0% found this document useful (0 votes)

449 views179 pages

Labor Law

Uploaded by

Christine Rose Lagura

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

0% found this document useful (0 votes)

449 views179 pages

Labor Law

Uploaded by

Christine Rose Lagura

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

You are on page 1/ 179

LABOR LAW II | ATTY.

AZUCENA | BLOCK B2020| 1

LABOR LAW II BOOK REVIEWER

If they do register, certain rights that are legally demandable, such as the right to
bargain as a group. (micro-labor relations)
o Labor organizations must be democratically governed and free from
ATTY. AZUCENA employer’s interference. If the employer tries to interfere with the workers’
organizational rights, he commits “unfair labor practice” (ULP) which may
trigger a strike or other group action by employees.
BOOK FIVE o Macro-Labor Relations- these are labor relations at the national level
o Micro-Labor Relations- labor relations in an enterprise
• COLLECTIVE CONTRACT – Again to bargain with the employer, employees need to
Title I: POLICY AND DEFINITION unionize. While supervisors and rank-and-file employees may unionize separately,
managers cannot unionize to bargain with employer. A selection of one union as
Chapter I: POLICY representative is necessary because the employees need to speak as one voice. (If
there is union rivalry, it is resolved thru election with or without DOLE intervention)
ART. 218. [211] DECLARATION OF POLICY o After representative union is selected, the employer and employee
A. It is the policy of the State: negotiate on the contract called the CBA. The CBA negotiation should be
a. To promote and emphasize the primacy of free collective bargaining and expeditious and free. Such contract cannot violate law and legal
negotiations, including voluntary arbitration, mediation and conciliation, as modes standards are deemed written in the CBA. There after it is ratified by the
of settling labor or industrial disputes; employees and registered with DOLE. NOTE: Even if unregistered, it is still
b. To promote free trade unionism as an instrument for the enhancement of valid and binding between parties.
democracy and the promotion of social justice and development; • DISPUTE HANDLING - Grievance machinery or an in-house problem-solving structure
c. To foster the free and voluntary organization of a strong and united labor is requirement in CBAs. If this fails, parties are free to select any third party or a
movement; voluntary arbitrator to resolve their differences. Government intervention is resorted
d. To promote the enlightenment of workers concerning their rights and to only when parties fail to reach an agreement or when one disregards the defined
e. obligations as union members and as employees; rights of the other.
f. To provide an adequate administrative machinery for the expeditious • WORK STOPPAGE- known as “strike” by employees or “lockout” by the employer, is
g. settlement of labor or industrial disputes; not favored by law but it is recognized as a legal right strictly regulated as to its
h. To ensure a stable but dynamic and just industrial peace; and purpose and manner of doing it (e.g. no violence + other prohibitions). It is a
i. To ensure the participation of workers in decision and policy-making measure of last resort and can only be resorted to because of bargaining deadlock
j. processes affecting their rights, duties and welfare. or ULP by employer.
B. To encourage a truly democratic method of regulating the relations between the • PUBLIC INTEREST- When the dispute violates the rights of others or is accompanied by
employers and employees by means of agreements freely entered into through collective violence or other illegal acts, then the injunctive power of the State may be
bargaining, no court or administrative agency or official shall have the power to set or fix invoked. The Secretary or the President can assume jurisdiction (AJ) or certify the
wages, rates of pay, hours of work or other terms and conditions of employment, except as case to NLRC. The common good is paramount.
otherwise provided under this Code.
2. WORKERS’ ORGANIZATION
1. OVERVIEW AND VIEWPOINT • LABOR OR TRADE UNION - combination of workmen organized for the ultimate
• Labor legislation is divided into labor standards and labor relations. purpose of securing through united action the most favorable conditions as regards
o LABOR STANDARDS – minimum terms and conditions of employment to wages, hours of labor, conditions of employment, etc., for its members
which employees are legally entitled and with which employers must • In a popular sense, it is a completely organized body of dues-paying members,
comply. operating through elected officers and constituting a militant, vital and functioning
o LABOR RELATIONS – interactions between employer and employees or organ.
their representatives and the mechanism by which the standards and • It may be said that while every labor union is a labor organization, not every labor
other terms and conditions of employment are negotiated, adjusted, and organization is a labor union.
enforced.
• Art. 218 policy statements point the means to achieve the constitutional goal which 3. WHY WORKERS ORGANIZE
is freedom from poverty. It enumerates the strategic policies and not the goals. • Basically, human drive toward self-advancement.
Goals are stated in the Constitution. • Three other human desires that lead workers to organize:
• Social justice ultimately is social-economic equity through access to political and 1. Desire for job security;
economic opportunities leading to freedom from poverty. 2. Employees wished to substitute “the rule of law” for the arbitrary and often
• PARTICIPATION– Participation is a major right from which, the right to organize and capricious exercise of power by the boss;
the right to bargain come from. The right to participation stems from the Constitution 3. Unions helped to give employees a sense of participation in the business
and is added to the Labor code but such right is not dependent on unionism. enterprises of which they are part – a function of labor unions which
Participation is exercisable without a collective employment contract became important as organizations spread in4to mass production
• ORGANIZATION AND ACTION - The process starts when workers organize themselves industries
into a union or association and here, they may or may not register their organization. • Unlawful for workmen to combine and to control the business of the employer in
matters not affecting the terms of their own hiring
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 2

j. "Bargaining representative" means a legitimate labor organization or any officer or

4. ILO CONVENTIONS NO. 87 AND 98 agent of such organization whether or not employed by the employer.
• Convention No. 87 of the ILO provides in part: k. "Unfair labor practice" means any unfair labor practice as expressly defined by this
o Article 2 – Workers and employers without distinction shall have the right to Code.
establish and, subject only to the rules of the organization concerned, to l. " Labor dispute" includes any controversy or matter concerning terms and
join organizations of their own choosing without previous authorization conditions of employment or the association or representation of persons in
o Article 3 – (1) Workers’ and employers’ organizations shall have the right to negotiating, fixing, maintaining, changing or arranging the terms and conditions of
draw up their constitutions and rules, to elect their representatives in full employment, regardless of whether the disputants stand in the proximate relation of
freedom, to organize their administration and activities and to formulate employer and employee.
their programmes. (2) The public authorities shall refrain from an m. "Managerial employee" is one who is vested with the powers or prerogatives to lay
interference which would restrict this right or impede the lawful exercise down and execute management policies and/or to hire, transfer, suspend, lay-off,
thereof. recall, discharge, assign or discipline employees. Supervisory employees are those
o Article 8 – (1) In exercising the rights provided, workers and employers and who, in the interest of the employer, effectively recommend such managerial
their respective organizations, like other persons or organized collectivities, actions if the exercise of such authority is not merely routinary or clerical in nature
shall respect the law of the land. (2) The law of the land shall no be such but requires the use of independent judgment. All employees not falling within any
as to impair, nor shall it be so applied as to impair, the guarantees of the above definitions are considered rank-and-file employees for purposes of this
provided for in the Constitution. Book.
n. "Voluntary Arbitrator" means any person accredited by the Board as such, or any
5. FIRST LABOR RELATIONS LAWS person named or designated in the Collective Bargaining Agreement by the parties
• Commonwealth Act. No. 103 was approved as our first labor law. A month later, to act as their Voluntary Arbitrator, or one chosen with or without the assistance of
Commonwealth Act No. 213 the first Philippine law to allow organizations, the National Conciliation and Mediation Board, pursuant to a selection procedure
associations, or unions of laborers agreed upon in the Collective Bargaining Agreement, or any official that may be
• “Collective Bargaining” as a term was first used in C.A. No. 213 but the term “Unfair authorized by the Secretary of Labor and Employment to act as Voluntary Arbitrator
Labor Practice” was first used in R.A. No. 875. upon the written request and agreement of the parties to a labor dispute.
• The Industrial Peace Act was replaced by the Labor Code. o. "Strike" means any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute.
CHAPTER II: DEFINITIONS p. " Lockout" means any temporary refusal of an employer to furnish work as a result of
an industrial or labor dispute.
q. " Internal union dispute" includes all disputes or grievances arising from any violation
ART. 219. [212] DEFINITIONS. of or disagreement over any provision of the constitution and by laws of a union,
a. "Commission" means the National Labor Relations Commission or any of its divisions, including any violation of the rights and conditions of union membership provided
as the case may be, as provided under this Code. for in this Code.
b. "Bureau" means the Bureau of Labor Relations and/or the Labor Relations Divisions in r. " Strike-breaker" means any person who obstructs, impedes, or interferes with by
the regional offices established under Presidential Decree No. 1, in the Department force, violence, coercion, threats, or intimidation any peaceful picketing affecting
of Labor. wages, hours or conditions of work or in the exercise of the right of self-organization
c. "Board" means the National Conciliation and Mediation Board established under or collective bargaining.
Executive Order No. 126. s. "Strike area" means the establishment, warehouses, depots, plants or offices,
d. "Council" means the Tripartite Voluntary Arbitration Advisory Council established including the sites or premises used as runaway shops, of the employer struck
under Executive Order No. 126, as amended. against, as well as the immediate vicinity actually used by picketing strikers in
e. "Employer" includes any person acting in the interest of an employer, directly or moving to and fro before all points of entrance to and exit from said establishment.
indirectly. The term shall not include any labor organization or any of its officers or
agents except when acting as employer. 1. EMPLOYER – EMPLOYEE RELATIONSHIP ESSENTIAL
f. "Employee" includes any person in the employ of an employer. The term shall not be • If there is no employer-employee relationship, there is no basis for organizing for
limited to the employees of a particular employer, unless the Code so explicitly purposes of collective bargaining
states. It shall include any individual whose work has ceased as a result of or in • Elements:
connection with any current labor dispute or because of any unfair labor practice if o Selection and engagement of the employee
he has not obtained any other substantially equivalent and regular employment. o Payment of wages
g. " Labor organization" means any union or association of employees which exists in o Power to dismiss
whole or in part for the purpose of collective bargaining or of dealing with o Power to control the employee’s conduct
employers concerning terms and conditions of employment.
h. " Legitimate labor organization" means any labor organization duly registered with 2. WHO ARE EMPLOYEES
the Department of Labor and Employment and includes any branch or local • The term employee:
thereof. 1. Shall include any employee
i. "Company union" means any labor organization whose formation, function or 2. And shall not be limited to the employee of any particular employer,
administration has been assisted by any act defined as unfair labor practice by this unless the Act explicitly states otherwise
Code. 3. And shall include any individual
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 3

a. Whose work has ceased as a consequence of, or in connection visitorial or administrative authority to enforce labor laws, policies, plans, or
with, any current labor dispute programs, or rules and regulations.
b. And who has not obtained any substantially equivalent and o CERTIFICATION OF BARGAINING REPRESENTATIVES - determination of which
regular employment contending unions shall represent employees in collective bargaining.
• “The term “employer” is defined in Angat River Irrigation System v. Angat River o ASSUMPTION OF JURISDICTION - an authority vested by law to the
Worker’s Union as “one who employs the services of others; one for whom Secretary of Labor or the President to decide a dispute causing or likely to
employees work and who pays their wages or salaries.” cause a strike or lockout in an industry indispensable to national interest.
• EMPLOYER – any person or entity who employs the services of others, one for whom o CERTIFICATION TO NLRC - an action of the Secretary of Labor empowering
employees work and who pays their wages or salaries. It includes any person NLRC to compulsorily arbitrate a dispute causing or likely to cause a strike
directly or indirectly acting in the interest of an employer. It shall also refer to the or lockout in an industry indispensable to the national interest.
enterprise where a labor organization operates or seeks to operate o INJUNCTION - writ of injunction is issued to stop or restrain an actual or
• “One Whose Work Has Ceased…” - Rothenberg: participation of an employee in a avoided in resolving a labor threatened commission of prohibited or unlawful acts or to require the
strike does not remove him from the status of “employee” dispute; state policy is to performance of an act, which if not restrained or performed forthwith,
encourage the parties to use may cause grave or irreparable damage to any party or render
3. LABOR ORGANIZATION AS EMPLOYER the nonjudicial processes ineffectual any decision in favor of such party. In short, an injunction
• A labor organization may be deemed an employer when it is acting as such in makes a negative or a positive command
relation to persons rendering services under hire, particularly in connection with its o JUDICIAL ACTION - complaint filed with regular court in cases falling under
activities for profit or gain. An organization may be ostensibly a labor union, but it its jurisdiction.
may attain the status of an ordinary business concern in the pursuit of a particular when it is allowed all o APPEAL - the process by which an order, decision, or award is elevated to
line of business. administrative remedies must a higher authority, on specified grounds, so that the order, decision or
first be exhausted before one
resorts to the court. award may be modified or set aside and a new one issued.
4. OVERVIEW OF LABOR DISPUTES o REVIEW BY COURT - No law allows appeal from a decision of the Secretary
• Any bona fide controversy concerning wage, hours or conditions of work or of Labor, or of the NLRC, or of a Voluntary Arbitrator. In these cases the
representation constitutes a labor dispute. To qualify for that status, the controversy petition for certiorari, prohibition, or mandamus (Rule 65, Rules of Court)
should involve or concern terms, conditions of employment or representation. Even may be lodged with the Supreme Court or the Court of Appeals.
the question of employer-employee relationship can be considered a labor dispute. • 4.3 ADR (ALTERNATIVE DISPUTE RESOLUTION) MODES
• 4.1 KINDS OF LABOR DISPUTES o CONCILIATION - a process where a disinterested third party meets with
o Labor standards disputes management and labor, at their request or otherwise, during a labor
1. COMPENSATION (e.g. underpayment of minimum wage, dispute or in collective bargaining conferences, and, by cooling tempers,
stringent output quota, illegal pay deductions) aids in reaching an agreement.
2. BENEFITS (e.g. non payment of holiday pay, overtime pay, or o MEDIATION - a third party studies each side of the dispute then makes
other benefits) proposal for the disputants to consider.
3. WORKING CONDITIONS (e.g. unrectified work hazards) o ARBITRATION (COMPULSORY/VOLUNTARY) - the submission of a dispute to
o Labor relations disputes an impartial person for determination on the basis of evidence and
1. ORGANIZATIONAL RIGHT DISPUTE/ULP (e.g. coercion, restraint or arguments of the parties. Arbitration, unlike conciliation or mediation, is
interference in unionization efforts, reprisals or discrimination due adjudication and the arbitrator's decision or award is enforcible upon the
to union activities, strikes/lockouts, etc) disputants.
2. REPRESENTATION DISPUTES (e.g. uncertainty as to which is the • 4.4 COMPROMISE AGREEMENT - agreement is freely entered into and is not contrary
majority union, determination of appropriate collective to law, moral, or public policy. A compromise agreement is also subject to approval
bargaining unit, contest for recognition by different sets of of the authority before whom the case is pending. in any stage of the settlement processes
officers of the same union)
3. BARGAINING DISPUTES (e.g. refusal to bargain, bargaining in Title II: NATIONAL LABOR RELATIONS COMMISSION
bad faith, bargaining in deadlock, economic strike or lockout)
4. CONTRACT ADMINISTRATION OR PERSONNEL POLICY DISPUTES Chapter I: CREATION AND COMPOSITION
(e.g. noncompliance with the CBA provision, disregard of
grievance machinery, non-observance or unwarranted use of ART. 220. [213] NATIONAL LABOR RELATIONS COMMISSION
union security clause etc.) There shall be a National Labor Relations Commission which shall be attached to the
5. EMPLOYMENT TENURE DISPUTES (e.g. non-regularization of Department of Labor and Employment solely for program and policy coordination,
employees, non absorption of labor only contracting staff, illegal composed of a Chairman and twenty-three (23) members.
termination, non issuance of employment contract)
• 4.2 REMEDIES IN LABOR DISPUTES Eight (8) members each shall be chosen only from among the nominees of the workers and
o GRIEVANCE PROCEDURE - in-house adjustment of complaint, problem, or employers organizations, respectively. The Chairman and the seven (7) remaining members
dispute following the steps prescribed in CBA or company policy. shall come from the public sector, with the latter to be chosen preferably from among the
o ENFORCEMENT OR COMPLIANCE ORDER - an act of the Secretary of Labor incumbent labor arbiters.
(through Regional Director or other representatives) in the exercise of his
Upon assumption into office, the members nominated by the workers and employers
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 4

organizations shall divest themselves of any affiliation with or interest in the federation or ART. 221. [214] HEADQUARTERS, BRANCHES AND PROVINCIAL EXTENSION UNITS.
association to which they belong. The Commission and its first, second, third, fourth, fifth and sixth divisions shall have their main
offices in Metropolitan Manila, and the seventh and eight divisions in the cities of Cebu and
The Commission may sit en banc or in eight (8) divisions, each composed of three (3) Cagayan de Oro, respectively. The Commission shall establish as many regional branches as
members. The Commission shall sit en banc only for purposes of promulgating rules and there are regional offices of the Department of Labor and Employment, sub-regional
regulations governing the hearing and disposition of cases before any of its divisions and branches or provincial extension units. There shall be as many Labor Arbiters as may be
regional branches and formulating policies affecting its administration and operations. The necessary for the effective and efficient operation of the Commission.
Commission shall exercise its adjudicatory and all other powers, functions and duties through
its divisions. Of the eight (8) divisions, the first, second, third, fourth, fifth and sixth divisions shall 1. NLRC: NATURE AND ORGANIZATION
handle cases coming from the National Capital Region and other parts of Luzon, and the
seventh and eighth divisions, cases from the Visayas and Mindanao, respectively: Provided, 1.1 Creation and Autonomy – Before the Labor Code, the labor court was the Court of
That the Commission sitting en banc may, on temporary or emergency basis, allow cases Industrial Relations. When martial law was declared, the CIR was abolished and replaced with
within the jurisdiction of any division to be heard and decided by any other division whose an ad hoc National Labor Relations Commission. This NLRC was short-lived and was replaced
docket allows the additional workload and such transfer will not expose litigants to with the NLRC created by the Labor Code
unnecessary additional expense. The divisions of the Commission shall have exclusive
appellate jurisdiction over cases within their respective territorial jurisdiction. 1.2 Administrative Supervision Delegated to the DOLE Secretary – Despite, the limiting phrase in
Article 213, “for program coordination only”, GMA released Executive Order No. 204 which
The concurrence of two (2) Commissioners of a division shall be necessary forthe delegated to the Secretary of Labor “administrative supervision over the NLRC, its regional
pronouncement of judgment or resolution. Whenever the required membership in a division is branches and all its personnel”. It cited two objectives: (1) to further improve the rate of
not complete and the concurrence of two (2) Commissioners to arrive at a judgment or disposition of cases and (2) to enhance existing measures for the prevention of graft and
resolution cannot be obtained, the Chairman shall designate such number of additional corruption in the NLRC
Commissioners from the other divisions as may be necessary. • The Secretary was tasked to (1) enhance existing measures within the agency, or
initiate new ones, to prevent graft and corruption, and including such measures as
The conclusions of a division on any case submitted to it for decision shall be reached in management audit, performance evaluations and inspections to determine
consultation before the case is assigned to a member for the writing of the opinion. It shall be compliance with policies, standards, and guidelines; (2) to investigate, on its own or
mandatory for the division to meet for purposes of the consultation ordained therein. A upon complaint, matters invoking disciplinary action against any presidential
certification to this effect signed by the Presiding Commissioner of the division shall be issued, appointees in the NLRC in accordance with existing law and regulations
and a copy thereof attached to the record of the case and served upon the parties. • RA 9347 is incorporated in Articles 220-223. Art. 220 reiterates that NLRC is attached
to DOLE “solely” for program and policy coordination.
The Chairman shall be the Presiding Commissioner of the first division, and the seven (7) other
members from the public sector shall be the Presiding Commissioners of the second, third, 1.3 Essential Character - The National Labor Relations Commission continues to act collegially,
fourth, fifth, sixth, seventh and eighth divisions, respectively. In case of the effective absence whether it performs administrative or rule-making functions or exercises appellate jurisdiction
or incapacity of the Chairman, the Presiding Commissioner of the second division shall be the to review decisions and final orders of the Labor Arbiters
Acting Chairman.
1.4 Tripartite Composition – Art. 220 provides that the Chairman and 23 members composing
The Chairman, aided by the Executive Clerk of the Commission, shall have exclusive the NLRC shall be chosen from the workers, employers, and public sectors.
administrative supervision over the Commission and its regional branches and all its personnel, • Once they assume office, they shall divest themselves of any affiliation with or
including the Labor Arbiters. interest in the federation or association to which they belong. Appointee to a
vacancy should be a nominee of the sector to which they belong.
The Commission, when sitting en banc, shall be assisted by the same Executive Clerk, and,
when acting thru its Divisions, by said Executive Clerk for its first division and seven (7) other 1.5 Allocation of Powers Between NLRC En Banc and its Divisions – The Commission shall sit en
Deputy Executive Clerks for the second, third, fourth fifth, sixth, seventh and eighth Divisions, banc only for purposes of promulgating rules and regulations governing the hearing and
respectively, in the performance of such similar or equivalent functions and duties as are disposition of cases before any of its divisions and regional branches and formulating policies
discharged by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals. affecting its administration and operations.
• RA 7700 requires an en banc decision so that a case within the jurisdiction of one
The Commission and its eight (8) divisions shall be assisted by the Commission Attorneys in its division may be heard and decided by another division whose docket can
appellate and adjudicatory functions whose term shall be coterminous with the accommodate the additional workload.
Commissioners with whom they are assigned. The Commission Attorneys shall be members of • Lastly, the appointment of a labor arbiter by the President needs a
the Philippine Bar with at least one (1) year experience or exposure in the field of labor- recommendation of the Commission en banc..
management relations. They shall receive annual salaries and shall be entitled to the same • Division is a legally entity, not the persons who sit in it; an individual commissioner has
allowances and benefits as those falling under Salary Grade twenty-six (SG 26). There shall be no adjudicatory power. The Resolution on a motion for reconsideration is valid even
as many Commission Attorneys as may be necessary for the effective and efficient operation if the commissioners that passed the resolution are not the same commissioners who
of the Commission but in no case more than five (5) assigned to the Office of the Chairman made the decision sought to be reconsidered.
and each Commissioner. • Nothing irregular in temporary designation of a commissioner to a division. Territorial
divisions do not confer exclusive jurisdiction to each division and are merely
designated for administrative efficiency.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 5

1.6 The NLRC Rules of Procedure – The 2011 NLRC Rules of Procedure govern the proceedings of stenographic notes, the following cases involving all workers, whether agricultural or
before labor arbiters, NLRC divisions and NLRC en banc as well as internal functions of the non-agricultural:
latter two. Rules of Court supplements the NLRC rules. 1. Unfair labor practice cases;
2. Termination disputes;
ART. 222. [215] APPOINTMENT AND QUALIFICATIONS 3. If accompanied with a claim for reinstatement, those cases that workers may file
The Chairman and other Commissioners shall be members of the Philippine Bar and must have involving wages, rates of pay, hours of work and other terms and conditions of
been engaged in the practice of law in the Philippines for at least fifteen (15) years, with at employment;
least five (5) years experience or exposure in the field of labor-management relations, and 4. Claims for actual, moral, exemplary and other forms of damages arising from the
shall preferably be residents of the region where they shall hold office. The Labor Arbiters shall employer-employee relations;
likewise be members of the Philippine Bar and must have been engaged in the practice of 5. Cases arising from any violation of Article 264 [now Art. 274] of this Code, including
law in the Philippines for at least ten (10) years, with at least five (5) years experience or questions involving the legality of strikes and lockouts; and
exposure in the field of labor-management relations. 6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims arising from employer-employee relations,
The Chairman, the other Commissioners and the Labor Arbiters shall hold office during good including those of persons in domestic or household service, involving an amount
behavior until they reach the age of sixty-five (65) years, unless sooner removed for cause as exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
provided by law or become incapacitated to discharge the duties of their office: Provided, a claim for reinstatement.
however, That the President of the Republic of the Philippines may extend the services of the (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by
Commissioners and Labor Arbiters up to the maximum age of seventy (70) years upon the Labor Arbiters.
recommendation of the Commission en banc. (c) Cases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company
The Chairman, the Division Presiding Commissioners and other Commissioners shall all be personnel policies shall be disposed of by the Labor Arbiter by referring the same to the
appointed by the President. Appointment to any vacancy in a specific division shall come grievance machinery and voluntary arbitration as may be provided in said agreements.
only from the nominees of the sector which nominated the predecessor. The Labor Arbiters
shall also be appointed by the President, upon recommendation of the Commission en banc 1. Additional cases where Labor Arbiters can exercise jurisdiction:
and shall be subject to the Civil Service Law, rules and regulations.*
M (EDAO) - WEO
The Chairman of the Commission shall appoint the staff and employees of the Commission 1. Money claims arising out of employer-employee relationship or by virtue of any law
and its regional branches as the needs of the service may require, subject to the Civil Service and contract, involving a Filipino workers for overseas deployment, including claims
Law, rules and regulations, and upgrade their current salaries, benefits and other emoluments for actual, moral, exemplary and other forms of damages as well as employment
in accordance with law. termination of OFWs
2. Wage distortion disputes in unorganised establishments not voluntarily settled by the
ART. 223. [216] SALARIES, BENEFITS AND EMOLUMENTS parties pursuant to R.A. 6727 as reflected in Art. 124
The Chairman and members of the Commission shall have the same rank, receive an annual 3. Enforcement of compromised agreements when there is non-compliance by any of
salary equivalent to, and be entitled to the same allowances, retirement and benefits as the parties pursuant to Art. 233 of the Labor Code as amended
those of the Presiding Justice and Associate Justices of the Court of Appeals, respectively. 4. Other cases as may be provided by law
Labor Arbiters shall have the same rank, receive an annual salary equivalent to and be
entitled to the same allowances, retirement and other benefits and privileges as those of the 2. Compulsory Arbitration by Labor Arbiters:
judges of the Regional Trial Courts. In no case, however, shall the provision of this Article result • In labor cases, compulsory arbitration is the process of settlement of labor disputes
in the diminution of the existing salaries, allowances and benefits of the aforementioned by a government agency which has the authority to investigate and to make an
officials. award which is binding to the parties.

NOTE – The third paragraph of Art. 222 that states that the presidential appointment of the 2.1 NLRC Appellate Proceedings Not Part of the Arbitration:
NLRC is subject to confirmation by the Commission on Appointments is null and void as the • A labor arbiter is a representative in a RAB (regional arbitration branch). They
Supreme Court ruled it has no constitutional basis. adjudicate cases on behalf of the NLRC but their decisions are appealable to the
NLRC.
NLRC COMMISSIONERS NOT JUSTICES – Congress can create and recognize ranks outside the • Labor Arbiter (LA) Definition: A labor arbiter is one who is clothed with authority to
Judiciary that are equivalent to the Judiciary ranks but it does not create “judicial ranks” conduct compulsory arbitration on terminations disputes or other cases under Art.
outside the Judiciary nor constitute the grantees of these ranks as judges and justices. 224
Technically, what Congress creates or grants are executive ranks that are equivalent to • However, proceedings on appeal cannot be considered as part of the arbitration
judicial ranks. proceedings (PAL v. NLRC). The rules is that once a the Labor Arbiter (LA) renders his
decision, the arbitration is deemed to have ended. Any appeal interposed by the
ART. 224. [217] JURISDICTION OF THE LABOR ARBITERS AND THE COMMISSION parties from the LA’s decision is beyond the scope of arbitration since the NLRC en
(a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and ban merely reviews the LA’s decision for errors of fact or law.
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the absence

2.2 Nature of the Proceedings: over the case shall exclude the others.
• The proceedings before the LA are non-litigious. This is however subject to the c. When venue is not objected to before the before the first scheduled mandatory
requirements of due process, the technicalities of law and procedure in the regular conference, such issue shall be deemed waived.
courts do not apply in in the NLRC/LA proceedings. The arbiter may reset to all d. The venue of an action may be changed or transferred to a different Regional
reasonable means including but not limited to: ocular inspection; he shall personally Arbitration Branch other than where the complaint was filed by written agreement of the
conduct the conferences or hearings and take full control of the proceedings parties or when the Commission of Labor Arbiter before whom the case is pending so
orders, upon motion by the proper party in meritorious cases.
2.3 Art. 224 Yields to Art. 273 and 274: e. Cases involving overseas Filipino workers may be filed before the Regional Arbitration
• The enumeration of cases falling under the “original and exclusive” jurisdiction of a Branch having jurisdiction over the place where the complainant resides or where the
labor arbiter gives the impression that none but the LA can hear and decide the six principal office of any of the respondents is situated, at the option of the complainant.
categories in of the cases listed. BUT THIS IS NOT REALLY TRUE. Any or all of the list of
cases can be submitted to an voluntary arbitrator (VA) or panel of VAs. 4.1 Worker’s Option:
• VA under Art.273 has “original and exclusive” jurisdiction of labor over disputes
concerning CBA implementation or personnel policy enforcement. Parties may also Dayag et al. vs. Canizares, NLRC, and Young Construction
submit the disputes regarding “unfair labor practices (ULP) and bargaining Facts: There was an initial hearing set by the labor arbiter in the Metro Manila, but instead of
deadlocks. attending Young Construction (Young) filed a motion to transfer to the Regional Arbitration
branch, Region VII of the NLRC which is in Cebu City. Young claims that since he workplace of
**N.B Also recall that, Voluntary Arbitration is a “master procedure“ for all labor petitioners was in Cebu City; the arbitration’s venue should be in Cebu according to Section
disputes. So VA can, even in disputes regarding strike, overturn the jurisdiction of 1(a) of the NLRC Rules of Procedure
the Sec. of Labor even if the latter assumes jurisdiction over the case.
Doctrine: The Court Ruled that the question of venue relates more to the convenience of the
• The reason being is that the labor code prefers the VA as the mode for settling parties. It is underscored that the fact of permissive rules underlying the provisions on venue
disputes as provided in Art. 218 instead of the compulsory arbitration. That is why Art. are intended to assure convenience for the plaintiff and his witnesses and to promote the
274 and the 224 (c) forbids a compulsory arbitrator to take cognizance of a dispute ends of justice. These principles finds applicability in cases involving the labor. The rational for
when such is already under the jurisdiction of the VA. the rules is that the workers, as an economically disadvantaged party, whether a
complainant/petitioner or respondent, must be afforded the nearest governmental
3. Labor Arbiter’s Jurisdiction in General. machinery to settle the dispute at his immediate disposal. Even if there’s a stipulation to the
• The cases which the LA can hear and decide are labor related, it’s the one element venue agreed by the parties he Court set-aside the stipulation if it will amount to lead to a
common to all the cases enumerated in the Art. 224. situation so grossly inconvenient to one party as to virtually negate his claim.

3.1 Immunity from Philippine Jurisdiction: Q: Where is the workplace of a worker, if the worker works in a vessel?
• Even if there is an employer-employee relationship existing between the parties, the
case will not prosper when the employer enjoys immunity or is exempted from the A: “In case of field employees, as well as ambulant or itinerant workers, their workplace is
application of Philippine laws. where they are regularly assigned, or where they are supposed to regularly receive their
salaries and wages or work instructions from, and report the results of their assignment to, their
e.g Asian Development Bank, International Rice Institute, and other international employers.” (Section 1 (a) of NLRC Rules of Procedure)
organisations
Thus in the case of Sulpicio lines v. NLRC, the workplace for purposes of venue shall, where the
4. Venue: workers are working in a vessel plying the Manila to Cotabato route. The court ruled that
Manila is the venue for the action since the workers are regularly assigned work in Manila.
NLRC 2011 RULES OF PROCEDURE:
SECTION 1. Venue. — 4.2 Waiver:
a. All cases which Labor Arbiters have authority to hear and decide may be filed in the • The workplace serving as a venue for the worker is for the benefit of the latter. As
Regional Arbitration Branch having jurisdiction over the workplace of the complainant or such the employee can waive venue. Section 1(c) of Rule IV of the 2011 NLRC Rules
petitioner. of Procedure also provides:

National Union of Bank Employees v. Judge Alfredo Lazaro • The court further said that the dismissal of the ULP case would have been proper for
Doctrine: Art. 258 ”….the civil aspects of all cases involving ULP which may include claims for voluntary arbitration had the parties explicitly so agreed. There was no such express
damages and other affirmative relief shall be under the jurisdiction of the labor arbiters”. agreement in the San Miguel case: “we find no agreement between SMC and the
respondent union that would state in unequivocal language that petitioners and
Facts: The CBTC entered into a collective bargaining agreement with the union representing the respondent union conform to the submission of termination disputes and unfair
the rank-and-file employees. When the time came for the renewal of the CBA, the union labor practices to voluntary arbitration” …. “ Hence consistent with the general rule
submitted some proposals for renegotiation. But CBTC suspended renegotiations because of under Art. 217 (a) [now 224 (a)] of the Labor Code the Labor Arbiter properly has
a merger with BPI which assumed all assets and liabilities of CBTC. The Union filed an action for jurisdiction over the complaint filed….”
specific performance with preliminary injunction and damages in the CFI. The CFI dismissed
the case for lack of jurisdiction. Q: Does the LA have jurisdiction over an illegal dismissal complaint filed by church
minister?
Ruling: Dismissal is proper. The case is an unfair labor practice controversy which is in the
original and exclusive jurisdiction of the labor arbiter and within the appellate jurisdiction of A: YES. It does not matter if the employer is a religious sect, or an organisation
the NLRC. organised for non-profit. The Labor Code applies to all establishments.

The claim agains BPI for allegedly inducing CBTC to violate the existing CBA in the process of • Austria v. NLRC & Cebu City Central Philippine Union Mission Corporation of the
renegotiation consists mainly of the civil aspect of the unfair labor practice charge referred to Seventh Day Adventists: The principle of separation of church and state finds no
under Art. 247 [now 258] of the Labor Code which provides that: “the civil aspects of all cases application at the case at bench. xxxx. The state is prohibited from interfering with
involving ULP which may include claims for damages and other affirmative relief shall be purely ecclesiastical affairs, and the Church likewise is barred from meddling in
under the jurisdiction of the labor arbiters”. purely secular matter.
• The dismissal of an employee in the employer church is not a purely ecclesiastical
The claim of injury as a consequence of tort allegedly committed by BPI and CBTC under Art. matter.
1314 of the Civil Code does not give the Court jurisdiction to try the damage suit.
7.1 Termination of Corporate Officer; Jurisdiction Over Intracorporate Disputes Transferred From
SEC to RTC:
6. CBA Violation Amounting to ULP:
• If the only questions is the legality of the expulsion of an employee from the union, Dismissal of a corporate officer by a corporate board is a corporate dispute that should be
then the question falls under the jurisdiction of the Bureau of Labor Relations (BLR). brought to the regular courts. Jurisdiction of the SEC has been transferred to the courts by the
• BUT if the questions extended to the dismissal of the employee or the steps leading Securities and Regulation Code (R.A. No. 8799.)
the dismissal of the employee, it would be subject to scrutiny. It will be asked
whether it violates such dismissal violates the existing CBA. Dy, et al. v. NLRC
• The violations of the CBA will now fall upon the jurisdiction of the LAs and the NLRC Doctrine: The changing of directors, executives, and officers of a corporation is not
(Manila Manadarin EmployeesUnion v. NLRC). The ruling in the case was affected considered dismissal. Therefore not in the jurisdiction of the LA and NLRC.
by changes made in R.A. No. 6715.
• THE RULE NOW is: ONLY GROSS VIOLATIONS OF THE CBA are considered ULP. IF THE Facts: CHV was a director and stockholder of ARB a banking corporation. A new board of
CBA VIOLATION IS NOT GROSS THEN IT’S NOT ULP. THEREFORE NOT UNDER THE LA and directors were elected, and they in turn elected new bank executive officers and managers.
NLRC. CHV was relieved of his post. He filed illegal dismissal and damages with Ministry of Labor

7. Labor Arbiter’s Jurisdiction: Termination Disputes Held: The issue is intracorporate. It concerns the election of directors, officers, or managers the
• Terminations disputes or illegal dismissal complaints fall within the jurisdiction of labor corporation. These matters fall under the jurisdiction of the SEC. The case is not one of
arbiter as stated in Art. 224 (2). The usual issue is the legality of the dismissal. dismissal. As he relationship of person to a corporation whether as officer or as agent, or as
• But there’s a question of overlapping jurisdiction has arisen because of Art. 224, last employee are not determined by the nature of the services performed but by the incidents of
sentence. It requires a labor arbiter to refer to the grievance machinery and the relationship as they exist.
voluntary arbitration all cases arising from the interpretation or enforcement of the
CBA or company personnel policies. The court ruled in a similar case that the position of the Executive Vice President was an
elective corporate office. Therefore a change in the position does not amount to dismissal of
Q: Is the dismissal of an employee an enforcement of personnel policy and therefore the corporate officer. Thus it is not under the jurisdiction of the LA or the NLRC but the regular
should be brought to a voluntary arbitrators instead of an LA? courts.

shareholders, the issue of consequential damages may just well be resolved ad • The court in Tabang goes on to say: “It has been held that an “office” is created by
adjudicated by the SEC. The jurisdiction of the SEC is not negated by the claims of the charter of the corporation and the officer is elected by the directors or
for vacation leaves, sick leaves and, 13th Month Pay. stockholders but by the managing officer of the corporation who also determines
the compensation to be paid to such employee. A further distinction may thus be
Mainland Construction Co., etc v. Movilla, et al. drawn between an officer and an employee of a private corporation in that the
Facts: Movilla was hired as an accountant by Mainland Construction (Mainland) and as an latter is subordinate to the officers and under their control and direction… It is clear
employee. Movilla was subsequently elected as a board member and administrative that the two terms officers and agents are by no means interchangeable
manager. Meanwhile DOLE conducted a routine inspection and found several labor law
violations. DOLE ordered the corporation to pay its 13 employees including Movilla unpaid Mainland v. Movilla Tabang v. NLRC
holiday pay, service incentive leave etc. Mainland paid all the employees except Movilla. The complainant is a stock-holder employee The complainant is a stock-holder corporate
Hence a complaint in the NLRC. officer
Both cases include claims for unpaid wages and 13th Month Pay
The labor arbiters rendered a judgment dismissing the complaint on the ground of lack of Classifies the claim as labor dispute Classifies the claim as an intracorporate
jurisdiction. The decision said Movilla was claiming salaries, and separation pay as controversy
administrative manager. A position which was appointed to by the Board of Directors (BOD),
therefore this is a case falling under the SEC. 7.5 “Tabang is not Controlling”

Issue: Which has jurisdiction over the case? SEC or the NLRC Matling v. Coros: The Tabang decision is not controlling because it too sweeping and does not
accord with reason, justice, and fair play. In order to determine whether a dispute constitutes
Held: The NLRC. In order that the SEC can take cognisance of a case, the controversy must an intra-corporate controversy or not, The Court considers two elects instead namely:
pertain to any of the following relationships:
1. The Status or relationship of the parties;
Between the corporation partnership or associations and: 2. The nature of the question that is the subject of their controversy
a. the public;
b. its stockholders, partners, members or officers; Establishment of any of the relationships mentioned, WILL NOT necessarily confer jurisdiction
c. the State as far as its franchise permit or license to operation is concerned, over to the SEC regarding the dispute to the exclusion of the regular courts.
d. and among stockholders, partners or associates amongst themselves.
• Matling then offers a criteria in distinguishing whether a dispute is intracorporate or
That the parties involved are all stockholders or that parties are stockholders and the labor related: “The criteria for distinguishing between corporate officers who may
corporation does not necessarily place the dispute within the ambit of the jurisdiction of the be ousted from office at will, and from ordinary corporate employees whammy only
SEC. The better policy to be followed in determining jurisdiction should be to consider be terminated for just causes. …. Do not depend on the nature of services
concurrent factors such as the status or relationship of the parties or the nature of the question performed but on the manner of the creation of office
that is the subject of the controversy. In the absence of any of these factors, the SEC will not
have jurisdiction. Furthermore, it does not necessarily follow that every conflict between the • The Matling ruling then applies the “better rule” criteria in Mainland v. Movilla, it
corporation and its stockholders would involve such corporate matters as only the SEC can aligns itself with the Prudential Bank v. Reyes, which took into account the length of
resolve in the exercise of its adjudicatory or quasi-judicial powers. service and the nature of the work to determine the worker is an employee and not
a corporate officer.
In the case at bench, the claim for unpaid wages and separation pay filed by the
complainant against. Petitioner involves a labor dispute. Since it’s a labor dispute it should be 7.6 When Bank Officer May be A Regular Employee:
under the jurisdiction of the NLRC according to Art. 224.
The case of Prudential is about a plea for security of tenure of a bank officer who rose through
the ranks and argues that she is not a corporate officer, but an employee such that the
7.3 Mailand v. Movilla: The “Better Policy” in determining SEC Jurisdiction complaint was correctly brought to the NLRC.

• The court in this case ruled that the “better policy” of determining SEC Jurisdiction, Prudential Bank v. Reyes
the court said “…. That the parties involved are stockholders and. The corporation Doctrine: The length of service of the employee, determines if one is corporate officer or a
does not necessarily place the dispute within the ambit of the jurisdiction of the SEC. regular corporate employee.
• However, the better policy rule enunciated in Mainland v. Movilla did not influence
the decision in the case of Tabang. The court ruled in the case of Tabang v. NLRC Facts: Complainant was first appointed as a clerk by the bank, she rose to become supervisor,
that the SEC has jurisdiction over all kinds of controversies between stockholders and the was elected by the board as an assistant vice-president (AVP). The bank contends that
corporations that fall under SEC’s jurisdiction. The case also clarified there term she holds an elective position and that she is not an employee belied by the nature of her
corporate officers: work and length of service:
• Jurisprudential Definition of a Corporate Officer: A “corporate officer” is the
president, secretary, or treasurer of the corporation or any other officer whose Held: As an AVP of the foreign department of the bank she performs tasks integral to the
officers created by the board of directors authorised or required by the corporate operations of the bank and her length of service totalling 28 years in the bank speaks volumes
charter or by-laws. of her status as a regular employee of the bank.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 9

Q: Is college dean a corporate officer of the University?

Where the claim to the principal relief sought
A: Barba v. Liceo De Cagayan: NO. The post not being creation the university’s by-laws. is to be resolved not be reference to the
Labor Code or other labor relations statute or
7.7 Summary: Who are Corporate Officers: a CBA, the jurisdiction over the dispute
belongs to the regular courts of justice.
• A corporate officer derives character from the Corporation Code or the Corporation’s by
laws. Under the corporation code the following are corporate officers (and therefore any The innovation program maybe unilateral in
dispute as to their dismissal falls under the SEC jurisdiction AS AN INTRACORPORATE dispute): origin however it could ripen into an
enforceable contractual obligation on part
1) President of SMC. Thus whether or not an enforceable
2) Secretary contract, albeit implied and innominate, and
3) Treasurer the questions such as whether an agreement
4) And Such other Officers as may be provided in the By-Laws between them existed is primarily answerable
by reference to other laws AND NOT labor
The person is also a corporate officer if these circumstances occur: EAC legislation.

(a) His/Her position is a creation of the corporate charter or by-laws 7.8 NLRC jurisdiction Over Privatised Government Corporation:
(b) His/Her position is elective • The Labor Code’s provision on breach of trust applies as ground for employee’s
(c) His/Her election is by the act of the directors or stockholders dismissal even if the breach of trust happened when the employer company was
still a government owned corporation. The privatisation did not extinguish the
Decisions so far regarding these kinds of cases have adhered to the rules under Matling and corporate personality although it did cause the termination of the employer-
Movilla cases and have considered the following factors whether the case of dismissal should employee relationship. Thus, the same entity even though privately owned can still
go the NLRC or the regular court: S2NL-Manner dismiss the employee for breach of trust before it was privatised. Hence jurisdiction is
still with the NLRC.
1) Status or relationship of the parties
2) The nature of the subject of controversy 8. Labor Arbiter’s (LA) Jurisdiction: Money Claims:
3) Nature of the complainant’s work • Money claims arising from employer-employee relations EXCEPT SSS/ECC/Medicare
4) Length of Service claims are within the jurisdiction of the LA if the claim is
5) Manner of Creation of Office
1. Regardless of the amount is accompanies by a claim for reinstatement
Pepsi -Cola Bottling Co. v. Martinez San Miguel Corp. NLRC 2. Whether or not accompanied with a claim for reinstatement EXCEEDS the
Facts: An employee won contest conducted Facts: SMC sponsored a program granting amount of Php 5,000.
by the Pepsi Cola, for being the top salesman cash rewards to employees who would
of the year. He was entitled to a prize of submit ideas or suggestions beneficial to the • The claim under No.1 is practically termination dispute which falls within the labor
house and lot, but Pepsi Cola (Company) corporation. arbiter’s jurisdiction as provided in Art. 224, however subject to VA under Art. 274 &
refused to deliver the prize. He was also 275.
terminated. Complainant submitted a proposition which • The claims under either No. 1 or 2 above are beyond the jurisdiction of a DOLE
he alleges that was implemented and Regional Director according to Art. 129 of the Labor Code, which removes claims
He sued the Company to deliver the house accepted by management. He demanded which exceed Php 5,000. If it exceeds Php 5,000 it should be filed with the NLRC.
and lot, back wages, and separation pay. He his cash prize but SMC refused to pay. • However, the new Kasambahay law should be noted. A claim under that law
submits that such a case is a civil claim REGARDLESS of the amount falls within the jurisdiction of the DOLE Regional Director
hence triable by the regular courts NOT the NLRC.
Held: The prize arose from a employer- Held: Money claims of workers which now fall
employee relationship thus Art. 217 [now 224] within the original and exclusive jurisdiction of 8.1 Only Money Claims Not Arising from CBA:
applies, and jurisdiction falls under LA and the labor arbiter are those money claims • The original exclusive jurisdiction of an LA under Art. 224(c) is limited to only those
NLRC. which have some reasonable causal arising from statutes or contracts OTHER than a CBA.
connection with the employer-employee • VA or a panel of VA will have the original and exclusive jurisdiction for money claims
The court rules that the employee wouldn’t relationship. arising from a “interpretation and implementation of a CBA, and those arising from
have been a contestant in the competition the interpretation or enforcement of company personnel policies.
in the first place if he wasn’t an employee. Granting that the complainant’s claim under
the prize was based on an incentive scheme
ONLY accessible to employees thus having a
reasonable connection to an employer-
employee relationship. Such is not enough
basis to grant jurisdiction to the LA.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 10

8.2 Double Indemnity: 8.7 Employer’s Complaint for damages

• R.A. 8188 makes the employer liable to pay an amount equivalent to double the • Bañez v. Hon. Valdevilla: An employer’s claim for damages against an employee
unpaid benefits owing to an employee by virtue of a wage order that increases or may be filed as counterclaim in the illegal dismissal case of the employee, such is
adjusts the wage rates. out of the jurisdiction of the regular courts.
• Enforcement of the “double indemnity” law falls under LA or DOLE Regional
director1 who is hearing the a money claim or illegal dismissal complaint 9. Labor Arbiter’s Jurisdiction: Strikes and Lockouts:
• All questions relating to strikes and lockouts or any form of work-stoppage including
8.3 Money Claims Must Have Arisen from Employment the incidents thereof under Art. 278 fall within the jurisdiction of the LA.
• If the money claim does not arise out of or is not in connection with employment, • BUT the power to issue injections is lodged with the NLRC NOT the LA, in the case of
jurisdiction is with the Regular Courts of Justice (MTC, RTC etc.) “national interest cases” Art. 278 (g) empowers the Sec.of Labor or the Pres. of the
Philippines to assume jurisdiction or refer the case to the NLRC if the impending labor
Q: What if the employee is claiming a prize under an incentive program? dispute or strike involves an industry indispensable to national interest.
• Another limitation is to the jurisdiction of the LA is the jurisdiction of the regular courts
A: There are two cases which ruled differently, the difference lies in what law will be to hear and decide actions filed by 3rd parties being affected by the strike of
applied to resolve the key questions raised people WHO ARE NOT the employees.
• Finally when it comes to criminal acts done in a strike the regular courts take
• TL;DR: There’s no definite answer as between the two cases. But San Miguel (which is cognisance of the case.
the more recent case) implies that if in determination of a claim requires reference
to other laws OTHER than Labor Law, or implementation of CBA then the jurisdiction 10. Labor Arbiter’s jurisdiction: OFW’s Money Claims or Dismissal
falls to the regular courts of justice. • Section 10 of Migrant Workers transfers from POEA to LA the original and exclusive
jurisdiction to hear and decide claims arising out of an employer-employee
8.4 Money Claims of Coop Employees. relationship or by virtue of any law or contract involving Filipino worker for overseas
• The provisions of P.D. No. 175 (Strengthening the Cooperative Movement) which deployment, including claims for actual, moral, exemplary and other forms of
requires the complaints be submitted to a grievance machinery and R.A. No. 6939 damages.
(Cooperative Development Authority Law) which requires issuance of a Certificate
of Non-Resolution DOES not apply to Employees of the Cooperative. The PNB v. Cabansag
aforementioned requirements applies only to members, officers, and directors of the Facts: Cabansag as a tourist in Singapore (SG) applied with the PNB SG branch and was
cooperative involved in disputes. hired a branch credit officer. She obtained the necessary “Employee Pass” from the SG
Government, and the from the PH embassy an “Overseas employment certificate”. After 4
8.5 Jurisdiction Over Claims of Damages: months, dismissed her because the branch manager needed a Chinese speaking credit
• Suario v. BPI : Money claims of workers over which the labor arbiter has original and officer. She filed an illegal dismissal complaint to the NLRC, the employer argued that she was
exclusive jurisdiction are comprehensive enough to include claims for moral a “local hire” thus was subject to SG laws, customs, and practice and not the laws of the PH.
damages. P.D. 1691 restored the LA’s and the NLRC’s jurisdiction to award all kinds
of damages in cases arising from employer-employee relationships. The legislative Held: Cabansag’s acquisition of an employment pass from the SG Gov’t was merely a
intent appears clear to allow recovery in proceedings before LA of moral and other compliant with that country’s immigration policies. The employment pass did not operate to
forms of damages, in all cases or matters arising from the employer-employee permit the waiver of the worker’s national laws on labor. Absent clear evidence to the
relations. contrary, the permit simply means that its holder has a legal status as a worker in the issuing
country. POEA certificate authorises here working status, and entitles here to all benefits and
8.6 Splitting of Actions Not Allowed: processes under PH statutes. Lastly, PNB is a PH corporation doing business in SG, and
• The rule in Civil Procedure that all claims that arise from the same cause of action Cabansag’s appointment had to approved by PNB’s president. This fact reinforces that she is
applies equally in the claims before the LA or the NLRC. An employee cannot a “migrant worker” with the definition of the R.A. No. 8042. Therefore she is under the
prosecute his claim piecemeal, separately or contemporaneously. He/She cannot jurisdiction of the LA as provided in R.A No. 8042 and Art. 224 of the Labor Code.
sue in two forms upon with two different theories for illegal dismissal and dismissal
was injurious and tortious. (Primero v. IAC) 10.1 Pretermination Under R.A. No. 8042
• Judgment of the LA granting separation pay operated to bar the subsequent • Among the cases now in the hands of labor arbiter are the claims arising from
action of the employee under the doctrine of res judicator pretermination of employment contract of an OFW.
• The previous ruling in Quisaba v. Sta.Ines-Melae Veneer and Plywood which drew • Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
distinction between the issue of dismissal and the issue of whether the manner of without just, valid, or authorized cause as defined by the law or contract, is entitled
exercise of the dismissal powers was proper which is cognizable by the regular to “full reimbursement of his placement fee with interest at 12% p.a., plus his salary
courts was sought to be eradicated by the law which now empowers to the LA and for the unexpired portion of his employment contract or for 3 months for every year
NLRC to allow recovery in proceedings before LA of moral and other forms of of the unexpired term, whichever is less.”
damages, in all cases or matters arising from the employer-employee relations. • Marsaman Manning Agency v. NLRC: the option of “3 months for every year” was
available only if the employment was for 1 year or more. If it was shorter than 1 year,
the salary to be recovered had to be that for the unexpired portion.

1 N.B. Take note of the rules in Section 8 still!

10.1a Section 10 Unconstitutional • TO BE ENGAGED – an applicant worker who has been promised or assured of
employment overseas and acting on such promise or assurance, sustains damage
Serrano v. Gallant and/ or injury.
Facts: Petitioner's employment contract was for a period of 12 months or from March 19, 1998 • R.A. No. 8042 allows claims for money or damages sustained during the period of
up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only 2 deployment or before departure for abroad.
months and 7 days of his contract, leaving an unexpired portion of 9 months and 23 days. The • R.A. No. 8042 also allows recovery of actual, moral, exemplary, or other forms of
issue is: Whether Serrano was entitled to the unexpired portion of his contract? Serrano argued damages.
that if “whichever is less” was to be followed, he would get $25k if the amount was based on • If the employment contract has been signed but the EE-ER relationship did not
the unexpired portion and only $4k if based on the 3 months’ pay per year. The Court ruled commence because the seafarer was not actually deployed, can he complain of
that the phrase “whichever is less” in Section 10 of R.A. 8042 was unconstitutional as it violates unpaid salary? Yes, as held in the case of Santiago v. CF Sharp
the OFW’s right to equal protection of the law and to substantive due process. Hence, the
clause was now deemed deleted from the law. The alternative to pay 3 months’ salary for Santiago v. CF Sharp
every year of unexpired term is no longer available. Facts: In this case, the employment contract has been signed by Santiago and CF Sharp
whereby the former was to render services on board “MSV Seaspread.” However, the EE-ER
Doctrine: Section 10 of R.A. No. 8042 provides, “full reimbursement of his placement fee with relationship did not commence because the respondent failed to deploy petitioner from the
interest at 12% p.a., plus his salary for the unexpired portion of his employment contract or for port of Manila to Canada. The issue is: Whether Santiago is entitled to unpaid salary? The
3 months for every year of the unexpired term, whichever is less.” The Court re-examined the Court held in the affirmative. Even before the start of the EE-ER relationship, contemporaneous
Marsaman Interpretation and ruled that the clause “whichever is higher” was violative of the with the perfection of the employment contract was the birth of certain rights and obligations,
right of the petitioner and other OFWs’ right to equal protection. Hence, in case of the breach of which may give rise to a cause of action against the erring party.
pretermination of employment contract, the alternative to pay 3 months’ salary for the
unexpired term is no longer available. The OFW is entitled to his salaries for the unexpired Doctrine: A distinction must be made between the perfection of the employment contract
portion of his employment contract, plus full reimbursement of his placement fee with interest and the commencement of the EE-ER relationship. The former occurred when the parties
of 12% p.a. agreed on the object, the cause, and the terms and conditions of the contract. The latter
would have taken place had the petitioner been actually developed from the point of hire.
• Note: Azu only cited the “whichever is less” part of the clause, but the originals of Hence, even before the start of the EE-ER relationship, contemporaneous with the perfection
the case referred to the clause beginning “or for 3 months for every year of of the employment contract was the birth of certain rights and obligations, the breach of
unexpired term, whichever is less.” which may give rise

10.1b R.A. 100022 Reiterates the Three Months’ Options; The Court Nullifies it Again 10.3 EE-ER Relations cases: Money claims’ employer’s nationality immaterial
• The Labor Code, the Migrant Workers’ law, and the relevant regulations extend
Sameer Overseas Placement Agency v. Cabiles protection to Filipino workers overseas (i.e. outside the Philippines).
Facts: Joy C. Cabiles, submitted her application for a quality control job in Taiwan, was • The statute and regulations do not limit the coverage to non-Filipino employers.
accepted, and signed a one year employment contract with Taiwan Wacoal with a monthly Filipinos working overseas share the same risks and burden whether their employers
salary of NT$15,360. Less than a month later, she was terminated and was told that she could be Filipino or foreigner.
only recover NT$3,000 as NT$3000 was deducted to cover her plane ticket to Manila.
10.4 Joint Liability
The issue is: Whether Serrano was entitled to the unexpired portion of his contract? The Court
ruled that Sameer was illegally dismissed and hence was entitled to her salaries for the R.A. No. 8042, SEC. 10. MONEY CLAIMS.
unexpired portion of his employment contract, plus full reimbursement of his placement fee The liability of the principal/employer and the recruitment/placement agency for any and all
with interest of 12% p.a. claims under this section shall be joint and several. This provision shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
Doctrine: In ruling on the said case, the Court took note that R.A. no. 10022 contained the performance bond to be filed by the recruitment/placement agency, as provided by law,
clause which was previously nullified in the case of Serrano. In this case, the Court reiterated shall be answerable for all money claims or damages that may be awarded to the workers. If
its finding in the case of Serrano that limiting wages that should be covered by an illegally the recruitment/placement agency is a juridical being, the corporate officers and directors
dismissed OFW to 3 months is both a violation of due process and the equal protection clause and partners as the case may be, shall themselves be jointly and solidarily liable with the
of the Constitution corporation or partnership for the aforesaid claims and damages.

• Corporate officers or directors cannot be held liable unless there is adequate Metromedia Times Corp. v. Pastorin
evidence of their personal involvement in their company’s wrongful action or Facts: Petitioner lodged an appeal with the NLRC, raising as a ground the lack of jurisdiction of
omissions. the labor arbiter over respondent’s complaint. Significantly, this issue was not raised by
petitioner in the proceedings before the Labor Arbiter. The NLRC reversed the decision of the
11. Labor Arbiter’s Jurisdiction: Wage Distortion LA and ruled that the LA has no jurisdiction over the case, it being a grievance issue properly
• A salary distortion case, referred to in Article 124, is resolved either through CBA cognizable by the voluntary arbitrator. The SC held that petitioner is not estopped from
mechanism or, in unorganized establishments, through NCMB. questioning the jurisdiction of the LA during appeal. Estoppel does not apply to confer
• If the NCMB fails to resolve the dispute in 10 days of conciliation conferences, it shall jurisdiction to a tribunal that has none over a cause of action. Where it appears that the court
be referred to the appropriate branch of the NLRC. or tribunal has no jurisdiction, then the defense may be interposed at any time, even on
appeal or even after final judgment.
12. Labor Arbiter’s Jurisdiction: Disputes Over Compromise Settlements
• Because labor law policy encourages voluntary resolution of disputes, compromise Doctrine: Since the Labor Arbiter assumed jurisdiction, when he should not over an issue which
settlements are ordinarily final and binding upon the parties. is properly cognizable by the grievance machinery, petitioner is not estopped from assailing
• However, a compromise settlement may itself become the subject of a dispute. the jurisdiction of the Labor Arbiter before the NLRC on appeal, in line with… the general rule
• Under Art. 233, non-compliance with the compromise agreement or a prima facie that estoppel does not confer jurisdiction.
evidence that the settlement was obtained through fraud, misrepresentation, or
coercion means that the NLRC, through the Labor Arbiter, may assume jurisdiction
Comparison/ contrast:
over the dispute.
• In the case of Soco, the Court ruled that a party cannot submit his case for decision
and then accepting the judgment only if favorable and attack it for lack of
13. Submission to Jurisdiction
jurisdiction when adverse.
• A party cannot invoke the jurisdiction of a court to secure affirmative relief against
• However, a line of other cases provide for a different view as in the case of La Naval
his opponent and, after obtaining or failing to obtain such relief, repudiate or
(as affirmed in Luzon v. NLRC). The Court held in La Naval that “whenever it appears
question that same jurisdiction.
that the court has no jurisdiction over the subject matter, the action shall be
Soco v. Mercantile Corp. dismissed. This defense may be interposed at any time, during appeal or even after
final judgment.” Concurrently, in the case of Multimedia when the Labor Arbiter
Facts: When the complaint for underpayment of minimum wage was pending before the
assumes jurisdiction over a case which he otherwise has no jurisdiction over,
Regional Director, the employer did not raise the issue of jurisdiction but instead actively
petitioner is not estopped from assailing his jurisdiction before the NLRC on appeal.
participated in the hearings. Neither did it do so in elevating the case to the Secretary of
Labor, not in the 2 MR of the DOLE’s decision. However, in the SC, the employer objected to
14. Immunity of Foreign Governments
the jurisdiction of the Secretary of Labor and the Regional Director to award the money claims
of the employees. It contended that the money claims of workers arising from an EE-ER
• IMMUNITY OF STATE FROM SUIT– commonly understood in international law as the
relationship were within the exclusive jurisdiction of the Labor Arbiter not the Regional Director.
exemption of the state and its organs from the judicial jurisdiction of another state.
This contention, which is being raised for the first time in the petition, can no longer be
• This is anchored on the principle of sovereign equality of states under which one
considered by the Court at that stage, consistent with the ruling in Tijam v. Sibonghanoy.
state cannot assert jurisdiction over another in violation of the maxim par in parem
Doctrine: The SC frowns upon the undesirable practice of a party submitting his case for
non habet imperium (an equal has no power over an equal.
decision and then accepting the judgment only if favorable, and attacking it for lack of
• The application of doctrine of immunity from suit has been restricted to sovereign or
jurisdiction when adverse.
governmental activities (jure imperii). The mantle of state immunity cannot be
extended to commercial, private and proprietary acts (jure gestionis).
La Naval Drug v. CA
Facts: Petitioner contended that the amended petition should be dismissed on the ground of 14.1 Immunity of the UN and Its Specialized Agencies
non-payment of the requisite filing fees and it being in the nature of an ordinary civil action, a • Being a member of the UN and a party to the Convention on the Privileges and
full blown and regular trial, is necessary; so that respondent Yao's proposition for a summary Immunities of the Specialized Agencies of the UN, the Philippine Government
hearing of the arbitration issue and separate trial for his claim for damages is procedurally adheres to the doctrine of immunity granted to the UN and its specialized agencies.
untenable and implausible. In moving for reconsideration, petitioner argued that in Special Both treaties have the force and effect of law.
Case No. 6024, the respondent court sits as a special court exercising limited jurisdiction and is • JUSMAG-Philippines v. NLRC and Sacramento: “Our courts can only assume
not competent to act on respondent Yao's claim for damages, which poses an issue litigable jurisdiction over private respondent if it expressly waived its immunity which is not so
in an ordinary civil action. The issue is: whether the court a quo has jurisdiction over the subject in the case at bench.”
matter? The Court ruled in the negative.
15. Executing Money Claims Against the Government
Doctrine: Lack of jurisdiction over the subject matter of the suit is yet another matter.
Whenever it appears that the court has no jurisdiction over the subject matter, the action shall Department of Agriculture v. the National Labor Relations Commission
be dismissed. This defense may be interposed at any time, during appeal or even after final Facts: Petitioner and Sultan Security Agency entered into a contract for security services to be
judgment. Such is understandable, as this kind of jurisdiction is conferred by law and not within provided by the latter to the said governmental entity. Thereafter, several guards filed a
the courts, let alone the parties, to themselves determine or conveniently set aside. complaint for underpayment of wages, nonpayment of 13th month pay, uniform allowances,
night shift differential pay, holiday pay, and overtime pay, as well as for damages against the
DA and the security agency. The issue is: whether the doctrine of non-suability of the State
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 13

applies in the case? The Court held in the negative. The State’s consent may be given CHAPTER II: POWERS AND DUTIES
expressly or impliedly. Express consent may be made through a general law or a special law.
Implied consent, on the other hand, is conceded when the State itself commences litigation, ART. 225 POWERS OF THE COMMISSION
thus opening itself to a counterclaim, or when it enters into a contract. In this situation, the The Commission shall have the power and authority:
government is deemed to have descended to the level of the other contracting party and to
have divested itself of its sovereign immunity. In this case, the DA did not assume a capacity (a) To promulgate rules and regulations governing the hearing and disposition of cases before
apart from its being a governmental entity when it entered into the questioned contract. The it and its regional branches, as well as those pertaining to its internal functions and such rules
Labor Code, in relation to Act No. 2083, provides the legal basis for the State liability but the and regulations as may be necessary to carry out the purposes of this Code;
prosecution, enforcement, or satisfaction thereof must still be pursued in accordance with the
rules and procedures laid down in C.A. 327, as amended by P.D. No. 1445. (b) To administer oaths, summon the parties to a controversy, issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books, papers, contracts,
Doctrine: Even when a government agency enters into a business contract with a private records, statements of accounts, agreements, and others as may be material to a just
entity, it is not the Labor Code but the C.A. No. 327 that applies in pursuing a money claim determination of the matter under investigation, and to testify in any investigation or hearing
(against the Government) arising from such contract. conducted in pursuance of this Code;

16. Local Water District (c) To conduct investigation for the determination of a question, matter or controversy within
its jurisdiction, proceed to hear and determine the disputes in the absence of any party
Hagonoy Water District v. NLRC thereto who has been summoned or served with notice to appear, adjourn its hearings to any
Facts: Petitioner Hagonoy moved for dismissal on the ground of lack of jurisdiction. Being time and place, refer technical matters or accounts to an expert and to accept his report as
government entity, its personnel are governed by the provisions of the Civil Service Law and evidence after hearing of the parties upon due notice, direct parties to be joined in or
not by the Labor Code. The issue: Whether local water districts are GOCCs whose employees excluded from the proceedings, correct, amend, or waive any error, defect or irregularity,
are subject to the exemption provision of the Civil Service Law? No. The Labor Arbiter, in whether in substance or in form, give all such directions as it may deem necessary or
asserting that it has jurisdiction over the employees of Hagonoy, relied on P.D. No. 198, known expedient in the determination of the dispute before it, and dismiss any matter or refrain from
as “Provincial Water Utilities Act of 1973” which exempts employees of water districts from the hearing further or from determining the dispute or part thereof, where it is trivial or where
application of the Civil Service Law. However, the Labor Arbiter failed to take into account further proceedings by the Commission are not necessary or desirable;
that P.D. 1479 wiped away the said exemption under P.D. No. 198. Thus, Sec. 25 of P.D. 198
exempting the employees of water districts from the application of Civil Service Law was (d) To hold any person in contempt direct or indirectly and impose appropriate penalties
removed from the statute books. therefor in accordance with law.

Doctrine: Local water districts are quasi-public corporations whose employees belong to the A person guilty of misbehavior in the presence of or so near the Chairman or any member of
civil service, hence, the dismissal of those employees shall be governed by the civil service the Commission or any Labor Arbiter as to obstruct or interrupt the proceedings before the
law, rules, or regulations. same, including disrespect toward said officials, offensive personalities toward others, or
• Tanjay Water District v. Gabaton: Inasmuch as P.D. No. 198 as amended is the refusal to be sworn or to answer as a witness, or to subscribe an affidavit or deposition when
original charter of the petitioner, local water districts come under the coverage of lawfully required to do so, may summarily adjudged in direct contempt by said officials and
the civil service law, rules, and regulations. punished by fine not exceeding five hundred pesos (P500) or imprisonment not exceeding five
(5) days, or both if it be the Commission or a member thereof, or by a fine not exceeding one
16.1 Exception: Where the NLRC Jurisdiction is Invoked hundred pesos (P100) or imprisonment not exceeding one (1) day, or both if it be a Labor
Arbiter.
Zamboanga City Water District v. Buat
Facts: Herein petition filed with the Labor Arbiter, a complaint to declare the strike illegal, this The person adjudged in direct contempt by a Labor Arbiter may appeal to the Commission
was followed by Zamboanga Utilities Labor Union (ZULU) to which herein respondents were and the execution of the judgment shall be suspended pending the resolution of the appeal
members, a complaint for illegal dismissal and unpaid wages before the Labor Arbiter. The upon the filing of subject person of a bond on condition that he will abide by and perform the
petitioner questioned the labor arbiter’s jurisdiction before the Supreme Court. The SC denied judgment of the Commission should the appeal be decided against him. Judgment of the
the petition saying that petitioner never raised the issue of lack of jurisdiction before the Commission on direct contempt is immediately executory and unappealable. Indirect
Executive Labor Arbiter, the NLRC, or even before the SC. It is only after the NLRC ordered contempt shall be dealt with by the Commission or Labor Arbiter in the manner prescribed
payment of back wages, that petitioner raises the issue of lack of jurisdiction. Petitioner is thus under Rule 71 of the Revised Rules of Court; and
estopped from questioning the jurisdiction of the NLRC.
(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or
Doctrine: It is unfair for a party who has voluntarily invoked the jurisdiction of a tribunal on a unlawful acts or to require the performance of a particular act in any labor dispute which, if
matter to secure an affirmative relief and to repudiate the same afterwards to escape a not restrained or performed forthwith, may cause grave or irreparable damage to any party:
penalty (Ocheda v. CA, 214 SCRA 629, Royales vs. IAC 127 SCRA 470, Tijam v. Sibonghanoy 23 Provided, That no temporary or permanent injunction in any case involving or growing out of
SCRA 29). a labor dispute as defined in this Code shall be issued except after hearing the testimony of
witnesses, with opportunity for cross-examination, in support of the allegations of a complaint
made under oath, and testimony in opposition thereto, if offered, and only after a finding of
fact by the Commission, to the effect:

(1) That prohibited or unlawful acts have been threatened and will be committed unless 1. Powers of the Commission
restrained, or have been committed and will be continued unless restrained, but no injunction 1.1 Rule-making Power
or temporary restraining order shall be issued on account of any threat, prohibited or unlawful • The Commission has the power to promulgate rules and regulations:
act, except against the person or persons, association or organization making the threat or 1. Governing the hearing and disposition of cases before it and its regional
committing the prohibited or unlawful act or actually authorizing or ratifying the same after branches;
actual knowledge thereof; 2. Pertaining to its internal functions; and
3. Those that may be necessary to carry out the purposes of this Code.
(2) That substantial and irreparable injury to complainant's property will follow; • The rules and regulations promulgated by the Commission have the force and
effect of law.
(3) That, as to each item of relief to be granted, greater injury will be inflicted upon • It is an elementary rule in administrative law that administrative regulations and
complainant by the denial of relief than will be inflicted upon defendants by the granting of policies enacted by administrative bodies, such as the Revised Rules of the NLRC, to
relief; interpret the law which they are entrusted to enforce, have the force of law, and
are entitled to great respect.
(4) That complainant has no adequate remedy at law; and • Rules and regulations must not be in conflict with or contrary to the provisions of the
Labor Code and other laws.
(5) That the public officers charged with the duty to protect complainant's property are
unable or unwilling to furnish adequate protection. 1.2 Power to Issue Compulsory Processes
• The Commission has the power to:
Such hearing shall be held after due and personal notice thereof has been served, in such 1. Administer oaths;
manner as the Commission shall direct, to all known persons against whom relief is sought, and 2. Summon parties; and
also to the Chief Executive and other public officials of the province or city within which the 3. Issue subpoena ad testificandum and duces tecum.
unlawful acts have been threatened or committed charged with the duty to protect
complainant's property: Provided, however, That if a complainant shall also allege that, unless 1.3. Power to Investigate and Hear Disputes Within Its Jurisdiction
a temporary restraining order shall be issued without notice, a substantial and irreparable • The Commission has the power to:
injury to complainant's property will be unavoidable, such a temporary restraining order may 1. Conduct investigations for the determination of a question, matter, or
be issued upon testimony under oath, sufficient, if sustained, to justify the Commission in issuing controversy within its jurisdiction; and
a temporary injunction upon hearing after notice. Such a temporary restraining order shall be 2. Proceed to hear and determine the disputes in the manner laid down under
effective for no longer than twenty (20) days and shall become void at the expiration of said paragraph (c) of Art. 225.
twenty (20) days. No such temporary restraining order or temporary injunction shall be issued
1.4 Contempt Power
except on condition that complainant shall first file an undertaking with adequate security in
• The commission has the power to hold any person in direct or indirect contempt
an amount to be fixed by the Commission sufficient to recompense those enjoined for any
under Rule IX of the NLRC 2011 Rules of Procedure.
loss, expense or damage caused by the improvident or erroneous issuance of such order or
• The procedures and penalties thereof are provided under paragraph (d) of Art. 225.
injunction, including all reasonable costs, together with a reasonable attorney's fee, and
• CONTEMPT – a disobedience to the Court by setting up an opposition to its authority,
expense of defense against the order or against the granting of any injunctive relief sought in
justice, and dignity. It signifies not only a willful disregard or disobedience of the
the same proceeding and subsequently denied by the Commission.
court’s orders but such conduct as tends to bring the authority of the court and the
administration of law into disrepute or in some manner to impede due
The undertaking herein mentioned shall be understood to constitute an agreement entered
administration of justice.
into by the complainant and the surety upon which an order may be rendered in the same
• There is no question that disobedience or resistance to a lawful writ, process, order,
suit or proceeding against said complainant and surety, upon a hearing to assess damages,
judgment or command of a court or injunction granted by a court or judge
of which hearing complainant and surety shall have reasonable notice, the said complainant
constitutes indirect contempt punishable under Rule 71 of the Rules of Court.
and surety submitting themselves to the jurisdiction of the Commission for that purpose. But
• The labor arbiter can cite an employer guilty of indirect contempt when he refuses
nothing herein contained shall deprive any party having a claim or cause of action under or
to reinstate an illegally dismissed employee.
upon such undertaking from electing to pursue his ordinary remedy by suit at law or in equity:
Provided, further, That the reception of evidence for the application of a writ of injunction
1.5 Power to Conduct Ocular Inspection
may be delegated by the Commission to any of its Labor Arbiters who shall conduct such
• Under Art. 226, the chairman, any commissioner, labor arbiter or their duly
hearings in such places as he may determine to be accessible to the parties and their
authorized representatives may, at anytime during working hours:
witnesses and shall submit thereafter his recommendation to the Commission. (As amended
1. Conduct an ocular inspection on any establishment, building, ship or vessel,
by RA 6715)
place or premises, including any work, material implement, machinery,
appliance or any object therein; and
ART. 226. OCULAR INSPECTION 2. Ask any employee, laborer or any person, as the case may be, for any
The Chairman, any Commissioner, Labor Arbiter or their duly authorized representatives may information or data concerning any matter or question relative to the object of
at any time during working hours conduct an ocular inspection on any establishment, the investigation.
building, ship or vessel, place or premises, including any work, material, implement, • This inspection power is but an adjunct to the adjudicatory function. It can be
machinery, appliance or any object therein, and ask any employee, laborer or any person as exercised only to assist or expedite adjudication of a pending dispute. The power is
the case may be for any information or data concerning any matter or question relative to not meant to duplicate the visitorial-enforcement authority under Art. 128.
the object of the investigation.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 15

1.6 Adjudicatory Power: Original 2.2 Conditions for Issuance Ex Parte of a TRO
• Each of the NLRC divisions had original jurisdiction over petitions for injunction or • A TRO (valid only for 20 days) may be issued ex parte under the ff conditions:
temporary restraining order under Art. 225(e). 1. The complainant “shall also allege that, unless a TRO shall be issued without
• It also has original jurisdiction to hear and decide “national interest” case certified notice, a substantial and irreparable injury to complainant’s property will be
to it by the Secretary of Labor under Art. 278(g). unavoidable”;
• The NLRC gains jurisdiction over all questions submitted or necessarily deemed 2. There is “testimony under oath, sufficient, if sustained, to justify the Commission
submitted so as to resolve the dispute, even over issues that otherwise fall within the In issuing temporary injunction upon hearing after notice”;
labor arbiter’s exclusive jurisdiction. 3. The “complainant shall first file an undertaking with adequate security in an
amount to be fixed by the Commission sufficient to recompense those
1.7 Adjudicatory Power: Appellate enjoined for any loss, expense, or damage caused by the improvident or
• The NLRC (i.e. a division) has exclusive appellate jurisdiction over all cases decided erroneous issuance of such order or injunction, including all responsible costs,
by labor arbiters and the DOLE regional director or hearing officers under Art. 129. together with a reasonable attorney’s fee, and expense of defense against the
• The NLRC has no appellate jurisdiction over decisions rendered by: order or against the granting of any injunctive relief sought in the same
1. A voluntary arbitrator, or proceeding and subsequently denied by the Commission”; and
2. The secretary of labor, or 4. The “temporary restraining order shall be effective for no longer than 20 days
3. The bureau of labor relations director and shall become void at the expiration of said 20 days.”
• The issuance of an ex parte TRO in a labor dispute is not per se prohibited. Its
on cases appealed from the DOLE regional offices. The decisions of the issuance, however, should be characterized by care and caution for the law
aforementioned offices are appealable rather to the CA. requires that it be clearly justified by considerations of extreme necessity.
• Where the labor arbiter has no jurisdiction or has not acquired jurisdiction, neither
has the NLRC. 2.3 Cash Bond
• Its jurisdiction over cases under Art. 224(a) is appellate, not original. • Under the 2011 NLRC Rules of Procedure (Rule X, Sec. 7), no TRO or writ of
preliminary injunction shall be issued except on the condition that petitioner shall first
2. Power to Issue Injunction or Temporary Restraining Order file an undertaking to answer for the damages and post a cash bond in the amount
• The NLRC has injunction power or, simply, the power to command that an act be determined by the Commission.
done or not done • Purpose of the bond: to recompense those enjoined for any loss, expense, or
• The NLRC may issue an injunction, which may either be mandatory or prohibitory. It damage caused by the improvident or erroneous issuance of such order or
may require, forbid, or stop the doing of an act. injunction, including all reasonable consts, together with a reasonable attorney’s
• Art. 225(e) explains the injunctive power of the Commission ad the prerequisites for fee, and expense of defense against the order or against the granting of any
its exercised. injunctive relief sought in the same proceeding and subsequently denied by the
• However, it must be stressed that injunctions or restraining orders are frowned upon Commission.
as a matter of labor relations policy • The NLRC’s power to enjoin or restrain can only be exercised in a labor dispute.
o This no injunction rule is found in Art. 266. • Nestle Philippines, Inc. v. NLRC: The rights and obligations of the parties under
• The reasons for the petition for injunction must be specified, but it is not necessary to contracts involving debtor-creditor relations may be enforced by a special civil
allege in the verbatim the requisites for the issuance of the temporary restraining action in the regular courts, not in the NLRC.
order and/ or writ of preliminary injunction under Art. 225(e) of the Labor Code.
• Where the trial court [now NLRC] did not follow and observe the procedure in Sec. 2.4 Reception of Evidence
9(d) of R.A. No. 875 [counterpart of present Art. 225(e)] in issuing the preliminary writ • Reception of evidence “for the application of a writ of injunction may be
of prohibitory injunction, the said writ is illegal and void, although the court had delegated by the Commission to any of its Labor Arbiters who shall conduct such
jurisdiction to issue it. hearings in such places as he may determine to be accessible to the parties and
their witnesses and shall submit thereafter his recommendation to the Commission.”
2.1 Injunction by Labor Arbiter
• Under the Guidelines Governing Labor Relations, this power was reserved 2.5 20 day life of TRO
specifically to the Commission proper. • A TRO, if issued in a petition for injunction, is valid only for 20 days and becomes void
• The Rules of Procedure of the NLRC, on the other hand, provided that the ancillary at the end of the period.
power of issuing preliminary injunction or a restraining order “may be exercised by • The TRO takes effect upon its issuance and not upon receipt of the parties.
the Labor Arbiters only as an incident to the cases pending before them in order to • In computing the effectivity of a TRO, Saturday, Sunday, and holidays are not
preserve the rights of the parties during the pendency of the cases but excluding excluded. Saturday, Sunday, and holidays are included in the maximum period of
labor disputes involving strike or lockout.” Such provision no longer appears in the 20 days.
NLRC Rules.
• The role of the labor arbiters, with regard to issuance of writs of preliminary 2.5a Illustrative Case: Issuance of TRO
injunctions, is limited to reception of evidence as may be delegated by the BLRC • Abbot,et al v. NLRC: the labor arbiter, in recommending the award in the original
under Section 1, Rule X of the 2011 NLRC Rules of Procedure. decision raised the amount to P98,883.80 to P1,372,452.55. Such fact alone,
according to the Court, is enough justification for the NLRC to issue a TRO, following
usual procedure.

Ilaw at Buklod ng Manggagawa v. NLRC and San Miguel Corporation 1. Proceedings Before Labor Arbiter or the Commission; Technical Rules not Applicable
Facts: On Dec 9, 1989, claiming that its action in the Arbitration Branch had as yet “yielded no • Administrative and quasi-judicial bodies, like the NLRC, are not bound by the
relief,” San Miguel Corporation (SMC) filed another complaint against the Union and members technical rules of procedure in the adjudication of cases.
thereof directly with the NLRC, “to enjoin and restrain illegal showdown and for damages, with • Simplification of procedure, without regard to technicalities of law or procedure
prayer for the issuance of a cease-and-desist and temporary restraining orders.” The NLRC First and without sacrificing the fundamental requisites of due process, is mandated to
Division issued a Resolution authorizing the issuance of the TRO for period of 20 days, directing insure speedy administration of justice.
the respondents to cease and desist from further committing the acts complained of. The • The SC construed Art. 227 of the Labor Code so as to allow the NLRC or a labor
Union asserted that the NLRC, as an essentially appellate body, had no jurisdiction to act on arbiter to decide a case on the basis of position papers and other documents
the plea for injunction in the first instance. The record reveals that the Commission exercised submitted without resorting to technical rules of evidence as observed in the regular
the power directly and plainly granted to it by sub-paragraph (e), Art. 224 in relation to Art. courts of justice.
266 of the Code, and that it faithfully observed the procedure and complied with the • Rules of evidence are not strictly observed in proceedings before administrative
conditions for the exercise of that power prescribed in said sub-paragraph (e). bodies like the NLRC.
1.1 Substantial Evidence; Cardinal Rights in Quasi-Judicial Proceedings
Doctrine: A petition for injunction and TRO may be filed with the NLRC where the complaint • Administrative quasi-judicial bodies like the NLRC are not bound by the technical
filed with the labor arbiter against slowdown by petitioner’s employees has not yielded rules of procedure in the adjudication of cases. However, this procedural rule should
adequate relief. not be construed as a license to disregard certain fundamental evidentiary rules.
• While the rules of evidence prevailing in the courts of law or equity are not
2.6 Injunction from NLRC not the Proper Remedy Against Employee’s Dismissal controlling in proceedings before the NLRC, the evidence presented before it must
at least have a modicum of admissibility for it to be given some probative value.
Philippine Airlines, Inc. v. NLRC, et al. • Not only must there be some evidence to support a finding or conclusion, but
Facts: Private respondents are flight stewards of the petitioner, who were dismissed from the evidence must be substantial. Substantial evidence is a mere scintilla. It means such
service for their alleged involvement in the currency smuggling in Hong Kong. Aggrieved by relevant evidence as a reasonable mind might accept as inadequate to support a
said dismissal, private respondents filed with the NLRC a petition for injunction. The NLRC issued conclusion.
a temporary mandatory injunction enjoining petitioner to cease and desist from enforcing its
Memorandum of dismissal. The issue is: whether the NLRC exceeded its jurisdiction when it Ang Tibay v. CIR
issued an injunction? The Court held in the affirmative, ruling that the petition for injunction Facts: Due to alleged shortage of leather, Toribio caused the layoff of members of National
directly filed before the NLRC is in reality an action for illegal dismissal. The power of the NLRC Labor Union (NLU). NLU averred that Toribio’s act is not valid. The CIR [NLRC], decided the
to issue an injunctive writ originates from "any labor dispute" upon application by a party case and elevated it to the SC, but a motion for new trial was raised by the NLU. The issue is:
thereof, which application if not granted "may cause grave or irreparable damage to any whether the CIR, as a special court, has jurisdiction over the case? The Court held yes, ruling
party or render ineffectual any decision in favor of such party." that the CIR is a special court whose functions are specifically stated in the law of its creation
which is the Commonwealth Act No. 103). It is more an administrative board than a part of
Doctrine: The NLRC shall have exclusive appellate jurisdiction over all cases decided by labor the integrated judicial system of the nation. However, this does not mean that it can entirely
arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of the NLRC ignore or disregard the fundamental and essential requirements of due process in trials and
in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the private investigations of an administrative character.
respondents' petition for injunction which challenges the dismissal orders of petitioner. Article Doctrine: There are cardinal primary rights which must be respected even of proceedings of
218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions this character:
to issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of Procedure 1. the right to a hearing;
of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes. 2. tribunal must consider the evidence presented;
3. decision must have something to support itself;
4. supporting evidence must be substantial;
CHAPTER II: POWERS AND DUTIES (CONT’D) [PART 3. PROCEDURE] 5. decision must be based on the evidence presented at the hearing; or at least
contained in the record and disclosed to the parties affected;
ART. 227. TECHNICAL RULES NOT BINDING AND PRIOR RESORT TO AMICABLE SETTLEMENT 6. the body or CIR or any of its judges must act on its own independent consideration
In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence of the law and facts of the controversy, and not simply accept the views of a
prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of subordinate;
this Code that the Commission and its members and the Labor Arbiters shall use every and all 7. decide in such manner that the parties to the proceeding can know the various
reasonable means to ascertain the facts in each case speedily and objectively and without Issue involved, and the reason for the decision rendered
regard to technicalities of law or procedure, all in the interest of due process. In any
proceeding before the Commission or any Labor Arbiter, the parties may be represented by 1.2 Nature of Proceedings
legal counsel but it shall be the duty of the Chairman, any Presiding Commissioner or • Proceedings before LA shall be non-litigious in nature.
Commissioner or any Labor Arbiter to exercise complete control of the proceedings at all • Technicalities of law and procedure and the rules obtaining in the courts of law shall
stages. not be strictly applied
Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts • LA may avail himself of all reasonable means to ascertain facts of the controversy
towards the amicable settlement of a labor dispute within his jurisdiction on or before the first speedily, including ocular inspection and examination of well-informed persons.
hearing. The same rule shall apply to the Commission in the exercise of its original jurisdiction.

1.3 Prohibited Pleadings and Motions purposes of conference as enumerated in Sec. 8 (a) of the 2011 NLRC Rules of
• NLRC 2011 Rules (Rule V, Sec. 5) does not allow following motions/pleadings: Procedure
a. Motion to dismiss the complaint except on ground of lack of jurisdiction
over the subject matter, improper venue, res judicata, prescription and 1.6 Non-appearance of Parties
forum shopping; • Non-appearance of complainant or petitioner on date scheduled in the summons
b. Motion for a Bill of Particulars; despite due notice, shall be a ground for dismissal of case without prejudice.
c. Motion for new trial; • Non-appearance by respondent during first scheduled conference, second
d. Petition for Relief from Judgment conference as scheduled in the summons shall proceed.
e. Motion to declare respondent in default; • If respondent still fails to appear – deemed to have waived his/her right to file
f. Motion for reconsideration of any decision or any order of the Labor position paper.
Arbiter; • LA shall immediately terminate the mandatory conciliation and mediation
g. Appeal from any interlocutory order of the Labor Arbiter, such as but not conference and direct complainant or petitioner to file a verified position paper
limited to, an order: and submit evidence in support of his/her causes of action and render his/her
1. denying a motion to dismiss; decision on the basis of evidence on record.
2. denying a motion to inhibit; • Incumbent upon LA to persuade parties to settle amicably and ensure that
3. denying a motion for issuance of writ of execution; or compromise agreement entered into by them is a fair one and agreed upon freely,
4. denying a motion to quash writ of execution. voluntarily and with a full understanding of the terms and conditions as well as the
h. Appeal from the issuance of a certificate of finality of decision by the consequences.
Labor Arbiter; • Latter onus gains significance when taken in conjunction w/ Art. 228 w/c allows non-
i. Appeal from orders issued by the Labor Arbiter in the course of execution lawyers to appear before labor tribunal in the representation of their own selves.
proceedings. • Compromise agreement once approved by the court has the effect of res judicata
j. Such other pleadings, motions and petitions of similar nature intended to between the parties and should not be disturbed except for vices of consent and
circumvent above provisions. forgery.
• However, NLRC may disregard technical rules of procedure to give life to
1.4 Mandator Conciliation and Mediation Conference constitutional mandate affording protection to labor and to conform to the need of
• LA shall personally preside and take full control of proceedings and may be assisted protecting the working class whose inferiority against employer has always been
by Labor Arbitration Associate. Mandatory conciliation and mediation conference earmarked by disadvantage.
shall be called for purpose of
a. Amicably settling the case upon a fair compromise; 2. BINDING EFFECT OF COMPROMISE AGREEMENT
b. Determining the real parties in interest; • Generally, judgment on compromise agreement puts an end to a litigation and is
c. Determining the necessity of amending the complaint and including all immediately executory.
causes of action; • HOWEVER, ROC requires a special authority before an attorney can compromise
d. Defining and simplifying the issues in the case; the litigation of his clients; it cannot be lightly presumed and must be established by
e. Entering into admissions or stipulation of facts; and evidence.
f. Threshing out all other preliminary matters • Rule 3, Sec. 7 of 2011 NLRC Rules of Procedure states: “Counsel or other authorized
• Conciliation and mediation efforts shall be exerted by LA all throughout mandatory representatives of parties shall have authority to bind their clients in all matters of
conference, procedure; but they cannot, without a special power of attorney or express
• Any agreement entered into by parties (partial/full settlement), shall be reduced to consent, enter into a compromise agreement with the opposing party in full or
writing and signed by parties and their counsel or parties authorized representative, partial discharge of a client's claim.”
if any.
• In any case, compromise agreement shall be approved by LA, if after explaining to General Rubber and Footwear Corporation vs. Drilon
the parties, particularly complainants, the terms, conditions and consequences, Facts: Wage Order No. 6 was issued increasing statutory minimum wage rate. General Rubber
he/she is satisfied that they understand the agreement, that they entered freely and applied for exemption but Wage Council denied application. Members of the union declared
voluntarily to the same and it is not contrary to law, morals and public policy a strike against General Rubber. General Rubber and Sto. Domingo, purporting to represent
• Compromise agreement duly entered into in accordance w/ this section shall be the striking workers entered into a return-to-work agreement, where Union agreed not to
final and binding upon parties and shall have force and effect of judgment demand differential pay arising from wage order. 268 members of Union ratified it but 100 did
rendered by LA. not. Ministry of Labor required General Rubber to pay 100 members their claims for differential
• Except for justifiable grounds, mandatory conciliation and mediation shall be pay.
terminated w/in 30 days from date of first conference.
• No motions for postponement shall be entertained except on meritorious grounds Issue: Is the waiver agreement binding upon all members of the union even those who did not
and when filed at least 3 days before scheduled hearing. sign it?

minority members. This does not mean that accrued money claims can never be waived. It’s • Thus, even assuming that employer’s motion to dismiss was filed out of time, there
just in this case there was no waiver. was nothing to prevent LA from dismissing complaint on the ground of prescription.

2.1 Quitclaims and Waivers 3.2 Res Judicata as Reason to Dismiss Complaint

Olcado, et. al. v. NLRC Delfin, et. al. v. Inciong, et. al.
Facts: Employees filed a complaint for unpaid wages and living allowances against their Doctrines:
employer. One of the issues raised was whether the documents each signed individually by • Requisites for prior judgment to constitute a bar to a subsequent case
employees denominated as “Receipts and Release” were legally binding. The documents a. It must be final judgment or order;
showed that the employees received the specified amounts from their employer representing b. Court rendering the same must have jurisdiction over the subject matter
full and final payment for past salaries, wages, termination pay and other privileges and that and over the parties;
they forever released and discharged their employer and its successors of any claims and c. It must be a judgment or order on the merits; and
liabilities. LA dismissed complaint for lack of merit. Employees filed another complaint for illegal d. There must be between the 2 cases identity of parties, subject matter or
dismissal with reinstatement and backwages. LA dismissed illegal dismissal charge but ordered cause of action
payment of separation pay. Upon appeal, NLRC reversed LA and ruled that issue on • When a labor union accuses an employer of acts of unfair labor practice allegedly
termination pay was already resolved in the previous case filed by the employees. committed during a given period of time, the charges should include all acts of
unfair labor practice committed against any and all members of the union during
Issue: Whether NLRC committed grave abuse of discretion in reversing LA? NO. that period. Union should not, upon dismissal of the charges first proffered, be
allowed to split its cause of action and harass the employer with the subsequent
Ratio: There is a clear case of res judicata or bar by former judgment. Employees had already charges based upon acts committed during the same period of time.
been paid their several money including termination pay. Parties ought not be permitted to • The underlying principle of res judicata – parties ought not be permitted to litigate
litigate an issue more than once. Decision in the “Unpaid Wages Case” legally and finally issue more than once.
settled the question of separation pay of employees. There is also no difference in cause of
action between the 2 cases filed by employees. 3.3. No Dismissal of Complain Despite Death Due the Proprietor
• Case was not extinguished because of death of the proprietor. The case is one for
The issue of the validity of the releases, executed by petitioners under oath, was squarely reinstatement of dismissed employees from their work. It was not a money claim w/c
raised and resolved in the Decision in the “Unpaid Wages Case.” falls under the exclusive authority of labor officials to hear and resolve. While it
combined a claim for backwages and the like, entitlement of individual employees
2.1a Final and Executory Judgment Cannot be Modified or Negotiated thereto solely depended on their right to reinstatement. This case falls under
• General rule that compromise agreements are encouraged does not apply to jurisdiction of NLRC not civil courts.
decisions that have become final and executory
• SC: A final and executory judgment can no longer be altered. The judgment may 3.4 Revival or Refiling of Dismissed Case
no longer be modified in any respect, even if the modification is meant to correct • Party may file a motion to revive or reopen a case dismissed “without prejudice,”
what is perceived to be an erroneous conclusion of fact or law, and regardless of within 10 calendar days from receipt of notice of the order; otherwise, his only
whether the modification is attempted to be made by the court rendering it or by remedy shall be to refile the case.
the highest court of the land.
• Final and executory judgment cannot be negotiated; any act to subvert it is 4. SUBMISSION OF POSITION PAPERS AND REPLY
contemptuous.
4.1 Determination of Necessity of Hearing or Clarificatory Conference
3. MOTION TO DISMISS • After submission by parties of their position papers/reply, LA shall, motu proprio,
• Old Rule: SC ruled that LC and NLRC did not provide for a specific period w/in w/c determine whether there is a need for a hearing or clarificatory conference.
to file a motion to dismiss. • He/she may at his/her discretion and for purpose of making such determination, ask
• NLRC Rules of 2011 Rule V, Sec. 6: Before the date set for the mandatory conciliation clarificatory questions to further elicit facts or information from any party or witness.
and mediation conference, the respondent may file a motion to dismiss on grounds
provided under Section 5, paragraph (a) hereof. Such motion shall be immediately 4.2 Submission of the Case for Decision
resolved by the Labor Arbiter through a written order. An order denying the motion • Upon submission of position papers/replies, or lapse of the period to submit the
to dismiss or suspending its resolution until the final determination of the case, is not same, case shall be deemed submitted for decision unless LA calls for a hearing or
appealable. clarificatory conference in accordance with Sec. 8 of this Rule, in w.c case, notice
of hearing or clarificatory conference shall be immediately sent to the parties. Upon
3.1 Motu Propio Dismissal of Complaint Based on Prescriptions termination of hearing or conference, case shall be deemed submitted for decision.
• Employee’s complaint for illegal dismissal cannot be entertained if apparent that
action has prescribed – complaint filed beyond time fixed by law. 4.3 Position Papers as Basis of Decision
• When plaintiff’s own allegations in the complaint show clearly that action has • In the determination of whether or not quantum of proof was satisfied by a party
prescribed, court may motu proprio (at its own initiative) dismiss the case, on the contending for a particular proposition, the procedure by w/c issues are resolved
ground of prescription. Ex: Employee – dismissed 1979 but only filed his complaint in based only position papers, affidavits or documentary evidence, if agreed upon by
1894 (action prescribed). parties, may be availed of by LA. This does not violate due process clause.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 19

• Affidavits may take the place of direct testimony. • The reviewing officer must perforce be other than officer whose decision is under
• LA may choose, if he deems necessary, to set the case for hearing on the merits review.
where witnesses may be presented and examined by parties.
• In both cases, burden of proving that termination was for valid or just cause rests on 7. SUSPENSION OF PROCEEDINGS
the employer.
• If employer filed no position paper despite notice and in no way justified Rubberworld (Phil), Inc. v. NLRC, et. al.
employee’s dismissal, LA is justified in deciding the case based on position papers • When a corporation, unable to pay its debts and liabilities, petitions the SEC for a
on record. declaration of suspension of payments, SEC my appoint a receiver or a
management committee tasked with the rehabilitation of the corporation.
4.4 Lack of Verification, Not Fatal Consequent to such appointment, according to PD No. 902-A, “all actions for claims
• Lack of verification of the position paper-affidavit is a formal, rather than a against such corp. xxx pending before any court, tribunal, board, or body shall be
substantial defect. It is not fatal. It could easily be corrected by requiring an oath. suspended accordingly.”
Lack of verification/or oath in appeal is not fatal. o Suspension applies even to complaint for illegal dismissal, ULP, damages
• Pleading w/c is required by ROC to be verified may be given due course even and payment of separation pay, retirement benefits, 13th month pay and
without a certification if circumstances warrant suspension of the rules in the interest service incentive leaves w/c employees have filed w/ and were awaiting
of justice. resolution by LA.
• To allow labor cases to proceed would defeat the purpose of the automatic stay
5. DUE PROCESS: OPPORTUNITY TO BE HEARD and severely encumber management committee’s time and resources.
• Procedural due process means that a party to a case must be given sufficient
opportunity to be heard. Its very essence is to allow all parties opportunity to present 8. RESOLUTION OF DOUBT IN LAW OR EVIDENCE
evidence. • Doubt as to the interpretation of labor laws and regulations has to be resolved in
• There is denial of due process when a party is not accorded an opportunity to be favor of labor.
heard in the case field against him. However, what the law prohibits is absolute lack • This precept extends to doubts about the evidence of disputants.
of opportunity to be heard.
o There is no denial where employer was duly represented by counsel and Nicario v. NLRC
given sufficient opportunity to be heard and present his evidence, nor Facts: Nicario, in her claim for payment of overtime pay alleged that she worked for 12hrs
where employer’s failure to be heard was due to various postponements (730am-730pm). LA awarded overtime pay by taking judicial notice that Mancao
granted to it or to his repeated failure to appear during the hearings. No establishments open at 8am-8pm. Upon MR, NLRC gave credence to daily time records
denial where party had a chance to present its side during a period of presented by respondent corporation. Showing that Nicario worked for 8 hours only 9-12 and
more than 2 ½ months and despite repeated extensions of time to present 2-7.
his position, he failed to do so. There is also no denial where a defect
consisting of an absence of notice of hearing was cured by alleged Ratio: NLRC’s reliance on daily time records submitted by employer is misplaced. Time records
aggrieved party having the opportunity to be heard on a motion for presented by the company are unreliable. Because originals were not presented; unusual to
reconsideration. have a 2 hr rest period; entries are suspiciously consistent. Unvarying records of a daily time
• Formal or trial-type hearing is not at all times essential to due process. Due process is record is improbably and contrary to human experience.
satisfied where parties are afforded fair and reasonable opportunity to explain their
side of the controversy. Well settled-doctrine that if doubts exist between evidence presented by employer and
employee, scales of justice must be tilted in favor of the latter. It is a time-honored rule that in
5.1 Inhibition controversies between a laborer and his master, doubts reasonably arising from evidence, or
• LA may voluntarily inhibit himself from resolution of a case and shall state in writing in interpretation of agreements and writing should be resolved in former’s favor.
legal justifications therefor.
• Upon motion of a party, either on ground of relationship w/in fourth civil degree of 9. DECISION OF LABOR ARBITER
consanguinity or affinity w/ adverse party or counsel, or on question of partiality or • LA shall render his/her decision w/in 30 calendar days without extension after
other justifiable grounds, lA may inhibit himself/herself from further hearing and submission of the case by the parties for decision even in the absence of
deciding the case. stenographic notes.
o motion shall be resolved w/in 5 days from filing. • However, involving Overseas Filipino Workers shall be decided w/in 90 calendar
o Order granting/denying motion is unappealable. days after filing of complaint.

6. DUE PROCESS INCLUDES IMPARTIALITY OF THE APPEAL BODY

• NLRC Commissioner cannot review on appeal his own decision as a LA.
• Ang Tibay vs. Court of Industrial Relations – procedural due process in administrative
proceedings requires a tribunal so constituted as to give reasonable assurance of
honesty and impartiality.
• Officer who reviews a case on appeal should not be the same person whose
decision is the subject of review.

ARTICLE. 228 [222]. APPEARANCES AND FEES 2. there must be filed the written consent of the client to the substitution;
a. Non-lawyers may appear before the Commission or any Labor Arbiter only: 3. there must be filed the written consent of the attorney to be substituted, if such
a. If they represent themselves; or consent can be obtained;
b. If they represent their organization or members thereof. 4. in case such written consent cannot be procured, there must be filed with the
b. No attorney’s fees, negotiation fees or similar charges of any kind arising from application for substitution, proof of the service of notice of such motion in the
any collective bargaining agreement shall be imposed on any individual manner required by the rules, on the attorney to be substituted
member of the contracting union: Provided, However, that attorney’s fees may • Under NLRC Rules, any change/withdrawal of counsel as representative shall be
be charged against union funds in an amount to be agreed upon by the parties. made in accordance w/ ROC.
Any contract, agreement or arrangement of any sort to the contrary shall be null
and void. 3. ATTORNEY’S FEE

1. APPEARANCE OF NON-LAWYERS • Art. 228 prohibits payment of attorney’s fees only when effected through forced
contributions from the workers from their own funds as distinguished from union
• NLRC Rules of Procedure 2011 (Rule 3, Sec. 6), a nonlawyer may appear before funds.
Commission or LA only if: o This is to prevent imposition on the workers of the duty to individually
• he/she represents himself/herself as party to the case; contribute respective shares in the fee to be paid the attorney on behalf
1. he/she represents a legitimate labor organization, as defined under Article 212 of the union in its negotiation w/ management.
and 242 of the Labor Code, as amended, which is a party to the case: o Obligation to pay belongs to union.
Provided, that he/she presents to the Commission or Labor Arbiter during the
mandatory conference or initial hearing: (i) a certification from the Bureau of 3.1 Negotiation Fee
Labor Relations (BLR) or Regional Office of the Department of Labor and
Employment attesting that the organization he/she represents is duly registered • 10% negotiation fee w/c covers attorney’s fees, agency fee and the like is based on
and listed in the roster of legitimate labor organizations; (ii) a verified the amount of backwages receivable under the CBA w/c is beyond what the law
certification issued by the secretary and attested to by the president of the said grants.
organization stating that he/she is authorized to represent the said organization
in the said case; and (iii) a copy of the resolution of the board of directors of Cebu Institute of Technology v. Ople
the said organization granting him such authority; Facts: Employer school is of the opinion that 10% negotiation fee should not be charged
2. he/she represents a member or members of a legitimate labor organization against 60% incremental proceeds from tuition fee increases as this is not a bargainable
that is existing within the employer’s establishment, who are parties to the case: matter and has already been fixed by law. Only 30% should be subject to computation of 10%
Provided, that he/she presents: (i) a verified certification attesting that he/she is negotiation fee. Faculty association argues that 90% incremental proceeds should be basis for
authorized by such member or members to represent them in the case; and (ii) computing 10% negotiation fee.
a verified certification issued by the secretary and attested to by the president
of the said organization stating that the person or persons he/she is Ratio: There is merit in School’s argument. Law has already provided for minimum percentage
representing are members of their organization which is existing in the of tuition fee increases to be allotted for teachers and other school personnel. This is
employer’s establishment; mandatory and cannot be diminished although it may be increased by collective bargaining.
3. he/she is a duly- accredited member of any legal aid office recognized by the It follows that only the amount beyond that mandated by law should be subject to
Department of Justice or Integrated Bar of the Philippines: Provided, that negotiation fees and attorney’s fees for the simple reason that it is only this w/c employees
he/she (i) presents proof of his/her accreditation; and (ii) represents a party to had to bargain for. 60% is not a negotiable issue and not obtained by negotiation.
the case;
4. he/she is the owner or president of a corporation or establishment which is a 3.2 For services rendered by union officers
party to the case: Provided, that he/she presents: (i) a verified certification
attesting that he/she is authorized to represent said corporation or
• Art. 228(b) prohibits imposition on any individual union member of attorney’s fees,
establishment; and (ii) a copy of the resolution of the board of directors of said
negotiation fees and similar charges arising from negotiation of a bargaining
corporation, or other similar resolution or instrument issued by said
agreement. Collection of special assessment partly for payment of services
establishment, granting him/her such authority.
rendered by union officers, consultants and others may not be in the category of
• Appearance of labor federations and local unions as counsel in labor proceedings
attorney’s fees or negotiation fees.
has been given legal sanction.
• No question that it is an exaction w/c falls w/in category of a similar charge,
therefore w/in prohibition in aforementioned article.
2. CHANGE OF LAWYER • This shall be correlated w/ Art. 250(n and o) and Art. 260(e)

ART. 229 [223]. APPEAL decisions or resolutions of the Regional Director of the Department of Labor and
Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days
the Commission by any or both parties within ten (10) calendar days from receipt of such from receipt thereof. If the 10th or 5th day, as the case may be, falls on a Saturday,
decisions, awards, or orders. Such appeal may be entertained only on any of the following Sunday or holiday, the last day to perfect the appeal shall be the first working day
grounds: following such Saturday, Sunday or holiday.
a. If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter; 1.2 Ten Calendar Days
b. If the decision, order or award was secured through fraud or coercion, including • Under Art. 229, decisions, awards or orders of a LA cannot be declared final and
graft and corruption; executory upon mere issuance thereof.
c. If made purely on questions of law; and • Period of 10 days from receipt of any order is granted to either party or to both
d. If serious errors in the findings of facts are raised which would cause grave or parties involved to appeal to NLRC.
irreparable damage or injury to the appellant. • Vir-Jen Ruling: 10 days fixed by Art. 223(now Art. 229) contemplates calendar days
and not working days.
In case of a judgment involving a monetary award, an appeal by the employer may be o Saturdays, Sundays and Legal Holidays are not to be excluded in
perfected only upon the posting of a cash or surety bond issued by a reputable bonding counting the 10-day period.
company duly accredited by the Commission in the amount equivalent to the monetary • This ruling cannot be applied to a case where appeal to NLRC was filed prior to the
award in the judgment appealed from. case (July 20, 1982).

