands to pay more

separation pay if it denominates the personnel reduction program it is
implementing as redundancy and not retrenchment. Under Article 298 [283],
redundancy would require the employer to pay its employees a separation pay
equivalent to at least their one (1) month pay or to at least one (1) month pay for
every year o f service, whichever is higher, while retrenchment would entail only
half o f this amount.

IV.
CLOSURE OR CESSATION OF BUSINESS OPERATIONS
1. C O N C EPT .

Closure or cessation of business is the complete or partial cessation of the

operations and/or shutdown o f the establishment o f the employer. It is carried out
to either stave off the financial ruin or promote the business interest of the
employer.2*Closure involves two (2) situations:

(a) When N O T due to serious business losses or financial reverses; or

(b) When due to serious business losses or financial reverses

It is only in the first that payment o f separation pay is required. No such

requirement is imposed in the secon d?

2. S O M E P R I N C I P L E S O N C L O S U R E .

* Employer may close its business whether it is suffering from business losses
or not; court cannot order employer to continue its business.4
1 Principle o f closure under Article 298 [283] applies in cases of both total and
partial closure or cessation o f business operations. Management may choose
to close only a branch, a department, a plant, or a shop.5
■ Closure o f department o r section and hiring o f workers supplied by
independent contractor as replacements is valid.6

1 Andradav.NLRC, supra.
2 Easfridge Golf Club, Inc. v. Eastridge Golf Club, Inc. Labor Union - Super, G R No. 166760, Aug. 22,2008.
2 North Davao Mring Corporation v. NLRC, G R No. 112546, March 13,1996,254 SCRA 721.727.
4 Pefefrantia Tours and Travel Transport Inc. v. Sarmiento, G R No. 178397, C tt 20,2010.
s Edge Apparel. Inc. v. NLRC, G R No. 121314, Feb. 12,1998.
6 AssodaScn of Integrated Security Force of Bislig [AISFB] - ALU v. Hon. CA, anc PICOP, G R No. 140150, Aug. 22,2005.

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 716 Bar Reviewer on Labor Law

■ Closure of a department or section due to losses amounts to retrenchment.1

■ Relocation of business may amount to cessation of operations.2
* The burden of proving that the closure or cessation of business operations is
bona-fide falls upon the employer.3
* Closure may constitute an unfair labor practice if it is resorted to as a ruse or
scheme to get rid of employees on account of their union activities.4
* Closure by reason of enactment o f a law is valid. Example: The closure o f the
Philippine Veterans Bank by operation o f law (R-A. No. 7169 [An Act to
Rehabilitate the Philippine Veterans Bank Created Under LA . 3518,
Providing the Mechanisms Therefor and for other Purposes]5 or closure of
the employer’s business because a large portion o f its estate was acquired by
the Department of Agrarian Reform pursuant to the Comprehensive
Agrarian Reform Program (CARP) under R.A. No. 6657.6
* Closure o f business to merge or consolidate with another or to sell or dispose
all of its assets is valid.7
* Proof o f losses is required if ground is serious business losses or financial
reverses. There should be clear proof of such losses since no separation pay
to the employees is required to be paid under the law.8
■ Externally audited financial statements necessary only in closure due to
losses.9
* Evidence of losses in a closure case should not be presented for the first time
on appeal with the NLRC, Court o f Appeals or Supreme C o u rt10
■ For closure to be a valid basis, it must be invoked at the time o f termination
and not after.11

1V-A.
RETRENCHMENT VS. CLOSURE OF BUSINESS
1. PRINCIPAL D IST IN C T IO N .
In a number of cases, retrenchment has been confused with closure o f the
entire business establishment or a department, division or oudet thereof. For

' San Miguel Cotp. v. Abate, G R No. 149011, June 28,2005.

1 Cherwer Deco Print Technics Corporation v. NLRC, G.R. No. 122876, Feb. 17,2000.
3 JA T. General Services v. NLRC. G.R. No. 148340, Jan. 26,2004.
4 St John Colleges, Inc. v. Si John Academy Faculty and Employees Union, G.R No. 167802, Oct 27,2006.
6 ComistaDomingov. NLRC, G.R. No. 156761. Oct 17,2006.
6 National Federation of labor v. NLRC.GJ l No. 127718, March 2,2000.
1 Esphav. Hon. CA.G.R No. 164582, March 28,2007.
! North Davao Mnhg Corporation v. NLRC, G.R. No. 112546, March 13,1995,254 SCRA 721.
* Danzas Intercontinental, Inc. v.Daguman, G.R. No. 154368, April 15,2005.
10 Me-Shum Corporation v. Me-Shum Workers Union - FSM, G.R. No. 156292, Jan. 11,2005.
” Sapitan v. JB Line Bicol Express, Inc., GR. No. 163775, Oct 19,2007.

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 C hapter Six 717
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instance, in JA .T . General Services v. NLRC,1 while the Court of Appeals defined the
issue to be the validity o f dismissal due to alleged closure of business, it cited
jurisprudence relating to retrenchment to support its resolution and conclusion. In
another case, A labang Country Club Inc. v. NLRC,2 the opposite of what the CA did
in JA T transpired in that it found this case o f Alabang one for retrenchment and
not for closure of a department. It resolved the issue using the standards for
retrenchment rather than for closure. Finally, the same issue of confusion over
what principle should apply has occurred in MPCEU-FUR-TUCP v. Manila Polo
Club, Inc.2 a case akin to Alabang, involving as it does the closure o f its F & B
Department due to the substantial losses this department suffered over the years.
Similarly, the CA affirmed in toto the Voluntary Arbitrator’s decision holding that
the closure o f the F & B Department was a case o f retrenchment.
Thus, in the afore-cited cases, the rule was enunciated and reiterated that
while the two are often used interchangeably and are interrelated, they are actually
two separate and independent authorized causes for termination of employment.
Termination o f an employment may be predicated on one without need of
resorting to the other.
Closure of business, on one hand, is the reversal o f fortune of the employer
whereby there is a complete cessation o f business operations an d /o r an actual
locking-up o f the doors o f the establishment, usually due to financial losses. Closure
of business as an authorized cause for termination o f employment aims to prevent
further financial drain upon an employer who cannot pay anymore his employees
since business has already stopped. On the other hand, retrenchment is a reduction o f
personnel usually due to poor financial returns so as to cut down on costs o f
operations in terms o f salaries and wages to prevent bankruptcy o f tire company. It
is sometimes also referred to as down-sizing. It is an authorized cause for
termination of employment which the law accords an employer who is not making
good in its operations in order to cut back on expenses for salaries and wages by

' G il No. 148340, Jan. 26,2004. It was held in this case that the issues and contentions more centered on dosure d
business operation rather than retrenchment What gave rise to the dosure is the dedine in the sate of heavy equipment
because d the Asian currency crisis. Consequently, JAT temporarily suspended is operations. Ultimately, on December 14,
1998, JAT fled an Establishment Termination Report with the DOLE, notifying the latter d its decision to dose its business
operations due to business losses and financial reverses.
2 G R No. 157611, Aug. 9 , 2005,503 Phi 937. In this case, realizing that it was no longer profitable for ACCI to maintain its
own F & B Department the management decided to cease from operating the department and to open the same to a
contractor, La Tasca Restaurant Inc. (La Tasca) which would be w ing to operate its own food and beverage busress within
the dub. This resulted in the closure of the F & B Department whose employees were terminated effective Januaiy 1,1995.
The arrangement is that they would be paid separation pay equivalent to one hundred twenty five (125%) percent d their
monthly salay for every year d service. ACCI also informed them that La Tasca agreed to absorb sB affected employees
immediately with the status d regular employees without need d undergoing a probationary period, and that all affected
employees would receive tie same salary they were recewtog from ACCI at the time d their termination
2 Mania Polo Club Employees' Union (MPCEU) FUR-RJCP v. Mania Polo Club, Inc., G R No. 172846 July 24,2013. Uke ri
Alabang, this case also involves the dosure d Manila Polo’s F & B Department due to extreme losses. It resulted n the
termination d 123 employees grounded on retrenchment and not dosure. Acordng to the Supreme Court, this case
involves a closure dbusiness undertaking, not retrenchment

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 718 Bar reviewer on U bor Law

laying off some employees. The purpose of retrenchment is to save a financially

ailing business establishment from eventually collapsing.1
Unlike retrenchment, closure or cessation of business, as an authorized
cause of termination of employment, need not depend for its validity on evidence
of actual or imminent reversal of the employer's fortune. Article 298 [283]
authorizes termination of employment due to business closure regardless of the
underlying reasons and motivations therefor, be it financial losses or not.2

V.
DISEASE
1. LEGAL BASIS.

Disease is provided for in Article 299 [284], which states:

Article 299 [284]. Disease as Ground for Termination. - An
employer may terminate the services of an employee who has been
found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as
to the health of his co-employees: Provided, That he is paid separation
pay equivalent to at least one (1) month salary or to one-half (Vi) month
salary for every year of service, whichever is greater, a fraction of at least
six (6) months being considered as one (1) whole year.
2. T W O A S P E C T S O F T H E R E Q U I S IT E S .

In the 2014 case of Deoferio v. Intel Technology Philippines, Inc.,1 the requisites
that must be complied with before termination of employment due to disease may
be justified were specifically divided into two, namely:
(1) S u b s ta n tiv e req u isites; a n d
(2) Procedural requisites.

The reason for so distinguishing the two is to emphasize the fact that the
law, Article 299 [284], only specifies the substantive requirements but not the
procedural ones - so unlike Article 298 [283] where both the substantive and
procedural requisites are specifically prescribed thereunder. Deoferio acknowledges
this fact in no uncertain terms when it declared: “The Labor Code and its ERR are
silent on the procedural due process required in terminations due to disease.”

V-1.
SUBSTANTIVE REQUISITES
1. T H R E E (3) S U B S T A N T I V E E L E M E N T S .

Based on the Labor Code1 and its Implementing Pules} the following three
(3) substantive elements, according to Deoferio, may be drawn therefrom, to wit

1 Sanofi Futon Phis., Inc v. Bernardo andTaghoy,G.R. No. 187214, Aug. 14,2013.
2 Eastridge Golf Club, me v. Eastndge Golf Club, he., Labor Union-Super, G.R. No. 166760, Aug. 22,2008
J G.R. No. 202996. June 18.2014.

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 CHAPTER Six 7 19
POST-EMPLOYMENT

(1) An employee has been found to be suffering from any disease;

(2) His continued employment is:
(a) prohibited by law, or
(b) prejudicial to his health as well as to the health o f his co­
employees; and
(3) A com petent public health authority issues a m edical certificate
that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical
treatment.3

2. 1st SUBSTANTIVE E L E M E N T .

The fact alone that an employee is suffering from a disease is not generally
a sufficient ground to terminate his employment. That a person has a disease does
not per se entide die employer to terminate his or her services.4 Termination is the
last resort.5 Even if the disease is a contagious one, like pulmonary tuberculosis
(PTB),6 mere sufferance thereof by an employee does not ipsofacto make him a sure
candidate for dismissal.7

3. 2nd SUBSTANTIVE E L E M E N T .

Contagious or communicable diseases or infections, like sexually

transmitted diseases or infections (STDs or STIs), tuberculosis, hepatitis A, malaria,
among others, are best examples of diseases which would render an employee’s
“continued employmentprejudicial to bis health as well as to the health of his co-employees” This
ground may not, however, be solely confined to these kinds of diseases. Dcoferiob
enunciates that the phrase “ p r e j u d i c i a l t o h i s health as well as to t h e h e a l t h o f
h i s c o - e m p l o y e e s ” should be liberally construed to mean “ p r e j u d i c i a l t o h i s
h e a l t h or to t h e h e a l t h o f his co-em ployees.” It is clear, therefore, that the
intent of the law is to allow the termination o f an employee if he suffers a disease
and his continued employment will either be prejudicial:

(1) to his own health; or12345*78

1 Artide299(284)thereof.
2 SecSon 8, Rule I. Book VI of tie Rules to Implement the Labor Code, to w t 'Sec. 8. Disease as a ground for dismissal. -
'Ahere the employee suffers from a dsease and his continued employment s prohibited by law or prejurfcial to his heath or
to the health of his coemployees, the employer shal not terminate his employment unless there is a certification by
competent public heafti authority that the disease is of sudi nature or at such a stage that it cannot be cured within a period
of six (6) months even with proper medical treatment If the disease a alment can be cured within the period, the employer
shad not terminate the employee but shall ask the employee to take a leave. The employer shal reinstate such employee to
his former position immediately upon the restoration ol his normal health.’
3 Per Deoferio v. Intel Technology Philippines, Inc., supra.; See also Fuji Television Network, Inc. v. Arfene S. Esprritu, G R
Nos. 20494445, Dec. 03.2014.
4 Id.
3 Id.
5 In the case c< Genera! Textiles, Inc. v. NIRC, G.R No. 102S69, Apni 4, 1995, pulmonary tuberculosis (PTB) was
pronounced as a contaaious disease.
7 Tan v. NIRC, G.R. No. 116807, April 14,1997.
8 Deoferio v. Inlet Technology Philippines, Inc., G.R. No. 202996, June 18,2014

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 720 Bar reviewer on Labor Law

(2) to the health of his co-employees.

Consistent with this construction, this provision has been applied in

resolving illegal dismissal cases due to non-contagious diseases such as stroke,
heart attack, osteoarthritis, and eye cataract, among others.. In Baby Bus, Inc. v.
Minister of Labor} the labor arbitration’s finding was upheld that private respondent
bus driver’s continued employment - after he suffered several strokes - would be
prejudicial to his health. In Dutertc v. Kingswood Trading Co., Inc.,1
2 the applicability of
Article 299 [284] to heart attacks was recognized. In that case, it was held that
private company’s failure to present a certification from a public health authority
rendered petitioner’s termination due to a heart attack illegal. This provision was
also applied in Sy v. CA,3*5to determine whether private respondent, Jaime Sahot,
was illegally dismissed due to various ailments such as presleyopia, hypertensive
retinopathy, osteoarthritis, and heart enlargement, among others. In Manly Express,
Inc. v. Payong, Jr.} it was ruled that petitioner company’s non-presentment of a
certification from a public health authority with respect to respondent’s eye cataract
was fatal to its defense.

It bears noting that suffering from HIV/AIDS under R.A. No. 8504,
otherwise known as the 'Philippine / UDS Pretention and Control Act of 1998,’s will
not justify termination of employment of the ailing employee. Under this law,
termination from work on the sole basis o f actual, perceived or suspected HTV
status is deemed unlawful.6*Similarly, DOLE Department Order No. 102-10, Series of
2010} categorically declared that “ (wjorkers shall not be terminated from work if
the basis is the actual, perceived or suspected HIV status.” Consequendy, even if an
employee actually suffers from HIV/AIDS, he/she cannot be dismissed solely on
the basis thereof since the law does not prohibit the continued employment of the
ailing employee. And because o f the manner R.A. No. 8504 extraordinarily treats
this kind of disease, the ailing employee cannot likewise be dismissed on the
ground that his/her “continued employment is prejudicial to his health as well as to the health
of his co-employeesThe ailing employee, in fact, is practically untouchable under this
law. And any form of discrimination against him /her will subject the offender to
criminal liability.8

1 O R No. 54223, Feb. 26.1988.241 PM. 1017.

1 G Jl No. 160325, Oct 4,2007,551 Phi. 11.
3 G R No. 142293, Feb. 27,2003,446 PH. 404.
< G R No. 167462, Oct 25,2005.510 PH. 818.
5 Approved on February 13.1998.
6 Section 35 thereof. Please see also Section 46, Rule 8 of the Rules and Regulations Implementing the Phifppine Aids
Prevention and Control Act of 1998 (RA 8504), issued on Apri 13,1999 by the Philippine National Aids Council;
1 Department Older No. 102-10, Series of 2010, entitled the “Guideines for the Implementation of HIV and AIDS Prevention
and Control in the Woricplace Program' issued by fomier DOLE Secretary Marianito D. Roque on March 25,2010.
8 Violation of R A No. 8504 carries with ft certa'n penalties, to w it'S ec 42 Penaffes for disch/nfna/Ofyacfs and pofc/es.-All
discriminatory acts and policies referred to in this Act shall be punishable with a penalty of imprisonment for six (6) months to
four (4) years and a fine not exceeding Ten thousand pesos (P10.000 00). In addition, icenses/permfts of schools, hospitals
and ofter institutions found guilty of commftting dsenminatoty acts and policies deserted in this Ad shall be revoked.'

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4. 3 rd S U B S T A N T I V E E L E M E N T .

The third element on presentation of a medical certificate issued by a

competent public health authority substantiates the contention that the employee
has indeed been suffering from a disease that:

(1) is prejudicial to his health as well as to the health o f his co­

employees; and
(2) cannot be cured within a period o f six months even with proper
medical treatment.

Without the medical certificate, there can be no authorized cause for the
employee’s dismissal. The absence of this element thus renders the dismissal void
and illegal. Deoferio instructs that this 3rd element is not merely a procedural
requirement but a substantive one. The certification from a competent public
health authority is precisely the substantial evidence required by law to prove the
existence of the disease itself, its non-curability within a period of 6 months even
widi proper medical treatment, and die prejudice that it would cause to the health
of the sick employee and to those of his co-employees.

An employer must not terminate if disease is curable within 6 months

with proper medical treatment. The employee must be allowed to take a leave o f
absence and reinstated after being cured.

The word competent” in the legal phrase “competent public health authority"
refers to a government doctor whose medical specialization pertains to the disease
being suffered by the employee. For instance, an employee who is sick o f
tuberculosis should consult a government-employed pulmonologist who is
competent to make an opinion thereon. If the employee has cardiac symptoms, the
competent physician in this case would be a cardiologist.

The company’s own physician engaged by the employer as its employee or

hired on a retainer fee basis to whom sick workers are referred for consultation or
treatment, is not the “ competentpublic health authority’ referred to in the law. Hence, a
medical certificate issued by the company’s own physician is not an acceptable
certificate for purposes o f terminating an employment based on Article 299 [284}.1

As to who should procure the medical certificate, the Court ruled in Tan v.
NLRC,2 that it devolves upon the employer the obligation to obtain a medical
certificate from a competent public health authority that the employee’s disease is
at such stage or o f such nature that it cannot be cured within 6 months even with
proper medical treatment. It is the employer, and not the employee, who has the
burden of proof to justify that the termination was supported by said certificate.

1 Cebu Royal Plant (San Miguel Corporation] v. Hon. Deputy Mkiister of Labor, G.R. No. 58639, Aug. 12.1987,153 SCRA 38
(1987).
J G.R. No. 116807, Aprfl14,1997,271 SCRA 216.

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Clearly, it is only where there is such prior certification that the employee could be
validly terminated from his job.1

The burden of proving the existence of the medical certificate required

under the law is upon the employer, not die employee.23

V-2.
PROCEDURAL REQUISITES
1. PROCEDURAL ELEM EN TS.

Deoferio* pronounced the rule that due process in termination due to

disease is similar to due process for just cause termination. Thus, the employer
must furnish the employee two (2) written notices, namely:

(1) The notice to apprise the employee o f the ground for which his
dismissal is sought; and
(2) The notice informing the employee of his dismissal, to be issued after
die employee has been given reasonable opportunity to answer and
to be heard on his defense.

This ruling reinforces the State policy of protecting the workers from
being terminated without cause and without affording them the opportunity to
explain their side of the controversy.4

Under this present rule, the employee should be given reasonable

opportunity to answer and to be heard on his defense. Although sufferance of
disease is not to be equated with commission of a wrongful act which is the
principal requisite of just cause termination, the ailing employee needs to be given
"reasonable opportunity to answer and to be beard on bis defense" before he could be validly
dismissed on the ground of disease. Consequently, once the substantive requisites
for termination due to disease are complied with, the employer should comply with
the other equally important procedural requisites as prescribed in Deoferio.

Per Deoferio, the 2nd required notice informing the employee of his
dismissal should be “issued gfter the employee has been given reasonable opportunity to
answer and to be heard on his defense." This requirement, in effect, dictates that
before an employee may be terminated due to disease, he must first be given a
show-cause notice that would afford him a “reasonable opportunity to answer” the
charge of his being terminable by reason o f his suffering a disease and, secondly, for
him to be afforded a "hearing on bis defense. ”

1 See also P h i Em ploy Services and R esources, Inc. v. Param io, G .R. No. 144786, A pril 1 5 ,2 0 0 4 ; Sy v. C A , G R No.
142293, Feb. 27,2003; See also D uterte v. K ingsw ood Tfading C o., In c , G il N o. 160325, O c t 4 ,2 0 0 7 .
2 ATCI O verseas Corporation v . CA, supra; Tan v . NLRC, G .R . N o. 116807, A pril 1 4 ,1 9 9 7 ,2 7 1 SCRA 216; Cebu R oyal P lant
[San M iguel C orporafion] v. Hon. Deputy M inister o f Labor, supra.
3. Citing the cases o f Sy v. C A, G .R . No. 142293, Feb. 2 7 ,2 0 0 3 ,4 4 6 P h i 404 and M anly E xpress, Inc. v. P ayong, Jr., G.R.
No. 167462, O ct 25,2 00 5 .5 1 0 P h i 818.
4 Deoferio v. Intel Technology P tiiipp in es, Inc., su p ra

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Comparatively, the authorized grounds under Article 298 [283] such as

installation of labor-saving device, redundancy, retrenchment or closure or
cessation o f business operations do not, in any way, involve any contributory cause
on the part of the employee. These grounds are solely caused by the employer,
never by the employees. The case of the authorized ground o f disease under Article
299 [284], however, is different as it is the employee who supplies the cause for his
termination; hence, there is a need for him to be afforded the twin requirements o f
notice and hearing where he shall have the opportunity to defend himself from his
possible termination.
2. FUJI RULE: EM PLO YEE HAS RIGHT TO PRESEN T
COUNTERVAILING MEDICAL CERTIFICATES.
Subsequent to Deoferio, another 2014 case, Fuji Television Network, Inc.
v. Espirituj has further expounded on the due process requirement in termination
due to disease, this time, by categorically specifying the right o f the ailing employee
to present countervailing evidence in the form of medical certificates to prove that
his dismissal due to disease is n o t proper and therefore illegal.
Indeed, affording the ailing employee procedural due process in the
manner prescribed in Deoferio and Fuji proceeds from the premise that he is not
dismissible solely on the basis o f his suffering from a disease. He should not be
dismissed outright upon showing alone that he is suffering from a disease. While an
employee may have become afflicted with a contagious disease such as pulmonary
tuberculosis (PTB), and that under Article 299 [284], an employer may terminate
the services of its employee found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as
to that o f his co-employees, however, the fact that an employee is suffering from
such a disease does not ipsofacto make him a sure candidate for dismissal.

3.
DUE PROCESS
a.
TWIN-NOTICE REQUIREMENT
b.
HEARING
(NOTE: These topics will be discussed herein jointly
in the light of their close interrelation).

L ORDER OF TOPICAL DISCUSSION.

The discussion o f this topic is divided into the following sections:

F u ; T elevision N etoori?, Inc. v . A rlene S. E spiritu, G il N os. 204944-45, D ec. 0 3,2014.

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 724 Bar reviewer on Labor Law

I. STANDARD SITUATIONS IN TERMINATION CASES

II. VARIATIONS IN PROCEDURAL DUE PROCESS
ll-A JUST CAUSE TERMINATION DUE PROCESS
ll-B AUTHORIZED CAUSE TERMINATION DUE PROCESS
ll-B-1. DUE PROCESS IN TERMINATION DUE TO BUSINESS-
RELATED CAUSES
ll-B-2. DUE PROCESS IN TERMINATION DUE TO HEALTH-
RELATED CAUSES
ll-C DUE PROCESS IN OTHER FORMS OF EMPLOYMENT
III. INDEMNITY IN THE FORM OF NOMINAL DAMAGES

STANDARD SITUATIONS IN TERMINATION CASES

1. INTERPLAY OF SUBSTANTIVE & PROCEDURAL DUE PROCESS.

The substantive (just or authorized cause) and procedural due process
requirements in termination of employment can only be better understood and
appreciated by looking at them through the prism o f the four (4) standard
situations provided in the Labor Code and enunciated in pertinent jurisprudence.
Thus, the dismissal is:

1) I.F.GAT. if it was done with both substantive and procedural due

process.1

2) ILLEGAL if it was done without substantive due process although

procedural due process was observed.2

3) ILLEGAL if it was done without both substantive and procedural due

process.3

4) LEGAL if it was done with substantive due process but without

procedural due process.4

2. CONTROVERSY OVER THE FOURTH SITUATION.

The first three (3) situations above are based on hornbook principles. It is
the fourth situation that has been the subject o f changes in doctrinal
pronouncements by the Supreme Court over the years. The following doctrines
would explain the changes in the manner the Court views this situation:

' P W ippneA irines, Inc. V .N LR C .G .R . No. 115785, A ug. 4 ,2 0 00 .

2 ACO Investigation S ecurity Agency, Inc. v. Daquera, G .R . N o. 147473, M arch 3 0 ,2 0 0 4 .
3 Lam bert P aw nbrokers and Jew elry C orp. v . B in a m ira, G .R . N o. 170464, J u ly 1 2 ,2 0 1 0 .
‘ A gabonv.N LR C ,G .R .N o. 158693. Nov. 17,2004.

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(a) Wenphil doctrine;

(b) Serrano doctrine;
(c) Agabon doctrine; and
(d) Abbott Laboratories doctrine.

2.1. W ENPHIL DOCTRINE: BELATED DUE PROCESS RULE.

Prior to 1989, the rule was that a dismissal or termination is illegal if the
employee was not given procedural due process. In the 1989 case of Wenphil Corp.
v. NLRC,1 the Court reversed this long-standing rule and held that the dismissed
employee, although not given any notice and hearing, was not entided to
reinstatement and backwages because the dismissal was for a just cause, i.e., grave
misconduct and insubordination, a just ground for termination under Article 297
[282]. The employee here had a violent temper and caused trouble during office
hours and defying superiors who tried to pacify him. The Court concluded diat
reinstating the employee and awarding backwages may encourage him to do even
worse and will render a mockery of the rules o f discipline that employees are
required to observe.

However, the employer (Wenphil) must nevertheless be held to account

for failure to extend to the employee his right to an investigation before causing his
dismissal. The dismissal o f an employee must be (1) for just or authorized cause
and (2) after due process. The employer committed an infraction o f the second
requirement; thus, it must be imposed a sanction for its failure to give a formal
notice and conduct an investigation as required by law before dismissing the
employee from employment Considering the circumstances o f this case, the
employer must indemnify the employee the amount o f P I,000.00. The measure o f
this award depends on the facts o f each case and the gravity of the omission
committed by the employer.

The rule thus evolved: where the employer had a valid reason to dismiss
an employee but did not follow the due process requirement, the dismissal may be
upheld but the employer will be penalized to pay an indemnity to the employee.
This became known as the W enphil Rule or B elated D ue P rocess Rule.

2.2. SERRANO DOCTRINE: INEFFECTUAL DISMISSAL RULE.

In 2000, the rule on the extent o f the sanction was changed in the en banc
decision in Serrano v. NLRC.2 The Court held that the violation by the employer o f
the notice requirement in termination for just or authorized causes was not a denial
o f due process that will nullify the termination. However, the dismissal is declared
ineffectual and the employer must pay full backwages from the time of
termination until it is judicially declared that the dismissal was for a just or
authonzed cause. The Court, in effect, re-examined the Wenphil doctnne. The

1 G .R N o 80587, Feb. 8 .1 9 8 9 ,1 7 0 SCRA 69.

J G R N o 117040, Jan. 27.2 00 0

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rationale for this re-examination was the significant number of cases involving
dismissals without requisite notices. It was concluded that the imposition of penalty
by way of damages for violation of the notice requirement was not serving as a
deterrent. Hence, instead of penalty, Serrano now required payment of full backwages
from the time of dismissal until the time the Courtfinds the dismissal wasfor ajust or authorised
cause. Serrano thus confronted the practice o f employers to dismiss now and pay
later by imposing full backwages as penalty.

For the first time, the Supreme Court distinguished denial o f due
process by the State and denial of due process by the employer. It concluded
that die violation by die employer o f the notice requirement cannot be considered a
denial of due process as would result in the nullity or illegality o f the employee’s
dismissal or layoff. The following reasons were cited:

1. The Due Process Clause1 o f the Constitution is a limitation on

governmental powers. It does not apply to the exercise of private
power, such as the termination of employment under die Labor Code.
2. The notice and hearing required under the Due Process Clause applies
before the powers o f organized society are brought to bear upon the
individual. This is obviously not the case of termination of
employment under Articles 297 [282] and 298 [283] of the Labor Code
because the employee is not faced widi an aspect of the adversary
system. The purpose for the requirement of notice and hearing is not
to comply with the Due Process Clause of the Constitution. Hie time
for notice and hearing is at the trial stage. Then that is the time we
speak of notice and hearing as the essence of procedural due process.
Thus, compliance by die employer with the notice requirement before
he dismisses an employee does not foreclose the right o f the latter to
question the legality o f his dismissal.
3. The notice requirement under Articles 297 [282] and 298 [283] of the
Labor Code cannot be considered a requirement of the Due Process
Clause since the employer cannot really be expected to be entirely an
impartial judge of his own cause.

2.3. AGABCWDOCTRINE: STATUTORY DUE PROCESS RULE.

About 4 years after Serrano, the Supreme Court, in the 2004 en banc
decision in Agabon v. NLRC,2 abandoned Serrano and reverted to the Wenphil
doctrine. It thus ruled that where the dismissal is for a just cause, as in the instant
case, the lack of statutory due process should not nullify- the dismissal, or render it
illegal, or ineffectual. However, the employer should indemnify the employee for
the violation of his right to statutory due process. Such indemnity or sanction,

1 Section 1, A rticle III states: ‘ Section 1. No petson sh a l be deprived o flife , Ib e rty, or property w ithout due process o f law , nor
shafl any person be denied the equal protection o f the law s.’
2 Agabon v. NLRC, G.R. No. 158693, Nov. 17,2004.

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however, must be stiffer than that imposed in WtnphiL Consequently, the sanction
imposed upon the employer in this case was in the form o f nominal damages in the
higher amount o f P30,000.00. The imposition of this form o f damages would serve
to deter employers from future violations o f the statutory due process rights o f
employees. At the very least, it provides a vindication or recognition o f this
fundamental right granted to the latter under the Labor Code and its Implementing
Rules.

Clearly, per Agabon doctrine,1 it is now the prevailing rule that it is not the
constitutional due process provided in the Constitution2 that is required in
termination o f employment but the statutory due process provided under Article
292(b) [277(b)] o f the Labor Code.
More succinctly, “ constitutional due process” protects the individual from the
government and assures him o f his rights in criminal, civil or administrative
proceedings; while “statutory due process” protects employees from being unjusdy
terminated without just cause after notice and hearing. Put differently, the Bill o f
Rights is not meant to be invoked against acts of private individuals like employers.
Private actions, no matter how egregious, cannot violate the constitutional
guarantees.

In other words, when the employer, in terminating its employee, does not
afford the latter the procedural due process he deserves, it is not the constitutional
due process that is violated but only the statutory due process provided in die Labor
Code, more specifically, Article 292(b) [277(b)] thereof.34

2.4. A BBO TT LABORATORIES D O C T R IN E : CON TRA CTU AL D U E

PROCESS RULE.

Just when everybody thought that the Agabon doctrine has finally solved
the lingering question involving the fourth situation where the dismissal is for just
or authorized cause but sans procedural due process, a new doctrine on
contractual due process, as distinguished from statutory d u e process, was
pronounced in the 2013 en banc decision in Abbott Laboratories, Philippines v. Alcarattf
It was held here that in a situation where there is an existing company policy
enunciating the procedural due process that must be observed in termination o f
employment, compliance alone with the statutory due process,5 would not
suffice. Additionally, there must be compliance too with the company-prescribed
due process procedure or the so-called contractual due process. Otherwise, the
same consequence as in Agabon will ensue, that is, the termination shall be

' E nunciated i i fie 2004 en banc decision in the case o f Agabon v. NLRC, G R N o. 158693, Nov. 17,2004.
J S ectio n 1, A rtic le III [B ill o f R ig h ts ], 1987 C o n s titu tio n w hich states that *no person sh a l be deprved o f ffe , Ib e rty o r
property w ithout due process o f law , nor shall any person be denied the equal protection o f the la w s’ ; P er Agabon v. NLRC,
supra.
3 See King o f K ings Transport, h e . v .M a m a c ,G R N o. 166208, June 29,2007.
4 A bbott Laboratories, P h fp p n e s v . P eariie Ann F. A lcaraz, G .R. N o. 192571, July 23,2013.
5 See A rticle 292(b) [277(b)] o f Ihe Labor Code, as interpreted r the case o f King o f Kings Transport, Inc. v. M am ac, supra.

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considered legal and valid but for lack of contractual due process, the employer will
be penalized with the payment of indemnity in the form o f nominal damages in die
same amount of P30,000.00 as awarded in Agabon.

In this case, it was found that respondent Alcaraz,1 who was hired as a
probationary managerial employee, was afforded both substantive and statutory
procedural due process, when she was terminated2 for failure to qualify as a regular
employee. Nonetheless, despite the existence of a sufficient ground to terminate
Alcaraz’s employment and Abbott’s compliance with the Labor Code termination
procedure, it was found that petitioner A bbott, breached its contractual
obligation to Alcaraz when it failed to abide by its own procedure prescribed in its
company rules in evaluating the performance of a probationary employee.

Veritably, a company policy partakes of the nature o f an implied contract

between the employer and employee. Hence, given such nature, company
personnel policies create an obligation on the part o f both the employee and the
employer to abide by the same. While it is Abbott’s management prerogative to
promulgate its own company rules and even subsequendy amend them, this right
equally demands that when it does create its own policies and thereafter notify its
employee of the same, it accords upon itself the obligation to faithfully implement
them. Indeed, a contrary interpretation would entail a disharmonious relationship
in the work place for die laborer should never be mired by the uncertainty of
flimsy rules in which the latter’s labor rights and duties would, to some extent,
depend.

VARIATIONS IN PROCEDURAL DUE PROCESS

1 . PROCEDURAL DUE PROCESS VARIES.
Based on law and jurisprudence, it is clear that the procedural due process
required to validly terminate an employee depends on the ground invoked. There is*7

' Respondent Alcaraz w as hired as M e d ia l and R egulatory A ffairs M anager (R egulatory A ffa irs M anager) o f petSoner,
subject to a 6-m onth probationary em ploym ent Upon being term inated, she file d a com plaint fa illegal dism issal and
dam ages dajm ing lh at she should have already been considered as a reg u la r and n o t a probationary em ployee given
Abbott’s failure to inferm her of tie reasonable standards fa h a reg d a riza tio n upon h a engagem ent as required u n d a
A rticle 296 [281) o f the L a b a Code. In this rela tio n , she contended that w tile h a em ploym ent contract stated th a t she w as to
be engaged on a probationary status, the sam e did not-indicate (he standards on w hich h a regularization w ould be based.
She fu rtie r averred lh a t the individual petitioners m aliciously connived to ille g a lly dism iss h a w hen: (a) they threatened h a
w ith term ination; (b) she was ordered not to e n ta com pany prem ises e v o i if she w as s til an em ployee thereof; and (c) they
pubfcfy announced that she already resigned in order to hum fiate h a . O n the contrary, petitioners m aintained th a t A lcaraz
was vaSdfy term inated from h a probationary em ploym ent given h a fa ilu re to sa tisfy the prescribed standards fa h a
regularization w hich w ere m ade known to h a a t (he tim e o f h a engagem ent
7 As the records show, AJcaraz’s dism issal w as effected through a letter dated M ay 1 9,2 00 5 w hich she received on M ay 23,
2005 and again on M ay 2 7,2 00 5 . Sated therein w ere the reasons fa h a term ination, i.e ., that a fte r p ro p a evaluation,
Abbott determ ined that she failed to m eet the reasonable standards fa h a regularization considering h a lack o f tim e and
people m anagem ent and decisionm aking skills, w hich are necessary in th e perform ance o f h a functions as R egulatory
A ffairs M anaga. U ndeniably, this w ritten notice su fficien tly m eets the crite ria se t forth above, thereby legitim izing the cause
and m a m a o f A lcaraz's dism issal as a probationary em ptoyee u n d a the param eters se t by the L a b a Code.

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no uniform procedural due process that should be applied in all cases. More
specifically, the variations may be summed up as follows:

(1) Just cause termination due process;

(2) Authorized cause termination due process;
(3) Due process in other forms of termination.

These are discussed below in seriatim.

Il-A
JUST CAUSE TERMINATION DUE PROCESS
1. K IN G OF KIN G S T R A N SP O R T D O C Y R IN E .

The Court has standardized procedural due process in just cause

termination in the 2007 case o f King o f Kings Transport, Inc. v. Mamac.1 It proclaimed
that the following steps should be complied with:

(1) Service o f first w ritten notice (show -cause notice).

The first written notice to be served on the employee should:

a) Contain the specific causes or grounds for termination against him;

b) Contain a directive that the employee is given the opportunity to
submit his written explanation within the reasonable penod of
FIVE (5) CALENDAR DAYS from receipt o f die notice:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer,
4) to gather data and evidence; and
5) to decide on the defenses he will raise against the complaint.
c) Contain a detailed narration o f the facts and circumstances that
will serve as basis for the charge against the employee. This is
required in order to enable him to intclligendy prepare his
explanation and defenses. A general description of the charge will
not suffice.
d) Specifically mention which company rules, if any, arc violated
and/ or which among the grounds under Article 297 [282] is being
charged against the employee.

(2) C onduct of h earin g .

After serving the first notice above, the employer should schedule and
conduct a hearing or conference wherein the employee will be given the
opportunity to:

' G .R . N o. 166208. June 2 9.2007.

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1) explain and clarify his defenses to the charge/s against him;

2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the management.

During the hearing or conference, the employee should be given the

chance to defend himself personally, with the assistance of a representative or
counsel of his choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.

(3) Sendee of second written notice (notice o f termination).

After determining that termination of employment is justified, the

employer shall serve the employees a written notice of term ination indicating
that:

1) all circumstances involving the charge/s against the employee have

been considered; and
2) grounds have been established to justify the severance o f his
employment.1
2. T H E PEREZ D O C TRIN E: N E W G U ID IN G P R IN C IP L E O N T H E
HEARING R EQ U IR EM EN T .

The above 2007 King of Kings concept o f hearing as part o f due process
has been significantly changed in 2009 in the en banc case o f Pere^ v. Philippine
Telegraph and Telephone Company} now known as the Pere\ doctrine. It enunciates the
new guiding principles on the hearing aspect o f procedural due process. Thus, a
formal hearing or conference is no longer m andatory. It becomes m andatory
only under any of the following circumstances:

(1) When requested by the employee in writing, or

(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.

The Court has given a new interpretation o f the term “ am ple

opportunity to be heard,” thus:

(a) “Ample opportunity to be h eard ” means any meaningful

opportunity (verbal or written) given to the employee to answer the
charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and
reasonable way.

King of Kings Transport, Inc v. Mamac. supra; See also Lima Land, Inc. v. Cuevas, G R No. 169523, June 16,2010;
Inguilov. First Phiippine Scales. Lx, G R. No 165407, June 5,2009,588 SCRA 471,491.
Perez v. Phifppine Telegraph and Telephone Company, G.R. No. 152048, April 7,2009,584 SCRA 110.

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(b) The “am ple o p p o rtu n ity to be heard” standard in the Labor Code
prevails over the “ h earin g or conference” requirement in its
Implementing Rules and Regulations. This is how the Supreme Court
resolved the conflict in the following provisions o f the Labor Code
and its implementing rules:

1) Under Article 292(b) [277(b)] of the Labor Code, the employer is

required to afford the employee “am ple opportunity to be
heard and to defend him self w ith the assistance o f his
representative if he so desires”; while -

2) Under Section 2(d), Rule I, Book VI of the Implementing Rules

of the Labor Code, the employer is required to afford to the
employee a “ h earin g or conference d u rin g w hich the
employee co n cern ed , w ith the assistance o f counsel, if he so
desires, is given opportunity to respond to the charge,
present his evidence or rebut the evidence p resented against
him .”

The Pere* doctrine is now the prevailing rule as shown by a catena of

cases1which cited it after its promulgation.

3. A B A N D O N M E N T IS T H E E X C E P T IO N .

The foregoing due process rule enunciated in King of Kings, as amended by

Pere% does not apply to cases o f a b a n d o n m e n t While this ground is considered a
just cause analogous to gross neglect o f duties under Article 297(b) [282(b)] o f the
Labor Code, however, the procedural due process applicable thereto is different
from the due process described above. For obvious reason, due process in
abandonment cases does not involve the conduct o f hearing. Compliance with the
following two (2) notices suffices, vi%:

1) First notice asking the employee to explain why he should not be

declared as having abandoned his job; and
2) S e c o n d notice informing him o f the employer’s decision to dismiss
him on the ground o f abandonment
(NOTE: See extensive discussion of Abandonment under the topic of
“B. TERMINATION BY EMPLOYER", "1. JUST CAUSES”, supra).

4. SO M E PR IN C IPL E S O N H E A R IN G R E Q U IR E M E N T .

■ If employee does not answer die show-cause notice, hearing should still
proceed1 in cases where hearing is mandatory.

1 Lopez v. Alturas Group of Companies, G.R. No. 191008. April 11,2011; Prudential Guarantee and Assurance Employee
Labor Union and Vatota v. NLRC, Prudential Guarantee and Assurance, Inc., G.R. No. 185385, June 13,2012; Esguerra v.
Valle Verde County Club, G R. No 173012, June 13,2012; ReyesTlayel v Phippine Luen Thai Holdings Corp, G.R No.
174893, July 11,2012; Sungao del Norte Electric Cooperative, Inc. v Gonzaga, G.R. No. 187722, June 10,2013.

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 Bar Reviewer on Labor Law

Outright termination violates due process.*12

Investigation still required even if incident was witnessed by many.3
Meeting, dialogue, consultation or interview is not the hearing required by­
law. It may not be a substitute for the actual holding of a hearing.4
Prior consultation with union is not part of the due process requirement.5
Cross-examination or confrontation o f witnesses is not necessary in company
investigations.6
Co-conspirator’s confession is not sufficient to p e n t dismissal.7
If a party was not initially given a chance to be heard at the company level,
but later was given full opportunity to submit position papers or present his
case and arguments before the Labor Arbiter, this defect is cured.8 But if the
dismissal is not justified, this principle does not apply.9

5. INSTANCES W H ERE H EA R IN G IS N O T R E Q U IR E D .

Hearing is not required in the following cases:

1. Termination of project, seasonal, casual or fixed-term employment.

2. Termination of probationary employment on the ground o f failure of
the probationary employee to qualify as a regular employee in
accordance with reasonable standards made known to him at the start
of the employment.10
3. Termination due to abandonment of work. (See above discussion)
4. Termination due to authorized causes under Article 298 [283]
(installation of labor-saving device, redundancy, retrenchment or
closure of business or cessation of operations). In such cases, there are
no allegations which the employees should refute and defend
themselves from by way o f a hearing.11
5. Termination due to disease under Article 299 [284].12
6. Termination by the employee (resignation) under Article 300 [285].
7. Termination after 6 months o f bona-fide suspension o f operation under
Article 301 [286]. For purposes o f satisfying due process, what is

« Hagcnoy Rual Bank, Inc. v. NIRC, G R No. 122075, Jan. 28,1998,285 SCRA 297.
1 Robusta Agra Marine Products, Inc. v. Gorombalem, G .R No. 80500, July 5,1989.
J Wenphi Corporation v. NLRC, G R No. 80587, Feb. 8,1989.
* Maneja v. NLRC, G. R No. 124013, June 5,1998.
s Century Textile Mils. Inc. v. NLRC, G R No. 77859, May 25,1988.
5 Alcantara v. The Philippine Commercial and Industrial Bank, G R No. 151349, Oct 20,2010.
7 Century Textile fAls. He. v. NLRC, G R No. 77859, May 25.1988.
8 Pepsr-Cda Distributors of the Philippines, Inc. v. NLRC, G.R. No. 100686, Aug. 15.1995.
8 Heienic Philippine Shipping, Inc. v. Siete, G.R. No. 84082, March 13,1991.
,(J Philippine Daily Inquirer, Inc. v. Magbbay, Jr.. G R No. 164532, July 24.2007.
" Wtehire R e Co. v. NLRC, G R No. 82249, Feb. 7,1991.
12 Agabon v. NLRC, G R No. 158693, Nw. 17,2004.

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 C h a pter Six 733
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required is simply that the notices provided under Article 298 [283] be
served to both the affected employees and the Department of Labor
and Employment at least one (1) month before the termination
becomes effective.1
8. Termination due to retirement under Article 302 [287].
9. Termination due to expiration o f tenure made coterminous with
lease.2
10. Termination due to closure or stoppage o f work by government
authorities when non-compliance with the law or implementing rules
and regulations poses grave and imminent danger to the health and
safety o f workers in the workplace.3
11. Termination o f employee who has admitted his guilt for the offense
charged.4

Il-B
AUTHORIZED CAUSE TERMINATION DUE PROCESS
1. TW O (2) KINDS.

Due process in authorized cause termination is classified into two (2), as

follows:

(a) Termination due to Business-Related Causes, such as: installation o f

labor-saving device, redundancy, retrenchment and closure o f
business or establishment.5
(b) Termination due to Health-Related Causes (Disease).6

These are discussed in seriatim below'.

Il-B-I.
DUE PROCESS IN TERMINATION DUE TO BUSINESS-RELATED AUTHORIZED CAUSES

1. PR O C ED U R A L STEPS.

Procedural due process in termination due tc any o f the authorized causes

o f instaUation o f labor-saving device, redundancy, retrenchment and closure o f
business or establishment is deemed complied with upon the separate and
simultaneous service o f a w ritten notice o f the intended termination to both:

1 Sebug uero v. NLRC, GTI Sportswear Corporation, G.R. No. 115394, Sept 27,1995.
2 Hiiado v. Leogardo, G.R. No. L-65863, June 11.1986.
3 Linder Article 128(c) of the Labor Code.
4 Philippine Pizza, Inc. v. Bungaboog, G. R. No. 154315, May 9,2005; Rodie [Fhfippines] v. NLRC, G.R. No. 83335, Oct 5,
1989,178 SCRA 385,394.
5 As provided in Article 298 (283), Labor Code.
6 As provided in Article 299 [284], Labor Code.

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 734 Bar Reviewer on Labor Law

(1) the employee to be terminated; and

(2) the appropriate DOLE Regional Office,

at least one (1) m onth before the intended date of the termination specifying die
ground/s therefor and the undertaking to pay die separation pay required under
Article 298 [283J of die Labor Code or die employment contract or the CBA,
whichever is higher. To iterate, no hearing is required, for obvious reason.

2. T H E O N E -M O N T H PE R IO D , M ANDATORY.

The one-month period should be observed not only with respect to the
notice to the employee but also to the notice to the DOLE. The observance o f the
period of 1 month mentioned in Article 298 [283] is mandatory. This means that
the written notices to both the affected employees and the DOLE should be served
separately to them at least one (1) month poor to the intended termination date. It
may, of course, be more dian one (1) month but certainly not less than this period.
Notably, said period shall be counted n o t only w ith respect to th e service
thereof to the affected employee b u t also to die D O LE.

There is deprivation of right to statutory due process if notice

requirement is not complied with at least a mondi prior to the effectivity o f the
termination. Hence, the dismissal, if properly and validly effected for authorized
cause, would still be declared legal but the employer shall be held liable to pay for
indemnity in the form of nominal damages in the stiffer amount of P50,000.00, per
Jaka doctrine.1

In the following cases, the notice requirement was violated:

(1) Plastimer Industrial Corporation v. Gopo} where the employer was held as
having violated the procedural due process requirement because it
failed to timely serve the notice to die DOLE, although it seasonably
served it on the affected employees.

(2) TP/ Philippines Cement Corp. v. Cajucom VI1? where the notices to both
the affected employee and the DOLE were served short of the 30-
day requisite. Petitioners sent the separate notices to the respondent
employee and the DOLE, tliree (3) days short of the 30 days required
by law.
(3) Shimiyu Phils. Contractors, Inc. v. Callanta,4 where, although there was
authorized cause to dismiss respondent from the service, petitioner
was declared as having violated the same 30-day prior written notice
rule because it served the notices to the DOLE and respondent*

1 JakaFoodProcessing Corporation v.Pacot,G.R. 151378, Mardi 28,2005.

* G.R. No. 183390, Feb. 16.2011.
J G il No. 149138, Feb. 28,2006.
« G.R. No. 165923, Sept 29,2010.

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employee, 21 days, in the case of the first notice, and 16 days, in the
case o f the second notice, before the intended date of respondent’s
dismissal.

Compliance with notice requirement is an indication of good faith.1

However, barring the affected employee from entering the company premises
during the 30-day period is an indication o f bad faith, a transgression o f the 1-
month prior notice rule.2

3. N O T IC E T O D O L E ; R A TIO N A LE.

The notice to the D O L E is necessary to enable it to ascertain the verity

and truth o f the cause of termination.3 It will enable the proper authorities to
determine after hearing whether the termination o f employment under Article 298
[283] is being done in good faith, i.e., for bonafide business reasons or whether, to
the contrary, it is being resorted to as a means of evading compliance with the just
obligations of the employer to the employees affected.4 The DOLE is equipped
with men and machines to determine whether the planned closure or cessation of
business or retrenchment or redundancy or installation o f labor-saving devices is
justified by economic factors.5

The notice is also considered as a substitute for hearing, as held in

Wiltshire File Co., Inc. v. NLRC.6

• Some principles on N otice to D O L E .

a. Notice to D O LE should state the correct number of workers to be

terminated.7
b. Notice to DOLE should contain the details of the personnel
reduction program.8
c. Notice to DOLE should be shown to have been duly received by
D OLE.9
d. Notice to DOLE need not be complied with in case of voluntary
personnel reduction program. If an employee consented to the
retrenchment or voluntarily applied for retrenchment, the required
previous notice to the DOLE is not necessary' as the employee

1 Coca-Ccia Bothers Phlippines, Inc. v. Del ViSar, Gf?. No. 163091, Oct 6,2010.
2 Philippine Tobacco FlueCuring & Redryng Corporation v. NLRC, G.R. No. 127395, Dec. 10,1998,300 SCRA 37,63-65.
3 Morales v. Metropolitan Bank and Trust Company, G il No. 182475, Nov. 21,2012.
4 Complex Electronics Employees Association [CEEA], ete .v. NLRC, G.R No. 121315, July 19,1999.
s Sebuguerov. NLRC, G.R No. 115394, Sept 27,1995,248 SCRA 532.
6 G.R No. 82249, Feb. 7,1991.
7 Id.
• Caftex [Phis.], Inc. v. NLRC, G.R No. 159641, Oct 15.2007.

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 736 Bar Reviewer on Labor Law

thereby acknowledged the existence of a valid cause for termination

of his employment.1
e. Notice to DOLE need not be complied with if the case is heard by
a Voluntary Arbitrator. The proceedings had before the Voluntary
Arbitrator where both parties were given the opportunity to be
heard and present evidence in dicir favor, constitute substantial
compliance with the requirement of the law.2
f. Notice to DOLE is unnecessary if NCMB supervised the
negotiation for tire separation package. This fact constitutes
sufficient notice to DOLE.3

4. N O T IC E TO T H E EM PLO Y EE; RATIONALE.

The notice to die employee is required to enable him to contest the

factual bases of the management decision or good faith of die termination before
the DOLE.4 Its purpose is to inform die employee of die specific date of his
termination or closure of business operations, and must be served upon him at
least 1 month before the date of effectivity to give him sufficient time to make the
necessary arrangements5 to ease the impact o f the loss of his job and his income.6
Absent compliance with such requirement would taint the dismissal.7

• Some principles on N otice to EM PLOY EE.

a. Knowledge by the employee of the redundancy program prior to

service of notice is not material. The fact that the organizational
realignment was made known to all the employees prior to the
termination is not significant. The notice should still be served on
the employee to be terminated.8
b. Notice should be served to affected employees personally and
individually.9
c. Posting of notice on the bulletin board or in conspicuous places
within the company premises is not sufficient asset docs not meet
the requirement of "serving a written notice on the workers" under Article
298 [283].10
d. A notice sent to the foremen, the section heads, the supervisors and
the department heads instructing them to retrench some o f the

1 Santos v. CA. G.R No. 141947, July 5,2001; Dote PhiSppines, Inc. v. NLRC, G.R No. 120009, Sept 13,2001.
J Revidad v. NLRC, G.R. No. 111105, June 27,1995.
3 Manatad v. Philippine Telegraph and Telephone Corp., G.R No. 172363, March 7,2008.
4 Wiltshire File Co. v. NLRC, G A No. 82249, Feb. 7.1991.
5 Manaipcs v. Texan PhFppnes, Inc., G.R. No. 197011, Jan. 28,2015.
6 Morales v. Metropolitan Bank and Trust Company, G.R. No. 182475, Ncv. 21,2011
1 Me-Shum Corporation v. Me-Shum Workers Union • FSM, G.R No. 156292, Jan. 11,2005.
! Smart Comninicaoons, Inc. v. Astorga, G.R No. 148132, Jan. 28,2003.
s Sangwoo Philippines, Inc. v. Sangwoo Phlippines, Inc. Employees Union, G.R Nos. 173154 & 173229, Dec. 09,2013.
10 Gdaxie Steel Workers Union [GSWJ-NAAU-KMU] v. NLRC, G.R No 165757, Oct 17,2006.

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 C hapter Six 737
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workers based on certain guidelines is not the required notice

. . contemplated by law. The written notice should be served on the
employees themselves, not on their supervisors.1

5. ADVANCE PA Y M EN T O F O N E -M O N T H SALARY, E F F E C T .

The employer may validly pay in advance, upon the service o f notice to the
employee and to the DOLE, the salary o f the employee equivalent to the one (1)
month period and without requiring him to report for work within said period.
The law does not preclude such procedure and the same is more beneficial to the
employee who will then have enough, unimpeded time to look for a new job during
die 1 month period he is no longer required to work by his employer. However, it
must be stressed that the service of separate notices to the affected employees and
to the D O LE at least 30 days from the effectivity o f the termination for authorized
cause should still be duly complied with. In other words, the advance payment o f
die salary for 1 month does not dispense with the requirement of the 1-month
prior notice. Such advance payment cannot be treated as a replacement or substitute
for the notices required under the law. The employer paying die advance salaries
should still comply with said notice requirement 1 month prior to die intended
effectivity o f the termination.2

II-B-2.
DUE PROCESS IN TERMINATION DUETQ HEALTH-RELATED AUTHORIZED CAUSES
(DISEASE)
(NOTE: This topic has been discussed very thoroughly under the topic o f
“V. DISEASE", “V-2. PROCEDURAL REQ UISITES", supra)

ll-C
DUE PROCESS IN OTHER FORMS OF EMPLOYMENT
1. PROBA TION ARY E M P L O Y M E N T .

Probationary employment may be terminated prior to die lapse o f die

probationary period fur ju st or authorized cause; in which case, die appropriate
applicable procedural due process, as discussed above, should apply. However, if
the ground invoked is the failure of the probationary em ployee to qualify as a
regular employee based on the reasonable standards made known to him at the
time of his engagement, a different kind o f due process is required.

(NOTE: Please see extensive discussion of this topic under the b p ic of “VI. POST-EMPLOYMENT,"
“2. KINDS OF EMPLOYMENT," “ C . PROBATIONARY EMPLOYMENT", supra)*

' Emco Plywood Corporation v. Abelgas, G.R. No. 14A532, April 14,2004.
* Seranov. NLRC, G.R No. 117040, May 4,2000.

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 738 Bar Reviewer on Labor Law

2. D E FIN IT E -PE R IO D EM PLO Y M EN T.

Procedural due process is no t required in termination o f the following:

1. Project employment which automatically terminates upon completion

of the project;
2. Seasonal employment which automatically terminates upon the end
of the season;
3. Casual employment which automatically terminates upon the lapse of
the agreed period;
4. Fixed-term employment which automatically terminates upon the
expiration of the fixed period.

III.
INDEMNITY IN THE FORM OF NOMINAL DAMAGES
1. APPLICATION OF T H E AGABON AND JAKA D O C T R IN E S .

Termination for a just cause or authorized cause but without affording the
employee procedural due process should no longer be considered illegal or
ineffectual1but legal. Consequently, the employee will not be ordered reinstated but
will be awarded an indemnity in the form of nominal damages, the amount of
which will depend on whether the termination is grounded on just cause or
authorized cause, thus:

1. If based on just cause - P30,000.00 p zr Agabon doctrine.2

2. If based on authorized cause - P50,000.00 per jaka doctrine.3

According to Jaka, the indemnity is “stiffer” in case of authorised cause

termination because, unlike in the case o f just cause termination where the employee
has committed a wrongful act, an employee dismissed based on authorized cause
has not committed any blameworthy act nor any delinquency or culpability on his
part. Instead, the dismissal process is initiated by the employer’s exercise o f his
management prerogative, it., when the employer opts to install labor saving device,
when he decides to cease business operations or when, as in this case, he
undertakes to implement a retrenchment program

• Some principles under the A gabon and Ja k a doctrines.

1. The measure of penalty or indemnity is no longer full backwages but

nominal damages.
2. Since the dismissal is considered legal, any award o f backwages must
be deleted and replaced by award of indemnity.1

' Per Serrano v. NLRC, G.R. No. 117040, Jan. 27.2000

7 Based on the case of Agabon v. NLRC, G.R. No. 158693, Nov. 17,2004.
3 Based on Jaka Food Processing Corporation v. Pacot G.R. 151378, March 28,2005.

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 C hapter Six 739
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3. Amount of nominal damages may be reduced.12 But as far as the

upping o f the amount is concerned, a survey o f Supreme Court
decisions indicates that there has yet been no decision increasing the
indemnity beyond what has been prescribed in Agabon and Jaka.

c.
TERMINATION BY EMPLOYEE

1. LEGAL BASIS.

The relevant provision o f the Labor Code is Article 300 [285] which
provides:
Article 300 [285]. Termination by Employee. -
(a) An employee may terminate without just cause the
employee-employer relationship by serving a written notice on the
employer at least one (1) month in advance. The employer upon whom
no such notice was served may hold the employee liable for damages.
(b) An employee may put an end to the relationship without
serving any notice on the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the
honor and person of the employee;
2. Inhuman and unbearable treatment accorded the
employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his
representative against the person of the employee or any
of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.3

2. C O N C E PT .

While normally it is the employer4 who :s possessed of the right to

terminate the employer-employee relationship, the Labor Code,5 in recognition o f
the equality of the parties to such relationship, grants :o an employee the same right
to terminate die employment relationship he has with his employer at any time he
wishes and with or without just cause. Moreover, there is a strong constitutional
basis for allowing employees to resign. The Constitution6 expressly prohibits
involuntary servitude, thus:

“Section 18. xxx (2) No involuntary servitude in any form

shall exist except as a punishment for a crime whereof the party shall
have been duly convicted.”

1 Electro System Industries Cap. v. NLRC, G.R. No. 155282, Oct 5,2005.
7 Industrial Timber Cotp. v. Ababon, G.R. No. 164518, March 30,2006.
3 As renumbered pursuant to Section 5, RA. No. 10151, June 21,2011.
J Under Articles 297 [282], 298 (283) and 299 [284] of the Labor Code, the employer is the one granted sudirighl
5 See Article 300 (285) thereof.
6 See Section 18(2), Article III (Bil of Rights) thereof.

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 740 Bar reviewer on I abor Law

3. TWO (2) KINDS O F T E R M IN A T IO N U N D E R A R T IC L E 300 [285].

Under Article 300 [285], an employee may terminate his employment in

cither of two (2) ways, to wit:

(1) Voluntary resignation - without just cause as provided in paragraph

(a) thereof; or
(2) Involuntary' resignation - with just cause under paragraph (b) thereof.

4. PRINCIPAL D ISTIN C TIO N S.

The following are the principal distinctions-between the two (2) kinds of
termination under paragraph (a) and p aragraph (b) o f Article 300 [285]:

(1) The termination contemplated under the former is in the nature of

voluntary resignation; while that contemplated under the latter is in the
nature of involuntary or forced resignation an d /o r constructive dismissal.
(2) The termination in the former is without just cause; while in the latter,
it is for just cause.
(3) In the former, the employee resigning is required to tender or submit a
written notice of resignation to the employer at least one (1) month in
advance; while in the latter, no such notice o f resignation is necessary
as he/she can terminate the employment relationship as soon as there
is evidence of any o f the acts enumerated under paragraph (b) of
Article 300 [285].
(4) In the former, the failure o f the employee to serve the notice at least
one (1) month prior to the effectivity date of the resignation will make
him/her answerable for damages; while the employee in the latter is
not subject to such adverse consequence.
(5) In the former, there is no illegal dismissal to speak of; while in the
latter, the employee is deemed constructively dismissed.

I.
VOLUNTARY RESIGNATION
(Termination by Employee Without Just Cause)

1. D E FIN IT IO N .

Per jurisprudence, "resignation" is defined as the voluntary act o f an

employee who finds himself in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service so much so that he has
no other choice but to dissociate himself from his employment.1 Viewed
differcndy, "resignation” is the formal pronouncement of relinquishment o f an
office, with the intention of relinquishing the office accompanied by the act of

' Gan v. GakJerma PhiSppines. Inc., G.R. Na 177167, Jan. 17,2013.

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relinquishment.1 In other words, the resignation must show the concurrence o f two
(2) things, to wit

(1) The intent to relinquish; and

(2) The overt act o f relinquishment.2

Consequcndy, the acts o f the employee before and after die alleged
resignation must be considered in determining whether he or she, in fact, intended
to sever his or her employment.3

To constitute a valid resignation, it must be unconditional and with the

intent to operate as such. It is o f course a setded doctrine that the resignation o f an
employee is presumed voluntary, unless established otherwise.4 Thus, the fact that
the employee has prepared her resignation letter in her own handwriting and that
she has signed an undertaking evidencing her receipt o f separation pay, when taken
together with her educational attainment and the circumstances surrounding the
filing of the complaint for illegal dismissal, comprise substantial proof o f the
employee’s voluntary resignation.5 Contrarily, there is no valid resignation where it
was made without proper discernment, such as when an employee’s act of writing
and handing in his resignation letter to his employer was a knee-jerk reaction
triggered by that singular mom ent when he was left with no alternative but to
accede, having been literally forced into it by being presented with the more
unpleasant fate o f being terminated.6

2. R E Q U ISIT E S IN R E S IG N A T IO N W IT H O U T JU ST CAUSE.

In case o f voluntary resignation without just cause, the following requisites

must concur;

(1) The resigning employee should submit a written (not verbal) notice
of termination (commonly known as “resignation letter')-,
(2) Service o f such notice to the employer at least one (1) month in
advance;7 and
(3) W ritten acceptance by the employer of the resignation.

Tire 3rd requisite above is not expressly provided in Article 300 [285]
but is given the character o f a mandatory requirement under well-established
jurisprudence.8

1 Intel Technology Phifppnes, Inc. v. NLRC, G R No. 200575, Feb. 5,2014; Gov. CA, G R No. 158922, May 28,2004.
2 Zenaida 0. Mendoza v. HMS Credit Corporation, G R No. 187232, April 17,2013;
3 Nationwide Security and Allied Services, Inc. v. Valderama, G R . No. 186514, Feb. 23,2011.
4 S t Michael Academy v. NLRC, G R No. 119512, July 13,1998,292 SCRA478.
s Bilbao v. Saudi Arabian Airlines, G R No. 183915, Dec. 14,2011.662 SCRA 540,549.
6 Metro Transit Organization, Inc. v. NLRC, G .R No. 122046, Jan. 16.1998,284 SCRA 308.
7 Article 3C0(a) [285(a)], Labor Code.
6 Shie Jie Corp. v. National Federation of L *o r, G R No. 153148, July 15.2005.

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 742 Bar Reviewer on labor Law

3. LIABILITY FOR DAMAGES.

The failure by the resigning employee to comply with the legal

requirement of service of a written notice (resignation letter) at least 30 days from
its effectivity date docs not result in making his resignation void but only in making
him liable for damages.1Thus, a resignation made effective “immediate//' or short of
the 30-day period violates the law and may subject the resigning employee to
damages, if diere exists no just cause to warrant die immediate termination of
employment by the employee.

The law is silent on die form or amount' of damages for which an

employee who violates die one (1) month prior written notice requirement in
Article 300 [285] may be held answerable. It may be deduced, however, that the
damages contemplated therein refer to actual damages that the employer may have
suffered as a consequence of the undue termination o f the employment
relationship by the employee.

Thus, in Almario v. Philippine Airlines, Inc.2 the Court affirmed the right of
the employer to be reimbursed for die cost of training a resigning employee to
higher position. Petitioner here was hired by respondent airline as a Boeing 747
Systems Engineer. Later, petitioner, then about 39 years of age and a Boeing 737
(B-737) First Officer at PAL, successfully bid for the higher position o f Airbus 300
(A-300) First Officer. Since said higher position required additional training, he
underwent, at PAL’s expense, more than 5 months o f training consisting o f ground
schooling in Manila and flight simulation in Melbourne, Australia. After completing
the training course, petitioner served as A-300 First Officer o f PAL, but after 8
months of service as such, he tendered his resignation, for "personal reasons. ” In
holding petitioner liable to reimburse PAL for the training costs, the Supreme
Court cited, among other grounds, Article 22 o f the Civil Code on unjust
enrichment which recognizes the principle diat one may not enrich himself at the
expense of another. Thus, petitioner was ordered to pay PAL the sum of
P559,739.90, to bear the legal interest rate o f 6% per annum from the filing of
PAL’s complaint on February 11, 1997 until the finality of the decision, the High
Court ratiocinated:

“Admittedly, PAL invested for the training of Almario to

enable him to acquire a liighcr level of skill, proficiency, or technical
competence so that he could efficiently discharge the position of A-300
First Officer. Given that, PAL expected to recover the training costs by
availing of Almario’s services for at least three years. The expectation
of PAL was not fully realized, however, due to Almario’s resignation
after only eight months of service following the completion of his
training course. He cannot therefore refuse to reimburse the costs of
training without violating the principle of unjust enrichment.” •*

« Serrano v.NLRC.G.R No. 117040, Jan 27,2000

* G R No. 170928. Sept 11.2007.

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The above ruling in Almario was used as basis in allowing the deduction o f
the same training cost from the retirement benefits due a pilot in Eltgir v. Philippine
Airlines, Inc.1The Court considered PAL’s act o f sending its crew for training as an
investment which made PAL expect an equitable return in the form of service
within a reasonable period of time such that a pilot who decides to leave the
company before it is able to regain the full value of the investment must
proportionately reimburse the latter for the co sts o f his training. To allow the
petitioner to leave the company before it has fulfilled the reasonable expectation o f
service on his part will amount to unjust enrichment.

4. SOM E PR IN C IP L E S O N V OLUN TARY R E S IG N A T IO N :

(A) O n the 30-dav prior w ritten notice rule.

(1) The 30-day period is for the benefit o f the employer and not for the
resigning employee.2 The employer may thus:

(a) Insist on the full observance by the resigning employee of the

entire 30 days; or
(b) Shorten it to such number o f days as it may deem appropriate or
necessary.3 or
(c) Waive it completely and make the resignation effective
immediately.
The employer has the discretion to waive such period. Its purpose is to
afford the employer enough time to hire another employee if needed
and to see to it that there is proper turn-over o f the tasks which the
resigning employee may be handling.4
(2) The unilateral extension by the employer o f the period beyond 30 days
is not allowed since the 30-day period is the maximum allowed by law.
In order to make the extension valid and legal, the employer should
secure the written consent o f the resigning employee to such extension.
It is o f course different if it is the resigning employee who voluntarily
sets the effectivity of his resignation beyond the 30-day period. If the
employer consents to the prolonged period, the employee cannot be
heard to complain later on that he was made to serve against his will, in
violation of the period mentioned in Article 300 [285],
(3) The resigning employee is still required to work during the legally
mandated 30-day period or such shorter period as may be unilaterally
prescribed by the employer or such extended period as may be mutually
agreed upon by the resigning employee and the employer. Failure on

1 6R .N o. 181995, July 16,2012.

7 Phimco Industries, Inc. v. NLRC, GR No. 118041, June 11,1997,273 SCRA 286.
3 Hechanova Bugay Vilchez Lawyers v. Ally. Leny 0. Malone, GR No. 198261, Oct 16,2013.

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the part of the resigning employee to work during such period will
subject him to damage suit

(B) On acceptance of resignation.

(1) Written acceptance of resignation is necessary to make it binding and

effective.
(2) Resigning employee may withdraw Iris resignation any time before
acceptance is made by the employer. Once accepted, however,
withdrawal thereof can no longer be made by the resigning employee,
except with the consent or agreement of the e'mployer.1
(3) A duly accepted resignation effectively terminates the employer-
employee relationship.2
(4) The employee cannot claim illegal dismissal if the employer does not
accept withdrawal of the duly accepted resignation.3 To say that the
employee who has resigned is illegally dismissed is to encroach upon
the right of tire employer to hire persons who will be of service to him.4
Such acceptance of the withdrawal of the resignation is, it must be
emphasized, the employer’s sole prerogative.5
(5) Acceptance of resignation should be expressed by the employer in no
uncertain terms. The usual practice of employers of simply noting such
acceptance on the face o f the resignation letter and not communicating
it to the resigning employee is not the acceptance that would be binding
on the latter. The acceptance should be in writing and must be duly
conveyed to and served upon the resigning employee in order to bind
him. If not duly informed of such acceptance, the resigning employee
may still validly withdraw his resignation anytime. The date of
acceptance therefore becomes a critical factor to consider in
determining whether or not the withdrawal o f resignation was
seasonably made by the resigning employee. Needlessly, before service
to him of such notice o f acceptance by the employer, the resignation
may be withdrawn anytime6

(C) On voluntariness of resignation.

(1) Resignation of managerial employees is different from that o f rank-and-

file employees. Being managerial employees holding responsible
positions, they are not ordinary laborers or rank-and-file personnel who
may not be able to completely comprehend and realize the

' Philippines Today, h a v. NLRC, G il No. 112965, Jan. 30.1997,334 Phil. 854,877.
* BMG Records [Rife.], Inc. v. Aparedo, G.R No. 153290, Sept 5,2007.
3 Intertod Maritime, Inc. v. NLRC, G il No. 81087, June 19,1991,198 SCRA 318.
4 Id.
s Id.
6 Mora v. Avesco Marketing Corporation, G il No. 177414, Nov. 14,2008.

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consequences o f their acts. They are educated individuals. Under these

circumstances, it can hardly be said that they were coerced into
resigning from the company. The quitclaim they executed in favor o f
the company amounts to a valid and binding compromise agreement.
To allow them to repudiate the same will be to countenance unjust
enrichment on their part. The Court will not permit such a situation.1
(2) Hefty salary and high corporate perks are not indicia o f involuntariness
o f resignation. Employees resign for various reasons. A big salary is
certainly no hindrance to a voluntary cessation o f employment. Human
resource studies2 reveal that various factors (in and out o f the
workplace) affect an employee’s employment decision.3
(3) Voluntariness may be inferred from the language used. A resignation
letter which contains words of gratitude and appreciation to the
employer can hardly come from an employee who was forced to
resign.4 Clearly, the employee’s use o f words o f appreciation and
gratitude negates the notion that she was forced and coerced to resign.5
Allegations o f coercion are belied by words o f gratitude coming from
an employee who is just forced to resign.6*
(4) Words o f gratitude may not, however, be considered indicative of
voluntariness of resignation in certain cases. While resignation letters
containing words o f gratitude may indicate that the employees were not
coerced into resignation, this fact alone, according to the 2013 en banc
decision in SME Bank, Inc. v. De Gunman,1 is not conclusive proof that
they intelligendy, freely and voluntarily resigned. To rule that
resignation letters couched in terms o f gratitude are, by themselves,
conclusive proof that the employees intended to relinquish their posts
would open the floodgates to possible abuse. In order to withstand the
test o f validity, resignations must be made voluntarily and with the
intention of relinquishing the office, coupled with an act of
relinquishment.8 Therefore, in order to determine whether the
employees truly intended to resign from their respective posts, the

1 Amkor Technotogy PhSpphes, he. v. Juangco, G i l No. 156507, Jan 23,2007.

2 The human resource studies cited as Footnote No. 50 in fie decision in this GJobe Telecom case refer to the ones made by
Stephen P. Robbins n his book *Organiza5onal Behavin' 981ed, 22-23 where it was advanced thus: ’A variable may either
be an individual level variable or a group level variable. Individual level variables arc those that relate to a person's
characteristics such as his or her age, gender, roles and marital status. On the other hand, group level variables are those
that pertain to the wxlt environment and organizational culture. Examples of this are communication patterns, leadership
style, power and pofScs and levels of conflict management A particular variable or a combination of shilar or dissimilar
variables can influence an employee to resign.’
3 Globe Telecom v. Crisologo, G H No. 174644, Aug. 10,2007,529 SCRA 811,818.
4 Vicente v. CA, G.R. No. 175988, Aug. 24,2007; VWfi Hahn Enterprises, v. Maghuyop, G i l No. 160348, Dec. 17,2004.
s Kbaov. Saudi Arabian Airihes,G.R. No. 183915, Dec. 14,2011.
5 Auza, Jr. v. MOL Phiipphes, Inc., G.R. No. 175481, Nov. 21,2012.
' G. R. Nos. 184517 & 186641, Oct 8,2013 (En Banc).
8 Magtoto v. NLRC, G R No. 63370, Nov. 18,1985; Black’s Law Dctionary (Revised Fourth Edition, 1968).

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tenor of the resignation letters cannot be merely relied upon, but must
take into consideration the totality o f circumstances m each particular
case.
(5) Here in SME Bank, the records show that some o f die respondent
employees only tendered resignation letters because they were led to
believe that, upon re-application, they would be re-employed by the
new management. As it turned out, they were not rehired by the new
management who bought the majority block o f the stocks in the bank.
Their reliance on the representation that diey would be re-employed
gives credence to their argument that they merely submitted courtesy
resignation letters because it was demanded o f them, and that they had
no real intention of leaving their posts. They therefore did not
voluntarily resign from their work; rather, diey were terminated from
their employment.
(6) No weight should be given to the employee’s resignation letter which
appears to have been written and submitted at the instance o f the
employer. Its form is o f the company’s and its wordings are more of a
waiver and quitclaim. More so when the supposed resignation was not
acknowledged before a notary public.1
(7) Resignation letters which are similarly worded and o f same tenor are
actually waivers or quitclaims which are not sufficient to show valid
separation from work or to bar the employees from assailing their
termination. They also constitute evidence of forced resignation or that
they were summarily dismissed without just cause.2
(8) The voluntariness of the resignation cannot be said to have been
weakened or reduced in efficacy simply because it was tendered under
threat of being terminated for just cause. For as long as the threatened
administrative action is well supported by evidence, the resignation
proferred by the employee to avoid it should continue to be treated as
having been made voluntarily.3
(9) The act of an employee of terminating employment relationship due to
disease is tantamount to resignation.4
(10) The burden of proof devolves on the employer who alleges
voluntariness of resignation. The case o f the employer must stand or

' A' Prime Security Services, Inc. v. NLRC, G R No. 107320, Jan. 19,2000; Mobile Protective & Detective Agency v. Ompad,
G R No. 159195, May 9,2005.
2 Great Southern Maritime Services Corporation v. Acuna, G.R No. 140189, Feb. 28,2005; Sue Angel Manpower and
Security Services, Inc. v. Hon. CA, G R No. 161196, July 28,2008.
3 Domondon v. NLRC, G.R. No. 154376, Sept 30,2005,471 SCRA 559, oiling Travis v. Tacoma Public School District, 120
Wash. App. 542,85 P3d 959, March 9,2004 (See Footnote 22 thereof).
4 Vitlanjelv. YeoHanGuan, G R No. 169191, June 1,2011.

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fall on its own merits and not on the weakness of the employee’s
defense.1
(11) Burden of proof shifts to the employee to prove involuntariness o f
resignation.2

(D) O n validity of giving em ployee the option to resign instead o f being

dism issed for just or au thorized cause.

• Giving an option to an erring employee to voluntarily resign rather than

be terminated for just cause has been upheld as valid in a number o f
cases.34In Cathay Pacific Airways, Ltd. v. Marin* respondent was asked to
resign voluntarily or else face the adverse consequences o f not being
granted regular employment on account o f unsatisfactory work
performance. Had he resigned voluntarily before the expiry o f die
probationary period, he would have brighter prospects o f employment
with another airline or other business entities. However, respondent
rejected die suggestion and opted to file Iris complaint with the NLRC.
A decision o f petitioner to afford respondent a graceful exit is perfeedy
within its discretion.5

In Sutherland v. Labrador,6 respondent, a call center agent, has committed

several infractions which were established by evidence during the
administrative investigation conducted by petitioners. However, instead
o f being dismissed for just cause, he requested dial he be allowed to
resign from the company effective immediately, to protect his
reputation and his future employment chances, to which petitioners
agreed. However, he later filed a constructive/illegal dismissal case
against petitioners. Raised as one o f the issues was whether Iris
resignation letter was voluntarily executed. The Supreme Court,
however, found this issue moot. This is so because even if respondent
Labrador had not submitted Iris resignation letter, petitioner Sutherland
could still not be held liable for constructive dismissal given die existing
just cause to terminate his employment.

(E) O n validity of Special V oluntary R esignation (SVR) Program .

(1) Employers may lawfully and effectively reduce dieir personnel by

offering resignation benefits through a Voluntary Resignation Program

1 Payno v. Orizon Trading Corp., G.R. No. 175345. Aug. 19.2009; MaSg-on v. Equitable General Services, Inc, G.R. No.
185269, June 29,2010, Cabalen Management Co, Inc. v. Quiambao, G.R No. 169494. July 24,2007.
2 Bilbao v. Saudi Arabian Airlines, G R No. 183915, Dec. 14,2011; Vicente v. CA (Former 17th Division), G.R No. 175988,
Aug. 24,2007; Digital Telecommunications Ph'jppries, Inc. v. Soriano. G.R. No 165039, June 26,2006.
2 Diana E. Betaunzaran v. NLRC, G R No. 120038, Dec. 23,1996,265 SCRA 800
4 G.R. No. 148931, SepL 12,2006.
s WJli Hahn Enterprises v. Maghuyop. GR . No. 160348, Dec. 17.2004; See also Chiang Kai Shek CoJege v. Rosalinda M.
Torres, GR. No. 189456, Apifl 02,2014; Mandapat v. Add Force Personnel Services, Inc, G R No. 180285, July 6,2010.
6 Sutherland Global Services (PhSpp'nes), Inc. v. Labrador, G.R. No. 193107, March 24,2014.

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where employees are afforded the right to voluntarily terminate the

employment relationship. If made in good faith, such a scheme should
be considered a valid form o f terminating employment. Consequently,
the employer need not comply with the requirement under Article 298
[283] of the Labor Code that notice be sent td the Department of
Labor and Employment at least one (1) month prior to tire effectivity
of the termination of employment. The reason is that by applying to
voluntarily resign, the employee thereby acknowledges the existence of
a valid cause for terminating his employment.1

(F) On employment elsewhere.

(1) Assumption of new job with another employer by resigning employee

prior to current employer’s acceptance o f resignation indicates intent to
relinquish position.2
(2) Employment elsewhere during the pendency of a case does not amount
to resignation.3

II.
INVOLUNTARY RESIGNATION
{Termination by Employee With Just Cause)

1. INVOLUNTARY R ESIG N A TIO N .

The termination initiated by the employee based on the just causes

described and enumerated in paragraph (b) of Article 300 [285] is in the nature of
involuntary resignation. Thus, an employee may put an end to the employment
relationship without need of serving any notice on the employer by reason of any
of the following just causes:

(1) Serious insult by die employer or his representative on the honor and
person o f the employee;
(2) Inhuman and unbearable treatment accorded the employee by the
employer or his representative;
(3) Commission of a crime or offense by the employer or his
representative against the person of the employee or any o f the
immediate members o f his family; and
(4) Odier causes analogous to any of the foregoing.4

' Dole Philippines, Inc. v. NLRC, G R No. 120009, Sept 13,2001; International Hardware, Inc. v. NLRC, G.R No. 80770,
Aug 10,1989,176 SCRA 256
* PWppnes Today, Inc v. NLRC, GR No. 112965. Jai. 30,1997,267 SCRA202.
3 Great Southern Maritime Services Corporation v. Acuna, G.R. No. 140189, Feb. 28,2005.
* Article 300(b) (285(b)]. Labor Code; Section 11. Rule I, Book VI. Rules to Implement the Labor Code.

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Termination initiated by an employee is involuntary in character if the just

causes expressly enumerated above or other similar or analogous circumstances
exist in a given situation. In this instance, the service of a written notice to the
employer commonly called "resignation letter” becomes unnecessary and immaterial
to determine the validity or legality o f the termination. The law expressly does not
require such notice.

Thus, unlike resignation without just cause under, paragraph (a) o f Article
300 [285], where the law requires prior written notice, the employee may terminate
his employment without serving any notice, verbal or written, to the employer if
such is occasioned by any of the just causes mentioned in paragraph (b) or by any
act, fact or circumstance clearly showing the involuntary nature o f the resignation.

III.
CONSTRUCTIVE DISMISSAL

1. C O N ST R U C TIV E DISMISSAL.

There is constructive dismissal when any or all o f die following three (3)
circumstances exist:

(1) When continued employment is rendered impossible, unreasonable or

unlikely;
(2) When there is a demotion in rank and/or a diminution in pay; or
(3) When a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee that it could foreclose any choice
by him except to forego his continued employment.1

Verily, the law recognizes and resolves this situation in favor of employees
in order to protect their rights and interests from the coercive acts o f the
employer.23Whereas valid termination by the employee under Article 300 [285]
contemplates such act to be voluntary, an employee who is forced to relinquish the
position held through the employer’s unfair or unreasonable acts is deemed to have
been illegally terminated or discharged and as such the termination is implied to be
involuntary} Indeed, the law on constructive dismissal is a well-settled rule in both
Philippine and foreign jurisdictions.4

2. C O M M O N D E N O M IN A T O R .

Involuntary and forced resignations are embraced within the general

concept of constructive dismissal. The common character pervading involuntary' or

1 GirtyG. Icov Systems Technology Institute, Inc.. G.R. No. 185100, July 09,2014.
2 Diamond Taxi and Btyan Ong v. Felipe Llamas. Jr.. G .R .N o. 190724, March 12.2014.
3 Globe Telecom, Inc. v. Fbrendo-Flores, G.R. No. 150092, Oct 20,2003.

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 750 Bar. Reviewer on Labor law

forced resignation or constructive dismissal is the act o f "quitting” from

employment by the employee because o f the attendant just causes, acts, facts or
circumstances which render the continued employment impossible, unreasonable
or unlikely.1 Thus, if there is no cessation of work, there can be no constructive
dismissal.2 .

3. TEST OF CONSTRUCTIVE DISMISSAL.

The test of constructive dismissal is whether a reasonable person in the

employee’s position would have felt compelled to give up his position under the
circumstances.3 It is an act amounting to dismissal but rhade to appear as if it were
not. In fact, the employee who is constructively dismissed may be allowed to keep
on coming to work.4 Constructive dismissal is therefore a dism issal in disguise.5

Following above test, it was held in Tuason v. Bank of Commerce,6* that

petitioner was constructively dismissed by respondent BOC not only when the
latter has exerted pressure on petitioner to resign from her work but when the
former, while on leave, was replaced by another in her post.

In accordance with the same test, the following acts were considered
indicative of constructive dismissal in the case of Globe Telecom, Inc. v. Florendo-
Flores?
“A lthough respondent continued to have the rank o f
supervisor, h er functions were reduced to those o f a m ere house-to-
house sales agent. ITus am ounted to a dem otion. She was deprived o f
bonuses, allowances and o th er benefits given to an o th er o f the sam e or
similar rank and position, benefits th at she used to receive. D espite her
having com plied w ith com pany policies, her im m ediate superior, Luzon
Head-Regional Sales Cacholo M. Santos, never accom plished and
subm itted her perform ance evaluation report thereby depriving her o f
salary increases, bonuses and o th e r incentives. The intolerable,
unreasonable and hostile conditions in the working en vironm ent set by
C acholo M. Santos, G lobe T elecom manager, undoubtedly coerced
respondent to relinquish her em ploym ent involuntarily, for which she
sought redress through legal m eans. T his is a clear-cut case o f
constructive dismissal.”

The fact that respondent, in Tan Brothers v. Escudero,8 was deprived of

office space, was not given further work assignment and was not paid her salaries

' MobJe Protective & Detective Agency v. Ornpad, 6.R. No. 159195, May 9,2005.
? University of the Immaculate Conception v. NLRC and Teodora Axalan, G R No. 181148, Jan. 26,2011.
J McMer Caporation, Inc. v. NLRC, G.R No. 193421, June 04,2014.
4 CRC Agricultural Tradrigv. NLRC. G.R. No. 177664, Dec. 23,2009,609 SCRA138,149.
5 Ang v. San Joaquin, Jr., G.R. No. 185549, Aug. 07,2013; Gating v. Malasugui, G R No. 174173, March 7,2012.
« G.R. No. 192076, Nov. 21,2012.
1 G.R No. 150092, Oct 20,2003 (ResoWon on Motion for Reconsideration promulgated on Sept 27,2002).
4 Tan Brothers Corporation of Basiiao City v. Escudero, G.R. No. 188711, July 08,2013.

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until she was left with no choice but to stop reporting for work, all combine to
make out a clear case o f constructive dismissal.

Petitioner, in another case, Philippine Advertising Counselors, Inc. v. NLRC,12

argues that private respondent did not suffer any demotion in rank since he has
“retained his rank o f Vice President, continued to work in the same office, and
received the same salaries, benefits and privileges/’ In holding that private
respondent was constructively dismissal, the Court emphasized drat constructive
dismissal does not always involve such kinds o f diminution; an act o f clear
discrimination, insensibility, or disdain by an employer may become so unbearable
on the part o f the employee that it could foreclose any choice by him except to
forego his continued employment.

The fact that an employee continues to report for work, according to The
Orchard Golf and Country Club v. Francisco} does not suggest that constructive
dismissal has not occurred nor does it operate as a waiver. Constructive dismissal
occurs not when the employee ceases to report for work, but when the
unwarranted acts o f the employer are committed to the end that the employee’s
continued employment shall become so intolerable. In these difficult times, an
employee may be left with no choice but to continue with his employment despite
abuses committed against him by the employer, and even during the pendency o f a
labor dispute between them. This should not be taken against the employee.
Instead, we must share the burden of his plight, ever aware o f the precept that
necessitous men are not free men.

4. V OLUNTARY R E S IG N A T IO N VS. C O N ST R U C TIV E DISMISSAL.

Voluntary resignation is obviously distinct from constructive dismissal.

For instance, an employee who tendered her voluntary resignation and signed the
quitclaim after receiving all the benefits due her for her separation cannot claim
that she was constructively dismissed. The fact of her transfer due to a new
secretarial staffing pattern which she objected to, or the alleged hostility on the part
of her employer, cannot render nugatory the voluntary nature o f her resignation.
She was not eased out much less was she forced to resign. This is a case o f
voluntary resignation and not constructive dismissal.3

The transfer o f the location o f an employee’s office from under the steps
of the stairs to die kitchen which allegedly caused her mental torture which forced
her to resign does not amount to constructive dismissal but a case o f voluntary
resignation. It was not shown that her transfer was prompted by ill will of

' G R No. 120008, Oct 18.1996.

2 G R No. 178125, March 18,2013.
3 PMppine Wireless, Inc. (Pockelbel] v. NLRC, G R No. 112963, July 20.1999.

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management. It merely involved a change in location of the office and not a change
of her position.1

An indication that the resignation was voluntary and does not constitute
constructive dismissal is the act of the employee who resigned and took a leave of
absence on the date of effeedvity of his resignation and while on leave, he worked
for the release of his clearance and the payment of his 13th month pay and leave
pay benefits. In doing so, he, in fact, performed all that an employee normally does
after he resigns. If indeed he was forced into resigning, he would not have sought
to be cleared by his employer and to be paid the mollies due him. The voluntary
nature of his acts has manifested itself clearly and belied his claim o f constructive
dismissal.23

An example of a resignation which was deemed indicative o f constructive

dismissal is Drtamland Hottl Risort v. Johnson? Respondent, an Australian citizen,
worked as Operations Manager for about 3 months with petitioner hotel but he
was not paid his salaries corresponding thereto, prompting him to tender his
resignation letter, the tenor of which reads:

“I hereby tender my resignation to you, Mr[.] Wes Prentice,

Dreamland Resort, Subic, Zambales, Philippines.

"Since joining Dreamland Resort & Hotel over three months

ago, I have put my heart and soul into the business. I have donated
many hours of my personal time. I have frequendy worked seven days a
week and twelve to thirteen hours a day. I am now literally penniless,
due totally to the fact that I have lent you and your rcsort/hotel
well over $20O,000AU (approx. 8million pesos) and vour non­
payment of wages to me from 1“ August 2007 as per Employment
Agreement, xxx.4

The above statement only goes to show that while it was Johnson who
tendered his resignation, it was due to the petitioners’ acts that he was constrained
to resign. The petitioners cannot expect Johnson to tolerate working for them
without any compensation. It is impossible, unreasonable or unlikely that any
employee, such as Johnson, would continue working for an employer who does not
pay him his salaries.

5. ILLEGAL (ACTUAL) DISMISSAL VS. C O N ST R U C TIV E

DISMISSAL.

There obviously is a fine distinction between “illegal actual” dism issal,

on the one hand, and “constructive” dism issal, on the other, although, in some

’ Admiral Realty Conpmy, he. (Admiral Hotel] v. NIRC, G R No. 112043. May 18.1999.
* Go V.CA.G.R No. 158922, May 28,2004.
3 G.R. No. 191455, March 12.2014.
* Bnphasis and underscoring supplied in the original text of Oie decision.

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cases,1 the Supreme Court conjoins the words “illegal constructive” dism issal or
“unlaw ful constructive” dism issal to underscore the patent illegality o f the
dismissal.

“Illegal dism issal” or “actual dism issal” is readily shown by the act o f
the employer in openly and expressly seeking and effecting the termination o f
employment o f an employee; while “constructive dism issal, ” being dismissal in
disguise, is not readily shown or indicated by any similar act o f the employer that
would openly and expressly show its desire and intent to terminate the
employment relationship. Notably, constructive dismissal does not always involve
forthright dismissal or even diminution in rank, compensation, benefit and
privileges.2

More concretely, the employer in illegal dismissal cases would normally

defend and justify the termination but in constructive dismissal, there being no
open and express dismissal to speak of, the employer would normally contend that
there was no termination at all.

In terms o f evidence, in illegal dismissal cases, documentary, testimonial

and other forms o f evidence are adduced by the employer to secure affirmation
from the courts o f the validity o f the termination; in constructive dismissal, the
employer, who normally denies the termination, would present evidence and
advance arguments against the circumstantial evidence being presented by the
employee to prove his constructive dismissal

As far as the reliefs under Article 294 [279]3 o f the Labor Code are
concerned, the same are available to both cases o f illegat and constructive dismissal.4

6. CONSTRUCTIVE DISMISSAL V IS -A -V IS TRANSFER OF

EMPLOYEE.
a. Conditions when transfer constitutes constructive dism issal.

While transferring an employee from one position to another or from one

workplace to another within the same establishment generally does not amount to
constructive dismissal, however, it may be considered constructive dismissal when
any or all of the following conditions concur:

1 See for instance the 2014 case of Gifly G. to v. Systems Technology Instrlute, Itc., G.R. No. 185100, July 09,2014, where
the epentog paragraph cf the decision states: "When another employee is soon after apported to a position which the
employer claims has been aboished, while the employee who had b vacate the same is transferred against her w l to a
position which does not exist in the corporate structure, there is evidently a case of illegal constructive dsmissaT
2 HyatlTaxiServices,be.v. Catinoy, G.R.No. 143204,June26,2001.
3 Article 294 [279], Security of Tenure. -In cases of regular employment the employer shall not terminate the services of an
employee except for a just cause or when auflxxized by this Title. An employee who is unjustly dismissed from work shaJ be
entitled to reinstatement without loss cf seniority rights and other privileges and to his ful backwages, induswe of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld
from him up to the time of te actual reinstatement
* Mark Roche International v. NLRC, G.R. No. 123825, Aug. 31.1999; Underscoring supplied.

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 754 Ba r r e v i e w e r o n La b o r La w

(1) When the transfer is unreasonable, inconvenient or prejudicial to the

employee;
(2) When the transfer involves a demotion in rank or diminution of
salaries, benefits and other privileges; or
(3) When the employer performs a clear act * o f discrimination,
insensibility, or disdain towards the employee, which forecloses any
choice by the latter except to forego his continued employment.1

To illustrate, the transfer of the respondent Assistant Vice-President in

the case of The Philippine American Life and General Insurance Co. v. GramajP- from the
Pensions Department to the Legal Department was declared not a legitimate
exercise of management prerogative on the part of petitioner. Before the order to
transfer was made, discrimination, bad faith, and disdain towards respondent were
already displayed by petitioner leading to the conclusion that she was constructively
dismissed.

The case of Star Paper Corp. v. EspiritiP is another good example o f transfer
amounting to constructive dismissal. Here, the combined circumstances o f the
immediate transfer of respondents to far-off provinces after their refusal to sign the
signature sheet of the document for the ratification o f the Addendum to the 1995
CBA, and petitioner’s emphasis on respondents’ alleged previous infractions at
work, point to the fact that the transfers are motivated by ill-will on the part of
petitioner. Petitioner’s order for respondents to report for work in petitioner’s
provincial branches on the very same day that they were served with the Memo of
Transfer is extremely unreasonable as the relocation would unduly inconvenience
not only respondents but their respective families. Petitioner therefore failed to
sufficiently prove that respondents’ transfer is for a just and valid cause and not
unreasonable, inconvenient, or prejudicial to them, making it liable for constructive
dismissal.

In Jarcia v. NLRCJ private respondent, a machinist who had been

employed with the petitioner company for 16 years, was reduced to the service job
of transporting filling materials after he failed to report for work for one (1) day on
account of an urgent family matter. This is one instance where the employee’s
demotion was rightly held to be an unlawful constructive dismissal because the
employer failed to show substantial proof that the employee’s demotion was for a
valid and just cause.

b. The transfer is valid when none o f the conditions are present.

Needlessly, when all the three (3) conditions afore-mentioned are not
attendant in a given case, the transfer must necessarily be affirmed as valid and

1 Dreamland Hotel Resortv. Johnson, G.R. No. 191455, March 12,2014.

? GR.No. 156953,Nov. 11.2004.
3 G.R. No. 154006, Nov. 2,2006.
* Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, G.R. No. 118045, Jan. 2.1997,266 SCRA 97; 334 Phil. 84.

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legal. Thus, the employee may not complain that it amounts to a constructive
dismissal.1

Vtckson v. Robinsons Supermarket Corporation,2 exemplifies valid transfer.

Petitioner contends that she was constructively dismissed because her transfer from
her position o f Category Buyer, a frontline position in the day-to-day business
operations of respondent supermarket, to Provincial Coordinator, constitutes a
demotion since the latter position was non-supervisory and clerical in nature.
Despite several directives, the petitioner refused to turn over her responsibilities to
the new Category Buyer, or to accept her new responsibilities as Provincial
Coordinator. The High Court, however, declared that petitioner was not
constructively dismissed because the circumstances show that such transfer was not
unreasonable, inconvenient, or prejudicial to her. She failed to dispute that the job
classifications of Category Buyer and Provincial Coordinator are similar, or that
they command a similar salary' structure and responsibilities. The Provincial
Coordinator’s position does not involve mere clerical functions but requires die
exercise of discretion from time to time, as well as independent judgment, since the
Provincial Coordinator gives appropriate recommendations to management and
ensures the faithful implementation o f policies and programs o f the company. It
even has influence over a Category Buyer because o f its recommendatory function
that enables the Category Buyer to make right decisions on assortment, price and
quantity of the items to be sold by the store. Further, it is untenable for petitioner
to contend that the respondents deliberately held her up to mockery and ridicule
when they cut off her email access, sent memoranda to her clients that she was no
longer a Category Buyer, and to the various Robinsons branches that she was now
a Provincial Coordinator on floating status and that Padilla was taking over her
position as the new Category Buyer. It suffices to state that these measures are the
logical steps to take for petitioner’s unjustified resistance to her transfer, and were
not intended to subject her to public embarrassment.

7. O T H E R IN STA N CES O F C O N ST R U C TIV E DISM ISSAL OR

IN VO LUN TA RY R E S IG N A T IO N .

■ If transfer is occasioned by a government directive, there can be no

constructive dismissal to speak of.3
■ Denying entry to the workers to their work area and placing them on shifts
“not by weeks but almost by month” by reducing their workweek to three
days.4
■ Barring the employees from entering the premises whenever dicy would report
for work in the morning without any justifiable reason, and they were made to

’ Pedcsoo v. Robinsons Supermarket Corporation, G.R. No. 198534. July 03.2013.

2 G.R No. 198534, Ju»y03.2013.
3 Bisig Manggagawa sa Tryco v. NLRC, GJt. No. 151309, OcL 15,2008.
4 Pasig Cylinder M g, Cap. v. Roto, G R No. 173631, Sept 8,2010.