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, 1.3 Date of Receipt by mail
insofar as the reinstatement aspect is concerned, shall immediately be executory, even • Service by registered mail is complete either upon actual receipt by addressee or at
pending appeal. The employee shall either be admitted back to work under the same terms the end of five days, if he does not claim it within five days from the first notice of the
and conditions prevailing prior to his dismissal or separation or, at the option of the employer, postmaster.
merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein. 1.4 Failure to give a copy of appeal to adverse party w/in 10 days
• failure to give a copy of appeal to appellee w/in 10 days is not fatal if appellee was
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose not prejudiced by the delay in the service of said copy of the appeal
reasonable penalty, including fines or censures, upon the erring parties. • Rules of technicality must yield to the broader interests of substantive justice.
• Labor law determinations should not only be secundum rationem but also
In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other secundum caritatem.
party who shall file an answer not later than ten (10) calendar days from receipt thereof. • In labor cases, nonservice of copy of appeal/appeal memorandum is not a
jurisdictional defect and does not justify dismissal of appeal.
The Commission shall decide all cases within twenty (20) calendar days from receipt of the • Dismissal on purely technical grounds is inconsistent w/ constitutional mandate on
answer of the appellee. The decision of the Commission shall be final and executory after ten protection to labor.
(10) calendar days from receipt thereof by the parties.
1.5 No extension of period
Any law enforcement agency may be deputized by the Secretary of Labor and Employment • No motion or request for extension of period w/in w/c to perfect an appeal shall be
or the Commission in the enforcement of decisions, awards or orders. allowed

1.6 Periods generally mandatory

1. FINAL DECISIONS CANNOT BE AMENDED • Rule of procedure and practice of the Ministry of Labor provide periods w/in w/c to
• if not appealed on time, LA’s decision becomes final and cannot be amended. do certain acts such as to file a MR.
• Aboitz Shipping Employees v. Trajano: except for correction of clerical errors or • Periods are imposed to prevent needless delays and to ensure orderly and speedy
making of nunc pro tunc entries w/c cause no prejudice to any party or where the discharge of judicial business.
judgment is void, after the judgment has become final and executory, same can • Strict compliance w/ such rule is imperative and mandatory. Only strong
neither be amended nor altered evein if purpose is to correct a perceived consideration of equity will lead SC to allow an exception to procedural rule in the
conclusion of fact or law. All litigations must come to an end however unjust the interest of substantial justice.
result or error may appear, otherwise, litigation would even be more intolerable than
the wrong or injustice it is designed to correct.
• Decision that has become final and executory cannot be amended so as to 2. WHERE TO FILE APPEAL
indicate in the writ of execution that the liability is not stated in the decision or the
dispositive portion. • Appeal should be filed w/ Regional Arbitration Branch or Regional Office where
case was heard and decided2
1.1 Appeal
• 2011 NLRC Rule reads (Rule VI, Sec.1): Decisions, awards, or orders of the Labor
Arbiter shall be final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt thereof; and in case of
2 NLRC Rules
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 22

3. GROUNDS OF APPEAL • In Acda v. Minister of Labor: Where fee has been paid belatedly, broader interest of
justice and desired objective in deicding the case on the merits demand the
appeal be given due course.
• Appeal may entertained only on the following grounds:
a. If there is prima facie evidence of abuse of discretion on the part of the Labor
6. APPEAL BOND
Arbiter or Regional Director;
b. If the decision, award or order was secured through fraud or coercion,
including graft and corruption; • In case the decision of the Labor Arbiter or the Regional Director involves a
c. If made purely on questions of law; and/or monetary award, an appeal by the employer may be perfected only upon the
d. If serious errors in the findings of facts are raised which, if not corrected, would posting of a bond, which shall either be in the form of cash deposit or surety bond
cause grave or irreparable damage or injury to the appellant.3 equivalent in amount to the monetary award, exclusive of damages and attorney’s
fees.
• In case of surety bond, the same shall be issued by a reputable bonding company
duly accredited by the Commission or the Supreme Court, and shall be
accompanied by original or certified true copies itemized in the NLRC Rules.
4. REQUISITES FOR PERFECTION OF APPEAL • A cash or surety bond shall be valid and effective from the date of deposit or
posting, until the case is finally decided, resolved or terminated, or the award
satisfied. This condition shall be deemed incorporated in the terms and conditions of
a. The appeal shall be:
the surety bond, and shall be binding on the appellants and the bonding
1. filed within the reglementary period provided in Section 1 of this Rule;
company.
2. verified by the appellant himself/herself in accordance with Section 4, Rule 7 of
• The appellant shall furnish the appellee with a certified true copy of the said surety
the Rules of Court, as amended;
bond with all supporting documents. The appellee shall verify the regularity and
3. in the form of a memorandum of appeal which shall state the grounds relied
genuineness thereof and immediately report any irregularity to the Commission.
upon and the arguments in support thereof, the relief prayed for, and with a
• Upon verification by the Commission that the bond is irregular or not genuine, the
statement of the date the appellant received the appealed decision, award
Commission shall cause the immediate dismissal of the appeal, and censure the
or order;
responsible parties and their counsels, or subject them to reasonable fine or
4. in three (3) legibly typewritten or printed copies; and
penalty.6
5. accompanied by: i) proof of payment of the required appeal fee and legal
research fee; ii) posting of a cash or surety bond as provided in Section 6 of this
Rule; and iii) proof of service upon the other parties. Sec.6, Rule VI, 2011 NLRC Rules of Procedure
b. A mere notice of appeal without complying with the other requisites aforestated No motion to reduce bond shall be entertained except on meritorious grounds, and only upon
shall not stop the running of the period for perfecting an appeal. the posting of a bond in a reasonable amount in relation to the monetary award.
c. The appellee may file with the Regional Arbitration Branch or Regional Office where
the appeal was filed, his/her answer or reply to appellant's memorandum of The mere filing of a motion to reduce bond without complying with the requisites in the
appeal, not later than ten (10) calendar days from receipt thereof. Failure on the preceding paragraphs shall not stop the running of the period to perfect an appeal.
part of the appellee who was properly furnished with a copy of the appeal to file
his/her answer or reply within the said period may be construed as a waiver on 6.1 Reduction of Bond
his/her part to file the same. • The bond is sine qua non to the perfection of appeal from the labor arbiter’s
d. Subject to the provisions of Article 218 of the Labor Code, once the appeal is monetary award.
perfected in accordance with these Rules, the Commission shall limit itself to • The appeal of a decision involving a monetary award in labor cases may be
reviewing and deciding only the specific issues that were elevated on appeal.4 perfected “only upon the posting of a cash or surety bond.” This is an indispensable
requirement to perfect an employer’s appeal.
• Rosewood cited Quiambao where the Court ruled that a relaxation of the appeal
5. PAYMENT OF APPEAL FEES
bond requirement could be justified by substantial compliance with the rule. The
petitioner’s motion to reduce bond (accompanied by a surety bond for less than
• The appellant shall pay the prevailing appeal fee and legal research fee to the the equivalent monetary award in the judgement) is substantial compliance with
Regional Arbitration Branch or Regional Office of origin, and the official receipt of the Labor Code.
such payment shall form part of the records of the case5. • The SC justified failure to pay the bond in the following cases: Rada where the bond
• Failure to pay appeal docketing fee confers a directory and not a mandatory was paid belatedly because the labor arbiter’s decision did not state the amount
power to dismiss an appeal and such power must be exercised w/ sound discretion awarded as backwages and overtime pay; Blancaflor in which the failure to give
and w/ great deal of circumspection considering all attendant circumstances. bond was in part due to failure of the LA to state the exact amount of backwages
and separation pay due; Your Bus Line where the failure to file bond was excused
because petitioner was misled by the notice of the Decision which, while stating the
requirement for perfecting an appeal did not mention that a bond must be filed.
3 NLRC Rules
4 NLRC Rules
5 NLRC Rules 6 NLRC Rules
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 23

6.2 “McBurnie Guidelines” on Appeal Bond Reduction be considered completed. The law however does not require its outright payment, but only
the posting of a bond to ensure that the award will be eventually paid should the appeal fail.
McBurnie vs. Gauzon
Summary: McBurnie filed an illegal dismissal complaint; LA ruled in his favor and awarded 6.4a Relaxing the Ten-day Period
$985,000 as salary plus 2M for damagaes. EGI appealed to NLRC and posted an appeal bond • Borja Estate case, Court summarizes situations where Court allowed tardy appeals.
of 100K and filed a memorandum of appeal and a motion to reduce bond. NLRC denied o SC has only relaxed application of rules on appeal in labor cases where
motion to reduce bond and required an additional bond of more than 54M. EGI failed to post the failure to comply w/ requirements for perfection of appeal was
the additional bond, NLRC dismissed EGI’s appeal. EGI appealed to CA; CA enjoined justified or where there was substantial compliance w/ rules.
enforcement of the LA’s decision; McBurnie went to SC § where the presence of any justifying circumstance recognized
by law such as fraud, accident, mistake or excusable
Doctrine: On the matter of the filing and acceptance of motions to reduce appeal bond, the negligence, properly vested the judge with discretion to
ff guidelines shall be observed: approve or admit an appeal filed out of time;
a. The filing of a motion to reduce appeal bond shall be entertained by the NLRC § where on equitable grounds, a belated appeal was allowed as
subject to the following conditions: the questioned decision was served directly upon petitioner
1. there is meritorious ground; and instead of her counsel of record who at the time was already
2. a bond in a reasonable amount is posted; dead;
b. For purposes of compliance with condition no. (2), a motion shall be accompanied § where counsel relied on the footnote of the notice of decision
by the posting of a provisional cash or surety bond equivalent to ten percent (10,) of of the LA that aggrieved party may appeal w/in 10 working
the monetary award subject to the appeal, exclusive of damages and attorney's days;
fees; § in order to prevent a miscarriage of justice or unjust enrichment
c. Compliance with the foregoing conditions shall suffice to suspend the running of the such as where tardy appeal is from a decision granting
10-day reglementary period to perfect an appeal from the labor arbiter's decision separation pay w/c was already granted in an earlier final
to the NLRC; decision;
d. The NLRC retains its authority and duty to resolve the motion to reduce bond and § or where there are special circumstances in the case combined
determine the final amount of bond that shall be posted by the appellant, still in w/ its legal merits or the amount and issue involved.
accordance with the standards on meritorious grounds and reasonable amount;
and 6.5 No Distinction Between “Filing” and “Perfection” of Appeal
e. In the event that the NLRC denies the motion to reduce bond, or requires a bond • Star Angel Decision that declared that appeal must be filed within 10 days but may
that exceeds the amount of the provisional bond, the appellant shall be given a be perfected after that period is NOT VENERABLE. Lawyers are advised to forget,
fresh period of ten (10) days from notice to the NLRC order within which to perfect rather than invoke, Star Angel.
the appeal by posting the required appeal bond.
Computer Innovations Center, et. al. vs. NLRC
• SC applied the guidelines in numerous cases. Sara Lee ruled that while McBurnie Facts: Petitioner invoke holding in Star Angel Handicraft v. NLRC, that there is a distinction
had effectively addressed the preliminary amount of the bond to be posted in order between filing of an appeal w/in reglementary period and its perfection, and that the appeal
to toll the running of the period to appeal, “there is no hard and fast rule in may be perfected after said reglementary period.
determining whether the addition bond to be posted is reasonable in relation to the
judgment award.” SC reduced 1 Billion to 725M which the Court deems reasonable. Doctrine: Indeed, Star Angel held that filing of a motion for reduction of an appeal bond
necessarily stays the reglementary period for appeal. However in this case, motion for
6.3 Period to Post the Bond reduction of appeal bond, w/c was incorporated in the appeal memorandum, was filed only
on the 10th day or final day of reglementary period. Under such circumstance, motion for
Sameer Overseas Placement Agency, Inc vs. Levantino reduction of appeal bond can no longer be deemed to have stayed appeal and petitioner
Summary: Having received a copy of the LA’s decision on Oct 17, 1997, Sameer had until Oct stays the risk of summary dismissal of appeal for non-perfection. Moreover, Star Angel case
28, 1997 to perfect the appeal. It filed notice of appeal and memorandum of appeal on Oct had only been cited once hence it has not acquired sheen of venerability reserved for
27, along with motion for extension of time to file a surety-appeal bond. It was only on Nov 3 repeatedly-cited cases.
that it filed the appeal bond. Thus, NLRC dismissed the appeal for failure to perfect it within
the 10 day reglementary period. It must also be noted that present provision in NLRC Rules of Procedure that “filing of a motion
to reduce bond shall not stop the running of period to perfect appeal” flatly contradicts the
Doctrine: The appeal bond is not merely procedural but jurisdictional, for w/o it, the NLRC notion expressed in Star Angel that there is a distinction between filing an appeal and
does not acquire jurisdiction over the appeal. NLRC did not acquire Sameer’s appeal w/in the perfecting an appeal.
10- day reglementary period.
6.6 Amount of Appeal Bond Excludes Damages
6.4 No Bond, No Appeal Perfected • An appeal is deemed perfected upon the posting of the bond equivalent to the
monetary award exclusive of moral and exemplary damages as well as attorney’s
Borja Estate vs. Spouses R. Ballad and R. Ballad fees.
The word “only” makes it perfectly clear that the lawmakers intended the posting of a cash or • The damages and attorney’s fees which are excluded from the computation of the
surety bond by the employer to be the exclusive means by which an employer’s appeal may award to determine the amount of the appeal bond are called “discretionaries.”
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 24

They are distinguished from the “mandatories” which refers to those amounts fixed in taken. Neither was a cash or surety bond posted.
the decision to which the employee is entitled upon application of the law on
wages. Mandatories include backwages, holiday pay, overtime pay, separation Doctrine: Even assuming that letter is a valid notice of appeal, lack of cash or surety bond is
pay, 13th month pay. fatal to appeal. In cases where judgment involves a monetary award, 2nd paragraph of Art.
229 provides that appeal by employer may be perfected only upon posting of a cash or
6.7 Is Property Bond Acceptable? surety bond issued by reputable bonding company duly accredited by NLRC. NLRC acted
• The Court ruled that although posting of a bond is jurisdictional, the requirement with grave abuse of discretion in treating the letter as an appeal from judgment of LA.
should be given a liberal interpretation. The real property bond posted by the Perfection of an appeal in the manner and within the period prescribed by law is not only
petitioners sufficiently protects the interests of private respondents should they finally mandatory but also jurisdictional. Failure to conform with the rules regarding appeal will
prevail. certainly render the judgment final and executory, hence, unappealable.

6.8 Bond Accepted Conditionally 9. PROCEEDINGS BEFORE THE COMMISSION

• Bond filed by petitioner is accepted by NLRC subject to conditions, the failure to • R.A. 9347: Increased the NLRC Divisions from 5 to 8, with 3 commissioners each
fulfill those conditions on time is tantamount to a failure to post the bond required by division.
law. 1. Commission En Banc – sits en banc only for purposes of promulgating rules
and regulations governing hearing and disposition of cases before its
6.9 Supersedeas Bond
Divisions and Regional Arbitration Branches, and for formulation of policies
• Substantial justie demands that the employer fulfill its commitment to post the bond
affecting its administration and operations.
in order to stay the execution of judgement against him pending resolution of the
2. Divisions – Unless otherwise provided by law, the Commission exercises its
appeal therefrom.
adjudicatory and all other powers, functions and duties through its five
• There is no procedural error imputable to the arbiter in requiring the employer to
[now eight] Divisions. Each Division consists of one member from the
post supersedeas bond as a condition for the stay of immediate execution of the
public sector who acts as the Presiding Commissioner and one member
judgment against it, after appeal had been taken from said judgment.
each from the workers and employers sectors, respectively.
• The presence of at least 2 Commissioners of a Division constituties a quorum. The
concurrence of 2 Commissioners of a Division is necessary for the pronouncement of
a judgment or resolution.
7. Effect of Appeal of Arbiter’s Decision
• Without prejudice to immediate reinstatement pending appeal under Section 6 of 9.1 Issues on Appeal
Rule XI, once an appeal is filed, the LA loses jurisdiction over the case. All pleadings • The Commission shall limit itself to reviewing and deciding those specific issues which
shall be addressed to and filed with the Commission. are raised on appeal. Those not raised shall be final and executory.
7.1 Execution or Reinstatement Pending Appeal 9.2. Evidence Submitted on Appeal to NLRC
• In case the decision includes an order of reinstatement, and the employer disobeys • The NLRC is not precluded from receiving evidence on appeal as technical rules of
the directive under the second paragraph of Section 18 of Rule V or refuses to evidence are not binding in labor cases. Labor officials are mandated by the Labor
reinstate the dismissed employee, the Labor Arbiter shall immediately issue writ of Code to use every and all reasonable means to ascertain the facts in each case
execution, even pending appeal, directing the employer to immediately reinstate speedily and objectively, without regard to technicalities of law or procedure, all in
the dismissed employee either physically or the payroll, and to pay the accrued the interest of due process.
salaries as a consequence of such reinstatement at the rate specified in the • The rules of evidence prevailing in courts of law or equity are not controlling in
decision. proceedings before the Commission. The submission of additional evidence in
• If the employer disobeys the writ, he may be cited for contempt in accordance with support of the employee’s appeal does not prejudice the employer since the latter
Rule IX. could submit counter-evidence.
7.2 Effect of Perfection of Appeal on Execution
Philippine Telegraph and Telephone Corporation vs. NLRC
• The perfection of an appeal shall stay the execution of the decision of the LA on
Facts: On appeal to Commissioner, petitioner (employer) submitted uncontradicted evidence
appeal, except execution for reinstatement pending appeal.
showing payment to employee of holiday pay and rest day pay, employee’s non-entitlement
8. Frivolous or Dilatory Appeals to incentive leave pay due to his enjoyment of vacation leave privileges consistent with Art.
• No appeal from an interlocutory order shall be entertained. To discourage frivolous 95 of LC. This was rejected because it was not presented at first opportunity or when case was
or dilatory appeals, including those taken from interlocutory orders, the Commission pending with LA.
after hearing may censure or cite in contempt the erring parties and their counsels,
or subject them to reasonable fine or penalty. Doctrine: notwithstanding belated presentation of evidence, Commission should have
considered them just the same. Technical rules of evidence are not binding in labor cases.
8.1 Example of Abuse of Discretion: Unverified Letter Not Proper Appeal Labor officials should use every reasonable means to ascertain the facts in each case
speedily and objectively without regard to technicalities of law or procedure, all in the interest
Garcia vs. NLRC of due process. Hence, the fact that it was duly introduced on appeal to Commission is
Facts: After receiving a copy of a decision, private respondent (employer) through its enough basis for it to have been more judicious in
President, wrote to the LA a letter expressing dismay over the judgment. No appeal was
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 25

10. FORM OF DECISION, RESOLUTION AND ORDER funeral home. This question was not answered by SC and it ended up referring it to CA.
• It shall state clearly and distinctly the findings of facts, issues and conclusions of law
on which it is based, and the relief granted, if any. If the decision, resolution or order Doctrine: Since appeals from NLRC to SC were eliminated, the legislative intendment was that
involves monetary awards, the same shall contain the specific amount awarded as the special civil action of certiorari was and still is the proper vehicle for judicial review of
of the date the decision is rendered. decisions of the NLRC. Pursuant to B.P. Blg. 129, all petitions for certiorari should initially be filed
in the CA in the strict observance of the doctrine on hierarchy of courts as the appropriate
10. 1 Reasoned Reversal forum for the relief desired.
• While it is within the Commission’s competence, as an appellate agency reviewing
decisions of LA, to disagree with and sent aside the latter’s finidngs, it stands to St. Martin precedent states that:
reason that it should state an acceptable cause therefor. It would otherwise be a 1. The way to review NLRC decisions is through special civil action of certiorari under
whimsical, capricious, oppressive, illogical, unreasonable exercise of quasi-judicial Rule 65
prerogative, subject to invalidation by the extraordinary writo of certiorari. 2. The jurisdiction over such action belongs to both the Supreme Court and the Court
• The Commission overturned the LA’s factual determination regarding LIPERCON’s of Appeals; but
being a legitimate independent contractor without stating the reason therefore, 3. In line with the doctrine of hierarchy of courts, the petition should be initially
without any explanation whatever as to why the LA’s evidentiary premises were not presented to the lower of the two courts, that is, the CA.
worthy of credit or why the inferences drawn therefrom were unacceptable, as a
mtter of law or logic (Coca-cola Bottlers vs. Hingpit) 14.2 60 Days: To File Petition for Certiorari

11. EXTENDED MEANING OF “APPEAL” UNDER ARTICLE 229; NLRC MAY ISSUE WRIT OF
Waterfront Cebu City Casino Hotel vs. Ledesma
CERTIORARI
In Laguna Metts Corporation vs. CA, SC categorically ruled that present rule mandatorily
requires complied with reglementary period. It cannot be extended.
Triad Security and Allied Services Inc, vs. Ortega
Facts: Petitioners insist that NLRC is bereft of authority to rule on a matter involving grave The rationale for amendements under A.M. No. 07-7-12 SC is essentially to prevent use or
abuse of discretion that may be committed by a LA. abuse of petition for certiorari under Rule 65 to delay a case or even defeat ends of justice. As
Rule now stands, petitions for certiorari must be filed strictly w/in 60 days from notice of
Doctrine: This conclusion proceeds from a limited understanding of Art. 223 of LC. Being the judgment or from order denying a MR.
administrative agency especially tasked with the review of labor cases, the NLRC is in a far
better position to determine whether petitioners’ grounds for certiorari are meritorious. In subsequent case of Domdom vs. Third & Fifth Divisions of Sandiganbayan, absence of a
specific prohibition in Sec. 4 of Rule 65, as amended, for extension of 60-day period was
11.1 Extraordinary Remedies construed as a discretionary authority of the courts to grant extension.
• The new rule allows a party to file a petition to annul or modify an order or resolution
of a labor arbiter on ground of abuse of discretion or serious errors in findings of In Republic vs. St. Vincent De Paul Colleges, Inc, SC clarified “conflict” between rulings in
facts, fraud. It has to be filed with the Commission within 10 days from receipt of Laguna Metts Corporation and Domdom. SC ruled that Laguna involves the strict application
such order or resolution. of the general rule that petitioners must file petitions for certiorari w/in 60 days from notice of
judgment or order denying MR. Domdom, on the other hand, is the exception. It relaxed rule
12. FINALITY OF NLRC DECISION; ENTRY OF JUDGMENT
and allowed extension of 60-day period.
1. FINALITY OF THE DECISIONS, RESOLUTION OR ORDERS OF THE COMMISSION – They
shall become final and executory after 10 calendar days from receipt by the
In Thennamaris Philippine, Inc. vs. CA , rules were relaxed. It reiterated the necessity for party
counsel or authorized representative or parties.
invoking liberality to advance a reasonable or meritorious explanation for failure to file a
2. ENTRY OF JUDGMENT – Upon expiration of 10 calendar days, the decision, resolution,
petition for certiorari w/in 60 day period.
order shall be entered in a book of entries of judgement. In the absence of return
cards, certifications from the post office, or other proof of service to parties, the
14.3 One Day Late
Executive Clerk or Deputy Executive Clerk shall consider the decision, resolution or
• The 60-day period must be carefully observed. Reglementary periods are
order as final and executory after 60 calendar days from date of mailing.
indispensable interdictions against needless delays.
• In a case where the CA dismissed the petition for certiorari because it ws filed on
13. CERTIFIED CASES
March 18, instead of March 17, the SC sustained the CA’s action. The Court stressed
• Proceedings before the Commission on strike cases certified to it by the DOLE
that incorrect computation of time by the petitioner’s counsel is “inexcusable
secretary under Article 278(g) are explained under that article.
neglect”, and the client is bound by his counsel’s conduct, negligence, and
14. APPEAL FROM THE NLRC mistakes. (LTS Phil. Corp. vs. Malimat)

14.4 Petition for Certiorari; Not Barred by Finality of Judgment

14.5 Certified True Copy of NLRC Decision • Instances of possible appeal to CA from DOLE Secretary are the following:
• In appeals under Rule 45, and in original civil actions for certiorari under Rule 65 in 1. under the rules governing local employment, dated June 5, 1997, regarding
relation to Rules 46 and 56, what is required to be certified is the copy of the the regional director’s decisions on complaints of employment agencies.
questioned judgement, final order or resolution. 2. Under Art. 128 and Section 2 in relation to Section 3a and Section 4, Rule X,
Book III, Implementing Rules regarding compliance order in labor standards
15. APPEAL TO LABOR SECRETARY ABOLISHED cases; under Section 1, Rule IV of the Rules on Disposition of labor standard
• PD 1391 amended Article 223 and abolished appeals to the Secretary of Labor. cases dated Sept. 16, 1987; execution, on occupational health and safety
cases.
16. GROUNDS FOR CERTIORARI 3. Under Art. 236 (now 243): denial of application for registration by BLR of
• No law provides for an appeal from decisions of the NLRC. Hence, there can be no registration of federation, national or industry union, or trade union center.
review and reversal on appeal by higher authority of its factual or legal conclusions. 4. Under Art. 238 (now 245): cancellation of registration by BLR or Regional Office.
When however, it decides a case without or in excess of its jurisdiction, or with grave 5. Under Art. 259 (now 272): order of a med-arbiter on a petition for certification
abuse of discretion, the party thereby adversely affected may obtain a review and election or as to the results of a certificate election.
nullification of that decision by the SC or CA through the extraordinary writ of 6. Under Book V of the Implementing Rules: decision of the BLR regarding
certiorari. administration of union funds;
• No law provides for an appeal from decisions of the NLRC. Hence, there can be no 7. Under Art. 263 (now 278): decisions in cases of assumptions of jurisdiction.
review and reversal on appeal by higher authority of its factual or legal conclusions.
17.1 Exhaustion of Administrative Remedies
16.1 “Grave abuse of discretion” • The remedy of an aggrieved party in a decision or resolution of the Secretary of
• Means capricious and whimsical exercise of judgement as is equivalent to lack of DOLE is to timely file a motion for reconsideration as a precondition for any further or
jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of subsequent remedy, and then seasonably file a special civil action for certiorari
discretion as when the power is exercised in an arbitrary or despotic manner by under Rule 65 of the Rules of Court.
reason of passion or personal hostility, and must be so patent and so gross as to • A petition for certiorari should be preceded by exhaustion of administrative
amount to an evasion of positive duty. remedies.

16.2 Sole Office of Certiorari 17.1a Appeal to the Office of the President Optional
• The appellate court’s jurisdiction to review a decision of the NLRC in a petition for • The remedy of appeal from the Secretary of Labor to the Office of the President is
certiorari is confined to issues of jurisdiction or grave abuse of discretion. not mandatory requirement before resort to courts can be had, but an optional
relief provided by law to parties seeking expeditious disposition of their labor
16.3 Not a Slave to Technical Rules disputes. Faulure to avail of such releid shall not in any way serve an impediment to
judicial intervention.
Reyes vs. NLRC, Coca-Cola Bottlers Phils
Facts: dismissed employee was ordered reinstated by LA. NLRC reversed decision. On appeal 17.2 Exceptions: When Motion for Reconsideration Dispensable
to CA, employee failed to explaint why he did not personally serve copy of petition to • In Sunshine Transportation vs. NLRC, the Court dismissed the petition for certiorari
adverse party as required by Rule 13, Sec. 11 of ROC. CA dismissed petition. No MR was filed. saying that in light of the doctrine of exhausttion of administrative remedies, a
Despite this and earlier failure to furnish the employer personally a copy of the petition, SC motion for reconsidereation must be first filed before the special cicila ction for
entertained and granted employee’s petition. certiorari may be availed of. (General Rule)
• Fe Alindao vs. Joson, et al: It has been held that the requirement of a motion for
Doctrine: Courts are not slaves to or robots of technical rules, shorn of judicial discretion. The reconsideration may be dispensed with in the following instances: (1) when the issue
general rule is that negligence of counsel binds the client. Hence if counsel commits a mistake raised is one purely of law; (2) where public interest is involved; (3) in cases of
in the course of litigation, thereby resulting in his losing the case, his client must perforce suffer urgency; and (4) where special circumstances warrant immediate or more direct
the consequence of the mistake. This is to prevent possibility that every losing party will reaise action. On the other hand, among the accepted exceptions to the rule on
issue of negligence to escape decision of court. This general rule however pertains only to exhaustion of administrative remedies are: (1) where the question in dispute is purely
simply negligence of the lawyer. Where the negligence of counsel is one that is so gross, a legal one; and (2) where the controverted act is patently illegal or was performed
palpable, pervasive, reckless and inexcusable, then it does not bind the client since in such without jurisdiction or in excess of jurisdiction.
case client is effectively deprived of his or her day in court. • To dispense with a motion for reconsideration, there must be a concrete,
compelling and valid reason for the failure to comply with the requirement.
In this case, negligence of petitioner’s counsel may be considered gross since it resulted to • Despite the jurisprudence insisting on exhaustion of administrative remedies, the
foreclosure of remedies available to petitioner. Higher interest of justice and equity demand DOLE department order amending the rules implementing Book V of the Code
that petitioner should not be denied his day in court and made him to suffer for his counsel’s states in part: “The decision of the Secretary shall become final and executory after
indiscretions. 10 days from receipt thereof by the parties. No motion for reconsideration of the
decision shall be entertained.”
17. APPEAL FROM OSEC TO CA; ST. MARTINS RULING APPLIES
• Like NLRC decisions, rulings issued by the Office of the Secretary (OSEC) of DOLE 17.3 Motion for Reconsideration: Inherent Requisite of Certiorari
may be appealed to the CA, not the SC pursuant to ruling in St. Martin Funeral • Although a government office may prohibit altogether the filing of a motion for
Homes vs. NLRC. reconsideration of its decision or order, the fact remains that certiorari inherently

requires the filing of a motion for reconsideration. A motion for reconsideration is the • Submission of a false certification or non-compliance with any of the undertakings
tangible representation of the opportunity given to the office to correct itself. shall constitute indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions.
17.3a No Second MR • If the acts of the party or his counsel clearly constitute willful and deliberate forum
• The NLRC does not allow a second MR. NLRC abuses its discretion when it violates its shopping, the same shall be a ground for summary dismissal with prejudice and shall
own rules by entertaining such a motion. constitute direct contempt, as well as administrative sanctions.

17.3b MR Prohibited by NLRC Rules 18.1 CERTIFICATION OF NON-FORUM SHOPPING MUST BE MADE BY PETITIONER
• Rule V, Section 5 of the 2011 NLRC Rules, prohibits a MR of any decision or order of
the LA. Santos, et. al. v. CA, Pepsi Cola Products, et. al.
Facts: Pepsi restructured physical sales and distribution systems, which led to certain positions
17.4 Party who failed to appeal on time from decision of Labor Arbiter may still file Motion
being declared redundant and abolished, including those of petitioners. However, Pepsi
for Reconsideration of NLRC Decision
subsequently created new positions with what the petitioners allege are substantially the
same functions. Petitioners filed for illegal dismissal, losing both in the LA and the NLRC. They
Sadol vs. Pilipinas Kao, Inc
filed a special action for certiorari before the CA, but it was dismissed outright because the
Facts: Petitioner was recruited as a laborer by a private recruitment agency, Vega & Co., w/ verification and certification against forum shopping were executed merely by petitioners'
assignment at Pilipinas Kao, Inc. He was summarily dismissed so he filed a complaint for counsel and not by petitioners themselves.
reinstatement and backwages. LA order Pilipinas Kao to pay Sadol separation pay of once a
month for every year of service. Sadol insisted on reinstatement so he appealed to NLRC. Doctrine: Section 3, Rule 46 of the 1997 Rules of Civil Procedure provide that the certification
Employer appealed but its appeal was filed out of time. NLRC modified LA’s decision. Pilipinas against forum shopping must be made by petitioner himself and not by counsel. Petitioner is in
Kao received copy of NLRC decision on Sept. 13, 1988. It field an MR on Sept. 22 w/c Sadol the best position to know whether he has previously commenced any similar action involving
opposed. Sept. 30, NLRC set aside decision hence petitioner filed case with SC. the same issues in any other tribunal or agency.
Doctrine: Party who failed to appeal from a decision of the LA to the NLRC can still participate
19. DISPOSITION BY COURT OF APPEALS
in a separate appeal timely filed by the adverse party by a motion for reconsideration of the
• The SC [or the CA, as per the St. Martins case] is clothed with ample authority to
decision of the NLRC on appeal. There is no question that private respondents failed to file a
review matters even if they are not assigned as errors in the appeal, if it finds that its
timely appeal from the decision of the LA while the petitioner was able to interpose his appeal
consideration is necessary in arriving at a just decision of the case.
within the reglementary period. It is also an accepted postulate that issues not raised in the
lower court or the LA may not be raised for the first time on appeal.
19.1 Remand
• Appraisal of the of the NLRC and LA lacks precision, giving rise to
Note is taken of the fact that even the Solicitor General refused to represent the NLRC in this
ambiguity that lends plausibility to a petition for certiorari, and there are
proceeding as it shares the view of petitioner that the decision of the labor arbiter having
matters regarding the quitclaim that still need to be clarified à remand to
become final by the failure to respondent PKI to appeal on time the NLRC may no longer
NLRC
amend, modify, much less set aside the same.
• Unfair if the SC or CA would disregard the quitclaim
This posture is correct insofar as respondent Pilipinas Kao is concerned. However, as petitioner
19.2 Dismissal of Appeal
had filed a timely appeal, the NLRC had jurisdiction to give due course to his appeal and
• Even if the appeal in the NLRC is still pending, if the SC or CA in a petition
render the decision of August 28, 1988, a copy of which was furnished respondents. Having
for certiorari finds the facts on record substantially sufficient to rule that the
lost the right to appeal can respondent PKI file a motion for reconsideration of said decision?
appeal was filed late and is patently dilatory, it may order NLRC to dismiss
he rules of technicality must yield to the broader interest of justice. It is only by giving due
the appeal.
course to the motion for reconsideration that was timely filed that the NLRC may be able to
equitably evaluate the conflicting versions of facts presented by the parties.
19.3 Findings of Facts Generally Final
• Findings of fact by the NLRC are binding on the SC and CA if supported
18. CERTIFICATE OF NON-FORUM SHOPPING by substantial evidence.
• Doctrine does not uphold erroneous conclusions or grave abuse of
FORUM SHOPPING – the act or attempt to present the same dispute to different adjudicators discretion by the NLRC.
in the hope of securing a favorable ruling. • Issue of existence of an employer-employee relationship is a question of
• Administrative remedies must be exhausted, but forum shopping cannot be resorted fact and is subject to this doctrine.
to.
• NOT ALLOWED because it mocks the basic tenet that one dispute ought to be 19.4 Exceptions; Review of Finding of Facts (Insular Life Assurance Company Ltd. v.
litigated only once in one forum; adversely affects efficient administration of justice. CA)
• Failure to comply with the requirements concerning the certification against forum
shopping shall be cause for dismissal of the case without prejudice, unless otherwise Exceptions to the finding of facts generally final rule:
provided, upon motion and after hearing. 1. Findings are grounded entirely on speculation, surmises, conjectures
2. Inference made is manifestly mistaken, absurd, or impossible
3. There is grave abuse of discretion
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 28

4. Judgment is based on a misapprehension of facts designate special sheriffs and take any measure under existing laws to ensure
5. Findings of fact are conflicting compliance with their decisions, orders or awards and those of the Labor Arbiters and
6. In making its findings, the CA went beyond the issues of the case, or voluntary arbitrators, including the imposition of administrative fines which shall not be
its findings are contrary to the admissions of both the appellant and less than P500.00 nor more than P10,000.00.
the appellee
7. Findings are contrary to the trial court [NLRC] 1. EXECUTION
8. Findings are conclusions without citation of specific evidence on
which they are based WRIT OF EXECUTION – a court order to carry out, to implement, a final judgment.
9. Facts set forth in the petition as well as in the petitioner’s main and
reply briefs are not disputed by the respondent A writ of execution may be issued by the following officials:
10. Findings of fact are premised on the supposed absence of evidence 1. Secretary of Labor and Employment
and contradicted by the evidence on record, 2. DOLE Regional Director
11. CA manifestly overlooked certain relevant facts not disputed by the 3. NLRC
parties, which, if properly considered, would justify a different 4. Labor Arbiter
conclusion. 5. Med-Arbiter
6. Voluntary Arbitrator
19.5 Examples: Some Findings of Facts Reversed 7. Panel of Arbitrators
• The appeal taken by the employee from the decision of the LA, dismissing
his complaint, was late, because it was perfected 12 days after service on • Execution is done through the regular or special sheriff.
him of notice of the decisions. The reglementary period for appeal fixed • Alternatively, the RD or the Director of the Bureau of Labor Relations (BLR) in
by the Labor Code is 10 days (Mai Phils. vs. NLRC) appropriate cases deputize the Philippine National Police or any law enforcement
• In another case, the LA found the dismissal of the employee justified, agencies.
hence, the company discontinued the payment of the employee’s salary.
The employee objected on the ground that the discontinuance vilated 1.1 BOTH PARTY AND COUNSEL SHOULD BE NOTIFIED
the earlier agreement that the employee would be kept in the payroll until • Art 230 enjoins that decisions, orders, or awards of the Secretary, RD, NLRC, or LA are
the case was finally resolved by the arbitrator. On appeal, the NLRC “to be separately furnished immediately to the counsels of record and the parties.”
affirmed the LA’s decision but ordered the company to continue paying • In labor cases, BOTH party and counsel must be duly served their SEPARATE COPIES
the employee’s salary since the arbitration case was not yet over. The SC of the order, decision, or resolution.
rueld that there is GAD. The clause “pending final resolution or the case of • Vs. ordinary judicial proceedings where notice to counsel is deemed notice to the
arbitration” should be limited only to the proceedings before the LA. (PAL party.
vs. NLRC)
2. APPEAL ON THE EXECUTION OF DECISION; SUPERVENING EVENTS
20. FROM CA TO SC: ONLY QUESTION OF LAW, RULE 45 • General rule: Once a judgment becomes final and executory, it can no longer be
• To appeal to the Supreme Court, a judgment, final order or resolution of the CA, the disturbed, altered, or modified.
proper remedy is a petition for review on certiorari under Rule 45. • Exception: Because of supervening events, it becomes imperative, in the
• Can raise only questions of law higher interest of justice, to direct its modification in order to harmonize
• Must be filed 15 days from notice of the judgment or final order or resolution the disposition with the prevailing circumstances or whenever it is
appealed from, or of the denial of petitioner’s motion for new trial or necessary to accomplish the aims of justice.
reconsideration • Although decision of the NLRC has become final, correctness of the execution may
• Failure to file petition within 15 days bars special civil action for certiorari under Rule be appealed to and reviewed by the NLRC.
65; not a substitute for appeal.
• With promulgation of St. Martin ruling, most labor cases end up at CA because SC Abbott v. NLRC
only entertains questions of law. Facts: Petitioners were regular agency managers of Travellers [sic] Life Assurance of the
Philippines, Inc. Without written clearance, their services were terminated, prompting them to
ART. 230 [224]. EXECUTION OF DECISIONS, ORDERS OR AWARDS. file a complaint for illegal dismissal. LA rendered a decision in their favor for reinstatement,
a. The Secretary of Labor and Employment or any Regional Director, the Commission or any which was affirmed by the NLRC on appeal by private respondent; MR also denied. After
Labor Arbiter, or Med-Arbiter or Voluntary Arbitrator may, motu proprio or on motion of lapse of 86 days, petitioners filed a motion for execution, opposed by private respondent
any interested party, issue a writ of execution on a judgment within five (5) years from the intimating its intention to appeal to the SC. LA retried despite finality, but found in favor of
date it becomes final and executory, requiring a sheriff or a duly deputized officer to petitioners again, and issued writ of execution raising final monetary award from 94k total to
execute or enforce final decisions, orders or awards of the Secretary of Labor and 372k.
Employment or regional director, the Commission, the Labor Arbiter or med-arbiter, or
voluntary arbitrators. In any case, it shall be the duty of the responsible officer to Doctrine: In the instant case, what is sought to be reviewed is not the decision itself but the
separately furnish immediately the counsels of record and the parties with copies of said manner of execution. While it is true that the decision itself has become final and executory
decisions, orders or awards. Failure to comply with the duty prescribed herein shall and so can no longer be challenged, there is no question either than it must be enforced in
subject such responsible officer to appropriate administrative sanctions. accordance with its terms and conditions. Any deviation can be subject of a proper appeal.
b. The Secretary of Labor and Employment, and the Chairman of the Commission may
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 29

3. INJUNCTION, GENERAL RULE: RTC CANNOT ISSUE INJUNCTION AGAINST THE NLRC • Thus, third-party claim to the NLRC was not forum shopping and did not preclude
• A regular court has no jurisdiction to hear and decide questions which arise and are petitioner from filing subsequent action for recovery of property with the RTC.
incidental to the enforcement of decisions, orders or awards rendered in labor
cases by appropriate officers and tribunals of the DOLE. 3.2 RTC INJUNCTION AGAINST LA OR NLRC, WHEN ALLOWED
• Any controversy in the execution of the judgment shall be referred to the tribunal • A separate civil action for recovery of ownership of the property would not
which issued the writ of execution who has the inherent power to control its own constitute interference with the powers or processes of the LA and NLRC which
processes in order to enforce its judgments. rendered the judgment to enforce and execute upon the levied properties.
• Jurisdiction to try and adjudicate such cases are exclusive to the proper labor • Property levied being that of a stranger is not subject to levy.
official concerned under the DOLE. SC cannot sanction split in jurisdiction. • A separate action for recovery, upon a claim and prima facie showing of ownership
• Jurisdiction once acquired is not lost upon the instance of the parties but continues by the petitioner, cannot be considered interference.
until the case is terminated.
3.3 THIRD PARTY CLAIM
• According to NLRC Rules of Procedure 2011, filed within 5 days from the last day of
3.1. EXECUTION OVER PROPERTY OWNED BY JUDGMENT DEBTOR; REMEDIES OF THIRD-PARTY posting or publication of the notice of execution sale; otherwise, claim is forever
CLAIMANT barred.
• Power of the courts or the NLRC to execute its judgment limited to properties • Third party claimant shall execute an affidavit stating his title to the property or right
unquestionably owned by the judgment debtor. to possession thereof with supporting evidence and file such with the sheriff and the
• If the property under levy does not belong to the judgment debtor in an NLRC case, NLRC or LA who issued the writ.
it cannot be validly levied by the sheriff for the satisfaction of the judgment. • Upon receipt of third-party claim, all proceedings with respect to the execution of
• Revised Rules of the NLRC (Section 4, Rule IX) provide that the sheriff of the the property shall be automatically suspended.
Commission, or other officer acting as such, must “be guided strictly by the Sherriff’s • LA who issued the writ may require third party claimant to adduce additional
Manual which shall form part of these Rules.” evidence to support his claim.
• Section 2, Rule VI of said Manual provides that when a third party claims the • LA shall resolve propriety of such claim within 10 working days from submission of
property subject to the execution and files an affidavit thereto, the Labor Arbiter said claim for resolution.
shall “conduct a hearing xxx and resolve the validity of the claim.”
• Rule prescribes only the procedure to be followed by the sheriff if the levied party is 3.4 SIMULATED SALE, VOID AB INITIO
claimed by any person other than the losing party or his agent. It does not limit the
procedure followed by the third-party claimant himself. Tanongon v. Samson
Facts: Four employees won their illegal dismissal case against employer. In due time, the LA
Yupangco Cotton Mills, Inc. v. CA issued a writ of execution. When the sheriff levied the tanker purportedly belonging to the
Facts: Petitioner contended that a sheriff of the NLRC erroneously and unlawfully levied employer, petitioner filed a third-party claim, alleging he was the owner of the tanker
certain properties which it claims as owner. It filed third-party claim before the LA, as well as because it had been sold to her.
recovery of property and damages case before the RTC. RTC dismissed. Petitioner filed
petition for certiorari and mandamus with CA, which was also dismissed on the ground of Doctrine: Employer obviously got word of the issuance of the writ and disposed of the tanker
forum shopping. Petitioner filed an MR arguing that the filing of a complaint for accion to prevent its sale on execution in a cavalier attempt to evade payment of the judgment
reinvindicatoria with the RTC was proper because it is a remedy specifically granted to an debt. Disputed contract is not merely rescissible; it was simulated or fictitious, and thus void ab
owner. MR denied. initio.

Doctrine: Not forum shopping. A third-party whose property has been levied upon by a sheriff ART. 231 [225]. CONTEMPT POWERS OF THE SECRETARY OF LABOR.
to enforce a decision against a judgment debtor is afforded with several alternative remedies In the exercise of his powers under this Code, the Secretary of Labor may hold any person in
to protect its interests. Remedies are cumulative, and one will not preclude him or availing of direct or indirect contempt and impose the appropriate penalties therefor.
the other alternative remedies in the event he failed in the remedy first availed of. (Discussion
outside of textbox below)

Alternative remedies of a third-party claimaint:

1. File a third-party claim with the sheriff or the LA
2. If the third-party claim is denied, appeal the denial to the NLRC.
3. Even if a third-party claim was denied, he may still file a proper action with a
competent court to recover ownership of property illegally seized.

TITLE III 3. Violation of union members’ rights and other disputes between unions or between a
union and its members
BUREAU OF LABOR RELATIONS
• Complaint involving inter/intra-union dispute may be filed by a legitimate labor
ART. 226. BUREAU OF LABOR RELATIONS. organization (LLO) or its members.
The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the • Where the issue involves the entire membership, the complaint shall be supported
Department of Labor, shall have original and exclusive authority to act, at their own initiative by at least 30% of the membership.
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 Rule XI recognizes a second category called “other related labor relations dispute” and these
workplaces, whether agricultural or non-agricultural, except those arising from the include
implementation or interpretation of collective bargaining agreements which shall be the • any conflict between a labor union and the employer or any individual, entity or
subject of grievance procedure and/or voluntary arbitration. group that is not a labor organization or workers’ organization
• such disputes include the cancellation of registration of a labor
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to organization and interpleader.
extension by agreement of the parties. • “related” to inter/intra union disputes to differentiate it from other labor-
management disputes (as in Art. 128, 129, 217, 261 or 263(g)) which are not handled
1. BLR JURISDICTION AND FUNCTIONS by the BLR
• Complaint filed by party-in-interest who is not necessarily a union or union member
• BLR no longer handles “all” labor-management disputes; its functions and jurisdiction
are confined to union matters, collective bargaining registry, and labor education. INTER/INTRA-UNION DISPUTE OTHER RELATED LABOR DISPUTE
• EO 251 of 1987 transferred to the National Conciliation and Mediation Board 1. Cancellation of union registration Any conflict between a labor union and the
(NCMB) the mediation, conciliation, and arbitration functions of the BLR. 2. Audit of union funds employer or any individual, entity or group
• RA 6715, effective Mar 21, 1989 expended and enhanced the NLRC (including its 3. Violation of union members’ rights that is not a labor organization or workers’
LAs) to make it the country’s only labor court. and other disputes between organization
• Current functions of the BLR are those stated in EO 292 or the 1987 Administrative unions or between a union and its • cancellation of reg, interpleader
Code: members

E.O. 292, or the 1987 ADMINISTRATIVE CODE Filed by an LLO or its members. Filed by party-in-interest who is not
Title VII: Labor and Employment • If issue involves the entire necessarily a union or union member
Chapter 4: Bureaus membership, the complaint must
SEC. 16. BUREAU OF LABOR RELATIONS. be supported by at least 30%
The Bureau of Labor Relations shall set policies, standards, and procedures on the registration members.
and supervision of legitimate labor union activities including denial, cancellation and
revocation of labor union permits. It shall also set policies, standards, and procedure relating • Whether the dispute be of the first or second category, if it involves an independent
to collective bargaining agreements, and the examination of financial records of accounts of union, a chartered local, or a workers’ association, it shall be filed with the DOLE
labor organizations to determine compliance with relevant laws. Regional Office where the LO is registered.
• But if the complaint involves a federation or an industry/national union, it shall be
The Bureau shall also provide proper orientation to workers on their rights and privileges under filed with the BLR itself.
existing laws and regulations, and develop schemes and projects for the improvement of the
standards of living of workers and their families. 2.1 DO NO. 40-03
• Took effect Mar 15, 2003
2. INTER-UNION AND INTRA-UNION DISPUTES; D.O. NO. 40-03 • Replaced DO No. 9 of 1997 as the Implementing Rules of Book V of the Labor Code
• Introduces new concepts such as union merger or consolidation and multi-employer
INTER-UNION DISPUTE – any conflict between and among legitimate labor unions involving bargaining.
representation questions for purposes of collective bargaining or to any other conflict or
dispute between legitimate labor unions. Azu’s enumeration of the specific objectives of DO No. 40-03 (note: he writes that the law
implies these ‘without saying so’):
INTRA-UNION DISPUTE – any conflict between and among union members, including 1. Simplify the formation and registration of unions, especially chartered locals
grievances arising from any violation of the rights and conditions of membership, violation of 2. Simplify and expediate the holding of certification elections
or disagreement over any provision of the union’s constitution and by-laws, or disputes arising 3. Promote responsible unionism, particularly in the administration of union funds
from chartering or affiliation of union. 4. Authorize union merger, consolidation, and change of name
5. Authorize deregistration of collective bargaining agreements
Under Rule XI of DO No. 40-03, the long list of inter/intra-union dispute include (non-exclusive)
1. Cancellation of union registration 3. EXTENT OF BLR AUTHORITY
2. Audit of union funds • Broad and expansive

• BLR may hold a referendum election among the members of a union for 2. FORMAL REQUIREMENTS OF COMPROMISE AGREEMENT
the purpose of determining whether or not they desire to be affiliated with
a federation In Union of Filipino Workers (UFW) v. NLRC, the SC held that compromise agreements involving
• BUT no authority to labor standards cases must be
• order a referendum among union members to decide whether to expel or 1. Reduced in writing
suspend union officers 2. Signed in the presence of the Regional Director (RD) or his duly authorized
• forward a case to the Trade Union Congress of the Philippines for representative
arbitration and decision 3. IF to be signed by an agent (including counsel), SPA is required in accordance with
Art. 1878 of the Civil Code
4. KATARUNGANG PAMBARANGAY, NOT APPLICABLE TO LABOR DISPUTES • “Special powers of attorney are necessary in the following cases: xxx (3)
• P.D. No. 1508 applies only to courts of justice and not to NLRC or LAs. To compromise, to submit questions to arbitration, to renounce the right to
• Art. 226 of the Labor Code grants original and exclusive jurisdiction over the appeal from a judgment, to waive objections to the venue of an action or
conciliation and mediation of disputes, grievances or problems in the regional to abandon a prescription already acquired.”
offices of the DOLE.
• The Bureau and its divisions and not the Barangay Lupong Tagapayapa which is 3. VALIDITY OF A COMPROMISE AND QUITCLAIM
vested by law with original and exclusive jurisdiction to conduct conciliation
proceedings on labor controversies before endorsement to LA. Veloso and Liguaton v. DOLE, Noah’s Ark Sugar Carriers
Facts: Petitioners won a case against the private respondent for unfair labor practices,
ART. 233 [227]. COMPROMISE AGREEMENTS underpayment, and non-payment of overtime, holiday, and other benefits. Private
Any compromise settlement, including those involving labor standard laws, voluntarily agreed respondent filed a motion for reconsideration and recomputation of the amount awarded to
upon by the parties with the assistance of the Bureau or the regional office of the Department the petitioners. While the motion was pending, petitioner Veloso, through his wife Connie,
of Labor, shall be final and binding upon the parties. The National Labor Relations Commission signed a Quitclaim and Release for and in consideration of P25k and on the same day his
or any court, shall not assume jurisdiction over issues involved therein except in case of non- counsel manifested “Satisfaction of Judgment” by receipt of the said sum by Veloso.
compliance thereof or if there is prima facie evidence that the settlement was obtained Petitioner Liguaton filed a motion to dismiss based on a Release and Quitclaim for and in
through fraud, misrepresentation, or coercion. consideration of the sum of P20k he acknowledged to have received from the private
respondent. Petitioners file for certiorari to the SC claiming that they were forced to sign their
1. COMPROMISE AGREEMENTS respective releases by reason of their dire necessity. Private respondent insists that the
• Fundamental policy in Philippine labor laws is to allow the parties to find solutions to petitioner entered into the compromise agreement freely and with open eyes and should not
their own disputes. now be permitted to reject their solemn commitments.
• Constitution (Art. XIII, Sec. 3) commands the state to promote the preferential use of
voluntary modes in settling disputes since maintenance of industrial peace is a joint Doctrine: Dire necessity is not an acceptable ground for annulling the releases, especially
responsibility of workers and employers. since it has not been shown that the employees had been forced to execute them. If the
• Assistance of BLR or the regional office of DOLE in the execution of a compromise agreement was voluntarily entered into and represents a reasonable settlement, it is binding
settlement is generally a basic requirement à without assistance, no valid upon the parties and may not later be disowned simply because of a change of mind.
compromise.
• Art. 233, any compromise settlement, even on labor standard matters, agreed to by 4. COMPROMISE SHOULD BE DULY AUTHORIZED
the parties with the assistance of the BLR or the regional office of the DOLE, is
allowed. Jag and Haggar Jeans and Sportswear Corp. v. NLRC, Lakas Manggagawa sa Jag
• Resulting agreement, if freely authored and not unconscionable/unlawful, is legally Facts: Lakas Manggagawa sa Jag (union) staged a strike. Petitioner filed to declare the strike
binding. illegal; LA agreed and ordered the dismissal of union officers and members who took part.
Affected officers and members appealed to the NLRC, which ordered their reinstatement, but
NLRC or any court cannot presume jurisdiction over issues involved in compromise later modified to dismiss certain employees and change monetary awards. Affected
agreements, except: employees filed MR and Motion for Clarification, but pending that, both parties (union and
1. In case of noncompliance with compromise agreement petitioner) agreed to negotiate a settlement and to deter the enforcement of the decision.
2. If there is prima facie evidence that the settlement was obtained through fraud, Both motions were dismissed, but parties were able to execute a compromise agreement. 90
misrepresentation, or coercion. employees availed of the benefits of the compromise agreement. Affected employees
moved for the execution of the NLRC decision, but petitioner opposed considering the
Quitclaims that are invalid per se or against public policy: compromise agreement.
1. Where there is clear proof that the waiver was wangled from an unsuspecting or
gullible person Doctrine: Sec 7, Rule III of the New Rules of Procedure of the NLRC provide that attorneys and
2. Where the terms of the settlement are unconscionable on their faces other representatives of parties cannot, without SPA or express consent, enter into a
compromise agreement with the opposing party in full or partial discharge of a client’s claim.
Neither the officers nor the majority of the union had any authority to waive the accrued rights
pertaining to the dissenting minority members. The authority to compromise cannot be lightly
presumed and should be duly established by evidence.

Under Article 1878 of the Civil Code, SPA is necessary: In effect, the ruling in Patio de Makati contradicted the prior ruling in
xxxxx Jesalva.
(2) To effect novations which put an end to obligations already in existence at the time the o 2005: The SC revived the ruling in Jesalva in Magbanua v. Uy.
agency was constituted
(3) To compromise 6.1 The Definitive Ruling: Magbanua vs. Uy
(4) To waive any obligation gratuitously
xxxxxx Magbanua v. Uy
(15) Any other act of strict dominion Facts: Employees won a case against employer regarding their entitlement for wage
differentials. To enforce the judgment, they asked for a writ of execution, but before the writ
5. RULINGS ON COMPROMISE SETTLEMENTS SUMMARIZED was issued, they entered into a compromise agreement (the amount agreed upon is
significantly lower than the SC’s award). Despite the signed affidavit of compromise, they still
Labor, et al. v. NLRC and Gold City Commercial Complex, Inc. asked for a writ of execution. Can a compromise agreement be entered by the parties even
Facts: Petitioners were employees of Gold City at its Eye Ball Disco who filed a complaint for after a judgment becomes final and executory?
illegal dismissal and for the violations of labor standards laws with the NLRC. Private
respondent alleged that petitioners had already agreed to compromised settlement before Doctrine: Yes. Rights, including those acquired after the end of litigation, may be waived
the DOLE concerning money claims, evidenced by the P2k cash vouchers duly signed by through a compromise agreement provided that the agreement was executed by the parties
them, which the letter deny. LA decided for petitioners ordering reinstatement and a total freely, voluntarily, and intelligently and that the agreement was not contrary to law, morals,
monetary award of P144k. Gold City appealed to NLRC, who reversed. NLRC held that good customs, and public policy. The SC also enumerated the requisites of a valid
compromise settlements were freely and voluntarily executed, and petitioners were estopped compromise agreement, to wit:
from claiming monetary benefits. Raised to SC via Rule 65. 1. Consent of the parties to the compromise;
2. Object certain that is the subject matter of the compromise; and
Doctrine: Even if the petitioners did enter into a compromise agreement, such would be valid 3. Cause of the obligation that is established.
and binding only if, per Veloso v. DOLE, the agreement was voluntarily entered into and
represents a reasonable settlement of the claims. In this case, as in Fuentes v. NLRC, the 6.2 Integration/ Reiteration: Compromise Over Final Judgement
amounts purportedly received by the petitioners were unreasonably lower than what they • The ruling in Magbanua was reiterated in Cosmos Bottling Corp. v. Nagrama (G.R.
were legally entitled to. Furthermore, the alleged “compromise settlements” were not No. 164403, 4 March 2008). In Cosmos, the parties may execute a compromise
executed with the assistance of the BLR or the RO of the DOLE. Gold City merely filed the agreement even after the finality of this decision. They are not precluded from
vouchers purporting to show payment of the “compromise settlements” after the fact with the doing so. In a catena of cases, the Court has consistently ruled that even final and
DOLE RO, which by no stretch of the imagination should be considered compliance with the executory judgments may be compromised.
requisite of assistance required by law.
6.3 Absence of Counsel Remedied
Quitclaims executed by employees may be given effect if the employer is able to prove the • The absence of the labor arbiter at the time that the compromise agreement was
following requisites: made will not invalidate the compromise agreement if compliance to the required
1. Employee executes the deed of the quitclaim voluntarily procedure has been made. In fact, compromise agreements relating to labor
2. There is no fraud or deceit on the part of any of the parties disputes do not require the presence of a labor arbiter because these agreements
3. Consideration of the quitclaim is credible and reasonable are treated as normal contracts. (See Eurotech Hair Systems, Inc. v. Go, G.R. No.
4. Contract is not contrary to law, public order, public policy, morals or good customs, 160913, 31 August 2006)
or prejudicial to a third person with a right recognized by law
• Even when a compromise agreement is approved by a LA, the judgment What can a party do if the other party in the compromise agreement violated the agreement?
cannot have the effect of res judicata upon persons who are not parties
to it. 7. OPTIONS WHEN COMPROMISE AGREEMENT IS VIOLATED

6. WHEN TO EFFECT COMPROMISE: FINAL DECISION, NEGOTIABLE? The aggrieved party has two options under Article 2041 of the civil Code:
• A compromise agreement may be entered into by the parties prior to the initiation 1. Enforce the agreement by a writ of execution; or
of litigation, while the case is pending, and even after a final executory judgment 2. Regard it as rescinded and so insist upon his original demand.
has been rendered. (See CIVIL CODE arts. 2028, 2029, and 2040).
• Development of the doctrine on compromise agreements entered after a final In Morales v. NLRC, the SC held that the employees may file a complaint for their original
executory judgment has been rendered: demand despite the compromise agreement if the employer fails to comply with his/her/its
o 1959: In Jesalva v. Bautista, the SC said that a compromise agreement obligations under the compromise agreement.
made after a final executory judgment has been rendered is still valid and
enforceable against the parties.
o 1991: In Patio de Makati v. NLRC, the SC said that a final executory
judgment cannot be altered nor negotiated by the parties. To allow the
parties to compromise after a final executory judgment has been entered
is to defeat the role of the SC to be the final arbiter of cases brought to it.

ART. 234 [228]. MANDATORY CONCILIATION AND ENDORSEMENT OF CASES Program. Any amount collected under this provision shall accrue to the Special Voluntary
(a) Except as provided in Title VII-A, Book V of this Code, as amended, or as may be excepted Arbitration Fund. The Bureau shall also maintain a file, and shall undertake or assist in the
by the Secretary of Labor and Employment, all issues arising from labor and employment shall publication of all final decisions, orders and awards.
be subject to mandatory conciliation-mediation. The labor arbiter or the appropriate DOLE
agency or office that has jurisdiction over the dispute shall entertain only endorsed or referred • What are they going to submit for registration? Copies of the Collective Bargaining
cases by the duly authorized officer. Agreement (CBA)
• Who will submit the CBA? The parties.
(b) Any or both parties involved in the dispute may pre-terminate the conciliation-mediation • When are they going to submit? Within 30 days from the execution of the CBA.
proceedings and request referral or endorsement to the appropriate DOLE agency or office • To whom are they going to submit the CBA? To the BLR or the regional office of DOLE.
which has jurisdiction over the dispute, or if both parties so agree, refer the unresolved issues to • Is registration a requisite for validity? No.
voluntary arbitration. • If registration is not a requisite for validity, what is the point of registering the CBA to the
BLR or DOLE? The registration is necessary to apply the contract-bar rule. (See Liberty
• This provision was added only on 29 January 2013. This is a statutory adoption of D.O. Flour Mills).
No. 107-10, otherwise known as SEnA introduced by DOLE.
• A simple “request for assistance” authorizes a SEnA Desk officer (SEADO) to conduct ARTICLE 238. [232] PROHIBITION ON CERTIFICATION ELECTION
and end within 30 days a conciliation-mediation conference aiming to prevent or The Bureau shall not entertain any petition for certification election or any other action which
solve the conflict before it ripens into a full-blown dispute. may disturb the administration of duly registered existing collective bargaining agreements
• Successful: end of dispute; Unsuccessful: refer the case to the appropriate DOLE affecting the parties except under Articles 253, 253-A and 256 of this Code.
Office/Agency having jurisdiction of the dispute.
• This is a mandatory procedure. • CONTRACT-BAR RULE: While a valid and registered CBA is subsisting, the BLR is not
allowed to hold an election contesting the majority status of the incumbent union.
ARTICLE 235. [229] ISSUANCE OF SUBPOENAS. Stated otherwise, the existence of a registered CBA bars the holding of the inter-
The Bureau shall have the power to require the appearance of any person or the production union electoral contest.
of any paper, document or matter relevant to a labor dispute under its jurisdiction, either at • In such case, election may be held only during the “freedom period”, i.e., the last 60
the request of any interested party or at its own initiative. days of the fifth year of the CBA.

ARTICLE 236. [230] APPOINTMENT OF BUREAU PERSONNEL ARTICLE 239. [233] PRIVILEGED COMMUNICATION
The Secretary of Labor and Employment may appoint, in addition to the present personnel of Information and statements made at conciliation proceedings shall be treated as privileged
the Bureau and the Industrial Relations Divisions, such number of examiners and other communication and shall not be used as evidence in the Commission. Conciliators and similar
assistants as may be necessary to carry out the purpose of the Code. officials shall not testify in any court or body regarding any matters taken up at conciliation
proceedings conducted by them.
ARTICLE 237. [231] REGISTRY OF UNIONS AND FILE OF COLLECTIVE BARGAINING AGREEMENTS
The Bureau shall keep a registry of legitimate labor organizations.

The Bureau shall also maintain a file of all collective bargaining agreements and other related
agreements and records of settlement of labor disputes and copies of orders and decisions of
voluntary arbitrators or panel of voluntary arbitrators. The file shall be open and accessible to
interested parties under conditions prescribed by the Secretary of Labor and Employment,
provided that no specific information submitted in confidence shall be disclosed unless
authorized by the Secretary, or when it is at issue in any judicial litigation, or when public
interest or national security so requires.

Within thirty (30) days from the execution of a Collective Bargaining Agreement, the parties
shall submit copies of the same directly to the Bureau or the Regional Offices of the
Department of Labor and Employment for registration accompanied with verified proofs of its
posting in two conspicuous places in the place of work and ratification by the majority of all
the workers in the bargaining unit. The Bureau or Regional Offices shall act upon the
application for registration of such Collective Bargaining Agreement within five (5) calendar
days from receipt thereof. The Regional Offices shall furnish the Bureau with a copy of the
Collective Bargaining Agreement within five (5) days from its submission.

The Bureau or Regional Office shall assess the employer for every Collective Bargaining
Agreement a registration fee of not less than one thousand pesos (P1,000.00) or in any other
amount as may be deemed appropriate and necessary by the Secretary of Labor and
Employment for the effective and efficient administration of the Voluntary Arbitration

TITLE IV ARTICLE 244. [237] ADDITIONAL REQUIREMENTS FOR FEDERATIONS OR NATIONAL UNIONS
Subject to Article 238, 184 if the applicant for registration is a federation or a national union, it
LABOR ORGANIZATION shall, in addition to the requirements of the preceding Articles, submit the following:
a. Proof of the affiliation of at least ten (10) locals or chapters, each of which must be
CHAPTER 1 a duly recognized collective bargaining agent in the establishment or industry in
which it operates, supporting the registration of such applicant federation or
REGISTRATION AND CANCELLATION national union; and
b. The names and addresses of the companies where the locals or chapters operate
ARTICLE 240. [234] REQUIREMENTS OF REGISTRATION and the list of all the members in each company involved.
A federation, national union or industry or trade union center or an independent union shall
acquire legal personality and shall be entitled to the rights and privileges granted by law to 1. DEFINITION OF LABOR ORGANIZATION
legitimate labor organizations upon issuance of the certificate of registration based on the
following requirements: 1.1 Labor Organization
a. Fifty pesos (P50.00) registration fee; • LABOR ORGANIZATION —
b. The names of its officers, their addresses, the principal address of the labor o any union or association of employees in the private sector which exists in
organization, the minutes of the organizational meetings and the list of the workers whole or in part for the purpose of collective bargaining or of dealing with
who participated in such meetings; employers concerning terms and conditions of employment.
c. In case the applicant is an independent union, the names of all its members o Generic term that may refer to a union or association of employees,
comprising at least twenty percent (20%) of all the employees in the bargaining unit registered or not.
where it seeks to operate; o Purpose may be broad, e.g., for CB purposes or mutual aid.
d. If the applicant union has been in existence for one or more years, copies of its 1.2 Union
annual financial reports; and • UNION — Any labor organization in the private sector organized for CV and for other
e. Four copies of the constitution and by-laws of the applicant union, minutes of its legitimate purposes.
adoption or ratification, and the list of the members who participated in it. o Note: Not every union is legitimate. Only those that were properly
registered are considered LLO. However, non-registration does not mean
ARTICLE 241. [234-A] CHARTERING AND CREATION OF A LOCAL CHAPTER that the union is illegitimate. An unregistered LLO has no legal personality.
A duly registered federation or national union may directly create a local chapter by issuing a • LEGITIMATE LABOR ORGANIZATION — any labor organization in the private sector
charter certificate indicating the establishment of the local chapter. The chapter shall acquire registered or reported with the DOLE in accordance with Rules III and IV of the IRR.
legal personality only for purposes of filing a petition for certification election from the date it
was issued a charter certificate. 1.3 Bargaining Representative
• EXCLUSIVE BARGAINING REPRESENTATIVE (EBR) — a legitimate labor union duly
The chapter shall be entitled to all other rights and privileges of a legitimate labor organization recognized or certified as the sole and exclusive bargaining agent (SEBA) or
only upon the submission of the following documents in addition to its charter certificate: representative of all the employees in a bargaining unit that will negotiate a
a. The names of the chapter's officers, their addresses, and the principal office of the collective contract with the employer. EBR = SEBA.
chapter; and o Not all LLOs are EBRs.
b. The chapter's constitution and by-laws: Provided, That where the chapter's o An EBR has to be an LLO.
constitution and by-laws are the same as that of the federation or the national o A union may be an LLO and at the same time, not an EBR.
union, this fact shall be indicated accordingly.
1.4 Association
The additional supporting requirements shall be certified under oath by the secretary or • WORKER’S ASSOCIATION — An association of workers organized for the mutual aid
treasurer of the chapter and attested by its president. and protection of its members or for any legitimate purpose other than CB.
• LEGITIMATE WORKER’S ASSOCIATION (LWA) — an association of workers organized
ARTICLE 242. [235] ACTION ON APPLICATION for mutual aid and protection of its members or for any legitimate purpose other
The Bureau shall act on all applications for registration within thirty (30) days from filing. than collective bargaining registered with DOLE in accordance with Rule III, Sec. 2-C
and 2-D of the IRR.
All requisite documents and papers shall be certified under oath by the secretary or the
treasurer of the organization, as the case may be, and attested to by its president. 1.5 Distinction Between Collective Bargaining and Dealing with Employer

ARTICLE 243. [236] DENIAL OF REGISTRATION; APPEAL COLLECTIVE BARGAINING DEALING WITH EMPLOYER (DWE)
The decision of the Labor Relations Division in the regional office denying registration may be It is a generic description of interaction
appealed by the applicant union to the Bureau within ten (10) days from receipt of notice A right to collectively bargain may be between employer and employees
thereof. acquired by a labor organization after concerning grievances, wages, work hours,
registering itself with the DOLE and after and other terms and conditions of
being certified by DOLE as the EBR of the employment, even if the group is not
employees. registered with DOLE.

As a legitimate labor relations process, DWE § D.O. No. 40-03 defines independent union as a labor
explains why an LO does not always have organization operating at the enterprise level that acquired
to be a labor union and why ER-EE legal personality through independent registration under Art.
collective interactions are not always CB. 234 (now 240) of the LC and Rule III, Sec. 2-A of these Rules.
§ An independent union may affiliate with a federation or
DWE involves a bilateral mechanism that national union, in which case it may also be called an affiliate.
entails a pattern or practice in which a o CHAPTERS — created by a federation or national union through
group of employees, over time, make chartering.
proposals to management, and § Chartering takes place when a duly registered federation or
management responds to those proposals national union issues a charter to a union in an enterprise and
by acceptance or rejection by word or registers the creation of the chapter with the Regional Office
deed. where the applicant operates.
§ Its legal personality is derived from the national union or
• D.O. No. 40, s. 2003 allows the formation of Worker’s Association for the mutual aid federation, but it may subsequently register itself independently.
and protection of its members or for any legitimate purpose other than CB. See also o COMPANY-UNION — a labor organization which, in whole or in part, is
Arts. 219, 257, 267, and 292 (g) and (h) employer-controlled or employer-dominated. Art. 259 (d) prohibits being a
company union.
2. CLASSIFICATION OF LABOR ORGANIZATION
2.3 CHANGES BY R.A. NO. 9481
2.1 NATIONAL LEVEL OR MACRO-LABOR RELATIONS 1. No required number. The initial number of members of an independent union must
o NATIONAL UNION/FEDERATION be 20% of the Bargaining Unit (BU) for it to be registrable. For local chapters, they are
§ any labor organization with at least 10 locals/chapters or registrable even if the number of its initial members is less than 20% of the BU.
affiliates each of which must be a duly certified or recognized 2. Tentative legal personality. A local chapter is created once a federation or national
CB Agent. union issues a charter certificate. Once issued a charter, the chapter acquires legal
§ A group of labor unions in a private establishment organized for personality to file a petition for CE. All other union rights will be acquired by
CB or for dealing with employers concerning terms and submitting the following in addition to the charter certificate:
conditions of employment for their member unions or for a. The names and addresses of the officers and members of the union.
participating in the formulation of social and employment b. The chapter’s constitution and by-laws which can be the same as that of
policies, standards, and programs, registered with the BLR in the federation.
accordance with Rule III, Sec. 2-B of IRR. (D.O. No. 40-03) Note: All these documents must be certified under oath by the Sec. or Treasurer
o INDUSTRY UNION and attested by the president.
§ Any group of LLOs operating within an identified industry, 3. Three specified grounds of cancellation. The grounds for cancellation are reduced
organized for CB or for dealing with employers concerning terms to three, i.e.:
and conditions of employment within an industry, or for a. Falsehood about the constitution and by-laws (CBL),
participating in the formulation of social and employment b. Falsehood about the election of officers, and
policies, standards, and programs in such industry, which is duly c. Voluntary dissolution.
registered with DOLE. Note: Violation of member’s right is not one of those grounds.
§ D.O. No. 40-03 does not carry this definition. But See Rule III, Sec. 4. Cancellation by action of the members. At least 2/3 of the members may vote to
2-B, which allows a union for a specific industry to apply as a dissolve the organization, but a subsequent application to cancel must be
national union or federation. submitted by the board of the organization, attested by president.
o TRADE UNION CENTER — a group of national unions or federations 5. PCE Proceeds Despite Petition to Cancel Union Registration. A petition to cancel the
organized for the mutual aid and protection of its members, for assisting registration does not prevent the filing or the hearing of a petition for a CE.
such members in CB, or for participating in the formulation of social and 6. Reportorial requirements. Every LLO has to submit to BLR four documents:
employment policies, standards, and programs. a. Adoption or amendments to CBL;
o ALLIANCE — an aggregation of unions existing in one line of industry, or in b. Election of officers, with list of voters to be submitted in 30 days;
a conglomerate, a group of franchises, a geographical area, or an c. Annual financial reports within 30 days from close of fiscal year; and
industrial center. Unions and federations may create an alliance to help d. Annual list of members.
one another to attain a particular purpose. An alliance cannot represent Note: non-submission of these reportorial requirements is no longer a ground to
its member unions in CBA negotiations. cancel registration, but erring officer be punished even by expulsion.
7. Affiliation with same federation. Supervisors’ union and rank and file union in the
2.2 ENTERPRISE LEVEL OR MICRO-LEVEL RELATIONS same company may affiliate with the same federation. This made a prior SC ruling
o INDEPENDENT LABOR UNION — created by independent registration. obsolete.
§ Independent Registration is obtained by the union organizers in 8. Commingling. If supervisors and rank and file belong to a single union, the union’s
an enterprise through their own action instead of through registration will not be cancelled, but the excludible members will be deemed
issuance of a charter by a federation or national union. Its removed from the list of members.
personality is not derived from a federation.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 36

9. Non-disclosure of identity. In an organized (unionized) enterprise the federation who 5.3 INDEPENDENT LABOR UNION (NO-20-AC)
files a Petition for Certification Election (PCE) on behalf of a chapter cannot be 1. The name of the labor union, its principal address, the name of its officers and their
required to identify the chapter’s officers and members. The PCE does to have to be respective addresses, approximate number of employees in the BU where it seeks to
filed by the local officers. operate, with a statement that it is not reported as a chartered local of any
10. Non-disclosure even in unionized company. The non-disclosure rule (in the federation or national union;
preceding number) applies also to a federation that files a PCE on behalf of its 2. The minutes of the organizational meeting(s) and the list of employees who
chapter in an enterprise without yet a union as bargaining agent. participated in the said meeting(s);
11. Employer, a bystander. In a PCE the employer is a bystander and has no right to 3. The name of all its members comprising at least 20% of the employees in the BU;
oppose the petition. His participation is limited to being informed about the petition 4. The annual financial reports if the applicant has been in existence for one or more
and to being required to submit the list of employees if a CE will be held. years, unless it has not collected any amount from the members, in which case a
statement to this effect shall be included in the application;
3. REGISTRATION RATIONALE 5. The applicant union’s CBL, minutes of its adoption or ratification, and the list of the
• The effect of registering an LO is that it becomes an LLO, but an unregistered LO members who participated in it. The list of ratifying members shall be dispensed with
does not mean that it is illegitimate. The effect of an unregistered LO that is not where the CBL was ratified or adopted during the organization meeting(s). In such a
illegitimate is that the unregistered LO does not have a legal personality to demand case, the factual circumstances of the ratification shall be recorded in the minutes
CB with the employer; it cannot petition for a certification election, or request a of the organizational meeting(s).
preventive mediation, or hold a legal strike. Nevertheless, this unregistered LLO may
deal with the employer. 5.4 WORKER’S ASSOCIATION (NO-FAR)
1. The name of the applicant association, its principal address, the name of its officers
3.1 EFFECT OF REGISTRATION UNDER THE CORPORATION LAW and their respective addresses;
• An LO may be registered under the corporation code (See Revised Corporation 2. The minutes of organizational meeting(s) and the list of members who participated
Code). But such incorporation has only the effect of giving to it juridical personality therein;
before regular courts of justice. Such incorporation does not grant the rights and 3. The financial reports of the applicant association if it has been in existence for one
privileges of an LLO. or more years, unless it has not collected any amount from the members, in which
case a statement to this effect shall be included in the application;
4. WHERE TO REGISTER 4. The applicant’s CBL to which must be attached the names of ratifying members, the
• Independent unions, chartered unions, and worker’s associations: DOLE Regional minutes of adoption and ratification of the CBL and the date when ratification was
Office made, unless ratification was done in the organizational meeting(s), in which case
• Federations, national unions, and worker’s association operating in more than one such fact shall be reflected in the minutes of the organizational meeting(s).
region: they may file the application to the Bureau or Regional Office of DOLE. In IF the applicant is operating in more than one region, the application shall be
the latter case, the application shall be processed and acted upon by the Bureau accompanied by a resolution of membership of each member association,
which has national jurisdiction unlike a regional office. duly approved by its board of directors.

5. REGISTRATION REQUIREMENTS 5.5. CHARTERED LOCAL (CN-CD)

5.1 FEDERATION OR NATIONAL UNION (NO-ACT-C) 5.5a Chartered Local has to be Registered; Requirements
1. A statement indicating the name of the applicant labor union, its principal a. A charter certificate issued by the federation or national union indicating the
address, the name of its officers and their respective addresses; creation or establishment of the local/charter;
2. The minutes of the organizational meeting(s) and the list of employees who b. The names of the local chapter’s officers, their addresses, and the principal
participated in the said meeting(s); office of the local/chapter; and
3. The annual financial reports if the applicant union has been in existence for c. The local/chapter’s CBL, provided that where the local/chapter’s CBL is the
one or more years, unless it has not collected any amount from the members, same as that of the federation or national union, this fact shall be indicated
in which case a statement to this effect shall be included in the application; accordingly.
4. The applicant union’s CBL, minutes of its adoption or ratification, and the list of d. (not included in the book’s enumeration but nevertheless a requirement) The
the members who participated in it. The list of ratifying members shall be genuineness and due execution of all the foregoing supporting requirements
dispensed with where the CBL was ratified or adopted during the organization shall be certified under oath by the Sec. or the treasurer of the local/chapter
meeting(s). In such a case, the factual circumstances of the ratification shall and attested by its President. Particularly as regards the CBL, its due execution
be recorded in the minutes of the organizational meeting(s); means that it was knowingly and freely deliberated upon and ratified by the
5. The resolution of affiliation of at least ten (1) LLOs, whether independent unions members of the chapter.
or chartered locals, each of which must be a duly certified or recognized BA in
the establishment where it seeks to operate; and 5.5b Tentative Legal Personality to File a PCE
6. The name and addresses of the companies where the affiliates operate and • The issuance of a charter certificate gives the chapter/local a legal personality to
the list of all the members in each company involved. file for a petition for a certification election. Nothing more.
• The subsequent submission of required documents, i.e., CN-CD, entitles the chapter
5.2 INDUSTRY UNION to all the rights and privileges of an LLO.
1. Same as Federation or National Union
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 37

5.5c Submission of Confirming Documents 5.5j Withdrawal by Members

• There is no time limit to submit the additional required documents. However, if it • If the withdrawal is done before the application for registration is filed, the
already filed a PCE, the supporting documents to the PCE shall be filed within 30 withdrawal is presumed VOLUNTARY and it may prejudice the registrability of the
days to become an LLO. applicant union.
• The Med-Arb may dismiss the PCE if the union is not listed in DOLE’s registry of • If the withdrawal is done after the application is filed, the withdrawal is considered
legitimate unions or if it fails to attach to its petition a duly issued charter certificate. INVOLUNTARY and does not affect the registration of the application.

5.5d Validity of D.O. No. 40-03 5.5k Union’s Legitimacy not Subject to Collateral Attack
• Is the imposition of the 30-day period an act that exceeds DOLE’s power? • Once the union acquires legal personality on the date the registration certificate is
• No. It is consistent with the State policy to promote unionism. The SC cannot look issued, such legal personality may be questioned only through an independent
into the question of policy decisions of a department of a co-equal branch (as in petition for cancellation of the union registration x x x and not by way of collateral
this case). Electromat Manufacturing and Recording Corp. v. Lagunsad, G.R. No. attack.
172699, 27 July 2011.
6. COLLECTIVE BARGAINING UNIT (CBU)
5.5e A Trade Union Center Cannot Create a Chapter
• Only duly registered federations or national unions may create chapters under Art. BARGAINING UNIT – refers to a group of employees sharing mutual interests within a given
234-A (this is the only provision that provides chapter unions). employer unit, comprised of all or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical grouping within such employer
5.5f When does a Chapter become an LLO? unit.
• From the date of issuance of its certificate of registration or certificate of creation of • One of the requirements to register an independent union is that the applicant should
chartered local. have a membership of at least 20 percent of the employees "in the bargaining unit
where it seeks to operate.
5.5g Recognition of BLR not a Ministerial Duty (See historical explanation at page 193) • The "bargaining unit" is always a group of employees. It may be all the supervisors or all
• When an application was filed, the BLR has no ministerial duty to automatically issue the rank-and-file in the company, but the law does not allow supervisors and rank-and-
a certificate of registration. The BLR may look into the possibility of commission of file to belong to the same bargaining unit.
falsification and other irregularities, esp. those appearing in the face of the • Can there be several bargaining units of supervisors or of the rank and file in just one
application. If falsification and other irregularities exist, the BLR may deny company? YES. The common denominator is sharing of concerns or problems among the
recognition as LLO or a petition for cancellation of registration may be filed if the members of a unit, whether big or small, concentrated or dispersed.
union becomes registered. No collateral attack to the validity of the LLO is allowed. • Obviously, therefore, the CBU is different from and bigger than a union. Union members
See Progressive Dev. Corp v. Laguesma, G.R. No. 115077, 18 April 1997. come from the CBU and there can be several rival unions within a CBU. While officers
lead and represent a union, a union represents a CBU. The representative is the union;
5.5h Requirements Relaxed the group represented is the CBU. The representative union, once determined, will
The creation of a local does not need subscription by a minimum number of members. represent even the members of other unions as long as they are part of the CBU. This is
• The 20 percent initial membership mentioned in Article 234(c) is required to register why the representative union (also known as the bargaining agent or majority union) is
an independent union but not a local. called “exclusive bargaining representative.”
• This makes it easier to create a chapter than an independent union.
7. CONSTITUTION, BY-LAWS, AND REGULATIONS: LIMITATIONS
Is the submission of a books of account necessary? NO.
• The current Implementing Rules (D.O. No. 40, issued in 2003) does not revive the Another registration requirement is the submission of the constitution and by-laws (CBL) of the
books-of-account requirement in registration (as stated in 1992). applicant union.
• But, a financial report is REQUIRED if the applicant independent union, or federation, • The articles of agreement of a labor union, whether called a constitution, charter,
or workers’ association has been existing for at least a year and has collected any by-laws, or any other name, constitutes a contract between the members which
some of money from its members. the courts will enforce, if not immoral or contrary to public policy or the law of the
land. A rule of a labor union which violates the statute is, of course, illegal.
5.5i Twenty Percent Membership Requirement • Under 240(e), it is implied that the members are the ones to adopt or ratify the
To create a chapter, no minimum size of membership is required. But the 20% minimum union’s constitution and by-laws. It being a governing law of the union, the CBL
membership is required to register an independent union. should be democratically ratified.
• The 20% is not a requirement for the organizational meeting or the ratification of the
independent union’s constitution and by-laws. But it is required at the time the 7.1 Amendments
independent union applies to register. • A union’s constitution and by-laws may be amended, modified and extended by
• Situation: Union had more than 20% membership at the time of the registration, but the duly constituted union authorities under the laws of the state. In the absence of
only 17% had attended the organizational meeting. Is the registration valid? YES. The other requirements, and subject to vested rights, a union constitution may be made,
Court held that the 20% requirement pertains to the union membership when it was changed, unmade, or superseded by a majority vote of the members or its
registered. constituent body

8. PROVISIONS COMMON TO THE REGISTRATION OF LABOR ORGANIZATIONS AND WORKERS’ 9.1 Principal-Agent Relationship
ASSOCIATIONS • The relationship between a local or chapter and the labor federation or national
union is generally understood to be that of agency, where the local is the principal
8.1 Attestation, Fee, Copies of Documents and the federation the agent.
• The application for registration of labor unions and workers' associations, notice for • A local union does not owe its existence to the federation with which it is affiliated. It
change of name, merger, consolidation and affiliation including all the is a separate and distinct voluntary association owing its creation to the will of its
accompanying documents, shall be certified under oath by its Secretary or members.7
Treasurer, as the case may be, and attested to by its President. • Affixing the name of the federation to the name of the local union, according to
• A labor union and worker's association shall be issued a certificate of registration the court, merely stresses that the local union is an affiliate of that federation or
upon payment of the prescribed registration fee. national union. It does not, however, mean that the local union cannot stand on its
own. The local union owes its creation and continued existence to the will of its
8.2 Action on the Application/Notices members and not to the federation to which it belongs.
The Regional Office or the Bureau, as the case may be, shall act on all applications for
registration or notice of change of name, affiliation, merger and consolidation within one (1) 9.2 Report of Affiliation, Requirements
day from receipt either by: The report of affiliation shall be accompanied by the following documents:
(a) approving the application and issuing the certificate of a) resolution of the labor union's board of directors approving the affiliation;
registration/acknowledging the notice/report; or b) minutes of the general membership meeting approving the affiliation;
(b) denying the application/notice for failure of the applicant to comply with the c) the total number of members comprising the labor union and the names of
requirements for registration/notice. members who approved the affiliation;
d) the certificate of affiliation issued by the federation in favor of the independently
8.3 Denial of Application/Return of Notice registered labor union; and
e) written notice to the employer concerned if the affiliating union is the incumbent
Where the documents supporting the application for registration/notice of change of name, bargaining agent.
affiliation, merger and consolidation are incomplete or do not contain the required
certification and attestation, the Regional Office or the Bureau shall, within one (1) day from 10. DISAFFILIATION
receipt of the application/notice, notify the applicant/labor organization concerned in writing The right of a local union to disaffiliate from its mother union is well-settled. It has been
of the necessary requirements and complete the same within thirty (30) days from receipt of repeatedly held that a local union, being a separate and voluntary association, is free to
notice. serve the interest of all its members including the freedom to disaffiliate when circumstances
warrant.
Where the applicant/labor organization concerned fails to complete the requirements within
the time prescribed, the application for registration shall be denied, or the notice of change • The sole essence of affiliation is to increase, by collective action, the common
of name, affiliation, merger and consolidation returned, without prejudice to filing a new bargaining power of local unions for the effective enhancement and protection of
application or notice. their interests.
• Yet the local unions remain the basic units of association, free to serve their own
The order of the Regional Office or the Bureau denying the application for interests subject to the restraints imposed by the constitution and the by-laws of the
registration/returning the notice of change of name, affiliation, merger or consolidation shall national federation and free also to renounce the affiliation upon the terms laid
be in writing, stating in clear terms the reasons for the denial or return. down in the agreement which brought such affiliation into existence.
• In other words, to disaffiliate is a right, but to observe the terms of the affiliation is an
8.4 Appeal obligation.
The denial by the regional office may be appealed to the Bureau and then to the Court of • In Skylanders v. NLRC, the Court ruled that the pendency of an election protest
Appeals. But if the denial originated at the Bureau itself, the appeal is to the Secretary of involving both the mother federation and the local union did not constitute a bar to
Labor and then, if appropriate, to the Court of Appeals. a valid disaffiliation.
• The appeal should be filed within ten (10) days from receipt of such notice, on the • Neither is the disaffiliation from the federation, alleged as an act of disloyalty, a
ground of grave abuse of discretion or violation of [the] Rules. sufficient ground for dismissal from employment.
• The Bureau or the Office of the SoL shall decide the appeal within 20 days from o A local union may sever its affiliation at any time and such disaffiliation
receipt of the records of the case. cannot be considered disloyalty in the absence of specific provisions in
the federation’s constitution prohibiting disaffiliation or the declaration of
9. AFFILIATION autonomy of a local union.
AFFILIATE – is an independently registered union that enters into an agreement of affiliation
with a federation or a national union. It also refers to a chartered local which applies for and is
granted an independent registration but does not disaffiliate from its mother federation or
national union.
• A federation or national union may cease as such when it loses its locals. According
to Articles 244, a federation or national union, to be registerable or to remain
registered, should have as affiliates no less than ten locals or chapters, each of
which is a duly recognized bargaining agent in the establishment where it operates. 7 Adamson & Adamson, Inc. vs. Court of Industrial Relations, 127 SCRA 268 (1984).
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 39

Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc • An individual member or any number of members may disaffiliate from their union
Facts: In the CBA, the company recognized the local union, represented by PAFLU (the during the freedom period. But disaffiliating the union itself from its mother union
federation), as the sole bargaining agent. While the CBA was still in force, 32 of 36 members must be supported by the majority of the members. If done by a minority, even
disaffiliated from PAFLU. PAFLU then requested the company to terminate the employees, during the freedom period, the act may constitute disloyalty.
alleging that the disaffiliation was contrary to the union security clause.
10.4 Disaffiliation: Effect on Union Dues
Doctrine: PAFLU, acting for and in behalf of its affiliate, had the status of an agent while the • The obligation of the employer to deduct and remit dues to the federation is
local union remained the basic unit of the association, free to secure the common interest of conditioned on the individual check-off authorization of the local union members.
all its members including the freedom to disaffiliate when the circumstances warrant. This was The federation is entitled to receive the dues from the employer only as long as the
clearly stated in its constitution and by-laws which provided that the local union should remain local union is affiliated with the federation. Without said affiliation, the employer has
an affiliate as long as 10 or more of the members evidence their desire to continue the no link to the mother union.
affiliation. As only 4 did not sign the resolution for disaffiliation, the intent to disaffiliate was • A local union which has validly withdrawn from its affiliation with the parent
manifest. Hence, the dismissal from employment was not justified. association and which continues to represent the employees of an employer is
entitled to the check-off dues under a collective bargaining contract.
Tropical Hut Employees Union-CGW, et al. vs. Tropical Hut Food Market, Inc., et al.
When the local union withdrew from the old federation to join a new federation, it was merely 10.5 Disaffiliation: Effect on Existing CBA; the “Substitutionary” Doctrine
exercising its primary right to self-organization for the effective enhancement and protection • The CBA continues to bind the members of the new or disaffiliated and
of common interests. In the absence of enforceable provisions in the federation’s constitution independent union up to the CBA's expiration date
preventing disaffiliation of a local union, a local may sever its relationship with its parent.
SUBSTITUTIONARY DOCTRINE – The “substitutionary doctrine” provides that the employees
10.1 Local Union is the Principal; Federation, the Agent cannot revoke the validly executed collective bargaining contract with their employer by the
• The NATU possessed the status of an agent while the local union remained the basic simple expedient of changing their bargaining agent. The new agent must respect the
principal union which entered into contract with the respondent company. When contract.
the THEU disaffiliated from its mother federation, the former did not lose its legal • The employees, thru their new bargaining agent, cannot renege on the collective
personality as the bargaining union under the CBA.8 bargaining contract, except to negotiate with management for the shortening
• Disaffiliation of employees from their mother union and their formation into a new hereof.
union do not terminate their status as employees of the corporation, as the
employees and members of the local union did not form a new union but merely 10.6 Employer Not a Party
exercised their right to register their local union. • The issue of affiliation or disaffiliation is an intra-union dispute that must be resolved
• HOWEVER, the disaffiliating union must itself be a registered union. If unregistered, it in an action at the instance of the federation or the union or a rival labor
is not a legitimate labor organization. For this reason, it has no legal personality and organization, not the employer.
does not possess the rights granted under Art. 251.9
10.7 Affiliation/Disaffiliation: A Summary/Integration
10.2 When to Disaffiliate • A local union may affiliate with or disaffiliate from a federation.
• Generally, a labor union may disaffiliate from the mother union to form a local or o This is an exercise of the right of association recognized by the
independent union only during the 60-day freedom period immediately preceding Constitution.
the expiration of the CBA. • Affiliation and disaffiliation entail rights and obligations
o Internally (i.e. between the union and its members): affiliation/disaffiliation
FREEDOM PERIOD – The freedom period refers to the last 60 days of the fifth and last year of a is a major issue that can be decided only by a majority of the members
CBA. through secret balloting in a formal meeting duly called for the purpose.
• But even before the onset of the freedom period (and despite the closed-shop o Externally (i.e. between the chapter and the federation): affiliation and
provision in the CBA between the mother union and management) disaffiliation disaffiliation is a contractual relation. The affiliation contract cannot
may still be carried out, but such disaffiliation must be effected by a majority of the absolutely prohibit disaffiliation, but may impose limitations or restrictions.
members in the bargaining.10 • By affiliating/disaffiliating, the local union does not dissolve itself nor does it lose its
• Atty. Azu opinion: the [ruling directly above] is true only if the contract of affiliation standing as the principal; the federation is an agent.
does not specify the period for possible disaffiliation. If it does, the stipulation must • But the legal union, even a local chapter, MUST be a legitimate labor organization –
be observed. it must have been duly registered with the DOLE, otherwise it is not entitled to the
rights of an LLO.
10.3 Disaffiliation must be by Majority Decision
• Disaffiliation has to be decided by the entire membership through secret balloting in 11. REVOCATION OF CHARTER
accordance with Article 250(d). • A federation, national union or worker’s association may revoke the charter issued
to a local/chapter or branch by serving on the latter a verified notice of revocation,
copy furnished the Bureau, on the ground of disloyalty or such other grounds as may
be specified in the constitution and by-laws of the federation, national union or
8 NAFLU v. Noriel, G.R. No. L-41955 (1977).
worker’s association.
9 Abaria v. NLRC, Metro Cebu Hospital, G.R. No. 154113 (2011).
10 AWU-PTGWO v. NLRC, G.R. Nos. 87266-69 (1990). • The revocation shall divest the local/chapter of its legal personality upon receipt of
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 40

the notice by the Bureau, unless in the meantime the local/chapter has acquired • The notice for change of name of a labor organization shall be accompanied by
independent registration in accordance with these Rules.11 the proof of approval or ratification of change of name; and the amended
constitution and by-laws.
11.1 Effect of Cancellation of Registration of Federation or National Union on Locals/Chapters
• The cancellation of registration of a federation or national union shall operate to 13.1 Effect of Change of Name
divest its locals/chapters of their status as legitimate labor organizations, unless the • The change of name of a labor organization shall not affect its legal personality.
locals/chapters are covered by a duly registered collective bargaining agreement. • All the rights and obligations of a labor organization under its old name shall
o In the latter case, the locals/chapters shall be allowed to register as continue to be exercised by the labor organization under its new name.
independent unions, failing which they shall lose their legitimate status
upon the expiration of the collective bargaining agreement. ARTICLE 245. [238] CANCELLATION OF REGISTRATION
The certificate of registration of any legitimate labor organization, whether national or local,
12. MERGER OR CONSOLIDATION may be cancelled by the Bureau, after due hearing, only on the grounds specified in Article
239 hereof.
MERGER CONSOLIDATION
Merger of labor organizations is the process Consolidation of unions refers to the creation ARTICLE 246. [238-A] EFFECT OF A PETITION FOR CANCELLATION OF REGISTRATION
where a labor organization absorbs another, or formation of a new union arising from the A petition for cancellation of union registration shall not suspend the proceedings for
resulting in the cessation of the absorbed unification of two or more unions. certification election nor shall it prevent the filing of a petition for certification election.
labor organization’s existence and the
continued existence of the absorbing labor In case of cancellation, nothing herein shall restrict the right of the union to seek just and
organization. equitable remedies in the appropriate courts.
If Union A absorbs Union B, Union A remains If Union A and Union B consolidate
and union B disappears, or it can be B themselves, both of them disappear and ARTICLE 247. [239] GROUNDS FOR CANCELLATION OF UNION REGISTRATION
absorbing A. Another name for merger is Union C is born. Another name for The following may constitute grounds for cancellation of union registration:
“absorption” consolidation is “amalgamation.” a) Misrepresentation, false statement or fraud in connection with the adoption or
One effect of merger is to transfer to the In consolidation the newly created labor ratification of the constitution and by-laws or amendments thereto, the minutes of
absorbing organization all the rights, interest organization acquires all the rights interest ratification, and the list of members who took part in the ratification;
and obligations of the absorbed and obligations of the consolidating labor b) Misrepresentation, false statements or fraud in connection with the election of
organization. organizations. officers, minutes of the election of officers, and the list of voters;
c) Voluntary dissolution by the members. (As amended by R.A. No. 9481, effective
12.1 Practical Considerations June 14, 2007.).

12.2 Notice of Merger/Consolidation of Labor Organizations; Where to File ARTICLE 248. [239-A] VOLUNTARY CANCELLATION OF REGISTRATION
• Notice of merger or consolidation of independent labor unions, chartered locals The registration of a legitimate labor organization may be cancelled by the organization itself:
and workers' associations shall be filed with and recorded by the Regional Office Provided, That at least two-thirds of its general membership votes, in a meeting duly called for
that issued the certificate of registration/certificate of creation of chartered local of that purpose to dissolve the organization: Provided, further, That an application to cancel
either the merging or consolidating labor organization. registration is thereafter submitted by the board of the organization, attested to by the
• Notice of merger or consolidation of federations or national unions shall be filed with president thereof.
and recorded by the Bureau.
ARTICLE 249. [240] EQUITY OF THE INCUMBENT
12.3 Requirements of Notice of Merger/Consolidation
All existing federations and national unions which meet the qualifications of a
legitimate labor organization and none of the grounds for cancellation shall continue to
The Notice shall be accompanied by the following documents:
maintain their existing affiliates regardless of the nature of the industry and the location of the
a) the minutes of merger/consolidation convention or general membership meeting (s)
affiliates. (As inserted by R.A. No. 9481, effective June 14, 2007.
of all the merging/consolidating labor organizations, with the list of their respective
members who approved the same; and
1. CANCELLATION OF REGISTRATION; GROUNDS
b) the amended constitution and by-laws and minutes of its ratification, unless
• While registration is the act that converts a labor organization to a legitimate labor
ratification transpired in the merger/consolidation convention, which fact shall be
organization, cancellation is the government’s act that divests the organization of
indicated accordingly.
that status. It thereby reverts to its character prior to the registration.
• Although it does not cease to exist or become an unlawful organization, its juridical
13. CHANGE OF NAME
personality as well as its statutory rights and privileges is suspended. It therefore loses
• The notice for change of name of a registered labor organization shall be filed with
entitlement to the rights enumerated in Article 242 of the Labor Code.
the Bureau or the Regional Office where the concerned labor organization’s
o It cannot demand recognition by or bargaining with the employer,
certificate of registration or certificate of creation of a chartered local was issued.
cannot file a petition for certification election, and cannot strike.
• Regarding the third ground (voluntary dissolution by members), four requisites must
be met.
11 IRR, Book V, Rule VIII, Sec. 5
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 41

FOUR REQUISITES cancellation of union registration based on petitions filed by the employer.
1. First, the member’s desire to dissolve or cancel the registration of their union should
have been voted upon through secret balloting, applying the rule in Article 241 (d). 3. WHERE TO FILE PETITION
2. Second, the balloting should take place in a meeting duly called for the purpose of • Subject to the requirements of notice and due process, the registration of any
deciding whether or not to dissolve the union. legitimate independent labor union, chartered local and workers' association may
3. Third, the vote to dissolve should represent two-thirds affirmative vote of the general be cancelled by the Regional Director, or in the case of federations, national or
membership, not just of the quorum. Neither the law nor the rules require justification industry unions and trade union centers, by the Bureau Director, upon the filing of an
of the decision. independent complaint or petition for cancellation.
4. Fourth, the members' resolution should be followed by an application for • In short, the office that registers the union is the same office that can cancel the
cancellation passed and submitted by the union's governing board, which registration.
application must be attested to by the president.12 • Cancellation orders issued by the Regional Director are appealable to the BLR. The
latter's decision is final and executory, hence, not appealable to the DOLE Secretary
1.1 Invalid Grounds but it may be elevated to the Court of Appeals by certiorari.
• Having held an illegal strike is not reason to cancel a union's registration. • BLR decisions on cancellation cases that originated at the BLR itself may be
• Along the same line, nonrenewal of registration/permit will not cause dismissal of the appealed to the Secretary and, again, by certiorari to the Court of Appeals.
case filed by the union, provided that when it filed the petition it had juridical
personality and the court had acquired jurisdiction over the case. 4. PROCEDURE
• The case could be continued without need of substitution of parties, but the • The rules of procedure in cancellation cases are those applicable to disputes in
decision to be rendered would bind only those union members who had not general which are already discussed under Article 232.
withdrawn from the case before its trial and decision on the merits. • Additionally, however, certain procedural requirements apply particularly to
"delisting" due to failure to comply with reportorial requirements.
1.2 “Cabo” and other Grounds Deleted • These additional requirements, related to new Article 252, such as publication of
notices in newspapers, are detailed in Rule XV of D.O. No. 40-03 as amended by
CABO – Cabo refers to a person or group of persons or to a labor group which, in the guise of D.O. No. 40-F-03.
a labor organization, supplies workers to an employer, with or without any monetary or other
consideration whether in the capacity of an agent of the employer or as an ostensible ARTICLE 249. [240] EQUITY OF THE INCUMBENT
independent contractor. All existing federations and national unions which meet the qualifications of a
• Because of R.A. No. 9481, engaging in Cabo is no longer a cause for cancellation of legitimate labor organization and none of the grounds for cancellation shall continue to
union registration. maintain their existing affiliates regardless of the nature of the industry and the location of the
affiliates.
SWEETHEART CONTRACT – a CBA which provides for terms and conditions of employment
below minimum standards established by law. Art. 250. RIGHTS AND CONDITIONS OF MEMBERSHIP IN A LABOR ORGANIZATION
• Also deleted. The following are the rights and conditions of membership in a labor organization:
(a) No arbitrary or excessive initiation fees shall be required of the members of a
• Asking for or accepting attorney’s fees or negotiation fees from the employer has legitimate labor organization nor shall arbitrary, excessive or oppressive fine and
also been removed. But this act of the union is STILL ILLEGAL because it is prohibited forfeiture shall be imposed;
by the Labor Code in Article 260, as it constitutes ULP. (b) The members shall be entitled to full and detailed reports from their officers and
representatives of all financial transactions as provided for in the constitution and
1.3 Violation of Member’s Rights by-laws of the organization;
• Under Art. 250, it is a ground for cancellation of union registration (c) The members shall directly elect their officers, including those of the national union
• Under Art. 247 by RA 9481, this ground is not one of the 3 listed. or federation, trade center or any similar aggrupation to which their union is
affiliated, by secret ballot at intervals of 5 years. No qualification requirements for
2. WHO FILES THE PETITION FOR CANCELLATION candidacy to any position shall be imposed other than membership in good
• D.O. No. 40-03 (Rule XIV, Section 2) states: "Any party-in-interest may commence a standing in subject labor organization. The secretary or any other responsible union
petition for cancellation of a union's registration, except in actions involving officer shall furnish the Secretary of Labor and Employment with a list of the newly-
violations of Article 241[now 250], which can only be commenced by members of elected officers, together with the appointive officers or agents who are entrusted
the labor organization concerned." (Note: The exception portion of this statement with the handling of funds within 30 calendar days after the election of officers or
has no more basis because violation of Article 250 is not one of the only three from the occurrence of any change in the list of officers of the labor organization;
grounds specified in Article 247 of R.A. No. 9841 In fact, this ground has been (d) The members shall determine by secret ballot, after due deliberation, any question
deleted from D.O. No. itself by D.O. No. 40-F-03.) of major policy affecting the entire membership of the organization, unless the
• The employer is a "party-in-interest," and jurisprudence reveals cases 13 of nature of the organization, unless the nature of the organization or force majeure
renders such secret ballot impractical, in which case the board of directors of the

organization may make the decision in behalf of the general membership; (n) No special assessment or other extraordinary fees may be levied upon the members
(e) No labor organization shall knowingly admit as member or continue in membership of a labor organization unless authorized by a written resolution of a majority of all
any individual who belongs to a subversive organization or who is engaged directly the members at a general membership meeting duly called for the purpose. The
or indirectly in any subversive activity; secretary of the organization shall record the minutes of the meeting including the
(f) No person who has been convicted of a crime involving moral turpitude shall be list of all members present, the votes cast, the purpose of the special assessment or
eligible for election as union officer or for appointment to any position in the union; fees and the recipients of such assessments or fees. The record shall be attested to
(g) No officer, agent or member of a labor organization shall collect any fees, dues, or by the president;
other contributions in its behalf or make any disbursements of its money or funds (o) Other than for mandatory activities under the Code, no special assessment,
unless he is duly authorized pursuant to its constitution and by-laws; attorneys fees, negotiation fees or any other extraordinary fees may be checked off
(h) Every payment of fees, due or other contributions by a member shall be evidenced from any amount due to an employee without an individual written authorization
by a receipt signed by the officer or agent making the collection and entered into duly signed by the employee. The authorization should specifically state the
the record of the organization to be kept and maintained for the purpose; amount, purpose and beneficiary of the deduction; and
(i) The funds of the organization shall not be applied for any purpose or object other (p) It shall be the duty of any labor organization and its officers to inform its members of
than those expressly provided by its constitution and by-laws or those expressly the provisions of its constitution and by-laws, collective bargaining agreement, the
authorized by written resolution adopted by the majority of the members at a prevailing labor relations system and all the rights and obligations under existing
general meeting duly called for the purpose; labor laws.
(j) Every income or revenue of the organization shall be evidenced by a record
showing its source, and every expenditure of its funds shall be evidenced by a For this purpose, registered labor organizations may assess reasonable dues to finance labor
receipt from the person to whom the payment is made, which shall state the date, relations seminars and other labor education activities.
place and purpose of such payment. Such record or receipt shall form part of the
financial records of the organization; Any violation of the above rights and conditions of membership shall be a ground for
Any action involving the funds of the organization shall prescribe after 3 years from cancellation of union registration or expulsion of officer from office, whichever is appropriate.
the date of submission of the annual financial report to the Department of Labor At least 30% of all the members of union or any member or members specially concerned
and Employment or from the date the same should have been submitted as may report such violation to the Bureau. The Bureau shall have the power to hear and decide
required by law, whichever comes earlier; Provided, that this provision shall apply any reported violation to mete the appropriate penalty.
only to a legitimate labor organization which has submitted the financial report
requirements under this Coahde; Provided, further, that failure of any labor CHAPTER II: RIGHTS AND CONDITIONS OF MEMBERSHIP (ART. 250)
organization to comply with the periodic financial reports required by law and such
rules and regulations promulgated thereunder 6 months after the effectivity of this 1. DEMOCRATIZATION OF UNIONS
Act shall automatically result in the cancellation of union registration of such labor • A fundamental paradox in a democratically governed market economy is the presence
organization; of democracy in the political sphere but its absence in the economic. The workers
(k) The officers of any labor organization shall not be paid any compensation other generally do not and cannot select their superiors, and neither do they decide policy
than the salaries and expenses due to their positions as specifically provide for in its questions or control the making of rules. This paradox germinates the seed of unionism.
constitution and by-laws, or in a written resolution duly authorized by a majority of • Unionization transforms the weakness of the individual into the strength of the group. But,
the members at a general membership meeting duly called for the purpose. The an unionism’s aim is to install industrial democracy, the unions themselves must be
minutes of the meeting and the list of the participants and ballots cast shall be democratic. This is a rationale behind Art. 250.
subject to inspection by the Secretary of Labor or his duly authorized o To democratize the union, Art. 250(c) requires the union members to elect their
representatives. Any irregularities in the approval of the resolutions shall be a ground officers every 5 years through secret balloting.
for impeachment or expulsion from the organization; o Also Art 250 explicitly grants policy-approving power to members. They
(l) The treasurer of any labor organization and every officer thereof who is responsible determine any question of major policy through deliberations and secret
for the account of such organization for the collection, management, disbursement, balloting.
custody or control of the funds, moneys and other properties of the organization,
shall render to the organization and to its members a true and correct account of 2. NATURE OF RELATIONSHIP BETWEEN UNION AND ITS MEMBERS
all moneys received and paid by him since the last day on which he rendered such • There must be fair dealing between the union and its members, which is fiduciary in
account, and of all bonds, securities and other properties of the organization nature, and arises out of 2 factors:
entrusted to his custody or under his control. The rendering of such account shall be o The degree of dependence of the individual employee in the union
made: organization
(1) At least once a year within 30 days after the close of its fiscal year; o The comprehensive power vested in the union with respect to the individual.
(2) At such other times as may be required by a resolution of the majority of the • The union is considered an agent of its members for the purpose of securing for them fair
members of the organization; and and just wages and good working conditions.
(3) Upon vacating his office. • Thus as agents, the union is obligated to give its members, as its principals, all information
The account shall be duly audited and verified by affidavit and a copy thereof shall relevant to union and labor matters entrusted to it.
be furnished the Secretary of Labor.
(m) The books of accounts and other records of the financial activities of any labor 2.1. Duty of Court to Protect Laborers from Unjust Exploitation by Oppressive Employers
organization shall be open to inspection by any officer or member thereof during and Union Leaders
office hours;
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 43

• Fair dealings is equally demanded of unions as well as of employers in their • What positions to fill up, where, and how election should be done are matters left by law
dealings with employees. Thus where the union leadership was recreant in its to the union’s constitution and bylaws or to agreement among members. Only in the
duty towards the union members, the courts must be vigilant to protect the absence thereof will the Implementing Rules of Book V apply. IRR:
individual interests of the union members. o Require incumbent president to create an election committee within 60 days
• The union officers cannot refuse to grant a benefit or assistance (e.g. financial before expiration of the incumbent officers’ term.
assistance in case of suspension or termination without reasonable cause) o No qualification requirements for candidacy to any position shall be imposed
which a union member is entitled under union constitution and by-laws. Upon other than good standing in the union.
complaint, a labor arbiter may order such grant. o If the officers with expired term do not call an election, the remedy is for at
least 30% of the members to file a petition with the DOLE Regional Office.
3. RIGHTS OF UNION MEMBERS • The members’ frustration over the performance of the union officers, as well as their fear
• Art. 249 may be viewed as the union members’ Bill of Rights. These rights may be of a “fraudulent” election to be held under the latter’s supervision does not justify
strengthened or supplemented but not defeated or restricted by union by-laws or board disregard of the union’s constitution and bylaws.
actions.
• The rights and conditions of membership may be summarized as follows: UST Faculty Union, et al v. Bitonio Jr, et al.
1. POLITICAL RIGHT – the member’s right to vote and to be voted for, subject to The petitioners, who are mostly disgruntled union members, claim that the numerous
lawful provisions on qualifications and disqualifications anomalies allegedly committed by the union officers impelled them to elect a new set of
2. DELIBERATIVE AND DECISION-MAKING RIGHT – the member’s right to officers before the end of the term of the incumbents. They assert that this was in pursuance of
participate in deliberations on major policy questions and decide them by their right to self-organization. The members’ frustration over the performance of the union
secret ballot officers, as well as their fear of a “fraudulent” election to be held under the latter’s supervision
3. RIGHTS OVER MONEY MATTERS – the member’s right against excessive fees; the does not justify disregard of the union’s constitution and bylaws. The union’s constitution and
right against unauthorized collection of contributions or unauthorized bylaws is the fundamental law that governs the relationship between and among the
disbursement; the right to require adequate records of income and expenses members of the union.
and the right of access to financial records; the right to vote on officer’s
compensation; the right to vote on proposed special assessments and be 4.1. Eligibility of Voters
deducted a special assessment only with the member’s written authorization. • Only members of the union can take part in the election of union officers. Under US
4. RIGHT TO INFORMATION – the member’s right to be informed about the Federal Law, every member in good standing is entitled to one vote.
organization’s constitution and bylaws and w collective bargaining o A member in good standing is any person who has fulfilled the requirements for
agreement and about labor laws. membership in the union and who has neither voluntarily withdrawn from
• Membership in the union does not divest the members of their primary standing as membership nor has been expelled or suspended from membership after
employees. He still has the personality and the right to make individual personal appropriate proceedings consistent with lawful provisions of the union’s
representation to the employer. constitution and bylaws.
o This is recognized in Art 266, stating that “an individual employee or group of • A labor organization may prescribe reasonable rules and regulations with respect to
employees shall have the right at any time to present grievances to their voting eligibility.
employer.” o May defer eligibility to vote by requiring a reasonable period of prior
o The worker is an employee first and a union member second. membership
o But may not create special classes of nonvoting members
3.1. Eligibility for Membership o May condition the exercise of the right to vote on payment of dues
• When, how, and under what conditions an employee becomes a union § But this right must be applied (1) uniformly and (2) members must be
member depends on the union’s constitution and bylaws since Art. 260 gives a given reasonable opportunity to pay dues (grace period)
labor organization the right to prescribe its own rules for acquisition or retention o Submission of the employee’s name with the Bureau of Labor is not a condition
of membership. sine qua non to voting in the election of the union’s officers
• Nonetheless, under Art 292 an employee is already qualified for union
membership starting on his first day of service. 4.2. Union Officers Must be an Employee
• An employee’s membership in a union, however, does not necessarily mean • One should be employed in the company to qualify as officer of a union in that
coverage by the collective bargaining agreement. company.
o This is because the CBA defines its coverage as agreed by parties (for • Although subsequent department orders deleted this provision in the IRR, the
instance, it may state that it only includes regular employees. membership qualification remains because it is required in the Code itself in Art.
• The reverse is equally true: membership in the CBU does not automatically 259(c), second sentence
mean membership in the union (ex: members of certain religious sects do not
join unions although they are members of a bargaining unit) 4.3. Disqualification of Union Officers
• No person who has been convicted of a crime involving moral turpitude shall
4. ELECTION OF UNION OFFICERS be eligible for election as a union officer of for appointment to any position in
• The officers of the union are elected directly by the members in secret ballot voting. the union.
o The election takes place at intervals of 5 years which is the term of office of the • Art. 250(c) provides that “no labor organization shall knowingly admit as
union officers including those of a national union, federation, or trade union member or continue in membership any individual who belongs to a subversive
center. organization or who is engaged directly or indirectly in any subversive activity.”
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 44

4.4. Union Election Protest: Proclamation of Winners • When there is a violation of due process, rule of exhaustion of
• A complaint or protest regarding election of union officers – a subject not administrative remedies may be disregarded.
mentioned at all in this Code – is treated in the Implementing Rules as an
intra/inter-union dispute. Rule XI of DO No. 40-03 applies. 8. CONSEQUENCE OF VIOLATION OF RIGHTS
• If the conditions of membership, or the rights of the members are violated, the violation
5. DUE PROCESS IN IMPEACHMENT may result in the cancellation of the union registration or the expulsion of the culpable
officers.
Litton Mills Employees Association-Kapatiran v. Ferrer-Calleja • However, another view holds that Art. 245 and 247 (as amended) limit to only 3 the
As to impeachment of a union officer, petitioner-union’s constitution and bylaws provides the grounds for cancellation of union registration, and violation of Art. 250 is not of the 3.
procedures to be followed. The procedure was not followed by the petitioners when they Hence, it is argued that the 30% requirement is now of doubtful application to the issue of
impeached Umali. To be sure, there was difficulty on the part of petitioners in complying with union cancellation.
the required procedure for impeachment. Nevertheless, despite the practical difficulty in • Under DO No. 40-03, any complaint or petition with allegations of mishandling,
complying with said impeachment procedure, petitioners should have shown substantial misappropriation or non-accounting of funds in violation of Art. 250 shall be treated as an
compliance with said impeachment procedure by giving Umali ample opportunity to defend intra-union dispute. It shall be heard and resolved by the Med-Arbiter pursuant to the
himself as contrasted to the outright impeachment, right after he failed to appear before the provisions of Rule XI (regarding inter-intra-union disputes)
first and only investigation scheduled.
8.1. Exception: When 30% Not Required
6. Expulsion of Member • Ordinarily, Art. 250 requires 30% of the members to report a violation of the
• A member of a labor union may be expelled only for a valid cause and by labor organization procedures. Nevertheless, when such violation directly
following the procedure outlined in the constitution and bylaws of the union affects one or two members, then only one or two members would be enough
to report such violation.
Ferrer, et al v. NLRC o In a 2005 decision, the SC ruled that the 30% requirement is not
Petitioner Ferrer and companions filed with the Department of Labor a complaint seeking the mandatory. The article relied upon (Art. 250) uses the permissive word
expulsion from SAMAHAN of its officers headed by Capitle allegedly because the officers may, and it declares that the report may be made, alternatively by
failed to attend to the economic demands of the workers. Subsequently, Ferrer and “any member or members specially concerned.” This is further
companions elected a new set of officers. As a result, the union officials headed by Capitle confirmed by the fact that the assent of 30% of the union members is
expelled Ferrer, et al from the union and demanded from the company the termination of not a factor in the acquisition of jurisdiction by the Bureau of Labor
their employment. In the first place, the union has a specific provision for the permanent or Relations as furnished in Art. 226 of the Labor Code. Indeed, the
temporary expulsion of its erring members in its constitution and bylaws. No hearing was ever officials mentioned are given the power to act on all inter-union and
conducted by SAMAHAN to look into petitioners’ explanation of their moves to oust the union intra-union conflicts (1) “upon request of either or both parties” as
leadership. Petitioner’s alleged act of sowing disunity among the members of the SAMAHAN well as (2) “at their own initiative”
could have been ventilated and threshed out through a grievance procedure within the
union itself. Expulsion of a member for arbitrary or impetuous reason may amount to unfair 9. VISITORIAL POWER
kabit practice by the union. • Art. 289 authorizes the Secretary of Labor and Employment or his duly
authorized representative to inquire into the financial activities of any labor
7. RELIEF WITHIN THE UNION organization on the basis of a complaint under oath, supported by 20% of the
• Generally, redress must first be sought within the union itself in accordance with membership in order to determine compliance or noncompliance with the
its constitution and bylaws. laws and to aid in the prosecution of any violation thereof.
• Thus a complaint for illegal disbursement filed by the union-vice president with
the DOLE, is considered a premature action. 10. CHECK-OFFS AND ASSESSMENTS
• A check-off is a method of deducting from an employee’s pay at prescribed
7.1. Exceptions period, the amounts due the union for fees, fines, or assessments. The right of a
• Where exhaustion of remedies within the union itself would practically union to collect union dues is recognized under Art. 292(a).
amount to a denial of justice, it would not be insisted upon as a condition • Under Art. 113, one of the lawful deductions from employee’s wage is for union
to the right to invoke the aid of a court. dues. But the amount of union due should be reasonable.
• Art. 250 prohibits the imposition of excessive or arbitrary fees.
Kapisanan ng mga Manggagawa sa MRR v. Hernandez • Art. 250(d) provides that “any question of major policy affecting the entire
membership” has to be determined by the members themselves by secret
A case was filed against the union and its incumbent officers, some of whom were members
ballot. The amount and collection of union dues are questions that affect the
of the board of directors. Although the constitution and bylaws provide that charges for any
entire membership, hence, they have to be approved by the members
violation thereof shall be filed before the board of directors, exhaustion of remedies within the
themselves.
union itself would practically amount to a denial of justice or would be illusory or vain because
the board of directors would in effect be acting as respondent investigator and judge at the
10.1. Assessments, like dues, may also be checked off
same time.
• Dues are defined as payments to meet the union’s general and current
obligations. The payment must be regular, periodic, and uniform. Payments

used for a special purpose, especially if required only for a limited time, are 10.2. Three Requisites to Collect Special Assessment
regarded as assessments. • In order that the special assessment for Union’s incidental expenses, attorney’s
• Attorney’s fees may not be deducted or checked off from any amount due to fees and representation expenses, may be valid, the following requisites must
an employee without his written consent, except for mandatory activities be complied with:
under the Code. 1. authorization by a written resolution of the majority of all the
o A mandatory activity is a judicial process of settling disputes laid members at the general membership meeting duly called for the
down by the law. An amicable settlement entered into by the purpose
management and the union is not a mandatory activity under the 2. secretary’s record of the minutes of the meeting
Code. 3. individual written authorization for check-off duly signed by the
• Deductions for union service fee are authorized by law and do not require employee concerned.
individual check-off authorizations. 10.3. Art. 250(n and o): Authorization Should Proceed from Free Consent
• Notwithstanding its “compulsory” nature, “compulsory arbitration” is not the • In another case, the union officers who negotiated the CBA, which grants
“mandatory activity” under the Code which dispenses with individual written P42m economic benefits package, required the union to sign a document
authorizations for check-offs. It is a judicial process settling disputes laid down embodying
by law. In other words, individual written authorizations are needed to deduct 1. the ratification of the CBA and
from members’ salary the attorney’s fee for concluding a collective bargaining 2. an authorization for the deduction or check-off of P4.2m as payment
agreement through compulsory arbitration. for attorney’s fees
• Special assessment may be checked off, but Art, 250, particularly (n) and (o) • Such authorization is invalid. It is a vitiated authorization because it could be
should be carefully observed. assumed that the union officers felt it difficult to turn down the substantial and
o Palacol, et al v. Pura Ferrer-Calleja, et al: The union president lucrative award of P42m economic package. They had no free choice: they
submitted to the company the ratification by the union members of had to sign the ratification which also embodies authorization for the
the newly concluded CBA. He also submitted an authorization for the deduction of union dues and special assessment. There is no legitimacy or
company to deduct union dues of P10 every pay day and, in genuine consent.
addition, 10% as special assessment, from the CBA lump sum pay
granted to the union members. The members assailed the 10% 10.4. Check-off of Agency Fee
special assessment as a violation of Art. 250 in relation to Art. 228(b) • Another allowable deduction from employee’s wage is agency fee. This is an
of the Labor Code. The failure of the union to comply strictly with the amount, equivalent to union dues, which a nonunion member pays to the
requirements set out by law invalidates the questioned special union because he benefits from the CBA negotiated by the union.
assessment. Substantial compliance is not enough in view of the fact
that the special assessment will diminish the compensation of union 10.5. Employer’s Liability in Check-off Arrangement
members. Their express consent is required, and this consent must be • No provision of law makes the employer directly liable for the payment to the
obtained in accordance with the steps outlined by law, which must labor organization of union dues and assessments that the former fails to
be followed to the letter. deduct from its employee’s salaries and wages pursuant to a check-off
§ Par. (n) of Art. 250 requires that the Union must submit to stipulation.
the Company a written resolution of a majority of all the • The employer’s failure to make the requisite deductions may constitute a
members at a general membership meeting duly called for violation of a contractual commitment for which it may incur liability for unfair
the purpose. In addition, the secretary of the organization labor practice. But the employer does not, by that omission, incur liability to the
must record the minutes of the meeting, which, in turn, union for the aggregate of dues or assessments uncollected from the union
must include among others, the list of all the members members, or agency fees for non-union employees.
present as well as the votes cast. This was not followed
because only local membership meetings were held, and 10.6. Jurisdiction Over Check-off Disputes
only minutes of the local membership meetings were • The Regional Director of DOLE, not the labor arbiter, has jurisdiction over check-
submitted. off disputes.
§ Par. (o) of Art. 250 requires an individual written • Under Art 250, the Bureau of Labor Relations has jurisdiction over cases of
authorization duly signed by every employee in order that violation thereof and to mete the appropriate penalty.
a special assessment may be validly checked off. This was • The complaint is not a money claim against the employer; it is against the
not followed because majority of the union members had union over which the labor arbiter has no jurisdiction.
already withdrawn their individual authorizations. The
withdrawal is equivalent to no authorization at all.
§ The collection of the special assessment partly for the
payment of services rendered by union officers, consultants
and others may not be in the category of “attorney’s fees
or negotiation fees” but it is an exaction which falls within
the category of a “similar charge,” and are therefore within
the coverage of the prohibition in the aforementioned
article.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 46

• The act of the employer in dealing with the workers individually, instead of collectively
Art. 251. RIGHTS OF LEGITIMATE LABOR ORGANIZATION through the union and its counsel, violates good morals as they undermine the unity of
A legitimate labor organization shall have the right: the union.
(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 2.1. Members Distrusting their Union
appropriate collective bargaining unit for purposes of collective bargaining; • The authority of a union to act as representative of its members includes the power
(c) To be furnished by the employer, upon written request, with the annual audited to represent its members for the purpose of enforcing the provisions of the CBA.
financial statements, including the balance sheet and the profit and loss statement, o When a union files a case for and in behalf of its members, a member will
within 30 calendar days from the date of receipt of the request after the union has not be permitted to file in the same case a complaint-in-intervention even
been duly recognized by the employer or certified as the sole and exclusive if it alleges that the union was not pursuing the case diligently.
bargaining representative of the employees in the bargaining unit, or within 60 o The intervention may be allowed when there is a suggestion of fraud,
calendar days before the expiration of the existing collecting bargaining collusion, or lack of good faith on the part of the union.
agreement, or during the collective bargaining negotiation;
(d) To own property, real or personal, for the use and benefit of the labor organization 3. COMPROMISE BINDING UPON MINORITY MEMBERS OF UNION; EXCEPTION
and its members; • A compromise agreement between the Union and the Company, pursuant to
(e) To sue and be sued in its registered name; and which the complaint in an unfair labor practice case had been withdrawn and
(f) To undertake all other activities designed to benefit the organization and its dismissed, is binding upon the minority members of the union.
members including cooperative, housing welfare and other projects not contrary to • In a case, however, where 257 out of 262 complainants agreed to drop their
law. criminal and ULP complaints against their employer, the court said that the union
had no authority to compromise the individual claims of members who did not
Notwithstanding any provision of a general or special law to the contrary, the income and the consent to such settlement. Not having authorized their union to enter into such
properties of legitimate labor organizations, including grants, endowments, gifts, donations compromise, those 5 members are not bound by the terms of the settlement.
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 4. COMPROMISE OF MONEY CLAIMS
taxes, duties and other assessments. The exemptions provided herein may be withdrawn only
by a special law expressly repealing this provision. Consent of Each Laborer Required
• Money claims due to laborers cannot be the object of settlement or compromise
effected by a union or counsel without the specific individual consent of each
CHAPTER III: RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS
laborer concerned.
1. L.L.O. AND E.B.R.
Role of Union
• The first 3 rights mentioned in this article (Art. 251) pertain only to the union that has been
• The beneficiaries are the individual complainants themselves. The union to which
selected as the bargaining representative of the employees in the bargaining unit. This
they belong can only assist them but cannot decide for them.
prerequisite id emphasized in Art. 267, first sentence
Employee Must Sign the Compromise Agreement
2. UNION AS REPRESENTATIVE
• A judgment based on a compromise agreement authorized by the members does
• Groups of workers become persons with “capacity to act” only when they formally
not bind the individual members or complainants who are not parties or signatories.
organize themselves and register with the government as a labor organization, either an
associations or a union.
Reliance on Authority of Parties: Collective Bargaining vs. Backwages
• To deal with the employer without going into formal negotiation, the union need only be
• An employer who bargains in good faith should be entitled to rely upon the
registered with the DOLE. But to formally negotiate a CBA, the union must not only be
promises and agreements of the union representatives with whom he must deal
registered, it must be the union certified by the DOLE as the bargaining representative of
under the compulsion of law and contract.
the employees.
o It must be the EBR of the Exclusive Bargaining Representative (also called SEBA
• However, where the collective bargaining process is not involved, and what is at
or the Sole and Exclusive Bargaining Representative)
stake are backwages already earned by the individual workers and final judgment
• The DOLE certification as EBR is obtained through a direct certification from the DOLE
has been rendered in their favor, the real parties in interest are the individual workers
without passing through an election, or through a DOLE certification after winning in a
themselves. Authority of the union to waive or quitclaim all or part of the judgment
certification election.
award in favor of the individual workers cannot be lightly presumed but must be
• It is the function of a labor union to represent its members against the employer’s unfair
expressly granted.
labor practices.
• Even if it is not clear from the record that the union is s registered organization, but
Application
considering that it filed a petition for certification election and such petition was granted
• In a case, the SC ruled that union members who did not ratify the Return-to-Work
on appeal by the Labor Undersecretary, such a union has the requisite personality to sue
Agreement could not be bound by it. The SC added that accrued money claims by
in its own name to challenge the ULP acts committed by the employer.
workers and employees must be regarded as a personal right. For a waiver thereof
to be legally effective, the individual consent or ratification of the workers or
employees involved must be shown. Neither the officers nor the majority of the
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 47

union had any authority to waive the accrued rights pertaining to the dissenting • Connected to 257 is right to engage in-group action, provided it is peaceful, to
minority members. support the organization’s objective which is not necessarily collective bargaining
but, simply, to aid and protect its members. But this is not strike.
5. RIGHT TO BE FURNISHED WITH FINANCIAL STATEMENT
1.1 Coverage of the Right to Organize; Exceptions
Purpose of the Right • General Rule: The right to form, join or assist a labor organization is granted to all
• The law gives the union the right to be furnished with the employer’s audited kinds of employees of all kinds of employers – public or private, profit or nonprofit,
financial statements in order to better equip the union in preparing for or in commercial or religious.
negotiating with the employer. • Exceptions:
• Managerial employees, regardless of the kind of organization where they are
6. RIGHT TO COLLECT DUES employed, may not join, assist or form any labor organization.
• The right to collect union dues is already mentioned under the topic of check-off in • Supervisors are allowed to organize, but they cannot form, join or assist a rank-
the comments under art. 250. and-file union.

ARTICLE 252 [242-A]. REPORTORIAL REQUIREMENTS 2. RIGHT TO ORGANIZE CANNOT BE BARGAINED AWAY
The following are documents required to be submitted to the Bureau by the legitimate labor • Regardless of the employees’ designations, whether they are employed as
organization concerned: supervisors or in the confidential payrolls, if the nature of their job does not fall under
a. Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the definition of “managerial” as defined in the Labor Code, they are eligible to be
the list of members who took part in the ratification of the constitution and by-laws members of the bargaining unit and to vote in the certification election. Their right
within thirty (30) days from adoption or ratification of the constitution and by-laws or to self-organization cannot be curtailed by a CBA. (Southern Philippines Federation
amendments thereto; of Labor v. Calleja, G.R. No. 80882, 1989)
b. Its list of officers, minutes of the election of officers, and list of voters within thirty (30)
days from election; 3. EXCEPTION: EMPLOYEE-MEMBERS OF A COOPERATIVE
c. Its annual financial report within thirty (30) days after the close of every fiscal year; • A cooperative is by its nature different from an ordinary business concern being run
and either by persons, partnerships, or corporations. Its owners and/or members are the
d. Its list of members at least once a year or whenever required by the Bureau. ones who run and operate the business while the others are its employees. Thus, an
employee of such cooperative who is a member and co-owner thereof cannot
Failure to comply with the above requirements shall not be a ground for cancellation of union invoke the right to collective bargaining, for certainly an owner cannot bargain with
registration but shall subject the erring officers or members to suspension, expulsion from himself or his co-owners.
membership, or any appropriate penalty. • However, insofar as it involves cooperatives with employees who are not members
or co-owners thereof, such employees are entitled to exercise the right to organize,
Noncompliance can still be a Ground for Delisting the Labor Organization collective bargaining negotiations, and others as are enshrined in the Constitution
• The implementing rules prescribe the procedure to “delist” the labor organization and existing laws.. (San Jose Electric Service Coop. v. Ministry of Labor, G.R. No.
that does not comply for five years with the reportorial requirements. 77231, 1989)
• While the new Art. 251 withholds cancellation, the IRR proceed with delisting. IRR • In another case, it is the fact of ownership of the cooperative, and not involvement
withholds considers delisting different, at least administratively, from cancellation in the management thereof, which disqualifies a member from joining any LO within
even if they both lead to the union’s loss of legal personality. the cooperative. Irrespective of degree of participation in the actual management
of the cooperative, all members cannot form, assist or join a LO for the purpose of
TITLE V – COVERAGE bargaining.

3.1 Exception to Exception: Association, not Union

ARTICLE 253 [243]. COVERAGE AND EMPLOYEES’ RIGHT TO SELF-ORGANIZATION
• While the members of a cooperative who are also its employees cannot unionize for
All persons employed in commercial, industrial and agricultural enterprises and in religious,
bargaining purposes, the law does not prohibit them from forming an association for
charitable, medical, or educational institutions, whether operating for profit or not, shall
their mutual aid and protection as employees.
have the right to self-organization and to form, join, or assist labor organizations of their
• Workers’ Association: one that is organized for mutual aid and protection of its
own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant
members or for any legitimate purpose other than collective bargaining. (DO 40-03)
workers, self-employed people, rural workers and those without any definite employers
• An employees’ Association (not union) can represent its members in an illegal
may form labor organizations for their mutual aid and protection.
dismissal case against the cooperative.
1. ORGANIZING IN GENERAL
4. EXCEPTION: INTERNATIONAL ORGANIZATIONS
• The rights to organize and to bargain, in a general sense, are given not exclusively
• Employees of an organization immuned from Philippine jurisdiction cannot unionize.
to employees. Even workers who are not employees of any particular employer may
Examples of such organizations are the International Rice Research Institute (IRRI)
form their organizations to protect their interests.
and the International Catholic Migration Commission (ICMC). The grant of such
• The lawful organization enjoys protection under the Bill of Rights.
immunity is a political question whose resolution by the executive branch of
government is conclusive upon the courts.

International Organizations Defined 1. The decision in Victoriano v. Elizalde was promulgated on Sept. 12, 1974.
• The term international organization is general used to describe an organization set At that time, the new Labor Code was already enacted.
up by agreement between two or more states. 2. Fr. Juaquin Bernas, in his Commentary to the Philippine Constitution, cited
the Victoriano ruling as an illustration of the right to free exercise of one’s
Labor’s Basic Rights Remain religion. In other words, even if the exemption under R.A. No. 3350 is not
• The immunity of international organizations from local jurisdiction by no means found in the Labor Code, still the exemption can be invoked under the
deprives labor of its basic rights, which are guaranteed by Article II, Section 18; freedom of religion clause in the present Constitution’s Bill of Rights.
Article II, Section 8; and Article XIII, Section 3, of the 1987 Constitution, and 3. In the decision rendered in 1988 in Kapatiran v. Calleja, the SC refused to
implemented by the Labor Code. compel the INK members to join the incumbent union.
4. In the case of Ebralinag v. Division Superintendent of Cebue, in
Certification Election Barred by Immunity exempting Jehova’s Witnesses from compulsory participation in flag
• International organizations are immune from every form of legal process except ceremonies, cited the religious objectors’ similar exemption from
insofar as in any particular case they have expressly waived their immunity. It is compulsory union membership.
inaccurate to state that a certification election is beyond the scope of that
immunity for the reason that it is not a suit against the international organization. A 5.2 Members of Religious Sect may Form and Join their Own Union
certification election cannot be viewed as an independent or isolated process. It
could trigger off a series of events in the collective bargaining process together with Kapatiran sa Meat and Canning Division v. BIR Director
related incidents and/or concerted activities, which could inevitable involve the FACTS: TUPAS was the sole and exclusive collective bargaining representative of the workers in
international organization in the legal process, which includes any penal, civil and the Meat and Canning Division of the Universal Robina Corp. The NEW ULO, composed mostly
administrative proceedings. of workers belonging to INC sect, registered as a labor union. The NEW ULO filed a petition for
certification election before the BLR.
4.1 Waiver of Immunity
• Waiver of its immunity is discretionary to the international organization. Without such ISSUE: Are the members of the INC barred from forming their own union? NO
express waiver, the NLRC or its labor arbiters have no jurisdiction over the
international organization even in cases of alleged illegal dismissal of any of its RATIO: The SC’s decision in Victoriano v. Elizalde, upholding the right of the members of the
employees. INC sect not to join a labor union for being contrary to their religious beliefs, does not bar the
members of that sect from forming their own union. The recognition of the tenets of the sect
4.2 Foreign Workers should not infringe on the basic right of self-organization granted by the Constitution to
• General Rule: Foreigners, whether natural or juridical, as well as foreign corporations, workers, regardless of religious affiliation.
are strictly prohibited from engaging directly or indirectly in all forms of trade union
activities. ARTICLE 254 [244]. RIGHT OF EMPLOYEES IN THE PUBLIC SERVICE
• Exception: Aliens working in the country with valid work permits may exercise the Employees of government corporations established under the Corporation Code shall have
right of self-organization if they are nationals of a country that grants the same or the right to organize and to bargain collectively with their respective employers. All other
similar right to Filipino workers. employees in the civil service shall have the right to form associations for purposes not
contrary to law.
5. EXCEPTION: RELIGIOUS OBJECTORS
• In 1961, R.A. No. 3350 was passed to exempt from compulsory union membership 1. GOVERNMENT EMPLOYEES’ RIGHT TO ORGANIZE; LIMITATIONS
the followers of any religious sect (such as the Iglesia ni Cristo) whose teachings • The highest law of the land guarantees to government employees the right to
forbid membership in the labor unions. organize and to negotiate, but not the right to strike.

Victoriano v. Elizalde (Upheld the Constitutionality of R.A. No. 3350) Ariza v. CA

The free exercise of religious profession or belief is superior to contract rights. It is only where Summary of Laws Covering the Government Employees’ Right to Self-Organize
unavoidably necessary to prevent an immediate and grave danger to the security and 1. P.D. No. 807
welfare of the community that infringement of religious freedom may be justified, and only to • Covers every branch, agency, supervision, and instrumentality of the
the smallest extent necessary to avoid the danger. government, including every GOCC whether performing governmental or
proprietary function.
Does the exception still stand? • Prohibits government employees to strike for the purpose of securing
• The provision of the R.A. No. 875 allowing employer and union to enter into a “union changes of their terms and conditions of employment.
security” agreement that compels union membership is still found in Article 259 (e) of 2. 1987 Constitution
the Labor Code. But left out is the exemption granted in 1961 by R.A. No. 3350 to • Declares that the right to self-organization shall not be denied to
religious objectors. government employees.
• Since the Labor Code repealed R.A. No. 875 and since R.A No. 3350 was merely an • Provides that the State shall guarantee the rights of all workers to self-
amendment to R.A. No. 875, then it is logical to conclude that the repeal of R.A. No organization, collective bargaining and negotiations, and peaceful
875 carries with it the repeal of R.A. No. 3350. The question therefore arises: Does the concerted activities, including the right to strike in accordance with law.
exemption of religious objectors from compulsory union membership still stand? The • States that workers shall be entitled to participate in policy and decision-
question has not been squarely answered, but four points must be noted:
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 49

making processes affecting their rights and benefits as may be provided 1.3a Professors as Rank-and-File Employees (University of the Philippines v. Ferrer-Calleja)
by law. • The professors, associate professors and assistant professors cannot be considered
3. CSC Memorandum Circular No. 6 as exercising such managerial or highly confidential functions as would justify their
• Enjoins, under pain of administrative sanctions, all government officers being categorized as high-level employees of the institution. Thus, they are
and employees from staging strikes, demonstrations, mass leaves, walk- considered rank-and-file employees.
outs and other forms of mass action which will result in temporary
stoppage or disruption of public services. Separate from Non-Academic Employees
4. E.O. No. 180 • There is no mutuality of interest between the academic and non-academic
• Defined and delineated the constitutional right of self-organization of personnel of UP. Thus, the full professors, associate professors, assistant professors,
government employees. instructors and the research, extension and professional staff may organize
• Provides that the right to self-organization pertains to all employees of all themselves into a separate collective bargaining unit.
branches, subdivisions, instrumentalities and agencies of the Government,
including GOCCs with original charters. Such employees shall not be 1.4 Right to Strike
discriminated against in respect of their employment by reason of their • E.O. No. 180 concedes to government employees the right to engage in concerted
membership in employees’ organizations or participation in the normal activities, including the right to strike. However, the E.O. quickly adds that those
activities of their organization, and their employment shall not be subject activities must be exercised in accordance with law. It further states that the
to the condition that they shall not join or relinquish their membership in resolution of complaints, grievances and cases involving government employees is
the employees’ organizations. not ordinarily left to collective bargaining or other concerted activities, but to Civil
Service Law and labor laws and procedures whenever applicable.
1.1 Limited Purpose
• The right of Government employees to deal and negotiate with their respective • The IRR of E.O. No. 180 explicitly provide that since the terms and conditions of
employers is not as extensive as that of private employees. employment in the government, including and political subdivision or instrumentality
thereof and GOCCs with original charters, are governed by law, the employees
Non-negotiable Matters therein shall not strike for the purpose of securing changes thereof.
1. Terms and conditions of employment that are fixed by law. Only those terms and
conditions not otherwise fixed by law may be subject of negotiation. 2. REGISTRATION
2. Those that require appropriation of funds e.g., increase in salary emoluments and 1. Government employees’ organizations shall register with the CSC and the DOLE.
other allowances, car plan, special hospitalization, medical and dental services, 2. The application shall be filed with the BLR which shall process the same in
increase in retirement benefits. accordance with the provisions of the Labor Code. Applications may also be filed
3. Those that involve the exercise of management prerogative e.g., appointment, with the Regional Offices of the DOLE which shall immediately transmit the said
promotion, assignment/detail, penalties as a result of disciplinary action. application to the BLR within three (3) days from receipt thereof.
3. Upon approval of application, a registration certificate shall be issued to the
Negotiable Matters organization recognizing it as a legitimate employees’ organization. With the right to
• Considered negotiable are such matters as schedule of vacation and other leaves, represent its members and undertake activities to further and defend their interests.
work assignment of pregnant women; recreational, social, athletic, and cultural 4. The corresponding certificates of registration shall be jointly approved by the CSC
activities and facilities. Chairman and DOLE Secretary.

1.2 No Signing Bonus 3. CERTIFICATION ELECTION IN GOVERNMENT CORPORATION

• Employees and officers of SSS are not entitled to the signing bonus provided for in • A certification election to choose the union that will represent the employees may
collective negotiation agreement because the collective negotiation in the public be conducted by the BLR in a government corporation, whether governed by the
sector does not encompass terms and conditions of employment requiring the Labor Code or the Civil Service rules.
appropriation of public funds.
3.1 Election of Officers in Government Unions
1.3 Excepted Employees • The BLR has the authority to assume jurisdiction over a certification election, or any
• For reasons of security and safety, members of the AFP, including police officers, inter-union or intra-union conflicts.
policemen, firemen and jail guards are not allowed to unionize.
• High level employees whose functions are normally considered as policy making or 4. WHEN PSLMC MAY RULE ON LEGALITY OF DISMISSAL
managerial, or whose duties are of a highly confidential nature shall not be eligible • The Public Sector Labor-Management Council, created by E.O. No. 180, has
to join the organization of rank-and-file government employees. jurisdiction to hear charges of unfair labor practice filed by government employees
o A managerial function refers to the exercise of powers such as: against their employer. In deciding the ULP charge, the PSLMC may also rule on the
1. To effectively recommend such managerial actions; complainants’ dismissal if the two issues – ULP and dismissal – are unavoidably
2. To formulate or execute management policies and decisions; or interlinked.
3. To hire, transfer, suspend, lay-off, recall, dismiss, assign or • The CSC may adopt the findings of the PSLMC and order the employer to reinstate
discipline employees. the dismissed employees.
• Union busting in a government office amounts to an unfair labor practice.

5. UNION-BUSTING IN A GOVERNMENT AGENCY, U.L.P. 3. Top Managers – Composed of a comparatively small group of executives, top
management is responsible for the overall management of the organization. It
Pamantasan ng Lungsod ng Maynila v. CSC establishes operating policies and guides the organization’s interactions with its
PLM committed ULP based on the following: environment.
• The PLM Management did not renew the appointments of faculty members with
temporary contracts, but those who were hired as replacements possess even lesser • A distinction exists [1] those who have the authority to devise, implement and
qualifications than the complainants. control strategic and operational policies (top and middle managers); and [2] those
• The PLM Management refused and still refuse to produce the results of their whose task is simply to ensure that such policies are carried out by the rank-and-file
evaluation of the performance of the complainants which can be indication that employees of an organization (first-line managers/supervisors). What distinguishes
presentation of such evidence would be detrimental to its case. them from the rank and file employees is that they act in the interest of the
• The complainants were among those active officers and/or members of the PLM employer in supervising such rank-and-file employees.
Faculty Organization. • The top and middle managers are prohibited from forming, joining, or assisting labor
• The complainants had impressive qualifications, training, experience and unions.
performance rating.
2.2 Constitutionality of the Prohibition
5.1 Even Temporary Employees May Organize
• Even temporary employees enjoy the basic right to form organization or association United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma
for purposes not contrary to law. Members of a labor organization cannot be FACTS: UPSU is a union of supervisory employees. The union filed a petition for certification
separated from the service for the simple reason of membership in the said election on behalf of the route managers at Peppsi-Cola. However, its petition was denied on
organization. And when the appointment status of these members happens to be the ground that the route managers are managerial employees and, therefore, ineligible for
temporary in nature, such becomes merely incidental and the doctrine that union membership.
temporary employees have no security of tenure must yield or is not applicable.
ISSUE: Is UPSU eligible to register as a union? NO
• Under Article 292 (c) of the Labor Code, any employee, whether employed for a
definite period or not, shall beginning on his first day of service an employee for RATIO: The guarantee of organizational right in Article III, Section 8 is not infringed by a ban
purposes of membership in any labor union. against managerial employees from forming a union. The right guaranteed in Article III,
Section 8 is subject to a condition that its exercise should be for purposes not contrary to law.
ARTICLE 255 [245]. INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN ANY LABOR In the case of Article 255, there is a rational basis for prohibiting managerial employees from
ORGANIZATION; RIGHT OF SUPERVISORY EMPLOYEES forming or joining labor organizations.
Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization of the rank- The rationale for this prohibition is that if these managerial employees would belong to a
and-file employees but may join, assist or form separate labor organizations of their own. The union, the latter might not be assured of their loyalty to the union in view of evident conflict of
rank-and-file union and supervisors’ union operating within the same establishment may join interests. The union can also become company-dominated with the presence of managerial
the same federation or national union. employees in union membership.

ARTICLE 256 [245-A]. EFFECT OF INCLUSION AS MEMBERS OF EMPLOYEES OUTSIDE THE 2.2a Other Opinions
BARGAINING UNIT 1. Chief Justice Davide, who was a member of the 1986 Constitutional Commission,
The inclusion as union members of employees outside the bargaining unit shall not be a believed, citing Constitutional Commission deliberations, that Article 255 is
ground for the cancellation of the registration of the union. Said employees are automatically unconstitutional as it abridges Section 8, Article III of the 1987 Constitution.
deemed removed from the list of membership of said union. 2. Justice Puno refuted CJ Davide’s opinion. He believed that debates and
proceedings of the Constitutional Convention are never of binding force. Justice
1. CATEGORIES OF EMPLOYEES Puno warned that to declare Article 255 of the Labor Code as unconstitutional cuts
• Employees are classified as managerial, supervisory, and rank-and-file. deep into our existing industrial life and will open the floodgates to unionization at all
levels of the industrial hierarchy. Such ruling will wreak havoc on the existing set-up
2. INELIGIBILITY OF MANAGERS between management and labor. If all managerial employees will be allowed to
• The Supreme Court upheld the constitutionality of the prohibition against managers unionize, then all who are in the payroll of the company may go on strike or picket
from forming, joining, or assisting labor unions. the employer. Company officers will join forces with the supervisors and rank-and-
file.
2.1 Types of Managerial Employees
1. First-line Managers – They direct operating employees only; they do not supervise 3. EVOLUTION OF SUPERVISOR’S RIGHT TO ORGANIZE
other managers. They are often called supervisors. ● Unlike managers, supervisors can unionize.
2. Middle Managers – They direct the activities of other managers and sometimes also ● The evolution of this right can be divided into three (3) periods: First Period: Under
those of operating employees. Their principal responsibilities are to direct the the Industrial Peace Act; Second Period: Under the Labor Code Before Amendment
activities that implement their organizations’ policies and to balance the demands by R.A. No. 6715; Third Period: Under the Labor Code as Amended by R.A. No. 6715
of their superiors with the capacities of their subordinates.

3.1. FIRST PERIOD: Under the Industrial Peace Act – During this period, the supervisors can and promotion or other change of status of other employees are given
unionize separately from rank-and-file. particular weight and
6. As a rule not paid hourly wages nor subjected to maximum hours of work.
Filoil Refinery Corp. vs. Filoil Supervisory and Confidential Employees Association and CIR
Doctrine: It was held in this case that a foreman or supervisor falls as an employee within the 5. TEST OF SUPERVISORY STATUS
meaning of the Industrial Peace Act. Supervisors are entitled to engage in union activities. ● Where the recommendatory powers are subject to evaluation, review and final
● The Industrial Peace Act defined a “supervisor” but failed to define a “manager” action by the department heads and other higher executives of the company, the
same, although present, are not effective and not an beexercise of independent
Caltex Filipino Managers and Supervisors Association vs. CIR judgment as required by law.
Doctrine: it included managers in the term “supervisor”, thus, allowing managers to unionize. ● The power to recommend of a supervisory employee must not only be effective but
should require the use of independent judgment.
3.2. SECOND PERIOD: Under the Labor Code Before Amendment by R.A. No. 6715 – the old
term “supervisor” was replaced with “managerial employee”. Managerial employees were Laguna Colleges vs. Court of Industrial Relations
not allowed to unionize. Facts: In the case of the supervisor, his recommendations are considered with a grain of salt. It
is stated in the supervisor’s own testimony that he recommended a teacher to teach biology
Bulletin Publishing Corp. v. Sanchez but this was rejected. When he assigned a teacher to teach Science, the teacher was given
Doctrine: The supervisory employees may not form a union, separate and distinct from the Arithmetic. The supervision by the area supervisors is nothing more than the enumeration of
existing bargaining unit of the rank-and-file employees. The supervisors are among managerial activities in the area, many of them merely routinary.
employees who cannot unionize. (note that this is an old ruling, see developments under the
third period) Doctrine: When the recommendations of the area supervisors are subject to evaluation,
review and final approval by the principal, the recommendations are considered ineffective
3.3. THIRD PERIOD: Under the Labor Code as Amended by R.A. No. 6715 – R.A. No. 6715 or clerical and the employees cannot be considered as supervisory.
retained the ineligibility of the managerial employees but revived the right of the supervisory
employees to unionize. 6. SEGREGATION OF RANK-AND-FILE AND SUPERVISORS
● It is not necessarily incompatible with the ILO Convention to deny managerial or
4. DEFINITION OF SUPERVISOR supervisory employees the right to belong to the same trade union as other workers
● A SUPERVISOR has the power only to recommend while a managerial employee has provided the these conditions are met:
the power to decide and do those acts. 1. Such workers have the right to for their own association to defend their interest
● To make one a supervisor, the power to recommend must not be merely routinary or 2. The categories of such staff are not defined so broadly as to weaken the
clerical in nature but requires the use of independent judgment. organization of other workers in the enterprise od branch of activity by
depriving them of a substantial portion of their present or potential
Recommendation must be: membership.
1. Discretionary or judgmental ● Supervisory employees are allowed to form, join, or assist separate labor
2. Independent, and organizations of their own BUT they are not eligible for membership in a labor
3. Effective organization of the rank-and-file employees.
If these qualities are lacking, the person is not really a supervisor but a rank-and-file ● A rank-and-file employee cannot join a union of supervisors.
employee. ● A union with commingled membership is not a legitimate labor organization. The
employees that should not have been included in membership are automatically
Definition of Manager deemed removed from the list of membership (Art. 256).
● A MANAGER in the eyes of the law must have the power to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, 7. CONFIDENTIAL EMPLOYEES
assign or discipline employees. ● Confidential employees do not constitute a distinct category of employees for
● An employee is not managerial if he does not take part in policy making but is given purposes of the right to self-organize. This is because confidentiality may attach to
ready policies to execute and standard practices to observe. managerial, supervisory or even rank-and-file job.
● Characteristics of managerial rank are: ● Confidentiality is a matter of job content and authority.
1. He is not subject to the rigid observance of regular office hours ● In principle, every managerial position is confidential but not every confidential
2. His work requires the consistent exercise of discretion and judgment in its employee is managerial.
performance
3. The output produced or the result accomplished cannot be standardized in
relation to a given period of time.
4. He manages a customarily recognized department or subdivision of the
establishment, customarily and regularly directing the work of other employees
there
5. He either has the authority to hire or discharge other employees or his
suggestions and recommendations as to hiring and discharging, advancement

The court has flip flopping decisions on whether a confidential employee should be included 7.4.a. Limited Exclusion; Doctrine of Necessary Implication
or excluded from a union.
National Association of trade Unions (NATU) – Republic Planters Bank Supervisors Chapter v.
7.1. FIRST SWING Honorable Ruben Torres
The court declared that bank managers/cashier controllers are not managers but only
Southern Philippines Federation of Labor v. Calleja supervisors. At the same time, they are confidential employees.
The Court upheld the argument that confidential rank-and-file employees should be included
in the bargaining unit. A confidential employee is one entrusted with confidence on delicate matters, or with
custody, handling, care and protection of employer’s property. The court noted that while
In this case, it was not shown that the nature of the jobs of confidential payroll employees is Art. 245 of the LC singles out managerial employees as ineligible to join, assist, or form any
classified as managerial. labor organization, under the doctrine of necessary implication, confidential employees are
similarly disqualified.
7.2. SECOND SWING
• HOWEVER, this case made an ambivalent reservation by stating that the said ruling
Golden Farms Inc. v. Calleja shall only apply to the present case based on the evidence of the parties, as well as
The Court upheld the exclusion of confidential employees from the CBA coverage. to those similarly situated and should not be understood to apply to banks in
general.
The court observes that confidential employees such as accounting personnel, radio and • DOCTRINE OF NECESSARY IMPLICATION – what is implied in a statute is as much a
telegraph operators having access to confidential information may become source of undue part thereof as that which is expressed.
advantage.
7.4.b. The Metrolab and Meralco summations
Philips Industrial Development vs. NLRC
The court again sustained the exclusion of the confidential rank-and-file employees from the Metrolab Industries Inc. v. Hon. Nieves Roldan-Confesor and Metro Drug Corp. Employees
rank-and-file union. Assn.-FFW
Facts: There was a bargaining deadlock between Metrolab and the Union. The Secretary
The company had a history of 5 collective bargaining agreements where confidential resolved all the disputed items and directed the parties to execute a new CBA. However,
employees were excluded. The court upheld their exclusion stating that by the nature of their Metrolab laid off rank-and-file employees due to redundancy. This was nullified by the
functions, they assist and ac in confidential capacity to, or have access to confidential Secretary of Labor and it was ruled that executive secretaries are part of the bargaining unit
matters of persons who exercise managerial functions. of rank-and-file employees.

7.3. THIRD SWING Doctrine: Executive secretaries as confidential employees are excluded from the closed-shop
provision and the membership in the bargaining unit of the rank-and-file employees because
Phil. Phosphate Fertilizer Corp. vs. Torres and Philphos Movement for Progress, Inc., they have access to “vital labor information”. Confidential employees cannot be classified as
In this case, the question is whether professional/technical employees and confidential rank-and-file.
employees may validly join a union composed of supervisors.
The Court ruled in the exclusion of the professional/technical but did not stop the inclusion of Manila Electric Co. vs. Hon. Secretary of Labor and Meralco Employees and Workers
the confidential employees. Association (MEWA)
This case reiterated the ruling in the Metrolab case. It stated that the disqualification of
The confidential employees are allowed to join the supervisor’s union provided that they are managerial and confidential employees from joining a bargaining unit for rank-and-file is
not managers or rank-and-file employees. already well-entrenched in jurisprudence.

7.4 FOURTH SWING 7.4.c Who are Confidential Employees

• CONFIDENTIAL EMPLOYEES – assist and act in a confidential rationale behind the
Golden Farms, Inc. v. Secretary of Labor and Progressive Federation of Labor ineligibility of managerial employee to form, assist or join a labor union equally
The sole issue was whether the monthly paid rank-and-file employees can constitute a applies to them (Philip).
bargaining unit separate from the existing bargaining unit of its daily paid rank-and-file • CONFIDENTIAL EMPLOYEES –those who by reason of their positions or nature of work
employees. And the court said yes without excluding the monthly paid confidential are required to assist or act in fiduciary manner to managerial employees and
employees. hence, are likewise privy to sensitive and highly confidential records (Metrolab).

Under this decision, the confidential employees were allowed to be included in the union of 7.4.d The Labor Nexus
the monthly rank-and-filers. • “in the field of labor relations” is important in the definition of who is a confidential
employee. This means that the confidentiality of the position should relate to labor
relations matters.

San Miguel Corp. Supervisors and Exempt Union, et. al. vs. Hon. Laguesma et.al., • Mutual aid or protection includes employees’ efforts to improve the conditions of
Doctrine: Confidential employees are those who: employment through channels outside the immediate employer-employee
● Assist or act in a confidential capacity relationship.
● To persons who formulate, determine, and effectuate management policies in the • It has been held that the employee handbook is unlawful because it was overboard
field of labor relations. in its restrictions on employees’ abilities to discuss compensation and pay rates.

These two criteria are cumulative and both must be met if an employee is to be considered TITLE VI: UNFAIR LABOR PRACTICES
as confidential.

An important element of the “confidential employee rule” is the employee’s need to use Art. 258 [247]. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR PROSECUTION
labor relations information. THEREOF
Unfair labor practices violate the constitutional right of workers and employees to self-
Access to confidential labor relations information which is merely incidental to the employee’s organization, are inimical to the legitimate interests of both labor and management, including
duties and knowledge therefore is not necessary in the performance of such duties does not their right to bargain collectively and otherwise deal with each other in an atmosphere of
render him a confidential employee. Access to information which is regarded by the freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy
employer as confidential from the business standpoint, such as financial information and and stable labor-management relations.
technical trade secrets will not render an employee a confidential employee.
Consequently, unfair labor practices are not only violations of the civil rights of both labor and
• Express exclusion of the computer operators and discipline officers from the management but are also criminal offenses against the State which shall be subject to
bargaining unit of rank-and-file employees in a previous CBA does not bar any prosecution and punishment as herein provided.
renegotiations for the future inclusion of the said employees in the bargaining unit. Subject to the exercise by the President or by the Secretary of Labor and Employment of the
powers vested in them by Articles 263 and 264 of this Code, the civil aspects of all cases
8. SECURITY GUARDS MAY JOIN RANK-AND-FILE OR SUPERVISORS UNION involving unfair labor practices, which may include claims for actual, moral, exemplary and
• Under R.A. 6715, security guards may now freely join a labor organization of the other forms of damages, attorney’s fees and other affirmative relief, shall be under the
rank-and-file or that of the supervisory union, depending on their rank. jurisdiction of the Labor Arbiters. The Labor Arbiters shall give utmost priority to the hearing and
resolution of all cases involving unfair labor practices. They shall resolve such cases within thirty
9. WORKERS IN EXPORT PROCESSING ZONES (30) calendar days from the time they are submitted for decision.
• Workers in export processing zones are considered to be in the Philippine territory
subject to the undiminished force of the Philippine Constitution that guarantees the Recovery of civil liability in the administrative proceedings shall bar recovery under the Civil
workers’ rights to organize, to strike and so forth Code.

No criminal prosecution under this Title may be instituted without a final judgment finding that
Art. 257 [246]. NON-ABRIDGEMENT OF RIGHT TO SELF-ORGANIZATION
an unfair labor practice was committed, having been first obtained in the preceding
It shall be unlawful for any person to restrain, coerce, discriminate against or unduly interfere
paragraph. During the pendency of such administrative proceeding, the running of the
with employees and workers in their exercise of the right to self-organization. Such right shall
period of prescription of the criminal offense herein penalized shall be considered interrupted:
include the right to form, join, or assist labor organizations for the purpose of collective
Provided, however, that the final judgment in the administrative proceedings shall not be
bargaining through representatives of their own choosing and to engage in lawful concerted
binding in the criminal case nor be considered as evidence of guilt but merely as proof of
activities for the same purpose of for their mutual aid and protection, subject to the provisions
compliance of the requirements therein set forth.
of Article 246 [renumbered as 279] of this Code.
1.CONCEPT OF UNFAIR LABOR PRACTICE
1. CONCEPT OF RIGHT TO SELF-ORGANIZATION
● Unfair Labor Practice (ULP) does not mean unfair practice by labor but a practice
• Right to self-organization (S.O.) includes at least 2 rights which although twins, can
unfair to labor, although the offender may be either an employer or a labor
exist and may be exercised separately:
organization.
1. The right to form, join, or assist labor organizations, and
● Art. 257 declares that it is unlawful for any person to restrain, coerce, discriminate
2. The right to engage in lawful concerted activities.
against or unduly interfere with the exercise of the right to self-organization – it is the
• Group action in concerted activities should be held peacefully to remain lawful. It
conceptual mother of ULP
can be for collective bargaining purpose or it can simply be for aid and protection
of the members.
1.1 Elements of ULP:
• A group action can be held even if the group is not involved in collective
1. There is employer-employee relationship between the offender and the
bargaining.
offended
• The group action is not necessarily a work stoppage or strike because it may be
2. The act done is expressly defined in the Code as an act of unfair labor
done during off-hours.
practice.
• The labor organization entitled to protection need not be a union. But an
● Not every unfair act is unfair labor practice. It has to be related to the right to self-
unregistered union does not have the right to represent the members.
organization and to the observance of the CBA.
• The right to self-organization is granted not only to employees but to “workers”,
● It refers only to acts opposed to workers’ right to organize. Without that element, the
whether employed or not.
act, no matter how unfair, is not unfair labor practice as legally defined.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 54

● ULP when committed by the employer commonly connotes anti-unionism members of the recognized collective bargaining agent;
f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for
Standard Chartered Bank Employees Union (NUBE) vs. Hon. Confessor having given or being about to give testimony under this Code;
Facts: The Secretary of Labor dismissed the charges of ULP of both the Union and the Bank g) To violate the duty to bargain collectively as prescribed by this Code;
explaining that both parties failed to substantiate their claims. The Secretary stated that ULP h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the
charges would prosper only if shown to have directly prejudiced public interest. The Supreme settlement of any issue in collective bargaining or any other dispute; or
Court disagreed. i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and agents of
Doctrine: A showing of prejudice to public interest is not a requisite for ULP charges. corporations, associations or partnerships who have actually participated in, authorized or
ratified unfair labor practices shall be held criminally liable.
1.2 Prejudice to Public Interest not an Element of ULP
CONDITION PRECEDENTS TO ULP CASES
National labor Union v. Insular-Yebana Tobacco Corporation 1. that the injured party be an “employee” as defined in the Labor Code
The Secretary of Labor (SOLE) dismissed charges of ULP and stated that ULP charges would 2. that the act charged as ULP falls under the prohibition of Art. 259 (acts of employer)
prosper only if shown to have directly prejudiced the public interest. or Art. 260 (acts of union)
The Supreme Court did not agree on this and ruled that showing prejudice to public interest is
not a requisite for ULP charges to prosper. Mariano vs. Royal Interocean Lines
Facts: Ms. Mariano, stenographer at Royal Interocean Lines, sent a letter to the managing
2. PROSECUTION OF ULP directors of the company in HK, coursed through its PH manager, complaining about the
• ULP has civil as well as criminal aspects. latter’s “inconsiderate and tactful attitude” towards the company’s employees and clients.
• Civil aspect may include liability for damages and these may be passed upon by a Because of this, the PH manager dismissed Ms. Mariano, which led her to file a charge against
labor arbiter. her employer with ULP for having dismissed her from the service for the reason that she wrote
• For the criminal offense, it is not to be prosecuted until after the finality of judgment a letter to the managing directors in HK. The Supreme Court held that the employee’s
in labor case finding that the respondent indeed committed unfair labor practice. dismissal was unjustified, but that the employer did not commit ULP because the act had no
• The criminal charge is under the jurisdiction of the Municipal or Regional Trial Court. union connection and did not arise from union activities.
• The penalty shall be imposed on the officers of a corporation, partnership,
association or entity. If committed by a Labor organization, those mention in Art. 259 Doctrine: Acts committed by employers are not ULP if they do not concern union activities.
are liable.
• The offense prescribes in one year. HISTORICAL LEGISLATIVE EVIDENCE OF THE LINK
• In the US, worker’s groups were judicially labelled as violation of anti-trust laws or as
CHAPTER 2: UNFAIR LABOR PRACTICES OF EMPLOYERS unlawful combinations or conspiracies of workers. But in 1914, the Clayton Act was
passed granting workers the right to organize for purposes of mutual assistance.
Employers reacted to this by vigorously using the “yellow dog” contracts by which
ARTICLE 259. [248] UNFAIR LABOR PRACTICES OF EMPLOYERS
employees promised not to join unions, and obtained injunctions to force unions to
It shall be unlawful for an employer to commit any of the following unfair labor practices:
respect these commitments.
a) To interfere with, restrain or coerce employees in the exercise of their right to self-
• ULP, as a concept and as acts, is and has to be related to a worker’s right to
organization;
organize. If this connection is absent, then the contentions of ULP may be rejected
b) To require as a condition of employment that a person or an employee shall not join
as baseless and irrelevant.
a labor organization or shall withdraw from one to which he belongs;
• In resolving the question of whether or not an employer committed the act charged
c) To contract out services or functions being performed by union members when such will
in the complaint, it is of no consequence how the act is denominated. However the
interfere with, restrain or coerce employees in the exercise of their right to self-
employee’s conduct may be characterized, what is important is that it constituted a
organization;
ULP.
d) To initiate, dominate, assist or otherwise interfere with the formation or administration of
• The Labor Code enumerates acts or categories of acts considered as ULP. The
any labor organization, including the giving of financial or other support to it or its
enumeration does not mean an exhaustive listing of ULP incidents, since the law
organizers or supporters;
cannot undertake the impossible task of specifying in precise and unmistakable
e) To discriminate in regard to wages, hours of work and other terms and conditions of
language each incident which constitutes ULP.
employment in order to encourage or discourage membership in anylabor organization.
• The Labor Code leaves to the court the work of applying the law’s general
Nothing in this Code or in any other law shall stop the parties from requiring membership
prohibitory language in light of infinite combinations of events which may be
in a recognized collective bargaining agent as a condition for employment, except
charged as violative of its terms.
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
NO ULP: ILLUSTRATIVE INSTANCES OF VALID EXERCISE OF MANAGEMENT RIGHTS
who are not members of the recognized collective bargaining agent may be assessed a
• The law on ULP is not intended to deprive the employer of his fundamental right to
reasonable fee equivalent to the dues and other fees paid by members of the
prescribe and enforce such rules as he believes to be necessary to the proper
recognized collective bargaining agent, if such non-union members accept the benefits
operation of his business.
under the collective bargaining agreement: Provided, That the individual authorization
• The only limitation on employers on their acts is that it must not be violative of the
required under Article 242, paragraph (o) of this Code shall not apply to the non-
laws concerning ULP.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 55

• Where, however, an employer violates the Labor Code and is found guilty of the and without ulterior motive. After all, the union members derive their benefits from the CBA,
commission of a ULP, it is no excuse that his conduct was unintentional and which constitutes the law between the parties.
innocent.
Doctrine: There is no ULP when a company decides to grant benefits to non-union members.
PERSONNEL MOVEMENTS Union members derive their benefits from the CBA, while non-union members are not bound
• It is the prerogative of the company to promote, transfer, and demote its by such agreement.
employees to other positions when the interests of the company reasonably
demand it. FORCED VACATION LEAVE
• Unless there are instances which directly point to interference by the company with • There is no ULP when the vacation leave without pay, which the employer requires
the employee’s rights to self-organization, transfer of an employee should be employees to take in view of an economic crisis, is neither malicious, oppressive, nor
considered as within the bounds allowed be law. vindictive.
• The management does not commit ULP if it exercises the option given to it in the
CBA to retire an employee who rendered 25 years of service or has reached the Philippine Graphic Arts vs. NLRC
age of 60. Summary: In October 1984, the corporation was forced by economic circumstances to
• It is the company’s prerogative to promote its employees to managerial positions, require its workers to go on mandatory vacation leave in batches. The workers were paid on
which are offices that can only be held by persons who have the trust of the leave but the pay was charged against their respective earned leaves. The affected
corporation and its officers. employees filed complaints for ULP and discrimination. The SC held that there is no ULP
• A promotion that is manifestly beneficial to an employee should not give rise to the committed. There was a consultation with the workers and supervisors and a consensus was
speculation that such promotion was made to deprive the union of the membership reached on how to deal with deteriorating economic conditions. The temporary reduction of
of the promoted employee. working days was a more humane solution than to reduce personnel. The decision to resort to
• Bondoc v. CIR: An employee was not promoted so he cried ULP, saying that the forced leaves was a management prerogative.
employer for discriminating against him for not being a member of any union. The
SC ruled that the employee’s argument is unconvincing because no specific union ISSUANCE OF RULES OR POLICY
was mentioned in his complained. It is unbelievable that an employer would
oppress an employee to force him to join a union, since it cannot be seen how that San Miguel Brewery Sales Force Union vs. OPLE and SMC
could be advantageous to the employer. Facts: In 1989, the company introduced a marketing scheme known as the Complementary
Distribution System (CDS) where its beer products were offered for sale directly to wholesalers
ACCEPTANCE OF MASS RESIGNATION through San Miguel’s sales offices. The union filed for ULP on the ground that the CDS was
• Acceptance of a voluntary resignation is not ULP. contrary to the existing marketing scheme where the route salesmen sold their beer to
• PAL case: When the pilots voluntarily terminated their employment relationship with assigned territories and that it violated the CBA because the CDS would reduce the take
the company, they cannot claim that they were dismissed. home pay of the salesmen, since the company would be unfairly competing with them. The
• A legitimate concerted activity cannot be used to circumvent judicial orders. SC concurred with the Labor Minister’s findings: they found nothing to suggest that the new
sales scheme was to discourage union organization or to diminish the union’s influence, and
GRANT OF PROFIT SHARING BENEFITS TO NON-UNION MEMBERS that on the contrary, it was part of its overall plan to improve efficiency and economy, and to
• Management has the prerogative to regulate, according to its discretion and gain profit at the highest.
judgment, all aspects of employment.
• Established rule: labor law does not authorize the substitution of the judgment of the Doctrine: Every business enterprise endeavors to increase its profits. In the process, it may
employer in conducting its business. Such prerogative may be availed of without adopt or devise means designed towards that goal. Even if the law is solicitous of the welfare
fear of liability so long as it is exercised in good faith and not for the purpose of of the employees, it must also protect the right of the employer to exercise what are clearly
defeating the rights of its employees, nor exercised in a malicious, harsh, oppressive, management prerogatives. The free will of management to conduct its own business affairs to
vindictive, or oppressive manner. achieve its purpose cannot be denied.

Wise and Co, Inc. v. Wise & Co, Inc Employees Union TAKING ACTION AGAINST SLOWDOWN
Facts: The management introduced a profit sharing scheme for its managers and supervisors, • Employees have the right to strike, but they have no right to continue working on
so the Union wrote the management asking that the union members be allowed to their own terms while rejecting the standards desired by their employer.
participate in the profit sharing program. The management denied the request saying that • An employer does not commit ULP by discharging employees who engage In a
such was not provided in the CBA. Later, when negotiation of the CBA was approaching, the slowdown, even if their object is a pay increase which is lawful.
management wrote the union that it was willing to consider the union members in the profit • An employer does not commit ULO by discharging only some of the employees who
sharing scheme if the negotiations could be concluded by Dec. 1987. In March 1988, the participate in the slowdown where he discharges them to “serve as an example” to
company distributed the profit sharing benefit not only to managers and supervisors, but also stop the slowdown and not for discriminatory reasons.
to rank and file employees NOT covered by the CBA because they were excluded from their
agreed definition of bargaining unit. SC held that there was no discrimination in granting profit DETERMINATION OF VALIDITY
sharing benefits to employees that are not union members, and that such act was not ULP. • Determining the validity of an employer’s acts involves an appraisal of his motives.
There can be no discrimination where the employees concerned are not similarly situated. The • Since motivations are seldom expressly avowed, there must be a measure of
grant of the management to include non-union members in the profit-sharing agreement falls reliance on the administrative agency. (in this case, NLRC, to weigh the employer’s
under the ambit of management prerogative; it appears to have been done in good faith
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 56

expressed motive in determining the effect on the employees of management’s with, and restraint and coercion of the petitioners in the exercise of their right to engage in
otherwise equivocal act). concerted activities for their mutual aid and protection.
• An employer may treat freely with an employee and is not obliged to support his
actions with reason or purpose. Interrogation
• Where the attendant circumstances, history of employer’s past conduct, coupled • Persistent interrogation of employees to elicit information as to what had happened
with an intimate connection between the employer’s action and the union in union meetings and the identity of active union employees was held violative of
affiliations taken as a whole raise a suspicion as to the motivation of the employer’s the organizational rights of employees.
action, the failure of the employer to ascribe a valid reason may justify an inference • For such questioning of an employee concerning his union activities not to be
that his unexplained conduct was inspired by the latter’s union membership or considered coercive, the employer must communicate the purpose of the
activities. questioning, assure him that no reprisal would take place, and obtain his
• Such suspicion does not take the place of evidence that the employer’s conduct participation on a voluntary basis.
was improperly motivated nor dispenses with the requirement of proof of the fact. • Interrogating an employee as to his union affiliation is not per se ULP, but
circumstances may make it such.
SUMMARY OF NINE ULP ACTS OF AN EMPLOYER UNDER ARTICLE 259
1. Interference ULP Even Before Such Union is Registered
2. Yellow Dog Condition (requiring employees not to be a member of a union as a • An employer who interfered with the right to self-organization before the union is
condition for employment) registered can be guilty of ULP.
3. Contracting Out • An employer who interferes with the formation of a labor union and retaliates
4. Company Unionism against the employee’s exercise of right to self-organization is guilty of ULP.
5. Discrimination for or against Union Membership
6. Discrimination because of Testimony Prohibiting Organizing Activities
7. Violation of Duty to Bargain • A rule prohibiting solicitation of union membership is unlawful if it applies to non-
8. Paid Negotiation working time as well as working time.
9. Violation of CBA • Where majority of the employees live on the employer’s premises, and cannot be
reached by any means or procedures practically available to union organizers, the
FIRST ULP: INTERFERENCE employer may be required to permit non-employee union organizers to come within
its premises to solicit employees
ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS • In the absence of showing that illegal dismissal was dictated by anti-union motives,
It shall be unlawful for an employer to commit any of the following ULP’s: the same does not constitute ULP as would be a valid ground for strike. The remedy
(a) To interfere with, restrain, or coerce employees in the exercise of their right to self- is an action for reinstatement with back wages and damages.
organization;
CLLG EG Gochango Workers Union vs. NLRC
• Outright and unconcealed intimidation is the most obvious form of interference. Summary: The company issued suspension and termination orders in the middle of the
• Such conduct, even on one occasion, consists ULP and will support a cease and petitioners’ certification election. The SC held that it was within the legal right of the
desist order by the Board. petitioners, the exercise of which was their sole prerogative, and in which management may
• Unusual to find an interference that is practiced forthright; in most cases, employers’ not interfere. As if to add insult to injury, the company suspended the petitioners on the
efforts are more covert and generally disguised to escape detection. ground of “abandonment of work”, the date on which the pre-election conference had
• Example: superintendent of employer threatened employees with cutting their pay, been scheduled. The petitioners sought permission on Feb. 26 and the suspension order was
increasing rent of company houses, and closing the plant if they supported the issued on Feb. 28. What unfolds here is a clear effort by management to punish the petitioners
union. for their union activities. ULP cases are not, in view of the public interest involved, subject to
• Example: employer encouraging employees to sign a petition repudiating the compromise.
union.
Violence or Intimidation
Dabuet et al vs. Roche Pharmaceuticals • An employer who asked the union’s recruiter to surrender the union affiliation forms,
Facts: The petitioners, officers of Roche Products Labor Union, wrote the company expressing threatening him with bodily harm, committed ULP.
the grievances of the union, and seeking a conference with management regarding the • An employer who unlawfully coerced employees by directing 2 individuals to his
previous dismissal of the president and VP of the union. After the meeting, the company’s GM office at gunpoint on the day of representation election after the individuals had
berated the petitioners for writing that letter, and called the author stupid. Feeling alluded to, informed the employer that they were on the premises to vote in the election and
the union’s counsel filed a complaint for slander against the GM, who later on filed a counter- that they did in fact vote.
suit for perjury alleging that their affidavit included false statements. The company also • An employer who provokes employees to fight because the company wanted to
construed the execution of an affidavit as an act of breach of trust, and dismissed the create a lawful cause for their dismissal is ULP.
petitioners. The SC found that the company committed ULP in dismissing the petitioners
without just and valid cause. Breach of trust, the grounds alleged for the petitioner’s dismissal, Espionage and Surveillance
must not be used as a shield to arbitrary dismiss and employee. • This device consists of using a small group of employees or other agents, inspired by
profit, opportunism, vengeance, or some human frailty to use their access to
Doctrine: The dismissal of the employees under the circumstances amounted to interference
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 57

employee’s quarters and affairs for the purpose of spying upon fellow employees Madrigal and Company vs. Zamora
and reporting back to the employer. Summary: In 1973, the Madrigal Employees Union sought the renewal of its CBA with the
• Such conduct on the part of the employer, no matter how subtly it may be company which was due to expire. It proposed a wage increase. In 1974, in an alleged
accomplished, constitutes interference with the employees’ exercise of their rights. resolution of its stockholders, the company reduced its capital stock from 765k shares to 267k
• A company may not invoke the defense that the fruits of the espionage were not shares. This was effected through the distribution of marketable securities owned by the
used. company in exchange for their shares in an equivalent amount in the corporation. The SC
• Unlawful surveillance was found where supervisors were present near the place held that the capital reduction efforts were a subterfuge, to camouflage the fact that it had
where the union meeting was being held to check the names of the employees been making profits, to justify the mass layoff of employees, especially the union members. It
leaving the meeting. was a plain and premature distribution of corporate assets to obviate a just sharing of labor of
the vast profits obtained by its joint efforts with capital through the years. It is a clear case of
Economic Inducements ULP.
• A violation results from an employer’s announcement of benefits prior to a
representation election, where it is intended to induce the employees to vote • In another case, SC held that the school committed ULP when it dismissed teachers
against the union. despite their permanent status because the president of the school feared that if
their contracts were renewed, there would be a strike the following semester.
Employer’s Expression of Opinion; Totality of Conduct Doctrine
• Totality of Conduct Doctrine: the culpability of employer’s remarks was to be Lockout of Closure Amounting to ULP
evaluated not only on the basis of their implications, but against the background of • A lockout, actual or threatened, as a means of dissuading the employees from
and in conjunction with collateral circumstances. exercising their rights, is ULP.
• Expressions of an employer, though innocent in themselves, were held to be • To hold an employer for ULP, the evidence must establish that the purpose was to
culpable because of the circumstances under which they were uttered, the history interfere with the employees’ exercise of their rights.
of this employer’s labor relations or anti-union bias, or their connection with an • An honest closing of one’s plant is not a violation of the act. However, cessation of
established plan of coercion or interference. operations, actual or threatened, constitutes ULP if it is, directly or indirectly,
• Expression which might be permissibly uttered by one employer, might, in the mouth expressly or impliedly, calculated or employed to interfere with the employee’s
of a more hostile employer, be deemed improper and consequently actionable as rights.
ULP. • It is difficult to prove the employer’s state of mind unless it expressed, but it may be
proven by circumstantial evidence.
The Insular Life Assurance Ltd Employees Association vs. The Insular Life Assurance Ltd • It is ULP for an employer to threaten its employees with moving or shutting down the
Summary: The company president sent individual letters to the striking employees urging them plant and consequent loss of employment as the result of their support for the union.
to abandon their strike with a promise of free coffee, movies, and paid overtime. He also
warned them that if they failed to return to work by a certain date, that they might be Closure, a Subterfuge
replaced in their jobs. Company-hired men broke into the picket line, resulting in violence and • An employer which closed its business to put an end to union activities, and which
the filing of criminal charges against union officers. When the strike was over, the court refused made no effort to allow the employee’s attempt to exercise their rights of self-
to readmit the unionists facing criminal charges. The SC ruled: organization and collective bargaining, and even threatening employees that they
1. Letter to individual employees: ULP, because they tend to undermine the concerted would lose their jobs if they did not cease affiliation with the union, constitutes ULP.
activity of employees, an activity to which they are entitled, free from employers’ • Threats of discharge and closing the plant made by supervisors during a union
molestation. campaigned justified a finding of unlawful interference, despite the lack of express
2. Strike-breaking: ULP, the “bribery” being tantamount to union-busting. employer sanction or the absence of an organized program of coercion.
3. Test of interference or coercion: whether the employer has engaged in conduct in • Example: An employer shut down its operations because of alleged business losses.
which it may reasonably said tends to interfere with the free exercise of employees’ However, under than generally referring to the 1998 financial crisis, they never
right. It is not necessary that there be direct evidence that any employee was in presented any report substantiating their claims. In termination cases, the employer
fact intimidated or coerced by statements of threats of the employer, if there is a bears the burden of showing that the dismissal was for just cause, otherwise, it is
reasonable inference that the anti-union conduct of the employer does have an deemed unjustified. SC held that the closure of the corporation is a subterfuge, a
adverse effect on self-organization and collective bargaining. systematic approach intended to dampen the enthusiasm of the union members.
4. The totality of conduct doctrine: the letters of the company should not be The real reason for the shutdown was the formation of the union.
considered by themselves alone but should be read in light of all the circumstances. • To constitute ULP, the dismissal need not entirely and exclusively be motivated by
The culpability of an employer’s remarks has to be evaluated not only on the basis union activities or affiliations. It is enough that the discrimination be a contributing
of their implicit implications, but in conjunction with collateral circumstances. factor.
• If the basic inspiration for the act of employer is derived from the affiliation or
Mass Lay Off Amounting to ULP activities of the union, the former’s assignment of another reason, no matter how
• A company’s capital reduction efforts, to camouflage the fact that it has been seemingly valid, is unavailing.
making profits, and to justify the mass lay off of its employees, especially union
members, were a ULP which cannot be condoned. Sale in Bad Faith
• It is irrational to suppose that a purchaser of a manufacturing enterprise is unaware
of the labor-management situation in the firm to be bought.

Cruz vs. PAFLU • The doctrine applies when the corporate fiction is used to defeat public
Summary: The factory workers formed a union, PAFLU, registered with DOLE. The company convenience, justify wrong, protect fraud, or made as a shield.
claimed to have an existing CBA with another union, PTGWO. PAFLU won the certification
election, so they proposed the finalization of a CBA with management. In less than a month H. Aronson Co, Inc. vs. Associated Labor Union
however, the factory was sold to Cruz. As a result of this sale, the members of PAFLU were Summary: The union proposed a CBA, but the management refused. Thus, union staged a
dismissed. The SC held that the sale of a business enterprise to avoid the legal consequences strike, leaving the management with no choice but to grant the union’s demands.
of a ULP is necessarily attended to with bad faith, and both the vendor and the vendee Management got mad and decided to dissolve the corporation, leading to the termination of
continue to be liable to the affected workers. Where the sale of a business enterprise is in bad all the employees. Later on, the management formed 2 new corporations with the same
faith, there is no need to consider the applicability of the rule that labor contracts, being in corporate purpose and capitalization. Only the non-union members were re-hired, so the
personam, are not enforceable against the transferee. The successor in interest is responsible union members filed a case for ULP. The SC held that there was ULP, because the dissolution
for all the rights and obligations of the predecessor. of the company and the formation of 2 new ones were part and parcel of a plan to
accomplish the dismissal of the union members. Worth mentioning is the fact that the family of
the controlling stockholders held the same positions in the new corporation as they did in the
Moncada Bijon Factory vs. CIR and Moncada United Worker’s Union (MUWU) dissolved corporation.
Summary: The owner of the factory called the members of MUWU to a meeting, requesting
them to resign from the union, revert to their working hours, and to withdraw the overtime SECOND ULP: “YELLOW DOG” CONDITION
claims they filed before CIR 3 years ago. The requests were rejected. 4 days later, the factory
suspended its operations. 11 days later, the owner executed a deed purporting to convey the ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS
factory to another person. When the factory reopened, the members of MUWU were not It shall be unlawful for an employer to commit any of the following unfair labor practices:
readmitted, but those who left the union were allowed to work. SC held there was ULP, and
that the sale of the factory is merely a device resorted merely to get rid of the employees who (b) To require as a condition of employment that a person or an employee shall not join a
are members of the union. labor organization or shall withdraw from one to which he belongs;

Assumption of Obligations by New Company • Contract provisions whereby an employee agrees that during the period of his
employment he will not become a member of a labor union have been outlawed in
PLASLU (Union) vs. Sy Indong Rice and Corn Mill the United States.
Summary: PLASLU filed a ULP case against Sy Indong and Tubod Labor Union (TLU), alleging • In the Philippines, such a contract is considered ULP by express provision of law.
that the VP of TLU had restrained and coerced members of PLASLU by threatening them with • Yellow Dog contract: a promise exacted from workers as a condition of
bodily harm unless they gave up their jobs as workers of Sy Indong. They alleged that Sy employment that they are not to belong to, or attempt to foster, a union during their
Indong discriminated against them by refusing to admit them to work when they reported for period of employment.
duty, on account of their affiliation with PLASLU. While the case was pending, Sy Indong sold • Only a yellow dog, cried the unionists, would sign such a contract.
its assets to Sen Chiong Rice Mill which was organized on the day of the sale. The new Three Provisions Usually Found in a “Yellow Dog” Contract
company had the same managing partner as Sy Indong. PLASLU alleges that Sy Indong and 1. Representation by the employee that he is not a member of a labor union
Sen Chiong are one and the same. The SC ruled that the Sy Indong’s allegation of bankruptcy 2. Promise by the employee not to join a labor union
was untenable, and that Sen Chiong was obviously organized in an attempt to relieve Sy 3. Promise by the employee that, upon joining a labor union, he will quit his
Indong of the consequences or effects of the present litigation. employment

Successor Employer; Piercing the Corporate Veil THIRD ULP: CONTRACTING OUT
• There is no closure when the “closed” department reappeared although under a
new name. ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS
• If the “new” company is engaged in the same business as the closed company, or is It shall be unlawful for an employer to commit any of the following unfair labor practices:
owned by the same people, and the “closure” is calculated to defeat the workers’
organizational right, then the closure may be declared a subterfuge. (c) To contract out services or functions being performed by union members when such will
• Doctrine of successor employer: the new company will be treated as a continuation interfere with, restrain or coerce employees in the exercise of their right to self-organization
or successor of the one that closed.
• The separated employees will have to be employed in the new firm because in the • This provision considers it ULP for an employer to contract out services or functions
first place they should not have been separated at all. being performed by union members when such act will interfere with, restrain, or
• The successor employer ruling is an enforcement of the legal recourse called coerce employees in the exercise of their right to self-organization (SO).
piercing the veil of corporate entity. • Contracting out, itself, is not ULP! It is the ill intention that makes it such.
• Doctrine of piercing the veil of corporate entity: the legal fiction that a corporation o Contracting out is ULP where it is motivated by a desire to:
is an entity with juridical personality, separate and distinct from its members and § Prevent his employees from organizing and selecting a CB
stockholders, may be disregarded. Representative,
• In such cases, the corporation will be considered as a mere association of persons, § Rid himself or union men, or
and liability will attach directly to officers and stockholders. § Escape his statutory duty to bargain collectively with his
employees’ bargaining representatives

• When is an employer NOT guilty of this ULP? FOURTH ULP: COMPANY-DOMINATION OF UNION
o When it is for business reasons, such as:
§ Decline in business, ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS
§ Inadequacy of equipment, or It shall be unlawful for an employer to commit any of the following unfair labor practices:
§ The need to reduce cost, even if the employer’s estimate of his
cost is based on a projected increase attributable to (d) To initiate, dominate, assist, or otherwise interfere with the formation or administration of
unionization. any labor organization, including the giving of financial or other support to it or its organizers or
§ *In such cases, the real issue is not whether the business reasons supporters.
are good or bad, but whether they actually motivated the
contracting out. Domination of a labor union usually manifests in the following forms:
• Contracting out is subject to limitations. 1. Initiation of the company union idea. May further occur in 3 styles:
o As held in Manila Electric v. Quisumbing, the company can determine in a. Outright formation by the employer or his representatives;
its best business judgment whether it should contract out the performance b. Employee formation on outright demand or influence by the employer;
of some of its work for as long as the employer is motivated by good faith, and
and the contracting out must not have been resorted to to circumvent c. Managerially motivated formation by employees
the law or must not have been the result of malicious or arbitrary action. 2. Financial support to the union
• Contracting out Restricted by CBA a. An employer commits unfair labor practice if he defrays the union
expenses or pays the attorney’s fees to the attorney who drafted the
Shell Oil Workers’ Union v. Shell Company of the Philippines constitution and by-laws of the union
Summary: Shell dissolved its security guard section and replaced it with an outside agency, 3. Employer encouragement and assistance.
claiming that such act was a valid exercise of management prerogative. The Union a. Immediately granting the union exclusive recognition as a bargaining
countered and relied on the CBA provision which assured the continued existence of a agent without determining whether the union represents the majority of
security guard section at least during the lifetime of the CBA. employees is an illegal form of assistance amounting to ULP
4. Supervisory assistance
The existing CBA constituted a bar to such a decision reached by management. There was a a. Takes the form of soliciting membership, permitting union activities during
specific coverage concerning the security guard section in the CBA. working time or coercing employees to join the union by threats of
dismissal or demotion
• Runaway Shop
o Resorting to a runaway shop is ULP • An employer was held to have unlawfully aided a union by assisting its attempt to
o Defined as an industrial plant moved by its owners from one location to secure authorization cards from employees and by executing a contract with such
another to escape union labor regulations or state laws union when it was not the authorized representative of the employees
o Also used to describe a plant removed to a new location in order to • When is a labor union company-dominated? (PH Jurisprudence)
discriminate against employees at the old plant because of their union o Where it appears that key officials of the company have been forcing
activities employees belonging to a rival labor union to join the former under pain
o Where a plant removal is for business reasons, BUT the relocation is of dismissal should they refuse to do so;
hastened by anti-union motivation, the early removal is a ULP o That key officials of the company, as well as its legal counsel, have
o It is immaterial that the relocation is accompanied by a transfer of title to attended the election of the officers of the former union;
a new employer who is an alter-ego of the original employer o That officers and members of the rival union were dismissed allegedly
pursuant to a retrenchment policy of the company, after they had
Complex Electronics Employees Association v. NLRC presented demands for the improvement of the working conditions
Summary: The rank-and-file workers of Complex comprised the union known as CEEA despite its alleged retrenchment policy
(petitioner). Complex’s customers were foreign-based companies with different product lines, o That, after dismissal of the aforesaid officers of the rival labor union, the
requiring Complex to employ specific workers for each product line (3 product lines, A, B, and company engages the services of new laborers.
C). Complex filed notice of closure of product line C and retrenchment of 97 affected
employees. Machinery and equipment transferred to premises of Ionics. Union filed complaint Progressive Development Corp. (PDC) v. CIR
for ULP (alleged that Complex and Ionics have same Pres.; that Ionics is a runaway shop) Summary: T The Araneta Coliseum Employees Association (ACEA), in behalf of 48 members,
filed a ULP case against PDC, its officers, and PDC’s Employee’s Union (PEU). Complainants
Ionics is not a runaway shop. No violation of Labor Code or CBA. A runaway shop is one allege that they were dismissed because they refused to resign from the ACEA and to affiliate
where the employer moves its business to another location or it temporarily closes its business with PEU which was being aided by PDC.
for anti-union purposes. Ionics was not set up merely for the purpose of transferring the
business of Complex. At the time the labor dispute arose at complex, Ionics was already The employer’s act constituted ULP. While PEU was allegedly organized on June 26, it was only
existing as an independent company. The Union failed to show that the primary reason for the on July 11 that its existence was publicly announced when the management of PDC refused
closure of the establishment was due to the union activities of the employees. to meet with the ACEA. PEU never collected dues from its members and all members were
made regular employees and were retained in the construction unit of PDC. Also, PEU
became inactive after the death of the former counsel of PEU. This showed that PEU was
organized to camouflage PDC’s dislike for ACEA and to stave off ACEA’s recognition.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 60

FIFTH ULP: DISCRIMINATION increased by an average of 98% only. The company couldn’t give a valid
explanation.
ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS o This was held to be ULP.
It shall be unlawful for an employer to commit any of the following unfair labor practices: o SC also considered the anti-union attitude exhibited by the Company in
transferring the union Pres. from the main office to another when the union
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of was still being organized.
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 Discrimination in Bonus Allocation or Salary Adjustments
recognized collective bargaining agent as a condition for employment, except those • A company, contrary to previous practice of dividing equally to all employees a
employees who are already members of another union at the time of the signing of the certain % of its net profits as Christmas bonus, allocated 50% thereof to its Manila
collective bargaining agreement. Employees of an appropriate bargaining unit who are not Hotel employees, some of whom were even granted year-end bonus. Its Pines Hotel
members of the recognized collective bargaining agent may be assessed a reasonable fee employees, where there exists a labor union, did not receive any year-end bonus;
equivalent to the dues and other fees paid by members of the recognized collective and only 5% was distributed to them. There is no union at the Manila Hotel. These
bargaining agent, if such non-union members accept the benefits under the collective circumstances clearly show discrimination
bargaining agreement: Provided, that the individual authorization required under Article 242, • In one case, the management gave salary adjustments to the employees of one of
paragraph (o) of this Code shall not apply to the non-members of the recognized collective its nonunionized branches although it was operating at a loss. However, the total
bargaining agent [the correct reference is to Art. 241(o) but this has been renumbered as Art. salary adjustments given every 10 of its unionized employees would not even equal
250(o)]; the salary adjustments given one employee in the nonunionized branch. Also held
as discrimination.
• What the law prohibits is discrimination to encourage or discourage membership in
a labor organization. Where the purpose is to influence the union activity of Discrimination in Layoff
employees, the discrimination is unlawful. • Where only unionists were permanently dismissed while nonunionists were not (even
• But discrimination is not the same as differentiation or classification when the layoff was justified)
o For instance: it is common management practice to classify jobs and o In the case, the employer demanded that they resign from the union and
grant them varying levels of pay or benefits package. à These are valid when they refused, they were dismissed permanently – SC held as
differentiations that recognize differences in job requirements or discriminatory
contributions
o In one case, SC allowed the giving of profit-sharing benefits to employees Bataan Shipyard and Engineering Co., Inc. v. NLRC
excluding the union members because the latter are CBA-covered unlike Summary: Company has around 1K employees, more than 100 belong to NAFLU labor union.
the others Company filed with NLRC an application for the retrenchment of 285 of its employees on the
• To constitute ULP, the discrimination committer by the mployer must be in regard to ground that the firm had been incurring heavy losses. In the meantime, some employees who
the ‘hire or tenure of employment or any term or condition of employment to had been on sick leave earlier were considered retrenched. All of those so retrenched
encourage or discourage membership in any labor organization.’ happened to be officers and members of the NAFLU.
o The exaction by the Company, from the strikers returning to work, of a
promise not to destroy the company property and not to commit acts of The Company had indeed been discriminatory in selecting the employees who were to be
reprisal against the Union members who did not participate in the strike, retrenched. All of the retrenched employees are officers and members of the NAFLU. The
cannot be considered as intended to encourage or discourage Union Company failed to explain itself in taking the said action. With this, SC concluded that it had
membership. been discriminating against membership in the union, an act which amounts to interference
o Taking the circumstances surrounding the prescribing of that condition, in the employee’s exercise of their right to SO.
the requirement by the Company is actually an act of self-preservation
and designed to insure the maintenance of peace and order in the Discrimination in Regularization
Company premises. • In a case, employees were never given any permanent status despite being long-
• Discrimination occurs when a union member, involved in a union activity is treated time employees with no improper act or behavior while others were given the status
differently from anon-union worker. even if they entered the Company much later.
o Antiunion animus is found when the employer’s conduct is not motivated, o Court held that the only reason for this indifferent attitude was the fact
or at least is not entirely motivated by legitimate and substantial business that the employees were affiliated with the union which did not have the
reasons but by a desire to penalize or reward employees for union activity sympathy of their employer
or the lack of it.
o Discouraging membership in a labor organization includes not only Discrimination by Blacklisting
discouraging adhesion to union membership but also discouraging • BLACKLISTING – a list of persons marked out for special avoidance, antagonism or
participation in union activities such as a legitimate strike enmity on the part of those who prepare the list, or those among whom it is
intended to circulate.
Discrimination in Work Quota o As when a trade union ‘blacklists’ workmen who refuse to conform to its
• In a case, the company increased the sales quota of the union president and VP to rules, or where a list of insolvent or untrustworthy persons is published by a
400% and 300%, respectively, unlike those of the other field reps. Whose quota commercial agency or mercantile association

• When it is resorted to by a combination of employers to prevent employment of Constructive Discharge

employees for union activities, it may constitute ULP • Where the employer prohibits employees from exercising their rights under the Act,
on pain of discharge, and the employee quits as a result of the prohibition, a
Indirect Discrimination constructive discharge occurs, which may be remedied in a ULP proceeding
• Art. 259(f) (the 6th ULP) provides that it shall be ULP for an employer to dismiss or o Example: Employee quit job because of discriminatory assignment
discriminate against an employee for having filed charges or for having given or requiring heavy lifting work which the employer knew she was physically
being about to give testimony under said Act. unable to perform.
o Although this provision seems to refer only to the one who preferred
charges against the company as constituting ULP, the legislative intent is Discharge Due to Union Activity, A Question of Fact
to assure absolute freedom of the employees to establish labor • Findings of the court as to this are conclusive and binding if supported by substantial
organizations and unions as well as to proper charges for violations of the evidence considering the record as a whole.
LC. o Substantial Evidence – such relevant evidence as a reasonable mind
o If the dismissal of an employee due to the filing of said charges would be might accept as adequate to support a conclusion
and is an undue restraint upon said freedom, the dismissal of his brother
owing to the nonwithdrawal of the charges of the former, would be in fact Valid Discrimination: Union Security Clause
a greater restraint upon the same freedom. What cannot be done • Where management and the union enter into a CBA containing a union security
directly cannot be done indirectly. clause, it is a form of encouragement of union membership which is not considered
• The following acts have been held as ULP (indirect discrimination): ULP
o Dismissal of a laborer on account of union activities of his brother; • USC – requires membership in the union so that an employee may retain his job and
o Discharge of an employee due to activities of the wife; the union’s existence may be assured
o Discharge of a wife due to the union activities of the husband. • A form of compulsory union membership which is limitedly authorized by the
provision (Art. 259(e))
Test of Discrimination o “Nothing in this Code or in any other law shall stop the parties from
• In determining whether or not a discharge is discriminatory, it is necessary to know requiring membership in a recognized collective bargaining agent as a
the underlying reason for the discharge condition for employment”
o The fact that a lawful cause is available is not a defense where the • “Union Security” is a generic term which is applied to and comprehends “closed
employee is actually discharged because of his union activities shop”, “union shop”, “maintenance membership” or any other form of agreement
o If the discharge is actually motivated by a lawful reason, the fact that the which imposes upon the employee the obligation o acquire or retain union
employee is engaged in union activities at the time will not lite against the membership as a condition affecting employment.
employer and prevent him from the exercise of his business judgment to • In a sense, there is discrimination, BUT it is discrimination IN FAVOR OF unionism – it is
discharge an employee for cause a valid kind of ‘discrimination’.

Cainta Catholic School v. Cainta School Employees Union Kinds of Union Security Agreements
Summary: Union charged an employer with ULP, who retired the union’s president and VP • Closed-shop – only union members can be hired by the company AND they must
because they had completed 20 years of service. Despite the CBA’s categorical provision remain as union members to retain employment in the company
allowing such retirement, the CA upheld the union’s contention that the employer committed • Union Shop – Nonmembers may be hired, but to retain employment must become
ULP. union members after a certain period.
o The requirement applies to present and future employee
The union cited NLRC v. Ace Comb, which in fact runs counter to the union’s position • Modified Union Shop – Employees who are not union members at the time of signing
(relevant Ace Comb citation is in italics above, 1st sub-bullet). Reliance on the Ace Comb is the contract need not join the union, but all workers hired thereafter must join
inappropriate. That case did not involve an employee sought to be retired, but one who was • Maintenance of Membership Shop – No employee is compelled to join the union,
for termination from employment for a cause. The Union and the CA would have been better but all present or future members must, as a condition of employment, remain in
off citing a case wherein a decision actually concluded that the employee was validly good standing in the union
dismissed for union activities despite the ostensible existence of a valid cause for termination. • Exclusive Bargaining Shop – the union is recognized as the exclusive bargaining
agent for all employees in the bargaining unit, whether union members or not.
• In another case, the employee complained that his discharge was a reprisal for his • Bargaining for Members Only – The union is recognized as the bargaining agent only
frequent and persistent filing and processing of grievances. On the other hand, the for its own members
employer contends that the employee was actually discharged for valid reasons. • Agency Shop – employees must either join the union or pay to the union as
Claim of employee was not supported by evidence while the claim of the employer exclusive bargaining agent a sum equal to that paid by the members.
was supported. o Directed against “free rider” employees who benefit from union activities
o The more substantial evidence establishes that the discharge was made without contributing financially to union support
with the proper motive. o Another term – “treasury shop”
• Where circumstances establish a discriminatory motive on the part of the employer,
the assignment of a just cause will be unavailing. Validity of Closed-shop Agreement
• An inference that the discharge was motivated by his union activity must be based • Disaffiliation from a labor union is allowed because it is implicit in the freedom of
upon evidence, direct or circumstantial, not upon mere suspicion. association ordained by the Constitution
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 62

• A “closed-shop”, however, it a valid form of union security, and such provision is not • Union members, although entitled to disaffiliate from their union and to form a new
a restriction of the constitutional right. organization of their own, must suffer the consequences of their separation from the
• By holding out to loyal members a promise of employment in the closed-shop, it union under the security clause of a CBA, as in the case of Tanduay
wields group solidarity. It is a very effective form of union security arrangement
• The law has sanctioned stipulations for the union shop and the closed-shop as a Tanduay Distillery Labor Union v. NLRC
means of encouraging the workers to join and support the labor union of their own Summary: Tanduay (TDI) and petitioner union (TDLU) entered into a CBA. It contained a union
choice as their representative in the negotiation of their demands and the security clause (as a condition of continued employment, must maintain membership in good
protection of their interests vis-à-vis the employer. standing in the union for the duration of the CBA). While CBA was still in effect, some members
joined another union (KAMPIL). TDI terminated the employment of the disaffiliating union
Advantages & Disadvantages of a Closed-shop Agreement members.
• Advantages:
o Increases strength and bargaining power of Los The employer did nothing but to put in force their agreement when it separated the
o Prevents non-union workers from sharing in the benefits of the union’s disaffiliating union members upon the recommendation of the union. There is nothing
activities without also sharing its obligations improper in the disputed provisions of the CBA (security clause) entered into by the parties.
o Prevents weakening of Los by discrimination against members
o Enables LOs to effectively enforce collective agreements Dismissal Pursuant to Closed-Shop Clause must clearly appear in contract
• Disadvantages: • In order to validly dismiss an employee by force of the union security clause, there
o Results in monopolistic domination of employment by LOs should be a clear and unequivocal statement that the loss of the status of a
o Interferes with the freedom of contract and personal liberty of the worker member of a good standing in the union shall be cause of dismissal
o Compels employers to discharge all non-union workers regardless of • Where the USC in the CBA merely provided that the employer shall have in its
efficiency, length of service, etc. employ and continue to employ members in good standing of the union and that it
o Facilitates use of LOs by unscrupulous union leaders for the purpose of will not employ nor hire any new employee or laborer unless he is a member of
extortion, restraint of trade, etc. good standing in the union, such clause does not reflect a closed-shop agreement
o Enables union to charge exorbitant dues and initiation fees (no clear and unequivocal statement)

“Right-to-Work” Laws Due Process Required in Enforcing USC; Intra-union Matter becomes Termination Dispute with
• In the US, there is a law that recognizes that a US State may pass laws that prohibit Employer
agreements requiring membership in a labor organization
o Such law is referred to as the “right-to-work” law. It outlaws closed-shop or Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos
union shop contracts at the state level Summary: Petitioner union officers were expelled by the federation for allegedly committing
acts of disloyalty. Upon the recommendation of the federation, the Company terminated the
Enforcement of Union Security Clause upon Corporate Merger petitioners without conducting a separate and independent investigation.
• How does the USC apply in merged corporations?
Although a USC in a CBA may be validly enforced and dismissal pursuant thereto may likewise
BPI v. BPI Employees Union be valid, this does not erode the fundamental requirement of due process. The reason behind
Summary: Because of the merger, Company A absorbed the employees of Company B. The the enforcement of the USC which is the sanctity and inviolability of contracts cannot override
bargaining union in A requested its management to require B’s employees, who are one’s right to due process. Also, while it is true that the issue of expulsion of the local union
unionized, to join the union pursuant to their CBA whose USC requires “new” employees to officers is a originally intra-union in character, the issue was later on converted to a
become union members as a condition of employment. A denied the union’s request, termination dispute when the company dismissed them without benefit of a separate notice
arguing that the “absorbed” employees are not “new”, hence, the compulsory membership and hearing.
clause does not apply to them.
Liability of Union to Pay Wages and Fringe Benefits of Illegally Dismissed Employee
SC was divided. 7 justices (majority) voted to apply the union security clause to the employees • Where the employer compelled the employee to go on forced leave upon union’s
of the absorbed Company. 6 disagreed. SC held that there is nothing in the USC that limits its insistence and demand (to the extent that the union filed a notice of strike), the
application to only new employees who possess non-regular status. What is indubitable from NLRC correctly ordered the reinstatement of the employee and directed the union
the USC is that upon the effectivity of the CBA, Company A’s new regular employees are to pay wages and fringe benefits which the employee failed to receive as a result
required to join the Union as a condition of their continued employment. of her forced leave, and to pay attorney’s fees.

Valid dismissal because of Application of Union Security Clause Employer in Good Faith Not Liable
• USCs in CBAs, if freely and voluntarily entered into, are valid and binding. Thus, the • Where the employer dismissed his employees in the belief in good faith that such
dismissal of an employee by the company pursuant to a labor union’s demand in dismissal was required by the closed-shop provisions, he may not be ordered to pay
accordance with a union security agreement does not constitute ULP back compensations to such employees, although their dismissal is found to be
• Even if the union members were unaware of the closed-shop stipulation in the CBA, illegal.
they are bound by it.

Exemption from Compulsory Membership: SIXTH U.L.P.: DISCRIMINATION BECAUSE OF TESTIMONY (ARTICLE 259[F])
All employees in the bargaining unit covered by a closed-shop clause in a CBA are subject to
its terms, except the following: ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS
1. Religious objectors It shall be unlawful for an employer to commit any of the following unfair labor practices:
• These are members of a religious sect that prohibits membership in a labor
union. They are protected by R.A. No. 3350. (f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having
2. Members of minority unions given or being about to give testimony under this Code;
• They are exempted from compulsory membership in the majority union
which is the bargaining agent. Otherwise, or if they can be compelled to • The law protects the employees’ right to testify on matters covered by the Code. If
disaffiliate and then join the majority union, it would render nugatory the not, their right to self-organization and right to engage in concerted activity will be
right of all employees to self-organization and to form, join or assist labor indirectly defeated and violated, by employer’s reprisal against a testifying
organizations of their own choosing. employee.
• If a closed-shop clause authorizes the dismissal of persons, belonging to • Concerted activity does not always require a number of people acting in unison, it
minority union who failed to join the majority union, would be null and also includes an employee acting alone in pursuing a group interest.
void. • In one case, while a certification election case is pending, an officer of the
• In the absence of a manifest intent to the contrary, “closed-shop” company asked him not to testify in the hearing of the certification election case so
provisions in a CBA apply only to persons to be hired or to employees who that he would be reinstated to his job. Because the employee still testified adversely
are not yet members of any labor organization and that said provisions of against the company, his case was dropped by the grievance committee and he
the agreement are not applicable to those already in the service at the was never reinstated. In this case, the Court held that the employer had committed
time of its execution. an ULP.
3. Confidential employees
• Because they are outside the bargaining unit being represented by the Mabeza v. NLRC
bargaining union. The CBA does not apply to them. Facts: The employer told the employee to sign a statement that she and the other employees
4. Employees expressly excluded by CBA stipulation were receiving the legal minimum wage and other labor standards. The employee signed but
refused to go to the City Prosecutor’s office to swear to the truth of her statement. Hence, she
Unites States’ “Right-to-Work” Laws was ordered to turn over the keys to her living quarters to her living quarters and was dismissed
• The law substantially provides that employees are not to be required to join a union for abandonment of job. Did the employer commit ULP?
as a condition of receiving or retaining a job.
• The Philippines presently has no specific counterpart of this law, but their effect exists Doctrine: The pivotal question in any case where unfair labor practice on the part of the
in the exemption of religious objectors and minority union members. employer is alleged is whether or not the employer has exerted pressure, in the form of
restraint, interference or coercion, against his employee’s right to institute concerted action
AGENCY FEE Instead of Union Membership for better terms and conditions of employment. Without a doubt, the act of compelling
• As an alternative to compulsory union membership, the agency fee is collectible employees to sign an instrument indicating that the employer observed labor standards
only from employees deriving economic benefits from the union-negotiated CBA, provisions of law when he might have not, together with the act of terminating or coercing
without being members of the bargaining union. those who refuse to cooperate with the employer’s scheme, constitutes ULP.
• Another term for the clause it “treasury shop”.
• A written authorization from the non-union employee is not required. The Labor Standards Violation, if Coupled with Retaliation, may Validate a Strike
employee’s acceptance of benefits from a CBA justifies the deduction of agency • Articles 118 (Retaliatory Measures) and Article 259 (f) are related as they both speak
fees from his pay and the union’s entitlement thereto. of employee’s filing a complaint or giving of testimony. However, Article 118 is
• The legal basis is quasi-contractual. limited to matters about wages, while in Article 259 (f), the subject testified to is any
issue covered by the Code.
Possible Effect of the Philippine Competition Law • Both articles likewise speak of retaliation by the employer. Retaliation is a wrong,
• A closed-shop agreement restricts the field the field of choice of the employer in and more than that, Article 259 considers it an ULP which, under Article 278, is a
hiring people and it compels workers to join an organization. Thus, the scheme is legal reason for employees to hold a strike.
both restrictive and monopolistic, something the Philippine Competition Act aims to • If labor standards are violated and the employer does not retaliate against the
combat. employees who reported, there are no ULP and no strikable situation. In this case,
• The Act provides that: “This Act shall not apply to combinations or activities of the enforcement-visitorial function of the DOLE Regional Office (Article 128), or the
workers or employees nor to agreements or arrangements with their employers adjudicatory power of that office or of the NLRC will operate.
when such combinations, activities, agreements or arrangements are designed
solely to facilitate collective bargaining in respect of conditions of employment.” SEVENTH U.L.P.: VIOLATION OF THE DUTY TO BARGAIN (ARTICLE 259[G])
• Whether this declaration sufficiently excludes union security clauses from the
coverage of the Act is a question awaiting a definitive judicial answer. ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS
It shall be unlawful for an employer to commit any of the following unfair labor practices:

(g) To violate the duty to bargain collectively as prescribed by this Code;

2. AFFIRMATIVE ORDER
“Duty to Bargain” is defined in Article 263 and 264. • The order may usually direct the full reinstatement of the discharged
employees to their substantially equivalent position without prejudice to
EIGHT U.L.P.: PAID NEGOTIATION their seniority and other rights and privileges.
• If other laborers have been hired, the order shall direct the respondent to
ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS dismiss these hired laborers to make room for the returning employee.
It shall be unlawful for an employer to commit any of the following unfair labor practices:
3. ORDER TO BARGAIN; MANDATED CBA
(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the • When an employer has failed or refused to bargain, the Court, in addition
settlement of any issue in collective bargaining or any other dispute; or to a cease and desist orders, issue an affirmative order to compel the
respondent to “bargain” with the bargaining agent.
• It is a punishable act of ULP for the employer to pay the union or any of its officers or • The Supreme Court has also upheld the ruling imposing a collective
agents any negotiation fee or attorney’s fee as part of settlement in collective bargaining contract upon an employer who refused to bargain with the
bargaining or any labor dispute. union of its employees.
• Article 260 prohibits union officers or agents from asking for or accepting such
payments. 4. DISESTABLISHMENT
• Where the employer had initiated, dominated or assisted in or interfered
NINTH U.L.P.: VIOLATION OF THE CBA with the formation or establishment of any labor organization or
contributed financial or other support to it, the Court may issue, in addition
ART. 259: UNFAIR LABOR PRACTICES OF EMPLOYERS to a cease and desist order, an order directing the employer to withdraw
It shall be unlawful for an employer to commit any of the following unfair labor practices: all recognition from the dominated labor union and to disestablish the
same.
(i) To violate a collective bargaining agreement. • Not necessarily to dissolve and liquidate the structure and organization,
rather, disestablishment comprehends withdrawal of recognition of such
The provisions of the preceding paragraph notwithstanding, only the officers and agents of labor organization as the employees’ bargaining agent and a bona fide
corporations, associations or partnerships who have actually participated in, authorized or and sufficient communication to the employees of such withdrawal of
ratified unfair labor practices shall be held criminally liable. (As amended by Batas Pambansa recognition.
Bilang 130, August 21, 1981).
ULP NOT SUBJECT TO COMPROMISE
• Implementation is still part of the bargaining process which, it should be recalled, • ULP cases are not, in view of the public interest involved, subject to compromises.
rests on the parties’ “duty to bargain”. The duty to bargain requires good faith and it • But in 1997, the Court affixed the stamp of approval to a compromise setting a ULP-
implies faithful observance of what has been agreed upon. based strike; ruling that because the agreement herein was voluntarily entered into;
• Noncompliance with the agreement is non-observance of good faith in bargaining; thus, it binds the parties.
therefore, the noncompliance amounts to ULP.
• But, to constitute ULP, violation must be “gross,” according to Article 274. ULP IN A GIVEN PERIOD SHOULD BE INCLUDED IN SINGLE CHARGE
• The charges should include all acts of ULP committed against and all members of
RELIEF IN ULP CASES the union during a given period of time. The union should not, upon the dismissal of
1. CEASE AND DESIST ORDER the charges first preferred, be allowed to split its cause of action and harass the
• If the Court, after investigation, finds that the person has engaged or is employer.
engaging in any ULP, then the Court shall state its findings of fact and shall
issue or cause to be served upon such person an order requiring him to EMPLOYER’S RESPONSIBILITY FOR ULP ACTS BY SUBORDINATE OFFICIALS
cease and desist from such ULP and take such affirmative action that will • All the authorities agreed that if the violations were traceable back to the employer,
effectuate the policies of the Act, e.g. reinstatement, back pay, etc. either by way of authorization or ratification, the employer, despite the fact that he
• To support a cease and desist order, the record must show: himself was not the actual actor, was held to be responsible for such violations.
o That the restrained misconduct was an issue in the case; o However, the difficulty arose when it was impossible to prove employer’s
o That there was a finding of fact of said misconduct; and authorization, participation or ratification.
o That such finding of fact was supported by evidence. • In great measure, the peculiar circumstances of each case were considered
• The Court is not authorized to issue a blank cease and desist orders, but controlling. The following considerations were often employed in deciding:
must confine its injunction orders to specific act or acts which are related o Knowledge by the employer of the employee’s improper acts: and his
to past misconduct. failure to prevent continuation of the course of conduct or his failure to
• A cease and desist order is not invalidated if the act complained of was renounce any connection or affinity therewith.
voluntarily discontinued prior or during the courts of the proceedings. o Continuity of improper conduct by employee:
o But if the act happened so long a time that there is no longer § A single utterance by a supervisory employee, whether
any threat or probability of a recurrence, a cease and desist improvident or deliberate, was not ordinarily, in absence of proof
order will not be justified. of actual authority, held to be sufficient to convict an employer of
ULP.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 65

§ However, continued, repeated or widespread activities by such Salunga v. Court of Industrial Relations (1967)
supervisory employee was deemed ample justification for Facts: Salunga resigned from the union out of disappointment over the union’s inaction on his
ascribing knowledge and blame to the employer. grievances and their alleged illegal disbursement of funds. The union then requested the
o Employer’s part policy and attitude: the past attitude or policy of the company to dismiss Salunga. Upon learning this, Salunga tried to revoke his resignation. But
employer and that of the offending supervisory employee might be the union denied the withdrawal and the company dismissed Salunga. Salunga then
indicative of a concert of effort between the two. complained of illegal dismissal.