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 756 bar reviewer o n Labor Law

wait fot a certain employee who would arrive in the office at around noon,
after they had waited for a long time and had left1
■ Instructing the employee to go on indefinite leave and asking him to return to
work only after more than three (3) years from die rim$ he was instructed to
gp on indefinite leave during which period his salaries were withheld.2
■ Implementing a rotation plan for reasons other than business necessity.3
■ Sending to an employee a notice o f indefinite suspension which is tantamount
to dismissal4
■ Demoting a worker or re-assigning him involving a demotion in rank or
diminution o f salaries, benefits and other privileges.5
■ Reducing the employee’s functions which were originally supervisory in nature
and such reduction is not grounded on valid grounds such as genuine business
necessity.6
a Imposing indefinite preventive suspension without actually conducting any
investigation. It was only after almost one (1) year that the employer made
known the findings in its investigation which was conducted exparte?
■ Threatening a sickly employee with dismissal if he will not retire and
promising employment to his son and daughter. The employee retired and
signed two (2) quitclaims enrided “Receipt and Release” in favor o f the
company.8
* Forcing the employee to resign with threat that if he will oot resign, he will file
charges against him that would adversely affect his chances for new
employment9
■ Asking the employee to choose whether to continue as a faculty member or to
withdraw as a lawyer against the mayor with whom the former owes certain
favors, makes the cessation from employment of said employee not voluntary.
Such act is in the nature o f a contrivance to effect a dismissal without cause.10
■ Asking the employee to file a resignation on the condition or promise that she
would be given priority for re-employment and in consideration of
immediately paying her two (2) m onths' vacation which she desperately

< Nsw he V.CA.GR No. 140555,Juty14,2005.

1 PynaRfcSbrntskerOutdixrAiAiefiriigSentes, he.v.Potonga\,GRNa 156589,June27,2005.
9 Utan SafetyGlass, he v.8 asartB,GRN0L154689,Nov. 25,2)04.
4 OrientalMKloroElectricGoopera&Be, Inc.v. NLRC, GA. No. 111905,July31,19%.
9 Gara v.NLRC.GR Na 116568,SepU 1999;OscarLatesma&Companyv. fflRC. GJl No. 110930,Jiiy 13,1995.
4 (^Teteoon^hev.Florendoflo^GR.No. 150092,Sept27,2002,390SCRA201. ‘
1 C.AtartOT&Somhav.NlRaGilNo.73521,Jan.5,m
> MamSr.v. NLRC.GR No- 1Q3S79.Dec 17,1991
9 GuatsonhtemaSonalTravelandTous, he.v.NLRC,GRNa 100322,March9,1994.
« RtoJMemoiyCofegesFaaflyUttioov.NLRC,GRNa59012-13,Oct 12,1989.

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P O S T -E M P L O Y M E N T

needed then because she was ill The employer's refusal in bad faith to
reemploy her despite its promise to do so amounted to illegal dismissal.1
■ Changing the employee's status from tegular to casual constitutes constructive
dismissal2
■ Offer made by a labor contractor to reassign its employees to another
company but with no guaranteed working hours and payment o f only the
minimum wage. The terms o f the redeployment thus became unacceptable for
said employees and foreclosed any choice but to reject the employer’s offer,
involving as it does a demotion in status and diminution in pay.3
■ Preventing the employee from reporting for work by ordering the guards not
to le th e rin . This is clear notice o f dismissal4
■ Transfer o f respondent employee from Credit and Collection Manager to
Marketing Assistant which resulted in demotion as it reduced his duties and
responsibilities although there was no corresponding diminution in his salary.
In holding that there was constructive dismissal the court took note o f the
fact that the former position is managerial while the latter is clerical in nature.5
• Reducing the number of trips o f the drivers and shortening their workdays
which resulted in the diminution o f their pay.6
■ Forcing the employee to tender her resignation letter in exchange for her 13th
month pay, die reason being that die employee was found by the employer to
have violated its no-employment-for-relatives-within-the-third-degree-policy,
she having been impregnated by a married co-employee.7

8. SOME PR IN C IPLES O N CONSTRUCTIVE DISMISSAL OR

INVOLUNTARY O R FORCED RESIG N A TIO N .

■ Mere allegations o f threat or force do not constitute evidence to support a

finding o f forced resignation or constructive dismissal.8
■ A threat to sue the employee is not unjust and will not amount to forced
resignation or constructive dismissal. For instance, a threat to file estafa case,
not being an unjust act, but rather a valid and legal act to enforce a claim,
cannot at all be considered as intimidation. A threat to enforce one's claim

1 Reyesv.t&RC, GA No.78)97,Aug.31,1969.
1 Syv.NLRC.GANa 65365,Jure21,1989.
1 R.P. Ovigtasmi ConstmcSon,fnc.v. Afienza.GJ^. No. 156104,June29,2004.
4 Suhaov.(>T0chSystemCaBtucSmte,GJlNa 171392, Oct 30.2006.
s NafeTraifing Co,tnc.v.Gnib,GANa159730.Feb.il,2008.
* SapSanv.JBUneBoolBq3iass,inc,GANa 163775,OcL19.2007.
1 StarPaperCap.v.arM , CombandEstEfa.GANa 164774,Aptl 12,2006.

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 758 B a r r e v i e w e r o n La b o r L a w

through competent authority, if the claim is just or legal, docs not vitiate
consent.1
■ Employee who alleges that he was coerced or intimidated into resigning has
die burden to prove such claim.2
■ Giving the employee the choice or option between resignation and
investigation is not illegal.3
■ The facts of the case should be considered to determine if there is
constructive dismissal.4 The case should be dismissed if a close scrutiny of
the facts of the case will bear out that the employee indeed failed to state
circumstances substantiating his claim of constructive dismissal.5 More so if
the records are bereft of any showing of clear discrimination, insensibility or
disdain on die part of petitioners in transferring respondents - both sewers
on piece-rate basis - to perform a different type o f sewing job. It is unfair to
charge petitioners with constructive dismissal simply because the respondents
insist that their transfer to a new work assignment was against their will. It
has long been stated that “die objection to the transfer being grounded solely
upon the personal inconvenience or hardship that will be caused to the
employee by reason of the transfer is not a valid reason to disobey an order
of transfer.”6
* Voluntary resignation is different from constructive dismissal. An employee
who tendered her voluntary resignation and signed die quitclaim after
receiving all the benefits due her for her separation cannot claim that she was
constructively dismissed.7

D.
PREVENTIVE SUSPENSION
1. LEGAL BASIS.

The Labor Code docs not contain any provision on preventive

suspension. The legal basis for the valid imposition thereof is found in Sections 8
and 9, Rule XXIII, Book V of the Rules to Im plem ent the L abor Code.8

2. PURPOSE AND JU STIFIC A TIO N .

Preventive suspension may be legally imposed upon an errant employee

only when his alleged violation is die subject of an investigation and it involves a

' Cattanta v. NLRC, G R No. 105083, Aug. 20,1993,225 SCRA 526.

2 Gan v. Galderma Phiippines, Inc., G R No 177167, Jan. 17,2013.
3 fvtandepatv. Add Force Personnel Services, Inc., G.R. No. 180285, July 6,2010.
♦ Philippine F?urat Reconstruction Movement [PRRMjv.Pulgar.GR No. 169227, July 5,2010.
5 Gemina. Jr. v. Bankwise, Inc, G.R No 175365, Od. 23,2013.
8 G.R. No. 191281. Oec. 05.2012.
7 Concrete Aggregates v. NLRC, G.R. No. 82458, Sept. 7,1989.
8 As amended by Arlide 1, Department Order No. 09, Series of 1997.

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 C hapter Six 759
POST-EMPLOYMENT

serious offense/s. Its purpose is to prevent him from causing harm or injury to the
company as well as to his fellow employees. It is justified only in cases where the
employee’s continued presence in the company premises during the investigation
poses a serious and imminent threat to the life or property o f the employer or of
the employee’s co-workers. W ithout this threat, preventive suspension is not
proper.1

3. SO M E PR IN C IPL E S O N P R E V E N T IV E S U S P E N S IO N .

• An employer lias the right to preventively suspend the employee during the
pendency of die administrative case against him as a measure o f self­
protection.2
• If the basis o f the preventive suspension is the employee’s absences and
tardiness, the imposition o f preventive suspension on him is not justified as
his presence in the company premises does not pose any such serious or
imminent threat to the life or property o f die employer or o f the employee’s
co-workers simply “by incurring repeated absences and tardiness.”3
• The grounds o f violation o f the school rules and regulations on the wearing o f
uniform, tardiness or absences, and maliciously spreading false accusations
against the school, do not justify the imposition o f preventive suspension.4
• The failure by an employee to attend a meeting called by his supervisor will
not justify his preventive suspension.5
• Preventive suspension does not mean diat due process may be disregarded.6
• Preventive suspension is not a penalty'.7 Preventive suspension, by itself, does
not signify that the company has already adjudged the employee guilty o f the
charges for which she was asked to answer and explain.8
• Preventive suspension is neidier equivalent nor tantamount to dismissal.9
• Preventive suspension should only be for a maximum period of thirty (30)
days. After the lapse of the 30-day period, the employer is required to reinstate
the worker to his former position or to a substantially equivalent position.
• During the 30-day preventive suspension, the worker is not entitled to his
wages and other benefits. However, if the employer decides, for a justifiable
reason, to extend the period of preventive suspension beyond said 30-day

« Sections 8 and 9. Rule XX1!I. Book V. Rules; M fido v. NLRC, G R No. 172988 July 26.2010.
2 Philippine National Bank v. Velasco, G.R. No. 166096, Sept 11,2008.
3 Valiao v. Hon. CA, G.R No. 146521, July 30,2004.
4 WOodridge Scriod [now knewn as Woodridge Cdege, Inc.) v Benito, G.R No. 160240, Oct. 29,2008.
5 Maricalum Mning Cap. v. Deconon, G R No. 158637, Apd 12,2006.
s R.B. Mchael Press v. Galit, G R No 153510, Feb. 13.2008; Tanala v. NLRC. G R No 116588, Jan. 24,1996.
2 Philippine Airlines. Inc. v. NLRC, G.R. No. 114307, July 8,1998,292 SCRA 40.
8 See also Adas Fertilizer Corporation v. NLRC, G R No. 120030, June 17,1997,273 SCRA 549
9 Jo Cinema Corporation v. Abellana, G.R. No. 132837, June 28,2001.

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period, he is obligated to pay die wages and other benefits due the worker
during said period of extension. In such a case, the worker is not bound to
reimburse the amount paid to him during the extension if the employer
decides to dismiss him after the completion of the investigation.1
• Extension of period must be justified. During the 30-day period o f preventive
suspension, the employer is expected to conduct and finish the investigation
of die employee’s administrative case. The period o f thirty (30) days may only
be extended if the employer failed to complete die hearing or investigation
within said period due to justifiable grounds. N o extension thereof can be
made based on whimsical, capricious or unreasonable grounds.2
• Preventive suspension lasting longer than 30 days, without the benefit o f valid
extension, amounts to constructive dismissal.3 Similarly, indefinite preventive
suspension amounts to constructive dismissal4
• Failure to state the duration o f the preventive suspension in the notice does
not mean it is indefinite. There is a reasonable and logical presumption that
said suspension in fact has a duration which could very well be not more than
30 days as mandated by law.5
• Salaries should be paid for improperly-imposed preventive suspension.6
• Preventive suspension is different from suspension o f operation under Article
301 [286]7 of the Labor Code.5 Preventive suspension is also different from
“floating status.”9

E.
RELIEFS FROM ILLEGAL DISMISSAL

1. RELIEFS UNDER T H E LABOR CODE.

Under Article 294 [279J o f the Labor Code, an illegally dismissed

employee is entitled to die following reliefs:

(1) Reinstatem ent without loss o f seniority rights and other privileges;
(2) Full backwages, inclusive o f allowances; and
(3) Other benefits or their monetary equivalent

1 Section9. Rule XXH1. BookV, Rulesto ImpSementthe Labor Code, as amended by Arfide 1. DepartmentOrder No. 09.
Seriesof1997[21June1997; SeealsoRural Ban*ofSanIsiiioINRl, Inc.v.Paez,GR No. 158707,Nov. 27,2006.
2 Pefezv.Ph?pfineTdegraphandTelephoneCompany,GRNo. 152048,Apti7.2009,584SCRA110(En Banc).
3 HyaSTaxiSendees,he v.&Snoy.GRNo. 1432M,June26.2001.
4 PWov.NlRC.6JlNo. 169812,Feb.23,2007;Wcartara4Sons,lnc.v.MRC.GRNo.73521,Jan.5,1994.
5 Mandapatv.AddFaiePefSomdSeJvioes.ha, G.R. No. 180285,Ju ly 6,2010.
* PragresswDevelopfnentCo(poiafion-PizzaHutv.SamfienSo,GRNo. 157076,Sept7,2007. ’
1 En^'VVbmEmploynwafWOeefnedTeminaled.'
• MaricahmMdngCoip.v.Deoorion.GRNo. 158537,Aprt 12,2006.
s Pidov. N1RC, GR No. 169812, Feb. 23,2007.

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2. O T H E R RELIEFS N O T FO IJN D IN T H E LABOR C O D E BUT

AWARDED IN ILLEGAL DISM ISSAL CASES.

H ie following reliefs that axe awarded in illegal dismissal cases ace not
provided for in Article 294 (279]:

(1) Separation pay in lieu o f reinstatem ent

(2) Indemnity in die form o f nominal damages in case o f termination
due to just or authorized cause but without affording the employee
procedural due process.
(3) Reliefs to an illegally dismissed employee whose employment is for a
fixed period consisting o f the payment to him /her o f his/her salaries
corresponding to the unexpired portion o f the employment contract.
(4) Moral and exemplary damages and attorney's fees.
(5) Financial assistance in cases where die employee's dismissal is
declared legal but there are circumstances justifying this award, such
as long years o f service, unblemished record o f service,
compassionate justice and other considexadons.
(6) Legal interest on separation pay, backwages and other monetary
awards.

3. O RD ER O F TOPICAL DISCUSSION.

The discussion o f this topic is divided into die following sections:

I. REINSTATEMENT
II. SEPARATION PAY IN LIEU OF REINSTATEMENT
III. BACKWAGES
IV. DISTINCTIONS (BETWEEN REINSTATEMENT, SEPARATION PAY IN
LIEU THEREOF AND BACKWAGES)

I.
REINSTATEMENT

1. LABOR CODE’S PROVISIONS O N REIN STA TEM EN T.

The Labor Code grants die remedy o f reinstatement in various forms and
situations. Its provisions recognizing reinstatement as a relief are as follows:

1. Article 229 [223] which provides for reinstatement o f an employee

whose dismissal is declared illegal by die Labor Arbiter. This form of reinstatement
is self-executory and must be implemented even during the pendency o f die appeal
that may be instituted by the employer. (NOTE: See discussion of this topic under Major
Topic "VIII. Jurisdiction and Reliefs; A . L abor A rb iter", in tia).

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 762 Bar. reviewer,on labor Law

2. Article 278(g) [263(g)] which provides for automatic return to work

o f all striking or locked-out employees, if a strike or lockout has already taken
place, upon the issuance by the DOLE Secretary o f an assumption or certification
order in national interest cases. The employer is required to immediately resume
operation and readmit all workers under the same terms and conditions prevailing
before the strike or lockout.

3. Article 292(b) [277(b)] which empowers the DOLE Secretary to

suspend the effects o f termination pending the resolution of the termination
dispute in die event o f a primfade finding by die appropriate official o f the DOLE
before whom such dispute is pending that the termination may cause a serious
labor dispute or is in implementation o f a mass lay-off Such suspension o f die
effects o f termination would necessarily results in die reinstatement o f the
dismissed em ployee while die illegal dismissal case is being heard and litigated.

4. Article 294 [279] which grants reinstatement as a relief to an employee

whose dismissal is declared illegal in a final and executory judgment

5. Article 301 [286] which involves bona-fide suspension o f operation for a

period not exceeding six (6) months or the rendition by an employee o f military or
civic duty. It is requited under this provision that the employer should reinstate its
employees upon resumption of its operation which should be done before die lapse
of said six-month period of bona-fide suspension o f operation or after the rendition
by the employees of military or civic duty.

SEPARATION PAY IN LIEU OF REINSTATEMENT

1. LACK OF PROVISION IN T H E LABOR CODE.

Article 294 [279] expressly mandates only actual reinstatement and never
the alternative remedy of separation pay in lieu thereof. But jurisprudence clearly
enunciates the award of separation pay in the event actual reinstatement is not
possible nor feasible *1 Undeniably, it is a recourse based on equity that has been
sanctioned by the Supreme Court in a catena o f cases.2
2. SPECIFIC INSTANCES.

It is now well-settled that separation pay in lieu of reinstatement should

be awarded in the following situations:

' Bani Rural Bank. tnc.v. De Uianan, G.RNo.170904, Nov. 13.2013; Capsv. NLRC, GR No. 117378, Mach2S,1997.
1 PhBreadTre 4 Ritter Corporationv. Vicente.GR No. 142759, Nw. 10,2004.

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P O S T -E M P L O Y M E N T

(1) Where the continued relationship between the employer and the
employee is no longer viable due to the strained relations and antagonism
between them (D octrine o f Strained R elations).1

(2) When reinstatement proves impossible, impracticable, not feasible or

unwarranted for varied reasons and thus hardly in the best interest o f
the parties such as:

(a) Where the employee has already been replaced permanently as

when his position has already been taken over by a regular
employee and there is no substantially equivalent position to which
he may be reinstated.2
(b) Where die dismissed employee’s position is no longer available at
die time o f reinstatement for reasons not attributable to the fault
o f die employer.3
(c) When there has been long lapse o r passage o f time that the
employee was out o f employer's employ from the date o f the
dismissal to the final resolution o f die case4 or because o f the
realities o f the situation.3
(d) By reason o f the injury suffered by the employee.6
(e) The employee has already readied retirement age under a
Retirement Plan.7
(f) When die illegally dismissed employees ate over-age or beyond the
compulsory retirement age and their reinstatement would unjusdy
prejudice their employer.8
(g) When reinstatement o f a security guard can no longer be ordered
because he was past die age qualification for a security guard
license.9
(h) When the general sales agency contract between the employer and
its client has been terminated and reinstatement is no longer
feasible.10

■ Boriomeov.CA,ORNo. i6!596.Febi2O,2013;A!3ng v.fefitian* GJlNo. 185829,Api 25,2012.

* SanMguet Cotpaafionv.Teodosfo,GR No. 163033,O d2,2009.
) TanduayKst^lalwUnioov.ttRC.&RNa 73352,Dec.06,1994.
4 Sanchl^PMs,bic.v.Bemaritoan(1Taghoy,GJlNa187214,Au9.14,2013.
s Batojue2mBWTUv.Zamora,GJlNts.L-4678S-7,Ap(i1,1980,97SCRA5,as cttedhOobeWacfey CableandRatfio
CaporaBonv.NLRC,GRNa 82511, March 3,1992 and Pandayv.URC.GR No. 67664, May 20,1992. The reason
titad by the Court is Siat % is not proper hat Sts protracted Bgafcn should tunaii petting fcr anofer kmg-diaMHXit
hearing.* Also, in Escario v. NLRC, GR No. 160302, Sept 27,2010, the fotowing facts were cted: (a) i w ti« TrriSct

6 Vfct^tJner.&TC.v.Raoe.GRfto. 164820,March28,2007.
7 Tones,Jr. v. NLRC, GR No. 172584, Not. 28,2008.
9 Sagaiesv. Rustan’s Commerda) Cofp., G.R. No. 166554, Nov. 27,20G3.
» Satalozav. MRC, GR No. 182086, Nov. 24,2010.
10 AsiaPacficChartering[Phas.]. Inc.v. Farofen.GR No. 151370, Dec 4,2002.

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 764 Bar Reviewer on La bo r Law

(i) Takeover o f the business o f the employer by another company and

there is no agreement regarding assumption o f liability by the
acquiring company.1

(3) Where the employee decides not to be reinstated as when he does not
pray for reinstatement in his complaint or position paper but asked for
separation pay instead.2

(4 ) When reinstatement is rendered moot and academic due to

supervening events, such as:

(a) Death o f the illegally dismissed employee.3

(b) Declaration of insolvency o f the employer by the court.4
(c) Fire which gutted the employer’s establishment and resulted in its
total destruction.5
(d) In case the establishment where the employee is to be reinstated
has closed or ceased operations.6

(5) To prevent further delay in the execution o f the decision to the

prejudice o f private respondent.7

(6) Other circumstances,8 such as (a) when reinstatement is inimical to the

employer’s interest;9 (b) reinstatement does not serve the best interests
of the parties involved;10 (c) the employer is prejudiced by the workers’
continued employment;11 or (d) that it will not serve any prudent
purpose as when supervening facts transpired which made execution
unjust or inequitable.12

3. COM PON EN TS.

The amount of separation pay that should be paid in lieu o f reinstatement

is not provided under the Labor Code. Jurisprudence, however, dictates that the
following should be included in its computation:

' Caitanta v. Carnation PMjpphes, G.R No. 70615, Oct 28,1986.

1 F. F. Marine Corporation v. The Hon. Seoond Orvision Nlfk), G.R No. 152039, April 8,2005.
3 Intercontinental Broadcasting Corp. v. Bened'cto. G.R No. 152843, July 20,2006.
4 Bedrock Asia, Inc. v. Mens, G.R No. 147031, July 27,2004.
5 BagongBayanCorporationv.Ople,GRNo.73334,Dec.8,1986.
6 Price v. Innodata Phfe., IncAmodata Corp., G.R No. 178505, Sept 30,2008.
1 Sealand Service, Inc. v. NIRC, G R No. 90500, Oct 5,1990,190 SCRA 347.
8 As cued in Escario v. NLRC, G.R No. 160302, Sept 27,2010.
9 San Mguel Corporation v. Deputy Mnister of tabor and Employment G.R No. L-58927 & 1-59870, Oct 27,1986.
10 Century Textile Mils, Inc. v. NLRC, G.R No. 77859, May 25,1988,161 SCRA 528.
" Gubacv. NLRC, G.R No. 81946, July 13,1990,187 SCRA 412.
« Sealand Service, Inc. v. NLRC, G R No. 90500, Oct 5,1990,190 SCRA 347.

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(1) The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of service, whichever is higher, a fraction
of at least six (6) months being considered as one (1) whole year.1
(2) Allowances that the employee has been receiving on a regular basis.2
4. P E R IO D C O V E R E D .
Separation pay in lieu o f reinstatement is computed from the start of
employment up to the time o f termination, including the im puted service for
w hich the employee is entitled to backw agcs.3 More definitively, it should be
reckoned from the first day o f em ploym ent until the finality o f the decision.4

When the employer has ceased its business operations, the separation pay
in lieu of reinstatement should be computed only up to the date of closure.5

5. SALARY RATE T O B E U SED IN T H E C O M P U T A T IO N .

The salary rate prevailing at the end of the p eriod o f putative service
should be the basis for computation which refers to the period of im p u ted
service for w hich the em ployee is entitled to backw agcs.6

6. SO M E PR IN C IP L E S .

• Award o f separation pay in lieu o f reinstatement is not proper if there is no

finding of illegality o f dismissal. This is so because the principal remedy o f
reinstatement may only be granted in case the dismissal is declared illegal.7
• Separation pay, as a substitute remedy, is only proper for reinstatement but not
for backwages.8
• Separation pay and backwages are not inconsistent with each other. Hence,
both may be awarded to an illegally dismissed employee.9 The payment of
separation pay is in addition to payment of backwages.10
• Employer does not have the option to choose between actual reinstatement
and separation pay in lieu thereof. Actual reinstatement has the primacy as the
proper relief to which an illegally dismissed employee is entided. Payment of
separation pay should be ordered only in the event that there is a showing that

' South East International Rattan, Inc. v. Coming, G.R No. 186621, March 12,2014.
2 Planters Products, he. v. NLRC, G R No. 78524, Jan. 20,1989.
3 Masagana Concrete Products v. NLRC, G.R. No. 106916, Sept 3,1999.
4 Agricultural and Industrial Supplies Corp. v. Siazar, G.R. No. 177970, Aug. 25,2010.
5 Polymer Rubber Corporate and Joseph Ang v. Bayolo Salamudhg, G R No. 165160, July 24,2013.
6 Ma^anaCoocreteProductsv.NLRC,GRNo.106916,SepL3,1999.
7 Leopard Security and Investigation Agency v.Quitoy.GR No. 186344, Feb. 20,2013.
8 Pheschem Industrial Corporation v.Moldez,G.R No. 161158, May 9,2005.
5 St Luke's Medical Center, Inc. v. Notario, G R No. 152166, Oct 20,2010.
» Alffing v. FeSdano, G R No. 185829, April 25,2012.

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reinstatement is no longer possible by reason o f the justifications allowed

under established jurisprudence.1
• Reinstatement cannot be granted when what is prayed for by employee is
separation pay in lieu thereof.2
• Grant of separation pay in lieu o f reinstatement converts the award of
reinstatement into a monetary award; hence, legal interest may be imposed
thereon.3

7. STRAINED RELATIONS RULE

'ITie doctrine of “strained relation/ ’ or “antipathy and antagonism" or

“irretrievable estrangement’ applies when reinstatement will no longer be in the best
interest of both the employee and the employer considering the animosity and
antagonism that exist between them brought about by the filing o f the labor case.4
However, standing alone, die doctnne of strained relations will not justify an award
of separation pay, a relief granted in instances where die common denominator is
the fact that die employee was dismissed by the employer.5 Even in cases o f illegal
dismissal, the doctrine of strained relations is not applied indiscriminately as to bar
reinstatement, especially when the employee has not indicated an aversion to
returning to work or does not occupy a position of trust and confidence or has no
say in the operation of the employer’s business. Although litigation may also
engender a certain degree of hostility, it has likewise been ruled that the
understandable strain in the parties’ relations would not necessarily rule out
reinstatement which would, otherwise, become die rule rather than the exception in
illegal dismissal cases.6

In a plethora of cases, the Supreme Court lias been consistent in its

holding that the existence of strained relations between the employer and the
illegally dismissed employee may effectively bar reinstatement o f die latter.7

7.1. SOME PRIN CIPLES ON ST R A IN E D R ELA TIO N S.

8 Strained relations must be proved and demonstrated as a fact.8

■ Litigation, by itself, does not give rise to strained relations that may justify
non-reinstatement. The filing o f the complaint for illegal dismissal does not by
itself justify the invocation o f the doctrine of strained relations.9

' Johnson & Johnson [Phils.]. Inc. v. Johnson Office & Sales Union - FFW, G R No. 172799, July 6.2007.
* SME Bank, Inc. v.De Guzman. G R Nos. 184517 & 186641, Oct 8,2013 (En Banc).
3 Session Delights Ice Cream and Fast Foods v. CA (Sixth Division), G R No. 172149, Feb. 8,2010,612 SCRA10.
4 Wensha Spa Center, Inc. v. Yung, G R No. 185122, Aug. 16,2010.
5 Leopard Security and Investigation Agency v. QuSoy, G.R. No. 186344, Feb. 20,2013.
6 ML Caimel College v. Resueda, G.R. No. 173076, Oct 10,2007; Velasco v. NLRC, G.R. No. 161694,'26 June 2006.
’ Wensha Spa Center, Inc. v. Yung. G.R. No. 185122, Aug. 16,2010.
8 Paguio Transport Corporation v. NLRC, G. R. No. 119500, Aug. 28,1998.
3 Id.; Capili v. NLRC, G.R. No. 117378, March 26,1997,270 SCRA 488.495.

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* N o strained relations should arise from a valid and legal act o f asserting one’s
right; otherwise, an employee who asserts his right could be easily separated
from the service by merely paying his separation pay on the pretext that his
relationship with his employer had already become strained.1
* Indeed, if die strained relations engendered as a result of litigation are
sufficient to rule out reinstatement, then reinstatement would become the
exception rather dian the rule in cases o f illegal dismissal2
■ The nature o f the position is material in determining the validity o f “strained
relations.” If the nature of the position requires that trust and confidence be
reposed by the employer upon the employee occupying it as would make
reinstatement adversely affect die efficiency, productivity and performance of
the latter, strained relations may be invoked in order to justify non­
reinstatement. Where the employee, however, has no say in the operation o f
his employer’s business, invocation of this doctrine is not proper.3
* Non-setdement of dispute after long period o f time is not indicative o f
strained relations.4
■ The refusal of an employee to be reinstated is indicative o f strained relations.5
* Criminal prosecution confirms die existence o f “strained relations” which
would render the employee’s reinstatement highly undesirable.6
■ A managenal employee should not be reinstated if strained relations exist.7
* In case o f new ownership o f the establishment, reinstatement is proper if no
strained relations exist widi new owner.8

III.
BACKWAGES
1. C O N C E P T .

Under Article 294 [279], an employee who is unjusdy dismissed is entided

not only to reinstatement, without loss of seniority rights and other privileges, but
also to the payment o f his full backwages, inclusive o f allowances and other
benefits or their monetary equivalent, computed from the time his compensation
was withheld from him (which, as a rule, is from the time o f his illegal dismissal) up
to the time o f his actual reinstatement.9

7 Gtobe-Mackay Cabte and Radio Corporation v. NLRC, G.R. No. 82511, March 2,1992,206 X R A 701,709.
2 Procter and Gamble Phifippines v. Bondesto, G.R. No. 139847, March 5,2004.
3 Aces'rte Corporation v. NLRC, G. R. No. 152308 Jan. 26,2005.
4 Palmeriav. NLRC, G.R. Nos. 113290-91, Aug 1995
5 Sentinel Security Agency, Inc. v. NLRC, G.R. No 122468, SepL 3,1998.
6 RDS Trucking, v. NLRC, G R No. 123941, Aug. 27 1998; Cabatulanv. Buaf G.R. No. 147142, Feb. 14,2005].
7 Golden Donuts, Inc. etal.v. NLRC, G R Nos 1 5758-59, Feb 21.1994
» PLOT v.Tolentino,G.R.No. 143171, Sept 21.200*
9 Phflippine Jouma&sts, Inc. v. Mosqueda, G R No ' ’• ’430. May 7,2004.

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The raison d' etre for die payment of backwages is equity. Backwages
represent compensadon that should have been earned by the employee but were
lost because o f the unjust or illegal dismissal.1

Simply stated, an employee whose dismissal is found to be illegal is

considered not to have left his office so that he is entided to all the rights and
privileges that accrue to him by virtue of the office that he held.2 But if the
dismissal is not illegal, an award o f backwages is not proper.3

2. BUSTAMANTE D O C TRIN E.

In 1996, the Supreme Court changed the rule4 on the reckoning o f

backwages. It announced a new doctrine in the case o f Bustamante v. NLRC,5_which
is now known as the Bustamante doctrine. Under this rule, the term ‘Jull backwages"
was interpreted to mean exactly that, Le., without deducting from backwages die
earnings derived elsewhere by the concerned employee during the period o f his
illegal dismissal.6

3. COM PON EN TS OF BACKWAGES.

The components of backwages are as follows:

1. Salaries or wages computed on the basis of the wage rate level at the
rime of the illegal dismissal and not in accordance with the latest,
current wage level of the employee’s position.7

2. Allowances and other benefits regularly granted to and received by

the employee,8 such as:

a) Emergency living allowances and 13th month pay mandated under

the law.9
b) Fringe benefits or their monetary equivalent.10
c) Transportation and emergency allowances.11

1 PLDT v. NLRC, G.R. No. 106947, Feb. 11,1999.

2 Buhah v. The Hon. CA, G.R. No. 143709, July 2,2002
3 Telefunken Semiconductors Employees Union-FFW v. Court of Appeals, G.R. Nos. 143013-14, Dec. 18,2000.
4 Eariier, there were two (2) rules on backwages. The first is tie so-called ’Mercury Drug Rule' which refers to the rute first
enunciated in file case of Mercury Drug Co., Inc. v. CIR G i l No. L-23357, April 30,1974,56 SCRA 694, which mandates
tfiat r case the Begal dismissal of an emplcyee has lasted for many years, he is enfifled to backwages for a fixed period of
three (3) years, *wifiiout further qualifications or deductions,' The Mercury Drug Rule was superseded later by the 'Ferrer
Doctme’ laid down in the case of Ferrer v. NLRC, G.R No. 100898, July 5,1993,224 SCRA 410,423, which granted
backwages in full but (he employer may deduct any amount which Hie employee may have earned elsewhere during the
period of his illegal termination.
s G R No. 111651, Nov. 28.1996,265 SCRA 61.
« See also Kay Products, Inc.v. CA, G. R No. 162472, July 28,2005.
7 PLDT v. NLRC, G.R No. 106947, Feb. 11,1999; General Baptist Bbfe Colleges v. NLRC, G.R No. 85534, March 5,1993
8 Evangeista v. NLRC, G.R No. 93915, Oct 11,1995.
s Espejo v. NLRC, G.R No. 112678. March 29,1996.
10 Aceste Corporation v. NLRC, G R No. 152308, Jan. 26,2005.
it Santos v. NLRC. G.R No. 76721, SepL 21,1987; Soriano v. NLRC, G.R No.L-75510, Oct 27.1987.

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d) Holiday pay, vacation and sick leaves and service incentive leaves.1
e) Just share in the service charges.2
f) Gasoline, car and representation allowances.3
g) Any other regular allowances and benefits or their monetary
equivalent.4

4. SO M E P R IN C IP L E S O N BACKWAGES.

■ The computation o f regular allowances and benefits as part of backwages

should be made up to the date o f reinstatement as provided under Article 294
[279] o f the Labor Code or, if reinstatement be not possible, up to the finality
o f the decision granting full backwages.5
* Salary increases during period o f unemployment are not included as
com ponent in the computation o f backwages.6
* Dismissed employee’s ability to earn is irrelevant in the award of backwages.7
■ The failure to claim backwages in a complaint for illegal dismissal is a mere
procedural lapse which cannot defeat a right granted under substantive law.
Hence, the illegally dismissed employee may still be awarded backwages
despite said failure.8
■ When Labor Arbiter or NLRC failed to award any backwages, the same may
be corrected on appeal even if worker did not appeal.9
■ In case reinstatem en t is ordered, full backwages should be reckoned from
the time the compensation was withheld (which, as a rule, is from the time o f
illegal dismissal) up to the time o f reinstatement, whether actual or in the
payroll.10
* If separation pay is ordered in lieu of reinstatem ent, full backwages
should be computed from the time o f illegal dismissal until the finality o f the
decision. The justification is that along with die finality of the Supreme Court’s
decision, the issue on the illegality o f the dismissal is finally laid to rest.11
* T he rule is different if em ploym ent is for a definite period. The illegally
dismissed fixed-term employee is entitled only to the payment o f his salaries

1 St Louise College of Tuguegarao v. NLRC, G.R. No. 74214, Aug. 31,1989; On service incentive have, see Fernandez v.
NLRC, G.R. No. 105892, Jan. 28,1998.
2 Maranaw Hotels & Resort Corporation v. NLRC, G.R. No. 123880, Feb. 23,1999.
2 ConsoSdated Rural Bank [Cagayan VaSey], Inc. v. NLRC, GR. No. 123810, Jan. 20,1999,301 SCRA 223.
* Hue Daily Corporation v. NLRC, G.R. No. 129843, Sept 14,1999.
s Fernandez v. NLRC, GR. No. 105892, Jan. 28,1998,285 SCRA 149.
6 Equitable Banking Corp.v.Sadac,GR. No. 164772, June 8,2006.
7 Tomas Claudio Memorial College, Inc. v. CA, G.R. No. 152568, Feb. 15,2004.
s DelaCiuzv. NLRC, G.R. No. 121288, Nov. 20,1998.
9 Aurora Land Projects Corporation v. NLRC, G.R. No. 114733, Jan. 2,1997,266 SCRA 48.
10 The Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, Dec. 15,2010.
« CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23,2009.

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corresponding to the unexpired portion of his fixed-term employment

contract.1
■ If the illegally dismissed employee has reached die optional retirement age of
60 years, his backwages should only cover the time when he was illegally
dismissed up to the time when he reached 60 years of age. Under Article 302
[287], 60 years is the optional retirement age.2
■ If the employee has reached 65 years of age or beyond, his full backwages
should be computed only up to said age. The contention o f the employer that
backwages should be reckoned only up to age 60 cannot be sustained.3 In
Jaculbe v. Silliman University,4 it was declared that since petitioner has already
reached seventy-one (71) years of age at the time the decision in this case was
rendered by the Supreme Court, the award of backwages in her favor must be
computed from the time o f her illegal dismissal up to her compulsory
retirement age of sixty-five (65).5
■ If termination was made effective immediately, the backwages should be
reckoned from the date of the termination letter where such was stated.6
■ If employer has already ceased operations, full backwages should be computed
only up to the date of the closure. To allow the computation o f the
backwages to be based on a period beyond that would be an injustice to the
employer.7
■ If valid retrenchment supervened during the pendency o f the case, full
backwages should be computed only up to the effectivity date o f the
retrenchment.8
■ In case the employee dies during pendency of the case, his full backwages
should be computed from the time of his dismissal up to the time o f his
death.9
■ The period of valid suspension is deductible from backwages.10
■ Backwages should include period of preventive suspension.11
■ Employer’s offer to reinstate does not forestall payment o f full backwages.12

’ PMippine-Singapore Transport Services, Inc. v. NLRC, GR. No. 95449, Aug. 18. '.997.
2 Espejo v. NLRC, G R No. 112678, March 29,1996,255 SCRA 430,435.
3 Si Michael's Institute v. Santos, G.R. No. 145280, Dec. 4,2001.
4 G.R. No. 156934, March 16.2007.
5 See also Intercontinental Broadcasting Corp. v. BenetfctD, G R No. 152843, July 20,20C6
3 RDS Trucking, v. NLRC, G R No. 123941, Aug. 27,1998.
’ Pncev. Innodata PhSs., IncAnnodata Corp., G.R No. 178505, Sepl 30,2008.
8 Mtsubishi Motors Philippines Cocporaton v. Chrysler PhSppines Labor Union, G R. No. 148738. June 29,2004.
9 Maxi Security and Detective Agency v. NLRC, G R No. 162850, Dec. 16,2005
» ld.,PLDTv.Teves,GRNo. 143511, Nov. 15.2010.
" Buhah v. The Hon. CA.GR No. 143709, July 2,2002
'2 Condo Suite Club Travel, he. v. NLRC, G R No. 125671, Jan. 28,2000.

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■ Any amount received during payroll reinstatement is deductible from

backwages.1

5. V A R IA TIO N S IN T H E G RA NT O F BACKWAGES.

The discussion above dwells on cases where backwages are granted in full
in accordance with the clear mandate of Article 294 [279] of die Labor Code.
However, in certain instances, backwages are not granted at all or are granted but
only for a limited amount. T ie discussion below will point out the variations in the
grant o f backwages as follows:

(a) When reinstatement is granted without backwages: or

(b) When reinstatement is granted with limited backwages.

6. R E IN S T A T E M E N T W ITHOUT BACKWAGES.

Under the following situations, reinstatement o f an illegally dismissed

employee is granted without the accompanying backwages:

(1) When the dismissal is deemed too h arsh a penalty;

(2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer dismissed the
employee.

• Illustrative cases o f the FIR ST situation above:

(1) AJM-TUCP v. NLRC,2 where reinstatement with no backwages was
ordered because the penalty o f dismissal imposed on the employee for committing
theft o f company property was reduced to suspension due to mitigating
circumstances. The justification was that the entire period when the employee was
out o f job because o f his dismissal should already be considered as the period o f
his suspension; hence, he should no longer be entided to backwages for the same
period.
(2) Yupangco v. NLRC,3 where, after finding that the employee was illegally
dismissed but at the same time guilty of misconduct, it was ruled that there was no
grave abuse of discretion in the resolution of the NLRC which meted only the
penalty o f suspension without backwages.
(3) Pepsi-Cola v. NLRC,4 where the employee filed a leave o f absence for
one day after he suffered stomach ache and upon the advice of his doctor, he took
a rest for 25 days without prior leave. When he reported back for work, he was told
diat he had been dismissed for being absent without leave. It was held that while he

1 Gkxy Phirppmes, Inc. v. Vergara, G R No. 175627, Aug. 24,2007.

1 Associated Labor Un'ons-TUCPv. NLRC, G.R No. 120450, Feb. 10.1999.
3 Yupangco Cotton Mils, Inc. v. NLRC, G R No. 94156, Jiiy 30,1990.
4 PepsFCota Dsstrixjtors of the PhSppines, Inc. v. NLRC, G R. No 100686, Aug. 15,1995,247 SCRA 386.

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was at fault, he could not be dismissed. He was thus ordered reinstated but he was
denied backwages.

• Illustrative cases of the SECOND situation above:

(1) In Itogon-Suyoc v. NLRC,1*the employee was found guilty o f breach o f
trust for stealing ore with high gold content. However, his dismissal was considered
drastic and unwarranted considering that he had rendered twenty three (23) years
of service without previous derogatory record and he was prematurely suspended
during the pendency of the case. Consequently, he was ordered reinstated but
without granting him any backwages. The High Court pronounced that “ [t]he ends
of social and compassionate justice would therefore be served if private respondent
is reinstated but without backwages in view of petitioner's good faith.”
(2) Finding factual similarity with the foregoing case o f Itogon-Suyoc, the
Supreme Court, in Pepsi-Cola v. Molon} deems it appropriate to render the same
disposition insofar as one o f the respondents in this case was concerned - Saunder
Santiago Remandaban III. This case involves a strike which the DOLE Secretary
certified to the NLRC for compulsory arbitration. A retum-to-work order was
issued as a consequence of such certification. However, Remandaban failed to
report for work within twenty-four (24) hours from receipt o f the said order.
Because of this, he was served with a notice of loss o f employment status (dated
July 30, 1999) which he challenged, asserting that his absence on that day was
justified because he had to consult a physician regarding the persistent and
excruciating pain of the inner side of his right foot. In ordering his reinstatement
but without backwages, the Supreme Court reasoned that the penalty o f dismissal
is too harsh for his infractions considering that his failure to report to work was
clearly prompted by a medical emergency and not by any intention to defy the July
27,1999 retum-to-work order. For its part, Pepsi's good faith is supported by the
NLRC's finding that “the return-to-work order o f die Secretary was taken lightly
by Remandaban.” In this regard, considering Rcmandaban's ostensible dereliction
of die said order, Pepsi could not be blamed for sending him a notice of
termination and eventually proceeding to dismiss him.
(3) It was likewise held in Integrated Microelectronics, Inc. v. Pionella,3 on
motion for reconsideration by petitioner, that the backwages4 should be deleted on
the grounds that (a) die penalty of dismissal was too harsh a penalty to be imposed
against Pionilla for his infractions;5 and (b) petitioner IMI was in good faith when it

' Itogon-Suyoc Mnes, Inc. v. NLRC, G.R. No. L-54280. Sept 30.1982,117 SCRA523,529.
7 Pepsi-Cola Products PhiSppines, Inc. v. Molon, G.R. No. 175002, Feb. 18,2013.
3 G.R. No. 200222, Aug. 28,2013 (Resolution on Motion for Reconsideration).
1 Respondent was ordered reinstated plus backwages by tie Court of Appeals.
5 Respondent PionSa has worked with petitioner IMI as is production worker since November 14,1996, On May 5,2005,
Pionlla received a notice from IMI requiring him to explain the incident which occurred the day before where he was seen
escorting a lady to boart the oompanyshutfe bus at the AlabangTemiina!. It was reported by the bus marshal that the lady
was wearing a company identification card (10) - which serves as a free pass far shuffle bus passengers - even if she was
just a job appfcant at IMI. In this regard, Pionilla admitted that he lent his ID to the lady wtio turned out to be his relative. He

<

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dismissed Pionilla as his dereliction o f its policy on ID usage was honesdy

perceived to be a threat to the company’s security. In this respect, since these
concurring circumstances trigger the application o f the exception to the rule on
backwages as enunciated in the above-cited cases, the Court found it proper to
accord the same disposition and consequently directed the deletion of the award of
backwages in favor o f Pionilla, notwithstanding the illegality o f his dismissal.

• Illustrative cases of the THIRD situation above:

(1) In Best Wear Garments v. De Lemos,*12where the records are bereft o f any
showing o f clear discrimination, insensibility or disdain on the part of petitioners in
transferring respondents - both sewers on piece-rate basis - to perform a different
type o f sewing job which would amount to constructive dismissal. That
respondents eventually discontinued reporting for work after their plea to be
returned to their former work assignments was their personal decision for which
the petitioners should not be held liable particularly as the latter did not, in fact,
dismiss them. Indeed, there was no evidence that respondents were dismissed from
employment. In fact, petitioners expressed willingness to accept them back to
work. There being no termination o f employment by the employer, the award of
backwages cannot be sustained. It is well setded that backwages may be granted
only when there is a finding of illegal dismissal. In cases where there is no evidence
of dismissal, the remedy is reinstatement but without backwages.

(2) In Leopard v. Quitoy} as well as in the earlier case o f Security and Credit
Investigation, Inc. v. NLRC,3 reinstatement without backwages was ordered because
petitioners were found not to have dismissed respondents (security guards) and
that the latter, for their part, have not abandoned their employment.4

(3) Leonardo v. NLRC,S where the Court orccred the reinstatement sans
backwages o f the employee (Fuerte) who was declared neither to have abandoned
his job nor was he constructively dismissed. As pointed out by the Court, in a case
where the employee’s failure to work was ~ '‘~<>sioned neither by his abandonment
nor by a termination, the burden o f economic loss is not rightfully shifted to the
employer. Each party must bear his own loss.

7. R E IN S T A T E M E N T W ITH L IM IT E D BACKWAGES.

While in the aforementioned cases o f illegal dismissal, the Supreme Court

ordered the employees’ reinstatement but without backwages, there are also

further htimated that he risked texting her his ID to save on their transportation expenses. Nevertheless, he apologized for
his actions.
1 GR. No. 191281, Dec. 05,2012.
2 Leopard Security and Investigation Agency v. Quitoy, GR. No. 186344, Feb. 20,2013.
3 G.R. No. 114316, Jan 26,2001.
4 See also Ledesma, Jr. v. NLRC, G R No. 174585, Oct 19,2007.
s G.R. Nos. 125303 & 126937, June 16,2000.

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instances where backwages were not awarded in full but merely limited for the
same reason of good faith on the part o f the employer.

• Illustrative cases where award o f backw ages was lim ited to 1 year:

(a) In San Miguel Corporation v. Javate, Jr.,1 the High' Court affirmed the
consistent findings and conclusions o f the Labor Arbiter, the NLRC, and the Court
o f Appeals that the employee was illegally dismissed since he was still fit to resume
his work; but the employer’s liability was mitigated by its evident good faith in
terminating the employee’s services based on the terms o f its Health, Welfare and
Retirement Plan. Hence, the employee was ordered reinstated to his former
position without loss of seniority and other privileges appertaining to him prior to
his dismissal, but the award of backwages was limited to only one (1) year
considering the mitigating circumstance o f good faith attributed to the employer.

(b) In Procter and Gamble Philippines v. Bondesto,2 the Supreme Court, while
affirming the illegality of the dismissal o f the employee, did not grant him full
backwages because it agreed with the findings o f the NLRC and the Court of
Appeals that in view of the employee’s absences that were not wholly justified,- he
should be entided to backwages limited to one (1) year only.34

• Illustrative case where award of backw ages w as lim ited to 2 years:

In Dolores v. NLRC,* the employee was terminated for her continuous

absences without permission. Although it was found that the employee was indeed
guilty of breach of trust and violation of company rules, the High Court still
declared the employee’s dismissal illegal as it was too severe a penalty considering
that she had served the employer company for 21 years, it was her first offense, and
her leave to study die French language would ultimately benefit the employer who
no longer had to spend for translation services. Even so, other than ordering the
employee’s reinstatement, the said employee was awarded backwages limited to a
period of two (2) years, given that the employer acted without malice or bad faith in
terminating the employee’s services.

• Illustrative case where award of backw ages was lim ited to 5 years:

In its resolution on the motion for reconsideration filed by the petitioner

in Victory Liner, Inc. v. Race,s the High Tribunal reduced and limited the original
award of full backwages to five (5) years in the light o f the evident good faith o f the
employer. While petitioner’s argument that respondent had already abandoned his
job in 1994 was not upheld, the Court conceded that petitioner, given the particular

' G.R. No 54244, Jan. 27.1992,205 SCRA469.

2 G.R. No. 139847. March 5,2004.
2 G.R. No 87673. Jan. 24.1992.205 SCRA 348.
4 G.R. No. 87673, Jan. 24,1992,205 SCRA 348.
s G R No 164820, Dec. 8,2008.

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circumstances of this case, had sufficient basis to reasonably and in good faith
deem respondent resigned by 1998.

IV.
D IS T IN C T IO N S
(BETWEEN REINSTATEMENT,
SEPARATION PAY IN LIEU THEREOF AND BACKWAGES)

1. D IS T IN C T IO N S B E T W E E N R E IN S T A T E M E N T A ND
SEPA R A TIO N PAY IN L IE U T H E R E O F .

Separation pay is proper only when reinstatement is no longer possible,

viable or feasible. Hence, it is a substitute remedy to reinstatement. Reinstatement
and separation pay cannot be ordered together. As held in Lope% Jr. v. NI^RO:
“Considering the purpose behind the grant of separation pay, it was grave abuse o f
discretion on the part of public respondent NLRC to order payment o f separation
pay, as it is inconsistent with the ruling reinstating the private respondent Their
inherent inconsistency is self-evident and needs no further elaboration.”

In effect, an illegally dismissed employee is entitled to either

reinstatement, if viable, or separation pay if reinstatement is no longer viable plus
backwages.2
O

2. R E IN S T A T E M E N T VERSUS BACKWAGES.

Reinstatement and backwages are separate and distinct reliefs given to an

illegally dismissed employee in order to alleviate die economic damage brought
about by the employee’s dismissal.3

The award of one does not preclude or bar the other.4 Both reliefs are
rights granted by substantive law which cannot be defeated by mere procedural
lapses.5

'The general rule is that where reinstatement is adjudged, the award o f full
backwages and other benefits continues beyond the date of the Labor Arbiter’s
decision ordering reinstatement and extends up to the time said order o f
reinstatement is actually carried out.6

R einstatem ent restores the employee who was unjusdy dismissed to die
position from which he was removed, i.c., to his status quo ante dismissal or the state

' G R N c 109166 July06,1995.

1 t i l Serves Cooperate v. CA, G R No. 118693, July 23,1998,354 PM. 905.
3 Reyes v RPGuaidians Security Agency, Inc., G R No. 193756, April 10,2013.
4 De Guznanv. NLRC, GR. No. 130617, Aug. 11,1999.371 PM. 192,202.
s a Mctiaefs Institute v. Santos, G.R No. 145280, Dec. 4,2001; Oeta Cruz v. NLRC, 299 SCRA 1,12-13 (1998],
6 loflo La flipiia Uy Gongco Cap. v. Hon. CA, G R No. 170244, Nov. 28,2007.

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from which one has been removed or separated;1 while the award of backw ages
allows the same employee to recover from the employer that which he had lost by
way of wages as a result of his unlawful dismissal.2 These twin remedies of
reinstatement and payment of backwages make whole the dismissed employee who
can then look forward to continued employment These- two remedies give
meaning and substance to the constitutional right of labor to security of tenure.3

Though the grant of reinstatement commonly carries with it an award of

backwages, the inappropnateness or non-availability o f one does not carry with it
the inappropriateness or non-availability o f the other. vThe award of one is not a
condition precedent to the award o f the other. Backwages may be ordered without
ordering reinstatement; conversely, reinstatement may be ordered without payment
of backwages.4

3. D ISTIN C TIO N S B ETW EEN SEPA R A TIO N PAY IN LIE U O F

R EIN STA TEM EN T AND BACKWAGES.

Separation pay in lieu o f reinstatement and backwages are two (2)

different things. Payment of separation pay in lieu o f reinstatement is not
inconsistent with payment of backwages.5

The award of one does not preclude the award o f the other as the
Supreme Court has, in proper cases, ordered the payment o f both.6

The payment of separation pay in lieu of reinstatement is in addition to

payment of backwages.7

The two may be distinguished as follows:

1. Separation pay is paid when reinstatement is not possible; while

backwages are paid for the compensation which otherwise the
employee should have earned had he not been illegally dismissed.8
2. The former is computed on the basis o f the employee’s length of
service; while the latter are based on the actual period when he was
unlawfully prevented from working.9
3. The former is paid as a wherewithal during the period that an employee
is looking for another employment; while the latter are paid for the loss

' De Guzman v. NIRC, G R No. 130617. Aug. 11,1999; Santos v. NLRC, 154 SCRA166,171,172 [1987],
} Reyes v. RP Guardians Security Agency, Inc, G R No. 193756, April 10,2013.
3 Id.
4 Mednav.Consoidated Broadcasting System, G.R Nos. 99054-56, May 28,1993.
5 Cabatulan v. Buat, G R No. 147142, Feb. 14,2005.
6 Triad Security & Alied Services, Inc. v. Ortega, G R No. 160871, Feb. 6,2006.
1 Bondomeo v. CA, G.R. No. 161596, Feb. 20.2013.
s Equitable Banking Cap. v. Sadac, G R No. 164772, June 8,2006.
» Lin v. NIRC, G R Nos. 79907 and 79975, Marcb 16,1989,171 SCRA 328,336.

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of earnings during the period between illegal dismissal and

reinstatement.1
4. The former is oriented towards the immediate future, that is, the
transitional period the dismissed employee must undergo before
locating a replacement job; while the latter involve the restoration of
the past income lost.2
5. Separation pay cannot be paid in lieu o f backwages.3
6. The grant of separation pay is a proper substitute only for
reinstatement; it could not be an adequate substitute both for
reinstatement and for backwages.45

Needlessly, payment o f backwages is not inconsistent with either

reinstatement or separation pay in lieu thereof.

F.
MONEY CLAIMS ARISING FROM
EMPLOYER-EMPLOYEE RELATIONSHIP

1. BASES O F E M PL O Y E E ’S M O N E Y CLAIMS.

The monetary claims that may be asserted by employees may be based on

any of the following;

(1) Labor Code;

(2) Other special laws;
(3) Jurisprudence;
(4) Employment contracts;
(5) Voluntary employer policy or practice; or
(6) Collective bargaining agreements (CBAs).

Examples o f N o. 1 above are the labor standards benefits provided

therein, such as claims for overtime, night differential, holidays, rest days, service
incentive leave, service charges, employees’ compensation benefits, separation pay
in case o f termination due to authorized causes, and retirement benefits.

Examples o f N o. 2 are the wage increases mandated under R.A. No.

6727s and the regional wage orders issued pursuant thereto, P.D. No. 851 [13th
Month Pay Law], R.A. No. 7641 [Retirement Pay Law],6 social secunty benefits

' SME Bank, Inc. v. De Guzman, G. R. Nos. 164517 8 186641, Oct 8,2013 (En Banc).
2 Lopez,Jr.v.NLRC.G.R.No. 109166,July06,1995;GeneralTextJes,Inc.v.NLRC.G.R.No. 102969,April4,1995.
3 Torillo v. Leogando, G.R. No. 77205. May 27,1991,197 SCRA 471.
4 SME Bank, Inc. v. De Guzman, supra, Century Canning Corp. v. Rami, G.R. No. 171630, Aug. 8,2010.
5 OJrerwseknowi as Sie'Wage Rationalization Act;
6 Signed into law by President Rodrigo Duterte on February 07,2019.

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from RA. No. 11199 [Social Security Act o f 2018],1 RA.. No. 11223 [Universal
Health Care Act],2 and RA. No. 9679 [Pag-IBIG Law].3

Examples of No. 3 arc the monetary reliefs accorded illegally dismissed

employees that are not found in the Labor Code nor in any other law, such as (1)
separation pay in lieu o f reinstatement; (2) indemnity in tfie form o f nominal
damages in case of termination due to just or authorized cause but without
affording the employee procedural due process; (3) payment o f salaries
corresponding to the unexpired portion of the employment contract in cases of
fixed-term employment; (4) financial assistance in cases where the employee’s
dismissal is declared legal but there are circumstances justifying this award, such as
long years of sendee, unblemished record of service, compassionate justice and
other considerations; (5) legal interest on separation pay, backwages and other
monetary awards.

Nos. 4, 5 and 6 involve monetary claims arising from the benefits granted
by the employer to the employees, either voluntarily or unilaterally in employment
contracts or company policies or practices, or through collective negotiations and
mutual agreements, such as those granted under CBAs. These benefits are varied
and too numerous to enumerate them here; suffice it to state that the bottomline
policy of the bw is that these benefits should not be below the minimum standards
and limits provided by law.

2. BURDEN OF PROOF IN M O N E T A R Y CLAIMS CASES.

As a general rule, in monetary claims cases, a party who alleges payment as

a defense has the burden of proving it.4 Well-settled is the rule that once the
employee has set out with particularity in his complaint, position paper, affidavits
and other documents the labor standards benefits he is entitled to (such as his
entidement to unpaid overtime pay, premium pay for holiday and rest day and
service incentive leave pay) and which he alleged that the employer failed to pay
him, it becomes the employer’s burden to prove that it has paid these money
claims.5 More succinctly, the burden rests on the employer to prove payment,
rather than on the employees to prove non-payment.6

In SLL International Cables Specialist v. NLR.C? petitioners, aside from their

bare allegations that private respondents received wages higher than the prescribed
minimum, failed to present any evidence, such as payroll or payslips, to support

’ The provisions o' thslaw are now part of theLabor Code as its Article 302 [287],
3 Approved by President Rodrigo Duterte on February 20,2019.
3 Otherwise known as the 'Home Development Mutual Fund Law o( 2009, otherwise known as Pag-IBIG (Pagtutulungan sa
kiiabukasan: Ikaw, Bangko, Industriya at Gobyemo) Fund.’
4 Our Hau^Reafy Development Cotpratimv.PariaaG.R. No. 204651, Aug. 06,2014.
s De Guzman v.N lRC .G A No. 167701, Dec. 12,2007.
6 Heis o' Manuel H. Ridad v. Gregorio Azaneta University Foundation, G.R No. 188659, Feb. 13,2013.
’ G.R.No 17216" Marth2.2011.

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their defense of payment. Thus, petitioners utterly failed to discharge the onus
probandi.

In trying to prove payment o f 13th month pay, holiday and service

incentive leave pays, petitioner, in OurHaus Realty Development Corporation v. Parian,*
did not present any credible document which will show that respondents had been
paid said benefits. O ur Haus merely presented a hand-written certification from its
administrative officer that its employees automatically become entided to five days
of service incentive leave as soon as they pass probation. This certification was not
even subscribed under oath. O ur Haus could have at Least submitted its payroll or
copies of the pay slips o f respondents to show payment of these benefits.
However, it failed to do so.

The rationale for this rule, according to a catena o f cases,2 is that the
pertinent personnel files, payrolls, records, remittances and other similar
documents which will show that the monetary claims have been paid are not in the
possession o f the worker but in the custody and absolute control o f the employer.
Thus, the burden o f showing widi legal certainty that the obligation has been
discharged with payment falls on die debtor, in accordance widi the rule that one
who pleads payment has the burden of proving it

Conscquendy, if the employer failed to present proof showing that it had

indeed paid the employee his monetary claims, the latter is entided to the same
monetary benefits. And all amounts due shall earn legal interest of six percent (6%)
per annum from the finality o f this ruling until full satisfaction.3*

The burden o f proof, however, may shift to the employee if the employer
denies the monetary claim. A good example is Solas v. Power & Telephone Supply
Phils., Inc.,Awhere petitioner asserted that he is entided to commissions which his
employer denied. Citing Lagatic v. NLRC,5 where it was held that there is no law
which requires employers to pay commissions, the High Court ruled that it is
incumbent upon petitioner to prove that there was indeed an agreement between
him and his employer for the payment thereof.6

In Salvalo^a v. NLRC,7 petitioner claimed that there was underpayment o f

wages and benefits to her late security guard husband, Gregorio, by his employer,
private respondent G ulf Pacific Security Agency, In c It was held, however, that
Gulf Pacific was able to rebut this claim through its payroll sheets correspondingly
signed by Gregorio. As the payroll sheets provide a convincing proof o f payment

' G R No. 204651, Aug. 06,2014.

1 Mamaril v. The Red System Company, Inc, G R No. 229920, July 04,2018.
3 Mamaril v. The Red System Company, Inc., supra.
‘ G R No. 162332. Aug. 28,2008.
5 G R No. 121004, Jan. 28,1998,285 SCRA 251,261.
6 See also RopaS Trading Corporation v. NLRC. G R No. 122409, Sept 25,1992,296 SCRA 309,315.
i GR. No. 182086, Nov. 24,2010.

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of his salaries and other benefits during his tours o f duty as a security guard, die
burden of proof was shifted to Gregorio to prove otherwise, but only with respect
to those salaries and benefits indicated in the said payroll sheets.

G.
RETIREMENT

I.
COVERAGE

1. EMPLOYEES ELIGIBLE FO R R E T IR E M E N T .

The following employees are eligible to avail o f retirement benefits under

Article 302 [287]1of die Labor Code:

1) All employees in die private sector, regardless o f their position,

designation or status and irrespective o f the method by which their
wages arc paid;2
2) Part-time employees;
3) Employees of service and other job contractors;
4) Domestic workers/kasambabays or persons in the personal service of
another;3
5) Underground mine workers;4
6) Employees of government-owned an d /o r controlled corporations
organized under the Corporation Code (without original charters).5

2. EXCLUSIONS.

Article 302 [287], as amended, does not apply to the following employees:

1. Employees of the national government and its political subdivisions,

including government-owned and/or controlled corporations, if they
arc covered by the Civil Service Law and its regulations.
2. Employees of retail, service and agricultural establishments or
operations regularly employing not more than ten (10) employees.
These terms are defined as follows:
a) “Retail establishm ent” is one principally engaged in the sale of
goods to end-users for personal or household use. It shall lose its

' As aaiended by R A No. 7641 (January 7,1993] and RA. No. 8558 [February 26,1998],
2 Section 1, Rule II, Implementing Rules of the Retirement Pay Law; Labor Advisory on Retirement Pay Law dated
Oct. 24,1996, issued by Secretary Leonardo A. Quisumbing.
3 Labor Advisory on Retirement Pay Law dated Oct 24,1996.
4 RA. No. 8558.
5 Postigo, et al.. v. Phifppsne Tuberculosis Society, Inc., G R No. 155146, Jan. 24,2006.

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retail character qualified for exemption if it is engaged in both

retail and wholesale of goods.
b) “Service estab lish m en t” is ooe principally engaged in die sale o f
service to individuals for their own or household use and is
generally recognized as such.
c) “A gricultural esta b lish m e n t/o p e ra tio n ” refers to an employer
which is engaged in agriculture. This term refers to all farming
activities in all branches and includes, among others, die
cultivation and tillage o f soil, production, cultivation, growing and
harvesting o f any agricultural or horticultural commodities,
dairying, raising o f livestock or poultry, the culture o f fish and
other aquatic products in farms or ponds, and any activities
performed by a farmer or on a farm as an incident to, or in
conjunction widi, such farming operations, but does n o t include
the manufacture an d /o r processing o f sugar, coconut, abaca,
tobacco, pineapple, aquatic or other farm products.1

II.
RETIREMENT AGE

1. O PT IO N A L OR COM PULSORY R E T IR E M E N T AGE.

Based on Article 302 [287],2 the employers and employees are free to
agree and stipulate on the retirement age, either in a CBA or employment contract.
It is only in die absence of such agreement that the retirement age shall be fixed by
law, that is, in accordance with the optional and compulsory retirement age
prescribed under Article 302 [287].3 This is so because retirement is the result of a
bilateral act of the parties, a voluntary agreement between die employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her
employment with the former.4

a. Under Article 302 [287j.

This article provides for two (2) types o f retirement:

(1) Optional retirement upon reaching the age o f sixty (60) years.5
(2) Compulsory retirement upon reaching the age of sixty-five (65) years.6

' Section 2, Rule II. Implementing Rules of the Refirement Pay Lav; Labor AtMsory on Retirement Pay Law dated Oct 24,
1996.
2 This provision states that '(a)ny employee may be retired upon reading tie retirement age established h the collective
bargaining agreement or other applicable employment contract’
3 Eastern Shipping Lines, Inc. v. Antonio, G.R. No. 171587, Oct 13,2009.
< Cereadov. Uniprom Inc.,GR No. 188154, Oct 13,2010.
5 Article 302 [287], Latxx Code; Section 4.1, Rule II, Implementing Rules of the Retirement Pay Law.
« Id.; Section 4.2, Rule II. Ibid.

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It is the employee who exercises the option under N o. 1 above.1 Upon

reaching the age of 65, the employee has no more option except to retire because
the law set the age of 65 as the compulsory retirement age.

b. Under retirem ent plan.

The optional and compulsory retirement schemes provided under Article 302
[287] come into play only in die absence o f a retirement plan or agreement setting
forth other forms of optional or compulsory retirement schemes. Thus, if there is a
retirement plan or agreement in an establishment providing for an earlier or older
age of retirement (but not beyond 65 which has been declared the compulsory
retirement age), the same shall be controlling.

2. R ET IR EM EN T AT AN EARLIER AGE OR A FT E R R E N D E R IN G
CERTAIN PERIO D OF SERVICE.

a. Validity o f em ployers’ prerogative.

The employer and the employee may mutually agree to grant to the
employer the sole and exclusive right to retire an employee at an earlier age or after
rendering a certain period of service. This agreement may be stipulated in an
employment contract or a CBA. By entering into an employment contract
containing such stipulation, the employee is bound to adhere thereto. In the same
vein, by their acceptance of the CBA, the union and its members are obliged to
abide by die commitments and limitations dicy had agreed to cede to the employer.
It is not repugnant to the constitutional guarantee o f security o f tenure.23

Cainta Catholic School v. Cainta Catholic School Employees Union [CCSEU]?

exemplifies this principle. The Supreme Court upheld the exercise by the school of
its option to retire employees pursuant to die existing CBA where it is provided
that the school has the option to retire an em ployee upon reaching the age
limit of sixty (60) or after having rendered at least twenty (20) years of
sendee to the school, the last three (3) years of w hich m u st be continuous.
Hence, die termination of employment of the employees, arising as it did from an
exercise of a management prerogative granted by the mutually-negotiated CBA
between the school and the union is valid.

In Pantranco North Express, Inc. v. NLRC,4 the Supreme Court upheld the
validity of the CBA stipulation that allowed the employee to be compulsorily
retired upon reaching die age of sixty (60) “or upon completing [25]years of service to
[Pantranco]. ”

1 Capii v NLRC, G.R No 120802, June 11 . 1997,273 SCRA 576.

1 Espejo v. NLRC, G.R No. 112678. Match 29,1996,255 SCRA 430.
3 G.R. No 151021, May 4,2006
4 GR.No 95940,July24,1996.259SCRA 161.

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b. To b e valid, retirem ent at an earlier age m ust b e voluntarily

consented to by the em ployee.

In Alpha Jaculbe v. Silliman University,1*3the Supreme Court ruled that in order

for retirement at an earlier age to be valid, it must be shown that the employee’s
participation in the plan is voluntary'. An employer is free to impose a retirement age
of less than 65 for as long as it has the employees’ consent Stated conversely,
employees are free to accept the employer’s offer to lower the retirement age if they
feel they can get a better deal with the retirement plan presented by the employer.

Following jaculbe, the retirement o f petitioner in Lourdes Cercado v. Uniprom,

Inc? at the age of 47, after having served respondent company for 22 years,
pursuant to its Employees’ Non-Contributoiy Retirement Plan, which provides that
employees who have rendered at least 20 years of service may be retired at the
option of the company, was declared illegal because it was not shown that she has
given her consent thereto. N ot even an iota o f voluntary acquiescence to
respondent’s early retirement age option is attributable to petitioner. The assailed
retirement plan was not embodied in a CBA or in any employment contract or
agreement assented to by petitioner and her co-employees. O n the contrary, it was
unilaterally and compulsorily imposed on them.

The same holding was made in the 2018 en banc case o f Alfredo F. Laya, Jr.
v. Philippine Veterans Bank? where petitioner, who was hired by respondent bank as
its Chief Legal Counsel with a rank o f Vice President, was compulsorily retired
under the following retirement policy o f the bank:

“Section Z Early Retirement. A Member may, with the approval

of the Board of Directors, retire early on the first day of any month
coincident with or following his attainment of age 50 and completion of
at least 10 years of Credited Service.”

According to petitioner Laya, he was made aware o f the retirement plan of

respondent bank only after he had long been employed and was shown a
photocopy of the Retirement Plan Rules and Regulations. His letter o f appointment
mentioned, among others, his “Membership in the Provident Fund ProgramI Retirement
Program” but the Court considered the mere mention thereof not sufficient to
inform him of the contents or details o f the retirement program. T o construe from
the petitioner's acceptance o f his appointment that he had acquiesced to be retired
earlier than the compulsory age o f 65 years would, therefore, not be warranted.
This is because retirement should be the result o f the bilateral act o f both the
employer and the employee based on their voluntary agreement that the employee
agrees to sever his employment upon reaching a certain age.4

' G.R. No. 156934, March 16.2007.

* G R No. 188154,Ocl 13,2010.
3 Alfredo F. Laya, Jr. v. Phfppine Veterans Bank and Ricardo A. Batoido, Jr., G R No. 205813, Jan. 10,2018.
4 Id., citing RobinaFams Cebu v. VSIa, G.R. No. 175869, Apri 18,2016.

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That the petitioner might be well aware of the existence of the retirement
program at the time of his engagement did not suffice. His implied knowledge,
regardless o f duration, did not equate to the voluntary acceptance required by law
in granting an early retirement age option to the employee. The law demanded
more than a passive acquiescence on the part o f the employee, considering that his
early retirement age option involved conceding the constitutional right to security
of tenure.*

Having thus automatically become a member o f the retirement plan

through his acceptance of employment as Chief Legal Officer o f respondent bank,
the petitioner could not withdraw from the plan except upon his termination from
employment.

Further, the retirement plan, having been established for respondent bank
and approved by its president more than five years prior to petitioner's
employment, was in the nature of a contract o f adhesion, in respect to which the
petitioner was reduced to mere submission by accepting his employment, and
automatically became a member o f the plan. With the plan being a contract of
adhesion, to consider him to have voluntarily and freely given his consent to the
terms thereof as to warrant his being compulsorily retired at the age of 60 years is
factually unwarranted.

To stress, company retirement plans must not only comply with the
standards set by the prevailing labor laws but must also be accepted by the
employees as commensurate to their faithful services to the employer within the
requisite period.12 Although the employer could be free to impose a retirement age
lower than 65 years for as long its employees consented,3 the retirement of die
employee whose intent to retire was not clearly established, or whose retirement
was involuntary' is to be treated as a discharge.4

In another 2018 case, Manila Holel Corporation v. Rosita De Leon,5 the same
ruling was made that an employee, in this case a managerial employee, cannot be
compulsorily retired at an earlier age without her express assent thereto. In this
case, respondent was retired under the retirement provision of the rank-and-file
CBA which provides that an employee's retirement is compulsory when he or she
reaches the age o f 60 or has rendered 20 years o f service, whichever comes first.
Respondent was only 57 at the time she was compulsorily retired but had already
rendered 34 years of service as Assistant Credit and Collection Manager/Acting
General Cashier. Besides holding that as managerial employee, she is not covered
by the CBA, die Court noted that there was nodiing in petitioner hotel’s
submissions showing that respondent had assented to be covered by die CBA's

1 Id., citing Cercado v. Uniprom, Inc., G.R. No. 188154, Oct 13,2010,633 SCRA 281,289. .
* Id., citing Obusan v. ftiilpp'ne National Bank, G.R No. 181178. July 26,2010,625 SCRA 542,554.
3 Id., citing Jacubev. SBman University, G.R No. 156934, March 16,2007,518 SCRA 445,450.
4 Id, citing Paz v. Northern Tobacco Redrying, Co., Inc., G.R. No. 199554, Feb. 18,2015,751 SCRA 99.115.
J G.R. No. 219774, July 23,2018.

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retirement provisions. Thus, in the absence o f an agreement to the contrary,

managerial employees cannot be allowed to share in the concessions obtained by
the labor union through collective negotiation.

Moreover, the rulings in Layax and Cercadtr were invoked in holding that
respondent De Leon was in effect, illegally dismissed. All told, an employee in the
private sector who did not expressly agree to an eady retirement cannot be retired
from the service before he reaches the age o f 65 years.3 "Acceptance by the employee of
an early retirement age option must be explicit, voluntary, free and uncompelled "* 'The law
demanded more than a passive acquiescence on the part of the employee, considering that his early
retirement age option involved conceding the constitutional right to security of tenure. 115

c. R etiring at an earlier ag e will am ount to illeg al dism issal i f

em ployee d id n ot consent thereto.

In accordance with Jaculhe, Cercado, Laya and De Leon, the employee’s

retirement at an earlier age based solely on a provision o f a retirement plan which
was not freely assented to by him would be tantamount to illegal dismissal.

III.
YEARS OF SERVICE

1. M IN IM U M YEARS O F SERVICE.

Five (5) years is the minimum years of service that must be rendered by
the employee before he can avail of the retirement benefits upon reaching optional
or compulsory retirement age under Article 302 [287]. But this period holds true
only “in the absence of a retirement plan or agreement providing for retirement
benefits o f employees in the establishment.” Hence, the employer and the
employee are free to stipulate a different period in the retirement plan, employment
contract or CBA.

However, being in the nature of "minimum" requirement, the parties

cannot stipulate a period higher than five (5) years since this will run counter to the
intention o f the law to grant retirement benefits n et upon reaching the "maximum'’
but merely the "minimum" requirement - a rule that obviously favors the workers
and therefore deserves to be construed for their benefit

2. C O M P O N E N T S O F T H E M IN IM U M 5-YEAR SERVICE.

The minimum length of service o f at least five (5) years required for
entitlement to retirement pay under Article 302 [287] includes authorized absences1*35

1 Alfredo F. Laya, Jr. v. Phiippine Veterans Bank and Ricardo A. Babido, Jr.; G J l No. 205813, Jan. 10,2018.
3 Id., citing Cercado v. Uniprom, Inc., G.R. No. 188154, Oct 13,2010,633 SCRA 281,289.
3 id., citing Alfredo F. Laya, Jr. v. Phiippine Veterans Bank and Ricardo A. Babido, Jr., supra.
* Id., cSng Cercado v. Uniprom, Inc., supra.
5 Id., citing Alfredo F. Laya, Jr. v. Philippine Veterans Bank and Ricardo A. Babido, Jr., supra.

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and vacations, regular holidays, and mandatory fulfillment of a military or civic

duty.1 In case, however, the business establishment has closed its operations for
sometime, only the penod of actual sendee should be counted and reckoned in
computing die retiring employee’s length o f service. The period o f time when the
business establishment was closed should not be included.2 ,

3. AGE AND SERVICE R E Q U IR E M E N T S CUM ULATIVE.

In the absence of any retirement plan or applicable agreement, an

employee must (1) retire when he is at least sixty (60) years of age and (2) serve at
least (5) years in the company to entitle him /her to the retirement benefits
provided under the law.J

Thus, where an employee like the petitioner in Padillo v. Rural Bank of

Nabunturan, Inc.,4 terminated his employment due to disease5 when he was at 55
years of age, his claim for retirement benefits was not granted and instead, he was
simply awarded financial assistance o f P75,000.00, exclusive o f the P100,000.00
benefit under the Philam Life rctirement/insurance plans earlier taken out for the
employees by respondent bank in anticipation o f its possible closure and the
concomitant severance of its personnel. In the absence o f any applicable contract
or any evolved company policy, Padillo should have met the age and tenure
requirements set forth under Article 302 [287] o f the Labor Code to be entitled to
the retirement benefits provided therein. Unfortunately, while Padillo was able to
comply with the five (5) year tenure requirement - as he served for twenty-nine
(29) years - he, however, fell short with respect to the sixty (60) year age
requirement given that he was only fifty-five (55) years old when he retired.

Intel Technology Philippines, Inc. v. NLRC,1234*6 similarly pronounced that if the

retirement plan requires a minimum number of years o f service as a pre-requisite to
cnutlemcnt to retirement benefits, the employee seeking such benefits should fully
comply therewith.

IV.
AMOUNT OF RETIREMENT PAY

1. SUPERIORITY OP B EN EFITS RULE.

Once an employee retires, it is not Article 302 [287] diat is controlling but
the retirement plan under the CBA or other applicable employment contract.7

1 Section 4.4. Rule II, Imptementing Rutes cf the Retirement Pay Law.
2 Santiago v. Binatbagan Estate, G.R. No. L-2268, Oct 20.1950,87 Phi 538.
3 PadiJo v. Rural Bank of Nabunturan, Inc., G R. No. 199338, Jan. 21,2013.
4 G.R. No. 199338, Jan. 21,2013
s Hypertension S/P CVA [Cefebcovascular AocidenlJ with short term memory loss,
s G R No. 200575, Feb 5.2014
' Oxalesv. United Laboratories, Inc, G.R. No 152991, July 21,2008.

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Article 302 [287] becomes relevant only in the matter of ensuring that the
retirement benefits are not less than those provided therein.
2. IN STA N C ES W H E N A R T IC L E 302 [287] A PPLIES.
Article 302 [287] only applies in a situation where:
(1) There is no CBA or other applicable employment contracts providing
for retirement benefits for employees; or
(2) There is a CBA or other applicable employment contracts providing
for retirement benefits for employees, but such benefits are below
the requirements set by law.1

The reason for N o. 1 above is to prevent the absurd situation where an

employee, who is otherwise deserving, is denied retirement benefits by the
nefarious scheme o f employers in not providing for retirement benefits for their
employees. The reason for N o. 2 is expressed in the Latin maxim pacta privatajuri
publico derogare non possunt. Private contracts cannot derogate from the public law.
Ang kasunduang pribado ay bindi makasisira sa bataspubliko”2

3. O N E -H A L F (V2) M O N T H SALARY.

In the absence o f a retirement plan or agreement providing for

retirement benefits o f employees in the establishment, an employee, upon reaching
the optional or compulsory retirement age specified in Article 302 [287], shall be
entitled to retirement pay equivalent to at least one-half (‘/a) month salary for every
year o f service, a fraction of at least she (6) months being considered as one (1)
whole year.3

For purposes of determining the minimum retirement pay due an

employee, the term “ one-half m onth salary” shall include all o f the following:

(1) Fifteen (15^1 days’ salary o f the employee based on his latest salary
rate. The term '!'salary” includes all remunerations paid by an
employer to his employees for sendees rendered during normal
working days and hours, whether such payments are fixed or
ascertained on a time, task, piece or commission basis, or other
method o f calculating the same, and includes the fair and reasonable
value, as determined by the DOLE Secretary, o f food, lodging or
other facilities customarily furnished by the employer to his
employees. The term does no t include cost-of-living allowances,
profit-sharing payments, and other monetary benefits which are not

1 Begf v. Phiipphe Airlines, Inc., G il No. 181995, July 16,2012.

2 Translation of the maxim to Pilipiio was made by Ihe Supreme Court itself in its decision n the case of Oxales v. United
Laboratories, Inc., G.R. No. 152991, July 21,2008.
3 Article 302 [287], Labor Code; Section 5.1, Rule II, Implementing Rules cf the Retirement Pay Law; Latxx Advisory on
Retirement Pay Law dated Oct 24,1996 issued by Secretary Leonardo A. Quisumbing.

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considered as part o f or integrated into the regular salary o f the

employees;
(2) The cash equivalent of five (5) days of service incentive leave:
(3) One-twelfth (1/12) of the 13lh month pay due the employee; and
(4) All other benefits diat the employer and employee may agree upon
that should be included in the computation o f the employee’s
retirement pay.1

4. “ONE-HALF (‘A) MONTH SALARY” MEANS 22.5 DAYS.

To dispel any further confusion on the meaning of “one-half [Vi] m onth

salary” provided in Article 302 [287], die Court, in Capitol Wireless, Inc. v. Confcsor,2
simplified its computation by declaring that it means the total o f “22.5 days”
arrived at after adding 15 days plus 5 days of service incentive leave plus 2.5 days
representing one-twelfth [1/12] o f the 13th month pay. Evidendy, the law expanded
the concept of "one-half month salary” from the usual one-month salary divided by
two.3

5. FIVE (5) DAYS OF SIL, H O W R ECK ON ED.

The five (5) days of service incentive leave provided under Article 302
[287] as part of the retirement benefit o f one-half (Vi) month salary for every year
of service should be paid in full. It should not be computed on the basis of 1/12
of the 5-day service incentive leave.45

6. EXCLUSION OF 1/12 OF 13™ M O N T H PAY A ND 5 DAYS O F SIL.

Supposing the retiring employee, by reason o f the nature o f his work, was
not entided to 13th month pay or to the SIL pay pursuant to the exceptions
mentioned in the 13thMonth Pay Law and the Labor Code, should he be paid upon
retirement, in addition to the salary equivalent to fifteen (15) days, the additional
2.5 days representing one-twelfth [1/12] o f the 13th month pay as well as the five
(5) days representing the service incentive leave for a total of 22.5 days?

This question was answered in the negative in R & E Transport, Inc. v.

Latapf The Court in this case ruled that employees who are not entitled to 13th
month pay and SIL pay while still working should not be paid the entire “22.5
days" but only the fifteen (15) days salary when they retire. In other words, the
additional 2.5 days representing one-twelfth [1/12] o f the 13th month pay and the
five (5) days of SIL should not be included as part of the retirement benefits.

1 Artde 302 [287], Labor Code; Section 52. Rule II, Implementing Rules of Ihe Retirement Pay Law.
2 G.R. No. 117174. Nov. 13.1995.264 SCRA 68.77.
3 Labor AtJAsory on Retirement Pay Law dated Oct 24,1996, issued by Secretary Leonardo A. Qu'sumb'ng.
1 Enriquez Security Services, Inc. v. C^otaje, G.R. No. 147993, Juty 21,2006.
5 G.R No. 155214, Feb. 13,2004.

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The employee in this case was a taxi driver who was being paid on the
“boundary” system basis. It was undisputed that he was entitled to retirement
benefits after working for fourteen (14) years with R & E Transport, Inc. However,
he was held not endded to the 13th month pay since Section 3 of the Rules and
Regulations Implementing P.D. No. 8511 exempts from its coverage employers of
those who arc paid on purely boundary basis. He was also not entided to the 5-day
service incentive leave pay pursuant to the Rules to Implement the Labor Code2
which expressly excepts field personnel and other employees whose performance
is unsupervised by the employer.3

7. D IS T IN C T IO N B E T W E E N E M PL O Y E ES PAID O N «BOUNDARY
SYSTEM” AND T H O S E PAID O N “COMMISSION” BASIS.

The said R & E Transport case should be distinguished from Serrano v.

Severino Santos Transit,4which involves a bus conductor (petitioner) who worked for
14 years for respondent bus company which did not adopt any retirement
scheme. It was held herein that even if petitioner as bus conductor was paid on
commission basis, he falls widiin the coverage of R.A. 7641 and its implementing
rules. This means that his retirement pay should include the cash equivalent o f the
5-day SIL and V 12 o f the 13th month pay for a total o f 22.5 days. The affirmance by
the Court o f Appeals o f the reliance by the NLRC on R & E Transport case was
held erroneous. For purposes o f applying the law on SIL as well as on retirement,
there is a difference between drivers paid under the "boundary system” and
conductors paid on commission basis. This is so because in practice, taxi drivers do
not receive fixed wages. They retain only those sums in excess o f the "boundary” or
fee they pay to the owners or operators o f the vehicles. Conductors, on the other
hand, are paid a certain percentage o f the bus’s earnings for the day. It bears
emphasis that under P.D. No. 851 and the SIL Law, the exclusion from its
coverage o f workers who are paid on a purely commission basis is only with
respect to field personnel.

The earlier case o f Auto Bus Transport Systems, Inc., v. Bautista,5 clarifies that
an employee who is paid on purely commission basis is entided to SIL.

8. C O N T R IB U T O R Y OR N O N -C O N T R IB U T O R Y PLAN.

a. R ight to contributory retirem ent plan.

Where both the employer and the employee contribute to a retirement

fund in accordance with a CBA or other applicable employment contract, die
employer’s total contribution thereto should not be less than the total retirement

' Granting the 13mMonth Pay.

2 See Section 1 of Rule V, Book III thereof
3 See also Article 82 of the Labor Code.
4 G.R. No. 187698, Aug 9.2010.
5 G R No. 156367, May 16.2005,458 SCRA 578.587-588.

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benefits to which die employee would have been entitled had there been no such
retirement fund. In case the employer’s contribution is less than the retirement
benefits provided under the law, the employer should pay the deficiency.1

b. Right to non-contributory retirem ent plan.

The employees have a vested and demandable right to a non-contributory
retirement plan. It is an existing benefit voluntarily granted to them by their
employer. The latter may not unilaterally withdraw, eliminate or diminish such
benefits.2

9. R ETIR EM EN T PAY U N D E R LABOR C O D E /R E T IR E M E N T PLAN,

SSS, GSIS AND PAG-IBIG, D IST IN G U ISH E D .

The following are the distinctions:

(a) The retirement benefits under the Labor Code,3 retirement policy or
plan of the employer or under a CBA are separate and distinct from
the SSS retirement pay.4
(b) The coverage of the Pag-IBIG Fund5 may be treated as a substitute
retirement benefit for the employee within die purview of the Labor
Code.
(c) GSIS retirement benefits apply to government employees only.

V.
RETIREMENT OF
UNDERGROUND MINE WORKERS
1. SPECIAL TREA TM EN T.

As a manifestation of concern for the welfare of underground mine

workers, Article 302 [287] was amended by ILA. No. 8558.6 Department Order No.
09, Series of 1998 was issued to implement this law.7

' Section 33. Rule II, Implemeating Rules of the Re&ement Pay Lav.
2 Nestle Philippines. Inc. v. NLRC, G.R. No. 91231, Feb. 4.1991; Razon. v. NLRC, G i l No. 80502, May 7,1990; Republic
Cement Corporation v. Honorable Panel of Arbitrators, G il No. 89766, Feb. 19,1990; Tiangco v. Leogardo, G.R. No. L-
57636, May 16,1983,122 SCRA 267.
3 Spedcaly under Article 302 [287J thereof.
4 Under Section 12-B, RA. No. 8282, otherwise known as the 'Social Security Act of 1997* (formerly known as the ‘Social
Security Law'[RA No. 1161, as amended]).
5 As provided h R A No. 7742, {Approved cxi June 17,1994J, a private emptoyer shall have the opfion Idtreat tie coverage of
the Pag-IBIG Fund as a substitute retirement benefit for the employee concerned withh he purview of the Labor Code as
amended, provided that such option does not in any way contravene an existing CBA or other employment agreement
Thus, the Pag-tBK3 Fund can be considered as a substitute retirement plan of the company for its employees provided that
such scheme offers benefits which are more than a at least equal to the benefits under R A No. 7641. f said scheme
provides for less than what the employee is entitled to under R A No. 7641, the employer is liable to pay the difference.
6 This law was approved on Feb. 26,1998.
1 See Section 8, Rule If-A, Rules Prescrfcing the Refinement Age for Underground Mine Employees. Department Order No.
09, Series of 1998 [May 4.1998.

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An underground mine employee refers to any person employed to extract

mineral deposits underground or to work in excavations o r workings such as shafts,
winzes, tunnels, drifts, crosscuts, raises, working places whether abandoned or in
use beneath the earth’s surface for the purpose of searching for and extracting
mineral deposits.1

2. D IF F E R E N T R E T IR E M E N T A GE.

The retirement age o f underground mine workers is as follows:

(a) O ptional - Fifty (50) years o f age;2

(b) C om pulsory - Sixty (60) years o f age.3

3. M IN IM U M YEARS O F SE R V IC E R E Q U IR E M E N T .

To be entided to retirement benefits, the underground mine worker

should have rendered service as such for at least five (5) years, in addition to the
age requirement.4 The minimum length o f service o f at least five (5) years required
for entidement to retirement pay shall include authorized absences and vacations,
holidays, and mandatory fulfillment o f a military or civic duty.5

4. R E T IR E M E N T B E N E F IT S .
The retirement benefits to which an underground mine worker is entided
shall be the retirement benefits provided under Article 302 [287] o f the Labor
Code, as amended.6 The components o f the retirement benefits consisting o f one-
half (V2) m onth salary arc the same as those prescribed in Article 302 [287] as
discussed above.7

VI.
RETIREMENT OF
WORKERS PAID BY RESULTS
1. BASIS O F R E T IR E M E N T B E N E F IT S .

For covered workers who are paid by results and do not have a fixed
monthly rate, the basis for the determination o f the salary for fifteen (15) days shall
be their average daily salary (ADS). The ADS is the average salary for the last
twelve (12) months reckoned from the date o f their retirement, divided by the
number o f actual working days in that particular period.8

' Sectionl,M e D A M .
7 Section 2.1, Rule It-A. Ibid.
3 Section 22, Rule ll-A, Ibid.
4 Article 302 [287], as amended by R A No. 8558.
5 Section 2.3, Rule IA M .
« Section 4.1, Rule H A M .
7 Section 42, Rule IA M .
8 Section 52, Rule II, Ibid.

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VII.
RETIREMENT OF
PART-TIME WORKERS

1. E N T IT L E M E N T TO R E T IR E M E N T B E N E F IT S . .
There can be no question that part-time workers are also entitled to
retirement pay of “one-half month salary” for every year of service under Article 302
[287], as amended by R.A. No. 7641,1 after satisfying the following conditions
precedent for optional retirement:
(a) There is no retirement plan between the employer and employee;
(b) The employee should have reached the age o f sixty (60) years; and
(c) He should have rendered at least five (5) years of service with the
employer.
2. HOW COM PUTED.
Applying, therefore, the principles under Article 302 [287], as amended,2
the components of retirement benefits o f part-time workers may likewise be
computed at least in proportion to the salary and related benefits due them.

VIII.
RETIREMENT BENEFITS VS. SEPARATION PAY
1. D ISTINCTIONS.

Retirement pay and separation pay are two distinct benefits granted under
the law. Their distinctions are as follows:

(1) While both retirement pay and separation pay are fixed by law,
retirement pay differs from separation pay in that the former is paid by reason of
retirement; while the latter is required in the cases enumerated in Articles 298 [283]3
and 299 [284]4 of the Labor Code and as substitute remedy in cases where
reinstatement is no longer feasible nor possible.5

(2) The purpose for the grant o f retirement pay is to help the employee
enjoy the remaining years of his life thereby lessening the burden of worrying for
his financial support; it is also a form of reward for the employee’s loyalty and
service to die employer.6 Separation pay, on the other hand, is designed as a

' Explanatory Bulletin on Part-Time Employment dated Jan. 02,1996 issued by Acting DOLE Secretary Jose S.
Brillantes.
7 As amended by R A No. 7641.
3 Termnawn due to autiwrized causes fpstafatioo of laba saving d e ^ , redundancy, retrenchment and closure ot business
estabtehment not due to serious business losses).
* Termination due to disease.
5 Aquino v. NLRC. G.R. No. 87653, Feb. 11,1992.
5 Aquino v. NLRC. supra; LagnEn v. WCC, G.R. No. L-45785, March 21,1988,159 SCRA 91,99.

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wherewithal during the period that an employee is looking for another employment
after his termination.1

2. W H E N B O T H R E T IR E M E N T PAY AND SEPA R A TIO N PAY MUST

BE PAID.

There are cases where both retirement pay and separation pay for
authorized cause termination were awarded and ordered paid. The most eloquent
example of this situation is Aquino v. NLRC,2 where the Supreme Court ordered
the payment to the retrenched employees of both the separation pay for
retrenchment embodied in the CBA as well as the retirement pay provided under a
separate Retirement Plan. The argument o f the company that it has more than
complied with the mandate o f the law on retrenchment by paying separation pay
double that required by the Labor Code (at the rate of one [1] month pay instead of
the one-half [V2] month pay per year o f service) was not favorably considered by
the Supreme Court because the employees were not pleading for generosity but
demanding their rights embodied in the CBA which was the result of negotiations
between the company and the employees. The company’s counsel should have
made it a point to categorically provide in the Retirement Plan and the CBA that an
employee who had received separation pay would no longer be entitled to
retirement benefits. O r to put it more plainly, collection of retirement benefits was
prohibited if the employee had already received separation pay. This, however, he
failed to do.

3. W H E N SEPA R A TIO N PAY MAY BE C H A R G ED T O R E T IR E M E N T

PAY.

Chargeability on one benefit to the other may also be agreed upon by the
employer and the employee. For instance, in Ford Philippines v. NLRC,3 a case
decided before the advent o f 1LA. No. 7641,4 the Supreme Court ruled that if it is
provided in the retirement plan o f the company that the retirement, death and
disability benefits paid in the plan are considered integrated with and in lieu of
termination benefits under the Labor Code, then the retirement fund may be
validly used to pay such termination or separation pay because of closure of
business.

4. W H E N E M PLO Y EES E N T IT L E D T O O N LY O N E FO RM OF
B E N E F IT .

There are cases where the employee is held to be entitled to only one
benefit. In Cipriano v. San Miguel Corporation,5it was ruled that in case the retirement

1 Id.
J G.R. No. 87653. Feb. 11,1992.
3 Ford Philippines Salaried Employees Association v. NLRC, G.R. No. 75347, Dec. 11,1987.
4 The Retirement Pay Law.
s GJl No. 1-24774,Aug. 21,1968.

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plan of the company provides that the employee shall be entitled to either the
retirement benefit provided die rein or the separation pay provided by law,
whichever is higher, the employee cannot be entided to bodi benefits.12

In the case of Zuellig Pharma Corporation v. Sibal'} respondents (36 in all),

were terminated on the ground of redundancy. They were properly notified o f their
termination and were paid their separation pay in accordance with the CBA34for
which respondents individually signed Release and Quitclaim in full setdement of
all claims arising from dteir employment widi Zuellig. Controversy arose when
respondents later on filed separate Complaints (which were later consolidated)
before the Labor Arbiter for payment o f retirement gratuity and monetary'
equivalent of their unused sick leave on top of the separation pay already given
them. Respondents claimed that they arc still entided to retirement benefits and
that their receipt of separation pay and execution of Release and Quitclaim do not
preclude them from pursuing such claim. In ruling against respondents, die
Supreme Court declared that the provision in die CBA is an effective bar to the
availment of retirement benefits once the employees have chosen separation pay or
vice versa. Thus, having chosen and accepted redundancy pay, respondents are thus
precluded from seeking payment of retirement pay under the CBA, which
enunciates express prohibition against "double recovery. ”

5. E N T IT L E M E N T OF EM PLOYEES D ISM ISSED FO R JUST CAUSE

TO R ET IR E M E N T BEN EFITS.

a. General rule.

Management discretion may not be exercised arbitrarily or capriciously

especially with regards to the implementation of the retirement plan. As held in
Ra^on, Jr. v. NLRCJ upon acceptance o f employment, a contractual relationship is
established giving die employee an enforceable vested interest in the retirement
fund. Hence, the dismissed employee is entided to the retirement benefits provided
thereunder.

b. Cases where just cause term ination was cited to validly deny
claim for retiremen t benefits.

However, in a number o f cases, the Supreme Court ruled that an

employee who is dismissed for cause loses his right to claim for his retirement
benefits.

1 See also Cruz v. PhSppine Global Communications, Inc., G.R. No. 141868, May 28,2004; Salomon v. Associate! of
Intematjooal Shipping Lines, Inc , G.R No. 156317, April 26,2005; Suarez, Jr. v. National Steel Corp., G R No. 150180,
Oct 17,2008; Santos v Sender Phfppines. Inc., G R No. 166377, Nov. 28,2008.
2 G R No. 173587, July 15,2013.
3 Section 3{b), A/tide XIV [Retirement Gratuity] thereof
4 G R No. 80502, May 7,1990,185 SCRA 44

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In San Miguel Corporation v. Lao,1 an employee who was dismissed for just
cause was held not entitled to the retirement benefits under the company’s
retirement plan which concededly prohibits the award o f retirement benefits to an
employee dismissed for just cause, a proscription that binds the parties to it.

Distinguishing Ra^on and San Miguel,, the Supreme Court declared that in
Ra^on, the employer’s refusal to give die employee his retirement benefits is based
on the provision o f the retirement plan giving management wide discretion to grant
or not to grant retirement benefits, a prerogative that obviously cannot be exercised
arbitrarily or whimsically. But in San Miguel, the retirement plan expressly prohibits
the grant of retirement benefits in case of dismissal for just cause. Hence, the
employee is bound by such prohibition.

In the case of PLDT v. Bolso,23 4the same ruling in San Miguel was made.
Thus, it was held in this case that since the employee was dismissed for just cause,
neither he nor his heirs can avail o f the retirement benefits.

,J
In Philippine Airlines, Inc. v. NLR.C it was held that private respondent’s
termination for cause rendered nugatory any entidement to mandatory or optional
retirement pay that she might have previously possessed.”

In Daabay v. Coca-Cola Bottlers Phils., Inc.,* the Court relied on the above
ruling in Philippine Airlines in denying die claim for retirement benefits of petitioner
Daabay in view o f his lawful dismissal by Coca-Cola on the grounds o f serious
misconduct, breach o f trust and loss o f confidence.

■ 0O0----------

1 G i l No. 143136-37, July 11.2002.

2 G R N o. 159701, Aug. 17,2007
3 G R N o. 123234,O ct20,2010,634SCRA18
4 G R No. 199890, Aug. 19,2013.

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MANAGEMENT PREROGATIVE

TOPICS PER SYLLABUS

VII.
MANAGEMENT PREROGATIVE
A. Discipline
B. Transfer of Employees
C. Productivity Standard
D. Bonus
E. Change of Working Hours
F. Bona Fide Occupational Qualifications
G. Post-Employment Restrictions

I.
MANAGEMENT PREROGATIVE

1. R IG HT O F EMPLOYER T O R EG U LA TE ALL ASPECTS O F

EMPLOYM ENT.

It is a well-recognized principle that employers have the right and

prerogative to regulate ever)' aspect of their business, generally without restraint in
accordance with their own discretion and judgment.1 This privilege is inherent in
the right of employers to control and manage their enterprise effectively.2 Such
aspects of employment include hiring, work assignments, working methods, time,
place and manner of work, tools to be used, processes to be followed, supervision
of workers, working regulations, transfer o f employees, lay-off of workers and the
discipline, dismissal and recall of workers.3

Our laws and jurisprudence extend recognition and respect to such

exercise by the employers of their rights and prerogatives. For this reason, courts
often decline to interfere in legitimate business decisions o f employers. In fact,

’ Deles, Jr. v. NLRC, G.R. No. 121348, Match 9,2000; Castillo v. NLRC, G.R No. 104319, June 17,1999.
J Mendoza v. Rural Bank of lucban, G.R. No. 155421,07 July 2004.
3 Philippine Airines, Inc. v. NLRC, G R. No. 115785, Aug. 4,2000;.