ART. 260. UNFAIR LABOR PRACTICES OF LABOR ORGANIZATIONS. Doctrine: It is well-settled that labor unions are not entitled to arbitrarily exclude qualified
It shall be unfair labor practice for a labor organization, its officers, agents or representatives: applicants for membership, and a closed-shop provision would not justify the employer in
a) To restrain or coerce employees in the exercise of their right to self-organization. discharging, or a union in insisting upon the discharge of, an employee whom the union thus
However, a labor organization shall have the right to prescribe its own rules with respect refuses to admit to membership, without any reasonable ground thereof.
to the acquisition or retention of membership;
b) To cause or attempt to cause an employer to discriminate against an employee, Having been dismissed from the service owing to an ULP on the part of the union, the
including discrimination against an employee with respect to whom membership in such employee is entitled to reinstatement as member of the union and to his former or
organization has been denied or to terminate an employee on any ground other than substantially equivalent position in the company, without prejudice to his seniority and/or
the usual terms and conditions under which membership or continuation of membership rights and privileges, and with back pay, which back pay shall be borne exclusively by the
is made available to other members; union.
c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the
representative of the employees; Manila Mandarin Employees Union v. NLRC (1987)
d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver Facts: Melba Beloncio, assistant head waitress, was expelled from the Manila Mandarin
any money or other things of value, in the nature of an exaction, for services which are Employees Union for acts allegedly inimical to the interests of the union, i.e. her emotional
not performed or not to be performed, including the demand for fee for union remark of “Wala akong tiwala sa Union ninyo” when she urged the other waiter to adopt a
negotiations; better attitude toward his work. Upon union’s demand, the hotel placed Melba on forced
e) To ask for or accept negotiation or attorney’s fees from employers as part of the leave. Hence, Melba filed for ULP and illegal dismissal against the union and the hotel.
settlement of any issue in collective bargaining or any other dispute; or
f) To violate a collective bargaining agreement. Doctine: The SC upheld LA’s decision that the union was guilty of ULP and that the union
The provisions of the preceding paragraph notwithstanding, only the officers, members of should pay all the wages and fringe benefits due to Melba. The CBA in this case contains a
governing boards, representatives or agents or members of labor associations or organizations union security clause, i.e. closed-shop agreement. The Court stresses that union security
who have actually participated in, authorized or ratified unfair labor practices shall be held clauses cannot be used by union officials against an employer, much less their own members,
criminally liable. except with a high sense of responsibility, fairness, prudence, and judiciousness. This is true in
this case where Melba was trying her best to make a hotel bus boy do his work properly.
1. RESTRAINT OF COERCION BY LABOR ORGANIZATION; INTERFERENCE BY UNION IS NOT ULP
• An employer may commit ULP through “IRC” – interference, restraint or coercion. • Not Disloyalty to Ask Help from Another Union:
But in ULP by a labor organization, interference is left out.
• A labor organization may interfere in the employees’ right to self-organization as Rance, et al. v. NLRC, Polybag Manufacturing Corp., Polybag Workers’ Union, et al. (1988)
long as the interference does not amount to restraint or coercion. Facts: Petitioners were members who were expelled by their union for disloyalty because they
o It is not ULP because interfering in the exercise of the right to organize is allegedly joined NAFLU, another federation. Because of their expulsion, they were dismissed
itself a function of self-organizing. by the Corporation upon the union’s demand.
o Example of interference: union campaigns for membership even among
those members of another union. Doctrine: The mere act of seeking help from NAFLU cannot constitute disloyalty as
• Coercing Participation in a Strike: Article 260 is violated by Union’s restraining or contemplated in the CBA; at most, it was an act of self-preservation of workers who was
coercing an employee in the exercise of his right to refuse to participate in or driven to desperation.
recognize a strike. A violation is also committed when a union threatens employees
with bodily harm to force them to strike. 3. REFUSAL TO BARGAIN
• A union violates its duty to bargain collectively by entering negotiations with a fixed
2. UNION-INDUCED DISCRIMINATION purpose of not reaching an agreement or signing a contract.
• The law forbids as ULP union attempts to cause an employer to grant advantages
for: 4. FEATHERBEDDING AND MAKE-WORK ARRANGEMENTS
o union members over nonmembers, • FEATHERBEDDING- a term given to employee practices which create or spread
o union members in good standing over suspended or expelled members, employment by “unnecessarily” maintaining or increasing the number of employees
o members of the union executive board over more senior employees, used, or the amount of time consumed, to work on a particular job.
o members of one union over members of another union.
• This may refer to terms of hiring or firing, in layoff, in seniority, or in benefits. 5. CBA DEAL WITH EMPLOYER
• Arbitrary Use of Union Security Clause: • Asking for or accepting some “fee” from the employer as part of CBA or dispute
settlement is considered ULP under par. (e).

ART. 261. PROCEDURE IN COLLECTIVE BARGAINING. management power in fields which employers in the past considered to be
The following procedures shall be observed in collective bargaining: exclusively within their own domain. It then introduces democratic practices into
a) When a party desires to negotiate an agreement, it shall serve a written notice upon paid employment, which used to be organized along authoritarian lines. Moreover,
the other party with a statement of its proposals. The other party shall make a reply it provides an orderly procedure by which each side can seek to present to the
thereto not later than ten (10) calendar days from receipt of such notice; other the best possible case for the satisfaction of its particular demands.
b) Should differences arise on the basis of such notice and reply, either party may
request for a conference which shall begin not later than ten (10) calendar days from EMERGENCE OF COLLECTIVE BARGAINING
the date of request. • ORIGINATOR: The practice existed before the name came into existence, some
c) If the dispute is not settled, the Board shall intervene upon request of either or both early forms of which are: arbitration and conciliation. The term was coined by
parties or at its own initiative and immediately call the parties to conciliation meetings. Beatrice Webb, in 1891, in her study on “The Cooperative Movement in Great
The Board shall have the power to issue subpoenas requiring the attendance of the Britain.”
parties to such meetings. It shall be the duty of the parties to participate fully and • ADOPTION IN THE PHILIPPINES:
promptly in the conciliation meetings the Board may call; o Collective bargaining first gained formal and official recognition through
d) During the conciliation proceedings in the Board, the parties are prohibited from Commonwealth Act No. 213, approved by Pres. Quezon on 21 November
doing any act which may disrupt or impede the early settlement of the disputes; and 1936.
e) The Board shall exert all efforts to settle disputes amicably and encourage the parties o But, it is the Industrial Peace Act (R.A. No. 875, approved by Pres. Quirino
to submit their case to a voluntary arbitrator. on 17 June 1953; Magna Carta of Labor) that defined collective
bargaining and outlined its procedure.
ART. 262. DUTY TO BARGAIN COLLECTIVELY IN THE ABSENCE OF COLLECTIVE BARGAINING
AGREEMENTS PARTIES TO COLLECTIVE BARGAINING
the absence of an agreement or other voluntary arrangement providing for a more • The duty to bargain collectively arises only between the
expeditious manner of collective bargaining, it shall be the duty of employer and the o Employer; and its
representatives of the employees to bargain collectively in accordance with the provisions of o Employees represented by their labor union.
this Code. • When there is no duty to bargain collectively, the refusal to bargain violates no right.
• Both negotiate through their representatives:
COLLECTIVE BARGAINING OR NEGOTIATIONAS TOWARDS COLLECTIVE AGREEMENT – a o The employees’ BARGAINING REPRESENTATIVE – (defined in Article 219 [j])
democratic framework to stabilize the relation between labor and management, to create a refers to a legitimate labor organization or any officer or agent of such
climate of sound and stable industrial peace. It is a mutual responsibility and legal obligation organization, whether or not employed by the employer.
of the employer and the union. It denotes negotiations looking forward to a collective § Thus, the officer of agent may be a total stranger to the
agreement. employer, e.g. a counsel or president of a mother union.
§ Only requirement: He is duly authorized to negotiate by the
• Collective bargaining includes four related but distinguishable processes: employees through the union that he represents.
1. Negotiation between representatives of the management and the union over o However, the Implementing Rules of Book V, as amended, has dropped
“wages, hours, and other terms… of employment”; “officer or agent”. It defined exclusive bargaining representative as “any
2. Execution of written contract embodying the terms agreed upon; legitimate labor organization duly recognized or certified as the sole and
3. Negotiation of any question arising as to the interpretation or application of exclusive bargaining agent of all the employees in a bargaining unit.”
the contract; and Hence, the bargaining representative is an entity – the union – and not its
4. Negotiation over the terms of a new contract or proposed modifications, officers.
when an existing agreement is validly opened for negotiations. • The representative union should have been selected or designated directly by
• It is helpful to distinguish: employees under the procedure in Article 267. Only then will bargaining follow.
o Negotiation of contracts: the legislative phase of the union-employer
relationship; JURISDICTIONAL PRECONDITIONS OF COLLECTIVE BARGAINING
o Administration of contracts: the executive phase; and The mechanics of collective bargaining are set in motion only when the following jurisdictional
o Interpretation or application of contracts: the judicial phase. preconditions are present:
1. Possession of the status of majority representation of the employees’ representative in
COLLECTIVE BARGAINING AGREEMENT - (Article 263) refers to a contract executed upon accordance with any of the means of selection or designation provided for by the
request of either the employer or the exclusive bargaining representative of the employees, Labor Code;
incorporating the agreement reached after negotiation with respect to conditions of 2. Proof of majority representation; and
employment, including proposals for adjusting any grievances or questions under such • The employer has the right to demand, of the asserted bargaining agent,
agreement. It covers the whole employment relationship and prescribes the rights and duties reasonable proof of its representation of its employees. Thus, it is not an ULP on the
of the parties. part of the employer to refuse to negotiate until presentation of such proof.
• Rationale: By collective bargaining, the employee shares through his chosen However, the demand must be made in good faith and not merely as device for
representatives in fixing the conditions under which he works, and a rule of law is delay or evasion.
substituted for absolute authority. 3. A demand to bargain under Article 261, par. (a) of the New Labor Code.
• Strength of Collective Bargaining Method: it is also a means of ensuring workers’ • An employer’s duty to recognize and bargain collectively with a union does not
participation in decision-making. It represents a diminution of absolute arise until the union requests the employer to bargain.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 67

BARGAINING WITH MINORITY UNION, U.L.P. • May take place within many different geographical subdivisions. Some of these
• Where a majority representative has been designated, it is an ULP for the employer, arrangements may embrace the whole industry within a particular geographical
as a refusal of collective bargaining, to deal and negotiate with the minority area, others may cover only a portion of such industry
representative to the exclusion of the majority representative. This is true even if • The unionized employer subjected to intensive competition from the nonunionized
there is no majority representative has been designated. sector may be highly supportive of multi-employer bargaining units, particularly if
• On the union side, it is ULP for one of the unions to stage a strike and demand that such units could affect the nonunionized employers who use substandard wages to
the employer sit down with it for collective bargaining when there exists a legitimate undercut prices in the product market
issue as to which of several unions is the legitimate representative of employees. • Multi-employer bargaining is particularly advantageous to both sides in industries
composed of many small, financially weak employers
Lakas ng Manggagawng Makabayan v. Marcelo Enterprises (1982) • It provides both management and unions with significant cost savings in negotiation
The facts show that a legitimate representation issue confronted the employer Marcelo of labor agreements. It is cheaper to negotiate one master multi-employer
Enterprises. agreement than a number of single-employer agreements
• To arrive at multi-employer agreements is much more difficult than to arrive at
Doctrine: The concerted activities, executed and carried into effect at the instigation and single-employer contracts. The expanded size of the unit composed of many
motivation of LAKAS, e.g. filing of a Notice of Strike, are all illegal and violative of the heterogeneous groups leads to intensive intraorganizational bargaining both on the
employer’s basic right to bargain collectively only with the representative supported by the union’s and on the employer’s side
majority of its employees in each of the bargaining units. • A uniform master contract covering the employees of a number of firms may
overlook the requirements of its component units
WHEN BARGAINING SHOULD BEGIN
MULTI-EMPLOYER BARGAINING PROCEDURE
CERTIFICATION YEAR - The collective bargaining should begin within 12 months following the A legitimate labor union and employers may agree in writing to come together for the
determination and certification of the employees’ exclusive bargaining representative purpose of collective bargaining, provided:
• The employer’s duty to bargain during the certification year has been held to a) Only legitimate labor unions who are incumbent exclusive bargaining agents may
extend throughout the entire year participate and negotiate in multi-employer bargaining
• An employer commits an unfair labor practice by refusing to bargain with the union b) Only employers with counterpart legitimate labor unions who are incumbent
during its certification year, notwithstanding the repudiation of the union by a bargaining agents may participate and negotiate in multi-employer bargaining;
majority of its employees before the expiration of the one-year period and
• A union which has been certified by the NLRB as a bargaining representative for a c) Only those legitimate labor unions who pertain to employer units who consent to
particular unit enjoys an irrefutable presumption of a majority status for one-year, multi-employer bargaining may participate in multi-employer bargaining
absent special circumstances
• Following the expiration of the one-year certification period, there continues to be a Multi-employer bargaining may be initiated by the labor unions or by the employers.
presumption in favor of a union majority, though the presumption is rebuttable. a) Legitimate labor unions who desire to negotiate with their employers collectively
shall execute a written agreement among themselves, which shall contain the
SINGLE ENTERPRISE BARGAINING PROCEDURE BROADLY DESCRIBED following in order to avail of multi-employer bargaining;
• The law gives primacy to free collective bargaining, and allows the parties to devise a. The names of the labor unions who desire to avail of multi-employer
their bargaining rules; bargaining
• The bargaining procedure is governed primarily by agreement of the parties b. Each labor union in the employer unit
• The agreed rules are the procedural law for the parties, as long as they respect the c. The fact that each of the labor unions are the incumbent exclusive
parties’ bargaining right and provide for a more expeditious manner of collective bargaining agents for their respective employer units
bargaining than the labor code does d. The duration of the collective bargaining agreements, if any, entered into
• The labor code procedure applies suppletorily only by each labor union with their respective employers
Legitimate labor unions who are members of the same registered federation,
WHEN SHOULD BARGAINING END? national, or industry union are exempt from execution of this written agreement
• The law fixes no time limit for completion of the negotiation
• The law only demands and expects observance of honesty and good faith b) The legitimate labor unions who desire to bargain with multi-employers shall send a
written notice to this effect to each employer concerned. The written agreement
MULTI-EMPLOYER BARGAINING stated in the preceding paragraph, or the certificates of registration of the
• Collective bargaining may take place at the national, industry, or enterprise level federation, national, or industry union, shall accompany said notice
Employers who agree to group themselves or use their existing associations to
MULTI-EMPLOYER BARGAINING – When a number of employers join forces for purposes of engage in multi-employer bargaining shall send a written notice to each of their
collective bargaining counterpart legitimate labor unions indicating their desire to engage in multi-
• The structure may consist of an association representing employers, or even a whole employer bargaining. Said notice shall indicate the following:
industry, or it may be composed of only a few employers who bargain as a group, 1) The names of the employers who desire to avail of multi-employer bargaining;
or through an association 2) Their corresponding legitimate labor organizations
3) The fact that each corresponding legitimate union is an incumbent exclusive
bargaining agent;
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 68

4) The duration of the current collective bargaining agreement, if any, entered PURPOSES OF THE MEETING AND CONVENING:
into by each employer with the counterpart legitimate labor union 1. To negotiate an agreement on the subjects of:
a. Wages
c) Each employer or concerned labor union shall express its willingness or refusal to b. Hours of Work
participate in multi-employer bargaining in writing, addressed to its corresponding c. All other terms and conditions of employment including proposals for
exclusive bargaining agent or employer. Negotiations may commence only with adjusting grievances or questions arising under such agreement; and
regard to respective employers and labor unions who consent to participate in 2. To execute a contract incorporating such agreement if requested by either party
multi-employer bargaining;
d) During the course of negotiations, consenting employers and the corresponding • The kind of compliance required is prompt, expeditious, and in good faith
legitimate labor unions shall discuss and agree on the following: • The limitations or reservations of the duty are that it does not compel any party to
a. The manner by which negotiations shall proceed; agree to a proposal or to make a concession. Thus, no violation and no ULP is
b. The scope and coverage of the negotiations and the agreement; and committed when a party in good faith turns down a proposal
c. Where appropriate, the effect of the negotiations on current agreements
or conditions of employment among the parties. Situation Two: WHERE A CBA EXISTS – the duty to bargain means all of the above and,
additionally, the obligation not to terminate or modify the CBA during its lifetime
Two (2) signed copies of collective bargaining agreement reached through multi- • But 60 days before the CBA expires, either party may notify the other in writing that it
employer bargaining shall be posted for at least 5 days in two conspicuous areas in desires to terminate or modify the agreement.
each workplace of the employer units concerned. Said collective bargaining • During the 60-day period and until a new agreement is reached, the CBA remains in
agreement shall affect only those employees in the bargaining units who have full force and effect; the parties are duty-bound to keep the status quo
ratified it. • The law therefore provides for automatic renewal or extension of the CBA. This 60-
day period under Article 253 refers to submission of proposal to renegotiate the
UNFAVORABLE TO CONSUMERS? nonrepresentational provisions of the CBA
• There is uniformity of contract terms in multi-employer bargaining, but this may be • It does not always coincide with the 60-day period mentioned in Articles 253-A and
detrimental to public interest 256 pertaining to “freedom period” to resolve representation contest between
• Scholars claim that multi-employer bargaining could strengthen monopolistic unions
forces in the economy and lessen competition
FOUR FORMS OF U.L.P. IN BARGAINING
MULTI-EMPLOYER BARGAINING IS OPTIONAL 1. Failure or refusal to meet and convene
• It is based primarily on the consent of the firms involved 2. Evading the mandatory subjects of bargaining
• Companies that elect to join a multi-employer unit must adhere to the terms and 3. Bad faith in bargaining, including failure or refusal to execute the collective
conditions of the bargaining agreement regardless of the impact that such an agreement, if requested;
agreement may have on one firm 4. Gross violation of the CBA

263 [252]. MEANING OF DUTY TO BARGAIN COLLECTIVELY. FIRST ULP IN BARGAINING; FAILURE OR REFUSAL TO MEET AND CONVENE
The duty to bargain collectively means the performance of a mutual obligation to meet and • An employer is guilty of an unfair labor practice in refusing to bargain with the
convene promptly and expeditiously in good faith for the purpose of negotiating an representative of a majority of his employees
agreement with respect to wages, hours of work and all other terms and conditions of • To bargain in good faith, an employer must not only meet and confer with the union
employment including proposals for adjusting any grievances or questions arising under such which represents his employees, but also must recognize the union for the purpose
agreement and executing a contract incorporating such agreements if requested by either of collective bargaining
party but such duty does not compel any party to agree to a proposal, or to make any • In addition, he must recognize the union as the bargaining representative of all the
concession. employees in the appropriate bargaining unit, even if they are not all members of
the union
• Negotiation of grievances is part and parcel of the bargaining process
ART. 264. [253] DUTY TO BARGAIN COLLECTIVELY WHEN THERE EXISTS A COLLECTIVE • The failure or refusal of an employer to bargain collectively with his employees
BARGAINING AGREEMENT. constitute an enjoinable labor practice not only under the subdivision of the Act
When there is a collective bargaining agreement, the duty to bargain collectively shall also dealing expressly with collective bargaining, but also under the subsection making it
mean that neither party shall terminate nor modify such agreement during its lifetime. an “unfair labor practice” to: “interfere with, restrain or coerce employees in the
However, either party can serve a written notice to terminate or modify the agreement at exercise of their guaranteed rights, on the theory that refusal by an employer to
least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the bargain collectively with his employees constitutes “interference” with the latter’s
status quo and to continue in full force and effect the terms and conditions of the existing right of self-organization
agreement during the 60-day period and/or until a new agreement is reached by the parties.
Capitol Medical Center v Trajano,
DUTY TO BARGAIN Facts: The employer contends that its petition for the cancellation of the registration of
Situation One: WHERE THERE IS YET NO COLLECTIVE BARGAINING AGREEMENT – the duty to respondent union which has been certified as the bargaining representative of the
bargain means in essence the mutual obligation of the employer and the employees’ employees, involves a prejudicial question that should first be settled before the Secretary of
majority union to meet and convene Labor could order the parties to bargain collectively
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 69

Doctrine: The pendency of a petition for cancellation of union registration does not preclude • A subsequent employer who is not a successor of a previous employer is not bound
collective bargaining. An unresolved petition for union cancellation is not a bar to set in by the previous employer’s duty to bargain with a union and does not violate the
motion the mechanics of collective bargaining Act by passing and failing to bargain with the union

Abaria v NLRC CONVERSION TO INDEPENDENT FRANCHISE OR OPERATION

Facts: The federation was the certified bargaining agent for the rank and file union for the 3 • A decision to withdraw capital from a company-operated facility and relinquish the
previous CBAs. When the last CBA was about to expire, the local union wanted the employer operating control to an independent dealership lies very much at the core of
to negotiate with it, but the employer refused to do so until the dispute between the mother entrepreneurial control, and hence is not a mandatory subject of bargaining
union and the local chapter was resolved. Does the employer’s refusal constitute ULP?
DO ECONOMIC EXIGENCIES JUSTIFY REFUSAL TO BARGAIN?
No. Refusal to bargain with an unregistered chapter does not constitute ULP. A local union • An employer has been held not guilty of a refusal to bargain by adamantly
which is not independently registered cannot, upon disaffiliation from the federation, exercise rejecting the union’s economic demands where he is operating at a loss, on a low
the rights and privileges granted by law to legitimate labor organizations. The employer profit margin, or in a depressed industry, as long as he continues to negotiate.
cannot be faulted for refusing to negotiate with the unregistered chapter. The members • But financial hardship constitutes no excuse for refusing to bargain collectively.
disaffiliating in the wrong manner and the wrong time can be investigated and penalized, • The NLRB has held that an employer is guilty of a refusal to bargain when he refuses
even expelled, in accordance with the federation’s constitution and by-laws. even to discuss a union’s economic demands on the ground that in his very serious
financial condition it would be impractical no negotiate or that he is financially
SELLING THE COMPANY unable to accept a contract negotiated by the union with the employer’s
• If the employer is guilty of unfair labor practice when he directly discharged his association of which he is a member
employees to forestall a demand for collective bargaining, he certainly should not • An employer’s refusal to enter into a collective bargaining agreement for a definite
be allowed to evade responsibility if he indirectly causes that discharge by selling to period with respect to wages, hours, or other conditions of work cannot be justified
a company that he knows is unwilling to accept his employees on the ground that it is necessary to keep wage schedules flexible in order to meet
• The basic rule is that if the transfer of assets and employees from one employer to exigencies arising out of competition in trade
another leaves intact the identity of the employing enterprise, the transferor’s duty
to recognize and bargain with an incumbent union devolves upon the transferee as ACTS NOT DEEMED REFUSAL TO BARGAIN
“successor employer”. The duty to bargain is not violated by:
• That means that an acquiring employer is a successor to the bargaining obligations 1. Adoption of an adamant bargaining position in good faith, particularly where the
of his predecessor if there is a continuity in the business operation company is operating at a loss
• A mere change in ownership of a business is insufficient to alter a union’s status as 2. Refusal to bargain over demands for commission of unfair labor practices
bargaining representative. If the transfer of assets and employees from one 3. Refusal to bargain during period of illegal strike
employer to another leaves intact the identity of the employing enterprises, the old
employer’s duty to recognize and bargain with an incumbent union devolves on • If a union engages in an illegal strike, the employer has no obligation to bargain until
the new employer as successor employer he is notified that the illegal strike has been terminated
• The subsequent employer can offer reasonable grounds for believing that the union
lost its majority status Neither is the duty to bargain violated where:
1. There is no request for bargaining
SUCCESSOR EMPLOYER: CONTINUITY AND IDENTITY 2. The union seeks recognition for an inappropriately large unit
• In making the determination as to whether an employer is successor, the NLRB looks 3. The union seeks to represent some persons who are excluded from the act
to the totality of circumstances to determine whether there has been a substantial 4. The rank-and-file unit includes supervisors or inappropriate otherwise;
and material alteration in the employing enterprise. If there is a substantial and 5. The demand for recognition and bargaining is made within the year following a
material alteration in the employing enterprise, the new employer need not bargain certification election in which the clear choice was no inion and no ad interim
wth the incumbent union. significant change has taken place in the unit
• There must be a substantial continuity of identiy in the business enterprise before 6. The union makes unlawful bargaining demands. But a union’s demand for
and after a change of ownership, and this continuity of identity in the business reinstatement of justifiably discharged strikers, which was not presented as an
enterprise necessarily includes a substantial continuity in the identity of the unconditional demand but rather as a bargainable issue, was held not to excuse an
workforce across the change in ownership. employer from its duty to bargain with the union
• The buyer of the business cannot avoid the rule by the simple expedient of having
the seller notify the employees that they are discharged as of the sale date ALLEGED INTERFERENCE IN THE SELECTION OF THE UNION’S NEGOTIATING PANEL
• If the buyer’s motive in securing the employees’ discharge is to avoid bargaining
with the union, he is guilty of two unfair labor practices: discrimination against Standard Chartered Bank Empoyees Union v Hon. Nieves Confesor
employees because of union membership or activities, and refusal to bargain. Facts: The union asserts that the employer committed ULP when the Bank’s HR manager
• The rule is different, however, where the buyer makes substantial nondiscriminatory suggested to the union that the president of the federation be excluded from the union’s
personnel changes and changes in the operational structure of the business. In such negotiating panel. In support of its claim, the union president executed an affidavit stating
a case, he is not a successor employer and need not recognize or bargain with the where and how the alleged interference took place. The union president also narrated that
incumbent union during the first meeting, the HR manager stated that the negotiation should be kept a “family
affair”. The union claims that interference in the choice of the Union’s bargaining panel is
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 70

tantamount to ULP. • Pension and insurance benefits for active employees are mandatory subjects of
bargaining, but benefits accorded to retirees are not a mandatory subject
Doctrine: If an employer interferes in the selection of union negotiators or coerces the Union to
exclude from its panel of negotiators a representative of the Union, and if it can be inferred Examples of matters considered as mandatory subjects of bargaining:
that the employer adopted the said act to yield adverse effects on the free exercise of the 1. Wages and other types of compensation, including merit increases
right to self-organization or on the right to collective bargaining of the employees, ULP under 2. Working hours and working days, including work shifts
Article 248 in connection with 243 of the Labor Code is committed. 3. Vacations and holidays
4. Bonuses
The circumstances that occurred during the negotiating do not show that the suggestion 5. Pensions and retirement plans
made is an anti-union conduct from which it can be inferred that the Bank consciously 6. Seniority
adopted such act to yield adverse effects on the free exercise of the right to self-organization 7. Transfer
and collective bargaining of the employees. 8. Lay-offs
9. Employee workloads
NON-REPLY TO PROPOSAL; CBA IMPOSED ON EMPLOYER 10. Work rules and regulations
11. Rent of company houses
Kiok Loy v NLRC and Kilusan 12. Union security arrangements
Facts: The Union of Kiok Loy Sweden Ice Cream furnished the latter with two copies of
proposed CBA, but no reply came from the employer. The case was certified to the NLRC for WAGE FACTORS; SOLOMONIC APPCROACH
compulsory arbitration. The NLRC declared the company guilty of unjustified refusal to • Merely finding the midway point between the demands of the company and the
bargain. Is the employer guilty of bargaining with bad faith? YES. union, and “splitting the difference” is a simplistic solution that fails to recognize that
the parties may already be at the limits of the wage levels they can afford
Doctrine: Collective bargaining, designed to stabilize the relations between labor and • It may lead to the danger too that neither of the parties will engage in principled
management for the purpose of industrial peace, is a mutual responsibility between labor and bargaining
management. It is a legal obligation, which the law makes it unfair labor practice for an • Thus, rather than encourage agreement, a “middle ground approach” instead
employer to refuse and meet and convene promptly and expeditiously in good faith for the promotes a “play safe” attitude that leads to more deadlocks than to successfully
purpose of negotiating an agreement for wages, hours of work, and other terms of negotiated CBAs.
employment.
WORKLOADS AND WORK RULES
A company’s refusal to make counter proposal if considered in relation to the entire • Employee workloads are a mandatory subject of bargaining. Employer rules
bargaining process, may indicate bad faith, and this is especially true where the Union’s concerning coffee breaks, lunch periods, smoking, employee discipline, and dress
request for a counter proposal is left unanswered. are also mandatory subjects of bargaining, as are plant safety rules and general
regulations
SECOND ULP IN BARGAINING: EVADING THE MANDATORY SUBJECTS • Company rules relating to safety and work practices come within the meaning of
the phrase “other terms and conditions of employment”, hence constitute a
STATUTORY OR MANDATORY PROPOSALS -- It is the obligation of the employer and the mandatory subject of collective bargaining.
employees’ representative to bargain with each other with respect to “wages, hours, and
other terms and conditions of employment” CODE OF CONDUCT (usually called Code of Discipline)
• An employer’s refusal to negotiate a mandatory subject of bargaining is an unfair • Work rules and regulations form part of terms and conditions of employment that
labor practice although the employer has every desire to reach agreement and are proper subjects of collective bargaining.
earnestly and in all good faith bargains to that end
• An employer’s duty to bargain is limited to the mandatory bargaining subjects; as to MANAGEMENT PREROGATIVES CLAUSE
other matters, he is free to bargain or not to bargain • An employer does not commit an unfair labor practice by insisting on the inclusion in
• A mere remote, direct, or incidental impact is insufficient to render a subject a the contract of management prerogatives clause, even though some of the
mandatory subject of bargaining; in order for a matter to be subject to mandatory matters covered by the clause are “conditions of employment” which are
collective bargaining. mandatory subjects of bargaining.
• However, conditions of employment include not only what an employer has already
granted, but also what it has announced it intends to grant UNION DISCIPLINE CLAUSE
• Whether the agreement concerns a mandatory subject of bargaining depends not • An employer may bargain over his proposal that the union eliminate a piecework
on its form, but on its practical effect. ceiling imposed by a union rule which subjects members to discipline for exceeding
the production quota
WAGES AND EMPLOYMENT CONDITIONS
• The term “wages” does not only include compensation, but also other emoluments ARBITRATION, STRIKE-VOTE, OR NO-STRIKE CLAUSES
of value furnished by the employer to his employees • An employer may lawfully bargain to an impasse over his proposal that the
• Under the labor code, it refers to remuneration or earnings, however designated, collective bargaining agreement include an arbitration clause or a no-strike clause
capable of being expressed in terms of money, etc. which prohibits the employees from striking during the life of the agreement.

NO-LOCKOUT CLAUSE; CLAUSE FIXING CONTRACTUAL TERM • Bargaining to the point of deadlock may or many not amount to bargaining in bad
• An employer’s statutory duty to bargain requires him to negotiate over the union’s faith depending on whether the insistence refers to a mandatory or a non-
proposal that their agreement include a clause binding him not to lock out the mandatory subject of bargaining
employees • Important: Over a mandatory subject, a party may insist on bargaining, even to the
• An employer’s obligation to enter into a CBA does not require that the employer point of deadlock, and his insistence will not be construed as bargaining in bad
enter into an unalterable obligation for an extended period of time, and many faith. The duty to bargain requires meeting and convening on terms and conditions
collective bargaining agreements contain a clause permitting termination or of employment, but does not require assent to the other party’s proposals
modification by either party upon prescribed notice • Over a non-mandatory subject, a party may not insist on bargaining to the point of
impasse, otherwise his insistence can be construed as bargaining in bad faith. It
SIGNING BONUS may be construed as evasion of the duty to bargain.
• Signing bonus is a grant motivated by the goodwill created when a CBA is • Making a settlement on a non-mandatory subject a precondition to the discussion
successfully negotiated and signed between the employer and the union or settlement of a mandatory subject is not allowed. If a non-mandatory subject is
• A singing bonus is justified by and is the consideration paid for a goodwill that proposed and agreed upon, the agreeing, by itself, is binding.
existed in the negotiations that culminated in the signing of a CBA. Without the
goodwill, the payment of a signing bonus cannot be justified and any order for such WHEN IS THERE IS DEADLOCK OR IMPASSE
payment constitutes grave abuse of discretion. • Whether the subject is mandatory or non-mandatory that caused a bargaining
• If the reason behind a signing bonus is absent, no signing bonus need be given deadlock, the union may file a notice of strike or the employer a notice of lockout.
• A bargaining impasse over an issue exists where good faith bargaining on the part
VOLUNTARY BENEFITS of the parties has failed to resolve the issue and there are no definite plans to further
• Employment benefits are either “statutory” if required by law or “voluntary” if efforts to break the deadlock
granted by the employer although not required by law
• The Supreme Court upheld the inclusion of the voluntary benefit as a proper subject IMPASSE – presupposes a reasonable effort at good-faith bargaining which, despite noble
of bargaining. The court also held that there is no bad faith on the employer’s intentions, does not conclude in an agreement between the parties
refusal to include the retirement program in the CBA negotiation • Whether a bargaining impasse exists is a matter of judgment dependent on such
factors as the bargaining history, the parties’ good faith in negotiations, the length
NO DUTY TO AGREE EVEN ON MANDATORY SUBJECTS of the negotiations, the importance of the issue or issues as to which there is
• The law does not compel agreements between employers and employees, and disagreement, and the contemporaneous understanding of the parties as to the
neither party is legally obligated to yield even on a mandatory bargaining subject state of negotiations.
• The duty to bargain does not obligate a party to make concessions or yield a • A substantial change in the bargaining position of one party is necessary to break
position fairly held. Hence, an employer’s adamant insistence on a bargaining an existing impasse so as to render unlawful the other party’s subsequent refusal to
position is not necessarily a refusal to bargain in good faith. meet and bargain
• Even if the negotiating party disagrees the other party’s proposals, there is no
violation of the duty to bargain – hence, no ULP – as long as the negative reply can DUTY TO BARGAIN WHEN THERE IS DEADLOCK OR IMPASSE
be explained in good faith • Deadlock does not mean the end of bargaining. It signals rather the need to
continue the bargaining with the assistance of a third party as a conciliator or
NON-MANDATORY SUBJECTS arbitrator whose first aim is to get the parties back to the negotiating table and help
• An employer cannot insist, to the point of creating a bargaining impasse, on the them craft a win-win situation
inclusion of a provision outside the scope of the statutory bargaining subjects, even • Although negotiations reach a deadlock, the employer must resume negotiations
if he acts in good faith where changed conditions indicate that an agreement may be possible
• It is lawful to insist on the inclusion of a provision in CBA if the provision is within the • Even after the union and the employer and the employer reach a genuine
scope of a statutory subject of bargaining bargaining impasse, the employer commits an unfair labor practice by cancelling a
• An employer bargains to an impasse over a non-mandatory bargaining subject scheduled bargaining meeting because the union filed unfair labor practice
when he refuses to reach any agreement with the union unless the union charges against the employer.
capitulates to him on that subject
• When a subject under discussion is not mandatory, it may be discussed if both STRIKE OR LOCKOUT IN CASE OF DEADLOCK
parties agree, but a strike or lockout may not be used to compel negotiation or • Bargaining may proceed smoothly, but it may be marred by insinuations,
agreement misunderstandings, and irreconcilable bargaining positions
• Deadlock may occur anytime for various reasons such as an unacceptability of a
BARGAINING TO THE POINT OF IMPASSE: NOT NECESSARILY BAD FAITH proposal or counter proposal, grandstanding of a negotiator, autocratic or arrogant
• If negotiations reach an impasse, it does not necessarily establish bad faith stance, imprecise wording of a stipulation
• A party may refuse to enter into a collective bargaining contract unless it includes a
desired provision as to a matter which is a mandatory subject of collective Manila Central Line Corp. v Manila Central Line Free Workers Union,
bargaining; but a refusal to contract unless the agreement covers a matter which is Facts: After the NCMB failed to resolve the bargaining deadlock between the parties, the
not a mandatory subject is in substance a refusal to bargain about matters which union filed a petition for compulsory arbitration in the Arbitration Branch of the NLRC. The
are mandatory subjects of collective bargaining; employer joined the petition and the case was submitted for decision. Although the union’s
petition was for “compulsory arbitration”, the subsequent agreement of petitioner to submit
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 72

the matter for arbitration in effect made the arbitration a voluntary one. o When the bargaining is finished and the CBA has been executed
voluntarily by the parties, a charge of bargaining in bad faith is too late
Doctrine: The essence of voluntary arbitration is that it is by agreement of the parties, rather and untenable
than compulsion of law, that a matter is submitted for arbitration. It does not matter that the
person chosen as arbitrator is a labor arbiter. There is nothing in the law that prohibits these Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines v NLRC
labor arbiters from also acting as voluntary arbitrators as long as the parties agree to have him Summary: Petitioner union claimed bad faith bargaining only after the CBA has been
hear and decide their dispute. executed. It harbored the notion that its members and the other employees could have had
a better deal in terms of wage increases had it relentlessly pursued the incorporation in the
4. THIRD ULP IN BARGAINING: BAD FAITH CBA of its proposal. The employer’s firm stand against the proposal did not mean that it was
• Good faith bargaining requires a sincere effort to reach agreement bargaining in bad faith. It had the right to insist on its position to the point of stalemate. The
o Does not require agreement itself employer did not commit the unfair labor practices of bargaining in bad faith and
o Demands more than sterile & repetitive discussion of formalities precluding discriminating against its employees for implementing the wage orders pursuant to law.
actual negotiation The CBA is proof enough that the employer exerted reasonable effort of good faith
o More than formal replies which constitute in effect a refusal to treat with bargaining.
the union
• Inviting employees to disregard and by-pass the union in seeking redress of their 4.3 Instances of Bad Faith: Delay of, or Imposing Time Limit on Negotiations
grievances – violation of duty to bargain in good faith • Unwarranted delay in the negotiations may be evidence of the employer’s bad
• Duty to bargain collectively may be violated without a general failure of subjective faith
good faith o Employer has been held NOT GUILTY of bad faith for failing to complete a
• No occasion to consider the issue of good faith if a party refuses to even negotiate collective bargaining contract during a three-year period, where many
in fact about any of the mandatory subjects conferences had been held during the period, even though the employer
• Employer cannot be guilty of a refusal to bargain if the union is not itself bargaining had insisted on a no-strike clause and had raised wages during
in good faith negotiations for the purpose of meeting competition
• Examples of bargaining in bad faith
4.1 Determination of Good Faith – A Question of Fact o Employer imposed a 7-month bargaining hiatus because of the
• There is no per se test of good faith in bargaining unavailability of its negotiators
• Good faith / bad faith is an inference to be drawn from the facts o Employer postponed several meetings and made no attempt to reach an
o Question of fact agreement when meetings took place
o Requires that the court look into the evidence to find if indeed there is o Employer’s negotiator frequently interrupted bargaining sessions with time-
proof that is substantial enough to show bad faith consuming discussions, and no new areas of agreement were reached in
spite of some counter proposals offered by the union and its often-
Manila Central Line Corp. v Manila Central Line Free Workers Union, Union of Filipino indicated willingness to listen to other offers by the employer, and the
Employees v Nestle Philippines employer subsequently retreated from previously agreed items
Summary: Union charged the employer with bargaining in bad faith because it refused to o Employer pursued a pattern of tactics designed to delay negotiations as
negotiate over the company’s retirement program. The court held that the company did not long as possible, to make it impossible for the union to reach a CBA
bargain in bad faith. without virtually surrendering its right to represent the employees in
disputes over working conditions, and to make it appear to the
An employer’s steadfast insistence to exclude a particular substantive provision is no different employees that they would be worse off with a union representative and
from a bargaining representative’s perseverance to include one that they dem of absolute a CBA than if they had neither
necessity… It is but natural that at negotiations, management and labor adopt positions or o Employer refused to bind himself contractually as to wage rates, hours of
make demands and offer proposals and counter proposals work, holidays, vacations and bonuses, insisting upon the right to grant
such conditions of employment as gratuities, and rejected a clause
against lockouts
• Based merely upon a consideration of the negotiations as a whole o ULP: Failing to vest its negotiators with sufficient authority to make
o The effect of an employer’s actions individually is not the test of good-faith agreements on their own initiative, or to accept tentatively commitments
bargaining, but the impact of all such occasions or actions, considered as which would have any reasonable likelihood of final acceptance by its
a while, and the inferences fairly drawn therefrom collectively, may offer a Board of Directors
basis for the finding of the NLRB • Lack of good faith according to the National Labor Relations Board of US
• Fair criterion of good faith: parties involved deal with each other with open and fair o Employer engages in unfair labor practices while bargaining with the
mind and sincerely endeavor to overcome obstacles or difficulties existing between union
them to the end that employment relations may be established and obstruction to o Employer engages in dilatory tactics during negotiations
the free flow of commerce prevented o Employer institutes a wage cut by unilateral action and without consulting
the majority representative
4.2 When can bargaining in bad faith occur?
• Bargaining in bad faith is considered ULP under Art. 259(g)
• Charge should be raised while the bargaining is in progress
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 73

Matter of Manville, Jenckes Corporation and Matter of Webster Mfg. Inc. Bank and the Union exchanged economic and non-economic proposals and counter-
Woonsocket Rayon Co proposals.
The employer’s president departed for Employer conducted negotiations through a
Europe in the midst of the bargaining succession of company officials, each of The Union has not been able to show that the Bank had done acts which tend to show that it
negotiations. whom in turn disclaimed authority to did not want to reach an agreement with the Union or to settle the differences between it
conclude a CBA. and the Union. The parties reached a deadlock. However, the duty to bargain “does not
Doctrine: Employer’s duty to accept in good faith the procedure of collective bargaining as compel either party to agree to a proposal or require the making of a concession.”
historically practiced includes an obligation to have his representatives available for
conferences with the union at reasonable times and places. While the refusal to furnish requested information is in itself a ULP, it also supports the inference
of surface bargaining. In this case, the Union, did not, as the Labor Code requires, send a
Colegio De San Juan De Letran v Association of Employers and Faculty of Letran and E. Ambas written request for the issuance of a copy of the data about the Bank’s rank-and-file
Summary: More than a month after the proposals were submitted by the union, employer still employees. Moreover, the fact that the Bank had made use of the guestimates made by the
had not made any counter-proposals. The employer’s only explanation was that the Board of Union, amounts to a validation of the data it had used in its presentation.
Trustees had not yet convened to discuss the matter as its excuse for failing to file its reply. The
company’s refusal to make counter-proposal to the union’s proposed CBA is an indication of BLUE SKY BARGAINING – making exaggerated or unreasonable proposals
bad faith.
The Union is not guilty of ULP for engaging in blue sky bargaining. The Bank failed to show that
Further, petitioner claims that the suspension of negotiation was proper since the authority of the economic demands made by the Union were exaggerated or unreasonable.
the union to negotiate on behalf of the employees was challenged when a rival union filed a
petition for certification election. The mere filing of a petition for certification election does 4.3b Giving of Information
not ipso facto justify the suspension of negotiation by the employer. The petition must first • Part of good-faith bargaining, and a method to expedite the process, is supplying of
comply with the provisions of the Labor Code and its Implementing Rules. information to the other party, as required by law
• Under Art 251, one of the rights of a legitimate labor organization which is certified
4.3a Bad Faith: Surface Bargaining; Shifting Bargaining Positions; Blue Sky Bargaining as the exclusive bargaining agent, is to ask for and be furnished with the employer’s
SURFACE BARGAINING – a sophisticated pretense in the form of apparent bargaining annual audited financial statements, including the balance sheet and the profit
• Example: employer’s proposals which could not be offered with any reasonable and loss statement
expectation that they would be accepted by the union
• Does not satisfy the statutory duty to bargain 4 Points in time when the Union may ask in writing for these statements
1. After the union has been recognized by the employer as sole bargaining
• Duty is not discharged by merely meeting together or simply manifesting a
willingness to talk representative of the employees in the bargaining unit; or
• Collective bargaining is not simply an occasion for purely formal meetings between 2. After the union is certified by DOLE as such sole bargaining representative; or
3. During the collective bargaining negotiation; or
management and labor while each maintains an attitude of “take it or leave it,” but
presupposes a desire to reach an ultimate agreement to enter into a collective 4. Within the last 60 days of the life of a CBA
bargaining contract a. The last 60 days is the time to give notice to terminate or modify the CBA;
time to gather fresh information to enable it to prepare intelligently for the
• Surface bargaining is not easy to determine – hovers between bargaining in bad
forthcoming CBA renegotiation
faith and mere hard bargaining
• The audited financial statements, including the balance sheet and the profit and
SHIFTING BARGAINING POSITIONS – repeated shifts in position and attitude on the part of an loss statement, should be provided by the employer within 30 calendar days after
employer whenever a tentative agreement is reached receipt of the union’s written request
• Evidence of refusal to bargain collectively in good faith • Relevant information or data may include information concerning the employees in
• Employer cannot reject a union’s acceptance of the employer’s counter offer on the bargaining unit, such as their names, addresses, and seniority standing, or
the ground that the union had earlier rejected the offer concerning the financial status of the employer
• The union’s right to disclosure of relevant and necessary data can be waived by the
union in a CBA
Standard Chartered Bank Employees Union (NUBE) v Hon. Nieves Confesor, et al.
o Even when the union has made such a waiver in the agreement, the
Summary: The Union alleged that the Bank engaged in surface bargaining when it made only employer must furnish, at an appropriate time, information that is relevant
6 economic counter-proposals out of the 34 economic provisions presented. The Bank, after to the negotiation of a new agreement
indicating the economic provisions it had rejected, accepted, retained or were open for • Duty to supply the bargaining representative with information does not arise until the
discussion, refused to make a list of items it agreed to include in the economic package. union makes a request or a demand that the information be furnished

strike notice for the 1st strike because it was already withdrawn on July 14, 1967. The 1st strike But at this stage, the collective bargaining process is not yet over, and the duty to
was held while the parties were in the process of negotiating. bargain is still operative because such duty further requires faithful adherence to the
contractual provisions
Marcelo Companies cannot be said to have bargained in bad faith since there were • Violation of the contract amounts to ULP if it is “gross” (Art. 274)
proposals offered by them, but the complainant LAKAS stood pat on its position that all of their
economic demands should be met and that all of these demands should be granted in all of 6. RATIFICATION BY THE CBU; MANDATORY REQUIREMENTS
Marcelo Companies. The companies’ refusal to accede to the demands of LAKAS appears • Agreement negotiated by the employees’ bargaining agent should be ratified or
to be justified since there is no showing that these companies were in the same state of approved by the majority of all the workers in the bargaining unit (Art. 231)
financial and economic affairs. o Not just the majority union
• Implementing Rules require posting of the CBA in 2 conspicuous places for 5 days.
It was LAKAS which refused to negotiate in the pending collective bargaining process. Their CBA submitted must carry the sworn statement of the union secretary, attested by
bargaining position was inflexible and it was in line with this uncompromising attitude that the the union president, that the CBA had been duly posted and ratified, as required by
strikes were declared. the IRR.
o Mandatory. Non-compliance rendered the CBA ineffective.
4.3d Bad Faith: Boulwarism; Take-It-or-Leave-It-Bargaining
6.1 Invalid Ratification
NLRB v General Electric Co.
Associated Labor Union (ALU) v Ferrer-Calleja
Summary: After a strike in 1946 which resulted in a settlement which the General Electric
Company regarded as extremely costly, it developed a new bargaining policy referred to as Summary: There was a failure to post the CBA in at least 2 conspicuous places in the
Boulwarism (named after a VP for personal relations). Three-fold plan: as negotiations establishment at least 5 days before ratification. Petitioner rationalized that it was because of
approached, the Company would use its local management personnel to help determine the the real existence of the illegal strike staged by SPFL in all the stores of GAW Trading, Inc. that it
desires of the workforce on the type and level of economic benefits; these were translated by had become impossible to comply with the posting requirement insofar as the realization of its
the Company into specific proposals, whose cost and effectiveness were researched in order purpose is concerned as there were no impartial members of the unit who could be apprised
to determine an attractive bargaining offer within the Company’s means; the Company then of the CBA’s contents.
attempted to “sell” its proposals to its employees, and the general public through a publicity
campaign in plant newspapers, bulletins, letters, television and radio announcements and Posting of the CBA is the responsibility of the employer which can easily comply with the
personal contacts. requirement through a mere mechanical act. The fact that there were “no impartial
members of the unit” is immaterial. The purpose is to inform the employees in the bargaining
The Board found that GE’s bargaining stance and conduct, considered as a whole were unit of the contents of the CBA so that they intelligently decide whether to accept the same
designed to derogate the Union in the eyes of its members and the public at large. The plan or not.
had 2 major facets: the take-it-or-leave-it approach which emphasized both the
powerlessness and uselessness of the Union to its members, and a communications program 6.2 When Ratification Not Needed
that pictured the Company as the true defender of the employees’ interests, further • When the CBA is a product of an arbitral award by appropriate government
denigrating the Union, and sharply curbing the Company’s ability to change its own position. authority or by a voluntary arbitrator
o The arbitral award may result from voluntary arbitration under Art 275 or
4.4 Not Bad Faith to Propose Modifications to the Expiring CBA from secretary’s assumption of jurisdiction or certification of the dispute to
• 2nd sentence of Art. 264 explicitly refers to serving a written notice “to terminate or the NLRC under Art 278(g)
modify” the agreement • Posting is still required, but for the information of, and not ratification by, the
• Modification may mean addition to, subtraction from, or other ways of changing employees
the contents or phraseology of contents of the expiring CBA • CBA has to be registered with the DOLE regional office
o Does not connote a one-direction upward movement
6.3 Ratified but Unsigned
o May even mean scaling down the CBA
• Effective on ratification by union members, even without signature by the union
• Not bad faith bargaining
president or union secretary-treasurer, notwithstanding a contractual provision that
• Proposed changes require honest justification
the agreement “is not valid unless so countersigned”
• Since modification is to be done through negotiation rather than by management’s
o Lack of the purely ministerial act of signing the formal contract did not
sole decision, the prohibition under Art 100 on nondiminution of benefits does not
obviate the fact that there was a binding contract
apply
• Modification / renegotiation is covered under Art. 263 6.4 Unratified but Implemented
o Renegotiation is preceded by 60 days that we may call the “notice • We do not declare the CBA invalid or void considering that the employees have
period” to differentiate it from the “freedom period” which is the 60-day enjoyed benefits from it. They cannot receive benefits under the provisions
period to file a petition for certification election under Art 265 and 268 favorable to them and later insist that the CBA is void simply because other
provisions turn out not to the liking of certain employees.
5. FOURTH ULP IN BARGAINING: GROSS VIOLATION OF THE CONTRACT
• Collective contract is already in place. At this stage, negotiations are over; the
document has been signed, sealed, and delivered. Implementation should follow.

7. EXECUTION OF CONTRACT • Denial, if by Regional Office, is appealable to the Bureau within 10 days or to the
• The Labor Code does not specify if the ratification or the execution comes first. In Secretary if the denial is by the Bureau
practice, the sequence usually depends on the likelihood of ratification as judged
by the union 9. IMPLEMENTATION, THEN RENEGOTIATION
o If the union strongly feels there will be no ratification problem, the CBA is • Frequently, implementation starts even before the contract is registered indicating
finalized, signed by the parties, and posted that registration is a formal step in the collective bargaining process but not a
o If there is no such certainty, the CBA is drafted, initialed by the parties, and prerequisite to its validity and enforceability
this “clean draft” is posted. If and when ratified, the CBA is finalized and • Implementation is still part of the duty to bargain
formal signing follows • Neglecting, deviating from or violating the terms of the CBA is considered ULP under
• The important thing is ratification and not sequence of steps Art 259 in relation to Art 274
• A party to a collective bargaining may be required to sign a contract where the • Part of the duty to bargain is the obligation to renegotiate the CBA when it is about
agreement has been reached by the parties and only one party’s refusal to to expire
execute a contract is preventing its being carried into effect – ULP • Renegotiation applies only to renegotiable provisions – those that do not pertain to
• No signing would be required nor any contract be enforced if the facts reveal that the identity and political status of the bargaining union
the discussions of provisions prior to a signing are merely preliminary expressions not o All nonpolitical nonrepresentational issues may be reopened and
constituting a contract and that the parties do not intend the agreement to be renegotiated
operative before the execution of the writing.
10. AUTOMATIC RENEWAL OF CBA
7.1 Unwritten or Unsigned Agreement • The parties shall continue the CBA in full force and effect until they reach a new
• American courts have held that a CBA is valid though not reduced to writing or agreement (Art 264)
signed, if neither party requests a written instrument
• Art. 263 in defining “duty to bargain” states that the duty includes “… executing a New Pacific Timber & Supply Company, Inc v NLRC et al
contract incorporating such agreements if requested by either party…” Summary: National Federation of Labor (NFL) was the sole and exclusive bargaining
representative of all the regular rank-and-file employees of New Pacific Timber & Supply Co.
7.2 Effect of Signing on Other Disputes NFL started to negotiate for better terms and conditions of employment; however, due to stiff
• “Considering that the evident purpose of the collective agreement is to restore resistance by the Company, NFL was prompted to file a complaint for ULP on the ground of
industrial peace by settling all previous controversies and that such purpose would refusal to bargain.
be aborted if the union were allowed to preserve the dispute on accrued vacation
leaves and considering that the right to payment of accrued vacation leaves is Executive Labor Arbiter issued an order declaring the Company guilty of ULP and that the
waivable, the union claim for such payment of accrued vacation leaves should be CBA proposals submitted by NFL be considered as the CBA between the regular rank-and-file
deemed validly and actually renounced by it under its CBA with employer.” employees in the bargaining unit and the Company.
8. REGISTRATION OF CBA
A “Petition for Relief” was filed in behalf of 186 private respondents who claimed to be
• The collective agreement, having been properly ratified, should be registered with
wrongfully excluded from enjoying benefits under the CBA since the agreement with the NFL
the DOLE Regional Office where the bargaining union is registered or where it
and the Company limited the CBA’s implementation to only the 142 employees enumerated.
principally operates
The NLRC issued a resolution declaring that the 186 employees form part and parcel of the
o Multi-employer CBAs shall be filed with the Bureau
then existing rank-and-file bargaining unit and were therefore, entitled to the benefits under
• Art 237 requires registration within 30 calendar days from execution of the
the CBA.
agreement
• Once the CBA is duly entered into and signed by the parties, it becomes effective
The Company argues that the claimant employees are not entitled to the benefits under the
as between the parties regardless of whether the same has been certified by the
CBA because employees hired after the term of a CBA are not parties to the agreement, and
BLR
therefore, may not claim benefits thereunder, even if they subsequently become members of
the bargaining unit.
8.1 Registration Requirements
• Application for CBA registration shall be accompanied by the original and 2
It is clear from Art 264 of the Labor Code that until a new CBA has been executed by and
duplicate copies of the following documents which must be certified under oath by
between the parties, they are duty-bound to keep the status quo and to continue in full force
the representative(s) of the employer(s) and labor union(s) concerned:
and effect the terms and conditions of the existing agreement. The law does not provide any
o CBA
exception nor qualification as to which of the economic provisions of the existing agreement
o Statement that the CBA was posted in at least 2 conspicuous places in the
are to retain force and effect, therefore, it must be understood as encompassing all the terms
establishment/s concerned for at least 5 days before ratification
and conditions in the said agreement.
o Statement that the SBA was ratified by the majority of the employees in
the bargaining unit of the employer/s concerned
When a CBA is entered into by the union representing the employees and the employer, even
• No other document shall be required in the registration of CBA
the non-member employees are entitled to the benefits of the contract. To accord benefits
• Application may be denied if the supporting documents are incomplete or not
only to members of the union without any valid reason would constitute undue discrimination
verified under oath
against non-members. It is even conceded that a laborer can claim benefits from a CBA
entered into between the company and the union of which he is a member at the time of the
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 76

conclusion of the agreement after he has resigned from said union. and conditions of the existing agreement until a new agreement is reached. The
law prevents the existence of a gap in the relationship between the parties.
The benefits under the CBA should be extended to those employees who only became such • Another legal principle that should apply is that in the absence of an agreement
after the year 1984. To exclude them would constitute undue discrimination and deprive between the parties, an arbitrated CBA takes on the nature of any judicial/quasi-
them of monetary benefits they would otherwise be entitled to under a new CBA to which judicial award. It operates prospectively unless there are legal justifications for its
they would have been parties. retroactive application.

ARTICLE 265. [253-A] TERMS OF A COLLECTIVE BARGAINING AGREEMENT Manila Electric Co. vs. Quisimbing
• CBA arbitral awards granted after six months from the expiration of the last CBA shall
Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the
retroact to such time agreed upon by the employer and employees of their union.
representation aspect is concerned, be for a term of five (5) years. No petition questioning the
Absent such an agreement as to the retroactivity, the award shall retroact to the
majority status of the incumbent bargaining agent shall be entertained and no certification
first day after the six-month period following the expiration of the last day of BA
election shall be conducted by the Department of Labor and Employment outside of the
should there be one.
sixty-day period immediately before the date of expiry of such five-year term of the Collective
• In the absence of a CBA the Secretary’s determination of the date of retroactivity
Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be
as part of his discretionary powers over tribunal awards shall control.
renegotiated not later than three (3) years after its execution. Any agreement on such other
provisions of the Collective Bargaining Agreement entered into within six (6) months from the
Union of Filipro Workers vs. NLRC and Nestle Phil. Inc.
date of expiry of the term of such other provisions as fixed in such Collective Bargaining
• Retroaction should be agreed upon by the parties. If no agreement is made to that
Agreement, shall retroact to the day immediately following such date. If any such agreement
effect, prospective application will apply.
is entered into beyond six months, the parties shall agree on the duration of retroactivity
• Article 265, which leaves to the parties the determination of retroactivity, refers to
thereof. In case of a deadlock in the renegotiation of the Collective Bargaining Agreement,
negotiation concluded by the party beyond six months, but it does not restrict the
the parties may exercise their rights under this Code.
effectivity date of arbitral awards by the Secretary of Labor.
• The effectivity date of the CBA depends on whether the CBA is the 1st CBA or a 2. Duration of CBA
renegotiated CBA
• R.A. 6715 has changed through Art. 265 the duration of a CBA at five years for the
• The duration depends on whether the subject provision is representational or non- “representation aspect” and not more than three years for “all other provisions”.
representational • The “representation aspect” refers to the identity and majority status of the union
that negotiated the CBA as the exclusive representative of the bargaining unit.
1. EFFECTIVITY AND RETROACTIVITY OF CBA
• “All other provisions” simply refers to the rest of the CBA, economic as well as non-
• If the CBA is the first ever in the bargaining unit, the effectivity date is whatever date
economic other than representational.
the parties agree on
• Why not synchronize the two terms? Lawyers believed that three years was too short
o Date is important particularly in relation to wage increase (if any) because
for the representation aspect while five years was too long for the economic
a long retroaction period will mean sizeable backpay to employees
provisions. As time goes by, the value of peso goes down.
• If CBA is renegotiated to replace the expired one
• The three year economic provisions may be renegotiated for another three years, if
o If renegotiation is finished and the new CBA is concluded within 6 months
upon expiration of the five year representation provision, a new union wins, then the
from the expiry date of the old one
new union will have to administer the CBA for its remaining one year, after which the
§ New CBA starts to take effect on the date following such expiry
new union may negotiate with the employer for a new CBA.
date
o If new CBA was completed beyond the 6-month period
§ New CBA, when done, will not automatically retroact San Miguel Corp. Employees Union-PTGWO v. Confesor, San Miguel Corp., Magnolia
§ If it will retroact at all, the retroaction date will have to be Corp., and San Miguel Foods
agreed upon by negotiating panels Facts: On June 28, 1990, Petitioner-union concluded a CAN with respondent SMC to take
• When precisely is the date an agreement is “concluded” or “entered into”? effect upon the expiration of the previous CBA on June 30, 1989. CBA provided that the
o Date the parties agreed, not the date they signed agreement shall remain in force until June 30, 1992 but insofar as the representation aspect is
o Art 265 refers merely to an “agreement” which is “a coming together of concerned, it shall be for five years from July 1, 1989 to June 30, 1994.
minds; the coming together in accord of two minds on a given
proposition” (Black’s Law Dictionary SMC informed their employees that the company would undergo restructuring, giving birth to
Magnolia and San Miguel Foods. The CBA was still in force and effect. During the negotiations,
1.1 Effectivity of CBA Concluded After Six Months from Expiration of Old CBA petitioner union contends that the bargaining unit of SMC should still include the employees of
• The law does not specifically cover the situation where sixth months have elapsed Magnolia and SMFI and that the renegotiated terms of the CBA shall be effective only for the
but the parties have reached no agreement with respect to effectivity. In this remaining period of two years or until June 30, 1994. SMC on the other hand contends that the
eventuality, the SC holds that any provision of law should then apply, for labor members who had moved to Magnolia and SMFI automatically ceases to be part of the
abhors vacuum. bargaining unit of SMC, and that the CBA should be effective for three years in accordance
• One provision is the principle of hold over, i.e. in the absence of a new CBA, the with Art. 265 of the Labor Code.
parties maintain the status quo and must continue in full force and effect the terms
ISSUE: Whether the duration of the renegotiated terms of the CBA is three years or two?

RULING: No outside union can enter the establishment within five years and challenge the 3.2. Union’s initiative to Help the Company
status of the incumbent union as the exclusive bargaining agent. The terms and conditions of
employment (the economic and non-economic) cannot be questioned by the employers or Insular Hotel Employees Union-NFL v. Waterfront Insular Hotel Davao
employees during the period of effectivity of the CBA. Notably, the framers of the law did not Facts: A hotel in Davao notified DOLE that it would suspend its operations for six months due to
give a fixed term as to the effectivity of the terms and conditions of employment. If can be business losses. The Union president proposed a suspension of the CBA for 10 years. To adopt
gleaned from their discussions that it was left to the parties to fix the period. the proposal, the management and the union signed a MOA; moreover, the retained
employees signed a “reconfirmation of employment” that embodies new terms of
As a matter of policy the parties are encouraged to enter into a renegotiated CBA with a employment.
term which would coincide with the aforesaid five (5)-year term of the bargaining
representative. High court upholds the MOA between the management and the union. Art. 100 does not
prohibit a union from offering and agreeing to reduce wages and benefits of the employees.
In the event however, that the parties, by mutual agreement, enter into a renegotiated The diminution is decided bilaterally with the union, not unilaterally by the management.
contract with a term of three (3)-years or one which does not coincide with the said five (5)-
year term, and said agreement is ratified by majority of the members in the bargaining unit, ART. 266 [254] INJUCTION PROHIBITED
the subject contract is valid and legal and therefore, binds the contracting parties. The same No temporary or permanent injunction or restraining order in any case involving or growing
will however not adversely affect the right of another union to challenge the majority status of out of labor disputes shall be issued by any court or other entity, except as otherwise provided
the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5)- in Article 218 [renumbered as 225] and 264 [renumbered as 279] of this Code.
year term of the CBA.
1. NO INJUNCTION POLICY
• Does it follow that all renegotiated non-representation provisions of the CBA should • Art. 266 announces the policy that labor disputes are generally not subject to
be for a terms of three years? No. The parties have to agree clearly whether those injunction. (Contrary to the policy – “to promote and emphasize the primacy of free
renegotiated provisions are to last for two years or three. and collective bargaining and negotiations including voluntary arbitration,
mediation, conciliation, as modes of settling labor or industrial disputes.
3. EXTENSION OF EFFECTIVITY OF CBA, WHEN VALID • If there is a dispute between the parties, the responsibility to solve it devolves upon
• The BLR director’s view that the one-year extension of the CBA was null and void the them primarily, not upon the government. Government intervention is the
was incorrect. The extension was approved by the Union in a referendum which was exception rather than the rule. The anti-injunction policy applies even as regards
properly supervised by the Department of Labor. It was accepted by the bank wage-fixing by the wage commission.
which gave a signing bonus to the employees who voted for it. An extension is • Any injunctive order in “non-national interests” disputes not falling under Art. 278(g)
acceptable to both parties to the agreement. It does not violate any law and is can be directed only against the illegal acts being committed in connection with
binding on them. the labor dispute. It cannot be directed to the dispute itself.
• An injunction is valid when it was issued not against the strike or picketing itself but
3.1. Ten Year Suspension of the CBA against acts of violence and intimidation committed against officials of the
employer and non-striking employees.
Rivera v. Espiritu • Labor injunction is not favored. It contradicts constitutional preference for voluntary
FACTS: PAL pilots who were affiliated with the Airline Pilots Association of the PH went on a modes of dispute settlement.
strike causing losses financially to the flag carrier. PALEA, another union in PAL went on strike to • However, injunction can apply when prohibited or unlawful acts are being or about
protest the retrenchment measures of PAL. PAL announced cessation of operations and to be committed that will cause grave or irreparable damages to the complaining
termination of employees. PALEA proposed a 10-year suspension of the CBA and entitlement party. (Those stated in Art. 279)
to three seats in the PAL board. PAL accepted. Seven officers filed a petition to annul the PAL-
PALEA agreement. 1.1. Reason for the No-Injunction Policy
• A labor injunction is an employer’s most effective remedy in a labor dispute. The
ISSUE: Is the 10-year suspension of the CBA unconstitutional and contrary to public policy? issuance of an injunction in the early phases of a strike can critically sway the
balance of the economic struggle against the union. It has the deceptive appeal
RULING: The agreement was the result of voluntary CBA negotiations undertaken in the light of a quick and easy solution. Consequently, injunctions have generally not proved
of severe financial situations. Article 265 has a two-fold purpose: One is to promote industrial to be an effective means of settling labor disputes.
stability and predictability. The other is to assign specific timetables wherein negotiations
become a matter of right and requirement. Nothing in Art. 265 prohibits the parties from 1.2. Injunctions issued by Regular Court, when proper
waiving or suspending mandatory timetables and agreeing on remedies to enforce the same. • Regular Courts are without authority to issue injunction orders in cases involving or
It was PALEA that voluntarily entered into the CBA with PAL and it was also PALEA who opted originating from labor disputes.
for the 10-year suspension of the CBA. Either case was the union’s exercise of its right to • However, a regular court may issue injunction to protect the interest of neutral
collective bargaining. It includes the right to suspend it employees in common situs picketing.

COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT Philippine Airlines v. NLRC

FACTS: PAL revised its Code of Discipline, and circulated it among the employees. PALEA filed
(CONT’D) a complaint in the NLRC for unfair labor practice due to the arbitrary implementation of the
code without prior notice and discussion with the Union.
PART 2 EMPLOYEE PARTICIPATION AND REPRESENTATION
ISSUE: Can PAL implement the New Code of Discipline unilaterally without consultation due to
management prerogative?
ART. 267 [255] – EXCLUSIVE BARGAINING REPRESENTATION AND WORKER’S PARTICIPATION IN
POLICY AND DECISION MAKING RULING: The law explicitly considers it a state policy to ensure the participation of workers in
The labor organization designated or selected by the majority of the employees in an decision and policy-making processes affecting their rights, duties, and welfare. However,
appropriate collective bargaining unit shall be the exclusive representative of the employees even in the absence of said provision of law, the exercise of management prerogatives was
in such unit for the purpose of collective bargaining. However, an individual employee or never considered boundless.
group of employees shall have the right at any time to present grievances to their employer.
The provisions of the Code clearly have repercussions on the employee’s right to security of
Any provision of law to the contrary notwithstanding, workers shall have the right, subject to tenure. The implementation of the rules may result in the deprivation of an employee’s
such rules and regulations as the Secretary of Labor and Employment may promulgate, to livelihood, which is a property right.
participate in policy and decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights, benefits and welfare. For this A line must be drawn between management prerogatives regarding business operations per
purpose, workers and employers may form labor-management councils: Provided, That the se and those which affect the rights of the employees. In treating the latter, management
representatives of the workers in such labor-management councils shall be elected by at least should see to it that its employees are at least properly informed of tis decisions or modes of
the majority of all employees in said establishment. action.

1. WORKERS’S PARTICIPATORY RIGHT: IT’S CONSTITUTIONAL MEANING 1.3. Participatory Right Does Not Grant Management Control

• Workers are consulted on matters pertaining to their interests, and the parameters would • The above ruling should be contrasted with those in San Miguel Brewery Sales Force
be references to the negotiations in the collective bargaining agreement and its terms. Union v. Ople and SMC and GTE Directories Corp. v. Sanchez. In both cases, the
Those would cover the process of grievance machineries; likewise, these would pertain to authority and power of the employer to make policy, without employees’
the voluntary modes of settling labor disputes and the conciliation proceedings which participation, is recognized and upheld.
can be initiated and mediated by the Ministry of Labor (Deliberations of the 1986 • The participatory right is not meant to grant co-management control of the
Constitutional Commission) business.

1.1. Adoption of the Participatory Management Style 2. WORKER’S PARTICIPATION AS THE REAL OBJECTIVE; THE LMC

• By granting the employees’ participatory right in policy-making, the Constitution • Art. 267 deals with the crucial concept of employee participation. The law, while
intentionally or unintentionally adopts the participatory style of management that the promoting collective bargaining, really aims at employee participation in policy
Human Relations theorists of personnel management advocated after World War II. and decision-making. The real aim is employee participation in whatever form it
• The Human Relations approach emphasized the participation of employees and worker may appear – bargaining or not bargaining, union or non union.
democracy, because it was believed that participation would motivate workers to be • This is why Art. 267, second sentence, reserves the right of an individual employee or
better through increased morale, decreased resistance to company authority, and a group of employees (unionized or ununionized or inside or outside a union) to
fuller sense of involvement and belonging. present grievances to their employer at any time.
• The Human Relations approach was also aimed at ensuring that workers were less • But individual representation in dealing or bargaining with the employer is weak. For
vulnerable to persuasion by union organizers. this reason, the provides another forum – the labor management council aside from
a union.
1.2. Employees’ Participation in Formulating the Code of Discipline • An LMC is versatile. It can exist with or without a union. It cannot replace a union. An
LMC does not need formal registration, etc.
• The court differentiated management prerogatives regarding business operations and • The LMC can deal with the employers on matters affecting the employee’s rights,
those which affect the employee’s rights. To the latter category belongs the making of a benefits, and welfare.
code of conduct. In formulating such code, therefore, the employees have the right to • The Code mentions two kinds of LMC: Labor management cooperation programs
participate. and labor-management committee in Art. 292(g) and (h). The common purpose is
• The employees’ posses the right to participate in the deliberation of matters which may promotion of productivity and of industrial peace through labor education.
affect their rights and the formulation of policies thereto.
• One such matter is the formulation of a code of discipline. “Formulation” (by dictionary 2.1. Department’s Promotion of LMC and Other Councils
definition) includes “to devise, to invent”. In this context, to make or create a policy.
• The department promotes the formation of labor-management councils in
organized and unorganized establishments. The aim is to enable the workers to
participate in policy and decision making processes in the establishment insofar as it
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 79

will directly affect their rights, benefits and welfare, except those which are covered o Subject to the proper requirement that proper consideration should be
by the CBA. given to all legally relevant factors
• The Rules also require the department to promote other labor-management • Basic test for appropriateness – Whether it will best assure to all employees the
cooperation schemes. exercise of their collective bargaining rights.
• In organized establishments, the worker’s representatives to the council shall be o Most efficacious bargaining unit – comprised of constituents enjoying a
nominated by the exclusive bargaining representative. In establishments where no community of interest.
LLO exists, the worker’s representative shall be elected by the employees at large. • Community of interest – reflected in groups having substantial
1. similarity of work and duties or
3. INDIVUAL GRIEVANCES 2. similarity of compensation and working conditions

• Presence of a union, LMC, or other forum does not replace the individual Mechanical Dept. Labor Union sa PNR v. CIR
employee’s right to pursue grievances. • The Industrial Court found that the works in the Caloocan Shops perform major
• The law (Art. 267) explicitly preserves and respects the right of an individual repairs of railway rolling sock, using heavy equipment and machineries, while the
employee or any group of employees to directly present grievances to their others perform minor repairs.
employers at any time. • Therefore, the workers in Caloocan shops require special skills sufficient to set them
• The second sentence of Art. 267 is meant to be an exception to the exclusiveness of apart from the rest of the workers.
the representative role of the labor organization. Such individual right cannot be
taken away even a union’s constitution or by laws. PH Land-Air-Sea Labor Union v CIR
• The stevedores and piece-rate workers were employed on a casual or day-to-day
4. COLLECTIVE BARGAINING UNIT basis and have no reasonable basis for continued or renewed employment for any
appreciable substantial time, not to mention the nature of the work they perform.
• At the enterprise level, there are three democratic devises statutorily embedded, to • They cannot be considered to have such mutuality of interest as to justify their
advance industrial peace and improve employment conditions. inclusion in the bargaining unit composed of permanent or regular employees.
o Airing of grievance even by an individual employee directly to the
employer anytime. Factors the Board will look at in making judgments about “community of interests”
o Participation in the policy and decision-making by employees, whether 1. Similarity in scales and manner of determining earnings
unionized or not 2. Similarity in employment benefits, hours of work and other terms and conditions of
o Collective Bargaining with the employer by unionized employees employment
• The collective bargaining that the law envisions occurs between the employer and 3. Similarity in the kinds of work performed
the employees comprised in an “appropriate” collective bargaining unit (CBU). 4. Similarity in the qualifications, skills and training of the employees
• The CBU is that group of jobs and jobholders represented by the recognized 5. Frequency of contact or interchange among the employees
certified union when it bargains with the employer. 6. Geographic proximity
• The group may comprise of all the supervisors or, separately, the rank-and-file 7. Continuity or integration of production processes
employees. 8. Common supervision and determination of labor-relations policy
• It is appropriate if its members share substantially common concerns and interests. 9. History of collective bargaining
• As defined in D.O. No. 40-03 which is not the revised Book V of the Rules 10. Desires of the affected employees
Implementing the Labor Code, “bargaining unit” refers to a group of employees 11. Extent of Union Organization
sharing mutual interests within a given employer unit, comprised of all or less than all
the entire body of employees in the employer unit or any specific occupational or UP v. Calleja-Ferrer
geographical grouping within such employer unit. • F – All non-academic rank-and-file employees of UP Diliman. Los Banos and Visayas
• Within one unit, there may be one or more unions. The bargaining unit is not the were allowed to participate in a certification election.
same as, and usually is a bigger group than a union. But only one union should • H – Geographical location can be completely disregarded if the communal or
represent the whole CBU in bargaining with the employer. mutual interests of the employees are not sacrificed.
• The choses union is called the bargaining agent, the principal being the CBU
members themselves. San Miguel Corporation Supervisors v. Hon. Laguesma
• The bargaining union has to be the majority union, where one where majority of the • F – There were three plants in three different places.
CBU members belong. 1. Cabuyao, Laguna
• “Representative union”, “bargaining union”, and “bargaining representative” are 2. Otis, Pandacan, Manila
one and the same. It refers to the union that represents the CBU in dealing with the 3. San Fernando Pampanga
employer. • H – The distance among the three plants is not productive of insurmountable
difficulties in the administration of union affairs nor are there regional differences
5. APPROPRIATNESS OF BARGAINING UNIT; FACTORS CONSIDERED that are to impede the operations of a single bargaining representative.
• Art. 267 in rel. to Art. 240 – requires that the CBU be appropriate but does not explain
what It means. Laguna College v. CIR
o What constitutes a proper bargaining unit lies on the discretion of the • F – Petitioner Laguna College proposed two separate units – college units
Bureau (professors + instructors in college) and high school units HS teachers)
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 80

o LACTA (union) proposed only one unit composed of all the teachers in the Note – The doctrine in this case has been reiterated in subsequent cases – Republic Planters
entire Laguna College Bank, Metrolab and San Miguel.
• H – The factors in favor of a single employer unity far outweigh the reasons for the
establishment of two separate bargaining units. 5.3 TEMPORARY OR PART-TIME EMPLOYEES
• The NLRD considers as one of the important factors in determining whether
DLSU v. DLSUEA – The SC affirms the Labor Arbiter and held that the employees of CSB should temporary or part-time employees are sufficiently identified with the regular
excluded from the bargaining of the rank-and-file employees of DLSU because employees in the bargaining unit is the reasonable likelihood that the temporary or
1. The two educational institutions have their own separate juridical personality part-time employees will eventually become adequately identified in employment
2. No sufficient evidence was shown to justify the piercing of the veil of the corporation with the other members of the bargaining unit.
fiction. • Regular part-time employees are included in the bargaining unit even
o If they are students
Holy Child Catholic School v. Sto. Thomas o If they work less than 20 hours a week
• F – There was a mixture of membership – some are teaching personnel while others o If they are regularly employed elsewhere unless their work schedules are
are administrative staff – in the bargaining unit. so arranged as not to conflict with the fill-time employment elsewhere.
• H – There is reason to hold that the teaching personnel are inappropriately mixed in
a bargaining unit composed of non-teaching personnel. 5.4 SEASONAL EMPLOYEES
1. The teaching staff would find very little in common with the non-teaching
staff as regards responsibilities and function, working conditions, FULL TIME SEASONAL EMPLOYEES PART-TIME SEASONAL EMPLOYEES
compensation rates, social life and interests, skills and intellectual pursuits. those who have reasonable expectation of those who receive none of the fringe benefits
2. But the inappropriate mixture is not a ground to dismiss the petition for substantial seasonal employment from year enjoyed by full-time employees
certification election – should hold two separate certification election for to year
each of the two bargaining units. Includible in the unit Insufficient common interest with the full-time
employees, not includible in the same
5.1 BARGAINING HISTORY NOT DECISIVE FACTOR bargaining unit

National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Casual Employees – Excluded
Union-United Lumber and General Workers of the PH • However, casual laborers working for an employer who operates a referral system
Facts: From 1979 to 1985, the Ministry of Labor Recognizes the existence of these two separate for unskilled labor have been held an appropriate unit.
bargaining units in MALDECO
1. Samwill Division in Butuan City 5.5 PROBATIONARY EMPLOYEES
2. Logging Division in KItcharao, Agusan Norte • The following classifications are insufficient to warrant such employee’s exclusion
o 80 km distance from each other from a bargaining unit:
o 175/201 employees consented and desired for just one bargaining representative. 1. Beginner
2. Trainee
Held: While the bargaining history is a factor, the same is not decisive or conclusive. The test of 3. Probationary Employee
grouping is community or mutuality of interests. 4. Fact that contemplation of permanent tenure is subject to satisfactory
completion of an initial trial period
Basic Test – Whether it is fundamentally the combination which will best assure to all • The eligibility of probationary employees does not turn on the proportion of such
employees the exercise of their collective bargaining rights. employees who, willingly or not, failure to continue to work for the employer
throughout the trial period.
In this case, there may be difference as to the nature of their individual assignments but the
distinctions are not enough to warrant the formation of a separate bargaining unit. 6. REFERENDUM WHERE INTERESTS ARE DISSIMILAR
• Philips Industrial – There is no doubt that sales representatives and service engineers
5.2 EXCLUSION OF CONFIDENTIAL EMPLOYEES (not holding supervisory positions) ae entitled to join or form a union. Considering
that they have interests dissimar to those of the rank-and-file employees comprising
Philips Industrial Development Inc V. NLRC and FFW the existing bargaining unit, and following the Globe Doctrine, they should be
Facts: NLRC committed GAD in reversing the decision of the Exec. Labor Arbiter and in allowed to determine for themselves what union to join or form. The best way to
decreeing that PIDI’s “Service Engineers, Sales Force, division secretaries, all Staff of General determine their preference is to a referendum.
Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and
Financial Systems are included within the rank-and-file bargaining unit”. 6.1 DESIRE OF THE EMPLOYEES; THE GLOBE DOCTRINE
• The relevancy of the wishes of the employees concerning their inclusion or exclusion
Held: All these employees, with the exception of the service engineers and the sales force from a proposed bargaining unit is inherent in the basic right to self-organization.
personnel, are confidential employees. By the very nature of their functions, they assist and • Desire of the Employees
act in a confidential capacity to, or have access to confidential matters of, persons who o Not controlling
exercise managerial functions in the field of labor relations. The rational behind the ineligibility o Only a factor taken into consideration in reaching decision
of managerial employees to form, assist or join a labor union equally applies to them.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 81

Globe Machine & Stamping Co. o Ex – The monthly-paid rank-and-file employees may constitute a CBU
Facts: Three AFL Union filed representative petitions with the NLRB. apart from that of the daily-paid.
o Three AFL Unions 8. TWO COMPANIES WITH RELATED BUSINESSES
1. Metal Polishers Union – polishers and buffers • Two corporations cannot be treated as a single bargaining unit even if their
2. Machinist Union – punch press operators businesses are related.
3. Federal Labor Union 18788 – production and maintenance workers
o UAW-CIO intervened and claimed to represent all the production and Indophil Textile Mill Workers Union-PTGWO v. Voluntary Arbitrator Teodorico P. Calica and
maintenance workers. Indophil Textile Mills
Facts: The union in Indophil Textile wants to represent the employees of Indophil Acrylic. The
Held: The Company’s production workers can be considered either as a single unit union maintains that the creation of Indophil Acrylic is a device to evade the application of
appropriates for the purposes of collective bargaining, as claimed by the UAWA, or as three the CBA between the Union and the Compnay to the Acrylic people. The Union points out
such units, as claimed by the petitioning unions. The history of successful separate negotiations that the two corporations have practically the same incorporators, directors and officers. It
at the Company’s plant, and the existence of a requirement of a certain amount of skill for also stresses out that the two entities are engaged in the same kind of business, which is the
that work, are proof of the feasibility of the latter approach. In such a case where the manufacture and sales of yarns and other materials of kindred character.
considerations ae so evenly balances, the determining factor is the desire of the men
themselves. Issue: Whether Indophil Acrylic Corporation is an extension of Indophil Textile Mills
• Whether the rank-and-file employees of Indophil Acrylic should be recognized as
The SC ordered part of the bargaining unit of Indophil
• That the elections to be held separately for the men engaged in polishing and
those engaged in punch press work Held: The fact that the business of Indophil Textile and Indophil Acrylic are related, that some
• That an election for the employees of the Company engaged in production and of the employees of the Indophil Textile are the same persons manning and providing for
maintenance, exclusive of the polishers and punch press workers and of clerical auxiliary services to the units of Acrylic and that the physical plants, offices and dacilities are
and supervisory employees be held. situated in the same compound – these facts are not sufficient to justify piercing the
corporate veil of Acrylic.
7. SINGLE OF “EMPLOYER UNIT” PREFERRED
• Policy of Bureau of Labor Relations – to encourage the formation of an employer Umali v. CA – the legal corporate entity is disregarded only if it is sought to hold the offices
unit unless circumstances otherwise require and stockholders directly liable for a corporate debtor obligation.
o One employer enterprise constitutes only on bargaining unit.
• The proliferation of unions in an employer unit is discouraged as a matter of policy Diatagon Labor Federation Local 110 of the ULGWP v. OPLE – It is gave abuse of discretion to
unless there are compelling reasons which would deny a certain class of employees treat two companies as a single bargaining unit when these companies are indubitably
the right to self-organization for purposes of collective bargaining distinct entities with separate juridical personalities.
• Single plant units are presumed to be appropriate for purposes of collective
bargaining 8.1 SUBSIDIARIES AND SPIN-OFF CORPORATIONS
• Subsidiaries or corporations formed out of former divisions of a mother company
Pagkakaisa ng mga Manggagawa sa Triumph International Lumber v. Pura Ferrer-Calleja following a bona fide reorganization may constitute separate bargaining units.
Facts: Petitioner is the exclusive bargaining representative of the rank-and-file employees of
Triumph International. No evidence that rules out the commonality of their interests. San Miguel Corp. Employees Union-PTGWO, etc v. San Miguel Corp., Magnolia Corp., and San
Miguel Foods, Inc.
Held: The holding of a certificate election was disallowed among the workers sought to be Facts: Magnolia and SMFI were spun-off to operate as distinct companies on 1 Oct. 1991. The
represented by the Respondent union for want of proof that the right of said workers to self- transformation of the companies was a management prerogative and business judgment
organization was suppressed. which the court cannot look into unless it is contrary to law, public policy or morals. Ever
mindful of the employees’ interests, management has assured the concerned employees that
Doctrine: The ends of unionism are better served if all the rank-and-file employees with they will be absorbed by the new corporations without loss of tenure and retaining their
substantially the same interests and who invoke their right to self-organization are part of a present pay and benefits according to the existing CBAs.
single unity so that they can deal with their employer with just one and yet potent voice. The
employees’ bargaining power with management is strengthened thereby. As a result of the spin-offs:
1. Each of the companies are run by, supervised and controlled by different management
7.1 EXCEPTIONS TO ONE-UNIT POLICY teams including separate human resource/personnel managers.
• Where the employer has to give way to the other units like the craft unit, plant unit 2. Each Company enforces its own administrative and operational rules and policies and
or a subdivision thereof are not dependent on each other in their operations.
o Takes into account the policy to assure the employees of the fullest 3. Each entity maintains separate financial statements and are audited separately from
freedom in exercising their rights each other.
• Where the one company-one union policy must yield to the right of the employees
to form unions or associations for purposes not contrary to law, to self-organization Held: Magnolia and SMFI became distinct entities with separate juridical personalities and
and to enter collective bargaining negotiation. cannot belong to a single bargaining unit. Considering the spin-offs, the companies would
consequently have their respective and distinctive concerns in terms of nature, work, wages,
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 82

hours of work and other conditions of employment. Interests of employees in the different
companies perforce differ. It would then be best to have separate bargaining units for the ART. 269 [257]. PETITIONES IN UNORGANIZED ESTABLISHMENTS
different companies where the employees can bargain separately according to their needs
and according to their own conditions. In any establishment where there is no certified bargaining agent, a certification election shall
automatically be conducted by the Med-Arbiter upon the filing of a petition by any
8.2. THE FOUR-FACTOR ANALYSIS legitimate labor organization, including a national union or which has already issued a charter
• The [US National Labor Relations] Board applies this analysis in determining whether certificate to its local/chapter participating in the certification election or a local/ chapter
two or more employers constitute a single employer: which has been issued a charter certificate by the national union or federation. In cases
1. Interrelations of Operations where the petition was filed by a national union or federation, it shall not be required to
2. Centralized control of labor relations disclose the names of the local chapter’s officers and members.
3. Common managements
4. Common Ownership Note: Art. 269 of the Labor Code, as amended, is further amended by Sec. 24 of RA No. 6715
• It is unnecessary that each element be present. and further amended by Sec. 11 Ra No. 9481, effective June 14, 2007.
• Single employer status depends on all the circumstances and is characterized by
the absence of the arms-length relationship found among the integrated ART. 258. WHEN AN EMPLOYER MAY FILE PETITION
companies. When requested to bargain collectively, an employer may petition the Bureau for an election.
• Centralized control of labor relations is the single most critical factors. If there is no existing certified collective bargaining agreement in the unit, the Bureau shall,
after hearing, order a certification election.
9. SUMMATION OF SIGNIFICANCE
• The bargaining unit is not the same as the union, in fact, there may be serval unions All certification cases shall be decided within twenty (20) working days.
*majority and minority) in one bargaining unit.
The Bureau shall conduct a certification election within twenty (20) days in accordance with
Determining the scope or “membership” of the bargaining unit is significant because it leads the rules and regulations prescribed by the Secretary of Labor.
to the determination of
1. The employees who can vote in the certification election ART. 258-A. EMPLOYER AS BYSTANDER
2. The employees to be represented in bargaining with the employer In all cases, whether the petition for certification election is filed by an employer or a
3. The employees who will be covered by the resulting CBA legitimate labor organization, the employer shall not be considered a party thereto with a
concomitant right to oppose a petition certification election. The employer’s participation in
Distinguishing the CBA from the union is important because such proceedings shall be limited to:
1. In a C.E. – the voters are the whole bargaining unit, whether union or nonunion 1. being notified or informed of petitions of such nature; and
members 2. submitting the list of employees during the pre-election conference should the Med-
2. In CBA ratification – the voters are the whole bargaining unit, not just the union Arbiter act favorably on the petition.
members
3. In Strike Voting – the voters are members of the union, not whole bargaining unit.
ART. 259. APPEAL FROM CERTIFICATION ELECTION ORDERS 
Any party to an election may appeal the order or results of the election as determined by the
ART. 268 [256] REPRESENTATION INSSUE IN ORGANIZED ESTABLISHMENTS
Med-Arbiter directly to the Secretary of Labor and Employment on the ground that the rules
In organized establishments, when a verified petition questioning the majority status of the
and regulations or parts thereof established by the Secretary of Labor and Employment for the
incumbent bargaining agent is filed before the Department of Labor and Employment within
conduct of the election have been violated. Such appeal shall be decided within fifteen (15)
the sixty-day period before the expiration of the collective bargaining agreement, the shall
calendar days.
automatically order an election by secret ballot when the verified petition is supported by the
written consent of at least 25% of all the employees in the bargaining unit to ascertain the will
I. DETERMINING THE BARGAINING UNION: OVERVIEW OF THE METHODS
of the employees in the appropriate bargaining unit. To have a valid election, at least a
• To bargain with the employer, the employees in the CBU can be represented by
majority of all eligible voters in the unit must have cast their votes. The labor union receiving
one and only one union which has to be a legitimate labor organization duly
the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all
designated or selected by the employees in the CBY.
the workers in the unit. When an election which provides for three or more choices results in no
• The bargaining agent is the union as an entity and not the union officers.
choice receiving a majority of the valid votes a election shall be conducted between the
• The selection of such bargaining agent may take place in an organized or an
labor unions receiving the two highest number of votes: That the total number of votes for all
unorganized establishment.
contending unions is at least 50% of the number of votes cast. In cases where the petition was
filed by a national union or federation, it shall not be required to disclose the names of the
ORGANIZED UNORGANIZED
local officers and members.
Refers to an enterprise where there Where a union that has yet been duly
exists a recognized or certified sole and recognized or certified as bargaining
At the expiration of the freedom period, the employer shall continue to recognize the majority
status of the incumbent bargaining agent where no petition for certification election is filed. exclusive bargaining agents representative.
Art. 268 Art. 269
Note: art. 268, as amended, if further amended by Sec. 23 of RA No. 6715 and further
amended by Sec. 10 RA No. 9481, effective June 14, 2007.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 83

• In both instances, the objective is the same, to identify the union that will represent o It is the official, reliable and democratic basis for the DOLE to determine
the employees in bargaining with the employer. and certify the union that shall exclusively represent the employees (in the
• Until this representation issue is resolved, no CBA negotiation can take place. bargaining unit) in bargaining with the employer.

Three methods to determine the bargaining union 3.1 FACT FINDING

1. SEBA Certification • Not a litigation in the sense in which the term is ordinarily understood, but an
2. Certification election with or without run-off investigation of non- adversary and fact-finding character. As such, it is not bound
3. Consent Election by technical rules of evidence.
• The law does not contemplate the holding of a certification election unless the
Familiar Abbreviations used in this chapter preliminary inquiry shows a reasonable doubt as to which of the contending unions
• CE – Certification Election represents a majority.
• PCE – Petition for Certification Election o depend on the weight of the evidence adduced by the rival unions, and
• SEBA – Sole and Exclusive Bargaining Representative this weight, in turn, cannot be determined properly if the right of cross
• LLO – Legitimate Labor Organization examination is
• CB – Collective Bargaining • Certification proceedings directly involve only two issues:
• CBA – Collective Bargaining Agreement a. proper composition and constituency of the bargaining unit;
• CBU – Collective Bargaining Unit b. veracity of majority membership claims of the competing unions so as to
identify the one union that will serve as the bargaining representative of
2. FIRST METHOD; SEBA CERTIFICATION; D.O. 40-I-15 the entire bargaining unit.
• D.O. 40-I-15 – issued Sept. 2015 – abolished voluntary recognition and replaced it • But some of the employees may not want to have a union; hence, "No Union” is one
with SEBA Certification. of the choices named in the ballot.
o Direct certification which EO 111 discontinued in 1987 is now revived. • If "No Union" wins, the company or the bargaining unit remains ununionized for at
• SEBA CERTIFICATION – process where a union requests the DOLE regional director to least 12 months, the period known as the bar.
recognize and certify the union as the sole and exclusive bargaining agent (SEBA) • After that period, a petition for a CE may be filed again.
of the bargaining unit it purports to represent to negotiate a CBA with the employer.
o May be issued if it is proved that 3.1a CERTIFICATION ELECTION DIFFERENTIATED FROM UNION ELECTION
1. The bargaining unit is ununionized
2. The requesting union is the only union in that bargaining unit. CERTIFICATION ELECTION UNION ELECTION
3. The CBU majority are members of the union. the process, ordered and supervised by Held pursuant to the union's constitution
o The alleged facts should be proved by documentary evidence DOLE, of determining, through secret ballot, and bylaws, and the right to vote in it is
§ Payroll whether or not a majority of the employees enjoyed only by union members. The object
§ Registration certificate – independent union wish to be by a labor union and if so, by is to elect officers of the union.
§ Charter certificate which union.
o The documentary evidence must be true and correct, submitted under All employees whether union member or Only member of that union may vote,
oath. not, who belong to the appropriate unless otherwise authorized by the union
o If the request for certification is denied, it may be referred to an election bargaining unit can vote. constitution and by-laws.
officer for the conduct of a certification election. Labor Code and its implementing rules Governed by union by-laws
o If the certification is granted, the certified union shall enjoy the rights and Winner is an entity which becomes the Winners become officers and
privileges of an exclusive bargaining agent. representative of the whole bargaining unit representatives of the union only.
o The certification shall bar the filing of a petition for CE for a period of one even the members of the defeated union.
year.
• D.O. 40-I-15 – also allows the Med-Arbiter to consider certain verifiable facts, such as 3.2 WHO FILES PETITION FOR CERTIFICATION ELECTION (PCE)
the existence of a CBA, to bar the holding of a certification election. • A request or petition to hold certification election may be filed by a registered union
o Decision – released within 10 days from the last hearing. or by an employer.
o Employer – by-stander – should not harass employees before, during or • Any legitimate labor including a national union or federation that has issued a
after the elections. charter certificate to its local/chapter or the local/chapter itself, may file a petition
o All employees who are members o the bargaining unit three months for certification election.
before the filing of the petition are eligible to vote in the CE. • A national union or federation filing a petition in behalf of its local/chapter shall not
o When an election results in a tie, a re-run election should be called. be required to disclose the names of the local/chapter's officers and members, but
shall attach to the petition the charter certificate it issued to its local/chapter.
3. SECOND METHOD: CERTIFICATION ELECTION (CE) • When requested to bargain collectively in a bargaining unit where no registered
• CERTIFICATION ELECTION – process of determining through secret ballot the sole and collective bargaining agreement exists, an employer may file a petition for
exclusive representative of the employees in an appropriation bargaining unit, for certification election with the Regional Office.
purposes of collective bargaining or negotiation. • When the employer files a PCE, the holding of the CE becomes mandatory.

o However, instead of itself filing a petition, the employer usually lets the The petition should also state any of the following circumstances:
unions interplead to determine who among them will bargain with the 1. that the bargaining unit is unorganized or that there is no registered collective
employer. bargaining agreement covering the employees in the bargaining unit; or
2. if there exists a duly registered collective bargaining agreement, that the petition is
3.2a INTERVENTION, EQUITY OF THE INCUMBENT filed within the sixty-day freedom period of such agreement; or
• In an organized establishment the incumbent bargaining agent, of course, will not 3. also in an establishment with a CBA, the signature of at least twenty-five percent
file a PCE because it will not contest its own incumbency. (25%) of all employees in the appropriate bargaining unit shall be attached to the
o The filer will most likely be a union that was defeated in the CE held some petition at the time of its filing. This 25% support is not required for a pre-CBA petition
five years before. for CE.
• EQUITY OF THE INCUMBENT – In any such petition the incumbent union is a necessary 4. if another union had been previously recognized voluntarily or certified in a valid
party, a forced intervenor. But even so, it does not thereby lose its representative certification, consent or run-off election, that the petition is filed outside the one-
status; it remains the sole bargaining representative until it is replaced by another. year period from date of recording of such voluntary recognition or conduct of
And until so replaced it has the right to retain the recognition by the employer. certification or election and no appeal is pending thereon.
• Other interested unions may also file a motion for intervention.
• Whether petitioner or intervenor, the union has to be an LLO. If the petition for 3.6 ACTION ON THE PETITION; PRELIMINARY CONFERENCE
certification election was filed by the federation which is merely an agent, the • Having been assigned by raffle, the petition shall immediately be transmitted to the
petition is deemed to be filed by the chapter, the principal, which must be a assigned Mediator-Arbiter who shall immediately prepare and serve a notice of
legitimate labor organization. The chapter cannot merely rely on the legitimate preliminary conference to be held within ten (10) working days from the Mediator-
status of the mother union. Arbiter's receipt of the petition.
• A union that has no legal personality to file a petition for C.E. has no personality • The service of the petition to the employer and of the notice of preliminary
either to file a petition-in-intervention. conference to the petitioner and the incumbent bargaining agent (if any) shall be
made within three (3) working days from the Mediator-Arbiter's receipt of the
3.2 WHEN TO FILE THE PCE petition.
• Depends whether the bargaining unit has a CBA or not. • A copy of the petition and of the notice of preliminary conference shall be posted
o Pre-CBA Petition – No CBA – anytime except within 12 months of a within the same three (3) day period in at least two conspicuous places in the
previous election (if any) establishment. In multiple-location workplaces, the posting shall be made in at least
o Post CBA Petition – with CBA – within the freedom period which is within two conspicuous places in every location.
the last 60 days of the fifth year of the CBA o Preliminary conference – meant to determine whether the PCE should be
processed further or be dismissed. It is the means also to determine the
3.4 WHERE TO FILE THE PCE bargaining unit that will participate in the election, the identity of the
• A petition for certification election (PCE) shall be filed with the Regional Office contending unions, and the possibility of holding a "consent election"
which issued the petitioning certificate of registration or certificate of instead of a certification election.
creation of chartered local. The petition shall be heard and resolved by the Med- • If at the preliminary conference the unions agree to hold a consent election, then
Arbiter. the PCE will no longer be heard and the unions will instead prepare for the consent
• Where two or more petitions involving the same bargaining unit are filed in one election.
Regional Office, the same shall be automatically consolidated with the Med-Arbiter
who first acquired jurisdiction. 3.7 ACTION ON THE PETITION: HEARINGS AND PLEADINGS
• Where the petitions are filed in different Regional Offices, the Regional Office in • If the contending unions fail to agree to a consent election during the preliminary
which the petition was first filed shall exclude all others; in which case, the latter shall conference, the Med-Arbiter may conduct as many hearings as he may deem
indorse the petition consolidation. necessary.
o Not exceed 15 days from the date of the schedule preliminary
3.5 FORM AND CONTENTS OF PETITION conference/hearing.
• The petition shall be o After that time, the petition shall be considered submitted for decision.
o In writing o The Med-Arbiter shall have control of the proceedings. Postponements or
o Verified under oath by the president of petitioning labor organization. continuances are discouraged.
• Where a federation or national union files a petition in behalf of its local or affiliate, • Within the same 15-day period within which the petition is heard, the contending
the petition shall be verified under oath by the president or duly authorized labor unions may file such pleadings as they may deem necessary for the
representative of the federation or national union with a certification under oath as immediate resolution of the petition.
to the existence of its local/ chapter in the establishment and attaching thereto the o Extensions of time shall not be entertained.
charter certificate or a certified true copy. o All motions shall be resolved by the Med-Arbiter in the same order or
• If the petition is filed by a local/chapter it shall attach its charter certificate or a decision granting or denying the petition.
certified true copy. • The failure of any party to appear in the hearing(s) when notified or to file its
• In case the employer filed the petition, the owner, president or any corporate pleadings shall be deemed a waiver of its right to be heard.
officer, who is authorized by the board of directors, shall verify the petition. o The Med-Arbiter, however, upon agreement of the parties for meritorious
reasons, may allow the cancellation of scheduled hearings.

o The cancellation of any scheduled shall not be used as a basis for 3.8a FIRST GROUND: NON-APPEARANCE14
extending the period within which to terminate the same. • If the petitioner (usually a union) does not appear in two successive conferences
• Within ten (10) days from the date of the last hearing, the Med-Arbiter shall issue a called by the Med-Arbiter, the petition may be dismissed, after it is shown that the
formal order denying or granting the petition. petitioner was duly notified.
o In organized establishments, however, the order or decision granting the • This ground was added by D.O. No. 40-F-03 (dated 30 October 2008) after R.A. No.
petition can only be issued after the lapse of the freedom period. The 9481 took effect on June 14, 2007, although the law itself does not state this ground.
reason for the last-mentioned rule is that during the entire freedom period,
up to its last day, the door should remain open for any union to file a PCE 3.8b SECOND GROUND: ILLEGITIMACY: UNREGISTERED UNION
or a motion for intervention. • Excepting Article 258, only a legitimate labor organization can file a petition for
o In an unorganized establishment, once a petition is filed by a LLO, the certification election.
Med-Arbiter shall automatically order the conduct of a certification o If the petitioning union is not listed in the DOLE's list of LLOs or if its
election. registration has been cancelled with finality, these facts will authorize the
§ The Med-Arbiter is still tasked to satisfy himself that all the med-arbiter to dismiss the PCE.
conditions of the law are met and among the legal • Even if the union is listed as LLO, its legitimacy may still be questioned in a separate
requirements is that the petitioning union must be a LLO in good and independent petition for cancellation to be heard and decided by the BLR
standing. Director or the Regional Director himself.

3.8 ACTION ON THE PETITION; DENIAL; EIGHT GROUNDS Q – Does the filing of the petition to cancel the petitioner’s registration cause the suspension
• The Med-Arbiter may either approve or disapprove the petition to hold a CE. or dismissal of the PCE?
• The disapproval or denial of the petition has to be based on a ground specified by • NO. The mere filing does not. To serve as a ground for dismissal of a PCE, the legal
law of which there are eight. personality of the petitioner should have been revoked or cancelled with finality.
• Section 1, Rule XI of CO No. 40-03 as renumbered by DO NO. 40-F-03
GROUNDS o The filing or pendency of any inter/intra-union dispute and other related
1. NON-APPEARANCE – non-appearance of the petitioner for two consecutive labor relations dispute is not a prejudicial question to any petition for
scheduled conferences before the Mediator-Arbiter despite notice; certification election and shall not be a ground for the dismissal of a
2. ILLEGITIMACY - Unregistered Union – the petitioning union or national petition for certification election or suspension of proceedings for
union/federation is not listed in the Department's registry of legitimate labor unions certification election
or that its registration certificate has been cancelled with finality. • But because of this rule, a problematic situation can easily arise
3. ILLEGITIMACY - No Charter - failure of a local/chapter or national union/federation o What happens if the petition for cancellation succeeds against the union
to submit a duly issued charter certificate upon filing of the petition for certification that won in the CE?
4. ABSENCE OF EMPLOYMENT RELATIONSHIP – absence of employer-employee o Can the victory in the CE prevail over the cancellation order?
relationship between all the members of the petitioning union and the o Or does the cancellation order nullify the victory in the CE
establishment where the proposed bargaining unit is sought to be represented. • Before D4 was issued in 2003 court rulings held that the petition for cancellation
5. ELECTION BAR – THE 12 MONTH BAR - if the petition was filed within one (1) year from would suspend hearings on the PCE.
the date of recording of the valid certification where no appeal on the election • In Progressive Development (1997) – Inasmuch as the legal personality of
results is pending respondent Union had been seriously challenged, it would have been more prudent
6. ELECTION BAR - NEGOTIATION OR DEADLOCK – where a duly certified union has for the Med- Arbiter and public respondent to have granted petitioner's request for
commenced and sustained negotiations with the employer in accordance with the the suspension of proceedings in the certification election case, until the issue of the
Labor Code within the one-year period referred to in Section of the legality of the Union's registration shall have been resolved. Failure of the Med-
Implementing Rules or where there exists a bargaining deadlock which has been Arbiter and public respondent to heed the request constituted a grave abuse of
submitted to conciliation or arbitration or has become the subject of a valid notice discretion.
of strike or lockout where an incumbent or certified bargaining agent is a party.
7. ELECTION BAR - EXISTING CBA – if the petition is filed before or after the freedom
period of a duly registered collective bargaining agreement; provided that the sixty-
day is not affected by any amendment, extension or renewal of the collective
bargaining agreement. 14At this point we must make an acerbic comment. This first ground is controversial because it
8. ELECTION BAR - LACK OF SUPPORT - in an organized establishment, the failure to legalizes a racket. True, there are unions, either local or national, that are legitimately
submit the twenty-five percent (25%) signature requirement to support the filing of registered and do honestly pursue legitimate objectives. But there are fly-by-night "union
the petition for certification election.  organizers” who file petitions for CE, then approach the target enterprise with a proposition
that, in exchange for "something," they will not pursue the petition for CE so that the company
NOTE – The eight grounds are explained below in the given sequence. may remain ununionized. Their proposition easily gets done because by simply absenting
themselves from two conferences, their petition, according to the DOLE rules, will be dismissed
by the Med-Arbiter. Twelve months later they will
replay the dirty charade. This scheme is one reason the DOLE relentlessly pursues a “cleansing
program” by delisting delinquent unions”.

• This ruling, apparently, no longer finds support in Section 2, Rule XI of D.O. No. 40-03, • Presupposes that there was an actual election (ballots were cast and actual counting of
quoted earlier, which refuses to hinder a PCE unless the petitioner's legal personality votes)
has been revoked or cancelled with finality. • The Certification Year Bar DOES NOT APPLY:
1. When there was no CE for failure to include employees in the CBU
Suspension of Proceedings: “Company Union” Charge 2. When there was failure of election because less than majority of the CBU
• Similar to a petition for cancellation of registration is a formal charge of members voted – another PCE may be held within 6 months
• company domination or company unionism. 3. When there was invalid election
• Prior to D.O. No. 40-03 such charge is a prejudicial question that, until decided, bars 4. On a second election held among a group of employees who had not
proceedings for a certification election, the reason being that the votes of the participated in the first election and had not been given the opportunity to be
members of the dominated union would not be free. represented as part of the unit in the first election
• United CMC “Company Union” Textile Workers Union vs. Bureau of Labor Relations – 5. On an election involving a unit of employees newly created by combining
A complaint for unfair labor practice may be considered a prejudicial question in a employees not previously considered as one unit.
proceeding for certification election when it is charged therein that one or more 6. Radical change in size of bargaining unit within a short period of time, raising
labor unions participating in the election are being aided, or are controlled, by the question as to the majority status of the certified representative
company or employer. 7. Unit clarification petition filed during the certification year
• The sustainability of the above ruling is placed under serious doubt by the words and
intention of D.O. No. 40-03, Rule XI, Section 2, quoted above, which does not favor Samahang Manggagawa sa Permex v Sec. of Labor (1998)
"prejudicial questions" that block certification proceedings. Facts: Majority of the employees voted for “NO UNION” in the certification election and was
• Neither may a certification election be stayed during pendency of unfair labor certified. The employer however recognized a union and entered into a CBA with it.
practice charge against a union filed by the employer.
• Similarly, certification election may be ordered despite pendency of a petition to Doctrine: There can be no determination of a bargaining representative within a year of the
cancel the union's registration certificate founded on alleged illegal strike by the proclamation of the results of the CE. There is something dubious about the fact that just 10
union. months after the employees had voted that they did not want any union to represent them,
• Even appeal to the Supreme Court from the order denying the motion for they would be expressing support for petitioner. The court strongly doubted that the union
reconsideration does not suspend the effect of a certification election; otherwise a voluntarily recognized was really the employee’s choice.
party could arrest, without the necessary adequate court action, the movement of
the bargaining processes by the inter-position of frivolous and useless appeals. SIXTH GROUND: NEGOTIATION OR DEADLOCK BAR
• NEGOTIATION BAR – where a duly certified union has commenced negotiations with the
THIRD GROUND: ILLEGITIMACY: NO CHARTER employer within the 12-month period and negotiation is still on-going. or where there
• Obliges the petitioner union, either local or national, to submit a duly issued charter exists a bargaining deadlock which has been submitted to
certificate of the chapter at the time the union files its PCE; failure to do so will cause • DEADLOCK BAR RULE – simply provides that a petition for CE can only be entertained if
dismissal of the PCE there is no pending bargaining deadlock submitted to conciliation or arbitration or had
become the subject of a valid notice of strike or lockout.
FOURTH GROUND: ABSENCE OF EMPLOYMENT RELATIONSHIP
• Employees’ right to unionize founded on existence of EE-ER relationship; absent such Capitol Medical Center Alliance of Concerned Employees Unified Filipino Service Workers v
relationship the petition has no legal basis and should be dismissed Laguesma (1997)
• Employer may invoke and prove absence of EE-ER relationship Facts: CMC refused to bargain collectively and continually evaded negotiating with the
• Contention of existence or absence of EE-ER relationship is not finally closed and certified bargaining union.
may be raised on appeal
• Order granting or denying PCE is appealable except the order granting a PCE in an Doctrine: If the law proscribes the conduct of a CE when there is a bargaining deadlock
ununionized enterprise submitted to conciliation or arbitration, with more reason should it not be conducted if,
despite attempts to bring an employer to the negotiation table by the certified bargaining
FIFTH GROUND: THE 12-MONTH BAR OR CERTIFICATION YEAR BAR agent, there was no reasonable effort in good faith on the part of the employer to bargain
• No petition for a CE may be filed within one-year from date of a valid certification, collectively.
consent, or run-off election.
• Example:
• Deadlock bar rule not applicable in an artificial deadlock – deadlock prearranged or
o Election was held; none of the unions won – a PCE can be filed only after 12
preserved by collusion of the employer and the majority union
months
o If a union has won, the employer and union must start negotiating a CBA within KAMPIL-KATIPUNAN v. Trajano (1991)
12 months; if they fail to do so, the unions that lost can petition for CE after 12
Facts: KAMPIL-Katipunan filed CE, claiming that NAFLU, the existing exclusive bargaining agent
months from last election to replace the unproductive bargaining agent which
failed to come up with a CBA. NAFLU claims that at the time the CE was filed, it was in a
perhaps is cavorting with the employer
bargaining deadlock with
o Deadlock Bar – If no CBA is concluded after the lapse of 12 months without the
employer VIRON.
fault of the bargaining agent, and a rival union files a PCE, the CE should not
be authorized even though no CBA has been concluded.
Doctrine: The records do not show that there was a bargaining deadlock prior to the filing of
the petition for CE. The strikes and submission to compulsory arbitration
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 87

alleged by NAFLU took place after the filing of the PCE. For a bargaining deadlock to bar a 3. The effective date and expiration date must be readily discernible on the face of
PCE, such deadlock must have been submitted to conciliation or arbitration or must have the contract
been the subject of a valid strike or lockout notice before – not after – the filing of the PCE.
• Contract Bar Rule Applied:
SEVENTH GROUND: EXISTING CBA AS ELECTION BAR o Even if the existing CBA is registered surreptitiously, as alleged by the petitioner
• Article 238 does not allow the filing of a PCE during the life of a duly registered CBA, union, but no evidence is presented proving the alleged surreptitious
EXCEPT, as provided in Article 168, within the last 60 days of the fifth year of the CBA registration, the PCE can’t be granted
• The PCE may be filed within this 60-day period – not before, not after – otherwise the PCE • Contract Bar Rule Not Applied:
may be dismissed 1. Defective CBA

PMTI-ULGWP v Ferrer Calleja (1990) Associated Labor Union v Ferrer Calleja (1989)
Facts: Respondent unions filed their petitions for certification election at the time a CBA was Facts: The union ALU informed the employer about the formation of the union and asked for
validly existing between petitioner union and Triumph International. the negotiation of the CBA. Two days later, the employer and the union signed a CBA. But
there were two other unions in the same bargaining unit. They questioned the validity of the
Doctrine: The CBA constituted a bar to the holding of the certification election as petitioned CBA and objected to the application of the contract bar rule.
by the respondent unions. The respondent unions should wait for the proper time to file their
petition, Doctrine: There was precipitate haste on the part of the company in recognizing petitioner
union, which recognition appears to have been based on the self-serving claim of the latter
• Registered CBA that it had the support of the majority of the employees in the bargaining unit. The unusual
o To bar a CE it is no longer necessary that the CBA be certified; it is enough that promptitude in the recognition of petitioner union by respondent company as the exclusive
it is registered bargaining representative of the workers under the fluid and amorphous circumstances then
• Freedom Period – refers to that time when unions are legally allowed to challenge openly obtaining, was decidedly unwarranted and improvident
and formally the status of a union as the exclusive bargaining representative of the
bargaining unit 2. Referendum to Register an Independent Union
• The freedom period is the last 60 days of the CBA’s fifth year of the representational • What is involved is a referendum to be conducted among the rank
aspect. and file employees to determine whether or not they are in favor of
• Two Different 60-Day Periods: Notice Period and Freedom Period having an independently registered union in the establishment. This
referendum is neither union disaffiliation nor severance; it is allowed
NOTICE PERIOD FREEDOM PERIOD by law even while CBA exists
• Proper time to propose modifications to • Political event involving only the rival 3. CBA signed before or within freedom period
the existing CBA unions and the voters-employees
• Renegotiation of an expiring CBA • The freedom period is the last 60 days of • A CBA may be renegotiated before, during, or after the 60-day freedom period. But if
• Notice from either the management or the CBA’s fifth year of the during such period a PCE is filed, the Med-Arbiter can order the suspension of the
the bargaining union representational aspect renegotiation until the representation proceedings finally end
• Refers to modifying or renegotiating the • Effect on the renegotiated CBA if a union other than the one that executed it should win
CBA provisions other than the CE – union thus certified would have to respect the contract, but that it may bargain
representational or economic provisions with the management to shorten the life of the contract if it is too long
• When a CBA is entered into at the time when the PCE had already been filed by a union
National Congress of Unions in the Sugar Industry v. Ferrer Calleja (1992) and was the pending resolution, the said CBA can’t be deemed permanent
Facts: Dacongcogon Company entered into a CBA with National Federation of Sugar
Workers. The CBA expired and the Company and union negotiated for its renewal. The CBA as EIGHTH GROUND: LACK OF 25% SUPPORT
extended for another 3 years but a deadlock in negotiation ensued on the matter of wage • In an organized establishment, the failure to submit the 25% signature requirement to
increases and retirement. Another union filed a petition for certification election support the filing of the petition for CE is a bar for CE
• In a case, the company’s rank-and-file employees are unionized but the supervisors are
Doctrine: A petition for CE can only be entertained within 60 days prior to the expiry date of not. Insofar as the supervisors are concerned, the “establishment” is considered
the existing CBA. The rule prohibits the filing of a petition for CE during the existence of a CBA unionized. In other words, in deciding whether 25% requirement is applicable or not, the
except within the freedom period. It shall be the duty of both parties to keep status quo and law considers the CBU involved, not the whole enterprise.
to continue in full force and effect the terms and conditions of the existing agreement during • Compliance with the 25% requirement need not be established with absolute certainty.
the 60-day period and/or until a new agreement is reached by the parties. Despite the lapse The requirement then is relevant only when it becomes mandatory to conduct a CE.
of the formal effectivity of the CBA, the law still considers the same as continuing in full force • Effect of withdrawal of signatures depends on whether the it happened before or after
and effect until a new one is executed. the filing of the petition.
o Before – presumed voluntary and it does affect the propriety of the petition
Requisites of Contract Bar: o After – deemed involuntary (perhaps pressured by the employer) and it does
1. Must contain substantial terms and conditions of employment sufficient to stabilize not necessarily cause the dismissal of the petition
bargaining relationship • Prohibited grounds for the denial/suspension of the petition
2. Must be signed by the parties 1. Commingling
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 88

§ Inclusion as union members of employees outside the bargaining unit o Within 24 hours from receipt of the appeal, the Regional Director shall cause
shall not be a ground for the cancellation of the registration of the the transmittal thereof together with the entire records of the case to the Office
union. Said employees are automatically deemed removed from the of the Secretary
list of membership of said unions o Reply to the appeal may be filed by any party within 10 days from receipt of
2. Validity of registration the memorandum of appeal. Reply shall be filed directly with the Office of the
§ Issues pertaining to validity of union’s certificate of registration or Secretary
legal personality, validity of registration and execution of CBA shall o Secretary has 15 days from receipt of the entire records of the petition within
be heard and resolved by the Regional Director in an independent which to decide the appeal
petition for cancellation of its registration and not by the Med-Arbiter o Decision of the secretary shall become final and executory after 10 days from
in the PCE, unless the petitioning union is not listed in the receipt thereof by the parties. No MR shall be entertained.
Department’s roster of LLO, or an existing CBA is not registered with • Conducting the CE
the Department a. Pre-election conference
3. Authority to decide existence of ER-EE relationship § Raffle of the case. - Within twenty-four (24) hours from receipt of the
notice of entry of final judgment granting the conduct of a
• Employer a bystander; cannot oppose PCE certification election, the Regional Director shall cause the raffle of
o SC, nevertheless, has allowed an employer to protest against irregularities the case to an Election Officer who shall have control of the pre-
committed in the conduct of a CE. election conference and election proceedings.
• If the employer believes that the union has inappropriate membership because it § Preelection conference. - Within twenty-four (24) hours from receipt
includes rank and file with managerial/supervisory employees, the employer’s recourse is of the assignment for the conduct of a certification election, the
not to oppose the PCE but to file a separate petition to cancel the union’s registration Election Officer shall cause the issuance of notice of preelection
• Action on the petition; approval conference upon the contending unions and the employer, which
o If there exists no ground to dismiss or otherwise deny the PCE, the med-arbiter shall be scheduled within ten (10) days from receipt of the
has to grant it assignment. The pre-election conference shall set the mechanics for
o Ruling for the conduct of CE shall state the following: the election and shall determine, among others, the following:
§ The name of the employer or establishment; o Date, time and place of the election, which shall not be
§ The description of the bargaining unit; later than forty-five (45) days from the date of the first pre-
§ A statement that none of the grounds for dismissal enumerated in the election conference, and shall be on a regular working
succeeding paragraph exists; The names of contending labor unions day and within the employer's premises, unless
which shall appear as follows: petitioner union/s in the order in which circumstances require otherwise;
their petitions were filed, forced intervenor, and no union; o List of eligible and challenged voters;
§ To afford an individual employee-voter an informed choice where a o Number and location of polling places or booths and the
local/chapter is one of the contending unions, a directive to an number of ballots to be prepared with appropriate
unregistered local/chapter or a federation/national union translations, if necessary;
representing an unregistered local/chapter to personally submit to o Name of watchers or representatives and their alternates
the election officer its certification of creation at least 5 working days for each of the parties during election;
before the actual conduct of the CE. Non-submission of this b. Voters
requirement as certified by the election officer shall disqualify the § All employees who are members of the appropriate bargaining unit
local/chapter from participating in the CE sought to be represented by the petitioner at the time of the
§ A directive upon the employer and the contending union(s) to issuance of the order granting the conduct of a CE shall be eligible
submit within ten (10) days from receipt of the order, the certified list to vote.
of employees in the bargaining unit, or where necessary, the payrolls § List of voters based on employer-certified list of employees in the CBU
covering the members of the bargaining unit for the last three (3) or payrolls. If employer does not submit a list, the union may submit its
months prior to the issuance of the order. own list. Even the list of employees submitted to the SSS may be used.
• Appeal of order granting or denying petition § In case of disagreement over the voters’ list or over the eligibility of
o 2 occasions of appeal to the office of the DOLE secretary voters, all contested voters shall be allowed to vote. But their votes
§ After the med-arbiter decides the petition for CE shall be segregated and sealed in individual employees
§ After the CE, when the med-arbiter certifies the election results § Employee who has been dismissed from work but has contested the
o Only order that can’t be appealed is an order granting the conduct of a CE in legality of the dismissal in a forum of appropriate jurisdiction at the
an unorganized establishment. Any issue arising therefrom may be raised by time of the issuance of the order for the conduct of a CE shall be
means of protest on the conduct and results of the CE considered a qualified voter, unless his/her dismissal was declared
o In organized establishment, appeal to the Office of the Secretary within 10 valid in a final judgment at the time of the conduct of the CE.
days from receipt thereof § All rank-and-file employees, probationary or permanent, have a
o Memorandum of appeal shall be filed in the Regional Office where the petition substantial interest in the selection of the bargaining representative.
originated. The Code makes no distinction as to their employment status as basis
for eligibility in supporting the PCE.

§ Iglesia Ni Kristo members may vote – In the CE all members of the consolidation of results shall be made within fifteen (15) days from the
unit, whether union members or not, have the right to vote conduct thereof.
c. Voting § Failure of the representative/s of the contending unions to appear
§ Voting shall open on the date and time agreed upon in the pre- during the election proceedings and canvass of votes shall be
election conference considered a waiver of the right to be present and to question the
§ Secrecy and sanctity of the ballot. - Election Officer, together with conduct thereof
the authorized representatives of the contending unions and the e. Who wins the CE; Proclamation and Certification
employer, shall before the start of the actual voting, inspect the § In order to have a valid election, at least a majority of all eligible
polling place, the ballot boxes and the polling booths. voters in the unit must have cast their votes
§ Marking of votes – the voter must put a cross (x) or check (/) mark in § Within twenty-four (24) hours from final canvass of votes, there being
the square opposite the name of the union of his choice or “No a valid election, the Election Officer shall transmit the records of the
Union” if s/he does not want to be represented by any union case to the Med-Arbiter who shall, within the same period from
§ Procedure in the challenge of votes. receipt of the minutes and results of election, issue an order
o Election Officer shall place the ballot in an envelope which proclaiming the results of the election and certifying the union which
shall be sealed in the presence of the voter and the obtained a majority of the valid votes cast as the sole and exclusive
representatives of the contending unions and employer. bargaining agent in the subject bargaining unit, under any of the
o Indicate on the envelope the voter's name, the union or following conditions:
employer challenging the voter, and the ground for the o No protest was filed or, even if one was filed, the same was
challenge. not perfected within the five-day period for perfection of
o Signed by the Election Officer and the representatives of the protest;
the contending unions and employer. o No challenge or eligibility issue was raised or, even if one
o Note all challenges in the minutes of the election and shall was raised, the resolution of the same will not materially
be responsible for consolidating all envelopes containing change the results of the elections.
the challenged votes. § The winning union shall have the rights, privileges and obligations of a
o The envelopes shall be opened and the question of duly certified collective bargaining agent from the time the
eligibility shall be passed upon only if the number of certification is issued.
segregated voters will materially alter the results of the § Where majority of the valid votes cast results in "No Union" obtaining
election. the majority, the Med-Arbiter shall declare such fact in the order.
§ On-the On-the-spot questions. - The Election Officer shall rule on any § Union which obtained a majority of the valid votes cast shall be
question relating to and raised during the conduct of the election. In certified as the sole and exclusive bargaining agent of all the
no case, however, shall the election officer rule on any of the employees in the appropriate bargaining unit within 5 days from the
grounds for challenge specified in the immediately preceding day of the election, provided no protest is recorded in the minutes of
section. the election
§ Protest; when perfected. -
o Any party-in-interest may file a protest based on the Failure of election; motion for another CE
conduct or mechanics of the election. • Failure of election - number of votes cast is less than the majority of the number of eligible
o Recorded in the minutes of the election proceedings. voters and there is no material challenged votes
o Protests not so raised are deemed waived. • the Election Officer shall declare a failure of election in the minutes of the election
o The protesting party must formalize its protest with the Med- proceedings.
Arbiter, with specific grounds, arguments and evidence, • Effect of failure of election.
within five (5) days after the close of the election o Shall not bar the filing of a motion for the immediate holding of another
proceedings. If not recorded certification or consent election within six (6) months from date of declaration
d. Canvassing of Votes of failure of election.
§ Voting shall close on the date and time agreed upon in the pre- • Action on the motion.
election conference. Canvassing shall immediately follow. o Within twenty-four (24) hours from receipt of the motion, the Election Officer
§ The votes shall be counted and tabulated by the Election Officer in shall immediately schedule the conduct of another certification or consent
the presence of the representatives of the contending unions. Upon election within fifteen (15) days from receipt of the motion and
completion of the canvass, the Election Officer shall give each o Cause the posting of the notice of certification election at least ten (10) days
representative a copy of the minutes of the election proceedings prior to the scheduled date of election in two (2) most conspicuous places in
and results of the election. The ballots and the tally sheets shall be the establishment. The same guidelines and list of voters shall be used in the
sealed in an envelope and signed by the Election Officer and the election.
representatives of the contending unions and transmitted to the
Med-Arbiter, together with the minutes and results of the election, • Run Off Election
within twenty-four (24) hours from the completion of the canvass. o When an election which provides for three (3) or more choices results in none
Where the election is conducted in more than one region, of the contending unions receiving a majority of the valid votes cast, and there

are no objections or challenges which if sustained can materially alter the fraud and other irregularities put in question the integrity of the conduct of the
results election.
o The Election Officer shall motu propio conduct a runoff election within ten (10) 2. Employer is prohibited from interfering with the C.E. for the purpose of influencing its
days from the close of the election proceedings between the labor unions outcome. But the employer has interest in seeing to it that the election is clean and
receiving the two highest number of votes; provided, that the total number of credible.
votes for all contending unions is at least fifty (50%) percent of the number of
votes cast. "No Union" shall not be a choice in the run-off election. 4.THIRD METHOD: CONSENT ELECTION
o Notice of run-off elections shall be posted by the Election Officer at least five • Purpose: to find out which union should serve as the bargaining agent.
(5) days before the actual date of run-off election. • This can involve 2 or more unions
o The same voters' list used in the certification election shall be used in the run-off • May take place in an organized or unorganized establishment
election. The ballots in the run-off election shall provide as choices the unions • Med arbiter may persuade the parties to go into consent election while hearing a
receiving the highest and second highest number of the votes cast. petition for certfication election. If parties agree, Med-arbiter shall do the ff:
• To summarize, a run-off election is proper if five concurrent conditions exist – o Enter this fact in the minutes of hearing or preliminary conference. Minutes
1. A valid election took place because majority of the CBU members voted must be signed by the parties and attested to by the Med-Arbiter.
Election presented at least three choices o Schedule the pre-election conference within 10D from the date of the
2. Not one of the unions obtained the majority of the valid votes consent election agreement. Subsequent confrences may be called to
3. Total number of votes for all the unions is at least 50% of the votes cast expedite and facilitate the holding of the consent election.
4. There is no unresolved challenge of voter or election protest o Immediately forward the records of the petition to the RD for
determination of an Election Officer.
3.16 Second Occasion of Appeal: Order Certifying the Election Result • To afford an individual employee-voter an informed choice where a local/chapter
is the petitioning inion, local/chapter shall secure its certificate of creatin at least
When issued in 2003, IRR of Book V did not carry provisions on appeal. DOLE issued the ff. rules 5working days before the date of the consent election.
to clarify the procedure in Certification Election protests:
CERTIFICATION ELECTION CONSENT ELECTION
1. Appeal: the decision of the Med-Arbiter may be appealed to the Secretary within 10D Ordered by the Department Voluntarily agreed upon by the parties with
from receipt of a copy of the decision. or without the intervention of the Department

Where no appeal is made, the Med-Arbiter shall enter this fact into the records, in which 4.1 Effect of Consent Election
case, the decision becomes final.
PCE NOT FILED BUT THE PARTIES AGREE TO
PETITION FOR CERTIFICATION ELECTION (PCE)
2. What to file: Memorandum of Appeal HOLD A CONSENT ELECTION WITH THE
FILED
INTERCESSION OF THE REGIONAL OFFICE,
Where: Regional Office where the petition originated. Results shall constitute a bar to the holding of
Results shall constitute a bar to another PCE.
CE for 1 year* from such consent election.
Copy furnished the contending unions and the employer. * 1 year shall be suspended in cases of
appeal until the decision is final and
3. Period to Repy: 10D from receipt of the memorandum executory

Where to file Reply: office of the secretary 5. THE WINNER AS SOLE AND EXCLUSIVE REPRESENTATIVE
• Since collective bargaining contemplates the representation of all collective
4. Secretary has 15D to decide from the receipt of the entire records of the petition within interests of all employees in the particular bargaining unit by a properly selected
which to decide the appeal. bargaining agent.
• Exclusive means an employer must treat representative to the exclusion of all other
The decision of the Secretary shall become final and executory after 10D from receipt claiming bargaining agents.
thereof by the parties. No MR shall be entertained.
5.1 Exclusive Bargaining Agent Represents Even the Minority Union
3.17 Election Irregularities, Protest by Employer • The winning union becomes certified as the exclusive bargaining agent of all the
workers in the bargaining unit.
National Federation of Labor v. SOL • It represents even the members of the minority union. Thus when the union files a
Facts: Employees complained that some were not able to cast their votes because they were case against the employer, the decision binds even the minority union, which is
not properly notified of the date. Thus, they could not have filed protests within 5D. barred from filing another case for the same cause against the employer under RES
JUDICATA.
Doctrine: • Union’s representation cannot negate their wishes on matters, which are purely
1. What is important is employees were accorded an opportunity to freely and personal and individual to employees. Case: Where employees chose to be
intelligently determine which labor organization shall act in their behalf. They were
denied such in this case. A number of them were disenfranchised. Allegations of
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 91

covered by the Old plan. This should be respected. Union cannot pretend to know arbitration prescribed in the Collective Bargaining Agreement.
better. For this purpose, parties to a Collective Bargaining Agreement shall name and designate in
advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement
5.2 Protection and Capacity of the Loser; the Duty Fair Representation a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators,
• DUTY of FAIR REPRESENTATION – the obligation of the majority union to serve the preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In
interest of all members of the whole bargaining unit without hostility or case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board
discrimination. shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary,
• The minority union does not lose the character as a lawful organization entitled to pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement,
protection under art. 257 which makes it unlawful for any person to abridge the right which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has
to self-organization. been selected by the parties as described above.
• Under art. 267, an individual employee or group of employees shall have the right at
any time to present grievances to their employer. 1. CONTRACT ADMINISTRATION AS PART OF THE DUTY TO BARGAIN
• Exclusive representation is only for the purpose of collective bargaining. • The duty to bargain continues into the contract administration stage since the duty
• For negotiation and administering a CBA, the majority union is the sole and exclusive to bargain is not an end in itself it is a means to an end.
representative. For non-CBA issues, the minority union may act as a group of
employees to present grievances to the employer. 2. C.B.A., LAW BETWEEN THE PARTIES
• Protection provided by art.257 and the ULP acts proscribed under arts.258-259 do no • The provisions of the collective bargaining agreement must be respected since its
distinguish bet bargaining agent and non-bargaining agent. Hence, a minority terms and conditions “constitute the law between the parties”.
union may charge the employer with ULP. What is shielded is ULP is the right to self- • Those who are entitled to its benefits can invoke its provisions.
organize and not only the right to collectively bargain. • If an obligation imposed in the CBA is not fulfilled, a party can go to court for
• What is the remedy if the majority union neglects the interests of the employees in redress.
the minority union? This is a violation of the duty of fair representation.
• Hence the minority union can file a ULP case against the employer and engage in Holy Cross of Davao College vs. Holy Cross Faculty Union
peaceful concerted action. It cannot engage in strike because such is reserved to Facts: A teacher applied for 18month study leave with salary and allowance. The school only
an exclusive bargaining representative. approved 12 months leave without pay on the ground that the CBA benefit is only extended
to those who would avail of higher studies and not those like the teacher’s, which would only
5.3 Is the Bargaining Union a Majority Union? confer a certificate.
• The bargaining union does not always comprise the numerical majority in the
bargaining unit. Doctrine: Unilaterally formulated rules and policy can neither contradict nor undermine the
• Art.268 requires, for a union to win in CE, only a majority of the valid votes cast. The CBA provisions. If the CBA exclusively referred to higher studies it would have said so. The term
majority of the valid votes may be lesser than the majority of the employees in the is broad enough to include other programs.
bargaining unit.
• Art.267 requires the selection of majority of unit members. There is incongruence bet
Continental Steel Mfg. Co v. V.A. Montano
267 and 268. The result may be a bargaining agent that does not carry the
mandate of the majority of the employees. Facts: CBA provides that the company agrees to grant bereavement leave with pay to any
employee in case of death of a dependent and death and accident benefits if the a legit
5.4 May the Bargaining Agent Represent Retired Employees? parent, spouse or child dies. Wife of employee had a premature delivery in the 38th week of
• In pursuing retirement benefits under the CBA, the claimant retirees are represented pregnancy. Fetus died.
by the union of which they were former members. The employer cannot assert that
ee-er no longer exists and the union has no personality to file. (Producers Bank of the Doctrine: Fetus was a dependent. The death entitles employee to the benefits under the CBA.
PH v. NLRC) While the individual complainants are the real party in interest in issues The child inside the womb has life. It can die inside the womb.
involving monetary claims and benefits, the union is not denied its right to sue on
behalf of its members. United Kimberly-Clark Employees Union v. Kimberly Clark Ph
Facts: CBA provides that the company will employ immediate members of the family of an
TITLE VII-A GRIEVANCE MACHINERYAND VOLUNTARY ARBITRATION employee provided qualified and regardless of sex, upon the employee’s resignation,
retirement, disability or death. In another case, SC ruled that the company was not obliged to
ART. 273 [260] GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION unconditionally accept the recommendee. The company formulated the 1995 Guidelines
The parties to a Collective Bargaining Agreement shall include therein provisions that will requiring the recommendee to have completed a two-year vocational course or third yr
ensure the mutual observance of its terms and conditions. They shall establish a machinery for college.Union objected and attempted to renegotiate. The guidelines remained intact.
the adjustment and resolution of grievances arising from the interpretation or implementation
of their Collective Bargaining Agreement and those arising from the interpretation or Doctrine: By executing the CBA in its present form, which although did not contain the union
enforcement of company personnel policies. proposal, union was bound by the terms and conditions therein set forth.

All grievances submitted to the grievance machinery which are not settled within seven (7)
calendar days from the date of its submission shall automatically be referred to voluntary

2.1 Construing the Contract 4.3 Effect of Collective Agreement on the Individual Contracts of Employment
• Civil code rules under interpretation of contracts govern CBA interpretation. If • Members of the labor union are precluded form entering into individual contracts of
contract is clear, implement as it is. But if the terms clearly contradict intent of the employment.
parties, intent prevails. • EXCEPT- agreements to fix wages and working conditions where employer may
• In case of doubt, all labor legislation and labor contracts shall be construed in favor agree with employees
of the safety and decent living for the laborer. All doubts should be resolved in favor
of the worker. 5. ENFORCEABILITY AGAINST TRANSFEREE OF ENTERPRISE
• Compliance with the CBA is mandated to give protection to labor. The CBA is not
an ordinary contract but one impressed with public interest. 5.1-2 Purchase of Assets and Exception
• GR: Labor contracts are in personam, binding only between the parties. This
2.2 Proposal Contained in Minutes but not in the CBA Itself conclusion draws its force from the right of an employer to select his employees and
to decide when to engage them as protected under our Constitution, and the
Samahang Manggagawa Top Farm Mfg. United Workers of the Ph v. NLRC same can only be restricted by law through the exercise of police power.
Facts: Union charged employer ULP when the employer refused to implement across-the- • EXCEPTION: when the transaction is colored with bad faith
board the wage increases mandated. Nowhere in the CA mention such alleged promise or
commitment. The promise was only contained in the minutes. Sundowner Devt. Co. v. Hon. Drilon
Facts: Hotel Mabuhay was to be ejected by its lessor, Syjuco for non-payment of rentals. To
Doctrine: Where a proposal raised by a contracting party does not find print in the CBA, it is raise the needed money, Syjuco found a buyer of its assets, Sundowner. Mabuhay Union
not part thereof and the proponent has no claim whatsoever to its implementation. Because demanded that Sundowner retain Mabuhay employees.
the proposal was never embodied in the CBA, the promise has remained just that, a promise.
Doctrine: The payment of Sundowner to Mabuhay was consideration for the sale of assets of
2.3 Zipper Clause Mabuhay and in no way involves any assumption or undertaking on the part Sundowner of
liabilities of Mabuhay. Court did not find any indicia of bad faith.
ZIPPER CLAUSE- a device to forestall negotiation proposals after the CBA has been signed. It is
a stipulation in the CBA indicating that issues that could have been negotiated upon but not 5.3 Merger and Consolidation
contained din the CBA cannot be raised for negotiation when the CBA was already in effect. • Under the corp code, the surviving or consolidated corporation shall be responsible
The CBA is a complete agreement; negotiation is closed, as a zipper does. and liable for all the liabilities and obligations of each of the constituent corporation
in the same manner as if such surviving corporation had itself incurred such liabilities
3. LAW DEEMED WRITTEN IN CONTRACT or obligations. Pending claims may be prosecuted under the surviving corporation.
• “The fact that the officers and unlicensed members of the crew of the vessels had a Such merger or consolidation shall not impair rights of creditors and liens on
CBA does not bar the employees’ resort to leave law.” The law forms part of, and is property.
read into, every contract, unless clearly excluded therefrom in those cases where
exclusion is allowed. 5.4 Wiley Doctrine
• US SC ruled that a duty to arbitrate arising form a CBA survives the employer’s
4. BINDING EFFECT OF AGREEMENT ceasing to do business as a separate entity after its merger and consolidation. So as
• CBA gives rise to a valid enforceable contractual relation against individual union to be binding to the larger corporation, where relevant similarity and continuity of
members in matters that affect them peculiarly and against the union in matters operations across the change in ownership is evidenced b the wholesale transfer of
that affect the entire membership or large classes of its members. A union member he smaller corporation’s employees to the larger corporation’s plant.
is bound by the agreements drawn by the union. • If a contractual duty to arbitrate survives the employer’s merger into another
corporate employer, question as to the effect of the merger on the rights of
4.1 Persons entitled to benefits employees covered by the agreement - are arbitrable if questions as to those rights
• To accord benefits only to members of union to the exclusion of non-members would have been arbitrable before the merger.
without any valid reason would constitute undue discrimination against non- • Duty to arbitrate does not survive when there is lack of substantial continuity of
members. identity in the business enterprise before and after the change or when the union
• A member, even after resignation, can claim benefits from a CBA entered into at abandons the right to arbitration by failing to make its claims known.
the time he was a member.
6. CHANGE OF BARGAINING AGENT ; SUBSTITUTIONARY DOCRINE
4.2 Managers not entitled to CBA benefits; Exception • CBA binding on the parties for the period specified. Employees cannot revoke the
• Managers not allowed to unionize to bargain collectively with the employer, cannot contract with their employer by the simple expedient of changing their bargaining
claim the benefits contained in the CBA negotiated by workers under them. representative. (Substitutionary doctrine)
• Managerial employees cannot, in the absence of an agreement to the contrary, be • Thus, when there occurs a shift in employees’ allegiance after the execution of such
allowed to share in the concessions obtained by the labor union through collective contract with their employer, and the employees change their bargaining
negotiation. Otherwise, they would be open to collusion. representative, the contract continues to bind them up to its expiration date. The
• There is, however, nothing to prevent the employer from granting benefits to new agent may, however, bargain for the shortening of the contract period.
managerial employees equal or higher than those afforded to union members.

Benguet Consolidated v. BCI Employees and Workers Union machinery amounts to the relinquishment of the right to submit a case to VA.
Facts: New bargaining agent replaced the old one. It went on strike. Employer contends that
it could not do so because of the no-strike provision in the CBA. Doctrine: CA is wrong. VA can be availed of upon the agreement of the parties.

Doctrine: The substitutionary doctrine only considers the employees’ interest in the existing 7.3. STRUCTURE AND PROCEDURE
bargaining agreement. The agent’s (remember, unions are agents of the employees) interest • In the absence of an applicable provision in the CBA, a grievance committee shall
never entered the picture. It cannot be invoked to support the contention that a newly be created within 10 days from signing of the CBA.
certified collective bargaining agent automatically assumes all the personal undertakings. Procedure in Handling Grievances
• In the absence of an applicable provision in the CBA or existing company practice
7. GRIEVANCES prescribing for the procedures in handling grievance, the ff. shall apply:
• GRIEVANCE – any question by either the employer or the union regarding the a. Employee shall present grievance or complaint orally or in writing to the shop
interpretation or application of the CBA or company personnel policies or any claim steward.
by either party that the other party is violating any provision of the CBA or company b. If the grievance is valid, the shop steward shall immediately bring the
personnel policies. complaint to the employee’s immediate supervisor. The shop steward,
o Loosely, any dispute or controversy respecting terms and conditions of employee and supervisor shall exert efforts to settle the grievance at their level.
employment which an employee or group of employees may present to c. If no settlement is reached, the grievance shall be referred to the grievance
the employer, with or without a union or a CBA committee which shall have 10 days to decide the case.
• The expansion of the original and exclusive jurisdiction of voluntary arbitrators to
include questions arising from the interpretation and enforcement of company 8. VOLUNTARY ARBITRATION
personnel policies has the effect of widening the meaning and interpretation of a • VOLUNTARY ARBITRATION – contractual proceeding whereby the parties to any
grievance to include a situation where there is no bargaining agent and no CBA. dispute, in order to obtain a speedy and inexpensive final disposition of the matter,
• PERSONNEL POLICIES: guiding principles stated in broad, long range terms that select an impartial third person (i.e. the judge) of their own choice and by consent
express the philosophy or beliefs of an organization’s top efficiency and well-being submit their controversy to him for determination.
of employees o Referral of the dispute is made pursuant to a voluntary arbitration clause
• The usual source of grievances, however is the rules and regulations governing in the agreement
disciplinary actions. o The judge here is called arbitrator
• A CBA will not be registered with the DOLE if it does not contain a provision on • COMPULSORY ARBITRATION – process of settlement of labor disputes by a
grievance procedure / machinery which is a must. government agency (or other means provided by the government) which has
• In the event that the CBA is without said provision, the registrar should advise parties power to investigate and make an award binding upon the parties.
to include a grievance procedure / machinery therein before it is considered duly o It’s a system whereby parties are compelled by the government to forego
registered. their right to strike and are compelled to accept the resolution of their
dispute through arbitration by a 3rd person normally appointed by the
7.1 By-passing the Grievance Machinery: ULP government.
• All grievances from the implementation or interpretation of the CBA and/or o The judge here is called labor arbiter
interpretation and enforcement of company personnel policies are compulsorily
subject to the grievance machinery. 8.1 VOLUNTARY ARBITRATION: A PRIVATE JUDICIAL SYSTEM
• The requirement is an extension of the duty to bargain and the violation is ULP under • A voluntary arbitrator is not a public tribunal imposed upon parties by a superior
art.259g&I because the grievance procedure is part of the continuous process of authority which the parties are obliged to accept…he is rather part of a system of
collective bargaining. self-government created by and confined to the parties.
o It is intended to promote friendly dialogue between labor and o Such arbitrator has no tenure of office and is not politically appointed or
management as a means of maintaining industrial peace. elected. His continued selection upon how satisfactorily and effectively he
• Before resorting to courts, must exhaust all remedies available to him. serves the needs of the parties.
• Strike availed of without availing of grievance procedure amounts to an invalidity in o In effect, management and labor have established a private judicial
the strike. system whereby they select their own judges and fix their own rules of
• Procedures described in the CBA must be observed. procedure.
• Before VA can be availed of, grievance procedures must be complied with. State o When parties have agreed to final & binding arbitration, courts will
policy to encourage VA, Azu submits that a grievance may be brought direcly to enforce the agreement and the award.
VA esp when proved to be effective in past or when parties have inadvertently • The primary function of voluntary labor arbitration is to provide:
failed to include a grievance machinery. 1. A process for the orderly disposition of disputes and
2. A foundation for stable labor management relations
7.2 Waiver of Grievance Machinery Procedure and Submission to VA • Commercial arbitration grew as an alternative to court action, while labor
management arbitration has evolved primarily as a substitute for strikes.
Apalisok v. Radio Ph
Facts: Apalisok was removed from work. She waived her right to resolve her case though 8.2 VOLUNTARY ARBITRATION: A MASTER PROCEDURE
grievance machinery as provided in the CBA and instead filed an illegal dismissal case. But • Voluntary arbitration is a master procedure in the sense that any & all kinds of labor
then both parties agreed to submit the case for VA. CA held that the waiver of grievance disputes may be submitted to, settled or resolved through it, if parties so desire.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 94

o As master procedure, it takes precedence over other dispute settlement those disputes in Art. 224 which ordinarily are under the L.A.’s original & exclusive
devices: for example, if a labor arbiter is presented with a case falling jurisdiction.
under his original and exclusive jurisdiction, the parties may withdraw it
from him, no matter at what stage, if parties mutually decide to bring the 1.1 JURISDICTION OVER TERMINATION DISPUTES
dispute to voluntary arbitration. • By the parties’ explicit agreement, V.A. has jurisdiction over termination cases
• The primacy of voluntary arbitration is mandated by the PH Constitution itself and between the union and the company arising from CBA or personnel policy
entrenched in the Labor Code as a matter of basic industrial relations policy—a implementation. Such cases, if filed with a labor arbiter, is to be dismissed for lack of
recognition that the best persons to resolve a dispute are the disputants themselves. jurisdiction and referred to the concerned NCMB Regional Branch for appropriate
• Voluntary arbitration is voluntary because parties themselves choose the arbitrator action.
and define the issues submitted. However, submission to him of the issues named o Parties will proceed to select a V.A. based on the procedure outlined in
under Article 274 is required by law. the CBA. But this referral presupposes in unequivocal language that the
• A dispute pending in voluntary or compulsory arbitration cannot be the subject of a termination dispute should be submitted to grievance machinery and
strike or lockout notice. voluntary arbitration.
§ Without such explicit agreement, the L.A. may hear & decide
ARTICLE 274. [261] JURISDICTION OF VOLUNTARY ARBITRATORS AND PANEL OF VOLUNTARY the case.
ARBITRATORS
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive Sanyo Philippines v. Cañizares (1992)
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or Facts: This case concerns a dispute between the union and the company (on one hand) and
implementation of the Collective Bargaining Agreement and those arising from the certain dismissed union and non-union employees (on the other hand.) The issue is which
interpretation or enforcement of company personnel policies referred to in the immediately entity should exercise jurisdiction.
preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as unfair labor practice and shall be Doctrine: The dispute has to be settled by an impartial body which, in this case, cannot refer
resolved as grievances under the Collective Bargaining Agreement. For purposes of this to the members of the grievance machinery designated by the union and the company.
article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or Since there has already been actual termination, the matter falls within the L.A.’s jurisdiction.
malicious refusal to comply with the economic provisions of such agreement. Only disputes involving the union and the company (as opposing parties themselves) shall be
referred to the grievance machinery or V.A.s.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor
and Employment shall not entertain disputes, grievances or matters under the exclusive and • If dismissal is still an unresolved grievance, V.A. has jurisdiction.
original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration 1.1a “POLICIES,” “RULES,” “PROCEDURES”
provided in the Collective Bargaining Agreement. • COMPANY PERSONNEL POLICIES – guiding principles stated in broad, long-range
terms that express the philosophy or beliefs of an organization’s top authority
ARTICLE 275. [262] JURISDICTION OVER OTHER LABOR DISPUTES regarding personnel matters. They deal with matters affecting efficiency and well-
The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall being of employees and include the procedure in the administration of wages,
also hear and decide all other labor disputes including unfair labor practices and bargaining benefits, promotions, transfer and other personnel movements which are usually not
deadlocks. spelled out in the CBA.
o The usual source of grievances, however, are the rules and regulations
governing disciplinary actions.
1. JURISDICTION OF LABOR ARBITERS (L.A.) AND VOLUNTARY ARBITRATORS (V.A.) • MINOR POLICIES – better known as rules and procedures, are the extension of major
• The jurisdiction of L.A. and V.A. over cases can possibly include money claims in one policies and are usually formulated by minor executives or department managers.
form or another. o Rules are specific guides intended to govern conduct and action of
• Cases where L.A. have original & exclusive jurisdiction are listed in Art. 224 while that operating supervisors and employees in the performance of their
of V.A. in Art. 274. designated activities.
• The L.A.’s original & exclusive jurisdiction is qualified by an exception in the o Procedure is made to specify ways of carrying out policies and rules. It tells
introductory sentence of Art. 224(a): “Except as otherwise provided under this what work/task to do, how to do it and when to do it.
Code…” which refers to the ff:
o Art. 224 (c): Cases arising from the interpretation or implementation of 1.2 JURISDICTION OVER CBA VIOLATION; “GROSS VIOLATION”
collective bargaining agreements and those arising from the • CBA violations not constituting ULP are likewise cognizable by a V.A. if not resolved
interpretation or enforcement of company personnel policies shall be through the grievance machinery.
disposed of by the Labor Arbiter by referring the same to the grievance o If the violations are gross in character, however, these are to be treated
machinery and voluntary arbitration as may be provided in said as ULP which is cognizable by the L.A.
agreements. § GROSS VIOLATIONS – flagrant/malicious refusal to comply with
o Art. 275 (supra) the economic provisions of the CBA.
• Jurisdiction of the V.A. or Panel of V.A.s under Art. 275 must be voluntarily conferred o Yet, even in gross violation cases, parties are allowed by Art. 275 to submit
by both labor and management. The labor disputes under Art. 275 can include such ULP case to a V.A.

1.2a TOTAL DISREGARD OF CBA CONSTITUTES ULP 2.1 THE SUBMISSION AGREEMENT; EXTENT OF ARBITRATOR’S AUTHORITY
• Although the contract may establish the breadth of the arbitrator’s power, his
Silva v. Philtread (1997) Employees’ Union v. Bayer (2010) power may be more sharply defined in the submission agreement.
Doctrine: For a ULP case to be cognizable Dispute arose when the employer o The issue argued in the grievance procedure may be quite different from
by the L.A., and the NLRC to exercise rescinded unilaterally its CBA with the what finally emerges in the submission agreement.
appellate jurisdiction, the allegations in the certified bargaining agent and later • In general, the arbitrator is expected to decide those questions expressly stated and
complaint should show prima facie the decided to bargain anew with a different limited in the submission agreement. However, since arbitration is the final resort for
concurrence of: group without legitimate reason and adjudication of disputes, arbitrator will assume that he has the power to make a
1. Gross violation of the CBA without following the proper procedure. final settlement.
2. Violation pertains to CBA’s economic
provisions Doctrine: Reference to the economic Sime Darby v. Magsalin (1989)
provisions of the CBA is not a necessary Facts: Sime Darby contends that the Arbitrator gravely abused his discretion in passing upon
element of ULP where the employer in not only the question of whether or not a performance bonus is to be granted but also, in the
effect totally disregarded the subsisting affirmative case, the amount thereof. SC ruled that in their agreement to arbitrate, parties
CBA. Total disregard of the CBA is more submitted to the V.A. “the issue of performance bonus.” Since the language of the issue was
than gross violation of economic provisions. cryptic, it was fatal for Sime Darby not to reflect his thinking that the issue only had a single
Comparison: The Bayer doctrine has modified the Silva doctrine in terms of when a ULP aspect (i.e. only covered whether or not the bonus should be granted, excluding the issue of
case is considered cognizable by the Labor Arbiter. the amount of such bonus.)

1.2b LIABILITY FOR DAMAGES; UNION NOT ENTITLED TO MORAL DAMAGES Doctrine: The V.A. has plenary jurisdiction & authority to interpret the agreement to arbitrate
• A union, like a corporation, is an artificial person that exists only in contemplation of and to determine the scope of his own authority, subject only, in a proper case, to the
law. It has no feelings. Hence, it can’t experience physical suffering or mental certiorari jurisdiction of the SC.
anguish that translate to moral damages.
Ludo and Luym Corp. v. Saornido (2003)
1.3 OTHER CASES Facts: Employees presented claims for monetary benefits to the employer but the latter didn’t
• V.A.s also have exclusive & original jurisdiction over wage distortion issues arising act on the claim because it questioned the starting date of the employees’ regular status. The
from the application of any wage orders in organized establishments, as well as employer and employees through their union executed a submission agreement raising the
unresolved grievances arising from the interpretation & implementation of the sole issue of the date of regularization. The V.A. ruled that the date was “6 months from the
productivity incentive programs under R.A. 6971. first day of service” but also further ruled that the complainants are entitled to sick leave,
• Upon agreement of the parties, any other labor dispute may be submitted to a V.A. vacation leave and salary increases during such period worth Php 5.7M. Employer argued
or panel of V.A.s. that the V.A. exceeded his authority. SC ruled that the issue of the date of regularization is a
two-tiered issue. Employees shouldn’t be required to file another action for payment of such
2. HOW VOLUNTARY ARBITRATION IS INITIATED benefits once they are determined to be entitled to them. Thus, the V.A. didn’t exceed his
• Voluntary arbitration may be initiated either by: power.
a. Submission and/or
b. Demand or Notice invoking a collective agreement arbitration clause Doctrine: Generally, the arbitrator is expected to decide only those questions expressly
• SUBMISSION – also known as “stipulation” or an “agreement to arbitrate,” it is used delineated by the submission agreement. Nevertheless, he can assume he has the necessary
where there is no previous agreement to arbitrate. It must be signed by both parties power to make a final settlement since arbitration is the final resort for adjudication of
and it describes an existing dispute. It often names the arbitrator, procedures in the disputes.
hearing and sometimes contains considerable details of the arbitrator’s authority
and other matters the parties wish to control. 2.2 ARBITRATOR’S INTERPRETATION OF CBA
o Submission is more appropriate in interest disputes since collective • An arbitral award doesn’t draw its essence from the CBA; hence, there is
agreements generally do not provide for the arbitration of such disputes unauthorized amendment thereof if:
that may arise in the future. 1. It is unfounded in reason and fact
o Submission is often entered into after the dispute has materialized and the 2. It is unconnected with the wording & purpose of the agreement
issues can already be defined. 3. It is without factual support in view of its language, its context, and any
• However, a DEMAND OR NOTICE OF INTENT TO ARBITRATE is more applicable to rights other indicia of the parties’ intention
dispute because collective agreements are required under R.A. 6715 to provide for 4. It ignores or abandons the plain language of the contract
a grievance procedure and a voluntary arbitration clause with respect to disputes 5. It is mistakenly based on a crucial assumption which concededly is a non-
arising from application or interpretation of the agreement. fact
o If a dispute is covered by such arbitration clause, arbitration may be 6. It is unlawful, arbitrary, or capricious
initiated unilaterally by one party by serving upon the other a written 7. It is contrary to public policy
demand or notice of intent to arbitrate. • When a CBA may be expected to speak on a matter, but does not, its sentence
imports ambiguity on that subject. In such case, the VA is not merely to rely on the
cryptic words on the CBA’s face but is mandated to discover the intention of the
parties, which may be done by resorting to extrinsic evidence.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 96

ARTICLE 276. [262-A] PROCEDURES • General Rule: A decision or award of the V.A. is appealable to the CA via petition
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the power to hold for review under Rule 43, just like decisions of quasi-judicial agencies, board,
hearings, receive evidences and take whatever action is necessary to resolve the issue or commissions, etc.
issues subject of the dispute, including efforts to effect a voluntary settlement between parties. o The mode of appeal is NOT Rule 65 because a petition for certiorari lies
All parties to the dispute shall be entitled to attend the arbitration proceedings. The only where there no appeal and no plain, speedy and adequate remedy
attendance of any third party or the exclusion of any witness from the proceedings shall be in the ordinary course of law. Certiorari is not a substitute for a lapsed
determined by the Voluntary Arbitrator or panel of Voluntary Arbitrators. Hearing may be appeal.
adjourned for cause or upon agreement by the parties. • Exceptions: A petition for certiorari, despite availability of appeal, may be
entertained:
Unless the parties agree otherwise, it shall be mandatory for the Voluntary Arbitrator or panel a. When public welfare and advancement of public policy dictates
of Voluntary Arbitrators to render an award or decision within twenty (20) calendar days from b. When broader interest of justice so requires
the date of submission of the dispute to voluntary arbitration. c. When the writs issued are null and void
d. When the questioned order amounts to an oppressive exercise of judicial
The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall contain authority
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. 1.3b PERIOD OF APPEAL IS 10 DAYS, NOT 15
• Despite Rule 43 providing for a 15-day period to appeal, the SC has ruled in Coca
Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators Cola Bottlers v. Coca-Cola (2005) that the V.A.’s decision must be appealed before
or the Labor Arbiter in the region where the movant resides, in case of the absence or the CA within 10 calendar days from receipt of the decision as provided in the
incapacity of the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may Labor Code.
issue a writ of execution requiring either the sheriff of the Commission or regular courts or any o The 10-day period to appeal under the Labor Code being a substantive
public official whom the parties may designate in the submission agreement to execute the right, this period cannot be diminished, increased or modified through the
fnal decision, order or award. Rules of Court because the Rules of Court are subordinate to the statute.
• WRITER’S NOTE: Since Sir’s book is currently the 2016 version, it hasn’t yet adopted
1. VOLUNTARY ARBITRATION AWARD, GENERALLY FINAL; EXCEPTIONS the ruling in the 2018 case of Guagua National Colleges v. CA where the SC has
• General Rule: The decisions of V.A.s must be given the highest respect and reconciled the 10-day period under Art. 276 of the Labor Code and the 15-day
accorded a certain measure of finality. period to appeal to the CA under Rule 43 of the Rules of Court, to wit: “…the 10-day
• Exception: The SC may take cognizance of petitions questioning these decisions period stated in Article 276 should be understood as the period within which the
where want of jurisdiction, grave abuse, violation of due process denial of party adversely affected by the ruling of the Voluntary Arbitrators or Panel of
substantial justice or erroneous interpretation of the law are brought to its attention. Arbitrators may file a motion for reconsideration. Only after the resolution of the
These may be raised in a certiorari petition. motion for reconsideration may the aggrieved party appeal to the CA by filing the
o In other words, a voluntary arbitral award may be modified or set aside petition for review under Rule 43 of the Rules of Court within 15 days from notice
only upon grounds on which an NLRC decision itself may be modified or pursuant to Section 4 of Rule 43.” But since he already cited the case in class, I think
set aside by the SC. it is safe to refer to this ruling if ever it comes out in the exam.

1.1 MOTION FOR RECONSIDERATION 1.4 FINDINGS OF FACTS OF A VOLUNTARY ARBITRATOR MAY BE REVIEWED
• A motion for reconsideration may be filed before the V.A. within 10 calendar days • Findings of fact and conclusions drawn therefrom by V.A.s have to be supported by
from receipt of the copy of the award/decision by the parties. substantial evidence. Otherwise, such findings of fact may be reviewed by the SC.
o However, Department Order No. 40 states that the V.A.’s decision, order,
resolution or award shall not be subject of a motion for reconsideration. ARTICLE 277. [262-B] COST OF VOLUNTARY ARBITRATION AND VOLUNTARY ARBITRATOR'S FEE
§ Atty. Azucena: This prohibition cannot stand in a petition for a The parties to a Collective Bargaining Agreement shall provide therein a proportionate
writ of certiorari because such petition inherently requires having sharing scheme on the cost of voluntary arbitration including the Voluntary Arbitrator's fee.
filed an MR (in other words, he disagrees with the D.O. No. 40) The fixing of fee of Voluntary Arbitrators, or panel of Voluntary Arbitrators, whether shouldered
§ NOTE: Sir mentioned that in the recent case of Guagua National wholly by the parties or subsidized by the Special Voluntary Arbitration Fund, shall take into
Colleges v. CA (2018), an MR must be filed with the V.A. within account the following factors:
the 10-day period before such decision can be appealed to the a. Nature of the case;
Court of Appeals via Rule 43. b. Time consumed in hearing the case;
c. Professional standing of the Voluntary Arbitrator;
1.2 REVIEW OF AWARD BY CERTIORARI d. Capacity to pay of the parties; and
• A V.A. acts in a quasi-judicial capacity; hence, there is no reason why his decisions e. Fees provided for in the Revised Rules of Court.
should be beyond the SC’s review.

1.3 APPEAL FROM VA TO CA

1.3a MODE OF APPEAL IS UNDER RULE 43, NOT RULE 65

institutions, it shall be the duty of the striking union or locking-out employer to provide and
ARTICLE 278. [263] STRIKES, PICKETING, AND LOCKOUTS maintain an effective skeletal workforce of medical and other health personnel, whose
a. It is the policy of the State to encourage free trade unionism and free collective movement and services shall be unhampered and unrestricted, as are necessary to
bargaining. insure the proper and adequate protection of the life and health of its patients, most
b. Workers shall have the right to engage in concerted activities for purposes of collective especially emergency cases, for the duration of the strike or lockout. In such cases,
bargaining or for their mutual benefit and protection. The right of legitimate labor therefore, the Secretary of Labor and Employment may immediately assume, within
organizations to strike and picket and of employers to lockout, consistent with the twenty four (24) hours from knowledge of the occurrence of such a strike or lockout,
national interest, shall continue to be recognized and respected. However, no labor jurisdiction over the same or certify it to the Commission for compulsory arbitration. For
union may strike and no employer may declare a lockout on grounds involving inter- this purpose, the contending parties are strictly enjoined to comply with such orders,
union and intra-union disputes. prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment
c. In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may or the Commission, under pain of immediate disciplinary action, including dismissal or loss
file a notice of strike or the employer may file a notice of lockout with the Ministry at least of employment status or payment by the locking-out employer of backwages, damages
30 days before the intended date thereof. In cases of unfair labor practice, the period of and other affirmative relief, even criminal prosecution against either or both of them.
notice shall be 15 days and in the absence of a duly certified or recognized bargaining
agent, the notice of strike may be filed by any legitimate labor organization in behalf of The foregoing notwithstanding, the President of the Philippines shall not be precluded
its members. However, in case of dismissal from employment of union officers duly from determining the industries that, in his opinion, are indispensable to the national
elected in accordance with the union constitution and by-laws, which may constitute interest, and from intervening at any time and assuming jurisdiction over any such labor
union busting where the existence of the union is threatened, the 15-day cooling-off dispute in order to settle or terminate the same.
period shall not apply and the union may take action immediately. h. Before or at any stage of the compulsory arbitration process, the parties may opt to
d. The notice must be in accordance with such implementing rules and regulations as the submit their dispute to voluntary arbitration.
Minister of Labor and Employment may promulgate. i. The Secretary of Labor and Employment, the Commission or the voluntary arbitrator or
e. During the cooling-off period, it shall be the duty of the Ministry to exert all efforts at panel of voluntary arbitrators shall decide or resolve the dispute within thirty (30)
mediation and conciliation to effect a voluntary settlement. Should the dispute remain calendar days from the date of the assumption of jurisdiction or the certification or
unsettled until the lapse of the requisite number of days from the mandatory filing of the submission of the dispute, as the case may be. The decision of the President, the
notice, the labor union may strike or the employer may declare a lockout. Secretary of Labor and Employment, the Commission or the voluntary arbitrator shall be
f. A decision to declare a strike must be approved by a majority of the total union final and executory ten (10) calendar days after receipt thereof by the parties.
membership in the bargaining unit concerned, obtained by secret ballot in meetings or
referenda called for that purpose. A decision to declare a lockout must be approved by ARTICLE 279. [264] PROHIBITED ACTIVITIES
a majority of the board of directors of the corporation or association or of the partners in (a) No labor organization or employer shall declare a strike or lockout without first having
a partnership, obtained by secret ballot in a meeting called for that purpose. The bargained collectively in accordance with Title VII of this Book or without first having filed the
decision shall be valid for the duration of the dispute based on substantially the same notice required in the preceding Article or without the necessary strike or lockout vote first
grounds considered when the strike or lockout vote was taken. The Ministry may, at its having been obtained and reported to the Ministry.
own initiative or upon the request of any affected party, supervise the conduct of the
secret balloting. In every case, the union or the employer shall furnish the Ministry the
results of the voting at least seven days before the intended strike or lockout, subject to No strike or lockout shall be declared after assumption of jurisdiction by the President or the
the cooling-off period herein provided. Minister or after certification or submission of the dispute to compulsory or voluntary arbitration
g. When, in his opinion, there exists a labor dispute causing or likely to cause a strike or or during the pendency of cases involving the same grounds for the strike or lockout.
lockout in an industry indispensable to the national interest, the Secretary of Labor and Any worker whose employment has been terminated as a consequence of any unlawful
Employment may assume jurisdiction over the dispute and decide it or certify the same lockout shall be entitled to reinstatement with full backwages. Any union officer who
to the Commission for compulsory arbitration. Such assumption or certification shall have knowingly participates in an illegal strike and any worker or union officer who knowingly
the effect of automatically enjoining the intended or impending strike or lockout as participates in the commission of illegal acts during a strike may be declared to have lost his
specified in the assumption or certification order. If one has already taken place at the employment status: Provided, That mere participation of a worker in a lawful strike shall not
time of assumption or certification, all striking or locked out employees shall immediately constitute sufficient ground for termination of his employment, even if a replacement had
return to work and the employer shall immediately resume operations and readmit all been hired by the employer during such lawful strike.
workers under the same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the Commission may seek the assistance of law (b) No person shall obstruct, impede, or interfere with by force, violence, coercion, threats or
enforcement agencies to ensure compliance with this provision as well as with such intimidation, any peaceful picketing by employees during any labor controversy or in the
orders as he may issue to enforce the same. exercise of the right to self-organization or collective bargaining, or shall aid or abet such
obstruction or interference.
In line with the national concern for and the highest respect accorded to the right of
patients to life and health, strikes and lockouts in hospitals, clinics and similar medical (c) No employer shall use or employ any strike-breaker, nor shall any person be employed as a
institutions shall, to every extent possible, be avoided, and all serious efforts, not only by strike-breaker.
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, (d) No public official or employee, including officers and personnel of the New Armed Forces
however legitimate, by labor of its right to strike and by management to lockout. In labor of the Philippines or the Integrated National Police, or armed person, shall bring in, introduce
disputes adversely affecting the continued operation of such hospitals, clinics or medical or escort in any manner, any individual who seeks to replace strikers in entering or leaving the
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 98

premises of a strike area, or work in place of the strikers. The police force shall keep out of the
picket lines unless actual violence or other criminal acts occur therein: Provided, That nothing • July 17, 1953 – R.A. No. 875 or the Industrial Peace Act was enacted which gave statutory
herein shall be interpreted to prevent any public officer from taking any measure necessary to recognition to the right to strike.
maintain peace and order, protect life and property, and/or enforce the law and legal • September 21, 1972 - It was subsequently prohibited due to Martial Law.
orders. • 1987 Constitution – for the first time, the fundamental law of our land mandataed the
State to guarantee the rights of all workers to self-organization, collective bargaining and
(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation negotiations, and peaceful concerted activities, including the right to strike in
or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or accordance with law.
obstruct public thoroughfares. • LOCKOUT - temporary refusal of any employer to furnish work as a result of an industrial
or labor dispute
THE RIGHT TO ENGAGE IN CONCERTED ACTIVITIES • Strikes and lockouts are similar because they both connote temporary stoppage of work.
• The right is guaranteed by the Constitution itself. The difference is in the identity of the doer.
• Article XIII, Section 3 of the Constitution commands the state to guarantee the rights of all • Lockout, in the universally-used sense, is an act directed at the union itself, rather than at
workers to self-organization, collective bargaining, peaceful concerted activities, and the individual employee-members of the union.
even the right to strike in accordance with law.
• Peaceful concerted activities include everything short of strike. GROUNDS FOR STRIKE/LOCKOUT
• The phrase “in accordance with law” applies not just to strikes but also to the other rights • They may be caused either by a collective bargaining deadlock or a ULP act.
mentioned in the provision. • Violations of CBA shall not be considered ULP and shall not be strikeable, except flagrant
• Concerted; connotes that the activity is planned and accomplished by people acting and/or malicious refusal to comply with its economic provisions.
together. • No strike/lockout may be declared on grounds involving inter-union and intra-union
o However, there is opinion that an individual, acting alone, may be deemed disputes or without first having filed a notice of strike or lockout or without the necessary
engaged in concerted activity. strike or lockout vote having been obtained and reported to the Board.
o Ex: employee is seeking to induce group activity or acting as representative of • No strike either in cases of assumption of jurisdiction by the SOL or after certification or
at least one other employee submission of the dispute to arbitration or during the pendency of cases involving the
• Concerted activity as defined in jurisprudence: one undertaken by two or more same grounds for the strike or lockout.
employees, or by one on behalf of others.
WHEN A LOCKOUT IS PROPER IN THE COURSE OF COLLECTIVE BARGAINING
NATURE OF STRIKE 1. Notice of intention to declare a strike/lockout has been filed with the DOLE
• STRIKE – cessation of work by employees in an effort to get more favorable terms for 2. At least 30 days has elapsed since the filing of the notice before lockout declared
themselves, or as a concerted refusal by employees to do anyn work for their employer, 3. Impasse as resulted in the negotiations
or to work at their customary rate of speed, until the object of the strike is attained by the 4. The strike/lockout is not discriminatory
employer’s granting the demanded concession.
• Ordinary meaning of strike: combined effort on the part of a body of workmen • In defending against a ULP charge arising out of such a use of lockout, an employer
employed by the same employer to enforce a demand for higher wages, shorter hours, should show that he was merely protecting his bargaining position and not acting out of
or any other concession, by stopping work and refusing to resume until the concession hostility to the process of collective bargaining or by way of discriminating against union
shall have been granted. members.
• Strike as defined in Art. 212(o): any temporary stoppage of work by the concerted action • In a ULP proceeding which arises out of a lockout used as a weapon during a labor-
of employees as a result of an industrial or labor dispute. management dispute, an employer’s legal position is improved if it appears that he did
• A strike may be legally held because of either or both: not lock out his employees during the early stages of negotiation, and did not employ
o (1) a collective bargaining deadlock; the lockout to force acceptance of his terms.
o (2) unfair labor practice act of the employer • A lockout is valid where, in the course of a labor dispute, it is undertaken as a defensive
weapon, or in pursuance of the employer’s interest.
CHARACTERISTICS OF A STRIKE: • Lockout must be for a lawful purpose and carried out through lawful means.
1. There must be an established relationship between the strikers and the person or • A lockout is unlawful where it is declared in order to defeat organizational and
persons against whom the strike is called; bargaining rights of employees.
2. The relationship must be one of employer and employee;
3. The existence of a dispute between the parties and the utilization by labor of the KINDS OF STRIKE
weapon of concerted refusal to work as a means of persuading, or coercing BASED ON EXTENT
compliance with the workmen’s demands; 1. General – extends over a whole community, province, state, or country. It is an
4. The contention advanced by the workers that although work ceases, the extended form of sympathetic strike, involving many workers who cease to work in
employment relation is deemed to continue, although in a state of belligerent sympathy with the workers of another employer, or in order to put pressure upon the
suppression; government or in order to paralyze the present economic and social systems
5. There is work stoppage, which stoppage is temporary; 2. Local or Particular – undertaken by workers in a particular enterprise, locality, or
6. The work stoppage is done through concerted action of the employees; occupation
7. The striking group is a legitimate labor organization and, in case of bargaining
deadlock, is the employees’ sole bargaining representative. BASED ON NATURE OF THE ACT
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 99

1. Strike proper – combination of the strike plus a refusal of the strikers to leave the AVOIDANCE OF STRIKE
plant and machineries, and a refusal to permit the latter to be operated. • Pacific measures/remedies must be exhausted before staging a strike.
2. Sit-down strike - the striking employees remain in the business premises and without • Strikes and other coercive acts are deemed justified only when peaceful alternative
working themselves, retain such dominion over the plant’s facilities. have proved unfruitful in settling the dispute.
3. Partial or quickie strike – intermittent, unannounced work stoppage, including • An issue awaiting resolution in arbitration proceedings cannot serve as a basis of strike.
slowdowns, unauthorized extension of rest periods, and walkouts; used • The NCMB may, upon request of either of both parties, or upon its own initiative, provide
interchangeably with wildcat strike conciliation-mediation services to labor disputes other than notices of strikes or lockouts.
a. Wildcat strike – work stoppage that violates the labor contract and is not • The Board shall have the power to require the appearance of any parties at conciliation
authorized by the union meetings.
• Any compromise settlement, including those involving labor standard laws, voluntarily
BASED ON DEGREE OF EMPLOYEE INTEREST agreed upon by the parties with the assistance of the Board and its regional branches
1. Primary strike – one declared by the employees who have a direct and immediate shall be final and binding upon the parties.
interest in the subject of the dispute • NLRC or any court shall not assume jurisdiction over issues except in case of non-
2. Secondary strike – when a group of employees refuse in concert to remain at work compliance thereof or if there is prima facie evidence that the settlement was obtained
for an employer because he persists in dealing with a third person against whom through fraud, misrepresentation, or coercion.
they have a grievance, not because of any complaint over their labor standards
under him. PROTECTION OF STRIKE
3. Sympathetic Strike – Stoppage of work to make common cause with other strikers in 1. It is generally not subject to labor injunction or restraining order;
other establishments or companies, without the existence of any labor dispute 2. Employees may not be discriminated against merely because they have exercised
between the striking employees and their own employer. Because a valid strike the right to strike;
presupposes a labor dispute, it follows that a sympathetic strike is illegal. 3. The use of strike-breakers is prohibited;
4. Mere participation in a strike does not sever the employment relationship;
BASED ON PURPOSE/NATURE OF EMPLOYEE INTEREST
1. Economic strike – intended to force wage and other concessions from the employer • Employee’s right to exercise the right to concerted activities should not be defeated by
which he is not required by law to grant. It is also known as bargaining strike. a directive of the employer for the strikers to report back to work.
2. Unfair labor practice strike - it is called against the ULP of the employer, usually for • The clear weight of authority is to the effect that striking employees may advise or
the purpose of making him desist from further committing such pratices persuade others to quit work and join in a strike, so long as contractual rights are not
invaded, and that they mad advise and persuade others not to engage their services.
A VALID STRIKE NEEDS A LABOR DISPUTE • The right to strike includes the right to use peaceable and lawful means to induce
present and expectant employees to join the ranks of strikers.
National Union of Workers In Hotels, etc. vs. NLRC and Peninsula Hotel • STRIKE BREAKER – person who obstructs, impedes, or interferes with by forcec, violence,
Doctrine: Petitioners should have complied with the prohibition to strike ordered by the NCMB coercion, threats, or intimidation any peaceful picketing by employees during any labor
when the latter dismissed the notices of strike after finding that the alleged acts of controversy affecting wages, hours or conditions of work or in the exercise of the right of
discrimination by the respondent were not ULP. Refusal to heed proscription is reflective of self-organization or collective bargaining
bad faith. An employer may lawfully discharge employees for participating in an unjustifiable • INP/AFP during strikes/labor disputes in general – participation is limited to maintenance
wildcat strike and especially so in this case, because said wildcat strike was an attempt to of peace and order, enforcement of laws and legal orders of duly constituted authorities,
undermine the Union’s position as the exclusive bargaining rep and was, therefore, an and the performance of specific functions as may be provided by law.
unprotected activity.
STATUS OF STRIKERS
• WELGA NG BAYAN – is in the nature of a general strike which is but an extended • Although striking employees cease to work, the employees intend to retain their position.
sympathetic strike; it is work stoppage affecting numerous employers including a • A declaration of a strike does NOT amount to a renunciation of the employment relation.
particular employer who has no dispute with his employees regarding their terms and • The EER is merely suspended as the work stoppage is not permanent but only temporary.
conditions of employment. • A striking employee is still an employee.
o Example: To portray a dictator-president as a hero, is to many people, • Art. 219(f) defines an employee as including any individual whose work has ceased as a
totally unacceptable. It is regarded it a national insult to them and a result of or in connection with any current labor dispute or because of any unfair labor
remorseless distortion of history. Indeed it justifies an all-out welga ng practice if he has not obtained any other substantially equivalent and regular
bayan. employment.
o However, workers that join such should not just leave their work without
observance of company rules. LEGALITY OF STRIKE: THE SIX FACTORS AFFECTING LEGALITY
o In the realm of political freedom, a general strike may be defensible but • Strike is a powerful weapon of the working class. It must be handled carefully lest it blow
participation in political protests or welga ng bayan should be balanced up in the worker’s own hands.
with the obligations at the workplace. • It must be declared only after the most thoughtful consultation among them,
conducted in the only way allowed that is peacefully anad in every case conformably to
reasonable regulation.

AN ILLEGAL STRIKE IS ONE WHICH their common course of action is inconsequential. The substance of the situation will be
1. Contrary to a specific prohibition of law, such as strike by employees performing deemed to be controlling. The ability to strike is not essential to the right of association.
governmental functions; or
2. Violates a specific requirement of law; SECOND FACTOR IN LEGALITY OF STRIKE: PROCEDURAL REQUIREMENTS
3. Is declared for an unlawful purpose, such as inducing the employer to commit an
unfair labor practice against non-union employees; or • A strike (or lockout), to enjoy the protection of law, must observe certain procedural
4. Employs unlawful means in the pursuit of its objective, such as a widespread requisites. These requisites are mentioned in Article 278 and the Implementing Rules.
terrorism of non-strikers; or
5. Is declared in violation of an existing injunction; or PROCEDURAL REQUISITES:
6. Is contrary to an existing agreement, such as a no-strike clause or conclusive 1. Filing of notice of strike
arbitration clause. 2. Observance of cooling-off period
3. Taking of strike vote
This enumeration came from an authoritative Ludwig Teller of the New York Bar and was 4. Observance of the seven-day strike-vote-report period
adopted by the Supreme Court in the leading case of Toyota Motor Phil. Workers Association
vs. NLRC. • These requisites are MANDATORY. Non-compliance will make the strike illegal.
• The intention of the law in requiring the strike notice and strike-vote report is to
FIRST FACTOR IN LEGALITY OF STRIKE: STATUTORY PROHIBITION reasonably regulate the right to strike, which is essential to the attainment of
• Government employees have the right to organize but they do not have the right to legitimate policy objectives embodied in the law.
strike.
• A strike held by government employees would be an example of an illegal strike that A. Notice of Strike (NS)
violates a legal prohibition. • A notice of strike (lockout) should be filed with the Department of Labor and
Employment, specifically the regional branck of the National Conciliation and
Social Security System Employees Association (SSEA) vs. CA Mediation Board, copy furnished the employer or the union, as the case may be.
• Who files a notice of strike? Only a legitimate (registered) labor organization can
Doctrine: Government employees may, through their unions or associations, either petition the
legally hold a strike.
Congress for the betterment of the terms and conditions of employment which are within the
o If the reason for the intended strike is ULP by the employer, the notice
ambit of legislation or negotiate with the appropriate government agencies for the
should be filed by the duly recognized or certified bargaining agent.
improvement of those which are not fixed by law.
§ If the bargaining unit involved has yet no bargaining agent,
then the notice may be filed by even an unrecognized labor
If there be any unresolved grievances, the dispute may be referred to the Public Sector Labor-
union, provided the union is duly registered.
Management Council for appropriate action. While there is no question that the Constitution
o If the reason for the intended strike is bargaining deadlock, only the
recognizes the right of government employees to organize, it is silent as to whether such
bargaining union has the legal right to file a notice of strike since a
recognition also includes the right to strike.
bargaining deadlock presupposes that a union has been selected as the
bargaining agent and such union has been certified by DOLE as the
Resort to the intention of the framers of the Constitution becomes helpful. In the deliberations:
employees’ exclusive bargaining representative.
“[…] it does not mean that because they [government employees] have the right to organize,
• A union, instead of filing a notice of strike, may request NCMB to do a preventive
they also have the right to strike. That is a different matter. We are only talking about
mediation (PM) as an alternative dispute resolution as preferred modes of
organizing as a union. […] If the purpose of the state is to prohibit the strikes coming from
settlement. But, in order to do so, the union has to be the certified or duly
employees exercising government functions, that could be done because the moment that is
recognized bargaining agent.
prohibited then the union which will go on strike will be an illegal union.”
• Contents of notice:
o In case of bargaining deadlocks, the notice shall, as far as practicable,
The rational is provided for in Alliance of Govt Workers vs. Minister of Labor and Employment:
further state the unresolved issues in the bargaining negotiations and be
“[…] The terms and conditions of employment in the Government are governed by law. Since
accompanied by the written proposals of the union, the counter-
the terms and conditions of government employment are fixed by law, government workers
proposals of the employer and the proof of a request for conference to
cannot use the same weapons by workers in the private sector to secure concessions from
settle the differences.
their employers.
o In case of ULP, the notice shall, as far as practicable, state the acts
complained of and the efforts taken to resolve the dispute amicably.
The principle behind labor unionism in private industry is that industrial peace cannot be
o In case a notice does not conform to these and other requirements, the
secured through compulsion by law. Relations rest on a voluntary basis.
regional branch of the Board shall inform the concerned party of such
fact.
Bangalisan vs. CA, The Civil Service Commission and The Secretary of DECS
Doctrine: Petitioner-public school teachers were charged by the Sec of DECS with grave B. Cooling-off Period
misconduct, gross neglect of duty, gross violation of Civil Service law, rules and regulations etc • COOLING-OFF PERIOD – time gap required to cool off tempers between the filing of
for joining the teachers’ mass action. notice and the actual execution of strike (or lockout)
o 30 days in case of bargaining deadlock
The fact that the conventional term strike was not used by the striking employees to describe o 15 days in case of ULP
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 101

o However, in the face of union busting as defined in Article 278 ©, the D. Strike Vote Report (SVR)
cooling-off period need not be observed. • The 7-day reporting period is intended to give DOLE an opportunity to verify whether
• The NCMB, unpon receipt of the notice of strike and during the cooling-off period, the projected strike really carries the imprimatur of the majority of the union
mediates and conciliates the parties. The regional branch of the Board may, upon members.
agreement of the parties, treat a notice as a preventive mediation case. It shall also • A strike held within the 7-day waiting period is plainly illegal.
encourage the parties to submit the dispute to voluntary arbitration. • A strike staged without the submission of the result of the strike-vote is illegal.
• During the proceedings, the parties shall not do any act which may disrupt or
impede the early settlement of the dispute. They are obliged to bargain collectively Purpose of the 24-hr requirement of giving notice of the conduct of a strike vote:
in good faith, to participate fully and promptly in the conciliation meetings called 1. inform the NCMB of the intent of the union to conduct a strike vote
by the regional branch of the Board. 2. give the NCMB ample time to decide on whether or not there is a need to supervise
• Information and statements given at conciliation proceedings are treated as the conduct of the strike vote to prevent any acts of violence and/or irregularities
privileged communication. It is to encourage free and frank exchange of proposals attendant thereto; and,
and counter-proposals between the parties, thus assisting the conciliator in 3. should the NCMB decide on its own initative or upon the request of an interested
searching for the formula most acceptable to both sides. party including the employer, to supervise the strike vote, to give it ample time to
prepare for the deployment of the requisite personnel, including peace officers if
C. Strike Vote need be.
• It is done by secret balloting, in meetings or referenda specially called for the
purpose. • Unless and until the NCMB is notified at least 24hrs of the union’s decision to conduct
• The regional branch of the Board may, at its own initiative or upon request of any a strike vote, and the date, place and time thereof, the NCMB cannot determine
affected party, supervise the conduct of the secret balloting. for itself whether to supervise a strike vote meeting or not and insure its peaceful
• In every case, the union or the employer shall furnish the regional branch of the and regular conduct.
Board the notice of meetings referred to at least 24 hours before such meetings as • Should the strike vote be taken within or outside the cooling-off period?
well as the results of the voting at least 7 days before the intended strike or lockout, o The law does not specify.
subject to cooling-off period. o But NCMB’s primer on Strike, Picketing and Lockout states that if the strike
• The decision to declare a strike requires the secret—ballot approval of majority (50% vote is filed within the cooling-off period, the 7-day requirement shall be
plus 1) of the total union membership in the bargaining unit concerned. The counted from the day following the expiration of the cooling-off period. In
members of the minority union may or may not be called to the strike vote meeting. effect, the 7 days are added to the 15-day or 30-day cooling-off period.
• The purpose of the strike vote is to ensure that the decision to strike broadly rests with
the majority of the union members in general and discourage wildcat strikes, union Declaration of Strike or Lockout
bossism and even corruption. • If the dispute remains unsettled after the lapse of the cooling-off period and the 7-
• A strike vote report submitted to the NCMB at least 7 days prior to the intended date day reporting period, the labor union may strike or the employer may lock out its
of strike ensures that a strike vote was, indeed, taken. workers. The regional branch of the NCMB shall continue mediating and
o In the event that the report is false, the 7-day period affords the members conciliating.
an opportunity to take the appropriate remedy before it is too late. o The conciliator-mediator, however, can only suggest solutions. He is not an
• The 15-30 day cooling-off period is designed to afford the parties the opportunity to arbitrator or an adjudicator who may impose his decisions upon the
amicably resolve the dispute to afford the parties the opportunity to amicably parties.
resolve the dispute with the assistance of the NCMB conciliator/mediator, while the
7-day strike ban is intended to give the DOLE an opportunity to verify whether the Procedural requirements, Mandatory; Non-observance makes strike illegal
projected strike really carries the imprimatur of the majority of the union members.
• A lockout also needs the secret-ballot concurrence of majority of the directors or National Fedration of Sugar Workers v. Ovejera
partners. Doctrine: The provisions hardly leave any room for doubt that the cooling-off period in Article
264(c) [now 278] and the 7-day strike ban after the strike-vote report prescribed in Art. 264(f)
Industrial Timber Corp. v. NLRC [now 278] were meant to be, and should be deemed, mandatory.
Facts: 60 out of 178 employees were dismissed and had received separation benefits, but
their dismissal was being contested by the union for being an illegal dismissal. The union had a The requirements of cooling-off period and 7-day strike ban must both be complied with,
strike vote. To know how many is the majority, shall the 60 employees be included in the although the labor union may take a strike vote and report the same within the statutory
count? – YES cooling-off period.

Doctrine: The needed vote is 50% plus one of the total union membership. The vote needed to If only the filing of the strike notice and the strike-vote report would be deemed mandatory,
pass a strike vote should be majority of the 178, which includes the 60. The union cannot claim but not the waiting periods as specifically and emphatically prescribed by the law, the
that the dismissal of the 60 is illegal and yet exclude them in trying to get majority vote to hold purposes for which the filing of the strike notice and strike vote is required would not be
a strike. achieved. 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 the prescribed waiting
periods mandatory.

opportunity for mediation and conciliation. The 7-day strike-vote report gives assurance that a The employees went on strike the very day they filed their notice of strike,
strike vote has been taken and that, if the report concerning it is false, the majority of the 4. In carrying out the strike, coercion, force, intimidation, violence with physical injuries,
members can take appropriate remedy before it is too late. sabotage and the use of unnecessary and obscene language or epithets were
If the purposes of the required strike notice and strike-vote report are to be achieved, the committed by the respondent officials and members of the union.
periods prescribed for their attainment must be deemed mandatory.
Strike on Installment: Work Slowdown and Overtime Boycott
When a statute is founded on public policy [such as the policy to encourage voluntary • In an Interphil case, the strike was in the form of overtime boycott and work
settlement of disputes without resorting to strikes], those to whom it applies should not be slowdown.
permitted to waive its provisions. o The employees refused to adhere to their normal work schedules unless
the company gives in to the demand of the union regarding the
The right to strike, because of its more serious impact upon the public interest, is more effectivity of the CBA. It resulted in financial loses and damaged to its
vulnerable to regulation than the right to organize and select representatives for lawful reputation.
purposes of collective bargaining. o The unilateral alteration of the 24-hr work schedule through their
concerted activities of overtime boycott and work slowdown can be
The cooling-off period and the 7-day period after the filing of a strike-vote report are classified as a strike on an instalment basis.
reasonable restrictions and their imposition is essential to attain the legitimate policy • In Ilaw at Buklod ng Manggagawa v. NLRC, the Court ruled that the strike on the
objectives embodied in the law. We hold that they constitute a valid exercise of the police instalment plant is a willful reduction in the rate of work by concerted action of
power of the State. workers for the purpose of restricting the output of the employer, in relation to a
labor dispute; as an activity by which workers, without a complete stoppage of
Gold City Integrated Port Service, Inc. (INPORT) v. NLRC, Adelo Ebuna, et. al. work, retard production or their performance of duties and functions to compel
Facts: On 30 April 1985, petitioner’s employees stopped working and gathered in a mass management to grant their demands. Such a slowdown is generally condemned as
action to express their grievances regarding wages, 13th month pay and hazard pay. They inherently illicit and unjustifiable, because while the employees continue to work
were all members of MLU-FFW with whom the company had an existing CBA. On the same and remain at their positions and accept the wages paid to them, they at the same
morning, the strikers filed individual notices of strike with the then Ministry of Labor and time select what part of their allotted tasks they are to perform of their own volition
Employment. Because of the mass action, the stevedoring and arrastre services of the or refuse openly or secretly, to the employer’s damage, to do their work; in other
company were paralyzed. words, they work on their own terms.

Conciliation proceedings failed so the employer filed a complaint before the LA for illegal In case of Union Busting
strike with prayer for a restraining order/preliminary injunction. The NLRC issued a TRO and • Where the employer is trying to bust the union, the union is a victim. It will be adding
majority of the strikers returned to work, leaving the private respondents who continued their insult to injury to ask the unionists to cool off while their union is being busted.
protest. o Hence, Art. 278 (c) does away with the cooling-off period requirement in
case of union busting.
Held: The strike was illegal for failure to comply with the requirements of Article 264 [not Article
278], paragraphs (c) and (f) of the Labor Code. The individual notices of strike filed by the Union Busting Requirements:
workers did not conform to the notice required by the law to be filed since they were 1. The union officers are being dismissed
represented by a union (MLU-FFW) which even had an existing CBA with INPORT. Neither did 2. Those officers are the ones duly elected in accordance with the union constitution
the striking workers observe the strike vote by secret ballot, cooling-off period and reporting and by-laws
requirements. 3. The existence of the union is threatened

Doctrine: The language of the law leaves no room for doubt that the cooling-off period and • Although the cooling-off period is not required, the filing of a notice of strike and
the 7-day strike ban after the strike0vote report were intended to be mandatory. taking a strike vote and submitting the strike vote report are still MANDATORY.
o These requirements cannot be dispensed with; in fact, there is greater
Union of Filipro Employees, et al. v. Nestle Philippines, Inc., et al. need for their observance.
Doctrine: The petitioner staged a strike but was declared illegal. The individual complainants • An allegation of union busting should therefore be subjected to an intelligent and
were also dismissed because of their brazen disregard of successive lawful orders of the labor unbiased review and verification. It calls for a delicate balancing of the respective
ministers and labor secretary and the treatment of the provisions of the Labor Code. rights of the employer and the workers. And it is a balancing task that us better
done by impartial persons.
The strike was declared illegal because of the following reasons: o Those persons are the NCMB and the union members themselves,
1. Violation of the existing CBA provisions on “No Strike/No Lockout Clause” stating that • Before going into a strike because of alleged union busting by the employer, the
a strike, which is in violation of the terms of the CBA is illegal, especially when such union officers should notify the NCMB and consult the general membership. These
terms provide for conclusive arbitration clause. The main purpose of such an persons must be given the opportunity to assess, coolly and carefully, whether or not
agreement is to prevent a strike and must be adhered to strictly and respected if union busting is indeed occurring.
their ends are to be achieved.
2. Petitioner went on strike directly without exhausting all steps provided for in the
grievance machinery as stated in the CBA.
3. The mandatory cooling-off period and the 7-day strike ban were not complied with.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 103

Strike During Arbitration, Illegal retaliatory action against them. He declared the strike valid.

Filsyn Employees Chapter v. Drilon, et al. Held: SC reversed the decision of the Labor Secretary except the monetary award given to
Facts: Filsyn, which produced polyester raw materials for textiles, required 24hr operations. the strikers. The court ruled that the strike was illegal because:
Pursuant to the employment contracts of the employees, they were to report for work on
Sundays and holidays with additional compensation required by law. The union officers filed 1. the strike was premature for there was an existing CBA since neither the party to a
notices of strike. They were placed into compulsory arbitration and conciliation meetings CBA shall terminate nor modify such agreement during its lifetime;
ensued. However, the union officers and members did not report for work on Maundy 2. it violated the no strike provision of the CBA; and,
Thursday and on two days thereafter, while the conciliation meetings were still pending. Thus, 3. the NCMB had declared the notice of strike as appropriate for preventive
the factory’s operations stopped and the company suffered losses. mediation. The effect of such declaration was to drop the case from the docket of
notice of strikes as if there was no notice of strike.
Doctrine: The certification of the dispute to the NLRC for compulsory arbitration had the effect
of enjoining the intended strike subject of the notices. Doctrine: During the pendency of preventive mediation proceedings, no strike could be
legally declared. A strike, while on-going mediation, is illegal, and the company has the right
The concerted action of the union members and officers in not reporting for work for three to take disciplinary action against the union officers who took part in it, and against any union
days, when they were supposed to render work on those days according to their work members who committed illegal acts during the strike.
schedules and during the pendency of the compulsory arbitration proceedings on the
certified labor dispute, constituted an illegal strike. The strike being illegal, the officers of the All the Secretary may enjoin is the holding of the strike, but not the company’s right to the
striking union who knowingly took part in the strike are deemed to have lost their employment take action against union officers who participated in the illegal strike and committed illegal
status. act.

Sukhotai Cuisine and Restaurarnt v. CA Violation of a Valid Order

Facts: The strike was declared illegal because of the union’s failure to exhaust all in the steps in • Misleading or deceiving the Industrial Court through assurances that they would not
the arbitration proceedings. Fully aware of such proceedings, it cannot claim good faith as a go on strike and that they do not have any intention of striking, but nonetheless,
defense. they conducted a strike; such strike was equivalent to a violation or disobedience of
an order of the court, hence, illegal.
Doctrine: If after the decision of the Court of Industrial Relations declaraing a strike illegal, new
demands or matters arise not in connection with, or similar to, the demands in the former case Grievance Procedure Bypassed
subject of the decision, and the laborers strike anew, the new strike cannot be held as a • A stipulation in the CBA which states that: “in case of any alleged ULP on the part of
violation of the decision. But, the procedural requirements must be complied with. either party, there will be no strikes, lockouts, or any prejudicial action until the
question or grievance is resolved by the proper court if not settled through a
Strike Despite Preventive Mediation grievance procedure outlined” is valid.
• MEDIATION – process of resolving disputes with the aid of neutral person (the o Strikes held in violation of the terms contained in a CBA are illegal,
mediator) especially when they provide for conclusive arbitration clauses. These
• MEDIATOR – a neutral person who helps the parties identify issues and develop agreements must be strictly adhered to and respected if their end is to be
proposals to resolve their disputes achieved.
o Unlike the arbitrator, but like a conciliator, the mediator is not empowered o Strike or walkout on the basis of grievances which have not been
to decide disputes. He proposes but does not dispose. submitted to the grievance committee, as stipulated in the agreement of
• Preventive mediation is not named as a settlement mode in the Labor Code. It is the parties sanctioned by the CIR, is premature and illegal.
enunciated in NCMB Manual as a remedy to prevent or resolve disputes whether
strikable or not. Dismissal of Employees During Conciliation, When Legal and Enforeceable
• Preventive mediation is initiated through a letter-request.
• Mediation should safeguard confidentiality. GTE Directoriies Corp. v. Sanchez, et al.
o Information discovered in mediation is inadmissible in court. Facts: GTE formulated a new set of Sales Administrative Practices requiring all sales
representatives to submit individual reports reflecting target revenues as of deadlines.
Philippine Airlines, Inc. v. Secretary of Labor and Employment However, nobody complied which caused their suspension. Although revisions were made in
Facts: CBA between PAL and PAL employees Association provided for pay increases for the policy, there were still no compliance so all the sales representatives concerned were
various categories of employees. It also provided for the formation of a PAL/PALEA Payscale suspended anew. Even after giving an ultimatum to the representatives, not one sales
Panel. PALEA accused PAL of bargaining in bad faith, then filed with the NCMB a notice of representative submitted a report. GTE terminated the 14 sales representatives, the union’s
strike on account of bargaining deadlock and ULP by bargaining in bad faith. The mediator president and third vice president, and several members of its board of directors. The union
advised PALEA that the issues raised in the notice of strike were appropriate only for declared a strike. Conciliation efforts were exerted, but were proved futile. The acting Labor
preventive mediation and are not valid grounds for a lawful strike. PALEA submitted the strike Minister assumed jurisdiction over the dispute but the company proceeded to dismiss the
vote to NCMB and declared a strike. Secretary of Labor assumed jurisdiction and ordered the employees.
strikers to lift the pickets and return to work and directed PAL to accept the returning strikers. It
also awarded monetary benefits to the strikers while prohibiting the company from taking Held: The dismissal is valid; the conciliation proceedings are not violated. When the strike

notice was filed by the union, the chain of events which culminated in the termination of the means of compelling or attempting to compel employees to accede to their
salespersons’ employment was already taking place; the series of defiant refusals by said sales demands for better terms and conditions.
representatives to comply with GTE’s refusals by said sales representatives to comply with o The reason for a strike may be based upon any one or more of the
GTE’s requirement to submit individual reports was already in progress. The filing of the strike multifarious considerations which in good faith may be believed to tend
notice, and the commencement of conciliation activities by the BLR did not operate to make toward the advancement of the employees.
GTE’s orders illegal and unenforceable so as to excuse continued noncompliance therewith.
Legality of Strike Not Dependent Upon Ability of Management to Grant Demands
THIRD FACTOR IN LEGALITY OF STRIKE: PURPOSE; ECONOMIC AND ULP STRIKE • The strike is not necessarily illegal just because the union’s demands exceed the
company’s capacity to grant.
2 strikeable grounds or causes that may validly support a strike under the Labor Code: o The ability of the Company to grant said demands is one thing, and the
1. collective bargaining deadlock and, right of the laborers to make said demands is another thing. The latter
2. employer’s ULP should be kept inviolate.
• The demands, if granted, would certainly tend to improve the conditions of the
Non-strikeable issues: laborers and employees affected and cannot be said to be trivial, much less illegal.
1. Inter-union or intra-union disputes But whether the same are unreasonable or unjust is a matter to be decided after
2. Violation of labor standards law, unless Article 258 (c), (f) or (i) is also violated proper consideration.
3. Any issue involving wage distortion o If said demands cannot be granted for being unjust or unreasonable, the
4. Cases pending at the DOLE regional offices, BLR, NLRC or its regional branches, only consequence should be their rejection and not the punishment of
NWPC and its regional wage boards, office of the Secretary, Voluntary Arbitrator, the workers who presented them.
Court of Appeals or the Supreme Court
5. Execution and enforcement of final orders, decisions, resolution or awards in no. 4 Lawful Purpose: Strike Against Employer’s ULP
above • Union busting or interference with the formation of a union, constitutes ULP, hence a
6. Any issue covered by a no-strike commitment in a duly executed CBA valid ground for the declaration of strike. Any ULP act under Art. 259 is strikeable.

• Inter-union and intra-union disputes are resolved through med-arbitration Davao Free Workers Front v. CIR, et al.
procedures. Labor standards violations are resolved through labor enforcement. Facts: The union submitted bargaining proposals for renewal of the CBA to the respondent
• UNFAIR LABOR PRACTICE (ULP) STRIKE – strike which is provoked or prolonged by a company. Management, instead, sponsored the organization of a new labor union, required
refusal to bargain or a discriminatory discharge or any other sort of ULP by the the members of petitioner union to join the new union, negotiated and bargained with the
employer new union. New CBA was executed Petitioner union refused to accept the new CBA,
• ECONOMIC STRIKE – strike held to force wage or other concessions from the management locked out is members. Petitioner union called for a strike.
employer which he is not required by law to grant
• It is important to distinguish economic strike from ULP strike because the upon it Held: The strike was valid. It was declared by the union as a measure of self defense and
depends the applicability of certain requirements or strikers’ rights. protection against the employer’s ULP.

The Conversion Doctrine

Phil. Steam Navigational Co. v. Phil. Marine Officers Guild [PMOG]
• A strike may start as economic and, as it progresses, become ULP, or vice versa.
Doctrine: The subjection by the company of its employees to a series of questioning regarding
• The issue of determining the cause of the strike becomes complicated when a strike
their membership in the union or in their union activities in such a way as to hamper the
is initiated over bargaining demands but during the course of the strike, the
exercise of free choice on their part, constitute ULP.
employer commits ULP. Such an employer ULP will be held to convert the strike if it
can be determined that the employer’s action prolonged the strike beyond the
Lawful Purpose: ULP Strike in Good Faith
date it would have terminated in due course as an economic strike.
• In Laid Law Corp. case, the NLRB applied the conversion doctrine when it ruled that
2 tests in determining the existence of ULP:
what had begun as a strike over bargaining demands became an ULP when it was
1. OBJECTIVE TEST – when the strike is declared in protest of ULP which is found to have been
prolonged by the union’s vote to protest the employer’s outright termination of
actually committed
strikers seeking reinstatement. The Board applied the usual rule that strikers who are
2. SUBJECTIVE TEST – when a strike is declared in protest of what the union believed to be ULP
permanently replaced during the economic phase of the strike are not entitled to
committed by management, and the circumstances warranted such belief in good
immediate reinstatement, while strikers replaced after the date of conversion are.
faith, although found subsequently as not committed
Lawful Purpose: Strike Incident to Collective Bargaining
• It is not required that there be in fact an ULP committed by the employer. It suffices if such
• The Labor Code recognizes the right of the employees to strike for the purpose of
belief in good faith is entertained by labor as the inducing factor for staging a strike. But
collective bargaining and other mutual aid or protection. The promotion of the
this good faith belief needs some rational basis.
welfare of the strikers should therefore be the aim of a valid strike.
• Laborers have the right, through concerted action by means of strike, to attempt to
secure the attainment of any of the lawful objects for which they may combine.
Workmen have the right to organize for the purpose of securing improvement in the
terms and conditions of labor, and to quit work or to threaten to quit work as a
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 105

Ferrer v. Court of Industrial Relations 12.4c Do the Procedural Requirements apply even to a U.L.P. Strike in Good Faith?
Facts: The union negotiated with the employer to press for a union security clause. The draft,
however, did not include a stipulation for a closed shop, the union disauthorized its National Federation of Labor, Et al vs. NLRC
representatives from signing the same. Management circularized the employees informing Facts: A strike was conducted by petitioners without compliance to the statutory
them of the union’s refusal to sign the contract which caused a number of resignations from requirements. Petitioners assert that the strike should be declared legal because it was done in
the union. As such, the union filed a notice of strike and declared a strike. good faith.

Held: The petitioners were reasonably justified in believing that the respondent’s act Doctrine: With the enactment of RA No. 6715, the rule now is that requirements such as the
constituted ULP and that union had to strike in order to arrest the evil effects of said practices filing of a notice of strike, strike vote and notice given to the Department of Labor are
upon the union and its members. Though there is no ULP, the strikers should not be punished mandatory in nature. Thus, even if the union acted in good faith in the belief that the
since it is a good faith belief of existence of ULP. Reinstatement of the strikers must be without company was committing an unfair labor practice, if no notice of strike or strike vote were
backpay. conducted, the strike is illegal.

The Good Faith Strike Doctrine Retracted and Reiterated 12. 5 Lawful Purpose: Strike to Compel Recognition of and Bargaining with the Majority Union

People’s Industrial and Commercial Employees and Workers Org. (FFW) v. People’s Industrial Caltex Filipino Managers and Supervisors Assoc. vs. CIR
and Commercial Corp. Facts: The Association sent a letter to the Company asking for recognition as the bargaining
Held: In case the cause for one’s dismissal was proved non-existent or false, such employee representatives of managers and supervisors in the company. Subsequently, the Association
must be reinstated with backwages, without deduction and qualification. This is justified and filed a notice of strike based on the Company’s refusal to bargain in good faith and act on
proper since the strike was proved and the same was not illegal but was induced in the the Association’s demands. The legality of the strike (which subsequently occurred) is at
honest belief that management had committed unfair labor practices and therefore, the question.
cause of their dismissal from employment was non-existent. Labor, being the weaker in
economic power and resources than capital, deserves protection that is actually substantial Doctrine: Even if the legality of the strike is was declared for the purpose of recognition, the
and material. concerted activities of the officers and members of the association may not be said to be
unlawful. In the voluntary return-to-work agreement, the company agreed to recognize for
Even Good Faith Strike Requires Rational Basis membership in the association the position titles indicated in the agreement. This goes to show
• The good faith strike doctrine does not tolerate groundless strike. It does not excuse that striking for recognition is productive of good result insofar as a union is concerned.
the union’s non-presentation of substantial evidence to support its allegation of ULP
by the employer. 12.6 Unlawful Purpose: Strike for Union Recognition Without Having Proven Majority Status
• The legal way to secure union recognition is not through a strike but through a
Tiu and Hayuhay v. NLRC and Republic Broadcasting System certification process.
Facts: RBS management issued guidelines intended to minimize overtime expenses. - This is the reason why Art. 278(b) prohibits a strike due to an intra or inter union
Management had invited comments from the union, but the union did not submit any. When dispute.
the guidelines were put into effect, the union filed a notice of strike, alleging that the - If there are 2 unions competing for majority status and ultimately to be the
guidelines violated CBA provisions. In the notice of strike, it charged the management with exclusive bargaining unit, it should be resolved through election and not work
interference, coercion, and discrimination against the union. Management requested for stoppage.
particulars of the alleged ULP. The union gave no particulars, and then went on strike. The • If, however, the employer refuses to bargain with a union is is rightfully the exclusive
union’s defense was the good faith strike, but it was declared illegal. bargaining agent, there is a valid U.L.P. strike provided that the statutory
requirements are met.
Docrine: It is the union who had the burden of proof to present substantial evidence to • Recognition Strike is different from ULP Strike:
support these allegations.
RECOGNITION STRIKE
The defense of the union was the presumption of legality of the strike prevails even if the 1. Possession of Majority status Note: If any one of these is not
allegations of ULP are subsequently found out to be untrue. However, this presumption must 2. Proof of Majority Representation present, it will be premature to for
be substantiated, at least a rational basis, why the union would wield a strike based on 3. Demand to Bargain a union to hold a strike to compel
alleged ULP. It is not enough that the union believed that the employer committed acts if ULP bargaining. (This is a strike to
when the circumstances clearly negate even a prima facie showing to warrant such a belief. compel recognition. )

In case of allegations of violations of CBA provisions, there must be a showing of flagrant 12. 7 May A Minority Union Strike?
and/or malicious refusal to comply with its economic provisions. • A minority union cannot demand collective bargaining with the employer because
such right properly belongs to the majority union.
Disregarding grievance machinery procedures before conducting a strike is illegal and the • If a union, after defeat in a certification election, stages a strike to compel
law cannot interpose its hand to protect them from the consequences of their behaviour. recognition as the bargaining agent, such strike is clearly unlawful.
• Recourse of a minority union: it may engage in peaceful concerted activity short of
a strike and it can file a ULP complaint.