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labor laws discourage interference in employers’ judgment concerning the conduct

of their business.1 The Labor Code and its implementing rules do not vest
managerial authority in the Labor Arbiters or in the different divisions of the
NLRC, or in the courts. Even as the law is solicitous o f the welfare of employees, it
must also protect the right o f employers to exercise what are clearly management
prerogatives. The free will o f management to conduct its own business affairs to
achieve its purpose cannot be denied.2

2. L IM IT A T IO N S O N T H E E X E R C ISE OF M A N A G EM EN T
PRERO G A TIV ES.

1. Limitations imposed by:

a) law,
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles o f fair play and justice.3
2. It is subject to police power.4
3. Its exercise should be without abuse o f discretion.5
4. It should be done in good faith and with due regard to the tights o f
labor.6

Ineluctably, the exercise of management prerogatives is not absolute. The

prerogatives accorded to management cannot defeat the very purpose for which
labor laws exist - to balance the conflicting interests o f labor and management, not
to tilt the scale in favor o f one over the other, but to guarantee that labor and
management stand on equal footing when bargaining in good faith with each
other.7

A.
DISCIPLINE
1. C O M PO N E N T S .
The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
3) Right to determine who to punish;
4) Right to promulgate rules and regulations;

1 Coca-Cola Bottlers Philippines.lnc. v. Del Villar. G.R. No. 163021. Oct 6,2010.
2 Valiaov. Hon. CA, G.R. No. 146621. July 30,2004.
3 The PhiSpp'ne American Life and General Insurance Co. v. Gramaje, G.R No. 156963, Nov. 11,2004.
4 Farrol v. CA. G.R No. 133259, Feb. 10,20001; Associated Labor Unions-TUCP v. NLRC, G.R No. 120450, Feb. 10,1999.
5 Pantranco North Express, Inc. v. NLRC, G .R No. 106516, SepL 21,1999.
6 Unicom Safety Glass, Inc. v. Basarte, G.R. No. 154689, Nov. 25,2004.
7 Philippine Airlines, Inc. v. Pascua, G R No. 143258, Aug. 15,2003,409 SCRA 195.

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5) Right to impose penalty; proportionality rule;

6) Right to choose which penalty to impose; and
7) Right to impose heavier penalty than what the company rules
prescribe.
2. RIGHT T O D ISC IPLIN E.
The employer’s right to conduct the affairs of its business according to its
own discretion and judgment includes the prerogative to instill discipline among its
employees and to impose reasonable penalties, including dismissal, upon erring
employees. The employer cannot be compelled to maintain in his employ the
undeserving, if not undesirable, employees.1The only criterion to guide the exercise
of its management prerogative to discipline or dismiss erring employees is that the
policies, rules and regulations on work-related activities o f the employees must
always be fair and reasonable and the corresponding penalties, when prescribed,
should be commensurate to the offense involved and to the degree o f the
infraction.2
3. RIGHT T O DISMISS.
The right o f the employer to dismiss its erring employees is a measure o f
self-protection.3 The law, in protecting the rights o f the laborer, authorizes
neither oppression nor self-destruction of the employer. While the constitution is
committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be automatically decided in
favor of labor. Management also has its own rights which, as such, are entided to
respect and enforcement in the interest of simple fair play. O ut of its concern for
those with less privilege in life, the Supreme Court has inclined more often than
not towards the worker and upheld his cause in his conflicts with the employer.
Such favoritism, however, has not blinded the Court to rule that justice is, in every
case, for the deserving, to be dispensed in die light o f the established facts and
applicable law and doctrine.4
4. RIGHT T O D E T E R M IN E W HO TO P U N IS H .
TTie employer has wide latitude to determine who among its erring
officers or employees should be punished, to what extent and what proper penalty
to impose.5
5. RIGHT TO PRESCRIBE COMPANY RULES A ND REG U LA TION S.

The prerogative of an employer to prescribe reasonable rules and

regulations necessary or proper for the conduct o f its business and to provide

1 Shoemart, Inc. v. NLRC, G.R. No. 74229, Aug. 11,1989.

3 St Michael's Institute v. Santos, G.R. No. 145280, Dec. 4,2001.
3 Reyes v. Mnister of Labor, G.R. No. 48705, Feb. 9.1989; Filipro, Inc. v. NLRC, G.R. No. 70546, Oct 16,1986.
4 PLOT v.Phgol,G.R. No. 182622, Sept 8,2010.
s Soriano v. NLRC, G.R.N0. 75510, Oct 27,1987.

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certain disciplinary measures in order to implement said rules and to assure that the
same would be complied with has been recognized in this jurisdiction.1

6. R IG H T T O IM PO SE PE N A L TY ; REASONABLE
PRO PO RTIO N ALITY R ULE.

The employer may lawfully impose appropriate penalties on erring

workers pursuant to its company rules and regulations.2 However, the "reasonable
proportionality ru le” should be observed. This means that infractions committed
by an employee should merit only the corresponding sanction demanded by the
circumstances. The penalty must be commensurate with die gravity of the offense,
the act, conduct or omission imputed to the employee and imposed in connection
with the employer’s disciplinary authority.3 Accordingly, in determining the validity
o f dismissal as a form of penalty, the charges for which an employee is being
administratively cited must be o f such nature that would merit the imposition o f
the said supreme penalty. Dismissal should not be imposed if it is unduly harsh and
grossly disproportionate to the charges.4

7. R IG H T T O C H O O S E W H IC H PEN A LTY T O IM PO SE.

The matter o f imposing the appropriate penalty depends on the employer.

It is certainly within the employer’s prerogative to impose on the erring employee
what it considered the appropriate penalty under the circumstances pursuant to its
company rules and regulations. Like all other business enterprises, its prerogative to
discipline its employees and to impose appropriate penalties on erring workers
pursuant to company rules and regulations must be respected.5

8. R IG H T T O IM PO SE H E A V IE R PEN A LTY T H A N W HAT T H E

COM PANY RULES PR ESC R IB E .

The employer has the right to impose a heavier penalty than that
prescribed in the company rules and regulations if circumstances warrant the
imposition thereof. The fact that the offense was committed for the first time or
has not resulted in any prejudice to the company was held not to be a valid excuse.
No employer may rationally be expected to continue in employment a person
whose lack of morals, respect and loyalty to his employer, regard for his employer’s
rules, and appreciation o f the dignity and responsibility of his office, has so plainly
and completely been bared. Company rules and regulations cannot operate to
altogether negate the employer’s prerogative and responsibility to determine and
declare whether or not facts not explicitly set out in the rules may and do constitute
such serious misconduct as to justify the dismissal of the employee or the

1 Phimco Industries, Inc. v. NLRC, G.R. No. 118041, June 11,1997.

3 Philippine Airtnes, Inc. v. NLRC, G R No. 115785, Aug. 4,2000,337 SCRA 286.
3 Manila Memorial PaikCemeteiy, Inc. v.Panado.GR No. 167118,June 15,2006.
1 Fefev. NLRC, G R No. 148256, Nov. 17,2004.
5 China Banking Corporation v. Bonromeo, G R No. 156515, Oct 19,2004.

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imposition of sanctions heavier than those specifically and expressly prescribed

therein. This is dictated by logic, otherwise, the rules, literally applied, would result
in absurdity; grave offenses, f.j., rape, would be penalized by mere suspension, this,
despite the heavier penalty provided therefor by the Labor Code or otherwise
dictated by common sense.1 ,
In Cru^ v. Coca-Cola Bottlers Phils., Inc.,2 admittedly, the violation o f the
company rules committed by petitioner is punishable with the penalty of
suspension for the first offense. However, the Supreme Court affirmed the validity
of his dismissal because respondent company has presented evidence showing that
petitioner has a record of other violations from as far batk as 1986.

B.
TRANSFER OF EMPLOYEES
1. TWO (2) KINDS OF TRANSFER.
A transfer means a movement:
(1) From one position to another of equivalent rank, level or salary,
without a break in the service;3 or
(2) From one office to another widiin the same business establishment.4
2. O T H E R FORMS OF TRANSFER.
The prerogative to transfer is broad enough to include the following
prerogatives that involve movements o f personnel:
(1) Prerogative to reorganize and implement a job evaluation program;
(2) Prerogative to promote; and
(3) Prerogative to demote.
3. SOME PRIN CIPLES.
■ The exercise of the prerogative to transfer or assign employees from one office
or area of operation to another is valid provided there is no demotion in rank
or diminution of salary, benefits and other privileges. The transfer should not
be motivated by discrimination or made in bad faith or effected as a form of
punishment or demotion without sufficient cause.5
■ The Court cannot look into die wisdom of die transfer of an employee.6
* Commitment made by die employee in the employment contract to be re­
assigned anywhere in the Philippines is binding on him.7

' Stanford Microsystems, Inc. v. NLRC, G.R. No. 1-74187, Jan 28,1988.
J G.R. No. 165586, June 15,2005.
3 Coca-Cola Bottlers Phfppines.lnc. v. Del Wiar, G.R No 16309: Oct. 6,2010.
* Sue Dairy Corporation v. NLRC, G.R. No. 129843. Sept 14,1999
5 Phamnada and Upjohn, Inc. v. Abayda, Jr., G.R. No. 172724, Aug 23,2010.
« Id.

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* Even if the employee is performing well in his present assignment,

management may reassign him to a new post.1
■ An employee cannot claim any vested right to his position. While an employee
may have a right to security o f tenure, this does not give her such a vested
right to her position as would deprive the employer o f its prerogative to
change her assignment or transfer her where her service will be most beneficial
to the employer’s interest.2
* The transfer o f an employee may constitute constructive dism issal when it
amounts to an involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or unlikely, when there is a
demotion in rank and/or a diminution in pay; or when a clear discrimination,
insensibility or disdain by the employer becomes unbearable to the employee
leaving him with no option but to forego with his continued employment.3
* More specifically, the following three (3) conditions must concur in order for
die transfer to be considered as constructive dismissal:
1) When the transfer is unreasonable, inconvenient or prejudicial to the
employee;
2) When the transfer involves a demotion in rank or diminution o f salaries,
benefits and other privileges; and
3) When the employer performs a clear act o f discrimination, insensibility, or
disdain towards the employee, which forecloses any choice by the latter
except to forego his continued employment.4
■ Transfer made in compliance with a government order does not amount to
constructive dismissal.5
■ The refusal o f an employee to be transferred may be held justified if there is a
showing that the transfer was directed by the employer under questionable
circumstances. For instance, die transfer o f employees during the height o f
their union’s concerted activities in the company where diey were active
participants is illegal.6
■ An employee who refuses to be transferred, when such transfer is valid, is
guilty of insubordination or willful disobedience o f a lawful order o f an
employer under Article 297 [282] o f the Labor Code.7 For example: The
dismissal o f a medical representative who acceded in his employment
application to be assigned anywhere in the Philippines but later refused to be
transferred from Manila to a provincial assignment, was held valid. The reason

' Id.; See also Abbott Laboratories (Phils.), Inc. v. NLRC. G.R. No. L-76959, Oct 12,1987,154 SCRA 713.
7 OSS Security & Allied Services, Inc. v. NLRC, G R No. 112752, Feb. 9,2000.
J Ftoren Hotel v. NLRC, G R No. 155264, May 6,2005. Mendo2av. Rural Bank of Lucban, G R No. 155421, July 7.2004.
< Trio v. CA. G.R No. 171764, June 8,2007; Mendoza v. Rurd Bank of Lucban. G.R. No. 155421, July 7,2004.
5 Bisig Manggagawa sa Tryco v. NLRC, G.R. No. 151309, Oct 15,2008.
6 Yuco Chemical Industries, Inc. v. Ministry of Labor and Employment, G.R. No. 75656, May 28,1990.
7 Pharmacia and Upjohn, Inc. v. Albayda, Jr., G.R. No. 172724, Aug. 23,2010.

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isthat when he applied and was accepted for die job, he agreed to the policy
of the company regarding assignment anywhere in the Philippines as
demanded by his employer’s business operation.1
■ Refusal to transfer due to parental obligations, additional expenses, inconvenience,
hardship and anguish is not valid. An employee could not validly refuse lawful
orders to transfer based on these grounds.2
* Refusal to transfer to overseas assignment is valid.3
* Refusal to transfer consequent to promotion is valid.4
■ Transfer pursuant to the company policy o f preventing connivance is valid.5
■ Transfer in accordance widi pre-determined and established office policy and
practice is valid.6
* Rotation among employees of banks as required in the Manual o f Regulations
for Banks and Odier Financial Intermediaries issued by the Bangko Sentral ng
Pilipinas is valid.7
* Transfer due to the standard operating procedure of rotating employees from
die day shift to the night shift is valid.8
■ Transfer to avoid conflict of interest is valid.9
■ A transfer from one position to another occasioned by the abolition o f the
position is valid.10
■ Reassignment and transfer pending investigation of irregularities is valid.11
■ Burden of proof in transfer cases is on the employer.12

3. PREROGATIVE TO REO RGA NIZE A ND IM P L E M E N T A JO B

EVALUATION PROGRAM.

Implementation of a job evaluation program or a reorganization is valid

for as long as it is not contrary to law, morals or public policy13 and it is carried out
in good faith.14 If the purpose of a reorganization is to be achieved, changes in the

1 Abbott Laboratories, Inc. v. NLRC, G.R. No. 76959, OcL 12,1987.

2 Alied Banking Corporation v. CA, G R No. 144412, Nov. 18,2003; Homewiers Savings and Loan Assodafon, Inc. v.
NLRC, G R No. 97067, Sept 26,1996,262 SCRA 406. '
3 Allied Balking Corporation v. CA G.R. No. 144412, New. 18,2003]; Dosdi v. NLRC, G R No. L-51182, Jufy 5,1983,208
Phi. 259; 123 SCRA 296.
4 Dosdi v. NLRC, [supra.
5 Cinema, Stage and Radio Entertainment Free Workers v. CIR G.R No. L-19879, Dec. 17,1966,18 SCRA 1068.
6 Phlipphe Industrial Security Agency v. Dapiton, G.R. No. 127421, Dec. 8,1999,320 SCRA 124,138.
7 Allied Banking Corporation v. CA, G.R. No. 144412, Nov. 18,2003.
« Castillov. CIR G R Nos. L-26124 and L-32725, May 29,1971,39 SCRA 75.
9 ftjncan Association of DetaflmarvPTGWO v Glaxo Welcome PhSpphes, Inc., G R No. 162994, Sept 17,2004.
10 Benguet Electric Cooperative v. Ranza, G.R No. 158606, March 9,2004.
11 CWdulao v. The CA and Baguio Colleges Foundation, G R No. 164893, March 1,2007.
12 Sukiaov.Omedi System Construction. Inc. G.R No. 171392, O cl30,2006.
'3 NAM4DA-NFL v. Davao Sugar Central Co. he, G R No. 145848, Aug. 0,2006.
14 SCA Hygiene Products Corp. Employees Association v.SCA Hygiene Products Corp.,G.R. No. 182877, Aug. 9,2010.

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positions and rankings o f the employees should be expected. To insist on one’s old
position and ranking after a reorganization would render such endeavor
ineffectual.1

For instance, in Batongbacal v. Associated Bank,23involving the dismissal o f

an assistant vice-president for refusing to tender his courtesy resignation which the
bank required in line with its reorganization plan, the Court held, among others,
that it is not prepared to preempt the employer’s prerogative to grant salary
increases to its employees by virtue of the implementation o f the reorganization
plan which diereby caused a distortion in salaries, notwithstanding that there is a
semblance of discrimination in this aspect o f the bank’s organizational setup.

The validity o f a job evaluation program was likewise affirmed in SCA

Hygiene v. SCA Hygiene Products Corp} Thus, it was pronounced here that a job
evaluation program is valid if the employer has not acted in bad faith and it was not
intended to circumvent the law and deprive the affected employees o f the benefits
they are supposed to receive. The job evaluation program was undertaken to
streamline respondent’s operations and to place its employees in dieir proper
positions or groupings. A perusal o f the CBA o f the parties showed that it merely
provided the procedure for the implementation o f the job evaluation and did not
guarantee any adjustment in die salaries o f the employees.

It is hard to accept die claim that an employer would go through all the
expenditure and effort incidental and necessary to a reorganization just to dismiss a
single employee whom they no longer deemed desirable.4

Reorganization does not necessarily give rise to promotional increases.5

Thus, in the same SCA Hygiene case, the High Court did not grant any conversion
or promotion increase to the 22 daily-paid rank-and-file employees since what
transpired was only a promotion in nomenclature. O f primordial consideration is
not die nomenclature or tide given to the employee but the nature o f his
functions. Based on the eight new job grade levels which respondent adopted after
the job evaluation, Job Grade Levels 1 and 2 positions are both categorized as.
rank-and-file employees. Said employees continued to occupy the same positions
they were occupying prior to the job evaluation. Moreover, their job tides remained
die same and they were not given additional duties and responsibilities.

There is also no evidence to show that Job Grade Levels 1 and 2

positions are confined only to daily and monthly-paid rank-and-file employees,
respectively, such that when a conversion from Job Grade Level 1 to Job Grade
Level 2 takes place, a promotion automatically ensues. The pronouncement o f

' Ametav.NLRC,G.R.No. 126230. Sept 18.1997,279 SCRA 326.

* G.R. No. 72977, Dec. 21,1988,168 SCRA 600.
3 SCA Hygiene Products Cap. Employees Association v.SCA Hygiene Products Coqp., supra.

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Voluntary Arbitrator Renato Q. Bello that Job Grade Level 2 positions are mostly
occupied by monthly-paid rank-and-file employees implies that some daily-paid
rank-and-file employees also occupy that position. Thus, a mere conversion from
job Grade Level 1 position to Job Grade Level 2 position does not, o f course,
make a daily-paid rank-and-filer a monthly-paid one with a corlcomitant conversion
and promotion increase.

4. PREROGATIVE T O PR O M O TE.

Promotion is the advancement from one position to another involving

increase in duties and responsibilities as authorized by law and usually accompanied
by an increase in compensation and benefits.1

a. Transfer vs. promotion.

Promotion denotes a scalar ascent of an officer or an employee to
another position, higher cither in rank or salary; while transfer involves lateral
movement from one position to another of equivalent level, rank or salary.2
c. Some principles on prom otion.
■ An employee has the right to refuse promotion. There is no law
which compels an employee to accept a promotion. Promotion is in
the nature of a gift or reward. Any person may refuse to accept a gift
or reward. Such refusal to be promoted is a valid exercise o f such
right and he cannot be punished therefor.3
* An employee cannot be promoted without his consent even if merely
as a result of a transfer. A transfer that results in promotion or
demotion, advancement or reduction or a transfer that aims to lure
the employee away from his permanent position cannot be done
without his consent.4
8 An employee cannot be dismissed because o f his refusal to be
promoted. It cannot amount to insubordination or willful
disobedience of a lawful order o f the employer.5
■ Employer’s decision on whether to promote an employee or not is
valid for as long as it does not appear to have been actuated by bad
faith6
5. PREROGATIVE T O D EM O TE.

Demotion involves a situation where an employee is relegated to a

subordinate or less important position consisting of a reduction to a lower grade or

' Coca-Cola Bottlers Phifippines.lnc. v. DeJ Villar, GK. No. 163091, Oct 6,2010.
2 Glares v. Subido, G.R No. L-23281, Aug. 10.1967,20 SCRA954.127 PM. 370,378.
3 Erasmov. Home Insurance 8 Guaranty CorporaSoo. GiR No. 139251, Aug. 29,2002
4 PhSppiie Telegraph & Telephone Corporafon v. CA, G.R. No. 152057, Sept 29,2003.
» ibid.
6 NAMADA-NFlv. Davao Sugar Central Co., Inc., G R No. 145848, Aug. 9,2006.

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rank with a corresponding decrease in duties and responsibilities and usually

accompanied by a decrease in salary.1

a. Two (2) forms o f demotion.

Demotion may either be a form of:

(1) Disciplinary sanction; or

(2) Constructive dismissal.

b. Demotion as disciplinary sanction.

It is a fact that the Labor Code provides only one form o f sanction, that
is, dismissal. In many instances, however, dismissal appears to be not the proper
sanction imposable because it is too harsh a penalty considering the gravity o f the
offense or in view o f the existence of mitigating circumstances that, if considered,
would justify the imposition o f less harsh penalty than dismissal. The law, however,
does not contain any provision on what that less harsh penalty than dismissal is;
hence, short o f dismissing the erring employee, employers usually resort to
demoting him to a position or two lower in rank than his current one, with the
corresponding reduction in pay, benefits and privileges. More often than not, the
erring employee who admits his wrongdoing usually accepts such penalty rather
titan be terminated from employment.

Thus, the Court has give its imprimatur to the imposition o f demotion as a
penalty. For instance, it was held in one case that the employer has the right to
demote and transfer an employee who has failed to observe proper diligence in his
work and incurred habitual tardiness and absences and indolence in his assigned
work.2

Demotion due to failure to comply with productivity standards was

likewise upheld as valid in the consolidated cases o f Leonardo v. NLRC,3 and Fuerte
v. Aquino.4 The employer here claims that the employee was demoted pursuant to a
company policy intended to foster competition among its employees. Under this
scheme, its employees are required to comply with a monthly sales quota. Should a
supervisor like Fuerte fail to meet his quota for a certain number of consecutive
months, he will be demoted, whereupon his supervisor’s allowance will be
withdrawn and be given to the individual who takes his place. When the employee
concerned succeeds in meeting the quota again, he is re-appointed supervisor and
his allowance is restored. The Supreme Court said tha: this arrangement appears to
be an allowable exercise of company rights. An employer is entitled to unpose
productivity standards for its workers and in fact, non-compliance may be visited
with a penalty even more severe than demotion.

1 Coca-Cola Bottlers Phiippines, Inc. v. Del War, G R No. 163091, Oct 6,2010; TViio v. CA, G R No. 171764, June 8,2007.
2 Intemalional Hawester Madeod, Inc. v. IAC, G.R No. 73287, May 18,1987.
3 G.R. No. 125303, June 16,2000.
4 G R No. 126937, June 16.2000.

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• Observance of due process in demotion cases.

While due process required by law is applied in dismissals, the same is also
applicable to demotions as the latter likewise affect the employment o f a worker
whose right to continued employment under the same terms and conditions is also
protected by law. Moreover, considering that demotion is, like dismissal, also a
punitive action, the employee being demoted should, as in cases o f dismissals, be
given a chance to contest the same.1 Simply put, even the employer’s right to
demote an employee requires the observance of the twin-notice requirement.2

b. Demotion amounting to constructive dismissal.

In this sense, demotion is being perpetrated by the employer as a form of

constructive dismissal of the employee.

As far as the prerogative o f transferring of employees is concerned, there

is demotion when the same results in reduction in position, rank or salary as a
result of a transfer.3 The case of Coca-Cola v. Del Villar* clearly illustrates when
transfer of an employee is tantamount to demotion. Respondent Del Villar was
transferred by petitioner company from the position of Transportation Services
Manager to the position of Staff Assistant to the Corporate Purchasing and Materials
Control Manager. Petitioner and its officials attempted to justify the transfer o f Del
Villar by alleging his unsatisfactory performance as Transportation Services
Manager. The High Court, however, was unconvinced. The dismal performance
evaluations of respondent Del Villar were prepared by his two superiors - San Juan
and Pineda - after Del Villar already implicated them in his Report dated January 4,
1996 in an alleged fraudulent scheme against petitioner company. Del Villar was
demoted as readily apparent in his new designation. Formerly, he was the
Transportation Services M anager; then he was made a Staff A ssistant - a
subordinate - to another manager, particularly, the Corporate Purchasing and
Materials Control Manager. Moreover, the two posts are not o f the same weight in
terms o f duties and responsibilities. Del Villar’s position as Transportation
Services Manager involved a high degree o f responsibility, he being in charge of
preparing the budget for all of the vehicles of the Company nationwide. As Staff
Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar
contended that he was not assigned any meaningful work at all. The Company
utterly failed to rebut Del Villar’s contention. While Del Villar’s transfer did not
result in the reduction of his salary, there was a diminution in his benefits. The
Company admits that as Staff Assistant of the Corporate Purchasing and Materials
Control Manager, Del Villar could no longer enjoy the use of a company car,

1 Jarba Machhe Shop and Auto Supply, Inc v. NLRC, G.R No. 118045, Jan 2,1997,266 SCRA 97. ’
7 Fkxen Hotel v. NLRC. G.R. No. 155264, May 6,2005; Jaroa Machine Shop and Auto Supply, Inc. v. NLRC, supra.
3 Philippine Wireless. Inc. (Pockctbel) v. NLRC, G.R. No. 112963, July 20,1999.
« CocaCda Bottlers Phrpp'nes. Inc. v. Del Vilar.GR No 163091, Oct 6.2010

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gasoline allowance, and annual foreign travel, which Del Villar previously enjoyed
as Transportation Services Manager.

Another illustration o f a transfer resulting in demotion is die case o f The

Orchard Golf and Country Club v. Francisco>,* where respondent, after being suspended
and made to take a forced leave for alleged violations, was ultimately transferred
from the position o f Club Accountant, in which she headed petitioner Club’s
General Accounting Division and four divisions under it, to the position o f Cost
Controller/Accountant, a lower ranked position. The Court held that the transfer
amounted to demotion which thus constitutes constructive dismissal because
Francisco’s transfer to the position o f Cost Controller was without valid basis and
that it amounted to a demotion in rank. W hen Francisco was placed on forced
leave and transferred to the Cost Accounting Section, not once was Francisco given
the opportunity to contest these company actions taken against her. Just when one
penalty has been served by Francisco, another would instantaneously take its place.
And all these happened even while the supposed case against her, the alleged
charge of “betrayal o f company trust,” was still pending and remained unresolved.
Interestingly, Francisco’s transfer was occasioned not by a past infraction or a
present one which has just been committed, but by her act o f filing a complaint for
impropriety against Famy.

c.
PRODUCTIVITY STANDARD
1. CONCEPT.
The employer has the prerogative to prescribe the standards o f
productivity which may be used as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass die productivity
standards or quota are usually given additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed for
failure to meet the productivity standards or quota.
• Illustrative cases:
In International School Manila v. ISAE,*2 the teacher3 was held guilty o f gross
inefficiency meriting her dismissal on the basis of the Court’s finding that she failed
to measure up to the standards set by the school in teaching Filipino classes.

' G.R. No. 178125, March 18,2013.

2 Coca£da Botes Phiippines, Inc. v. Del Villar, G.R. No. 167286, Feb. 5,20M
3 Evangelne Santos was first hired by the School in 1978 as a fult-tirre Spanish language teacher. She took a leave of
absence and at the time of her return to the School, only one class of Spanish was available for her to teach Thus, for the
school year 1993-1994, Santos agreed to teach one d ak of Spanish and four other classes of Filipino that were left behind
by a refired teacher. Subsequent to this, she taught only Fifipino until her termination.

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In Repcs-Rayel v. Philippine Luen,1 the validity o f the dismissal o f petitioner

who was the Corporate Human Resources (CHR) Director for Manufacturing of
respondent company, on the ground o f inefficiency and ineptitude, was affirmed
on the basis of dte Court’s finding that pedrioner, on two occasions, gave wrong
information regarding issues on leave and holiday pay which ^generated confusion
among employees in the computation of salaries and wages.
In another case, Realda v. New Age,2 petitioner, a machine operator of
respondent company, was dismissed on the ground, among others, o f inefficiency.
In affirming the validity of his dismissal, the Supreme Court reasoned:

“xxx (T)he petitioner’s failure to observe Graphics, Inc.’s work standards

constitutes inefficiency that is a valid cause for dismissal. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by failing
to complete the same within the allotted reasonable period, or by producing
unsatisfactory results ”

In Buiser v. Leonardo, Jr.,1 the petitioners’ failure to meet the sales quota
assigned to each of them was deemed a just cause for their dismissal, regardless of
the permanent or probationary status o f their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to
inefficiency, well constitutes a just cause for dismissal.

In fine, according to Aliling v. Feliciano,4an employee’s failure to meet sales

or work quotas falls under the concept of gross inefficiency, which in turn is
analogous to gross neglect of duty that is a just cause for dismissal under Article
297 [282] of the Labor Code. However, in order for the quota imposed to be
considered a valid productivity standard and thereby validate a dismissal,
management’s prerogative of fixing the quota must be exercised in good faith for
the advancement of its interest. The duty to prove good faith, however, rests with
the employer as part of its burden to show that the dismissal was for a just cause.
The employer must show that such quota was imposed in good faith.

2. DOLE T O ESTABLISH STANDARD O U T P U T RATES.

In appropriate cases, the DOLE intervenes, mtu proprio or upon the

initiative of any interested party, to establish productivity standards. For instance,
in the case of workers paid by results who are considered “non-time” workers as
their compensation is based not on the basis of the time spent on their work but
according to the quantity, quality or kind o f job and the consequent results thereof,
it is subject to more regulations in order to ensure the payment of fair and*

' Reyes-Raye) v. Phifppine Luen Thai Holdings to p.. G R No. 174893, July 11.2012.
7 Rekdav. New Age Graphics. Inc., G R No. 192190, April25,2012.
J G R No. L-63316, July 13,1984,131SCRA151.158.
* G R No. 185829, April 25,2012

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m a n a g e m e n t p r e r o g a t iv e

reasonable wage rates. Thus, on petition o f any interested party or upon its own
initiative, the D O LE shall use all available measures, including the use o f time and
motion studies and individual/collective bargaining agreement between the
employer and its workers as approved by the D O L E Secretary and consultation
with representatives o f employers’ and workers’ organizations, to determine
whether the employees in any industry or enterprise are being compensated in
accordance with the minimum wage requirements o f the rule on wages.1

In the case o f hom ew orkers, at the initiative o f the D O LE or upon

petition o f any interested party, the DOLE Secretary or his authorized
representative is mandated to establish the standard output rate or standard
minimum rate in appropriate orders for the particular work or processing to be
performed by the homeworkers.2
3. H O W D E T E R M IN E D .
The standard output rates or piece rates shall be determined through any
of the following procedures:
a) Time and motion studies;
b) An individual/collective agreement between the employer and its
workers as approved by the DOLE Secretary or his authorized
representative; or
c) Consultation with representatives o f employers’ and workers’
organizations in a tripartite conference called by the DOLE Secretary.

4. T IM E A ND M O T IO N STU D IES.

The time and mouon study is the more scientific and preferred method.
The basis for the establishment o f rates for piece, output or contract work is the
performance of an ordinary worker of minimum skill or -ability.3 An ordinary
worker o f minimum skill or ability is die average worker of the lowest producing
group representing fifty percent (50%) o f the total number of employees engaged
in similar employment in a particular establishment, excluding learners, apprentices
and handicapped workers employed therein.4

In the case o f homeworkers, the time and motion studies should be

undertaken by the D O LE Regional Office having jurisdiction over the location o f
the premises used regularly by the homeworker/s. However, where die job
operation or activity is being likewise performed by regular factory workers at the
factory or premises of die employer, the time and motion studies should be
conducted by the D O LE Regional Office having jurisdiction over the location of

1 Section 5 (a), Rule Vll-A, Book ill, Rules to Implement the Labor Code, as amended by Memorandum Circular No. 3, Nov. 4,
1992.
2 Section 7, Department Order No. 5 [Rule XIV, Book III, Rules to Implement toe Labor Code
3 Section 5 (b], Rule Vll-A, Book III, Rules to Implement toe Labor Code, as amended by Memorandum Circular No. 3, Nov. 4,
1992.
4 Section 5 (c), Rule Vll-A, Book III, Ibid.

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die main undertaking or business o f the employer. Piece rates established through
time and motion studies conducted at the factory or main undertaking of the
employer shall be applicable to the homeworkers performing the same job activity.
The standard piece rate shall be issued by the D O LE Regional Office within one
(1) month after a request has been made at said office. Upon request of the DOLE
Regional Office, the Bureau of Working Conditions (BWC) shall provide assistance
in die conduct of such studies.1

5. ALLOWED TIME.
In incentive wage system, the number of minutes allowed for tool care,
personal needs and fatigue, is added to operating time in establishing job standards
or "task"as a basis for determining piece rates or incentive bonus.

6. BASE RATE.

In incentive wage system, the rate for the established task or job standard
production is called "base rate. ” The base rate usually represents the one hundred
percent (100%) basis for measuring the incentive bonus. It is also used to describe
the regular rate for time worked which is the established rate per hour for the
assigned job, exclusive of extras resulting from merit or service increase or
overtime, among others.

D.
BONUS
1. GENERAL RULE.
Bonus, as a general rule, is an amount granted and paid ex gratia to the
employee. Its payment constitutes an act o f enlightened generosity and self-interest
on die part of the employer rather than as a demandable or enforceable obligation.2
It is 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.3 It is something given in addition to what is ordinarily
received by or strictly due the recipient.4

It is a gratuity or act of liberality of the giver which the recipient has no

right to demand as a matter of right.5 Its grant is a management prerogative.6 It
cannot be forced upon the employer who may not be obliged to assume the
onerous burden of granting bonuses or other benefits aside from the employees’
basic salaries or wages. It is something given in addition to what is ordinarily

1 Section 7, Ibid
2 Producers Bank of the Phipp'nes v. NLRC, G.R. No. 100701, March 28,2001.
1 UST Faculty Union v. NLRC, G.R. No. 90445, Oct 2,1990.
4 Protado v. Laya Mananghaya & Co., G.R. No. 158654, March 25.2009.
5 Aragon v. Cebu Porfand Cement Co., 610.G . 4597.
6 Producers Bank of the Phifpp'nes v. NLRC, G.R. No. 100701, March 28,2001,355 SCRA 489,496.

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MANAGEMENT PREROGATIVE

received by, or strictly due to, the recipient.1 If there is no profit, there should be
no bonus. If profit is reduced, bonus should likewise be reduced, absent any
agreement making such bonus part o f the compensation o f the employees.2

2. BON US; W H E N D E M A N D A B L E A N D E N F O R C E A B L E .

While bonus does not form part o f the wage or salary o f the employees, it
becomes demandable and enforceable under any o f the following circumstances:

1) When it is stipulated in an employment contract or CBA;

2) When the grant o f bonus is a company policy or practice;3
3) When it is granted as an additional compensation which the employer
agreed to give without any condition such as success o f business or
more efficient or more productive operation and, thus, must be
deemed part o f wage or salary; hence, demandable.4

It thus becomes a demandable and enforceable obligation only w hen it is

m ade part of the w age or salary or com pensation. When considered as part of
the compensation and, therefore, demandable and enforceable, the amount is
usually fixed. But if the amount o f bonus is depen d en t u pon th e realization of
profits, the bonus is n o t demandable and enforceable.5

3. F O R F E IT U R E O F B O N U S.

It is valid for an employer to establish as policy that once an employee is

found guilty o f an administrative charge, he shall forfeit his bonus in favor o f the
employer. In the case o f Republic Planters Bank v. NLRC,6 the Supreme Court
recognized as valid the forfeiture of the 1988 mid-year and year-end bonus of an
employee who was found guilty o f an administrative charge in 1988, in accordance
with the existing company policy o f the employer.

E.
CHANGE OF WORKING HOURS
1. PR ER O G A TIV E T O C H A N G E W O RK IN G H OU RS.

Employers have the freedom and prerogative, according to their

discretion and best judgment, to regulate and control the time when workers
should report for work and perform their respective functions.7

’ Kamaya Point Hotel v. NLRC, G.R. No. 75289, Aug. 31,1989,177 SCRA160
1 Luzon Stevedoring Corporation v. Court of Industrial Relations, G.R No. L-17411, Dec. 31,1965.
3 Manila Electric Company v. Secretary of Labor, G.R. No. 127598, Jan. 27,1999.
‘ Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Association, G.R. No. L-5276, March 3,1953.
5 Protado v. Laya Mananghaya & Co., G.R No. 168654, March 25,2009.
6 Republic Planters Bank, now known as PNB-Republic Bank v. NLRC, GR. No. 117460, Jan. 6,1997.
7 Philippine Airlines, Inc. v. NLRC, G.R No. 115785, Aug. 4,2000; OSS Security and A!3ed Services, Inc. v. NLRC, G.R No
112752, Feb. 9,2000,325 SCRA 157.

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2. IL L U ST R A T IV E CASES.

(1) Sim Darby Pilipinas, Inc. v. NLRC,1*where it was held that m anagem ent
retains the prerogative to change the w orking hours o f its employees w henever
exigencies o f the service so require.

(2) Manila Jockey Club Employees Labor Union - PTGWO, v. Manila Jockey
Club, Inc.,1w here the validity o f the exercise o f the sam e prerogative to change the
working hours was affirmed in this case. I t was found that while Section 1, A rticle
IV o f the CBA provides for a 7-hour w ork schedule from 9:00 a.m. to 12:00 noon
and from 1:00 p.m. to 5:00 p.m. from M ondays to Saturdays, Secdon 2, A rticle X I
thereof expressly reserves to respondent the prerogative to change existing
methods o r facilities and to change the schedules o f work. Consequently, the
hours o f work o f regular monthly-paid employees w ere changed from die original
9:00 a.m. to 5:00 p.m. schedule to 1:00 p.m . to 8:00 p.m . when horse races are held,
that is, every Tuesday and Thursday. T he 9:00 a.m. to 5:00 p.ra. schedule fo r n o n ­
race days was, however, retained. Respondent, as employer, d ie d the change in the
program o f horse races as reason for the adjustm ent o f the w ork schedule. It
rationalized that when the CBA was signed, the horse races started a t 10:00
a.m. W hen the races were moved to 2:00 p.m ., there was no other choice for
m anagem ent but to change the w ork schedule as there was n o w ork to b e d o n e in
the morning. Evidendy, die adjustm ent in the w ork schedule is justified.

F.
BONA FIDEOCCUPATIONAL QUALIFICATIONS
I.
THE BFOQ RULE

1. C O N C E P T .

O ne o f the m ore touchy issues in th e hiring and retention o f employees is

whether die employer has die prerogative to im pose certain qualifications based on
such criteria as race, sex, age, national origin, civil o r marital status, physical
appearance (such as a requirement on “pleasing personality” o r height and weight)
and the like. T he general rule is that em ploym ent in particular jobs may n o t be
limited to persons that m eet any o f the said qualifications unless the em ployer can
show that the same are actual qualifications fo r perform ing the job. T he
qualification is called a bonajide occupational qualification (BFOQ).3
In the United States, there are a few federal and many state job
discrimination laws that contain an exception allowing an employer to engage in an

» GR No. 119205,AfM915.1998,289 SCRA86.

t GA No. 167760, Marti) 7,2007.
3 Yrasueguv.PtiGppneAsfnes. Cnc^GANo. 168081.Oct 17.2008.dtingBtack%Law[>ctionary.68ied.

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MANAGEMENT PREROGATIVE

otherwise unlawful form o f prohibited discrim ination w hen the action is based o n a
B F O Q necessary to the norm al operation o f a business o r enterprise.1 T o
determ ine if a policy in hiring o r job assignm ent is discrim inatory o r legal, the
policy is examined to ascertain w hether die discrim ination is necessary to the
norm al business operation and w hether th at category denied inclusion is uniquely
unsafe.2 T hus, i f religion, sex, o r national origin can b e show n to be necessary for
die job, then a B F O Q exception can b e made.3

G eneral examples o f B F O Q s are: m andatory retirem ent ages fo r bus

drivers and airplane pilots for safety reasons, churches requiting m em bers o f its
clergy to be o f a certain denom ination and may lawfully bar from em ploym ent
anyone w ho is n o t a m em ber. H ow ever, for positions at a church such as janitors,
discrim ination based o n religious denom ination would be illegal because religion
has no effect on a p erson’s ability to fulfill the duties o f the job. O th e r examples o f
bonafide occupation qualifications include the use o f models an d actors for the
purpose o f authenticity o r genuineness, the requirem ent o f emergency personnel to
be bilingual, judged o n language com petency, not national origin.4

T he concept o f a B F O Q is not foreign in Philippine jurisdiction.5 T here

are certain laws and pieces o f jurisprudence which enunciate B F O Q o r otherwise
recognize the existence o f circum stances similar thereto.

In Yrasnegtd ». PhilippineAirlines, Inc.,6 the C ourt has fully taken cognizance

o f such laws and jurisprudence. T hus, it debunked petitioner’s contention that
B F O Q is a statutory defense and that it does n o t exist if there is n o statute
providing fo r i t In so holding, it cited the following laws w hich contain provisions
similar to B F O Q :

(1) Constitution;7
(2) L abor C ode^ and
(3) R A N o. 7277 o r the Magna CartaforDisabledPersons?

1 U^cSng4SAAiRjur.2d,Jobascnntaftn.§269.
2 The Definitionof the Bona Fide Occupational Qualification BFOQ: When IPs Legal to Discriminateon the Basis of
Sex and Age by Unda NapfosH at (i0|^AinMir.9ioughtooxornA}ona4lete<BOt4MAx>3kitmEIIC8Son-3530827; Last
Accessed: May28,2019.
3 M.
* Id.
5 StarPaper(tap. v.SintooLGR No.164774,Apr! 12,2006.
8 Yrasuegdv.Ph^ppineAirlines.Inc.GJlNo. 168081,0117,2008.
7 Gons&u&n (1987), AitXW,Set 3.TheStatsshaS aftxd M protecfion to ttor, local and overseas, ugartaed and
unagattizBd.andpiDnioleftdeniployinentandequa^oremploynienloppCMlunifesIbraB.xxx
8 ART.3.Deciara5mdBasicPcScy.-TheSlaSshat^^prctecSontolalxy.pnmteMerutoymentensure
opportunities regardlessofsex, raceorcreed, and regulate9ie relafionsbetweenwxtes and employes. The Stalesltal
assurehe rightsofwaters b selkigaifeafion, cotecfivebargaining, securayofterue, andjustandhumaneconditionsof
woric.
8 Apprwed on March 24,1992; See its Sec. 32. Discriminaiion of Empoyment - No entity, wteCie pubfcor prv&e shad
tSscrirrihate against a qua&fieddisabled person reason of (SsabS^ inregard b>job atPPOcaHonprocedures; the hiring.

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T he Court further cited the following relevant cases:

(1) Star PaperCorp. v. Simbol,1 and

(2) Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines,
Inc2
In addition to the foregoing, th e latest R*A. N o. 10911 (July 21, 2016],
otherwise known as the "Anti-Age Discrimination in Employment Act” is another
B FO Q legislation as it expressly prohibits discrim ination against any individual in
employment on account o f age.3

Further, Yrasutgmitself and the earlier case o f F T & T ». N L R C * are g ood

examples o f cases where the Suprem e C ourt had d ie opportunity to discuss th e
B FO Q exception.

2. M E IO R IN T E S T .

Yrasuegmcited the 'Meiorin Test”s as additional justification for die B F O Q

exception. The Supreme Court o f Canada, in one case,6 developed this three-step
test in determining whether an em ploym ent policy is justified. U nder this test, an
employer can justify the impugned standard by establishing o n the balance o f
probabilities:

1. that the employer adopted the standard for a purpose ratio n ally
co n nected to the perform ance o f the job;
2. that the employer adopted the particular standard in an h o n e s t a n d
good faith belief that it was necessary to the fulfilment o f that
legitimate work-related purpose; and
3. that the standard was reaso n ab ly n e c e ss a ry to the accom plishm ent
o f that legitimate work-related purpose. T o show th at the standard is
reasonably necessary, it m ust be dem onstrated th at it is im possible
to acco m m o d ate individual employees sharing die characteristics o f
the claimant without im posing u n d u e h a rd s h ip u p o n the employer.7

Similarly, in Star Paper Corp. v. Simbol, the C ourt held that in o rder to
justify a B FO Q , the employer m ust prove th a t

ptomoGon,ordischargeofemployeescompensation,job(rainingandothertoms, conditionsandpMfegesofemphpent
not
1 StarPapo-Cotp.v. Ssnbd. OR No.164774.Apd12.2006.
2 ftincanAssociationofOetaSman-PTGWOv. GlaxoWefccmePhifppfoes, fnc„GR No.162994,Sept 17,2004.
* *Fhislawwasl36e!yirnptementedbyOOL£DepartmentO(ttefNo.170.Seriesof2017j3Febrtmv02,2017].
4 PtfipfxneT^egrE^andTetephoneCornpanyv.NLRC, GJR. No.118978.May23,1997,272SCRA596,613.

< Brffish Columbia RjMc Service Employee Commission (BSPSERC) v. The BriSsh Columbia Government and
SeiviceEmployee'sUnion(BC6SEU),3SCR3.1939 SCC48

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(1) H ie em ploym ent qualification is re a s o n a b ly related to the essential

operation o f th e job involved; an d

(2) T here is factual basis fo r believing that all o r substantially all persons
m eeting th e qualification w ould b e unable to properly perform the
duties o f the job.1

In short, the te s t o f re a s o n a b le n e s s o f th e c o m p a n y po licy is used

provided it reflects an inherent quality
because it is parallel to B F O Q .23*5B F O Q is valid
reasonably necessaryfor satisfactoryfobperformance. ’* T his is otherwise know n as the
“ R e a so n a b le B u sin e s s N e c e s s ity R u le.”

L
CIVIL STATUS/MARiTAL STATUS QUALIFICATION

1. R E L E V A N T CA SES.

A s far as the qualification o f civil status o r m arital status is concerned, the

following cases are relevant:

(1) PT&T».NLKC*
(2) Duncan Association of DelaHman-PTGWO v. Glaxo Welcome Philippines,
lnc.f and
(3) Star Paper Corp. v. SimboL6
2. T H E P T & T C A SE.

In F T T, the em ployer invoked concealm ent o f civil status as ground to

term inate the private respondent employee. In the job application form that was
furnished the employee, she indicated in the portion for civil status that she was
single although she had contracted marriage a few m onths earlier, that is, o n May
26, 1991. It appears that the employee had m ade the same representation in the
two successive reliever agreements which she signed on June 10,1991 and July 8,
1991. W hen petitioner supposedly learned about the sam e later, its branch
supervisor in Baguio City sent to private respondent a m em orandum dated January
1 5 ,1 9 9 2 requiring h er to explain the discrepancy. In that m em orandum , she was
rem inded about the company’s policy o f n o t accepting m arried w om en fo r
em ploym ent In her reply letter dated January 17,1992, private respondent stated
that she was n o t aware o f P T S cP s policy regarding m a rtia l w om en at the tim e, and
that all along she had n o t deliberately hidden h er true civil status. P etitioner

1 Star PaperCaporafonv. Srrbol, ii at 242-243, d9ngRood, R.G. andCatfl, KA, The Rver BendDecfefanand HowIt
A^M unqt^'Peisonndf^ andRegul^om(June1993)^inoisMur^ Review,p. 7..
2 kU243.
3 Ph^reTetegrapharriTetephoneConpanyv.flRC,supra
< GRNa118978.May23.1997,272SCRA596,605.
5 GR.Na162994.Sepl17.200i
• GR.Na 164774,April12.2006.

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nonetheless remained unconvinced by her explanations. Private respondent was

dismissed from the company effective January 29,1992. T h e Court, in declaring the
dismissal o f respondent illegal, ratiocinated as follows:

“In the case at bar, petitioner's policy o f not accepting or considering as

disqualified from work any woman worker who contracts thartjage runs
afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the Constitution...
Contrary to petitioner's assertion that it dismissed private respondent
from employment on account of her dishonesty, die record discloses
dcady that her ties with the company were dissolved principally because
of the company's policy that married women are not qualified for
employment in PT & T, and not merely because of her supposed acts of
dishonesty.”

3. T H E D U N C A N CASE.

In Duncan, the contract o f em ploym ent expressly prohibited an employee

from having a relationship with an employee o f a com petitor com pany. It
provides:
“10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with co­
employees or employees o f competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign
voluntarily from the Company as a matter o f Company policy.”
The Supreme Court ruled that this stipulation is a valid exercise o f
management prerogative. The prohibition against personal o r marital relationships
with employees o f competitor-com panies upon its employees is reasonable under
the circumstances because relationships o f that nature m ight com prom ise the
interests o f the company. In laying dow n the assailed com pany policy, die em ployer
only aims to protect its interests against the possibility that a com petitor com pany
will gain access to its trade secrets, manufacturing formulas, marketing strategies
and other confidential programs and information.

4. T H E STAR P A P E R CASE.

The employees in Star Paperv/ete terminated on various occasions, o n the

basis o f the following company policy,
“1. New applicants will not be allowed to be hired if in case he/she has [a]
relative, up to (the) 3rd degree of relationship, already employed by the
company.
“2. In case two of our employees (both singles [sic], one male and another
female) developed a friendly relationship during the course of their
employment and then decided to get married, one of them should
resign to preserve the policy stated above.”

According to the employer, said rule is only intended to cany o u t its no-
employment-for-relatives-within-the-third-degree-policy w hich is within the am bit

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o f the prerogatives o f managem ent. T h e S uprem e C ourt, how ever, disagreed. It

ruled that said policy failed to com ply w ith th e standard o f reasonableness w hich is
being followed in o u r jurisdiction.

5. A P P L IC A T IO N O F T H E B F O Q R U L E .

T he requirem ent that a com pany policy m u st b e re a s o n a b le u n d er the

circumstances to qualify as a valid exercise o f m anagem ent prerogative was upheld
in the said 1997 case o f PT & T v. NLRC1 A s p ointed o u t above, the employee
was dismissed in violation o f petitioner’s policy o f disqualifying from w ork any
woman w orker w ho contracts marriage. T h u s, the C o u rt held th a t die com pany
policy violates th e right against discrim ination afforded all w om en w orkers under
Article 136 o f the L abor Code, b u t established a perm issible exception, vi%‘.
“[A] requirement that a woman employee must remain unmarried could
be justified as a *bona fide occupational qualification,' or BFOQ,
where the particular requirements o f the job would justify the same, but
not on the ground of a general principle, such as the desirability o f
spreading work in the workplace. A requirement o f dbat nature would
be valid provided it reflects an inherent quality reasonably necessary
for satisfactory job performance. Thus, in one case, a no-marriage rule
applicable to both male and female flight attendants, was regarded as
unlawful since the restriction was not related to the job performance o f
the-flight attendants.”

In Dunam, th e H igh C o u rt passed o n the validity o f th e policy o f a

pharmaceutical com pany prohibiting its em ployees fro m m arrying em ployees o f
any com petitor com pany. I t held drat G laxo has a right to guard its trade secrets,
m anufacturing formulas, m arketing strategies and o th er confidential program s and
inform ation from com petitors. It considered die prohibition against personal o r
rnantal relationships w ith employees o f com petitor com panies upo n G laxo’s
employees reasonable un d er the circum stances because relationships o f th at nature
might com prom ise the interests o f G laxo. I n laying dow n the assailed com pany
policy, th e C o u rt recognized that G laxo only aim s to p ro tect its interests against the
possibility th a t a com petitor com pany will gain access to its secrets and procedures.

T h e cases o f PT&T and Duncan instruct that the requirem ent o f

re a s o n a b le n e ss m ust be dearly established to uphold th e questioned em ploym ent
policy. T h e em ployer has the burden to pro v e the existence o f a re a s o n a b le
b u sin e ss n ec e ssity . T h e burden was successfully discharged in Duncan b u t n o t in
VT& T.

T h e C ourt thus co n duded in Star Paper Carp, that it did n o t find a

re a so n a b le b u s in e s s n e c e ssity in the policy. Petitioners’ sole contention th at "the
company did n o t just w ant to have tw o (2) o r m o re o f its employees related
between the third degree by affinity a n d /o r consanguinity” is lame. T h a t the

1 GJl No. 118978,May23,1997,272SCRA596,605.

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 8 i8 Bar Reviewer o n Labor U w

second paragraph was m eant to give teeth to the first paragraph o f the questioned
rule is evidently not the valid reasonable b u sin e ss n e c e ss ity required by d ie law.

It is significant to note th at in Star Paper Corp., respondents w ere hired

after they were found fit for the job, but were asked to resign.w hen they m arried a
co-employee. Petitioflers failed to show how the m arriage o f Simbol, then a
Sheeting Machine Operator, to A lm a Dayrit, then an em ployee o f die Repacking
Section, could be detrimental to its business operations. N either did petitioners
explain how this detrim ent will happen in the case o f W ilfreda Comia, then a
Production Helper in the Selecting D epartm ent, w ho m arried H ow ard Comia, then
a helper in die cutter-machine. T h e policy is prem ised o n the m ete fear that
employees married to each other will be less efficient I f the questioned rule is
upheld without valid justification, the employer can create policies based o n an
unproven presumption o f a perceived danger at the expense o f an employee’s right
to security o f tenure.

Peddonets contend that their policy will apply only w hen one employee
marries a co-employee, but they are free to marry persons o th e r than co-employees.
T he questioned policy may not facially violate Article 136 o f the Labor Code b u t it
creates a disproportionate effect and under die disparate im pact theory, the only
way it could pass judicial scrutiny is a showing th at it is reasonable despite the
discriminatory, albeit disproportionate, effect. T he failure o f petitioners to prove a
legitimate business concern in im posing the questioned policy cannot prejudice die
employee’s right to be free from arbitrary discrimination based upon stereotypes o f
married persons working together in one company.

Lasdy, the absence of a statute expressly prohibiting marital

discrimination in our jurisdiction cannot benefit the petitioners. T he protection
given to labor in our jurisdiction is vast and extensive that we cannot prudently
draw inferences from the legislature’s silence th at m arried persons ate not
protected under our C onstitution and declare valid a policy based on a prejudice o r
stereotype. Thus, for failure o f petitioners to present undisputed p ro o f o f a
reaso n ab le b u sin e ss necessity, the C ourt ruled that the questioned policy is an
invalid exercise o f management prerogative.

PHYSICAL APPEARANCE QUALIFICATION

1. T H E Y R A SU E G U I CASE.

The case o f Armando G. Yrasuegui v. Philippine Airlines, Inc.,1 is the m ost

appropriate example o f termination based on B F O Q involving the physical
appearance o r attribute o f an employee which, in this case, is petitioner’s w eight

' Yiasueguv.PMjppineAirfines. Inc..GA No. 168081.Oct 17,2008.

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M A N A G EM EN T PR E R O G A T IV E

Foe several tim es spanning a total period o f five (5) years, petitioner, an
international flight steward o f re sp o n d e n t PAL, w as given the opportunity to
reduce his w eight to die acceptable level in accordance w ith the w eight standards
b u t h e foiled to m easure u p therewith. H e w as thus term inated fo r his continued
obesity. In his illegal dismissal case, o n e o f th e issues raised is w h eth er petitioner's
dismissal fo r obesity can b e predicated on th e B F O Q defense.

Citing Star Paper Corp. and Duncan, the C ourt ruled that B F O Q is a p roper
defense th a t justified petitioner's dism issal grounded o n his obesity. Verily, the
C ourt said, there is no m erit to the argum ent th at B F O Q cannot be applied if it has
n o supporting statute. T o o , the L ab o r A rbiter, N LR C , and CA are on e in holding
that the w eight standards o f PA L are reasonable. A com m on carrier, from the
nature o f its business and for reasons o f public policy, is b o u n d to observe
extraordinary diligence for the safety o f d ie passengers it transports. It is bound to
carry its passengers safely as far as hum an cate and foresight can provide, using the
utm ost diligence o f very cautious persons, with due regard for all the
circum stances.

T h e law leaves no room for m istake o r oversight o n the part o f a

com m on carrier. T hus, it is only logical to hold that the weight standards o f PA L
show its e ffo rt to comply with the exacting obligations im posed u p o n it by law by
virtue o f being a com m on carrier.

T h e business o f PAL is a ir transportation. A s such, it has com m itted itself

to safely transport its passengers. I n o rd e r to achieve this, it m ust necessarily rely
o n its em ployees, m o st particularly th e cabin flight deck crew w ho are o n board the
aircraft. H ie weight standards o f PA L should be viewed as im posing strict norm s
o f discipline upon its employees. In o th e r w ords, the primary objective o f PA L in
d ie im position o f the w eight standards fo r cabin crew is flight safety. It cannot be
gainsaid th a t cabin attendants m u st m aintain agility a t all times in order to inspire
passenger confidence o n their ability to care fo r the passengers w hen som ething
gpes w rong. I t is n o t farfetched to say th a t airline com panies, ju st like all com m on
carders, thrive due to public confidence o n their safety records. People, especially
the tiding public, expect n o less th a t airline com panies transport their passengers to
their respective destinations safely and soundly. A lesser perform ance is
unacceptable.

T h e task o f a cabin crew o r flight attendant is not limited to serving meals

o r attending to the whims and caprices o f die passengers. T he m ost im portant
activity o f th e cabin crew is to care for the safety o f passengers and the evacuation
o f the aircraft w hen an emergency occurs. Passenger safety goes to the core o f the
job o f a cabin atten d an t Truly, airlines need cabin attendants w ho have the
necessary strength to open emergency doors, the agility to attend to passengers in
cram ped w orking conditions, and the stamina to withstand grueling flight
schedules.

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O n board an aircraft, the body weight and size o f a cabin attendant are
important factors to consider in case o f emergency. Aircrafts have constricted
cabin space, and narrow aisles and exit doors. Thus, the argum ents o f respondent
that “[wjhether the airline’s flight attendants are overw eight o r n o t has n o direct
relation to its mission o f transporting passengers to their destination”; and th a t th e
weight standards ‘lia s nothing to d o w ith airworthiness o f respondent’s airlines,”
m ust fail.

AGE QUALIFICATION v

1. A N T I-A G E D IS C R IM IN A T IO N I N E M P L O Y M E N T A C T .

R-A. N o. 10911 [July 21, 2016], otherwise know n as th e "Anti-Age

Discrimination in Employment Act” prohibits discrim ination against any individual in
employment on account o f age. T his law was lately im plem ented by D O L E
Departm ent O rder No. 170, Series o f 2017 [February 02,2017].

a. Coverage.
The law shall apply to all employers, publishers, labor contractors o r
subcontractors, and labor organizations, w hether o r n o t registered.1

b. Pohibidons.
Under this law, the following are the prohibited discrim inatory acts related
to employment on account o f age:

(a) It shall be unlawful fo ra n em p lo y er to:

(1) Print o r publish, o r cause to be printed o r published, in any form

o f media, including the internet, any notice o f advertisem ent
relating to em ploym ent suggesting preferences, limitations,
specifications and discrimination based o n age;
(2) Require the declaration o f age o r birth date during the application
process;
(3) Decline any employment application because o f the individual’s
age;
(4) Discriminate against an individual in term s o f com pensation,
terms and conditions or privileges o f em ploym ent o n account o f
such individual’s age;
(5) Deny any employee’s or w orker's prom otion o r opportunity for
training because o f age;
(6) Forcibly layoff an employee or w orker because o f old age; o r
(7) Im pose early retirem ent on the basis o f such, employee’s or
worker’s age.1

1 Sec6m4,RANa10911;SectiM3,DepartmentOrderN&170,Seriesof2017.

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M A N A G EM EN T PR ER O G A TIV E

(b) I t shall be unlawful fo r a la b o r c o n tra c to r o r su b c o n tra c to r, i f any,

to refuse to refer fo r em ploym ent o r otherw ise discrim inate against
any individual because o f such person’s age.

(c) I t shall be unlaw ful fo r a la b o r o rg a n iz a tio n to:

(1) D eny m em bership to any individual because o f such individual’s

age;
(2) Exclude from its m em bership any individual because o f such
individual’s age; o r
(3) Cause o r attem pt to cause an em ployer to discrim inate against an
individual in violation o f the Rules.

(d) I t shall be unlaw ful fo r a publisher to p rin t o r publish any n otice o f

advertisem ent relating to em ploym ent suggesting preferences,
limitations, specifications, and discrim ination based o n age-2

c. Exceptions.
It shall be lawful for an em ployer to set age limitations in em ploym ent if:

(a) Age is a bona fide occupational qualification (B F O Q ) reasonably

necessary in the norm al operation o f a particular business o r w here die
differentiation is b ased o n reasonable factors o th er th a n age;

(b) T he intent is to observe the term s o f bona fide seniority system that is
not intended to evade th e purpose o f th e Rules.

(c) T he intent is to observe the term s o f a bonafide em ployee retirem ent o r

a voluntary early retirem ent plan consistent w ith th e purpose o f the
Rules; Provided, T h a t such retirem ent o r voluntary retirem ent plan is in
accordance w ith th e L abor C ode, as renum bered, and o th e r related
laws; or

(d) The action is duly certified by the D O L E Secretary after consultation

with the stakeholders in accordance w ith the purpose o f die Rules.

F or purposes o f the foregoing exceptions, an em ployer w ho invokes

die qualifications as provided herein, shall subm it a report p rio r to its
im plem entation to th e D O L E Regional O ffice w hich has jurisdiction
over the workplace. T he subm ission o f the report shall be a
presum ption that th e age limitation is in accordance with the Rules
unless proven otherw ise by the c o u rt

Failure to subm it said report shall give rise to die presum ption that the
employer is not allowed to set age limitation.1

i Setftn5,W.;Sec6on4,W.
* Id.;Id.

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 822 Bar Reviewer o n Labor Law

d. Employment age o f children.

The age requirement in the em ploym ent o f children shall be governed by
R A N o. 9231 and its Implementing Rules and Regulations, Article 138 o f the
Labor Code as renum bered, and o ther applicable laws, rules and regulations.

Upon hiring, the employer may require the child o r the guardian to show
proof o f the child's age for purposes o f compliance w ith minim um employable age
under existing laws.2

G.
POST-EMPLOYMENT RESTRICTIONS

L K IN D S O F P O S T -E M P L O Y M E N T P R O H IB IT IO N S .
The employer, in the exercise o f its prerogative, may insist o n an
agreement w ith die employee for certain prohibitions to take effect after die
termination o f their employer-employee relationship. T h e following stipulations in
an employment contract are illustrative o f the prohibitions normally agreed up o n
by die employer and die employee:
1) N on-C om pete Clause;
2) Confidentiality and N on-D isclosure Clause;
3) Non-Solicitation Clause;
4) N on-Recruitm ent o r Anti-Piracy Clause;
5) Inventions Assignment Clause (Intellectual Property Clause).

I.
NON-COMPETE CLAUSE

L FR EED O M T O CONTRACT.
T he employer and the employee are free to stipulate in an em ploym ent
contract prohibiting the employee w ithin a certain period from and after the
termination o f his employment, from:
(1) starting a similar business, profession o r trade; or
(2) working in an entity that is engaged in a similar business that might
com pete with the employer.

T he non-com pete clause is agreed upon to prevent the possibility that

upon an employee's termination o r resignation, he m ight start a business o r w ork
for a com petitor w ith the full competitive advantage o f knowing and exploiting
confidential and sensitive inform ation, trade secrets, marketing plans,
custom er/client lists, business practices, upcom ing products, etc., w hich he
acquired and gained from his em ploym ent w ith the form er employer. C ontracts

1 Section6, Id,'Section5, W.
2 Sec6on6.DepartmentCWerNo. 170,Seriesof2017.

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 CHAPTER SEVEN 823
m a n a g e m e n t p r e r o g a t iv e

w hich prohibit an employee from engaging in business in com petition w ith the
em ployer are no t necessarily void for being in restraint o f trade.

2. J U R IS P R U D E N C E O N T H E N O N - C O M P E T E C L A U S E .

T h e nature and extent to w hich a non-com pete clause is legally allowed

usually varies from one jurisdiction to another. In th e Philippines, several cases
dating back to as early as 1910 have dealt w ith issues o n die validity o f “ non­
com pete” o r “non-involvem ent” stipulations, also know n as C o v e n a n t N o t to
C o m p e te (C N Q in an em ploym ent c o n tra c t In o rd e r to appreciate the principles
affecting this clause in o u r jurisdiction, the following cases o f significance may be
d te d an d are w orth looking into:

1) Carlos Gsellv. Pedro Koch**

2) Ansehno Femngim v. Carlos Gsellf
3) William Olletidorfv. IraAbrahamson (En Bane),3
4) G. Martini (Ltd.) 0. J. M. Glmserman (En Bane),*
5) Alfonso delCastillo v. Shannon Richmond?
6) RaquelP. Consulia 0. CA, Pomona Philippines, Inc.,6
7) YitsenAir andSea Service Philippines, Inc. v. Villamor?
8) Daisy B. Tin v. PlatinumPlans Philippines, Inc?

T w o (2) cases dealing w ith th e issue o f jurisdiction over breach o f the

non-com pete clause have also been decided by d ie Suprem e C ourt, namely:

1) Dai-Chi ElectronicsManufacturingCorporation v. Hon. Villarmap and

2} Portillo 0. RudojfLiety ha19
3 . IL L U S T R A T IV E C A SE.

T h e m ost significant case that would broadly describe the historical

developm ent as well as illustrate the legal com plications and implications o f a n o n ­
com pete clause is d ie 2007 case o f Daisy B. Tiu 0. Platinum Plans Philippines, Inc,u
w here th e non-com pete clause (called “N on-Involvem ent Provision” in this case)
in the em ploym ent contract stipulates as follows:

“8. NON-INVOLVEMENT PROVISION - The EMPLOYEE

further undertakes that during his/her engagement with EMPLOYER and in

1 GJl No. 4907, Match22,1910.

* OR. Na 10712,Aug. 10.1916.
3 GR No. 13228, Sept 13,1918.
< GR No. L-13699, Nov. 12,1918.
* GR No. 21127, Feb.9,1924.
8 GR No. 145443, March18,2005.
1 GR. No. 154060,Aug. 16.2005.
3 GR.No. 163512,Feb.28,2007.
» GR No. 112940, Nov.21,1994.
» GR No. 196539,Oct 10,2012.
« GR No. 163512, Feb.28,2007.

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 824 Bar Reviewer o n Labor Law

case of separation from tbe Company, whether voluntary or for cause,

he/shc shall not, for the next TWO (2) years thereafter, engage in oc be
involved with any corporation, association or entity, whether direedy or
indireedy, engaged in the same business or belonging to the same pre-need
industry as the EMPLOYER. Any breach of the foregoing provision shall
render the EMPLOYEE liable to the EMPLOYER in tho amount of One
Hundred Thousand Pesos (PI00,000.00) for and as liquidated damages.”

Starting on January 1, 1993, petitioner worked for respondent as Senior

Assistant Vice-President and Territorial Operations Head in charge of its
Hongkong and Asean operations under a 5-year .contract o f employment
containing the afore-quoted clause. O n September 16, 1995, petitioner stopped
reporting for work. In November 1995, she became the Vice-President for Sales of
Professional Pension Plans, Inc., a corporation engaged also in the pre-need
industry. Consequently, respondent sued petitioner for damages before the RTC of
Pasig City. Respondent alleged, among others, that petitioner’s employment with
Professional Pension Plans, Inc. violated the above-quoted non-involvement clause
in her contract of employment. Respondent thus prayed for PlOO.OOO as
compensatory damages; P200,000 as moral damages; P I00,000 as exemplar)'
damages; and 25% of the total amount due plus P i,000 per counsel’s court
appearance, as attorney’s fees.
Petitioner countered that the non-involvement clause was unenforceable
for being against public order or public policy: First, the restraint imposed was
much greater than what was necessary to afford respondent a fair and reasonable
protection. Petitioner contended that the transfer to a rival company was an
accepted practice in the pre-need industry. Since the products sold by the
companies were more or less the same, there was nothing peculiar or unique to
protect. Second, respondent did not invest in petitioner’s training or improvement.
At the time petitioner was recruited, she already possessed the knowledge and
expertise required in the pre-need industry and respondent benefited tremendously
from it Third, a strict application o f the non-involvement clause would amount to a
deprivation of petitioner’s right to engage in the only work she knew.
In upholding the validity o f the non-involvement clause, the trial court
ruled that a contract in restraint o f trade is valid provided that there is a limitation
upon either time or place. In the case o f the pre-need industry, the trial court
found die two-year restriction to be valid and reasonable.
On appeal, the Court of Appeals affirmed the trial court’s ruling. It
reasoned that petitioner entered into the contract on her own will and volition.
Thus, she bound herself to fulfill not only what was expressly stipulated in the
contract, but also all its consequences that were not against good faith, usage, and
law. The appellate court also ruled that the stipulation prohibiting non-
employment for two years was valid and enforceable considering the nature of
respondent’s business.

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 ' C h a pter S even 825
MANAGEMENT PREROGATIVE

In affirming the validity o f the Non-Involvement Clause, die Supreme

Court ratiocinated as follows:
‘Tctitioner avers that the non-involvement clause is offensive to public
policy since the restraint imposed is much greater than what is necessary to
afford respondent a fair and reasonable protection. She adds that since the
products sold in the pre-need industry are more or less the same, the transfer to
a rival company is acceptable. Petitioner also points out that respondent did not
invest in her training or improvement At the time she joined respondent, she
already had the knowledge and expertise required in the pre-need industry.
Finally, petitioner argues that a strict application o: the non-involvement clause
would deprive her of the right to engage in the only work she knows.
“Respondent counters that the validity of a non-involvement clause has
been sustained by die Supreme Court in a long line of cases. It contends that
the inclusion of the two-year non-involvement clause in petitioner’s contract of
employment was reasonable and needed since her job gave her access to the
company’s confidential marketing strategies. Respondent adds that the non-
involvement clause merely enjoined her from engaging in pre-need business
akin to that of respondent’s widiin two years from petitioner’s separation from
respondent. She had not been prohibited from marketing otiier service plans.
“As early as 1916, we already had the occasion to discuss the validity of a
non-involvement clause. In Ferrazzini v. GseJJ,1we said that such clause was
unreasonable restraint of trade and therefore apainst public policy’. In Fcrrtrgini,
the employee was prohibited from engaging in ar.y business or occupation in
the Philippines for a period of five years after the termination of his
employment contract and must first get the written permission of his employer
if he were to do so. The Court ruled that while the stipulation was indeed
limited as to time and space, it was not limited as to trade. Such
prohibition, in effect, forces an employee to leave the Philippines to work
should bis employer refuse to give a written permission.
“In G. Martini, Ltd. v. Glaiserman,23 we also declared a similar
stipulation as void for being an unreasonable restraint of trade. There, the
employee was prohibited from engaging in any business similar to that of his
employer for a period of one year. Since the employee was employed only in
connection with the purchase and export of abaca, among the many businesses
of the employer, the Court considered the restraint too broad since it effectively
prevented .the employee from working in any other business similar to his
employer even if_his employment wasJimited only to one of its multifarious
business activities.
“However, in D el Castillo v. Richmond,1 we upheld a similar
stipulation as legal, reasonable, and not contrary to public policy. In the said
case, the employee was restricted from opening, owning or having any
connection with any other drugstore within a radius of four miles from die
employer’s place of business during the time the employer was operating his

' Anseftio Ferrazzini v. Carlos GseUGR No. 10712, Aug. 10,1916.

2 G Martini (Ud.) v. J. M. Gfessermm, G.R. No. L-13699, Nov. 12,1918 (En Banc).
3 AtfonsoddCakltov.SharmiRSciimond.GRNo^l^Z.Feb.g, 1924.

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 826 Bar. Reviewer o n Labor Law

drugstore. We said that n contract in restraint of trade is valid provided there is

a limitation upon either time or place and die restraint upon one party is not
greater than the protection the other party requires.
“Finally, in Consults v. Court o f Appeals,1 we considered a non­
involvement clause in accordance with Article 1306 of the Civil Code. While
the complainant in that case was an independent agent and ndt an employee,
she was prohibited for one year from engaging directly or indirectly in activities
of other companies that compete with the business of her principal. We noted
therein that the restriction did not prohibit the agent irom engaging in any
other business, or from being connected with any other company, for as long as
the business or company did not compete with the principal’s business.
Further, the prohibiuon applied only for one year after the termination of the
agent’s contract and was therefore a reasonable restriction designed to prevent
acts prejudicial to the employer.
“Conformably then with the aforementioned pronouncements, a
non-involvement clause is not necessarily void for being in restraint of
trade as long as there arc reasonable limitations as to time, trade, and
place.
“In this case, the non-involvement clause has a time limit: two years
from the rime petitioner’s employment with respondent ends. It is also
limited as to trade, since it only prohibits petitioner from engaging in any
pre-need business akin to respondent’s.
“More significandy, since petidoncr was the Senior Assistant Vice-
President and Territorial Operations Head in charge of respondent’s Hongkong
and Ascan operations, she had been privy to confidential and highly sensitive
marketing strategies of respondent’s business. To allow her to engage in a rival
business soon after she leaves would make respondent’s trade secrets
vulnerable especially in a highly competitive marketing environment. In sum,
we find the non-involvement clause not contrary to public welfare and
not greater than is necessary to afford a fair and reasonable protection to
respondent.
“In any event, Article 1306 of the Civil Code provides that parties to a
contract may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they arc not contrary to law, morals, good
customs, public order, or public policy'.
“Article 1159 of the same Code also provides that obligations arising from
contracts have the force of law between die contracting parties and should be
complied with in good faith. Courts cannot stipulate for the parties nor amend
their agreement where the same does not contravene law, morals, good
customs, public order or public policy, for to do so would be to alter the real
intent of the parties, and would run contrary to the function of the courts to
give force and effect thereto. Not being contrary to public policy, the non-
involvement clause, which petitioner and respondent freely agreed upon, has
the force of law between them, and thus, should be complied with in good
faith.

Raquel P. Consults v. CA, PamanaPMpp'res, Inc.. G.R. No. 145443. March 18.2005.

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 CHAtaER. Seven 827
MANAGEMENT PREROGATIVE

“Thus, as held by the trial court and the Court of Appeals, petitioner is
bound to pay respondent P100.000 as liquidated damages. While we have
equitably reduced liquidated damages in certain cases, wc cannot do so in this
case, since it appears that even from the start, petitioner had not shown the
least intention to fulfill the non-involvement clause in good faith.”1

II.
O TH E R P O ST-EM PLO YM EN T PR O H IB IT IO N S

1. C O N F ID E N T IA L IT Y A N D N O N -D IS C L O S U R E CLAUSE.

The confidentiality and non-disclosure clause reflects the commitment o f

the employee that he shall not, either during the period o f his employment with the
employer or at any time thereafter, use or disclose to any person, firm or
corporation any information concerning the business or affairs o f his employment,
for his own benefit or to the detriment o f the employer. This clause may also cover
Form er E m ployer Inform ation and T hird Party Inform ation.

2. N O N -S O L IC IT A T IO N CLAUSE.

To protect the legitimate business interests o f the employer, including its

business relationships, the employee under this clause, may, dirccdy or indireedy,
be prohibited from soliciting or approaching, or accept any business from any
person or entity who shall, at any time within a fixed period preceding the
termination o f his employment, have been (a) a client, talent, producer, designer,
programmer, distributor, merchandiser, or advertiser o f die Company, (b) a party
or prospective party to an agreement with the employer, or (c) a representative or
agent of any client, talent, producer, designer, programmer, distributor,
merchandiser, or advertiser o f the employer for the purpose o f offering to that
person or entity goods or services which are o f the same type as or similar to any
goods or services supplied by the employer at termination.

3. N O N -R E C R U IT M E N T O R A NTI-PIRA CY CLAUSE.

'Hus clause prohibits the recruitment by the employee of personnel or

employees of the employer for a certain period after his termination of
employment, either on his own account or in conjunction with or on behalf o f any
other person.

4. IN V E N T IO N S A S S IG N M E N T CLAUSE (IN T E L L E C T U A L
PR O PER TY CLAUSE).

In industries engaged in research and development and related activities,

this clause requires the employee, within a certain period, to disclose in confidence
to the employer and its subsidiaries and to assign all inventions, improvements,

! Enphasisawjwxjerscoringsuppfed.

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designs, original works of authorship, formulas, processes, compositions o f matter,

computer software programs, databases, mask works and trade secrets, whether or
not patentable, copyrightable or protecrible as trade secrets (collectively, the
“Inventions”), which the employee may solely or joindy conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to practice,
during the period of Iris employment with the employer.

0O0

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Chapter Eight
JURISDICTION AND RELIEFS

T O P IC S PER S Y LLA B U S
VIII.
JURISDICTION AND RELIEFS
A. Labor Arbiter
B. National Labor Relations Commission
C. Judicial review of labor rulings
D. Bureau of Labor Relations
E. National Conciliation and Mediation Board
F. DOLE Regional Directors
G. DOLE Secretary
H. Grievance machinery
I. Voluntary arbitration
J. Prescription of actions
1. Money claims
2. Illegal dismissal
3. Unfair labor practice
4. Offenses under the Labor Code
5. Illegal recruitment

General Table of Jurisdiction

NLRC BLR DOLE VA NCM B
Supreme Court Supreme Court Supreme Court Supreme Court
Rule 45 Rule 45 Rule 45 Rule 45
Court of Appeals Court of Appeals Court of Appeals Court of Appeals
Rule 65 Rule 65 Rule 65 Rule 43
Motion for Motion for Motion for Motion for
Reconsideration Reconsideration Reconsideration Reconsideration
Automatic No appeal or
Appeal to Appeal to Appeal to Elevation to certiorari (NCMB is
NLRC BLR Director DOLE Secretary Voluntary not a quasi-judicial
Arbitrator body)
Med-Arbiter DOLE Director or Grievance 'NCMB Conciliator-
Labor Arbiter or DOLE Regional Med-Arbiter Machinery Mediator
Director

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 830 Bar review er o n Labo r La w

PRELIMINARY CONSIDERATIONS
ON JURISDICTION AND REMEDIES

L E X IS T E N C E O F E M P L O Y E R -E M P L O Y E E R E L A T IO N S H IP .
T he existence o f employer-employee relationship betw een the parties-
lidgants, o r a reasonable causal connection to such relationship1 is a jurisdictionalpre­
requisite for the exercise o f jurisdiction over a labor dispute by the L abor A rbiters2
o r any other labor tribunals.
2. T H E C A U SE O F A C T IO N M U S T A R IS E F R O M T H E E M P L O Y E R -
E M P L O Y E E R E L A T IO N S H IP .
Even if there is employer-employee relationship, if the cause o f action did
not arise o u t o f o r was no t incurred in connection w ith the employer-employee
relationship, Labor Arbiters have n o jurisdiction thereover.3 This is so because not
every dispute between an employer and employee involves m atters that only labor
tribunals like the Labor Arbiters and the N LR C can resolve in the exercise o f their
adjudicatory o r quasi-judicial power. A ctions between employers and employees
where the employer-employee relationship is merely in c id e n ta l are within the
exclusive original jurisdiction o f die regular courts.4
3. R E A SO N A B L E CAUSAL C O N N E C T IO N R U L E .
T he “Reasonable Causal Connection Rule” is a rule to determ ine jurisdiction
between labor courts and regular courts. U nder this rule, if there is a reasonable
causal connection between the claim asserted and the employer-employee relations,
then the case is within the jurisdiction o f labor courts.5 In the absence o f such
nexus, it is the tegular courts that have jurisdiction.5
4. P O W E R T O D E T E R M IN E E M P L O Y M E N T R E L A T IO N S H IP .
U nder labor laws, it is n o t only the L abor A rbiters and the N LR C w ho are
vested with the power to determ ine the existence o f employer-employee
relationship.
T h e D O L E Secretary and the D O L E R e g io n a l D ire c to rs are
possessed o f similar pow er as held in d ie 2012 en baric Resolution in People's
BroadcastingService ». TheSecretary? In
fact, it w as held here that the determ ination by
the D O L E Regional Director and the D O L E Secretary o f the existence o f
employer-employee relationship in th e exercise o f their visitorial and enforcem ent
power under Article 128(b) o f the L abor C ode is to die ex c lu sio n o f th e L a b o r
A rbiter a n d th e N L R C .

' KnownasTreasonableCausa!ConnectionRule.'
2 Afy.AndreaUyv. Bueno,G.RNo. 199119, Match14,2006.
2 Fondocv. NLRC, G. R. No. 116347,Oct 3,1896,262 SCRA632.
4 ViSamaria,Jr.V.CA.GJINo. 165881,Apri 19,2006,tilingEviolav.CA.45504118.129(2003).
2 DaHcfii Electronics ManufacturingCorporationv. VJtarama, Jr. G.R. No. 112940, Nov. 21,1994.
6 SanMgutiCoqporaQonv.BcubaiG.RNo. 127639,Oec.3.1999.
7 Peopte^8roadC3StngServicev.TTwSecretarycit(heOOLE,GJlNo.179652,Martii6i2012.

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 C h a pt er Eig h t 831
JU R I S D I C T I O N A N D R ELIEFS

T h e M e d -A rb ite r h as also th e sam e pow er. M. Y. San Biscuits, Inc. v.

Laguesma? p ro n o u n ced
th a t d ie M ed-A rbiter has th e authority to determ ine die
employer-employee relationship because it is necessary and indispensable in the
exercise o f his jurisdiction. I t is absurd to suggest that th e M ed-A rbiter and
Secretary o f L abor c a n n o t m ake th eir ow n independent finding as to the existence
o f such relationship a n d m u st h av e to rely a n d wait fo r such a determ ination by the
L abor A rbiter o r N L R C in a separate proceeding. F o r then, given a situation .where
there is n o separate com plaint filed w ith th e L abor A rbiter, the M ed-A rbiter a n d /o r
die Secretary o f L ab o r can nev er decide a certification election case o r any labor-
m anagem ent dispute properly b ro u g h t before them as they have no authority to
determ ine the existence o f an em ployer-em ployee relationship. Such a proposition
is, to say die least, anom alous.

T h e S o cial S e c u rity C o m m is s io n (SSC) is also vested w ith this pow er.

In Republic ofthe PhMppints v. Asiapro Cooperative? involving the issue o f coverage o f
ow ners-m em bers o f respondent C ooperative u nder the Social Security System
(SSS), it was held that it is n o t only the L abor A rbiter o r the N LR C w ho/w hich has
the exclusive jurisdiction to determ ine the existence o f the em ployer-employee
relationship. T he Social Security Com m ission (SSC) has also that power.

5. E X C E P T IO N O F O F W C A SE S.

In cases filed by O F W s, th e L abor A rbiters m ay exercise jurisdiction even

absent die em ploym ent relationship. In Santiago ». CFSharp CrewManagement, Inc.? it
was held th a t a seafarer w ho h as already signed a P O E A -approved em ploym ent
contract b u t was n o t deployed overseas and, therefore, there is n o em ployer-
employee relationship, m ay file his m onetary claims case w ith the L abor A rbiter.
This is because the jurisdiction o f L abor A rbiters is n o t limited to claims arising
from employer-employee relationships. U nder Section 10 o f R. A. N o . 8042
(Migjwit Workers and Overseas FilipinosAct of 1995), as amended,4 the L abor A rbiter
may exercise jurisdiction over the claims o f O FW s arising ou t o f an em ployer-
employee relationship o r b y v irtu e o f a n y law o r c o n tra c t involving F ilip in o
w o rk ers f a r o v erseas d e p lo y m e n t including claims fo r actual, moral, exem plary
and o ther form s o f damage.

Santiago w as d te d in th e 2012 case o f Bright Maritime Corporation v.

Fantomal? w here it w as ruled th a t while respondent seafarer cannot be deem ed as

has n o t yet com m enced, nevertheless, petitioners’ act o f preventing respondent *24

' GRNo.95011,4x322,1991.
2 Gft No. 172101,Nov.23,2007.
2 G il No. 162419, Juty 10,2007.
4 Aslatelyamendedby SecGon7 of RA No. 10022 (March 0,2010). But even beforethisamendment this provision
isalreadyembodied In SecGon 10of RA No. 8042.
2 GR. No. f65935, Feb.8,2012.

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 832 Ba r reviewer o n labor law

from leaving and complying with his contract o f em ploym ent1 constitutes breach o f
contract for which petitioner com pany is liable for actual damages to respondent
for the loss o f one-year salary as provided in the contract.2 Additionally, respondent
was awarded moral damages in the am ount o f P30,000.00, exemplary damages o f
P50,000.00 and 10% o f all recoverable am ounts as attorney’s fees.

6. JU R IS D IC T IO N O V E R O F W CASES F IL E D BY H E IR S .

The Labor Arbiters have jurisdiction over cases filed by a non-party to

thee-employer-employee relationship, such as the heies o f an OFW . This was the
ruling in Medline Management, Inc. v. RosHnda? As heirs, the wife and son o f Juliano
Roslinda, the deceased OFW , have the personality to file the claim for death
compensation, reimbursement o f medical expenses, damages and attorney's fees
before die Labor Arbiter o f the NLRC.

7. BARANGAY C O N C IL IA T IO N O F L A B O R D IS P U T E S .
Labor cases are not subject to die conciliation proceedings prescribed
under P.D. N o. 1508 requiring the submission o f disputes before the Barangcg
Lupong Tagapqyapa prior to their filing w ith the court o r o th e r governm ent offices.
Requiring conciliation o f labor disputes before the barangay courts w ould defeat
the very salutary purposes o f the law. Instead o f simplifying labor proceedings
designed at expeditious settlement o r referral to the p ro p er courts o r offices to
decide diem finally, die conciliation o f die issues before the Bamngqjt Lupong
Tagapayapa would only duplicate d ie conciliation proceedings and unduly delay the
disposition o f labor cases.4

A.
. LABOR ARBITER

L O R D E R O F T O P IC A L D IS C U S S IO N .

T he discussion o f this topic is divided into die following sections:

I. JURISDICTION
1. JURISDICTION OVER ULP CASES
2. JURISDICTION OVER ILLEGAL DISMISSAL CASES
3. JURISDICTION OVER MONEY CLAIMS CASES
3-A. JURISDICTION OF LABOR ARBITER VS. DOLE REGIONAL
DIRECTOR
4. JURISDICTION OVER CLAIMS FOR DAMAGES
5. JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS

' Inlhiscase^therewasavafidPOBl-apprevedoonlractbehMeenpeSBonetsandiespondent
2 ThemonthlysmatystipuSstBdinthecontractisUS$670,indusweofallaKanoe.
J 6.R. No. 168715. Sept 15,2010.
4 Montoyav. Escayo,G.R. Nos. 8221M2, March21,1889.171SCRA442.

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 C h a pt er e ig h t 833
JU R IS D IC T IO N A N D R ELIEFS

6. JURISDICTION OVER CASES INVOLVING LEGISLATED WAGE

INCREASES AND WAGE DISTORTION
7. JURISDICTION OVER ENFORCEMENT OR ANNULMENT OF
COMPROMISE AGREEMENTS
8. JURISDICTION OVER EXECUTION AND ENFORCEMENT OF
DECISIONS OF VOLUNTARY ARBITRATORS
9. JURISDICTION OVER CASES OF OVERSEAS FILIPINO WORKERS
(OFWs)
10. OTHER CASES OVER WHICH LABOR ARBITERS HAVE
JURISDICTION
11. OTHER CASES OVER WHICH LABOR ARBITERS HAVE NO
JURISDICTION
II. REQUIREMENTS TO PERFECT APPEAL TO NLRC
III. REINSTATEMENT PENDING APPEAL
IV. REVERSAL OF LABOR ARBITER'S REINSTATEMENT ORDER BY NLRC
OR HIGHER COURTS
1. ROQUERO DOCTRINE
2. GENUINO DOCTRINE
3. GARCIA DOCTRINE

I.
JURISDICTION

1. V A R IO U S P O W E R S O F T H E L A B O R A R B IT E R S .
T h e L abor A rbiter is a n official in the Regional A rbitration B ranch o f the
N ational Labor Relations Com m ission (NLRC) w h o hears an d decides cases falling
under his original and exclusive jurisdiction as provided by law.
Besides their adjudicatory po w er to hear and decide cases over w hich they
have jurisdiction, the L abor A rbiters have (1) c o n te m p t po w er,1 and (2) p o w e r to
c o n d u c t o c u la r in sp e c tio n .2 Previously, drey a te also possessed o f injunctive
power.3 T his g ra n t o f injunctive pow er; how ever, was deleted in recen t NLRC
Rules.4 T h e L abor A rbiter thus has n o m o re injunctive power.5 Only the
Com m ission (NLRC) has th at power.5

1 Atfcte218(d),asamendedbyRANo.6715,March21t1969;SecSon1,Riie(X2011tiRCf^o(Procedure;Sec8on
1, R^XXIII, BookV, Rules toImpfemertlheLalxyCode, as amendedbyDepartmentOrderNo. Seriesof2003,
(Feb. 17.20031
7 Arfcte219oftie LaborCode.
1 Under the 1990NettRjtesdPw»e4ireoflhetfLRC, LaborArt)^arcexpressVgrantedt»powtoissuei#c6onh
onfiwycases.(SeeSectiont. RideXIthereof).
4 Thesaidprovisioniri the 1990NLRCF?u1eslsnolcxigerfioundtnte2002,2005and2011 versions.
5 Asconfirmedh Lafvntilv. Mayor,AC. No. 7430, Feb. 15,2012.
6 UnderAnide218(e), LaborCode.

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 834 Ba r review er o n Labor law

2. O R IG IN A L A N D E X C L U S IV E JU R IS D IC T IO N .

T he jurisdiction conferred by Article 224 [217] upon the L abor A rbiters is

both orignal and exclusive. This m eans that as a general rule, n o o ther officers o r
tribunals can take cognizance of, o r hear and decide, any ^of die cases therein
enumerated.

3. E X C E P T IO N S .

T he following are the exceptions to die exercise o f original and exclusive

jurisdiction o f Labor Arbiters:

1. W hen the D O L E Secretary o r th e President exercises his p ow er under

Article 278(g) [263(g)] o f the Labor C ode to assume jurisdiction over
nationalinterest casesand decide them himself.

2. When the NLRC exercises its pow er o f com pulsory arbitration over
similar national interest cases that are certified to it by the D O L E
Secretary pursuant to the exercise by the latter o f his certification
power under the same Article 278(g) [263(g)].

3. When cases arise from the interpretation o r im plem entation o f

collective bargaining agreem ents and from die interpretation o r
enforcem ent o f com pany personnel policies w hich shall b e disposed
o f by the Labor A rbiter by referring the same to the grievance
machinery and voluntary arbitration, as may be provided in said
agreements.1

4. When the parties agree to subm it the case to voluntary arbitration

before a Voluntary A rbitrator o r panel o f Voluntary A rbitrators who,
under Articles 274 [261] and 275 [262] o f the L abor C ode, are also
possessed o f original and exclusive jurisdiction to heat a n d decide
cases mutually subm itted to them by the parties for arbitration and
adjudication.

H ie Labor Arbiters do n o t have jurisdiction over the cases m entioned

above which are taken cognizance o f by said o ther labor officials o r tribunals under
specific provirions o f the Labor Code.

4. LAWS C O N F E R R IN G JU R IS D IC T IO N O N L A B O R A R B IT E R S .

T he following laws grant original and exclusive jurisdiction to L abor

Arbiters:

U n d e r th e L a b o r Code;

t) Article 224 [217];*

1 Seeparagraph{4 Arficle224(217], LaborCode;Secfionl, RuleV, 2011NLRCRulesofProcedure.

1 AsamendedbyRA.Na 6715(Math21,1989].

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 C h a pt e r Eig h t 835
JU R I S D I C T I O N A N D RELIEFS

2) A rticle 124;1
3) A rticle 128(b);2
4) A rticle 233 [227];
5) A rticle 276 [262-A] ^ an d

UpdejLQjherJaffi
6) Section 10 o f R A . N o . 8042,4 as am ended by R A . N o. 10022.5

5. R U N D O W N O F C A SE S.

M ore particularly, L a b o r A rbiters shall have original a n d exclusive

jurisdiction to hear and decide the following cases involving all w orkers, w hether
agricultural o r non-agricultural:

1. U n d e r A rticle 224 l[217] o f th e L a b o r C ode;

(a) U nfair labor practice cases;
(b) T erm ination disputes;
(c) I f accom panied w ith a claim for reinstatem ent, those cases that
w orkers may file involving wages, cates o f pay, hours o f w ork and
o th er term s and conditions o f employment;
(d) Claims for actual, m oral, exemplary and other form s o f dam ages
arising from em ployer-em ployee relations;
(e) Cases arising fro m any violation o f Article 279 [264] o f th e L abor
C ode, as am ended, including questions involving the legality o f
strikes and lockouts;
(f) Except claims fo r employees com pensation, social security,
PhilHealth (Medicare) and maternity benefits, all o th e r claims
arising from em ployer-em ployee relations, including those o f
persons in dom estic o r household service, involving a n am ount
exceeding Five T housand Pesos (P5,000.00), w hether o r n o t
accom panied w ith a claim fo r reinstatem ent

2. U n d e r A rticle 124 o f th e L a b o r C o d e . a s a m e n d e d b v R .A . N o .
6727;

• D isputes involving legislated wage increases and m g distortion in

unorganized establishm ents n o t voluntarily settled by the parties
pursuant to R A . N o . 6727.6

1 AsamendtebyRAhh6727pim 9,1^invoi^i^(feiorto(2ses inunorganizedesisUshments.

2 AsamehdedbyRANa7730pUre2l1994linw*iingcnntetedcasesunto^
3 AshcaporatedbySecfion26,RA.No.6715ptech21,198^.
4 OThav^lnovmas^MgranJWatersaridOvefseasFBpi»sAao(19%.‘
s March8,2010.

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 836 Bar Reviewer o n Labor Law

3. U n d e r A rticle 128(b) o f th e L a b o r C o d e , a s a m e n d e d by R.A, N o .

7730;

• Confuted cases under the exception clause in Article 128(b) o f the

Labor Code.
4. U n d e r A rticle 233 (227) o f th e L a b o r C o d e;

• Enforcem ent o f compromise agreements w hen there is non-com pliance

by any o f the parties thereto, pursuant to Article 233 [227] o f the
Labor Code.

5. U pdgt-^ttjgl.e.2J6.[262-A ]oi th < L U b o t- M e ;

• Issuance o f writ of execution to enforce decisions o f Voluntary

Arbitrators o r panel o f Voluntary A rbitrators, in case o f their absence
o r incapacity, for any reason.1

6. U n d e r Section 10 o f R.A. N o . 8042. as. a m e n d e d b v R.A. N o .

10222:
• Money claims arising out o f employer-employee relationship o r by
virtue o f any law o r contract, involving Filipino workers for overseas
deployment, including claims for death and disability benefits and for
actual, moral, exemplary and o th e r form s o f damages as provided by
R.A. N o. 8042, as amended.2
7. O th e r ca se s a s m ay b e p ro v id e d b y law .3
All die foregoing shall be discussed hereunder in seriatim.

1.
JURISDICTION OVER ULP CASES

L L IM IT A T IO N S O N E X E R C IS E O F J U R IS D IC T IO N O V E R U L P .

U nder Article 258 [247], a ULP act has two (2) aspects: the civil and
criminalaspects. T he Labor Arbiters have jurisdiction only on its civil aspect which
may include claims for actual, moral, exemplary and o ther forms o f damages,
attorney’s fees and other affirmative reliefs. It m ust be noted that recovery o f civil

1 ThelastparagraphofAitoe 2?6|252-A)cftttelabor CodeenfiUed**Pmoedures' (xcNides:*1^)00 mocionof anyinterested

pa^, ^eV(Ar^AiMratorap^cfVQUntaiyAM^a!hel^Ait&nlhe regionRteeihemovantresides, in
caseof8» absenceoritapactyof fte VoluntaryAiWratora panelof voluntaryAithabs. far^nyreason, mayissuea
wfcofexecuSonrequringeitherhe sheii ofhe Commissionorregularcourtsor anypubicofficialwhomtie partiesmay
de^snatainthesubcnissianasreerneRttQexecutethefingdcfecison.orderorawvd.*
* Secfcn10ofRA No.8042,asamendedbyRA No. 10022.
) SeeSe^1.RjteV.2011NLi?C RulesofProcedure.

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 C ha pter . Eig h t 837
JU R IS D IC T IO N A N D R ELIEFS

liability in die administrative proceeding before th e L abor A rbiters bars recovery

u n d er the G vil Code.1

L abor A rbiters have n o jurisdiction over the criminal aspect o f ULP. T h e

crim inal aspect is properly cognizable by th e regular courts. H ow ever, it is a p re­
requisite that n o criminal prosecution for U LP m ay be instituted w ithout a final
judgm ent finding that U L P w as com m itted having been first obtained in th e
administrative proceedings before th e L abor A rbiter. D uring the pendency o f th e
administrative proceedings before th e L abor A rbiter, th e tunning o f th e
prescriptive period for the crim inal offense is interrupted. T h e final judgm ent in th e
adm inistrative proceedings before die L ab o r A rbiter will neither be binding in the
crim inal case n o r will it be considered as evidence o f guilt o f the accused in th e
crim inal case. Its sole probative value is to prove com pliance w ith d ie said p re­
requisite before the corresponding criminal action m ay be instituted in the regular
courts.2

2. J U R IS D IC T IO N O V E R V IO L A T IO N S O F C BA .

T h e L abor A rbiters have n o jurisdiction 07er sim p le violation o f the

CBA. Such violation is now considered simply a grievable issue to be adjudicated
through th e grievance m achinery in the CBA. B ut w h en die violation o f th e CBA is
g ro s s in character, it is considered U LP, hence, falling under the jurisdiction o f die
L abor Arbiter.

A ccording to die Suprem e C ourt in Silva p. I'JLR.C? fo r U LP cases to b e

cognizable by the Labor A rbiters, and for the N LRC to exercise its appellate
jurisdiction thereover, the allegations in the com plaint should show primafade th e
concurrence o f tw o (2) requisites, namely:

(1) G ross violation o f the CBA; and

(2) T he violation pertains to the economicprovisions o f the CBA.
I t is clear therefore that if the violation o f die CBA is n o t gross in
character or, even if gross, if the same does n o t relate to the economic provisions
th e re o f the jurisdiction to hear and decide it is vested w ith the grievance machinery
under A rticle 273 [260] o r w ith the V oluntary A rbitrators or Panel o f V oluntary
A rbitrators under Article 274 [261].

Following the ruling in Silva, it was held in San Miguel Foods, Inc. ». San
Miguel Corporation Employees Union-FJWGO* that the Labor A rbiter has n o
jurisdiction to decide the issue o f w hether the grievance machinery was violated by
the petitioner company. T he grievance machinery provision in the CBA is no t an

1 Article258P47), LaborCode.
1 kid.
* G.R No. 110226,June19.1997,274 SCRA159.
* GR No. 168569,Oct 5,2007.

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 838 Bar Reviewer o n labor Law

economic provision, hence, the second requisite for a Labor Arbiter to exercise
jurisdiction over ULP is not present.

However, a different ruling was made in the same San Miguel Foods case on
the issue of violation of the job security provision o f the CBA, specifically the
seniority rule therein provided. The union charged the employer (SMFI) for ULP
because it lias “appointed less senior employees to positions at its Finance
Department, consequently intentionally bypassing more senior employees who are
deserving of said appointment.” The Supreme Court, following a liberal
construction of Article 274 [261] o f die Labor Code, held that the job security issue
is economic in nature since the seniority rule in the promotion o f employees has a
bearing on salaries and benefits. Hence, it may not be seriously disputed diat the
afore-said charge is a gross or flagrant violation of the seniority rule under die
CBA, a ULP act over which the Labor Arbiter has jurisdiction.

3. JU R ISD ICTIO N OVER ULP CASES FILED BY A U N IO N M E M B E R

AGAINST HIS U N IO N .

In the 2016 case of Allan M. Mendoza v. Officers of Manila Water Employees

Union (MWEU),1 it was held that the Labor Arbiter has jurisdiction over
petitioner’s complaint for ULP which he lodged against his union based on his two
(2) successive suspensions for 30 days each for his first 2 offenses, and subsequent
expulsion, for lus 3rd offense - all involving his non-payment o f his union dues as a
member of respondents’ union. The Court ruled that the nature of petitioner’s
cause of action is not that of an “inter/intra-union dispute”; the respondent union
officers, by their act of twice suspending petitioner and subsequendy expelling him
from membership therewith, without affording him the right to appeal under the
union’s constitution and by-laws, “are guilty7 o f unfair labor practices under Article
260 [249] (a) and (b) - that is, violation of petitioner's right to self-organization,
unlawful discrimination, and illegal termination o f his union membership - which
case falls within die original and exclusive jurisdiction o f the Labor Arbiters, in
accordance with Article 224 [217] of the Labor Code.”

2.
JURISDICTION OVER ILLEGAL DISMISSAL CASES

1. LABOR OFFICIALS W HO MAY TAKE C O G N IZ A N C E O F

TER M IN A T IO N DISPUTES.

An examination of the Labor Code shows that the following officials have
die power to take cognizance of termination disputes in the exercise of their
respective original and exclusive jurisdictions:

« G.R No. 201595, Jan 25 2015.

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 C hapter . Eig h t 839
JURISDICTION AND RELIEFS

1) Labor Arbiters;1
2) Voluntary Arbitrators or panel o f Voluntary Arbitrators;2
3) The D O L E Secretary, in the exercise o f his assumption power in
national interest cases;34or
4) The NLRC, in national interest cases certified to it for compulsory
arbitration by the D O L E Secretary/

2. SO M E P R IN C IP L E S .

• The validity o f the exercise o f jurisdiction by Labor Arbiters over illegal

dismissal cases is not dependent on the kind or nature o f the ground cited in
support of the dismissal; hence, whether the dismissal is for just cause or
authorized cause, it is o f no consequence.5
• In case of conflict of jurisdiction betw een L abor A rbiter a n d the
Voluntary A rbitrator over termination cases, the former’s jurisdiction shall
prevail for the following reasons:
(1) Termination o f employment is not a grievable issue that must be
submitted to the grievance machinery or voluntary arbitration for
adjudication.6 The jurisdiction thereover remains within the original and
exclusive ambit o f the Labor Arbiter and not o f the Voluntary Arbitrator.7
(2) Even if the CBA provides that termination disputes arc grievable, the
same is merely discretionary on the part of the parties thereto.8
(3) Once there is actual termination, jurisdiction is conferred upon Labor
Arbiters by operation o f law.9*
(4) Interpretation o f CBA and enforcement o f company personnel policies
are merely corollary to an illegal dismissal case.13
(5) Article 224 [217] is deemed written into the CBA being an intrinsic part
thereof.11
(6) The Labor Code, in its Article 292(b) [277(b)],12 grants the right to the
dismissed employee to contest his termination with the Labor Arbiter.
(7) Estoppel confers jurisdiction on Labor Arbiters.1

1 Under paragraph [a] (2) of Article 224 p i 7],

7 Under Articles 274 [261] and 275 [262).
3 Under paragraph [g] of Article 278 [263], he may take cognizance of termhation deputes that are included or subsumed in
the case/s ever which he has assumed jurisdiction.
4 Id.; Such certified cases may indude or subsume the issue of termination of employment fie legality of which the NLRC may
validly decide upon.
5 C. Alcantara & Sons, Inc. v. CA, G.R. Nos. 155109,155135 & 179220, SepL 29,2010.
6 Navarro III v. Damasco, G.R. No. 101875, July 14,1995.
' Manejav. NLRC, G it No. 124013, June 5,1998,290 SCRA 603.
8 San NSguel Corporation v. NLRC, G R No. 108001, March 15,1996.
5 Atlas Farms, he. v. NLRC, G R No. 142244, Nov. 18,2002.
,0 Manejav.NLRC,supra.
” Landtex Industries v. CA.G.R. No. 150278. Aug. 9.2007; San Mguel Corporation v. NLRC, supra.
12 This is trie provision of the Labor Code on procedural due process, now known as 'satutory due process.'

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 840 Ba r R e v ie w e r o n La b o r La w

(8) H ie phrase "all other labor disputes” in Article 275 [262]2 does not
automatically confer jurisdiction on Voluntary Arbitrators.3
(9) The State policy of promoting voluntary arbitration does not foreclose
filing of termination case with Labor Arbiter.4
(10) Failure o f the employer to activate grievance* machinery confers
jurisdiction on Labor Arbiters.5
• In other words, a Voluntary Arbitrator will only have jurisdiction over illegal
dismissal cases when there is express ag reem en t o f die parties in the CBA,
Le., die employer and the bargaining agent, to submit die termination case to
voluntary arbitration. Absent die mutual express agreement o f die parties,
Voluntary Arbitrator cannot acquire jurisdiction over termination cases.6 This
was the consistent holding o f the Supreme Court in the cases o f Negros Metal
Gup. v. hrncyo} Landtex Industries v. CA? Atlas Farms, he. v. N L R C 9 and San
Miguel Corporation v. NLRC10 In all these cases, die Supreme Court has
categorically declared that termination cases fall under the original and
exclusive jurisdiction of Labor Arbiters and not o f Voluntary Arbitrators . u
• The express agreem ent must be stated in the CBA or, in its absence, there
must be enough evidence on record unmistakably showing that the parties
have agreed to resort to voluntary arbitration.12

3.
JURISDICTION OVER MONEY CLAIMS CASES

1. CLASSIFICATION O F M O N E Y CLAIMS.

Money claims falling within the original and extlusive jurisdiction o f the
Labor Arbiters may be classified as follows:

1) Any money claim, regardless o f amount, accompanied with a claim for

reinstatement, or

< Lanfehdustiesv.CA, supra.

* ArtSde275 [282). Juistfcfion Over OtherLabor Disputes. - The VoluntafyAiblrator or Panel of VotuntaiyArbSrators, upon
agreement of(hepartes, shallalso hearanddecidesOother labordsputesinducing unfairlaborpracSoesand bespaining
J.-Ji. -A—

> Werov.CA,6ilNo. 138938,Oct24,2000,344SCRA268,281.

< NaaroHiv.Damasco,supra.
5 Alas Fans, he. v.NLRC.supra.
« Manejav.MRC,supra; PantraicoNothExpress, he. v. NLRC,GRNo. 95340,July24,1996.
7 OR. No. 18G557.Aug.25.
s GR No. 150278.Aug.9,2007.
9 GR No. 142244,Nov. 18,2002.
M G A N a 108001,Mach 15.1996.255SCRA 133.
" Univeisfyof file fcixnacutate ConoepSon v. NLRCand Teodora Axalan, GiR. No. 181146, Jan. 26,2011.
0 tt

J9JC9B0M
 cha pter Ei g h t 841
JURISDICTION A N D RELIEFS

2) Any money claim, regardless o f whether accompanied with a claim for

reinstatement, exceeding the amount o f five thousand pesos
(P5,000.00) per claimant.

The money claim in N o . 1 above presupposes that it proceeds from a

termination case, it being accompanied w ith a claim fo r reinstatement Hence, it
falls within die jurisdiction o f the Labor A rbiter since it is principally a termination
dispute

The money claim in N o . 2 above does n o t necessarily arise from or

involve a termination case but because the am ount exceeds P5.000.00, it falls within
die jurisdiction o f die Labor Arbiter. I f die am ount does not exceed P5,000.00, it
is die Regional D irector o f die Departm ent o f Labor and Employment o r his duly
authorized heating officers who have jurisdiction to take cognizance thereof.1

2. LABOR A R B IT E R VS. V O L U N T A R Y A R B IT R A T O R I N M O N E Y
CLAIMS CASES.

The original and exclusive jurisdiction o f the Labor Arbiters under Article
224(c) [217(c)], over cases for money claims is lim ited only to those arising from
statutes or contracts o th er th a n a C B A T h e Voluntary Arbitrators, under Article
274 [261],2 have original and exdusive jurisdiction over money claims “arising
from die interpretation or im plem entation o f th e CBA and, those arising
from the interpretation o r enforcem ent o f co m pany perso n n el policies.”

SanJose». NLRC,1 ruled that it was correct for die NLRC to hold that the
Labor Arbiter has no jurisdiction to hear and decide the employee’s money claims
(underpayment o f retirement benefits), as the controversy between die parties
involved an issue “arisingfrom the interpretation or implementation”o( a provision o f the
CBA. The Voluntary Arbitrator o r panel o f Voluntary Arbitrators has original and
exclusive jurisdiction over this controversy under Article 274 [261] o f the Labor
Code, and not die Labor Arbiter.

Gting San Jose on the distinction between the jurisdiction o f the Labor
Arbiters and the Voluntary Arbitrators, die Supreme Court, in DelMonte Philippines,
Inc. v. Saldivar,* ruled that the Labor Arbiter in die instant case could not properly
pass judgment on the money claim cited as cross-claim by petitioner against the
union (Association Labor Union [ALU]) since it is a money claim arising from the
CBA, hence, the Voluntary Arbitrator has jurisdiction to resolve the same.

' Article 129, labor Code; Briad Agio Development Corporation v .d ela Serna, G R No. 82805, Nov. 9,1989,179 SCRA
269;Brt*ensNreMen»ial Hospital hc.v.M hrstarofU toand Bnploym ert,G RNa 74621, ftb .7 ,1990.
* Ai5ds274 E261].Juris(&&xiorVbtuntaiyArt)&raSnsorPanelGrVokm&yAd}2rakxs.
9 San Josev. NLRC, G R No. 121227, Aug. 17,1998.
< G R No. 158620, Oct 11,2006.

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 842 bar Re v ie w e r o n La b o r La w

3. SOME PRIN CIPLES O N JU R IS D IC T IO N O V iR M O N E Y CLAIMS.

• Money claims must arise out o f employer-employee relationship.1 If not,

jurisdiction is with the regular courts.2
• Award o f statutory benefits even if not prayed for s valid.3
• The money claims lodged by an employee are not to be properly offset by his
unpaid subscription of stocks.4
• Claim for n o t a r i a l fees by a lawyer employed bp a company is within the
jurisdiction o f the Labor Arbiter.5

3*A.
JURISDICTION OF LABOR ARBITER VS. DOLE REGIONAL DIRECTOR

L INTERPLAY OF JURISDICTION.
There are certain issues and cases where die jurisdiction o f die Labor
Arbiter appears to be in conflict with o r closely related to the jurisdiction o f the
D OLE Regional Director. A discussion therefore o f the jurisdictional interplay
between these two labor authorities is in order.

2. SMALL MONEY CLAIMS UNDER ARTICLE 129.

Under Article 129 o f the Labor Code, it is the D O L E Regional Directors
or the duly authorized hearing officer, who are empowered, in a summary
proceeding, to hear and decide small money claims that does no t exceed P5,000.00,
including legal interest, provided the following requisites concur

1) The claim must arise from employer-employee relationship;

2) The claimant does not seek reinstatement; and
3) The aggregate money claim o f each employee does not exceed
P5,000.00.6

I f the claimant claims reinstatement, then the case is not considered a

purely money claim but an illegal dismissal case. The reason is that reinstatement as
a remedy can only be claimed in an illegal dismissal case. If the total amount of
claim exceeds P5,000.00, the Labor Arbiter has jurisdiction thereover.

3. V1SITORIAL AND E N F O R C E M E N T PO W ER U N D E R A RTIC LE 128.

Article 128 o f die Labor Code grants to the D OLE Regional Director, as
the authorized representative o f the DOLE Secretary, the power to conduct

1 San Migud Corporationv.NLRC, 161SGRA719.

2 LapandayAgricuaura) OevelopmentCoiporaSon v. CA. GJ%. No. 112139, Jan. 31,2000.
3 OstasAcariemyv. DOLE,G R Nos. 832S7-58,Dec 21,1990,192SCRA 612.
4 Apodacav. t&RC, G A N a 80039, April 18,1989,172 SCRA442.
5 Air MaterialW ngSavif^ and UmAssodaSon, Inc. v.N LR C ,G R N a 111070, June 30.1994.
6 M. R anter Indastriesv. Seaway ofLaba and Emptoymert.GR No. 89894,Jan. 3,1997.

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 C h a p t e r Ei g h t 843
JURISDICTION AND RELIEFS

inspection o f establishments to determine compliance with labor laws, rules and

regulations. The labor inspectors shall have access co employer’s records and
premises at any time o f the day or night whenever work is being undertaken
therein, and the right to copy therefrom, to question any employee and investigate
any fact, condition o r matter which may be necessary to determine violations or
which may aid in the enforcement o f this Code and o f any labor law, wage order o r
rules and regulations issued pursuant thereto.

Before the visitorial and enforcement power may be exercised, die

following requisites should concur.

(1) The employer-employee relationship should still exist;

(2) The findings in question were made in die course o f inspection by
labor inspectors;1and
(3) The employees have not yet initiated any claim o r complaint w ith the
D O L E Regional Director under Article 129, o r die Labor Arbiter
under Article 224 [217). T he reason is i f an action has already been
filed under Article 129 (small money claims o f P5,000.00 or less) o r
before the Labor Arbiter under Article 224 [217], the D O L E
Regional Director can no longer exercise jurisdiction thereover.

4. JURISDICTION OVER CONTESTED CASES UNDER THE

EXCEPTION CLAUSE IN ARTICLE 128(b).
Paragraph (b) o f Article 1282 is a very controversial provision which must
be discussed in connection with the jurisdiction o f the Labor Arbiters. The
provision itself expressly acknowledges the conflict o f jurisdiction. Thus, the
opening sentence o f paragraph (b) pertinendy states:

“(b) Notwithstanding the provisions of Articles 1293 and

224 [217)4 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, die Secretary of Labor
and Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings
of labor employment and enforcement officers or industrial safety
engineers made in die course of inspection. The Secretary or his duly
authorized representatives shall issue writs 0: execution to the
appropriate authority for (he enforcement of their orders, EXCEPT]^
ga«8-wfagte. .fos-cmployw Jab o r
empioym^t.antLsnfolSement.Q j t e .^ j ^ s^jiMM^^ppoqc^

' Ri^eiTtng tothelabevernploymenlaitoenfptceinentodioefsorlRdustrialsafie^en^neeisvvhoaretaskedtoinspectdie

estabfchmerts under Artcle 128 of t « LaborCote.
i Afterts amendmentby HA. Na 7730 (June 2,199q
* Aiich129-Recov«iy(tfWages, S n fte Money Claims and OBierBendlh.
4 AflSdo 224 (2171 - JurisdicOon of ttte LsborAibitots and the Cotmiis^on.

J9JC9B0M
 844 Bar Reviewer on Labor Law

by documentary proofs which were not considered in the course

o f in sp e c tio n .”1

'H ie a b o v e h ig h lig h te d p o r tio n o f A rtic le 128(b) p r o v id in g f o r th e

e x c e p tio n g ra n ts ju risd ic tio n to L a b o r A r b ite rs o v e r c o n te s te d cases fa llin g
th e re u n d e r.

In in te rp re tin g th e a f o re -q u o te d p r o v is io n o f th e e x c e p tio n c la u s e , th re e
(3) e le m e n ts m u s t c o n c u r to d iv e s t th e R e g io n a l D ir e c to r s o r th e ir re p re s e n ta tiv e s
o f ju risd ictio n th e re u n d e r, to wit.

(a) T h a t th e e m p lo y e r c o n te s ts th e fin d in g s o f th e la b o r in s p e c to r a n d
raises issu es th e re o n ;
(b) T h a t in o r d e r to re s o lv e su c h iss u e s, th e re is a n e e d to e x a m in e
ev id e n tia ry m atte rs; a n d
(c) T h a t such m a tte rs a re not v e rifia b le in th e n o rm a l co u rse of
m s p e c tio n .2

R esu ltan tly , if th e said e le m e n ts a re p r e s e n t a n d th e r e fo r e th e la b o r

sta n d a rd s case is c o v e re d by said exception clause, th e n th e R e g io n a l D ir e c to r w ill
h a v e to e n d o rs e th e c ase to th e L a b o r A r b ite rs o f th e N L R C .34

T h e case o f Meteoro v. Creative Creatures, lnc.,A b e s t illu stra te s th e a p p lic a tio n

o f th e e x c e p tio n clau se. H e re , it w a s h eld th a t th e C o u r t o f A p p e a ls a p tly a p p lie d
th e “e x c e p tio n cla u se ” b eca u se a t th e e a rlie st o p p o r tu n ity , r e s p o n d e n t c o m p a n y
re g iste re d its o b je c tio n to th e fin d in g s o f th e la b o r in s p e c to r o n th e g r o u n d th a t
th e re w as n o e m p lo y e r-e m p lo y e e re la tio n s h ip b e tw e e n p e titio n e r s a n d r e s p o n d e n t
c o m p a n y . T h e la b o r in sp e c to r, in fa c t, n o te d in h is r e p o r t th a t " r e s p o n d e n t a lle g e d
th a t p e titio n e rs w e re c o n tra c tu a l w o rk e rs a n d / o r in d e p e n d e n t a n d ta le n t w o r k e rs
w ith o u t c o n tro l o r s u p e rv is io n and a ls o s u p p lie d w ith to o ls and a p p a r a tu s
p e rta in in g to th e ir jo b ." In its p o s itio n p a p e r , r e s p o n d e n t a g a in in s is te d th a t
p e titio n e rs w e re n o t its em p lo y e e s. I t th e n q u e s tio n e d th e R e g io n a l D i r e c to r ’s
ju ris d ic tio n to e n te rta in th e m a tte r b e f o re it, p rim a rily b e c a u s e o f th e a b s e n c e o f a n
e m p lo y e r-e m p lo y e e re la tio n sh ip . F in ally , it ra ise d th e s a m e a r g u m e n ts b e f o r e t h e
S e c re ta ry o f L a b o r a n d th e a p p e lla te c o u rt. I t is, th e r e f o r e , c le a r th a t r e s p o n d e n t
c o n te s te d a n d c o n tin u e s to c o n te s t th e fin d in g s a n d c o n c lu s io n s o f th e la b o r
in sp e c to r. T o reso lv e th e issu e ra ise d b y r e s p o n d e n t, th a t is, th e e x is te n c e o f a n
em p lo y e r-e m p lo y e e re la tio n sh ip , th e r e is a n e e d to e x a m in e e v id e n tia ry m a tte rs .

1 Em phasis suppSed.
3 See Ex-Bataan Veterans S ecurity Agency, Inc. v The Secretary o f Labor Laguesm a, G .R N o. 152396, Nov. 2 0,2 00 7 ; SSK
Parts C orporation v. Cam as, G .R Nos. 85934-36. Jan 3 0 .1 9 9 0 ,1 8 1 SCRA 6 7 5 ,6 7 8 ; Batong B uhay G old M ines, Inc. v.
Sec. Deta Sem a, G.R No. 86963, Aug 6 ,1 9 9 9 ,3 7 0 P hil 872; Bayhaven, Inc. v. A ix ia n , G .R N a 160859, July 3 0 ,2 0 0 8 ;
Section 1 (b). Rule IR o f the R ules on the D isposition o f Labor Standards C ases in the R egional O ffices (Septem ber 16,
1987],
3 As held in Ex-Bataan Veterans Security Agency, Inc v Laguesm a. G R N o. 152396, N ov. 2 0 ,2 0 0 7 .
4 G.R. No. 171275, July 13,2009.

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 C hapter e ig h t 845
JURISDICTION AND RELIEFS

4.
JURISDICTION OVER CLAIMS FOR DAMAGES

1. L A B O R A R B I T E R S H A V E J U R I S D I C T I O N .

I t is n o w w e ll-s e ttle d th a t c la im s f o r d a m a g e s a s w e ll a s a tto r n e y ’s fe e s in

la b o r c a s e s a re c o g n i 2a b le b y th e L a b o r A r b ite r s , to t h e e x c lu s io n o f all o t h e r
c o u rts. R u lin g s to th e c o n tr a r y are d e e m e d a b a n d o n e d o r m o d ifie d a c c o rd in g ly -1
No m a tte r h o w d e s ig n a te d , fo r a s lo n g a s th e a c tio n p rim a rily in v o lv e s an
e m p lo y e r -e m p lo y e e r e la tio n s h ip , th e la b o r c o u r t h a s ju r is d ic tio n o v e r an y d a m a g e
c la im s .23

2. C L A IM S F O R D A M A G E S O F O F W s .

C la im s f o r a c tu a l, m o ra l, e x e m p la ry a n d o th e r f o r m s o f d a m a g e s th a t m ay
b e lo d g e d b y o v e r s e a s F ilip in o w o rk e rs a re c o g n iz a b le b y th e L a b o r A r b ite r s .5

5.
JURISDICTION OVER
LEGALITY OF STRIKES AND LOCKOUTS

1. S T R I K E S A N D L O C K O U T S N O T A F F E C T I N G N A T I O N A L
IN T E R E S T .

I n g e n e ra l, t h e L a b o r A r b ite r h a s th e p o w e r to d e te r m in e q u e s tio n s
in v o lv in g t h e leg ality o r illegality o f a strik e o r lo c k o u t u p o n th e S lin g o f a p r o p e r
c o m p la in t a n d a f te r d u e p r o c e e d in g s .4

T h e e m p lo y e r , in c a s e o f a strik e , o r th e u n io n , in c a s e o f a lo c k o u t, m ay
S le th e p r o p e r p e titio n w ith t h e L a b o r A r b ite r to se e k a d e c la r a tio n o f th e illegality
th e re o f. I t sh a ll b e th e d u ty o f th e L a b o r A r b ite r c o n c e r n e d t o a c t o n th e case
im m e d ia te ly a n d d is p o s e o f th e sa m e , s u b je c t o n ly to th e r e q u ir e m e n ts o f d u e
p r o c e s s .5

2. S T R IK E S A N D L O C K O U T S A F F E C T I N G I N D U S T R I E S
IN D IS P E N S A B L E T O T H E N A T IO N A L IN T E R E S T .

T h e ju r is d ic tio n o v e r n a tio n a l in te r e s t c a s e s (la b o r d is p u te s a ffe c tin g

in d u s trie s in d is p e n s a b le to th e n a tio n a l in te r e s t) is lo d g e d w ith e ith e r th e D O L E
S e c re ta ry , in c a s e h e a s s u m e s ju ris d ic tio n th e r e o v e r , o r w ith th e N L R C , in c a s e th e
D O L E S e c re ta ry c e rtifie s it th e r e to fo r c o m p u ls o r y a r b itra tio n . U n d e r e ith e r
s itu a tio n , all c a s e s b e tw e e n th e s a m e p a rtie s sh a ll b e c o n s id e re d s u b s u m e d to , o r

' P rim ero v. Interm ediate A ppellate C o u rt G .R. N o. L-72644, D ec. 1 4 ,1 98 7 ,1 5 6 S C R A 435.
2 R odriguez, J r. v . A g u ia r, S r., G .R . No. 159482. A ug. 30,2005.
3 Section 10, R A No. 8042; S ection 58, R ules and R egulations Im plem enting R A N o. 8042.
4 No. 22, NCM B P rim er on S trike, P icketing and L ocko ut 2nd E dition, D ecem ber 1995.
5 No. 26, G uidelines G overning Labor R elations.

J9JC9B0M
 ^ 5 ?

846 Bar Reviewer o n Labor Law

a b s o rb e d by, th e a s s u m e d o r c e rtifie d c ase, as th e c a se m ay b e , a n d shall b e d e c id e d

accord in g ly by th e D O L E S e c re ta ry 1 o r b y th e a p p ro p ria te D iv is io n o f d ie N L R C .2
The exception to th is ru le is w h e n th e a s s u m p tio n o r c e rtific a tio n o r d e r sp e c ifie s
d ia t th e cases will n o t b e s u b s u m e d o r a b s o rb e d in th e a s s u m e d o r c e rtifie d c ase, in
w h ic h e v e n t, th e L a b o r A rb ite r sh all c o n tin u e to e x ercise ju ris d ic tio n th e re o v e r.

3. J U R IS D IC T IO N O V E R C R IM IN A L C A S E S A R IS IN G F R O M S T R IK E S
O R LOCKOUTS.

The L abor A rb ite r cannot a d ju d ic a te issu es in v o lv in g any c rim e s

c o m m itte d , w h e th e r re la te d to a strik e o r lo c k o u t o r n o t. P ro s e c u tio n o f c rim e s o r
felonies falls w ith in th e ju ris d ic tio n o f th e re g u la r c o u rts o f ju stic e .

5-A.
JURISDICTIONAL INTERPLAY
IN STRIKE OR LOCKOUT CASES

1. N E C E S S IT Y T O D E S C R IB E IN T E R P L A Y O F JU R IS D IC T IO N .

A t th e o u ts e t, th e re is a n e e d to d isc u ss a n d e x p la in th e ju ris d ic tio n a l

issues in v o lv ed in strik e o r lo c k o u t s itu a tio n s b e c a u se o f th e ir se e m in g c o m p le x ity .
A s d istin g u ish e d fro m o th e r la b o r c a se s, a la b o r d is p u te in v o lv in g a strik e o r
lo c k o u t is u n iq u e as it in v o lv es a n in te rp la y o f ju ris d ic tio n o f se v e ra l la b o r o fficials
o r trib u n als. C o n fu s io n usually a rise s as to w h e n th e s a id la b o r o ffic ia ls o r trib u n a ls
c a n p ro p e rly tak e c o g n iz a n c e o f strik e -re la te d o r lo c k o u t-re la te d issu es.

2. A S T R I K E O R L O C K O U T I S C R O S S - J U R I S D I C T I O N A L .

B ased o n th e p e rtin e n t p r o v is io n s o f th e L a b o r C o d e , d te re is really n o

o v e rla p o r c o n flic t in th e ex ercise o f ju ris d ic u o n o f th e la b o r o ffic ia ls an d trib u n a ls
c o n c e rn e d . B e lo w is a n o u tlin e o f th e in te rp la y in ju ris d ic tio n a m o n g th e m .

1. F ilin g o f a n o t i c e o f s t r i k e o r l o c k o u t w i t h N C M B . - A u n io n w h ic h
in te n d s to sta g e a strik e o r an e m p lo y e r w h ic h d esire s to m o u n t a lo c k o u t s h o u ld
file a n o tic e o f strik e o r n o tic e o f lo c k o u t, as th e case m a y b e , w ith th e N C M B a n d
n o t w ith an y o th e r o ffic e . I t m u s t b e n o te d , h o w e v e r, th a t th e N C M B , p e r Tabigut v.
Inteniational Copra Export Corporation,3 is n o t a q u a si-ju d ic ia l b o d y ; h e n c e , th e
C o n c ilia to rs-M e d ia to rs o f th e N C M B d o rio t h a v e a n y d e c is io n -m a k in g p o w e r.
T h e y c a n n o t iss u e d e c is io n s to re s o lv e th e issu e s ra ise d in th e n o tic e o f s trik e o r
lo c k o u t. T h e ir ro le is c o n fin e d so le ly to th e c o n c ilia tio n a n d m e d ia tio n o f th e said
issu es, a lth o u g h th e y c a n su g g e st to th e p a rtie s th a t th e y s u b m it th e ir d is p u te to
v o lu n ta ry a rb itra tio n th r o u g h th e V o lu n ta r y A rb itra to rs a c c re d ite d b y th e N C M B .

1 In assumed cases.
2 In certified cases.; See A rticle 278(g) [263(g)], Lab o r C ode; S ee also Section 31b], R ule V III, 2011 NLRC R ules o f Procedure.
3 G .R . No. 183335, D ec. 2 3 ,2 0 0 9 ; H otel Em ployees U n 'crvN F l v . W aterfront Insular H otel D avao, G .R . N os. 174040-41,
S ep t 22,2010.

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2. F i l i n g o f a c o m p l a i n t t o d e c l a r e t h e i l l e g a l i t y o f t h e s t r i k e o r
lo c k o u t w ith th e L a b o r A r b ite r o r V o lu n ta r y A r b itr a to r o r p a n e l o f V o lu n ta r y
A r b i t r a t o r . - I n c a s e a p a r ty w a n ts to h a v e th e s tr ik e o r lo c k o u t d e c la re d illegal, a
c o m p la in t s h o u ld b e file d e ith e r w ith t h e L a b o r A r b i t e r u n d e r A rtic le 2 2 4 (a )(5 )
[2 1 7 (a)(5 )]1 o f th e L a b o r C o d e o r , u p o n m u tu a l a g r e e m e n t o f t h e p a rtie s , w ith th e
V o lu n ta r y A r b itr a to r o r p a n e l o f V o lu n ta r y A r b itr a to r s u n d e r A r tic le 2 7 5 [262] o f
th e sa m e C o d e . T h e is s u e o f ille g a lity o f t h e s tr ik e o r lo c k o u t c a n n o t b e re s o lv e d b y
th e C o n c ilia to r s - M e d ia to rs o f t h e N C M B a s e a rlie r p o i n t e d o u t a n d d is c u s s e d .

3. F i l i n g o f a n i n j u n c t i o n p e t i t i o n w i t h t h e C o m m i s s i o n ( N L R Q . -
I n c a s e illegal a c ts v io la tiv e o f A r tic le 2 7 9 [2 6 4 ]2 a rc c o m m itte d in th e c o u r s e o f th e
s trik e o r lo c k o u t, a p a rty m a y file a p e t i t i o n f o r in ju n c tio n d ire c d y w ith th e
C o m m is s io n (N L R Q u n d e r A r tic le 2 2 5 (e ) [2 1 8 (e)]3 o f th e L abor C ode fo r
p u r p o s e s o f s e c u rin g a te m p o r a r y r e s tr a in in g o r d e r ( T R O ) a n d in ju n c tio n . T h e
L a b o r A r b ite rs o r V o lu n ta r y A r b itr a to r s a re n o t p o s s e s s e d o f a n y in ju n c tiv e p o w e r
u n d e r th e L a b o r C o d e . I n o th e r w o r d s , th e a g g rie v e d p a r ty , d e s p ite th e p e n d e n c y o f
th e c a s e f o r th e d e c la r a tio n o f th e illeg ality o f th e s tr ik e o r lo c k o u t w ith th e L a b o r
A r b ite r o r V o lu n ta ry A r b itr a to r , a s th e c a s e m a y b e , m a y d ire c d y g o to d ie
C o m m is s io n to se c u re th e in ju n c tiv e relief.

4. A s s u m p t i o n o f ju r is d ic tio n by th e DOLE S e c re ta ry . - U nder

A rtic le 2 7 8 (g ) [263(g)]4 o f th e L a b o r C o d e , t h e D O L E S e c r e ta r y h a s th e p o w e r to
a s s u m e ju ris d ic tio n o v e r la b o r d is p u te s w h ic h , in h is o p in io n , m a y c a u s e o r likely to
c a u s e a strik e o r lo c k o u t in in d u s tr ie s in d is p e n s a b le to th e n a tio n a l in te r e s t (so-
c a lle d “ n a tio n a l in te r e s t” cases). O n c e h e m a k e s th e a s s u m p tio n , h e shall d e c id e all
th e iss u e s re la te d to th e la b o r d is p u te h im s e lf, to th e e x c lu s io n o f all o t h e r la b o r
a u th o n tie s .

5. C e r t i f ic a t i o n o f t h e l a b o r d i s p u t e to t h e N L R C . - U n d e r d ie sa m e
p r o v is io n o f A rtic le 2 7 8 (g ) [263(g)] o f th e L a b o r C o d e , th e D O L E S e c re ta ry h a s
d ie o p tio n o f n o t a s s u m in g ju ris d ic tio n o v e r th e la b o r d is p u te in n a tio n a l in te r e s t
c a se s. I n s te a d , h e m a y c e rtify it to th e N L R C fo r c o m p u ls o r y a r b itra tio n , in w h ic h
c a s e , it w ill b e th e N L R C w h ic h s h a ll h e a r a n d d e c id e all th e is s u e s su b je c t o f th e
c e rtific a tio n o rd e r.

I n c a s e a t th e tim e o f t h e sa id a s s u m p tio n o r c e rtific a tio n , th e r e is a

p e n d in g c a s e b e f o re d ie L a b o r A r b ite r o r V o lu n ta r y A r b itr a to r o n d ie iss u e o f
illeg ality o f th e s trik e o r lo c k o u t, th e s a m e sh a ll b e d e e m e d s u b s u m e d in th e
a s s u m e d o r c e rtifie d case. R e s u lta n d y , it is n o lo n g e r th e L a b o r A r b ite r o r th e
V o lu n ta r y A r b itr a to r w h o s h o u ld d e c id e th e sa id c a s e b u t th e D O L E S e c re ta ry , in
th e c a s e o f 'a s s u m e d c a s e s, o r th e N L R C , in t h e c a s e o f c e rtifie d c a se s.

1 A rticle 224 [2 1 7 ]-Ju risd ictio n o f tie Labor A rbiters and Ihe C om m ission.
2 A rticle 279 (264] - P rohbfted A ctivitie s.
3 A rticle 225 (21 8 ]-F 'o w e is o f Ih e Com m ission.
4 A rticle 278 [263] - S trides, P icketing and Lockouts.

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6. Assum ption of jurisdiction over a national interest, case b y th e

President. - The President of the Philippines is not precluded from intervening in
a national interest case by exercising himself the powers o f his alter eg>, the D O L E
Secretary, granted under Article 278(g) [263(g)] by assuming jurisdiction over the
same for purposes of settling or terminating i t

7. Submission o fjL n ational interest case to vohm tag_arbitration, -

Despite the pendency o f the assumed or certified national interest case, the parties
are allowed to submit any issues raised therein to voluntary arbitration at any stage
o f the proceeding, by virtue of Article 278(g) [263(g)] which provides that “(b)efon
orat any stag ofthe compulsory arbitrationprocess, theparties may opt to submit that dispute to
voluntaryarbitration,1'
The foregoing interplay explains why Article 278(g) [263(g)] makes
specific reference to the President o f die Philippines, the Secretary o f Labor and
Employment, the Commission (NLRQ or the Voluntary Arbitrator in connection
with the law on strike, lockout and picketing embodied in Article 278 [263]. The
only labor official not so mentioned therein but who has a significant role to play in
the interaction of labor officials and tribunals in strike or lockout cases, is the
Labor Arbiter. This is understandable in the tight o f the separate express grant o f
jurisdiction to the Labor Arbiters under Article 224(a)(5) [217(a)(5)] as above
discussed.

6.
JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE DISTORTION

1. CASES IN ORGANIZED E STA B LISH M EN TS.

In establishments where there are existing collective bargaining

agreements (CBAs) or certified sole and exclusive bargaining agents (SEBAs), R A .
No. 6727,1 vests upon the Voluntary Arbitrator or panel o f Voluntary Arbitrators,
the jurisdiction to hear and decide wage distortion cases, after the grievance
procedure in the CBA failed to settle the same.2

2. CASES IN U N O RG A N IZED E S T A B U S H M E N T S .

In establishments where there are no CBAs or certified SEBAs, the Labor

Arbiters have jurisdiction to hear and decide wage distortion cases after the parties
and the NCMB failed to correct the distortion.3

3. RULE W H EN MADE SUBJECT O F N O T IC E O F STRIKE O R

LOCKOUT.

1 CJOwnvisekriownasme'WageRationafizaQonAoL''
2 Affcte 124, laborCofe, as amended by Section 3, RA.No. 6727; Sec&n 7. Chapter B. Implementing (U es of R A N a
6727; Section 1. Rule VH, Rules of Procedure on MWmum Wage Fixing issued by to NW PCon04Ju»1990.
» Id.

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JURISDICTION AND RELIEFS

Wage distortion is n o t a proper ground to be invoked in support o f a

strike o r lockout Disputes arising from wage distortion resulting from wage orders
issued by the Regional Tripartite Wages and Productivity Board (RTWPB) which
are alleged in the notice o f strike o r notice o f lockout, should be referred to the
Labor Arbiter if not settled within ten (10) calendar days o f conciliation by the
NCMB.«

7.
JURISDICTION OVER ENFORCEMENT OR ANNULMENT
OF COMPROMISE AGREEMENTS

L LEGAL BASIS.
Article 233 [227] dearly embodies the following provisions on
compromise agreements:

“Article 233 [227]. CompromiseAgreements, - Any compromise

settlement, including those involving labor standard laws, voluntarily
agreed upon by the parties with the assistance of the Bureau or the
regional office of die Department of Labor, shall be final and binding
upon the parties. T he National Labor Relations Commission or any
court shall not assume jurisdiction over issues involved therein
except in case o f non-compliance thereof or if there is prima fade
evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.”2

It is dear from the foregoing provision that although the compromise

agreement may have been entered into by the parties before die Bureau o f Labor
Relations (BLR) or the D O L E Regional Office, it is the Labor Arbiter who has
jurisdiction to take cognizance o f the following issues related thereto, to the
exdusion o f the BLR and the D O L E Regional Directors:

(1 ) T o enforce the compromise agreement in case o f non-compliance

therewith by any o f die parties thereto; or

(2) To nullify it if there is prima fade evidence that the settlement was
obtained through fraud, misrepresentation, o r coercion.

A similar provision is found in the 2011 NLRC Rules of Procedure,3 where

die jurisdiction o f the Labor Arbiters is recognized over the enforcement o f
compromise agreements when there is non-compliance by any of the parties
thereto pursuant to A rtide 233 [227] o f the Labor Code.

1 Emphasis suppled.
) SeeSecfion1(h)cfRuteVlhereof.

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 850 Bar. Reviewer o n La b o r u w

8.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS

1. D ECISION S O F VOLUNTARY A RB ITR A TO RS. .*

Article 276 [262-A]1 o f the Labor Code prescribes the procedures that
Voluntary Arbitrators should follow in adjudicating cases filed before them. Once a
decision has been rendered in a case and subsequendy becomes final and executory,
it may be enforced through the writ o f execution issued by the same Voluntary
Arbitrator who rendered it, addressed to and requiring certain public officers2 to
execute the final decision, order or award.

2. LABOR ARBITERS MAY ISSUE T H E W R IT O F E X E C U T IO N .

In situations, however, where the Voluntary Arbitrator who rendered the

decision is absent or incapacitated for any reason, Article 276 [262-A] grants
jurisdiction to any Labor Arbiter in the region where the winning party resides, to
take cognizance of a motion for the issuance o f the writ o f execution filed by such
party and accordingly issue such writ addressed to and requiring the public officers3
to execute the final decision, order or award o f the Voluntary Arbitrator.

9.
JURISDICTION OVER CASES
OF OVERSEAS FILIPINO WORKERS fOFWsl

1. JU R ISD IC TIO N OVER M O N E Y CLAIM S O F OFW s.

RA. No. 8042, as amended,4 confers originaland exclusive jurisdiction upon

Labor Arbiters, to hear and decide all claims arising from employment relationship
or by virtue o f any law or contract involving OFWs, including claims for actual,
moral, exemplary and other forms o f damages.

2. JU R ISD IC T IO N W H E N T H E R E IS A CBA.

If there is a CBA between the foreign employer and the bargaining union
o f the OFWs, die jurisdiction over monetary claims o f OFWs is vested in the
Voluntary Arbitrator and not in the Labor Arbiter.3

1 A(fid0276|252A]-PnxediEes.
2 Sudi as (1) Ble SheriS trf (he Convnssion (NLRC); a duty deptdized oSoer, 0 ) a Special Sheriff; (4) Bie Sherif of O^e
regular courts; or {5} any pubic official whom the p ates may designate it the submission agreement to execute he final
derision, orderor award.
1 II
4 O te w ra known as the‘M g rartV M as a rt Overseas Flqpinostaot 1 9 9 5 , ' Mo. 10022 (Approved on
Man*t8,201ty.
5 t o Navigata Co, h e v. Fernandez, G A No. 197309, Oct 10.2012: Estateof Dulay vA bofe Jefean Maritime, Inc. and
General Charterers h a , G A N o. 172642, June 13,2012.

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JURISDICTION AND RELIEFS

3. O FW CASES FA L L IN G U N D E R P O E A JU R IS D IC T IO N .

T he Philippine Overseas Employment Administration (POEA) has

originaland exclusive jurisdiction to hear and decide:
(1) All cases which are administrative in character, involving or arising
out o f violation o f rules and regulations relating to licensing and
registration o f recruitment and employment agencies o r entities,
including refund o f fees collected from workers and violation o f the
conditions for the issuance o f license to recruit workers.1
(2) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals,
contracting partners and Filipino migrant workers.2

10.
OTHER CASES OVER WHICH
LABOR ARBITERS HAVE JURISDICTION

1. JU R IS D IC T IO N AS R E C O G N IZ E D IN JU R IS P R U D E N C E .

In accordance with well-entrenched jurisprudence, the issues, claims or

cases o f the following fall under the jurisdiction o f the Labor Arbiters:

(a) Employees in government-owned a n d /o r controlled corporations;

(b) Alien parties;
(c) Priests and ministers;
(d) Employees q f cooperatives;
(e) Counter-claims o f employers against employees.

All die foregoing are discussed below in seriatim.

10-A.
JURISDICTION OVER CASES INVOLVINGEMPLOYEES
OF GOVERNMENT-OWNED AND/OR CONTROLLED CORPORATIONS

L PR EV A ILIN G R U L E .
The hiring and firing o f employees o f government owned and/or
controlled corporations without original charters are covered by die Labor Code and,
therefore, the Labor Arbiters have jurisdiction over illegal dismissal and other cases
that may be filed under this law, while those with orignal charters are basically
governed by the Civil Service Law, rules and regulations and, therefore, jurisdiction

1 Secfion 1. Rule I, Part VI. 2002 POEA Rules for Land&sed Overseas Wortceis; Section 1, Rute II, Part V, 2003 POEA
Rules for Seatoas; Secfion 28, Omnfcus Rubs and Regdafions Implementing M giait Workers and Ovussas Ftytos Act
of1995d3tedFeb.29.1996.
2 Ibid; Id.; Id.

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 852 bar reviewer o n Labor Law

o n an y o f th e cases th a t m ay b e in itia te d u n d e r th is law is v e s te d in th e C ivil S e rv ic e

C o m m is sio n (CSC )1

10-B.
JURISDICTION OVER DISPUTES
INVOLVING ALIEN PARTIES

1. C H O I C E O F L A W B Y P A R T I E S .

A b asic p o licy o f c o n tra c t is to p r o te c t th e e x p e c ta tio n s o f th e p a r tie s .2

S u c h p a rty e x p e c ta tio n s a rc p r o te c te d b y g iv in g e f fe c t to th e p a rtie s ’ o w n c h o ic e o f
th e ap p licab le law .3 T h e c h o ic e o f la w m u s t, h o w e v e r, b e a r s o m e r e la tio n s h ip to
th e p arties o r th e ir tra n s a c tio n .4 A m a n n in g a g e n c y , f o r in s ta n c e , c a n n o t b e fa u lte d
fo r co m p ly in g w ith th e a p p licab le fo re ig n law . B y so c o m p ly in g , it h a s d is c h a rg e d
its m o n e ta ry o b lig a tio n to th e e m p lo y e e .5

2. W H E N P H I L I P P I N E L A W P R E V A I L S .

Pakistan International Airlines Corp. v. Ople,6 is in p o in t. I n th is case , tw o

c o n tra c ts o f e m p lo y m e n t w ere e x e c u te d in M a n ila b e tw e e n P a k is ta n I n te rn a tio n a l
A irlin es C o rp o ra tio n a n d tw o F ilip in o flig h t a tte n d a n ts . P a ra g ra p h 10 o f th e
c o n tra c ts e m b o d ie s th e stip u la tio n , a m o n g o th e r s , th a t th e te r m s th e r e o f sh a ll b e
c o n s tru e d a n d g o v e rn e d by th e law s o f P a k is ta n a n d o n ly th e c o u r ts o f K a ra c h i,
P ak istan shall h av e ju risd ic tio n to c o n s id e r any m a tte r arisin g o u t o f o r u n d e r th e
a g reem en t. P rio r to th e e x p ira tio n o f th e c o n tr a c ts , th e se rv ic e s o f th e tw o F ilip in o
fligh t a tte n d a n ts w e re te rm in a te d . T h e y jo in tly filed a c o m p la in t fo r illegal
dism issal. O n e o f th e issu es raised is w h ic h la w s h o u ld ap p ly a n d w h ic h c o u r t h a s
jurisd ictio n o v e r th e d isp u te .

T h e S u p re m e C o u rt, in h o ld in g th a t th e P h ilip p in e law s h o u ld a p p ly a n d

th a t d ie P h ilip p in e c o u r t h as ju ris d ic tio n , d e c la re d th a t p e titio n e r PLA c a n n o t ta k e
re fu g e in p a ra g ra p h 10 o f its e m p lo y m e n t a g re e m e n t w h ic h , firsd y , sp e c ific s th e law
o f P ak istan as th e ap p lic a b le law o f th e a g re e m e n t a n d , se c o n d ly , lays th e v e n u e fo r
se td e m e n t o f an y d isp u te arisin g o u t o f o r in c o n n e c tio n w ith th e a g re e m e n t “only
[in] c o u rts o f K a ra c h i, P a k ista n .” 'T h e firs t c la u s e o f p a r a g r a p h 10 c a n n o t b e
in v o k e d to p re v e n t th e ap p lic a tio n o f P h ilip p in e la b o r law s a n d re g u la tio n s to th e
su b je c t m a tte r o f th is case, i.e., th e e m p lo y e r-e m p lo y e e re la tio n s h ip b e tw e e n
p e titio n e r PLA a n d p riv a te r e s p o n d e n ts . T h e re la tio n s h ip is m u c h a ffe c te d w ith
p u b lic in te re st a n d th a t th e o th e rw is e a p p lic a b le P h ilip p in e law s a n d re g u la tio n s
c a n n o t b e re n d e re d illu so ry by th e p a rtie s a g re e in g u p o n s o m e o th e r la w to g o v e r n

' Zamboanga C ity W ater D istrict v.B u a t,G .R . No. 104389, M ay 2 7,1994.
2 Reese, 0 ^ o f L a w n Torts and (k n lra c ts ,1 6 O skim b ri Journal o f T ransnational Law , 1,21 [1977],
3 F ridcev.fsbcan d tse n C o,In c., 1 51F .S u p p ,4 6 5 ,467(1957).
4 Asia International B uiiderC orp v. M ondejar, G R N o. 105029-32, D ec. 0 5 ,1 9 9 4 .
5 OmanN International M anpower Developm ent C orporation v . N LRC, G R N o. 130339, D e c 2 2 ,1 9 9 8 ,3 0 0 SCRA 455.
« G R No. 61594, S ept 28,1990.

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th e ir r e la tio n s h ip . N e ith e r m a y p e titio n e r in v o k e th e s e c o n d c la u s e o f p a r a g r a p h 10,

s p e c ify in g th e K a r a c h i c o u r ts a s th e s o le v e n u e f o r th e s e ttle m e n t o f d is p u te s
b e tw e e n th e c o n tr a c tin g p a rtie s . E ven a c u rso r/ s c ru tin y of th e re le v a n t
c ir c u m s ta n c e s o f th is c a s e w ill s h o w th e m u ltip le a n d s u b s ta n tiv e c o n ta c ts b e tw e e n
la w a n d P h ilip p in e c o u r ts , o n t h e o n e h a n d , a n d th e r e la tio n s h ip b e tw e e n th e
p a rtie s , u p o n th e o th e r . T h e c o n tr a c t w a s n o t o n ly e x e c u te d in th e P h ilip p in e s , it
w a s a ls o p e r f o r m e d h e r e , a t le a s t p a rtia lly . P riv a te r e s p o n d e n ts a re P h ilip p in e
c itiz e n s a n d r e s id e n ts , w h ile p e titio n e r , a lth o u g h a f o re ig n c o r p o r a tio n , is lic e n s e d
to d o b u s in e s s (a n d is a c tu a lly d o in g b u s in e s s in t h e P h ilip p in e s ) a n d h e n c e , is a
r e s id e n t in th e P h ilip p in e s . L a sd y , p r iv a te r e s p o n d e n ts w e re based in th e
P h ilip p in e s in b e tw e e n th e ir a s s ig n e d flig h ts to th e M id d le E a s t a n d E u r o p e . A ll th e
a b o v e c o n tr a c ts p o i n t to th e P h ilip p in e c o u r ts a n d a d m in is tr a tiv e a g e n c ie s a s th e
p r o p e r f o r u m f o r th e re s o lu tio n o f th e c o n tr a c tu a l d is p u te s b e tw e e n t h e p a rtie s .
U n d e r th e s e c ir c u m s ta n c e s , p a r a g r a p h 1 0 o f th e e m p lo y m e n t a g r e e m e n t c a n n o t b e
g iv e n e f f e c t so a s to o u s t P h ilip p in e a g e n c ie s a n d c o u r ts o f th e ju r is d ic tio n v e s te d
u p o n t h e m b y P h ilip p in e law .

10-C.
JURISDICTION OVER LABOR CASES
INVOLVING PRIESTS AND MINISTERS

1. W H E N L A B O R A R B I T E R S H A V E J U R I S D I C T I O N .

T h e fact th a t a c a se in v o lv e s a s p a r tie s th e r e to th e c h u r c h a n d its re lig io u s

m in is te r d o e s n o t ipsofacto giv e th e c a s e a re lig io u s sig n ific a n c e . I f w h a t is in v o lv e d
is a la b o r c a s e , say illegal d ism issa l, th e re la tio n s h ip o f th e c h u r c h , as e m p lo y e r , a n d
th e p r ie s t o r m in is te r , as e m p lo y e e is a p u re ly s e c u la r m a tte r n o t r e la te d to th e
p ra c tic e o f fa ith , w o r s h ip o r d o c tr in e s o f th e c h u r c h . I le n c e , L a b o r A r b ite rs m a y
v alid ly e x e rc is e ju ris d ic tio n o v e r sa id la b o r case.

T h e re lig io u s m in is te r in Austria v. Hon. NLRC,1w a s n o t e x c o m m u n ic a te d

o r e x p e lle d f ro m th e m e m b e r s h ip o f th e ch u rc h b u t w as te r m in a te d fro m
e m p lo y m e n t b a s e d o n th e ju st c a u s e s p r o v id e d in A rtic le 2 9 7 [282] o f th e L a b o r
C ode. I n d e e d , th e m a tte r o f te r m in a tin g a n e m p lo y e e w h ic h is p u re ly s e c u la r in
n a tu r e is d if fe r e n t f ro m th e e c c le s ia stic a l a c t o f e x p e llin g a m e m b e r f ro m th e
re lig io u s c o n g r e g a tio n . A s s u c h , th e S ta te , th r o u g h th e L a b o r A r b ite r a n d th e
N L R C , h a s th e rig h t to ta k e c o g n iz a n c e o f th e c a s e to d e te r m in e w h e th e r t h e
c h u rc h , a s e m p lo y e r, rig h tfu lly e x e rc is e d its m a n a g e m e n t p re ro g a tiv e to d is m is s th e
relig io u s m in is te r a s its e m p lo y e e .

2. E C C L E S IA S T IC A L A F F A IR , M E A N I N G .

An "ecclesiastical affair" is o n e th a t c o n c e r n s d o c tr in e , c re e d , o r f o rm o f
w o rs h ip o f th e c h u r c h , o r th e a d o p tio n a n d e n f o r c e m e n t w ith in a re lig io u s

1 A ustria v . H on. NLRC, G K . N o. 124382, Aug. 16,1999.

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a sso ciatio n o f n e e d fu l law s an d re g u la tio n s fo r th e g o v e r n m e n t o f its m e m b e r s h ip ,

a n d the p o w e r o f e x c lu d in g f ro m s u c h a sso c ia tio n th o s e d e e m e d u n w o r th y o f
m e m b e rs h ip .1 B a sed on this d e fin itio n , an ec c le sia stic a l a ffa ir in v o lv e s th e
re latio n sh ip b e tw e e n th e c h u rc h a n d its m e m b e rs a n d rela te s to m a tte r s o f faith ,
religious d o c trin e s, w o rsh ip a n d g o v e rn a n c e o f th e c o n g re g a tio n . T o b e c o n c r e te ,
exam p les o f th e se so -called e cclesiastica l a ffa irs to w ltic h th e S ta te c a n n o t m e d d le ,
are p ro c e e d in g s fo r e x c o m m u n ic a tio n , o rd in a tio n of re lig io u s m in is te rs ,
a d m in istra tio n of sa c ra m e n ts and o th e r a c tiv ities w ith a tta c h e d re lig io u s
sig n itican ce .2

1 0 -D .
JU R IS D IC T IO N O V E R C A SE S O F
E M P L O Y E E S O F C O O P E R A T IV E S

1. W H E N L A B O R A R B I T E R S H A V E J U R I S D I C T I O N .

T h e L a b o r A rb ite r h a s ju ris d ic tio n o n ly o v e r m o n e ta r y cla im s a n d illegal

dism issal cases in v o lv in g e m p lo y e e s o f c o o p e ra tiv e s b u t n o t th e c la im s o r
te rm in a tio n o f m e m b e rs h ip o f m e m b e r s th e re o f. C o o p e ra tiv e s o rg a n iz e d u n d e r
R .A . N o . 6 9 3 8 ,34 are c o m p o s e d o f m e m b e r s ; h e n c e , is s u e s o n th e te r m in a tio n o f
th e ir m e m b e rsh ip w ith th e c o o p e ra tiv e d o n o t fall w ith in th e ju r is d ic tio n o f th e
L a b o r A rb ite rs b u t w ith th e C o o p e ra tiv e D e v e lo p m e n t A u th o r ity (C D A ).
P e titio n e r in Perpetual Help Credit Cooperative, Inc. v. Faburadap c o n te n d s th a t
th e L a b o r A r b ite r h a s n o ju ris d ic tio n to ta k e c o g n iz a n c e o f th e c o m p la in t o f p riv a te
re sp o n d e n ts w h o a re n o t m e m b e rs b u t e m p lo y e e s o f th e c o o p e ra tiv e . T h e S u p re m e
C o u rt ru le d th a t th e re is n o e v id e n c e th a t p riv a te r e s p o n d e n ts a re m e m b e r s o f
p e titio n e r c o o p e ra tiv e a n d ev en i f th e y a rc , th e d is p u te is a b o u t p a y m e n t o f w a g e s,
o v e rtim e pay , re s t d ay a n d te rm in a tio n o f e m p lo y m e n t. U n d e r A rtic le 2 2 4 [217] o f
th e L a b o r C o d e , th e s e d isp u te s a re w ith in th e o rig in a l a n d e x c lu siv e ju ris d ic tio n o f
th e L a b o r A rb ite rs .5

In San Miguel Corp. v. Semillano,6 p e titio n e r a s s e rts th a t th e p r e s e n t c a s e is

o u tsid e th e ju ris d ic tio n o f th e la b o r trib u n a ls b e c a u s e r e s p o n d e n t V ic e n te S e m illa n o
is a m e m b e r o f th e A lilgilan M u lti-P u rp o s e C o o p (A M P C O ), n o t a n e m p lo y e e o f
p e titio n e r S M C . P e titio n e r is o f th e p o s itio n th a t th e in s ta n t d is p u te is intra­
cooperative in n a tu re falling w ith in d ie ju ris d ic tio n o f d ie A r b itra tio n C o m m itte e o f
th e C o o p e ra tiv e D e v e lo p m e n t A u th o rity . A M P C O w a s c o n tr a c te d b y p e titio n e r to
supp ly it w id i w o rk e rs to p e rfo rm th e ta sk o f se g re g a tin g b o td e s , re m o v in g d irt

’ Black’s Law D ictionary, 5*1E d., (1979), p. 460.

2 Id.
3 O fierw ise known as T h e C ooperative Code o f th e P hirp ph e s ‘
4 G.R. No. 121943. O ct 8,2001.
5 P.D. No. 175 [Law Strengthening the C ooperative M ovem ent) was repealed by express provision o f A rticle 127 o f R A No.
6938 [The C ooperative Code o f the P hilippines) w hich w as then the law in force a t the tim e Ihe com plaint in th is case was
filed with the DOLE.
* G R No. 164257, July 5.2010.

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th e r e f r o m , filin g th e m in d e s ig n a te d p la c e s , lo a d in g a n d u n lo a d in g th e b o ttle s to
a n d f r o m th e d e liv e ry tru c k s , a n d to p e r f o r m o t h e r task s a s m ay b e o r d e r e d by
S M C ’s o ffic e rs . S e m illa n o , to g e th e r w ith th e o t h e r r e s p o n d e n ts , filed t h e c o m p la in t
f o r re g u la riz a tio n w ith p e titio n e r S M C , c o n te n d in g th a t A M P C O w as a m e r e la b o r -
o n ly c o n tr a c to r . T h e H ig h C o u r t d e c la re d in th is c a s e th a t A M P C O w a s a la b o r -
o n ly c o n tr a c to r a n d c o n s e q u e n d y p r o n o u n c e d d ia t all th e r e s p o n d e n ts , in c lu d in g
S e m illa n o , w e re re g u la r e m p lo y e e s o f p e titio n e r. O n th is is s u e o f ju r is d ic tio n , th e
H ig h C o u r t h e ld th a t th e L a b o r A r b ite r has ju ris d ic tio n because p re c ise ly ,
S e m illa n o h a s jo in e d th e o th e r s in filin g th is c o m p la in t b e c a u s e it is h is p o s itio n
th a t p e titio n e r S M C is his tr u e e m p lo y e r a n d lia b le fo r all h is c la im s u n d e r th e
L ab o r C ode.

10-E.
JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS

1. E M P L O Y E R S M A Y A S S E R T C O U N T E R - C L A IM S A G A IN S T
E M P L O Y E E S F IL E D B Y T H E L A T T E R B E F O R E T H E L A B O R
A R B IT E R S .

A lm o s t all la b o r c a s e s d e c id e d b y la b o r c o u r ts in v o lv e c laim s a s s e r te d b y
th e w o rk e rs . T h e q u e s tio n t h a t m a y b e p r o p o u n d e d is w h e th e r th e e m p lo y e r s c a n
a s s e r t c o u n te r -c la im s a g a in st th e ir e m p lo y e e s b e f o r e th e L a b o r A r b ite rs . T h e
S u p re m e C o u r t a n s w e re d th is p o s e r in th e a ffirm a tiv e .

In Bating v. Hon. Valdtvilla, l it w a s d e c la r e d th a t th e ju r is d ic tio n o f L a b o r

A r b ite rs a n d th e N L R C is c o m p r e h e n s iv e e n o u g h to in c lu d e c la im s f o r all f o rm s o f
dam ages “ a ris in g fro m th e e m p lo y e r-e m p lo y e e r e la tio n s .” By th is c la u s e ,
A rtic le 2 2 4 [217] s h o u ld a p p ly w ith e q u a l f o rc e to th e c laim o f a n tmployer f o r a c tu a l
d a m a g e s a g a in s t its d is m is s e d e m p lo y e e , w h e r e th e b a s is f o r th e c laim a rise s f ro m
o r is n e c e s sa rily c o n n e c te d w ith d ie fa c t o f te n n in a tio n , a n d s h o u ld b e e n te r e d as a
c o u n te r-c la im in th e illegal d ism is sa l c ase. T h is is in a c c o r d w ith p a r a g r a p h 6 of
A rtic le 2 2 4 (a) [217(a)], w h ic h c o v e rs “ a ll o t h e r c l a i m s , a r i s i n g f ro m e m p l o y e r -
e m p lo y e e r e la tio n s .”

Bane^ w a s c ite d in Domondon v. NLRC,2, w h e r e o n e o f th e issu e s is w h e th e r

th e L a b o r A r b ite r h a s ju ris d ic tio n to d e c id e a n is s u e o n th e tra n s fe r o f o w n e r s h ip
o f a v e h ic le a s sig n e d to th e e m p lo y e e . I t w a s a rg u e d th a t o n ly re g u la r c o u r ts h a v e
ju ris d ic tio n to d e c id e th e issu e. T h e C o u r t, h o w e v e r, ru le d th a t sin c e th e tr a n s f e r o f
o w n e r s h ip o f th e v e h ic le to th e e m p lo y e e w a s c o n n e c te d to h is s e p a ra tio n f r o m th e
e m p lo y e r a n d a ro s e fro m th e e m p lo y e r-e m p lo y e e re la tio n s h ip o f th e p a rtie s , th e
e m p lo y e r’s cla im fell w ith in th e L a b o r A r b ite r ’s ju ris d ic tio n .7 8 *

’ G.R. No. 128024, M a y 9 ,2000,331 SCRA 584.

* Dom ondon v. NLRC. G .R . N o. 154376, S e p t 30,2 00 5 ,4 7 1 SCRA 559.

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In Milan v. NLRC,1r e s p o n d e n t S o lid M ills, In c . c laim s th a t its p r o p e rtie s

are in p e titio n e rs ’ p o ss e s sio n by v irtu e o f th e ir sta tu s as its e m p lo y e e s . R e s p o n d e n t
Solid M ills allo w e d p e titio n e rs to u s e its p r o p e rty as a n a c t o f lib erality . P u t in o th e r
w o rd s, it w o u ld n o t h a v e allow ed p e titio n e rs to u s e its p r o p e r ty h a d th e y n o t b e e n
its em p lo y ees. T h e r e tu rn o f its p r o p e r tie s in p e titio n e rs ’ p o s s e s s io n b y v irtu e o f
th e ir sta tu s as e m p lo y e e s is an iss u e th a t m u s t b e re s o lv e d to d e te r m in e w h e th e r
b e n e fits c a n b e re le a se d im m ed iately . T h e iss u e ra ise d b y th e e m p lo y e r is, th e re fo re ,
c o n n e c te d to p e titio n e rs ’ claim fo r b e n e f its a n d is su ffic ie n tly in te rtw in e d w ith th e
p a rtie s’ e m p lo y e r-e m p lo y e e re la tio n sh ip . T h u s , it is p r o p e rly w ith in th e la b o r
trib u n a ls’ ju ris d ic tio n .2

11.
OTHER CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION

1. L A B O R A R B I T E R S ’ L A C K O F J U R I S D I C T I O N .

T h e fo llo w in g issu es o r c a s e s d o n o t fall u n d e r th e ju ris d ic tio n o f L a b o r

Arbiters:
(a) C laim s fo r d am ag es a risin g f ro m b re a c h o f a n o n - c o m p e te cla u se a n d
o th e r p o st-e m p lo y m e n t p r o h ib itio n s ;
(b) C laim s fo r p a y m e n t o f c a s h a d v a n c e s , c a r, a p p lia n c e a n d o th e r lo a n s
o f e m p lo y ees;
(c) D ism is sa l o f c o rp o ra te o ffic e rs a n d th e ir m o n e ta r y claim s;
(d) C a se s in v o lv in g e n titie s im m u n e f ro m su it;
(e) C a ses falling u n d e r th e d o c tr in e o f Jorum non conveniens-,
(f) Q u a s i-d e lic t o r to rt ca se s;
(g) C rim in a l and civil liab ilitie s a risin g fro m v io la tio n s o f c e rta in
p ro v is io n s o f th e L a b o r C o d e ;
(h) C o n s titu tio n a lity o f C B A p ro v is io n s .

A ll d ie fo re g o in g issues o r c a s e s a re d is c u s s e d b e lo w seriatim.

11-A.

CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-COMPETE CLAUSE

AND OTHER POST-EMPLOYMENT PROHIBITIONS

1. J U R I S D I C T I O N IS L O D G E D W I T H T H E R E G U L A R C O U R T S .

In case o f v io la tio n o f th e n o n - c o m p e te c la u s e and sim ila r p o s t-

e m p lo y m e n t b a n s o r p ro h ib itio n s , th e e m p lo y e r c a n a s s e rt h is cla im fo r d a m a g e s *

' M fr v . NLRC. G .R . No. 202961, Feb. 4,2015.

* Id.

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a g a in s t th e e rrin g e m p lo y e e w ith th e re g u la r c o u r ts a n d n o t w ith tire la b o r c o u r ts ,

su c h b r e a c h b e in g civ il in n a tu r e .1

11-B.
EMPLOYER’S CLAIMS FOR CASH ADVANCES, CAR, APPLIANCE AND OTHER
PERSONAL LOANS OF EMPLOYEES

1. L A B O R A R B I T E R S H A V E N O J U R I S D I C T I O N .

W ith r e s p e c t to r e s o lv in g iss u e s in v o lv in g lo a n s a v a ile d o f by e m p lo y e e s

f ro m th e ir e m p lo y e rs , it h a s b e e n th e c o n s is te n t ru lin g o f th e S u p re m e C o u r t th a t
th e L a b o r A r b ite rs h a v e n o ju r is d ic tio n th e r e o v e r b u t t h e r e g u la r c o u rts .

W h e r e d ie c la im to th e p r i n c i p a l r e l i e f s o u g h t is to b e re s o lv e d not by
reference to the lurbor Code or other labor relations statute or a collective bargaining agreement but
by the general civil law, thejurisdiction over the dispute belongs to the regular courts ofjustice and
not to the Labor Arbiter and the NLRC. I n s u c h s itu a tio n s , r e s o lu tio n s o f th e d is p u te
re q u ire s e x p e rtis e , n o t in la b o r m a n a g e m e n t r e la tio n s n o r in w a g e s tr u c tu r e s a n d
o th e r te r m s a n d c o n d itio n s o f e m p lo y m e n t, b u t r a t h e r in th e a p p lic a tio n o f th e
g e n e ra l civ il law . C lea rly , su c h cla im s fall o u ts id e th e a re a o f c o m p e te n c e o r
e x p e rtis e o rd in a rily a s c rib e d to L a b o r A r b ite rs a n d th e N L R C a n d th e r a tio n a le fo r
g ra n tin g ju ris d ic tio n o v e r s u c h c la im s to th e s e a g e n c ie s d is a p p e a r s .”2

T h e fo llo w in g lo a n s m a y b e cited :

a. C a s h l o a n s / a d v a n c e s are in th e n a tu r e o f sim p le c o lle c tio n o f a s u m

o f m o n e y b r o u g h t b y th e e m p lo y e r, as c r e d ito r , a g a in s t d ie e m p lo y e e ,
a s d e b to r . T h e f a c t th a t th e y w e r e e m p lo y e r a n d e m p lo y e e a t th e tim e
o f th e tr a n s a c tio n d o e s n o t n e g a te th e civ il ju r is d ic tio n o f d ie trial
c o u rt. T h e c a s e d o e s n o t in v o lv e a d ju d ic a tio n o f a la b o r d is p u te b u t
re c o v e ry o f a s u m o f m o n e y b a s e d o n o u r civil la w s o n o b lig a tio n a n d
c o n t r a c t 34

b. C a t l o a n s s u c h a s th o s e g ra n te d to sales o r m e d ic a l re p re s e n ta tiv e s b y
re a s o n o f th e n a tu r e o f th e ir w o rk . T h e e m p lo y e r ’s d e m a n d fo r
p a y m e n t o f th e e m p lo y e e s ’ a m o r tiz a tio n s o n th e ir c a r lo a n s , o r, in th e
a lte rn a tiv e , th e r e tu r n o f th e c a rs to th e c o m p a n y , is n o t a la b o r , b u t a
civil, d is p u te . It in v o lv e s d e b to r - c r e d ito r re la tio n s , r a th e r th a n
e m p lo y e e -e m p lo y e r r e la t i o n s /

c. A p p l i a n c e lo a n s c o n c e rn th e e n f o r c e m e n t o f a lo a n ag reem en t
in v o lv in g d e b to r - c r e d ito r re la tio n s f o u n d e d o n c o n tr a c t a n d d o n o t in
any w ay co n cern e m p lo y e e re la tio n s. As such it s h o u ld be

1 D ai-C hi E lectronics M anufacturing C orporation v . H o n V ilaram a, G .R . No. 1 12940. N ov. 2 1 ,1 9 9 4 ; PortSo v. R u do f Lietz.
Inc., G .R . N o. 196539, O c t 10.2012.
3 San M g u e lC a p o ra tio n v . NLRC, 1 61 SCRA 719 (1988).
3 G eorg G rotjahn G M BH & C o. v . H on. Isnani and Rom ana R. Lanchinebre, G .R . N o. 109272, A ug. 10,1994.
4 Locsin II v. M ekeni Food C orporation, G il N o. 192105, Dec. 0 9,2013.

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 858 Bar reviewer o n Labor. Law

e n fo rc e d th ro u g h a se p a ra te civil a c tio n in th e re g u la r c o u r ts a n d n o t
b e fo re tlte L a b o r A r b ite r .1

d. L o a n s f ro m r e t i r e m e n t f u n d a lso in v o lv e th e sa m e p rin c ip le as
ab o v e ; h e n c e , c o lle c tio n t h e r e f o r m a y o n ly b e m a d e th r o u g h th e
re g u la r c o u rts a n d n o t th r o u g h th e L a b o r A r b ite rs o r a n y la b o r
trib u n a ls .2

11-C .
DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS

1. C O R P O R A T E O F F I C E R S U N D E R R .A . N O . 1 1 2 3 2 [ F E B . 2 0 ,2 0 1 9 ] .

T h e d ism issal o f a d ire c to r o r c o r p o r a te o f fic e r is n o t a la b o r c a se b u t an

in tra -c o rp o ra te d isp u te c o g n iz a b le by th e R e g io n a l T ria l C o u r t 3 a n d n o t b y th e
L a b o r A rb ite r.

T h e te rm "corporate officers” is n o w d e fin e d u n d e r S e c tio n 2 4 o f th e n e w

law , R.A . N o . 1 1232,4 o th e rw ise k n o w n as th e "Revised Corporation Code of the
Philippines, ” th u s:

“ SEC. 24. Corporate Officers. - Im m ediately after their election, die

directors o f a corporation m ust formally organize and e le c t (a) a
p re sid e n t, w ho must be a director; (b) a tre a s u re r, w ho m ust be a
resident; (c) a secretary, w ho m u st be a citizen and resident o f the
Philippines; and (d) su c h o th e r o ffic e rs a s m a y b e p ro v id e d in th e
by law s. If the corporation is vested w ith public interest, the board shall
also elect a co m p lia n c e o fficer. T h e sam e person may hold two (2) o r
m ore positions concurrently, except th at no one shall act as president
and secretary or as president and treasurer at the sam e tim e, unless
otherw ise allowed in this Code.

“T he officers shall manage the co rp o ratio n and perform such duties as

may be provided in the bylaws a n d /o r as resolved by the board o f
directors.”

In su m , th e fo llo w in g a re th e c o r p o r a te o ffic e rs:

(1) P re sid e n t;
(2) T re a s u re r,
(3) S ecretary ;
(4) S u c h o th e r o ffic e rs as m a y b e p r o v id e d in th e b y law s; a n d
(5) C o m p lia n c e O ffic e r, i f th e c o r p o ra tio n is v e s te d w ith p u b lic i n t e r e s t

' Hongkong and Shanghai Banking C a p ., Ltd. S ta ff R etirem ent Plan v. Spouses Broqueza, G .R . N o. 178610, N ov. 17,2010.
J bid.
3 Under Section 5 (5 2 ) o f R A No. 8799 the ju risd ictio n o f the S ecurities and E xchange Com m ission (SEC) ever aS cases
enum erated under P D . N o. 902-A, has been transferred to the courts o f general jurisd ictio n o r h e appropriate R egional
Trial C ourt (R IC ).
4 Approved P resident R odrigo O ite fte on February 2 0,2 01 9 .

J9JC9B0M
 CHAJTER EIGHT 859
JURISDICTION AND RELIEFS

In d e e d , th e te r m "corporate officers” re fe rs o n ly to th o s e e x p re ss ly
m e n tio n e d in th e 2 0 1 9 R e v is e d C o r p o r a tio n C o d e a n d b y la w s. A ll o t h e r o f fic e r s
n o t s o m e n tio n e d th e r e in a r e d e e m e d "employees. ” T h is is s o b e c a u s e c o r p o r a te
o f fic e r s a r e e le c te d o r a p p o in te d b y th e d ir e c to r s o r s to c k h o ld e rs , a n d th o s e w h o
a re g iv e n th a t c h a r a c te r e ith e r b y th e 2 0 1 9 R e v is e d C o r p o r a tio n C o d e o r by th e
c o r p o r a tio n ’s b y -la w s .. E m p lo y e e s a re n o t.

O th e r w is e s ta te d , a n "office” is c r e a te d b y th e c h a r te r o f d ie c o r p o r a tio n
an d th e "corporate officer” is e le c te d b y th e d ir e c to r s o r s to c k h o ld e rs . O n th e o t h e r
hand, a n "employee” o c c u p ie s n o o f fic e a n d g e n e ra lly is e m p lo y e d n o t b y th e a c tio n
o f th e d ir e c to r s o r s to c k h o ld e r s b u t b y th e m a n a g in g o f fic e r o f th e c o r p o r a tio n
w h o a ls o d e te r m in e s t h e c o m p e n s a tio n to b e p a id to s u c h e m p lo y e e .

2. M A T L IN G D O C T R IN E .

T h e 2010 case o f Mailing Industrial and Commercial Corp. v. Ricardo K Corns}

r e p ris e s th e g e n e ra l r u le th a t in th e c a s e o f a r e g u la r e m p lo y e e , th e L a b o r A r b ite r
h a s ju ris d ic tio n ; o th e r w is e , th e R T C e x e rc is e s th e le g a l a u th o r ity to a d ju d ic a te .2

T h e fa c ts o f th is c a s e a re q u ite sim p le . A f te r h is d ism is sa l by M a tlin g as its

V ic e P r e s id e n t fo r F in a n c e a n d A d m in is tr a tio n , r e s p o n d e n t C o r o s file d o n A u g u s t
10, 2 0 0 0 , a c o m p la in t f o r illeg al d ism is sa l a g a in s t M a tlin g a n d s o m e o f its c o r p o r a te
o ffic e rs (p e titio n e rs ). T h e p e titio n e rs m o v e d to d is m is s d ie c o m p la in t, ra isin g th e
g r o u n d , a m o n g o th e r s , th a t t h e c o m p la in t p e r ta in e d to d ie ju ris d ic tio n o f th e S E C
d u e to th e c o n tr o v e rs y b e in g in tr a - c o r p o r a te in a s m u c h as d ie r e s p o n d e n t w a s a
m e m b e r o f M a tlin g ’s B o a rd o f D ir e c to r s a sid e f r o m b e in g its V ic e -P re s id e n t f o r
F in a n c e a n d A d m in is tr a tio n p r io r to h is te r m in a tio n . T h e r e s p o n d e n t o p p o s e d
p e titio n e rs ’ m o tio n to d ism is s, in s is tin g th a t h is s ta tu s as a m e m b e r o f M a tlin g ’s
B o a rd o f D ir e c to rs w a s d o u b tf u l, c o n s id e rin g th a t h e h a d n o t b e e n fo rm a lly e le c te d
as su c h ; th a t h e d id n o t o w n a sin g le s h a re o f s to c k in M a tlin g , c o n s id e rin g th a t h e
h a d b e e n m a d e to s ig n in b la n k a n u n d a te d in d o r s e m e n t o f d ie c e rtific a te o f s to c k
h e h a d b e e n g iv e n in 1 9 9 2 ; th a t M a tlin g h a d ta k e n b a c k a n d re ta in e d d ie c e rtific a te
o f s to c k in its c u s to d y ; a n d th a t e v e n a s s u m in g th a t h e h a d b e e n a D ir e c to r o f
M a tlin g , he had been re m o v e d as th e V ic e P re s id e n t fo r F in a n c e and
A d m in is tr a tio n , n o t a s a D ir e c to r , a f a c t th a t th e n o tic e o f h is te rm in a tio n d a te d
A p ril 1 0 ,2 0 0 0 s h o w e d .

In ru lin g th a t C o r o s ’ d ism is sa l w a s n o t a n in tra -c o r p o r a te d is p u te b u t a

la b o r c a s e , th e C o u r t e m p lo y e d th e fo llo w in g tw o - tie re d te s t to d e te r m in e w h e th e r
a d is p u te c o n s titu te s a n in tra -c o r p o r a te c o n tr o v e rs y o r n o t, nam ely:

(1) T h e s ta tu s o r re la tio n s h ip o f th e p a rtie s (R elationship Test); and

(2) T h e n a tu r e o f t h e q u e s tio n th a t is t h e su b je c t o f th e ir c o n tr o v e rs y
(N ature o f Controversy Test).

t G R No. 157802, O ct 13.2010.

J See the opening paragraph o f h e decision h M a fin g .

J9JC9B0M
 860 Bar. R eviewer C)M Labor Law

T h is te st sim ply d ictates th a t b e f o r e th e R T C c a n ta k e c o g n iz a n c e o f a

c a se , th e c o n tro v e rs y m u s t p e rta in to an y o f th e fo llo w in g re la tio n sh ip s:

a) b e tw e e n th e c o rp o ra tio n , p a r tn e rs h ip o r a s s o c ia tio n a n d th e p u b lic ;

b) b e tw e e n th e c o r p o ra tio n , p a r tn e rs h ip or a s s o c ia tio n and its
sto c k h o ld e rs , p a rtn e rs , m e m b e r s o r o ffic e rs ;
c) b e tw e e n th e c o rp o ra tio n , p a r tn e rs h ip o r a s s o c ia tio n a n d d ie S ta te as
fa r as its fran ch ise, p e r m it o r lic e n s e to o p e r a te is c o n c e r n e d ; a n d
d) a m o n g th e sto c k h o ld e rs , p a r tn e r s o r a s so c ia te s th e m s e lv e s .1

T h e fact th a t in Mailing, th e p a rtie s in v o lv e d a re th e c o r p o r a tio n a n d

C o ro s , its d ire c to r a n d s to c k h o ld e r a n d a t th e sa m e tim e its V ic e P re s id e n t, d o e s
n o t n ecessa rily p lace th e d isp u te w ith in th e a m b it o f th e ju r is d ic tio n o f d ie R T C .
T h e b e tte r po licy to b e follow ed in d e te r m in in g ju ris d ic tio n o v e r a c a se s h o u ld be
to c o n s id e r c o n c u rre n t facto rs s u c h a s th e s t a t u s o r r e l a t i o n s h i p o f t h e p a r t i e s
OR t h e n a t u r e o f th e q u e s tio n t h a t is t h e s u b j e c t o f t h e i r c o n t r o v e r s y . I n d ie
ab sence o f an y o n e o f th ese fa c to rs , th e RTC w ill n o t have ju ris d ic tio n .
F u rth e rm o r e , it d o e s n o t n e c e ssa rily fo llo w th a t e v ery c o n f lic t b e tw e e n th e
c o r p o ra tio n a n d its sto c k h o ld e rs w o u ld in v o lv e s u c h c o r p o r a te m a tte r s as o n ly th e
R T C can reso lv e in d ie exercise o f its ju d ic ia l p o w e rs.

Mailing th u s p rescrib es th a t th e c rite ria fo r d istin g u is h in g b e tw e e n

c o rp o ra te o ffic e rs w h o m ay b e o u s te d f ro m o ffic e a t w ill, o n o n e h a n d , a n d
o rd in a ry c o rp o ra te em p lo y ees w h o m a y o n ly b e te r m in a te d fo r ju s t c a u s e , o n th e
o th e r h a n d , d o n o t d e p e n d o n t h e n a tu r e o f th e se rv ic e s p e r f o r m e d , b u t o n th e
m a n n e r o f c re a tio n o f th e office. I n r e s p o n d e n t C o r o s ’ case, h e w a s s u p p o s e d ly at
o n c e a n e m p lo y e e , a s to c k h o ld e r, a n d a d ir e c to r o f M a tlin g . T h e c irc u m s ta n c e s
s u rro u n d in g h is a p p o in tm e n t to o f fic e m u s t b e fully c o n s id e re d to d e te r m in e
w h e d ie r th e d ism issal c o n s titu te d an in tr a - c o r p o r a te c o n tr o v e rs y or a la b o r
te rm in a tio n d isp u te . I t m u st also b e c o n s id e re d w h e th e r h is s ta tu s as d ir e c to r a n d
sto c k h o ld e r h a d any relatio n at all to h is a p p o in tm e n t a n d s u b s e q u e n t d ism is sa l as
V ice P re s id e n t fo r F in a n c e and A d m in is tr a tio n . O b v io u s ly e n o u g h , th e r e s p o n d e n t
w as n o t a p p o in te d as V ice P re s id e n t fo r F in a n c e a n d A d m in is tr a tio n b e c a u s e o f his
b e in g a s to c k h o ld e r o r d ire c to r o f M a tlin g . H e h a d s ta rte d w o rk in g fo r M a tlin g o n
S e p te m b e r 8, 196 6 , a n d h a d b e e n e m p lo y e d c o n tin u o u s ly f o r 33 y e a rs u n til his
te rm in a tio n o n A p ril 17, 2000, firs t as a b o o k k e e p e r , a n d h is c lim b in 1987 to his
la st p o s itio n as V ice P re sid en t fo r F in a n c e a n d A d m in is tr a tio n h a d b e e n g ra d u a l
b u t ste a d y .2 E v e n th o u g h h e m ig h t h a v e b e c o m e a s to c k h o ld e r o f M a tlin g in 1 9 92,
h is p r o m o tio n to th e p o s itio n o f V ic e P re s id e n t f o r F in a n c e a n d A d m in is tr a tio n in
1987 w as b y v irtu e o f th e len g d i o f q u a lity se rv ic e h e h a d r e n d e r e d as an e m p lo y e e

1 See also Reyes v . Hon. RTC, Branch 1 4 2 .G R N o. 165744. A ug. 1 1.2 00 8 ,5 8 3 P h i. S91.
2 The folcw ing is the sequence o f respondent C o o s 's rising from the ranks: 1 96 6 - Bookkeeper, 1958-S enkx A ccountant:
1969 -C h ie f A ccountant 1972-O ffice Supervisor; 1 973-A ssistant Treasurer; 1978-S pecial A ssistant fo Finance; 1980-
A ssistant C om ptroller, 1 9 3 3 -fn a n ce and A dm inistrative M anager, 1 9 8 5 -A sst V ice P resident for Finance and
A dm inistration; 1987 to A pril 1 7 ,2000-V ce P resident for Finance and A dm inistration.

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 Chatter Eight 861
JURISDICTION AND RELIEFS

o f M a tlin g . H is s u b s e q u e n t a c q u is itio n o f th e s ta tu s o f d i r e c t o r / s t o c k h o l d e r h a d n o
r e la tio n to h is p r o m o tio n . B e s id e s , h is s ta tu s of d ire c to r/s to c k h o ld e r w as
u n a f fe c te d b y h is d is m is s a l f r o m e m p lo y m e n t a s V ic e P r e s id e n t fo r F in a n c e a n d
A d m in is tr a tio n .

I n th e 2 0 1 4 c a s e o f Cosan v. Broadcom Asia, Inc.,*1th e S u p re m e C o u r t, c itin g

Matling, r u le d th a t th e L a b o r A r b ite r , n o t th e re g u la r c o u r ts , h a s o rig in a l ju r is d ic tio n
o v e r th e illeg al d is m is s a l c a s e file d b y p e titio n e r C o s a r e w h o w a s a n i n c o r p o r a to r 2
o f r e s p o n d e n t B r o a d c o m a n d w a s h o ld in g th e p o s itio n o f A s s is ta n t V ic e P re s id e n t
fo r S ales ( A W f o r S ales) a n d H e a d o f th e T e c h n ic a l C o o r d in a tio n a t th e tim e o f
h is te r m in a tio n . T h e fo llo w in g ju s tific a tio n s w e re c ite d in s u p p o r t o f th is ru lin g :

( 1) T h e Nature of the Controversy Test. T h e m e r e fa c t th a t a p e r s o n w as a

s to c k h o ld e r a t th e tim e o f th e filin g o f th e illegal d ism is sa l c a s e d o e s n o t m a k e th e
a c tio n a n in tr a - c o r p o r a te d is p u te .

(2) A p e r s o n , a lth o u g h a n o f fic e r o f th e c o m p a n y , is n o t n e c e s sa rily a

c o r p o ra te o f fic e r th e r e o f. P ro m in e n tly c ite d w a s Mailings d is tin c tio n b e tw e e n a
"regular employee” and a "corporate officer” f o r p u r p o s e s o f e s ta b lis h in g th e tr u e n a tu r e
o f a d is p u te o r c o m p la in t f o r illegal d ism is sa l a n d d e te r m in in g w h ic h b o d y h a s
ju r is d ic tio n o v e r it.

F u r th e r , it w a s e m p h a s iz e d in th is c a se th e tw o (2) c ir c u m s ta n c e s w h ic h
m u s t c o n c u r in o r d e r f o r a n in d iv id u a l to b e c o n s id e re d a c o r p o r a te o ffic e r, as
a g a in s t a n o r d in a ry e m p lo y e e o r o ffic e r, n a m e ly : ( 1) t h e c r e a t i o n o f t h e p o s i t i o n
is u n d e r t h e c o r p o r a t i o n ’s c h a r t e r o r b y - la w s ; and ( 2) th e e le c tio n o f th e
o f f ic e r is b y t h e d i r e c t o r s o r s t o c k h o l d e r s . I t is o n ly w h e n th e o ffic e r c la im in g to
h a v e b e e n illegally d is m is s e d is c la ssified a s su c h c o r p o r a te o f fic e r th a t th e iss u e is
d e e m e d a n in tr a - c o r p o r a te d is p u te w h ic h falls w ith in th e ju ris d ic tio n o f th e trial
c o u rts.

(3) T h e B o a rd h a s n o p o w e r to c re a te c o r p o r a te o ffic e w ith o u t a m e n d in g

th e B y -L aw s.

(4) G e n e r a l I n f o r m a tio n S h e e t (G IS ) s u b m itte d to S E C n e ith e r g o v e rn s

n o r e s ta b lis h e s th e n a tu r e o f o ffic e .

I n th e 2 0 1 8 c a se o f Cacho v. Balagtas? r e s p o n d e n t B a la g ta s w as e le c te d as
N o r th S ta r's E x e c u tiv e V ic e P re s id e n t a n d C h ie f E x e c u tiv e O ffic e r. S h e filed a n
illegal d ism issa l c a s e a g a in st N o r th S ta r a n d th e L a b o r A rb ite r a w a rd e d h e r
s e p a ra tio n p ay , fu ll b a c k w a g e s a n d P3 M m o ra l d a m a g e s , P 2 M e x e m p la ry d a m a g e s
a n d 1 0 % a tto r n e y ’s fees. O n a p p e a l, th e N L R C ru le d th a t B alagtas w as a c o r p o ra te
o ffic e r a t th e tim e o f h e r d ism is sa l a n d n o t a m e re e m p lo y e e . T h e C A re v e rse d it

1 G H No. 201298, Feb. 5 ,2 0 1 4 .

1 P etitioner R aul C . C osare, although a salesm an em ployee o f private respondent D ante A revalo, was nam ed an incorporator
of A rw a to ’s Broadcom , having been assigned 100 shares o f stock w ith par value o f P I .00 per share.
1 G .R N o. 202974, Feb. 7 ,2 0 18 .

J9JC9B0M
 862 Bar reviewer o n Labor Law

b u t th e SC a ffirm e d th e N L R .C s ru lin g th a t w h a t is in v o lv e d h e r e is a n in tr a ­
c o rp o ra te d isp u te a n d n o t a la b o r c a s e b e c au se:

( 1) T h e E x e c u tiv e V ice P re s id e n t p o s itio n is o n e o f th e c o r p o r a te o f fic e s

p ro v id e d in p e titio n e r N o r th S ta r's B y law s ( o n e o r m o r e ' v ic e
p resid e n ts).
(2) R e s p o n d e n t B a la g ta s w a s a p p o in te d b y th e B o a rd a s p e titio n e r N o r t h
S ta r's E x e c u tiv e V ice P re sid e n t.

A n o th e r 2 0 1 8 case, Malcaba v. Prohealth Pharma Philippines, * a ls o r e ite ra te s

Matting. P e u tio n e r M a lcab a h a d b e e n e m p lo y e d w ith r e s p o n d e n t P r o H e a lth sin c e it
sta rte d its o p e ra tio n s in 1997. H e w a s o n e o f its in c o r p o ra to r s a n d a m e m b e r o f th e
B o a rd o f D ire c to rs . H e h e ld 1 M illio n sh a re s in th e c o r p o ra tio n . H e w a s in itially th e
V ice P re sid e n t fo r Sales th e n la te r b e c a m e its P re s id e n t in 2 005 u n til th e tim e o f h is
dism issal.

B o th th e L a b o r A rb ite r a n d th e N L R C ru le d th a t M a lc a b a w a s illegally
d ism issed . T h e C A a n d th e SC , h o w e v e r, h e ld th a t s in c e h e is a c o r p o r a te o ffic e r,
h is te rm in a tio n is intra-corporate in n a tu re a n d ju ris d ic tio n th e r e o v e r b e lo n g s to th e
R T C . A n y issu e o n his alleged d ism issal is b e y o n d th e ju ris d ic tio n o f t h e L a b o r
A rb ite r a n d th e N L R C . C o n s e q u e n tly , it w a s p r o n o u n c e d th a t th e L a b o r A r b ite r ’s
a n d N L R C ’s a d ju d ic a tio n o n his m o n e y cla im s w a s v o id fo r lack o f ju ris d ic tio n . A s
a m a tte r o f eq u ity , p e titio n e r M a lc a b a m u st, th e re fo re , r e tu r n all a m o u n ts re c e iv e d
as ju d g m e n t aw ard p e n d in g final a d ju d ic a tio n o f h is claim s. T h e C o u r t's d ism is sa l
o f p e titio n e r M alcab a's claim s, h o w e v e r, is w ith o u t p re ju d ic e to h is filin g o f th e
a p p ro p ria te c ase in th e p ro p er fo ru m . He w as th u s o r d e re d to RETURN
P 4 ,937,4 2 0 a w a rd e d to h im by th e L a b o r A r b ite r b y w ay o f s e p a ra tio n p a y ,
b ack w ag es a n d 13th m o n th pay.

11-D.
LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT

1. N O N - S U A B I L I T Y F O R L A B O R L A W V I O L A T I O N S .

In o u r ju ris d ic tio n , th e g e n erally a c c e p te d p rin c ip le s o f in te r n a tio n a l law

a re re c o g n iz e d a n d a d o p te d as p a r t o f th e la w o f th e la n d .2 I m m u n ity o f a S ta te a n d
in te rn a tio n a l o rg a n iz a tio n s fro m suit is o n e o f th e s e u n iv e rsa lly re c o g n iz e d
prin cip le s. I t is o n th is b asis th a t L a b o r A rb ite rs o r o t h e r la b o r tr ib u n a ls h a v e n o
ju risd ic tio n o v e r im m u n e e n titie s .3

T h e re arc q u ite a n u m b e r o f c a ses th a t m a y b e c ite d to illu s tra te th is

p rin c ip le b u t tire fo llo w in g w o u ld b e the m o s t id eal e x a m p le s:

' G .R. No. 209085. June 6,2 0 18 .

* Section 2. A rtjde II, 1987 C onstitution
3 Southeast Asian Fisheries D evelopm ent C enter v. Acosta, G .R . Nos. 97468-70, S ept 2 ,1 9 9 3 ,2 2 6 SCRA 49.

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 C hapter Eig h t 863
JURISDICTION AND RELIEFS

In Department of Foreign Affairs v. N L R C ,1 in v o lv in g a n ille g a l d is m is s a l c a s e

file d a g a in s t th e A s ia n D e v e l o p m e n t B a n k (A D B ), it w a s r u le d th a t sa id e n tity
e n jo y s im m u n ity f r o m leg al p r o c e s s o f e v e r y f o r m a n d t h e r e f o r e th e s u it a g a in s t it
c a n n o t p ro sp e r. A nd th is im m u n ity e x te n d s to its o f f ic e r s w h o a ls o e n jo y
im m u n ity in r e s p e c t o f all a c ts p e r f o r m e d b y th e m in th e ir o f fic ia l c a p a c ity . T h e
C h a r te r a n d th e H e a d q u a r te r s A g r e e m e n t g r a n tin g th e s e immunities a n d p riv ile g e s
to th e A D B a r e tre a ty c o v e n a n ts a n d c o m m itm e n ts v o lu n ta r ily a s s u m e d b y th e
P h ilip p in e g o v e r n m e n t w h ic h m u s t b e r e s p e c te d .

In Lasco v. UNRFNRE,2 i n v o lv in g a n illeg al d is m is s a l c a s e file d a g a in s t th e

r e s p o n d e n t w h ic h is a sp e c ia liz e d a g e n c y o f th e L’n ire d N a tio n s , th e sa id im m u n ity
ru le w a s a s s e r te d a n d r e ite ra te d b y th e S u p r e m e C o u r t. In d is m is s in g th e c a s e , th e
H ig h C o u r t sa id th a t b e in g a m e m b e r o f d ie U n ite d N a tio n s a n d a p a r ty to th e
C o n v e n tio n o n th e P riv ile g e s a n d I m m u n itie s o f th e S p e c ia liz e d A g e n c ie s o f th e
U n ite d N a tio n s , d ie P h ilip p in e g o v e r n m e n t a d h e r e s to th e d o c tr in e o f im m u n ity
g r a n te d to th e U n ite d N a tio n s a n d its s p e c ia liz e d a g e n c ie s . B o th tre a tie s h a v e th e
fo rc e a n d e f fe c t o f la w .34

Jusmag Philippines v. NLRC,* a

T h e sa m e d o c tr in e w a s e a rlie r a p p lie d in
Joint United States
c a s e in v o lv in g illegal d ism is sa l o f a F ilip in o e m p lo y e e o f th e
Militaty Assistance Group to the Republic of the Philippines (JUSM A G -Philippines). I n
u p h o ld in g th e L a b o r A r b ite r ’s d ism is sa l o f th e c a se , th e H ig h C o u r t e n u n c ia te d th a t
s in c e th e e m p lo y m e n t c o n tr a c t w a s e n te r e d in to b y J U S M A G in th e d is c h a rg e o f its
governmental f u n c tio n s , J U S M A G b e in g a n e n tity p e r f o r m in g a governmental f u n c tio n
o n b e h a l f o f th e U n ite d S ta te s G o v e r n m e n t p u r s u a n t to d ie M ilitary A s s is ta n c e
A g r e e m e n t d a te d M a rc h 2 1 ,1 9 4 7 , th e ille g a l d is m is s a l su it is o n e a g a in s t th e la tte r,
a lb e it it w a s n o t im p le a d e d in t h e c o m p la in t. C o n s id e r in g th a t th e U n ite d S ta te s
h a s n o t w a iv e d o r c o n s e n te d to t h e s u it, th e c o m p la in t a g a in s t J U S M A G c a n n o t
p r o s p e r . J U S M A G is b e y o n d th e ju r is d ic tio n o f P h ilip p in e c o u r ts .

2. EXCEPTION TO THE RULE.

T h e r e is a n e x c e p tio n to th e im m u n ity ru le as e x e m p lifie d b y th e c a s e o f
United States v. Hon. Rodrigo,5w h e r e i t w a s h e ld th a t w h e n th e f u n c tio n o f d ie fo re ig n
e n tity o th e r w is e im m u n e fro m s u it p a r ta k e s o f th e n a tu r e o f a proprietary activ ity ,
s u c h a s th e re s ta u r a n t se rv ic e s o f f e r e d a t J o h n H a y A ir S ta tio n u n d e r ta k e n by d ie
U n ite d S ta te s G o v e r n m e n t as a c o m m e r c ia l a c tiv ity fo r p r o f it a n d n o t in its
governmental c a p a c ity , t h e c a se f o r illeg al d is m is s a l file d b y a F ilip in o c o o k w o rk in g
th e r e in is w ell w ith in th e ju r is d ic tio n o f P h ilip p in e c o u rts . T h e re a s o n is th a t by
e n te r in g in to th e e m p lo y m e n t c o n tr a c t w id i th e c o o k in d ie d is c h a rg e o f its
proprietaryfunctions, it im p lie d ly d iv e s te d its e lf o f its s o v e re ig n im m u n ity f r o m su it.

' G R N o. 113191, S e p t 1 8,1 99 6 ,2 6 2 SCRA 3 9 ,4 3 -4 4 .

J Lasco v . U nited N ations R evolving Fund for N atural R esources E xpkxafon, G .R . N os. 109095-109107, Feb. 2 3,1 99 5 .
3 See also W orid H eath Q ga n iza tio n v. A quino. G R N o. 1-35131. Nov. 2 9 ,1 9 7 2 .4 8 SCRA 242
4 G R N o. 108813, D ec 15.1994.
5 G R No. 79470, Feb. 2 6 ,1 9 9 0 ,1 8 2 SCRA 6 4 4 ,6 6 0 .

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 864 Bar Reviewer on Labor law

3. E S T O P P E L D O E S N O T C O N F E R JU R IS D IC T IO N O V E R A N
IM M U N E E N T IT Y .

A n en tity im m u n e fro m su it c a n n o t b e e s to p p e d f r o m c la im in g s u c h
d ip lo m a tic im m u n ity sin ce e s to p p e l d o e s n o t o p e r a te to c o n f e r ju r is d ic tio n to a
trib u n a l th a t h a s n o n e o v e r a cause o f a c tio n .1 J

11-E.
DOCTRINE OF FORUM NON CONVENIENS

1. R E Q U I S I T E S . V

T h is d o c trin e is a n in te rn a tio n a l la w p rin c ip le w h ic h h a s b e e n a p p lie d to

la b o r cases. T h e fo llo w in g are th e re q u is ite s f o r its ap p licab ility :

(1) T h a t th e P h ilip p in e c o u r t is o n e to w h ic h th e p a rtie s m a y c o n v e n ie n tly

re so rt;
(2) T h a t th e P h ilip p in e c o u r t is in a p o s itio n to m a k e a n in te llig e n t
d e c is io n as to th e law a n d th e fa c ts; a n d
(3) T h a t th e P h ilip p in e c o u r t h a s o r is likely to h a v e p o w e r to e n f o r c e its
d e c is io n .*
23
2. A P P L IC A T IO N T O L A B O R C A S E S .

a. Case where doctrine was rejected.