12.8 Unlawful Purpose: Trivial, Unjust or Unreasonable 12.10b Nonstrikeable: Company’s Sales Evaluation Policy
• General Rule: The law does not explicitly ban Strikes
Exception: GTE Directories Corp. v. Hon. Sanchez v. NLRC
1. When enjoined by the court Facts: The union disagrees with a new company regulation and deliberately disobeyed it.
2. Trivial, Unjust or for an Unreasonable purpose or if it is carried out through
unlawful means Doctrine: Deliberate disregard or disobedience of the rules cannot be countenanced. The
remedy of the employees is:
12.8a Illegal Strike: Shaven Head Strikes in a Tourist Class Hotel 1. to object thereto,
• What constitutes illegal strike? 2. ask for negotiations or
Acts calculated to force disruption of operations thereby violating the no-strike 3. bring proceedings for redress against the employer before the Ministry of Labor.
clause in the CBA
But until and unless the rules or orders are declared to be illegal or improper by competent
National Union of Workers in the Hotel Restaurant and Allied Industries Dusit Hotel Nikko authority, the employees ignore or disobey them at their peril.
Chapter v. CA
Facts: The renegotiation of the CBA resulted in a deadlock and in effect, the bargaining union 12.10d Nonstrikeable: Inter-union or Intra-union dispute
filed a notice of strike and took a strike vote. Male hotel workers came to work with their • Since the dispute is not with the employer, the dispute cannot justify a work
heads shaven but the Hotel stopped the workers from entering the premises, claiming that stoppage.
they violated the hotel’s grooming standards. • No strike or lockout may be declared on grounds involving inter-union or internal
union disputes or on issues brought to voluntary or compulsory arbitration.
Doctrine: The Union’s concerted action to shave their heads not only violated the Hotel’s
Grooming Standards but also violated the Union’s duty to bargain in good faith. They violated 13. FOURTH FACTOR IN LEGALITY OF STRIKE: MEANS AND METHODS
the Implementing Rules of Book V of the Labor Code which prohibits the commission of any
act which will impede or disrupt the early settlement of labor disputes that are under • A strike does not suspend the binding force of the law; it must be pursued within the
conciliation. Since the bargaining deadlock is being conciliated by the NCMB, the Union’s bounds of the law
action to have their officers and members’ heads shaved was calculated to embarrass and
antagonize the hotel management and in doing so, effectively disrupted operations of the Limitations to the Right to Strike:
hotel and their duty to bargain in good faith. No person engaged in picketing shall
1. Commit any act of violence, coercion or intimidation, or
12. 9 Strike to Compel Removal of An Employee; Implied Assertion of Union Infallibility 2. Obstruct the free ingress to or egress from the employer’s premises for lawful
purposes, or
Luzon Marine Department Union vs Roldan Citizens Labor Union v Standard Vacuum Oil 3. Obstruct public thoroughfares
A strike motivated by an unreasonable The weight of authority is that employees
demand of the labor union for the dismissal have a right to quit working because a fellow **Whoever commits these acts – whether union officers or members, employees or
of a factory foreman is illegal and unjustified employee is obnoxious to them (except if non-employees- is answerable for the acts
there an employment contract for a definite
period of if the move is actuated by malice), • Use of violence or threat in pursuing labor rights is punishable by under the Art. 289
since employees may choose not only their of the RPC:
employer but also their associates
Comparison/ Contrast: Citizens Labor Union is a latter decision but the book does not mention The penalty of arresto mayor and a fine not exceeding 300 pesos shall be imposed
which one truly governs. upon any person who, for the purpose of organizing, maintaining or preventing
coalitions or capital or labor, strike of laborers or lock-out of employees, shall employ
12.10 Unlawful Purpose: Strike on Nonstrikeable Issue violence or threats in such a degree as to compel or force the laborers or employers
in the free and legal exercise of their industry or work, if the act shall not constitute a
12.10a Nonstrikeable: Physical Reaarangement of Office more serious offense in accordance with the provisions of this Code

Reliance Surety and Insurance Co. Inc. v. NLRC 13.1 Threats, Coercion or Violence
• Even if the purpose of the strike is valid, it will be held to be invalid if the means
Doctrine: Reliance Surety Insurance made changes in the seating arrangement of personnel.
employed is illegal.
Four employees protested the change asserting that it was done without prior notice and was
done merely to harass them as union members. A heated discussion ensued resulting in the
13.2 Strikers vs. Nonstrikers
employees hurling insults to the manager and supervisors. They were then placed under
• What makes an illegal strike?
preventive suspension and dismissed after investigation. The union filed a notice of strike.
1. Use of Violence, Intimidation, Restraint or Coercion
Doctrine: The court is at a loss how rearranging furniture can justify a 4-month long strike.
2. It is injurious to the rights of property or to particular individuals

• HOWEVER, before dismissal, charges of the commission of an illegal act must be 14.2 What are Considered National Interest Cases
proved at an investigation duly called for that purpose where the employee shall • Who has unlimited discretion to determine what industries are considered
have the opportunity to defend himself. indispensable to national interest?
- Applies even if the ground constitutes a criminal offense. 1. President of the Philippines; and
2. Secretary of Labor and Employment
13.1a Violence on Both Sides • The power to determine is in the nature of police power.
• Where violence was committed on both sides during a strike, such violence cannot
be a ground for declaring the strike as illegal. 14.2a List of National Interest Industries
The following industries/services are recognized and deemed indispensable to national
13.3 Responsibility for Use of Force: Individual or Collective interest:
• General Rule: Responsibility is individual and not collective 1. Hospital sector
Exception: To hold a labor organization liable for the unlawful acts of its individual 2. Electric power industry
members, agents or officers, there must be proof of actual authorization or 3. Water supply services, to exclude small water supply services such as bottling and
ratification of such acts after actual knowledge thereof. refilling stations
4. Air traffic control
13.4 Minor Disorders 5. Such industries as may be recommended by the NTIPC
• Minor disorders will not deprive a striker from the possibility of reinstatement.
14.2b National Interest by Statutory Declaration
13.5 Officials’ Inability to Leave Premises, Not Illegal Detention • Banking is also an industry indispensable to National Interest:

People v. Barba any strike or lockout involving banks, if unsettled after seven (7) calendar days shall
Facts: Some management officials were unable to leave the premises of the company during be reported by the Bangko Sentral to the Secretary of Labor who has two options:
a strike. 1. he may assume jurisdiction over the dispute or decide it or
2. certify the same to the National Labor Relations Commission for
Doctrine: The detention or deprivation of liberty was done without criminal intent. Such compulsory arbitration.
conduct cannot be made the basis for a finding of probable cause that the crime penalized
in the codal provision in question was committed. 14.3 Assumption of Jurisdiction: Prior Notice Not Required
• Discretion to assume jurisdiction may be exercised by the Secretary of Labor and
13.6 Blockade or Obstruction Employment without the necessity of prior notice or hearing given to any party
• Obstruction of points of ingress or egress as well as public thoroughfares is prohibited disputants,
by the Labor Code. - Rationale: exigency of the situation in relation to national interest
- Because it deprives the owner of the company the right to use them for lawful
purposes and the passers-by of the use of public passage. 14.4 Bargaining Disputes, Even Without Bargaining Deadlock, Justifies Assumption of
- Illegal obstruction are nuisances which local government authorities can Jurisdiction
summarily remove.
Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the Department
14. FIFTH FACTOR IN LEGALITY OF STRIKE: INJUNCTION of Labor and Employment
Doctrine: The intention of the law is to give the Labor Secretary full authority to resolve all
14.1 National Interest Cases; Automatic Injunction and Return-To-Work Order disputes within the dispute that gave rise to or which arose out of the strike or lockout; it
• When there is a labor dispute causing or likely to cause a strike affecting national includes all questions and controversies arising from or related to the dispute, including cases
interest, the Secretary of Labor and Employment may either: over which the labor arbiter had exclusive jurisdiction
1. Assume jurisdiction; or
2. Certify the dispute to the NLRC for compulsory arbitration 14.4a Existence of a Deadlock, A Question of Fact
• The Secretary may act upon its own initiative or upon petition by any of the parties • The determination of whether there is a deadlock between the union and the
• Such assumption or certification has the effect of automatically enjoining the company is a question of fact
intended or impending strike or lockout as specified in the assumption or - It requires the determination of evidence to find whether there is a
certification order counteraction of forces between the union and the company and whether
• AUTOMATIC INJUNCTION each party exerted reasonable effort at good faith bargaining.
- If one has already taken place at the time of the assumption of certification, all 14.5 Procedural Details of Assumption of Jurisdiction
striking or locked out employees shall immediately return to work and the • See DO No. 40-G-03
employer shall immediately resume operations and readmit workers under the
same terms and conditions prevailing before the strike or lockout. 14. 6 Power to Assume Jurisdiction, Constitutional
- Strictly limited to National Interest cases
- The parties still retain the option to submit to voluntary arbitration Union of Filipro Employees v. Nestle Phil.
• General Rule: Labor injunctions are prohibited Facts: The union questions the power of the SOLE to assume jurisdiction over a labor dispute
Exception: Issuance of Injunction in national interest cases tainted with national interest or to certify it for compulsory arbitration
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 108

Doctrine: The Labor Code has enacted this power pursuant to the police power of the state, - In effect, the continuance of the strike shall be declared an illegal act,
which has been defined as the power inherent in a Government to enact laws, within subjecting the workers to a loss of their employment status.
constitutional limits, to promote the order, safety, health, morals and general welfare of • Upon receipt or constructive receipt of the order, the worker must return to work.
society. • A grace period may be given but it is not required by law.

14.7 Certification to NLRC University of San Agustin v CA

• CERTIFIED LABOR DISPUTES Facts: Union officers refused to receive the Assumption of Jurisdiction Order because it was
- Cases certified or referred to the NLRC for compulsory arbitration under Art. not served upon the designated member agreed upon by the Union’s board resolution. The
278(g) of the Labor Code about National Interest cases. Union asserts that there is a well-settled practice that the SOLE always gives 24 hours to the
• A national interest dispute may be certified to the NLRC even before a strike is striking workers within which to return to work.
declared because what is needed is only:
1. an industrial dispute and Doctrine: Said practice does not have basis in law or jurisprudence. If a strike has already
2. that officials of the DOLE previously tried to conciliate the disputants but taken place at the time of assumption of jurisdiction or certification, all striking or locked out
without success. employees shall immediately return to work and the employer shall immediately resume
• When sitting in a compulsory arbitration certified to by the Secretary of Labor, the operations and readmit all workers under the same terms and conditions prevailing before the
NLRC is not sitting as a judicial court but as an administrative court charged with the strike or lockout.
duty to implement the order of the Secretary.
- It does not have the power to amend the order of the Secretary because it is a 14.11 Defying the RTWO
mere implementing body
Sarmiento vs. Tuico; Asian Transmission Corp vs. NLRC
14.8 Effects of Defiance Doctrine: The return-to-work order not so much confers a right as it imposes a duty. While as a
• Non-compliance with the certification order shall be considered as an illegal act right it may be waived, it must be discharged as a duty even against the worker’s will.
committed in the course of a strike or lockout Returning to work in this situation is not a matter of option but of obligation. The worker must
- It authorizes the Commission to resort to immediate disciplinary action return to his job so the operations of the company can be resumed and it can continue
serving the public and promoting its interest. That is the reason such return can be compelled.
14.9 Assumption of Certification Order Immediately Effective Even Without Return-to Work So imperative is the order in fact is not considered as violative of the right against involuntary
Order; Strike Becomes an Illegal Activity servitude.

Union of Filipro Employees v. Nestle Phil. One purpose of the return-to-work order is to protect the workers who might otherwise be
Summary: Regardless of their motives, or the validity of their claims, the striking workers must locked out by the employer for threatening or waging the strike. But the more important
cease and/or desist from any and all acts which tend to or undermine the authority of the reason is to prevent impairment of the national interest in case the operations of the company
Secretary of Labor, once an assumption or certification is issued. They cannot ignore return to are disrupted by a refusal of the strikers to return to work as directed.
work orders, citing unfair labor practices on the part of the company, to justify their actions.
Where the return to work order is issued pending the determination of the legality of the strike,
An assumption of certification order of the SOLE automatically results into a return to work of it is not correct to say that it may be enforced only if the strike is legal and may be
all striking workers, whether or not an order has been issued by the SOLE. Once the disregarded if the strike is illegal. Precisely, the purpose of the return-to-work order is to
assumption/certification order is issued, strikers are enjoined, or if one has taken place maintain the status quo while the determination is being made. Otherwise, the workers who
already, all strikers shall immediately return to work. A strike that is undertaken despite the contend that their strike is legal can refuse to return to their work and use a standstill in the
SOLE’s assumption or certification order becomes an illegal activity pursuant to Art. 279 of the company operations while retaining the positions they refuse to discharge or allow the
Labor Code. 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
Certification of the dispute to the NLRC makes the continuation of the strike illegal, provided employer's interest.
that the parties are duly notified of the certification order. Notice to the parties is a
prerequisite even if the order states that it is immediately executory. 14.11a Defiance of RTWO

is knowingly participating in an illegal act. The reinstatement order is certainly contrary to whether they knowingly committed illegal acts would be tantamount to dismissal with due
existing law and jurisprudence. process of law.

Doctrine: It is clear from the provisions above-quoted that from the moment a worker defies a 14.15 Actual, Not Payroll, Readmission
RTWO, he is deemed to have abandoned his job. It is already in itself knowingly participating • The phrase "under the same terms and conditions" contemplates actual, not payroll
in an illegal act. Otherwise, the worker will just simply refuse to return to his work and cause a reinstatement of the workers. This is in keeping with the rationale that any work
standstill in the company operations while retaining the positions they refuse to discharge or stoppage or slowdown in that particular industry can be inimical to the national
allow the management to fill. economy.
• Payroll reinstatement [under Article 278(g)] in lieu of actual reinstatement is a
• To reiterate, A strike undertaken despite the issuance by the Secretary of Labor of departure from the rule and there must be a showing of special circumstances
an assumption or certification order becomes a prohibited activity and, thus, illegal, rendering actual reinstatement impracticable or otherwise not conducive to
pursuant to Article 264 (a) of the Labor Code. Moreover, the union officers and attaining the purpose of the law.
members who have participated in the said illegal activity are, as a result, deemed • In another case the Court recognizes that one of the "superseding circumstances"
to have lost their employment status. that justifies payroll reinstatement, instead of actual reinstatement, is the fact that
the subject employees’ position were declared confidential in nature by a panel of
14.11b Defiance Must be Proved voluntary arbitrators. To insist on their actual reinstatement is impracticable and
• To justify dismissal, the defiance of the RTWO must be proved. For abandonment more likely to exacerbate the situation.
to constitute a valid cause for termination of employment, there must be a • Neither did the Secretary of Labor abuse her discretion when she allowed payroll
deliberate, unjustified refusal of the employee to resume his employment. This refusal reinstatement of the strikers in a large hotel. She did not insist that the management
must be clearly established. Mere absence is not sufficient, it must be accompanied physically and immediately reinstate them because as the management pointed
by overt acts unerringly pointing to the fact that the employee simply does not want out, it would not look nice to have bald staff attending to the hotel’s guests.
to work anymore.
• Thus, alleged or perceived defiance of the RTWO does not mean automatic 14.16 All Issues to be Determined in the Certified Industrial Dispute
dismissal of the defying employees. Due process must be observed. • Where the industrial dispute has been certified by the President or the Secretary to
the industrial court, all issues involved in the industrial dispute should be aired and
14.11c Individual Identification of Strikers determined in the case where the dispute as certified by the President is docketed.
• The union officers who participated in the illegal strike may be dismissed from • The parties should not be permitted to isolate other germane issues or demands and
employment, but the participation of every such officer must be established. Each reserve them for determination in the other cases pending before other branches of
of these officers must be individually identified and the extent or nature of his the industrial court.
participation proven with certainty; otherwise, the termination is invalid. • All such other pending cases should be consolidated in, or at least jointly tried by,
the branch which has taken cognizance of the case over the certified industrial
14.12 “Abandonment” has Varying Elements dispute.
• Whenever a certified labor dispute involves a business entity with several workplaces
located in different regions, the Division having territorial jurisdiction over the
• Abandonment of work as a ground to dismiss under Article 282 (b) should not be
principal office of the company shall acquire jurisdiction to decide such labor
confused with abandonment of work under the law on strike, particularly under
dispute; unless the certification order provides otherwise.
Article 263 (g) and 264 (a).
• The certification for compulsory arbitration, as directed by the Minister of Labor,
• The rule that to constitute abandonment of position there must be concurrence of
overrides the other unresolved proceedings before the National Labor Relations
the intention to abandon and some overt act under Article 282. But it cannot be
Commission.
invoked in dismissals resulting from a striker’s defiance of RTWO under Article 263(g)
or 264 (a).
• DOLE Secretary may temper the consequence of the defiance to the RTWO. He International Pharmaceuticals, Inc. vs. Secretary of Labor and Associated Labor Union (ALU)
may merely suspend rather than dismiss the employees involved. Facts: Before the CBA expired, the Union submitted to the Company its economic and
political demands. A deadlock ensued, triggering a strike. 3 labor cases were subsequently
filed. Meanwhile, considering that the company was engaged in the manufacture of drugs
14.13 Restoration of Condition Upon Issuance of Return-to-Work Order
and pharmaceuticals and employed 600 workers, Secretary issued an order assuming
• An order to return to work, which the Labor Court may properly issue in the exercise
jurisdiction over the case. The secretary ordered the consolidation of the 3 cases. Company
of its power of arbitration and conciliation, is intended to restore the strikers to their
assails the order. Issue is whether the Secretary has the power to assume jurisdiction over a
positions in the company under the last terms and conditions existing before the
labor dispute and its incidental controversies – YES.
dispute arose.
Doctrine: The issuance of the assailed orders is within the province of the Secretary as
14.14 Where a return-to-work order is issued, may the employer be compelled to accept
authorized by Article 263(g) and Article 217(a) (1) and (5), taken jointly and rationally
back to work the strikers with pending criminal case
construed to subserve the objective of the jurisdiction vested in the Secretary. It is
fundamental that a statute is to be read in a manner that would breathe life into it, rather
Telefunken Semiconductors Employees Union-FFW vs. Secretary of Labor, et. al.
than defeat it.
Doctrine: To exclude union officers, shop stewards and those with pending criminal charges in
the directive to the company to accept back the striking workers without first determining
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 110

The Secretary was conferred with jurisdiction over cases which would otherwise be under the c) No motion for postponement or extension shall be entertained. Execution of
original and exclusive jurisdiction of labor arbiters. There was an existing labor dispute as a Judgment in Certified Cases – Upon issuance of the entry of judgment, the
result of a deadlock in the negotiation for a CBA and the consequent strike over which the Commission, motu proprio or upon motion by the part, may cause the execution of
Secretary assumed jurisdiction pursuant to Article 263(g). “Necessarily, this authority to assume the judgment in the certified case.
jurisdiction over the said labor dispute must include and extend to all questions and
controversies arising therefrom, including cases over which the labor arbiter has exclusive 14.19 Assumption Order Regulates Management Provisions
jurisdiction. • When such a labor dispute has in fact occurred and a general injunction has been
issued restraining the commission of disruptive acts, management prerogatives must
14.17 Submission of Incidental Issues; Rulings Reconciled be exercised consistently with the statutory objective.

St. Scholastica’s College vs. Hon. Ruben Torres Metrolab Industries, Inc. vs. Roldan-Confesor
Facts: The union and the school initiated negotiations for a first-ever collective bargaining Facts: Secretary assumed jurisdiction over dispute. While the dispute was still unresolved, the
agreement. Deadlock led to a strike. The Secretary of Labor assumed jurisdiction over the company laid off employees on ground of redundancy due to lack of work. Secretary nullified
labor dispute and issued on the same day a RTWO. Instead of returning to work, the union the dismissals. Metrolab claims that the order enjoining the parties from committing an act
filed a MR of the RTWO, questioning the assumption of jurisdiction. Secretary denied the MR. that might exacerbate the dispute is overly broad, sweeping, and vague and should not be
Union continued to defy the RTWO. SSC then terminated the employment of all the striking used to curtail employer’ right to manage his business. SC sided with the Secretary.
employees. Secretary issued an order which directed the reinstatement of striking union
members, but sustained the termination of the union officers. SSC questions the assumption by Doctrine: Any act committed during the pendency of the dispute that tends to give rise to
the Secretary of jurisdiction to decide on termination disputes, maintaining that jurisdiction is further contentious issues or increase the tensions between the parties should be considered
vested on the Labor Arbiter an act of exacerbation. One must look at the act itself, not on speculative reactions. This
unilateral action of management is a blatant violation of the injunction of the Secretary
Doctrine: Before the Secretary of Labor and Employment may take cognizance of an issue against committing acts which would exacerbate the dispute. The mass layoff is clearly one
which is merely incidental to the labor dispute, therefore, the same must be involved in the which would result in a very serious labor dispute unless the Secretary swiftly intervenes.
labor dispute itself, or otherwise submitted to him for resolution. If it was not, as was the case in
PAL vs. Secretary Labor and Employment, and he nevertheless acted on it, that assumption of 14.20 Secretary’s Arbitral Award
jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the ruling in International • While an arbitral award cannot per se be categorized as an agreement voluntarily
Pharmaceuticals, Inc. vs. Secretary of Labor and Employment, will apply. The case provides entered into by the parties because it requires the interference and imposing power
that Secretary of Labor has the power to assume jurisdiction over a labor dispute and its of the State through the Secretary of Labor when the assumes jurisdiction, the
incidental controversies, causing or likely to cause a strike or lockout in an industry award can be considered as an approximation of a collective bargaining
indispensable to the national interest agreement which would otherwise have been entered into by the parties. Hence, it
has the force and effect of a valid contract obligation between the parties.
14.17a Preemptive Power
• The term “assume of jurisdiction” connotes the intent of the law is to give the Labor 14.21 “Legal Discretion”; Judicial Review of Secretary’s Award or Order
Secretary full authority to resolve all matters within the dispute that gave rise to or • The Supreme Court has taken a position of respect and understanding towards the
which arose out of the strike or lockout; it includes and extends to all questions and secretary's resolution of national interest cases. But respect towards the exercise of
controversies arising from or related to the dispute, including cases over which the the Secretary's assumption power does not mean exemption from judicial review.
labor has exclusive jurisdiction. The Court may inquire not just into the validity of the act of assuming jurisdiction over
the dispute but even into the correctness or reasonableness of the contents of the
14.17b Abdication is Abuse of Discretion secretary's order, award, or resolution.
• In assumption of jurisdiction, the power of the Secretary extends to all questions and • No matter how broad the exercise of discretion is, the same must be within the
controversies arising therefrom. The power is plenary and discretionary in nature to confines of law.
enable him to effectively and efficiently dispose of the primary dispute.
• Exception: Where the parties have an existing no strike-no lockout agreement
Manila Electric Co. vs. Hon. Sec. Quisumbing and Meralco Employees and Workers
requiring that their disputes be brought to voluntary arbitration.
Association (MEWA)
Facts: Meralco and MEWA were renegotiating their CBA, deadlocked on certain issues.
14.18 Procedure in Certified Cases
Meralco management petitioned the DOLE secretary to assume jurisdiction over the
a) When there is no need to conduct a clarificatory hearing, the Commission shall
deadlock dispute. Secretary rendered an award and directed the parties to incorporate it in
resolve all certified cases within 30 calendar days from receipt by the assigned
their renegotiated CBA. Meralco moved for MR and the Secretary did not reconsider some of
Commissioner of the complete records, which shall include the position papers of
the items. Meralco charged the Secretary with grave abuse of discretion
the parties and the order of the Secretary of Labor denying the MR of the
certification order, if such motion has been filed.
Doctrine: Any act of the Secretary of Labor that is attended by grave abuse of discretion is
b) Where a clarificatory hearing is needed, the Commission shall within five calendar
subject to review by the courts in an appropriate proceeding. The extent of judicial review
days from receipt of the records, issue a notice to be served on the parties through
over the Secretary of Labor’s arbitral award is not limited to a determination of grave abuse
the fastest means available, requiring them to appear and submit additional
in the manner of the secretary’s exercise of his statutory powers. This court is entitled to, and
evidence, if any. All certified cases shall be resolved by the Commission within 60
must – in the exercise of its judicial power – review the substance of the Secretary’s award
calendar days from receipt of the complete records.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 111

when grave abuse of discretion is alleged to exist in the award, i.e., in the appreciation of • In this case, petitioners enumerated the violations of the CBA committed by the
and the conclusions the Secretary drew from the evidence presented. employer such as subcontracting workers. They are likewise asking for the
implementation of one of the provisions in the CBA which grant them a specific
14.22 Secretary’s Abuse of Discretion, Examples benefit.
• In a bargaining deadlock over which the Secretary of Labor assumed jurisdiction, it
is abuse of discretion for the Secretary to impose a stipulation which even the union 15.2 No-Strike Clause Binding; Primacy of Voluntary Arbitration Agreement
did not ask for. • Where the CBA stipulates that the disputes between the parties should be resolved
• In the Meralco case, the management nor the union raised union security. But the through a grievance machinery, including voluntary arbitration, a notice of strike
Court changed the maintenance of membership clause in a more stringent union filed by the union violates the agreement. The NCMB should consider such notice as
shop clause. not duly filed and then direct the union to avail of the grievance machinery and
voluntary arbitration.
PLDT Co. vs. Manggagawa ng Komunikasyon sa Pilipinas
Doctrine: Even in the exercise of his power of compulsory arbitration under Article 263(g), the University of San Agustin Employees Union-FFW vs. CA and University of San Agustin
Secretary must follow the law. All striking or locked out employees shall immediately return to Facts: The university and the union concluded a five year CBA which contained a “no strike-
work and the employer shall immediately resume operations and readmit all workers under no lockout” clause and a grievance machinery procedure ending in voluntary arbitration if
the same terms and conditions prevailing before the strike or lockout. the grievance committee fails to resolve the dispute, including bargaining deadlock. When
the parties are renegotiating the economic provisions for the remaining two years, the
14.23 Withdrawal of Case Submit to VA negotiation was caught in a deadlock which necessitated preventive mediation by NCMB.
• Parties are allowed, at any stage, to withdraw the case from compulsory arbitration When the mediation filed, the union filed a notice of strike which the university opposed by
to bring it instead to a voluntary arbitrator. filing a Motion to Strike out Notice of Strike and refer the dispute to VA precisely to call to the
attention of the NCMB and the union to the fact that the CBA provides for a grievance
15. SIXTH FACTOR IN LEGALITY OF STRIKE: AGREEMENT OF THE PARTIES mechanism and the parties obligation to honor said mechanism.
• A CBA contains a no strike/ no lockout clause. It provides that disputes between the
parties, including alleged ULP act by the employer should be resolved through Accordingly, the NCMB should have directed the Union to honor its agreement with the
voluntary arbitration instead of through a strike. Is this stipulation valid? May the university to exhaust all administrative grievance measures and bring the alleged deadlock to
union disregard it and stage a strike? voluntary arbitration. Unfortunately, the NCMB did not resolve the university’ motion. The
• Two decisions of the SC on this matter conflict with each other. failure of the NCMB and the Secretary to recognize, honor and enforce the grievance
machinery and VA provisions of the CBA unwittingly rendered said provisions, as well as Article
Philippine Metal Foundries vs. CIR GOP- CCP Workers Union vs. CIR 251 and 262 of the Labor Code useless. As here, a union can resolve differences or conflicts
The employer accepted the invitation of The union argues that the clause in the CBA through VA through the simple expedient of filing a notice of strike. On the other hand,
Baylon, the union president, for grievance is illegal, which states that ‘in case of any management can avoid the grievance machinery and VA by simply filing a notice of lockout
conference. Two hours later, it dismissed alleged unfair labor practice on the part of
Baylon without prior notice/investigation. either party, there will be no strikes, lockout, Doctrine: Main purpose of adopting a procedure in the CBA is precisely to avoid strike/lockout
Union went on strike. Strike was deemed or any prejudicial action x x x until the • Primacy of voluntary arbitration over assumption of jurisdiction – NCMB should have
valid because of the ULP of the employer. question or grievance is resolved by the declared as not duly filed the union’s notice of strike and referred the disputed to
proper court if not settled through a VA.
Doctrine: A no-strike prohibition in a CBA is grievance procedure’. SC held that the
applicable only to economic strikes. argument is vague and unconvincing. 15.3 No-Strike Clause Not Binding Upon Newly Certified Bargaining Agent

Doctrine: No-strike prohibition is valid and Benguet Consolidated, Inc. vs. BCI Employees and Workers Union-PALFU Agent
binding. The authorities are numerous which Facts: CBA effective for 4 and 1⁄2 years, containing a no- strike clause. While CBA was
hold that strikes held in violation of the terms subsisting, a CE was held among the employees, which resulted in the selection of another
contained in the CBA are illegal, especially bargaining representative. The certified Union thereafter declared a strike for the
when they provide for conclusive arbitration enforcement of certain demands. Company maintains that Union violated the no strike
clauses. clause. Issue: Is the new bargaining agent bound by the strike clause, thus making the strike
Comparison/ Contrast: GOP-CCP case is more recent and in view of the present state policy illegal? NO
of preference for voluntary modes of dispute settlement, it is submitted such case is more
conducive to industrial stability, unless the ULP act of the company is so gross and so patent Doctrine: The substitutionary doctrine means that the employees, through their bargaining
as to threaten the existence of the union. agent, cannot renege on their collective bargaining contract except of course to negotiate
with management for the shortening thereof. This doctrine cannot be invoked to support the
15.1 Ruling in Master Iron Case contention that a newly certified collective bargaining agent automatically assumes all the
• A no-strike clause is applicable only to economic strikes. Corollarily, if the strike is personal undertakings – like the no strike stipulation –in the CBA made by the deposed union.
founded on an ULP of the employer, a strike declared by the union cannot be
considered a violation of the no-strike clause.

15.4 If Members Disregard a No-Strike Clause, Union May Become Liable • Employees may picket without engaging in strike or work stoppage. Picketing is
• No strike clause establishes a rule of conduct or condition of employment, the considered a concerted action.
violation of which by an employee justifies discipline or discharge. A no strike clause
is binding not only upon the union, but also upon its individual members. 1.1 As a Phase of Freedom of Speech
• A union which agrees to an express no strike clause impliedly agrees to undertake • The right to picket as a means of communication the facts of a labor dispute is a
every reasonable means to induce members participating in an unauthorized strike phase of the freedom of speech guaranteed by the Constitution.
to return to work. The union is entitled to a reasonable period of time, as such. • It cannot be curtailed if peacefully carried out, even in the absence of an
• Where the union knows of the strike at about the time it commences, the union is employer-employee relationship.
properly allowed about 48 hours in which to take action to end the strike, after
which the union’s period of liability runs. 1.2 Picketing without Striking
• A state cannot outlaw picketing merely because there is no strike in progress.
15.5 No Violation If Work Stoppage Not Initiated or Supported by the Union • Peaceful picketing where there is no immediate employer-employee dispute, as in
• In one case, there was a temporary work stoppage which resulted to dismissal of 2 the case of organizational or recognitional picketing cannot be infringed.
employees. Union, through officers, lost no time in putting an end to the incident
and prevailed upon the employees to resume their work. SC held that there was no 1.3 Moving Picket
strike that violated the clause of the CBA. • A picket line, regardless of size must be kept in constant motion.
• The union took steps to get the situation back to normal as soon as they were • Picketers have the right of passage over so much of the employer's land as is used
notified about it; and good labor-management relations as well as the broader as a highway.
imperatives of industrial peace dictated that the spontaneous recalcitrance of • The right is one of a pedestrian’s right.
some employees which after all had been settled without unnecessary delay, • This does not create additional rights, such as squatting over the employer’s land,
should not be made an excuse to punish the union officers. which would be considered as trespass.
• Picketers used by the union may not be employees of the offending employer.
• The task of picketing in a strike where less than all of the union’s members are
ART. 280 [265]. IMPROVED OFFER BALLOTING
involved is generally first assigned to such of the union’s members who are directly
In an effort to settle a strike, the Department of Labor and Employment shall conduct a involved. If the number is inadequate, other members of the striking union are
referendum by secret balloting on the improved offer of the employer on or before 30th day of assigned to that task. These disinterested pickets are customarily drawn from the
the strike. When at least a majority of the union members vote to accept the improved offer, union’s unemployed or partially employed members. Where all of the members are
the striking workers shall immediately return to work and the employer shall thereupon readmit affected, all are assigned to picket duty. Where circumstances necessarily requires
them upon signing of the agreement. it, fully employed and disinterested members are assigned, as is compatible with the
requirements of their employment.
In case of a lockout, the Department of Labor and Employment shall also conduct a
referendum by secret balloting on the reduced offer of the union on or before the 30th day of 1.4 Obstruction
the lockout. When at least a majority of the board of directors or trustees or the partners • Picketing amounting to nuisance is unlawful.
holding the controlling interest in the case of a partnership vote to accept the reduced offer, • Picketing may be a nuisance if:
the workers shall immediately return to work and the employer shall thereupon readmit them 1. It constitutes an obstruction to the free use of property, substantially
upon signing of the agreement. interfering with the comfortable enjoyment of life or property.
2. It constitutes unlawful obstruction to the free passage or use, in the
• Improved offer balloting" is a device to stop the work stoppage. Basically, work customary manner, of a street
stoppage is counter-productive. This is why the law itself disfavors it, and if it has 3. It is accompanied by intimidation, threats, violence and coercion.
begun the law wants to end it as soon as possible. By the improved-offer balloting • Pickets may not aggressively interfere with the right of peaceful ingress and egress
device, the strike or lockout may end peaceable without anyone losing face to and from the shop, nor obstruct public thorough fares.
because no one will appear defeated. • Picketing is not peaceful where the sidewalk or entrance to a place of business is
• Sometimes a strike (or a lockout) is prolonged by amor propio. The one that started obstructed by pickets parading around in circle or lying on a sidewalk.
it is too proud to admit that he "backs out" from a fight despite the contrary
sentiment of the group. Improved-offer balloting opens a graceful exit. An improved 1.4a A Moving Picket as Illegal Obstruction
offer by the employer, or a reduced demand by the union, will serve as basis for a 1. A peaceful and moving picket may illegal if it blocks the entry or exit points of
secret balloting that will not reveal who "retreated" from the fight. the company premises.

I. PICKETING Phimco Industries, Inc. v. Phimco Industries Labor Association

Doctrine: While the picket was moving, it was maintained so close to the company gates that
PICKETING – involves the presence of striking workers or their union brothers who pace back it virtually constituted an obstruction, especially when the strikers joined hands, as described
and forth before the place of business of an employer considered “unfair to organized labor” by Aguilar, or were moving in circles, hand-to-shoulder, as shown by the photographs, that, for
in the hope of being able to persuade peacefully other workers not to work in the all intents and purposes, blocked the free ingress to and egress from the company premises.
establishment, and customers not to do business there.

1.5 Picketing of Neutral Parties or “Innocent Bystanders” 1.9 Untruthful Picketing

• A picketing labor union has no right to prevent employees of another company • Untruthful picketing is unlawful picketing and is enjoinable even though its purpose is
from getting in and out of its rented promises, otherwise, it will be held liable for valid.
damages for its acts against innocent bystanders • Constitution does not permit an injunction against all picketing merely because the
pickets have carried signs with false statements.
Philippine Association of Free Labor Union v. Cloribel • Picketing is not peaceful where there is shouting or the use of loudspeakers in front
Summary: Union had a labor dispute with a banking firm holding office in a six-storey building. of a picketed place of business. Pickets may not properly use abusive and
Union picketed in front of the building and along the common passageways. Two other threatening language toward patrons of a place or business or against employees.
tenants in the building filed a petition for damages and injunction against the union, arguing • Permissible activities on the part of picketers do not include misrepresentation. This is
that they are neutral parties to the dispute. The SC ruled that while peaceful picketing is in accord with the general rule that the means employed in aid of a strike must be
entitled to protection as an exercise of free speech, we believe that courts are not without free from falsehood or defamation.
power to confine or localize the sphere of communication or the demonstration to the parties • Use of discourteous and impolite language by the picketers does not give rise to a
to the labor dispute, including those with related interest, and to insulate establishments or cause of action for libel and damages.
persons with no industrial connection or having interest totally foreign to the context of the • Following means used to carry on a picketing were illegal:
dispute. Thus the right may be regulated at the instance of third parties or "innocent 1. Conspiring to injure and destroy a business by inducing their willing patrons
bystanders" if it appears that the inevitable result of its exercise is to create an impression that and would-be patrons not to patronize them
a labor dispute with which they have no connection or interest exists between them and the 2. By having the agents of the union walk forward and back constantly
picketing union 9 or constitute an invasion of their rights. during all the business hours in front of plaintiff s restaurant, and within five
feet thereof, displaying a banner announcing in large letters that the
Liwayway Publications Inc. v. Permanent Concrete Workers Union, et al., restaurant was unfair to cooks and waiters and their union.
Summary: Liwayway Publications, Inc. brought an action in the CFI-Manila against Permanent 3. By having agents attend at or near the entrance of the restaurant during
Concrete Workers Union, Et. Al. for the issuance of a writ of preliminary injunction and for all business hours and continuously announce in a loud voice, audible for
damages it incurred when its employees were prevented from getting their daily supply of a great distance, that the restaurant was unfair to the labor union.
newsprint from its bodega by the union. The SC found that the appellant union and its 4. By characterizing the employees of the plaintiffs as cab Mexican labor,
members picketed the gate leading to appellee’s bodega. This gate is about 200 meters from using opprobrious epithets concerning them in handbills continuously
the gate leading to the premises of the employer of the appellants. Appellee is not in any way distributed in front of the restaurant to would-be customers.
related to the striking union except for the fact that it is the sublessee of a bodega in the
company’s compound. The picketers belonging to the appellant union had stopped and 2. OTHER CONCERTED ACTIVITIES
prohibited the truck of the appellee from entering the compound to load newsprint from its
bodega, the union members intimidating and threatening with bodily harm the employees of 2.1 Collective Letter
the appellee who were in the truck. The union members also stopped and prohibited the • Concerted activities include informal action participated in by at least two
general manager, personnel manager including the man in-charge of the bodega and other employees for "mutual aid or protection" in regard to their interests.
employees of the Liwayway Publications, Inc. from getting newsprint in said bodega. In such a • Such as acting in concert with other employees to voice their grievances
factual situation, the query to be resolved is whether the appellee is a third party or an against the bank president through a letter signed and published by
"innocent by-stander" whose right has been invaded and, therefore, entitled to protection by them.
the regular courts. We find and hold that there is no connection between the appellee
Liwayway Publications, Inc. and the striking Union, nor with the company against whom the 2.2 Publicity
strikers staged the strike. • Members of a labor union may, without authorization by statute, make known the
facts of a labor dispute.
Picketing of Home • The fact of the existence of a strike setting forth their claims in a
controversy over terms and conditions of employment, by sign, handbill,
• Picketing of a private home in a residential district is generally held improper, even if or newspaper advertisement as a legitimate means of economic
the pickets are domestic servants. coercion is permitted.
• The reason is that a home is not an industrial enterprise.
2.3 Placards and Banners
1.7 Limitations • A striker may inscribe his grievances upon placards and banners to be seen at a
• Picket must have a lawful purpose and means; same as a strike. distance and to be read by many. He may carry such placards or banners upon a
public street, provided the inscription is not libelous or otherwise unlawful.
1.8 Violence and Intimidation • Right to publish may depend upon the locality in which it takes place, and the right
• Pickets carried on with violence, threats, force, or coercion is unlawful. to speak or publish may not be so used as to constitute a nuisance.
• There is no exception. • Display of signs misstating the facts in respect of the labor dispute is not permitted.
• Unlawful intimidation depends on all the circumstances. There may be unlawful • Display in the street of banners and placards advising the public of the existence of
intimidation without many direct threats or overt acts of violence. Words or acts an industrial dispute, or that the employer is "unfair" is not unlawful if:
which are calculated and intended to cause an ordinary person to fear injury to his 1. The statements made are true fact
person, business, or property are equivalent to threats. 2. If there is no obstruction to traffic or of access to the plaintiff s place of
• A display of force without actual use thereof may be intimidation. business
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 114

3. No threat, intimidation, or other unlawful interference of expression, in general, and of their right of assembly and of petition for redress of
4. If the object sought to be attained by the boycott is not an unlawful one grievances, in particular, before the appropriate agency, the Chief Executive, against the
police officers of the municipality of Pasig. They exercised their civil and political rights for their
2.4 Wearing of Armbands mutual aid and protection from what they believed were police excesses.

Bascon et al. vs. CA, et al., 2.6a Rallies as Illegal Strike

Summary: Court of Appeals found that petitioners' [employees'] actual participation in the
illegal strike was limited to wearing armbands and putting up placards. There was no finding Toyota Motor Phils. Corp. Workers Association, et al. vs. NLRC, et al.,
that the armbands or the placards contained offensive words or symbols. Thus, neither such Summary: Workers and union officers of Toyota Motors tried to justify the work stoppages they
wearing of armbands nor said putting up of placards can be construed as an illegal act. In committed on February 22 and 23, 2001 as they held rallies in front of DOLE offices.
fact, per se, they are within the mantle of constitutional protection under freedom of
speech.... The Court rejected the argument with this explanation: "... the Unions fail to realize one major
difference: there was no labor dispute in Philippine Blooming Mills Employees Organization. In
Wearing armbands and putting up placards to express one's views without violating the rights the present case, there was an on-going labor dispute arising from Toyota's refusal to
of third parties, are legal per se and even constitutionally protected. Thus, MCCH could have recognize and negotiate with the Union, which was the subject of the notice of strike filed by
done well to respect petitionrs' right to freedom of speech instead of threatening them with the Union on January 16, 2001. Thus, the Union's reliance on Philippine Blooming Mills
disciplinary action and eventually terminating them. Employees Organization is misplaced, as it cannot be considered a precedent to the case at
bar." The Court thus affirmed the dismissal of more than 200 union officers and members.
Wearing armbands to signify union membership and putting up placards to express their views
cannot be of such great dimension as to warrant the extreme penalty of dismissal, especially 3. BOYCOTT
considering the long years of service rendered by petitioners and the fact that they have not
heretofore been subject of any disciplinary action in the course of their employment with BOYCOTT – A combination to harm one person by coercing others to harm him — that is, a
MCCH. combination of many to cause a loss to one person by causing others, against their will, to
withdraw from him their beneficial business intercourse through threats that unless others do
The termination of petitioners' employment not being for any of the just or authorized causes, so, the many will cause similar loss to him or them.
it constitutes illegal dismissal. • Boycott has been defined as an attempt, by arousing a fear of loss, to coerce
others, against their will to withhold from one denominated "unfriendly to labor" their
2.5 Speeches, Music, and Broadcasts beneficial business intercourse.
• It is not unlawful for a labor organization in a radio broadcast, without employing • The essential idea of boycotting is a confederation, generally secret, of many
threat or intimidation, to express its honest opinion as to the fairness of an employer persons whose intent is to injure another by preventing any and all persons from
toward organized labor and to advise the public and friends of labor not to doing business with him, through fear of incurring the displeasure, persecution, and
patronize him. vengeance of the conspirators.
• It is not unlawful to cause to be driven through streets a vehicle which bears signs
that are not unlawful and is equipped with apparatus for broadcasting music. 3.1 Lawfulness of the Boycott
• The use of loudspeaker in front of a picketed place of business has been • Boycott may be lawful or unlawful depending on the means and methods
condemned as a form of intimidation. The same is true of the holding of street employed, and the ends intended to be accomplished.
meetings near the place of business of the employer with whom a union has a • Boycott by labor for the purpose of the maintenance or advancement of wages,
dispute. improvement of conditions of labor, shortening of periods of labor, engagements of
union employees, and reinstatement under contract of union men dismissed
2.6 Employees' Demonstration to Protest Police Abuses because of union affiliation are considered legitimate.
• Boycott is illegal where its purpose is to require an employer to coerce his
Philippine Blooming Mills Employees Organization vs. Philippine Blooming Mills employees to pay their back dues to the union or discharge them, or to compel the
Summary: The workers of the Company working in the first, second and third shifts planned a payment by an employee of a fine or other penalties, or to compel an employee to
demonstration in Malacañang to protest alleged abuses of the Pasig police. Upon learning of refrain from working, or to compel employment of more help than is necessary, or to
this plan, the Company management called a meeting with the Union officers. The Company compel one to sign a contract, or to compel an employer to refrain from issuing
officers warned the Union officers that a mass action of all the workers would be in violation of new process or machinery.
the no-strike clause of the CBA. The Union officers asserted that the demonstration had • As to the means or methods employed, only a boycott that is free of violence or
nothing to do with the Company with which the Union had no dispute. When the workers malevolence is held anywhere to be lawful.
proceeded with the demonstration despite the pleas of the company, it filed an unfair labor o Interference with one's patronage by persuading his patrons against their
practice case against the Union and its officers for their violation of the no-strike clause of the will, or preventing them by means of violence or threats, from having
CBA. The CIR declared the Union and its officers guilty of bargaining in bad faith and violating beneficial intercourse with him is unlawful.
the CBA and ordered the dismissal of the Union officers.
3.4 Overtime Boycott
The SC ruled that The demonstration held by petitioners on March 4, 1969 before Malacañang • Overtime boycott and work slowdown may amount to illegal strike.
was against alleged abuses of some Pasig policemen, not against employer, herein private
respondent firm. Said demonstration was purely and completely an exercise of their freedom
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 115

4. SLOWDOWN • A union member may not be held responsible for the union's illegal strike on the sole
basis of such membership or on account of his having voted affirmatively for the
SLOWDOWN – is a method by which one's employees, without seeking a complete stoppage holding of the strike later declared illegal.
of work, retard production and distribution in an effort to compel compliance by the • Jurisprudence rejects of the rule of "vicarious liability" that mere membership in a
employer with the labor demands made upon him. labor union could serve as basis of liability for acts of individuals, or for a labor
• The "slowdown" does not amount to the complete curtailment of operations. The activity, done on behalf of the union.
plant to continue to function, but merely at a reduced pace of production and • Court declared in Toyota Motor Phil. Corp Workers Association, et al. vs. NLRC, et al,
distribution. The extent of the reduction depends entirely on the circumstances and G.R. No. 158786 and 158789, October 19, 2007 that the rule on vicarious liability of a
disposition of the labor element involved, although it sometimes happens that union member is inapplicable and it is only when a striking worker "knowingly
operations are reduced to so diminished a point that the condition differs only participates in the commission of illegal act during a strike" that he will be penalized
nominally from complete stoppage of work. with dismissal.
• The slowdown may or may not be accompanied by strike.
• Slowdown can be executed only by the employees themselves. 2. INTEGRATION/SUMMARY: STRIKERS’ LOSS OF EMPLOYMENT
• In one case, our Supreme Court sustained the concept that a slowdown • Mere participation in a strike, without committing illegal acts, does not cause the
is "strike on the installment plan," a willful reduction of the rate of work by concerted dismissal of a union member. This is true even if the strike itself is illegal such as, for
action of workers to restrict the output of employer, in relation to a labor dispute, example, a strike held without proper prior notice. But participation in an illegal strike
without a complete stoppage of work. by a union officer is cause for his dismissal because as an officer, he has to answer
• Slowdown is contrary to Republic Act 6727 and the parties' collective bargaining for leading a strike that violates the law.
agreement. • Mere participation in a strike is different from committing illegal acts during a strike.
Civil and criminal law are not suspended during a strike, hence anyone who
CHAPTER I commits an illegal act, whether a union officer or a member, is civilly or criminally
liable no matter whether the strike is legal or not. The commission of illegal acts,
STRIKES AND LOCKOUTS (CON’T) including coercion, grave threats, intimidation is reason enough to terminate the
[PART 3. CONSEQUENCES OF CONCERTED ACTIONS] employment of such striker-employee.
• Article 279 makes a distinction between workers and union officers who participate
1. STRIKERS' RETENTION OF EMPLOYMENT in a strike. An ordinary striking worker cannot be terminated for mere participation in
• Strikers remain as employees while they are on strike. an illegal strike. There must be proof that he committed illegal acts, during a strike. A
• The effects of employment, generally, are merely suspended during that time — the union officer, on the other hand, may be terminated from work when he knowingly
workers do not work and do not get paid. When the strike is over, the employees go participates in an illegal strike, or when he commits an illegal act during a strike.
back to work and the effects of employer-employee relationship are resumed. • Participation in strike:
Generally therefore the strikers retain their jobs.
• Mere participation of a worker in a lawful strike shall not constitute sufficient ground DISMISSABLE?
for termination of his employment, even if a replacement had been hired by the Legal Strike Illegal Strike
employer during such lawful strike. Union Officer NO YES
• Even if declared illegal, the strike need not have been attended with such a drastic Union Member NO NO
consequence as termination of employment relationship. This is so, according to the
court, because of the security of tenure provision of the Constitution. o Union officer + Legal Strike = NOT DISMISSABLE
• A finding of illegality of a strike should not be automatically followed by wholesale o Union officer + Illegal Strike = DISMISSABLE
dismissal of striking workers from their employment. o Union member + Legal Strike = NOT DISMISSABLE
• On equitable considerations, the Court ordered the reinstatement of the striking o Union member + Illegal Strike = NOT DISMISSABLE
workers to their former positions without backwages, or if reinstatement is not • Commission of illegal act in a strike:
possible, to pay them separation pay under the Labor Code or under the collective
bargaining agreement, whichever is higher, except those who have accepted their DISMISSABLE?
termination and financial assistance from the company. Legal Strike Illegal Strike
Union Officer YES YES
Progressive Workers Union vs. Aguas,
Union Member YES YES
Summary: In one case, the strikers are low income earners to whom a seemingly meager
increase of PI.50 in daily wage is worth fighting for. Their reading and interpretation of the
o Union officer + Legal Strike = DISMISSABLE
collective bargaining agreement provision, albeit erroneous, led them to believe in good faith
o Union officer + Illegal Strike = DISMISSABLE
that they are entitled to such increase and that the failure of respondent company to comply
o Union member + Legal Strike = DISMISSABLE
with the collective bargaining agreement provision provided a valid ground for a strike. They
o Union member + Illegal Strike = DISMISSABLE
had previously met with representatives of respondent company over this matter, but to no
avail. Under the circumstances, they cannot entirely be blamed for thinking that only through
2.1 What "Illegal Acts"?
the potent weapon of strike could they attain their objective.
• May encompass a number of acts that violate existing labor or criminal laws, such
as the following:

1. Violation of Article 279(e) of the Labor Code x xx 2.4 Shop Stewards are Union Officers
2. Commission of crimes and other unlawful acts in carrying out the strike; SHOP STEWARD – a union official who represents members in a particular department.
and • Union's shop stewards are not mere members; they are officers.
3. Violation of any order, prohibition, or injunction issued by the DOLE • A shop steward (who) is appointed by the Union in a shop, department, or plant
Secretary or NLRC in connection with the assumption of jurisdiction/ serves as representative of the Union, charged with negotiating and adjustment of
certification Order under Article 278(g) of the Labor Code. grievances of employees with the supervisor of the employer.
4. Individual strikers committing illegal acts. • His duties include the conduct of initial negotiations for settlement of grievances. He
• This enumeration is not exclusive and it may cover other breaches of existing laws. is to help other members when they have concerns with the employer or other
• Substantial evidence available under the attendant circumstances, suffices to justify work-related issues. He is the first person that workers turn to for assistance or
the imposition of the penalty of dismissal on participating workers and union officers. information.
• Dismissal of a union officer who committed illegal acts during a strike is not • Petitioners-shop stewards participated in the (illegal) strike. Thus, like the officers and
discrimination constituting ULP. A union officer carries heavier responsibilities than a directors of petitioner Union who joined the strike, petitionersshop stewards also
union member does. deserve the penalty of dismissal from their employment.

2.2 Suspension Instead of Dismissal 2.5 Union Members

• Penalty imposable on the erring strikers does not always have to be dismissal; it may • A union member who participated in committing illegal acts during a strike (whether
be scaled down to suspension. legal or illegal) may also lose his employment status.

PAL vs. Brillantes and PALEA Chua vs. NLRC

Summary: Both parties (employer and union) contributed to the volatile atmosphere Summary: Petitioner's participation in the illegal strike and his commission of illegal acts while
emerging despite the Secretary of Labor's status quo order, disrupting thereby the orderly the strike was in progress, i.e., he participated in the barricade which barred people from
continuance of negotiations. The PAL management, observed the Court, did not come with entering and/or leaving the employer's premises, had been sufficiently established by
"clean hands" in seeking the termination of PALEA officers and members who participated in substantial evidence, including the testimony of Mr. Maniego, Personnel Supervisor at the
the illegal strike. PAL had terminated en masse 183 strikers in violation of the Secretary's earlier Cabuyao Plant. Mr. Maniego testified, among other things, that he was not able to report to
Order enjoining the parties to cease and desist from committing any act that might work because of the presence of the barricade. The law prohibits any person engaged in
exacerbate the situation. In short, both sides were at fault or in pari delicto. The Court invoked picketing from obstructing free ingress to or egress from the employer's premises for lawful
its judicial prerogative to resolve disputes in a way to render to each interested party the most purposes. Since petitioners' participation in the unlawful and violent strike was amply shown by
judicious solution, and in the ultimate scheme a resolution of a dispute tending to preserve the substantial evidence, the NLRC was correct in holding that the dismissal of petitioner was valid
greater order of society. being based on lawful or authorized cause.

2.3 Union Officers or Leaders? • In a similar case, two strikers were found guilty of acts of violence consisting of
hurling stones which smashed glass windows of the building of the company and
Cement Corporation Labor Union [NLU] vs. Continental Cement Corporation and the Deputy the headlights of a car and the utterance of obscenities such as "P.. i...."
Minister of Labor
Summary: Union staged a strike to compel the employer to comply with an arbitration award 3. WHO DECLARES "LOSS OF EMPLOYMENT STATUS"?
for payment of vacation and sick leave of employees. The Court held that the strike was • Article 264, third paragraph, quoted above, states that the union officer or worker xx
unnecessary and had no lawful basis. What the union should have done was to apply for a x "may be declared to have lost his employment status."
writ of execution of the award instead of going on strike. The union did not only violate the no- • Who may declare? EMPLOYER
strike provision of the CBA but also repeatedly defied the returnto-work orders. The Court said
that the union officers had the duty to guide their members to respect the law. Instead, they Gold City Integrated Port Service, Inc. [INPORT] vs. NLRC, Adelo Ebuna, et al.,
urged them to violate the law and defy the duly constituted authorities. Their responsibility is Summary: Notwithstanding the fact that INPORT previously accepted other union officers and
greater than that of the members. Their dismissal from the service is a just penalty for their that the screening required by it was uncalled for, still it cannot be gainsaid that it possessed
unlawful acts. the right and prerogative to terminate the union officers from service. The law, in using the
word "may," grants the employer the option of declaring a union officer who participated in
Progresibong Samahan ng Manggagawa sa ITM vs. Secretary of Labor and Imperial Textile an illegal strike as having lost his employment.
Mills
Summary: Secretary of Labor issued a return-to-work order in January 1990, in which he Moreover, an illegal strike which, more often than not, brings about unnecessary economic
considered not only the first work stoppage staged by the union in September 1989 but also disruption and chaos in the workplace should not be countenanced by a relaxation of the
the mass protest and strike in October 1989. "For these acts of the petitioners," said the Court, sanctions prescribed by law.
"who are leaders of petitioner union obviously inimical to the national interest, the Secretary of
Labor properly and lawfully sustained and upheld their separation from the service and their
exclusion from the return-to-work order."

• The codal provision mentions "officers," not "leaders." There can be leaders who are
not officers.

3.1 Declaration of Illegality of Strike Not a Prerequisite to Dismissal of the draft of a collective bargaining agreement. . . As stated in the decision of his Honor, the
Illegal Strikers trial judge, said belief was confirmed by the fact that prosecutors of the Court of Industrial
Relations found sufficient grounds to file, and did file against the management, a complaint
Jackbilt Industries, Inc. vs. Jackbilt Employees' Workers Union-NAFLU-KMU for unfair labor practices.
Summary: Filing a petition to declare a strike illegal is not a prerequisite for the employer to
terminate the employment of employees, whether union officers or members, who commit In other words, both parties had performed acts which understandably induced each other
illegal acts in the course of the strike. Article 264(e) prohibits any person engaged in picketing to believe that the other was guilty of such practices — although, as we now analyze the
from obstructing the free ingress to and egress from the employer's premises. Where the strikers whole situation, without the excitement, the heat and the passion of the direct participants in
were found to have prevented the free entry into and exit of vehicles from the employer's the labor dispute, at the peak thereof, such belief may not turn out to be borne out by the
compound, their dismissal from employment was declared legal. A prior petition to declare objective realities — and both were reasonably justified in taking the counter-measures
the strike illegal is not necessary. Article 264 allows an employer to terminate employees that adopted by them. As a consequence, we hold that the strike in question had been called to
committed illegal acts in the course of a strike. offset what petitioners were warranted in believing in good faith to be unfair labor practices on
the part of management, that petitioners were not bound, therefore, to wait for the expiration
3.1a Exception: Pending Case at the NLRC of thirty (30) days from notice of strike before staging the same, and that the strikers had not
• May the employer dismiss the strikers while its complaint for illegal strike is thereby lost their status as employees of respondents herein. Upon the other hand,
pending at the NLRC? NO considering that the latter had been absolved from the charge of unfair labor practices, the
reinstatement of the strikers must be without backpay.
PNOC Dockyard and Engineering Corp. vs. NLRC, et al
Summary: The issues relating to the strike and lockout were already submitted before the Cebu Portland Cement Company vs. Cement Workers Union
NLRC through the corresponding complaints filed by petitioner itself and private respondents. Summary: The Union declared a strike against the Company for its refusal to concede to its
By filing a formal complaint for illegal strike, it behooved petitioner to desist from undertaking demand for the collection of agency fee of PI.00 from each nonunion member. The strike was
its own investigation on the same matter, concluding upon the illegality of the union activity certified to the CIR which declared it illegal but nonetheless ordered the return to work of the
and dismissing outright the union officers involved. The latter objected, in fact, to the conduct strikers. The company contended before the Supreme Court that the CIR should have
of such investigations precisely due to the pendency before the NLRC of an action based on authorized the dismissal of the strikers, relying upon certain decisions of the Court. The
the same grounds. Instead, petitioner preempted the NLRC from ascertaining the merits of the Supreme Court conceded that under earlier decisions, the participants in an illegal strike
complaints. forfeited their employment but declared that these cases had already been abandoned, xx x

3.2 Employer Observance of Due Process In the case of Ferrer vs. CIR, et al, the belief of the strikers that the management was
• Employer’s declaration that a striker has lost his employment status is not dismissal committing unfair labor practice was properly considered in declaring an otherwise
although it amounts to the same thing. premature strike not unlawful, and in affirming the order of the labor court for the
• The declaration that an employee has lost his employment status is merely reinstatement without backwages of said employees.
confirming the effect of an illegal act initiated by the employee himself.
• Nonetheless, the declaration must proceed in accordance with due process – valid 5. STRIKE WHICH IS ILLEGAL AND NOT MARKED WITH GOOD FAITH – STRIKERS FORFEIT THEIR
cause and procedure must be observed. EMPLOYMENT
• In Reliance Surety and Insurance Co. v. NLRC, the strike in question was illegal for
Phimco Industries Inv. v. Phimco Industries Labor Association failure to observe legal strike requirements. Certain strikers harassed non-striking
Summary: The employer directed the strikers to explain within 24 hrs. why they should not be employees, called company officers names, and committed acts of violence. The
dismissed for committing illegal acts during their strike. Three days later, they were informed of strike itself was prompted by no actual existing unfair labor practice committed by
their dismissal. This procedure was found insufficient with the due process requirement which petitioner.
applies to every case of employment termination. The Court found the employees dismissed, • In staging the strike that was illegal in more ways than one, the reinstated union
and ordered Phimco to pay damages.z officers were clearly in bad faith. To reinstate the officers without loss of seniority
rights is to reward them for an act public policy does not sanction.
4. "GOOD-FAITH STRIKE" • General Rule: The Court is on the side of the laboring classes, not only because the
• A strike may be justified by belief in good faith that the employer was committing Constitution imposes sympathy but because of the one-sided relation between
unfair labor practice at the time the strikers went on strike. Good faith saves the labor and capital.
strike from being declared illegal and the strikers from being declared to have lost • However, the Court must take care, that in the contest between labor and capital,
their employment status. the results achieved are fair and in conformity with the rules.

Ferrer vs. Court of Industrial Relations 6. FORFEITURE OF REINSTATEMENT

• A striker who failed to report for work when one had the opportunity to do so
Summary: Although management may have had the strict legal right to take against Union
waived thereby his right to reinstatement. (East Asiatic Co. v. CIR)
members disciplinary and other administrative measures above referred to, there is no
• If during a strike, a striker has found another job, is he still entitled to reinstatement?
denying the fact that the time chosen by the management therefor, when considered in
Yes and No.
relation with the attending circumstances, reasonably justify the belief of the Union that the
o The mere fact that strikers or dismissed employees have found such
real or main purposes of the management was to discourage membership in the Union, to
employment elsewhere is not necessarily a bar to their reinstatement.
discredit the officers thereof, to weaken the Union and to induce or compel the same to sign

o Discriminatorily dismissed employees must be ordered reinstated even though 10.2 Exception: “Involuntary” Strikers Illegally Locked Out
they have found substantially equivalent employment somewhere.
Macleod & Co of PI v. Progressive Federation of Labor
7. DISCRIMINATION IN READMISSION OF STRIKERS Facts: The workers were notified that on a certain date they would cease to work, and
• Discrimination undoubtedly exists where the record shows that the union activity of notwithstanding their efforts to reach a compromise, the company adopted a stern
the rehired strikers has been less prominent than that of the strikers who were denied attitude which left no other alternative for them than to walk out. The company not only
reinstatement. limited itself to dispensing with their services but indirectly forced them to join another labor
union
8. EXACTION OF PROMISE OR CLEARANCES FROM RETURNING STRIKERS
• To constitute ULP, the discrimination must be in regard to the “hire or tenure of Issue: Whether the workers are entitled to be reinstated with backpay
employment or any term or condition of employment to encourage or discourage Held – YES. The 38 laborers did not voluntarily strike. It is only fair that they be reinstated with
due membership in any labor organization” the payment of their backwages. The principle of “fair day’s wage for a fair day’s labor”
• In the case of PIMA v. Ang Tibay, the exaction made by the company to the does not apply in the case of involuntary strike of the laborers.
returning strikers of a promise not to destroy property or commit acts if reprisal
against Union members who did not participate in the strike was an act of self-
Davao Free Workers Front v. CIR
preservation and designed to insure the maintenance of peace and order.
Facts: Strike duration pay was awarded to the workers. Employer questioned such award
9. REINSTATEMENT MAY RENDER MOOT THE QUESTION OF ILLEGALITY OF STRIKE because generally, strikers are not entitled to such pay.
• Where the employer voluntarily agreed to reinstate the strikers, such agreement on
the part of the employer constitutes a waiver of the defense that the strike was Issue: Whether the award was valid
illegal. (Bisaya Land Trans v. Court of Industrial Relations)
Held: YES. The company’s ULP and discriminatory acts and anti-union activities fully justifies
10. GENERALLY, NO BACKWAGES IN STRIKE the award since the strikers were left no other alternative by their employer’s improper and
10.1 Economic Strike oppressive conduct.
• The strikers are not entitled to backwages on the principle that a “fair day’s wage”
accrues only for a “fair day’s labor” 10.2a “Voluntary” Strikers in ULP who Offered to Return to Work Unconditionally
• A strike is a voluntary and deliberate cessation of work on the part of the workers. • The strikers return should be unconditional so that they will be entitled to backpay.
(San Miguel Brewery v. National Labor Union) • To be effective so as to entitle the strikers to backpay, the offer must be
unconditional. The strikers must have offered to return to work under the same
The Philippine Marine Radio Officers Association v. Court of Industrial Relations conditions under which they worked just before their strike so that the company’s
Facts: PHILMAROA presented a list of demands. As none of the companies considered their refusal would have placed on the latter blame for their economic loss.
demands, they gave notice of its intention to strike. They eventually declared a strike. • For this exception to apply, it is required that the strike must be legal.
Strike was certified by the President to the CIR for compulsory arbitration.
10.3 Court’s Discretion on Backwages
Issue: Whether the claim of PHILMAROA that the strikers should be entitled to reinstatement
with backwages Consolidated Labor Association of the PH v. Marsman and Company Inc
Facts: The Union and the company failed to reach an agreement eventually leading to
Held: The Court upheld the reinstatement but denied the backwages. The strike was the filing of a notice of strike. The strike was attended by violence by certain strikers. Upon
resorted to by the union as an economic weapon to compel respondent to grant the intercession of the Secretary of Labor, the strikers agreed to return to work on the
improvement in the pay of the members and in the conditions of employment. The strike, promise that the company would discuss their demands with them. The company refused
by all means, was a voluntary act on the part of the strikers. The grant of backwages is to admit some strikers unless they ceased to be active union members, as a result, the strike
governed by the general principle of fair day’s wage for a fair day’s labor. resumed. Union argues that they are now entitled to backwages since the refusal to admit
some members constitutes ULP.
10.1a Unfair Labor Practice Strike
Issue: Whether the company is liable for backwages
Cromwell Commercial Employees and Laborers Union v. Court of Industrial Relations
• Two types of employees involved in unfair labor practice cases Held: The SC held that the CIR had the discretion whether or not to award backwages in
a. Those who were discriminatorily dismissed for union activities ULP. In an economic strike, strikers are not entitled to backwages. During the time that the
b. Those who voluntarily went on strike even if it is in protest of an ULP. strike was an economic one, complainant had no right to backpay. Even after the court
• Both type is entitled to reinstatement. has made a finding of ULP, it has a discretion to determine whether or not to grant
• Except: Although discriminatorily discharged, employees must be denied backpay. Considering the climate of violence, the court did not abuse its discretion in not
reinstatement because of granting backwages.
1. unlawful conduct or
2. because of violence. • Even in a strike by government employees, no backwage ruling applies. (Brugada v.
• Discriminatorily dismissed employees received backpay from the date of the act of Secretary of Education)
discrimination, the day of their discharge.

11. REITERATION: NO BACKWAGES; BASCON, AN ERROR • As to abandonment:

• Ruling in Bascon and G&S Transport (abandoned): Illegally dismissed strikers are o The failure to report for work or absence must be without valid or
entitled to reinstatement and backwages except for the period they were on strike. justifiable reason
o There must be a clear intention to sever the ER-EE relationship
Abaria v. NLRC
Facts: For 3 preceding CBAs the certified, recognized, and authorized collective 13. INTEGRATION/SUMMARY: DISMISSAL OF STRIKERS
bargaining agent in MMCH was NFL (national federation). NFL issued a charter creating a) If the strike is legal, the strike is not a reason to dismiss an employee, whether union
NAMA (local union). When the latest CBA was about to expire, NAMA requested the officer or member.
hospital to renegotiate but the latter refused without an endorsement or authorization from b) If the strike is illegal, the illegality is a reason to dismiss a union officer. His overt acts
NFL, which NFL refused to grant. NAMA filed a notice of strike. NAMA not being an LLO, and participation must be proved. Illegality of strike or mere participation is not
MCCH warned the members not to join the strike. The strike blocked the entry and exit enough reason to dismiss a union member.
areas. MCCH dismissed the strikers c) Whether the strike is legal or illegal, no one should commit unlawful acts during the
• LA: dismissal legal but grant separation pay strike. Any union officer or member who commits any lawful acts during a strike may
• NLRC: no separation pay be dismissed after proving the individual’s illegal acts.
• CA: granted backwages in lieu of reinstatement. d) Any dismissal of an employee must comply with due process:
a. Based on a valid/legal cause
Issue: Whether the CA erred in granting backwages b. Done through proper procedure
Two type of Illegal Dismissal
Held: The dismissal was illegal since members did not commit illegal acts. But the Court did a. Lack of Legal Cause (Substantively Illegal)
not order their reinstatement due to stained relations and lapse of time. The Court ordered b. Non-observance of proper procedure (Procedurally Illegal)
the payment of separation pay. The Court explained that in the case of Bascon, the court e) Substantively Illegal Dismissal – entitled the employee to all reliefs mentioned in
called for the reinstatement and payment of backwages. The Court now says that that Article 294
ruling is “not cast in stone”. Bascon has to be rectified because it is an erroneous Procedurally Illegal Dismissal – does not entitle employee to reliefs in Art 294
application for the law. In the case of G&S Transport v. Infante, the Court ruled that the f) If reinstatement is impossible or inadvisable, separation pay in lieu thereof may be
workers did not render work during the strike this are entitled only to reinstatement. awarded. Separation pay is one month’s pay for every year of service. 6 months is
counted as one year. It is a substitute for reinstatement only. It does not affect the
12. EMPLOYER’S INSTRUCTION TO THE STRIKERS TO RETURN TO WORK right to backwages.
g) Backwages, like reinstatement, is a standard relief in every case of unjust or
Hong Kong Shanghai Banking Corp. Employees Union v. NLRC substantively illegal dismissal. Such illegally dismissed employee should be paid the
Facts: Two months before the expiration of the CBA’s nonrepresentational provisions, the full wages “computed from the time of actual reinstatement” The period covered
bank announced the implementation of a job evaluation program (JEP). The union by backwages, however, should exclude the period of strike.
demanded the suspension of JEP for being ULP. Union members started picketing during
break time while wearing black hats and black bands. The union took a strike vote where 13.1 HSBC Ruling on Backwages of Strikers Illegally Dismissed
the majority voted (not by secret ballot) to hold a strike. The employees walked out and • Comparison of the rulings in Abaria and HSBC.
gathered outside the building. They blocked the entrance which resulted in airlifting the
officials of said bank. There is no showing that they complied with the requirements of Abaria HSBC
strike. The bank issued a notice to return to work. Some returned to work. Those who did not Totally denies backwages to illegally Denies backwages for the period of the
were issued a notice of termination. dismissed strikers. The Court sees this as strike only. For the period after the strike
erroneous because backwages and where they remained illegally dismissed,
Issue: Whether the dismissal was proper reinstatement are reliefs given by statute in they are entitled to backwages.
every case of illegal dismissal.
Held: The strike was illegal.
• All union officers, except one who did not participate, where lawfully dismissed. 14. EMPLOYER’S RIGHT TO HIRE REPLACEMENTS DURING STRIKE; DISCHARGE OF REPLACEMENTS
The members who committed illegal acts were lawfully dismissed. • The replacements are deemed to have accepted their employment as
• The others who did not commit illegal acts should not have been dismissed. replacements with the knowledge that the same is subject to the consequences of
• Refusal to return to work: the labor dispute.
o The employee’s right to exercise their right to concerted activities • The replacements did not gain permanent right to the positions they hold.
should not be defeated by the directive of HSBC for them to report • Failure or refusal of the employer to obey the Court order reinstating the strikers
back to work. constitutes contempt of court.

LA ordered the parties to execute and sign a CBA containing certain benefits contained in 16.6 Liability for Extorting Money from Employers
the decision. Corporation protested the jurisdiction of the LA on the ground that when the • A labor union has no right to extort money from employers as the price for
workers voluntarily returned to work, the LA was divested of jurisdiction. Corporation also forbearance from threatened labor difficulties.
alleges that the bargaining agent ceased to be a certified bargaining agent since the
workers who took part in the strike resigned and thus could not meet the 20% requirement. 16.7 Liability for Damages Arising Out of Publications and Circulation of False Statements
• Labor unions have been held liable for damages arising out of the publication and
Issue: Whether the bargaining agent ceased to be the certified bargaining agent circulation of false statements relating to industrial controversies.

Held: The collective bargaining deadlock has not yet been resolved. The 20% requirement 17. DAMAGES
pertains to the registration of a LLO and not to its election as a collective bargaining • Union officers may not be held vicariously liable for illegal acts of strikers.
agent. Even if it could not meet the 20%, it would not ipso facto lose its status as such until • Mere membership in a labor union is sufficient to predicate liability for acts of
after due hearing individuals done in behalf of the union.
• For a labor union and/ or its officials and members to be liable, there must be proof
16. CIVIL LIABILITY OF LABOR ORGANIZATIONS of actual participation in, or authorization or ratification of, the illegal acts.
• The efforts of the labor organization by any lawful means to attain their legitimate • The RTC has no jurisdiction over a complaint for damages filed by an employer
objects will not make them or their members liable in damages to those who may against a labor union for declaring an allegedly illegal strike.
be directly or indirectly injured. • In sum, union officers are liable for damages caused to the business by the illegal
• However, labor unions may be held liable for resulting damages where they strike. The business owner may recover damages if he is able to prove them. In
attempt to attain their legitimate objectives by unlawful means or where they addition, the officers will lose their jobs.
attempt to attain unlawful objectives. In order to be held liable, there must be proof
National Federation of Labor v. NLRC and Permex Producer and Exporter Corp.
of actual authorization or ratification of such acts after actual knowledge thereof.
Doctrine: In order that damages may be recovered, the best evidence obtained by the
16.1 Labor Organizations Not Liable for Unauthorized Acts of Officers injured party must be presented. Actual or compensatory damages cannot be presumed but
• Labor unions are liable for the authorized acts of their officers or members. However, must duly be proved with a reasonable degree of certainty. A court cannot rely on
labor unions are not liable in damages for the unauthorized or unratified unlawful speculation, conjecture, or guesswork but must depend upon competent proof.
acts of their officials nor are they responsible for the unlawful acts of individual
members which neither their officers nor committees have directed, aided, or 18. IN PARI DELICTO
approved. • The court will restore their respective positions before the strike. The dismissed strikers
will be ordered reinstated without backwages.
16.2 Liability of Officers of Labor Organizations
• The officers participating in such unlawful actions are liable for the resulting ARTICLE 281 [266]. REQUIREMENTS FOR ARREST AND DETENTION
damages irrespective of the fact that they were acting in behalf of the union. They Doctrine: Except on the grounds of national security and public peace, or in case of
are also held liable for unlawful or tortious acts done pursuant to a conspiracy. commission of a crime, no union members or union organizers may be arrested or detained
for union activities without previous consultation with the Secretary of Labor.
16.3 Liability of Members of Labor Organizations
• Members are not subject to civil liability for the acts of its officers unless it is shown • Circular No. 15 Series of 1982 and Circular No. 9 Series of 1996 requires fiscals and
that they personally authorized or participated in the particular acts. other government prosecutors to first secure the clearance of the Secretary Labor or
• Liability of a member for the wrongful acts of his associates done without his the Office of the President before taking cognizance of complaints for preliminary
knowledge or approval is not to be inferred from mere membership in the union. investigation and the filing in court informations arising out of or related to labor
• Members are liable for damages resulting from particular unlawful acts which they dispute.
participated in or which are performed at their direction or pursuant to a delegation • The criminal cases should be suspended until the completion of the compulsory
of authority by them. arbitration proceedings in the NLRC.

16.4 Liability of Labor Unions for Damages Arising from Boycott CHAPTER II
• The corporation/person to whom an unlawful boycott was instituted has a cause of
action against all who have participated provided that there is a causal connection ASSISTANCE TO LABOR ORGANIZATIONS
between the acts complained of and the damages suffered.
• This is true irrespective of the impossibility of determining the total amount of the loss ARTICLE 282 [267]. ASSISTANCE BY THE DEPARTMENT OF LABOR.
or the difficulty of ascertaining with certainty the money value of the damages. The Department of Labor, at the initiative of the Secretary of Labor, shall extend special
assistance to the organization, for purposes of collective bargaining, of the most
16.5 Liability of Labor Unions for Damages for Interfering with Right of Laborers to Work underprivileged workers who, for reasons of occupation, organizational structure or insufficient
• A labor organization which interferes with the right of a worker to dispose of his incomes, are not normally covered by major labor organizations or federations.
services must justify such interference or respond in damages.
• An action for damages will lie against anyone who unlawfully prevents one from
procuring employment or procures an employer to discharge his employee. ARTICLE 281 [266]. REQUIREMENTS FOR ARREST AND DETENTION
The Institute of Labor and Manpower Studies shall render technical and other forms of
assistance to labor organizations and employer organizations in the field of labor education,
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 121

especially pertaining to collective bargaining, arbitration, labor standards and the Labor CHAPTER IV
Code of the Philippines in general.
PENALTIES FOR VIOLATION
Labor Education
• Advancement of industrial peace and democracy should be matched by ARTICLE 287 [272]. PENALTIES
sustained education of workers. A labor union’s failure to provide labor education to a. Any person violating any of the provisions of Article 264 of this Code shall be punished by
members is such a great neglect it was a ground for cancellation of union a fine of not less than one thousand pesos (P1,000.00) but more than ten thousand pesos
registration and expulsion of the union officers at fault. Employers also need labor (P10,000.00) and/or imprisonment for not less than three months nor more than three (3)
education. years, or both such fine and imprisonment, at the discretion of the court. Prosecution
• In short, labor education is a potent force for mutual respect towards attainment of under this provision shall preclude prosecution for the same act under the Revised Penal
industrial peace. Code, and vice versa.
b. Upon the recommendation of the Minister of Labor and Employment and the Minister of
CHAPTER III National Defense, foreigners who violate the provisions of this Title shall be subject to
immediate and summary deportation by the Commission on Immigration and
FOREIGN ACTIVITIES Deportation and shall be permanently barred from re-entering the country without the
special permission of the President of the Philippines.
ARTICLE 284 [269]. PROHIBITION AGAINST ALIENS; EXCEPTIONS.
All aliens, natural or juridical, as well as foreign organizations are strictly prohibited from
• Regular courts shall have jurisdiction over any criminal action under Article 272.
engaging directly or indirectly in all forms of trade union activities without prejudice to normal
• In the case of foreigners, Article 288 provides that “in addition to such penalty, any
contacts between Philippine labor unions and recognized international labor centers: alien found guilty shall be summarily deported upon completion of service of
Provided, however, That aliens working in the country with valid permits issued by the
sentence.
Department of Labor and Employment, may exercise the right to self-organization and join or
assist labor organizations of their own choosing for purposes of collective bargaining: ARTICLE 288. [273] STUDY OF LABOR-MANAGEMENT RELATION
Provided, further, That said aliens are nationals of a country which grants the same or similar The Secretary of Labor shall have the power and it shall be his duty to inquire into:
rights to Filipino workers. (As amended by Section 29, Republic Act No. 6715, March 21, 1989) a) the existing relations between employers and employees in the Philippines;
b) the growth of associations of employees and the effect of such associations upon
ARTICLE 285 [270]. REGULATION OF FOREIGN ASSISTANCE employer-employee relations;
a. No foreign individual, organization or entity may give any donations, grants or other c) the extent and results of the methods of collective bargaining in the determination
forms of assistance, in cash or in kind, directly or indirectly, to any labor organization, of terms and conditions of employment;
group of workers or any auxiliary thereof, such as cooperatives, credit unions and d) the methods which have been tried by employers and associations of employees
institutions engaged in research, education or communication, in relation to trade for maintaining mutually satisfactory relations;
union activities, without prior permission by the Secretary of Labor. e) desirable industrial practices which have been developed through collective
bargaining and other voluntary arrangements;
“Trade union activities” shall mean: f) the possible ways of increasing the usefulness and efficiency of collective
1. organization, formation and administration of labor organization; bargaining for settling differences;
2. negotiation and administration of collective bargaining agreements; g) the possibilities for the adoption of practical and effective methods of labor-
3. all forms of concerted union action; management cooperation;
4. organizing, managing, or assisting union conventions, meetings, rallies, h) any other aspects of employer-employee relations concerning the promotion of
referenda, teach-ins, seminars, conferences and institutes; harmony and understanding between the parties; and
5. any form of participation or involvement in representation proceedings, i) the relevance of labor laws and labor relations to national development.
representation elections, consent elections, union elections; and The Secretary of Labor shall also inquire into the causes of industrial unrest and take all the
6. other activities or actions analogous to the foregoing. necessary steps within his power as may be prescribed by law to alleviate the same, and shall
b. This prohibition shall equally apply to foreign donations, grants or other forms of from time to time recommend the enactment of such remedial legislation as in his judgment
assistance, in cash or in kind, given directly or indirectly to any employer or may be desirable for the maintenance and promotion of industrial peace.
employer’s organization to support any activity or activities affecting trade unions.
c. The Secretary of Labor shall promulgate rules and regulations to regulate and
control the giving and receiving of such donations, grants, or other forms of ARTICLE 289. [274] VISITORIAL POWER
assistance, including the mandatory reporting of the amounts of the donations or The Secretary of Labor and Employment or his duly authorized representative is hereby
grants, the specific recipients thereof, the projects or activities proposed to be empowered to inquire into financial activities of legitimate labor organizations upon the filing
supported, and their duration. of a complaint under oath and duly supported by the written consent of at least twenty
percent (20%) of the total membership of the labor organization concerned and to examine
ARTICLE 286 [271]. APPLICABILITY TO FARM TENANTS AND RURAL WORKERS their books of accounts and other records to determine compliance or non-compliance with
The provisions of this Title pertaining to foreign organizations and activities shall be deemed the law and to prosecute any violations of the law and the union constitution and by-laws:
applicable likewise to all organizations of farm tenants, rural workers, and the like: Provided, Provided, That such inquiry or examination shall not be conducted during the sixty (60) days
That in appropriate cases, the Secretary of Agrarian Reform shall exercise the powers and freedom period nor within the thirty (30) days immediately preceding the date of election of
responsibilities vested by this Title in the Secretary of Labor. union officials.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 122

1. VISITORIAL ENFORCEMENT POWER rights, attaining industrial peace, and improving productivity.
Article 128 v. Article 289
• Article 128: pertains to administrative enforcement of Labor Code provisions and all The TIPCs shall have the following functions:
labor laws and wage orders in employer establishments. It is covers a broader 1. Monitor the full implementation and compliance of concerned sectors with the
subject than Article 289 provisions of all tripartite instruments, including international conventions and
o May be done at the Department’s own initiative declarations, codes of conduct, and social accords;
• Article 289: speaks of enforcement of law or regulations relating only to financial 2. Participate in national, regional or industry-specific tripartite conferences which
activities and records of labor organizations. the President or the Secretary of Labor and Employment may call from time to
o needs a sworn complaint filed and supported by at least 20% of the time;
organization’s membership 3. Review existing labor, economic and social policies and evaluate local and
international developments affecting them;
2. Under D.O. No. 40-30 4. Formulate, for submission to the President or to Congress, tripartite views,
• Filing of a request of examination of books of accounts: recommendations and proposals on labor, economic, and social concerns,
o For independent labor unions, chartered locals and workers associations including the presentation of tripartite positions on relevant bills pending in
pursuant to Article 289 shall be filed with the Regional Office that issued its Congress;
certificate of registration or certificate of creation of chartered local. 5. Advise the Secretary of Labor and Employment in the formulation or
o For federations or national unions and trade union centers – filed with the implementation of policies and legislation affecting labor and employment;
Bureau. 6. Serve as a communication channel and a mechanism for undertaking joint
• Complaint or petition for audit or examination of funds and book of accounts shall programs among government, workers, employers and their organizations toward
prescribe WITHIN 3 YEARS from the date of submission of the annual financial report enhancing labor-management relations; and
to the Department or from the date the same should have been submitted as 7. Adopt its own program of activities and rules, consistent with development
required by law whichever comes earlier. objectives.
• Decision granting the audit shall include appointment of Audit Examiner and All TIPCs shall be an integral part of the organizational structure of the NTIPC.
directive upon him to submit his report and recommendations within 10 days from
The operations of all TIPCs shall be funded from the regular budget of the DOLE.
termination of audit.
o Such decision is interlocutory and shall not be appealable.
TRIPARTISM – is a representation of the 3 sectors (see below) in the policy-making bodies of the
• Decision denying or dismissing the petition for audit may be appealed within 10
government.
days from receipt.
1. The public or the government
2. The employers
ARTICLE 290. [275] TRIPARTISM, TRIPARTITE CONFERENCES, AND TRIPARTITE INDUSTRIAL PEACE
3. The workers
COUNCILS.
a) Tripartism in labor relations is hereby declared a State policy. Towards this end,
• What is provided for, for the private sector, is workers’ participation in policy and
workers and employers shall, as far as practicable, be represented in decision and
decision-making processes directly affecting their rights, benefits, and welfare.
policy-making bodies of the government.
b) The Secretary of Labor and Employment or his duly authorized representatives may
from time to time call a national, regional, or industrial tripartite conference of ARTICLE 291. [276] GOVERNMENT EMPLOYEES
representatives of government, workers and employers, and other interest groups as The terms and conditions of employment of all government employees, including employees
the case may be, for the consideration and adoption of voluntary codes of of government-owned and controlled corporations, shall be governed by the Civil Service
principles designed to promote industrial peace based on social justice or to Law, rules and regulations. Their salaries shall be standardized by the National Assembly as
align labor movement relations with established priorities in economic and social provided for in the New Constitution However, there shall be no reduction of existing wages,
development. In calling such conference, the Secretary of Labor and Employment benefits and other terms and conditions of employment being enjoyed by them at the time of
may consult with accredited representatives of workers and employers. the adoption of this Code.
c) A National Tripartite Industrial Peace Council (NTIPC) shall be established, headed
by the Secretary of Labor and Employment, with twenty (20) representatives each
from the labor and employers' sectors to be designated by the President at regular ARTICLE 292. [277] MISCELLANEOUS PROVISIONS
intervals. For this purpose, a sectoral nomination, selection, and recall process shall (a) All unions are authorized to collect reasonable membership fees, union dues,
be established by the DOLE in consultation with the sectors observing the 'most assessments and fines and other contributions for labor education and research, mutual
representative' organization criteria of ILO Convention No. 144. death and hospitalization benefits, welfare fund, strike fund and credit and cooperative
undertakings.
(b) Subject to the constitutional right of workers to security of tenure and their right to be
Tripartite Industrial Peace Councils (TIPCs) at the regional or industry level shall also be protected against dismissal except for a just and authorized cause and without prejudice
established with representatives from government, workers and employers to serve as a to the requirement of notice under Article 283 of this Code, the employer shall furnish the
continuing forum for tripartite advisement and consultation in aid of streamlining the role of worker whose employment is sought to be terminated a written notice containing a
government, empowering workers' and employers' organizations, enhancing their respective statement of the causes for termination and shall afford the latter ample opportunity to
be heard and to defend himself with the assistance of his representative if he so desires in

accordance with company rules and regulations promulgated pursuant to guidelines set of Labor Relations or Med-Arbiter, or the Regional Director.
by the Department of Labor and Employment. Any decision taken by the employer shall
be without prejudice to the right of the worker to contest the validity or legality of his
Upon expiration of the corresponding period, a certification stating why a decision or
dismissal by filing a complaint with the regional branch of the National Labor Relations
resolution has not been rendered within the said period shall be issued forthwith by the
Commission. The burden of proving that the termination was for a valid or authorized
Chairman of the Commission, the Executive Labor Arbiter, or the Director of the Bureau
cause shall rest on the employer. The Secretary of the Department of Labor and
of Labor Relations or Med-Arbiter, or the Regional Director, as the case may be, and a copy
Employment may suspend the effects of the termination pending resolution of the
thereof served upon the parties.
dispute in the event of a prima facie finding by the appropriate official of the
Department of Labor and Employment before whom such dispute is pending that the
Despite the expiration of the applicable mandatory period, the aforesaid officials shall,
termination may cause a serious labor dispute or is in implementation of a mass lay-off.
without prejudice to any liability which may have been incurred as a consequence thereof,
(c) Any employee, whether employed for a definite period or not, shall, beginning on his first
see to it that the case or matter shall be decided or resolved without any further delay.
day of service, be considered as an employee for purposes of membership in
any labor union.
(d) No docket fee shall be assessed in labor standards disputes. In all other disputes, docket BOOK SIX
fees may be assessed against the filing party, provided that in bargaining deadlock, POST EMPLOYEENT
such fees shall be shared equally by the negotiating parties.
(e) The Minister of Labor and Employment and the Minister of the Budget shall cause to be
created or reclassified in accordance with law such positions as may be necessary to TITLE I
carry out the objectives of this Code and cause the upgrading of the salaries of the TERMINATION OF EMPLOYMENT
personnel involved in the Labor Relations System of the Ministry. Funds needed for this
purpose shall be provided out of the Special Activities Fund appropriated by Batas ARTICLE 293. [278] COVERAGE
Pambansa Bg. 80 and from annual appropriations thereafter. The provisions of this Title shall apply to all establishments or undertakings, whether for profit or
(f) A special Voluntary Arbitration Fund is hereby established in the Board to subsidize the not.
cost of voluntary arbitration in cases involving the interpretation and implementation of
the Collective Bargaining Agreement, including the Arbitrator's fees, and for such other
ARTICLE 294. [279] SECURITY OF TENURE
related purposes to promote and develop voluntary arbitration. The Board shall
In cases of regular employment, the employer shall not terminate the services of an employee
administer the Special Voluntary Arbitration Fund in accordance with the guidelines it
except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
may adopt upon the recommendation of the Council, which guidelines shall be subject
from work shall be entitled to reinstatement without loss of seniority rights and other privileges
to the approval of the Secretary of Labor and Employment. Continuing funds needed for
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
this purpose in the initial yearly amount of fifteen million pesos (P15,000,000.00) shall be
equivalent computed from the time his compensation was withheld from him up to the time
provided in the 1989 annual general appropriations acts.
of his actual reinstatement.
The amount of subsidy in appropriate cases shall be determined by the Board in
1. CONSTITUTIONAL GUARANTY OF TENURE
accordance with established guidelines issued by it upon the recommendation of the
Council. • The policy of the state is to assure the right of workers to security of tenure
o The guaranty is an act of social justice.
The Fund shall also be utilized for the operation of the Council, the training and
education of Voluntary Arbitrators, and the promotion and development of a 2. ARTICLE 294, MISLEADING
comprehensive Voluntary Arbitration Program. • Article 294 recognizes security of tenure only “in cases of regular employment.”
o Such specification is NOT found in the Constitution which entitles “ALL
(g) The Ministry shall help promote and gradually develop, with the agreement WORKERS” to the right to security of tenure.
of labor organizations and employers, labor-management cooperation programs at o The Code itself and the court rulings do not limit security of tenure to
appropriate levels of the enterprise based on shared responsibility and mutual respect in regular employees.
order to ensure industrial peace and improvement in productivity, working conditions
o A project or seasonal employee enjoys security of tenure even only for the
and the quality of working life.
duration of the limited period of their employment
(h) In establishments where no legitimate labor organization exists, labor-management
committees may be formed voluntarily by workers and employers for the purpose of
o IN SHORT: There is security of tenure for a limited period and security of
tenure for an unlimited period.
promoting industrial peace. The Department of Labor and Employment shall endeavor to
enlighten and educate the workers and employers on their rights and responsibilities • SECURITY OF TENURE – the right not to be removed from one’s job without valid
through labor education with emphasis on the policy thrusts of this Code. cause and valid procedure.
(i) To ensure speedy labor justice, the periods provided in this Code within which decisions o So fundamental that it extends to regular (permanent) as well as
or resolutions of labor relations cases or matters should be rendered shall be mandatory. nonregular (temporary) employment.
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

3. TENURE OF MANAGERIAL PERSONNEL be performed is seasonal in nature and the employment is for the duration of the season.
• Generally, employers are allowed a wider latitude of discretion in terminating the
employment of managerial personnel or those who, while not of similar rank, An employment shall be deemed to be casual if it is not covered by the preceding
perform functions that require the employer’s full trust and confidence. 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
• This should be distinguished from the case of ordinary rank-and-file employees,
respect to the activity in which he is employed and his employment shall continue while such
whose termination on the basis of same grounds require a higher proof of
activity exists.
involvement in the events in question.
o BUT while managerial employees may be dismissed merely on the ground 1. ESSENTIALITY OF EMPLOYER-EMPLOYEE RELATIONSHIP
of loss of confidence, the matter of determining whether the cause for
dismissal is justified on the ground of loss of confidence CANNOT be left • Article 295 presupposes employment relationship.
entirely to the employer. o Art. 295 applies where the existence of EER is NOT the issue in dispute.
• Article 295 limits itself to differentiation 4 kinds of employment arrangement, as
EVEN MANAGERIAL EMPLOYEES ARE ENTITLED TO SECURITY OF TENURE follows:
• While an employer has its own interests to protect, it may terminate a managerial 1. Regular
employee for a just cause, such prerogative to dismiss or lay off an employee must 2. Project
be exercised without abuse of discretion 3. Seasonal
o The fact that one is a managerial employee DOES NOT by itself exclude 4. Casual
him from the protection of the constitutional guarantee of security of
tenure. Examples of Non- employment
• Hydro Resources Contractors Corp. vs. Pagalilauan: "A lawyer, like any other
Commission agent
professional, may very well be an employee of a private corporation or even of the
government. A corporation may also contract with a law firm to act as outside
Singer Sewing Machine Co. vs. Drilon (1991)
counsel on a retainer basis. The two classes of lawyers often work closely together
Facts: The nature of the relationship between a company and its collecting agents depends
but on group is made up of employees while the other is not. A similar arrangement
on the circumstances of each particular relationship. Not all collecting agents are employees
may exist as to doctors, nurses, dentists, public relations practitioners, and other
and neither are all collecting agents independent contractors. The respondents' contention
professionals.
that the union members are employees of the Company is based on selected provisions of
o An in-house legal counsel may therefore be a regular employee which is the Agreement but ignores the following circumstances:
entitled to security of tenure.
1. The collection agents are not required to observe office hours or report to Singer's
office every day except, naturally and necessarily, for the purpose of remitting their
4. CONTRAST: EMPLOYEE-AT-WILL (EAW)
collections.
• This means that EAWs are working with no assurance about their condition or term of 2. The collection agents do not have to devote their time exclusively for Singer. There is
employment which can be altered or terminated by the employer at any time, for no prohibition on the part of the collection agents from working elsewhere. Nor are
good reason, no reason, or even for immoral reason. these agents required to account to account for their time and submit a record of
1. This has been a practice in the US but NOT in the PH. their activity.
2. In Book I, it was noted that an EAW contract, knowingly entered into by an 3. The manner and method of effecting collections are left solely to the discretion of
OFW in a FOREIGN LAND where EAW is legal, has been held valid and the collection agents without any interference on the part of Singer.
binding for both employer and employee. BUT that’s abroad, not here in 4. The collection agents shoulder their transportation expenses incurred in the
the PH. collections of the accounts assigned to them.
• In PH, every employment termination has to accord with “due process” which has 5. The collection agents are paid strictly on commission basis. The amounts paid to
two aspects: them are based solely on the amounts of collection each of them makes. They do
1. Existence of lawful cause and not receive any commission if they do not effect any collection even if they put a
2. Observance of proper procedure lot of effort in collecting. They are paid commission on the basis of actual
collections.
TITLE I 6. The commissions earned by the collection agents are directly deducted by them
from the amount of collections they are able to effect. The net amount is what is
TERMINATION OF EMPLOYMENT ( cont’d) then remitted to Singer.

Article 280 is not the yardstick for determining the existence of an employment relationship relation to the particular business or trade considering all circumstances, and in some cases
because it merely distinguishes between two kinds of employees, i.e., regular employees and the length of time of its performance and its continued existence.
casual employees, for purposes of determining the right of an employee to certain benefits, to
join or form a union, or to security of tenure. Article 280 does not apply where the existence of Ecal, et al v. NLRC
an employment relationship is in dispute. Thus, a company physician "on retained" basis, under Workers Supplied by Labor-only Contractor May be Declared Regular Employees of
Article 157, is not necessarily an employee. Contractee
Facts: Hi-Line Timber denies the existence of an EER between the company and the workers
A Non-employee even after Eleven Years claiming that they are under the employ of an independent contractor, pet. Mr. Ecal, an
• When there is no EER, the non-employee remains as such despite passage of time. employee of the company until his resignation. NLRC held that there is no EER between them
• In the four-fold test, passage of time or length of service is NOT one of the four and the company. The Court finds that petitioner Mr. Ecal is a labor-only contractor, a mere
elements. supplier of manpower to Hi-Line.
o Thus, one who agreed to help, on retainer basis, in the prosecution of
illegal occupants, without being controlled in the manner of Ruling: A finding that Mr. Ecal is a labor only-contracttor is equivalent to a finding that an EER
accomplishing his tasks, remained a non-employee even AFTER 11 years. exists between the company and Ecal including the latter’s contract workers herein
petitioners, the relationship being such as provided by the law itself.
● REGULAR EMPLOYMENT
o Primary standard to determine a regular employment is the reasonable Magante v. NLRC and Constress Philippines
connection between the particular activity performed by the employee in Contractual Project Employee becoming Regular
relation to the usual business or trade of the employer. Facts: Magante was emploted by Constress Philippines until his dismissal. Every three months
o TEST: WHETHER THE FORMER IS USUALLY A NECESSARY OR DESIRABLE IN THE he was made to fill up and sign an employment contract relating to a particular phase of
USUAL BUSINESS OR TRADE OF THE EMPLOYER work in a specific project.
o What determines regularity or casualness is NOT the employment
contract, written or otherwise, but the nature of the job. Ruling: Although the petitioner only rendered work for almost two year, nevertheless this
should not detract from his status of being a regular employee because as correctly stated by
Policy Instructions No. 2 of the Ministry of Labor (SOLE) the LA, the determining factor of the status of complainant-petitioner or any worker is the
- PD 859 has defined the concept of regular and casual employment. nature of the work performed by the latter and the place where he performed his assignment.
- What determines regularity or casualness is not the employment contract, written or
otherwise, but the nature of the job. Baguio Country Club Corporation v. NLRC
- If the job is necessary or desirable to the main business of the employer, then Day to Day Contractual Employee Becoming Regular
employment is regular.
Facts: J. Calamba was employed on a day-to-day basis in various capacities as laborer and
dishwasher for 10 months. Afterwards, he was hired as a gardener and rehired when he was
o Basis of regular status of the employee is entirely different from the basis of
dismissed by the corporation. He complained of illegal dismissal.
computation of the compensation.
▪ Labor Congress of the Philippines v NLRC- employees paid on a
Ruling: Article 295 is applicable. Petitioner is arguing that it is certified as an entertainment and
piece-rate basis are considered as regular employees.
that the employee was contracted for a fixed and specific period. However, records reveal
o If the work is an integral part of the business and the work does not furnish
that the employee was repeatedly re-hired to perform tasks ranging from dishwashing and
an independent business or professional service, the work is presumed to
gardening, aside from performing maintenance work. Such repeated rehiring and the
be a regular employment.
continuing need for his service are sufficient evidence of the necessity and indispensability of
o Two Kinds of Employees (Art. 295)
his service to the petitioner’s business or trade.
▪ Regular employees by nature of work
▪ Regular employees by years of service
Beta Electric Corporation v. NLRC
Temporary Employee Becoming Regular
De Leon v NLRC
Facts: Pet. argues that PR’s appointment was temporary and hence, she may be terminated
Examples of Regular Employment by Nature of Work
at will.
Facts: Moises was employed by La Tondena at the maintenance section of its Engineering
Department. He was paid on a daily basis through petty cash vouchers and after more than Ruling: That she had been hired merely on temporary basis and for purposes of meeting the
one year he requested to be included in the payroll of the regular workers. La Tondena seasonal or peak demands of the business and as such, her services may lawfully be
dismissed Moises. The Court held that Moises was a regular employee. The law demands that terminated after the accomplishment of her task is untenable. She was to all intents and
the nature and entirety of the activities performed by the employee be considered. His work purposes, and at the very least, a probationary employee who became a regular upon the
consists of that a maintenance man and not just a building painter. He was given other work expiration of six months. PR’s work, that of a typist clerk is far from being specific or seasonal
assignments in between painting activities. but rather one which are necessary and desirable in the usual business.

Ruling: What determines whether a certain employment is regular or casual is not the will and
word of the employer, to which the worker often accedes, much less the procedure of hiring
the employee or the manner of paying his salary. It is the nature of the activities performed in

Sorreda v. Cambridge Electronics Corporation Ruling: Pet. are casual employees who cannot be considered as employees under the
No Legal Room for Perpetual Employment provision of the Labor Code. They may be considered regular employees if they have
Facts: Five weeks after Sorreda was hired, he met an accident and a machine crushed his left rendered services for at least one year. In this case, they were dismissed before the expiration
arm. It had to be amputated. He would later claim later that after his release from the of the one-year period.
hospital, company officials assured him he would be made a regular employee as long as the
company existed. When he recovered from the injury, he was not allowed to work but instead ● Salary of Casual Employee Converted to Regular Should not be Reduced
was made to sign a memorandum of resignation to formalize his separation from the o Casual employees who have been converted to regular should be
company because his five-month contract had expired. entitled to be treated as such in every respect.
o In addition to enjoying the fringe benefits, they should be allowed to
Ruling: A contract of perpetual employment deprives the management of its prerogative to retain the same rate they were enjoying at the time of their conversion to
decide whom to hire, fire, and promote, and renders inutile the basic precepts of labor regular employees.
relations. An absolute and unqualified employment for life in the mold of petitioner’s concept ● May Regular Jobs be Contracted Out?
of perpetual employment is contrary to public policy and good customs as it unjustly forbids o Is contracting out valid if it results in terminating the employment of regular
the employer from terminating the services of an employee despite the existence of a just or employees? Or if it reduces the work hours of the employees? Or if it
valid cause. reduces or splits the bargaining unit?
▪ Qualified Yes or No
● Causal employee; Regular Employee by Years of Service o Serrano v. Isetam
o Casual employee who after one year of service becomes regular. ▪ Management abolished some regular positions and instead
o Regular only for the work activity for which he was hired hired an independent contractor.
o Employment may be on-and-off but every time the particular work activity ▪ As pointed out in another case, the management of a
occurs, he is the one to be rehired company cannot be denied the faculty of promoting efficiency
o “Regular Casual” and attaining economy by a study of what units are essential for
operation. To it belongs the ultimate determination of whether
Philippine Geothermal, Inc. v. NLRC et al services should be performed by its personnel or contracted to
Issue: Whether PR may be considered regular and permanent employees due to their length outside agencies. (Serrano citing Asian Alcohol Corporation v.
of service in the company despite the fact that their employment is on a contractual or NLRC)
casual basis ▪ Absent the proof that management acted in malicious or
arbitrary manner the Court will not interfere with the exercise of
Ruling: Two kinds of regular employees: judgment by an employer. (Serrano citing Asian Alcohol
1. those who are engaged to perform activities which are usually necessary or Corporation v. NLRC)
desirable in the usual business or trade of the employer ▪ Bare assertion is not sufficient for concluding that the
2. those who have rendered at least one year of service, whether continuous or termination of petitioner’s employment was not a bona fide
broken with respect to the activity in which they are employed. decision of a management to obtain reasonable return from its
investment, which is a right guaranteed to employers under the
Employee’s right to security of tenure: Constitution. (Serrano citing Asian Alcohol Corporation v. NLRC)
▪ Assuming that the employee could be regarded as casual, he ▪ Efficiency and economical operations are recognized as valid,
becomes entitled to be regarded as a regular employee of the lawful reasons for contracting out jobs, even those being done
employer as soon as he completes one year of service. by direct-hire regular employees.
▪ Employer may not terminated\ the service of a regular employee ▪ Legal bar must not be transgressed so as to protect workers,
except for just cause or when authorized by the labor code. namely:
▪ Contractual arrangement if uphold would in effect permit employers ● Contractor must be a legitimate one and not a labor-
to avoid the necessity of hiring regular or permanent employees only contractor
indefinitely on a temporary or casual status, thus to deny them ● Contracting out is not one of the arrangements
security of tenure of their jobs. prohibited

Capule, et al. v NLRC ● Outsourcing of Union Member’s Jobs: Is this Allowed?

terminated. They filed complaints of illegal dismissal against petitioner. be identifiably separate and distinct from the ordinary or regular
business operations of the employer.
Issue: Whether contracting out of the complainants’ job with BSMI legal and valid? o Common basic requisite: designation of named employees as project
employees and their assignment to a specific project are effected and
Ruling: BSMI is an independent contractor, engaged in the management of projects, business implemented in good faith and not merely as a means of evading
operations, functions, jobs and other kinds of business ventures, and has sufficient capital and otherwise applicable requirement of labor laws.
resources to undertake its principal business. It had provided management service to various o Service of project employees are coterminous with the project while
industrial and commercial business establishments. As a legitimate job contractor, there can regular employees are entitled to remain the service of their employer
be no doubt as to the existence of an EER between the contractor and workers. until their services are terminated by the recognized modes of termination
under the Labor Code.
● Does Contracting Out Require Union’s Conformity?
o Contracting out is a management right, subject to regulations already PRINCIPAL TEST
existing. A contrary rule will limit and tend to curtail business growth that Whether or not the project employees were assigned to carry out a specific project or
the company and the union must aspire for. Additionally, contracting out undertaking, the duration and scope of which were specified at the time the employees were
is not unlimited. It is a prerogative that management enjoys subject to specified at the time the employees were engaged for that project.
well-defined legal limitations.
● PROJECT EMPLOYMENT: MEANING AND SCOPE ● Predetermination of the duration or period of a project employment is
o Regular job is defined as usually necessary or desirable in the usual important in resolving whether one is a project employee or not.
business or trade of the employer. o Period- length of existence
▪ EXCEPTION: o Duration-a point of time marking a termination as of a cause or an
● Project employment activity, an end, a limit, a bound, conclusion, termination. (a series of
● Seasonal employment years, months, or days)
o Project or seasonable jobs are in a sense also “regular” and as such the ● Violeta case: Court observes that the employee is clearly hired for a specific
jobholder cannot be dismissed except for a just or authorized cause. They project but the absence of a definite duration of the project led the Court to
are also entitled to security of tenure at least for the duration of the conclude the employee was regular.
project or season. o Law and court decisions incline toward regular instead of non-regular
o They are exceptions not because they are unnecessary or undesirable but employee status.
because they are temporary in existence. They exist for a defined period. o Art. 295 manifests a bias for regularity of status.
o The difference therefore is not in the nature of work but in the duration of o To be exempted from the presumption of regularity of employment,
existence. the agreement between project employee and his employer must
o Project employee- one whose employment has been fixed for a specific strictly conform with the requirements and conditions provided in Art.
project or undertaking, the completion or termination of which has been 295.
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the Fernandez v. NLRC and D.M. Consunji, Inc.
employment is for the duration of the season. Project Employees in the construction Industry
o It is evidently important to make clear the meaning and scope of the term Summary: Documentary evidence clearly showed gaps of month or months between the
“project” in the present context. hiring of petitioner in the numerous projects wherein he was assigned. The conclusion is that
▪ In a case, the Court held that there should be no difficulty in pet. has not continuously worked with PR but only intermittently as he was sired solely for
designating the employees who are retained or hired for the specific projects. He is governed by Policy Instruction No. 20 which states that project
purpose of undertaking dish culture or the production of employees are not entitled to termination pay if they are terminated as a result of the
vegetables as “project employees” as distinguished from completion of the project or any phase thereof in which they are employed.
ordinary or “regular employees” as long as the duration and
scope of the project were determined or specified at the time o Policy Instruction No. 20 requires an employer company to report to the nearest
of engagement of the “project employees”. Public Employment Office the fact of termination of a project employee as a
● Two Types of Project Activities result of completion of a project or any phase.
o Project could refer to one or the other of at least two distinguishable types o The provision for this is an indicator of project employment:
of activities: o Sec. 2.2 of D.O. No. 19, Either one or more of the following
▪ Particular job or undertaking that is within the regular or usual circumstances , among others, may be considered as indicator that
business of the employer company but which is distinct and an employee is a project employee: (e)termination of his
separate, and identifiable as such from the other undertakings employment in the particular project/undertaking is reported to
of the company. Such job or undertaking begins and ends at DOLE Regional Office having jurisdiction over the workplace within 30
determined or determinable times. (Example: Particular days following the date of his separation from work , using the
Construction Job) prescribed form on employees’ terminations/dismissals/suspensions.
▪ Particular job or undertaking that is not within the regular o Work Pool
business of the corporation. Such a job or undertaking must also o General Rule: Members of a work pool from which a construction
company draws its project employees, if considered employee of the
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 128

construction company while in the work pool, are non-project employees o Project employee who has gained regular status is separated from
or employees for an indefinite period. If they are employed in a particular employment on the alleged ground of completion of project, such
project, the completion of the project or any phase thereof will not mean separation is for an invalid reason.
severance of employer-employee relationship.
▪ But in a case, the Court decided that an employee in a work ● Computing the Backwages of Project Employee Who Has Become Regular, “No
pool may also be a project employee. Work, No Pay Rule Applicable
o Follow the principles of “suspension of work” and “no pay” in between
Cartagenas v. Romago Electric Company the end of one project and the start of a new one
Illustrative Case: Project Employee
Doctrine: Since the work depends on the availability of such contracts or projects (Romago is ● SEASONAL EMPLOYMENT; “REGULAR SEASONAL” AFTER ONE SEASON
an electrical contractor who depends for its business on the contracts it is able to obtain from o Seasonal employees are considered as regular employees
real estate developers and builders of building), necessarily the duration of the employment o Regular Seasonal Employees are those called to work from time to time,
of its workforce is not permanent but coterminous with the projects. season after season
o During off season they are temporarily laid off but during the summer
De Ocampo, et al. v. NLRC season they are reemployed or when their services may be needed
Project Employees Not Entitled to Separation Pay; Exception o Not strictly separated from service but are merely employed considered
Doctrine: The ruling in Certeganas v. Romago Electric Co. is not applicable in this case. as on leave of absence without pay until they are reemployed.
Record shows that although the contracts of the project workers indeed expired, the project o Employment relationship is not severed but suspended.
itself was still on-going and so continued to require the workers’ services for its completion. o To be considered as seasonal employee and not regular employee, he or
One can wonder why on view of the circumstances, the contract workers were not retained she must have also been employed for the duration of one season. (and
to finish the project they had begun and were still working on. It is obvious in this case that the nor for several years)
real reason for the termination of services was the complaint that the project workers had filed
and their participation in the strike against the PR. o Employer-Employee Relationship Exists Between Milling Company and Its
Workers Even During Off Season
De Jesus v. Philippine National Construction Corporation
Non-Project Employee; Three Types ▪ Cessation of the Central’s milling activities at the end of the
season is certainly not permanent or definitive; it is a foreseeable
Doctrine: Petitioner is a non-project employee and is entitled to regular employment having
suspension of work, both Central and laborers have reason to
rendered service for more than 10 years. As such, he cannot be terminated unless for just
expect that such activities will be resumed, as they are in fact
cause. Generally, there are three types of non-project employees:
resumed, when sugar can ripe for milling is again available.
1. Probationary
2. Regular Employees
3. Casual Employees.
Zamudio v. NLRC
Based on the personnel action forms, petitioner is either a member of a work pool of workers, Seasonal “Pakiao” Employees
which Policy Instructions No. 20 terms as “non-project employees” or at the very least, a Doctrine: Seasonal nature of pet’s work does not detract from the conclusion that employer-
probationary worker who, after period of six months, has achieved a regular status. As a employee relationship exists. Seasonal workers whose work is not merely for the duration of the
regular employee, petitioner could not have been validly terminated by reason alone of season, but who are rehired every working season are considered regular employees.
competition of the project.
4.3 The Mercado Ruling: Project Employees do NOT Become Regular Although Service
William Uy D.M Consunji Exceeds One Year
In another case involving again an employee Continuous rehiring, the long period of
in a construction company, the court takes a service, and the relation of the complainant’s Mercado Sr. et al. v. NLRC
different view. To apply the standard of work to the employer’s business are the Summary: Petitioners alleged that they were agricultural workers utilized by Private
length of service to the construction industry primary factors that the Court considered in Respondents in all the agricultural phases of work on the rice and sugar lands owned by them.
is unrealistic and unfair, hence despite declaring the worker a regular employee. They were employed individually fro 1949 to 1979. In any case, each individual’s employment
repeated rehiring and long years of service Worker has been rehired repeatedly, exceeds one year.
the project worker cannot become regular. continuously m successively for a total of 38
times within almost 31 years initially as a Private Respondent Cruz denied that Petitioners were her regular employees and instead
laborer then a carpenter in local and foreign averred that she engaged their services through Sps. Mercado, their “mandarols” (persons
construction projects. who take charge in supplying the number of workers needed by owners of various farms), but
only to do a particular phase of the agricultural production, after which they were free to
The D.M Consunji decision came after William Uy. render their services to other farm owners.

casual employment in regular jobs, which has been abused by many employers to prevent restraints on the freedom of the parties to fix the duration of a contract, except when
casuals from enjoying the benefits of regular employees or preventing them from joining they are contrary to law, goods customs, morals, etc.
unions. The rule regarding regularization after a year was not designed to prevent small-scale • Hence, under the Civil Code, fixed-term employment contracts are not limited, as they
businesses fromal engaging in legitimate methods to realize profit. Hence, said proviso is are under the present Labor Code, to those by nature are seasonal or for specific
applicable only to employees who are deemed “casuals” but not to project or season projects with predetermined dates of completion; they also include those to which the
employees like Petitioners. Hence, Petitioners’ employment legally ended upon completion of parties by free choice have assigned a specific date of termination.
the project/season, it was not an illegal dismissal. • Employment for a fixed period arises for various reasons: to substitute a worker on a one-
year study leave or on a 60-day special leave, or a woman on maternity leave, etc.
4.3a Mercado reconciled with earlier rulings • Fixed-period employment is not necessarily the same as project employment. A Project
• The Mercado ruling does not reverse earlier rulings that seasonal employees Employment lasts only for the project’s duration, which is predetermined at the time of
are regular and merely on leave without pay during off seasons. hiring. So by definition, a project employment is also a fixed-period employment.
• The peculiar facts of Mercado where despite the fact that the services of • But not all fixed-period employment is project or season employment for example
Petitioners therein were constantly availed of from year to year, it was still clear working in a place of an employee on maternity leave, is a fixed term employment but it
that they were not in Respondent’s regular employ. While working for is not project/seasonal.
Respondent for particular phases of the production, they were free to contract
their services with other farm owners. Brent School, Inc. v. Zamora
• They were project employees, not necessarily seasonal employees. Summary: Alegre was engaged by Brent School as athletic director for a duration of 5 years
as stipulated in his employment contract. Such contract, however, was signed in 1971 or prior
4.4 “Regular Contractuals” entitled to benefits of Regular Employees to the promulgation of the Labor Code. 3 months prior to the expiration of the stipulated
period, Alegre was given a copy of the report filed by Brent with the DOLE advising of the
Cinderella Marketing Corp. v. NLRC termination of his services on the ground of the completion of contract. DOLE Regional
Summary: Private Respondents are employed by Petitioner as “regular contractuals,” Director considered the report as an application or clearance to terminate and not as a
performing work as salesladies, wrappers, stockmen, etc. in Petitioner’s stores engaged in the report of termination, and refused to give such clearance. It instead required that Alegre be
sale of dresses. They are season employees who are hired by petitioner during the peak reinstated as a permanent employee since the ground cited by Brent was not sanctioned by
season from Sept. – Jan every year, but as soon as the demand for their services end, their the Labor Code. SC set aside DOLE’s decision and declared that the contract was lawfully
employment was terminated. But when the CBA was negotiated in 1988, the Union proposed terminated, hence, Alegre was not entitled to reinstatement. Under Art. 295 of the Labor
that the season employees be allowed to stay. Petitioner acceded to this request. Hence, the Code, a narrow and literal interpretation of which not only fails to exhaust the gamut of
season employees were retained as “regular contractuals” who enjoyed the benefits of employment contracts to which the lack of a fixed period would be an anomaly, but would
regular employees, including security of tenure. They would be deemed regularized once also appear to restrict, the right of an employee to freely stipulate with his employer the
they filled a position in a newly-opened branch of Petitioner. However, prior to regularization, duration of his engagement. Since the purpose of the Labor Code is to prevent circumvention
they were excluded from the bargaining unit. The Union fought for their inclusion in the of the employee’s right to be secure in his tenure, the clause in said article indiscriminately
bargaining unit while they were “regular contractuals.” The SC ruled that Petitioner was merely and completely ruling out all written or oral agreements conflicting with the concept of
engaged in a semantic interplay of words to distort the meaning of a regular employee. It is regular employment as defined therein should be construed to refer to the substantive evil
undeniable that Respondents rendered at least 1 year of service to Petitioner, the nature of that the Code itself has singled out: agreements which circumvent security of tenure. It should
such services being necessary or desirable in the usual business or trade of the employer. NOT apply to instances where a fixed period of employment was agreed upon knowingly and
Hence, they are regular employees who are entitled to all the benefits under the CBA. voluntarily by the parties, without force, duress, or improper pressure or without vitiation of
consent. Hence, Alegre’s employment was terminated upon the expiration of his last contract
4.5 Casual Employment with Brent in 1976, without the necessity of any notice.
• There is casual employment where an employee is engaged to perform a job, work or
service, which is merely incidental to the business of the employer, and such job, work, or 5.1 Summary of the Brent Doctrine
service is for a definite period made known to the employee at the time of engagement; • Art. 295 of the Labor Code does not prohibit an employment contract with a fixed
provided that any employee who has rendered at least 1 year of service, whether such period, provided it is entered into by the parties without any force, duress or improper
service is continuous or not, shall be considered a regular employee with respect to the pressure being brought to bear upon either party, particularly the employee, and absent
activity in which he is employed and his employment shall continue while such activity any other circumstance vitiating consent.
exists. • Such employment for a defined period is allowed even where the duties of the
• Notwithstanding such distinctions, every employee shall be entitled to the rights and employee consist of activities usually necessary or desirable in the usual business of the
privileges, and shall be subject to the duties and obligations, as may be granted by law employer. There is nothing essentially contradictor between a definite period of
to regular employees during the period of their actual employment. employment and the nature of the employee’s duties.