P e titio n e rs ’ in v o c a tio n o f th is p rin c ip le w as re je c te d in Pacific Consultants v.

Schonfeld.J P e titio n e rs ’ in sisten ce w a s b a s e d on th e fa c t th a t r e s p o n d e n t is a
C a n ad ian c itiz e n a n d w as a re p atriate. I n s o re je c tin g p e titio n e rs ’ c o n te n tio n , th e
S u p re m e C o u r t c ite d th e follow ing r e a s o n s th a t d o n o t w a rra n t th e a p p lic a tio n o f
the said p rin cip le : ( 1) th e L a b o r C o d e d o e s n o t in c lu d e forum non conveniens as a
g ro u n d fo r th e d ism issal o f th e c o m p la in t ;4 a n d (2) th e p ro p rie ty o f d is m is s in g a
case b a se d o n th is p rin c ip le req u ires a fa c tu a l d e te rm in a tio n ; h e n c e , it is p ro p e rly
c o n s id e re d as a d e fe n se .

b. Case where doctrine was applied.

T h is d o c trin e w as ap p lied in th e c a s e o f The Manila Hotel Corp. v. NLRC.5

w h e re p riv a te re s p o n d e n t M arcelo S a n to s w a s a n o v e rse a s w o r k e r e m p lo y e d as a
p rin te r in a p rin tin g p re ss in th e S u lta n a te o f O m a n w h e n h e w a s d ire c tly h ir e d b y
th e P alace H o te l, B eijing, P e o p le ’s R e p u b lic o f C h in a to w o r k in its p r in t s h o p . T h is
h o te l w as b e in g m a n a g e d by the M a n ila H o te l In te rn a tio n a l L td ., a fo re ig n e n tity

’ Ebro 111v. NLRC, G .R . N o. 110187, S ep t 4,1996,261 SCRA 399.

2 According to Bank o f Am erica, NT&SA, Bank of Am erica International, Ltd. v . C A, G .R . No. 120135, M&rch 3 1,2003.
3 Pacific C onsultants International A sia, In c v. Schonfeld. G .R . N o. 166920, Feb. 1 9,2007.
4 See PHILSEC Investm ent C orporafon v. CA, G.R. No. 103493, June 19; 1997,274 SCRA 102.
5 The M anila H otel C orp. and M anila Hotel International Lim ited v . N LR C , G .R . N o. 120077, O c t 1 3,2000.

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JURISDICTION AND RELIEFS

re g is te re d u n d e r t h e la w s o f H o n g K o n g . L a te r , h e w a s te r m in a te d d u e to
r e tr e n c h m e n t o c c a s io n e d by b u s in e s s r e v e r s e s b r o u g h t a b o u t by th e p o litic a l
u p h e a v a l in C h in a (re f e r rin g to t h e T ia n a n m e n S q u a r e in c id e n t) w h ic h se v ere ly
a f fe c te d th e h o te l’s o p e r a tio n s .

I n h o ld in g th a t th e N L R C w a s a s e rio u s ly in c o n v e n ie n t f o r u m , th e
S u p re m e C o u r t n o t e d th a t th e m a in a s p e c ts o f th e c a s e tr a n s p ir e d in tw o fo re ig n
ju r is d ic tio n s a n d th e c a s e in v o lv e s p u re ly f o re ig n e le m e n ts . T h e o n ly lin k th a t th e
P h ilip p in e s h a s w ith t h e c a s e is th a t t h e p r iv a te r e s p o n d e n t e m p lo y e e (M a rc e lo
S a n to s) is a F ilip in o c itiz e n . The P a la c e H o te l and M H IC L a re fo re ig n
c o r p o ra tio n s . C o n s e q u e n tly , n o t all c a s e s in v o lv in g F ilip in o c itiz e n s c a n b e trie d
h e re . R e s p o n d e n t e m p lo y e e w a s h ir e d d ire c tly b y t h e B e ijin g P a la c e H o te l, a
fo re ig n e m p lo y e r, th r o u g h c o r r e s p o n d e n c e s e n t to h i m w h ile h e w a s w o r k in g a t th e
S u lta n a te o f O m a n . H e w a s h i r e d w ith o u t t h e in te r v e n tio n o f th e P O E A o r a n y
a u th o r iz e d r e c r u itm e n t a g e n c y o f th e g o v e r n m e n t. H e n c e , th e N L R C is a n
in c o n v e n ie n t f o r u m g iv e n th a t a ll th e in c id e n ts o f t h e c a se - f ro m th e tim e o f
re c r u itm e n t, to e m p lo y m e n t to d is m is s a l - o c c u r r e d o u ts id e th e P h ilip p in e s . T h e
in c o n v e n ie n c e is c o m p o u n d e d b y th e fa c t th a t th e p r o p e r d e f e n d a n ts , th e P a la c e
H o te l a n d M H IC L , a re not n a tio n a ls o f th e P h ilip p in e s . N e ith e r a re th e y “ d o in g
b u s in e s s in th e P h ilip p in e s .” L ik e w ise , th e m a in w itn e s s e s , M r. S h m id t (G e n e ra l
M a n a g e r o f th e P a la c e H o te l) a n d M r. H e n k (P a la c e H o te l’s M a n a g e r) a re n o n ­
re sid e n ts o f d ie P h ilip p in e s .

N e ith e r c a n a n in te llig e n t d e c is io n b e m a d e a s to th e la w g o v e rn in g th e
e m p lo y m e n t c o n tr a c t as su c h w a s p e r fe c te d in fo re ig n soil. T h is calls to f o re th e
a p p lic a tio n o f th e p r in c ip le o f lex loci contractus ( th e la w o f th e p la c e w h e re th e
c o n tr a c t w as m a d e ). I t m u s t b e n o te d th a t th e e m p lo y m e n t c o n tr a c t w as not
p e rfe c te d in th e P h ilip p in e s . P riv a te r e s p o n d e n t e m p lo y e e sig n ifie d his a c c e p ta n c e
th e r e o f b y w ritin g a le tte r w h ile h e w as in th e S u lta n a te o f O m a n . T h is le tte r w a s
s e n t to th e P alace H o te l in th e P e o p le ’s R e p u b lic o f C h in a . N e ith e r c a n th e N L R C
d e te r m in e th e fa c ts s u r r o u n d in g t h e a lle g e d illeg al d ism is sa l as all a c ts c o m p la in e d
o f to o k p lace in B e ijin g , P e o p le ’s R e p u b lic o f C h in a . T h e N L R C w a s not in a
p o s itio n to d e te r m in e w h e th e r th e T ia n a n m e n S q u a r e in c id e n t tru ly ad v e rse ly
a ffe c te d th e o p e r a tio n s o f th e P a la c e H o te l as to ju s tify r e s p o n d e n t e m p lo y e e ’s
r e tre n c h m e n t.

E v e n a s s u m in g th a t a p r o p e r d e c is io n c o u ld b e re a c h e d by th e N L R C ,
s u c h w o u ld n o t h a v e an y b in d in g e ffe c t a g a in s t th e e m p lo y e r, th e P a la c e H o te l,
w h ic h is a c o r p o r a tio n in c o r p o r a te d u n d e r th e law s o f C h in a a n d w as n o t e v e n
se rv e d w id i s u m m o n s . J u r is d ic tio n o v e r its p e r s o n w a s n o t a c q u ire d . T h is is n o t to
say th a t P h ilip p in e c o u r ts a n d a g e n c ie s h a v e n o p o w e r to so lv e c o n tro v e rs ie s
in v o lv in g fo re ig n e m p lo y e rs . N e ith e r c o u ld it b e sa id th a t th e S u p re m e C o u r t d o e s
n o t h a v e p o w e r o v e r a n e m p lo y m e n t c o n tr a c t e x e c u te d in a fo re ig n c o u n try . I f th e
re s p o n d e n t e m p lo y e e w e re a n “ o v e rs e a s c o n tr a c t w o r k e r ” , a P h ilip p in e fo ru m ,

J9JC9B0M
 866 Bar reviewer o n labor La w

specifically th e P O E A , n o t the N I J I C , w o u ld p r o te c t h im . H e is n o t a n “ o v e rs e a s
c o n tra c t w o rk e r" , a fact w h ic h h e a d m its w ith c o n v ic tio n .1

11-F.
QUASI-DELICT OR TORT CASES •

1. L A B O R A R B I T E R S L A C K J U R I S D I C T I O N .

D a m a g e s a risin g fro m q u a s i-d e lic t o r to r t a rc o f te n c o n fu se d w ith

d a m ag es th a t m ay be c laim ed under la b o r law's and la b o r a g re e m e n ts .
C o n s e q u e n d y , q u a si-d e lic t o r to r t d a m a g e s are a s s e rte d , th o u g h e r ro n e o u s ly , in
la b o r cases filed w ith th e L a b o r A rb ite rs . A s ea rlie r e m p h a s iz e d , h o w e v e r , L a b o r
A rb ite rs a n d th e N L R C h av e n o p o w e r o r a u th o rity to g r a n t re lie fs in c la im s th a t
d o n o t arise fro m e m p lo y e r-e m p lo y e e r e la tio n s h ip s u c h a s th o s e e m a n a tin g f ro m
q u a si-d e lic t o r to r t cases p e r A rtic le 2 1 7 6 o f th e C ivil C o d e d ta t h a v e n o r e a s o n a b le
cau sal c o n n e c tio n to a n y o f th e cla im s p r o v id e d in d ie L a b o r C o d e , o th e r la b o r
sta tu te s, o r co lle c tiv e b a rg ain in g a g re e m e n ts .

2. T H E T O L O S A C A S E .

T h e b e s t e x a m p le to c ite o n th is p o in t is th e c a s e o f Evefyn To/osa v.

NLRC.2 B e c a u se o f th e d e a th o f h e r h u s b a n d , C a p ta in V irg ilio T o lo s a , a c o m p la in t
fo r d a m a g e s w a s lo d g e d w ith th e L a b o r A r b ite r b y th e s u rv iv in g w ife b u t th e
S u p re m e C o u r t ru le d th a t th e L a b o r A r b ite r h a s n o ju ris d ic tio n o v e r t h e c a se
b e c a u s e it w a s e s ta b lis h e d th a t t h e s a m e w a s in th e n a tu r e o f a n a c tio n b a s e d o n
q u a si-d e lic t o r to rt, it b e in g e v id e n t th a t th e iss u e p r e s e n te d th e r e in in v o lv e d th e
alleged g ro ss n e g lig e n c e o f C a p ta in T o lo s a ’s s h ip m a te s , P e d r o G a r a te a n d M a rio
A sis, w ith w h o m C a p ta in T o lo s a h a d n o e m p lo y e r-e m p lo y e e r e la tio n s h ip . H e n c e ,
this case d o e s n o t in v o lv e th e a d ju d ic a tio n o f a la b o r d is p u te , b u t th e re c o v e ry o f
d a m a g e s b a s e d o n q u asi-d elict. N o ta b ly , t h e ju ris d ic tio n o f la b o r trib u n a ls is
lim ite d to d is p u te s a risin g fro m e m p lo y e r-e m p lo y e e re la tio n s.

11-G.
CRIMINAL AND CIVIL ACTIONS ARISING FROM VIOLATIONS
OF THE PENAL PROVISIONS OF THE LABOR CODE

1. R E G U L A R C O U R T S H A V E J U R I S D I C T I O N .

T h e L a b o r C o d e h as e x p re ss ly c o n f e r r e d ju ris d ic tio n o v e r c rim in a l a n d

civil cases a risin g fro m v io latio n s o f th e L a b o r C o d e w ith d ie re g u la r c o u r ts . T h e
relev an t p ro v isio n s are as follow s:

1 Id.
} G .R. No. 149578, A pril 10,2003.

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JURISDICTION AND RELIEFS

1. A r tic le 2 5 0 [241] - w h ic h p r o v id e s th a t c rim in a l a n d civil liab ilitie s

a risin g f r o m v io la tio n s o f rig h ts a n d c o n d itio n s o f u n io n m e m b e r s h ip
p r o v id e d f o r th e r e u n d e r sh a ll c o n tin u e to b e u n d e r d ie ju r is d ic tio n o f
o r d in a ry c o u rts .

2. A r tic le 2 5 8 [2 4 7 ] - w h ile th e ju r is d ic tio n to h e a r a n d d e c id e th e

a d m in is tra tiv e a n d c iv il a s p e c ts o f u n fa ir la b o r p r a c tic e s is lo d g e d w ith
d ie L a b o r A r b ite rs , th e ju r is d ic tio n o v e r th e c rim in a l a s p e c t t h e r e o f is
v e s te d in th e re g u la r c o u r ts .

3. A r tic le 2 8 7 [272] - A lth o u g h th is a rtic le 1 d o e s n o t m e n tio n e x p re s s ly

th a t th e ju r is d ic tio n o v e r th e c rim in a l v io la tio n o f its p r o v is io n is
v e s te d in th e re g u la r c o u r t, it, h o w e v e r , m e n tio n s th e w o rd “court' in
p a ra g ra p h [a] th e r e o f, o b v io u s ly r e fe rr in g to th e re g u la r c o u r t F u r th e r ,
in th e Rules to Implement the Labor Code, a s a m e n d e d ,2 it is p r o v id e d th a t
th e re g u la r c o u r ts sh a ll h a v e ju r is d ic tio n o v e r a n y c rim in a l a c tio n
u n d e r A rtic le 2 8 7 [272] o f th e L a b o r C o d e , a s a m e n d e d , b u t s u b je c t to
th e r e q u ire d c le a ra n c e f ro m t h e D O L E o n c a s e s a ris in g o u t o f o r
re la te d to a la b o r d is p u te p u r s u a n t to th e M in is try o f J u s tic e 3*Circular
No. 15, Series of 1982, a n d Circular No. 9, Series of 19865
4. A r tic le 3 0 3 [2 8 8 ] - I t is p r o v id e d th e re in th a t a n y p r o v is io n o f la w to
th e c o n tr a ry n o tw ith s ta n d in g , a n y c rim in a l o f fe n s e p u n is h e d in th e
L abor C ode sh a ll be under th e co n cu rren t ju r is d ic tio n of th e
M u n ic ip a l o r C ity C o u r ts a n d th e C o u r ts o f F irs t I n s ta n c e (n o w
RTQ .5

11-H.
CONSTITUTIONALITY
OF LABOR CONTRACT STIPULATIONS

1. T H E H A L A G U E N A D O C T R I N E .

In Halaguena v. Philippine Airlines, Inc.,6 i t w a s p r o n o u n c e d th a t it is n o t th e

L a b o r A r b ite r b u t th e re g u la r c o u r t w h ic h h a s ju ris d ic tio n to ru le on th e
c o n s titu tio n a lity o f la b o r c o n tr a c ts s u c h a s a C B A . P e titio n e rs w e r e fe m a le flig h t
a tte n d a n ts o f r e s p o n d e n t P h ilip p in e A irlin e s (P A L ) a n d a re m e m b e r s o f th e F lig h t
A tte n d a n ts a n d S te w a rd s A s s o c ia tio n o f th e P h ilip p in e s (F A S A P ), th e s o le a n d

' E n ffie d ’ P enalties.’

7 As am ended, by D epartm ent O rder No. 4 0 0 3 . S eries o f 2003, and further am erded by D epartm ent O d e r N o. 4 0 6 0 3 ,
Series o f 2010 (M arch 2 9.2 01 0 ],
3 Now D epartm ent of Justice.
* Section 19 (form erly S ection 15], Rule X X II, Book V, R ules to Im plem ent the Labor Oode, as am ended by D epartm ent O rder
No. 4 0 6 0 3 , S eries o f 2010, [M arch 1 9,2 01 0 ], previously am ended by D epartm ent O rder No. 4 0 0 3 , S eries o f 2003, [Feb.
17,2003],
5 Now R egional T ria l C ourts.
6 OR. No. 172013, O ct 2 ,2 0 09 .

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exclu siv e b arg ain in g re p re se n ta tiv e o f th e flig h t a tte n d a n ts , flig h t s te w a rd s a n d

p u rse rs o f re sp o n d e n t. T h e Ju ly 11, 200 1 C B A b e tw e e n P A L a n d F A S A P p r o v id e s
th a t th e c o m p u lso ry re tire m e n t f o r fe m a le flight a tte n d a n ts is fifty -fiv e (55) a n d
sixty' (60) fo r th eir m ale c o u n te rp a rt.

C laim in g th a t said CBA p r o v is io n is d is c rim in a to ry a g a in s t th e m ,

p e titio n e rs filed ag ain st re s p o n d e n t a S p e c ia l C ivil A c tio n fo r D e c la r a to r y R e lie f
w ith P ra y e r fo r th e Issu an ce o f T e m p o ra r y R e s tra in in g O r d e r a n d W r it o f
P re lim in ary In ju n c tio n u n til th e R e g io n a l T ria l C o u r t (R T C ) o f M a k a ti C ity.

In ru lin g th a t th e R T C h a s ju ris d ic tio n , th e S u p re m e C o u r t c ite d th e

follo w in g reaso n s:

( 1) T h e case is an o rd in a ry civ il a c tio n , h e n c e , b e y o n d th e ju ris d ic tio n o f

lab o r tn b u n a ls.

(2) T h e said issue c a n n o t b e re s o lv e d solely by a p p ly in g th e L a b o r C o d e .

R a th e r, it rcq iu res th e a p p lic a tio n o f th e C o n s titu tio n , la b o r s ta tu te s ,
law o n c o n tra c ts a n d th e C o n v e n tio n o n th e E lim in a tio n o f A ll
F o rm s o f D is c rim in a tio n A g a in s t W o m e n (C E D A W ). T h e p o w e r to
apply an d in te rp re t th e c o n s titu tio n a n d C E D A W is w ith in th e
ju risd ictio n o f tnal c o u r ts , a c o u r t o f g e n e ra l ju ris d ic tio n .

(3) N o t every' c o n tro v e rs y o r m o n e y c laim b y a n e m p lo y e e a g a in s t th e

em p lo y e r o r vice-versa is w ith in th e ex c lu siv e ju r is d ic tio n o f th e L a b o r
A rb iter. A c tio n s b e tw e e n e m p lo y e e s and e m p lo y e r w h e r e th e
em p lo y e r-e m p lo y e e re la tio n s h ip is m e re ly in c id e n ta l a n d th e c a u s e o f
actio n p ro c e e d s fro m a d if fe r e n t s o u rc e o f o b lig a tio n a re w ith in th e
exclusive ju risd ic tio n o f th e reg u la r c o u r ts . H e r e , th e e m p lo y e r-
em p lo y e e re la tio n sh ip b e tw e e n th e p a rtie s is m e re ly in c id e n ta l a n d
th e cau se o f a c tio n u ltim a te ly a ro s e f ro m d if f e r e n t s o u r c e s o f
o b lig a tio n , i.e., th e C o n s titu tio n a n d C E D A W .

II.
REQUIREMENTS TO PERFECT APPEAL TO NLRC

A.
APPEAL IN GENERAL

1. A P P E A L , M E A N I N G A N D N A T U R E .

T h e te rm “appeal” r e fe rs to th e e le v a tio n b y a n a g g rie v e d p a r ty to an

agen cy v e s te d w ith ap p ellate a u th o r ity o f a n y d e c is io n , re s o lu tio n o r o rd er
d is p o s in g th e p rin cip al issues o f a c a s e r e n d e r e d b y a n a g e n c y v e s te d w ith o rig in a l
ju risd ic tio n , u n d e rta k e n by filing a m e m o r a n d u m o f a p p e a l .1

' S ection 1 |b). R ule I Book V , R ules to Im p le m en t the Labor C ode, a s am ended by D e pa rtm e n t O rder N o. 40-03,
S enes o f 2003, (Feu 17.2003]

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2. G R O U N D S F O R A P P E A L T O T H E C O M M IS S IO N (N L R C ).

T h e a p p e a l t o th e N L R C m a y b e e n te r ta in e d o n ly o n a n y o f th e fo llo w in g
g ro u n d s:

a. I f th e r e is a prima facie e v id e n c e o f a b u s e o f d is c r e tio n o n th e p a rt o f

d ie L a b o r A r b ite r,
b . I f th e d e c is io n , o r d e r o r a w a r d w a s s e c u re d th r o u g h f ra u d o r c o e r c io n ,
in c lu d in g g r a ft a n d c o r r u p tio n ;
c. I f m a d e p u re ly o n q u e s tio n s o f la w , a n d / o r
d . I f s e rio u s e r ro r s in th e fin d in g s o f fa c t a re ra is e d w h ic h , i f n o t
c o r re c te d , w o u ld c a u s e g r a v e o r irre p a ra b le d a m a g e o r in ju ry to th e
a p p e lla n t.12

• N L R C h a s c e rtio ra ri p o w e r.

The first g r o u n d above re g a r d in g prima facie e v id e n c e of abuse of

d i s c r e t i o n o n th e p a r t o f th e L a b o r A r b ite r is a c tu a lly a n e x e rc is e o f c e rtio ra ri
p o w e r b y d ie N L R C . T h e c a se o f Triad Security & Allied Services, Inc. v. Ortega}
e x p re s s ly re c o g n iz e d th is c e r tio ra r i p o w e r o f th e N L R C .34 C le a rly , a c c o r d in g to
Au^a, Jr. v. MOL Philippines, Inc.,* th e N L R C is p o s s e s s e d o f th e p o w e r to re c tify
a n y a b u s e o f d is c re tio n c o m m itte d b y th e L a b o r A rb ite r.

3. S O M E P R I N C I P L E S O N A P P E A L .

• A p p e a ls u n d e r A rtic le 2 2 9 [223] a p p ly o n ly to a p p e a ls f r o m th e L a b o r
A r b ite r ’s d e c is io n s , a w a rd s o r o r d e r s to th e C o m m is s io n (N L R C ).

• T h e r e is n o a p p e a l fro m th e d e c is io n s , o rd e rs o r a w a rd s o f th e N L R C . C learly,
th e r e f o r e , A rtic le 2 2 9 [223] o f th e L a b o r C o d e is n o t th e p r o p e r b a s is f o r
e le v a tin g th e c a s e to th e C o u r t o f A p p e a ls o r to th e S u p r e m e C o u r t.5 T h e
p r o p e r re m e d y f ro m th e d e c is io n s , a w a rd s o r o r d e rs o f th e N L R C to th e
C o u r t o f A p p e a ls is a R u le 6 5 p e titio n fo r certiorari a n d fro m th e C o u rt o f
A p p e a ls to th e S u p re m e C o u r t, a R u le 4 5 p e titio n f o r r e v ie w o n certiorari.
• A p p e a l is n o t a c o n s titu tio n a l rig h t b u t a m e r e s ta tu to r y p riv ile g e . H e n c e ,
p a r tie s w h o se e k to avail o f it m u s t c o m p ly w ith th e s ta tu te s o r ru le s a llo w in g
it.6

• A m o t i o n fo r r e c o n s id e r a tio n is u n a v a ilin g as a re m e d y a g a in s t a d e c is io n o f
th e L a b o r A rb ite r. T h e L a b o r A r b ite r s h o u ld tre a t th e s a id m o tio n as a n
a p p e a l to th e N L R C .7

1 A rticles 129 and 229 [223], Labor Code; S ection 2 , R ule V I, 2011 NLRC R ules o f P rocedure.
2 G .R . No. 160871, Feb. 6 .2 0 06 .
3 M etro Drog D istribution, Inc. v. M etro Drug C orporation E m ployees A ssooatiorvFFW , G R N o. 142666, S e p t 26,2005.
4 G R N o. 175481, N ov. 2 1,2 01 2 .
5 Tom as C laudio M em orial C ollege, Inc. V .C A .G R N o. 152568, Feb. 16,2004.
6 P h ilu x, In c. v . N LR C . G R N o. 151854, S epL 3 ,2 0 0 8 .
1 M ille n n iu m E re ctors C o rp o ration v. M a ga lla ne s, G R N o . 184362, N ovem ber 1 5 ,2 0 1 0 .

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• A “ P e titio n fo r R e lie f’ sh o u ld b e tre a te d as a p p e a l.1

• A ffirm a tiv e r e lie f is n o t a v a ila b le to a p a r ty w h o f a ile d to a p p e a l . A p a rty

w h o d o e s n o t ap p eal fro m a d e c is io n o f a c o u r t c a n n o t o b ta in a ffirm a tiv e
relief o th e r th a n th e o n es g ra n te d in th e a p p e a le d d e c is io n .2

B.
PERFECTION OF APPEAL

1. E F F E C T O F P E R F E C T I O N O F A P P E A L O N E X E C U T I O N .

T o re ite ra te , th e p e rfe c tio n o f a n a p p e a l sh a ll stay th e e x e c u tio n o f th e

decisio n o f d ie L a b o r A rb ite r except e x e c u tio n fo r re in s ta te m e n t p e n d in g a p p e a l.3

2. P E R F E C T I O N O F A P P E A L , M A N D A T O R Y A N D J U R I S D I C T I O N A L .

T h e p e rfe c tio n o f ap p eal w ith in th e p e rio d a n d in th e m a n n e r p r e s c r ib e d

by law is ju risd ictio n al a n d n o n -c o m p lia n c e w ith th e leg al r e q u ire m e n ts is fatal a n d
h a s d ie e ffe c t o f re n d e rin g d ie ju d g m e n t fin a l a n d e x e c u to ry , h e n c e , u n a p p e a la b le .4

3. R E Q U I S I T E S .

T h e req u isites fo r p e rfe c tio n o f a p p e a l to th e N L R C a re as follo w s:

(1) O b s e rv a n c e o f th e r e g l e m e n t a r y p e r i o d ;
(2) P a y m e n t o f a p p e a l a n d l e g a l r e s e a r c h fe e ;
(3) F iling o f a M e m o r a n d u m o f A p p e a l;
(4) P r o o f o f s e rv ic e to th e o t h e r p a rty ; a n d
(5) P o stin g o f c a s h , p r o p e r t y o r s u r e t y b o n d , in c a se o f m o n e t a r y
a w a rd s.

T h e fo re g o in g are d isc u sse d b e lo w in seriatim.

c.
REGLEMENTARY PERIOD

1. T H R E E (3) R E G L E M E N T A R Y P E R I O D S .

T h e re g lem en tary p e n o d d e p e n d s o n w h e r e th e a p p e a l to d ie N L R C
em a n a te s, «£.:

1) T e n (10) c a l e n d a r d a y s - in th e c a se o f a p p e a ls f ro m d e c is io n s o f th e
L a b o r A rb ite rs u n d e r A rtic le 2 2 9 [223];

2) F iv e (5) c a l e n d a r d a y s - in th e c a se o f a p p e a ls in c o n te m p t cases
d e c id e d by L a b o r A rb ite rs ;1 a n d

1 N ew P acific T im ber & S upply C o., Inc. v. NLRC, G .R . N o. 124224, M arch 1 7 ,2 0 0 0 .

2 Canedo v. Kam piian Security and D e te c ts Agency, Inc., G R N o. 179326, Ju ly 3 1,2 01 3 .
5 Section 3, Rule X I, 2011 NLRC Rules o f Procedure.
4 OpinaWo v . R a viia , G.R. No. 196573, O ct 16,2013.

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3) F iv e (5 ) c a l e n d a r d a y s - in t h e c a s e o f a p p e a ls f r o m d e c is io n s o f th e
D O L E R e g io n a l D i r e c to r u n d e r A r tic le 1 2 9 (sm a ll m o n e y c la im s o f
P 5 ,0 0 0 .0 0 o r less).12

T h e p e r io d s p r o v id e d a b o v e a re all c a le n d a r d a y s a n d n o t w o r k in g d a y s .3
C o n s e q u c n d y , S a tu rd a y s , S u n d a y s a n d le g a l h o lid a y s a r e in c lu d e d in r e c k o n in g a n d
c o m p u tin g th e re g le m e n ta ry p e r io d .4

2. E X C E P T IO N S T O T H E R E G L E M E N T A R Y P E R I O D R U L E .

C e rta in p r o c e d u r a l la p s e s m a y b e d is r e g a r d e d w h e r e th e r e is a n acceptable
reason t o e x c u s e ta r d in e s s in th e ta k in g o f th e a p p e a l.5 I t is a lw a y s w ith in t h e p o w e r
o f th e c o u r t to s u s p e n d its o w n ru le s o r to e x c e p t a p a r tic u la r c a s e f r o m its
o p e r a tio n , w h e n e v e r th e p u r p o s e s o f ju s tic e r e q u ire it.6 T h u s , p r o c e d u r a l r u le s m ay
b e w a iv e d , d is p e n s e d w ith o r re la x e d in th e in te r e s t o f s u b s ta n tia l ju stic e . T h e C o u r t
m a y d e ig n to v e e r a w a y fro m th e g e n e r a l r u le if, o n its fa c e , t h e a p p e a l a p p e a r s to
b e a b s o lu te ly m e r ito r io u s .7

T h e fo llo w in g a re d ie s p e c ific in s ta n c e s w h e r e th e r u le s o n th e r e c k o n in g
o f th e re g le m e n ta ry p e r io d h a v e n o t b e e n s tr ie d y o b s e r v e d :

1) 1 0 !h d a y (o r 5th d ay ) fallin g o n a S a tu rd a y ,8 S u n d a y o r h o lid a y ,9 in

w h ic h c a s e , th e a p p e a l m ay b e file d th e n e x t w o r k in g day.
2) R e lia n c e on e rro n e o u s n o tic e o f d e c is io n 10 a s w hen th e n o tic e
e x p re ss ly s ta te s “ w o rk in g d a y s ” a n d n o t “ c a le n d a r d a y s .”
3) F ilin g o f p e titio n fo r e x tra o rd in a ry re m e d ie s f ro m o rd e rs or
r e s o lu tio n s o f L a b o r A r b ite rs o r o n t h i r d p a r t y c l a i m s - t e n (10)
calendar d a y s .11
4 ) W h e n N L R C e x e rc ise s its p o w e r to “ correct,
amend, or waive any error,
defect or irregularity whether in substance or jom i’ in th e e x e rc is e o f its

1 Section 1, Rule IX , 2011 NLRC R ules o f P rocedure: See also A rticle 225(d) [218(d)], as am ended by R A . N o. 6715, M arch
2 1,1 98 9 ; Section 1, R ule X X III, Book V. R ules to Im plem ent the Labor C ode, as am ended by D epartm ent O rder N o. 40-03,
Series o f 2003, (Feb. 1 7.2 00 3 ]
2 Section 1, R ule V I, Ib id .; See also B ristol M yers S qubb [P h ils.], Inc. v. V itoria, G R N o. 148156, S e p t 2 7,2 00 4 .
3 R J L M a rtto e zF ish in g C o rp o ra tio n v.N L R C ,G R N o s.L -6 3 5 5 0 -5 1 ,J a n .3 1 .1984.
4 Jucfy P hilippines, h e . v . N LR C . G .R . No. 111934, A pril 2 9,1 99 8
5 P A L Inc. v . N LRC, G R N o. 120506, O ct 2 8,1 99 6 ; C to n g G uan Trading v . N LR C , G R N o. 81471, A pril 2 6 ,1 9 8 9 .
6 C hronide S ecurities C orpocatton v. NLRC. G .R . N o. 157907, N ov. 25,2004.
7 Tiger C onstruction and D evelopm ent C orporation v. A bay, G R N o. 164141, Feb. 2 6,2 01 0 .
8 Judy P h ip p in e s, Inc. v . N LRC. G R No. 111934, A pril 2 9 ,1 9 9 8 ,2 8 9 SCRA 7 55; 352 Phfl. 593.
9 P hilippine G eotherm al, Inc. v . N LRC, G R N o. 106370, S e p t 8 ,1 9 9 4 .
10 Firestone T ire and R ubber Com pany o f She P hitippines v. Lariosa, G R N o. L-70479, Feb. 27,1 98 7 .
11 U nder the current 2011 NLRC R ules of P rocedure, the decision o f (he Labor A rb ite r on a ffiitd party claim is n o t appealable
b ut m ay be elevated to the Com m ission and resolved in accordance w fih R ule X II [E xtraordinary R em edies] o f th e 2011
NLRC R ules o f P rocedure. (S ection 11 (d], R ule X) (hereof). ConsequenBy, such elevation to (he C om m ission m ay o nly be
tortiated b y w ay o f fiin g o f a p etition fo r extiraordinary rem edy n ot la te r lhan ten (10) calendar days from receipt o f Ih e o rd e r o r
resolution o f Ihe Labor A rb ite r, fum ishhg a copy thereof to the adverse party.( S ection 3, R ule X II, Ibid.).

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appellate jurisdiction, as provided under Article 218(c) o f the Labor

Code,1in which case, the late filing of the appeal is excused.
5) When technical rules are disregarded under Article 227 [221].2
6) When there are some compelling reasons that justify the allowance of
the appeal despite its late filing such as when it is granted in the
interest of substantial justice.3

3. SOME PR IN CIPLES ON REG LEM EN TARY PE R IO D .

(1) lhe reglementary period is mandatory and not a “mere technicality."4

(2) The failure to appeal within the reglem entary period renders the
judgment appealed from final and executory by operation of law.5 Consequently,
the prevailing party is entided, as a matter of right, to a writ of execution and die
issuance thereof becomes a ministerial duty which may be compelled through the
remedy of mandamus.6

(3) The date of receipt of decisions, resolutions or orders by the parties

is of no moment. For purposes o f appeal, the reglementary period shall be counted
from receipt of such decisions, resolutions, or orders by the counsel or
representative of record.7

(4) Miscomputation of the reglementary period will not forestall the

finality of the judgment. It is in the interest o f everyone that the date when
judgments become final and executory should remain fixed and ascertainable.8

(5) The date of mailing by registered mail o f the appeal memorandum is

die date of its filing.9

(6) Morion for extension of time to perfect the appeal is not allowed.10
This kind of morion is a prohibited pleading.11

(7) Morion for extension o f rime to file the memorandum of appeal is not
allowed.12

(8) Motion for extension o f rime to file appeal bond is n o t allowed.1

' New Pacific Timber & Supply Co.. Inc. v. NLRC, G. R No. 124224, March 1 7 .2000.328SCRA404.
2 Article 227 [221]-Technical Rules Not Binding and Prior Resort to Amicable Settlem ent; City Fair CorporaSonv. NLRC, G .R
No. 95711, April 21,1995.
3 Surima v NLRC. G .R No. 121147, June 26,1998; Valderrama v. NLRC, G R No. 98239, April 25,1996.
4 Cafpayv NLRC, G.R.No. 166411, Aug. 3,2010; Moneytrend Lending Corporation V .C A .G JI No. 165580, Feb. 20,2006.
5 Chroncie Securities Corporation v. NLRC, G R No. 157907, Nov. 25,2004.
6 Building Care Corpora fon/Leopard Security & Investigation Agency v. Myma Macaraeg, G .R No. 198357, Dec. 10,2012.
7 Section 4 (b), Rule III, 2011 NLRC R ile s of Procedure; Flexo M g. Corp. v. NLRC, G .R No. L-55971, Feb. 28,1985,135
SCRA145; Lytu Industries Contractor, Inc. v. Tala, G R No. 164333, Aug. 24,2007.
! Vofcschel Labor Union v. NLRC, G. R. No. L-39686, June 25.1980,98 SCRA 314.
9 Assocated Anglo-American Tobacco Corporation v. NLRC, G R No. 125602, A p ri 29,1999,306 SCRA 380.
15 Section 1, Rule VI, 2011 NLRC Rules of Procedure.
» Bristol-Myers Squibb [P his.], Inc. v. Vitoria, G .R No. 148156, S ept 27,2004.
17 Bunagan v. Sentinel Watchman & Protective Agency, Inc, G R No. 144376, S ept 13,2005.

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D.
A P P E A L FEE A N D LEG A L RESEARCH FEE

1. M A ND ATO RY A N D JU R IS D IC T IO N A L .

The payment by the appellant o f the prevailing ap peal fee and legal
research fee is both mandatory and jurisdictional.*2 An appeal is perfected only
when there is proof o f payment o f the appeal fee.34It is by no means a mere
technicality.? If not paid, the running of the reglementary period for perfecting an
appeal will not be tolled.5

2. E X C E PT IO N S.

The following are the recognized exceptions to the strict observance o f

the rule on appeal fee:

(1) Most persuasive and weighty reasons;

(2) To relieve a litigant from an injustice not commensurate with his
failure to comply with the prescribed procedure;
(3) Good faith o f die defaulting party by immediately paying within a
reasonable time from the time o f the default;
(4) The existence o f special or compelling circumstances;
(5) The merits o f the case;
(6) A cause not entirely attributable to the fault or negligence o f the party7
favored by the suspension o f the rules;
(7) A lack o f any showing that the review sought is merely frivolous and
dilatory;
(8) The other party will not be unjustly prejudiced thereby;
(9) Fraud, accident, mistake or excusable negligence without the
appellant's fault;
(10) Peculiar, legal and equitable circumstances attendant to each case;
(11) In the name of substantial justice and fair play;
(12) Importance o f the issues involved; and
(13) Exercise of sound discretion by the judge, guided by all the
attendant circumstances.

Thus, there should be an effort, on the part o f die party invoking

liberality, to advance a reasonable or meritorious explanation for his failure to
comply with the rules.6

’ Lam zonv NLRC G.R No 113600, M a y2 8 .1999.307 SCRA 665; 367 P ti 169,177.
2 Saint Lous University, Inc v C o b a n u b ii, G.R. No. 187104, Aug. 3,2010.
3 W ooers d Antique Electric Cooperative, Inc v. NLRC, G R. No 120062, June 8,2000.
* Acdav M aster ot Labor, G.R. No.L-51607, Dec. 15,1982,119 SCRA 326.
5 Lunav NLRC, G R No. 116404, March 20,1997,270 SCRA 227,231.
4 Saint Lous University, Inc. v Cobanubias, G R No. 187104, Aug. 3,2010.

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E.
MEMORANDUM O F A PPEA L

1. REQUISITES.

The requisites for a valid Memorandum of Appeal are as follows:

1) The Memorandum of Appeal should be verified by the appellant

himself in accordance with the Rules of Courts as amended;1
2) It should be presented in three (3) legibly typewritten or printed
copies;
3) It shall state the grounds relied upon and the arguments in support
thereof, including the relief prayed for,
4) It shall contain a statement o f the date the appellant received the
appealed decision, award or order; and
5) It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research
fee;
(it) posting of a cash or surety bond (in case of monetary awards);
and
(iii) proof of service upon the other party.2

2. R EQ U IR EM EN TS N O T JU R ISD IC T IO N A L .

The aforesaid requirements that should be complied with in a

Memorandum of Appeal are merely a rundown of the contents of the required
appeal memorandum to be submitted by the appellant, 'Hiey are not jurisdictional
requirements.3 But it must be emphasized that per Navarro v. NLR.C,45 the
perfection of an appeal includes die filing, within the prescribed period, of the
Memorandum of Appeal containing, among others, the assignment of error/s,
arguments in support thereof, the relief sought and, in appropriate cases, posting of
the appeal bond.

3. SOME PR IN CIPLES ON M E M O R A N D U M O F APPEAL.

• Mere notice of appeal without complying with the other requisites afore-stated
shall not stop the running of die period for perfecting an appeal.s

• Memorandum of appeal is not similar to motion for reconsideration.6

1 See Section 4, Rule 7 thereof.

2 Section 4 [a]. Rule VI, 2011NLRC Rules of Procedure; Bristol M yers Squibb (Phils .], Inc. v. Vitoria, G.R No. 148156, Sept
27.2004.
3 Dei Mar Domestic Enterprises v. NLRC, G A No. 108731, Dec. 10,1997.
4 G.R. No. 116464, March 1,2000.
5 Section 4(b), Rule VI, 2011 NLRC Rules ofProcedure; Bristol Myers Squibb (P his.]. Inc. v.V tona. G .R No '48156. Sept
27.2004.
6 Lamsan Trading, Inc. v. Leogardo, G.R. No. 73245, S ept 30,1986.

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• Lack of verification in a memorandum o f appeal is not a fatal defect It may

easily be corrected by requiring an oath.1

• Supplemental appeal need not be verified.2 Neither the laws nor the rules
require the verification o f the supplemental appeal.3 Furthermore, verification
is a formal, not a jurisdictional, requirement. It is mainly intended as an
assurance that the matters alleged in the pleading are true and correct and not
o f mere speculation.4

• An appeal will be dismissed if signed only by an unauthorized representative.5

• Only complainants who signed the memorandum o f appeal are deemed to

have appealed the Labor Arbiter’s decision. The prevailing doctrine in labor
cases is that a party who has not appealed cannot obtain from the appellate
court any affirmative relief other than those granted, if any, in the decision o f
the lower tribunal.6

• Certificate of non-forum shopping is no longer provided in the 2011 NLRC

Rules of Procedure. It is only required in the initiatory complaint or petition
filed with the Labor Arbiter.7

F.
PRO OF OF SER VIC E TO A D VER SE PARTY

1. FA ILU R E T O SERV E COPY T O ADVERSE PARTY, N O T FATAL.

While it is required that in all cases, the appellant shall furnish a copy o f
the Memorandum of Appeal to the other party (appellee),8 non-compliance
therewith, however, will not be an obstacle to the perfection o f the appeal; nor will
it amount to a jurisdictional defect on the NLRC’s taking cognizance thereof.9

It has long been settled that mere failure to serve a copy of a

Memorandum of Appeal upon the opposing party does not bar the NLRC from
entertaining an appeal.10 It may even be dispensed with since in appeals in labor
cases, non-service of. a copy o f appeal memorandum to the adverse party is not a
jurisdictional defect which calls for the dismissal o f the appeal.11

1 NBennium Erectors Corporation v. Magaflanes G.R. No. 184362, Nov. 15,2010.

1 Loon v. Power Master, Inc., G.R. No. 189404, Dec. 11,2013.
3 Section 3, Rule 1 of the NLRC Rules d Procedure, in relation to Section 4, Rule 7 of the Rules o l C ourt
* Citing Roy P asosv.P hippine National Construction Corporation, G R No. 192394, July 3,2013.
5 See No. 4, Adm inistrative O rder No. 1109, Series of 2012 [November 16,2012], issued by the NLRC Chairman.
6 Sofgus Corp. v. Hen. C A ,G .R No. 157488, Feb. 6,2007.
7 See Section 1, Rule III thereof.
8 Required under Article 229 [223], Labor Code; Section 4 [a], (5) (in). Rule VI, 2011 NLRC Rules of Procedure.
8 PNCCv. NLRC, G.R. No. 103670, July 10,1998,292 SCRA 266; C. W. Tan M lg. v. NLRC, G.R. No. 79596, Feb. 10,1989.
10 Sunrise Manning Agency, In c v. NLRC, G.R. No. 146703, Nov. 18,2004.
» NBlennium Erectors Corporation v. Magaflanes. G .R No. 184362, Nov. 15,2010.

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G.
POSTING OF BOND

1. W HEN BOND R EQ U IR ED .

Only in case the decision o f the Labor Arbiter of the D O LE Regional

Director (under Article 129 of the Labor Code) involves a m onetary aw ard, that
an appeal by the employer may be perfected upon the posting o f a bond, which
shall either be in the form of:

(1) cash deposit;

(2) surety bond; or
(3) property bond.*1

The amount of such bond should be equivalent to the monetary award,

exclusive of damages and attorney’s fees.2 In other words, only monetary awards
(such as unpaid wages, backwages, separation pay, 13th month pay, etc) are
required to be covered by die bond. Moral and exemplary damages and attorney’s
fees arc excluded.

2. MANDATORY AND JU R ISD ICTIO N A L.

The provision of Article 229 [223] requiring the posting o f a bond is self-
executory and does not need any rule to implement it. The reason for this rule is
that the filing of a bond for the perfection of an appeal is both mandatory and
junsdicnonal.3

3. SOME PRINCIPLES ON PO ST IN G O F BO N D .

(1) The cash or surety bond required for die perfection o f appeal should
be posted within the reglementarv period.4 If a party failed to perfect
his appeal by the non-payment of the appeal bond within the 10-
calendar day period provided by law, the decision of the Labor Arbiter
becomes final and executory upon the expiration of the said period.5
(2) In case the employer failed to post a bond to perfect its appeal, the
remedy of the employee is to file a motion to dismiss the appeal and
not a petition for mandamus for the issuance of a writ o f execution.6
(3) Surety bond must be issued by a reputable bonding company duly
accredited by the Commission (NLRC) or the Supreme Court.1

’ Although Article 229 [223] expressly requires Hie posting "only’ of a 'c ash or surety bond* in order to perfect the appeal, i i
UERM-Memonal t/ed'cal Center v. NLRC, G.R. No. 110419, March 3,19 97,269 SCRA 70, Hie posting of real property
oerd in aeu of casn or surety bond was held sufficient protection for tie nterests o f Ihe employees should they fin a l/ prevaL
Section 6 Rule Vi. 2011 NLRC Rules of Procedure; Roos Industrial Construction, Inc. v. NLRC, G A No. 172409, Feb. 4,
2008, Boqa Estate v BaTiad, G.R. No. 152550, June 8,2005; Ong v. CA, G.R. No. 152494, S ept 22,2004.
’ Quiambaov. NLRC. G R No. 91935, March 4,1 9 9 6 ;A quinov. NLRC, G R No. 98108, S e p t3,1993,226 SCRA76.
1 Gaudiav NLRC.GR. No. 109371. Nov. 18,1999;Lam zonv. NLRC.G.R. No. 113600,M ay28.1999.
’ Santos v Velarde. G R No. 140753. A pri 30,2003; Borja Estate v. Spouses Ballad G R No. 152550, June 8,2005.
« Diaz v Nora. G R. No. 89324, Oct 11,1990.

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JURISDICTION AND RELIEFS

(4) The bond shall be valid and effective from the date o f deposit or
posting, until the case is finally decided, resolved or terminated, or the
award satisfied.*2
(5) Posting o f a bank guarantee or bank certification is not sufficient
compliance with the bond requirem ent It is not equivalent to nor can
be considered compliance with the cash, surety or property bond.3
(6) Cooperatives are not exempted from posting bond.4
(7) Government is exempt from posting o f bond; government-owned
an d /o r controlled corporations, however, are not exempt therefrom.5
(8) Bond is not required for the NLRC to entertain a motion for
reconsideration.6 An appeal bond is required only for the perfection o f
an appeal o f a Labor Arbiter’s decision involving a monetary award.78
(9) Bond is not required to file a Rule 65 petition for certiorari.6

4. N O N -P O S T IN G O F B O N D , W H E N JU S T IF IE D .

• N o m onetary award, no bond required. The rule is clear that when the
judgment o f the Labor Arbiter does not involve any monetary award, no
appeal bond is necessary.9
• T here is no duty to p o st a bond if the m onetary award is not specified in
the decision. The Labor Arbiter’s decision or order should state the amount
awarded. If the amount o f the monetary award is not contained or fixed in the
judgment, the appeal bond is not required to be posted.10
• In case of conflict betw een the body an d th e folio o f die decision, th e
latter should prevail.11

5. DELAY IN PO STIN G O F BON D, W H E N ALLOW ED.

The rules on posting of bond have been liberally construed and relaxed
considering the substantial merits of the case and the existence o f exceptional
circumstances justifying the same, such as:12

(1) Fundamental consideration o f substantial justice;

(2) Prevention of miscarriage o f justice or o f unjust enrichment; and

' A/ticte 229 [223], Labor Code; Section 6, Rule VI, 2011 NLRC Rules o f Procedure.
2 Section 6. Rute VI, 2011 NLRC Rules of Procedure.
3 Biogenerics Mariceting and Research Corp. v. NLRC, G.R. No. 122725, SepL 8,1999,313 SCRA 748.
* Bategtas Multi-Purpose Cooperative, >nc. v. CA, G.R. No. 159268, O ct 2 7 ,2D06.
5 Banahaw Broadcasting C oqxxafionv.P acana,G R No. 171673.M ay30.2011.
« CadaSn v. Hon. CA, G A No. 168923, Nov. 28,2008.
1 See Rdes of Procedure o f the NLRC. Series of 1999, Rule VI, Section 6, n re te fo n b Rule VII, Section 14 [Section 15 in the
2011 NLRC Rules of Procedure] thereof.
8 Sang-an v. Equator Knights Detective and Security Agency, tnc., G.R. No. 173189, Feb. 13,2013.
9 Aba v. NLRC, G R No. 122627, July 28,1999.
10 Orozco v. The Fifth Division of the Honorable Court of Appeals, G R . No. 155207, April 29,2005.
'' Mendoza, Jr. v. San Miguel Foods, Inc., G R No. 158684, May 16,2005.
12 Sercblante v. CA, GaUera de Mandaue, et aL, G R No. 196426, Aug. 1 5 ,2 0 11.

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 878 Bar. Reviewer , o n Labor Law

(3) Existence of special circumstances in the case combined with its legal
merits as well as the amount and the issue involved.1*3

In Semblanle v. CA} the respondents’ failure to post the required appeal

bond within the 10-calendar day rcglementary period was excused because the
High Court found it compelling to rule on the issue of whether the petitioners,
who worked as masiador and sentenciador in the cockpit of respondents, were
employees of the latter. It thus declared that they were not employees but
independent contractors since their relationship with respondents failed to pass
muster die four-fold test of employment.

In Your Bus Unt v. NLRC} the Labor Arbiter’s decision failed to state die
exact total amount due which would be the basis of the computation of the bond,
hence, the failure of the petitioner to post the bond was excused because it was
misled by the notice of the decision which did not mention that a bond must be
filed. The lawyer for petitioner relied on such notice and considering diis
circumstance as an excusable mistake, the Supreme Court allowed petitioner to file
the bond and appeal from the decision o f the Labor Arbiter.

G-1.
MOTION TO RED UC E APPEAL BOND

1. C O N C EPT.

The general rule is that the appeal bond that should be posted should be
equivalent to the monetary award o f the Labor Arbiter.4 Its reduction is neither
provided in the Labor Code nor in its implementing rules. In practice, however, the
NLRC has allowed the reduction o f the bond upon showing of meritorious
grounds.

The validity of this practice has been given judicial imprimatur. It was first
recognized in the case of StarAnpel Handicraft v. NLRC,5where it was observed that
neither the Labor Code nor its implementing rules specifically provide for a
situation where the appellant moves for a reduction o f the appeal bond. Inasmuch
as in practice the NLRC allows the reduction o f the appeal bond upon motion of
appellant and on meritorious grounds, it follows that a motion to that effect may be
filed within the rcglementary period for appeal. Such motion may be filed in lieu of
a bond which amount is being contested. In the meantime, the appeal is not
deemed perfected and the Labor Arbiter retains jurisdiction over the case until the

1 Philippine Airfnes, Inc. v. NLRC, G R No. 120506, OcL 28,1996.

7 Semblanle a id Pilar v. CA. Galtera de Mandaue, G.R. No. 196426, Aug. 15,2011.
3 G .R No. 93381, Sept 28,1990,190 SCRA160
< Ram rezv. Hon. CA. G il No. 182626, Dec. 4,2009.
5 G.R. No. 108914, Sept 20,1994.

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JURISDICTION AND RELIEFS

NLRC has acted on the motion and appellant has filed die bond as fixed by the
NLRC.1

This practice-evolved norm has been enshrined as an established rule in

NLRC Resolution No. 01-02, Series o j2002, and carried over to Section 6, Rule VI of
both the 2005 and the current 2011 NLRC Rules of Procedure.23

2. T H E M C BU R N IE D O C T R IN E : G U ID E L IN E S FO R F IL IN G AND
A C C E PT A N C E O F M O T IO N S T O R E D U C E B O N D .

The 2013 en banc decision rendered in die case of Andrew James Mcbumie v.
Eulalio Ganypn} has enunciated the following guidelines that must be observed in
the matter o f the filing and acceptance o f morions to reduce appeal bond, as
provided in Section 6, Rule VI o f die 2011 NLRC Rules of Procedure-.

(a) The filing o f a motion to reduce appeal bond shall be entertained by

the NLRC subject to the following conditions: (1) there is
meritorious ground; and (2) a bond in a reasonable amount is posted;

(b) For purposes o f compliance with condition no. (2) above, a motion
shall be accompanied by the posting o f a provisional cash or surety
bond equivalent to te n p ercen t (10%) o f the monetary award subject
o f the appeal, exclusive of damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend

the running o f the 10-day reglementary period to perfect an appeal
from the Labor Arbiter’s decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve die morion to
reduce bond and determine the final amount o f bond diat shall be
posted by die appellant, still in accordance with die standards of
meritoriousgrounds and reasonable amount, and

(e) In the event that the NLRC denies the motion to reduce bond, or
requires a bond that exceeds the amount o f die provisional bond, the
appellant shall be given a fresh period o f ten (10) days from notice o f
the NLRC order within which to perfect the appeal by posting the
required appeal bond.

This Mcbumit ruling has completely overhauled die rules on morion to

reduce bond. Before its advent, the issue o f what amount to post by way of partial
or provisional bond has continued to hound the party litigants and the courts.
Now, the fixing o f “ten p ercen t (10%) of the monetary award subject o f the
appeal, exclusive of damages and attorney's fees” as the “reasonable amount” that

1 See also Coaco, Jr. v. NLRC, G .R No. 118432, May 23,1997,272 SCRA 583; Buenaobra v Lm King Guan, G R. No
150147, Jan. 20,2004,420 SCRA 359.
1 ffico l v. Fooijoy Industrial C op., G.R. No. 159372, July 27,2007.
3 G R Nos. 178034,178117,186984 and 186985, O ct 17.2013.

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 88o Bar reviewer o n Labor Law

should be posted has completely eradicated any and all controversies thereon. In
other words, no more motion for reduction o f bond accompanied by said 10%
requirement would be denied outright on the ground o f insufficiency or inadequacy
of the partial or provisional bond.

What is left for the determination by the NLRC, using its sound judgment
and discretion, are only the issues of (1) the reasonable final amount of the bond;
and (2) what constitute “mentorious grounds.” This determination is important
since “in all cases, the reduction o f the appeal bond shall be justified by meritorious
grounds and accompanied by the posting of the required appeal bond in a
reasonable amount.”1

111.
REINSTATEMENT PENDING APPEAL

1. PIO N E E R TEX TU R IZIN G D O C T R IN E .

According to die Pioneer Texturizing doctrine,2 an order of reinstatement

issued by die Labor Arbiter under Article 229 [223]3 o f the Labor Code is self-
executory or immediately executory even pending appeal by the employer.4 This
means that while the perfection of an appeal shall stay the execution of the decision
of the Labor Arbiter the exception is in respect to the execution o f the reinstatement
order which should proceed even pending appeal by the employer.5 As a
consequence of Pioneer Texturizing, the rulings in earlier cases6 that the reinstatement
aspect of the Labor Arbiter’s decision needs the issuance of a writ o f execution
before it can be enforced, are deemed abandoned.7

2. REINSTA TEM EN T P E N D IN G APPEAL, APPLICA BLE SOLELY TO

LABOR ARBITER’S ORD ER.

By way of distinction, the rule on reinstatement pending appeal applies

only to die order of reinstatement issued by the Labor Arbiter and to no other.
This means that if the reinstatement order is issued by the NLRC on appeal, or by
the Court of Appeals8 or by the Supreme Court,1 there is a need to secure a wait of

' M dxm ie v. Ganzon, G it Nos. 178034,178117,185984 and 185985, O ct 17,2013.; See also Sara Lee P hlppines v.
ErmSnda MacatJang, G .R Nos. 180147-180150,180319 and 180685, June 4,2014.
7 Pioneer Texturizing Corporation v. NLRC, G.R. No. 118651, O ct 16,1997,280 SCRA806.
3 Article 229 [223] provides n p a rt In any evert, the decision of the Labor Arbiter reinstating a dismissed a separated
employee, insofar as the reinstatement aspect is concerned, sh al immediately be executory, even pending appeal. The
employee shal either be admitted back to work under the same terms and conditions p ro v in g prior to his dism issal a
separation or, at the option of the employer, merely reinstated in the payrod The posting of a bond by the employer shaft not
stay the execution for reinstatement provided herein.*
* 3^ paragraph o f Article 229 [223J o( the Labor Code, as amended by Section 12 o f RA l No . 6715, [Mamti 21,1989].
5 See Section 3 of Rule XI, 2011 NLRC Rules of Procedure.
6 Such as the cases of Maranaw Hotel Resort Corporation (Century Park Sheraton M arta) v. NLRC, G.R. No. 110027, Nov.
16,1994, as reiterated in Archilles Manufacturing Corporation v. NLRC, G R No. 107225, June 2,1995.
’ International Container Terminal Services, Inc. [ICTSI] v. NLRC, G .R No. 115452, Dec. 21,1998.
8 By virtue of Rule 65 certiorari petition.

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JURISDICTION AND RELIEFS

execution from the Labor Arbiter of origin to enforce the reinstatement o f the
employee whose dismissal is declared illegal.*
2

3. TW O (2) O P T IO N S O F E M PL O Y E R .

To implement the reinstatement aspect o f a Labor Arbiter’s decision,

there are only two (2) options available to the employer, to wit

1. Actual reinstatem ent. - The employee should be reinstated to his

position which he occupies prior to his illegal dismissal under the same
terms and conditions prevailing prior to his dismissal or separation or,
if no longer available, to a substantially-equivalent position; or
2. Payroll reinstatem ent. - The employee should be reinstated in the
payroll o f the company without requiring him to report back to his
work.3

4. DUTY O F E M PL O Y E R T O N O T IF Y R E IN S T A T E D E M PL O Y E E.

It is required4 that in case the decision of die Labor Arbiter includes an

order of reinstatement, it should contain:

(a) A statement diat the reinstatement aspect is immediately executory;

and
(b) A directive for the employer to submit a report o f compliance widiin
ten (10) calendar days from receipt o f the said decision.5

Disobedience by the employer of this directive clearly denotes a refusal to

reinstate. The employee need not file a motion for the issuance o f the writ o f
execution since the Labor Arbiter is mandated thereafter to motn proprio issue the
writ. With the new rules in place, diere is hardly any difficulty in determining die
employer’s intransigence in immediately complying with the order.6

5. LIABILITY F O R D ISO B E Y IN G R E IN S T A T E M E N T O R D E R .

Under any of the two (2) circumstances described above, the Labor
Arbiter shall immediately issue a writ o f execution, even pending appeal, directing
the employer to immediately reinstate the dismissed employee either physically or

’ By reason o f Rule 45 petifon for review on certiorari.

J M l Carmel C otege v.R esu ena.G A No. 173076, O ct 10,2007.
3 Article 229 [223], Labor Code; Zarrtoanga C iy W ater D istrict v. Buat G A No. 104389, May 27,1994,232 SCRA 587.
4 See Section 19 [Contents o( Decisions] o f Rule V [Proceedings Before Labor Arbiters] of the 2011 NLRC Rules o f
Procedure.
5 2*paragraph, Section 19, Rule V thereof, as renumbered by NLRC En Banc Resolution No. 11-12, Series o f 2012.
5 Garcia and Orm ago v. Phifippine A rtn es, Inc., G A No. 164856, Jan. 20,2009 Tin Banc).

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in the payroll.*1 As a consequence o f such disobedience, die employer has the

following liabilities,2 to wit

1. He shall be liable to pay the accrued salaries of the reinstated employee

as a consequence of such non-reinstatement in the apiount specified in
the decision; and
2. He may be cited for contempt, in accordance with the 2011 N LR C Rules
of Procedure,3 for his refusal to comply with the writ o f execution
ordering die reinstatement.4 This remedy, however, is available only
after the Sheriff shall have served the writ o f execution upon the
employer or any other person required by law to obey the same.5

On No. 1 above, the employer should pay the accrued salaries in case of
disobedience because the employee should not be left without any remedy in case
the employer unreasonably delays or refuses reinstatement. The unjustified refusal
of die employer to reinstate an illegally dismissed employee entities the employee to
die payment of his salaries.6 The entidement o f the dismissed employee to his
salaries occasioned by the unjustified refusal of the employer to reinstate him
becomes effective from the time the employer failed to reinstate him despite the
issuance of a writ of execution.7

On No. 2 above, the remedy available to the employee whose

reinstatement ordered by the Labor Arbiter was not implemented by the employer
is to file for contempt against the latter and certainly not the institution o f a
separate action in the regular court or with the Labor Arbiter. Such recourse will
violate die well-sctdcd principle o f resjudicata. It would give rise to multiplicity of
actions which the law abhors and exerts every effort to eschew.8

6. INSTANCES W H EN WRIT O F E X E C U T IO N STILL R E Q U IR E D .

Under die 2011 NLRC Rules of Procedure,9 there are two (2) instances when
a writ of execution should still be issued immediately by the Labor Arbiter to
implement his order of reinstatement, even pending appeal, w$:

’ See 1s paragraph of Section 12 (lormerty Sectior, 9). Rule XI, 2011 NLRC Rules cfProcedure, as renumbered by NLRC En
Banc Resolution No. 11-12, Series of 2012 (November 16,2012], effective January 11,2013.
1 ibid
3 The contempt proceecfng shall be in accordance with Rule IX [Contempt] o f trie 2011 NLRC Rules of Procedure. See 3 *
paragraph of Section 12 (formerly Section 9), Rule XI, 2011 NLRC Rules o f Procedure, as renumbered by NLRC En Banc
Resolution No. 11-12, Series of 2012 [Novem ber16,2012], effective January 11,2013.
* SeealsoO cam pov.H oaC ara!e,G R N o.110687,D ec.15,1993.
5 See 3^ paragraph of Section 12 (formerty Section 9), Rule XI, 2011 NLRC Rules o f Procedure, as renumbered by NLRC En
Banc Resolution No. 11-12, Series of 2012 (November 16,2012], e ffe c ts January 11,2013.
5 Pioneer Texturizing Corporation v. NLRC, G .R No. 118651, OcL 16,1997,280 SCRA 806.
7 Roquero v. F tilip p iie Air Lines, Inc., G.R. No. 152329, April 22,2003.
a MAi Phiippines, Inc v. NLRC, G R No. 73662, June 18,1987.
9 See Section 12 [Execution o f Reinstatement Pending Appeaf], Rule XI [Execution Proceedings] of the 2011 NLRC Rules of
Procedure. It m ust be noted that ttiis Section 12 was previously numbered Section 9 of the original version of the 2011

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(1) When the employer disobeys the prescribed directive*1 to submit a

report of compliance within ten (10) calendar days from receipt o f
the decision; or
(2) When the employer refuses to reinstate the dismissed employee.

The Labor Arbiter shall rnotu proprio issue a corresponding writ to satisfy
the reinstatem ent w ages as they accrue until actual reinstatement or reversal o f
the order o f reinstatement2

7. SO M E P R IN C IP L E S O N R E IN S T A T E M E N T P E N D IN G A PPEAL.

(1) Employer has no way o f staying execution o f immediate

reinstatement. H e cannot post bond to prevent its execution.3
(2) Reinstatement pending appeal applies to all kinds o f illegal dismissal
cases, regardless o f the grounds thereof.4
(3) Reinstatement pending appeal does nor apply when the dismissal is
legal but reinstatement is ordered for some reasons like equity and
compassionate justice.5
(4) The failure o f employee ordered reinstated pending appeal to report
back to work as directed by the employer does not give the employer
the right to remove him, especially when there is a reasonable
explanation for his failure.6
(5) When former position is already filled up, the employee ordered
reinstated pending appeal should be reinstated to a substantially
equivalent position.7
(6) Reinstatement to a position lower in rank is not proper.8
(7) In case o f two successive dismissals, the order o f reinstatement
pending appeal under Article 229 [223: issued in the first case shall
apply only to the first case and should not affect the second
dismissal.9

NLRC Rules of Procedure. It was renumbered by NLRC En Banc Resolution No. 11-12, Series of 2012 [November 16,
2012), effective January 11,2013.
1 This directive is provided under the T6 paragraph of Section 19 (formerly Section 18) of Rule V, 2011 NLRC Rules of
Procedure, as renumbered by NLRC En Banc Resolution No. 11-12, Series of 2012 [November 16,2012], effective January
11,2013.
7 See 1? paragraph o f Section 12 (form erly Section 9), Rule XI o f h e 2011 NLRC Rules of Procedure, as renumbered by
NLRC En Bara Resolution No. 11-12, Series o f 2012[Novem ber 16,2012], elective January 11,2013.
3 Article 229 [223], Labor Code; Pioneer Texturizing Corporation v.N IR C , supra.
4 C. Alcantara & Sons, Inc. v. CA, G R Nos. 155109,155135 & 179220, Sept 29,2010.
5 Lansangan v. Amkor Technology Phiippines, Inc., G R No. 177026, Jan. 30,2009.
6 Buenviaje v. CA, G.R. No. 147806, Nov. 12,2002; See also Pfizer, In c v. Velasco, G R No. 177467, March 9,2011.
7 Medina v. Consolidated Broadcasting System (CBS) - DZWX, G R Nos. 99054-56, May 28,1993,222 SCRA 707.
6 PanuraDo v. CAP P hippnes, In c, G .R No. 161305, Feb. 9,2007.
3 Sevilla v. N LR C .G R No. 108878, S ept 20,1994.

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(8) Reinstatement pending appeal is not affected by the reinstated

employee’s employment elsewhere.1
(9) Effect of grant of achievem ent award during reinstatem ent
pending appeal. In G ary v. Coca-Cola Bottlers Philippines, Inc.,2 it was
pronounced that the act of respondent CCBPI irr giving an award o f
a Certificate of Achievement to petitioner for his exemplary sales
performance during his reinstatement ordered by the Labor Arbiter,3
while respondent’s appeal with the NLRC was still pending,
constitutes recognition of petitioner’s abilities and accomplishments.
It indicates that he is a responsible, trustworthy and hardworking
employee of CCBPI. It constitutes adequate proof weighing in his
favor.
(10) The issuance of temporary restraining order (TRO) by the Court of
Appeals or by the Supreme Court, as the case may be, merely
suspends die implementation and enforcement of die reinstatement
order but it does not have the effect of nullifying the right of the
employee to his reinstatement and to be paid his reinstatement
wages.4

IV.
REVERSAL OF LABOR ARBITER’S REINSTATEMENT ORDER
BY NLRC OR HIGHER COURTS

1. E FFEC T OF REVERSAL OF R EIN S T A T E M E N T O R D E R W H E N

EM PLOYEE WAS N E IT H E R R EIN ST A TE D T O HIS FO R M ER
PO SITIO N N O R IN T H E PAYROLL.

From the moment an employee is ordered reinstated by the Labor Arbiter

on the basis of the finding that his dismissal is illegal, up to the time that an
appellate tribunal like the NLRC, CA or Supreme Court, as the case may be,
reverses the said finding, the reinstated employee is generally entitled to his so-
called “reinstatem ent salaries/w ages” and regular allowances, benefits,
incentives and bonuses.5

There is no complication if the employer complies with the reinstatement

order by reinstating the employee to his former position or, alternatively, in the
payroll. But in cases where the employer totally fails or refuses to reinstate the
employee but nonetheless appeals from the Labor Arbiter’s adverse decision, die re

1 Triad Security & A lied Services, Inc. v. Ortega, G R. No. 160871, Feb. 6,2006.
1 G.R. No. 180972, Jan. 20.2014.
3 Issued by the Labor Arbiter pursuant to Artide 229 {223] of the Labor Code.
4 Zam boaTgaCityW aterDistrictv. B uaLG R No. 104389. May 27.1994
5 See, for instance, Smart Communicators, he. v. Sofidum. G.R No. 204646, Apnl 15,2015 and Artyn D. Bago v. NLRC,
G R . No. 170001, April 4,2007,549 PM. 414.

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arises the issue o f whether the employee would still be entided to his accrued
reinstatement salaries/wages, allowances and other benefits in the event that the
employer is subsequendy successful in having the reinstatement order reversed in
its appeal.

This issue has been the subject o f several doctrinal rulings now known as
follows:

(1) R oquero doctrine;

(2) Genuino doctrine; and
(3) Garcia doctrine.

1.
ROQUERO DOCTRINE

The Roquero doctrine, enunciated in the 2003 case of Roquero v. Philippine

A ir Lines, Inc.,*1 declared the rule that in cases where an employee is ordered
reinstated by the Labor Arbiter and die employer fails or refuses to obey die
reinstatement order but initiates an appeal, the employer’s success in having die
decision o f the Labor Arbiter’s decision reversed on appeal will not exculpate him
from the liability to pay the reinstatement wages and benefits of the employee,
reckoned and computed from the time the employee was ordered reinstated by die
Labor Arbiter until the date o f reversal on appeal.

In this case o f Roquero, the dismissal o f petitioners Roquero and Pabayo2

was held valid by the Labor Arbiter.3 On appeal to the NLRC, the Labor Arbiter’s
decision was reversed and consequendy, petitioners were ordered reinstated.4 They
did not appeal from that decision o f die NLRC but filed a motion for the issuance
of a writ o f execution of the order of reinstatement. The Labor Arbiter granted the
motion but respondent PAL refused to comply with the said order on the ground
that it has filed a Petition for Review before the Supreme Court.5 Subsequendy, the

» G R No. 152329, April 22,2003.

1 From the evidence on record h fts case, it appears fia t petitioner Alejandro Roquero and another PAL employee, Rene
Pabayo, were caught red-handed possessing and using Methampethamine Hydrochlonde or shabu in a raid conducted by
PAL security officers and NARCOM personnel.
1 In the Labor Arbiter's decision, the dism issal o f Roquero and Pabayo was upheld. The Labor Arbiter found both parties a t
fault - PAL for applying means to enfce complainants Roquero and Pabayo into committing the infraction and the
complainants forgiving in to the temptation and eventuafy indulging in the prohibited activity. Nonetheless, tbe Labor Arbiter
awarded separation pay and attorney's fees to the complainants.
4 W hte the case was on appeal with the NLRC, complainants Roquero anc Pabayo were acquitted by the Regional Trial
Court (RTC) Branch 114, Pasay City, in fie crim inal case which charged them with "conspiracy for possession and use of a
regulated dreg in violation of Section 16, Article III of Repubfc Act 6425/ on the ground of insogaton The NLRC ruled in
favor o f complainants as it Ikewise found PAL guilty of instigation tt ordered reinstatement to ther form er posdons but
without backwages.
5 Before the advent of the 1998 case of S i M artin Funeral Home v. NLRC, G R No. 130866, Sept 16,1998, decisions of the
NLRC were brought dreeffy to the Supreme Court by way of Rule 65 petition for certiorari without passing through the Court
of Appeals. In accordance with ths case of S i M artn Funeral Home, PAL's petition was refeneo ro the Court of Appeals
(CA). This is the reason why it was fie CA that reversed the decision of the M R C .

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CA reversed the decision of the NLRC and ruled that the dismissal of petitioners
was valid.*1The Supreme Court later affirmed the CA’s decision but it held that the
unjustified refusal by PAL to reinstate Roquero who, unlike Pabayo, has not
amicably setded his case, enrides him to the payment of his reinstatement wages
effective from the time PAL failed to reinstate him despite the,issuance of the writ
of execution. Thus, it was mandatory for PAL to actually reinstate Roquero or
reinstate him in the payroll. Having failed to do so, the former must pay the latter
the salaries he is cntided to, as if he was reinstated, from the time of the decision of
the NLRC until the finality of the decision o f the Supreme Court.2

Following Roquero, it is now the norm that even if the order o f

reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages o f the dismissed employee during
the period of appeal until its reversal by the NLRC, or the CA or the Supreme
Court, as the case may be. If the employee has been reinstated.during the appeal
period and such reinstatement order is subsequendy reversed on appeal with
finality, the employee is not required to reimburse whatever salaries he has received
for he is entided to such, more so if he actually rendered services during the said
period.

In Air Philippines Corp. v. Zamora,3 the Labor Arbiter ordered the

reinstatement of respondent Zamora who immediately filed a motion for execution
of the said order of reinstatement. The Labor Arbiter granted the motion and
issued a writ of execution directing petitioner Air Philippines Corp. (APC). to
reinstate him to his former position. On appeal, the NLRC reversed the ruling o f
the Labor Arbiter and held that no dismissal, constructive or otherwise, took place
for it was respondent Zamora himself who voluntarily terminated his employment
by not reporting for work and by joining a competitor - Grand Air. Respondent
Zamora filed a Motion for Reconsideration but the NLRC denied it. However, it
ordered petitioner APC to pay respondent Zamora his unpaid salaries and
allowances in the total amount of P198,502.30 within 15 days from receipt o f its
resolution. Displeased with the modification, petitioner APC sought a partial
reconsideration of the said resolution but the NLRC denied it and justified the
award of unpaid salaries on the ground that the grant o f salaries and allowances to
complainant (respondent herein) arose from the order of his reinstatement which is
executory even pending appeal by respondent company (petitioner herein)
questioning the same, pursuant to Article 229 [223] o f the Labor Code. In the eyes

' During the pendency of the case with the CA, PAL and Pabayo fle d a Mo6on to VNfilhciraw/Disrrtss Ihe case wSh respect to
Pabayo, after they votuntarfy entered into a compromise agreem ent The m oton was granted in a Resolution promulgated
by the Former Thirteenth Division d the CA on January 29,2002. The CA later reversed the decision of the NLRC and
reinstated the decision of the la b o r Arbiter insofar as it upheld the dism issal o f Roquero. However, It denied the award of
separation pay and attorney's fees to Roquero on the ground that one who has been valicfy dismissed is not entitled to those
benefits.
1 Id.
i G.R. No 148247, Aug. 7,2006.

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of the law, complainant was as if actually working from the date respondent
received the copy o f the appealed decision o f the Labor Arbiter directing his
reinstatement based on his finding that the latter was illegally dismissed from
employment.

In affirming the above grant by the NLRC of salaries and allowances to

respondent Zamora, the Supreme Court ratiocinated, thus: “The premise o f the
award o f unpaid salaries to respondent is that prior to the reversal by the NLRC of
die decision o f the Labor Arbiter, the order o f reinstatement embodied therein was
already the subject o f an alias writ o f execution even pending appeal. Although
petitioner did not comply with this writ o f execution, its intransigence made it liable
nonetheless to the salaries o f respondent pending appeal. There is logic in this
reasoning o f the NLRC.” 1

The above ruling in A ir Philippines was reiterated in the 2008 case o f Torres,
Jr. v. NLRC.2 Thus, it was held that petitioner-employees should not be compelled
to return the salanes and benefits already received by them on account o f the order
for reinstatement adjudged by the NLRC and affirmed by the Supreme Court.

2.
GENUINO DOCTRINE

'Flie Genuino doctrine traces its origin to the case o f Gtnuino v. NLRC.3
The essence of dus doctrine is that the employee who is reinstated in the payroll, as
distinguished from actual reinstatement, should refund the reinstatement salaries
she received if her dismissal is finally found legal on appeal. This doctrine,
however, docs not apply if the employee was actually reinstated to her former
position or not reinstated at all pending appeal. In effect, the Genuino ruling
qualified the earlier Roquero doctrine4 on the issue o f whether the dismissed
employee who is reinstated in the payroll and not actually to his former position
has the obligation to refund what he has received as and by way of salaries during
his payroll reinstatement if and when his dismissal is held valid and legal on appeal.

The Supreme Court had thus taken the view in Genuino that: “(i)f the
decision of the Labor Arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund the salaries h e/she received
while the case was pending appeal, or it can be deducted from the accrued benefits
that the dismissed employee was entitled to receive from his/her employer under

' Citing Roquero v. PtViSppine A ir Lines, Inc., G.R. No. 152329, A pril 22,2003 and Arts (P hi.) Inc. v. NLRC, G.R. No. 90501,
Aug. 5,1991
1 G .R.N 0 . 172584, Nov 28,2008.
5 Marilou S Genuine v NLRC, Citibank, N A , G .R Nos. 142732-33, Dec. 4,2007
4 Roquero v Phifipprte Air Lines. Inc., supra

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existing laws, collective bargaining agreement provisions, and company

practices. However, if the employee was reinstated to work during the pendency of
the appeal, then the employee is entitled to the compensation received for actual
services rendered without need of refund.”

This refund ruling in Gtnuino has been modified by the Garda doctrine
enunciated in the 200 9 case of Garda v. Philippine Airlines, Inc.1 [infra], in that the
employee reinstated in die payroll need not refund the reinstatement wages he
has received after the decision is reversed by a higher tribunal or court. The
Court dius ratiocinates:

“E ven outside the theoretical trappings o f th e discussion and

into the m undane realities o f hum an experience, th e ‘r e fu n d d o c trin e ’
easily dem onstrates how a favorable decision by th e L abor A rbiter
could harm, m ore than help, a dism issed em ployee. T h e em ployee, to
make both ends m eet, w ould necessarily have to use u p the salaries
received during the pendency o f th e appeal, only to end up having to
refund the sum in case o f a final unfavorable decision. I t is mirage o f a
stop-gap leading the employee to a risky cliff o f insolvency.”

3.
GARCIA DOCTRINE

The Roquero and Genuino doctrines have been modified by the Garda
doctrine enunciated in the en banc 2009 case o f Garda v. Philippine Airlines, Inc.2 In
this case, while respondent Philippine Airlines (PAL) was undergoing rehabilitation
receivership, an illegal dismissal case was filed by petitioners3 against it which was
decided by the Labor Arbiter in their favor thus ordering PAL to, inter alia,
immediately comply with the reinstatement aspect o f the decision. On appeal, the
NLRC reversed the ruling of the Labor Arbiter and held that their dismissal was
valid. Resolving the issue of whether petitioners may collect their reinstatement
wages during the period between the Labor Arbiter’s order of reinstatement
pending appeal and the NLRC decision overturning that o f the Labor Arbiter, now
that respondent PAL has terminated and exited from rehabilitation proceedings,
the Supreme Court ruled that the employee may be barred from collecting the
accrued wages, if it is shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part o f the employer. It thus enunciated the
following two-fold test to determine the liability o f the employer (who did not
reinstate the employee pending appeal) to pay the “reinstatement wages” of die
dismissed employee covering die period from die time he was ordered reinstated
by the Labor Arbiter to die reversal of the Labor Arbiter’s decision either by the
NLRC, the CA or the High Court, to wit.

' Juanto A. Garda and Alberto J. Dumago v. Phlipphe Airlines, Inc., G.R. No. 164656, Jan. 20,2009 (EnBanc).
3 Id.
3 PetSoners here were caught in the act of sniffing shabu during a raid at the PAL Technical Center's Tootoom Section.

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(1) There must be actual delay or the fact that the order o f reinstatement
pending appeal was not executed prior to its reversal; and
(2) The delay must not be due to the employer’s unjustified act or
omission. If the delay is due to its unjustified refusal, it may still be
required to pay the salaries notwithstanding the reversal o f the Labor
Arbiter’s decision.

Petitioners exerted efforts to execute the Labor Arbiter’s order o f

reinstatement until they were able to secure a writ o f execution, albeit issued on
O ctober 5, 2000 after the reversal by the NLRC o f the Labor Arbiter’s
decision. Technically, there was still actual delay which brings to the question o f
whether the delay was due to respondent’s unjustified act or omission. It is
apparent that there was inaction on the part o f respondent to reinstate them, but
such omission was justified because o f its corporate rehabilitation.

It is settled that upon appointment by the SEC1 of a rehabilitation

receiver, all actions for claims before any court, tribunal or board against the
corporation shall ipsojure be suspended. As stated early on, during the pendency o f
petitioners’ complaint before the Labor Arbiter, the SEC placed respondent under
an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision,
the SEC replaced the Interim Rehabilitation Receiver with a Permanent
Rehabilitation Receiver.

Case law recognizes that unless there is a restraining order, the

implementation o f the order o f reinstatement is ministerial and mandatory. This
injunction or suspension o f claims by legislative fiat partakes of the nature o f a
restraining order that constitutes a legal justification for respondent’s non-
compliance with the reinstatement order. Respondent’s failure to exercise the
alternative options o f actual reinstatement and payroll reinstatement was thus
justified. Such being the case, respondent’s obligation to pay the salaries pending
appeal, as the normal effect o f the non-exercise o f the options, did not attach.

B.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)

1. TW O (2) KINDS O F JU R IS D IC T IO N .

The NLRC exercises two (2) kinds of jurisdiction:

1. Exclusive original jurisdiction; and

2. Exclusive appellate jurisdiction.2

1 Now the jurisdiction over rehabilitation receivership is lodged with the Regional Trial Court under R A No. 8799 [Securities
Regutatioon Code].
2 Section 1, Rule VII, 2011 NLRC Rules of Procedure.

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2. EXCLUSIVE O RIGINAL JU R ISD IC T IO N .

The NLRC exercises exclusive and original jurisdiction over the following
cases:
a. Petition for injunction in ordinary labor disputes to enjoin or
restrain any actual or threatened commission of any or all prohibited
or unlawful acts or to require the performance of a particular act in
any labor dispute which, if not restrained or performed forthwith, may
cause grave or irreparable damage to any party.1
b. Petition for injunction in strikes or lockouts under Article 279
[264] of the Labor Code.2
c. Certified cases which refer to labor disputes causing or likely to cause
a strike or lockout in an industry indispensable to the national interest,
certified to it by die Secretary of Labor and Employment for
compulsory arbitration by virtue of Article 278(g) [263(g)] o f the
Labor Code.3
d. Petition for extraordinary rem edies from orders or resolutions o f
Labor Arbiters (including those issued during execution proceedings).4

3. EXCLUSIVE APPELLATE JU R IS D IC T IO N .

The NLRC exercises exclusive appellate jurisdiction over the following:

a) All cases decided by die Labor Arbiters.5

b) Cases decided by the DOLE Regional Directors or hearing officers
involving small money claims under Article 129 o f the Labor Code.
c) Contempt cases decided by the Labor Arbiters.6

4. JU RISD ICTIO N O F LABOR ARBITERS VS. NLRC.

The Commission (NLRC) does not have original jurisdiction over the cases
over which Labor Arbiters have original and exclusive jurisdiction. Thus, if a claim
does not fall within the original and exclusive jurisdiction of the Labor Arbiter, the
NLRC cannot have appellatejurisdiction thereover.7

Under the Labor Code, die authority to conduct compulsory arbitration is

principally vested upon Labor Arbiters.8 It is only in the exercise by the NLRC o f its
original jurisdiction that it discharges compulsory arbitration; hence, the exercise

1 Articte 218(e), Labor Code; Section 1. Rule X, 2011 NLRC Rules of Procedure
2 Section 2, Rule X, 2011 NLRC Rules of Procedure.
3 Articte 278(g) [263(g)], Labor Code; Section 2, Rule VIII, 2011 NLRC Rules o( Procedure
4 Rule XII [Extraordinary Remedies], 2011 NLRC Rules of Procedure,
s Article 224(b) (217(b)], Labor Code.
6 Section 1, Rule XXIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 4fH )3, Series of
2003, Feb. 17,2003.
> Pondoc v. NLRC, G. R. No. 116347, O ct 3,1996,262 SCRA 632.
8 Philippine Airines, toe v. NLRC, G .R No. 55159, Dec. 22,1989

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by the N L R C of its appellate jurisdiction is n o t in the natu re o f com pulsory

arbitration. This is so because it is the Labor Arbiter who is clothed with the
authority to conduct compulsory arbitration in cases involving labor disputes falling
under Article 224 [217] o f the Labor Code. On appeal, the NLRC merely reviews
the Labor Arbiter’s decision; for as an appellate body, it is not, generally, a trier of
facts.1 Hence, the exercise by the NLRC o f its appellate jurisdiction cannot be
considered as part o f the compulsory arbitration process.2

C.
JUDICIAL REVIEW OF LABOR RULINGS
1.
JUDICIAL REVIEW THROUGH
RULE 65 PETITION FOR CERTIORARI

1. T H E O N LY M O D E T O ELEV A TE CASE T O CA.

There is no appeal from the decisions, orders or awards of any of the

following labor officials:

(a) D O LE Secretary;
(b) Commission (NLRC); and
(c) Director o f the Bureau o f Labor Relations (BLR) in cases decided by
him in his appellate jurisdiction (as distinguished from those he
decides in his original jurisdiction which are appealable to the
D O LE Secretary).

The only mode by which a labor case decided by any o f them may reach
the Court o f Appeals is through a Rule 65 petition for certiorari.

The reason for this rule is that after the lapse of the 10-day period to file a
motion for reconsideration, the decisions, orders or awards o f DOLE Secretary,3
the NLRC4 or the BLR Director1 (in cases which he decided in his appellate
jurisdiction) become final and executory and therefore inappealable.

1 Nagkakaisang Manggagawa sa Sony v. NLRC, G.R. No. 121490, May 5,1997.

2 P W ppre Airlines, Inc. v. NLRC, G R No. 55159, Dec. 22,1989.
3 Pet National Federation of Labor [NFL] v. Laguesma, G.R. No. 123426, March 10,1999, The decision o f the DOLE
Secretary shafl be fina! and executory after ten (10) days from notioe. Yet, ik e the dedaons o f frie NLRC which, under Artxte
229 (223) of the Labor Code, become final and executory after ten (10) caJendar days from receipt thereof by the parties, the
decisions of the DOLE Secretary also become final and executory after ten {10) calendar days from receipt thereof by the
parties, and may also be brought to the Court of Appeals by way of a petition for certiorari under Rule 65 of the 1997 Rules of
Cwi Procedure, even beyond the K ka ie nda r day period provided h the Labor Code and its implementing rules but within
the reglementary period set for Rule 65 petitions under tee 1997 Rules of C ivi Procedure.
4 Under Article 229 [223] of the Labor Code, the decision of the NLRC becomes final after ten (10) calendar days from receipt
thereof by the parties. However, a party is not prosCTi)ed from fifing a petition for certiorari within a period o f sixty (60) days
finom notice o f the denial o f his motion for reconsideration of Ihe decsion of the NLRC under Section 1, Rule 65 of the Rules
of Court

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The only exception to this rule pertains to decisions, orders or awards of

Voluntary Arbitrators or panel of Voluntary Arbitrators which are appealable to the
Court of Appeals by way of an ordinary' appeal under a Rule 43 petition for
review.123

Certiorari petition may be filed even if labor rulings have become final
and executory. Thus, if the CA grants the petition and nullifies their decisions on
the ground of grave abuse of discretion amounting to excess or lack o f jurisdiction,
such decisions are, in contemplation o f law, null and void ab initio; hence, they
never became final and executory.2

2. NO D IR EC T RESORT TO T H E SU PR EM E CO U RT.

Previous to the ruling in Si. Martin Funeral Home v. NLRC,4 a labor case is
allowed to be elevated directly to the Supreme Court from the decisions, orders or
awards of DOLE Secretary, the NLRC or the BLR Director, without passing
through the Court of Appeals, by way of Rule 65 petition for certiorari. With the
advent of the St. Martin Funeral doctrine, it is now required that all labor cases
should first pass through the Court of Appeals by way of a Rule 65 petition for
certiorari before they can reach the Supreme Court through a Rule 45 petition for
review on certiorari.

3. AN IN D E P E N D E N T SPECIAL CIV IL A CTIO N .

The only grounds that would justify’ the elevation o f labor cases to the
Court of Appeals are when the same were rendered (1) w ithout or in excess of
jurisdiction, or (2) with grave abuse of discretion am ounting to lack or
excess of jurisdiction.

Section 1 of Rule 65 states as follows:

“Section 1. Petitionfor certiorari. - When any tribunal, board, or officer

exercising judicial functions, has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require.

1 The decision of the BLR Director or the Office of the DOLE Secretary (in cases o f appeals from decisions of the BLR
Director) shall become final and executory after ten (10) days from receipt thereof by the paries, unless a motion for its
reconsideration is f3ed by any party therein wrihtn the same period. Only one (1) moSon for reconsideraticin o f ffte decision o f
the BLR or the Office of the DOLE Secretary in the exercise o f their appellate jurisdiction sh al be allowed. (Section 20
(formerly Section 21J, Rule XI, Bcok V. Rules to Implement the Labor Code, as amended by Department O rder No. 4003,
Series of 2003, [Feb. 17,2003), and as re-numbered by Department Order No. 4O-F-03, Series oT2008 [O ct 30,2008]).
J As held in Luzon Development Bank v. Association of Luzon Development Bank Employees, G.R. No. 120319, O cl 6,1995.
3 Tomas Claudio Memorial College Inc. v. CA, G.R No. 152568, Feb. 16,2004.
« G.R. No. 130866, Sept 16,1998.295 SCRA 494 (En Banc).

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“The petition shall be accompanied by a certified true copy of the

judgment, order or resolution subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third paragraph of Section 3,
Rule 46.”

The phrase “ grave ab u se of discretion am o u n tin g to lack or excess o f

jurisdiction” has been defined as the capricious and whimsical exercise o f
judgment amounting to or equivalent to lack o f jurisdiction.1 There is grave abuse
of discretion when the power is exercised in an arbitrary or despotic manner by
reason o f “passion or personal hostility, and must be so patent and so gross as to
amount to an evasion o f a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation o f law.” 2

The jurisdiction of the Court o f Appeals to review a decision o f the labor

tribunal in a petition for certiorari does not include the correctness o f its evaluation
o f the evidence or o f its factual findings which are generally accorded not only
respect but also finality, but is confined to issues o f jurisdiction or grave abuse o f
discretion.3

4. R U L E O N P E R IO D .

a. Period within which to file certiorari petition is sixty (60) days from
notice o f judgment, order or resolution.4
b. In case a Motion for Reconsideration or Motion for New Trial is filed,
regardless of whether such motion is required or not, the 60-day period is reckoned
and computed from notice o f the denial of said motion.5
c. The 60-day period is reckoned from receipt of the decision by counsel
or representative of record, n^t by litigant-party.67
d. Rule on extension of the 60-day period. In Labao v. Flores,1 some o f
the exceptions to the strict application o f the 60-day period rule were laid down,
thus: (1) most persuasive and weighty reasons; (2) to relieve a litigant from an
injustice not commensurate with his failure to comply with the prescribed
procedure; (3) good faith o f the defaulting party by immediately paying within a
reasonable time from the time o f the default; (4) the existence o f special or
compelling circumstances; (5) the merits o f the case; (6) a cause not entirely
attributable to the fault or negligence o f the party favored by the suspension o f the
rules; (7) a lack o f any showing that the review sought is merely frivolous and

• Don Orestes RomuakJez Electric Coop., Inc. v . NLRC, G R No. 128389, Nov. 25,1999., 377 P hi. 268,273.
2 Ibid.
3 Sea Power Shipping Enterprises, Inc. v. CA, G R No. 138270, June 28,2001.
4 OpinaJdo v. Ravina. G.R. No. 195573, O ct 16,2013.
5 Trazona v. CA, G.R. No. 169712, March 13,2008; See Section 4 o f Rule 65 introduced by A.M. No. 00-2-03-SC, further
Amending Section 4. Rule 65 of the 1997 Rules of C M Procedure (effective September 1,2000).
6 Secfion 4 (b], Rule III, 2011 NLRC Rules of Procedure.
7 Labao v. Flores, G R No. 187984, Nov. 15,2010.

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 894 Bar Reviewer on La bo r Law

dilatory; (8) the other part}' will not be unjustly prejudiced thereby; (9) fraud,
accident, mistake or excusable negligence without appellant's fault; (10) peculiar
legal and equitable circumstances attendant to each case; (11) in the name o f
substantial justice and fair play; (12) importance o f the issues involved; and (13)
exercise of sound discretion by die judge guided bp all the attendant
circumstances.1 Thus, dicre should be an effort on the part o f the party invoking
liberality’ to advance a reasonable or meritorious explanation for h is/her failure to
comply with the rules.2
5. RULE O N MATERIAL PO RTIO N S O F T H E R EC O R D .
According to The Heritage Hotel Manila v. PIGLAS-HERITAGE ,3 the
Court of Appeals is correct to dismiss a Rule 65 petition for certiorari for failure to
attach material portions of the record. However, the CA should bend back a little
when the petitioner subsequendy attaches the missing materials to its motion for
reconsideration. As a general rule, petitions for certiorari that lack copies of
essential pleadings and portions of the record may be dismissed but this rule has
not been regarded as absolute. The omission may be cured.4
The CA has three (3) courses o f action when the annexes to the petition
are insufficient. It may (1) dismiss the petition,5 (2) require the submission o f the
relevant documents, or (3) order the filing o f an amended petition with the required
pleadings or documents. A petition lacking in essential pleadings or portions o f the
record may still be given due course, or reinstated if earlier dismissed, upon
subsequent submission of the necessary documents or to serve the higher interest
of justice.6*

6. RULE O N V ERIFICA TION AND C E R T IF IC A T E O F N O N -F O R U M

SH OPPIN G.

a. Rule i f co-parties are bein g su ed in their individual capacities.

In Pctron Corp. v. NLKC,1 it was pointed out that the reliance o f the Court
of Appeals on the ruling in L oquias v. Office of the Ombudsman* when it dismissed the
petition is misplaced because, unlike the instant case, the co-parties therein are
being sued in their individual capacities.9 Thus, the certification on non-forum
shopping signed by only one of two or more petitioners is defective, unless he was
duly authorized by his co-petitioners.

' Urn v. Debs Santos, G A No. 172574. Ju!y 31.2009; V ilena v. Rupisan, G R No. 167620, April 3.2007.
2 laba ov Flores, supra.
3 The Heritage Hotel Manila v. PIGLAS-HER1TAGE, G R No. 177024, O ct 30,2009.
4 Air Philippines Corporation v. Zamora, G R No. 148247, August 7.20 06,498 SCRA 59,69.
5 Last paragraph o! Rule 46 of the R ife so f Court
6 S ua nv.C A ,G A No. 150819, July 27,2006,496 SCRA 760,767-768.
1 P e ta l Corporation and Peter C. M aigro v. NLRC, G R No. 154532, O ct 27,2006.
6 G.R. No. 139396,Aug. 15,2000.338 SCRA62.
5 Note that the petitioners in Loquias are the mayor, vice-m ayor, and three members o f the municipal board o f San M guel,
Zamboanga del Sur. The said co-parties were charged with violation of R A No. 3019 in their various capacities.

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b. R ule in case petition is Hied by a corporate entity.

In the same case o f Pe/rvn, the Court o f Appeals dismissed the petition for
certiorari thereat filed by the petitioners on the ground that the Verification and
Certification on Non-Forum Shopping was defective because co-petitioner Peter C.
Maligro was not a signatory thereto. Maligro was being impleaded in the case as the
former Visayas Operations Assistant Manager o f Petron's Visayas-Mindanao
District Office at Lahug, Cebu City. The Supreme Court, however, ruled that
considering that Maligro derives his standing or personality in the case from
Petron, the certification on non-forum shopping executed and signed only by the
corporation benefited Maligro such that the attachment o f said certification to the
certiorari petition should be deemed substantial compliance with the rule on
certification on non-forum shopping.

c. Secretary's C ertificate authorizing a representative or ag en t to

sign the verification an d certification o f non-forum shopping.

As a general rule, the Board o f Directors or Board o f Trustees o f a

corporation must authorize the person who signs the verification and certification
against non-forum shopping of its petition.1But such authorization is not necessary
when it is self-evident that the signatory is in a position to verify the truthfulness
and correctness o f the allegations in the petition such as when the verification and
certification were signed by one who, based on the given facts o f the case, was “in a
position to verify the truthfulness and correctness o f the allegations in the
petition.”2

7. N O B O N D R E Q U IR E D IN R U LE 65 C E R T IO R A R I P E T IT IO N .

The requirement of a cash or surety bond as provided under Article 229

[223] of die Labor Code only applies to appeals from the orders o f the Labor
Arbiter to the NLRC. It does not apply to special civil actions such as a petition for
certiorari under Rule 65 o f the Rules of Court. In fact, nowhere under Rule 65 does
it state that a bond is required for die filing o f the petition.3

8. M O T IO N FO R R E C O N S ID E R A T IO N , A P R E -R E Q U IS IT E .

The rule on the filing of a Motion for Reconsideration o f the decision o f

the D O LE Secretary,4 the NLRC5 and the BLR Director6 is m andatory and

1 University o f the East v.P epanio and Bueno. G.R. No 193897, Jan. 23,2013.
2 Cagayan Valley Drug Corporaconv C oovnssioner ot mtemal Revenue. G.R. No. 151413, Feb. 13.2008.
3 Sang-an v. Equator Knights DetectNe and Security Agency. Inc., G.R. No. 173189, Feb. 13,2013,
4 The 2014 case of Phfltranco Service Enterprises. Inc. v. PMtranco W orkers U ncrv Association o f G enuine Labor
Organizations (FWU-AGLO), G.R. No. 150962, Feb. 26, 2014, reiterated the rule on the m andatory fifing o f a m otion for
reconsideration prior to the institution of a Rule 65 petition for certiorari from the decision ofthe DOLE Secretary.
5 As provided in Section 15, Rule VII of the 2011 NLRC Rules o f Procedure, only one motion for reconsideration o f the NLRC
decision from the same party shari be entertained
c Only one (1) motion for reconsideration of ffiedeasion of the BLR or the O ffice of the DOLE S ecretaiyh the exercise of Iheir
appelate jurisdiction shall be a towed. (Section 20 [form erly Section 21], Rule XI, Book V, Rules to Implem ent the Labor

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jurisdictional. Failure to comply therewith would result in the dismissal o f the

Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule that a
motion for reconsideration is a pre-requisite for the filing o f a special civil action
for certiorari.*1

The reason for this rule is that in labor cases, a motion for reconsideration
is die plain and adequate remedy from an adverse decision o f the DOLE Secretary,
the NLRC and the BLR Director. It has been long settled that the filing o f a
motion for reconsideration is a condition sine qua non to the institution of a special
civil action for certiorari under Rule 65 of the Rules o f Court, subject to well-
recognized exceptions (See below for the enumeration of these exceptions). The law
intends to afford die tribunal, board or office, an opportunity to rectify the errors
and mistakes it may have lapsed into before resort to the courts of justice can be
had. Certiorari cannot be resorted to as a shield from the adverse consequences of
a party’s own omission to file the required motion for reconsideration.2 Failure to
exhaust administrative remedies is fatal.3

8.1. T H E PHILTRANCO D O C T R IN E .

A motion for reconsideration should be filed even though it is not

required or even prohibited by the concerned governm ent office. This was the
rule enunciated in Phillranco v. PIPV-AGLO.4 Thus, while a government office5 may
prohibit altogether the filing of a motion for reconsideration with respect to its
decisions or orders, the fact remains that certiorari inherently requires the filing of a
motion for reconsideration which is the tangible representation o f the opportunity
given to the office to correct itself. Unless it is filled, there could be no occasion to
rectify. Worse, the remedy of certiorari would be unavailing. Simply put, regardless
o f the proscription against die filing o f a motion for reconsideration, the same may
be filed on the assumption that rectification o f the decision or order must be
obtained and before a petition for certiorari may be instituted.

10. EXCEPTIONS TO T H E RULE O N F IL IN G O F M O T IO N FO R

RECO NSIDERATIO N.

It bears to stress that the principle o f exhaustion o f administrative

remedies when a motion for reconsideration is required, is not an iron-clad rule.
'Phis principle may be disregarded under the following circumstances:

Code, as amended by Department Order No. 40-03, Series o f 2003, [Feb. 17,2003], and as renum bered by Department
Order No. 4 0 f-0 3 . Series o f 2008 (O ct 30,2008]).
1 Pfpino Telephone Corporation v. National Tefecom rnjnications Commission, G il No. 138295, Aug. 28,2003.
2 Seagull Shipmanagement and Transport Inc. v. NLRC, G.R. No. 123619, June 8,2000; See also Malayang Manggagawa
ng Stayfast Phfls, Inc. v. NLRC, G.R. No. 155306, Aug. 28,2013.
3 Dam cnonv. Department of Labor and Employment G.R. No. 108951, March 7,2000.
4 Philtranco Service Enterprises, Inc. v. Phltranco W orkers Union-Association of Genuine Labor O rganizaions (PWU-AGLO),
G.R. No 180962, Feb 26,2014. Although this case involves a decision of the DOLE Secretary, the principle enunciated
heren equally apples to the NLRC.
4 Or persm , tribunal or board.

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(1) When there is a violation o f due process;

(2) When the issue involved is purely a legal question;
(3) When the administrative action is patendy illegal amounting to lack
or excess of jurisdiction;
(4) W hen there is estoppel on the part o f the administrative agency
concerned;
(5) When there is irreparable injury,
(6) When the respondent is a department secretary whose acts as an alter
ego o f the President bear the implied and assumed approval o f the
latter;
(7) When to require exhaustion o f administrative remedies would be
unreasonable;
(8) When it would amount to a nullification o f a claim;
(9) When the subject matter is a private land in land case proceedings;
(10) When the rule does not provide a plain, speedy and adequate remedy;
(11) When there are circumstances indicating the urgency o f judicial
intervention;
(12) W hen no administrative review is provided by law,
(13) Where the rule o f qualified political agency applies; and
(14) When the issue o f non-exhaustion o f administrative remedies has
been rendered moot.

2.
JU D IC IA L R E V IE W O F D EC ISIO N S
OF V O L U N T A R Y A R B ITR A TO R S
TH R O U G H R U LE 43 A P P E A L

1. D E C IS IO N S , FIN A L A N D E X E C U T O R Y .

As a general rule, decisions or awards o f Voluntary Arbitrators are final

and executory after ten (10) calendar days from receipt o f a copy thereof by the
parries.1 The awards of voluntary arbitrators determine the rights o f parties; hence,
their decisions have the same legal effect as judgments o f a court.2

2. JU D IC IA L REV IEW .

It is well-settled a rule, however, that the findings o f fact and law made by
the Voluntary Arbitrator may be reviewed by the court.3 Judicial review is justified
in certain cases.4 The Voluntary Arbitrator’s decisions or awards may thus be
contested judicially on the following grounds:

' Article 276 [262-A], Labor Cede: No. 107, NCMB Prim er on Grievance M achnery and V o tn ta ry Arbitration.
2 Luzon Developm ent Bank v. Association of Luzon Development Bank Employees, G il No. 120319, October 6,1995.
3 Continental Marble Corporaton v. NLRC. G .R No. L-43825, May 9,1988.
* Unicraft Industries International Corporation v. CA, G .R No. 134903, March 26,2001,407 P hi. 527.

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 898 Ba r R e v ie w e r o n La b o r l a w

(1) Lack or want of jurisdiction;

(2) Grave abuse of discretion;
(3) Violation of due process;
(4) Denial of substantive justice; or
(5) Erroneous interpretation o f the law.1

The Supreme Court, in many cases, has taken cognizance of petitions

questioning 'final" decisions of certain administrative agencies based on any o f the
foregoing grounds.2

3. FACTUAL FIN D IN G S A CCORDED RESPEC T AND FIN ALITY .

Because of their expertise, the findings o f fact o f Voluntary Arbitrators

are accorded not ooly respect but even finality if they are supported by substantial
evidence, evea if not overwhelming or preponderant.3 In the case of Colego de San
Juan de Letran-Calamba v. Villas,4 the Supreme Court asserted this rule in affirming
the factual findings of die Voluntary Arbitrator as earlier affirmed by the CA. It
held that such factual findings are conclusive on the parties and are not subject to
review.

In the same light, the Supreme Court, in Ludo & Litym Corporation v.
Saomido} affirmed the findings of fact of the Voluntary Arbitrator, specifically his
finding that presenpdon has not as yet set in to bar the respondents’ claims for the
monetary benefits awarded to them. The Voluntary Arbitrator received the
evidence of die parties first-hand. No compelling reason has been shown to
diverge from his findings, especially since the appellate court affirmed his findings.
That it took some time for respondents to ventilate their claims was due to the
repeated assurances made by the petitioner that it would review the company
records and determine therefrom the validity of said claims, without expressing a
categorical denial diereof.

In Abalos v. Philex Mining Corporation,6 the High Court refused to disturb

the factual findings of the Voluntary' Arbitrator because of the well-settied rule that
it is not its function to assess and evaluate die evidence all over again, particularly
where the findings of both the Voluntary Arbitrator and the CA coincide and there
was absence of a showing of an error o f law or o f a whimsical or capricious
exercise of their judgment, or a demonstrable lack of basis for their conclusions.7
But as held in Mitsubishi Motors Philippines Corporation v. Chiysler Philippines Labor
Union,6 if the findings of fact of the CA clash with those o f the Voluntary

Sme Darby PSpnas, Inc. v. Magsafn, G .R No. 90426, Dec. 15,1989.

Unicraft Industries In& nafooal Corporation v. CA, supra; Continental Marble Corporafon v. NLRC, supra.
Honda P hils, Inc. v. Samahan ng Malayang Manggagawa sa Honda, G.R. No. 145561, June 15,2005.
G R No. 137795, March 26.2003.
G R No. 140960, Jan. 20,2003.
GR No. 140374, Ntv. 27,2002
See also Tetefunken Semiconductors Employees Union-FFW v. CA. G R No. 143013-14,348 SCRA 569,579-580 [2000],
G R No. 148738, June 29,2004.

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Arbitrator with contradictory results, as in the case o f Zajra v. Hon. CA} the records
o f the case as well as the submissions o f the parties should be reviewed.

An example where the High Court reviewed the factual setting o f the case
is National Steel Corporation v. CA.2 After reviewing the facts, it was established that
the award o f the 1993 year-end incentive was patently erroneous amounting not
only to grave abuse o f discretion but also to a denial o f substantial justice. The
Voluntary Arbitrator himself has found that the mid-year incentive pay for 1993
was given by petitioner as an advance payment o f the Bscal year-end incentive
award for the same year. Indubitably, to require petitioner to pay again the same
incentive pay at the year-end o f 1993 is obviously a great injustice that would be
committed against petitioner.

4. V O LU N TA R Y A R B IT R A T O R ACTS IN Q U A SI-JU D IC IA L
CAPACITY.

Although not a part o f a government unit or a personnel o f the D O LE, a

Voluntary Arbitrator, by the nature o f his functions, acts in a quasi-judicial
capacity.3 He is a means by which government acts, or by which a certain
government act or function, are performed. He performs a state function pursuant
to a governmental power delegated to him under the Labor Code.4 The landmark
en banc case o f Litton Development Bank v. Association of Litton Development Bank
Employees} clearly declared that a Voluntary Arbitrator, whether acting solely or in a
panel, enjoys in law the status o f a quasi-judicial agency but independent of, and
apart from, the NLRC since his decisions are not appealable to the latter.6

5. O RD IN A R Y A PPEA L U N D E R RU LE 43.

Being a quasi-judicial agency, the decisions and awards of a Voluntary

Arbitrator are appealable by way o f a petition for review to the CA under Revised
Administrative Circular No. D9P which provides for a uniform procedure for
appellate review of all adjudications o f quasi-judicial entities and which is now
embodied in Section 1, Rule 43 o f the 1997 Rules of GvilProcedure.

The en banc ailing in Lu%on Development Bank} in effect, equates the

decisions or awards o f a Voluntary Arbitrator to those of a Regional Trial Court
(RTC). Hence, in a petition for certiorari from the awards or decisions o f the
Voluntary Arbitrator, the CA has concurrent jurisdiction with the Supreme Court.9

G R No. 139013. Sept 17,2002,389 SCRA 200.

G R No. 134468, Aug. 29,2002
Oceanic B e Division (FFW) v. Romero, G R No. L43890, July 16,1984,130 SCRA 392;
Id.; See also Ludo & Luym Corporation v. Saomido, G R No. 140960, Jan. 20,2003,395 SCRA 451,458.
G R No. 120319, O ct 6.1995.
See A rticle 276 [262-AJ, n relation to pars, (b) and (c). Article 224 [217], Labor Code, as amended by R A No. 6715.
Promulgated on May 16,1995.
Luzon Development Bank v. Association of Luzon Development Bank Employees, G .R No. 120319, October 6,1995.
La P eria,lnc.v.V A R en eO fren eo.G R .N o 117811, O ct 25,1995.

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 900 Bar reviewer o n Labor Law

In Alcantara, Jr. v. CA,1 it was held that Lu^pn Development Bank is still a
good law.2 The introduction of die provision of Section 2, Rule 42 of the Revised Rules
of Civil Procedure did not alter the ruling in said case. The reason is that Section 2, Rule
42 is nothing more than a reiteration of the exception to the exclusive appellate
jurisdicuon of the CA, as provided in Section 9 o f Batas P.ambansa Big. 129, as
amended.3

In Centro Escolar University v. CA,45the Supreme Court related the

development of Rule 43, as regards the proper appeal o f decisions o f Voluntary
Arbitrators. It observed that the Labor Code was silent as regards the appeals from
the decisions of die Voluntary Arbitrator, unlike those of the Labor Arbiter, which
may be appealed to the NLRC. The High Court noted, however, that the
Voluntary Arbitrator is a government instrumentality within the contemplation of
Section 9 of Batas Pambansa Big. 129 which provides for the appellate jurisdiction o f
the CA. The decisions of die Voluntary Arbitrator are akin to those o f the RTC
and, therefore, should first be appealed to the CA before being elevated to the
Supreme Court. This is in furtherance and consistent with the original purpose of
Circular No. 1-91 to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial agencies not expressly excepted from the coverage
of Section 9 of B.P. Big. 129. Circular No. 1-91 was later revised and became Revised
Administrative Circular No. 1-95. The Rules o f Court Revision Committee
incorporated said Circular in Rule 43 of the 1997 Rules of Civil Procedure. The
inclusion of the decisions of the Voluntary Arbitrator in said Rule was based on the
Court’s pronouncements in Litton Development Bank?

The Supreme Court has since reiterated the Lu^on Development Bank ruling
in a catena of decisions.6

6. PERIOD O F APPEAL, A L IN G E R IN G CO N TRO V ER SY .

a. Conflict in periods.

Over die years, there lias been a lingering conflict in the reckoning of the
reglementary period widnn which to elevate a case on appeal from the decision o f a
Voluntary Arbitrator or Panel of Voluntary Arbitrators to the CA. This conflict

1 G R No. 143397, Aug. 6,2002.

2 Philippine Electric Corporation v. CA, G.R No 168612, Dec 10,2014.
1 As amended by R A No. 7902, See Leyte IV Electric Cooperative, Inc v. LEYEC O IV Employees Un'on-ALU, G R No.
157775, O ct 19,2007.
* Centro Escolar University Faculty and Allied W orkers-lndependent Union v CA, G R No. 165486, May 31,2006,490 SCRA
61.69-70
5 See Mora v.Avesco Marketing Corporation, G R No. 177414. Nov. 14,2008,591 P h i 827, Footnote No. 19 thereof.
6 Some of them are Yetow Bus Line Employees Unon (YBc EU) v. Yellow Bus Line, Inc. (YBLI), G R No. 190876, June 15,
2016; Philippine Electric C orporator v. CA, G R No. 168612, Dec. 10,2014; R oyd Plant W orkers Union v. C ocaT da
B o te s Philppines, Inc.-Cebu Plant, G.R. No. 198783, April 15,2013,696 SCRA 357; Samahan ng mga Manggagawa sa
Hyatt (SAMASAH-NUWHRAIN) v. Magsato, G R No. 164939, June 6,2011.

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arose from the variance in the periods provided in Article 276 [262-A]1 o f the
Labor Code, on the one hand, and the Rules of Court, particularly Section 4, Rule
43 thereof, on the other hand.

Article 276 [262-A] provides for a 10-calendar day period. It reads,

insofar as pertinent, as follows:

“The award or decision of the Voluntary Arbitrator or Panel

of Voluntary Arbitrators shall contain the facts and the law on which it is
based. It shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties.”2

Rule 43, Section 4 o f the Rules o f Court, on the other hand, provides for
a 15-day reglementary period for filing an appeal, thus:

“Section 4. Period oj appeal. - The appeal shall be taken witliin

fifteen 7151 days from notice of the award, judgment, final order or
resolution, or from the date of its last publication, if publication is
required by law for its cffectivity, or of the denial of petitioner's motion
for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. Only one (1) motion for
reconsideration shall be allowed. Upon proper motion and the payment
of the full amount of the docket fee before the expiration of the
reglementary period, the Court of Appeals may grant an additional
period of fifteen (15) days only within which to file the petition for
review. No further extension shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days.”3

b. C onflict in decisions.
It appears that die Supreme Court, for a very long period o f time, has not
come up with a definitive ruling on the proper reckoning o f the reglementary
period for appeal. Thus, diere have been decisions prescribing the 15-day period
under the Rules o f Court,4 on the one hand, and 10-calendar day period under the
Labor Code,5 on the other hand.

' Article 276 (262-A] is an am endment introduced by R A No 6715. Prior to the e ffe cM y o f the amendment on M ach 21,
1959, Article 262 (the predecessor provision) stated that voluntary arbitration decisions or awards w otid be final,
unappealable and executory. Despite such im m edately executory nature of the decisions and awards of the Voluntary
Arbitrators, however, the Court pronounced in Oceanic Bic Division (FFW) v. Romero, [G.R. No. L-43890, July 16,1984,130
SCRA 392], that lhe dedsioas o r a-wands o f the Voluntary Artitoators involving nterpretations o f law were within the scope of
the Courts power of review.
2 Underscoring suppled.
5 Id.
* The 15-day reglementary period has been upheld by the Supreme Court in a long line of cases, such as: Royal Plant
W a te rs Union v. CocaCola Bottlers PhiSppines, Inc.-Cebu P lart, G R No. 198783, A pri 15 ,2013,371-372; Samahan ng
mga Manggagawa sa Hyatt (SAMASAH-NUWHRAIN) v. MagsaSn, G.R. No. 164939, June 6,2011; Saint Luis University,
Inc. v. Cobanubias, G .R No. 187104, Aug. 3, 2010; Samahan Ng Mga Manggagawa sa Hyatt-NUWHRAIN-APL v.
Bacungan, G R No. 149050, March 25,2009.
5 Such as (he cases o f NYK-FIL Ship Management, Inc. v. Dabu, G .R No. 225142, S ept 13,2017; Baronda v. CA, G R No.
161006, O d 14. 2015; Philippine Electric Corporation v CA, G R No. 168612, Dec. 10, 2014; C oca^ola Bottlers

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In sonic of the cases where the 15-day period was held to be the
rcglemcntary period, the Supreme Court denied petitioners’ petitions for review
since petitioners failed to appeal the Voluntary Arbitrator’s decision within said
pedod provided in Rule 43. In these cases,*1 it was pronounced that the CA had no
jurisdiction to entertain the appeal assailing the Voluntary Arbitrator’s decision.
And in the cases2*5where the 10-calendar day period was asserted as the
proper reglementary period, the Court declared that the decision of the Voluntary
Arbitrator had become final and executory because it was appealed beyond the 10-
calendar day reglementary period under Article 276 [262-A] o f the Labor Code.
6.1. T H E GUAGUA D OCTRINE.

a. Clarification o f the rule on appeal.

Finally, the en banc decision in the 2018 case o f Guagua National Colleges v.
CA} has laid to rest the above conflict. The Court declared that the variable rulings
notwithstanding, the period now to be followed in appealing die decisions or
awards of the Voluntary Arbitrators or Panel o f Arbitrators should be as follows:

(1) 'lhe 10-calendar day period stated in Article 276 [262-A] should be
understood as die period within which the party adversely affected by
die ruling of the Voluntary Arbitrators or Panel o f Arbitrators may
file a motion for reconsideration; and
(2) Only after the resolution o f the motion for reconsideration may the
aggrieved party appeal to the CA by filing the petition for review
under Rule 43 of the Rules o f Court widiin 15 days from notice
pursuant to Section 4 o f Rule 43.
b. M otion for Reconsideration, an indispensable requirement.
The indispensable pre-requisite requirement before a Rule 43 petition for
review may be filed is tire filing of a Motion for Reconsideration with the Voluntary
Arbitrator or Panel of Voluntary Arbitrators who rendered the decision.
In die 2010 ruling in Ttng v. Pagahac} the Court clarified that the 10-day
period set in Article 276 [262-A] of the Labor Code gave the aggrieved parties the
opportunity to file dieir motion for reconsideration, which was more in keeping
with the principle of exhaustion of administrative remedies.

PhJippines. Inc. Sales Force Union-PTGWO-BALAIS v. Coca-Cola Bottlers Phifppines, Inc., G il No. 155651, July 28,
2005.
1 Examples are the cases of AMA Computer Coflege-Santiago City, Inc. v. Nadno, G.R. No. 162739, Feb. 12,2008; Nippon
Paont Employees Union-OLALIA v. CA, G.R. No. 159010, New. 19,2004; M ania Midta/vn Hotel v. Bomomeo, G.R. No.
138305, Sept 22.2004
1 See Philippine Electric Corporation v. CA, supra; Coca-Cola Bottlers Phlippines, Inc. Sales Force Union-PTGWO-BALAIS v.
Coca-Cola Bottlers Phlippines, In c , supra.
5 Guagua National Colleges v. CA, G.R. No. 188492, Aug. 28,2018.
< G.R No 169704. Nov. 17,2010.635 SCRA173.

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JURISDICTION AND RELIEFS

c. Directive to D O L E and N C M B to am en d the Procedural Rules.

The Court noted in Guagua that despite the clarification made in Teng v.
Pagabac, the D O LE and the NCMB have not revised or amended the Bruised
Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings insofar as its
Section 7l of Rule VII is concerned. This inaction has obviously sown confusion,
particularly in regard to the filing o f the m otion for reconsideration as a condition
precedent to the filing of the petition for review in the CA. Consequently, die
DOLE and the NCMB were directed by the Court to cause the revision or
amendment o f Section 7 o f Rule VII o f the Revised Procedural Guidelines in the Conduct
of Voluntary Arbitration Proceedings in order to allow the filing o f motions for
reconsideration in line with Article 276 [262-A] o f the Labor Code.

7. PAYM ENT O F A PPEA L D O C K E T F E E W IT H IN PR ESC R IB E D

PE R IO D , B O T H M A N D A TO RY A N D JU R IS D IC T IO N A L .

Upon die filing of the petition within the 15-day reglementary period
earlier nienuoned, it is required under Section 5 o f Rule 43 o f the Rules o f Court
that the petitioner should pay to the CA clerk o f court the docketing and odier
lawful fees. Non-compliance with this procedural requirement is considered a
sufficient ground for die petition’s dismissal.

Thus, payment in full o f docket fees within the prescribed period is not
only mandatory, but also jurisdictional.2 It is an essential requirement, without
which, die decision appealed from would become final and executory as if no
appeal has been filed.3
8. E R R O N E O U S U SE O F R U L E 65 IN ST EA D O F R U LE 43 P E T IT IO N .

It is elementary in remedial law that the use o f an erroneous mode o f

appeal is a valid cause for dismissal o f a petition for certiorari.4 It has been
repeatedly stressed that the independent action o f certiorari under Rule 65 cannot
be availed of as a substitute for the lost remedy o f an ordinary appeal, including
that provided for under Rule 43, especially if such loss or lapse was occasioned by
one’s own neglect or error in the choice o f remedies.5 This is due to the nature o f a
Rule 65 petition for certiorari which lies only where there is “no appeal,” and “no
plain, speedy and adequate remedy in the ordinary course o f law.”6 Compliance
with this rule is material since without an appeal seasonably filed, the questioned

1 Section 7. Motions for RecxxisicSefation. The decision of the votuntary arbitrator ts not subject o f a mobon for reconsderatjon.
2 As early as the 1932 case of Lazaro v. Endencsa and Andres, [7 Phil. 552,553], the Supreme Court has stressed that the
payment of the full amount of the docket fee is an indispensable step for the perfection of an appeal. In Lee v. Repubfc,
]G .R No L-15027, Jan. 31, 1954,10 SCRA 65 .6 7], the Court decided that even though half o f the appellate co u t docket
fee was deposited, no appeal was deemed perfected where the other half was tendered after the period within which
payment should have been made..
3 Ruby Shelter Builders and Realty Development Corporation v. Formaran III, G .R No. 175914, Feb. 10,2009.
* Sebastian v. Morales, G.R. No 141116,Feb. 17,2003.
5 SeviSa Trading Company v. A V. A. Semana, G .R No. 152456, April 28,2004.
‘ Section f Rule 65 1997 Rules of Civil Procedure; Republic v.C A , supra

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decision of a Voluntary Arbitrator becomes final and executory after ten (10)
calendar days from notice and may thus be appropriately executed.*1

9. EXCEPTIONS W H EN R U LE 65 P E T IT IO N G IVEN D U E C O U R SE
D ESPITE AVAILABILITY O F REM EDY O F APPEAL.

The following are the recognized exceptions when certiorari may be

granted despite the availability of an appeal:

(a) When public welfare and the advancement o f public policy dictates;
(b) When the broader interest of justice so requires;
(c) When the writs issued are null and void; or
(d) When the questioned order amounts to an oppressive exercise of
judicial authority.2
In Unicraft Industries International Corp. v. The Hon. CA,3 petitioners filed a
petition for certiorari against the Voluntary Arbitrator’s decision. Finding that the
Voluntary Arbitrator rendered an award without giving petitioners an opportunity
to present evidence, therefore, null and void for violation of petitioners’ right to
due process, die Supreme Court allowed petitioners’ petition for certiorari despite
being the wrong remedy and accordingly decided it on the merits.
In Mora v. Avesco Marketing Corporation,4 the Court held that petitioner
erred in filing a pedtion for cerriorari against the Voluntary Arbitrator’s decision.
Nevertheless, it decided the case on the merits “in the interest o f substantial jusdee
to arrive at the proper conclusion that is conformable to the evidentiary facts.”

In Yellow Bus Line Employees Union fi'BLEU) v. Yellow Bus Line, Inc.
(YBL1),5 the peddon for certiorari was given due course on die radocination that
where the evidendary facts do not jive with the conclusion of die Panel of
Voluntary Arbitrators, it is a valid reasoning that it is in the interest of justice that
the Court of Appeals gave cognizance to a certiorari petition.

3.
JUDICIAL REVIEW BY THE SUPREME COURT
THROUGH RULE 45 PETITION FOR REVIEW ON CERTIORARI

1. T H E ONLY MODE.

Since the Court of Appeals has jurisdiction over the peddon for certiorari
under Rule 65 that may be filed before it from the decisions o f the NLRC, the
DOLE Secretary or the BLR Director (in cases decided by him in Iris appellate
jurisdiction), any alleged errors committed by it in the exercise of its jurisdiction

1 Mania M dtwn Hotelv. VA Bonomeo, G R No. 138305, Sept 22,2004.

1 AM4 Computer CofiegeSartfego City, Inc. v. Nadno, G.R. No. 162739, Feb. 12.2008.
J G R No. 134903, March 26,2001,407 Phi. 527.
* G R No. 177414, Nov. 14,2008,591 PM. 827.
s G.R. No. 190876, June 15,2016.

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would be errors o f judgment which are renewable by means o f a timely appeal to

the Supreme Court and not by a special civil action o f certiorari.

Such appeal from a final disposition o f the Court o f Appeals is a petition

for review on certiorari under Rule 45, and not a special civil action o f certiorari
under Rule 65 o f the Rules of C ourt Rule 45 is clear that the decisions, final
orders or resolutions of the Court o f Appeals in any case, regardless o f the
nature o f the action or proceeding involved, may be appealed to the Supreme
Court by filing a petition for review which would be but a continuation o f the
appellate process over the original case. Under Rule 45, the reglementary period to
appeal is fifteen (15) days from notice o f judgment or denial o f the motion for
reconsideration.1

If the aggrieved party fails to do so within the reglementary period and the
decision accordingly becomes final and executory, he cannot avail himself o f the
writ of certiorari, his predicament being the effect o f his deliberate inaction. A
petition for certiorari under Rule 65 cannot be a substitute for a lost appeal under
Rule 45; hence, it should be dismissed.2

2. MAY R U L E 65 C ER TIO RA R I P E T IT IO N BE AVAILED O F FR O M CA

D E C IS IO N T O T H E SU PR E M E C O U R T?

This poser has been answered both in the affirmative and in the negative.

In answering this poser in the affirm ative, it was held in Tomas Claudio
Memorial College, Inc. v. CA,3 that a Rule 65 certiorari petition may be filed if in
issuing the assailed decision and resolution, the CA acted with grave abuse o f
discretion, amounting to lack or excess o f jurisdiction and there is no plain, speedy
and adequate remedy in the ordinary course o f law. A remedy is considered plain,
speedy and adequate if it will promptly relieve die petitioner from the injurious
effect o f the judgment and the acts of the lower c o u rt4

The aggrieved party is proscribed from filing a petition for certiorari if

appeal is available, for the remedies o f appeal and certiorari arc mutually exclusive
and not alternative or successive. The aggrieved party is likewise barred from filing
a petition for certiorari if the remedy o f appeal is lost through his negligence.5 A
petition for certiorari is an original action and docs not interrupt the course o f the
principal case unless a temporary restraining order or a writ o f preliminary
injunction has been issued against the public respondent from further proceeding.6

1 Asian Transmission Corporation v.C A ,G R No. 144664, March 15,2004.

2 Maiayang Manggagawa ng Stayfast Ftife, Inc. v. NLRC, G R No. 155306, Aug. 28,2013.
J G.R. No. 152568, Feb. 16,2004.
4 See also PortHIo v. Rudolf Lietz, Inc., G R No. 196539, Oct 10,2012.
5 Maiayang Manggagawa ng Stayfast Phfe, Inc. v. NLRC, supra.
6 Section 7, Rule 65, Rules of Court.

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In Cirtek Employees Labor Union v. Cirtek Electronics, Inc.} it was conceded

that respondent indeed availed o f the wrong remedy o f certiorari under Rule 65.
Due, however, to die nature of die case, involving workers' wages and benefits, and
die fact diat whether the pedtion was filed under Rule 65 or appeal by certiorari
under Rule 45, it was filed widiin 15 days (the reglementary period under Rule 45)
from petitioner's receipt of the resolution of the CA' Resolution denying its motion
for reconsideration, the Court resolved to give it due course. As Almelor v. KTC oj
Las Pinas} restates: “Generally, on appeal taken either to the Supreme C ourt or
the CA by die wrong or inappropriate mode shall be dismissed. This is to
prevent die party from benefiting from one's neglect ai}d mistakes. However, like
most rules, it carries certain exceptions. After all, the ultim ate purpose of all
rules of procedures is to achieve substantial justice as expeditiously as
possible.”345

But in New Ever Marketing, Inc. v. CA} and in the earlier case of San Miguel
Corporation v. The Hon. CA} die Supreme Court answered the same poser in the
negative because the Rule 65 petition was not proper since an appeal was not only
available but also die speedy and adequate remedy. Hence, for failure of petitioner
to file a timely appeal, the questioned decision of the Court o f Appeals had already
become final and executory.6

It is thus clear, according to Tiradona v. CA} that in case what is filed is a

petition under Rule 65 instead o f Rule 45, before the Supreme Court may treat die
petition erroneously filed under Rule 65 as having been filed under Rule 45, the
same must comply with the reglementary period for filing an appeal. This
requirement is not only mandatory but also jurisdictional such that failure to do so
renders the assailed decision final and executoiy and deprives the Supreme Court of
jurisdiction to alter die final judgment, much less to entertain the appeal.

In Malayang Manggagawa ng Stayfast Phils, Inc. v. NLRC,8 petitioner, instead

of filing a Rule 45 petition for review on certiorari from the decision of the CA,
filed a Rule 65 petition for certiorari to the Supreme Court after 52 days from its
receipt of the CA decision. Contrary to petitioner’s claim that there was no appeal
or any other plain, speedy and adequate remedy in the ordinary course of law other
than this petition for certiorari, the right recourse was to appeal to the Court in the
form of a Rule 45 petition for review on certiorari. For purposes of appeal, the
decision of the CA was a final judgment as it denied due course to, and dismissed,
the petition. Thus, the decision disposed o f die petition o f petitioner in a manner

' Crtek Employees Labor Unioo-FedefBtion of Free Wortersv. Cirtek Electronics, Inc., G.R. No. 190515, June 6,2011
7 G.R No. 179620, Aug. 26,2008.
} See also M adriagav.CAGJl No. 142001, July 14,2005.
* GR No 140555, July 14,2005.
4 G R. No. 146775, Jan. 30,2002,375 SCRA 311,315.
4 See also Assodation of Integrated Security Force o< BisTig [AISFB] - ALU v. Hon. CA, GK. No. 140150, Aug. 22 2005
7 GR No. 169712,March 13,2008.
5 GR. No. 155306, Aug. 28,2013.

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JURISDICTION AND REUEFS

that left nothing more to be done by the CA in respect to the said case. Petitioner
should have filed an appeal by petition for review on certiorari under Rule 45, not a
petition for certiorari under Rule 65, in the Supreme Court. Where the rules
prescribe a particular remedy for the vindication of rights, such remedy should be
availed of.

3. A PARTY C A N N O T F IL E A P E T IT IO N B O T H U N D E R R U L E 65
A N D R U L E 45.

As a general rule, a part)’ cannot file a petition both under Rules 45 and 65
of the Rules of Court because said procedural rules pertain to different remedies
and have distinct applications.1*3 In Panganiban v. Tara Trading Shipmanagemcnt,
Inc.} petitioner denominated his petition as one under Rule 45, but considering the
grounds raised, he filed it as both a petition for review under Rule 45 and a petition
for certiorari under Rule 65 o f the Rules o f Court. Tne applicable rule is Rule 45,
which clearly provides that decisions, final orders or resolutions o f the CA in any
case, regardless of the nature o f the action or proceeding involved, may be
appealed to the Supreme Court through a petition for review. This remedy is a
continuation of the appellate process over the original case. Recourse under Rule
65 cannot be allowed either as an add-on or as a substitute for appeal. The
procedural infirmity notwithstanding, the Supreme Court treated this petition as
one filed under Rule 45 only and considered die alleged grave abuse o f discretion on
the part o f the CA as an allegation o f reversible error.5

4. T H E NEYPES D O C T R IN E (F R E S H P E R IO D RULEL

The Neypes doctrine, which was enunciated in the tn banc ruling in Neypes v.
CA,4 has standardized the appeal periods to afford litigants fair opportunity to
appeal their cases. For this purpose, the appellant is allowed a fresh period o f
fifteen (15) days within which to file the notice o f appeal in the Regional Trial
Court, counted from receipt o f the order dismissing a motion for a new trial or
motion for reconsideration. T h is ‘fresh period rule’ also applies to Rule 43
appeals from quasi-judicial agencies to the C ourt of Appeals and Rule 45
appeals by certiorari to the Suprem e C ourt, The new rule aims to regiment or
make the appeal period uniform, to be counted from receipt o f the order denying
the motion for new trial, motion for reconsideration (whether full or partial) or any
final order or resolution. There is no doubt, therefore, that this rule applies to labor
cases.5

' Nagkatiiusang Mamumuo sa Picop Resources, lnc.-Southem Phtipphes Federation of Labor [NAMAPR1-SPFL] v. The
Hon. CA, G R Nos. 148639-40, No/. 2,2006; G & S Transport Coporation v. CA. G R. No. 120287, May 28,2002, for an
exception to this general rale.
* G R No. 187032, Oct 18,2010.
3 Citing Pagoda Phiipp'nes, lnc.v. Universal Canning, Inc., G.R. No. 160966, Oct 11,2005,472 SCRA 355,359.
4 G R No. 141524, Sept 14,2005.
5 Bizabeth Gagii v. Dejero, G R No. 196036, Oct 23,2013.

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D.
BUREAU OF LABOR RELATIONS
I.
JURISDICTION, IN GENERAL

1. JU RISDICTIO N OF H E BLR.

The jurisdiction of the Bureau o f Labor Relations or simply “Bureau” or

"BLR”is described in Article 232 [226] of the Labor Code as follows:

“Article 232 [226]. Bureau of Labor Relations. - The Bureau of

Labor Relations and the Labor Relations Divisions in the regional
offices of the Department of Labor, shall have original and exclusive
authority to act, at their own initiative or upon request of either or both
parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-management
relations in all workplaces, whether agricultural or non-agricultural,
except those arising from the implementation or interpretation of
collective bargaining agreements which shall be the subject of grievance
procedure and/or voluntary' arbitration.

“The Bureau shall have fifteen (15) working days to act on

labor cases before it, subject to extension by agreement of the parries.”*1

2. LABOR RELATIONS DIVISIONS (LRDs) IN R E G IO N A L O FFIC ES.

"Labor Relations Division" (LRD) refers to the following units in the DOLE
Regional Office: (1) Labor Organization and CBA Registration Unit;2 and (2) Med-
Arbitration U nit3

3. CONCURRENT JURISDICTION OF THE BLR AND TH E LRDs.

The BLR and the LRDs in the Regional Offices have concurrent
jurisdiction over the cases described in Article 232 [226]. This concurrent character is
stressed not only in the provision of this article but in Article 219 [212] of the
Labor Code which defines the term “ Bureatl' as referring to both the “Bureau of
Labor Relations and/or the Labor Relations Divisions in the regional offices
established under P.D. No. 1, in the Department of Labor.”

1 As amended by Section 14, RA. No. 6715. March 21,1989; As renumbered pursuant to Section 5, R A No. 10151, June
21,2011 and DOUE Department Advisory No. 01, Series of 2015 (Renumbering of the Labor Code of the Phiippines, as
Amended), issued on Juty 21,2015.
1 The Labor Organization and CBA Registration Unit is in charge of processing the applications for registration of independent
unions, local chapters, workers' associations and cofectwe bargaining agreements (CBAs), maintaining said records and aS
other reports and incidents pertaining to labor organizations and workers' associations. (Section 1 jdd], Rule I, Book V, Rules
to Implement the Labor Code, as amended by Department Oder No. 4W)3, Series of 2003, [Feb. 17,2003].).
1 The Med-A/fcitration Unit, on toe other hand, conducts hearings and decides certification election or representation cases,
inter-union or rntraunion and other related labor relations disputes. (Section 1 |dd]. Rule I, Book V, Ibid.).

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 C h a p t e r .Eig h t 909
JURISDICTION AND RELIEFS

4. A U T H O R IT Y O F BLR U N D E R A D M IN IS T R A T IV E C O D E O F 1987.

The Administrative Code of 19871 contains the following provision which

has been cited as basis in resolving certain cases falling under the BLR’s
jurisdiction,2*thus:
“ Section 16. Bureau o f L abor Relations. - The Bureau o f Labor
Relations shall set policies, standards, and procedures on the registration and
supervision o f legitimate labor union activities including denial, cancellation
and revocation o f labor union permits. It shall also set policies, standards
and procedure relating to collective bargaining agreements, and the
examination o f financial records and accounts o f labor organizations to
determine compliance w ith relevant laws.
"The Bureau shall also provide proper orientation to workers on
their rights and privileges under existing laws and regulations, and develop
schemes and projects for the improvement o f the standards o f living o f
workers and their families.”

5. F IL L IN G IN D ETAILS IN T H E LABOR C O D E .

Notably, there are chief ambiguities and omissions in the provisions o f

the Labor Code and its Implementing Rules that need to be filled up through
supplemental issuances by labor authorities. For instance, as will be discussed
below, the grant o f jurisdictional authority to Med-Arbiters and D O LE Regional
Directors are not clearly laid down in the Labor Code and in its Implementing
Rules. This unfortunate fact has been recognized by the High Court in Varies? It
observed therein that to fill in the missing details in the Labor Code and its
implementing rules, the Rules of Procedure on Mediation-Arbitration was issued on April
10, 1992. In upholding these Rules’ validity, it was pronounced that “ [without
doubt, the Rules of Procedure on Mediation-Arbitration did not amend or supplant
substantive law but implemented and filled in details of procedure left vacuous or
ambiguous by the Labor Code and its Implementing Rules.”4

LABOR OFFICIALS HAVING JURISDICTION OVER ARTICLE 232 [226] CASES

1. LABOR OFFICIALS CONCERNED.

For purposes of clarifying the issue of jurisdiction over cases mentioned
in Article 232 [226], there is a need to cite first the following labor officials who
exercise such jurisdiction, to wit:

1 See Section 16, Chapter 4, fife VII, Book IV (hereof.

2 Such as the case of La Tondeha Workers Union v.The Hon. Secretary of Labor and Employment G.R. No 96821, Dec. 09,
1994. where it was declared fiat, independent of any delegation from the DOLE Secretary, the BLR based on the afore-
quoted prevision in the Administrative Code, has power of its own to conduct examination cf accounts of unions.
1 Baries v. Btorto, G.R. No. 120220, June 16,1999.

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 910 Ba r . R e v ie w e r o n La b o r La w

(1) Mediator-Arbiters (Med-Arbiters);

(2) DOLE Regional Directors; and
(3) BLR Director.

2. MED-ARBITER.

The term “Med-Arbiteirefers to an officer in the DOLE Regional Office

or in the BLR authorized to hear and decide representation casts, inttr-union or intra-
union disputts and other related labor relations disputes.*

While the Labor Code refers to this official as “Med-Axbiter,”*12 it should,

however, be construed to mean “M ediator-Arbiter.”3 Most recent D O L E
issuances45have specifically changed such reference to “M ediator-Arbiter” in their
provisions. This is but proper since the word “Med’* obviously is an abbreviation
of the word ‘Mediator. ”

Incidentally, Article 232 [226], which is the only provision o f the Labor
Code treating the jurisdiction of the BLR and its Med-Arbiters, never specifically
mentions Med-Arbiters in its provision,6 thereby creating the confusion as to which
article of the Code the Med-Arbiters really derive their jurisdictional authority
from. It may be implied, however, that die mention in this article of the LRDs, of
which die Med-Arbiters are part, suffices.7

Indeed, under the law and rules, Med-Arbiters arc not merely ordinary
functionaries in the BLR; they arc possessed of certain powers not even available to

’ Section 1 [i], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Senes of
2003, [Feb. 17,2003], Excepted from the Wed-Arbiter's jurisdiction are cases over which the Regional Director exercises
original and exdusve jurisdiction such as application for union registration, petitions for cancelation of union registration and
complaints for examination of unions books of accounts ’ This is per Section 3, Rule II [MerFAibrtraSon], Rules of Procedure
on ktaJiation-Artxtration, which provides: ‘SEC. 3. Jurisdiction cf the Regional Directa.- The Regional Director shall exercise
original and exclusive jurisrfcfion over appfcaoon fa union registration, petitions fa cancelation of union registration and
complains fa examination of unions books of accounts.’ See also Bartes v. Bitonio, G.R. No. 120220, June 16,1999.
1 The term ’MedArteer' is used and cited h toe fofowng aticies of Ihe Laba Code: Articles 230 [224] (Execution of
decisions, orders a awards), 268 [256] (Representation issue in organized establishments), 269 [257] (Petitions in
unorganized establshments), 272 [259] (Appeal from certification election orders), and 292 [277] (Msceflaneous provisions),
paragraph (i) thereof. Surprisingly, Med-Arbiter is not referred to at al in Article 232 [226].
3 Nowhere, however, in the Labor Code is the term *Mediatof-Art>itef" used or cited.
4 Such as Department Order No. 40-F-03, Series of 2008, issued on October 30,2008. This Department Order was issued by
the DOLE Secretary to rnplement the changes n the Laba Code brought about by the amendments introduced thereto by
R A No. 9481 pective June 14,2007], Another issuance is Department Order No. 40-M5, Series of 2015 [September 07,
2015], entitled ’Further Amending Department Order No. 4-3, Series of 2003, Amending the Implementing Rules and
Regulations of Book V of the Laba Code of the Philippines, as Amended*
5 Altl^hwithoutaperiodlhatwoulds'gnifylhatitisanabridgementofaword.
4 Although as eariier noted, Med-Arbiter is being referred to in other provisions of the Laba Code.
7 M. Y. San Biscuits, Inc. v. Laguesma, G.R No. 95011, A pi 22,1991, where it was stated: "Under Article 226 of the Laba
Code, as amended, the Bureau of Labor Relations (BLR), of vrfiich the med-aibiter is an officer, has Ihe foflcMmg jurisdiction
xxx. [T]he BLR has the original and exclusive jurisdiction to, inter ala, deride al disputes, grievances a problems arising
Iron or affecting latxx-management relations in all workplaces whether agricultural a non-agricultural. Necessarily, in Ihe
exercise cf this jurisdiction over laba-management relations, the med-artxter has the authority, original and exclusive, to
determine Ihe existence of an employer-empto/ee relationship between the parties.'

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 C h a p t e r .Eig h t 911
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Labor Arbiters, such as injunction power.1They have the authority to issue writs o f
injunction in appropriate cases,2 the determination o f which is addressed to their
sound discretion.3 Additionally, they ace also granted contempt powers.4

3. D O L E R EG IO N A L D IR E C T O R .

The Regional Directors are the duly authorized representatives of the

D O LE Secretary in the D O L E regional offices. They are in charge of the
administration and enforcement o f labor standards within their respective territorial
jurisdictions.5 Although, like the Med-Arbiters, they are not also specifically
mentioned in said article, it is a known procedural rule, however, that in addition to
their jurisdiction over cases falling under Articles 1286 and 1297 o f the Labor Code,
they also have jurisdiction over certain specified cases contemplated in Article 232
[226] o f the same Code such as disputes concerning union registration and
cancellation thereof as well as CBA registration or deregistration cases.

4. BLR D IR E C T O R .

The BLR is headed by a Director who hears and decides certain specified
cases over which he has either original or appellate jurisdiction. In many cases, Iris
name, instead o f the BLR, is usually the one impleaded as public respondent in
certiorari petitions to the CA or subsequent appeals to the Supreme Court.

III.
CASES PROVIDED UNDER ARTICLE 232 [226]

1. GENERAL CLASSIFICATION.
The following are the general classifications of the cases mentioned in
Article 232 [226] falling under the jurisdiction o f the said officials, to wit:

(a) Inter-union disputes;

1 Under (he 1990 NIRC Rules of Procedure, Labor Aitilers were previously granted injunctive power. However, this provision
is no longer found in its 2002,2005 and 2011 versions. The reason behind its deletion is that under Article 225(e) [218(e)] of
the Labor Code, injunctive power g granted only to the 'Commission' which obvious!/ refers to the NLRCs various revisions
and not to the Labor Arbiters.
1 Section 5, Rule XVI, Book V of toe Omnbus Rules Implementing the Laba Code: ‘Sec 5. Injunctions. - No temporary
injunctions a restraining order in any case involving or growingout of a latxr dispute shall be issued by any court a otoer
entity. On the other hand, the Office of the President, the Secretary of Latxx, the Commission, toe Laba Arbiter a Med-
Arbiter may enjoii any a al acts involving a arising from any case pending before any of said offices a officials which if not
restrained forthwith may cause grave a reparable damage to any of the parties to the case a seriously affect social a
economic stablity*
3 Dinio v. Laguesma, G il No. 108475, June 9,1997,273 SCRA109. But its issuance should be h accordance with the
grounds provided by law and its determination must be in the manner provided by law.
4 Section 4, Rule XVI, Book V, RJes to Implement the Laba Code.
5 See Article 128, Laba Code.
4 Visitorial and enforcement powers of the DOLE Secretary and his duty authorized representatives, toe DOLE Regional
Directors.
7 See Article 129, Laba Code, involving smal monetary dams ofP 5,000 or less.

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 912 Ba r r e v i e w e r o n La b o r La w

(b) Intra-union disputes;1 and

(c) Other related labor relations disputes.2

Ill-A.
INTER-UNION AND INTRA-UNION DISPUTES
1. IN T ER -U N IO N OR R EPR E SE N T A T IO N D ISPU TE.

An “inter-union dispute or “representation dispute” is one occurring or carried

on between or among unions.3 It refers to a case involving a petition for
certification election filed by a duly registered labor organization which is seeking
to be certified as the sole and exclusive bargaining agent (SEBA) of the rank-and-
file employees or supervisor)’ employees, as the case may be, in the appropriate
bargaining unit of a company, firm or establishment.4 If there are two or more
legitimate unions involved, it also refers to any conflict between and among them
concerning the issue of which o f them should be certified as the SEBA for
purposes of collective bargaining with the employer. Broadly, it covers any other
conflict or dispute between legitimate labor unions.5

Note must be made of the latest innovative amendment o f the Labor

Code’s implementing Voiles introduced by Department Order No. 40-1-15, Series of 2015,6
which has expressly repealed the entire provision7 on ‘Voluntaty Recognition” o f the
Implementing Rules on Book V and replaced it with the freshly-minted mode of
securing die status of a sole and exclusive bargaining agent through a “R equ est fo r
SEBA Certification" ot “Request. ” Voluntary recognition is therefore no longer
allowed and is effectively replaced by the Request mode.

The Request basically is in the nature o f an inter-union or representation

dispute. While it may not involve the actual conduct o f a certification election when
it is made in an unorganized establishm ent w ith only one (1) legitim ate union,
since it would merely require a simple validation process by the DOLE Regional

1 Dioknov. Hon. Cacdac, G.R. No. 158475, July 4,2007; Bautista v. CA, G R 123375, Feb. 28,2005,452 SCRA406,420.
2 Section 1[B] (formerty Section 2), Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order
No. 40-F-03, Series of 2008 (Oct 30,2008): Article 232 (226), Labor Code; Pofcy Instructions No. 6; VJIaor v. Trajano, G R
No. 69188, Sept 23,1986; M. Y. San Biscuits, Inc. v. Laguesma, G.R. No. 95011, Aprt 22,1991.
3 Dioknov. Hon. Cacdac, supra; Bautista v.CA supra.
4 Section 1 (9), Rule III, NCMB Manual of Procedures for Condiation and Preventive Mediation Cases; Appendix 2 [Definition
of Terms], NCMB Pnmer on Strfce, Picketing and Lockout 2nd Edition, December 1995; Diokno v. Hon. Cacdac, bid.;
Bautista v.CA, bid.
5 Section 1 [x]. Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of
2003, (Feb. 17,2003],
8 Issued on September07,2015.
1 Particularly its Rule VII (Voluntary Recognition], Book V, Rules to Implement the Labor Code, as amended by Department
Order No. 40-03, Series o4 2003, [Feb. 17,2003] This provision has been repealed and replaced by anew prevision entiled,
'REQUEST FOR SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA) CERTIFICATION*, pursuant to the amendment
ntroduced by Section 3, Department Order No. 40-M5, Series of 2015 [September 07,2015], entitled 'Further Amending
Department Order No 40, Series of 2003. Amending the Implementing Rules and Regulations of Book V of the Labor Code
of the Philippines, as Amended*

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 C h a p t e r Eig h t 913
JURISDICTION AND RELIEFS

Director of confirming the majority support o f the employees composing the

bargaining unit for the requesting union and once validated, the requesting union is
immediately certified as the SEBA without conducting a certification election,
however, certification election will have to be conducted under any o f the following
situations:

(1) When the Request is made in an u n o rg an ized estab lish m en t w ith

only one (1) legitim ate u n io n , and the requesting union or local jails to complete the
requirementsfor SEBA certification during the validation conference before the DOLE
Regional Director, such Request should be referred to the Election Officer for the
conduct o f certification election,1 in which case, such certification election should
now be under the jurisdiction o f the Mediator-Arbiter.

(2) When the Request is made in an un o rg an ized establishm ent w ith

more than one (1) legitim ate labor o rganization, in which case, the DOLE
Regional Director, before whom Requests are required to be filed, should refer the
Request directly to the Election Officer for the conduct o f a certification election23in
accordance with the RuleA and

(3) When the Request is made in an organized establishm ent, in which

case, the Regional Director should refer the same to the Mediator-Arbiter for the
determination o f the propriety o f conducting a certification election.4

It is clear from die foregoing discussion that there is a jurisdictional

interplay between the D O L E Regional Director and the Med-Arbiter, a subject
which will be discussed further in the sections below dwelling on the jurisdiction of
these labor authorities.

2. IN T R A -U N IO N O R IN T E R N A L U N IO N D IS P U T E .

/In “intra-union dispute” or “internal union dispute" refers to a conflict within

or inside a labor union.5 It may refer to any conflict between and among officers
and/or members o f one particular union, including grievances arising from any
violation of the rights and conditions of membership, violation o f or disagreement
over any provision of the union’s constitution and by-laws,6 issues over control,

1 Section 4. Rule VII of toe Rules to Implement toe Labor Code, as amended by Department Oder No. 40+15. Series of
2015 [September 07,2015], The election should be conducted in accordance wito Rule IX thereof.
1 Section 5, Rule VII, Ibid.
3 Referring to R iielX of toe l^ b a Code's Implementing Rules, as amended by Department Order No. 40+15, Series of 2015
[September 07,2015).
4 Sectioo 6, Rule VII, Ibid, n accordance with Rules Vlli and IX fb'd.
5 Dioknov. Hon. Cacdac, supra, citing Bautista v.CA, supra.
6 Section 1 [bb], Rule I, Book V, Ibid., Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.

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 914 Ba r R e v ie w e r o n La b o r L a w

supervision and management of its internal affairs,*1 or disputes arising from

chartering or affiliation o f a union.2

3. RUNDOW N OF IN T E R -U N IO N A ND IN T R A -U N IO N CASES.

In accordance with the Labor Code’s Implementing Rprles, as amended in

2015,34the following is a rundown o f all possible inter-union/intra-union disputes:

a) Cancellation of registration of a labor organization filed by its

members or by another labor organization;
b) Conduct of election of union and workers’ association officers or
nullification of election of union and workers' association officers;
c) Audit/accounts examination o f union or workers' association funds;
d) Deregistration of collective bargaining agreements;
e) Validity/invalidity of union affiliation or disaffiliation;
f) Validity/invalidity o f acceptancc/non-acceptance for union
membership;
g) Validity/invalidity- of impeachment/expulsion of union and workers'
association officers and members;
h) Validity/invalidity of Request for SEBA CerdGcatiorf (Replacing
‘Voluntary Recognition" as a mode of securing sole and exclusive bargaining
agent status);
i) Opposition to application for union and CBA registration;
j) Violations of or disagreements over any provision in a union or
workers' association constitution and by-laws;
k) Disagreements over chartering or registration o f labor organizations
and collective bargaining agreements;
l) Violations of the rights and conditions of union or workers'
association membership;
m) Violations of the rights of legitimate labor organizations, except
interpretation of collective bargaining agreements;5 and

' Section 1 (8), Rule III, NCMB Manual of Procedures for Condition and Preventive Mediation Cases; Appendix 2 [Definition
ofTerms], NCMB Prrner on Strite, Picketing and Lockout. 2nd Edition, December 1995.
1 Secfionl |bb], Rule I, Book V, bid.; Dioknov. Hon. Cacdac, supra; Baufetav.CA, supra.
J See Section 1,Rute)fl,BookVoftheRulestolmplernent!heLabaCodel asprevioustyamendedbyDepartmentOrderNo.
40-F-03, Senes of 2008 (October 30,2008] which designated this section as “Section 1(A)*, and as further amended by
Section 18, Department Order No. 404-15, Series cf 2015 [September 07,2015], enfiSed “Further Amending Department
Order No. 40, Series of 2003, Amending the Implementing Rules and Regulations of Book V of the Labor Code of the
PhSppmes, as Amended ’
4 This is in the nature of an inter-union dispute which may be occasioned by the rilroducSon of a new mode of securing the
status cf sole and exclusive bargaining agent (SEBA). The Labor Code's Implementing Rules, particularly its RULE VII on
“Voluntary Recognition' was actually repealed and replaced by a completely new provision enffied “REQUEST FOR SOLE
AND EXCLUSIVE BARGAINING AGENT (SEBA) CERTIFICATION' This was introduced by the amendatory provision of
Section 3, Department Order No. 40-1-15, Series of 2015 (September 07,2015], Ibid.
5 Disputes over the interpretation or riiplementation of the CBA are considered as grievabte issues cognizable by and should
be processed through the grievance machinery and voluntary arbitration provided in the C8A itself. (See Artdes 273 [260]
and 274 (261), Latxx Code).

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 C h a p t e r Eig h t ' 915
JURISDICTION AND RELIEFS

n) Such other disputes or conflicts involving the rights to self­

organization, union membership and collective bargaining -
1) Between and among legitimate labor organizations; or
2) Between and among members o f a union or workers’ association.

Ill-B.
OTHER RELATED LABOR RELATIONS DISPUTES

1. MEANING OF “ O THER RELATED LABOR RELATIONS

DISPUTES.”
"Other related labor rsbtions dispute" refers to any conflict between a labor
union and the employer or any individual, entity or group that is not a labor union
or workers’ association.*1

More specifically, it may refer to any o f the following:

(a) Any conflict between:

(1) a labor union and an employer, or

(2) a labor union and a group that is not a labor organization; or
(3) a labor union and an individual who is not a member o f such
union;
(b) Cancellation o f registration o f unions and workers’ associations filed
by individuals other than their members, or by a group that is not a
labor organization; and
(c) A petition for interpleader involving labor relations.2

2. jF/K ST SIT U A T IO N : C onflict betw een a lab o r union an d the em ployer.

In addition to the first two kinds o f disputes mentioned in Article 232

[226], that is, inter-union and intra-union conflicts, a 3rd set o f disputes is provided
therein as falling under the jurisdiction o f the BLR, to wit:

“Article 232 [226]. Bureau of Labor Relations. - The Bureau of

Labor Relations and the Labor Relations Divisions in the regional
offices of the Department of Labor, shall have original and exclusive
authority to act, at their own initiative or upon request of either or both
parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-
management relations in all workplaces, whether agricultural or
non-agricultural, except those arising from the implementation or

' Section 1 [it], Rule I, Book V, Rules to Implement Ihe labor Code, as amended by Department Order No. 404)3, Series of
2003, [Feb. 17,2003].
1 Section 1[B) (formerly Section 2), Rule XI, Book V, Rules to Implement the labor Code, as amended by Department Order
No. 4 0 f -03, Series of 2008 jO d 30,2008],

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 916 8*R REVIEWER.ON LABOR lAW

in te rp re ta tio n o f collective b a rg a in in g agreem ents w h ic h s h a ll be

the subject o f grievance pro ce du re a n d /o r v o lu n ta ry a rb itra tio n .” 1

The afore-underscorcd part o f this article constitutes the first enumerated

situation o f "other related labor relations dispute," that is, a conflict between a labor
union and the employer2*or more broadly, a labor-management' relations dispute. It is
neither an inter-union or intra-union dispute.

In La Tondena Workers Union v. Secretary of Labor,1 the union contends that

die intra-union dispute mentioned in Article 232 [226J does not include the
examination of accounts of the union because it> contemplates “intra-union
conflicts affecting labor-management relations.” The Supreme Court considered
this argument untenable. It held that conflicts affecting labor-management relations
are apart from intra-union conflicts, as is apparent from the text o f said article.
Such examination of union accounts is an intra-union dispute and thus does not fall
under the odier classification of disputes in said article concerning labor-
management relations disputes.

An example of a labor-management relations dispute is the matter of

determining the existence of an employer-employee relationship between the
employer and the members of the union/s participating in a certification election
case pending before the Med-Arbiter. This issue certainly does not fall under the
class of either inter-union or intia-union dispute. Since under Article 232 [226], the
BLR has the original and exclusive jurisdiction thereover, necessarily, in the
exercise of this jurisdiction, its Med-Arbiter has the authority, original and
exclusive, to determine the existence of such relationship.4 And once there is a
determination as to die existence of such a relationship, the Med-Arbiter can then
decide the certification election case.5

3. SECOND SITUATION: Conflict betw een a labor union an d a group that

is not a labor organization.

Ordinarily, if the conflict is between two or more legitimate labor

organizations, such is to be correctly denominated as an “inter-union” dispute
which, broadly covers any conflict or dispute between legitimate labor unions.6

But what if one of the contending parties is a group which is not a labor
organization, much less, a legitimate one, as this term is understood within the
context of the law?1How should that dispute be legally denominated?

1 Emphasis suppGed.
2 Article 232 (226], Labor Code; Pofcy hstiucfcns No. 6; Vitlaor v. Trajano, G.R. No. 69188, Sept 23,1986.
2 G.R. No. 96821, Dec. 9,1994,239 SCRA117,124.
4 M. Y. San Biscuits, Ina v. Laguesma, GJL No. 95011, April22,1991.
5 Besa v. Trajano, Director of the BLR, G.R No. 72409, Dec 29,1986,146 SCRA 501.
8 Sectioo 1 (x]. Rule I, Book V, Rules to Imptement the Labor Code, as amended by Department Order No. 4003 Series of
2003, (Feb. 17,2003].

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 C h a p t e r Eig h t 917
JURISDICTION AND RELIEFS

This kind o f dispute should be properly termed as "other related labor

relations dispute," the second enumerated situation under this classification.

4. TH IRD S IT U A T IO N : C onflict b etw een a labor union a n d an individual

who is not a m em b er o f such union.

If the dispute concerns a labor organization and any of its officers or

members, it appropriately falls under the categorization o f “intra-union” dispute.
However, if the individual party is neither an officer nor a member o f the labor
union, in no way can it be called an intra-union case. It is proper to be technically
denominated as "other related labor relations dispute," the third enumerated situation
under this classification.

5. F O C /F T f/S IT U A T IO N : C ancellation of registration o f unions and

w orkers’ associations filed by individuals oth er than their m em bers, or by
a group th at is n o t a labor organization.

The controversy may be correctly designated as “intra union” when die

petition to cancel the registration o f a labor union or workers’ association is
initiated by its officers a n d /o r members and when it is lodged by another labor
union, it may be appropriately denominated as “inter-union” conflict.

However, a petition to cancel a labor organization’s registration can be

designated neither as “intra-union” nor “inter-union” if it is filed by individuals
odier than its officers an d /o r members or by a group that is not a labor
organization. This kind of conflict should be properly termed as "other related labor
relations dispute, ” the fourth situation under this classification.

6. F /F T i/S IT U A T IO N : A p etition for interpleader involving labor relations.

Widiin the context of labor relations, the term "interpleader” refers to a

proceeding brought by a party against two or more parties with conflicting claims,
compelling die claimants to litigate between and among diemselves dieir respective
rights to the claim, thereby relieving the party so filing from suits they may
otherwise bring against it.2

' As distinguished from other kinds of organizations, a labor organization or a union is organized for the primary purpose of
collective bargaining. (Article 219(g) [212(g)], Labor Code; See also Section 1(13], Rule III, NCM8 Manual of Procedures for
CcncJiaSon and Preventive Mediation Cases). On the other hand, a legitimate labor organization* refers to any labor
organization in the private sector registered or reported with the Department of Labor and Employment in accordance with
the Labor Code and Us implementing nies. Itindudesany branch or local tereof. (See Article 219(h) (212 (h)|, Labor Code;
Rules III [Registration of Labor Organizations] and IV provisions Common to the Registration cf Labor Organizations and
Workers' Associations) h relation to Section 1 Jee], Rule I, Book V of the Rules to Implement the Labor Code, as amended
by Department Order No. 40-03, Series of 2003, peb. 17,2003]; San Mguel Cctp. Employees UncrvPTGWO v. San
Mguel Packaging Products Employees Union - POMP, G.R. No. 171153, Sepl 12,2007).
1 Sotion 1 [z], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 4003, Series of
2003, fe b . 17,2003],

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 918 Ba r R e v ie w e r . o n La b o r L aw

IV.
ORIGINAL AND EXCLUSIVE JURISDICTION
OF MED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR

Having known the various cases afore-described, a_ discussion of the

respective jurisdictions of the Med-Arbiters, DOLE Directors and BLR Director
over these cases may now be made with greater clarity.

1.
MEDIATOR-ARBITER’S
ORIGINAL AND EXCLUSIVE JURISDICTION

The cases falling under the original and exclusive jurisdiction o f the
Mediator-Arbiters are as follows:

(1) Inter-union disputes (representation or certification election

conflicts), such as:
(a) R equest for SEBA certification when made in an unorganized
establishm ent with only one1 or m ore than one (1) legitim ate
union2 or in an organized establishm ent;3 or
(b) Petition for certification election, consent election, run-off
election or re-run election;
(2) Intra-union disputes;
(3) Other related labor relations disputes;4
(4) Injunction cases;5 and

' In case (he Request is made in an unorganized establishment with only one (1) legitimate union, and the requesting union or
local tails to complete the requirements for SEBA certification during the validation conference before the DOLE Regional
Directa, in which event such Request should be referred to the Election Officer for the conduct of certification election
(Section 4, Rule VII of the Rules to Implement the Laba Code, as amended by Department Order No. 40-M5, Series of
2015 [September 07.2015]. The election should be conducted in accordance with Rule IX thereof.), which necessarily would
mean that such certification election should now be conducted under the jurisdiction of the Mediator-Arbiter to whom the
Election Officer s duty-bound to report the outcome of the election proceeding. Certainly, the ensung certification election
cannot be conducted under the directive of the DOLE Regional Director without the perforation of the Mediata-Arbiter who,
under the law, is trie one possessed of tie original and exclusive jurisdiction over certification election cases, including the
proclamation of the winning SEBA. (See Section 21, Rule IX Book V, Rules to Implement the Laba Code, as ordered
renumbered by Section 17, Department Order No. 40-M 5, Series of 2015 [September 07,2015]. This section was originally
numbered Section 20, per Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], but it was subsequently re-
mmbered to Section 19, per Department Order No. 4 0 f-03, Series of 2008 [Oct 30,20085.
2 Section 5, Rule VII, in relation to Rules VIII and IX Department Order No. 40-M 5, Series of 2015 [September 07,2015].
1 Section 6, Rule VII, in relation to Rules VIII and IX bid.
4 Section 1 [i], Rule [ Book V, Rules to Implement the Laba Code, as amended by Department Order No 40-03, Senes of
2003, [Feb. 17,2003]; Section 4, Rule XJ. Book V of the Rules to Implement the Laba Code, as amended by Department
Order No. 40-F-03, Series of 2008 [October 30,2008]. See also Article 226, Laba Code; Policy instructions No. 6; Villaa v.
Trajano.GR. No. 69188, SepL 23,1986.
5 Med-Arbiers have the authority to issue temporary restraining orders (TROs) and writs of injunction'in approoriate cases
Section 5, Rule XVI, Book V of the Omnibus Rules Implementing the Laba Code states: “Sec 5. Injunctions.- No temporary
injunctions a restraining order in any case involving a growing out of a laba dispute shall be issued by any court a other
entity. On the other hand, the Office of the President the Secretary of Latxx, the Commission, the Laba Arbiter a Med-

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 C h a p t e r Ei g h t 919
JURISDICTION AND RELIEFS

(5) Contempt cases.*1

O n N o. l[a] above, the Mediator-Arbiter will have jurisdiction over a

R equest for SEBA C ertification if it is made in an organized establishm ent
as well as in instances w here it is m ad e in an u n o rg an ized establishm ent
w ith m ore than one (1) legitim ate org an izatio n . Under this situation, the
D O LE Regional Director, before whom the said Request is filed, is required to
refer it to the Mediator-Arbi ter for the determination o f die propriety of
conducting a certification election; consequendy, the Media tor-Arbiter would
now have the jurisdiction to take cognizance of die certification election.2

[NOTE: See further discussion on this topic in the immediately succeeding

section below, in relation to the original and exclusive jurisdiction of the
DOLE Regional Directors].

2.
DOLE REGIONAL DIRECTOR’S
ORIGINAL AND EXCLUSIVE JURISDICTION

The DOLE Regional Directors have o r ig in a l and e x c lu s iv e jurisdiction over

numerous cases.3 But not all o f them are relevant to or connected widi die three (3)
classes o f cases4 expressly mentioned in Article 232 [226]. Only the following cases
cognizable by them are related thereto or connected therewith by virtue o f laws and
rules:

Arbiter may enjoin any or si acts hvolving or arising from any case pending before any of said offices or officials which if not
restrained forthwith may cause graze or irreparable damage to any of the parties to the case or seriously affect social or
economic stability.'
1 Section 4, Rule XVI, Book V, Rules b Implement the Laba Code.
} Section 6, Rule VII. in relation b Rules VIII and IX. Department Order No. 40-M 5. Series of 2015 [September 07,2015],
3 AH the cases cognizable by the DOLE Regional Directors are as Mows; (a) Vrsitorial (inspection) cases under Article 37; (b)
VtsitonaJ (inspection) and enforcement cases under Article 128; (c) VisitDrial cases under Article 289 [274], involving
examination of books of accounts of independent unions, local chaptefsdiarfered locate and workers' associations; (d)
Occupational safety and health violations; (e) Smal money claims cases arising from labor standards violations in an amount
not exceeding P5.000.00 and not accompanied with a claim for reinstatement under Artide 129; (0 Cases related to private
recruitment and placement agencies (PRPAs) for local employment, such as: (1) Applications for Icense or denial thereof,
(2) Complaints for suspension or cancellation of (cense by reason of administrative offenses; (3) Complaints for Segal
recruitment; and (4) Petition for dost/e of agency, (g) Cases submrtled for voluntary arbitration in tieir capadty as Ex-Offido
Voluntary Arbitrators (EVAs) under Department Order No. 83-07, Series of 2007; (h) Union registration-related cases, such
as; 1) Applications for union registration of independent unions, local chapters and workers' associations; 2) Petition for
denial of appticaticn for registration of said unions; 3) Petitions for revocation or cancelation of registration of said unions; (i)
Notice of merger, consofdation, affiation and change of name of said unions and or petition for denial thereof © CBA-
related cases, such as: 1) Application (or registration of singlerenterprise CEAs or petition for deregistration (hereof 2)
Petition for denial of registration of single-enterprise CBAs or denial of deregistration thereof, and (k) Request fa SEBA
certification when made in an unorganized estabrshmentwith only one (1) legitimate union.
4 These are (1) inter-union disputes; (2) intraunion disputes; and (3) Other related laba relations disputes.

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 920 Ba r R e v ie w e r o n L a b o r La w

(1) Visitorial cases under Article 289 [274] ,*l involving exam ination of
books of accounts of independent unions, local
chapters/chartcred locals and w orkers’ associations;
(2) Union registration-related cases, such as:
a) Applications for union registration o f independent unions,
local chapters and workers’ associations;2
b) Denial of application for registration3 of said unions;4
c) Petitions for revocation or cancellation of registration5 o f said
unions;67
(3) Denial of registration of s in g le -e n te rp ris e 1 CBAs or petitions for
deregistration thereof;8 and
(4) Request for SEBA certification when made in an unorganized
establishm ent with only one (1) legitim ate union.9

On No. 1 above, it is imperative to point out that aldiough by nature, this

is an intra-union dispute, die rules, however, treat this separately from those

' ‘Ariide 289 [274) Vsioral power The Secretary of labor and Employment a his duly authorized representative is hereby
empowered to inquire into the financial activities of legitimate labor organizations upon the filing of a complaint under oath
and duly supported by the written consent of at least twenty percent (20%) of the total membership of fie tabor organization
concerned and to examine (her books of accounts and other records to determine compliance or norvcompfence with toe
law and to prosecute any violations of the law and the union constitution and by-laws: Provided, That such inquiry or
examination shall not be conducted during the sixty [60)-day freedom period nor within the thirty (30) days immediately
preceding the date of election of union officials-* (As amended by Section 31, Republic Act No. 6715, March 21.1989).
1 Section 3, Rule II of the Med-Arbrtration Rules states: ‘SEC. 3. Jurisdiction of toe Regional Director.- The Regional Director
shal exercise original and exdusive jurisdiction over application for union registration, petitions for cancellation of
union registration and complaints for examination of unions books of accounts.’ See also Section 1, Rule II, Rules of
Procedure on Mediation-Arbitration.
1 See Article 243 (236) of the Labor Code which provides: ’Art 243 [236]. Denial of registration; appeal The decision of toe
labor Relations Division h the regional office denying registration may be appealed by the applicant union to toe Bureau
within ten (10) days from receipt of notice thereof "
4 Referring to independent unions, local chapters and workers' associations, as distinguished from federations, national
unions, industry unions, trade union centers and their local chaptere/chartered locals, affifetes and member organizations
whose appfeation for registration as well as denial cr cancellation or revocation of registration is cognizable by toe BLR
Director in his original and exdrsive jurisdiction fnfraj.
5 Spedficaty cited as exception to Med-Arbiteris jurisdiction is cancellation of union registration, per Section 1 pi], Rule I, Book
V, Rules to Implement toe Labor Code, as amended by Department Order No. 4003, Series of 2003, [Feb. 17,2003].
1 Section 3. Rule II of the Med-Arbitration Rules, supra. See also Section 4, Rule XI, Book V of the Riles to Implement the
Labor Code, as amended by Department Order No. 40-F-O3, Series of 2008 [October 30,2008).
7 As distinguished from cases imoMrg multkmpoyer CBAs which fall under toe original jurisdiction of toe BLR Director.
• Section 4 (formerly Section 5], Rule XI, Book V. Rules to Implement toe Labor Code, as amended by Department Order No.
40-03, Series of 2003, [Feb. 17,2003], and as re-mimoered by Department Order No. 4O-F-03, Series of 2008 [Oct 30,
2008)
5 Section 4, Rue VII, Department Order No 4C415, Series of 2015 [September 07,2015). Under this situation, toe DOLE
Regional Directa, befae whom toe Request fa SEBA Certification is filed, should refer the Request fo r SEBA Certification
to the Mediator-Arbiter fa toe determination of toe propriety of conducting a certification election, in which case, toe
Mediator-Arbiter now has toe jurisdiction to decide toe certification election issue. (Section 6, Rule VII, in relation to Rules VIII
and IX Department Order No. 40415. Senes of 2015 [September 07,2015]). Note must be made that when toe Request fa
SEBA Certification is made in an unorganizec establishment with m ae than one (1) legitimate laba organization, toe Med-
Arbiter takes over from the DOLE Regional Diector to tne matter of hearing and resolving toe issue of certification election.

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 C h a p t e r Eig h t 921
JURISDICTION AND RELIEFS

generally applicable to intra-union disputes12 and accordingly vest jurisdiction

thereover in the D O L E Regional Directors and not in the Med-Arbiters.
barks v. Bitonicr is clear on this point. It was held here34that while intra­
union conflicts, such as examination o f accounts are under the jurisdiction o f the
BLR, however, the Ruks of Procedure on Mediation-Arbitration purposely and expressly
separated or distinguished examinations o f union accounts from the genus o f intra­
union conflicts and provided a different procedure for their resolution.
Consequently, original jurisdiction over complaints for examination o f union
accounts is vested not in the Med-Arbiter but in the D O L E Regional Director.
This is apparent from Section 3* thereof.
But there is a need to point out though that the foregoing rule applies
only when the request for examination o f books o f accounts concerns only those
o f independent unions, local c h a p te rs/c h a rte re d locals and w orkers’
associations. If what is involved are those o f federations, national unions,
industry unions or trade union centers, and their local c h ap te rs/ch artered
locals, affiliates and m em ber organizations, the jurisdiction diereover is vested
with the BLR Director and not with the D O LE Regional Director.
On N o. 2[a] above, as far as workers’ associations are concerned, if they
operate in more than one region, the application for registration should be filed
with the BLR or the Regional Offices, but either way, it should be processed by the
BLR.5 This is so in order to have a unified resolution o f the merits o f the
application by one, single agency.
O n N o. 4 above, when the R equest for SEBA Certification is made in
an unorganized establishm ent w ith only one (1) legitim ate union, it should be
filed with the DOLE Regional Director who will make an immediate determination
on whether there is majority support by the members o f the bargaining unit to the
requesting union. Once the majority support is confirmed and the requesting union
does not fail to complete the requirements for SEBA certification during the
validation conference, the requesting union is immediately certified by the DOLE
Regional Director as the SEBA without conducting a certification election.

As a consequence o f this latest change in the Ruks, it may be said that the
D O LE Regional Director, in a way, is now empowered to rule on a
“representation” issue which, technically speaking, falls under and is covered by

1 See Section 3, Rule Xlll, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03. Series
of 2003, (Feb. 17,2003], ftus, a request for examination of books of accounts pusuant to Article 289 (274], in the absence of
ategations pertaining to a violation of Article 250 (241], should not be treated as an htraunion dispute.
2 G.R. No. 120220, June 16,1999.
1 Citing La Tondena Workers Unionv. Secretary of Labor, G R No. 95821, Dec. 9,1994,239 SCRA117.
4 Section 3, Rule II of the Med-Arbitration Rules states: “SEC. 3. Jurisdiction of the Regional Director.- The Regional Director
shal exercise original and exduswe jurisdiction over application for union registration, petitions for cancellation of union
registration and complaints for examination of unions books of accounts.’
5 See 2't) paragraph, Section 1, Rule III. Rules to Implement the Labor Code, as amended by Department Order No. 40-03,
Series of 2003, (Feb. 17,2003]; See also Section 1, Rule II, Rules of Procedure on Mediation-Arbitration.

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 922 Ba r Re v ie w e r o n L a b o r L a w

the general class of “inter-union disputes” that falls within the jurisdiction o f the
Mediator-Arbiter. In fact, the very Request itself speaks o f “ SEBA C ertification,” a
relief that is not the consequence o f “Voluntary Recognition” - the original remedy
intended to be replaced by this Request mode.
For it is clear that under the previous repealed .rule on voluntary
recognition, the DOLE Regional Director never issues a “ SEBA C ertification” ;
what is done is the mere recording*1 o f the “N otice o f Voluntary R ecognition”
jointly submitted by the employer and the union to the D O LE Regional Office
which issued the recognised labor union’s certificate o f registration or, in the case o f
local chapter, where the charter certificate and the other documents required under
Article 241 [234-A] were submitted and filed.2 Since it is crystal clear under existing
laws, rules and jurisprudence that it is the Mediator-Arbiter who has the original and
exclusive jurisdiction to issue a “SEBA Certification” under any o f the modes3 o f
selecting a SEBA, it is not surprising if the issue of the validity o f the exercise of
similar power to issue the SEBA Certification by the D O LE Regional Director
would be raised in an appropriate proceeding.
But the rule is quite clear that the M ediator-Arbiter would acquire original
jurisdiction over the Request for SEBA Certification under the following
situations:
(1) In case the Request is made in an unorganized establishm ent with
only one (1) legitimate union, and the requesting union or local fails to complete the
requirementsfor SEBA certification during the validation conference before the D O LE
Regional Director, in which event, such Request should be referred to the Election
Officer4 for the conduct of certification election5 which necessarily would mean
that such certification election should now be conducted under the jurisdiction o f

' Under the previous repealed provision, it is stated that where the notice of voluntary recognition is sufficient n form, number
and substance and where there is no other registered labor union operating within the bargaining unit concerned, the DOLE
Regional Office, through the Labor Relations Division shall, withh ten (10) days from receipt of the notice, record the fact of
voluntary recognition in its roster of legitimate tabor unions and notfy the labor union concerned. (See the repeated provision
of Section 3, Rule VII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of
2003, (Feb. 17,2003]).
Where the notice of voluntary recognition is insufficient ii form, number and substance, the DOLE Regional Office shal,
wthin the same period, notify the labor union of fcs frylings and acivise it to rxmply with the necessary nsquiremerrts. Where
neither the employer nor the labor union failed to complete Ihe requirements for voluntary recognition within thirty (30) days
from receipt of the advisory, the DOLE Regional Office shal return the notice of voluntary recognition together with a l its
accompanying documents without prejudice to its re-submission. (Section 3, Rule VII, Book V, foid.).
1 Section 1, Rule VII, Book V, Rules to Implement Ihe Labor Code, as amended by Department Order No. 40-03, Series of
2003, [Feb. 17,2003],
3 Besides this mode, Ihe other modes of selecting or designating a SEBA are certification election, consent election, rurvofl
election, and lately, rerun election.
* ■Qection Officer' refers to an officer of Ihe Bureau of Labor Relations or the Labor Relations Division in the Regional Office
authorized to conduct certification elections, election of union officers and other forms of elections and referenda. (Section 1
[o], Rule L and Sections 2-5, Rule XII, Book V, Rules to Implement the Labor Code, as amended by Department Order No.
404)3, Series of 2003, [Feb. 17,2003]). It s tie Election Officer who shall have control of ihe preelection conference and
election proceedings. (Section 1, Rule IX, Book V, Ibid.).
5 Section 4, Rule VII of Ihe Rules to Implement the Labor Code, as amended by Department Order No. 404-15, Series of
2015 [September 07,2015). The election should be conducted in accordance with Rule IX thereof.

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 ‘C h a p t e r E i g h t 9 23
JURISDICTION AND RELIEFS

the Mediator-Arbiter to whom the Election Officer is duty-bound to report the

outcome o f the election proceeding.1 Certainly, the ensuing certification election
cannot be conducted under the direction o f the D O L E Regional Director without
the participation o f the Mediator-Arbiter who, under the law,2 is the one possessed
o f the original and exclusive jurisdiction over certification election cases, including the
proclamation o f the winning SEBA.3
(2) In case the Request is made in an unorganized establishm ent with
m ore th an one (1) legitim ate u n io n , in which event, the DOLE Regional
Director is required to refer the Request directly to the Election Officer for die
conduct o f a certification election4*which should be in accordance with the Rules1
that state, in its Section 2, Rule VIII, that the “(Request) shall be heard and resolved
by the Mediator-Arbiter.” Resultandy, it is still the Mediator-Arbiter who should
take cognizance o f the Request which, in this case, is the equivalent o f the Petitionfor
Certification Election over which he exercises original jurisdiction.
(3) In case the Request is made in an organized establishm ent, in which
case, the Regional Director should refer the same to the Mediator-Arbiter for the
determination of the propriety o f conducting a certification election.6
3.
BLR DIRECTOR’S
ORIGINAL AND EXCLUSIVE JURISDICTION

At the outset, it must be stressed that reference in the law and pertinent
rules to “BLR”, as far as the issue o f jurisdiction is concerned, should appropriately
mean “BLR D irector.” This is as it should be because “BLR” is a generic term
that includes not only the Med-Arbiters and DOLE Regional Directors but the

1 Under Ihe Rules, wilhin 24 hours from the final canvass of votes, there being a vafd election, the Election Officer shall
transmit the records of the case to the Med-Arbiter who shal, witon the same peiod from receipt of the minutes and results
of election, issue an order proda'ming the results of the election and certifying the union which obtained the majority of the
valid votes cast as the sole and exclusive bargaining agent in the sublet bargaining unit, xxx (Die provision entitled
'Proclamation and certification of the result of the election' should now be denominated as Section 21, Rule IX, Book V,
Rules to Implement the Labor Code, by virtue of the renumbering ordered by Section 17, Department Order No. 40-H 5,
Series of 2015 (September 07,2015]. This section was originally numbered Section 20, per Department Order No. 40-03,
Series of 2003, [Feb. 17,2003), but it was subsequently renumbered to Section 19, per Department Order No. 40F-03,
Series of 2008 [Oct 30,2008). This latest 2015 renumbering was effected through said Section 17 which states: "Sections
subsequent to inserted new provisions and/or renumbered sections are renumbered accordingly/).
2 Article 232 [226], Labor Code.
3 See Section 21, Rule IX, Book V, Rules to Implement Ihe Labor Code, as ordered renumbered by Section 17, Department
Oder No. 40-1-15, Series of 2015 [September 07,2015]. This section was originally numbered Section 20, per Department
Order No. 40-03, Series of 2003, [Feb. 17,2003], but it was subsequently renumbered to Section 19, per Department Order
No. 40-F-03, Series of 2008 [Oct 30,2008).
4 Section 5, Rule VII, Rules to Implement the Labor Code, as amended by Department Order No. 40-1-15, Series of 2015
[September 07,2015).
3 Referring to Rule IX of tie Rules to implement toe Labor Code, as amended by Department Order No. 40-H5, Series of
2015 [September 07,2015]. Note must be made that when toe Request for SEBA Certification is made in organized
estabfshment, in which case, toe Regional Director should refer toe same to the Mediator-Arbiter for toe determination of toe
propriety of conducting a certificafcn ejection. (Section 6, Rule VII, bid. in accontence with Rules VIII and IX. Ibid)
* Section 6, Rule VII, in relation to Rules VIII and IX, Department Order No. 40-1-15, Series of 2015 [September 07,2015],

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 924 Ba r R e v ie w e r o n L a b o r La w

BLR Director himself. More significantly, there is jurisprudential variance in the

cases cognizable by the BLR Director, in relation to Med-Arbiters and DOLE
Regional Directors, hence, referring to the cases properly falling under the
jurisdiction of the “BLR Director” as such would be more appropriate and less
confusing than simply referring to them as falling under the jurisdiction o f the
"BLR.”

The BLR Director exercises two (2) kinds o f jurisdiction, namely: original
and appellate.*1 The following cases fall under his original jurisdiction:

(1) Complaints and petitions involving the application for registration,

revocation or cancellation o f registration of federations, national
unions, industry unions, trade union centers and their local
chapters/chartered locals, affiliates and member organizations;2*
(2) Request for exam ination o f books of accounts o f said labor
orgamzationsJ under Article 289 [274] of the Labor Code;
(3) Intra-union disputes involving said labor organizations;4
(4) Notice of merger, consolidation, affiliation and change o f nam e
of said unions and or petition for denial thereof;5*
(5) Registration of multi-employei* CBAs or petitions for deregistration
thereof,7
(6) Contempt cases.
As far as No. 3 above is concerned, the 2010 case of Atty. Montano v. Atty.
Verctlts,8 is relevant. Petitioner9 here claimed that under the Implementing Ruler,10 it is
the DOLE Regional Director and not the BLR (Director) who has jurisdiction over
intra-union disputes involving federations which, in this case, pertains to the
election protests in connection with the election o f officers o f the federation
(Federation of Free Workers [FFW]). In finding no merit in petitioner’s contention,

1 The appellate jurisdiction of the BLR Director is tSscussed r> asiother secSon beJcw.
1 As distinguished from petitions for cancellation of registration of independent unions, local chapters and workers'
associations, as provided r Section 3, Rule II of the Med-Artoitrabon Rules which states: *SEC. 3. JunsdicSon of the Regionaf
Director -The Regional Director shaS exercise original and exdusve jurisdiction ever application for union registration,
petitions for cancellation of union registration and complaints for examination of unions books of accounts.' See
also Section 4, Rule XI, Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03,
Series of 2(X)8 [October 30.2008] and Section 1, Rule II, Rules of Procedure on MerftaSon-Artxtrafion.
1 Referring to federations, national unions, industry unions and trade union centers, as distinguished Irom ndependent unions,
local chapters and workers' associations
4 Id.
1 Section 5, Rule IV, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 404)3, Series of
2003, (Feb 17,2003] and as further amended by Department Order No. 40-005, Series of 2005, Sept 13,2005.
‘ As distinguished from cases invoking single-enterprise CBAs which fail under the jurisdiction of the DOLE Regional Director.
1 Section 4, Rule XI, Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 4 0 f-03,
Series of 2008 [October 30,2008],
8 G R No. 168583, Jufy 28,2010.
5 Petitioner was elected the National Vice President of FFW to the National Convention held at SLibic International Hotel,
Otongapo City over the strong opposraon and protest of respondent Atty. Ernesto C. Vercefes, a delegate to the convention
and president of University of the East Employees Association (UEEA-FFW) which is an affiliate union of FFW.
10 See Section 6 of Rule XV in rotation to Section 1 of Flule X/V of Book V of the F?ules to Implement the Labor Code.

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 C hapter . Eig h t 925
JURISDICTION AND RELIEFS

the High Court pointed out that Article 232 [226] o f the Labor Code clearly
provides that the BLR (Director) and the Regional Directors o f D O L E have
concurrent jurisdiction over inter-union and intra-union disputes. Such disputes
include the conduct or nullification o f election o f union and workers’ association
officers. There is, thus, no doubt as to the BLR (D irector’s jurisdiction over the
instant dispute involving member-unions o f a federation arising from disagreement
over the provisions o f the federation’s constitution and by-laws. It agreed with the
following observation o f the BLR (Director):
“Rule XVI lays down the decentralized intra-union dispute settlement
mechanism. Section 1 states that any complaint in this regard ‘shall be filed in
the Regional Office where the union is domiciled.’ The concept of domicile
in labor relations regulation is equivalent to the place where the union seeks
to operate or has established a geographical presence for purposes of
collective bargaining or for dealing with employers concerning terms and
conditions of employment
“The matter of venue becomes problematic when the intra-union
dispute involves a federation, because the geographical presence of a
federation may encompass more than one administrative region.
Pursuant to its authority under Article 232 [226], this Bureau exercises
original jurisdiction over intra-union disputes involving federations. It
is well-settled that FFW, having local unions all over the country,
operates in more than one administrative region. Therefore, this
Bureau maintains original and exclusive jurisdiction over disputes
arising from any violation of or disagreement over any provision of its
constitution and by-laws.”*1

V.
APPELLATE JURISDICTION OF THE BLR DIRECTOR
AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY

1. N E C E SSIT Y FO R JU R IS D IC T IO N A L D IS T IN C T IO N S .

The distinctions pointed out above between the respective jurisdictions o f

the Med-Arbiters, DOLE Regional Directors and the BLR Director acquire
significance in determining which of the cases over which they exercise jurisdiction
may be appealed to the BLR Director and those that may be appealed to the
DOLE Secretary, both o f whom, based on law and jurisprudence, are possessed o f
exclusive appellate jurisdiction over certain cases decided by the Med-Arbiters,
DOLE Regional Directors and BLR Director.

The Supreme Court had occasion to distinguish the appellate jurisdiction

of the BLR Director from that of the DOLE Secretary in the case o f Abbott
Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union.2 Accordingly, the

1 Emphasis supplied.
1 G.R. No. 131374, Jan. 26,2000.

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 926 Ba r R e v ie w e r o n La b o r La w

appellate jurisdiction of the DOLE Secretary is limited only to the review o f

decisions rendered by the BLR Director in the exercise o f his exclusive and original
jurisdiction. The DOLE Secretary has no jurisdiction over decisions of the BLR
Director rendered in the exercise o f his appellate jurisdiction over decisions made by
Med-Arbiters and DOLE Regional Directors in the exercise* of their respective
original and exclusive jurisdictions, the reason being that such decisions are final and
inappealable.

1.
APPEALS FROM DECISIONS OF MED-ARBITERS.

1. APPEAL IN GENERAL.

Decisions in the cases falling under the original and exclusive jurisdiction o f
the Med-Arbiters are appealable as follows:

(1) Inter-union disputes (representation or certification election conflicts)

- to D O LE Secretary*1
(a) Request for SEBA certification when made in an unorganized
establishment with only one2 or more than one (1) legitimate
union3 or in an organized establishment - to D O L E Secretary
(b) Petition for certification election, consent election, run-off
election or re-run election - to D O L E Secretary
(2) Intra-union disputes45- to BLR D irector
(3) Other related labor relations disputes - to BLR D irector

1 This is by virtue of Artide 272 (259] of frie Labor Code. Thus arBde is entifled 'Appeal from CertficaSon Elecfon Orders* and A
provides as follows: "Article 259. Appeal from Certification Election Orders.—Any party to an election may appeal the order
or resutts of the eiectioo as determined by the Med-Arbiter dreefiy to the Secretary of Labor and Emptoyment on the ground
that the rnies and reguiaSons or parts thereof estabfehed by the Secretary of Labor and Emptoyment Sar the cooduct of the
election have been violated. Such appeal shal be decided within fifteen (15) calendar days.’ Prior to Die amendment of
Article 272 [259] by R A No. 6715, the decisions of toe Med-Artxterin certification elecSon cases are appealable to the BLR
Now, they are appealable to the DOLE Secretary. (A’ Prime Security Services. Inc. v. Hon. Secretary of Labor, G.R No.
91987, July 17,1995). It must be emphasized that as far as intra-union disputes are concerned, the decisions of the Med-
Arbiters thereon remain appealable to he BLR (See Secfion 1 (1), Rule in, NC f® Manual of Procedures for Condfafcn
and Preventive Mediation Cases).
1 to case toe Requert 6 made to an uncrganiredestabrdimertwito only are (1) legitimate union, arto toe requesting union or
local feJs to complete the requirements for SEBA certification during the validation conference before toe DOLE Regional
Director, to which evert, such Request should be referred to toe Section Officer for toe conduct of certifcaSon election
(Section 4, Rule VII of the Rules to Implement toe Labor Code, as amended by Department Order No. 40+15, Series of
2015 [September 07,2015]. The election should be ccxiducted h accordance wflh Rule IX thereof.), which necessariy would
mean hat such certification election should now be conducted under toe jurisdiefion of the Mediator-Arbiter to whom the
Election Officer is duty-bound to report the outcome of the election proceeding. Certainty, toe ensuing certification election
cannot be conducted under the drrechve of Ihe DOLE Regioaal Director without dne partc^iatjon of the Mediata-Arbiter wtxi,
under the law. is the one possessed of the original and exetisrve jurisdicbon ever certification eleefion cases, including the
proclamation of the winning SEBA (See Section 21, Rule IX, Book V, Rules to Implement the Labor Code, as ordered
renumbered by Section 17, Department Order No. 40+15, Series of 2015 (September 07,2015) Tht^ section was origtoaty
numbered Section 20, per Department Older No. 4003, Series of 2003, [Feb. 17,2003), but it was subsequently re­
numbered to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct 30,2008)).
5 Section 5, Rule VII, n relation to Rules Vlil and IX Department Order No. 40+15, Series of 2015 [September 07,2015).
4 Section 1(1], Rule III, NCMB Manual of Procedures for Condfafion and Preventive MerJation Cases.

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 C h a pter Eig h t 927
JURISDICTION AND RELIEFS

(4) Injunction cases - to B LR D irecto r

(5) Contempt cases - to B LR D irector

2. D IF F E R E N T R U L E R E A P P E L L A T E JU R IS D IC T IO N O VER M E D -
A R B IT E R ’S D E C IS IO N S IN IN T E R -U N IO N D IS P U T E S .

While generally, the decisions o f die Med-Arbiters arc appealable to the

BLR Director, excepted therefrom are their decisions in inter-union disputes1 which
are appealable direedy to the D O L E Secretary by virtue o f Article 272 [259]23o f the
Labor Code.

3. V ARIA NCE IN T H E R U L E O N A PPEA L IN U N O R G A N IZ E D A ND

O R G A N IZ E D E ST A B L ISH M E N T S.

The rule on appeal in certification election cases in u norganized

establishments is different from that o f o rganized establishments, to wit:
(1) Appeal in u norganized establishm ents. - The order granting the
conduct of a certification election in an unorganised establishment is n ot subject to
appeal. Any issue arising from its conduct or from its results is proper subject o f a
protest. Appeal may only be made to the D O L E Secretary in case o f denial of the
petition widvin ten (10) calendar days from receipt of the decision o f denial}
(2) Appeal in organized establishm ents. - The order granting the
conduct of a certification election in an organised establishment and the decision
dismissing or denying the petition for certification election may be appealed to the
DOLE Secretary within ten (10) calendar days from receipt thereof.4
2.
APPEALS FROM DECISIONS OF DOLE REGIONAL DIRECTORS

1. D E C ISIO N S A PPEALABLE T O T H E BLR D IR E C T O R .

N ot all decisions, awards or orders rendered by the DOLE Regional

Directors are appealable to the BLR Director. Only decisions in the following cases
relevant and related to labor relations, are appealable to the BLR Director

(1) Visitorial cases under Article 289 [274], involving examination o f

books o f accounts o f independent unions, local chapters/chartered
locals and workers’ associations;5

’ OtoervriseloKxm as representation a certification election c ^

: Supra.
3 Section 18 [formety Section 17], RuteWI, Book V, of toe Rdes to Imptement toe LaborCode, as amended by Department
Order No. 40-F-03, Series of 2008 [October 30,2008].
‘ Id.
5 The BLR Director, not toe DOLE Secretary, has toe appeiate authority over derisions of toe DOLE Regional Directors
involving examinations of union accounts as provided under Rule II of toe Rules of Procedure on MediatiorvArtitation,
issued on Apri 10,1992, to wit 'SEC. 3. Jurisdiction oftoe Regional Director. -The Regional Director shad exercise original
and exclusive jurisdiction over appkaticn for union registration, petitions for cancellation of union registration and complaints
for examination of unions boois of accounts. SEC. 4. Jurisdiction of toe Bureau.- xxx '(b) The Bureau shal exercise

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 928 Ba r Re v ie w e r o n La b o r La w

(2) Union registration-related cases, such as:

a) Denial of applications*1 for union registration of in dependent
unions, local chapters and workers’ associations;
b) Revocation or cancellation2 o f registration o f said unions;
(3) Notice o f merger, consolidation, affiliation an d change o f name of
said unions and or petition for denial thereof;34
(4) CBA-related cases, such as:
a) Application for registration of single-enterprise* CBAs or petition for
deregistration thereof;5
b) Petition for denial o f registration o f single-enterprise CBAs or denial
of petition deregistration thercofi

As far as N o. 1 above is concerned, appellate authority over decisions of

the DOLE Regional Directors involving exam inations o f union accounts is
expressly conferred on the BLR Director under die Rules of Procedure on Mediation-
A rb itra tio n ,67to wit:

“RULE II
MED-ARBITRATION
“SEC. 3. J u r is d ic tio n o f th e R e g io n a l D ir e c to r . - The Regional
Director shall exercise original and exclusive jurisdiction over application
for union registration, petitions fo r cancellation o f union registration and complaints for
exam ination o f union books o f accounts.
“SEC. 4. J u r is d ic tio n o f th e B u r c a u .-
xxx
“(b) The Bureau shall exercise appellate jurisdiction over all cases
originating from the Regional Director involving union registration or
cancellation o f certificates o f union registration and com plaints fo r exam ination o f union
books o f accounts.”'1

The language of the law is categorical. Any additional explanation on the

matter is superfluous. It is thus clear then that die DOLE Secretary' has no

appeilate jurisdiction over all cases originating from fie Regional Director involving union registration or cancellation of
certfcatfis of union registration and con-plaints for examination of union books of accounts.*
1 See Article 243 [2361 of the Labor Code whch provides. "Art 2431236], Denial of registration; appeal. The decision of Ihe
Labor Relations Division in the regional office denying registration may be appealed by the appScant union to the Bureau
wrthin ten (10) days from receipt of notice thereof.*
2 See Article 245 [2381 of the Labor Code vvhidi provides ‘Art 245 [238], Cancellation registration; appeal. The certificate of
registration of any tegi&nale labor orgarazation, iMiether nabonaf or local, shall be canceJed by the Bureau has reason to
believe, after due hearing, (hat the said labor organization no tonga- meets one a more of he requirements hereto
presetted.*
2 Section 5, Rule IV, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of
2003, [Feb. 17,2003] and as further amended by Department Order No. 4 0 005, Series of 2005, Sept 13,2005.
4 As distinguished from cases irrvofving mutb-employef CBAs which faB under the original jurisdiefion of the BLR Dinector.
5 Section 4 [formerly Section 5], Rule X!, Book V, Rules to Implement the Labor Code, as amended by Department Order No.
4003, Series of 2003, [Feb. 17,2003], and as re-numbered by Department Order No. 4 0 0 0 3 ,'Series of 2008 [Oct 30,
2008).
‘ Issuedon April 10,199Z
7 ItaScs and underlining supplied.

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 C h a p t e r Ei g h t 929
JURISDICTION AND RELIEFS

appellate jurisdiction over decisions o f D O LE Regional Directors involving

petitions for examinations o f union accounts.1

2. CASES N O T A PPEA LA B LE T O T H E BLR D IR E C T O R BUT T O

SO M E O T H E R LABOR O FFIC IA L S.

For greater clarity in presentation and to avoid any confusion, it is worthy

to mention that the decisions o f the D O L E Regional Directors in the following
cases which are not related to labor relations are appealable to the D O L E Secretary
and not to the BLR D irector

(a) Visitorial (inspection) cases under Article 37;2

(b) Visitorial (inspection) and enforcement cases3 under A rticle 128,
(either routine or initiated through a complaint);4
(c) Occupational safety and health violations;5
(d) Cases related to private recruitment and placement agencies (PRPAs) for
local employment, such as:
1) Applications for license or denial thereof;
2) Complaints for suspension or cancellation o f license by reason o f
administrative offenses;
3) Complaints for illegal recruitment; and
4) Petition for closure o f agency.6

Additionally, their decisions on small money claims cases arising from

labor standards violations in an amount not exceeding P5,000.00 and not

’ Bariesv.Btenb,G.R.No. 120220, Jine 16.1999.