• Before the end of the agreed period, he cannot be removed without a valid cause. If this as meter readers without the benefit of a new contract or agreement or without the term of
is done, the employer commits illegal dismissal and a breach of contract, in which case, their employment being fixed anew. After the 24 days had lapsed, the employment of the
the employee is entitled to payment of his salaries corresponding to the unexpired petitioners was no longer on a fixed-term basis. Petitioners have attained the status of regular
portion of his contract. The existence of a fixed-term contract should not mean that there employees considering that they perform necessary or desirable activities in the usual course
can be no illegal dismissal. Due process must still be observed in the pre-termination of of business or trade of the employer. Meter readings is necessary to the business since there
fixed-term contracts of employment. could be no valid basis for billing customers without such task. The fact that Petitioners were
allowed to continue working after the expiration of their employment contract is evidence of
5.3 A Fixed-Term Employee is NOT an Independent Contractor the necessity and desirability of their service to BENECO’s business. The court ordered their
• Employees under fixed term contracts cannot be independent contractors because in reinstatement and full backwages + indemnity.
fixed-term contracts, an employer-employee relationship exists.
• The test in this kind of contract is not the necessity and desirability of the employee’s 5.4b “ENDO” (End-of-Contract) Contractualization; When “Five-Month Contractuals”
activities, but the day certain agreed upon by the parties for the commencement and considered regular employees; the Purefoods Precedent
termination of the employment relationship.
• For regular employees, the necessity and desirability of their work in the usual course of Purefoods Corp. v. NLRC
the employer’s business are the determining factors. Summary: In applying the Brent criteria under which term employment cannot be said to be in
circumvention of the law on security of tenure:
5.4 Illegal “Fixed-Period Employment”; Brent Ruling Clarified 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
Cielo v. NLRC the employee and absent any other circumstances vitiating his consent; or
Summary: Petitioner was a truck driver who claimed to have been illegally dismissed by 2. It satisfactorily appears that the employer and the employee dealt with each other
Respondent, Henry Lei Trucking Company. The Labor Arbiter ruled in favor of Petitioner and on more or less equal terms with no moral dominance exercised by the former or
ordered his reinstatement with backwages. This decision was reversed by the NLRC on the the latter.
ground that the employment expired under a valid contract. The Solicitor General sided with
the NLRC, finding that the contract was a binding agreement for Petitioner to render services Held: The court ruled that none of these criteria had been met in the present case. It could
for 6 months. It appears that all drivers of Respondent were hired under the same agreement. not be supposed that Respondents who were casual workers of the Petitioner knowingly and
The SC ruled that the employer’s intention was clearly to evade the application of the labor voluntarily agreed to the 5-month employment contract. Cannery workers are never at equal
laws by making it appear that the drivers of the trucking company were not its regular terms with their employers. Almost always, they agree to any terms of an employment
employees. Under this arrangement, the employer hoped to be able to terminate the services contract just to get employed considering that it is difficult to find work given their ordinary
of the drivers without the inhibitions of the Labor Code. All it had to do was to refuse to renew qualifications. Security of tenure has no value if there is freedom to starve if they refuse to work
6-month long agreements, without having to establish cause for termination. The employer did as casual or contractual workers.
not even have to wait for the expiration of the contract as it provided that it could be earlier
terminated at the option of either party. He was also able to prevent the drivers from Petitioner does not deny or rebut the employees’ averments that:
becoming regular employees. The Court accepted the factual findings of the Labor Arbiter 1. the main bulk of its workforce consisted of casual employees,
that Petitioner was a regular employee. The Respondent is engaged in the trucking business 2. that casual workers numbered 1,835 while regular employees 263;
as a hauler of cattle, crops, and other cargo for the PH Packing Corp. This business requires 3. that the company hired casuals every month for 5 months, after which their services
the services of drivers, and continuously because the work is not seasonal, nor is it limited to a were terminated and they were placed by other casual employees on the same 5-
single undertaking/operation. Even if ostensibly hired for a fixed period, Petitioner should be month duration; and
considered a regular employee. In Brent, the Court affirmed the general principle that “where 4. that the casual employees were actually doing work that was necessary and
from the circumstances it is apparent that periods have been imposed to preclude desirable in Petitioner’s business. Petitioner’s scheme was clearly intended to
acquisition of tenurial security by the employee, they should be struck down or disregard as prevent casual employees from attaining the status of a regular employee.
contrary to public policy, morals, etc.” The agreement in this case was null and void.
The 5-month period specified in Respondents’ employment contract having been imposed
5.4a Effect of Retention of Employee Beyond the period of Employment precisely to circumvent the constitutional guarantee of security of tenure should be struck
down as contrary to public policy or morals.
Viernes v. NLRC and Benguet Electric Cooperative, Inc. (BENECO)
Summary: BENECO contracted the services of Petitioners as meter readers for 24 days. 5.4.c Effect of Renewals of Fixed-Period Employment in Regular Jobs
Notwithstanding said term, the Petitioners were allowed to work beyond 24 days for an • Where the direct-hired employee is doing necessary or desirable job, the three-
additional 2 months. Thereafter, they were served with identical notices of termination. month fixed term of the employment, renewed several times exceeding 1 year,
Petitioners claim that the were illegally dismissed. The SC ruled that the Petitioners should be establishes her being a regular employee. Such contractual employment on
reinstated as meter readers, not on a probationary status, but as regular employees. Petitioner “as needed” basis contravenes the employee’s right to security of tenure.
have never been probationary employees. Nothing in the letter of appointments indicates • The 2 criteria so that “term employment” may not violate the law on security of
that their employment as meter readers was on a probationary basis, nor were Petitioners tenure are:
informed at the time of their employment of the reasonable standards under which they 1. the fixed period employment was knowingly and freely agreed upon
could qualify as regular employees. The Brent case is not applicable here as that case applies by the parties; no circumstance such as force, duress, or improper
only with respect to fixed-term employments. While it is true that Petitioners were initially pressure vitiates the employee’s consent; and
employed on a fixed-term basis, they were allowed to continue working in the same capacity
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 131

2. the employer and the employee dealt with each other on more or • Probationary employees, notwithstanding their limited tenure, are also entitled to security
less equal terms with no moral dominance exercised by the former of tenure. Hence, they cannot be terminated except for just or authorized causes as
over the latter. provided by law or under the employment contract.

5.4d Overseas seafarers are contractuals Manila Hotel Corp. v. NLRC

Summary: Cruz was employed as a gardener by Manila Hotel for a probationary period of 6
Millares and Lagda v. NLRC months. A day before the expiration of the probationary period, Cruz’s position was
Summary: A seafarer is not a regular employee and is not entitled to separation pay. His “abolished” by Manila Hotel allegedly due to a business recession. Cruz filed an illegal
employment is governed by the POEA Standard Employment Contract for Filipino Seamen, dismissal complaint against Manila Hotel. The Labor Arbiter ordered for his reinstatement as a
which are contracts that Seafarers sign every time they are rehired. Seafarers are considered regular employee. Manila Hotel contends that he was a mere probationary employee whose
as contractual employees and their employment is terminated when the contract expires. position could be abolished for cause. The SC held that even as a probationary employee,
Moreover, it is an accepted maritime industry practice that employment of seafarers is for a Cruz enjoyed security of tenure. Citing Biboso, the Court ruled that as the Labor Code so
fixed period only. Constrained by the nature of their employment which is quite peculiar and provides, the termination of probationary employees…shall be subject to such regulations as
unique in itself, it is for the mutual interest of both the seafarer and the employer why the the SOLE may prescribe to prevent circumvention of the right of the employees to be secured
employment status must be contractual only or for a certain period of time. in their employment as provided herein. What makes Cruz’s dismissal highly suspicious is that it
took place a day before he became eligible as a regular employee. He has already proven
5.4e Domestic Seafarers are NOT contractual his competence considering that he was even promoted to lead gardener in so short a span
• Seamen employed in domestic shipping are entitled to security of tenure, can of less than 6 months. Hence, there is a strong presumption in his favor that his performance
become permanent employees and can be terminated only for just or had been satisfactory. By abolishing his position with but only 1 day remaining in his
authorized causes. They are covered by the Labor Code. probationary appointment, Petitioner deprived Cruz of qualifying as a regular employee with
its concomitant rights and privileges. Cruz was also deprived of his only means of livelihood
ART. 296 [281] PROBATIONARY EMPLOYMENT upon a vague and empty assertion of “retrenchment.” If an employee hired allegedly on a
Probationary employment shall not exceed six (6) months from the date the employee started probationary basis was not informed of the standards that should qualify her as a regular
working, unless it is covered by an apprenticeship agreement stipulating a longer period. The employee, the employee is deemed to have been hired from day one as a regular
services of an employee who has been engaged on a probationary basis may be terminated employee.
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 A.M. Oreta & Co., Inc. v. NLRC
engagement. An employee who is allowed to work after a probationary period shall be Summary: Nowhere in the employment contract executed by the company and Grulla is
considered a regular employee. there a stipulation that the latter shall undergo a probationary period for 3 months before he
can qualify as a regular employee. There is also no evidence on record showing that Grulla
1. Probationary Employment: Reason and Purpose was apprised of his probationary status and the requirements he should comply with in order
• It is within the exercise of the right to select his employees that the employer may set or to be a regular employee. Absent these requisites, there is justification in concluding that
fix a probationary period within which the latter may test and observe that conduct of Grulla was a regular employee at the time he was dismissed by the company. As such, his
the former before hiring him permanently. services cannot be terminated except for just and authorized causes enumerated under the
• Once the employer finds the employee qualified, the employer may extend to him Labor Code and under the employment contract. During the probationary period the
regular (permanent) appointment even before the end of probation. Conversely, if the employer utilizes that opportunity to size up not just the knowledge, skills, and abilities but also
purpose sought by the employer is neither attained nor attainable during probation, the the character traits of the prospective employee such as whether he gets along with other
employer may terminate it. people, whether he has an appropriate attitude, if he is a manager, does he have leadership
• A probationary employee is one who is under observation by an employer to determine qualities, whether he’ll be an asset or a liability, etc.
whether he is qualified for permanent employment. A probationary appointment gives
the employer an opportunity to observe the fitness of a probationary employee while at Canadian Opportunities Unlimited v. B. Dalangin, Jr.
work, and to ascertain whether he will become a productive and efficient employee. Summary: Petitioner is engaged in the business of assisting immigration applicants to Canada.
• The word probationary as used to describe the period of employment implies the It hired Dalangin as an Immigration and Legal Manager. His principal tasks were to review the
purpose of the term/period, but not its length. During this time, the employee seeks to applications of their clients to assure compliance with Canadian and PH laws. He was advised
prove that he has the qualifications to meet the reasonable standards for permanent that he was under probation for 6 months and that he would be evaluated on the basis of
employment. results of his work and his attitude towards the company and his co-workers as spelled out in
his job description. Within the first month of the probation, he was observed to have routinely
2. Conditions and Standards of Probation exceeded the 1-hr lunch break or not returning to the office after the break. He showed no
• Probationary employment must have been expressly agreed upon. Without such explicit interest when attending to clients or in familiarizing himself with company policies. He also
agreement, the employment is considered regular. refused to attend a “Values Formation Seminar” together with other employees considering
• The agreement must, of course, be genuine. Where the employee denies the that it was to be held on Saturdays after office hours and because he believed he should not
genuineness of the signature appearing on the alleged appointment paper and the be treated similarly with other employees as there were “marked differences between their
employer failed to disprove the employee’s claim, the doubt has to be resolved in the respective positions and duties.” Hence, within the 4th week of probation, Petitioner
employee’s favor. terminated his employment. The SC ruled that the dismissal was proper. His refusal to attend
the “Values Formation Seminar” is an eye-opener on the kind of person and employee that

Dalangin was. It highlights his lack of interest in familiarizing himself with the company’s 3. Duration and Termination of Probation
objectives and policies. He also exhibited negative working habits, particularly with respect to 3.1 Period of Probation not necessarily 6 months
the 1-hr lunch break policy. It was clear that he would be a liability rather than an asset. Art. 296 provides that the “probationary employment shall not exceed 6 months,” which
means that the probationary employee may be dismissed for cause at any time before
2.1 Rights of Probationary Employee the expiration of 6 months after hiring. The six-month probation, however, is a general
• Causes for termination: just or authorized causes as well as failure to qualify as a rule. Probation longer than 6 months can be justified.
regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of the engagement. Buiser, et al. v. Hon. Leogardo, Jr. & General Telephone Directory Co.
Summary: Generally, the probationary period of employment is limited to 6 months. The
2.2 Limitations to Termination of Probation; Regular Status after probationary period exception to this general rule is when the parties to an employment contract agree otherwise,
• The employer’s power to terminate a probationary employment contract is subject such as when the same is established by company policy or when the same is required by the
to the limitations that: nature of work to be performed by the employee. In the latter case, there is recognition of the
a. It must be exercised in accordance with the specific requirements of the exercise of managerial prerogative in requiring a longer period of probationary employment,
contract; which is 18 months in this case, especially where the employee must learn a particular kind of
b. If a particular time is prescribed, the termination must be within such time and if work such as selling, or when the job requires certain qualifications, skills, experience, or
formal notice is required, then that form must be used; training. It it shown that the Company needs at least 18 months to determine the character
c. The employer’s dissatisfaction must be real and in good faith, not feigned so as and selling capabilities of the petitioners as sales representatives. Publication of solicited ads is
to circumvent the contract or the law; and done a year after the sale has ben made and only then will the company be able to
d. There must be no unlawful discrimination in the dismissal. evaluate the efficiency, conduct, and selling ability of its sales representatives, the evaluation
being based on published ads. Moreover, an 18-month probationary period is recognized by
• The standards of performance should be explained and accepted, and the the employees’ union in the CBA. The contracts of employment signed and acquiesced to by
performance should be appraised against those standards unless the job if self- petitions specifically states that the probationary period will be 18 months. This stipulation is not
descriptive like maid, cook, driver, or messenger. contrary to law, morals, and public policy. Here, the Petitioners failed to meet the sales quota,
• In Dusit Hotel, the court ruled that in the absence of any evaluation or valid this constitutes a just cause for their dismissal, regardless of the permanent or probationary
extension, we cannot conclude that Respondent failed to meet the standards of status of their employment.
performance set by the hotel for a chief steward. It is an elementary rule in labor
relations that a probationary employee engaged to work beyond the probationary 3.2 No successive probations
period of 6 months, as provided under the Labor Code, or for any length of time set • An employee who is allowed to work after a probationary period shall be
forth by the employer, shall be considered a regular employee. considered a regular employee.
• In one case, the court held that the employee (Lina) should be considered as a
2.3 Non-observance of Employer’s own termination procedure: Termination regular employee considering that: the nature of her job required her to perform
“procedurally infirm” activities which are deemed necessary and desirable in the usual business, her
employment was not covered by any apprenticeship agreement, and she was
Abbott Laboratories v. Alcaraz rehired after the end of her probationary period. This fact of rehiring negates
Summary: The manager, hired on 6-month probation, was briefed on her duties and management’s claim that she failed to qualify as a regular employee. Not only was
performance standards. Performance was rated on her 3rd month and since she failed to she rehired, but she was rehired after her second probationary period. These
meet the regularization standards, she was asked to resign. But whether she would resign or successive hirings and firings is a mere ploy to avoid the obligations imposed by law.
not, she was told, she should no longer report for work and was asked to surrender her
company ID. The dismissal letter was given a few days later, detailing the reasons for her 3.3 Probation in a sister company
termination i.e. ineffective time management and failure to gain trust of her staff. The SC ruled • The Court ruled that it cannot sanction the practice of some companies where
that the employer complied with the requirements to terminate probationary employee i.e. shortly after a worker has become a regular employee, effects the transfer of the
communication of regularization standards to the employee and that such communication said employee to another entity whose owners are the same/identical, to deprive
was done at the time of the employee’s engagement. However, the Court also found that the employee of the benefits and protection to which he is entitled to.
Abbott failed to abide by its own procedure which required that the performance of an • There is no basis for subjecting an employee to a new probationary/temporary
employee be discussed and reviewed with the employee 2 times: on the 3rd and 5th month of employment where he had already become a regular employee when absorbed
probation. A Performance Improvement Plan (PIP) was also required during the 3rd month by a sister company.
review. Hence, the employer was liable for nominal damages but the dismissal was upheld.
3.4 Last day of probation
NOTE: This was a hotly debated case before the en banc. Justice Brion posted a strong When the probationary period of an employee is “six months,” when is its last day?
dissent. He maintained that there was not only non-observance of procedural due process
but there was also Abbott’s failure to establish the existence of a valid cause to dismiss. How The Supreme Court has used 2 different computation methods in 3 cases.
can Abbott cite “unsatisfactory performance” when it did not do its own performance a. It ends on the same date it started six months before (as used in Cals Poultry where
assessment procedure requiring 2 performance appraisals? the Court ruled that the probation period was from May 16, 1995 – Nov. 15, 1995); or
b. It ends 180 days from the starting date (as used by the court in Mitsubishi Motors v.
Chrysler PH Labor Union. The Court explained that probationary period of 6 months
means 180 days in conformity with Art. 13 of the Civil Code which provides that a
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 133

month undesignated by name is understood to consist of 30 days. Hence, 30 x 6 =

180 days. In that case, the Court ruled that when the employee was terminated, The policy of the Bureau of Private Schools extending the probationary employment of
because the period ended 180 days later, the employee was already regular). teachers to 3 years did not repeal or render inoperative Art. 296 of the Labor Code,
which provides that “the services of an employee who has been engaged on a
3.5 Extension of probation 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 to the
Mariwasa Manufacturing, Inc. v. Hon. Leogardo employee at the time of his engagement.”
Summary: Dequila was hired on probation by Mariwasa as a general utility worker. Upon
expiration of the probationary period of 6 months, Dequila was informed that his work proved 3.8 Reversion from full-time to part-time teacher to avoid “regularization”
unsatisfactory and he failed to meet the required standards. To give him a chance to improve
his performance and qualify for regular employment, Mariwasa, with his written consent, Bongar v. NLRC and AMA Computer College
extended his probation period for another 3 months. His performance, however, did not Summary: Mr. Bongar was employed as an instructor by AMA College. After serving for more
improve. Mariwasa then terminated his employment at the end of the extended period. The than 3 years, which is the probationary period for teachers as provided for by the Manual of
SOLE held that Dequila was already a regular employee when he was dismissed and Regulations for Private Schools, Bongar claimed that he had acquired the status of a
therefore could not have been lawfully dismissed for failure to meet company standards as a permanent employee, hence entitled to tenurial security. AMA asserted that he was hired on
probationary worker. The SC ruled that the extension of probation was ex gratia or an act of a contractual basis and upon the termination of said contract without the same being
liberality on the part of the employer, affording him a second chance to make good after renewed, the employer-employee relation between them has ceased, hence, he could not
initially failing to prove his worth as an employee. It cannot now be unjustly turned against the be considered to have been dismissed. AMA also contended that he could not be classified
employer to compel it to keep on its payroll one who does not perform according to work as a regular employee as he has served as full-time instructor only for 2 years and 9 ½ months,
standards. By voluntarily agreeing to an extension of the probationary period, Dequila in effect short of the 3-year full-time service required by law. The SC ruled that the contention that the
waived any benefit attaching to the completion of said period if he still failed to make the teaching contract expired was negated by the fact that petitioner had rendered service for
grade during the period of extension. Nothing in the law prohibits such a waiver. No public nearly 4 years. All an unscrupulous school has to do to negate or render meaningless the rule
policy is violated by giving the employee another opportunity to demonstrate his fitness for on probationary employment, is to inflexibly confine the recruitment or employment of its
regular employment. teachers to part-time basis, or to revert as what happened to the complainant herein, an
originally full-time status to mere part-time basis to prevent in any way the incumbent teacher
3.6 Probation not the same as a fixed-term employment from becoming regular.

FIXED-TERM EMPLOYMENT PROBATION 3.9 Is it proper to reinstate a probationary employee?

Terminates when the agreed period ends Termination must be justified by a valid cause If an employee was illegally terminated while on probation, is reinstatement a justified
and in which there is no need to prove the grounded on the employee’s failure to pass remedy despite the lapse of the probationary period? Yes.
employee’s unsatisfactory performance agreed standards of performance or
conduct. There must be performance In one case, the employee was hired for 5 months of probation. 2 weeks later, the
standards that were made known to the employee was the suspect for the loss of 20k from the company’s locker, which loss she
employee at the time of hiring and which the herself reported to her supervisor. She was strip-searched and brought to the police
employee failed to meet. which filed a criminal complaint. Unable to post bail, she was jailed for 2 weeks. When
acquitted, she filed an illegal dismissal complaint. The Court rule that Art. 279 (now 294)
3.7 Probation of teachers providing for reinstatement applies even to a probationary employee unjustly dismissed
hence, reinstatement is the proper relief. However, the relations between the parties are
According to Policy Instructions No. 11 issued by DOLE, “the probationary employment of so strained that separation pay in lieu of reinstatement should instead be awarded.
professors, instructors and teachers shall be subject to standards established by the Considering that the agreed probation is 6 months, counted as 1 year, the separation
DECS.” Par. 75 of the Manual of Regulations for Private Schools, in turn, provides that pay is one month’s pay. And as the dismissal is illegal, the employee is likewise entitled to
“[f]ull time teachers who have rendered 3 consecutive years of satisfactory services shall backwages covering the period from date of dismissal to the last day of the agreed
be considered permanent.” probation period.

employer or any immediate member of his family or his duly authorized 4. Right to Dismiss
representatives; and • Right of company to dismiss its employers is a measure of self-protection.
5. Other causes analogous to the foregoing. • Power to Dismiss NOT absolute.
o GR: Employer can dismiss or layoff an employee for just and authorized
Management Rights causes enumerated under Art. 297 and 298.
The next three articles emphasize the right to terminate employment as circumstances o However - Right of ER to freely discharge his employees is subject to
warrant. regulation by the State.

Basic Rights of the Employer: JUST CAUSES OF DISMISSAL

Valid causes are called “just” under Art. 297 and “authorized” under Art. 288-289. Removal of
1. Right to Manage People, in General employee under Art . 297 is called “dismissal” or “discharge” while under Art 288/289 it is
• Except as limited by special laws, an employer is free to regulate, called “separation”.
according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, 1. Serious Misconduct
place and manner of work, transfer of employees, discipline, and recall of • MISCONDUCT- improper or wrong conduct; transgression of some
workers. established and definite rule of action, a forbidden act, dereliction of
• The free will of management to conduct its own business affairs to duty, willful in character, and implies wrongful intent and not mere error in
achieve its purpose cannot be denied. judgment.
• As long as the company’s prerogatives are exercised in good faith for the • SERIOUS MISCONDUCT - grave and aggravated character and not merely
advancement of the employer’s interest and not for the purpose of trivial or unimportant.
defeating or circumventing the rights of the employees, SC will uphold • Misconduct, however serious, MUST be in connection with the employee’s
them. work to constitute just cause for dismissal.
• Equality of Right exists bet EE and ER:
§ Right to sell his labor = Right to purchase labor from any person Misconduct to be just cause for dismissal:
whom it chooses 1. Serious;
2. Relate to the performance of the employee’s duties:
§ Obligation to give just compensation = right to expect 3. Must show that employee has become unfit to continue
adequate work, diligence, and good conduct
working for the employer
2. Right to Discipline
• ER has prerogative to instill discipline in his employees and to impose • Fitness for continued employment cannot be compartmentalized. Series of
reasonable penalties, including dismissal on erring employees pursuant to irregularities when put together may constitute serious misconduct.
company rules and regulations. • The employer may dismiss an employee is the former has reasonable grounds to
believe that the latter is responsible for the misconduct and the nature of his
3. Right to Demote participation renders him absolutely unworth of trust and confidence demanded by
his position.
Petrophil Corporation v. NLRC
Facts: Encarnacion was working in Petrophil premises as a casual employee of Campos, • Examples of Serious Misconduct:
an independent contractor. Gersher Engineering replaced Campos but retained o Pressure and influence a colleague to change a failing grade as well as
Encarnacion in its payroll. Gersher received a complaint from Petrophil regarding misrepresentation of his relation to the student;
Encarnacion’s unsatisfactory performance, thus Gersher decided to reassign him to Caltex. o Employee who utters obscene, insulting or offensive words against a
Encarnacion refused unless he would be given the same position of warehouseman as in superior may be dismissed. Act not only destructive of his co-employee’s
Petrophil. morale and violation of company regulations but also constitutes gross
misconduct.
Ruling: Encarnacion was not dismissed but was only demoted and transferred to Caltex o GR: Immorality on the part of the EE does not justify a discharge unless
because of his performance. But following demotion and transfer, Encarnacion refused to such conduct is prejudicial or in some way detrimental to ER’s interest.
report for work anymore. o Test is not morality in the abstract but whether, taking the nature of
employment into account, the immoral acts were such to render the
Management prerogative to transfer, demote, discipline and even dismiss to protect its employee incapable of performing the service properly or were
business is sustained, provided it is not tainted with unfair labor practice. calculated to injure ER’s business.
• Demotion considered as Dismissal o An employee who sells the product of a competitor may be justifiably
o Where a company guard was reassigned as laborer and his pay was changed dismissed.
from monthly to daily basis because the Company believed he was more pro-
worker than pro-management, SC ruled his demotion as illegal constructive
dismissal.

• Illustrative Case of Sexual Harassment: Ruling: In this case, there is no substantial evidence of the imputed immoral acts, it follows
that the alleged violation of the Code of Ethics governing school teachers have no basis.
Villarama v. NLRC and Golden Donuts The school failed to show that Evelyn took advantage of her position to court her student.
Facts: Villarama was charged with sexual harassment by Ms. D, clerk-typist assigned in his In termination cases, the burden of proving just and valid cause for dismissing an employee
department. The humiliating experience compelled her to resign from work. In her rests on the employer and his failure to do so would result in a finding that the dismissal is
resignation letter, she narrated that all the girls of Materials Department were invited for unjustified.
dinner when in the last minute the three girls decided not to join. After dinner and drinks,
she was brought to a motel by Villarama. Although her dismissal was unwarranted and illegal, it being apparent that the relationship
between EE and ER has been severely strained, it would neither be to the interest of the
Ruling: Sexual harassment abounds in all sick societies. It is a valid cause for separation parties to order reinstatement.
from service.
• Secular Not Religious, Immorality
• In a similar case where the acts occured before the passsage of Anti-Sexual
Harassment Law, the manager was only given a 30-day suspension for fondling the Leus v. St. Scholastica’s College Westgrove
hand, massaging the shoulder and caressing the nape of his secretary which Facts: SSCW argued that it fired Leus, a full-time office assistant, based on the Labor Code
constitutes sexual harassment. and Manual of Regulation of Private Schools for “disgraceful or immoral conduct”. Leus
married the father of her child before SSCW fired her but SSCW argued that the pregnancy
was scandalous to the school.
• Causes found Inadequate
o Where the fisticuffs are plainly a private matter between two employees Ruling: SC ruled that when the law refers to morality, it necessarily pertains to public and
which had no apparent deleterious effect on the substantial interests of
secular morality and not religious morality. The court also ruled that no law which penalizes
the company, penalty of dismissal is not commensurate with the alleged
an unmarried mother by reason of her sexual conduct or prescribes sexual activity
misconduct.
between two unmarried persons and such conduct is not denounced by public and
o A first offender employee who solicits or engage in usurious activities do secular morality.
not warrant dismissal since the company regulations merely provide for
the penalty of written reprimand for the first offense.
§ Compared with Stanford Microsystem: Dismissal instead of • Extra-marital relationship as Immorality
suspension for the first offense was imposed and upheld.
o Compared with the preceding case: Two lovers were both unmarried. In
another case, both teachers were married. SC considered the affair as
• Series of Irregularities by Union Officer: Dismissal Valid, No Financial Assistance immoral.

Samahan ng Manggagawa sa Hyatt-NUHWRAIN v. Phil. Rabbit Bus Lines • IMMORAL CONDUCT - that conduct which is so willful, flagrant, or shameless as to
Facts: Caragdag, a waiter at the hotel and a director of the union, refused to be frisked by show indifference to the opinion of good and respectable members of society.
the security personnel. HR required him to explain why no disciplinary action should be o Such conduct must he grossly immoral such that it must he so corrupt as to
taken against him. The same incident happened, thus a second notice to explain was constitute criminal act or so unprincipled as to be reprehensible to a high
given. He was reprimanded for the first incident and suspended for the second. Caragdag degree or committed under such scandalous or revolting circumstances
committed several infractions. Due to these incidents, he was required to explain but he as to shock the common sense of decency.
did not comply not attended the hearing. He was given a notice of dismissal. VA ruled that
Caragdag threatened and intimidated his superior while the latter was performing his 2. Willful Disobedience
duties.
• In order that willful disobedience by the employee may constitute a just cause for
Ruling: Caragdag’s dismissal was due to several instances of willful disobedience to the terminating his employment, the orders, regulations, or instructions of the employer
reasonable rules and regulations prescribed by the employer. VA pointed out that or representative must be:
according to the Code of Discipline, an employee who commits three different acts of 1. Reasonable and lawful;
misconduct commits serious misconduct. Serious of irregularity when put together may 2. Sufficiently known to the employee; and
constitute serious misconduct which is a just cause for dismissal. 3. In connection with the duties which the employee has been engaged to
discharge.
• Teacher in love with student: The heart has reasons which reason does not know • When an order or rule is not reasonable, in view of the terms of the contract of
employment and the general rights of the parties, a refusal to obey does not
Chua-Qua v. Hon. Jacobo Clave constitute a just cause for the employee’s discharge.
Facts: Evelyn is a grade 6 class adviser where Bobby was enrolled. They fell in love and o As to what a reasonable order or rule will depend on the circumstances of
eventually got married in accordance with the rites of their religion. Private respondent each case.
filed with DOLE an application for clearance to terminate Evelyn on the ground that her o Reasonableness has reference not only to the kind and character of
“abusive and unethical conduct is unbecoming of a dignified school teacher and that her directions and commands, but also to the manner in which they are
continued employment is inimical to the best interest of the school.” made.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 136

o Disobedience, in order to justify dismissal under this provision, must relate the latter were laid down to oppress the former and subvert legitimate labor union
to substantial matters, not merely trivial or unimportant matters. activities. It would be a dangerous doctrine to allow employees to refuse to comply with
• Any employee may be dismissed for violation of a reasonable company rule for the rules and regulations, policies and procedures laid down by their employer by the simple
conduct of the latter’s business such as: expedient of formally challenging their reasonableness or motives.
o Rule which prohibits employees from using company vehicles for private
purpose without authority from management • Insubordination by a Manager
o Where a painter smoked in the painting booth contrary to company rules o Although a managerial employee is clothed with discretion to determine
• Disobedient Dean validly dismissed what was in the best interest of the company, such managerial discretion
o Employer school instructed the dean to give up her 6 units of teaching is not without limits.
load so that she could concentrate on her primary function of o Rules of dismissal for managerial employees are different from those
administering the Institute and Agro-Forestry Program. But the Dean governing ordinary employees, for it would be unjust and inequitable to
refused. Unsatisfied with her explanation, the school terminated her compel an employer to continue with the employment of a person who
employment. occupies a managerial and sensitive position despite loss of trust and
confidence.
o Ruling: The dismissal was valid. The dean was holding a managerial
position. Her disobedience to the order of the school led to the erosion of
the trust and confidence the school reposed on her. • Disobeying a suspension order
o Employee was validly dismissed on the ground of willful disobedience for
• Elements of Disobedience: refusing to comply with suspension order.

Gold City v. NLRC • Violating a Company Policy: Being the spouse of a co-employee
Facts: The management, suspecting undermeasuring of cargo, ordered two other o May an employee be dismissed for being married to a co-employee a
admeasures to remeasure three pallets of bananas already measured by Bacalso and marriage which company policy prohibits?
found that he under-measured the bananas. Bacalso felt insulted by the re-measurement. § Employees were hired after they were found fit for the job but
He confronted one of the two admeasurer which led to a quarrel between them and their were asked to resign when they each married co-employees.
immediate superior. He ignored the oral directive and a fistfighy erupted. Bacalso was Employer contends that its policy will apply only when one
charged with assaulting a co-employee and falsifying reports and records of company employee marries a co-employee but employees remain free to
which led to issuance of notice of termination. marry other persons.
§ The failure of the employer to prove a legitimate business
Ruling: Willful Disobedience of the ER’s lawful orders as a just cause for dismissal requires of concern in imposing the questioned policy cannot prejudice
atleast two requisites: the employee’s right to be free from arbitrary discrimination
1. Conduct must have been willful and intentional based upon stereotypes of married persons working together.
2. Order violated must be reasonable, lawful, made known to the employee and
must pertain to the duties which he had been engaged to discharge.
• Knowledge of Company Policy
It is essential that the employee knows such policy and that its violation is punishable.
Two requisites were present in this case. Bacalso disregarded the courtesy and respect due
from a subordinate and superior. • “Ignorance” of “Fundamental and Universal Rules”
o Does the defense of lack of information excuse reckless driving?
Suspension not Dismissal - It does not follow that Bacalso’s services were lawfully § An evaluator boarded the passenger bus being driven
terminated. The Court believes that not every case of insubordination or willful by a newly hired driver being subject to evaluation.
disobedience by an employee of a lawful work-connected order of the employer or its The evaluator reported the reckless driving. The driver
representative is reasonable penalized with dismissal. Art 282 (no Art 297) refers to “serious denied the report and claimed that even if such were
misconduct or willful disobedience. There must be reasonable proportionality between the true it is not a valid cause to justify his dismissal under
offense and the penalty imposed thereof. the Labor Code.
§ SC ruled that those acts of a bus driver constitutes
• Employer’s Policy Enforceable despite Union’s Objection serious misconduct or conduct analogous to serious
misconduct under Art. 282 (now 297). The claim of
GTE Directories v. Sanchez ignorance is without merit. The job requirements are so
Facts: 14 sales representatives of GTE deliberately refused to submit the reports required by “fundamental and universal” that any bus driver is
the company’s sales policy, which the policy was being objected to by the union. The expected to satisfy them.
employer proceeded to dismiss the disobedient sales representative pending conciliation.
DOLE found the employer acting in bad faith, thus he invalidated the dismissal. • Midstream changing of company policy
o Is an employee bound by a policy initiated after he was hired?
Ruling: Court disagreed with DOLE. It does not follow that just because the employees or § Company policies do not stand still. The employer
their union are unable to realize or appreciate the desirability of the employer’s policies, may change company policy even after employees
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 137

have been hired. Such amended policy becomes an • Invalid Transfer Order, Justified Disobedience
implied contract between the employer and o Example 1: Unreasonable Instruction
employee if the latter continues to work which such
amended policy is in effect. The implied contract Escobin, et al. v. NLRC
binds both the employer and employees. Facts: Some 70 security guards of PISI were assigned to UP-NDC Basilan Plantation. When
the land was placed under agrarian reform program, the plantation had to reduce the
• “Employee Considered Resigned”, not Dismissed number of security guards. 57 were placed on floating status. While in that status, they
o A broadcasting company policy declares that an employee were instructed to report to PISI head office in Metro Manila for posting to clients. Since the
who files a COC for any elective office is deemed resigned from guards did not reply or comply after several chance to do so, they were terminated on
the company. Such policy is lawful and justified. ground of insubordination and willful disobedience.

Ruling: Court ruled in favor of the security guards. First, they were residents and heads of
• Disobeying an Order to Transfer
families in Basilan, to commute to Manila. Second, they were not provided with funds to
o The Gold City case has enumerated two requites that must defray their transportation and living expenses. Even if it was alleged that they were given
concur to validly serve as a valid reason to dismiss an employee: allowance, it was given to those not parties to this case. Fourth, they were not informed of
1. Employee’s attitude - wrongful and perverse their living arrangement prior to departure to Basilan. It is obvious that the transfer was
2. Qualities of the order - lawful, reasonable, made known intended to punish for their refusal to heed to their employer’s directive.
to the employee and pertain to the duties of the
employee
Abbot (1987), Philippine-Japan
Active Carbon (1989), PT & T (1989) Escobin (1998)
• Valid Transfer Order and Homeowner’s Savings (1996)
o Example 1: Business Need Court sustained validity and Employee guards in Mindanao were told to report
enforceability of the transfer order – to Manila office for reassignment in Metro Manila,
Abbot Laboratories v. NLRC disobeying employees were validly the Court invalidated the Order.
Facts: AB employed in Abbot as a medical representative, received instruction transferring dismissed.
him from Manila to Cagayan Valley. AB objected. The company explained that it was Difference with other cases: Reasonableness, Good
company practice to reassign its “med reps” from one territorial area to another. Further, in Faith, Exercise of management “prerogative”
his application for employment AB agreed to accept assignment anywhere in the PH. Still, should not only be lawful but also equitable.
AB did not comply, thus he was dismissed for disobedience.
o Example 2: ULP Act of Employer
Ruling: AB had no valid reason to disobey the order of transfer. He had tacitly given his
consent to the transfer when he acceded to the employer’s policy of hiring sales staff who Yuco Chemical Industries v. Ministry of Labor and Employment
are willing to be assigned anywhere in the PH which is demanded by the employer’s Summary: The reassignment of complainant employees to Manila is legally indefensible on
business. By the very nature of employment as medical representative, he should several grounds. First, it was grossly inconvenient to them. They are working students. When
anticipate reassignment according to the demands of the business. they received the letter to transfer, classes had already started. Second, there appears to
be no genuine business urgency that necessitated their transfer. Company discriminated
o Example 2: Transfer during Investigation against the complainant employees when they were selected for reassignment. The
transfer was tiem at the height of union converted activities, deliberate calculated to
Ruiz v. Wendel Osaka Realty demoralize the other union members.
Facts: An office manager was placed on 30-day suspension while being investigated for
the loss of important company records. The suspension ended but the investigation was still o Example 3: Discriminatory Transfer
on going. Instead of letting her return to her office at QC, she was transferred to Cavite but
her salary neither increased nor decreased. She was given transportation allowance but Misamis Oriental II Electric Service Cooperative v. V.M. Cagalawan
since it was insufficient, she stopped reporting at her new assignment and subsequently Facts: Complainant, after 6 years under a permanent appointment, was designated as
filed a constructive dismissal complaint. Her transfer was alleged to have been made in acting head of a disconnection crew in Balingasag but ten months later was transferred to
bad faith because its underlying purpose was to so humiliate her that she would give up Gingoog City as a member of a disconnection crew. The memo said that the transfer was
her job. “in the exigency of the service.” He complied with reservation as he alleged that the
transfer was a demotion and was prejudicial to him as it would entail additional travel
Ruling: The Court found no constructive dismissal. Considering the gravity of the offense of expense. One month after complying with the transfer, the employee stopped working
stealing company records, the company was justified in transferring her to another work and filed a complaint of constructive dismissal.
place while the investigation was underway. The executive assistant/office manager
position is sensitive; it demands the employer’s utmost trust and confidence. The transfer Ruling: The Court did not believe there was really a letter request from Gingoog for
may indeed be a personal inconvenience or hardship to the employee but unless known additional personnel. It concluded that the complainant’s transfer was not a legitimate
to be motivated by bad faith, the transfer must be upheld as valid exercise of a exercise of an employer’s discretion to transfer an employee.
management prerogative.

o Example 4: Transfer with Pay Reduction No less than seven (7) memoranda were issued to private respondent urging her to follow
o A retained physician was transferred from one client company to the directive of management transferring her to the Urdaneta Branch coupled with a
another, resulting in diminution of her salary. The Court ruled that the generous offer by the petitioner to pay or reimburse her for the actual cost of
transfer with reduction in pay constituted constructive dismissal. transportation that she may incur as a result of the new assignment.

• May an employee disobey inconvenient transfer? • Summary: Inconvenient Transfer

o Employee’s transfer is invalid if it is done for an illicit or underhanded o Inconvenience to the employee does not necessarily invalidate a transfer
purpose, such as to defeat the employee’s right of self-organization, or to order as shown in Homeowner’s Savings and other cases. But
penalize an employee for union activities, or to remove an undesirable inconvenience caused by unreasonableness of the transfer order makes
employee. the order itself invalid, and disobedience is not reason to dismiss the
o To remove an employee requires a valid reason and valid procedure. worker.
Dismissal disguised as transfer is not the legal mode to dismiss a worker. o The transfer order becomes flawed and unenforceable if it fails the criteria
o Where no such illicit, improper or underhanded purpose can be ascribed of lawfulness and reasonableness.
to the employer, but the employee opposes transfer on ground of § Reasonableness pertains to the kind of character of directives
inconvenience, may the employee disobey the order as unlawful or and commands and to the manner in which they are made.
unreasonable? Change of Position and Work
• Similar to the problem of relocation or geographical transfer is the issue of position
Homeowners Savings and Loan Association v. NLRC change or job redefinition. (e.g. from cashier to collector; from clerk to technician)
Facts: Marilyn Cabatbat was employed and had started working as Branch Accountant in • Situation: A female employee (working as a Property Custodian) was ordered to
petitioner's branch office in San Carlos City (Pangasinan). She was re-assigned to the Sta. assume the job of a Bill Distributor. She refused to follow the order saying that it was
Barbara, Pangasinan branch office of petitioner but then returned to her old post in San a man’s job and a demotion in rank. She was then dismissed. The Supreme Court
Carlos City, for the same position. Petitioner issued a memorandum announcing held the dismissal as valid after the employer’s explanation and evidence of
management’s decision to promote five (5) junior officers and to move four (4) of its restructuring. The abolition of position was done in good faith and with valid and
employees to new assignments. She was among those moved from her old post in San legitimate grounds. The transfer was not unreasonable, inconvenient or prejudicial
Carlos branch. She was transferred to the petitioner’s branch in Urdaneta, also in to the employee and not a demotion in rank or diminution of salary privileges or
Pangasinan. Both the promoted and the transfer employees received corresponding other benefits.
increases in their salaries. A letter was made requesting for the deferment of her new
assignment, citing as her reason the fact that she was on her sixth month of pregnancy. Test of Validity of Transfer/Change of Position
The request was granted. After private respondent’s delivery, petitioner again ordered
private respondent to report to her new assignment. She again requested that the order to Blue Dairy Corp v. NLRC and E.R. Recalde
re-assign her be reconsidered because of some very personal reasons. She protested that Facts: The transfer of Recalde from being a food technologist to a worker in the vegetable
her new assignment will entail additional expenses and physical exhaustion as Urdaneta is processing section was a radical change in the nature of her work. She was transferred
too far for her to commute daily. Thereafter, she wrote petitioner a letter, this time bluntly because she allegedly used the company vehicle in looking for a new residence during
refusing her assignment on the pretext that her new assignment was a promotion, in which office hours. However, she was not given a chance to refute the reason of her transfer. Her
case, she has the option to reject or accept the same. She was given a warning by previous job was a high technical position requiring mental faculty yet she was transferred
petitioner that her continued defiance will be dealt with according to law. However, she to mere mechanical work. It was a demotion in rank.
continued reporting to the San Carlos branch. Private respondent was issued a notice of
termination. She then filed a complaint for illegal dismissal against petitioner. Labor Arbiter Doctrine: The managerial prerogative to transfer an employee must be exercised without
dismissed the complaint, which was reversed on appeal to the NLRC. Hence, this petition. grave abuse of discretion, bearing in mind the basic elements of justice and fair play.
The employer must be able to show that the transfer is not unreasonable, inconvenient or
Ruling: It is the employer’s prerogative, based on its assessment and perception of its prejudicial to the employee nor does it involve a demotion in rank or a diminution of his
employees’ qualifications, aptitudes and competence to move them around in the salaries, privileges and other benefits. Failing to do so, the transfer would be tantamount to
various areas of its business operations in order to ascertain where they will function with constructive dismissal.
maximum benefit to the company. The rationale for this rule is that an employee’s right to
security of tenure does not give him such a vested right in his position as would deprive the CONSTRUCTIVE DISMISSAL – exists when an act of clear discrimination, insensibility or disdain
company of its prerogative to change his assignment or transfer him where he will be most by an employer has become so unbearable to the employee leaving him with no option
useful. Of course, the managerial prerogative must be exercised without grave abuse of but to forego with his continued employment.
discretion and putting to mind the basic elements of justice and fair play. Thus, it cannot
be used as a subterfuge by the employer to rid himself of an undesirable worker nor to Employer’s Waiver
penalize an employee. • In resisting a transfer order, the employee might allege that the employer waived his
right to transfer the employee. Before the right to transfer or re-assign employee can
Private respondent's refusal to obey the transfer order constitutes willful disobedience of a be deemed waived by the employer, the stipulation to that effect must be clearly
lawful order of her employer sanctioned under Article 282 (Now Art. 297) of the Labor stated so as to leave no doubt as to the intention of the parties.
Code and, therefore, warrants dismissal. No doubt, private respondent was accorded due • Mere specification in the employment contract of the position to be held by the
process. employee is not such stipulation.

Invalid Change of Position; Constructive Dismissal • Safety, business goodwill, or regulatory compliance are common reasons of
• The court held that a transfer from being an AVP of the Pension Dept. to the AVP of company regulations requiring employees to wear prescribed work uniform or
the Legal Dept. was a constructive dismissal. The employer failed to prove the “proper attire”. Such regulations are within the right of the employer to issue and
ineptness of the employee (which was supposedly the reason of the transfer). enforce regulations/policies that are lawful and reasonable. Their non-observance
• The transfer from a Transportation Manager to a Staff assistant, receiving the same can be appropriately punished.
salary but his car and other privileges withdrawn and sitting on the desk without any
meaningful work, made the dismissal unjustified and the award of full backwages JUST CAUSE: NEGLECT OF DUTIES
with moral and exemplary damages proper. • Gross and habitual neglect of duty come after disobedience in the list of “just
causes” in Art. 297.
Transfer with Promotion of a Manager • GROSS NEGLECT – absence of that diligence that an ordinarily prudent man would
• A transfer becomes unenforceable if the transfer is coupled with or is in the nature use in his own affairs
of a promotion, where the promotion is rejected by the employee. • To constitute a just cause for the employee’s dismissal, the neglect of duties must
not only be gross but also habitual.
Dosch v NLRC and Northwest Airlines • It is not necessary for the employer to show that he has incurred actual loss,
Facts: Dosch, an American Citizen married to a Filipina, was the resident manager of damage or prejudice by reason of the employee’s conduct. It is sufficient that the
Northwest Airlines in the Philippines for 9 years. He was promoted to Director of International gross and habitual neglect by the employee of his duties tends to prejudice the
Sales, transferring him to USA. He refused the promotion and transfer for personal and family employer’s interest since it would be unreasonable to require the employer to wait
reasons. Northwest filed a report on resignation of a managerial employee. until he is materially injured before removing the cause of impending evil.
• An employee may be dismissed because of inefficiency, neglect or carelessness.
Doctrine: There is no law that compels an employee to accept a promotion as it is in the • The degree of skill, care, diligence and authentication imposed by the implied
nature of a gift or a reward, which a person has a right to refuse. He who uses his own legal possession of competency, knowledge, skillfulness etc of an employee is that of
right injures no one. While the right to transfer or reassign an employee is an employer’s ordinary and reasonable skill, care, and diligence. He then cannot be discharged
exclusive right and prerogative of the management, it is not an absolute right. merely because he fails to exercise the highest degree of skillfulness and care unless
the contract of employment expressly stipulates for such degree of skill and care or
Being a managerial employee, he is not excluded from the constitutional grant of security unless employee represents that he possesses such.
of tenure. • However, if the parties contracted that the employee’s services shall be warranted
or agreed to give satisfaction, the employer has the power to determine if the work
No insubordination or defiance can be observed in his preference to remain in his position. is satisfactory and the reasonableness of the grounds of dissatisfaction cannot be
inquired into by the courts.
• UNSATISFACTORY PERFORMANCE – not one of the just causes for dismissal under the
Transfer Distinguished from Promotion Labor Code.
TRANSFER – movement from one position to another of equivalent rank, level or salary without
break in the service Gross Negligence Defined: Examples
- Lateral movement from one position to another of equivalent rank, level or salary • GROSS NEGLIGENCE - want or absence of or failure to exercise slight care or
PROMOTION – advancement from one position to another with an increase in duties and diligence or the entire absence of care; a thoughtless disregard of consequences
responsibilities as authorized by law and usually accompanied by an increase in salary. without exerting any effort to avoid them
- Denotes a scalar assent of a senior officer or employee to another position higher • Ex. A bank employee is grossly negligent when she delivered new credit cards to a
either in rank or salary person she had never seen before nor did she ask for receipts. This caused 740k loss
to the bank. Her dismissal was valid.
Philippine Telegraph and Telephone Corp v Court of Appeals
Facts: PT&T initiated a “Relocation and Restructuring Program” to decongest surplus Associated Bank v. National Labor Relations Commission
workforce to some branches. Relocation benefits and allowances would be given to Facts: “S” was a credit investigator working as an appraiser. He gave a property an
employees who would agree to be transferred. Some employees directed to relocate estimated fair market value of P 769, 545, as it was to serve as collateral for a loan. The loan
refused because of the distant places of the transfer that would require their separation was granted and when it became due and demandable, another appraiser found out
from their families. Such was considered by PT&T as insubordination causing the employees that the property only had an estimated FMV of P 142, 915 and an appraised value of P
to be dismissed. The labor union filed a complaint for unfair labor practice and illegal 114, 332.
dismissal against PT&T.
Doctrine: The huge disparity in values is indicative of his gross negligence. “S” went to
Doctrine: The transfers here are promotions in nature even if not accompanied by an appraise the property on a Sunday and merely asked the people residing there for the
increase in salary. The indispensable element for there to be a promotion is that there must land valuation without confirming with the City Assessor’s office.
be an advancement from one position to another or an upward vertical movement of the
employee’s rank or position. Any increase in salary should only be incidental but never Gross Negligence Distinguished from Habitual Neglect and Fraud
determinative of whether or not a promotion is bestowed to an employee or not. • GROSS NEGLIGENCE – want of care in the performance of one’s duties
An employee cannot be promoted, even if merely as a result of a transfer, without his • HABITUAL NEGLECT – repeated failure to perform one’s duties over a period of time,
consent. depending upon the circumstances
Disobeying Regulations on “Proper Attire”
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 140

• Fraud and willful neglect of duties imply bad faith on the part of the employee in Illustrative Case: Valid Dismissal Due to Unauthorized Absences of a Union Officer
failing to perform his job to the detriment of employer and latter’s business.
Cando v. NLRC and Filipinas Bank
Abandonment Facts: Cando was a senior distributing clerk in Filipinas Bank and a ranking officer of the labor
• Abandonment of job is a neglect of duty union. The union declared a strike and the Ministry of Labor and Employment issued a return to
• ABANDONMENT – clear and deliberate intent to discontinue one’s employment work order which the employees obeyed except Cando. Cando filed an application to go on
without any intention of returning back. official leave and did not report for work. His time cards showed entries such as “union
• An employee may be dismissed under this ground if the absence is for a period of 1 matters” and “hearing”. He explained that his various absences were due to union matters
year without any valid notice or leave from the company and absence is not by that need immediate attention.
reason of illness or disease.
Doctrine: The dismissal of the employee due to unauthorized absences was justified. As an
Elements of Abandonment; Immediate Filing of Dismissal Complaint employee, the petitioner is expected to know the rules and regulations of the bank regarding
leaves of absences.
Labor et al v. NLRC and Gold City Commercial Complex Inc. and Uy
Facts: Respondent did not prove any overt act of petitioners that clearly show their intention Is “Attitude Problem” a Just Cause to Dismiss and Employee?
to abandon their posts. Petitioner, on the other hand, lost no time in filing for illegal dismissal. • An employee who cannot get along with his co-employees is detrimental to the
The filing of an employee of a complaint for illegal dismissal is proof enough of his desire to company for he can upset and strain the working environment.
return to work thus negating any charge of abandonment. • An employee’s attitude problem is a valid ground for his termination. It is a situation
analogous to loss of trust and confidence that must be duly proved by the
Doctrine: Two elements of Abandonment: employer. Compliance with notice and hearing must also be proven by the
1. Failure to report for work or absence without valid or justifiable reason employer.
2. Clear intention to sever the employer-employee relationship* • Proof beyond reasonable doubt is not required, only substantial evidence is required
to support termination on the ground of attitude. Such burden is on the employer.
The second element is the more determinative factor and being manifested by some overt
acts. JUST CAUSE: DISHONESTY; LOSS OF CONFIDENCE
• The third “just cause” of dismissal under Art. 297(c) is “fraud or willful breach by the
The employer has the burden of proof to show a deliberate and unjustified refusal of employee of the trust reposed in him by his employer or duly authorized
employee to resume his employment without intent of returning. Mere absence is not representative”.
sufficient. • To be a just cause for termination, the fraud must be against the employer or
representative in connection with the employee’s work.
Immediate Filing of Complaint Negates Abandonment; Exception • The fraud committed by an employee to a third person not related to his work and
• There are peculiar circumstances when the immediate filing of a complaint for does not involve his employer is not a ground for the dismissal of the employee.
illegal dismissal does not disprove abandonment of work. • Fraud implies willfulness or wrongful intent, the innocent non-disclosure of facts by
• The Supreme Court formerly held that an “over reliance” on the notion that the filing the employee to the employer will not constitute just cause of dismissal.
of a complaint for illegal dismissal is inconsistent with abandonment by the • DISHONESTY – disposition to lie, cheat, deceive or defraud; untrustworthiness; lack of
employee of his work. In this case, the illegal dismissal complaint was only to gain integrity; lack of honesty, probity or integrity in principle; lack of fairness and
leverage for the employee to induce the employer to withdraw the criminal charge straightforwardness; disposition to defraud, deceive or betray.
filed against the former.
Examples of Dishonesty: Falsification of Time Cards
Tardiness and Absenteeism
• Tardiness and Absenteeism – form of neglect of duty San Miguel Corporation v. NLRC
• Acts of insubordination with habitual tardiness are sufficient causes for employee’s Facts: Complainants were former security guards of SMC which dismissed them for falsification
dismissal (especially since the employees in this case were not mere rank and file of time cards. Their entries showed that they reported to work but in fact went on a hunting
but were supervisors). trip with their Chief.
• In another case, the employee’s 3 counts of tardiness cannot be considered as
gross and habitual neglect given that the infrequency of his tardiness removes the Doctrine: In order for obedience to be considered an exempting circumstance, it must be in
character of habitualness. The late attendances were also broadly spaced out. compliance with a lawful order not opposed to a higher positive duty of the subaltern and
• The SC also held that an employee who consistently receives promotions in rank that the person commanding act within the scope of his authority.
and salary must be a highly efficient worker and thus should be retained despite To be exempted on the ground of obedience, both the person who gives the order and the
occasional lapse in punctuality and attendance. person who executes it are acting within the limitations prescribed by the law.

Theft of Company Property Pecuniary Gain

• Is pecuniary gain a necessary element of termination on account of loss of trust?
Firestone Tire and Rubber Company of the Philippines v. Lariosa No. Misappropriation of company funds, although shortages had been fully
Doctrine: Theft by an employee is a valid reason for his dismissal by the employer. Art. 297 of restored, is a valid ground to terminate the services of an employee of the
the Labor Code, an employer may terminate an employment for “serious misconduct” or for company for loss of trust and confidence.
“fraud or willful breach by the employee of the trust reposed in him by his employer or
representative”. HR Director’s Lack of Working Knowledge of Labor Law, A Valid Reason for Dismissal

If there is sufficient evidence that an employee has been guilty of a breach of trust or that his Three reasons that the employer considered enough to lose confidence on the employee:
employer has ample reasons to distrust him, the labor tribunal cannot justly deny to the 1. Failure on several occasions to update her superior on the progress of her important
employer the authority to dismiss such employee. assignments
2. Negative attitude
Theft of Scrap Material 3. Unprofessional behavior towards her own staff and company
• Even if considered as scrap materials, the LPG cylinders still had monetary value • In this case, the SC held that the complainant’s low performance ratings revealed
which the employee cannot appropriate for himself without the employer’s her “work handicap” and that she should have exerted efforts to improve herself in
consent. This act is a serious misconduct or willful disobedience by the employee of her job. She remained complacent and lax in her duties that resulted to the
the lawful orders of his employer in connection with his work, a just cause for employer’s loss of confidence in her managerial abilities.
termination of employment.
Failure to Reach Quota
Theft of Co-employee’s Property • Does failure to reach sales or production quota amount to “breach of trust” that
justifies dismissal? The failure to reach the monthly sales quota cannot be
Villamor Golf Club v. Pehid considered an intentional and unjustified act of respondent (employee) amounting
Summary: Malversation of a “Paluwagan” or voluntary contribution to a common fund by the to a willful breach of trust on his part that would call for his termination based on loss
employees which was not known by the employer, is not a serious misconduct. The voluntary of confidence.
contribution of the employees to a mutual fund for their own personal benefit is not in any • To be a valid ground for an employee’s dismissal, loss of trust and confidence must
way connected to their work. Such is a separate transaction not related to the employee’s be based on a willful breach. A breach is willful if it is done intentionally, knowingly
work. and purposely without justifiable cause.

• In another case involving the theft of property not belonging to the company, the Loss of Confidence Because of Poor Performance
court upheld the dismissal of the erring employee seeing that the act was • “Poor performance” is equivalent to inefficiency and incompetence in the
analogous to serious misconduct. performance of official duties. Art 297 of the Labor Code holds that an
unsatisfactory rating can be a just cause for dismissal only if it amounts to gross or
Loss of Confidence habitual neglect of duties.
• To be a valid reason of dismissal, loss of confidence must be genuine.
• Loss of confidence should not be used as a subterfurge for causes which are illegal, Proof Required
improper and unjustified. It must be genuine and not a mere afterthought to justify • Loss of confidence is a valid ground for dismissing an employee and proof beyond
an earlier action taken in bad faith. reasonable doubt of the employee’s misconduct is not required. It is sufficient if
• Also, the act complained of must be related to the performance of the duties of the there is some basis for such loss of confidence.
employee to show him to be unfit to continue working for the employer. The alleged • The right of an employer to dismiss employees on the ground that it has lost its trust
loss of confidence should have arisen from the performance of his job. and confidence in him must not be exercised arbitrarily and without just cause.
• For loss of trust and confidence to be a valid ground for an employee’s dismissal, it
To whom Applicable; “Position of Trust” Explained: Two Classes must be substantial and not arbitrary and must be founded on clearly established
facts sufficient to warrant the employee’s separation from work.
Loss of Confidence applies only when:
1. To cases involving employees occupying positions of trust and confidence Guidelines Summarized
2. To those situations where the employee is routinely charged with the care and • While loss of confidence is one of the just causes for termination of an employee,
custody of the employer’s money or property the dismissal must rest on an actual breach of duty committed by the employee.
• The first class includes managerial employees i.e. those vested with powers or • Guidelines for applying the doctrine of loss of confidence are:
prerogatives to lay down management policies and/or to hire, transfer, suspend, 1. Loss of confidence should not be simulated
layoff, recall, discharge, assign or discipline employees or effectively recommend 2. It should not be used as a subterfuge for causes which are improper, illegal, or
such managerial actions unjustified.
• The second class includes cashiers, auditors, property custodians etc. or those in the 3. It may not be arbitrarily asserted in the face of overwhelming evidence to the
normal and routine exercise of their functions, regularly handle significant amounts contrary
of money or property. 4. It must be genuine, not a mere afterthought to justify earlier action taken in bad
• An ordinary chambermaid does not fall under either category. faith
5. Employee involved holds a position of trust and confidence
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 142

• While proof beyond reasonable doubt is not required, still substantial evidence is • Contracts, which are the private laws between the parties, should be fulfilled
vital and the burden rests on the employer to establish it. according to the literal sense of their stipulation if their actions are clear and leave
no doubt as to the intention of the parties.
JUST CAUSE: COMMISSION OF A CRIME OR OFFENSE • Except in specified instances (e.g. statute of frauds and law on succession),
• Another just cause is the employee’s commission of a crime or offense against the contracts are binding regardless of form whenever the essential requisites for their
person of his employer or against any immediate member of the employer’s family. validity are present.
• The immediate members of the family referred to are limited to spouse, ascendants, • Essential Requisites of a Valid Contract:
descendants, or legitimate, natural or adopted brothers or sisters of the employer or 1. Consent of the contracting parties
of his relative by affinity in the same degrees and those by consanguinity within the 2. Object certain which is the subject matter of the contract
4th civil degree. 3. Cause of the obligation which is established
• The cause is unlawful if it is contrary to law, morals, good customs, public order or
Conviction or Prosecution Not Required public policy.
• The conviction of an employee in a criminal case is not indispensable to warrant his • The terms and conditions that the contracting parties may establish must not be
dismissal by his employer. contrary to laws, morals, customs, public policy or public order. It must not
• Conviction of a crime involving the loss of funds is not necessary before the contravene labor law provisions.
employee may be dismissed. • Also, a contract of employment is imbued with public interest. The parties are then
• An employee, who was exonerated from a criminal charge of theft of gasoline on not at liberty to insulate themselves from the impact of labor laws and regulations.
the basis of technicality, may still be dismissed from employment if the employer has
ample reason to mistrust him. Obligations to Stay in Service After a Training Grant
• An agreement to stay in service of the company for a given period after
ANALOGOUS CAUSES completion of training or scholarship grant is a valid contractual commitment that
• The determination of whether the cause for terminating employment is analogous binds the employee. Enforcing the agreement is in accord with the law of contracts
to any of those enumerated in Art. 296 depend on the circumstances of each case. and is a valid exercise of management prerogative.
• To be considered analogous, a cause must be due to the voluntary and/or willful
act or omission of the employee. 8.2 No-Compete Undertaking
• Example: The employer could not continue the employment of 4 employees • An undertaking in the employment contract may prohibit an employee from getting
because Petrophil prohibited them from entering Petrophil’s premises as they were employed with a company who is a competitor of the current employer.
suspected of illegally diverting gasoline. • In cases where an employee assails a contract as against public policy, the employer
• Theft committed by an employee against another employee is not work-related, has to adduce evidence to prove that the restriction is reasonable and not greater
hence not serious misconduct under Art. 295 (a). But it may be considered an than necessary to protect the employer’s legitimate business interests. The restraint may
Analogous Cause under the same article. The theft, if proven by substantial not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to earn
evidence, is analogous to serious misconduct. a livelihood and must be reasonable in light of sound public policy.

Must the Analogous Causes be Anticipated in Company Regulations? Ollendorf v. Abrahamson

• D.O. No. 147-15 amends the IRR of Book VI. It states “No act or omission shall be Facts: Ollendorf was in the business of manufacturing underwear where he employed
considered as analogous cause unless expressly specified in the company rules and Abrahamson for a two-year period. Their contract stipulated that the employee should not
regulations or policies.” enter into or engage himself directly or indirectly in a similar or competitive business anywhere
• Is this a just and valid administrative rule? in the Philippine Islands for a period of five years from this date. Six months later, Abrahamson
• Statutory Construction holds that administrative rules are meant for the sole purpose left and went to US but returned as manager of another underwear company which was
of carrying into effect the general provisions of law. Nowhere does the labor code clearly similar and competitive to that of Ollendorf. The latter sued Abrahamson. The Court
require analogous acts or omissions to be expressly specified in company ruled by saying that the restraint imposed upon the employee is not unreasonable.
regulations or policies.
• To demand an express specification of all analogous causes is to demand Doctrine: In determining whether there was a violation of the no-compete provision, each
anticipation of all things similar. But these cannot be preconceived or predefined. case must be decided according to peculiar circumstances and make the validity of the
Yet that is what the IRR wants: to put into writing all incidents or causes that are restraint depending upon it reasonableness. The modern rule provides for the validity of
analogous to those mentioned in Art. 297. restraints upon trade or employment is to be determined upon by the reasonableness of the
• This is something the law does not require because it borders on the impossible. restriction in each case, rather than by a fixed rule.

CONTRACT-BASED DISMISSAL 8.3 No-hire Agreement: Contractee Should not “Pirate” Contractor’s Employees
• Is noncompliance with a stipulation in the employment contract a valid or just • This is similar to the no-contract agreement or “no-pirating agreement”
cause of termination? Does it fall under analogous causes? • Example:
• Employment is a civil/commercial relationship created by a contract, express or o If Company A for instance employs lawyers or guards, or other skilled
implied, between the employer and employed. It is a postulate in the Bill of Rights workers that render services to clients, the contract might stipulate
that “No law impairing the obligations and contracts shall be passed.” that the client Company B should not hire as its employees the
workers supplied by Company A.

Case cited in the International Labour Law Reports TITLE 1. TERMINATION OF EMPLOYMENT (CONT’D)
Facts: In an American case, the employer (A) provided physical therapy services to a nursing
home (B), one of its many clients. In the contract, it stated that if B would hire as employee
any physical therapist from A, then B must pay half of the annual salary of the therapist. The PART 4. AUTHORIZED CAUSES OF TERMINATION
physical therapist were not informed of this provisions when they were employed by A. After 2
years, B terminated its contract with A and then hired four therapists who were A’s employees. ART. 298. [283] CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL.
B, then, refused to pay one-half of their salary. The Supreme Court of Wisconsin ruled that the The employer may also terminate the employment of any employee due to the installation of
no-hire provision was harsh and excessive in scope and was entered into without the labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation
knowledge or consent of the affected employees. The no-hire provision acts as a restrictive of operation of the establishment or undertaking unless the closing is for the purpose of
covenant on A’s employees. circumventing the provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the intended date thereof. In
case of termination due to the installation of labor-saving devices or redundancy, the worker
DOCTRINE: To determine a no-hire provision’s enforceability, the five-factor analysis provides: affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month
1. Be necessary to protect the employer pay or to at least one (1) month pay for every year of service, whichever is higher. In case of
2. Provide a reasonable time limit retrenchment to prevent losses and in cases of closures or cessation of operations of
3. Provide a reasonable territorial limit establishment or undertaking not due to serious business losses or financial reverses, the
4. Not be harsh or oppressive to the employee separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
5. Not be contrary to public policy for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
DISSENT: Justice Skyes suggests that that this is not a lawsuit between and employer and a
former employee. It is a breach of contract between two businesses. The contract was in
ART. 299. [284] DISEASE AS GROUND FOR TERMINATION
writing and was freely entered into with no suggestion of undue influence or unequal
An employer may terminate the services of an employee who has been found to be suffering
bargaining power.
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
8.4 Enforcement of Union Security Clause
equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of
• It is a clause in the CBA that requires or authorizes the employer to terminate an
service, whichever is greater, a fraction of at least six (6) months being considered as one (1)
employee who refuses or fails to join the bargaining union, as discussed under Article
whole year
259.
• Removing an employee on the basis of such clause is a delicate matter that
1. AUTHORIZED CAUSES IN GENERAL
the employee should face cautiously. It requires observance of substantive
and procedural due process.
ARTICLE 298 AND 299 ARTICLE 297
“Authorized” causes of termination “Just” causes
9. EMPLOYMENT CONTRACT ARE MOSTLY ADHESION CONTRACTS
• Whether the employee is probationary, contractual, regular, or even a casual, the
employment contract more often than not, is prepared by the employer. • If something is “just” why should it not be authorized, and why authorize something if it
• A Contract of adhesion is where there is already a prepared form containing the is unjust? Because of this overlapping demarcation, RA. No. 1787 (the old law) included
provisions of the employment contract, the employee takes it or leaves it. among the “just causes” the “closing” or “cessation of operation” of the enterprise
• As to the interpretation of contracts: which are among the present-day “authorized” causes.
o Article 1377 of the Civil Code: The interpretation of obscure words or
stipulations in a contract shall not favor the party who caused the 1.1 Many Other Authorized Causes
obscurity. • Article 298 and 299 are not complete enumeration of authorized causes of
• According to Villanueva v. NLRC, since the respondent company prepared the employment termination. Many other causes are lawful are lawful and authorized.
contract of employment, its terms should be construed strictly against the party who o Example:
prepared it. o Total and permanent disability of an employee
• Any ambiguity therein must be resolved against the respondent company, o Valid application of a union security clause
especially because, in case of doubt, all labor contracts should be in favor of the o Expiration of a period in a term employment
laborer. o Completion of project in
o Failure in probation
o Sale amounting to closure of business
o Defiance of return-to-work order
o Commission of illegal acts in a strike
o Non-feasible reinstatement
o Floating status or off-detailed beyond six months
o Resignation
o Violation of a contractual commitment such as being a consultant to a
competitor
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 144

o Retirement
o Death of employee 3.1 Creation of Positions with Functions Related or Similar to Those of the Abolished
Positions Does Not Necessarily Invalidate the Declaration of Redundancy
1.2 Separation Pay
• “Separation pay” is used in four senses: Santos v. CA and Pepsi Cola Products
1. As a statutory benefit Facts: PEPSI informed its employees that due to poor performance of its sales operations it
2. As employment benefit voluntarily granted or required by contract would streamline certain physical and sales distribution systems. Certain positions including
3. As alternative to reinstatement of an illegally dismissed employee that of petitioner employees were declared redundant and abolished. Thereafter, petitioners
4. As financial assistance to a legally dismissed worker who were separated on the ground of redundancy learned that PEPSI created new positions
• Articles 298 and Article 299 are the only provisions of the Labor Code that (Account Development Managers, ADM) with substantially the same duties and
specifically relate to and require the payment of separation pay, thus, this is the responsibilities as their roles Complimentary Distribution Specialists. The Court held that the
statutory separation pay. positions have no similar descriptions. While CDS are required to physically deliver, sell and
• The amount of pay varies as to cause collect payments for softdrinks, they do so not primarily to retail outlets but to wholesale
o Example: If termination is due to redundancy of workers, separation pay dealers.
shall be equivalent to at least one month pay or one month pay of every
year of service, whichever is higher. In case of retrenchment to prevent Doctrine: When two positions are different, it follows that the redundancy program instituted
losses or closure of business not due to serious business losses, it shall be by the employer was undertaken in good faith. One reason for such restructuring and
equivalent to one month pay or at least 1/2 month pay for every year of streamlining could be an honest effort to make the company more efficient.
service, whichever is higher.
3.2 Redundancy Selection Criteria
1.3 Backwages Incompatible with Statutory Separation Pay • Golden Thread Knitting Industries v. NLRC: the Court said that the employer must use
fair and reasonable criteria in the selection of employees who will be dismissed from
ARTICLE 297 ARTICLE 298 employment due to redundancy.
An employee who is unjustly dismissed from Is entitled to separation pay (except closure • Such fair and reasonable criteria may include:
work is entitled to reinstatement without loss or cessation because of serious losses) a) Less preferred status
of seniority rights and other privileges and to b) Efficiency
his full backwages, inclusive of allowances, c) Seniority
and to his other benefits or their monetary • The presence of these criteria used by the employer shows good faith on its part
equivalent computed from the time his and is evidence that the implementation of redundancy was painstakingly done by
compensation was withheld up to the time of the employer in order to properly justify the termination from the service of its
his actual reinstatement. employees.

2. INTRODUCTION OF LABOR-SAVING DEVICES SPI Technologies v. Mapua

• Reduction of the number of workers in a company’s factory made necessary by the Facts: In proving redundancy, presentation of a new table of organization and certification
introduction of machinery in the manufacture of the products is justified. that the position has become redundant is inadequate evidence. A more compelling
• However, the right to reduce personnel should, of course, not be abused. It should evidence would have been a comparison of the old and new staffing patterns. Change in
not be made a pretext for easing out laborers on account of their union activities. job title is not synonymous to change in functions.
• But neither should it be denied when it is shown that they are not discharging their
duties in a manner consistent with good discipline and the efficient operation of an Doctrine: Redundancy means an excess position. It is not the way to improve an unwanted
industrial enterprise. occupant. For the implementation of a redundancy program to be valid, the employer must
comply with the following requisites:
3. REDUNDANCY (1) Written notice served on both the employees and the Department of Labor and
• Redundancy exists where the services of an employee are in excess of what is Employment at least one month prior to the intended date of retrenchment
reasonably demanded by the actual requirements of the enterprise. (2) Payment of separation pay equivalent to at least one month pay or at least one
• It may be the outcome of factors such as: overhiring of workers, decreased volume month pay for every year of service whichever is higher
of business, dropping of a particular product line or service activity previously (3) Good faith in abolishing the redundant positions
manufactured or undertaken by enterprise, or abolition of departments. positions. (4) Fair and reasonable criteria in ascertaining what positions are to be declared
The employer has no obligation to keep in its payroll more employees that are redundant and accordingly abolished.
necessary for the operation of its business.
• Under Article 298 of the Labor Code, the employer may terminate an employee In cases of redundancy, the management should adduce evidence and prove that a
due to redundancy, among others. However, the employer must comply with the position which was created in place of a previous one should pertain to functions which are
procedural requirement of a written notice to the Minister of Labor and the dissimilar and incongruous to the abolished office.
employee concerned at least one month prior to the dismissal.
• Redundancy does not necessarily refer to duplication of work. In any well-organized
business enterprise, it would be surprising to find duplication of work and two or
more people doing the work of one person.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 145

Caltex v. NLRC overtime pay.

Facts: After declaring the employee’s position of Senior Accounting Analyst as redundant, the
company opened other accounting positions for hiring. There was no showing that the private LA found the petitioner to have been illegally dismissed. But the NLRC held that the phase-out
respondent therein could not perform the functions demanded of the vacant positions. of the security section constituted an exercise of a legitimate business decision. The issue is
whether the hiring of an independent security agency by the employer to replace its current
Doctrine: An employer’s claim of redundancy shall be dismissed if there’s no showing that the security section a valid ground to dismiss the employees in that section. The Court held that
employees could not perform the functions demanded of the vacant positions and the the phase-out of the security section constituted a “legitimate business decision” is a factual
employers thereafter opened other similar positions. finding of an administrative agency which must be accorded respect and even finality by
this Court since nothing can be found in the record. The Court held that termination of
3.3 Valid Abolition of Position and Transfer to Lower Position petitioner’s services was for an authorized cause i.e. redundancy.

Great Pacific Life Assurance Corp. v. NLRC Doctrine: The management of a company cannot be denied the faculty of promoting
Facts: Ms. Allado was transferred to Makati from her abolished position as Regional Cashier in efficiency and attaining the economy by a study of what units are essential for its operation.
Baguio. The Regional Administrator had assumed the function of her position and GREPALIFE To it belongs the ultimate determination of whether services should be performed by its
has not hired anyone in her stead. The Court deemed it was a valid exercise of management personnel or contracted to outside agencies. While there should be mutual consultation
prerogative. eventually deference is to be paid to what management decides.

Doctrine: It is a management prerogative to abolish a position which it deems is no longer 3.5 Contracting Out to a Concessionaire
necessary, absent any findings of malice on the part of management, cannot erase that • The following are evidence of good faith to arrest losses before terminating the
initiative simply to protect the person holding office. It should be noted that GREPALIFE employees:
accommodating Allado by ordering her transfer two two grades lower is immaterial because 1. Engaging an independent consulting firm to conduct manpower audit
the employer could have terminated her services when it abolished her position. Thus, it and organizational development
cannot be deemed that it was a force resignation. 2. Instituting of cost-saving programs
3. Termination of probationary employees
International Harvester Macleaod Inc. v. Intermediate Appellate Court 4. Retrenchment of some managers
Offer of Lower Position to Redundant Employee 5. Efforts to find jobs in other firms where employees to be retrenched may
Facts: Petitioner employer claims that the sole function of its government sales department of be employed.
which private respondent is a an employee as government relations officer is to take charge
of sales of trucks, equipment, and spare parts to the government. Such function was taken 3.6 Good Faith is Presumed
over by International Heavy Equipment Corporation. Eventually, the government sales • By imputing bad faith to the actuations of the employers, the employee has the
department was phased out and complainant was offered a lesser position to which he burden of proof to present substantial evidence to support the allegation of unfair
refused to transfer. The Court held that it was no longer economical to retain the services of labor practice.
the employee. Thus, it cannot be said that in demoting the employee and later terminating 3.7 Invalid Declaration of Redundancy: Illustrative Case
his services, the employer acted oppressively, unjustly, or arbitrarily. • It is the management that determines what services are no longer necessary. This is
an exercise of business judgment whose soundness or enforcement is generally not
Doctrine: It is management prerogative to transfer, demote, discipline, and even to dismiss an subject to unsolicited review of the labor court or labor administrators.
employee to protect its business, provided it is not tainted with unfair labor practice.
Asufrin v. San Miguel Corporation
• Five months after the case of International Harvester, the court took another Facts: San Miguel Beer Corporation adopted a “pre-selling” operations scheme and all route
occasion to stress the reorganization cannot be used as a convenient device to and warehouse positions being declared “redundant.” SMC offered an early retirement
remove personnel in order to replace them with new ones. package to which the petitioner did not avail and instead requested that he be retained in
o If this is the objective, the rules and procedures on dismissal with any position. The SC ordered his reinstatement with full backwages.
employees have to be followed.
o The court required the employer to pay the employee one month’s pay Doctrine: The Supreme Court cited reasons why it was not convinced about the redundancy:
for every year of service. 1. Of the 14 employees who did not avail of the retirement package, only the
complainant was not redeployed to other offices or outlets, he therefore appeared to
3.4 Replacing a Regular Employee with an Independent Contractor be single out.
2. Complainant was in the payroll of Sta. Fe Brewery although actually posted at the Sum-
Serrano v. NLRC and Isetann ag Warehouse where his post was declared redundant; he could have been retained
Facts: Petitioner was hired by Isetann as a security checker to apprehend shoplifters and in Sta. Fe;
prevent pilferage of merchandise. Initially hired on contractual basis, he eventually became a 3. Despite contrary allegation, warehousing activities continued in Sum-ag as transit point
regular employee and then became head of the Security Checkers section. Thereafter, he where dealers got their stocks;
received from his employer about the retrenchment program of the company thus reiterating 4. No criteria, e.g. employee status, efficiency, and seniority was adopted in determining
termination as Security Head. The petitioner then filed a complaint for illegal dismissal, illegal the employees to be laid of.
lay-off, unfair labor practice, underpayment of wages, and nonpayment of salary, and

3.8 Redundancy in Bad Faith: Hiring New Employees While Firing Old Ones o First Requisite: Whether an employer would imminently suffer serious or substantial
losses for economic reasons is essentially a question of fact for the Labor Arbiter and
General Milling Corp v. Viajar the NLRC to determine
Facts: GMC terminated the employment of Viajar who has been working with them for 24 o Second Requisite: What the law requires is a written notice to DOLE and to the
years. GMC alleged that it has been downsizing its operations where a sizeable number of employees concerned, and that requirement is mandatory. The notice must be
positions have become redundant. The HR manager called for her to sign an “Application for given at least one month in advance of the intended date of retrenchment to
Retirement and Benefits” which she refused to sign because she was not applying for enable that employees to look for other means of employment and to ease the
retirement. Viajar filed a complaint for illegal dismissal with damages. GMC proceeded to impact of the loss of their jobs and income.
terminate Viajar’s employment and reported to DOLE in the official form that the termination o Third Requisite: Article 297 requires the employer to pay the employee a separation
was caused by economic setbacks. However, Viajar argued that if her job had become pay equivalent to one month pay or at least ½ month pay for every year of service,
redundant, why was the company hiring new employees in the weeks preceding her whichever is higher.
termination? The Court ruled in favor of the employee. GMC should have shown that it o To the three requisites mentioned above should be added two more:
evaluated the effect to the company of retaining the alleged redundant positions. The (1) The employer exercises its prerogative to retrench employees in
termination report to DOLE was not such proof, it was just a self-serving compliance with good faith for the advancement of its interest and not to defeat or
formalities. circumvent the employee’s right to security of tenure
(2) The employer uses fair and reasonable criteria in ascertaining who will
Doctrine: In addition to giving 30-day notice to the employee and to DOLE and payment of be dismissed or retained among the employees, such as status,
separation pay, it is also required, that the abolition of redundant positions should be in good efficiency, seniority, physical fitness, age, and financial hardship for
faith and that the employer observe fair and reasonable criteria in ascertaining which certain workers.
positions are really redundant. The redundancy cannot just be alleged, it has to be proved by
evidence. • Criteria: Who to Retrench
o There must be fair and reasonable criteria to be used in selecting employees to
4. RETRENCHMENT be dismissed, on account of retrenchment, such as
• It is one of the economic grounds resorted to by an employer to terminate a. less preferred status
employment primarily to avoid or minimize business losses. b. efficiency rating,
• The employer bears the burden to prove his allegation of economic or business c. seniority
reverses. The employer’s failure to prove it necessarily means that the employee’s o When there is need to reduce the workforce, the management has the right to
dismissal was not justified. choose whom to lay off, depending on the work still required to be done and
• Retrenchment to prevent losses is considered a just cause for terminating the qualities of the workers to be retained.
employment and the decision whether to resort to such move or not is a
management prerogative. • Seniority Rights
o An employee has no inherent right to seniority. He has only such rights as may
4.1 Causes of Retrenchment be used based on contract, a statute, or an administrative regulations.
• Lack of Work o Seniority rights are contractual and not constitutional. But in selecting the
o It is a justifiable cause for termination of employment. employees to retrench, the employer cannot completely disregard seniority as
o Where the continuation of the men in the service is patently inimical to the a factor.
interest of the employer, there is no alternative but for the court to authorize
the employer to lay off such number of workers as the circumstances may • Contribution to Income
warrant. • In deciding what positions to retrench, the company is allowed to
• Business Recession consider the margins of contribution to the income of the company as a
o Where the management found it unnecessary to continue employing primary retrenchment standard.
some of its laborers because of a business recession, lack of materials to • The positions that give high contributions will be retrenched last, while the
work on due to government control or due to lack of demand for its positions with low contributions to income will be retrenched first.
products, the Court upheld management’s right to dismiss its laborers, • LI-FO Rule, “Last in-First Out Rule”
specially when the dismissal was only temporary - Rule of Seniority: It indicates that where there is a need to reduce
• Basic Requirements of a Valid Retrenchment personnel, the more recently hired ones will be the first to go instead of
o Under Article 297, there are three basic requisites for a valid those longer service.
retrenchment: 4.3 Four Standards of Retrenchment
1. The retrenchment is necessary to prevent or minimize losses • Retrenchment: It is recognized as a preventive and curative measure. Actual losses
and such losses are proven or profuse bleeding of the business does not have to happen.
2. Written notice is given to the employees and the Department
of Labor and Employment at least one month before the Lopez Sugar Corporation v. Federation of Free Workers
intended date of retrenchment Facts: Petitioner employer to prevent losses due to major economic problems, and exercising
3. Separation pay is paid . its privilege under the collective bargaining agreement, retrenched and retired a number of
its employees. It filed a combined report on retirement and application for clearance to
retrench 86 of its employees. Private respondent file a complaint for unfair labor practice
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 147

stating that the terminations undertaken by petitioner were violative of security of tenure. of the complaining employees. On appeal, NLRC reversed and adjudged employer
liable for illegal dismissal.
Doctrine: Four Standards of Retrenchment • Held: We observe that the basis of the labor arbiter is the statement of profits and
(a) To “prevent losses” justifies retrenchment – Retrenchment or termination of losses submitted by the employer. The same however does not bear the signature of
employment is authorized to be undertaken by the employer sometime before the a CPA or audited by an independent auditor. Briefly stated, it has no evidentiary
losses anticipated are actually sustained or realized/ value. SC pointed out that evidence presented in NLRC proceedings must have
(b) Standards which justify retrenchment modicum of admissibility
1. The losses expected should be substantial and no merely de minmis in
extent. 4.5 Hiring of Replacement after Retrenchment
2. The substantial loss apprehended must be reasonably imminent as such • Retrenchment are allowed for all unnecessary position based on the employer’s
imminence can be perceived objectively and in good faith by the own reorganization program.
employer • Reorganization cannot be used as a convenient device to get rid of existing
3. It must be reasonably necessary and likely to effectively prevent the personnel in order to replace them with new ones
expected losses. • In one case, hiring new employees to replace retrenched employees “clearly belies
4. Alleged losses if already realized, and the expected imminent losses employer’s contention that retrenchment was necessary to prevent or offset the
sought to be forestalled, must be proven by sufficient and convincing expected losses effectively.”
evidence. • Retrenchment does not substitute for dismissal of an employee. Dismissal results from
(c) Determination of loss lies with the LA and NLRC an intolerable act of the employee, and dismissal has its own procedure and
(d) Effect of quitclaims – The fact that several workers signed quitclaims will no by itself effects. Retrenchment, on the other hand, arises from an economic condition – the
bar them from joining in the complaint. poor financial health of the business.
(e) Effect of unjustified retrenchment – All retrenched employees due to legally
ineffective retrenchment should be reinstated and backwages be paid to them. 4.6 Contracting Out After Retrenchment/Redundancy
• In Asian Alcohol Corp v. NLRC, Court upheld the termination on the ground of
On CONDITIONAL EMPLOYMENT redundancy and subsequent hiring of an independent contractor to promote
economy and efficiency
Sagun v. ANZ Global Services and Operations (Manila), Inc.
Summary: Sagun passed the interview and online examinations of ANZ. He was thereafter 4.7 Preventive Retrenchment
offered the position of Customer Service Officer, which he accepted. In the letter of • In one case, the employer presented evidence of the low volume of sales which
confirmation of the offer which constituted Sagun’s employment agreement with ANZ, the inevitably prompted it to streamline its operations. It decided to cut down
terms and conditions of employment required a satisfactory result of his pre-employment operational costs by shutting down one of its paper mills. Yet, the employer did not
screening. It expressly provided that “[Sagun;s] initial and ongoing employment is condition on outrightly dismiss the workers affected by the closure of that mill. It gave them the
ANZ being satisfied that the results of” his police record and other required background option to be transferred to posts of equal rank and pay. Retrenchment was utilized
checks. The agreement likewise states that if in the opinion of ANZ, any of Sagun’s by the employer only as an available option in case the affected employees would
background checks were not satisfactory, ANZ may choose not to commence with his not want to be transferred. This is an indication of good faith on the employee’s part
employment or to terminate it immediately, if he already started, without any liability to pay as it exhausted other possible measures before resorting to retrenchment.
compensation to Sagun. A month after signing, he was informed by the HR Department that • As held in International Harvester Macleod, Inc. vs. IAC “the determination of the
his job offer was withdrawn on the ground that the company found material inconsistencies in need to phase out a particular department and consequent reduction of personnel
the information he declared and with the background checks they conducted. Sagun and reorganization as a labor and cost-saving device is a recognized management
asserted that his employment contracted had already been perfected upon acceptance prerogative which the courts will not generally interfere with” The closing of one of
and he could only be dismissed for cause. He filed a complaint for illegal dismissal. the mills was a valid business judgment to prevent financial drain.
4.8 Redundancy Distinguished from Retrenchment; Temporary versus Permanent
The Court ruled that the employment contract had not taken effect. Here, the subject Retrenchment
employment contract required a satisfactory completion of petitioner's background check
before he may be deemed an employee of ANZ. Considering, however, that petitioner failed REDUNDANCY RETRENCHMENT
to explain the discrepancies in his declared information, ANZ's obligations as a would-be Results from the fact that the linked with losses; cost-cutting
employer were held in suspense and thus, had yet to acquire any obligatory force. To position of the employee has measure made immediately
reiterate, in a contract with a suspensive condition, if the condition does not happen, the Causes become superfluous, an excess necessary by business reduction or
obligation does not come into effect. Thus, until and unless petitioner complied with the over what is actually needed, even reverses.
satisfactory background check, there exists no obligation on the part of ANZ to recognize and if it has not suffered reverses.
fully accord him the rights under the employment contract. Consequently, no employer- separation pay is higher than Either permanent or temporary *
employee relationship was said to have been created between petitioner and ANZ under the retrenchment When the 6-month period is over
circumstances. and the employee (still willing to
Effect
work) is not recalled, he is deemed
4.4 Evidence to Prove Losses: “Modicum of Admissibility” separated or constructively
• Uichico, et al. vs. NLRC and Santos et al. - Labor Arbiter sustained the company’s dismissed.
submission that it suffered business losses in1991 thus, necessitating the retrenchment
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 148

*Permanent Retrenchment is contemplated in Art 297. Temporary Retrenchment is included in the result of a number of factors, such as the over-hiring of workers, a decrease in
Art 300. the volume of business or the dropping of a particular line of service previously
• Constructive dismissal is inferred or construed from the employer’s action; at first manufactured or undertaken by the enterprise.
glance it does not look like a dismissal but upon closer viewing of the facts and • Retrenchment, in contrast to redundancy, is an economic ground to reduce the
interpretation, the action amounts anyway to dismissal. number of employees. It is an act of the employer of reducing the workforce
because of losses in the operation of the enterprise, lack of work, or considerable
Sebuguero, et al. v. NIRC, G.T.I. Sportswear Corp reduction on the volume of business. Retrenchment is, in many ways, a measure of
Facts: Thirty-eight (38) employees of GTI were given “temporary lay-off” notices due to last resort when other less drastic means have been tried and found to be
alleged lack of work and heavy losses. Believing that it was a ploy to dismiss them, they filed a inadequate. A lull caused by lack of orders or shortage of materials must be of such
complaint for illegal dismissal, ULP, underpayment of wages, and non-payment of overtime nature as would severely affect the continued business operations of the employer
pay and 13th month pay. GTI denied charges and asserted that it was a prerogative to lay-off to the detriment of all and sundry if not properly addressed.
employees temporarily for a period not exceeding 6 months to prevent losses.LA found GTI • In another case, the Court explains that both retrenchment and redundancy are
liable for constructive dismissal, underpayment of wages and 13 month pay differential. Labor forms of downsizing.
Arbiter ruled that there was no evidence to prove that there was ULP. NLRC affirmed, saying
that there was no valid work. But the NLRC disagreed with the ruling granting backwages, Hotel Enterprises of the Philippines v. SAMASAH-NUWHRAIN
saying that it is only after the 6-month period (Article 286) that an employee can be presumed Facts: The employer hotel suffered business slump alongside local and international economic
to have been terminated slowdown. It terminated some of its employees to cut cost. The union held a strike. LA held
that strike was legal but NLRC disagreed. CA agreed with the LA and held that it was an
Doctrines: What the NLRC sustained and affirmed is not redundancy but retrenchment. invalid redundancy.
Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. Retrenchment is the termination of Doctrine: SC held that strike was illegal because the retrenchment was valid. “Some position
employment initiated by the employer through no fault of the employees and without had to be declared redundant to cut losses. In this context, what may technically be
prejudice to the latter, resorted to by management during periods of business recession or considered as redundancy may verily be considered as retrenchment measure.”
during lulls occasioned by lack of orders, shortage of materials, etc.Article 283 speaks of a
permanent retrenchment. There is no provision which treats of a temporary retrenchment or • HOWEVER, the court has not given clear answer to the question: when some
layoff and provides for the requisites in effecting it or a period or duration therefore. Hence, personnel have to be removed because of decreased volume of business, should
Article 286 may be applied but only by analogy to set a specific period that employees may their removal be treated as preventive retrenchment or is it redundancy?
remain temporarily laid-off or in floating status. 6 months is the period set by law that the • Redundancy is practically indistinguishable from preventive retrenchment. Both are
operation of a business or undertaking may be suspended, thereby suspending the forms of downsizing and resorted to during periods of business recession.
employment of the employees concerned. The temporary layoff wherein the employees • In Asian Alcohol case, the court calls redundancy and retrenchment “twin
likewise cease to work should also not last longer than 6 months. After 6 months, the grounds”. But are they separate or inseparable twins? Whichever, the questions are
employees should either be recalled to work or permanently retrenched following the still unanswered.
requirements of the law, and that failing to comply with this would be tantamount to
dismissing the employees and the employer would thus be liable for such dismissal. To 4.10 Reduction of Work Days; Constructive Retrenchment
determine, therefore, whether the petitioners were validly retrenched or were illegally
dismissed, we must determine whether there was compliance with the law regarding a valid International hardware, Inc. vs. NLRC
retrenchment at anytime within 6-month period that they were temporarily laid-off. Facts: Pedroso’s working days was reduced to just 2 days a week due to the financial losses
suffered by International’s business. He claimed he was retrenched and should be paid.
4.9 The Puzzle: Redundancy or Preventive Retrenchment? separation pay. LA said that since it was subsisting for more than 6 months and since the
• Preventive personnel reduction blurs the line between retrenchment and financial crisis has not ceased, Pedroso is entitled to payment of separation pay as if he was
redundancy. In many cases, retrenchment may be undertaken by the employer actually retrenched.
before losses are actually sustained. The employer need not keep all his employees
until after his losses shall have materialized. Otherwise, the law could be vulnerable Held: Admittedly, Pedroso had not been terminated or retrenched by the employer due to
to attack as undue taking of property for the benefit of another. financial crisis the number of working days of Pedroso was reduced to just two days a week.
o In many cases the disagreement relates to money. Separation pay for The employer could not have been expected to notify DOLE of the retrenchment of Pedroso
redundancy is bigger than that for retrenchment. The employee opts for under the circumstances for there was no intention to do so on the part of the employer.
redundancy pay while employer insist on retrenchment pay.
• In Edge Apparel case, LA saw manpower reduction as retrenchment while NLRC Nevertheless, considering that he had been rotated by the employer for over 6 months due to
saw it as redundancy. SC sided with the LA. Puzzle persist because “decrease in serious losses in the business so that Pedroso had been effectively deprived of a gainful
volume of business” is an acceptable reason to justify redundancy as well as occupation, thereby, and considering further that the business of the employer was ultimately
retrenchment. closed and sold off, Pedroso was constructively dismissed or retrenched from employment.

5. CLOSURE OF BUSINESS to terminate employees, where operations continued after such repairs, and it is
apparent that the closure of the company’s warehouse was merely a ploy to get rid
5.1 Closure Because of Losses of the employees who were then agitating the company for benefits, reforms and
• A firm which faces serious business decline or loss is entitled to close its business in collective bargaining as a union.
order to avoid further economic loss, and a court has no power to require such firm
to continue operating at a loss. 5.5 Should Separation Pay be Paid in case of Closure of Because of Serious Business Losses?
• DOLE clearance is no longer required • Banco Filipino Savings and Mortgage Bank etc. v. NLRC (1990), SC ruled that
o “Art 297 of the LC enumerates the just causes for an employer to
5.1a Losses must be sufficiently proven by the employer terminate an employee. If an employee is dismissed for just cause, he is
• Financial losses are a question of fact that must be proven before the LA or the not entitled to termination pay. However, in Art 298, in case of closure of
NLRC establishment, the employee is always given termination pay. The reason
for the closure is taken into consideration only to determine whether to
5.2 Right to Close Whether Losing or Not give one month or one-half month pay for every year of service. This
• If the business is not losing but its owner, for reasons of his own, wants to get out of provision is based on social justice and equity.”
the business, he in good faith can lawfully do so anytime. But the employees should
be paid the severance pay. 5.5a Contrary Jurisprudence
• In Catatista v. NLRC, the SC ruled that the Labor Code is clear that an employer o State Investment House v. CA (1992), Victor Mendoza v. NLRC (1993), and
may close or cease his business operations or undertaking even if he is not suffering Mindanao Terminal and Brokerage Service, Inc. v. Honorable Minister of
from serious business losses or financial reverses, as long as he pays his employees Labor and Employment (1994)
their termination pay in the amount corresponding to their length of service. o “Closure of business establishment due to serious losses or financial
• Under Art 298 of the Labor Code, Cessation of business operations NOT due to reverses negates the grant of separation pay to employees whose
business reverses must meet 3 requisites – services are terminated. It is only when the closure is for reasons other than
a. Service of a written notice to the employees to the DOLE at least 1 month business reverses or losses that separated personnel are entitled to
before the intended date thereof separation pay
b. Cessation of or withdrawal from business operations must be bona fide in • The contrary jurisprudences are more recent than the 1990 ruling of Banco Filipino. It
character supports the conclusion that separation pay need not be paid to employees if
c. Payment to the employees of termination pay amounting to at least one- business has closed or ceased operation because of serious losses or financial
half (1/2) month pay for each year of service or 1 month pay, whichever is reverses DULY PROVEN.
higher
5.5b The final word: Rulings in North Davao and Reahs Corporation
5.2a Closure Contrasted to Downsizing o Where, however the closure was due to business losses the Labor Code
• “Closure of Business” and “retrenchment” are often used interchangeably and are DOES NOT impose any obligation upon the employer to pay separation
interrelated, but are actually two separate and independent authorized causes for benefits
termination of employment. • The grant of separation pay under Article 283 is a statutory right on the part of the
• In JAT General Services v. NLRC the Court ruled that closure of business, on one employer and a demandable right on the part of the employee, EXCEPT only where
hand, is the reversal of fortune of the employer whereby there is a complete the closure or cessation was due to serious business losses or financial reverses and
cessation of business operations and/or an actual locking up of the establishment. It there is sufficient proof of this fact or condition
aims to prevent further financial drain upon an employer who cannot pay anymore
his employees since business has already stopped. Retrenchment is reduction of 5.5c Does Previous Generosity Obligate the Company?
personnel usually due to poor financial returns so as to cut down on costs of
operations in terms of salaries and wages to prevent bankruptcy. It is also sometimes North Davao Mining Corporation v. NLRC
referred to as downsizing. The law accords the employer who is not making good in Facts: A mining company ceased operations due to losses, its remaining employees were
its operation in order to cut back on expenses for salaries and wages by laying off separated and given the equivalent of 2.5 days’ pay for every year of service. In prior years, it
some employees. Its purpose is to save a financially ailing business establishment had been giving a separation pay of 30 days’ pay for every year of service. Must the
from eventually collapsing. company equalize the pay?

closure to prevent losses in which case employees must be paid separation pay. The most that the purchasing company may do, for purposes of public policy and social
justice, is to give preference to the qualified separated employees of the selling company,
5.6 Justification for Closure Not Credible; Unfair Labor Practice who in their judgment are necessary in the continued operations of the establishment.
• Another question aside from separation pay with regard to closure is Closure
whether or not it is bona fide or merely an evasion of the obligation to deal with the 6.1 Sale of Business: Is it “Closure” or “Cessation of Business”
employee’s union. Closure, in other words, may turn out to be ULP in disguise
• Carmelcraft v. NLRC Manlimos, et al. v. NLRC
o Where it is manifest that the closure is motivated not by a desire to avoid • Whether it is closure or cessation is not material. In any case, the employees lose
further losses but to discourage the workers from organizing themselves their jobs (with postemployment benefits) unless the new owner opts to retain or
into a union for more effective negotiations with the management, the rehire them.
State is bound to intervene. • The hiring of employees on a probationary basis is an exclusive management
prerogative
5.7 Closure by Operation of Agrarian Reform Law
• National Federation of Labor v. NLRC 6.1a Manlimos reversed: Sale of Assets v. Sale of Stocks
o Patalon Cocomut Estate was closed down because it was subject to • SME Bank, Inc. v. De Guzman, expressly reversed the ruling in Manlimos because it
CARP. Closure was not done voluntarily but by mandate of law. applied the doctrine on asset sale to a case of stock sale. Sale of corporate stock
o Since the closure was due to the act of the government to benefit the does not terminate employment, sale of asset does.
petitioners, as members of the Patalon Estate Agrarian Reform • Sale of Stock should be differentiated from Sale of Assets
Association, by making them agrarian lot beneficiaries of said estate, the o In sale of stocks, there is no transfer of ownership of the business. It involves
petitioners are not entitled to separation pay. only a change of equity composition of the corporation
o Art 298 does not contemplate a situation where the closure of the business o In sale of assets, employees may be separated from employment but
establishment is forced upon the employer and ultimately for the benefit seller is liable for separation pay. Buyer in good faith is not required to
of the employees. retain or pay the claims of employees.