2 ‘Article 37. Vstorial Power. - The Secretary of Labor a his duly authorized representatives may, at any time, inspect the
premses, bcoics of accounts and records of any person or entity covered by this Tide, require it to subnvt reports regularly on
presorted forms, and act on violation of any provisions of this Title.' (Referring to Tie I [Recruitment and Placement of
Workers), Book I, Labor Code).
3 Vrsitonal cases w of/e inspection of estebfetvnents to determine compliance win labor standards; while enforcement cases
involve issuance of compSance orders and writs of execution.
4 Based on the 2 * paragraph of Article 128(b), Labor Code, which states: ‘An order issued by the duly authorized
representative of the Secretary of Labor and Employment under this Article may oe appealed to the latter, xxx*(As amended
by Republic Act No. 7730, June 2,1994). Additionally, it is provided in Section t, Rule IV, of Ihe Rules on the Disposition of
Labor Stancards Cases in the Regional Offices, thus: “Section 1. Appeal - The order cf the Regional Director shat be final
and executory unless appealed to Ihe Secretary of Labor and Employment within ten (10) calendar daysfrem recent
thereof.' The grounds fa the appeal are provided in Section 2 thereof, thus: 'Q w n d s Jbrappeal. - The aggrieved party may
appeal to the Secretary the Oder of the Regional Director on any cf the following grounds: (a) there is a p m fa d e
evidence of abuse of discretion on the part of the Regional Director; (b) toe Order was secured through fraud, coercion or
graft and corruption; (c) the appeal is made purely on questions of law; and (rj) serious errors in the fadings of fads were
committed which, if not corrected, would cause grave reparable damageor injury to the appellant' (See also Section 2, in
relation to Section 3(a), Rule X Book III cf the Rules to Implement Ihe Labor Code).
5 Section 6(a) of Rule VI [Health and Safety Cases] of Ihe Rules on the Disposition of Labor Standards Cases in the Regional
Offices whi-h provides: Section 6. Review by Ihe Secretary. - (a) The Secretary at his own initiative or upon the request of
Ihe employer and/or employee, may review the order cf Ihe Regional Director wnich shall be rnmediately final and executory
unless stayed by the Secretary upon posting by the employer of a reasonable cash or performance bond as fixed by the
Regional Director.' Seeabothe2rBparagraph of Article 128(b), Labor Code.
5 Section 62, Department Order No. 141-14, Series of 2014, Nov. 20,2014.

J9JC9B0M
 930 Ba r r e v ie w e r o n La b o r law

accompanied with a claim for reinstatem ent under Article 129 are appealable to the
NLRC.

3. E X C E P T IO N W H E N D O L E S E C R E T A R Y M A Y E N T E R T A IN
A PPE A L D IR E C T L Y F R O M T H E D O L E R E G IO N A L D IR E C T O R ’S
D E C IS IO N W IT H O U T PA SSIN G T H R O U G H T H E B L R D IR E C T O R .

The rule as shown above is that jurisdiction to review the decisions o f the
D O L E Regional Directors over certain cases lies with the BLR D irector.1 H ence,
no appeal from the D O L E Regional D irector's decision can directly be filed with
the D O LE Secretary who has no appellate jurisdiction thereover.2 H ow ever, a
unique deviation was allowed from this rule in the 2011 case o f The Heritage Hotel
Manila? when the BLR Director in h ib ite d him self from taking cognizance o f die
appeal from the decision o f the D O L E Regional D irector because he was a form er
counsel o f respondent. Under this situation, the D O L E Secretary may legally
assume jurisdiction over the appeal from the decision o f the D O L E Regional
Director. T he reason is that in the absence o f the BLR D irector, there is n o person
more competent to resolve the appeal than the D O L E Secretary. T he jurisdiction
remained with the BLR despite the BLR D irector’s inhibition. W hen the D O L E
Secretary resolved the appeal, she merely stepped into the shoes o f th e B LR
Director and perform ed a function that the latter could n o t him self perform . She
did so pursuant to her power o f supervision and control over die B L R

4. V A L ID IT Y O F R E F E R R A L T O B L R O F A N A P P E A L
E R R O N E O U S L Y F IL E D W IT H D O L E S E C R E T A R Y .

In the 2014 case o f Takata* the motuproprio referral to die BLR D irector
by the D O L E Secretary o f an appeal erroneously filed before him from the
decision o f the D O L E Regional D irector ordering the cancellation o f respondent
union’s registration was held valid. Consequendy, by reason o f such referral, the
BLR Director can then validly act on it.

3.
APPEALS FROM DECISIONS OF MED-ARBITERS.

1. A PPEA LS F R O M D E C IS IO N S O F B L R D IR E C T O R R E N D E R E D IN
H IS O R IG IN A L JU R IS D IC T IO N .

Decisions in the cases falling under the orignal and exclusive jurisdiction o f
the BLR Director are all appealable to the D O L E Secretary, to w it

1 Abbottlaboratories PtiSpphes, Inc. v. A IM LaboratoriesEmployeesUnion, GR No. 131374,Jan.26,2000.

1 «.
1 llieKedtageHotelMandav. NationalUnionolVWoikemintheHotei.RestauFantandAfiedlndustrife+tenlageHobdMaraa
SupervisorsChapter(NUWHRAIN-HHMSC).G.R No. 178296.Jan. 12,2011.
« Takala (Philippines) Coiporeflmv Bureau of I^R elafioreaiaSam ahm gLakasM aiggagasangTakatapALAM Al),
G R No. 196276. June04,2014.

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 C h a pt er Eig h t 931
JU R IS D IC T IO N A N D R E L IE FS

(a) C om plaints and petitions involving th e application for registration,

revocation o r cancellation o f registration o f fe d e ra tio n s, n a tio n a l
u n io n s , in d u s try u n io n s , tr a d e u n io n c e n te r s a n d th e ir lo c a l
c h a p te r s /c h a r te r e d lo c a ls, a ffilia te s a n d m e m b e r o rg a n iz a tio n s;
(b) Request for exam ination o f books o f accounts o f said labor
organizations*1 u n d er Article 289 [274] o f the L abor Code;
(c) Intra-union disputes involving said la b o r organizations;2
(d) N otice o f m erger, consolidation, affiliation and change o f nam e o f
said unions and o r petition fo r denial thereof;
(e) Registration o f multi-employer CBAs3 o r petitions for deregistration
thereof; and
(f) C ontem pt cases.4

2. AMPLIFICATION OF DISCUSSION ON SPECIAL CASES.

a. Appeals to m denial ofapplication for registration and
revocation or cancellation o f registration o f labor organizations.
F o r purposes o f appeal, the issue o f u n io n registration involves 2
situations,

(1) D e n ia l o f a p p lic a tio n for union registration;5 and

(2) R e v o c a tio n o r c a n c e lla tio n o f union registration.6

T he applicable rules w ould depend o n w h o h as taken original and exclusive

jurisdiction over the case, thus:

(1) I f die denial o f the registration application o r revocation o r cancellation o f

union registration is m ade by the D O L E R e g io n a l D ire c to r, in die
exercise o f his original and exclusive jurisdiction over cases involving
in d e p e n d e n t u n io n s , lo c a l c h a p te r s /c h a r te r e d locals and
w o rk e rs’ a ss o c ia tio n s, the same m ay be appealed to the B L R

< Referring to federations, nationa/mions. indus&yurooosandtradetHifencanters, astfisSoguished fromindependentunions,

localchapter andwaters'associations.
* h
* Secta 15, XI, Book V, fetes to inptemert the Laba Code, as amended by Department CWerNaWQ.Setfes of
2003, (Feb. 17,2003jand as renumberedby OepartnentOitierNa 40^-03, October30,2008. SeeNational Federation of
Laborv. Laguesma, GJl No. 123426, March 10,1999.
4 The pasm a t^ e d in (^ c a rte m p t by iheBtPDsecky may appeal to the DOLE Seaw ay. (See Secfionl, Rule XXIII,
BookV.Rulestolmplementfte labor Coda as amended by DepartmertO der fto.4W 3,Seftes of2003, fe b . 17,20031).
1 As provided in Article 243 (236) o( the Labor Code, which provides: ‘Art 243 (236). Denial of registration; appei The
decisionof IheLaborRelationsOMsionntiie regionalofficedenyingregistrationmaybeappealedbylheappfcantunionto
theBureauwithinten(10)daystom receptofnoticethereof.*
4 As pro/kled in Arbde245 [238] of the LatxxCode, wtachprovides: "Art 245 R38). Cancefiation of registrafion; appeaLThe
certSc^e c#regiscration of any legiimatfi labor organization, i%tieSierneaional cr local, shafl becanceled IheBureau f it
has reason to beieve, after due heahg. that the said labor organization no longer m e* one or moreof he requtenents
herein presated'

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 932 Ba r r e v i e w e r o m La b o r I a w

Director,1 whose decision on the matter shall be final and

inappealable;2 or

(2) If the denial of the registration application or revocation or cancellation of

union registration is made by the BLR Director, in the exercise o f his
original and exclusive jurisdiction in cases involving federations,
national unions, industry unions and trade union centers, the
same is appealable to the D O L E Secretary,3 whose decision on the
matter shall be final and inappealable.4

The reglementary period for appeal to the BLR Director5 or D O LE

Secretary,6 as the case may be, is ten (10) calendar days from receipt o f the decision,
copy furnished the opposing party.

b. Appeals involving denial o f CBA registration or deregistration.

There are two (2) situations involved in the denial o f CBA registration
or CBA deregistration, vi%:

(1) Single-enterprise CBAs. - The denial by the R egional D irector

of the registration of single-enterprise CBAs or their deregistration
may be appealed to die BLR Director within ten (10) days from
receipt of die notice o f denial.7

’ Section 6, Rule IV [Provisions Common to tne Registration of Labor Organizations and Woricers Assodatjon], Book V of the
Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17,20031 The
ground that may be bled is either grave abuse of discretion a violation of the Rules to Implement the Labor Code. Earlier, it
was provided under Section 4, Rule V. Book V (Labor Relations), of the Rules to Implement the Labor Code, as amended by
Department Order No. 9 dated May 1,1997, issued by former Secretary of Labor and later Supreme Court Associate Justice
Leonardo A. Quisumbhg, that he dedson of the Regional Office denying he application for registration of a wooers'
association whose place of operation is confined to one regional jurisdiction, or he Bureau of Labor Relations denying he
registration of a federation, national or industiy union or trade union center may be appealed to the Bureau a the Secretary,
as the case may be, who shal decide the appeal whin twenty (20) calendar days tom receipt cf the records of he case.
(See National Federation of Labor v. Laguesma. G R. No. 123426, March 10,1999).
2 Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union, G.R No. 131374, Jan. 26,2000.
3 Section 6, Rute IV provisions Common to the Registration of labor Organizations and Woricers Association], Book V of he
Rules to Implement the Labor Code, as amended by Department Order No. 4003, Series of 2003, (Feb. 17,2003],
4 Abbott Laboratories Phippines, Inc. v. Abbott Laboratories Employees Union, supra.
5 Section 16. Rule XI, Book V, Rules to Implement he Labor Code, as amended by Department Order No. 4003, Series of
2003. [Feb. 17,2003).
1 Section 15, Rule XI. Book V. Rules to Implement the Labor Code, as amended by Department Order No. 4003, Series of
2003, [Feb. 17,2003] and as renumbered by Department Order No. 40-F-03, October 30,2008. Previously, it was provided
in Section 4, Rule VIII, Book V of he Rules to implement he labor Code hat he decision of he Regional Office or he
Director of he Bureau of Labor Relations may be appealed within ten (10) days from receipt hereof by he aggrieved party
to he Director of he Bureau or he Secretary of Labor, as he case may be, whose decision shal be final and executory.
(See National Federation of Labor v. Laguesma, G.R. No. 123426, March 10,1999).
7 Section 5, Rule XVII, Book V, Rules to Implement he Labor Code, as amended by Department Order No. 404)3, Series of
2003, [Feb. 17,2003).

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 c h a p t e r . Eig h t 9 33
JURISDICTION AND RELIEFS

(2) M ulti-em ployer CBAs. - The denial by the BLR D irector o f the
registration o f multi-employer CBAs or their deregistration may be
appealed to the D O L E Secretary within the same period.1

The Memorandum o f Appeal should be filed with the Regional Office or

the BLR, as the case may be. The same should be transmitted, together with the
entire records o f the application to the BLR o r the Office of the D O LE Secretary,
as the case may be, within 24 hours from receipt o f the memorandum o f appeal.23
The BLR or the Office o f the DOLE Secretary, as the case may be, should resolve
the appeal within the same period and in the same manner prescribed in the Rules to
Implement the Labor Code}

c. Direct and indirect contempt.

(1) Direct contem pt.
A person guilty o f misbehavior in the presence of or so near the BLR
Director as to obstruct or interrupt the proceedings before him, including
disrespect towards him, offensive personalities towards others, or refusal to be
sworn or to answer as a witness or to subscribe an affidavit or deposition when
lawfully required to do so may be summarily adjudged in direct contempt by said
official and punished by a fine not exceeding P I00.00 or imprisonment not
exceeding one (1) day, or both.4

The person adjudged in direct contempt by the BLR Director may appeal
to the DOLE Secretary. The execution of the judgment is suspended pending the
resolution o f the appeal upon the filing by such person o f a bond on condition that
he will abide by and perform the judgment should the appeal be decided against
him. The judgment o f the DOLE Secretary is immediately executory and
inappcalable.5

(2) Indirect contem pt.

Indirect contempt shall be dealt with by the BLR Director67in the manner
prescribed under Section 12, Rule 71 o f the Revised Rules of Court.1 hx Land Bank of the
Philippines v. Listana, Sr.,6 it was held that under the above-quoted provision, quasi­

1 Id.
1 Id.
3 See Section 6. Rule XVII, Book V, Ibid, n relation to Rute XI, Book V thereof.
4 Section 1, Rule XXIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of
2003, [Feb. 17,2003].
s Section 1, Rule XXIII, Book V, bid.
* Section 2, Rule XXIII, Book V, bid.
7 This rule provides as folows: *S£C. 12. C o fte n p a g c in S tq u a s iju c k id e ri^ . - Unless otherwise provided by law, bis
Rule shall apply to oontempt commitled against persons, entities, bodies or agencies exerds'ng quasi-judicial functions, or
shal have supptetory efect to such rules as bey may have adopted pursuant te authority granted to toem by law to punish
for contempt The Regional Trial Court of be place wherein the contempt has been committed shal have jurisdiction over
such charges as may be filed therefor.*
* G R No. 152611, Aug. 5,2003.

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 934 Ba r R e v ie w e r o n La b o r La w

judicial agencies that have the power to cite persons for indirect contempt pursuant
thereto can only do so by initiating it in the proper Regional Trial Court and that it
is not within their jurisdiction and competence to decide indirect contempt cases as
these matters are still within the province o f the Regional Trial Courts.

However, Robosa v. NLRC,*1 clarified that said Rule 71 ■’does not require
quasi-judicial authorities2 to initiate indirect contempt proceedings before the trial
court since this mode is to be observed only when there is no law granting them
contempt powers. Since Section l 3 and Section 24 o f Rule XXIII, Book V o f the
Rules to Implement the Labor Code, as amended,5 expressly grant both direct and
indirect contempt power to the BLR Director, the requirement in Land Bank does
not apply. The BLR Director therefore need not initiate any indirect contempt
proceeding before the Regional Trial Court.

VI.
REMEDIES FROM DECISIONS OF
BLR DIRECTOR AND DOLE SECRETARY
RENDERED IN THEIR APPELLATE JURISDICTION

1. APPEALS E N D W ITH BLR D IR E C T O R A ND D O L E SECRETARY.

Notably, the remedy of appeal involved in the cases contemplated under

Article 232 [226] is available only up to the level o f either the BLR Director or the
DOLE Secretary, as die case may be. Appeal to the CA from their decisions
rendered in their respective appellate jurisdictions is not available; the only remedy
being the filing of an original special civil action for certiorari under Rule 65 o f the
Rules of Court.6

In the case of decisions rendered by the BLR Director in his appellate

jurisdiction, they can no longer be appealed to die DOLE Secretary because
another appeal to die DOLE Secretary is not tenable anymore, the BLR Director’s
decisions thereon having already become final and executory.7

2. REMEDY FROM CA D ECISION S T O T H E SU PREM E CO U RT.

There is only one mode to elevate labor cases from the CA to the
Supreme Court and that is, dirough Rule 45 petition for review on certiorari.

' Robosa v. NLRC, Chemo-Tedinische Manufacturing, Inc., G.R. No. 176085, Feb. 8,2012.
i Ike the Labor Arbiter or the NLRC in this case,
i Direct Contempt
< Indirect Contempt
5 As amended by Department Order No. 40-03, Series of 2003, [Feb.
5 Section 23, Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of
2003, [Feb. 17,2003]; National Federation of Labor [NFTJv. Laguesma, G.R No. 123426, March 10,1999.
1 Abbott Laboratories Philippines, Inc. v. Abbott Laborkories Employees Union, G.R No. 131374, Jan, 26,2000.

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 C h a p t e r Ei g h t 935
JURISDICTION AND RELIEFS

VII.
ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs

The BLR and the Labor Relations Divisions (LRDs) in the D O LE

Regional Offices have concurrent jurisdiction over the following administrative
functions:

1. Registration o f labor unions;

2. Keeping o f registry o f labor unions;
3. Maintenance and custody o f the files o f CBAs and other related
agreements.
4. Records o f setdement o f labor disputes; and
5. Copies o f orders and decisions o f Voluntary Arbitrators.1

It must be noted that it is the registration o f the labor organization with

the BLR and not with the Securities and Exchange Commission (SEC) which
makes it a legitimate labor organization with rights and privileges granted under the
Labor Code.2

E.
NATIONAL CONCILIATION AND MEDIATION BOARD3

1. M A ND ATE.

The NCMB is an agency attached to the D O L E principally in-charge o f

the settlement of labor disputes dirough conciliation, mediation and voluntary
arbitration. It is also charged with the promotion o f voluntary approaches to labor
dispute prevention and setdement.4

2. C O N C IL IA T O R -M E D IA T O R .

A '‘Conciliator-Mediator” refers to an officer o f the NCMB whose principal

function is to assist in the setdement and disposition o f labor-management disputes
dirough conciliation and preventive mediation, including the promotion and
encouragement of voluntary approaches to labor disputes prevention and
setdement.5

1 Article 237 (231), Labor Code.

2 Cebu Seamen's Association, Inc. v. Hon Pura Fetter-Calteja, G.R. No. 83190. Aug. 4,1992; See also Philippine Land-Sea-
Air Labor Union [PLASLU] v. CIR, G.R Nos. L-5664 & L-5698, SepL 17,1953,93 PhJ. 747.
3 Relevant Provisions: (1) Executive Order No. 126, [Reorganizing the Mnistry of Labor and Employnent and for Other
Purposes] (January 30,1987) and (2) Executive Order No. 251 [Creating the NCMB] (July 25,1987) Both were issued by
President Corazon C. Aquino.
* Section 1[15[, Rule III, NChB Manual of Procedures fa Concfetion and Preventve Mediation Cases
5 Section 1 [k]. Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03. Series of
2003, [Feb. 17,2003],

J9JC9B0M
 936 Bar Reviewer on Labor Law

1.
NATURE OF PROCEEDINGS

1. N C M B IS N O T A Q U A S I - J U D I C I A L A G E N C Y .

A c c o rd in g to Tabigue v. International Copra Export Corporation} d ie N C M B ,*2

is n o t a quasi-judicial agency.

“Quasi-judicialfunction'1is a te r m w h ic h ap p lies to th e a c tio n , d is c re tio n , e tc .

o f p ublic a d m in istrativ e o ffic e rs o r b o d ie s , w h o are re q u ire d to in v e s tig a te fa c ts o r
a scerta in d ie e x iste n ce o f fa c ts, h o ld h e a rin g s , a n d d ra w c o n c lu s io n s f ro m th e m as a
b asis fo r th eir official a c tio n a n d to e x e rc ise d isc re tio n o f a ju dicial n a tu r e .3

2. E F F E C T O F N O T B E I N G A Q U A S I - J U D I C I A L A G E N C Y .

In Tabigue, th e N C M B D ir e c to r d id n o t g ra n t p e titio n e rs ’ r e q u e s t to s u b m it
th e case fo r v o lu n tary a rb itra tio n b e c a u s e th e b a rg a in in g u n io n o f w h ic h th e y are
m e m b e rs, re fu se d to jo in th e m in th e p re v e n tiv e m e d ia tio n c a s e th e y file d w ith th e
N C M B . T h e b arg a in in g u n io n , b e in g d ie p a rty to th e C B A , is r e q u ire d to g iv e its
c o n s e n t to th e v o lu n ta ry a r b itra tio n case. P e u u o n e r s q u e s tio n e d th e N C M B
D ir e c to r ’s a c tio n th ro u g h a R u le 4 3 p e titio n w ith th e C o u r t o f A p p e a ls . R u le 4 3 o f
th e R ules o f C o u rt, h o w e v e r, ap p lie s o n ly to a w a rd s, ju d g m e n ts , final o r d e rs o r
re so lu tio n s o f o r a u th o riz e d b y an y q u a s i - j u d i c i a l a g e n c y in th e e x e rc ise o f its
quasijudicialfunctions. H e n c e , N C M B ’s d e c is io n , n o t h a v in g b e e n re n d e r e d b y a q u a s i­
jud icial b o d y , c a n n o t b e e le v a te d to th e C o u r t o f A p p e a ls u n d e r said rule.

2.
CONCILIATION VS. MEDIATION

1. J U R I S D I C T I O N O V E R C O N C I L I A T I O N , M E D I A T I O N A N D
V O L U N T A R Y A R B IT R A T IO N C A S E S .

O rig in ally , c o n c ilia tio n , m e d ia tio n a n d v o lu n ta ry a r b itra tio n fu n c tio n s are

v e s te d w id i d ie B u reau o f L a b o r R e la tio n s (B L R ). T h e s e f u n c tio n s , h o w e v e r, w e re
all a b s o rb e d b y th e N C M B u n d e r th e la w w h ic h c re a te d it.4

2. C O N C I L I A T I O N A N D M E D I A T I O N , M E A N I N G .

B o th th e te rm s “conciliation” a n d “mediation" re fe r to a p r o c e s s w h e re b y a
n e u tra l th ird p e rs o n usually called C o n c ilia to r (in case o f c o n c ilia tio n ) o r M e d ia to r
(in c ase o f m e d ia tio n ), in te rv e n e s in a d is p u te in v o lv in g tw o o r m o r e c o n flic tin g

' G.R. No. 183335, Dec. 23,2009

2 As enumerated in Section 22 of Executive Order No 125, ne Reorganize n Act erf Die Mnsay of Labor and Employment).
3 Metropolitan Bank and Trust Company, Inc. v. NWPC, G F No. 144322, Fen 6,2007.
4 See Section 22 of Executive Order No. 126, [Reorganizing the Mrustiy of _abor and Employment and tor Other Purposes)
promulgated on Jan 30,1987 by President Corazon C Aquino, as amended by Section 4 of Executive Order No. 251
promulgated on July 25,1987, creating toe NCfJB.

J9JC9B0M
 C hapter Eig h t 937
JURISDICTION AND RELIEFS

p a r tie s f o r th e p u r p o s e o f re c o n c ilin g th e ir d if fe r e n c e s o r p e r s u a d in g th e m in to
a d ju s tin g o r s e ttlin g th e ir d is p u te . T h e C o n c ilia to r o r M e d ia to r n o r m a lly d o e s n o t
m a k e o r r e n d e r an y d e c is io n , h is ro le b e in g c o n f in e d to th e f u n c tio n s a f o re -
d e s c rib e d .

3. D IS T IN C T IO N B E T W E E N C O N C IL IA T IO N A N D M E D IA T IO N .

G e n e ra lly , th e r e a re n o m a r k e d d is tin c tio n s b e tw e e n c o n c ilia tio n a n d

m e d ia tio n . T h e re a s o n is th a t in b o th c a s e s, a n e u t r a l th ird p a rty (c a lle d
C o n c ilia to r o r M e d ia to r) is ta s k e d to a s sist tw o o r m o r e o p p o s in g p a r tie s in fin d in g
a p p r o p r ia te re s o lu tio n to a d is p u te .

P h ilip p in e la w a n d ju r is p r u d e n c e d o n o t e m b o d y a n y s p e c ific d is tin c tio n s

b e tw e e n th e s e tw o as in fact, th e r e a p p e a r s to b e n o u n iv e rs a l d e f in itio n o f th e s e
w id e ly a c c e p te d a lte rn a tiv e m o d e s o f d is p u te re s o lu tio n .

I n th e N C M B , th e h e a r in g o f f ic e r is c a lle d C o n c ilia to r -M e d ia to r . T h e r e is
no s e p a ra te c la s sific a tio n b e tw e e n c o n c ilia to r s and m e d ia to r s . W hen th e
C o n c ilia to r -M e d ia to r p e r f o r m s h is ta s k , h e d o e s n o t m a k e a n y d is tin c tio n w h e n h e
is a c tin g a s C o n c ilia to r o r a s M e d ia to r. H o w e v e r , th e f o llo w in g d e f in itio n a n d
d e s c r ip tio n o f th e s e te rm s a re p r e s c r ib e d :

Conciliation - is c o n c e iv e d o f as a m ild f o r m o f in te r v e n tio n b y a n e u tr a l

th ird p a rty , th e C o n c ilia to r -M e d ia to r , re ly in g o n h is p e rs u a s iv e e x p e r tis e , w h o ta k e s
a n a c tiv e ro le in a s sistin g p a r tie s b y try in g to k e e p d is p u ta n ts ta lk in g , fa c ilita tin g
o t h e r p r o c e d u r a l n ic e tie s , c a rry in g m e s s a g e s b a c k a n d f o r th b e tw e e n t h e p a r tie s ,
a n d g e n e ra lly b e in g a g o o d fe llo w w h o trie s to k e e p th in g s c a lm a n d fo rw a rd -
lo o k in g in a te n s e s itu a tio n .

Mediation - is a m ild in te r v e n tio n b y a n e u tr a l th ird p a r ty , th e C o n c ilia to r -

M e d ia to r, w h e re b y h e s ta rts a d v is in g th e p a r tie s o r o f fe r in g s o lu tio n s o r a lte rn a tiv e s
to th e p r o b le m s w ith th e e n d in v ie w o f a s s is tin g th e m to w a r d s v o lu n ta rily r e a c h in g
th e ir o w n m u tu a lly a c c e p ta b le s e ttle m e n t o f th e d is p u te .1

In o th e r ju ris d ic tio n s , th e p rin c ip a l d is tin c tio n b e tw e e n c o n c ilia tio n a n d

m e d ia tio n lies o n th e e x te n t o f th e p o w e r a n d a u th o rity g r a n te d to th e n e u tr a l third
party.

In m e d ia tio n , th e M e d ia to r n o rm a lly fac ilita te s a d e lib e r a tio n or

d is c u s s io n o f th e issu e s b e tw e e n th e p a rtie s. H e m a y o r m a y n o t o f f e r a n y o p in io n s
o n th e s tr e n g th a n d w e a k n e sse s o f e a c h p a rty 's p o s itio n s a n d a rg u m e n ts . T h u s ,
m e d ia tio n m ay b e classified in to tw o , n am ely :

1. F a c i l i t a t i v e M e d i a t i o n w h e re th e M e d ia to r d o e s n o t m a k e o r o f f e r
an y o p in io n ; o r

1 See htlpy/coxxTT*.pWa)naratiomne(Ja6o^ where fas distinction is made by the NCMB. Last Accessed: January 31,
2019.

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 938 Bar Reviewer on Labor Law

2. Evaluative M ediation where the Mediator offers an opinion which is

not binding on the parties.

It bears stressing, however, that regardless o f which o f the 2 methods

above is chosen, the Mediator is not empowered to impose his will on the parties.
.1

In conciliation, the Conciliator is given mote power and authority in that

he may not only offer an opinion on the issues at hand but may actually make a
binding opinion thereon provided the parties stipulate in advance to this effect His
opinion is based on the facts and the law involved in die controversy before him.

It may thus be observed that conciliation is mdre formal than mediation

in the sense that the Conciliator's opinion, unlike the Mediator's, may be binding
on the parties, although it may be merely temporary in character.

4. PRIVILEGED N A TU R E O F T H E IN F O R M A T IO N IN
CON CILIATIO N A ND M E D IA T IO N P R O C E E D IN G S .

Any information and statements made at conciliation proceedings should

be treated as a privileged communication and thus may no t be used as an evidence
in any proceedings. They are inadmissible in evidence. Conciliators and similar
officials are not allowed to testify in any court o r body regarding any matters taken
up at conciliation proceedings conducted by them.1

The privileged nature of the communication applies not only in cases o f

conciliauon and mediation proceedings before the BLR, its Med-Arbiters or any o f
its hearing officers but also in similar proceedings conducted by other labor
officials, such as the Conciliators-Mediators o f the NCMB as well as the Labor
.Arbiters and the Commissioners of the NLRC.

For instance, in modifying the award o f annual salary increases given by

the DOLE Secretary to the employees under die CBA in the case o f Nissan Motors
Philippines, Inc v. Secretary ofLabor and Employment? the Supreme Court pointed out
that it cannot sanction the award made by the public respondent D O L E Secretary
based ostensibly on the revelation o f the NCMB Administrator that was sourced
from the confidential position given to him by petitioner company. The reason for
this is simple. Article 239 [233] of the Labor Code prohibits the use in evidence o f
any confidential information given during conciliation proceedings. The NCMB
Administrator clearly breached this provision o f law.

1 Aructe ;.<9 [233], Labor Code; Section 2, Rule XXII, Booh V, Rules b Implement Hie Labor Code, as amended by
Department OrderNo. 4003, Seriesof 2003, 17,2003].
^ GR Nos 1S819O91.June21.2006.

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JURISDICTION AND RELIEFS

3.
PREVENTIVE MEDIATION
1. P R E V E N T IV E M E D IA T IO N AS A R EM ED Y .
“Preventive mediation," as a remedy, is not found in the Labor Code. But
under the law which created the NCMB, it is expressly stated that one o f its
functions is to provide preventive mediation to disputing parties.1 It covers
potential labor disputes that ate the subject o f a formal o r informal request for
conciliation and mediation assistance sought by either or both parties o r upon the
initiative o f the NCMB to avoid the occurrence o f actual labor disputes and in
order to remedy, contain or prevent its degeneration into a full blown dispute
through amicable setdement.2*

The term “ preventive mediation case" refers to the potential or brewing labor
dispute which is the subject o f a formal or informal request for conciliation and
mediation assistance sought by either o r both parties in order to remedy, contain or
prevent its degeneration into a full blown dispute through amicable setdement.

2. H O W T O IN IT IA T E P R E V E N T IV E M E D IA T IO N .

Preventive mediation proceeding may be initiated in two (2) ways:

(1) By filing a n otice o r request o f preventive m ediation, as

distinguished from a notice o f strike/lockout; or
(2) By conversion o f the notice o f strike/lockout into a preventive
mediation case.

Procedurally, the filing o f the notice o f preventive suspension is the first

step to submit a case for mediation. I t is only after this step that a submission
agreement may be entered into by the parties concerned.5 Moreover, just like in
notices o f strike o r lockout, only certified SEBAs may file a notice or request for
preventive mediation in cases o f bargaining deadlocks and unfair labor practices,
the only two (2) grounds that may be invoked in support o f a strike or lockout4

As distinguished from a notice o f strike/lockout, “notice of preventive

mediation* refers to the notification filed by either an employer o r a duly registered
labor union with die NCM B-DOLE informing die latter o f its desire to submit die
issues between diem for preventive mediation and conciliation. The issues that may
be submitted for preventive mediation may either b e stnkeable or non-strikeable.

1 Secfion22.ExecufiveOriertto.126.
1 Secfionl [20], Rule ID, NCMB Manual of Procedures txCondiaflon and PrevenfiveMediaSon Cases; See also Section 1
fmm|, Rute I. Book V . Rules to Imptement the la te C od* as amended by Department Order No. 4003, Safes o f2003,
(F etaay 1 7 ,2 00$ Append* 2 [DefWfon of Terms], NCMB Primer on Sdfe. PtteSng and Lockout 2 k I Edfion.
December 1965.
i Insula Hotel Employees U niotvIRv.W aafrontlnsLbr Hotel Davao, G il Nos. 17404W 1, September22.2010.
4 to; Section3. Rule IV of Ihe NCMB Manual of Procedure.

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 940 Bar Reviewer on Labor Law

In cases o f strikeable issues, the parties may mutually agree that the same
be treated or converted into a preventive mediation case, in which event, no strike
or lockout may be legally and validly mounted based on the same issues since their
conversion into a preventive mediation case lias the effect o f dismissing the notice
o f strike/lockout and removing it horn the docket o f notices o f strike/lockout

In cases of non-strikeable issues raised in a notice o f strike or notice o f

lockout, the NCMB may, motuproprio, convert the same into a preventive mediation
case or, alternatively, refer said issues to voluntary arbitration, if they are in the
nature of unresolved grievances or to die Med-A^biter, if they involve
representation or inter-union disputes.

3. AUTHORITY T O CONVERT A N O T IC E O F S T R IK E /L O C K O U T
IN T O A PR EV E N T IV E M E D IA T IO N CASE.

The NCMB has the authority to convert a notice o f strike/lockout filed

by the union/employer into a preventive mediation case under any o f the following
circumstances:

1. When the issues raised in the notice o f strike/lockout are not

strikeable in character.
2. When the party which filed the notice o f strike/lockout voluntarily
asks for the conversion.
3. When both parties to a labor dispute mutually agree to have it
subjected to preventive mediation proceeding.

Such authority is in pursuance o f the NCMB’s duty to exert all efforts at

mediation and conciliation to enable the parties to setde their dispute amicably and
in line with the State policy of favoring voluntary modes o f settling labor disputes.1

The NCMB introduced this concept o f preventive mediation service since

1988. Its distinctive feature lies in the fact that under this mode, disputes are
setded without the pressure o f any threat o f a strike o r lockout Both parties
therefore could deliberate and adjust their differences in a mote conducive
atmosphere than when there is a pending strike o r lockout notice.

4. G UID ELINES IN T H E C O N V ER SIO N O F T H E N O T IC E O F

STRIK E/LO CK O U T T O A P R E V E N T IV E M E D IA T IO N CASE.

In case o f conversion o f a notice o f strike o r lockout into a preventive

mediation case, the following guidelines must be followed after such conversion:

(1) Cteady determine whether the issue/s raised in the notice o f

strike/lockout is/are strikeable or not.

' toM9,NCMBPrimmS^PHtei^andljoctoia,2rel&^Decanber1995.

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JURISDICTION AND RELIEFS

(2) If conversion is warranted, a written recommendation from the

Conciliator-Mediator handling the case is required, after dose
consultadon with the Regional Branch Director.
(3) The written recommendation must be formally endorsed to the
Regional Branch Director II for approval
(4) The conversion must be done before the cooling-off period expires or
before the union conducts its strike balloting.
(5) Parties concerned must be formally notified o f the action taken by the
Regional Branch Director through a letter signed by the Conciliator-
Mediator handling the case and approved by the Director IL
(6) The notice should be dropped from die docket o f notices o f
strike/lockout and to be renumbered as a preventive mediation case
and a conference thereon should be set on spedfic date/s.1

5. C O N V E R SIO N O F N O T IC E R ESU LTS I N IT S DISMISSAL.

Once the notice o f strike is converted into a preventive mediation case,

the notice is deemed dropped from the dockets as if no notice o f strike has been
filed. Since there is no more notice o f strike to speak about, any strike subsequendy
staged by the union after the conversion is deemed not to have complied with the
requirements o f a valid strike and therefore illegal.2 The same rule applies in the
case o f lockout by an employer.34

6. R EL E V A N T CASES.

A case in point is PhilippineAirlines, Inc.». Secretary ofLaborand Employment,*

where the strike was declared illegal for lack o f a valid notice o f strike in view o f the
NCMB’s conversion of said nonce into a preventive mediation case. The Supreme
Court reasoned, thus:

“The NCMB had declared the notice of strike as ‘appropriate for

preventive mediation.’ T be effect of that declaration (which PALEA did not ask
to be reconsidered or set aside) was to drop A t casefrom the docket of notice of
strikes, as provided in Rule 41 o f the NCMB Rules, as i f then was no notice of
strike. During the pendency ofpreventive mediation proceedings no strike could he legally
declared... The strike which the union mounted, while preventive mediation
proceedings were ongoing, was apdy described by the petitioner as 'an
ambush."’5

1 S ec(jm 4,f^V ,N C \B M afw al of F^awxsesMCorxSaticr and FVw en^M afetion Cases.

2 No.18, NCMBPitneron Strike. Picketingand Lockout, 2nd EdiSon, Deoember 1995.
2 bid.
4 O R . No.88210, Jan. 23,1991,193 SCRA 223
5 Per DOLEwebsfe June30.2014.

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 942 Bar Reviewer o n Labor Law

It is clear, a c c o rd in g to San Miguel Corporation v. NLRC,1 th a t th e m o m e n t

th e N C M B o rd e rs th e p re v e n tiv e m e d ia tio n in a strik e c a se , th e u n io n th e r e u p o n
loses th e n o tic e o f strik e it h a d filed. C o n s e q u e n tly , if it still d e fia n d y p r o c e e d s w ith
the strike w h ile m e d ia tio n is o n -g o in g , th e strik e is illegal.

In th e case o f NUU^HRAIN v. NLRC,2 w h e r e thfe p e titio n e r- u n io n

th e re in sim ilad y d e fie d a p ro h ib itio n b y th e N C M B , th e S u p re m e C o u r t said:

“Petitioners should have complied with the prohibition to strike

ordered by the NCMB when the latter dismissed the notices of strike after
finding that the alleged acts of discrimination of the hotel were not ULP
hence not ‘strikeable.’ The refusal of the petitioners to heed said proscription
of the NCMB is reflective of bad faidi.”

F.
DOLE REGIONAL DIRECTORS

1. R O L E O F T H E D O L E R E G I O N A L D I R E C T O R S .

T h e D O L E h a s a to tal o f 16 R e g io n a l O ffic e s n a tio n w id e e a c h o n e o f

th e m is h e a d e d by a R eg io n a l D ire c to r. T h e D O L E R e g io n a l D ir e c to rs a re th e d u ly
"authorised representatives" o f th e D O L E S e c re ta ry re fe rre d to in A rtic le 128 o f th e
L a b o r C o d e w h ic h g ra n ts to th e m b o th v i s i t o r i a l a n d e n f o r c e m e n t p o w e r s .
T h e y are in ch arg e o f th e a d m in istra tio n a n d e n f o rc e m e n t o f la b o r s ta n d a rd s w ith in
th e ir resp ec tiv e te rrito ria l ju risd ic tio n s.3

1.
JURISDICTION

1. R O L E O F T H E D O L E R E G I O N A L D I R E C T O R S .

T h e D O L E h a s a to ta l o f 16 R e g io n a l O ffic e s n a tio n w id e e a c h o n e o f
th e m is h e a d e d by a R e g io n a l D ire c to r. T h e D O L E R e g io n a l D ir e c to r s a re th e d u ly
"authorised representatives" o f th e D O L E S e c re ta ry re fe rre d to in A rtic le 128 o f d ie
L a b o r C o d e w h ic h g ra n ts to th e m b o th v i s i t o r i a l a n d e n f o r c e m e n t p o w e rs . T h e y
are in ch arg e o f th e a d m in istra tio n a n d e n f o r c e m e n t o f la b o r s ta n d a rd s w ith in th e ir
resp ec tiv e te rrito rial ju risd ic tio n s.4

' G.R. No. 119293, June 10.2003.

* G.R No. 125561, March 6,1998,287 SCRA192.
3 See Section 3, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Offices [Sept 16,1987]; Atflano v.
De la Cruz. G.R No. 82488, Feb. 28,1990,182 SCRA 886; San Niguel Corporation v. The Hon. CA. G.R. No. 146775, Jan
30,2002
‘ See Section 3, Rule I, Rules on the Disposition of labor Standards Cases in the Regional Offices (Sept. 16,1987]; Atiano v.
De la Cruz, G.R No. 82488, Feb. 28,1990,182 SCRA 886; San Mguel Corporation v. The Hon. CA. G R No. 146775, Jan
30,2002.

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2. J U R IS D IC T IO N O F T H E D O L E R E G IO N A L D IR E C T O R S .

T h e D O L E R e g io n a l D ir e c to rs h a v e original a n d exclusive ju ris d ic tio n over

th e fo llo w in g c ases:

(a) V isito ria l (in sp e c tio n ) c a s e s u n d e r A r t i c l e 3 7 1 o f th e L a b o r C o d e

r e fe rr in g to th e in s p e c tio n o f d ie p r e m is e s , b o o k s o f a c c o u n ts a n d
r e c o r d s o f an y p e r s o n o r e n tity c o v e r e d by th e T itle I [ R e c r u itm e n t
a n d P la c e m e n t o f W o rk e rs], B o o k I, L a b o r C o d e .

(b) V isito ria l (in sp e c tio n ) a n d e n f o r c e m e n t c a se s2 u n d e r A r tic le 1 2 8 ,3

( e id ie r r o u tin e o r in itia te d th r o u g h a c o m p la in t);

(c) V is ito ria l c a se s u n d e r A r tic le 2 8 9 [ 2 7 4 ] ,4 in v o lv in g e x a m i n a t i o n o f

books of a c c o u n ts of in d e p e n d e n t u n io n s, lo c a l
c h a p t c r s / c h a r t e r e d l o c a ls a n d w o r k e r s ’ a s s o c i a t i o n s ;

(d) O c c u p a tio n a l sa fe ty a n d h e a lth v io la tio n s ;5

(e) S m a ll m o n e y c la im s cases a risin g f r o m la b o r s ta n d a rd s v io la tio n s in

a n a m o u n t n o t e x c e e d in g P 5 ,0 0 0 .0 0 a n d n o t a c c o m p a n ie d w ith a
c la im f o r re in s ta te m e n t u n d e r A r tic le 129;

(f) C a s e s r e la te d to private recruitment and placement agencies (P R P A s) f o r

l o c a l 6 e m p lo y m e n t, s u c h as:

1) A p p lic a tio n s f o r lic e n se o r d e n ia l th e r e o f;7

2) C o m p la in ts f o r s u s p e n s io n o r c a n c e lla tio n o f licen se b y re a s o n o f

a d m in is tra tiv e o ffe n s e s ;8

3) C o m p la in ts f o r illegal r e c r u itm e n t;9 a n d

4) P e titio n f o r c lo s u re o f a g e n c y ,10

1 'Article 37. Visitorial Power. - The Secretary- of Labor or his duly authorized representatives may, at any time, nspect the
premises, books of accounts and records of any person or enffiy covered by ths Tifle, require ft to submit reports regiiady cxi
prescribed forms, and act on violation of any provisions of this Titie.’ (Referring to Tile I [Recruitment and Placement of
Workers], Book I, Labor Code).
2 Visitorial cases involve inspection of establishments to determine complance with labor standards; while enforcement cases
invoke issuance of compfence orders and wrts of execution.
3 Article 128 is entitled Visitorial and Enforcement Power.'
4 Article 289 [274] is entitled 'Visitorial Power.'
5 See Section 22, R A No. 11058 [August 17,2018], entitled ‘An Act Strengthening Complance with Occupational Safety and
Health Standards and Providing Penalties for Violations Thereof.’ See also Sectfon 6 of Ru!e VI [Health and Safety Cases] of
the Rules on the Disposition of Labor Standards Cases n the Regional Offices.
6 As (Sstinguished from recruitment and placement of workers for overseas employment which falls under the jurisdiction of
the Philppine Overseas Employment Administration (POEA).
7 Section 8, Department Order No. 141-14, Series of 2014 (Revised Rules and Regulations Govemng Recruitment and
Placement for Local Employment), Nov. 20,2014; See previous provision or this matter in Section 36, Rule VII, Rules And
Regulations Governing Private Recruitment and Placement Agency for Local Employment, June 5,1997. See also National
Federation of Labor v. Laguesma, G R No. 123426, March 10,19$).
8 Section 54, in relation to Section 51, Department Order No. 141-14. Series of 2014, Ibid
5 Section 45, Department Order No. 141-14, Seriesof 2014, Ibid.
10 Section 47, Department Order No. 141-14, Series of 2014, Ibid.

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 944 Bar Reviewer o n La bo r Law

(g) Cases submitted for voluntary arbitration in their capacity as Ex-

Offttio Voluntary Arbitrators (EVAs) under Department Order No. 83-
07, Seriesof2007}
(h) Union registration-related cases, such as:
1) Applications for union registration o f in d ep en d e n t unio n s,
local chapters and w orkers' associations;12
2) Petitions for denial o f application for registration3 o f said unions;45
3) Petitions for revocation or cancellation o f registration3 o f said
unions;6 k
0 Notice o f merger, consolidation, affiliation and change o f name o f
said unions and or petition for denial thereof,7*
0 CBA-related cases, such as:
1) Application for registration o f single-enterprisP CBAs o r petition for
deregistration thereof;9
2) Petition for denial o f registration o f angle-enterprise CBAs or denial
of petition for deregistration thereof, and
(k) Request for SEBA certification when made in an unorganized
establishm ent with only one (1) legitim ate union.10

1 Issued by formerDOLE Secreta^.latarAssociSeJus&e of 9ie& pem e Court, M roD .B fion on June8,2007.

1 Section 3, W e Hof (he Med-ArbSrafion Rules states: 'SEC. 3. Jiateficflon of 8ie Regional Director.- The Regional Director
shall exercise orighai and exclusive jiatscficSon over appficaSon for union registraSon, peffions for canceBafion of udon
rerpsbafion and co n flate for examination ofunions books ofaccounts.’ See also Section 1, Rub II, Rules of Procedure on
M8oaQ0imnw 80Qn.
1 See Article 243 [236] of the Labor Code which provides: ‘Art. 243 [236]. Dental of registraSon; appeal The decision of the
Labor Retains Dtfsion n the regional office denying registration may be appealed by the appfcant union to the Bureau
within ten (10) daysfnom receiptof notice hereof
4 Referring to independent unions, local chapfers and waiters’ associaSons, as cfisSngiashed tom fecferaScns, nafonal
tmions, hchtsby unions, frade union cenbsrs and their local chapteisfcharteted locals, afSi^es and member organizations
whose appicafion for legsbaSon as wei as denial or canceSaSoo or revocation of registr^on is cognizable by h e BLR
Directorn his orl^nal and e»dusivejrafscficSon fnfraj.
5 See Artich245(23^ of be LaborCodev^ p io v iiie s r'A rt 245 [2381 (^nrsSaSm ofregisbaSon;appeal. The cergfical& of

6 SecSon 3, Rule f) of the Med-ArbSration Rules, supra; See aiso SecSon 4, Rule XI, Book V of 9ie Rules to Implement the
Laba(k)de,asameodedbyDepstmerttOrderNa40-F-03,Se(iesof2008GOctotier30,2008].
7 Sedk»5. Rude IV, Book V. Rides to Implenientffie Labor Code, as amended b / D^parftnent Onter Nb. 4(^09, Series of
2003, {Feb. 17,2003] and as hitheraunendedbyDepertnerttOnferNo.4(H>06, Series of2005, Sept 13.2005.
* Asdis^idshedtancasesirMiMhgrnuI'ternpoyurCBAsvMchlallunderlhsodiinaljuriscScSonoftheBLROireclor.
5 SecSon 4 pormerty Secfion 5], Rule Xi, Book V, Rules to tmptemert the Labor Coda, as amarxied by Department Order No.
4003, Series of 2003, [Feb. 17.20031, and as re-rennbefEd by Department Oriier No. 40-F-03, Series of 2008 {Oct 30,

eJecSor, in wWch case, tie MecSator-Artxternow has (he jurfedxtkxi to decide cerffiicaSon elecfion issue. (Secfion 6, Rule
VII, in cetaSon to Rides ViEI and IX. Departnent Order No. 404-15, Secies of 2015 (September 0 7 ,2015Q. N tfs must be
made that when the Request for SEBA CerfficaSon is made ki an unorganized esteb&hment with more than one (1)

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JURISDICTION AND RELIEFS

EXPANDED DISCUSSION OF IMPORTANT TOPICS

VISITORIAL AND ENFORCEMENT POWERS

1. T H R E E (3) K IN D S O F P O W E R U N D E R A R T IC L E 128.
Article 128*1 o f die Labor Code, as amended, basically enunciates the three
(3) kinds o f power which die D O L E Secretary a n d /o r the Regional Directors, his
duly authorized representatives,2 may exercise in connection with the
administration and enforcement o f the laborstandards provisions o f the Labor Code
and o f any labor law, wage order o r rules and regulations issued pursuant thereto.3

. legitimate labor organization, the MedwWter takes ever from Ihe DOLE Regional Director in the matter of baaing and
resolving(heissueofcerfficafion election.
1 Article 128. Vfe&ra/ and Enforcement P o m . - (a) The Secretary of _abor and Employment or his dify authorized
representatives, including labor regulationofficers, shaShaveaccesstoemployer's recordsandpremisesatanytimeof tie
day or night wheneverw rt is being undertaken therein, and the right to copy herefrom, to question any employee and
investigate any feet, condffion a matter which may be necessaiy to determine vUafians a which may aid in the
enforcementofthisCodeandofanylaborleer,wageorderorrulesandregulationsissuedpusuantthereto.
0)) Notwfthstancfing 9ie provisions of Arfides 129 and 224 [217] of this Code to the contrary, and ri cases where tie
relationship of employer-employee still exists, tire Secretary of Labor and Employment or Ids duly autirxtzed
representativesshall havetie powerto issuecompianoe orders to gire effecttotire laborstandards provisionsof this
Code and other tabor legislation based on foe findings of labor enptoyment and enforcement officers or ndustrial
saftyengheers made h fee course of tospectiori The Secretaryahisduy authored representatives s h a fl^
wife of executionto tie appropriate authorityfor Ihe enforcementofflieironleiSk excepttocases wheretie employer
contests the findingsoffoe taboremploymentand enforcementofficer and raises issues supported by documentary

AnorderissuedbyIhedulyauthorizedrepresentativeoftheSecrefetyoflaborarri EmploymentundertitisAificlemay
be appealedIDtheIdler, tocasesatf onto involvesa monetaryaward, anappeal by Iheemployermaybe perfected
ortiy upon toe posting of a cash or surely bond issued by a reputable boning company duly accredted by toe
Secre&yofLaborandEmploymenttoDieamountequferalenttotiremonetaryawardtotheOderappealedfrom.
(c) TheSecretaryofLeba andErrploymertmayfcewiseorderstoppageofworkorsuspensionofoperationsof anyunJ
or department of an estabishment when norvcompfencewlh Ihelaw or irptemertfing tules and regulations poses
^andimnH^dangfffolheh^arrisa^<tfwodtereh}E«vo(t(pfe£.VVahintwenty4ourhous,ahea(tng
steal beconducfedtodebirtoewhetiieranoderforthestoppageofwok orsuspensionofoperationsshal beBled or
ncl to casetoeviolationis a&Autabfeto tiretoutoffoe enptyef, heshal payIheernptoyeesconoemedfteir salaries
orwage&cfuringtheperiodofsuchsSoppageofworicorsuspensioncfoperaSoo. •
(d) as f^ be unlav^liT anypersonae^ to obstiuct, impede, delaya ofoewise renderhdfeefive foeoniers of the
Secretaryof Labor and Employment or his duly autoorized representatives Issued pusuant to Ihe authority Sorted
under ffiis Article, and no inferiorcourt or entityshall issue temporary or permanent injunction or restrahing order or
otherwiseassumejurisdictionwerary caseinvoking theenforcementordersissuedtoaccordancewftit tills Article.
(e) Anygovernment employeefoundguSy cf vntaSon a abuse of auSxxf^, under Ks A^cle shal, after appropriate
admnstostiveiNestigaSon,besubjectb summarydismissal torn tireservice.
(Q The Secretary of Labor and Employment may, by appropriate regtiafions, require employers to keep and maintain
suchemploymentreoordsasmaybenecessaryin aidofNsvisrtoriatandenforcementpowersunderthisCode.
2 The DOE Regional Diectois are tie duty ^authorized representatives' of tie DOLESecretary referred to toArticle 128of
me Laoor logo, iney are n cnatge oi me aomnsriaucn am enixremera or boot suvueres wvun meir respeewe
tenftioriEdjuris£cSans.Uhdertheamen(faaciiypra«^onsofRA.No.6715.rievfdGorialandertfi)reementpoweRcftheOOLE
pB»SBffinn3 RtibI, RiAypntiwDlspnfiBnnrfl^Standi^
Offices (Sept 16,1987]; A8anov.De la Cruz, GR. No. 82488, Feb. 28,1990,182 SCRA886; San Mguel Corporationv.
TheHon.CA.GRN01146775,Jaa 30.2002).
J Seepaagraph(a)thereof.

J9JC9B0M
 946 Bar reviewer on labor law

The three (3) kinds o f power are as follows:

1) Visitorial power;1
2) Enforcement power,2 and
3) Appellate power or power o f review.3

2. W H O EXERCISES T H E POW ERS?

N os. 1 and 2 above are exercised under the original jurisdiction o f the
DOLE Regional Directors. The appellate power in N o . 3 above may only be
exercised by the DOLE Secretary in respect to any decision, order o r award issued
by die DOLE Regional Directors.

3. N ATURE O F T H E V ISITORIA L A N D E N F O R C E M E N T POW ERS.

The visitorial and enforcement powers granted to the DOLE' Secretary

and the DOLE Regional Directors who ate his duty authorized representatives, are
quasi-judicial in nature.4

4. SUBJECT O F T H E V ISITORIA L A N D E N F O R C E M E N T PO W ERS.

What is being inspected in the exercise o f the visitorial and enforcement

powers granted to die D O LE Secretary or the DOLE Regional Directors under
Article 128 is die em ployer-establishm ent and n o t d ie em ployees thereof!
Consequendy, in case o f a finding o f violation o f die labor standards, the awards
granted in die inspection case are not confined to employees who signed the
complaint inspection but are equally applicable to all those who were employed by
the establishment concerned at die time the complaint was filed, even if they were
not signatories thereto.5

5. GRANT O F A N O T H E R V ISITORIA L PO W ER U N D E R A RTIC LES 37

AND 289 [274].

a. Separateness o fth e grant o f visitorialpower.

Besides the visitorial power granted under Article 128, another visitorial
power is granted to die D O LE Secretary and the D O LE Regional Directors under
Articles 37 and 289 [274] o f the Labor Code, to wit:

“Article 37. V'totonal Power. - The Secretary of Labor or his duly

authorized representatives may, at any time, inspect die premises, books of
accounts and records of any person or entity covered by this Tide,6 require it

< TNsiseirbodiedhparagiaph^toeQi.
* ThsistreatBdnpara9faphs(b)andW »weof.
3 As amended by Secfion 31, R A No. 6715, March21,1889.
* T1usistoundinlhe2nJparaiBraptiofA(€cle128(b}th«eo(.
5 Maternity CMtfren's Hospital v. Secretary of Labor, G A No. 78909; Jine30,1969.
5 Referring to T3e I (Recrultinent and Placement of Wcricersl. Book I. Labor Code.

J9JC9B0M
 Chatter Eight 947
JURISDICTION AND RELIEFS

to submit reports regularly on prescribed forms, and act on violation of any

provisions of this Tide.”1

“Article 289 [274J. Visitorial potttr. • The Secretary of Labor and

Employment or his duly authorized representative is hereby empowered
to inquire into the fiffinsttl KttritiffS o f legitimate W?Pt. QtgMWWons upon
the filing o f a complaint under oath and duly supported by the written
consent of at least twenty percent f20%l of the total membership of the labor
organization concerned and to examine their books of accounts and other
records to determine compliance or non-compliance with the law and to
prosecute any violations of the lax and die union constitution and by-laws:
Provided, That such inquiry or examination shall not be conducted during the
sixty (60)-day freedom period nor within the thirty (30) days immediately
preceding the date o f election of union officials."2

b. Distinctions.
Article 128 should n o t be confused with Articles 37 and 289 [274] because
the purpose and object o f the D O L E Secretary’s exercise o f his visitorial power
provided thereunder are completely distinct from each other.

While Article 128 dwells on the visitorial and enforcement powers o f the
D O LE Secretary to inquire into the employer’s compliance with labor standards
prescribed under labor laws and social legislations, the purposes o f the other
articles are different, thus:

(a) Article 37 treats o f die visitorial power o f die D O L E Secretary and

die D O L E Regional Directors in reladon to recruitment and
placement o f workers for both local and overseas employment
(b) Article 289 [274] treats o f the visitorial power o f the D O L E Secretary
and the D O L E Regional Directors to inquire into the financial
activities o f legitimate labor organizations.

6. E N F O R C E M E N T P O W E R U N D E R A R T IC L E 128(b).

As earlier stressed, the enforcement power is exercised pursuant to the

original jurisdiction o f the DOLE Regional Directors. More particularly, this
involves the pow er

a) To issue compliance orders to give effect to the labor standards

provisions of the Labor Code and other labor legislations;

b) To issue writs o f execution to the appropriate authority for the

enforcement o f their orders, except in contested cases;3

' Id.
2 AsamendedbySec8on31l R A No.6715,M arch2l,1989.
3 Artde 128 [belabor Code.

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 948 Bar Reviewer on Labor Law

c) To order stoppage o f Work or suspension o f operations o f any unit or

department o f an establishment when non-compliance with the law o r
implementing rules and regulations poses grave and imminent danger
to the health and safety o f workers in the workplace.1

d) To require employers to keep and maintain such employment records

as may be necessary in aid o f his visitorial and enforcement powers
under the Labor Code.23

(NOTE: For more discussion on this topic, please refer to the comments
under the topic of nF. DOLE REGIONAL DIR EC TOR S/’ supra).
7. IT IS T H E REGIONAL D IR EC T O R S, A ND N O T T H E D O L E
SECRETARY, W HO HAVE O R IG IN A L JU R IS D IC T IO N T O
EXERCISE T H E VISITORIAL A N D E N F O R C E M E N T POW ERS
U N D ER ARTICLES 37,128 A N D 289 (274].

In the instances contemplated under Articles 37, 128 and 289 [274], it is
the DOLE Regional Directors, the D O LE Secretary's duly authorized
representatives commonly referred to in these three (3) articles, who have die
original jurisdiction to exercise the visitorial power granted therein.

8. T H E ROLE O F T H E D O L E SECRETARY IN T H E E X E R C IS E O F
VISITORIAL AND E N F O R C E M E N T POW ERS IS A PPE L L A T E IN
NATURE.

It is dear from the above disquisition that the original jurisdiction over
the exercise o f die visitorial and enforcement powers belongs to the D O LE
Regional Directors, as the duly authorized representatives o f the D O L E Secretary.
The role o f die DOLE Secretary is confined to the exercise o f his appellate
jurisdiction over the decisions, orders and awards o f the D O L E Regional Directors
in cases brought before them for adjudication under Artides 128 and 289 [274].
(See the discussion on the appellate jurisdiction of the DOLE Secretary, Infra , which

LABOR STANDARDS ENFORCEMENT CASES

L LABOR STANDARDS.
'Labor standards" refer to the m inim um requirements prescribed by
existing laws, rules and regulations and other issuances relating to wages, hours o f
work, cost of living allowances and other monetary and welfare benefits, induding
those set by occupational safety and health standards.1

1 Article 128 jej, tnd.; Section 3 [a] and (bj, Rule X, Book Bl, Rules to implement the Labor Code
2 Articte128|q,latorCttfe.
3 S ec^7,R u tei, RutesontheDisposlionofLabofStandanJsCasesintheRegiGnalOfficeslSepL 16,1987].

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 C hapter , eig h t 949
JURISDICTION AND RELIEFS

2. SU BJEC T O F T H E V ISIT O R IA L A N D E N F O R C E M E N T POW ERS.

At the outset, it bears to stress that the subject o f the visitorial and
enforcement powers granted to the DOLE Secretary or his duly authorized
representatives under Article 128 is the estab lish m en t which is under inspection
and n o t die em ployees thereof.
Consequendy, according to Maternity Children's Hospitalv. Secretary ofLabor}
any awards granted are not confined to employees who signed the complaint
inspection but are equally applicable to all those who were employed by the
establishment concerned at the time the complaint was filed, even if they were not
signatories diereto. T h e reaso n is th a t the visitorial a n d en forcem ent powers
are relevant to, a n d m ay be exercised over, estab lish m en ts, no t over
individual em ployees thereof, to determ ine com pliance by su c h
establishm ents w ith labor stan d ard s laws. N ecessarily, in case o f an aw ard
from su ch violation by the establishm ent, all its ex istin g em ployees should
b e benefited thereby. It must be stressed, however, that such award should not
apply to those who resigned, retired or ceased to be employees at the time the
complaint was filed.

3. O R IG IN A L JU R IS D IC T IO N .

The D O LE Regional Directors exercise o riginal jurisdiction over the

following:

(a) Cases involving inspection of establishments to determine compliance with

labor standards (V isitorial Power); and
(b) Cases involving issuance of compliance orders and writs of execution
(E nforcem ent Power).

4. V ISITO R IA L PO W ER U N D E R A R T IC L E 128(a).

Pursuant to their visitorial power under Article 128(a), the DOLE

Regional Directors shall have:

(a) access to employer’s records and premises at any time o f die day o r
night, whenever work is being undertaken therein; and
(b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact, condition or
matter which may be necessary to determine violations or which
may aid in the enforcement o f the Labor Code and o f any labor

' G A No. 78909, June 30,1989.

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 95<> Bar reviewer on labor law

law, wage older, oc rules and regulations issued pursuant

thereto.1

5. E N FO R C E M E N T PO W ER U N D E R A R T IC L E 128(b).

The statutory basis o f the authority o f the D O L E Regional Directors to

administer and enforce labor standards is found in Article 128(b) o f the Labor
Code, as amended.2

Pursuant thereto, die DOLE Regional Director, in cases when the employer-
employeerelationshipstillexists, shall have the pow er
a) To issue compliance orders to give effect to die labor standards
provisions o f the Labor Code and other labor legislations based on the
findings o f labor employment and enforcement officers o r industrial
safety engineers made in the course o f inspection.
b) To issue w rits of execution to the appropriate authority for the
enforcement o f their orders, except in cases where the employer
contests the findings o f the labor employment and enforcement
officer and raises issues supported by documentary proofs which were
not considered in the course o f inspection,3 in which case, the
contested case shall fall under the jurisdiction o fih e Labor Arbiter to
whom it should be endorsed by the Regional Director.4
c) To order stoppage of w ork or su sp en sio n o f operations of any unit
or department of an establishment when non-compliance with the law
or implementing rules and regulations poses grave and imminent danger
to the health and safety of teorkers in the workplace. Within 24 hours, a
heating shall be conducted to determine whether an order for the
stoppage o f work or suspension o f operations shall be lifted or not. In
case die violation is attributable to the fault o f the employer, he shall
pay the employees concerned their salaries o r wages during the period
o f such stoppage o f work or suspension o f operation.5
d) To require employers, by appropriate regulations, to keep and
maintain such employment records as may be necessary in aid o f his
visitorial and enforcement powers under die Labor Code.6

1 1 2 ^ Lato Code; SectSml, Ride X,B ixi^R ^(D hplem e(4^Laixr (Me, as amended byO^atnent

2 As amended by R A No. 7730 jJune 2,1994], Strengfcenhj Hie Vsfrxial and Enfcrcemert P w « s of tie Secretary of
tabor and Employment Sea also S e ftn 2, RJe t, Rides on tte OsposSon of Labor Standards Cases ta t e Regional
QBpftA
2 Article 128 jb], labor Code.
* Sectim l.i^IIlRLdesm heO fspositim dLatoStendarcisCasesinlheRegaiaiO Soes^epl <6,1887}
5 Articb 128 9 ^ SecSm 3[^ and [b], Ruh X, Book Dl Rules to ImplementIh eL ^xr Code.
6 Article 128 [ I Labor Code.

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 Chapter Eight 951
JURISDICTION AND RELIEFS

6. R E Q U IS IT E S F O R V ALID E X E R C IS E O F P O W E R .

For the valid exercise o f the visitonal and enforcement powers provided
under Article 128, the following three (3) requisites should concur.

1) The employer-employee relationship still exists at the time ofthe initiation

ofthe actionj1
2) The findings in question were made in toe come ofinspection, regardless of
whetherit wasinitiated by complaint orroutine inspectioni2 and
3) The employees have n o t yet initiated any claim o r complaint with the
D O L E Regional D irector under Article 129 (small money claims n o t
exceeding P5,000.00), or the Labor Arbiter, under Article 224 [217]
(money claims exceeding.P5,000.00).

O n N o. 1 above:

• I f at die time o f the initiation o f the action, the employer-employee

relationship had already ceased to toast, it is not the D O L E Regional
Director but the Labor Arbiter who has jurisdiction over the same.3

• The D O L E Regional Director, in the exercise of his visirorial and

enforcement powers, has the authodty to make a determination on
whether employer-employee relationship exists.4 Such determinadon
should be respected in otder not to render nugatory the exercise o f his
visitonal and enforcement powers. Such finding o f existence o f
employer-employee relationship is to the exclusion o f the NLRC. It is
subject to judicial review but n o t review by die NLRC.5

O n N o. 2 above:

• T he jurisdicdon o f die D O L E Regional D irector, as expanded by the

amendatory R.A. N o. 7730, is not affected whether the case is the result
o f regular inspection under Article 128(b) or it originates from a
complaint under either Article 129 o r Article 224 [217]. T he D O L E
Regional Director has jurisdiction, despite the amount o f the money
claims involved. T he initiation o f a case through a complaint does not
divest the D O L E Regional Director o f his jurisdiction under Article
128(b).

’ RzalSecurfly&ProtedveSfflvices, hie. v. Hon. Msraan, GA No. 124915, Feb. 18,2008.

2 Se8 the 2012 En Banc Resolution in People's Broadcasfing Service (Bombo Radyo PMs., Inc.) v. The Secrete^ of
tie Department of Labor and Employment, 6 R . No. 179652, March 6.2912, which modified its earter May 8.2009
decision.
3 Bating Buhay Gold fifties, Inc. v. Sec. Dela Serna, G R No. 86963, Aug. 8,1999,370 PH . 872.
4 Peopfe’s Broadcasfing Sewioe (Bombo Radyo PltBs., Inc.) v. The S ea etiiy of the Department of labor and

J9JC9B0M
 952 bar Reviewer o n Labor law

O n No. 3 above:

• Once die complaint has already been taken cognizance o f by the

DOLE Regional Director under Article 129, or by the Labor Arbiter
under Article 224 [217], jurisdiction attaches thereto and will not be lost
as a result o f the findings made in the course o f inspection by the
DOLE Regional Director.

• T he restrictive effect o f Articles 129 a n d 224 [217] no longer

applies after the am en d m en t o f Article 128(b) by R.A. N o . 7730.
This means that the visitoxial and enforcement powers o f the DOLE
Regional Director to order and enforce compliance with labor standard
laws can be exercised even w here the individual claim exceeds
PS^OO.1 The rule therefore that the D O LE Regional Director should
stop his proceeding once the individual claim exceeds P5,000 no longer
bolds.1

SMALL MONEY CLAIMS CASES

1. JU R ISD ICTIO N OVER CLAIMS N O T E X C E E D IN G P5,000.00.

The DOLE Regional Director has original jurisdiction over small money
claims cases arising from labor standards violations in the am ount not exceeding
P5,000.00 and not accompanied with a claim for reinstatement under Article 129
o f the Labor Code.

Article 129 contemplates the recovery o f wages and other monetary

Haims and benefits, including legal interest, owing to an employee arising from
employer-employee relations provided the claim does not exceed P5,000.00.

2. REQUISITES.

The following requisites for the valid exercise o f jurisdiction over small
money Haims must all concur, to m t

(1) The claim is presented by an employee:3

(2) The claimant, no longer being employed, does not seek reinstatement;
and
(3) The aggregate money claim o f the employee does not exceed
P5,000.00*

» Cirineo BowEng Plaza, Inc. v. Sensing, G R N a 145572, Jan. 14.2005,448SCRA175,186.

* VI_Ettoprises v. Hon. CA, O R Nn 167512, March 12.2007. .
* M.
4 Albay I Electric Cooperative, (nc. v. Martinez, Sr., G R . No. 95559, Nw. 9.1993.

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 Chapter eight 953
JURISDICTION AND RELIEFS

In the ab sen ce o f any o f the aforesaid three (3) requisites, the L ab o r

A ibiters have origin al a n d exclusive ju risd ictio n over all claims arising from
employer-employee relations, other than claims for employees’ compensation,
social security, PhilHealth and maternity benefits.1

O n N o. 1 above:

• Article 129 no longer applies to claims o f domestic workers or

kasambahay. (See discussion below). It, however, applies to all “employees”as
may be clearly deduced from the phrase “owing to an employee xxx arising

O n N o. 2 above:

• Employment relationship should no lo n g er exist a t the tim e o f th e

initiation o f th e co m plaint fo r monetary claim under Article 129.
• I f die employment relationship still exists at the time o f the filing o f the
complaint, the case necessarily falls under the coverage o f A rticle 128
where it is a pre-requisite that such relationship should still exist at the
time o f the initiation o f die com plaint
• I f die employment relationship no longer exists, the complaint falls
under Article 129 for as long as the terminated employee does not raise
the issue o f legality o f his dismissal or asserts any claim for
reinstatement and merely confines his complaint only on his monetary
claims which should not exceed P5,000.00.
• Once the employer-employee relationship has already ceased and die
legality o f the dismissal is raised and reinstatement is sought,
jurisdiction thereover necessarily falls under the Labor Arbiter by virtue
o f Article 224 [217] o f the Labor Code. And such jurisdiction covers
the recovery o f any and all monetary and other benefits consequent to
such dismissal2

O n N o. 3 above:

• Jurisdiction when the total monetary claims exceeds P5,000.00 is lodged

with the Labor Arbiter.3 This is regardless o f whether o r not the
monetary claim is accompanied with a claim for reinstatement.4
• The monetary claims may include unpaid wages, salary differentials, 13d1
m onth pay and other benefits.5

1 See also Section 1 [a], Rule XI, Book HI, Rules to Implement h e Labor Code; Rajah Humabon Hotel, Inc. v. Trajano, G .R
f a 100455, Sept 17,1993,226 SCRA 394.
3 OreshoctWring Corporation v. Hen. Aretano, G R Nos. 75746-48. Dec. 14,1987.
3 SecSonl fc§.RuteXl, Book ULRLdestDlmptementffieLaborCode.
4 CMereOaMsteGngCaporafonv.NLRC.GJtNo. 112535,June22,1998.
5 Abay I Bectrfc Cooperative, he. v. Martinez, Sr., R. No. 95559, Nov. 9,1963,227 SCRA 606

J9JC9B0M
 954 Bar reviewer on Labor Law

• When claim does not exceed P5.000.00 but employee prays for
reinstatement, the case falls within die original and exclusive jurisdiction
o f die Labor Arbiter.*1
• An action which carries w ith it a claim for freinstatem ent is
principally an illegal dism issal case a n d not, one for m onetary
claims. Consequently, since it is an illegal dism issal case, the amount
o f any accompanying monetary claims is inconsequential.

3. APPLICATION O F A RTICLE 129 T O CLAIMS O F KASAMBAHA1S.

%
a. The P5,000.00 threshold no longer applies to Kasambahays;
DOLE Regional Director has jurisdiction over all their money
claims regardless o famount.
The jurisdiction o f the D O LE Regional Director o r heating officer under
Article 129 covers "any matter involving the recovery of wages and other monetary claims and
benefits, including legalinterest, owing to an employee orperson employed in domestic or
household service or househelper under tins Code, arising from employer-employee
relations ..."Accordingly, a distinction is made in the law between money claims o f
a househelper whose total amount falls within the threshold figure o f P5,000.00
and below and those above i t The jurisdiction over the former is lodged with the
Regional Director or heating officer while that o f the latter, with the Labor Arbiter.

Although there was no express repeal o f this particular provision o f

Article 129,2 it appears that this distinedoa as to the threshold amount o f P5,000.00
ceased to have any relevance in the light o f the amendatory provision o f Section 37,
Chapter VII of RA. No. 10361,3 otherwise known as "Domestic Workers Act” or
,<batas Kasambahay,"which provides that;
"SEC. 37. Mechanism for Settlement of Disputes. - AH labor-
related disputes shall be elevated to the DOLE Regional Office having
jurisdiction over the workplace without prejudice to the filing of a civil
or criminal action in appropriate cases. The DOLE Regional Office shall
exhaust all conciliation and mediation efforts before a decision shall be
tendered.”*

Mote specifically, the procedure prescribes that all labor-related disputes

shall be filed before the DOLE Field/Provindal/Regjonal Office having

1 M. Ramiraz Industriesv. Secretary of Labor. G.R. No. 89894, Jan. 3.1997.266 SCRA111.
J Sedkx)44,ArtcleX(rnalProOTSiC)RS)ofRANo.1(>361 expresdyrepealiadonVanesetofpraMSionsfoundunderCtiapter
01 of he labor Code, thus: * $ £ . 44. Repealng Clause. - All artdes or provisions of Ctepter III (Employment of
Househdpers) of ftoskfefilia! Decree No. 442, as amended and renumbered by Repubfc Act No. 10151 are hereby
expressly repeated. AS lavs, decrees, executive orders, issuances, rules aid regulations or parts frereof inconsistant witi
tie previsions of ti's Act are hereby repealed or modified acanfcgV’ NoSbly, Article 129 of 9ie Labor Code was not
expresslyrepealed by Ms new law.

J9JC9B0M
 Chapter, eight 955
JURISDICTION AND RELIEFS

jurisdiction over the workplace and shall go through the thirty-day (30) mandatory
conciliation under the D O L E Single Entry Approach (SEnA) program to exhaust
all efforts for the settlement o f the dispute.1 In case the parries fail to reach a
settlement, a mandatory conference not exceeding thirty (30) days shall be
conducted by the D O L E Field/Provindal/Regional Office from referral o f the
unsettled dispute. The DOLB-Regional Director shall issue a Compliance Order
within ten (10) days from the submission o f the case for resolution.2 Any aggrieved
party may file a morion for reconsideration from the Compliance O rder within ten
(10) days from receipt thereof.3

Based on this latest amendment as discussed above, the jurisdiction over

all labor-related disputes involving a Kasambabay, including illegal dismissal, money
claims (regardless o f amount) and other labor issues, is now lodged entirely with
the D O L E Regional Director. Albeit Article 129 o f the Labor Code was not
expressly repealed by R A N o. 10361 which giants jurisdiction to Labor Arbiters
over small money claims o f m ore than the threshold amount o f PS,000.00, it
appears that with die all-embracing provision o f this new law as above-quoted,
which recognizes the jurisdiction o f the D O L E Regional Directors over “all labor-
related disputes’*involving Kasambahays, the Labor Arbiter appears to have no more
jurisdiction thereover.

b. There is no more appeal to the N LR C in monetary claims cases

o f Kasambahays decided by D O LE Regional Directors.

Notably, too, the appeal to the NLRC in small money claims cases
provided under Article 129 should now exclude the appeal from decisions o f the
D O LE Regional Directors in claims o f Kasambahays, regardless o f the amount
thereof. This is so because the appeal therefrom is now lodged with the D O LE
Secretary.4 Thus, the Implementing Rules o fR A . No. 10361 states:

“SECTION 4. Appeal. - The Resolution on the Motion for

Reconsideration of the DOLE-Regional Director may be appealed to the
Secretary of Labor and Employment within ten (10) days from receipt
thereof.
“Thereafter, die Order of the Secretary of labor and
Employment shall be final and executory.**5

4. A R T IC L E 128 VS. A R T IC L E 129.

There is a whale o f difference between Articles 128 and 129 o f the Labor
Code. While Article 128 speaks o f the visitorial and enforcement powers o f the
D O LE Secretary or his duly authorized representatives (referring to the DOLE

’ SeeSectior 1,Ruie>3(SeOJement)DisposajonofLaborRe(ated-CfepuiesJ. bmp)amen5ng Rulesof RA. No. 10381.

1 See Secfion 2, Rute XI [SetJtementTfepositjon ot Labor RelataO-Disputfisi id.
3 See Section 3, Rule XI, Id.
4 Id., Section4 thereof.
* SeeSecfcn4.Rute)Q(SeBJernentfDisposa»notLatx3rRetated-Oisputes].tnipJementingRulesofRANa 10361.

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 956 Bar reviewer on Labor U w

Regional Directors), Article 129 refers to the adjudication power o f the Regional
Directors or any duly authorized heating officers o f D OLE.

The nature and subject o f die proceedings under Article 128 speak o f
inspection o f establishments and the issuance o f orders to compel compliance with
labor standards, wage orders and o th er. labor laws and regulations; thus, die
presence o f employer-employee relationship is a condition’ sine qua non. O n the
other hand, Article 129 confers upon tire D O L E Regional Directors adjudicative
power, that is, the power to hear and decide any claim for recovery o f wages,
simple (small) money claims, and other benefits. T he said provision deals with
small money claims o f employees arising from severed employer-employee
relations.1

5. DOLE REGIONAL D IRECTORS W EAR TW O (2) HATS: O N E , FO R

ARTICLE 128 AND A N O T H E R , F O R A R T IC L E 129.

It is obvious from a reading o f Articles 128 and 129 that the DOLE
Regional Directors wear two (2) hats thereby giving rise to the confusion as to
when they exercise their adjudicatory power under Article 129 and when they
exercise their twin visitotial and enforcement powers under Article 128 as the duly
authorized representatives o f the DOLE Secretary.

This confusion is underscored in the matter o f where to elevate a case on

appeal from the decision o f the D O LE Regional Director. I f the decision o f the
DOLE Regional Director is issued pursuant to Article 128 which basically involves
an inspection case, the appeal should be made to the D O LE Secretary. But if the
decision of die DOLE Regional Director is made in accordance with Article 129
which does not involve an inspection case, the appeal should be made to the
NLRC.

Illustrative o f this point is a case decided by the Court o f Appeals endded

Stortk Product Manufacturing Corporation v. Hon. Stentary of Labor and Employment}
Petitioner in this case coatends that although the issues raised stemmed from an
inspection case, the appeal should be made to the NLRC and not to die D O LE
Secretary because the appeal itself specifically stated that it is being elevated to die
NLRC. Finding this contention untenable, the Court o f Appeals declared that the
order of the Regional Director, being an offshoot o f an inspection complaint, is
appealable to the office o f public respondent D O LE Secretary. The provisions o f
Article 129 o f the Labor Code find no application in the present case considering
that the instant case stemmed from an inspection complaint duly filed with die
DOLE Regional Office for alleged violations o f labor standards. Article 129, as
amended, refers to the adjudicatory power o f the D O LE Regional Directors o r any*

' Brokenshte Memorial Hospital, he. v. The Hon. Mnister of Labor and Employment, G R No. 74621, Feb. 7,1990,182
9CRA 5; See also Stack ftotoct Manubekring Corporation v. Hon. Secretary of labor and Emphymert. C M 5 R SR No.
92t64.Aug.31,2006.
* CAG R SPNo. 92164, Aug. 31,2006.

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 Chapter,eight 957
JURISDICTION AND RELIEFS

duly authorized hearing officers o f D O L E so much so that any dedsion/order o f

said representatives, in the exercise o f their adjudicatory power, should be appealed
to the NLRC. But the instant case does not pertain to the exercise o f adjudicatory
power by said labor officers but to the exercise o f their visitodal and enforcement
powers under Article 128.

IV.
OCCUPATIONAL SAFETY AND HEALTH VIOLATIONS

1. T H E N E W A PPLIC A B LE L A W - JLA. N O . 11058 A N D IT S

IM P L E M E N T IN G RU LES.

O n August 17,2018, President Rodrigo D uterte signed into law, R~A. N o.

11058, entitled “An Act Strengthening Compliance with Occupational Safety and Health
Standards and Providing Penaltiesfor Violations Thereof." O n December 6,2018, D O LE
Secretary Silvestre Bello III issued Department Order No. 198, Series of 2018, which
promulgated the Implementing Rules o f said law.

2. O C C U PA T IO N A L SA FETY A N D H E A L T H (O S H ) STANDARDS.

This law enunciates die Occupational Safety and Health (OSH) Standards
issued by the D O L E Secretary pursuant to Articles 168 [162]1 and 171 [165],2
Chapter 2, Tide I o f Book IV o f die Labor Code, and such other standards as.may
be issued pursuant to R.A. No. 11058.3

‘OSH Standards” refer to a set o f rules issued by D O L E which mandates

the adoption and use o f appropriate practices, means, methods, operations o r
processes, and working conditions reasonably necessary to ensure safe and
healthful employment4

3. E N F O R C E M E N T O F O S H STANDARDS.

a. Visitodalpower.
Pursuant to the visitodal power o f the D O L E Secretary under Article 128
o f the Labor Code and other applicable laws, the D O L E Secretary or his
authorized representatives (Regional Directors) shall have die authodty to enforce
the mandatory occupational safety and health standards in all establishments and
conduct, together with representatives from the labor and the employer sectors, an
annual spot audit on compliance with OSH standards. The Secretary or the
Secretary's duly authorized representatives can enter workplaces at any time o f the
day or night where work is being performed to examine records and investigate

1 EnBJed^Safe^andHeaDfiStandmds.'
2 Ert^'Ac^inis&BSoaofSafdyandHeatJiLaws.'
3 Section 3 G),R A No. 11058.
4 Section 3 (p). Implementing Rutes of R A No. 11058.

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 958 Bar.Reviewer om labor Law

facts, conditions or matters necessary to determine compliance with the provisions

o f this Act.1

No person or entity shall obstruct, impede, delay or otherwise render

ineffective the orders o f the DOLE Secretary o r the Secretary's duly authorized
representatives issued pursuant to the authority granted under Article 128, and no
lower court or entity shall issue temporary o r permanent injunction or restraining
order or otherwise assume jurisdiction over any case involving the enforcement
orders.2

The DOLE Secretary may likewise order stoppage o f work o r suspension

of operations of any unit or department o f an establishment when noncompliance
with law or implementing rules and regulations poses grave and imminent danger
to the health and safety o f workers in the workplace.3

The procedure for inspecting work premises, notifying employers o f

violations, and issuing compliance o r stoppage, orders shall be pursuant to the
procedure laid down in Article 128 as implemented through relevant regulations
issued by die DOLE on administration and enforcement o f labor laws. The
inspector or person authorized by die D O L E to enforce compliance with OSH
standards shall present proper identification upon request; and such inspector o r
person shall only act within die authority o r direction given by die D O L E
Secretary.4

The DOLE Secretary or the Secretary’s duly authorized representatives

shall inspect establishments and workplaces regardless o f the size and nature o f
operation. Any kind o f self-assessment shall n o t take the place o f labor, inspection
conducted by die DOLE. However, chartered dries may be allowed to conduct
industrial safety inspection o f establishments within their jurisdiction in
coordination with the DOLE: Provided, That they have adequate facilities and
competent personnel for the purpose as determined by the D OLE, and subject to
national standards established by the latter.5

b. Stoppage o f work due to im m inent danger.

If stoppage o f work due to imminent danger occurs as a result o f the

employer's violation or fault, the employer shall pay the workers concerned their
wages during the period o f such stoppage o f work o r suspension o f operations. For
purposes o f payment o f wages and any other liabilities arising from a work
stoppage order, the employer is presumed a party at fault if die work stoppage*

< Section 22, R A No. 11058 (August 17,2016).

*U

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JURISDICTION AND RELIEFS

order is issued secondary to an imminent danger situation which would imperil the
lives of the workers.1

c. Delegation o f authority.
The authority to enforce mandatory OSH standards may be delegated by
the D O LE Secretary to a competent government authority.2

V.
COMPLAINTS AGAINST PRIVATE RECRUITMENT
AND PLACEMENT AGENCIES (PRPAs) FOR LOCAL EMPLOYMENT

L JU R IS D IC T IO N O F D O L E R E G IO N A L D IR EC T O R S.

The D O L E Regional Directors have original jurisdiction over complaints

against a licensee an d /o r its authorized representative/s which are filed in writing
and under oath with the Regional/District/Provincial Office having jurisdiction
over the place (1) where die Private Recruitment and Placement Agencies
(PRPAs)/Branch Office is located, o r (2) where die prohibited act was committed,
or (3) at complainant’s place o f residence, at the opdon o f die, complainant
provided, that the Regional Office which first acquires jurisdiction over die case
shall do so to the exclusion o f die others.3

It must be emphasized that this jurisdiction o f the D O L E Regional

Directors covers only complaints against PRPAs engaged in local re c ru itm e n t
Complaints against recruitment/manning agencies engaged in overseas
em ploym ent involving the following causes fall under the jurisdiction o f the
POEA:

(1) All pre-employment/recruitment violation cases which are

administrative in character, involving or arising out o f violations o f
rules and regulations relating to licensing and registration, including refund
of fees collected from OFWs or any violation o f die conditions for the
issuance o f die license or authority to recruit OFW s/

* Section 23, Id.

* Section 24, Id.
3 Section 35, Ride VII, Rules And Regutadons Govemng Ritvate RecruitmentaKl Placement Agency fiarLocalCntfAiynient.
Junes, 1997.This was mentioned h the enumerafionof the various appeals to the DCX£ Secretary made by the Supreme
Court in the 1999 caseof National FederaSon of labor v. Laguesma, G R No. 123426, Maid) 10,1999,
* Section 6, Ride X (Role of DOLE), Omnbus Ruies and Regulators tmpianen&ig file M grart Workers and Overseas

F^ptnos Act of 1995, as Amended by RA. No. 10022 issued on JuV 8,2010; SecGon 133, Ride I (Juristfiction). Part V)
O%ecnahfnertViola&nsandOisdpSnaiyAc6onCa»^.RmnsedPC^Rulesandn0gi4aISansGiwentinglheRecnAnent
and Employment of Land-Based Overseas Fifpno l/fa k e s o f 2016; Section 118, R ile I (fcxisdeton and Wenue),PartV
(Recmitrnen} Violations and Disapfinary Action Cases), 2016 Revised POEA Rules and Regulations Govetnhg the
Reautment and Employmentd Seafarers issued on Febnny 2(201 6.

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 960 Bar Reviewer on Labor Law

(2) Disciplinary action cases and other special cases, which are
administrative in character, involving employers, principals, contracting
partners and OFWs processed by the POEA, excludingmoneyclams}

And as far as monetary claims o f OFWs are concerned, die Labor

Arbiters have jurisdiction per R.A. No. 8042, as amended.2 r

VL
CASES SUBMITTED TO REGIONAL DIRECTORS FOR VOLUNTARY
ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO VOLUNTARY
ARBITRATORS (EVAs) %

1. LACK OF APPLICABLE PR O V ISIO N IN T H E LABO R C O D E .

DOLE Regional Directors and Assistant Regional Directors are neither

expressly authorized to act as Voluntary Arbitrators under the Labor Code nor
explicidy prohibited from acting as such. Tliis is a void in the law which was
appropriately addressed by Department OrderNo. 83-07, Series oj2007? designating all
DOLE Regional Directors and Assistant Regional Directors as Ex-Officio Voluntary
Arbitrators (EVAs). Its issuance was made in line with the constitutional principle
on die preferential use o f voluntary modes in settling disputes and die mandate o f
die DOLE to promote voluntary arbitration as an expeditious and non-litigious
mode o f settling labor disputes, and in order to give workplace parties real and
practical alternatives in the voluntary arbitration o f disputes.

2. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants have
jurisdiction over the following cases:

(a) All grievances arising from the interpretation or implementation o f the

CBA;

(b) All grievances arising from die interpretation o r enforcement o f

company personnel policies which remain unresolved after exhaustion
o f the grievance procedure;

(c) Cases referred to them by the DOLE Secretary under the DOLE’S
Administrative Intervention for Dispute Avoidance (AIDA) initiative
(provided under DOLE GmlarNo. 1, Series of2006)? and *2

’ bid'Id,-Id.
* AsanendedtqfftA.Na 100!22.specScalySecSon10ttiefeot
2 Issuedty00l£SecretA rtjroD .B tiononJune8,2007.
4 (ssuedonAugustU, 2006byformerDOLE Secretary, now Associate Justfce (rf the Supreme Cowt Arturo D. Brion.Thises
(fecussed undertie tope of DOLE Secretary’s juristScOoa io^a.

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JURISDICTION AND REUEFS

(d) Upon agreement o f the parties, any other labor dispute may be
submitted to the EVAs for voluntary arbitration.

3. H O W IN IT IA T E D .

W here a grievance remains unresolved despite bipartite efforts, either o r

both parties may voluntarily bring the grievance to an EVA who has jurisdiction
over the region where the parties operate or work, through a written request
indicating the following:

(a) Issue or issues to be arbitrated;

(b) The names and addresses o f the parties involved; and
(c) Such other information that the parties deem vital in the immediate
resolution o f die dispute.

4. PO W E R T O H O L D H EA R IN G S, R E C E IV E E V ID E N C E A N D ISSUE
W R IT O F E X E C U T IO N .

The EVA shall have the power to hold hearings, receive evidence and
take die necessary actions to resolve the dispute. The EVA may conciliate or
mediate to obtain a voluntary settlement o f the dispute.

The decision or award o f the EVA shall be final and executory after ten
(10) calendar days from the parties’ receipt o f the copy o f the decision o r award. A
motion for reconsideration may be filed before the decision/award lapses to finality
and shall stop the running o f the 10-day period for finality. N o second motion for
reconsideration shall be allowed. A motion for reconsideration shall be resolved
within fifteen (15) days after the adverse party files its comment o r opposition
thereto. T he EVA shall issue a writ o f execution requiring die Sheriff o f the
Regional Office o r any duly-authorized regional personnel to execute die final
decision, order o r award.

G.
DOLE SECRETARY
1. TW O (2) K IN D S O F JU R IS D IC T IO N

T he D O L E Secretary has die following jurisdiction:

(1) Original and exclusive jurisdiction; and

(2) Appellate jurisdiction.

1.
ORIGINAL AND EXCLUSIVE JURISDICTION

1. SPE C IFIC CASES.

The D O L E Secretary has original jurisdiction over die following cases:

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 q 62 Bar Revifwer on Labor Law

(1) . P e titio n to a s su m e ju ris d ic tio n o v e r la b o r d is p u te s a ffe c tin g in d u s tr ie s

in d isp e n s a b le to th e n a tio n a l in te re s t (n a tio n a l in te r e s t c a s e s);1
(2) P e titio n to c e rtify n a tio n a l in te re s t c a s e s to th e N L R C fo r c o m p u ls o r y
a rb itra tio n ;2
(3) P e titio n to su s p e n d e ffe c ts o f te rm in a tio n ;3
(4) A d m in is tra tiv e In te rv e n tio n fo r D is p u te A v o id a n c e (A ID A ) c a se s;4
(5) V o lu n ta ry a rb itra tio n cases;5 a n d
(6) C o n te m p t c a s e s.6

1.
ASSUMPTION OF JURISDICTION AND CERTIFICATION
BY DOLE SECRETARY OF NATIONAL INTEREST CASES

(NOTE: This power of the DOLE Secretary is extensively discussed in Chapter Five
under the topic of "F. PEACEFUL CONCERTED ACTIVITIES," s u p r a )

2.
POWER TO SUSPEND EFFECTS OF TERMINATION

1. L E G A L B A S IS .

O n e o f th e e x tra o rd in a ry p o w e rs g r a n te d to th e D O L E S e c re ta ry is h is
p o w e r u n d e r A rticle 2 9 2 (b ) [277(b)] o f th e L a b o r C o d e to s u s p e n d th e e ffe c ts o f
te rm in a tio n o f e m p lo y m e n t w h ich h e m ay e x e rc ise e v e n p e n d in g re so lu tio n o f th e
legality o r validity th e r e o f in an a p p ro p ria te p ro c e e d in g .

2. G R O U N D S .

T h e D O L E S ecretary m ay su s p e n d th e e f fe c ts o f te rm in a tio n p e n d in g
resolu tio n o f th e d is p u te in th e e v e n t o f a prima facie fin d in g b y th e a p p r o p ria te
official o f th e D O L E b e f o re w h o m th e d is p u te is p e n d in g th a t:

1) th e te rm in a tio n m ay c a u se a s e r i o u s l a b o r d i s p u t e : a n d / o r
2) th e te rm in a tio n is in im p le m e n ta tio n o f a m a s s la y - o f f .7

’ See paragraph (g) of Artde 278 (263|, Labor Code.

2 Id.
3 See paragraph (b) of Artide 292 [277], Labor Code.
1 This is a new form of cfepute setflement introduced by the DOLE Secretary under DOLE Circuter No. 1, Series of 2006,
issued on August 11.2006 by former DOLE Secretary Arturo D. Brion, later a distinguished member of the Highest Court
This was issued in line with the objectives of R A No. 9285, otherwise known as fie 'Alternative Dispute Resolution Act of
2004’ [approved on April 2,2004], Executive Order No. 523 dated April 07,2006 and the mandate of the DOLE to promote
industrial peace.
s As mandated under DOLE Circular No. 1. Series of 2006. Ibid.
5 As provided under Aride 231 [225] which states: Article 231 [225]. Contempt powers of the Secretary of Labor. In the
exercise of his powers under this Code, the Secretary of Labor may hold any person in direct or indirect contempt and
impose the appropriate penalties therefor.
3 Artide 292(b) [277(b)], Labor Code, as amended by Section 33, RA. No. 6715; No. 30, NCMB Primer on Strike, Picketing
and Lockout 2nd Edition, Dec. 1995

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 C hapter eig h t 963
JURISDICTION AND RELIEFS

3. R A T I O N A L E F O R S U S P E N D I N G E F F E C T S O F T E R M I N A T I O N .

T h e o b v io u s p u r p o s e b e h in d th is ru le is to b r in g t h e p a r tie s b a c k to t h e
status quo ante litem, th a t is, th e ir s ta te o f r e la tio n s h ip p r io r to d i e te r m in a tio n . I n th is
w a y , th e w o r k e rs w ill b e litig a tin g th e is s u e o f th e v a lid ity o r le g a lity o f th e ir
te r m in a tio n o n m o r e o r le s s e q u a l f o o tin g w ith th e e m p lo y e r s in c e th e y w ill b e
im m e d ia te ly re in s ta te d a n d a c c o rd in g ly n o t b e d e p r iv e d o f th e ir w a g e s w h ile t h e
litig a tio n is o n - g o in g . S u s p e n s io n o f th e e f fe c ts o f te r m in a tio n w ill n e c e s sa rily r e s u lt
in th e im m e d ia te r e in s ta te m e n t o f th e te r m in a te d e m p lo y e e s . An o rd er of
r e in s ta te m e n t p e n d in g r e s o lu tio n o f th e c a s e m a y th u s b e is s u e d b y th e D O L E
S e c re ta ry p u r s u a n t to th is p o w e r .1

4. T E R M I N A T I O N N E E D N O T B E R E L A T E D T O U N I O N I S M .

'I h e te r m in a tio n c o n te m p la te d u n d e r A rtic le 2 9 2 (b ) [277(b)] n e e d n o t b e

re la te d to d ie e x e rc is e o f th e rig h t to s e lf- o rg a n iz a tio n b y th e e m p lo y e e s s o
te r m in a te d . H e n c e , th e e m p lo y e e s n e e d n o t b e o f fic e r s o r m e m b e r s o f a u n io n in
o r d e r to in v o k e o r a p p ly th is p o w e r to s u s p e n d th e e f fe c ts o f te r m in a tio n o f t h e
D O L E S e c re ta ry . S im p ly p u t, it is n o t a p r e -r e q u is ite to th e v alid e x e rc is e o f d iis
p o w e r th a t th e e m p lo y e e s s o te r m in a te d s h o u ld b e o ffic e rs o r m e m b e r s o f a u n io n
o r th a t d ie c a u s e o f th e ir te r m in a tio n b e re la te d to th e e x e rc is e o f th e ir rig h t to s e lf ­
o rg a n iz a tio n . F o r a s lo n g as t h e r e is a prima fade fin d in g b y t h e a p p r o p r ia te o ffic ia l
o f th e D O L E b e f o r e w h o m th e te r m in a tio n d is p u te is p e n d in g th a t it m a y c a u s e a
s e rio u s la b o r d is p u te o r is in im p le m e n ta tio n o : a m a s s lay -o ff, th e D O L E
S e c re ta ry m a y v alid ly s u s p e n d th e e f fe c ts o f s u c h te r m in a tio n b y o r d e rin g th e
im m e d ia te r e in s ta te m e n t o f th e te rm in a te d e m p lo y e e s p e n d in g re s o lu tio n o f th e
leg ality o r illegality th e re o f.

5. “ A P P R O P R IA T E O F F IC IA L S ” , M E A N I N G .

T h e L a b o r A r b ite rs a n d th e V o lu n ta ry A r b itr a to r s o r p a n e l o f V o lu n ta r y
A r b itra to r s , as th e c ase m ay b e , are th e "appropriate officials” re fe rr e d to in A rtic le
2 9 2 (b ) [277(b)] w h o m a y m a k e th e p re lim in a ry d e te r m in a tio n o f th e e x is te n c e o f a
primafade e v id e n c e th a t th e te r m in a tio n w ill c a u s e a se rio u s l a b o r d is p u te o r is b e in g
m a d e in im p le m e n ta tio n o f a m a s s la y - o f f S u c h primafade f in d in g w ill th e n b e c o m e
th e b a sis f o r th e iss u a n c e b y th e D O L E S e c re ta ry o f h is o r d e r s u s p e n d in g th e
e ffe c ts o f te r m in a tio n w h ic h , a s e a rlie r e m p h a s iz e d , w o u ld m e a n th e im m e d ia te
r e in s ta te m e n t o f th e te r m in a te d e m p lo y e e s p e n d in g th e fin a l r e s o lu tio n o f th e ir
termination case.

6. D I S T I N G U I S H E D F R O M D O L E S E C R E T A R Y ’ S A S S U M P T I O N
P O W E R IN N A T IO N A L IN T E R E S T C A SE S.

T h is p o w e r o f th e D O L E S e c re ta ry g r a n te d u n d e r /A rticle 2 9 2 (b ) [277(b)]
s h o u ld b e d is tin g u is h e d f ro m h is p o w e r to a s s u m e o r c e rtify la b o r d is p u te s

No. 12, Briefing Paper on R A 6715.

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 964 Bar reviewer on Labor, law

involving industries indispensable to the national interest under Article 278(g)

(263(g)). The following distinctions may be cited:

First, the exercise o f the power to suspend the effects o f termination

involves only the issue o f termination o f employment which may cause a serious
labor dispute or is in implementation o f a mass lay-off, while the £ower to assume
or certify labor disputes is applicable to all labor disputes, irrespective o f the
grounds therefor, provided such labor disputes will cause or likely to cause strikes
or lockouts in industries indispensable to the national interest
Second, the former requires the conduct o f prelinpinary determination o f
the existence o f primefade evidence that the tenninadon may cause a serious labor
dispute or is in implementation o f a mass lay-off to be conducted by the
appropriate official of the DOLE before whom the termination dispute is pending;
while the latter does not require such preliminary primafade determination. In fact,
prior notice and hearing are not required before the DOLE Secretary may issue an
assumption or certification order.1
Third, the “serion: labor dispute contemplated under the former may or
may not involve a strike or lockout; while the labor dispute referred to in the latter
will cause or likely to cause a strike or lockout
Fourth, the former m ay ' be exercised in cases o f termination o f
employment for as long as any of the two (2) grounds mentioned in Article 292(b)
[277(b)] exists, irrespective o f the nature o f the business o f the employer, while the
latter may only be exercised in industries indispensable to the national interest
Fifth, the remedy under the former is immediate reinstatement pending
resolution of the termination case; while in the latter, the remedy is the automatic
return to work o f the strikers or locked-out employees, if the strike o r lock-out is
on-going at the time o f the issuance o f the assumption/certification order o r the
enjoining of the strike or lockout, if one has not taken place, pending the resolution
of the issues raised in the notice o f strike or lockout

The case of University of Sto. Tomas v. NLRC and UST Fatuity Union,2
illustrates the situation where the DOLE Secretary ordered both the suspension o f
the effects of termination and the return to work o f employees pursuant to a
certification order. In this case, all the sixteen (16) officers and directors o f the
faculty union were terminated on the grounds o f grave misconduct, serious
disrespect to a superior and conduct unbecoming a faculty member. As a result o f
said dismissal, some faculty members staged mass leaves o f absence for several
days, dismpting classes in all levels at the university. The faculty union filed a
complaint for illegal dismissal and unfair labor practice with the Labor Arbiter who,
on a primafade showing that the termination was causing a serious labor dispute,
certified the matter to the DOLE Secretary for a possible suspension o f the effects

1 As held in CapSol MecBcat Center, fnc. v. Tratano, GJR. No. 155690, June 30, 2005.
* G il No. 69920, Oct 18,1990.

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 Chapter Eight 965
JURISDICTION AND RELIEFS

o f tenninatiofL O n this basis, D O LE Secretary Franklin Drilon issued an order

suspending the effects o f the termination o f the union officers and directors and
directing the university “to accept them back to work under the same terms and
conditions prevailing prior to their dismissal” Later, on the basis o f a petition for
assumption or certification filed by die university, Secretary Drilon modified said
order by certifying the labor dispute to the NLRC for compulsory arbitration
pursuant to Article 278(g) 1263(g)] of the Labor Code. He accordingly ordered the
university to readmit all its faculty members, including the 16 union officers and
directors, under the same terms and conditions prevailing prior to the dispute.

Based on the foregoing, it may be said tha: suspension of the effects o f

termination has the same effect as assumption or certification as far as the
reinstatement o f the affected employees is concerned.

7. PR EL IM IN A R Y D E T E R M IN A T IO N O F PRIMA-FACIE E V ID E N C E .

The determination o f whether a prima fade evidence exists that die

termination may cause a serious labor dispute or is in implementation o f a mass lay­
o ff as would justify the suspension o f the effects o f termination should be made at
the inception o f the labor proceedings. Thus, evidence on this particular point may
be presented prior to the presentation o f evidence in the main case. The only
purpose o f such presentation is to ascertain and establish whether die termination
may cause a serious labor dispute or is in implementation o f a mass lay-off O nce
evidence is presented upon which the appropriate official before whom the
termination dispute is pending may reasonably and suffidendy make out a prima
fade finding o f such fact, a recommendation to the D O LE Secretary for the
suspension o f the effects o f termination may then be propedy made.

3.
ADMINISTRATIVE INTERVENTION
FOR DISPUTE AVOIDANCE (AIDA)

1. N E W R U LE O N D O L E SECRETARY’S A D M IN IST R A T IV E
IN T E R V E N T IO N .

A new form o f dispute settlement by the D O L E Secretary was introduced

by DOLE GrmlarNo. 1, Series of 2006} Called A dm inistrative Intervention for
D ispute Avoidance (AIDA), this is a new administrative procedure for the
voluntary settlement o f labor disputes in line with the objectives o f R.A. No. 9285,*2
Executive Order No. 5231 and the mandate o f the D O LE to promote industrial
peace.

’ Issuedm August11,2006t^iorrnertXXE Secretary ArLroD.BrioRnowatlistinguishedmenterof ttie HighestCourt

2 Olheiwiseknovm as lIie'A eem ato Dispute R e s o ^ A d of2004'[approved on A{>^ 2,2004].
J Dated April07,2006.

J9JC9B0M
 966 Bar.Reviewer on Labor Law

2. NATURE O F A DM INISTRATIV E IN T E R V E N T IO N .

This recourse is separate from die established dispute resolution modes

o f mediation, conciliation and arbitration under the Labor Code, and is an
alternative to other voluntary modes o f dispute resolution such as the voluntary
submission o f a dispute to the Regional Director for mediation; to die NCMB for
preventive mediation, or to the intervention o f a regional o r’local tripartite peace
council for die same purpose.1

3. PARTIES W HO MAY R EQ U EST IN T E R V E N T IO N .

Either or both die employer and the certified collective bargaining agent
(or the representative o f the employees where there is no certified bargaining agent)
may voluntarily bring to the Office o f the D O LE Secretary, through a Request for
Intervention, any potential or ongoing d ispute defined below.2

4. PO TEN TIAL O R O N -G O IN G D ISPU TE.

A potential or on-going dispute refers to:

(a) a live and active dispute;

(b) that may lead to a strike o r lockout o r to massive labor unrest; and
(c) is not the subject o f any complaint o r notice o f strike or lockout at
the time a Request for Intervention is made.3

5. PROCEDURE.

All Requests for Intervention should be in writing and filed with die
Office of the DOLE Secretary. A Request for Intervention shall state:

(a) The name and address o f the employer,

(b) The name o f the certified bargaining agent, o r the employee
representative duly designated in writing by a majority o f the
employees where there is no collective bargaining agent;
(c) The number o f employees affected by the potential or ongoing
dispute; and
(d) A brief description o f the potential or ongoing dispute.4

Upon receipt o f the Request, the Office o f the D O L E Secretary should

forthwith notify the parties and invite them for conference. The conference for
Requests coming from the National Capital Regjtan, Regions III, IV-A or IV-B
shall be held at the Office of the D O L E Secretary unless die Secretary otherwise

’ No. 1,DOLEC*cularNo.1, Seriesof2006.

* Id.
3 id.
4 No. 2. Ibid.

J9JC9B0M
 Chapter eight 967
JURISDICTION AND REUEF5

directs. The conference for Requests coming from die other regions shall be
conductedby the appropriate RegionalDirectorsforandon behalfofthe DOLE Secretary}
6. P R E -R E Q U IS IT E T O IN T E R V E N T IO N BY D O L E SECRETARY.

The Office o f die Secretary o r die Regional Director, in die proper case,
shall proceed to intervene after die parties shall have manifested th a t

(1 ) They voluntarily submit their potential o r ongoing dispute to

intervention by the Office o f the D O L E Secretary;
(2) There is no pending notice o f strike or lockout o r any related
complaint in relation to their potential o r ongoing dispute;
(3) They shall refrain from any strike o r lockout or. any form o f work
stoppage o r from filing any related complaint while the Secretary's
intervention is in effect; and
(4) They shall abide by the agreement reached, whose terms may be
enforced through the appropriate writs issued by die D O L E Secretary.

All agreements settling the dispute should be in writing and signed by the
parties as well as the official who mediated die dispute.2

7. P R O H IB IT IO N O N D ISC LO SU R E O F IN F O R M A T IO N .

The parties and the officials o r employees o f the Department o f Labor

and Employment who took part in the intervention proceedings are not allowed to
testify in any court or body regarding the disclosures, submissions o r positions
made by the parties therein.3

4.
VOLUNTARY ARBITRATION BY DOLE SECRETARY

1. VOLUN TARY A R B IT R A T IO N A F T E R AIDA.

If the intervention through AIDA fails, either or both parties may avail
themselves o f the remedies provided under the Labor Code. Alternatively, the
parties may submit their dispute to the Office o f the D O L E Secretary for voluntary
arbitration. Such voluntary arbitration should be limited to the issues defined in the
parries' submission to voluntary arbitration agreement and should be decided on
the basis o f the parries' position papers and submitted evidence. The Office o f the
D O L E Secretary is mandated to resolve the dispute within sixty (60) days from the
parries' submission o f the dispute for resolution.4

' No. 3. Ibid.

* N0.4.W.
* No. 5, RAJ.
4 No. 6, RAJ.

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 968 Bar Reviewer o n Labor Law

2. DOLE SECRETARY DOES N O T ASSUME RO LE OF VOLUNTARY

ARBITRATOR W HEN H E ASSUMES JURISD ICTION OVER A
LABOR DISPUTE.

It was declared in Philtranco Service Enterprises, Inc. ». PW U -A G U O } that the

DOLE Secretary does not assume the role of a Voluntary Arbitrator when he
exercises his extraordinary power of assumption of jurisdiction over a national
interest case. A notice of strike was filed in this case by respondent union which,
after failure of conciliation and mediation by the NCMB, was referred by the
Conciliator-Mediator to the Office of the DOLE Secretary who thereby assumed
jurisdiction over die labor, dispute. The case2 was resolved by the Acting DOLE
Secretary3 in favor of respondent union.4A motion for reconsideration was filed by
petitioner company. The DOLE Secretary, however, declined to rule on die motion
citing a DOLE regulation,5 applicable to voluntary arbitration, which provided that
die Voluntary Arbitrators’ decisions, orders, resolutions or awards shall not be the
subject of morions for reconsideration. The DOLE Secretary took the position that
when he assumed jurisdiction over die labor dispute, he was acting as a Voluntary
Arbitrator. Petitioner subsequendy filed a Rule 65 certiorari petition with die CA.
The CA, however, dismissed petitioner company’s Rule 65 certiorari petition on die
ground, among others, that the decision o f die DOLE Secretary, having been
rendered by him in his capacity as Voluntary Arbitrator, is not subject to a Rule 65
certiorari petition but to a Rule 43 petition for review which properly covers
decisions of Voluntary Arbitrators.6

Before the Supreme Court, petitioner asserted that, contrary to die CA’s
ruling the case7 is not a simple voluntary arbitration case. H ie character o f the
case, which involves an impending strike by petitioner’s employees; the nature of
petitioner’s business as a public transportation company, which is imbued with
public interest; the merits of its case; and the assumption o f jurisdiction by the
DOLE Secretary - all these circumstances removed the case from die coverage of

' FlaIlianooSe(vioeEnlapRses,lnav.(%it[anooWMmmLkiK]i>As9ociaSonorGentdmljat)or(>g^tizat3oRsG^VUTAQ.O>.
GJl No. 160962, Feb. 26,2014. Afltough ftis case imdves a decision of he DOLE Secretory, (he principle enunciated
hereinequaflyapplestoiheNLRC.
2 ThecasewasdodcetedasNCMB4ICRCASENaNS<12-02&07.
3 AcfingDOLESectary DaniloP. Cruz.
4 TheAcCngCXXESeoma^sdeciaononSeredthereiristafianentof 17retrenchedennployeespbsbaclcwsge^amongonier
tGn6S«
5 SeeSecbon7 [Fnaf^ ofAvvanW3ecisjon], Rjle XIX ^GrievanceMachinejyandVokmtaryArWVaSonl DepartmentOrderNo.
4003, Series of 2003 ssued on February 17,2003 by tamer D0i£ Secretary PaWa A &>. Tomas. Rprovides: “SedSon
7. FnaBy of AwarcPDedaon. - The decision, order, resolution oratari of he voluntary artxtrator or panel ofvdtmtary

5 For this reason, acconfrg to he CA. Ite peffion is dismissibte pusuant to Stpeme Cout Circular No. 2-90, enffled
■GuMelnestobe Observedin Appealsto theCourtofAppeals and to tie SupremeCourt «Wch providesffiat^-Erroneous
Appeals.-An appeal t a k m t o e ^ # n 9 u p ( B i n e Courtor (heCourtofAppedsby (hewrong orinappropriatamodeshd be
dsrrissed.xxx’
7 ReferriTg63lhecase(toctetedasNCh©^OCASENa.NS(12-02W)7.

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 C h a pter Eig h t 969
JU R IS D IC T IO N A N D RELIEFS

Article 277 [262],1 and instead placed it under Article 278 [263],2 of die Labor
Code. For its part, respondent union argued that the DOLE Secretary decided the
assumed case in his capacity as Voluntary Arbitrator; thus, his decision, being that
of a Voluntary Arbitrator, is only assailable via a petition for review under Rule 43.

The Supreme Court, however, pronounced that

"It cannot be said that in taking cognizance of NCMB-NCR CASE No.
NS-02-028-07, the Secretary of Labor did so in a limited capacity, L t, as a
voluntary arbitrator. The feet is undeniable that by referring the case to the
Secretary of Labor, Conciliator-Mediator Agjibut conceded that the case fell
within die coverage of Article 278 [263] of die Labor Code; the impending
strike in Philtraaco, a public transportation company whose business is
imbued with public interest, required that the Secretary of Labor assume
jurisdiction over the case, which he in fact did. By assuming jurisdiction over
the case, the provisions of Article 278 [263] became applicable, any
representation to the contrary or that he is deciding die case in his capacity as
a voluntary arbitrator notwithstanding.”

Consequently, the Supreme Court reversed and set aside the CA ruling
and reinstated the case and directed die CA "to resolve the same with deliberate
dispatch.”

II.
A PPELU TE JURISDICTION

1. DECISIONS N O T APPEALABLE T O T H E D O LE SECRETARY.

At the outset, it is important to emphasize the decisions, awards or orders

that are not appealable to the Office o f die DOLE Secretary, to w it

(1) Those rendered by Labor Arbiters that are appealable to the

Commission (NLRQ which has exclusive appellate jurisdiction
thereover,3
(2) Those rendered by the Commission (NLRQ since they can be
elevated direedy to the CA by way of a Rule 65 certiorari petition;
(3) Those rendered by die BLR Director in the exercise of his appellate
jurisdiction since they can be brought direedy to the CA under Rule 65
certiorari petition;
(4) Those rendered by DOLE Regional Directors in simple or small
money claims under Article 1291 of the Labor Code since they are
appealable to the NLRC;

1 Article 275 (262J Juiaficfon over other labor deputes. - Hie VcMayAittrator or panel of vauntayAiMratns,upon
agreement ofthe partes, shaSalsohear anddecide £^tother labor(SsjxJtes rtetufingunfairlaborpractices andbaigairting
deadlock.
t A lto 27612631iserfflled^es.PSckeSm am Lockouts.'
3 Per Aitide 224(b) (217 (b^ h relation to Article 229 (223) of He Labor Code. Article 224(b) (217 (b]] provides: The
C^inmissianshaltiaveexdtekmnppeBalBjuilsdicSoncMeralcasesdecidedbyLaborAifeaefs.’

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 970 Bar reviewer o n Labor Law

(5) Those issued by DOLE Regional Directors in their capacity as £ x -

Offtao Voluntary Arbitrators (EVAs) since they can be brought directly
to the CA under Rule 43 o f the Rules of Court; and
(6) Those rendered by Voluntary Arbitrators which are appealable directly
to the CA under Rule 43 o f the Rules o f Court.12 ,

1.1. APPEAL FROM NLRC TO DOLE SECRETARY AND FROM D O LE

SECRETARY TO T H E PRESIDENT, ELIM IN A TED .

The original rendering of the Labor Code3 provided that the decisions of
the NLRC are appealable to the DOLE Secretary on specified grounds.4 And the
decisions of die DOLE Secretary rendered in his appellate jurisdiction may be
appealed to the President of the Philippines subject to such conditions or
limitations as die president may direct.5 These modes o f appeal, however, have
been completely eliminated. Hence, there is no more appeal from the NLRC to the
DOLE Secretary and subsequendy to the Office o f the President. The current rule
is that diere is no appeal from the NLRC’s decisions. The only way to elevate the
decisions of the NLRC to the CA is to initiate an original special civil action of
certiorari under Rule 65 of die Revised Rules o f Court.

2. PRESENT-DAY RULES O N APPEALS T O T H E D O L E SECRETA RY .

Though appeals from the NLRC to the D O L E Secretary were eliminated,

presendy, there are several instances in the Labor Code and its implementing and
related rules where appeals to, and exercise o f appellate jurisdiction by, the Office
of the DOLE Secretary are allowed.6 Unfortunately, there is no single provision in
the Labor Code or piece of jurisprudence7 which consolidates or comprehensively
embodies the rules on appeals to the D O L E Secretary. These appellate rules are
scattered in various provisions o f the Labor Code, its implementing rules and a
number of other rules o f procedure as well.

1 Entitled “Recovery o f w ages, s in g le m oney claim s and o ther b e n e fits ' II p ro vid e s: 'A n y d ecision o r resolution o f tie
Regional D irector o r hearing o fficer pursuant to th is provision m ay be appealed on th e sam e grounds provided in A rticle 229
(223] o f tfi's C ode, w ithin five (5) calendar days from receip t o f a copy o f said d ecision o r resolu tio n , to the N ational Labor
Relations Com m ission w hich shall resofve the appeal w ith in ten (10) calendar days from the subm ission o f the la s t pleading
required o r a bw e d under is roles *
2 In accordance w ith Rule 43 o f the Revised R ules o f C o u rt as enunciated in Luzon D evelopm ent B ank v . A ssociation o f
Luzon Developm ent Bank Em ployees. G .R N o. 120319. O c t 6 .1 9 9 5 .
2 See A rticle 223 [222] thereof.
4 It is provided under A rticle 229 [2 2 3 ]:‘ A rfcle 229 [2231 xxx. (a) If there is a prim a fa d e evidence o f abuse o f d iscre tion ; (b) If
m ade purely on questions o f law; and (c) If there is a show ing th a t the national se cu rity o r so cia l and econom ic s ta b iity is
threatened.
5 N a fio n a lF e d e ra fcn o fL a b a v.L a g u e s m a .6 .R .N o .1 2 3 4 2 6 .M a rc h 1 0 l 1999.
« Id.
1 An enum eration o f the various appeals to the DOLE S ecretary w as m ade in the 1999 case o f N ational F ederation o f L a b o rv.
Laguesm a, supra. However, this rundown needs to be updated in the ig h t o f the la te st am endm ents to the Labor C ode as
wefl as pronouncem ents o f the Suprem e C ourt in a num ber o f decisions prom dgated in recent cases.

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 C hapter e ig h t 971
JURISDICTION AND RELIEFS

Below is a detailed discussion o f the various appeals that may be instituted

to and filed with the Office o f the D O L E Secretary in the exercise o f its appellate
jurisdiction.

3. OFFICES FROM W H IC H APPEALS TO D O LE SECRETARY

ORIGINATE.

Appeals to the D O L E Secretary may originate from any o f the following

offices:

(1) D O L E Regional Directors;

(2) Med-Arbiters;
(3) BLR Director, and
(4) Philippine Overseas Employment Administration (POEA).

Il-A.
APPEALS FROM DOLE REGIONAL DIRECTORS

1. CASES APPEALABLE T O DOLE SECRETARY.

N ot all decisions, awards or orders rendered by the D O L E Regional

Directors are appealable to the D O LE Secretary. Among the cases enumerated
earlier as falling under the D O L E Regional D irectors’ jurisdiction, only decisions
rendered in the following cases are so appealable:

(a) Visitorial (inspection) cases under A rticle 37;1

(b) Visitorial (inspection) and enforcement cases2 under Article 128,
(either routine o r initiated through a complaint);3
(c) Occupational safety and health violations;1

1 'A rtic le 3 7. V isito ria l P ow er. - T he S ecre ta ry o f Labor o r h is d uly a uthorized representatives m ay, a t a n y tim e, in sp e ct the
prem ises, books o f acco u nts and record s o ( a n y person o r e n fity covered b y th is T itle , req u ire it to s u b m i reports reg u la rly on
p re s a te d form s, and a c t on vio la tio n o f a n y provisions o f th is T itle .' (R eferring to Trie I (R ea u ilm en t and P lacem ent o f
W orkers], B ook I, Labor C ode).
2 V is ito ria l cases in vo lve to s p e c tio n rf esta b lishm e n ts to determ ine co m p fa n c e w S i la b o r standards; w h ile enforcem ent ca se s
involve issuance o f com pliance o rd e rs and w rits o f execution.
3 Based on the 2nd paragraph o f A rticle 128(b), Labor C ode, w hich sta te s : 'A n o rd e r issued by the d uly authorized
representative o f the S ecretary o f Lab o r a nd E m ploym ent u nd e r th is A rticle m ay be appealed to the la tte r. In case sa id o rd e r
involves a m onetary aw ard, an appeal b y th e em ployer m ay be perfected o n ly upon th e posting o f a cash o r surety bond
issued b y a reputable bonding com pany d uly accredited by the S ecre ta ry o f Lab o r and E m ploym ent in lire am ount
equivalent b the m onetary aw ard n th e o rd e r appealed from .’ (A s am ended by R e public A ct N o. 7730, June 2 ,1 9 9 4 ).
A dditionally, it is provided n Section 1, Rule IV, o f the Rules on the Disposition Of Labor Standards Cases in fie Regional
O ffices, thus: 'S e ctio n 1. A p p e a l - T h e o rd e r o f the R egional D irector s h a l be fin a l and executory unless appealed to the
S ecretary o f Labor and E m ploym ent w rth n ten (10) ca lendar daysfrom receip t th e re o f.' The grounds fo r the appeal are
provided in S ection 2 th ereof, th u s: 'G rounds for appeal - T he aggrieved p a rty m ay a p p e d to the S ecretary the O rder o f the
R egional D irector on any o f the follow ing g rounds: (a) there is a pnma fade evidence erf abuse of d iscre tion on the p a rt o f the
R egional D ire c to r (b ) the O rder w as secured through fraud, coercion o r g ra ft and co rru p tio n ; (c) the appeal is m ade purely
on questions o f law ; and (d ) serious e rro rs in the findings o f fa cts w ere com m itted w h ich , if n ot corrected, w ould cause grave
irreparable dam ageor t y iy to the a p p e la n t* (S ee also S ection 2, in rela tio n to S ection 3 (a ), R ule X B ook 111 o f fie R ules to
Im plem ent the Labor C ode).

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 972 Bar reviewer o n La b o r law

(d) Cases related to private recruitment and placement agencies (PRPAs) for
local employment, such as:
1) Applications for license or denial thereof;
2) Complaints for suspension or cancellation o f license by reason o f
administrative offenses; r
3) Complaints for illegal recruitment; and
4) Petition for closure of agency.2

2. CASES N O T APPEALABLE TO D O LE SECRETARY.

The decisions of the DOLE Regional Directors in die following cases are
not appealable to the DOLE Secretary but to die labor office or labor official
indicated opposite each one of them:

(a) Visitorial cases under Article 289 [274], involving examination of

books of accounts of independent unions, local chapters/chartered
locals and workers’ associations - to BLR Director3'
(b) Small money claims cases arising from labor standards violations in
an amount not exceeding P5,000.00 and not accompanied with a
claim for reinstatement under Article 129 - to NLRC4
(c) Cases submitted for voluntary arbitration in their capacity as E x -
Officio Voluntary Arbitrators (EVAs) under Department Order N o. 83-
07, Series of2007 • to Court of Appeals5
(d) Union registration-related cases, such as:
1) Denial of application for registration1 of said unions - to BLR
Director

Officeswhich provides: Section 6. Reviewby (he Secretary. • (a) The Secretary at Msown irtSafive a upon tie request of
theemployerand/oremployee, may rwiew he crier oftoe Regional Directorwhich shall be hmedfetety final and execuby
unless stayed by the Secretary upon posfing by fie employer of a reasonable cash a petfbmence bend as fixed by the
f^gkxiatDirectiar.'Seeafeotie 2^para^aphofArtcSe128Cb), LaborCode.
2 SecSon62,DeparbnertChderNa 141-14.Setiescf2014.Nov.20,2014.
3 The GLR Director, not he DOLE Secretay, has the appelate autoorfy over dedans of the DOLE Regional Direcbs
iivoMng examinations of union accounts as prowled under Rife D of toe Rules of Rrocedura on MetSafiooArtftafion,
issuedonApd 10,1992. tovKt‘SEC.3. JuristficSonofffieRegionalO&BctDr.-TheRegtanalOSrectorshaaexardsoodghal
anderdjsta!jurisdictionoverappficaSonlotunionrBgktrsfion.peSSonsfcrcanodBaSon cfurttonro^stiafion andcomplaints
fer examination of unions books cf accounts. SEC. 4. MstficSon of toe Bureau.- xxx Ip) The 8ueau shaf exercise
appelate furiscficSon over eS cases cdghsthg from toe Regional Director invoMng union registration or cancelsSon of
certficaEesofunionre$s&a8onandoomplainbforexamtoaflonofunionbooksofaccounts.*
4 At8de129oUheLaborCocte|iioufcles:'Anydetisionor»esoliBonoflheRBgjonalProctororheadngotBoerpupuantbte

effliiten (10) calendarilEfys&omQiesOb(Tisdonor9ietastp)ea(fing requiredoratowd underIs roles.*

5 h accordance k9) Rule 43 oftoe Rwised Rules ofCourt, as enunciated in Luzon Development Bank v.AssodaSon of
LuzonDevelopment Bark Employees; OR No. 120319, Oct 6,1995. It mustbe noted hat Department Outer No. 8M 7.
Seriesd2007,does nrtmertim theprxeAreotelevaSng the dedsiensefthe EVAsbaligherft&nalCertanly, appeal
to he DOLE Seaetay is notpropershoe he DOLERegional Dtectore ate taking cognteanoeoftie case h M r capacity
as EVAslRafter, I is artnowledged to thesaid Department Orderthat toekdes$na&n as B tts isDJo axnplemerttoe
QdsSngmsterofquaGBedandAocn9(EBBdVtAffdaqfArb&rBlois(IWAs)xxx.*

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 C ha tter Eig h t 973
JU R IS D IC T IO N A N D R E U E F S

3) Decision on petition for revocation or cancellation of registration

o f said unions - to BLR Director
(e) Notice of merger, consolidation, affiliation and change o f name o f
said unions - to BLR Director
(f) CBA-related cases -
1) Application for registration o f single-enterprise12-CBAs or petition for
deregistration thereof - to BLR D irector
2) Petition for denial o f registration o f single-enterprise CBAsor denial
of petition for deregistration thereof - to BLR Director
Note must be made as regards Request for SEBA Certification when
made in an unorganized establishm ent w ith only one (1) legitimate union,3
over which the DOLE Regional Director has original jurisdiction to issue the
SEBA Certification being requested. The rule, however, becomes different once the
requesting union fa ils to complete the requirements fo r SE B A certification during the
validation conference before the DOLE Regional Director, in which event, such
Bequest should be referred to the Election Officer4 for the conduct of certification
election5 which necessarily would mean that such certification election should now
be conducted under the jurisdiction o f the Med-Afbiter (Mediator-Arbiter) to
whom the Election Officer is duty-bound to report the outcome of the election
proceeding.6 Certainly, the ensuing certification election cannot be conducted
under the directive o f the DOLE Regional Director without the participation of

' See Article 243 p36J of belabor Code which provides: ‘Ait 243 [236]. Denial of registration; appeal The decision of (he
Labor Relations Division in he regiond office denying registration may be appealed by he appfcant union to the Bureau
wfflm ten (10) daystan receiptof note hereof.'
2 Asrfis&igiished&omcasesintfoMnginUt&«(npayerC8AswMchfiaAunder8)eo(1ginaliurls(Bc6onoieieBLROirector.
3 Unto this s!toa1on,te DOLE RegiotoDirecto,betorevtfKrite Requestfar SEBA CetScationis Bed, should refer toe
Request for SEBA Ceitotion fo he Medator-Artxter fix he determination of he propriety of conducing a certification
eiection, inwbichcase, the Mediator-ArbiternowhastheJurisdictionto decide thecerfrScstionetecfionissue. (Section6, Rule
VII. in (elation to Rules VIII and DCDepartment Onto No. 404-15. Series of 2015 {September 07,2015b. Note must be
made that uteri the Request for SEBA CertScation is made in an unoigarfcsd estebSsfment w&i more ten one (1)
legitimate labor organsaion, me Meo-Aiater taxes over tram ro um c Regional urector n toe matter ot neamg and
rpcflfayfj flftiwfift'jfiif]pIwAyi
4 TBectionOffitorefera to an o te d te B u re a i ofLaborRelations ortelabaRebfiore Divisionto te Regional Office
strtiwi^pH jn rpftSf^iinp dylini ft andotter toffns ofelftctfons and (Secdon 1
M. Rule L and Sections2-5, Rub XII. BookV, Rulesto bnptementtoe LaborCode, as amendedby DepartmentOnto No.
4WJ3, Seriesof2003, [Feb. 17,2003]). Ils te Q e c S o n O ^ v te shadhave oorM of tepreeiecbon conference and
etec&npmceecfinQS. (Section 1. RdeOC BookV. todl
5 Section 4, Rub VII of te Rules to hutment te tabor Code, as amended by Department0^ 6 ^ 4 0 4 -1 5 , Series of
2015{SeptenteO7,2015). Selection staid beanductedhaccoctorewSh Rub IX (hereof.
8 Under ihe Rides, within 24 horns ton the final canvass of votes, Siere' bdng a vaid decSon, 8ie BeC6on Officer
BartsttttTO recofos of w ca$8» to MBmDSBrmiosnas, wnn ro saro penoo roomrecap! o to fftTOTOanoresuws
or eecoon, L yuiAA
asm anAorto
am JaAAA ujALkLkALaauvJL a
prociaimng toe resuEBor! L
toe
aa (a|J|a
escOT AA jJ A
aro
a A|fJtiA
cersyiy A|||A ,A||a
re uratn || IlilllL a1
|L
vmm ooaneo )S
am| LaM WtS
rwjk
tne majony*a
otI |L
rea
valid votes cast as te sole and eniuste bargattig agent to te street batgaintog unit, sot (The ptwMon enffled
Vrodamalm and aerification of te rest* of Ihe efeefiori’ should now be denorrinabd as Section 21. Rde DC. Book V,
Rules to Implement the Labor Code, by vttreoftereflumbetttS ottered by Secfcn 17, Departnent Order hb. 404-15,
Series of 2015 [September07,2015]. Thbsectawmorfcinafynunbemd Section20. per Department Otto No. 404)3,
Series of 2003, Feb. 17,200% but k was sdbsequenBir renumbered to SecSon \9, per Department OrderNo. 40f4»,
Seriescf2008pct30.20081.TWsl^est2015rewnbering2^effectedaTOJ5hs^SecSon17wtechstates:'*Secllons
subsequentto insertednewprovisionsandtorrenumberedsecOonsarerenumberedacconfingfy.').

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 974 Bar Reviewer on labor Law Chapter Eight 975
JU R IS D IC T IO N A N D R ELIEFS

the Med-Arbiter (Mediator-Arbiter) who, under the law,1 is the one possessed of (4) Notice o f merger, consolidation, affiliation and change of name of said
the origttal and exclusive jurisdiction over certification election cases, including the unions and or petition for denial thereof,2
proclamation of the winning SEBA.2 (5) Registration of muhi-emphyefi CBAs or petitions for their
deregistration;4 and
ll-B. (6) Contempt cases.5
APPEALS FROM MED-ARBITERS ,
Il-D.
1. ONLY DECISIONS IN IN TER-U N IO N DISPUTES. APPEALS FROM POEA

Among the cases cognizable by the Med-Arbiters in their original and

1. APPEALABLE CASES.
exclusive jurisdiction, only decisions in inter-union disputes (representation or
certification election conflicts) are appealable to the DOLE Secretary by virtue of Under the two (2) distinct 2016 Revised P O E A Rules for land-based
Article 272 [259]3 of the Labor Code. All the others are appealable to the BLR OFWs6 and seafarers7 and the Omnibus Rules,i die Office of the DOLE Secretary
Director.* has exclusive jurisdiction to act on appeals from the Orders o f the Administration
(POEA), in the following cases over which it has original and exclusive jurisdiction:
Il-C.
(a) All cases which are administrative in character, involving or arising
APPEALS FROM BLR DIRECTOR
out o f violations of recruitment rules and regulations, including
refund of fees collected from land-based OFWs and seafarers and
1. CASES DECIDED BY BLR DIRECTOR IN H IS ORIGINAL any violation o f die conditions for the issuance of the license to
JURISDICTION. recruit OFWs.9
The decisions of the BLR Director rendered in his original jurisdiction
are all appealable to the DOLE Secretary, thus:

(1) Complaints and petitions involving the application for registration,

revocation or cancellation of registration of federations, national
unions, industry unions, trade union centers and their local ‘ Id.
* Section 5, Rute IV, Book V, Rifes to frnpJemert the Labor Code, as amended by Department Orefa- No. 4CWJ3, Series rf
chapters/charteted locals, affiliates and m em ber organizations;5 2003, [F *. 17,2003] and as tetheramenitedbyDepartmentOrderNo.4(HM)5, Seriesof2005, Sept 13,20(S.
(2) Request for examination of books of accounts of said labor 3 As(flu s h e d tem cases involvingsligloenteiprisef^ whichfalunda toejuriscficbmdthe DOLERegiatal Director.
organizations6 under Article 289 [274] of the Labor Code; Section 15, Rule XI. Book V, Rules to Implement he Labor Code, as amended by Departnent Order No. 4003, Series of
2003, [Feb. 17,2003] and as renumbered by Department Grier No.4&f03, October30,2008. See NaSonal Federation of
(3) Intra-union disputes involving said labor organizations;1
Laborv. Laguesma, G R No. 123426, March 10,1999.
4 Secfion 4. Rule XI, Book Vof he Rules to Implement he Laba Code, as amended by.Departnent Order No. 4W-03,
Seriesof2008 [October30,2008].
' Article232(226), L&or Code. s Thepersmar^xlgedindretioatoptbytteaRDtectormayappealtoheDOLESeattsy.(SeeSecfion1,RuteXXItl,
2 See Section 21, Rute IX. Book V, Rules to Implement the Labor Code, as ordered renumbered by Secfon 17, Department BookV, Rules to Implementthe Ldxjr Code, as amended byDepartmentOrderNo. 4W3, Seriesof2003, [Feb. 17,2003D-
Order No. 40-M5, Series of 2015 (September07,2015]. This sectionwas originallynumbered Section 20, per Department « Section 185, RuteVil, Part VI, Revised POEA Rules and Regulars Governing the Reenfcnenland Employment of Land-
Order No. 4003. Seriesof2003, [Feb. 17,2003], but t was subsequentlyrenumbered to Section 19, perDepartnentOrder BasedOveisemFfyinoWloiteiscf2016.
No. 40-F-03, Seriesof2008 fOct. 30,2008], J Section 169, fWe IX, Part V.the 2016 Revised POEA Rules andRegutefonsGovemtog the Reouftrwit and Employment
1 Supra ofSeatorets issuedonFebruary26,2016.
4 Tlie othercases ialng underIhe original andexcluswjurisificSm butare appeaiaWetothe BLR Krccix are as fetiows: (a) * Sedim11, Rute X,OmnixB Rulesand RegdaSaBlmplemerrtng toe MgtartVMersmd OverseasFEpinosActcf 1995,
tnzsHniondisputes; (b) OJierrelated labor refefonsiSsputes; (c)b£mc5on cases; and (d) Contemptcases. as Amended by Repubfc Act No 10022 issued on July 8.2010; See also Ormixts Rules and Regulafionslmplementrg
5 As (fetinguished frem petitions for canceSafion of registration of independent unions, local chapters and waters’ MgrartWodteisand OverseasFfyinosActof 1995dated Feb. 29,1996.
assodafons, as providedit Section3, W ell of BteMedAWraSon Ruleswhichstates:aSEC.a Jurisdk^dnofffteRegiond * Sectim 138, Rule I (Jurisdto), PartVI (ReauttriertViolafions and DiscipSnary Action Cases), Revised POEA Rules and
Director - The Regional Director shall exercise original and exclusive juristfidion over appfcafion tor union registration, Regulations Governing toe Reoid&nert and Employment of LandSased Overseas FBpiio Waiters of 2016; Secfion 118,
pedtionsforcara^astionotunionregistiationarMlcorriplaintefixescafrrnalionorunkxnsbooksofaooounts’ SeealsoSection
4, Rtie XI, Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of
2008 [October30,2008] and Section I. Rutefl, RulesofRtoceduremMerfetionAbbaSoa
6 F^en^tofedec3dons.naikxtalunions,indus«yiiraonsandaa(]euiioncentets.as<Ss6^nshedfinDmindef>eiKfenttawons. No. 10022 issued on July 8,2010; See also Section 28, Omntius Rules and RegtMns ImplemenSng Mipant Workers
local chaptersandwaters' associations. and OverseasREphosActof 1995datedFeb. 29,1996.

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 976 '&AS. REVIEWER O N LABOR LAW

(b) Disciplinary action cases against land-based OFWs and seafarers and
principals/employers that are administrative in character, excluding
money claims.1

1 PERIOD TO APPEAL

The party aggrieved by a decision o f the POEA Administration may

appeal the same to the Office of die DOLE Secretary within fifteen (15) calendar
days from receipt of a copy of die decision. Failure of the aggrieved party to perfect
the appeal within the rcglementary period shall render the decision o f the POEA
Administration final and executory. The Docket and Enforcement Division shall
not accept an appeal that is filed beyond the reglementary period of appeal.2 The
period is ten (10) days in case of appeal to the DOLE Secretary of the Order of the
POEA Administrator denying the Morion to Lift a Closure Order or Motion to Re­
open. Any morion filed on the denial of a motion to lift shall be treated as an
appeal.3

3. POEA HAS NO JURISDICTION OVER MONEY CLAIMS CASES.

It must be noted that the POEA ceased to have any jurisdiction over
money claims of OFWs, or those arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment, including claims for actual, moral, exemplary and other forms
of damages. The jurisdiction over these claims was transferred to the Labor
Arbiters of the NLRC by virtue of Section 10 of RA. No. 8042, as amended.4
Consequently, appeals from decisions o f the Labor Arbiter may be instituted to the
Commission (NLRC).

H.
GRIEVANCE MACHINERY

L LEGAL BASIS.

The legal basis of grievance machinery is Article 273 [260] -which states:
“Aitide 273 [260]. Griem a Machinery and Voluntary Arbitration. -
The parties to a Collective Bargaining Agreement shall indude therein
provisions that will ensure the mutual observance of its twins and
conditions. They shall establish a machinery for die adjustment and

* M .;U.;ld.;td.'
2 SecSon 186,Rie Vtl, PartVI RevisedPOEARules and Regutatkns Governingthe Recruamentand &nptoyment of Land-
BetsedOverseas FSpto Workersof2016and SecOon 170, forte DCPartV, the 2016 Revised POEA fofes aid Regtdafions
GovemingtheRecnj&TientaridEmploymentrrfSeefiarers.
3 Section 92. Rule XL Part II, Revised POEA Rules atxl RegutatSons Govemmg the Recnjitniem and Employment of Land-
Based Oraseas Rpino Workersd 2016 and Section 88. Rule X, Part D, (he 201$ Revised POEA Rules and Regulations
Gowendig0ieRecndnentandEntpk9 ynientofSeefe(os.
4 AsamendedlatelybyRA No. 10022[March8,2)10].

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 Chapter Eight 977
JU R IS D IC T IO N A N D RELIEFS

their Collective Bargaining Agreement and those arising from the

interpretation or enforcement of company personnel policies.
"AH grievances submitted to the grievance machinery which are
not settled within seven (7) calendar days from the date of its [sc]
submission shall automatically be referred to voluntary arbitration prescribed
in foe Collective Bargaining Agreement
“For this purpose, parties to a Collective Bargaining Agreement
shall name and designate in advance a Voluntary Arbitrator or Panel of
Voluntary Arbitrators, or include in foe agreement a procedure for foe
selection of such Voluntary Arbitrator or Panel of Voluntary Arbitrators,
preferably from foe listing of qualified Voluntary Arbitrators duly accredited
by the Board In case foe parties fail to select a Voluntary Arbitrator or
Rand of Voluntary Arbitrators, foe Board shall designate foe Voluntary
Arbitrator or Band of Voluntary Arbitrators, as may be necessary, pursuant
to foe selection procedure agreed upon in the Collective Bargaining
Agreement, which shall act with the same force and effect as if the
Arbitrator or panel of Arbitrators has been selected by foe parties as
described above.”1

I.
GRIEVANCE AND GRIEVANCE PROCEDURE OR MACHINERY

1. GRIEVANCE OR GRIEVABLE ISSUE.

A “g u rn et* ot “gievablt issue“ is any question raised by either the

employer or the union regarding any of foe following issues or controversies:

1. The interpretation or application of foe CBA;

2. The interpretation or enforcement of company personnel policies;
or
3. Any rlaim by either party that the other party is violating any
provisions of foe CBA or company personnel policies.2

In its technical or restricted sense, a grievance is a dispute or controversy

between foe employer and foe sole and occlusive bargaining agent (SEBA) arising
from foe interpretation or implementation of their CBA and/or those arising from
the interpretation or enforcement of company personnel policies, for foe
adjustment and resolution o f which, foe parties have agreed to establish a
machinery or a series of steps commencing from foe lowest level o f dedsion-

t Ask«xpo(atedbySec(ion26.RANa6715,Maich21,1389;Asr8numh6redpu>suanttoSechon5.RANo.10151,June
21,2011 and OOLE DepartmentAdfoay No. 01, Series of 2015 (Renumbering of he Labor Code of he PfflppiieSkas
Amended), issuedonJuly21,2015.
2 Sectbnl (u], Rule l BixAV, (yes to Implementhe Latxr Code, as amendedby DepartmentOrder No. Series of
2003, Feb. 17,2003; Seetot 1&1, Rub Q, NCM8Refoed Procedural Guidelines ii he Conduct of Vbkm&yAiblrafion
Proceedings(Oct 15,2004J No.4, NCMB PrimeronGrievanceMachineryand Voluntary AibiraSon.

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 978 Bar. Reviewer on Labor law

making in the management hierarchy (usually between die shop steward of the
employee or employees aggrieved and the supervisor/foreman/manager which
exercises control and supervision over the grievants or who is responsible for
executing the management action that have given rise to die grievance) and usually
terminating at the highest official of the company. If sqch dispute remains
unresolved after exhausting the grievance machinery qr procedure, it shall
automatically be referred to voluntary arbitration prescribed in die CBA.1

It must be stressed, however, that in order to be grievable, the violations

of the CBA should be simpk or ordinary and not gross in character; otherwise, they
shall be considered as unfair labor practices (ULPs), the jurisdiction over which
righdy belongs to the Labor Arbiter under Article 2 2 4 1211\ o f die Labor Code or
concutrendy with die Voluntary Arbitrator or Panel o f Voluntary Arbitrators who
may be mutually chosen and agreed upon by the parties pursuant to Article 275
[262] of the same Code.

Gross violation of the CBA is defined under Article 274 [261] as flagrant
and/or malicious refusal by a party thereto to comply with the economic
provisions thereof. If what is violated therefore is a non-economic or a political
provision of the CBA, the same shall not be considered as ULP and may thus be
processed as a grievable issue in accordance with, and following the grievance
machinery laid down in, the CBA.

2. GRIEVANCE MACHINERY.

“G rim m machine^’ refers to the mechanism for die adjustment and

resolution of grievances arising from the interpretation or implementation of a
CBA and those arising from the interpretation or enforcement of company
personnel policies.2 Additionally, it is also mandated to process, adjust and resolve
violations of the CBA which are not gross in character as discussed above. It is part
of the continuing process of collective bargaining.3

3. GRIEVANCE PROCEDURE.

'Grievance procedure” is the series of formal steps that parties to a CBA

agreed to take for the adjustment of grievances or questions arising out of the
interpretation or implementation of the CBA or company personnel policies,
including voluntary arbitration as die terminal step. The grievance procedure
provides the parties a first crack in addressing problems in die CBA administration
and its use is an essential requisite before a Voluntary Arbitrator can take
cognizance. of the unresolved grievance. It usually consists of a multi-step
procedure starting from the discussion of the grievance between the employee
and/or the union steward, on the one hand, and the foreman and supervisor, on*

1 Na 5,W ^ l^ m G r te v ^ M a c h ^ andVoluntaryArtjJration.
* M de273pKL LaborCode.
» RepublicSavingsBankV.CIRG.R. No. L-20303, Sept 27,1967,21 SCRA226.

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 C hapter eight 979
JU R IS D IC T IO N A N D R ELIEFS

the othet hand, and ending with the highest decision-making officials of the
company, reflecting the hierarchy of command or responsibility.1

Legally speaking, the grievance procedure is an appeal procedure and is a

"must” provision in every collective agreement It is that part of the agreement
which provides for a peaceful way o f settling differences and misunderstanding
between the parties.2 The terms "grievance procedure and “grievance machinery* are
sometimes used interchangeably.

4. CBA PROVISIONS SUBJECT O F GRIEVANCE MACHINERY.

A CBA contains two (2) kinds o f stipulations, to w it

1. Economic or non-political provisions which have direct and measurable

monetary cost consequences such as wage rates, paid leaves,
pensions, health and welfare plans, and other fringe benefits; and
2. Non-economic or political provisions whose monetary cost cannot be
direcdy computed such as the no-strike-no-lockout, union security
clause, management tights clause, check-off clause, grievance
procedure, etc3
Any violadon of the economic and non-economic provisions of the CBA or any
law, rules and regulations as well as customary practices, may constitute a grievance
and is often referred to as “rig h ts disp u te.* * However, it must be pointed out that
when the violation of the CBA consists in the flagrant and/or malicious refusal to
comply with the economic provisions thereof die same shall be treated as ULP and,
therefore, not a grievable issue that is properly cognizable under the grievance
machinery of the CBA.
5. “C O M P A N Y P E R S O N N E L P O L IC IE S ", MEANING.

What are the personnel policies and what are the matters usually covered
by such policies, whose wrong horn enforcement and interpretation may constitute
grievance/s or other sources of rights disputes?

Personnel policies are guiding principles stated in broad, long-range

terms that express the philosophy or beliefs of an organization's top authority
regarding personnel matter. They deal with matters affecting efficiency and well­
being of employees and include, among others, the procedures in the
administration of wages, benefits, promotions, transfers and other personnel

1 No. 12, NCM8Primer on Grievance Machhay and Votuntay Aib&afion: Rule a (71, NCMB Manual of Procedures for
CcncEataandPrevenfoeMedaim
* No. 12, Ibid.; See also Secfion ipi], Rute II, NCM3 Revised Procedural Goide&ies in the Condudcf Votmtay Aitoitration
Ptcceedngs pet 15,20041
3 No.9,N (M Prn»m G ow anaM 3d ^
4 M. ArigtfecSsputecm&Tuia&feen&nceofaCBAateacfyconcijdedaas^^
stout a formal changein its terms a tocreate a newone. The dfcpute retales eitier b fte meaning a properappficafionof

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 980 Bar Reviewer on Labor Law

movements which are usually not spelled out in the collective agreement The usual
sources of grievances, however, are the rules and regulations governing disciplinary
actions.1

The law considers the interpretation and implementation of company

personnel policies as one of the frequent causes of irritation 'between labor and
management and thus must be treated as a gnevable issue properly cognizable by
the grievance machinery. The law contemplates the situation where workers are not
satisfied with the manner by which management interprets and implements its
personnel policies or where management has actually^ taken disciplinary action
against an employee pursuant to its personnel policies. In these cases, the law
recognizes the right of the workers affected by the same to file a grievance with die
grievance machinery before ,the issue becomes an arbitrable grievance that may be
brought for voluntary arbitration before the designated Voluntary Arbitrator or
Panel of Voluntary.Arbitrators.2

6. GRIEVANCE PROCEDURE/MACHINERY, A “MUST" PROVISION.

A CBA will not be registered with the DOLE if it does not contain a
provision on grievance procedure/machinery which is a “m ust' provision required
of all CBAs. In the event that a CBA without such provision is submitted for
registration, die registrar should advise the parties to include a grievance
procedure/machinery therein before it is considered duly registered.3

7. CREATION OF GRIEVANCE COM M ITTEE.

In the absence of any applicable provision in die CBA, a grievance

committee is requited to be created within ten (10) days from die signing thereof.
The committee shall be composed of at least 2 representatives each from die
members of die bargaining unit and the employer, unless otherwise agreed upon by
die parties. The representatives from among the members of the bargaining unit
shall be designated by the SEBA.45

8. NO PARTICULAR SET-UP OF GRIEVANCE MACHINERY.

No particular set-up for a grievance machinery is mandated by law. Article

273 (260}, as incorporated by RA. No. 6715, provides for only a single grievance
machinery in the company to sctde grievances.3

1 No. to, bid.; Manga v. NLRC, GR No. 124013, June 5,1998,290 SCRA 603; Union of Nestle Workers Cagayan<feOro
Factoryv. NestlePhJppines, he. GR No. 148303, Oct 17,2002.
7 See (he tnterpefeSons on Senate BS 530 which later became RA No. 6715, Record of be Senate, VoL I. No. 163APP-
5640-6641.
5 Nos. 12and14tNCMBR1nieronG()evanceMachReiyandV'o(unt3iyAibitjafion.
* Secdon 1. Rule XIX, Book V, Rules to Implementthe Labor Code, as amended by Departnent Oder No. 4003, Series of
2003.(Feb. 17.20031
5 Catex FtefineryEmplcyeesAssoda5on [CREAJv. Brtlantes. GR No. 123782, Sept 16,1997,279 SCRA218,236,240.

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 C hapter Eight 981
JU R IS D IC T IO N A N D R E U E FS

II.
INITIATION OF GRIEVANCE THROUGH GRIEVANCE MACHINERY

1. COMPULSORY SUBJECT O F GRIEVANCE MACHINERY.

All grievances arising from the implementation or interpretation of the

CBA and/or interpretadon and enforcement of company personnel policies are
compulsory subject to the grievance machinery. This is clear from Articles 273
[260] and 274 [261] of the Labor Code.1 A idde 273 [260] is emphatic on the duty
of the parties to a CBA to establish a machinery for the adjustment and resolution
o f grievances arising from the interpretation and enforcement of the CBA and/or
company personnel policies, and for the mandatory use of the said machinery.
Article 274 [261], on the other hand, directs the NLRC, its Regional Arbitration
Branches and die DOLE Regional Directors not to entertain disputes, grievances
or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator
or Panel o f Voluntary Arbitrators and to immediately dispose o f and refer the same
to the grievance machinery or voluntary arbitration provided in the CBA.

Moreover, in Rule X I o f the Implementing Rules o f the Code, the NCMB

Regional Blanches are enjoined, in case issues arising from the intexpretation or
implementation o f CBAs or those arising from the interpretation or enforcement
of company personnel policies are raised in notices of strikes or lockouts or
requests for preventive mediation, to advise the parties to submit the issue/s to
voluntary arbitration.2

2. R IG H T O F EMPLOYEES T O BRING A GRIEVANCE.

Generally, it is the employees who initiate a grievance. This is recognized

by Article 267 [255] which provides, among others, that “... an individual employee
or group of employees shall have the right at any time to present grievances to their
employer.” Further, the grievance procedure, being part and parcel of the
"continuous collective bargaining process” and the union designated or selected by
the majority of the employees being their exclusive bargaining representative,
unions are generally recognized as having the right to initiate, rile or present a
grievance, either with regard to their rights as unions under die contract, or with
regard to the rights of employees, whether collective or individual.3

3. R IG H T O F INDIVIDUAL EMPLOYEE O R GROUP O F EMPLOYEES

T O PRESEN T GRIEVANCES DIRECTLY T O T H E EMPLOYER.

(NOTE: See the extensive discussion of fills topic in

"C. BARGAINING REPRESENTATIVE”, supra).

1 AsamendedbyRA.No. 6715;SeealsoNo.8uNCAi®PdmeronGrievanceMacttinefyandVoturtayArbXiafion.
2 Na8,NCMBf^mGiia^MachheiyandVdmtsyA(bi^im
3 No.25.aAl.

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 982 Bar Reviewer on Labor U w

4. RIGHT OF AN EMPLOYER T O IN ITIA TE A GRIEVANCE.

As a general rule, employers may not initiate a grievance. However, it

would be prudent to include a provision in the CBA granting die employer such
right, especially in cases where the employer may wish tor iise the grievance
machinery to resolve a question over a vague or indefinite provision of the CBA.*
1*

DECISIONS OF GRIEVANCE COMMITTEE

>

1. VALIDITY AND BINDING EFFECT.

A member of the SEBA who brought his grievable issue for resolution by
the Grievance Committee is bound by whatever disposition the latter may render
thereon. In Octavio t>. PLD T} the grievable issue raised by petitioner Octavio before
the Grievance Committee was resolved in favor of respondent PLDT. Petitioner
Octavio then contends that the Grievance Committee’s resolution has the effect o f
amending the CBA without the consent and approval of the employees. The
Supreme Court, however, disagreed and ruled that the resolution is valid and not a
modification of the CBA. Rather, it only provides for the proper implementation of
the CBA provision respecting salary increases. It is a product of the grievance
procedure outlined in the CBA itself. It was arrived at after die management and
the union through their respective representatives conducted negotiations in
accordance with the CBA.

I.
VOLUNTARY ARBITRATOR
1.
VOLUNTARY ARBITRATION IN GENERAL

1 VOLUNTARY ARBITRATION.

‘'Voluntary arbitratioif' refers to the mode o f settling labor-management

disputes in which die parties select a competent, trained and impartial third person
who is tasked to decide on die merits o f the case and whose decision is final and
executory.34It is a third-party settlement o f a labor dispute involving die mutual
consent by the representatives of die employer and the labor union involved in a
labor dispute to submit their case for arbitration.1

' Nos.8and2S.0AL
1 Ocbvtov. Ph^jpre long DistanceTelephoneCompany,GR No.175492, Feb. 27.2013.
3 SeetionlW, Ride I), NCMB Roused RnooetAnal Guidefines in teConductof Votafay Aibara8onnwea&nsIOcL15,
2004;
4 A p p ^ 2 Pe&^tfTem ^NCM Bniner onStrike, Pid^ng and Lockout, 2ndEdi8on.Oecenter 1995.

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 Chapter Eight 983
JU R IS D IC T IO N A N D R E L IE F S

2. VOLUNTARY ARBITRATOR.
A “ Voluntary A rbitrate? refers to:

1. Any person who has been accredited by the National Conciliation and
Mediation Board ( 4N C M B " o t'!Board’) as such; or
2. Any person named or designated in the CBA by the parties as their
Voluntary Arbitrator, or
3. One chosen by the parties with or without the assistance of die NCMB,
pursuant to a selection procedure agreed upon in the CBA; or
4. One appointed by the NCMB in case either of the parties to the CBA
refuses to submit to voluntary arbitration.

This term includes a panel of Voluntary Arbitrators.1

Based on the above definition, Voluntary Arbitrators may be classified

into two (2) kinds, namely:

(1) “Permanent Arbitrator" referring to the Voluntary Arbitrator specifically

named or designated in the CBA by die parties as their Voluntary
Arbitrator; and
(2) “Ad-H oc Arbitrator" referring to the Voluntary Arbitrator chosen by the
parties in accordance with the established procedure in the CBA or the
one appointed by the NCMB in case there is failure in the selection or
in case either of the parties to the CBA refuses to submit to voluntary
arbitration.2

3. N O SPECIFIC N U M BER O F VOLUNTARY ARBITRATORS.

Article 273 [260] does not specify the number of Voluntary Arbitrators
that should take cognizance o f a case. However, under die N CM B Revised Procedural
Guidelines? it is provided that if die CBA does not specify die number o f Voluntary
Arbitrators, the case should be heard and resolved by a sole Voluntary Arbitrator,
unless die parties agree otherwise. In effect, the parties are afforded the latitude to
decide for themselves die number ofVoluntary Arbitrators as they find appropriate
to a particular situation.4

200^; See £&oArfcfe 212(n), L2borCode; SecSon1, Rule I, Book V, Rules to knptemerthe LaborCode, as amerxled by
Department Older No. 4003, Safes of 2003, [Feb. 17,2003; Secfion 1 p7], Ride 111, NCMB Manual of Rocedures fer
Gondiate andftevenSve Mediate Cases.
1 Sec&n1 NO® Revised PioxduralGudefiriesnlie Conduct of Vo!u^A rt*atoProoeetJngspc^
15,2004).
3 See Secte 3, Rile W, NO© Revised Prtxsechiral GiddeEnes in 9ie Conduct ofVbluntaeyAd>itra6onPRioee(fings.issue(f
onOctober 15,2004.
4 Cater Relheiy EmployeesAssociate (CREAJv. Mantes,G.R. No. 123782, Sept 18,1997,279SCRA218.

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 984 Bar Reviewer on Labor u w

2.
JURISDICTION

1. ORIGINAL AND EXCLUSIVE JURISDICTION.

The Voluntary Arbitrator or panel of Voluntary 'Arbitrators shall have

exclusive and original jurisdiction over the following cases:

(1) Unresolvedgrievances arising from the interpretation or implementation

of the collective bargaining agreement (CBA).1
(2) Unresolvedgrievances arising from the interpretation or enforcement of
company personnel policies.2
(3) Violations of the CBA which are not gross in character.3
(4) Other labor disputes, including unfair labor practices and bargaining
deadlocks, upon agreement o f the parties.4
(5) National interest cases3
(6) Wage distortion issues arising from the application of any wage
orders in organized establishments.4
(7) Unresolved grievances arising from the interpretation and
implementation of the Productivity Incentive Programs under RA.
No. 6971.7

I.
JURISDICTION OVER UNRESOLVED GRIEVANCES

1. UNRESOLVED GRIEVANCES.

As to what is meant by the term "unresolved” grievance, both Articles 273

(260] and 274 [261] are silent on this point They do not require that a "decision" o t
"resolution" be made or rendered or an action be taken on the grievance before it
„ may be considered as '!unresolved." The grievance that would necessitate its

’ AsprovidedinArtcte274 P61). LaborCode; No. 44. hO ® PrimeronGrievanoeMaciunetyandVoluntasyAibSmtioo.

2 HU.
3 Pef Article 274 [2611 the tarn ‘gross* viotafion d fte C8A means flagrant andfcr maBdous reteal to comply wflh the
economicprovisionsofhereof.
4 See Article 275 (2621, Labor Code. Under hs provision, aS other tabor tfsputes, induing unfair labor pracfices aid

atsoN0.44.NC\BPitneranGdevan»MachtneryandVDkmta(yArbSrsSoa
6 RA. No. No. 6727 enacted on July 7,1989 also expanded lie jufafic&n ofvt&nbiy atitrafion to include a! unresofved
v^(fe^(3sesasaresiaoJ^appa^ofv^<rtas^tjyanyRegionalTtbartteV^arUftaM ^
Boanlinestai)Ssl)me(tevil)emtierelsafledNebaQarAiga9eememorrBOc^tiaB(llaborunion.Seeal9oNn.44,(CM 8
PitoxmGfemieUetttoay
1 Otiawise know as te ■ProducSvfy Incentives Act of 1990" enacted on November 22,1990. Tbs law expanded the
juris&ion ot voluntary art&aSon to include a] unresolved (Gsputes. grievances or other mates arising fom he
Me(pfetatknartemtplernenta^<rfa|xodUcth^irioe(tS^ptO9rOT«IMrennain5unrasoMBd«4^teen^(20)caiendar
days ftom the Sene of the sdwteion to febor-management eamfltee. See riso No. 44, NCW8 Primer on Grievance
f^crtneryandVofcnta^ArtjeraSm

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JURISDICTION AND REUEFS

elevation to a Voluntary Arbitrator or panel o f Voluntary A rbitrators for

adjudication and resolution may be treated as “unresolved"]n either of two (2) senses,
namely:
(1) A decision or resolution was rendered thereon through the various
steps o f the grievance machinery and either or both parties is/are not
satisfied therewith; or
(2) No action at all was taken thereon within die period of seven (7) days
from its submission for resolution to the last step of the grievance
machinery;

Within said seven (7) days, the law1 requires that the grievance be
“automatically referred to voluntary arbitration.” It is thus dear that the said
period should be reckoned not from the date o f the issuance of any dedsion or
resolution on the grievance, or mote accurately, from the receipt of a copy o f the
dedsion or resolution by the parties to the grievance but from the date the
grievance is submitted for resolution to the last step of the grievance machinery.
No other condusion can be drawn from the dear provision of Ardde 273 [260]
except that whether or not a decision or resolution is issued therein, the said period
starts to run from the date of submission for resolution of the grievance to die last
step of the grievance machinery prescribed in the CBA and not from the date a
dedsion or resolution is rendered by and through the grievance machinery.

2. PROCEDURE IN SUBMITTING UNRESOLVED GRIEVANCES T O

VOLUNTARY ARBITRATION.

When a grievance remains unresolved, either party may serve notice upon
die other o f its decision to submit the issue to voluntary arbitration. The notice
should state the issue or issues to be arbitrated and a copy thereof should be
furnished to the NCMB or the Voluntary Arbitrator or Pand of Voluntary
Arbitrators named or designated in the CBA.

If the party upon whom the notice is served fails or refuses to respond
favorably within seven (!) calendar days from receipt thereof, the Voluntary
Arbitrator or Panel of Voluntary Arbitrators designated in die CBA should
commence voluntary arbitration proceedings. Where the CBA does not so
designate the particular Voluntary Arbitrator, die NCMB is mandated to call the
parties and appoint a Voluntary Arbitrator or Panel of Voluntary Arbitrators who
shall thereafter commence arbitration proceedings.

In instances where the parties failed to select a Voluntary Arbitrator or

Panel of Voluntary Arbitrators, the regional branch of die NCMB shall designate
the Voluntary Arbitrator or Panel of Voluntary Arbitrators as may be necessary,

' M fe 273 {260&LaborCode.

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 986 Bar Reviewer on Labor Law

which designation shall have the same force and effect as if the parties have
selected the Voluntary Arbitrator or Panel of Voluntary Arbitrators themselves.*1
3. ELEVATION OF GRIEVANCE DIRECTLY T O VOLUNTARY
ARBITRATION WITHOUT PASSING TH RO U G H GRIEVANCE
MACHINERY.

The elevation of a grievable issue directly to voluntary arbitration without

coursing it through the grievance machinery appears to be proscribed by the Labor
Code which directs the parties to a CBA to establish a grievance machinery for the
adjustment and resolution of grievances prior to their elevation to voluntary
arbitration which is considered the last step in the grievance procedure. In view,
however, of the State policy to encourage voluntary arbitration of labor-
management disputes, it is submitted that a grievance may be brought directly to
voluntary arbitration without passing through the grievance machinery, especially
when the latter has been proven to be ineffective in the past, or when the parties
inadvertently failed to include a grievance machinery provision in their CBA.2

In Centred Pangasinan Electric Cooperative, Inc. v. Macamegp the parties

voluntarily agreed to submit the issue of illegal dismissal for voluntary arbitration
without passing through the grievance machinery. The Supreme Court ruled that
the parties’ active participation in the voluntary arbitration proceedings, and their
failure to insist that the case be remanded to die grievance machinery shows a dear
intention on their part to have die issue of respondents* illegal dismissal direcdy
resolved by the Voluntary Arbitrator. The Court, therefore, found it unnecessary
to rule on the matter in light of their preference to bring the illegal dismissal
dispute to voluntary arbitration without passing through the grievance machinery.

4. PARTY NOT ALLOWED TO GO DIRECTLY TO COURT IN

DISREGARD OF VOLUNTARY ARBITRATION AFTER DECISION
•* BY GRIEVANCE COMMITTEE.
It is setded that when parties have validly agreed on a procedure for
resolving grievances and to submit a dispute to voluntary arbitration, then that
procedure should be stricdy observed.4
Moreover, “before a party is allowed to seek the intervention of die court,
it is a precondition that he should have availed of all the means o f administrative
processes afforded him. Hence, if a remedy within die administrative machinery
can still be resorted to by giving the administrative officer concerned every
opportunity to decide on a matter that comes within his jurisdiction^ then] such
remedy should be exhausted first before the court’s judicial power can be sought.
The premature invocation of [the] court’s judicial intervention is fatal to one’s

1 Sec&m3.I^XIX.BookV.NCMBReMsedProceduralGinddnesh1heConductorVo)untaryArbitiH6onPiPooeedings.
» N0.47.Wd.
1 G.R No. 145800,Jan. 22,2003.
< Vtorov. CA.G.R. No 138938,Oct24,2000,344SCRA268,281.

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JU R IS D IC T I O N A N D R ELIEFS

cause of action."1 Indeed, the underlying principle of the rule on exhaustion of

administrative remedies tests on the presumption that when the administrative
body, or grievance machinery, is afforded a chance to pass upon the matter, it will
decide the same correctly.2*
The case of OctavuP presents the classic example of an employee who
brought a grievable issue for adjudication by the Grievance Committee but who,
instead of submitting the issue for voluntary arbitration after the Grievance
Committee resolved it against him, filed a case raising the same issue with the
Labor Arbiter. Petitioner here raised before respondent’s UnionrManagement
Grievance Committee the determination o f his salary increases as provided in the
CBAs. Thus, his case involves die proper interpretation and implementation o f die
pertinent provisions of the CBAs. And in accordance with the procedure
prescribed therein, the said committee made up of representatives o f both the
SEBA and the management convened. Unfortunately, it failed to teach an
agreement Petitioner’s recourse pursuant to the CBA was to elevate his grievance
to the Board of Arbitrators for final decision. Instead, nine (9) months later, he
filed a complaint before the Labor Arbiter. Holding that petitioner Octavio’s
recourse to the labor tribunals (Labor Arbiter and NLRQ below as well as to the
CA, and, finally, to die Supreme Court, must fail, die Hjgjh Court pronounced as
follows:
“By failing to question the Committee Resolution through
the proper procedure prescribed in die CBA, that is, by raising the
same before a Board of Arbitrators, Octavio is deemed to have waived
his right to question die same. Qeady, he departed from the grievance
procedure mandated in the CBA and denied the Board of Arbitrators
the opportunity to pass upon a matter over which it has jurisdiction.
Hence, and as correcdy held by the CA, Octavio’s failure to assail the
validity and enforceability of the Committee Resolution makes the
same binding upon him. On this score alone, Octavio’s recourse to the
labor tribunals below, as well as to the CA, and, finally, to this Court,
must therefore fail.”

II.
JURISDICTION OVER VIOLATION OP CBA

1. SIMPLE VS. GROSS VIOLATION O F CBA

Paragraph ® of Article 259 [248]4 o f the Labor Code mentions violation

of a CBA by the employer as a form o f ULP. Similarly, paragraph (f) of Article 260

’ Diokno v. Cacdac. G A No. 168475. July 4.2007,526 9CRA 440,458; Metro Dreg Distribution. Inc. v. Metro Dreg
Qxixxafim EmployeesAssodaliixvFFW, G A No. 142666. Sept 26.2005,508 PM. 47.60.
’ Rizal Security & Protective Savices, he. v. Maraan, G A No. 124915, Feb. 18.2008,546 SCRA 23.40; Proviwe d
ZamboangaDel Nortev. CA. G.R. No. 109853, Oct 11,2000,396 Phi 709,720.
5 Octaviov. PhSppineLong DistanceTelephoneCompany, GA No.175492, Feb. 27,2013.
4 Entitled Unfair LaborPracfces of Employers.

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 988 Bar Reviewer on Labor Law

[249]1 thereof considers violation o f a CBA by die labor organization as ULP.

These provisions, however, have been qualified by Article 274 [261]* in that
“violations of a Collective Baigaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under die CBA. For purposes o f this article, “gross violation" o t CBA shall
mean flagrant and/or malicious refusal to comply with the economic provisions of
such agreement”
In other words, (1) ordinary violation of a CBA which involves non­
economic provisions thereof; and (2) violation of its economic provisions
which is not gross in character, are no longer treated as ULP. Consequently,
they should be resolved as ordinary grievances or grievable issues properly
cognizable under the grievance machinery and voluntary arbitration provisions of a
CBA.
Only gross violation of a CBA as defined in Article 274 [261] is
considered ULP, in which case, the jurisdiction thereover belongs to the Labor
Arbiter under Article 224(a) [217(a)] of the Labor Code. If not gross in nature, the
same shall be treated as a grievable issue properly to be adjudicated under the
Grievance Machinery3 and, if unresolved, through the process o f voluntary
arbitration.4
III.
JURISDICTION OVER OTHER LABOR DISPUTES

1. ALL KINDS OF DISPUTE ARE ARBITRABLE.

Under Article 275 [262] o f the Labor Code, upon agreement o f the
parties, the Voluntary Arbitrator or panel o f Voluntary Arbitrators may also hear
and deride all other labor disputes, including unfair labor practices and
bargaining deadlocks. Fox this purpose, before or at any stage o f die compulsory
arbitration process, parties to a labor dispute may agree to submit their case to
voluntary arbitration.5

IV.
JURISDICTION OVER NATIONAL INTEREST CASES

1. SUBMISSION TO VOLUNTARY ARBITRATION AT ANY STAGE.

Article 278(g) [263(g)] of the Labor Code which involves the DOLE
Secretary’s power of assumption of jurisdiction or certification to the NLRC for

' EntitledUri^LaborPlmdicesofUborOtgariz^ORs.
* Jurts<fcSonafVblijraaryArtA3torsorPaneiofVc8un6aryArbaratDfs.
3 UnderArficte273(260),LaborCode
< UnderArticle274(281], Md.
5 See alsoSection4, Rule XIX, Book V, Rules tolmpiement the LaborCode, as amended by Department Order No. 40413.
Series of 2003, (Feb. 17,2003]; Section 2, Rule IV, Revised Procedural GudeSnes in the Conduct of Voturttaiy
Arbib^ionProceedings (OcL15,2004).

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 Chapter Eight 989
JU R IS D IC T IO N A N D R ELIEFS

compulsory arbitration of labor disputes affecting industries indispensable to the

national interest, also provides that “[b]efore or at any stage of the compulsory
arbitration process, die patties may opt to submit their dispute to voluntary
arbitration.” This means that even if the case has already been assumed by the
DOLE Secretary or certified to die NLRC for compulsory arbitration, or even
during its pendency thereof the parties thereto may still withdraw the case from
die DOLE Secretary or NLRC, as die case may be, and submit it to a Voluntary
Arbitrator for voluntary arbitration purposes.
Consequendy, once submitted for voluntary arbitration, it is the Voluntary
Arbitrator who is now mandated to resolve the dispute. His decision rendered
therein shall be final and executory ten (10) calendar days after receipt thereof by
die parties.1

V.
JURISDICTION OVER WAGE DISTORTION CASES

L JURISD ICTION D EPEN D S O N W H E T H E R T H E

ESTABLISHMENT IS ORGANIZE D O R U N ORGANIZ E D -

In orvamgA establishments, the employer and die SEBA axe required to

negotiate to correct die wage distortion. Any dispute arising from such wage
distortion should be resolved through the grievance procedure under the CBA and
if it remains unresolved, through voluntary arbitration.2

In unorvamwd establishments where there ate no CBAs or certified

SEBAs, the employer and the workers should endeavor to correct such distortion
among themselves. It is required that any dispute arising therefrom should be
setded through the NCMB and if it remains unresolved after ten (10) calendar days
of conciliation, it should be referred to a Labor Arbiter in the appropriate branch
of the NLRC. It is mandatory for the Labor. Arbiter to conduct continuous
hearings and decide the dispute within twenty (20) calendar days from the time said
dispute is submitted to him for compulsory arbitration.3

VI.
JURISDICTION OVER DISPUTES INVOLVING
THE PRODUCTIVITY INCENTIVES PROGRAM

Disputes and grievances arising from the interpretation or implementation

o f the productivity incentives program under R~A. No. 69714 should first be

« Article278(g) (2636)}], LaborGode.

2 Article 124, Labor Code, as amended by Section 3, RA No. 6727; Section 7, Chapter it, Implementing Rules of RA No.
6727; Section 1, Rule VII, Rides of Prooodue on Mrdmum Wage Fodng issued by the NaSon^ Wages and Productivity
CcnrosfcnonM June 1990.
3 ML; IL; 11; Id.
4 OlheMi%lgmffl8lhe?RxJuc6fylncen&reArtrf1990.‘ ttr a

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 990 Bar Reviewer on Labor Law

submitted to the Labor-Management Committee for resolution. If they remain

unresolved within twenty (20) calendar days from the time of their submission to
said Committee, the same should be submitted for voluntary arbitration in line
with the pertinent provisions of the Labor Code. Under this law, the productivity
incentives program is required to designate and include the names of the Voluntary
Arbitrators or panel of Voluntary Arbitrators who were previously chosen and
agreed upon by the Labor-Management Committee.1

VII.
SOME PRINCIPLES ON JURISDICTION

1. IMPORTANT TENETS.
1) Resort to voluntary arbitration from grievance machinery is in the
nature of appeaL - Article 274 (261] describes die nature o f the
jurisdiction of Voluntary Arbitrators or panel o f Voluntary Arbitrators as
“original and exclusive" when they exercise their power to hear and decide
"unresolved" grievances which are elevated to them after the process o f the
grievance machinery proved unsuccessful In reality, the exercise of such
power vested upon them is appellate in nature as may be cleady gleaned
from the provisions of Article 273 (260], in relation to Article 274 [261],
that all grievances which are not settled or resolved within seven (7)
calendar days from the date of their submission for resolution to the last
step of the grievance machinery shall automatically lx reftm d to voluntary
arbitration presctibed in the CBA.2
2) Only grievances that ate “u n reso lved ” by the grievance machinery
fall under the “origin al a n d e x clu sive” jurisdiction of die Voluntary
Arbitrators or panel of Voluntary Arbitrators. If a grievance therefore
has not been submined at the first instance to die grievance machinery, the
Voluntary Arbitrators or panel of Voluntary Arbitrators do not have
jurisdiction to hear and decide it Bring mandated by law3*5to hear and
decide grievances at die first instance, it is the grievance machinery which is
in actuality, exercising *1original and exclusive” jurisdiction over die same and
not die Voluntary Arbitrators or panel of Voluntary Arbitrators who may
only validly acquire jurisdiction over them if they are “not setded or
resolved within seven (7) calendar days from die date of the submission for
resolution to the last step o f die grievance machinery.” Prior to the
completion of the grievance procedure or grievance machinery, the

1 Sec6on4 p>]and9, RA No. 6971;Secfcn3fo]lRUtel.andSec6on3[el.RutetV,Ru!eslmpiemen&igRA.No.6971.

2 See Article 273 [260], Labor Code; Secfion 4, Rite XIX, Book V, Rides to Implement the Labor Code, as amended by
Departed Order No.4003, Series of2003. (Feb.17,200$ SecBon 1, Rule IV. NCMB Revised Procedural GuifeEnes h
tieConductofVolunAavAjtiba6onProoee(£ngspCL15,2004).
5 Article273 (260)of8ie laborCode.

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 C hatter . Eig h t 99*
JU R IS D IC T IO N a n d RELIEFS

grievance cannot “automatically be referred to voluntary arbitration

prescribed in die CBA.”
3) Cases cognizable by Voluntary Arbitrators in their original
jurisdiction b u t filed with Labor Arbiters,1 D O L E Regional Offices2
or NCMB3 should be disposed of by referring them to the Voluntary
Arbitrators or panel of Voluntary Arbitrators mutually chosen by the
parties.4
4) Cases cognizable by Voluntary Arbitrators b u t filed with regular
courts should be d ism issed - The case o f Union o f Nestle Workers Cagayan
de O n Factory v. N estle Philippines, Inc,5presents a unique situation where the
union filed an injunction case (with prayer for the issuance o f a temporary
restraining order) with the Regional Trial Court (RTC) against the
employer to prohibit the implementation of die 'Drug Abuse JV&y” which
requires die conduct o f simultaneous drug tests on all employees from
different factories and plants in keeping with the government's thrust to
eradicate the proliferation o f drug abuse. The company asserts that it has
die right: (a) to ensure that its employees are of sound physical and mental
health, and (b) to terminate the services o f an employee who refuses to
undergo the drug test The union challenged the validity o f die
implementation o f die said policy and branded it as a mete subterfuge to
defeat the employees' constitutional rights. In affirming the ruling of the
RTC and Court o f Appeals dismissing the complaint, the Supreme Court
ruled that said policy is in the nature of a “company personnel pokey” and
therefore any issue pertaining thereto falls under the jurisdiction of the
Voluntary Arbitrators or panel of Voluntary Arbitrators, not the RTC,
under Article 274 [261] of the Labor Code.

1 Paragraph 2, 274 [261Jothe Code,as amendedtyR A N a 6715 and impfernented by Departnert Order No.
40-03; See also Section 1, Rule IV, NCK© Revised Procedural GuSdeEnes in the Conduct of Vb&mJary MMon
Proceecfngs [Oct 15,2004]. This prooeAra of requiring r^en^ of the issue to the grievafy» madunery and voluntary
art*afon is also enunciated under the last paragraph of Arfcfe 224 p17j which states that XBases arising ftom he
interpretaSionorirrplemerAaSonofooQecSvebaqpairingagieemerbandSwsesal^ngfomlheintBiprelaSQnorenSorcement
of company personnel poGries shall be disposed of by he LaborArbiter by referring the same to he grievance machhoy
andtmiunt^artiaraSonasmaybeprawidedkisaadagreemenlsJ*
* Paragraph 2, Article274 (2 6 1 J ,l^ Code;Secfcn 4, Rule XIX, BookV.Rulestolnptenwttte Lata Code, as amended
by Department OttJer No. 40-03, Series of2003, [Feb. 17,2003]. The Regional Otrectors of the Department of Labor and
Employment are not adowod to entertain disputes, grievances ormatters faSng underthe exdusivs and originaljurisdiction
of theVohattaryArbitratorsorpanelofVoluntsyAtitabrs andftey are legufed toimmerfialefydsposeand referthesame
tothe apprcpriategrievancemachhay orvObitay arbitrationpraridedin he C8A.
3 See Sections 4 and 6[aj & |b], Ride V, NCMB Manual of Proceduresfor ConcSaSon and Preventive Mcc£35on Cases. In
casesvtere unresolved grievances are raised in noticesof strikesand lockoutsbeing handled by Coocfistors-MecfstDrs of
(he NCf*©, the samesfmuU immecSatety be (^ared to a VokmtaryArti&^or mutiaSy accepted by the parties frem the Bst
ofNCMBAoaaStedVoSuntaryAjbitratorsforappnDprtateacSoa
4 See paragraph 2, Aitide Z74 [261) cJ the Labor Code, as amended by RA No. 6715 and rnptemertfid by Department
OrderNa 4003; See atsoSecfion1,RutelV.N(>« RevisedRocedurafQAWneshhe Conductof VotunbryAibftadon
Rowings (Oct 15.20041
* GANo. 148303,Oct 17.2002.

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 992 Bar reviewer on Labor law

5) The well-entrenched rule is that when a case does not involve the
parties to a CBA - the employer and the SEBA - it is not subject to
voluntary arbitration. While individual or group of employees, without
the participation of die SEBA, are granted the right to bring grievance
direcdy to the employer, they cannot submit the same grievance, if
unresolved by the employer, for voluntary arbitration without the SEBA’s
approval and participation. The reason is that it is the SEBA which is the
party to the CBA, and not the individual or group of employees. This rule
was lately affirmed in Tabigue v. International Copra Export Corporation}
Pursuant to Article 273 [260] of the Labor Code, it is required that the
parties to a CBA shall name or designate their respective representatives to
the grievance machinery and if the grievance is unsetded in that level, it
shall automatically be referred to the voluntary arbitrators so designated in
advance by the parties to the CBA. Consequendy only disputes
involving the union and the company shall be tefetred to the
grievance machinery or voluntary arbitrators.”
The prominence of this rule is highlighted in termination disputes where
the SEBA is not named a party to the illegal dismissal suit either because it
failed to object to the dismissal of the employee or the suit was initiated by
the employee alone, without the assistance o f the SEBA. Thus, in a number
of cases,2 the Voluntary Arbitrator was held not to have any jurisdiction
thereover because the SEBA did not come into the picture, not having
objected or voiced any dissent to die dismissal of the employees. It is
obvious that arbitration, without die SEBA’s active participation on behalf
of the dismissed employees, would be pointless or even prejudicial to their
cause.

3.
PROCEDURES

1. HOW VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.

The Voluntary Arbitrator or panel o f Voluntary Arbitrators shall exercise
jurisdiction over a specific case only upon receipt of the following:
(1) Submission Agreement duly signed by both parties; or
(2) Demand or Notice to Arbitrate when there is refusal to arbitrate by
onepatty, or
(3) Appointment or designation as Voluntary Arbitrator by the NCMB
(Board) in either of the following circumstances:

' GRNo.183335.Oec.23.2009.
’ Such as (be casesof Mmja v. NIRC, G.R. NO. 124013, June 5,1998,290 SCRA 603; Pantranco Norffi Express, Inc. v.
NLRC.GR No. 95940, JuV24,1996; andAlas Farms, he. v. NLRC.GR. No. 142244, Nov. 18,2002.

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 Chapter Eight 993
JU R IS D IC T IO N A N D R E L IE FS

(a) In the event that the patties failed to select a Voluntary Arbitrator;
or
(b) In the absence of a named Voluntary Arbitrator in the CBA and
the party upon whom the Notice to Arbitrate is served does not
favorably reply within seven (7) days from receipt of such notice.1

2. SUBMISSION AGREEMENT.

A “Submission Agreement' refers to a written agreement by the parties

submitting their case for arbitration, containing a statement of the issues, the name
of their chosen Voluntary Arbitrator and a stipulation and an undertaking to abide
by and comply with the resolution that may be rendered therein, including the cost
of arbitxatioa23The Submission Agreement should contain, among others, the
following stipulations:

(1) An agreement to submit the case to arbitration;

(2) The specific issue/s to be arbitrated;
(3) The name/s of the Voluntary Arbitrator or panel of Voluntary
Arbitrators;
(4) The names, addresses and contact numbers of the parties;
(5) The agreement to perform or abide try die decision that may be
rendered therein by die Voluntary Arbitrator or panel of Voluntary
Arbitrators.5

3. N O TIC E T O ARBITRATE.

A "Notue to Arbitrate” refers to a formal demand made by one party to the

other for die arbitration o f a particular dispute in die event of refusal by one party
in a CBA to submit die same to arbitration.4

If after exhausting the grievance procedure, the grievance remains

unresolved and one patty re fu se s to submit the same to voluntary arbitration, die
M owing procedure should be observed:

(1) A Notice to Arbitrate should be served upon the refusing or

unwilling party, copy furnished die permanent Voluntary Arbitrator,
if one is named in the CBA, and the NCMB Regional Branch having
jurisdiction over the workplace;

' Section 4, Rife IV, NCMB Revised Procedural Guide&ies in fhe Conduct of Voluntay AifcHrafion Proceedings [Oct 15,
200^No.S4,NC^PmiermGhaQn(»Machine(yandVQtijntaryAibitiaSon.
2 Section 10, Rule II, NOffi Revised Procedural Guidelines in the Conduct of Voluntary Alteration Proceerfings p e t 15,
2004).
3 Section5, RuleIV, Ibid.
4 Section IQ, Rule II. NCM8Revised Prooechoal Otiidelhes kt Oia Conduct of Vbkmtaiy Aibilralion Prooeofing^ [Oct 15.
2004].

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 994 Bar reviewer on Labor Law

(2) After the lapse of the 7-day period within which to respond to the
Notice to Arbitrate, the permanent Voluntary Arbitrator shall
immediately commence die arbitration proceedings;

(3) In the absence of a permanent Voluntary Arbitrator named in the

CBA, the NCMB shall appoint a Voluntary Arbitrator who shall
immediately commence the arbitration proceedings upon receipt of
such appointment.1

The Nodce to Arbitrate should contain, among others, the following:

(1) The names, addresses and contact numbers of the party upon whom
the notice is made;
(2) The arbitration clause of the CBA;
(3) The specific issue/s or dispute/s to be arbitrated;
(4) The relief sought; and
(5) The name, address and contact numbers of the party initiating or
requesting the arbitration.2

4. SUBMISSION AGREEMENT VS. N O TICE TO ARBITRATE.

“Submission Agreement' is sometimes called a “stipulation or an “agreement to

arbitrate.” It is used where there is no previous agreement to arbitrate. The
submission agreement which must be signed by both parties, describes an existing
dispute. It often names the arbitrator, prescribes the procedure in the hearing and
sometimes contains considerable details of the arbitrator’s authority and other
matters which the parties wish to control.

However, a “Demand” o t a “Notice of Intent to Arbitrate” or simply a 'Notice

to Arbitrate,” is used more in instances where there is an arbitration clause in the
CBA which, under die law, is required to provide for a grievance procedure and a
voluntary arbitration clause with respect to disputes arising from die application or
. interpretation of the CBA or the interpretadon or enforcement o f company
personnel policies. Thus, it is perfecdy valid to stipulate in the CBA on an
“agreement to arbitnati’ future disputes that may arise under and during die term
thereof If a dispute is covered by such an arbitration clause, arbitration may be
initiated unilaterally by one party by serving aipon'the other a written demand or
notice of intent to arbitrate.3 Sometimes, both the Submission Ageem ent and die
Notice to Arbitrate are used interchangeably.4 Parties to a case may still choose to
execute a submission agreement even if there is already an arbitration clause in the
CBA.3

’ Section6. Rule IV, Bad.

’ Sec6on7.RuleiV.Ebii
3 No.55.Ud.
4 No.54.Ud.
3 tntemafional ShoeCo., 21 LA550,550-551. Roder, 1953.

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5. PROCEDURES AS PRESCRIBED IN T H E LAW.

Article 276 [262-A] of the Labor Code prescribes the following:
“Article 276 [262-A]. Procedures. - The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have the power to hold hearings, receive
evidences and take whatever action is necessary to resolve the issue or issues
subject o f the dispute, including efforts to effect a voluntary settlement
between parties.
“All parties to the dispute shall be entided to attend the arbitration
proceedings. The attendance o f any third party or the exclusion of any
witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned for
cause or upon agreement by the parties.
“Unless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel o f Voluntary Arbitrators to render an award or
decision within twenty (20) calendar days from the date of submission o f the
dispute to voluntary arbitration.
‘T h e award o r decision o f the Voluntary Arbitrator or panel o f
Voluntary Arbitrators shall contain the facts and the law on which it is based.
It shall be final and executory after ten (10) calendar days from receipt of the
copy o f the award o r decision by the parties.
“Upon motion o f any interested party, the Voluntary Arbitrator or
panel o f Voluntary Arbitrators or the Labor Arbiter in the region where the
movant resides, in case o f the absence or incapacity o f die Voluntary
Arbitrator or panel o f Voluntary Arbitrators, for any reason, may issue a writ
of execution requiring either the sheriff o f the Commission or regular courts
or any public official whom the parties may designate in the submission
agreement to execute the final decision, order or award.”1
6. NATURE O F PROCEEDINGS.
The proceedings before a Voluntary Arbitrator are non-lidgious in nature.
They are not governed by technical rules applicable to court or judicial proceedings
but they must, at all times, comply with the requirements of due process.2
7. ARBITRATION PROCEDURES.
As a general rule, die rules governing die proceedings before a Voluntary
Arbitrator or panel of Voluntary Arbitrators am subject to legal requirements,3
agreement among die parties4 to a labor dispute and their chosen Arbitrator. In the
absence of any agreement on any o f the various aspects of the voluntary arbitration
proceedings, die pertinent provisions of the 2004 N CM B Revised Procedural Guidelines

' AsincwpofatedbySec6oo26.RANo.6715.March21.1989.
2 Section 1. Rub VI. Bfti .
3 Sudiasthosepre6cadbeduncferRA.Nb.6715anda5lmplemen6ngRuteSw
* Suchas the CBAandofter relevant agreements.

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in the Conduct of Voluntary Arbitration Proceedings1 and the Revised Rules o f Court shall
apply by analogy or in a directory or suppletory character and effect2
8. LIBERAL CONSTRUCTION OF PROCEDURAL RULES.
The said Guidelines should be liberally construed to carry out the objectives
of the Labor Code, to promote voluntary arbitration as a preferred mode o f labor
or industrial dispute settlement and as an integral component o f die collective
bargaining process.3
9. REVISED EXPEDITED PROCEDURES.
In accordance with the State policy of promoting the expeditious
setdement of labor disputes and as a response to concerns over delays in case
disposition, the Tripartite Voluntary Arbitration Advisory Council (TVAAQ
passed several Resolutions4 on expedited procedures in voluntary arbitration
proceedings. The procedures apply to all voluntary arbitration cases handled by a
Voluntary Arbitrator involving simple issue/s where hearings, reception of
evidence, submission of post heating briefs/position papers, if necessary, and
promulgation of decision can be completed within twenty (20) calendar days from
submission of the case to the arbitrator. However, this procedure does not apply
to uses falling under the Free Legal Aid and Voluntary Arbitration Services
(FLAVAS) program.
10. CONTROL OF ARBITRATION PROCEEDINGS.
It is generally accepted that the conduct of arbitration proceedings is
under the jurisdiction and control o f the Voluntary Arbitrator subject to such rules
of procedures that the parties may jointly prescribe or those which appropriate
agencies like the NCMB may legally require.5
11. RELIEFS AND REMEDIES.
Besides the procedural remedies discussed above, the Voluntary
Arbitrator or panel of Voluntary Arbitrators may grant the saime reliefs and
remedies granted by Labor Arbiters under Article 294 [279] of the Labor Code,
such as reinstatement; separation pay in lieu of reinstatement, in case reinstatement
becomes impossible, non-feasible or impractical; full backwages; monetary awards,
moral and exemplary damages and attorney’s fees.

' The NCMB Revised Procedural Guidefaes in fte Conduct of Vokntay Arbitration Proceetings was adopted and
parndgated on October 15.2004, pusuantto te mandateof fe NCMBunderBtecuftra OrderNa 126, as amended by
Executve Order. No. 251, and in order to implement Artcies 273 PBO] to 2771262-B] of the Lrfxx Code, as amended by
RA. No. 6715 as wel as R$implemenfing (lies vtah were Hitheramended by DepartmentOlderNa 4003; See also No.
52,NCMBPrirnerm&ievanaMad^and\Aiw^Ait)ara5on
2 Section3.Rulel,NCMBRovi9edPiooeduF3lGui(leBriesinAeCondtictofVcAiRbyArt)tfra6anProoeedingsEOct 15,2004].
3 Section2. Rule I, Ibid.
4 Suchas Resolubm Nat.S^oi 1995[August11,1995Jpiomu^ati^ theExpectedProcedures(drVoiuntayAiUrafion
ofLabor OispuGes. TWswas Bar superceded by ResoMon No. 1, Series of 1997 (Janoy 06,19971 andsubsequently
ResolutionNo. 2, Seriesof1999 (November 15,1999J.
5 fo.53.MM)f^mGrievanaMacttineiyandVoluria^

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JU R IS D IC T IO N A N D R H J E F S

J.
PRESCRIPTION OF ACTIONS1
1. MONEY CLAIMS.

The prescriptive period o f money claims and benefits arising from

employer-employee relationship is three (3) years under Article 306 [291] of the
Labor Code, reckoned from the time the cause of action accrued; otherwise, they
shall be forever barred.2

Money claims under Artide 306 [291] include those anting from:

1) Law,
2) CBA.3
3) Incremental proceeds from tuition increases.4
4) Overseas employment o f OFWs.5
As far as No. 4 above is concerned, the Court, in Southeastern Shipping ».
Navam i, Jr.,6 declared as null and void the 1-year prescriptive period in Section 28
of the POEA Standard Employment Contract (SEC) because it is Article 306 [291]
of die Labor Code which is the law governing the prescription of money claims of
OFWs, including those asserted by seafarers. This law prevails over said Section
28.
2. ILLEGAL DISMISSAL.
The prescriptive period of illegal dismissal cases is four (4) years and not
three (3) years. The legal basis is not Article 306 [291] of the Labor Code but
Article 1146 o f the Gvil Code.7
The 3-year prescriptive period in Article 306 [291]8 solely applies to
money claims but not to illegal dismissal cases which are not in the nature of
money claims.

• Note must be made of he feet (hath boh Bte 2011 and 2012 sylsbifar labor law, only ttie presabSw periods of toe
Mowing arespetificafymentioned: ^ M o t^ d a ln ^ h fl^(fism iss 2taU r^labgprac 6oe;(j.OfefisespenaSzedby
fcelaborCodeand IRR issuedpusuartthereto* tothe 2013and 20*4 syfebi, here is nostoflarenumeration Hence,tie
prescript periodsin othercasesaredied in instant(Sscus^
2 Section I.Rute tl. BookVIl,RuiestolmptemerttheLaborCode;E. Ganzon, ina v.NLRC.GR No. 123769, Dec. 22,1999;
Surimav. NLRC, GJL Na 121147, June^ 1998.
2 Caddnv. POEA,G Jl Nos. 104776,104911-14end 105Q2M2, Dec.-35,1994.
4 Universityof Pangasinanv. Confesor, G R. No. 109977, Sept 5 ,19S7; Cebu hs&Jte ofTechnologyv. Ople, G Jl No.L-
58870,Aprii 15,1988,160SCRA503.
5 Degamo v. Avan£anfe Shipping Cotjx, G Jl No. 154460, New. 22,2005; Southeastern Shippmg v. Navarra, Jr., GJl No.
167678,Jur»22, 2(M0:Me(fiwltea 9eroertllmv.RoSWa1G Jl Ns. 168715, SepL 15,2010.
5 GJl No. 167678, June22,2010.
7 Cafentav. CarnationPhilippines, GJl No. 70615, Feb. 29,1986; See afeoPIDT v. Pingot, GJl No. 182622, Sept 8,2010;
Arcor Manufacturing, ho v. NLRC, G Jl No 117963, Feb. 11,1999; Prerriera Development Bank v. NLRC, GJl No.
114695,July23,1998; HagonoyRuralBarit, he v.MRC,GJl No. 122075,Jan 28,1998,285SCRA297.
1 Artide 306 [291]. MoneyClains.- Al mooeydaimsariang firm emptayer-emptayeeretafionsaccruing duringChe^PectMty
of Us Code shal be fled vdhh ffvee (3) years torn On Sne he cause of acton accrued; oihemise fay shaBbe forever
barrel

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3. UNFAIR LABOR PRACTICE (ULP).

The prescriptive period for criminal complaints involving ULPs is one (1)
year from the time the acts complained of were committed; otherwise, they shall be
forever barred1
However, before a criminal case for ULP can be 'filed with the
prosecutor's office, it is a pre-requisite that a labor case for ULP involving the same
set of facts should first be initiated with the competent labor court. It is only upon
a finding of guilt in the labor case and after the decision therein has become final
and executory that the one-year prescriptive period to prosecute the criminal aspect
of ULP starts to run. During the entire pendency of the labor case, die running of
the said one-year prescriptive period is interrupted.2 Final judgment is one that
finally disposes of the action or proceeding. For instance, if the remedy of appeal
is available but no appeal is made, then, the judgment is deemed final and
executory. If an appeal is made, then the final judgment rendered by the last
tribunal, say the Supreme Court, to which the case was elevated should be the
reckoning factor.
May the final decision in the labor case adjudging the respondent therein
guilty of ULP be presented as evidence of bis guilt in the criminal case? The answer
is in the negative for the simple reason that in the labor case, die quantum of
evidence used in arriving at the guilty ruling is merely substantial evidence while in
the criminal case, a higher degree of proof beyond reasonable doubt is required.
What then is the evidentiary value of such final adverse decision in die
labor case vis-a-vis the criminal case? Its only evidentiary or probative value is to
prove the fact of compliance with the condition sine qua non prescribed by law prior
to the filing of the criminal case, that nfinal judgment has been tendered in the
labor proceeding finding that a ULP act was in fact committed by die respondent
therein.3 Without compliance with said pre-requisite, no criminal case for ULP can
be propedy initiated.
4. OFFENSES UNDER T H E LABOR CODE.
*v
The prescriptive period of alTdriminal offenses penalized under the Labor
Code and its Implementing Rules is three (3) years from die time of commission
thereof.45Failure to initiate or file die criminal action or complaint within the

It must be emphasized that the act of die employer in dismissing an

employee without just or authorized cause, although a violation of the Labor Code

1 Paagraph2, Artjde305E29Q.L^orCode;Secfioo2,Rulell,BookVil,RutestDtmplementtheLaborCode.
1 W.
1 Id.
4 Article 305 (290). Offenses. - Offenses penalized under this Code and fte rules and regulations issued pursuant
thereto shall prescribe in three (3) years.
Al unfair labor practices arising from Book V shall be fited wth b>e appropriate agency within one (t) year from
accrual of such unfair labor practice; otherwise, they shall be forever barred.
5 See Article 305 (290]. Labor Code.

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JU R IS D IC T IO N A N D RELIEFS

and its implementing rules, does not amount to an “offettsi' as this term is
understood and contemplated under die Labor Code.1
5. ILLEGAL RECRUITMENT CASES.
The prescriptive period of simple illegal recruitment cases is five (5)
years.2
The prescriptive period of illegal recruitment cases involving economic
sabotage is twenty (20) years.3

oOo

1 See Article 305 [290] thereof; CaSantav. Cartaton PhSppines, Ina. GJL Na 70615, F^). 29,1986.
2 Section 12, RA No. 8042; See also Secfai 7, Rule IV, Omnfous Rides and Regi&fons tmplemen&ig the Mgrant
Waters and Overseas FEpinosAd of 1995, as Amendedby R. A. No. 10022 (March08.20tO).
J Id.; Id.

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