5.7a Expiration of Lease 6.1b Simulated Sale: Illegal Termination

o If the worker’s tenure of employment is coterminous with the lease of the • If sale is simulated, there is no change of ownership, no cessation of business, hence,
hacienda, their employment expires as soon as the lease expires and the termination has no basis. It is done in bad faith.
lessees turns over the hacienda to the owner. • In such a case, employees are entitled to reinstatement with full backwages.
o What severs the employer-employee relationship is not the worker’s
dismissal but the expiration of their working relationship with the lessee. 6.2 Change of Name
Hence, the workers are not entitled to any separation pay as the case • Change of Corporate Name is not an authorized cause of employment termination.
entails expiration of tenure, not dismissal. • It is not a change in corporate being.
• The renamed corporation remains liable for illegal dismissal committed under the
6. SALE IN GOOD FAITH old name.
• There is no law prohibiting bona fide sale of a going enterprise.
• When that happens, the purchaser, UNLESS he agrees to do so, has no legal 6.3 Successor-in-Interest, Contractual Obligation to Employ
obligation to continue employing the employees of the seller
• The seller, as employer, is obliged to pay his employees separation pay and other Marina Port Services, Inc. v. Iniego
benefits founded on law, policy or contract. Facts: Philippine Ports Authority cancelled the contract with MPSI as arrester operator. It
• Transferee, may, but is not obliged to, give employment preference to the former awarded the contract to Marina Port Services on the condition that it shall absorb all the
employees; if hired, they may be required to pass probation. employees. Marina refused to be bound by the condition.
• If the sale is tinged with bad faith, the law and rulings on ULP and the doctrine of
successor employer may apply Doctrine: If the transferee contractually committed itself to retain the employees of the
transferor, such contractual commitment must be honored
San Felipe Neri School of Mandaluyong et al. vs NLRC, Roman Catholic Archbishop of Manila
Facts: San Felipe Neri sold its properties and assets to Roman Catholic. RCAM as the 6.4 Merger
transferee-purchaser, continued the operation of the school. Respondent teachers were • By the fact of merger, succession of employment rights and obligations occurs
asked to apply as a new teacher, demoting them to probationary status which disregard their between the absorbing corporation and the employees of the absorbed
past services. Teachers filed a complaint against petitioner and RCAM for separation pay, corporation. Not only must the absorbing corporation retain the employees; it
differential pay and other claims. should likewise recognize the length of service in the previous employer.
• In merger, like in sale in bad faith, the successor employer principle applies.
Doctrine: When the Deed of Sale does not provide any stipulation relative to the continued
employment of the teachers/employees and there is a manifest unwillingness to absorb the Filipinas Port Services, Inc. v. NLRC et al.
teachers or recognize prior service. They have been effectively terminated and there was in Facts: In compliance with government policy, different stevedoring and arrastre corporations
effect a closure. No law requires the purchaser to absorbed the employees of selling were consolidated into a single corporation, Davao Dockhandlers Inc., which was renamed
corporation. Filport. It started its operation in 1977. It was mandated to draw its personnel complements
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 151

from the merging operators. Some employees filed a complaint with DOLE alleging that their because they have in fact acknowledged in their quitclaims that they had received
retirement benefit was computed only from 1977 and not from 1955 when they started their separation pay.
working from Filport’s predecessor. Filport refused contending that it was not a successor
employer therefore not liable. 7. AILMENT OR DISEASE
• Under Art. 229, disease is also an authorized cause for separation. The substantive
Doctrine: Appellant is a successor-employer thus, answerable to the lawful obligations of the and procedural elements of due process should be observed.
predecessor employers. Filport has the obligation not only to absorb the workers of the The substantive elements as found by the Court in Deoferio v. Intel Tech, are: (4)
dissolved companies but also include the length of service earned by the absorbed 1. an employer has been found to be suffering from any disease (contagious or
employees with their former employees as well. To rule otherwise would be manifestly less than not)
fair, certainly less than just and equitable. 2. his continued employment is prohibited by law or prejudicial to his health or to
the health of his co-employees
6.5 CONSOLIDATION 3. a competent public health authority certifies that the disease is of such nature
• The Court in the case of Filport stated that: or at such stage that it cannot be cured within a period of 6 months even with
“Granting that Filport had no contract whatsoever with private respondents proper medical treatment.
(employees) regarding the services rendered by them prior to 1977, by the fact of A fourth element must be added:
merger, a succession of employment rights and obligations had occurred between 4. payment of separation pay = to at least one month salary or to ½ month salary
Filport and the employees. The law enforced at the time of merger was Section 3 of for every year of service, WHICHEVER IS GREATER, a fraction of at least six
Act. 2772 which states that: months being considered as one whole year.

Sec. 3 Upon perfecting, as aforesaid, of a consolidation made in the manner herein • The burden of proving the validity of the dismissal rests on the employer. As such, the
provided, the several corporations parties thereto shall be deemed and taken as employer must prove that the requisites for a valid dismissal due to a disease have
one corporation, upon the terms and conditions set forth in said agreement; or, been complied with. In the absence of the required certification by a competent
upon the perfecting of a merger, the corporation merged shall be deemed and public health authority, this Court has ruled against the validity of the employee’s
taken as absorbed by the other corporation and incorporated in it; and all singular dismissal.
rights, privileges, and franchises of each of said corporations, and all property, real
and personal, and all debts due on whatever account, belonging to each of such A medical certificate issued by the company’s own physician is not a certificate by
corporations, shall be taken and deemed as transferred to and vested in the new competent public health authority.
corporation formed by the consolidation, or in the surviving corporation in case of
merger, without further act or deed; xxx” Triple Eight Integrated Services, Inc. v NLRC
Doctrine: The requirement for a medical certificate under Art. 284 of the Labor Code cannot
6.6 SUMMARY be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by
• As a rule, the corporation that purchases the assets of another will not be liable for the employer of the gravity or extent of the employee’s illness and this defeat the public
the debts of the selling corporation, provided, the former acted in good faith and policy on the protection of labor.
paid adequate consideration for such assets. The buying corporation becomes
liable, however, when any of the following circumstances is present: 7.1 RESIGNATION OF DISEASED EMPLOYEE
a. Where the purchaser expressly or impliedly agrees to assume the debts • Art. 299 contemplates a situation where the employer, and not the employee,
b. Where the transaction amounts to a consolidation or merger of the initiates the termination of employment on the ground of the latter’s disease or
corporations sickness. Where the employee resigned from his position because he was suffering
c. Where the purchasing corporation is merely a continuation of the selling from a disease, Art. 299 is NOT applicable. Hence, the claim for separation pay may
corporation be denied. Neither is the employee entitled to retirement benefit because he was
d. Where the selling corporation fraudulently enters into transaction to not yet 60 y/o. Nor can he claim retirement pay from the company because it has
escape liability for those debts no retirement benefit program, and to have one is not a statutory obligation.
Neither is there an established practice to give retirement pay.
GENERAL RULE – Purchasing corporation do not assume the liabilities of selling corporation
• But considering the employee’s 29 years of service, the award of financial
EXCEPTIONS – ACCF assistance benefit from the Philam Life Plan is appropriate. This ruling is in accord
1. Agreement – express or implied with a 1990 ruling. A security guard resigned due to ill health and the question
2. Consolidation or Merger whether he resigned voluntarily arises. The court ruled that in as much as he was in
3. Continuation of the selling corporation service for almost 25 years, he deserves full measure of the law’s benevolence and
4. Fraud grants him separation pay, applying Art. 299 analogously.

PART 5. c. A written notice of termination served on the employee indicating

that upon due consideration of all the circumstances, grounds have
PROCEDURE TO TERMINATE EMPLOYMENT been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee’s last
The cause and procedure of dismissal are both important but they are not of equal legal known address
effects. Absence of valid cause make the dismissal illegal and invalid. Absence of valid
procedure makes the dismissal merely defective or ineffectual. Where the dismissal is illegal II. For termination of employment based on authorized causes under Art.
and invalid, the employee is entitled to reinstatement, backwages etc (Art. 294). Where the 297, the requirements of due process shall be deemed complied with
dismissal is merely defective for non-observance of proper procedure, the dismissal stays, so upon service of a written notice to the employee and the appropriate
the employee remains dismissed, but the employer has to pay nominal damages. Regional Office of the Dept. at least 30days before the effectivity of the
termination, specifying the ground/s for termination.
BUT, in the 2016 case of HSBC, the SC, through Justice Bersamin, uses the word “illegal” to refer III. If the termination is brought about by the completion of the contract or
to a dismissal lacking in valid cause as well as to a dismissal lacking in valid procedure. phase thereof, no prior notice is required. If the termination is brought
Ineffectual or defective is no longer used. about by the failure of an employee to meet the standards of the
employer in the case of a probationary employment, it shall be sufficient
Therefore: A dismissal lacking in valid cause is SUBSTANTIVELY ILLEGAL; a dismissal lacking in that a written notice is served the employee within a reasonable time from
valid procedure is PROCEDURALLY ILLEGAL. The terms are changed but the effects are the effective date of termination.
unchanged. In substantively illegal dismissal, the employee is entitled to reinstatement. In
procedurally illegal dismissal, the employee remains dismissed but the employer is liable for The Court ruled that the employee’s right to due process prevails over the company rules that
nominal damages. allow “immediate dismissal” of the erring employee.

1. PROCEDURAL DUE PROCESS; AMPLE OPPORTUNITY TO BE HEARD Where the employee denies the charges against him, a hearing is necessary to thresh out all
doubts. The failure of the employer to give the employee the benefits of a hearing and an
• The constitutional right to due process has two aspects: substantive and investigation before his termination constitutes an infringement of his constitutional right to
procedural. Substantive due process mandates that an employee may be due process of law.
dismissed only on just and authorized cause. Procedural due process requires
further that he may be dismissed only after he has been given an opportunity 2.1 TWO-NOTICE REQUIREMENT FOR THE “JUST” AND ‘AUTHORIZED” CAUSES
to be heard. The due process principle requires compliance with these two
aspects. • For a dismissal under the “just” causes, the law requires an employer to furnish the
worker sought to be dismissed with two written notices before terminating his
• The right to a labor is a constitutional as well as a statutory right. Every man has employment:
a natural right to the fruits of his own industry. A man who has been employed 1. Notice which apprises the employee of the particular acts or omissions for which his
to undertake certain labor and has put into it his time and effort is entitled to dismissal is sought;
be protected. The right of a person to his labor is deemed to be property within 2. The subsequent notice which informs the employee of the employer’s decision to
the meaning of constitutional guarantees. He cannot be deprived of his labor dismiss him
or work without due process of law. The guarantee of due process applies to all
workers, including the managerial employees. • Failure to comply with the requirements taints the dismissal with illegality. This
procedure is mandatory, in the absence of which any judgment reached by
2. STANDARDS OF PROCEDURAL DUE PROCESS management is void and inexistent.

The procedural legal requirements to terminate employment are contained in the • After receiving the first notice apprising him of the charges against him, the
IRR of Book IV. DO 147-15 (Sept. 7, 2015) inserted in the IRR Rule 1-A about employee may submit a written explanation (in the form of a letter, memorandum,
application of “just” and “authorized” causes of termination. The IRR prescribes the affidavit or position paper), and offer evidence in support thereof, like relevant
standards of due process, varying according to the cause of termination. company records and the sworn statements of his witnesses. For this purpose, he
may prepare his explanation personally or with the assistance of a representative or
I. For termination of employment based on just causes under Art. 297 of the a counsel. He may also ask the employer to provide him a copy of records material
Code: (3) to his defense. His written explanation may also include a request that a formal
a. Written notice served on the employee specifying the ground or hearing or conference be held. In such a case, the conduct of a formal hearing or
grounds for termination, and giving to said employee reasonable conference becomes mandatory, just as it is where there exist substantial
opportunity within which to explain his side; evidentiary disputes or where company rules or practice requires an actual hearings
b. Hearing or conference during which the employee concerned, with as part of employment pretermination procedure.
the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut • For the “authorized” causes under Art. 298 and 299, two notices are also required:
the evidence presented against him; (Trial type hearing is not one to the employee to be separated and another to the DOLE. Notice is to
required) individual employees, NOT to a group. Each notice must be served 30days before
the employee’s separation takes effect.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 153

union. The employee may, however, waive those rights if he chooses BUT the union cannot
2.1 a PREVENTIVE SUSPENSION AND INVESTIGATION DO NOT REPLACE “TWO NOTICE” waive them for him.
REQUIREMENT OF DUE PROCESS; DEFECT NOT CURED BY NLRC HEARINGS
2.1c TWO NOTICE RULE; FIVE DAYS TO EXPLAIN
De Vera v NLRC and BPI
Summary: The Notice of Preventive Suspension cannot be considered adequate notice of The case of King of Kings Transport, Inc. v Mamac lays down the contents of notices to be
charges since it does not apprise the employee of the causes of his desired dismissal. Likewise, served upon an employee prior to termination, as follows:
the subsequent interview is not the “ample opportunity to be heard” contemplated by law. 1. The first written notice to be served on the employees must contain:
Ample opportunity to be heard is accorded to the employee after he is informed of the a. Specific causes or grounds for termination against them
charges against him in order to give him an opportunity to refute the accusations. It certainly b. Directive that the employees are given the opportunity to submit
does not consist of an inquiry conducted merely for the purpose of filing a criminal case their written explanation within a reasonable period.
against another person. The employer’s contention that the petitioner, with his education and i. Reasonable opportunity under the Omnibus Rules means
position, should have realized, after going through some rigorous interrogations, that he every kind of assistance the management must accord to
himself was being suspected and investigated for possible complicity in the anomalies is the employees to enable them to prepare adequately for
unacceptable. The petitioner as an assistant cashier is not expected to be proficient with the their defense. This should be construed as a period of at
intricacies of law and procedure. In fact, the employer should be admonished for provoking least 5 CALENDAR days from receipt of the notice to give
self-incriminating statements from the employee under the guise of conducting an the employees an opportunity to study the accusation
investigation for some other reason. Furthermore, it has been repeatedly held that the against them, consult a union official or lawyer, gather
employers are mandated to furnish the employee sought to be dismissed two notices: the data and evidence, and decide on the defenses they will
written charge and the notice of dismissal, if after hearing dismissal is warranted. raise against the complaint.
c. Detailed narration of the facts and circumstances that will serve as
The employer then defends that the alleged defects in due process were cured when the basis for the charge against the employees
employee presented his case and arguments before the NLRC. This is untenable. The case i. To enable the employees to intelligently prepare their
before the NLRC is the petitioner’s complaint for illegal dismissal. At the same time, he had explanation and defenses
already been terminated. What the Labor Code sets forth is the procedure PRIOR to the ii. A general description of the charge will not suffice
dismissal. “Fire the employee and let him explain later” is not in accord with the due process d. Specify which company rules, if any, are violated and/or which
under the law. among the grounds under Art. 297 is being charged against the
employees
Doctrine: Ample opportunity to be heard is accorded to the employee after he is informed of 2. After determining that termination of employment is justified, the employers
the charges against him to give him an opportunity to refute the accusations against him. shall serve the employees a written notice of termination indicating that:
a. All circumstances involving the charge against the employees have
2.1b CONSULTATION WITH UNION, INSUFFICIENT NOTICE been considered
b. Grounds have been established to justify the severance of their
Century Textile Mills, Inc. et al v. NLRC employment
Summary: The employer’s prior consultation with the labor union with which the employee is
affiliated is legally insufficient. The rights of an employee whose services are sought to be 2.2 AMPLE OPPORTUNITY SHOULD BE PRIOR TO THE EMPLOYEE’S DISMISSAL
terminated to be informed beforehand of his proposed dismissal/suspension and the reasons
therefor, and to be afforded an adequate opportunity to defend himself from the charges Ruffy v NLRC and Central Azucarera Don Pedro
levelled against him, are rights personal to the employee. Those rights are not satisfied by the Facts: An employee must be given notice and an ample opportunity prior to his dismissal to
employer’s obtaining the consent of or consulting with the labor union. Such consultation or adequately prepare for his defense. The law lays down the procedure prior to the dismissal of
consent is NOT a substitute for actual observance of those rights of the employee. The an employee. It need not be observed to the letter, but at least, it must be done in the natural
employee can waive those rights, if he chooses, BUT the union cannot waive them for him. sequence of notice, hearing and judgment.

The fact that the employee simply kept silent all the while, is not adequate to show an In the present case, prior to investigation, employee was informed that his services had been
effective waiver of his rights. Notice and opportunity to be heard must be accorded by an terminated. He was made to air his side subsequently, yet the stubborn fact was that
employer even though the employee does not affirmatively demand them. A finding of the notwithstanding such an opportunity, he had been dismissed from the firm. By “ample
employee’s participation in an alleged criminal conspiracy cannot be made to rest solely on opportunity” is meant every kind of assistance that management must accord to the
the unilateral declaration of one who is himself a confirmed coconspirator. Such declaration employee to enable him to prepare adequately for his defense. In this case, there really was
must be corroborated by other competent and convincing evidence. In the absence of such nothing to defend, because he had been fired.
other evidence, a coconspirator’s confession implicating the dismissed employee must be
received with considerable caution. Doctrine: An employee must be given notice and ample opportunity prior to his dismissal to
adequately prepare for his defense. The law lays down the procedure prior to the dismissal of
Doctrine: The rights of an employee whose services are sought to be terminated to be an employee. At least, it must be done in the natural sequence of notice, hearing and
informed beforehand of his proposed dismissal/suspension and the reasons therefore and to judgment.
be afforded an opportunity to defend himself are rights PERSONAL to the employee. Those
rights are not satisfied by the employer’s obtaining the consent of or consulting with the labor
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 154

2.2a MEANING OF AMPLE OPPORTUNITY TO BE HEARD and procedural due process be complied with. A request of an employee that he be assisted
a counsel during the investigation must be allowed; else, there will be a violation of his right to
Perez et al. v Phil. Telegraph and Telephone Co. due process
Facts: A hearing means that a party should be given a chance to adduce his evidence to
support his side of the case and that the evidence should be taken into account in the • NOTE: In the case of Lopez v. Alturas |G.R. 191008, the SC held that the right to
adjudication of the controversy. “To be heard” does not mean verbal argumentation alone in counsel and the assistance of one in investigations involving the termination cases is
as much as one may be heard just as effectively through written explanations, submissions or neither indispensable nor mandatory, except when the employee himself requests
pleadings. Therefore, while the phrase ample opportunity to be heard may in fact include an for one or that he manifests that he wants a formal hearing on the charges against
actual hearing, it is not limited to a formal hearing only. The existence of an actual, formal, him.
trial-type of hearing, although preferred, is not absolutely necessary to satisfy the employee’s
right to be heard. 2.2c WEINGARTEN RIGHT: UNION REPRESENTATION DURING INVESTIGATION

Doctrine: To be heard does not mean verbal argumentation alone. One may be heard just as In the case of NLRB v. J. Weingarten, Inc. and Ladies Garment Washers v Quality
effectively through written explanations, submissions or pleadings. And while the phrase Manufacturing Co. | 420 US 251, the US Supreme Court ruled that the employee’s insistence
ample opportunity to be heard may include an actual hearing, it is not limited to a formal upon union representation at an employer’s investigatory interview, which the employee
hearing only. reasonably believes might result in disciplinary action, is protected concerted activity.
Accordingly, the discipline or discharge of an employee for refusal to cooperate in such an
The guiding principles in connection with the hearing requirement in dismissal cases: investigatory interview without union representation is a violation of Sec. 8a and constitutes
a. Ample opportunity to be heard means any meaningful opportunity (verbal or unfair labor practice.
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 In discussing the source, contours and limits of the Weingarten rule, the SC explained that:
fair, just and reasonable way; a. the right to union representation inheres in Sec. 7’s guarantee of the right of the
b. A formal hearing or conference becomes mandatory only when requested by the employees to act in concert for mutual aid protection;
employee in writing or substantial evidentiary disputes exist or a company rule or b. the right arises only in situations where the employee requests representation
practice requires it, or when similar circumstances justify it c. the employee’s right to request representation as a condition to participation in the
c. The ample opportunity to be heard standard in the Labor Code prevails over the interview is limited to the situations where the employee reasonably believes the
hearing or conference requirement in the IRR investigation will result in disciplinary action
d. exercise of the right may not interfere with the legitimate employer prerogatives
2.2b PARTICIPATION OF COUNSEL e. employer may carry on its inquiry without interviewing the employee, thus leaving
the employee the choice between having an interview unaccompanied by his
Lorlene Gonzales v Ateneo de Davao University representative, or having no interview and foregoing any benefits that might be
Facts: Ateneo Grade School Headmaster sent a letter to petitioner Gonzales about derived from one
complaints of two parents for alleged use of corporal punishment on her students. Gonzales f. the employer has no duty to bargain with any union representative who may be
claimed that she was not informed of the identity of the parents. She also claimed that she permitted to attend the investigatory interview
was not confronted about it by Ateneo and that it was only after two years after the
complaints were made that she discovered, that Ateneo had solicited complainants to lodge 2.2d DUE PROCESS “NOT RIGID OR FORMULAIC”; VALID SUSPENSION WITHOUT TWO NOTICES
written complaints against her. An investigative committee was organized but Gonzales
refused to take part in the investigation unless its rules of procedure be revised, contending Caong, et al. v Regualos
that the same were violative of her rights to due process. She specifically objected to the Facts: When the jeepney owner noticed that some of his drivers repeatedly failed to remit the
provision which stated that the counsel of Gonzales shall not directly participate in the daily boundary of P 500.00, he called them to a meeting and announced that the delinquent
investigation but will merely advise Ms. Gonzales. The Committee maintained the rules over drivers could not drive the jeepneys assigned to them until they pay the arrears of their
the objection of Gonzales. Subsequently, Gonzales was terminated from employment. boundary payments. The affected drivers reacted by filing illegal dismissal complaint, assailing
the legality of the employer’s policy and the lack of due process.
Held: The NLRC appears to have skirted several important issues raised by petitioner foremost
of which is the absence of due process. Upon being notified of her termination, she has the Held: There was no dismissal, only a suspension, and the suspension is valid. Neither was
right to demand compliance with the basic requirements of due process. Compliance entails procedural due process violated even if the drivers were not given two notices before they
the twin requirements of procedural and substantial due process. Ample opportunity must be were suspended. The jeepney owner’s policy of suspending drivers who fail to remit the full
afforded the employee to defend herself either personally and/or with the assistance of a amount of the boundary was fair and reasonable under the circumstances. As the case did
representative; to know the nature of her offense; and to cross examine and confront face to not involve termination of employment, the strict, even rigid application of the twin notice rule
face the witnesses against her. Likewise, due process requires that the decision must be based is not warranted. Due process is not a matter of strict or rigid or formulaic process. The essence
on established facts and on a sound legal foundation. The very reason why Gonzales of due process is simply the opportunity to be heard, or as applied to administrative
demanded the revision of the rules laid down by the Investigation Committee was to demand proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration
compliance with these requirements. The adamant refusal of Committee to accede to this of the action or ruling complained of.
demand resulted in her failure to confront and cross-examine her accusers.
Doctrine: When the matter does not involve termination, but merely suspension, the strict
Doctrine: It is an essential requirement that in cases of employee termination, both substantive application of the twin notice requirement is not warranted.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 155

dismissal of employees who have not maintained their membership in the union, the manner
2.3 PROCEDURAL DUE PROCESS NOT WIPED AWAY BY UNION SECURITY CLAUSE in which the dismissal was enforced must be made in a manner that will not violate an
employee’s right to due process. The twin notice and hearing requirements must be met in
Carino v NLRC termination
Facts: After being formally advised in writing of the expulsion of Carino from the union, the
company issued a termination letter to him which is effective the very next day. The company • In terminating the employment of an employee by enforcing the union security
should have given Carino a chance to explain his side of the controversy with the union. clause, the employer needs only to determine and prove that:
Notwithstanding the union’s security clause in the CBA, the company should have reasonably a. The union security clause is applicable;
satisfied itself by its own inquiry that the Union had not been merely acting arbitrarily and b. The union is requesting for an enforcement of the union security provisions in
capriciously in impeaching and expelling Carino. The company acted in bad faith in the CBA
dismissing Carino without giving him a chance to present his side in the controversy with his c. There is sufficient evidence to support the union’s decision to expel the
own union. The company failed to accord Carino his right to procedural due process. The employee from the union
right of 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 union, is not 3. WHEN HEARING NOT REQUIRED
wiped away by a union security clause or a union shop clause in the CBA. An employee is • No hearing is needed if the employee has admitted his guilt. Even if a hearing is
entitled to be protected not only from a company which disregards his rights but also from his essential to due process, no formal hearing was necessary when the petitioner had
own union the leadership of which could yield to the temptation of swift and arbitrary already admitted his responsibility for the act he was accused of. All that is needed
expulsion from membership and hence, dismissal from his job. is to inform the employee of the findings of the management.

Doctrine: A union security clause or a union shop clause in the CBA will not have the effect of • But there must be admission of guilt. If the employee merely narrated and explained
depriving an employee of his right to be informed of the charges against him, and the right to what he did, without admitting his guilt, then conducting a hearing is required;
a reasonable opportunity to present his side in a controversy. otherwise, there is failure of due process.

Ferrer, et al. v NLRC • In the case of Loadstar Shipping Co. v R. Mesano, Loadstar is insisting that the
Facts: The Samahang Manggawa ng Occidental Foundry Corporation – FFW and OFC employee’s handwritten explanation is a categorical admission of his guilt. But a
entered into a collective bargaining agreement which would be effective for a three-year cursory reading of the said letter would show that the employee was merely
period. The CBA contains provisions which state: a. as a condition of continued employment, explaining his actions, but did not categorically admit having stolen the item. In any
all workers must maintain their membership in the union in good standing and b. that the case, the fact remains that no hearing was made to hear the employee’s side.
union and the company agrees that failure to retain membership in good standing with the Loadstar virtually made an assumption on the basis of the letter alone that
UNION shall be ground for the dismissal by the company of the aforesaid employee upon the considering the time and manner in which the taking was made, then the
written request of the union. Invoking these provisions in the CBA, the union expelled Mr. Ferrer employee is guilty of stealing and, therefore, should be dismissed. No notice was
and four others from the union and then asked the management to terminate their ever given to inform the employee that his dismissal is being sought and by which he
employment. The management complied with the union’s request. Alex Ferrer and others could be apprised on the full consequence of his acts. And neither was a hearing
questioned their expulsion and subsequent dismissal. conducted, in order that he be given an opportunity to refute the accusations
leveled against him.
Held: A CBA is the law between the company and the union. Compliance therewith is
mandated by the express policy to give protection to labor. Said policy should be given 3.1 OTHER INSTANCES WHEN HEARING NOT REQUIRED
paramount consideration unless otherwise provided for by law. A CBA provision for a closed • In addition to the situation where the employee admits his guilt, other
shop is a valid form of union security and it is not a restriction on the right or freedom of instances where no hearing is required include the following: (5)
association guaranteed by the Constitution. However, in the implementation of the provisions 1. Termination which is justified by any of the authorized causes
of the CBA, both parties should see to it that no right is violated or impaired. In the present under Art. 298 (see Wiltshire case)
case, while it is true that the CBA provided for the dismissal of employees who have not 2. Termination initiated by the employee (Art. 300)
maintained their membership in the union, the manner in which the dismissal was enforced 3. Termination of the probationary period of employment (see
left much to be desired in terms of respect for the right of petitioners to procedural due A.M. Oreta v NLRC)
process. The need for a company investigation is founded on the consistent ruling of this Court 4. Termination resulting from bona fide suspension of operation
that the twin requirements of notice and hearing, which are essential elements of due (Art. 301)
process, must be met in employment termination cases. The employee concerned must be 5. In case of project employment termination upon completion of
notified of the employer’s intent to dismiss him and of the reason/s for the proposed dismissal. the project or phase thereof for which the employee is hired.
The hearing affords the employee an opportunity to answer the charge/s against him and to
defend himself therefrom before dismissal is effected. Observance to the letter of the 4. BURDEN OF PROOF
company rules on investigation of an employee about to be dismissed is not mandatory. It is • In termination cases, the burden of proof rests upon the employer to show that the
enough that there is due notice and hearing before a decision to dismiss is made. But even if dismissal is for just and valid cause. Failure to do so would necessarily mean that the
no hearing is conducted, the requirement of due process would have been met where a dismissal was not justified and, therefore, was illegal. The employer must affirmatively
chance to explain a party’s side of the controversy had been accorded him. show rationally adequate evidence that the dismissal was for a justifiable cause.

• Where the termination case involve all Filipino workers recruited and deployed to being deemed to have been conditioned upon future good conduct. In case of
overseas employment, the burden devolves upon both foreign-based employer continuing breach of contract of employment, there can be no waiver or
and the employment agency or recruitment entity which recruited the worker, for condonation that will prevent the employer from discharging the employee at any
the latter is not only the agent of the former, but is also solidarily liable with the time.
foreign principal for any claims or liabilities arising from the dismissal of the workers. • The fact that the employer has paid the wages or salary of an employee to the time
of his discharge does not amount to such a condonation of a violation by the
• In a case where the employer alleged that the employee was not dismissed but employee of his duties as will deprive the employer of his right to terminate the
had voluntarily resigned, but the employee vehemently denies the genuineness of contract of employment.
the signature on the resignation letter and waiver, the Court would rule against the • But a conclusion that the employee’s misconduct was condoned is sustainable
employer. It is a fundamental rule in illegal dismissal cases that when the employer where it appears that the employer retained him in the service after having had
interpose the defense of resignation, he has the burden of proving that the knowledge of the facts, and paid to him the stipulated wages or salary without
employee indeed voluntarily resigned objection or protest.

• Proof beyond reasonable doubt of the employee’s misconduct is not required. It is 7. DUE PROCESS IN AUTHORIZED CAUSES; TWO NOTICES REQUIRED BUT NOT A HEARING
sufficient that there is some basis for the same or that the employer has reasonable • In employment termination due to authorized causes, the due process requirement
ground to believe that the employee is responsible for the misconduct and his is not completely done away with. Investigation and hearing need not be done by
participation therein renders him unworthy of the trust and confidence demanded the employer.
by his position • BUT, the one month advance notice to the affected employee and to DOLE must
be complied with under Art. 297
SUBSTANTIAL EVIDENCE – such relevant evidence as a reasonable mind might accept as • Where the ground for dismissal or termination of service does not relate to a
adequate to support a conclusion. blameworthy act or omission on the part of the employee, there appears to be no
need for investigation and hearing to be conducted by the employer who does
• The finding of probable cause by the DOJ Secretary in the criminal aspect of the not, to begin with, allege any malfeasance or non feasance on the part of the
case against an employee is sufficient justification for his termination of employment employee. There are no allegations which the employee should refute and defend
in the administrative aspect of the case. If the conviction of a person in a criminal himself from. To require a hearing on the business and financial circumstances
case can be absorbed on circumstantial evidence, with more reason can compelling retrenchment and resulting in redundancy would be to impose upon
termination of employment be anchored likewise on circumstantial evidence. the employer an unnecessary and inutile hearing as a condition for legality of
termination. (Wiltshire case)
5. FILING OF ILLEGAL DISMISSAL COMPLAINT INSTEAD OF SUBMITTING EXPLANATION • This not to say that the employee may not contest the reality or good faith
• The burden of proving the legality of dismissal in illegal dismissal cases is on the character of the retrenchment or redundancy asserted as grounds for termination
shoulders of the employer. BUT this task does not arise until the complainant has of services. The appropriate forum for such issues will be the DOLE, and not an
shown that he indeed had been dismissed. investigation or hearing to be held by the employer himself.
• The filing of a complaint for illegal dismissal, irrespective of whether reinstatement or
separation pay was prayed for, could not by itself be the sole consideration in 7.1 INDIVIDUAL, NOT COLLECTIVE NOTICE
determining whether they have been illegaly dismissed. The substantial evidence
presented by the employer that it had not terminated the complainants should not Shoppers Gain Supermart v NLRC
be ignored on the pretext that the employee would not have filed the complaint if Facts: As the lease contract over the premises where the employer supermart was using was
he had not really been dismissed. not renewed, the business had to close down. 30 days before the closing, the employer
• The dismissal should be shown from the acts of the employer, not from the fact that posted a notice of closure on the employees’ bulletin board. According to the SC, such
the employees filed their complaint. notice is not sufficient compliance with the statutory requirement. The law is very clear that an
employer who seeks to terminate the employment of its employee must notify him in writing at
6. CONDONATION least 30 days before the intended dismissal.
• An employer may, by condonation or waiver of the conduct of his employees,
preclude himself from subsequently asserting the right to discharge them for cause. Doctrine: In cases of termination of employment based on authorized causes, an employer
• The act of the employer in condoning the misconduct of the employee is MUST notify the affected employees individually, in writing, at least 30 days before the
considered to be a waiver of his right to insist on the employee’s act as grounds for intended dismissal.
dismissal.
• The lapse of a considerable period of time from the commission of a breach of duty 7.2 DOES THE TWO-NOTICE RULE APPLY TO EMPLOYEE TERMINATION ON GROUND OF DISEASE
and its discovery by the employer will not in itself preclude the latter from relying UNDER ART. 298 OF LABOR CODE
upon the breach as a ground of dismissal. • Labor Code and IRR are silent on this matter. But, according to the book, the two-
o BUT, the retention of an employee after the actual discovery of an act of notice rule should be observed in employee’s separation on ground of disease. The
misconduct will, in some circumstances, warrant the inference that the first notice informs the employee of the ground for which dismissal is sought; the
act has been condoned and will no longer be available as a ground for second notice apprises the employee of his dismissal after the employee had been
dismissal. given opportunity to explain his side.
• If there has been a repetition of offenses, the employer has a right to take the entire
record into account, the condoning and pardoning of the employee’s misconduct
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 157

7.3 VOLUNTARY ARIBITRATION AS NOTICE separation from employment was not for cause.
• Voluntary arbitration is substantial compliance with the 1-month mandatory notice
required under Art. 297. The purpose of this notice requirement is to enable the Doctrine: Preventive suspension, by itself, does not signify that the company has adjudged the
proper authorities to ascertain whether the closure of the business is being done in employee guilty of the charges she was asked to answer and explain. Such disciplinary
good faith and is not just a pretext for evading compliance with the just obligations measure may be resorted to for the protection of the company’s property pending
of the employer to the affected employees. investigation of any alleged malfeasance or misfeasance committed by the employee.
• The voluntary arbitration proceedings more than satisfied the intendment of the law
considering that the parties were accorded the benefit of a hearing, in addition to 8.3 PERIOD OF SUSPENSION
the right to present their respective position papers and documentary evidence. • Preventive suspension, being only an intermediate protective measure, cannot last
for an indefinite period. Under the IRR of the Labor Code, it was provided that no
7.4 WHEN NOTICE NOT NEEDED preventive suspension shall last longer than 30 days.
• If an employee consented to his retrenchment or voluntarily applied for • After the said 30 day period, the employer shall:
retrenchment with the employer due to the installation of labor saving devices, o reinstate the worker in his former position or in a substantially equivalent
redundancy, closure or cessation of operation or to prevent financial losses to the position
business of the employer, the required previous notice to the DOLE is not necessary o extend the period of suspension, provided that during the period of
as the employee acknowledged the existence of a valid cause for termination of his suspension, he pays the wages and other benefits due to the worker. In
employment. such case, the worker shall not be bound to reimburse the amount paid to
8. PREVENTIVE SUSPENSION him during the extension if the employer decides, after completion of the
• Authority of an employer to place an employee under preventive suspension is not hearing, to dismiss the worker.
found in the Labor Code but in the rules implementing the code (Book V, Rule XXIII, • 30 day preventive suspension applies to employment in general. For project and
as amended by DO No. 9) non project employees in the construction industry, the preventive suspension
cannot be longer than 15 days. Beyond that, the employee is entitled to wages and
Sec. 8 Preventive Suspension – The employer may place the worker concerned under other benefits. (DO No. 19, series of 1993, Sec. 4)
preventive suspension if his continued employment poses a serious and imminent threat to the
life or property of the employer or of his co-workers. 8.4 PREVENTIVE SUSPENSION EXCEEDING 30 DAYS; CONSTRUCTIVE DISMISSAL
• Under the IRR, preventive suspension cannot be more than the maximum period of
8.1 INVALID PREVENTIVE SUSPENSION 30 days. Hence, after the 30 day period, the employee must be reinstated to his
• In one case, the employer placed an employee on preventive suspension for former position because suspension beyond this maximum period amounts to
having violated company rules and regulations by incurring repeated absences constructive dismissal.
and tardiness and subsequently dismissed her. • Constructive dismissal does not always involve forthright dismissal or dimunition in
o NLRC and SC ruled on the preventive suspension of the employee and rank, compensation, benefit and privileges. There may be constructive dismissal if
stated that the continued presence of the subject employee does not an act of clear discrimination, insensibility or disdain by an employer becomes so
pose a serious and imminent threat to the life or property of the employer unbearable on the part of the employee that it could foreclose any choice by him
or co-employees. Her tardiness does not in any way pose a serious threat except to forego his continued employment.
to the property of the employer. • Genesis Transport: What the Rules require is that the employer act on the suspended
worker’s status of employment within the 30day period by concluding the
8.2 VALID PREVENTIVE SUSPENSION investigation either by absolving him of the charges, or meting the corresponding
penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30 day
Globe Mackay Cable and Radio Corporation v NLRC and Salazar period without any corresponding action on the part of the employer, the employer
Facts: Petitioner conducted an investigation of Saldivar (manager for technical operations must reinstate the employee or extend the period of suspension, provided the
support) after reports were made that some of petitioner’s expensive equipment and spare employee’s wages and benefits are paid in the interim.
parts were missing. Saldivar was also investigated over reports that he formed a partnership
with one of petitioner’s suppliers. Salazar, another employee, was also under investigation 9. PROGRESSIVE DISCIPLINING; APPROPRIATE PENALTY
because she signed as a witness to the Articles of Partnership between Yambao and Saldivar. • The fundamental rule is that the penalty must be commensurate to the offense. The
Salazar, being closely associated with Saldivar, was placed under preventive suspension. cause may be valid and due process may have been followed, but still the dismissal
Salazar then was prompted to file a complaint. may be questioned and eventually nullified if the penalty itself is not appropriate.
• Principle of Progressive Disciplining: Light offenses deserve light penalties and only
Held: On the matter of preventive suspension, the Court ruled in favor of petitioner. The grave offenses deserves grave penalties. Diverse factors must be considered such
findings of auditor which pointed to Saldivar’s acts in conflict with his position necessitated as the long years of satisfactory service, penalty imposed in similar offenses and the
immediate and decisive action on any employee closely associated with Saldivar. The amount of money or value involved.
suspension of Salazar was further impelled by the discovery of missing AC units inside the • Art. 296 mentions the causes for which employer may dismiss an employee but the
apartment which Salazar shared with Saldivar. By itself, preventive suspension does not signify penalty does not always have to be dismissal. Dismissal is the supreme penalty at
that the company has adjudged the employee guilty of the charges she was asked to answer the workplace. It should be imposed only as a last recourse.
and explain. Such disciplinary measure is resorted to for the protection of the company’s
property pending investigation of any alleged malfeasance or misfeasance committed by
the employee. But while the preventive suspension of Salazar was proper, her eventual
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 158

Negros Slashers, Inc. v Alvin Teng

Facts: During Game 4 of the Championship Round for the year 2000 season, Teng had a 9.3 Forfeiture of Benefits, A Valid Penalty
below-par playing performance. Because of this, the coaching staff decided to pull him out • Only unjustly dismissed employees are entitled to retirement benefits and privileges
of the game. Teng then sat on the bench, untied his shoelaces and donned his practice including reinstatement and back wages.
jersey. On the following game (Game 5), Teng called in sick and did not play. After • An employee dismissed for a just cause is not entitled to any retirement benefits. To
administrative hearings where Teng was duly represented, Negros Slashers removed him form hold otherwise would be to reward acts of willful breach of trust by the employee.
the team. Teng complained of illegal dismissal and was awarded a significant sum of money. • It would also open the floodgate to potential anomalous banking transactions by
bank employees whose employments have been extended. Since a banking
Held: the penalty of dismissal was too harsh. As an employee of Negros Slashers, Teng was institution is imbued with public interest, it cannot be compelled to continue to in its
expected to report for work regularly. Missing a team game is indeed a punishable offense. employ a person in whom it has lost trust and confidence and whose continued
Untying of shoelaces when the game is not yet finished is also irresponsible and unprofessional. employment would patently be inimical to the bank’s interest.
But such isolated foolishness does not justify the extreme penalty of dismissal. Other forms of
disciplinary action could have been taken after the incident to impart on the team that such Some Criteria the SC has applied in Evaluating the Appropriateness of the Penalty:
misconduct will not be tolerated. 1. The penalty imposed must be commensurate to the depravity of the malfeasance,
violation or crime being punished.
Doctrine: The penalty imposed for offenses and misconduct by an employee must be 2. Number of commission of the offense.
commensurate to the offense committed. Dismissal is a harsh penalty and if at all avoidable, 3. Value of the property pilfered or stolen.
without oppressing the employer, it should be avoided. 4. The company suffered no loss.
5. If under the company’s code of conduct, the penalty prescribed for first offense is
9.1 Value of Property suspension, then dismissal is not appropriate.
• In determining the appropriate penalty, the value of the property taken is a 6. Length of service of the employee.
pertinent factor. a. However, long service doesn’t by itself mitigate the offense, considering
• The penalty should be appropriate or apportionate to the offense. the kind of offense (dishonesty) and the loss to the employer.
• Appropriateness of penalty depends on several factors one of which is the amount
involved. 9.4 Past Offenses
• The motto “dishonesty is dishonesty regardless of amount” is ignored by the courts in • Previous offenses may be used as valid justification for dismissal from work only if the
reexamining the penalty imposed. The juridical guideline is that there are degrees of infractions are related to the subsequent offense upon which basis the termination
dishonesty and degrees of penalty under both the penal and labor laws. of employment is decreed.
9.1a Used Oil
10 DISMISSING A RETIRED OR RESIGNED EMPLOYEE
Gelmart Industries Phil. V NLRC • The manager was dismissed due to serious misconduct resulting in employers loss of
Summary: Felix, an auto-mechanic for Gelmart, was caught by the security guards taking out confidence. The LA found the dismissal illegal and ordered reinstatement. The
of Gelmart’s premises one plastic container filled with about 16 ounces of used motor oil employer appealed to the NLRC. While pending appeal, the manager turned 65
without the necessary gate pass. Under the company’s rules, if you are found guilty of theft, it and retired from employment. Soon after, the NLRC found the manager’s dismissal
merits an outright termination from employment. He was found guilty thus was dismissed. The valid. In the SC, the manager argued that when he retired while the appeal was
court ruled that whether it’s of small or big commercial value, the used motor oil remains the pending, his retirement rendered the dismissal case moot and academic. The SC
property of Gelmart. To take the same out of its premises without the gate pass is a violation of rejected the contention and said that the manager’s mandatory retirement during
the rule on theft of company property. However, where a penalty less punitive would suffice, the pendency of the case did not absolve him from his wrongdoings committed
whatever missteps may be committed by labor ought not to be visited with consequences as while he was in service.
severe as dismissal. The suspension imposed upon Felix is a sufficient penalty. • The resignation or retirement does not preclude the findings of administrative liability
for which he shall still be answerable.
9.2 Length of Service
• Employers are allowed a wide latitude of discretion in terminating the employment 11 FILING OF ILLEGAL DISMISSAL COMPLAINT; VENUE AND TIME
of managerial personnel or those who, while not similar of rank, perform functions • Where to file? Regional branch of the NLRC
which by their nature require the employer’s full trust and confidence. • REGIONAL BRANCH - branch comprising the workplace
• Higher standards are expected of management vs ordinary rank and file. • What is the prescriptive period? 4 years from the time the employee was dismissed.
• Length of service is taken into consideration in imposing the penalty to be meted an
erring employee. 12 CLEARANCE NO LONGER REQUIRED
• However, trust in an employee once lost is difficult if not impossible to regain. • Batas Pambansa Blg. 130 approved on Aug. 21, 1981 abolished the clearance
• An employee occupying a position of trust and confidence is outside the protective requirement.
mantle of the principle of justice, because his act of concealing truth from the
company is clear disloyalty to the company which has long employed him. Length SUMMARY
of service is not a bargaining chip that can simply ne stacked against the employer.
• The longer an employee stays in the service of the company, the greater is his ESSENTIAL REQUIREMENTS OF A DEFENSIBLE DISCIPLINARY ACTION
responsibility for knowledge and compliance with the norms and conduct and 1. Sound Policy or code of conduct
code of discipline of the company. 2. Documented report on the incident
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 159

3. Observance of due process: Substantive and Procedural

4. Consideration of mitigating or exempting circumstances to determine appropriate 1.2 Under Present Law; 4 Kinds of Separation Pay
penalty • The LC requires a valid reason to terminate an employee. What the law prefers is
5. Documentation of support or chance given toe employee to make him reform the employee’s continued possession of his job, which is considered a property,
and not mere advance notice or monetary help towards finding another job.
TWO ASPECTS OF EMPLOYEE DISMISSAL: CAUSE AND PROCEDURE • GR: continuance of the job, EXP: payment on separation pay in lieu of the job.
• Valid cause is substantive due process; appropriate procedure is procedural due • Separation pay may be viewed in four ways:
process. No valid cause, no valid dismissal. i. Separation pay as employer’s statutory obligation in cases of
• PROCEDURAL DUE PROCESS – any meaningful opportunity (verbal or written) given to legal termination due to authorized causes.
the employee to answer the charges against him and submit evidence in support of ii. Separation pay as financial assistance, as an act of social
his defense, whether in a hearing, conference or some other fair, just and justice, even in case of legal dismissal, at court’s discretion.
reasonable way iii. Separation pay in lieu of reinstatement in illegal dismissal cases
• FACT-TO-FACE INVESTIGATION – is not always required. A formal hearing becomes where the employee is ordered reinstated but reinstatement is
mandatory only when (1) requested by the employee in writing or (2) substantial not feasible.
evidentiary disputes exist or (3) a company or a company rule or practice requires it, iv. Separation pay as an employment benefit granted in a CBA or
or (4) when similar circumstances justify it. company policy.
• REASONABLE OPPORTUNITY – to explain means at least 5 days from receipt of the
notice to explain. 1.3 First Kind of Separation Pay: As Statutory Requirement for Authorized causes
under Art. 298 and 299
PROCEDURAL DUE PROCESS REQUIRES GIVING OF TWO NOTICES TO THE EMPLOYEE THAT MIGHT Only in Art. 298 and 299 does the LC explicitly impose separation pay.
BE DISMISSED (Statutory Separation Pay)
• THE WRITTEN CHARGE OR NOTICE TO EXPLAIN (NTE) – the memorandum that
specifies the particular acts or omissions the employee allegedly committed which, 1.3a Amounts of Separation Pay for Authorized Causes
if found true, might cause his dismissal. - Vary according to the cause of termination
• THE NOTICE OF DECISION – a memorandum that informs the employee of the - Termination due to introduction of labor saving device or redundancy: the
employer’s decision to dismiss him and the reasons thereof. separation pay is equivalent to whichever is higher of either the (1) one
• The first notice is fact-finding (not pre-judgment); the second is the decision after an month pay or (b) one month pay multiplied by the employees years of
objective evaluation of the charge and the employees’ side. service, a fraction of at least six months being counted as a year
• The charge in the first notice should be specific and be the basis of the decision - Termination due to retrenchment or closure or cessation of operations not
announced in the second notice. The two notices should be specific and consistent due to serious business losses: the separation pay is lower than that for the
with each other. preceding two causes precisely because the business is caught in
financial straits. The separation pay is equivalent to whichever is higher of
HOW TO WIN DISCIPLINARY CASES either (a) one month pay or (b) one-half month pay multiplied by the
1. Substantive and procedural due process must be observed. employees years of service, a fraction of at least six month being
2. The provision of the labor contract, if one exists, must be observed. considered as one year. This is also the formula applicable to separation
3. Disciplinary policies must be legal, reasonable, and known to employees. due to disease under Art. 299.
4. Violation of policies must be prove, and the burden of proof rests on the employer. - Termination due to closure or cessation of business due to serious business
5. The application of rules must be consistent: losses: no separation pay need to be paid at all.
§ Employees cannot be singled out for discipline. -
§ Past practice should be considered. 1.3b Computation of Statutory Pay; Inclusion of regular allowance
6. If employees are held to a standard, the standard should be reasonable. - It’s an error to not integrate the allowance with the basic salary in the
7. Training provided to employees must be adequate. computation of the separation pay.
8. Action must be impersonal and based on facts, not arbitrary, capricious or - Commissions (“override commissions” plus “net deposit incentive”) may
discriminatory. not be included in such base figure since such commissions must be
earned by actual market transactions attributable to the employee.
TITLE I: TERMINATION OF EMPLOYMENT (CONT’D) - Neither should “travel equivalents” and “commission in trading personal
clients” be included in such base figure.
[PART 6. CONSEQUENCES OF TERMINATION]
1.3c Minimum Separation Pay
1. SEPARATION PAY - The code only provides a minimum separation pay for employee
1.1 Old Law separation for any of the authorized causes.
• Even if employee’s dismissal was found to be without just cause, without due notice - Employers have the right to enter into agreements providing a separation
and abusive on the part of the employer, the latter could only be liable for pay higher than the rates in Art. 298 and 299 so long as the agreement is
separation pay and moral damages, but the dismissed employee cannot demand not contrary to laws, morals, good customs, public order or public policy.
reinstatement.
• The Labor Code changed that. No valid reason, no dismissal.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 160

1.4 Second Kind of Separation Pay: As Financial Assistance in Legal Dismissal under • The grant of FA in exceptional circumstances does not supersede but restrictively
Article 297 retains the Toyota Ruling.
• An exception to Art. 296. An exception crafted by the Court to clothe with 1.6a No Financial Assistance apart from Separation Pay
compassion a stiff and indiscriminating dismissal action abed on the so-called “just - The court should refrain from adding more than what the law requires… The
causes.” employer, voluntarily may grant any amount more than the law requires, but to
• Not a statutory requirement. insist that more FA should be given is certainly something this court cannot
countenance.
Philippine Long Distance Telephone Co. Vs NLRC
Summary: The employee was dismissed for receiving money in consideration of her promise to 1.7 Third Kind of Separation Pay: As Substitute for Reinstatement in Illegal Dismissal
facilitate approval of their applications for telephone installation. The LA required the Cases
company to give complainant, who had worked with the company for 10 years, one month’s • Unlike the preceding two kinds of Separation pay which both involve legal
pay for every year of service as financial assistance. The issue is whether or not it is legal to termination, this kind is an alternative relief after a finding of illegal dismissal.
award financial assistance to an employee who is legally dismissed for just cause. The SC held • Where there is illegal dismissal, there should ordinarily be an order to reinstate the
that the grant of separation pay in this case in unjustified. The respondent has been dismissed employee. BUT situations arise where reinstatement is neither possible nor advisable
for dishonesty. The fact that she has worked for PLDT for more than a decade, if it is to be as such when the employees positions no longer exists or the company has closed
considered at all, should be taken against her as it reflects a regrettable lack of loyalty that down or sever strained relations has set between the parties, In this situation, SPIR is
she should have strengthened instead of betraying during all of her 10 years of service with resorted to.
the company. • SPIR (Separation pay instead of reinstatement) – an alternative to reinstatement
when the latter option is no longer desirable or feasible. On one hand, such
1.4a Dishonety Doubted: Financial Assistance may be Granted payment liberates the employee from what could be a highly oppressive work
- When there is doubt that honesty was committed, financial assistance may still be environment. On the other hand, it releases the employer from the grossly
awarded an employee who has rendered long years of service. unpalatable obligation of maintaining in its employ a worker it could no longer trust.
- Doubt is resolved in employee’s favor, hence despite the nature aof the offense,
financial assistance on ground of compassionate justice may still be given. 1.8 Fourth Kind of Separation Pay: As Employment Benefit from Employer
• Does not arise from legal or illegal dismissal but from nonadversarial mode of leaving
1.5 Compassion reconsidered: Financial Assistance Denied one’s employment, such as resignation.
• The PLDT precedent of 1988 gives separation pay, in the name of compassionate • Its demandability depends on the terms of its grant through a CBA or voluntary
justice, to an employee dismissed for a “just cause” with two exceptions: (1) serious company policy or established practice.
misconduct and (2) other offense reflecting on his moral character. • Commonly called as resignation pay or gratuity.
• These two exception have been expanded to include the other offenses from • Its standard requisite is that the employee has rendered a specific minimum length
clause (a) to (d) of Art. 297. Dismissal under any of these four precludes separation of service to the employer, usually at least 5 years.
pay or financial assistance. • The rule is that an employee who voluntarily resigns is not entitled to separation pay
• However, for the analogous causes (clause e), the labor court may opt to grant except when it is stipulated in the CBA or it is sanctioned by established employer
separation pay anchored on social justice. practice or policy.
• Toyota Ruling: If the dismissal is based on any of the “just causes” in Art. 297, no • Even if not granted by company policy or practice, resignation pay may still be
financial assistance can be granted except perhaps under the last mentioned awarded for equitable reason.
ground (analogous causes) where the court, for the sake of social justice, may grant
the financial assistance. 2 BACKWAGES
• Backwages and separation pay are given to illegally dismissed employees. They are
1.5a No Financial Assistance To Dismissed Strikers separate and distinct from one another.
• Backwages are granted on grounds of equity for earnings which an employee has
Alcanara & Sons Inc. v CA lost due to his illegal dismissal. Reinstatement, on the other hand, means restoration
Summary: The court not only declared the strike illegal but also found the union officers to to a state of condition from which one had been removed or separated.
have knowingly participated in the illegal strike. Worse, the union members committed Backwages recover lost income. Reinstatement recovers a lost job.
prohibited acts during the strike. Thus, the award of separation pay must be deleted. • Backwages presupposes illegal termination. It is restitution of earnings unduly
withheld from the employee because of illegal termination. Hence where there is no
1.6 Financial Assistance in Exceptional Circumstances Only illegal termination, there is no basis for claiming or awarding of backwages.
• The Toyota ruling that employees dismissed on a just cause precludes grant of • There may be a judgment of an illegal dismissal without a grant of backwages.
financial assistance does not mean that financial assistance (FA) is totally barred. • When the penalty of dismissal is invalidated and the employee is ordered reinstated,
• FA is still allowed and court decisions may still require it for compassionate reason in the court may or may not award backwages. When a penalty of dismissal is
exceptional circumstances of justified dismissal. reduced by the Court to reprimand only, the employee may be awarded
• Meralco Case: an employee with 13 years of service and series of promotions, damages.
incurred a string of unauthorized absences, which the employee explained was
prompted by painful arthritis. The court upholds the dismissal but orders the 2.1 Backwages Distinguished from Separation Pay
employer to pay the employee separation pay of one-half month for every year of • SEPARATION PAY as a statutory benefit - is the amount that an employee receives at
service as a measure of social justice. the time of his severance from the services and is designed to provide the
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 161

employee with the wherewithal during the period that he is looking for another • Salary scales reflect the standard of living prevailing in the country and the
employment. purchasing power of the domestic currency.
• BACKWAGES – earnings that would have accrued to the dismissed employee during • An employee who is unjustly dismissed shall be entitled to full back wages, inclusive
the period between the dismissal and reinstatement. of allowances, and to his other benefits or monetary equivalent from the time his
• Payment of backwages is a form of relief that restores the income that was lost by compensation was withheld from him up to the time of his actual reinstatement.
reason of unlawful dismissal; Separation pay is oriented towards the immediate
future, the transitional period the dismissed employee must undergo before locating Evangelista v NLRC and Mendoza
a replacement job. Summary: This case is about employee dismissal and computation of backwages has an 18
• A LA cannot order the separation pay be deducted from the backwages. year history. In the end, the employee, though he won the case, would be getting
backwages at his pay rate 18 years before (his rate when he was dismissed). Mendoza filed a
2.1a Backwages Distinguished From Unpaid Salary motion seeking clarification with respect to the salary scale which should be applied in
• UNPAID SALARIES – those earned prior to dismissal, whereas backwages refer to computing the three years’ backwages. Evangelista contended that the computation of the
those earnings lost after and because of illegal dismissal. award of backwages based on the current wage levels and maintained that the same should
• Oftentimes but not always, an order of reinstatement carries with it an award of be instead be computed based on the rate of the wage level in 1977 when Mendoza was
backwages; payment of unpaid salary, on the other hand, is only ordered if there dismissed. The SC ruled in favor of Evangelista. An unqualified award means that the
are still salaries collectible by the employee from the employer by reason of services employee is paid at the wage rate at the time of his dismissal.
already rendered.
2.3a Vice President’s Commission
2.2 Complainants Failure to Claim Backwages
• Failure to claim backwages in a complaint for illegal dismissal has been held to be a Philippine Duplicator Philippine Spring Water vs. CA
mere procedural lapse which cannot defeat a right granted under substantive law. The claimants are salesmen directly selling The claimant was the vice president for Sales
duplicating machines to customers. and Marketing and he won in his illegal
2.3 Labor Arbiters Failure to Award Damages dismissal case and was awarded
• While as a general rule, a party who has not appealed is not entitled to affirmative Doctrine: The Court considers their sales backwages.
relied other than the ones granted in the decision of the court below, law and commission as part of their wage and of the
jurisprudence authorize a tribunal to consider errors, although unassigned, if they 13th month pay. Doctrine: Commission includible as part of
involve: (1) errors affecting the lower court’s jurisdiction over the subject matter, (2) the wage must be earned by actual market
plain errors not specified and (3) clerical errors. transactions attributable to the claimant.
Comparison/ Contrast: In the Philippine Spring Water, the VP is not a salesman, he does not
St. Michael’s Institute et al vs. Santos directly effect any sale of the product. Thus, his “commission on monthly sales” and
Summary: The employer dismissed three of its regular classroom teachers allegedly on the “commission on each payments” must be taken in the nature of overriding commission, not
ground of serious disrespect and serious misconduct. The LA dismissed the employee’s sales commission. They partook the nature of profit sharing and had no clear, direct, or
complaints for lack of merit. The NLRC reversed the LA and ordered the employees necessary relation to the amount of work he actually performed. Hence, the commissions do
reinstatement but not backwages. The CA sustained the NLRC and awarded backwages. The not form part of the basic salary and therefore should be excluded from the backwages
issue is whether or not the CA cannot grant backwages to the employees. The SC said that awarded.
the fact that the NLRC did not award damages does not bar the CA from awarding
damages. While as a general rule, a party who has not appealed is not entitled to affirmative 2.3b Reckoning of Backwages
relief other than the ones granted in the decision, the CA is imbued with sufficient authority • Backwages should be computed from the time the employee’s compensation was
and discretion to review matters if it finds that their consideration is necessary in arriving at a withheld from him i.e. from the time of his illegal dismissal up to the time of his actual
complete and just resolution of the case or to serve the interests of justice or to avoid reinstatement. The computation does NOT begin from the time the employee filed
dispensing piecemeal justice. Substantive rights like the award of backwages resulting from the illegal dismissal complaint.
illegal dismissal must not be prejudiced by a rigid and technical application of the rules. • In illegal dismissal cases, the employee is given a period of FOUR (4) years from the
time of his illegal dismissal within which to institute a complaint. (Art. 1146 of the Civil
2.3 Basis Of Computation Of Backwages Code)
• UNQUALIFIED AWARD – employee is paid at the wage rate at the time of his
dismissal. 2.3c Entitlement to Backwages Not Barred by Non- Execution
• The base figure of the award should include not just the basic salary but also the • The employee’s entitlement to backwages even during the pendency of the
regular allowances that he had been receiving such as the emergency living employer’s appeal is not barred by the non-execution of the labor arbiter’s decision
allowances and the 13th month pay. if such non-execution is due to the employer’s unjustified act or omission.
• BASE: wage rate at the time of the employee’s dismissal inclusive of regular
allowances that the employee had been receiving such as emergency living 2.3d Backwages Continue to Accrue until Employer Complies with the Reinstatement Order
allowances and the 13th month pay. • The award of backwages, 13th-month pay, and other benefits subsists and those
• The annual general salary increases, which allegedly the employee could have monetary obligations continue to accumulate, as long as the employer has not
received during the period of his illegal termination cannot be included in complied with the order to reinstate (at work or in payroll) the employees who were
computing the backwages. illegally dismissed.

Triad Security and Allied Services et.al. vs. Ortega the finality of decision ordering separation pay.
Summary: The Labor Arbiter ordered the reinstatement of the respondent employees and the 3. When separation pay is ordered after the finality of decision ordering reinstatement
payment of their backwages until their actual reinstatement and in case reinstatement is no by reason of a supervening that makes the award of reinstatement no longer
longer possible, the payment of separation pay. The employer paid the employees separation possible, backwages is compured from the time of dismissal until the finality of the
payment two years from the decision of the Labor Arbiter. decision ordering separation pay.

Doctrine: The employer is liable to pay the amount that accrued within the 2 year period. Until 2.4 “Full” Backwages: The Rule Before R.A. No. 6715: The Mercury Drug Rule
the payment of separation pay is carried out, the employer should not be allowed to remain • Prior to the Mercury Drug Rule, the award of backwages to an employee could be
unpunished for the delay, if not outright refusal, to immediately execute the reinstatement reduced by subtracting the wages actually earned by him from employment during
aspect of the labor arbiter’s decision. the period of his separation, or the wages which he could have earned had he
been diligent enough to find a job.
Bani Rural Bank et.al. vs. De Guzman • In 1974, the Mercury Drug Rule was promulgated which adopts the policy of
Three employees filed for an illegal dismissal case. The Labor Arbiter fixed the period of granting backwages for a maximum period of three years without qualification and
backwages up to Aug 25, 1995, the date the employees manifested that they did not want deduction.
reinstatement. Computation was appealed to NLRC. The NLRC rendered a resolution on July
31, 1998 and awarded a separation pay in lieu of reinstatement at the rate of one month’s 2.4a Backwages: The Rule After R.A. No. 6715: Full Backwages but with deductions: The
pay per year of service, computed from the start of their executory employment up to the Mercury Drug Rule Abandoned
date of the finality of the decision, Jan. 29, 1999. The Court held that employees must be • R.A. 6715 took effect in March 21, 1989, amended article 294 in part, and entitled
computed from the time of their illegal dismissal until Jan. 29, 1999 the date of finality of the illegally dismissed employee to full backwages. The law abandoned the
NLRC’a July 31, 1998 decision. Mercury Drug Rule.
Doctrine: • Mercury Drug rule is no longer applicable for illegal dismissals that occurred after
I. Reinstatement and Backwages: Two Basic Awards to Illegally Dismissed March 21, 1989. However, in Ferrer case, the Court still allowed the employer to
Employee: deduct any amount, which the employee may have earned during the period of
1. Reinstatement without loss of seniority rights his illegal termination. This ruling was reiterated in Pines City Educational Center vs.
2. Payment of backwages from the time compensation was withheld up to NLRC. In Pines City, Justice Padilla dissented by saying that interim earnings should
the date of actual reinstatement not be deducted because the law uses the qualification “FULL” to the word
3. If reinstatement is no longer viable, separation pay equivalent to one backwages. Unjust Enrichment is no applicable because 1.) the applicable
month salary for every year of service should be awarded as an provision should be construed in favor of labor, 2.) Labor Code is a special law,
alternative. The separation pay is in addition to backwages. which should prevail over the Civil Code, and 3.) the language employed by the
II. Separation Pay in lieu of Reinstatement (SPIR): Only an alternative remedy. statute and its intent is clear
Possible only when:
1. In cases where the dismissed employee’s position is no longer available 2.4b Full Backwages without Deduction: Pines City Ruling Abandoned in Bustamante
2. The continued relationship between the employer and employee is no • In Osmalik Bustamante vs. NLRC and Evergreen Farms, the Court held that
longer viable due to the strained relations between them backwages to be awarded to an illegally dismissed employee, should not, as a
3. When the dismissed employee opted not to be reinstated, or the payment general rule, be diminished or reduced by the earnings derived by him elsewhere
of separation benefits would be for the best interest of the parties during the period of his illegal dismissal
involved. • The clear legislative intent in R.A. 6715 is to give more benefits to workers than was
• In these instances, the separation pay is the alternative remedy to reinstatement in previously given to them under the Mercury Drug rule or the “deduction of earnings
addition to the award of backwages. The payment of separation pay and elsewhere” rule. Thus, a closer adherence to the legislative policy behind R.A. 6715
reinstatement are exclusive remedies. The payment of separation pay replaces the as full backwages as meaning exactly that i.e. without deducting from backwages
legal consequences of reinstatement to an employee who was illegally dismissed. earnings derived elsewhere by the concerned employee during the period of his
• When there is an order of separation pay, the employment relationship is terminated illegal dismissal.
only upon the finality of the decision ordering the separation pay. The finality of the
decision cuts off the employment relationship and represents the final settlement of 2.4c Full Backwages Amendment Not Retroactive
the rights and obligations of the parties against each other. Hence, backwages no • The full backwages provided by R.A. 6715 has no retroactive effect; it applies
longer accumulate upon the finality of the decision ordering the payment of prospectively. The rule is: where the illegal dismissal happened before the effectivity
separation pay since the employee is no longer entitled to any compensation from of R.A. 6715, that is before March 21, 1989, the award of backwages is limited to 3
the employer by reason of severance of his employment. years without deduction or qualification. If the illegal dismissal occurred on or after
March 21, 1989, the full backwages rule is applicable.
The Basis of Computation of Backwages
1. When reinstatement is ordered, compute the backwages from the time of dismissal 2.5 Backwages Up to Retirement Age Only
until the employee’s reinstatement. The computation of backwages can even • If the ordered reinstatement is no longer feasible because the employee has
continue beyond the decision of the Labor Arbiter or the NLRC and ends only when reached the retirement age, the Court will not insist on reinstatement and even the
the employee is actually reinstated. backwages will not extend beyond the employee’s retirement date.
2. When separation pay is ordered in lieu of the reinstatement or reinstatement is
waived by the employee, backwages is computed from the time of dismissal until
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 163

2.6 Inflation The omission cannot be corrected by the investigation later conducted by POEA. The due
• With regard to inflation, the Court has held that the effects of extraordinary inflation process requirement in the dismissal process is different from the due process requirement in
are not to be applied without an agreement between the parties and without an the POEA proceedings. Both requirements must be separately observed.
official declaration thereof by competent authorities.
While it is true that in the Wenphil Case, the lack of due process before the dismissal of the
2.7. FOUR PHASE DEBATE: Dismissal with Valid Cause but Invalid Procedure employee was deemed corrected by the subsequent administrative proceedings where the
dismissed employee was given a chance to be heard, those cases involved dismissals that
Issue: If the employee’s dismissal is based on valid cause but procedurally defective, is the were later proved to be for a valid cause. The doctrine in those cases is not applicable to the
dismissal lawful and valid? case at bar because our finding here is that the dismissal was not justified.

2.7a Phase One, 1989: Employer Must Pay Nominal Damages Illegal or Merely Defective?

Wenphil Corporation vs. NLRC Sebuguero et. Al. vs. NLRC, G.T.I. Sportswear Corp.
(MODIFIED BY AGABON RULING) Facts: Employees filed for illegal dismissal because of retrenchment and there was no notice
Summary: The employee filed an illegal dismissal case against the employer because he was furnished to the employees. The Court held that the retrenchment was for a valid cause. Their
not afforded due process since there was no prior investigation. The employer dismissed the retrenchment, for not having been effected with the required notices, is merely defective.
employee on the grounds of violent temper, causing trouble during office hours, and defied
his superiors as they tried to pacify him. The Court held that the dismissal of the employee for Doctrine: It is now settled that where the dismissal of an employee is in fact for a just and valid
just cause should be maintained. cause and is so proven to be but he is not accorded his right to due process, i.e. he was not
furnished with the twin requirements of notice and the opportunity to be heard, the dismissal
Doctrine: Although the ground for dismissal is valid, the employer must nevertheless be held shall be upheld but the employer must be sanctioned for non-compliance with the
accountable for failure to extend to the employee his right to an investigation before causing requirements of for failure to observe due process.
his dismissal. The dismissal of an employee must be for; 1. Just or authorized cause and 2. After
due process. Where the employer committed an infraction for failure to give a formal notice Note: In the case of HSBC, the court simplified the term and calls it “illegal” as opposed to
and conduct an investigation as required by law. An indemnity of P1000 may be awarded. merely defective as used in the Sebuguero case. Any dismissal lacking in valid cause or valid
The measure of this award depends on the facts of each case and the gravity of the omission procedure is either substantively illegal or procedurally illegal, or both.
committed by the employer.
Magnolia Dairy Products vs. NLRC and Calibo
Amount of Penalty for Not Observing Due Process Facts: Respondent employee was dismissed because the employer installed labor saving
devices. No required written notice to the employee and to the DOLE was given at least one
RULE: The amount of the sanction depends on the facts of each case and the gravity of the month before the intended date of termination.
omission committed by the employer.
Doctrine: The failure of petitioner employer to serve the written notice to private respondent
EXAMPLES: and to the DOLE, does not ipso facto make private respondent’s termination from service
• Wenphil Corp vs. NLRC: Court imposed on the employer a penalty of P1000. illegal so as to entitle reinstatement and payment of backwages. If at all, her termination is
• Reta vs. NLRC: Court imposed a penalty of P10 000 because the employee was merely defective because it was not tainted with bad faith or arbitrariness and was due to a
given his walking papers and was forced to leave his ship in a foreign port. valid cause.
• Alhambra Industries vs. NLRC: Court imposed P10 000 as fair, reasonable, and
realistic amount of penalty on the employer. 2.7b Phase Two, 2000: Employer Must Pay Full Backwages
• Segismundo vs. NLRC: Court imposed P1000
• Serrano modifies Wenphil: Where due process is disregarded, full backwages must
No Just Cause and No Due Process: The Wenphil Doctrine Does Not Apply; Dismissal Illegal be awarded

Hellenic Philippine Shipping vs. E. Siete and NLRC Serrano vs. NLRC and Isetann Department Store
Summary: The employer relieved Siete as Master of M/V Honda, hence, Siete filed a case for (OVERTURNED BY AGABON RULING)
illegal dismissal. The employer said that he was dismissed because of his failure to comply with Facts: Serrano was replaced by an independent contractor, for reasons of economy and
the instructions of Sultan Shipping to erase the timber load line on the vessel and for his efficiency, which was a valid cause as held by the Court. However, Serrano was given a
negligence in the discharge of the cargo at Tripoli that endangered the vessel and the notice of termination and on the same day his services were terminated.
stevedores. Siete had not been informed of the cause of his dismissal and repatriation, either
in Cyprus or later in Manila. He insisted that he was dismissed without being informed of the Doctrine: The Serrano ruling modified Wenphil ruling by awarding full backwages (in Wenphil,
charges against him or given an opportunity to refute them. The employer argued that only indemnity is imposed on the employer) to penalize violation of due process. The
whatever defects might have tainted by Siete’s dismissal was subsequently cured when the employee dismissed for a valid reason, remains dismissed but the employer who disregarded
charges against him were specified and sufficiently discussed in the position papers submitted proper procedure, must pay full backwages in addition to separation pay, if applicable, and
by the employer. indemnity. This is to avoid the practice of “dismiss now, pay later”.

From Wenphil to Serrano to Viernes: Not Only Full Backwages but Also Indemnity Article 297 or for health reasons under Article 298, and due process was observed à
the dismissal is undoubtedly valid and the employer will not suffer any liability
Viernes vs. NLRC and BENECO B. The dismissal is without just or authorized cause, but due process was observed
Facts: Employees were meter readers and were dismissed from their employment. The C. The dismissal is without just or authorized cause but due process was not observed
employer failed to give notice to the employees and to the DOLE 30 days prior to intended • B and C à under Article 293, the employee is entitled to reinstatement without loss
date of termination. of seniority rights and other privileges and full backwages, inclusive of allowances,
and other benefits or their monetary equivalent computed from the tome the
Doctrine: Indemnity is compatible with the award of backwages. Backwages are granted on compensation was not paid up to the time of actual reinstatement.
grounds of equity to workers for earnings lost due to their illegal dismissal from work. Indemnity
is meant to vindicate or recognize the right of an employee to due process which has been The dismissal is for just or authorized cause but due process was not observed à the dismissal
violated by the employer. It is in the nature of nominal damages. The Court fixed the should be upheld. While the procedural infirmity cannot be cured it should not invalidate the
indemnity at P2,590.50 which was equivalent to the employee’s one month salary. dismissal. However, the employer should be held liable for non-compliance with the
procedural requirements of due process.
2.7c Phase Three, 2004: Employer Must Pay Higher Nominal Damages
• Agabon discards Serrano and partially restores Wenphil 2.7d Phase Four, 2005: Employer Must Pay Higher Nominal Damages, Depending on the Cause
• Prior to 1989, the rule was to declare the termination outright illegal and the of Dismissal
employee should be reinstated. Then came Wenphil in 1989 which declared the • The JAKA Food Ruling fine-tunes the Agabon Doctrine. Whereas the Agabon’s
termination valid but the employer should pay indemnity for not respecting the award of nominal damages does not distinguish whether the employee’s
employee’s right to due process. termination is based on just or on authorized cause, JAKA now makes a distinction:
• Serrano came in 2000 which stiffened the penalty to full backwages followed by 1. If the dismissal is based on a just cause under Article 282 but the employer
Viernes in 2003 which imposed both backwages and indemnity. failed to comply with the notice requirement, the sanction to be imposed upon
• Now comes Agabon. The Court changes its mind again by saying in effect “Lets him should be tempered because the dismissal process was in effect initiated
disregard Serrano and essentially restore Wenphil. That is, the temrination is valid, the by an act imputable to the employee
employee remains dismissed, but the employer must pay an indemnity heavier than 2. If the dismissal is based on authorized cause under Article 283 but the employer
that imposed in Wenphil but lighter than full backwages. failed to comply with the notice requirement, the sanction should be stiffer
because the dismissal was initiated by the employer’s exercise of his
Agabon vs. NLRC and Reviera Home Improvements management prerogative
(PREVAILING DOCTRINE)
Facts: The employees were cornice installers of a company whose business was selling and 2.7e JAKA Refined Further by Industrial Timber; Authorized Causes Subdivided
installing of ornamental construction materials. They were dismissed allegedly because they • Industrial Timber further refined the JAKA ruling. Industrial Timber does not lump the
refused to work on pakyaw basis as proposed by their employer. The employer, on the other authorized causes together but subdivides them into: 1. Due to losses and 2. Not
hand, maintained they abandoned their work. The employees asserted that they were due to losses. If the authorized cause that terminates employment arises from losses,
dismissed without notice and hearing. the penalty to the employer who disregarded due process may be lighter than if
the authorized cause has no relation to losses.
Doctrine: The employee remains dismissed since there was a valid cause, but the employer • Several Factors in Determining the Amount of Nominal Damages (Industrial Timber)
must pat an indemnity heavier than that imposed in Wenphil but lighter than full backwages. 1. The authorized cause invoked, whether it was a retrenchment or a closure of
Payment of backwages and other benefits including reinstatement is justified only if the cessation of operation of the establishment due to serious business losses or financial
employee was unjustly dismissed. reverses or otherwise
2. The number of employees to be awarded
The better rule is to abandon the Serrano doctrine and to follow the Wenphil doctrine by 3. The capacity of the employers to satisfy the awards, taking into account their
holding that the dismissal was for just cause but imposing sanctions on the employer. Such prevailing financial status as borne by the records
sanctions must be stiffer than that imposed in Wenphil. By doing so, this Court would be able 4. The employers grant of other termination benefits in favor of the employees
to achieve a fair result by dispensing justice not just to employees but to employers as well. 5. Whether there was a bona fide attempt to comply with the notice requirements as
The Court awarded P30, 000 as indemnity. opposed to giving no notice at all

Procedures Additional Factors as ruled in Deoferio vs. Intel Technology

• Considering that due process has substantive and procedural aspects, an improper 3.3 Reinstatement Without Backwages
dismissal, therefore, may be “substabtially illegal”, “procedurally illgeal”, or both.
• The terms are simplied and standardized but the respective consequences, as Manila Electric Co. v. NLRC
established in Agabon, are not affcted: the employee remains dismissed but the Facts: “S,” a supervisor-leadman of MERALCO, facilitated the processing of an application for
employer must pay nominal damages. electrical services and required documentation for a consideration. “S” was found guilty of
breach of trust and violation of company rules, the penalty for which ranges from reprimand
REINSTATEMENT to dismissal. He, however, had been with the company for 20 years without any previous
• The normal consequences of a finding than an employee has been illegally derogatory record and the company had awarded him two commendations for honesty. The
dismissed (there being no valid cause), are that the employee becomes entitled to Supreme Court held that the reinstatement of “S” without backwages is proper considering
reinstatement to his former position without loss of seniority rights and the payment the good faith of the employer in dismissing him.
of backwages
• Reinstatement restores the employee who was unjustly dismissed to the position from Doctrine: While an award of backwages presupposes a finding of illegal dismissal, not every
which he was removed, that is, to his status quo ante dismissal; while the grant of case of illegal dismissal entails an award of backwages.
backwages allows the same employee to recover from the employer that which he
had lost by way of wages as a result of his dismissal. Soriano v. Atienza
• Though the grant of reinstatement commonly carries with it an award of Summary: The employer dismissed the employee upon the union president’s representation
backwages, the inappropriateness or non-availability of one does not carry with it that the employee violated the union security clause of the CBA. However, it turned out that
the inappropriateness or non-availability of the other. Reinstatement is also the union president had already resigned, hence not authorized to act on behalf of the
incompatible with guilt. union. The court declared the dismissal illegal and ordered the employee’s reinstatement but
without backwages or financial assistance to the employee because the employer merely
3.1 Salary Rate Upon Reinstatement complied in good faith with the union security clause in the CBA.

REINSTATEMENT – restoration to a state of condition from which one has been removed or Integrated Microelectronics v. Dionilla
separated. One who is reinstated assumes the position he occupied prior to the dismissal and
Summary: The employee let a job applicant use his company ID card to ride the shuttle bus
is, ordinarily, entitled only to the last salary in that position.
for free. For this act, which company rules prohibit, the employer dismissed the employee. Too
harsh, the court said of the penalty, and ordered the employee’s reinstatement without
Grolier International Inc. v. Executive Labor Arbiter backwages because the employee was not faultless.
Facts: Fernandez was occupying the position of comptroller of Grolier with a basic monthly
salary of P4,000 when he left for Australia. There he worked for Grolier Australia for AUS $8,000 • Award of backwages presupposes a finding of illegal dismissal, but not every case
per annum. He returned to Manila where his immigrant visa was disapproved. He sought of illegal dismissal entails an award of backwages.
reinstatement. The Supreme Court held that Fernandez should be paid a separation pay of • Employer’s good faith, employee’s fault, and harshness of dismissal are factors that
P4,000 per month because prior to his stay in Australia, this was presumably a reasonable and may justify a denial of backwages to an illegally dismissed employee.
satisfactory renumeration for the work done by him, taking into account the standard of living • Instead of denial of backwages in toto, the court may opt to grant limited
and cost of living in the Philippines then. It cannot be supposed that he was promoted when backwages only.
he went to the office of Australia as it was only a business trip. • Deciding what degree of relied is appropriate is situational. Where dismissal is illegal,
reinstatement will be decreed, but due consideration will be given to the
Doctrine: Salary scales are based upon or reflect, as economic facts, the standard of living employer’s honest belief that dismissal is justified.
prevailing in the country and the purchasing power of the domestic currency. • Reinstatement should be coupled with full backwages but there are cases where
the court directed reinstatement devoid of backwages or with only partial
3.2 May An Employee Lose the Right to Reinstatement? backwages. Deciding what degree of relief is appropriate is situational.
• Within how many days must the employees come to their employer to have • Where dismissal is illegal, reinstatement will be decreed but due consideration will
themselves reinstated? be given to the employer’s honest belief that dismissal is justified.
• Also to be considered the fact the employee is not faultless and therefore deserves
Buenviaje v. Court of Appeals some kind of penalty short of dismissal.
Facts: The employer, complying with the NLRC’s order of reinstatement, gave the employer
five days to report for work. When they failed to do so, the employer declared them to have 3.4 Reinstatement Not Feasible Due to Adverse Circumstances
lost their employment status. The Supreme Court faulted the employer for not giving the • In an order of reinstatement, the employer may not be compelled to reemploy
employees ample time to explain why they failed to report to work at once. Art. 229 is more persons than the economic operation of his business requires. If the employer’s
intended for the benefit of the employee and cannot be used to defeat their own interest. commercial or financial circumstances have changed, the court cannot compel
the employer, despite the latter’s ULP, to reinstate such number of employees as
Doctrine: Employees must be given a reasonable time to come to their employer to have may exceed his needs under the altered circumstances.
themselves reinstated. • But the court does have the right to order that those who were not reinstated be
given precedence in future hiring.
• If the employer has already hired a replacement, reinstatement of the illegally
dismissed employee to his former position would be neither fair nor just. The

employer’s remedy is to reinstate the employee to a substantially equivalent 3.5b “Strained Relations” is a Factual Issue, Not a Rule
position.
• Similarly, reinstatement of an illegally dismissed employee will not be insisted upon D.V. Quijano v. Mercury Drug
an employer who, while the illegal dismissal complaint was pending, had to resort to Doctrine: To protect labor’s security of tenure, we emphasize that the doctrine should be
retrenchment due to losses adequately proven. strictly applied so as not to deprive an illegally dismissed employee of his right to
o Instead, the dismissed employee should be paid full backwages from the reinstatement. Every labor dispute almost always results in “strained relations,” and the phrase
time of his dismissal up to the time the retrenchment would have taken cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee
effect, as well as separation pay. can never be reinstated.
• The NLRC cannot compel the employer guilty of ULP to reinstate the employee is
the employer suffered business recession such that its commercial or financial • Strained relations are a factual issue which must be raised before the labor arbiter
circumstances have changed, forcing it to close one outlet or branch. for the proper reception of evidence. If raised only on appeal, there would be no
• An illegally dismissed employee who is approaching or has reached the retirement evidentiary basis to support the assertion that a peaceful working relationship as no
age shall not be ordered reinstatement. Instead he shall be entitled to separation longer possible.
pay, full backwages, and retirement benefits pursuant to any CBA or as provided for
in Sec. 14, Book VI of the Labor Code IRR. 3.6 When Reinstatement Not Feasible; Separation Pay Instead of Reinstatement (SPIR)
• In the event that reinstatement is no longer feasible (see previous list of factors), or if
Association of Independent Unions of the Philippines v. NLRC the employee chooses not to be reinstated, the employer shall pay him separation
Summary: Complainant employee had not yet reached retirement age but the Supreme pay in lieu of reinstatement, such separation pay to be computed according to the
Court allowed payment of separation pay in lieu of reinstatement because considerable time formula used in earlier cases.
had lapsed between the dismissal and the resolution of the case. In fact, ten (10) years had
already passed. 3.6a SPIR Different from Backwages

3.4a Factors Justifying Nonreinstatement: SPIR – a substitute for immediate and continued reemployment with the employer. It does not
1. Business recession redress the injury that is intended to be relieved by the second remedy of backwages, i.e the
2. Attainment of retirement age loss of earnings that would have accrued to the dismissed employee during the period
3. Injury or disability of the employee between dismissal and reinstatement. It is oriented towards the immediate future, the
4. Dissolution of the company transitional period before the dismissed employee locates a replacement job.
5. Merger of the companies
6. Sale of the company • The grant of separation pay is a proper substitute only for reinstatement. It could not
7. Closure of the company be an adequate substitution both for reinstatement and for backwages.
8. Insolvency of the company
9. Abolition of the position BACKWAGES – a form of relief that restores the income that was lost by reason of unlawful
10. Difficulty in enforcing the employee’s reinstatement because the employer is in a dismissal; loss of earnings that would have accrued to the dismissed employee during the
foreign country period between dismissal and reinstatement.

3.5 Reinstatement Not Feasible Due to Strained Relations 3.6b SPIR Different from Separation Pay in Legal Terminations
• Where the relationship of employer to employee is so strained and ruptured as to
preclude a harmonious working relation should reinstatement be decreed, the Philippine Tobacco Flue-Curing v. NLRC
employee should be afforded the right to a separation pay. Doctrine: SPIL proceeds from an illegal dismissal wherein reinstatement is ordered but cannot
• Examples: be carried out. On the other hand, separation pay under Art. 298 arises from retrenchment to
o Antagonism brought about by the filing of the complaint by the employee prevent losses or in case of closure or cessation of the employer’s business, in either of which
as well as the fact that a new employee had been hired and there is no the separation pay is equivalent to at least one (1) month or one-half (1/2) month pay for
equivalent position available every year of since whichever is higher.
o Where the officer occupies a key position such as VP for marketing, who
can only work effectively if he has the full trust of top management 3.6c How Much is the Separation Pay in Lieu of Reinstatement (SPIR)
• Employee’s demand for separation pay was an acknowledgement by him that • Although there are different computations by the Supreme Court of SPIR,
because of the strain in his relation with the employer, reinstatement is no longer preponderant jurisprudence favors one month pay for each year of service.
feasible.
3.6d Objection: Disproportionate Substitution
3.5a Qualifications to the “Strained Relations” Principles • One month’s pay per year of service is a very poor substitute for reinstatement. How
can a whole job, the regular source of livelihood, be equivalent to only one month’s
Globe-Mackay Cable and Radio Corp v. NLRC pay for every year of service?
Doctrine: It should be proved that the employee concerned occupies a position where he • If reinstated, the employee would again have a regular source of income; he would
enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an at least get his regular pay as well as employment benefits granted by law, policy or
atmosphere of antipathy and antagonism may be generated as to adversely affect the contract, restoration of seniority rights and other privileges, full backwages,
efficiency and productivity of the employee concerned. allowances and other benefits.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 167

• If that is the meaning and extent of reinstatement, why then, if reinstatement 4.1 Recomputation of Monetary Award
cannot be done, the employer’s entitlements are suddenly reduced to just one- • A LA’s monetary award to an illegally dismissed employee is subject to re-
month pay for every tweleve months of service? The employee thereby is not computation after the case is decided on appeal. Following the finality of the
restored. He is severely shortchanged. appellate court’s decision, the award will have to be recomputed or adjusted to
include the accumulations when the case was pending on appellate level. Such re-
3.6e SPIL of Seasonal Worker computation is not a violation of the rule that a final decision cannot be modified.

Philippine Tobacco Flue-Curing v. NLRC 4.2 Payroll Reinstatement as an Option

Doctrine: The computation of the separation pay of seasonal (on-and-off) workers is one-half • Under Art. 229, par. 3 the decision of the LA reinstating a dismissed employee is
(1/2) their respective average monthly pay during the last season they worked multiplied by immediately executory even while the case is no appeal. The reinstatement may be
the number of years they actually rendered service, provided that they work for at least six actual or merely in payroll, at the employer’s option.
months during a given year (a fraction of at least six months is considered one whole year). • This provision means that if execution pending appeal is granted, the employee
concerned shall be admitted back to work under the terms and conditions
4. Remedy if Reinstatement is Thwarted prevailing prior to his dismissal.
• If the employers fails or is unable to comply with a final and executory judgment for • However, instead of doing so, the employer is granted the option to merely reinstate
the reinstatement of an employee, the remedy is to compel the employer by writ of the employee in the payroll. This would mean that although not admitted to work,
execution to effect the reinstatement and pay the amounts decreed. the employee would nevertheless be included in the payroll and entitled to receive
• If there be valid and insuperable cause for such inability to reinstate, this factor must her salary and other benefits as if she were in fact working.
be taken into account in the process of effectuating the award of relief consistent • The NLRC rules on reinstatement of an illegally dismissed employee state:
with the judgment.
• The single, particular act of the employer in refusing or professing inability to comply Section 18, Rule V (2011 NLRC Rules of Procedure)
with the executory judgement to reinstate cannot be made the subject of two SECTION 18. CONTENTS OF DECISIONS. xxx In case the decision of the Labor Arbiter includes
proceedings: one, execution; and two, a separate action instituted by the an order of reinstatement, it shall likewise contain: a) a statement that the reinstatement
employee in the NLRC for damages. aspect is immediately executory; and b) a directive for the employer to submit a report of
• The remedy for refusal of the employer to reinstate despite several writs of execution compliance within ten (10) calendar days from receipt of the said decision.
is not the grant of additional backwages to serve as damages but to file a motion
to cite the employer for contempt. Section 19, Rule V (2011 NLRC Rules of Procedure)
SECTION 9. EXECUTION OF REINSTATEMENT PENDING APPEAL. - In case the decision includes an
Quijano v. Bartobalac order of reinstatement, and the employer disobeys the directive under the second paragraph
Facts: In the case of Quijano v. Mercury Drug, the employee was ordered reinstated by the of Section 18 of Rule V or refuses to reinstate the dismissed employee, the Labor Arbiter shall
Supreme Court. Four years after, Quijano’s reinstatement has not happened not only because immediately issue writ of execution, even pending appeal, directing the employer to
of the unwillingness of the employer but also because of the technicalities in the execution immediately reinstate the dismissed employee either physically or in the payroll, and to pay
process which the Labor Arbiter himself and an NLRC commissioner cited as reasons why the accrued salaries as a consequence of such nonreinstatement in the amount specified in
Quijano could not be reinstated despite finality of the Court’s decision. Hence present petition the decision.
against the LA and NLRC commissioner. The Supreme Court held that they did not have any
latitude to depart from the Court’s ruling which was already final and executory. Applying the The Sheriff shall serve the writ of execution upon the employer or any other person required by
Code of Professional Responsibility, they were suspended from the practice of law for a period law to obey the same. If he/she disobeys the writ, such employer or person may be cited for
of 3 months. contempt in accordance with Rule IX.

Doctrine: It is incumbent upon the LA and NLRC commissioner to order the execution of the Roquero v. PAL
judgement and implement the same to the letter. They have no discretion on this matter, Facts: “R” and “P”, equipment mechanics of PAL were caught red-handed possessing and
much less any authority to change the order of the Court. The implementation of the final using shabu in a raid conducted by PAL and NARCOM security personnel. Dismissed by PAL,
and executory decision is mandatory. they filed a case for illegal dismissal. The LA found both parties at fault. On Appeal, the NLRC
ruled that the dismissal was invalid as PAL was guilty of instigation, and ordered their
Siy v. NLRC reinstatement without backwages. Complainants filed a motion of execution of reinstatement
Facts: The reinstatement of an employee had been ordered by the LA and affirmed by the which the LA granted but PAL refused to execute on the ground that it had filed a Petition for
NLRC, CA and SC. The SC’s decision became final, entry of final judgment was done, and the Review which was referred to the CA. The SC held that such petition did not suspend the
employee moved for execution of judgement. But the employer’s counsel filed an appeal reinstatement. Moreover, since PAL refused to reinstate “R”, PAL must pay him the salary he is
with the NLRC seeking to prevent the issuance the issuance of the write of execution. The SC entitled to as if he was reinstated, from the time of the NLRC decision until the finality of the SC
held that the deceptively “innocent” appeal consistuted either a willful disregard or gross decision.
ignorance of basic rules of procedure resulting in the obstruction of justice. Counsel is guilty of
indirect contempt. Doctrine: An order of reinstatement by the LA is immediately executory even pending appeal.
The employee has an option to be reinstated in the payroll.
Doctrine: Elementary is the rule that an order granting a motion for a writ of execution is not
appealable.

4.3 No Obligation to Reimburse may still be the lesser evil compared to the intolerable presence in the workplace of an
unwanted employee.
Roquero v. PAL Garcia v. PAL
Doctrine: We reiterate the rule that technicalities have Doctrine: Pursuant to the police 4.5 Rationale and Constitutionality of Reinstatement During Appeal
no room in labor cases where the Rules of Court are power, the state may authorize
applied only in a suppletory manner and only to an immediate implementation, Aris (Phil.) Inc. v. NLRC
effectuate the objectives of the Labor Code and not to pending appeal. Of a decision Facts: Petitioner employer urges the Court to declare unconstitutional that portion of Art. 223
defeat them. Hence, even if the order of reinstatement reinstating a dismissed or of the Labor Code allowing immediate execution, even pending appeal, of the reinstatement
of the Labor Arbiter is reversed on appeal, it is obligatory separated employee. The aspect of a decision of a LA. It argues that it violates the due process clause of the
on the part of the employer to reinstate and pay the immediate reinstatement is “a Constitution in that it negates the right of the employer to self-protection. The SC en banc
wages of the dismissed employee during the period of saving act” designed to stop a held that these rationalizations and portrayals are misplaced, proceeding from a
appeal until reversal by the higher court. On the other continuing threat or danger to misunderstanding of the nature and scope of the relief of execution pending appeal.
hand, if the employee has been reinstated during the the survival or even the life of the
appeal period and such reinstatement order is reversed employee and his family. Social Doctrine: Execution pending appeal is interlinked with the right to appeal. One cannot be
with finality, the employee is not required to reimburse justice principles of labor law divorced from the other. The latter may be availed of by the losing party or a party who is not
whatever salary he received for he is entitled to such, outweigh or render inapplicable satisfied with a judgment, while the former may be applied for by the prevailing party during
more so if he actually rendered services during the the civil law doctrine of unjust the pendency of the appeal. The right to appeal, however, is not a constitutional, natural or
period. enrichment. inherent right. It is a statutory privilege of statutory origin and, therefore, available only if
4.3a Comparison/ Contrast: Garcia reaffirms the no reimbursement doctrine in Roquero and granted or provided by statute. The law may then validly provide limitations or qualifications
conformable rulings. Art. 229 grants the employee the substantive right to receive his salary thereto or relief to the prevailing party in the event an appeal is interposed by the losing party.
when his dismissal, already found illegal by the labor arbiter, is elevated on appeal by the Execution pending appeal is one such relief long recognized in this jurisdiction. The Revised
employer. Such substantive right cannot be treated as a procedural matter that can be Rules of Court allows execution pending appeal and the grant thereof is left to the discretion
undone and taken back when conditions change. of the court upon good reasons to be stated in a special order.

Wenphil v. Abing 4.6 Exception to Immediate Reinstatement

Doctrine: Reinstatement and backwages are two separate reliefs available to an illegally • Where the dismissed employee’s reinstatement would lead to a strained relation
dismissed employee. The normal consequences of a finding that an employee has been between the employer and employee or to an atmosphere of antipathy and
illegally dismissed are: first, that the employee becomes entitled to reinstatement to his former antagonism, the exception to the twin remedies of reinstatement and payment of
position without loss of seniority rights; and second, the payment of backwages covers the backwages can be invoked, and reinstatement, which might become anathema
period running from his illegal dismissal up to his actual reinstatement. These two reliefs are not to industrial peace, could be held back pending appeal.
inconsistent with one another and the labor arbiter can award both simultaneously.
4.7 Reinstatement Pending Appeal is Enforceable Despite Employer’s Denial of Employer-
Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot be Employee Relationship
a substitute for the payment of backwages. In instances where reinstatement is no longer
feasible because of strained relations between the employee and the employer, separation PAL v. NLRC
pay should be granted. In effect, an illegally dismissed employee should be entitled to either Facts: PAL questioned the application by the NLRC of Art. 223 of the Labor Code, asserting
reinstatement – if viable, or separation pay if reinstatement is no longer be viable, plus that “this provision does not apply where there is no ‘reinstatement’ to speak of, as in the
backwages in either instance. instant case, where the alleged employer-employee relationship is contested because the
complainants below never have been employees of PAL. The SC held that it is indisputable
4.3b Backwages Pending Appeal End When Court of Appeals Upholds the Employee’s that prior to the filing of the numerous cases before the LA, the said complainants were
Dismissal working for PAL and that the LA even declared them to be regular employees.
• The LA’s award of backwages remains effective even while such decision is
elevated on appeal, and the employee’s entitlement to the backwages continues Doctrine: The intent of the law in making a reinstatement order immediately executory is much
until such decision is reversed by a higher court. like a return-to-work order, i.e., to restore the status quo in the workplace in the meantime that
the issues raised and the proofs presented by the contending parties have not yet been finally
4.4 Rationale of Payroll Reinstatement resolved.5 It is a legal provision which is fair to both labor and management because while
• Why does the law give the employer the option of physical reinstatement or payroll execution of the order cannot be stayed by the posting of a bond by the employer, the
reinstatement? This is explained in the case of Maranaw Hotel v. NLRC. workers also cannot demand their physical reinstatement if the employer opts to reinstate
them only in the payroll.
Maranaw Hotel v. NLRC (note: wrong citation in book)
Doctrine: This option is based on practical considerations. The employer may insist that the 4.8 Reinstatement Should Have Been Ordered by Labor Arbiter
dismissal of the employee was for a just and valid cause and the latter’s presence within its • If the LA has not ordered reinstatement of the employee, the NLRC cannot award
premises is intolerable by any standard; or such presence would be inimical to its interest or backwages for the period when the appeal was pending at the NLRC.
would demoralize the co-employees. Thus, while payroll reinstatement would in fact be • Reinstatement during appeal is warranted only when the LA has ruled that the
unacceptable because it sanctions the payment of salaries to one not rendering service, it dismissed employee should be reinstated.

4.9 Is Reinstatement Self-executory? award cannot be justified solely upon the premise that the employer fired his
employee without just cause or due process.
Maranao Hotel v NLRC • Apart from the reliefs expressly out in the Labor Code flowing from illegal dismissal
Doctrine: … that although the reinstatement aspect of the decision is immediately executory, from employment, no other damages may be awarded to an illegally dismissed
it does not follow that it is self-executory. There must be a writ of execution which may be employee other than those specified by the Labor Code. Hence, the fact that the
issued motu proprio or on motion of an interested party as stated in Article 230 of the Labor issue of whether or not moral or other damages were suffered by an employee and
Code. In the absence then of an order for the issuance of a writ of execution on the in the affirmative, the amount that should properly be awarded to him in the
reinstatement aspect of the decision of the Labor Arbiter, the petitioner [employer] is under circumstances, is determined under the provisions of the Civil Code and not the
no legal obligation to admit back to work the employee under the terms and conditions Labor Code.
prevailing prior to her dismissal or, at the petitioner’s option, to merely reinstate her in the
payroll. 5.1 Moral Damages
• Moral damages may be awarded to compensate one for diverse injuries such
as mental anguish, besmirched reputation, wounded feelings and social
• The Court noted that prior to RA 6715, the Labor Code contained no provision humiliation.
dealing with reinstatement of an illegally dismissed employee. But the amendment • It is essential that they have sprung from a wrongful act or omission of the
introduced by RA 6715 uses the phrase “shall immediately be executory” without defendant which was the proximate cause thereof.
qualification, emphasizing the need for prompt compliance. • Employer is liable for moral damages under the provisions of Art 2220 of the
• According to the Court, Article 229 is clear that an award for reinstatement shall be Civil Code providing for damages for “breaches of contract” where the
immediately executory even pending appeal, and the posting of a bond by the employer acted fraudulently or in bad faith.
employer shall not stay the execution for reinstatement. To require the application • Moral damages recoverable only where:
for and issuance of a writ of execution as prerequisites for the execution of a 1. The dismissal or suspension of the employee was attended by bad
reinstatement award would betray and run counter the very object and intent of faith or fraud;
Art 229, i.e., the immediate execution of a reinstatement order. 2. Constituted an act oppressive to labor
• Court concluded that an award or order of reinstatement is self-executory. After the 3. Done in a manner contrary to morals, good customs or public policy.
receipt of the decision or resolution ordering the employee’s reinstatement, the • Bad faith implies a conscious and intentional design to do a wrongful act for a
employer has the right to choose whether to re-admit the employee to work under dishonest purpose or some moral obliquity; must be proven by clear and
the same terms and conditions prevailing prior to his dismissal, or to reinstate the convincing evidence for the law always presumes good faith.
employee in the payroll. In either instance, the employer has to inform the • Bad faith is essentially a state of mind affirmatively operating with a furtive
employee of his choice to apprise the employee if he has to report to work or not. design or motive of ill will. Does not simply connote bad judgement or
negligence.
4.10 NLRC’s Reinstatement Order Not Self-Executory • Moral damages cannot be awarded to a corporation; it has no feelings, no
• In the 2007 Panuncillo case the Court clarifies that a reinstatement ordered by a emotions, and no senses.
Labor Arbiter (art 229, 3rd paragraph) is self-executory, but a reinstatement order
from the NLRC itself is not self-executory (art 229, 6th paragraph). 5.2 Exemplary Damages
• The decision of the NLRC needs a writ of execution as art 230 states; “motu proprio • Exemplary damages shall be upheld where the employee had been harassed by
or on motion of any interested party, issue a writ of execution on a judgement within the employer or when the union and employer connived to commit ULP.
5 years from the date it becomes final and executory”. • May be awarded only if the dismissal was shown to have been effected in a
wanton, oppressive or malevolent manner.
4.11 If Reinstatement is Not Prayed For
• As provided for by Labor, et al. v NLRC, if the employee decides not to be 6 ATTORNEY’S FEES
reinstated, the employer shall pay him separation pay in lieu of reinstatement. They • In employment termination cases, attorney’s fees are not recoverable where there
would be entitled to separation pay equivalent to at least one month’s salary for is no sufficient showing of bad faith on the part of the employer.
every year of service in lieu of reinstatement in addition to their full backwages. • Under Art 2280 (2) of the Civil Code, the award is justified if the claimant is
• Note that the case of Labor contradicts the ruling in General Baptist College. In the compelled to litigate with third persons or to incur expenses to protect his interest by
latter case, the Court ordered reinstatement although the complainant did not ask reason of an unjustified act of the party against whom it is sought.
for it. But note that Labor is a 1995 decision, Baptist College is 1993.
7 PERSONS LIABLE FOR WRONGFUL DISMISSAL: GENERAL RULE – THE SUNIO DOCTRINE
5. DAMAGES
• If the evidence adduced by the employee before the LA should establish that the Sunio v NLRC
employer did indeed terminate the employee’s services without just cause or Facts: Sunio was made jointly and severally responsible with petitioner company and CIPI for
without according him due process, the LA;s judgement shall be for the employer to the payment of backwages of private respondents. It was argued that he being the owner of
reinstate the employee and pay him backwages, or exceptionally, for the ½ interest of said corporation he should be liable.
employee to simply receive separation pay. These are reliefs explicitly prescribed by
the Labor Code. But any award of moral damages by the LA obviously cannot be Doctrine: Mere ownership by a single stock-holder or by another corporation is not of itself
based on the Labor Code but would be grounded on the Civil Code. Such an sufficient ground for disregarding the separate corporate personality. Not liable.

• The mere fact that the officer is part of the family corporation does not mean that president in the person of Jose Beltran had been elected. Can the VP be held jointly and
all its acts are imputed to him directly and personally, in the absence of showing severally liable with the corporation for the unpaid wages of the company’s former president?
that he acted without or in excess of his authority or was motivated by personal ill- Doctrine: Petitioner must be held responsible for its outcome. With Johnson’s manifest interest
will against the employee. His acts were official acts, done in his capacity as VP of in the case and his being the top officer after his brother was eased out, there is enough
the company and on its behalf. reason to believe that Johnson had a hand in the dismissal of Jesus. It is an established
principle that when the veil of corporate fiction is made as a shield to perpetuate a fraud or
7.1 Government as Stockholder Not Directly Liable for Corporate Indebtedness to confuse legitimate issues (here, the relation of employer-employee), the same should be
• A stockholder as a rule is not directly, individually and/or personally liable for the pierced.
indebtedness of the corporation.
Carmelcraft Corp v NLRC
7.2 Exception: Piercing the Corporate Veil: Officers Become Personally Liable
Facts: Carmen contends that she is not liable for the acts of the company, assuming it had
• Where the incorporates and directors belong to a single family, the corporation and
acted illegally, because the Corporation is a distinct and separate entity with a legal
its members can be considered as one in order to avoid its being used an
personality of its own.
instrument to commit injustice, or to further an end subversive of justice. The shield of
corporate fiction should be pierced when it is deliberately and maliciously designed
Doctrine: We do not agree. She is, in fact and legal effect, the corporation, being not only its
to evade financial obligation to employees.
president and general manger but also its owner.
• The doctrine applies only in three basic areas
1. Defeat of public convenience as when the corporate fiction is used as a
7.4 Instances When Corporate Officers Become Solidarily Liable
vehicle for the evasion of an existing obligation;
2. Fraud cases or when the corporate entity is used to justify a wrong,
Uichico v NLRC, Santos, et al.,
protect fraud, or defend a crime; or
3. Alter ego cases, where a corporation is merely a farce since it is a mere Doctrine: The general rule is that obligations incurred by the corporation, acting through its
alter ego or business conduit of a person, or where the corporation is so directors, officers and employees, are its sole liabilities. EX: When solidary liabilities may be
organized and controlled and its affairs are so conducted as to make it incurred but only when exceptional circumstances warrant such as in the following cases:
merely an instrumentality, agency, conduit or adjunct of another 1. When directors and trustees or, in appropriate cases, the officers of a corporations: (a)
corporation. vote for or assent to patently unlawful acts of the corporation: (b) act in bad faith or
with gross negligence in directing the corporate affairs; (c) are guilty of conflict of
7.2a Key Element of Personal Liability interest to the prejudice of the corporation, its stockholders or members, and other
• The veil of corporate fiction can be pierced, and responsible corporate directors persons;
and officers or even a separate but related corporation, maybe impleaded and 2. When a director or officer has consented to the issuance of watered stocks or who,
held answerable solidarily in a labor case, even after final judgement and on having knowledge thereof, did not forthwith file with the corporate secretary his written
execution, so long as it is established that such persons have deliberately used the objection thereto;
corporate vehicle to unjustly evade the judgement obligation, or have resorted to 3. When a director, trustee or officer has contractually agreed or stipulated to hold himself
fraud, bad faith, or malice in doing so. personally and solidarily liable with the corporation; or
• The key element is the presence of fraud, malice, or bad faith. 4. When a director, trustee or officer is made, by specific provision of law, personally liable
for his corporate actions.
7.3 Sole Proprietorship: Piercing the Veil Doctrine Applies
• It is the act of hiding behind the personalities of juridical entities that the equitable In labor cases, particularly, corporate directors and officers are solidarily liable with the
piercing doctrine was formulated to address and prevent. corporation for the termination of employment of corporate employees done with malice or
in bad faith.
AC Ransom v NLRC
Doctrine: The responsible officer of an employer corporation can be held personally liable, not • At the very least, as held in Pabalan, to justify solidary liability, “there must be an
to say even criminally liable for nonpayment of backwages. If no definite proof exists as to allegation or showing that the officers of the corporation deliberately or maliciously
who is the responsible officer, the president of the corporation who can be deemed to be its designed to evade the financial obligation of the corporation to its employees,” or
chief operation officer shall be presumed to be the responsible officer. If the non-payment of a showing that the officers indiscriminately stopped its business to perpetrate an
the backwages of the strikers has been a continuing situation, the employer-corporation illegal act, as a vehicle for the evasion of an existing obligation, in circumvention of
president’s personal liability at the time the backwages were ordered to be paid should also statutes, and to confuse legitimate issues.
be a continuing joint and several personal liabilities of all who may have thereafter • In the absence of a clear identification of the officer directly responsible for failure
succeeded to the office of the president; otherwise, the strikers would be deprived of their to pay the backwages, the Court considered the president of the corporation as
rights by the election of a president who has no leviable assets. such officer. Or, as in the case of Chua, the court held the VP as personally liable
being the highest and most ranking official of the corporation.
Chua v NLRC
Facts: Jesus and Johnson Chua are brothers, serving as president and vice-president,
respectively of the family corporation. At the time of the filing of the complaint for illegal
dismissal by Jesus, Johnson was the highest and most ranking official of said corporation.
Johnson showed personal interest in the case of Jesus despite the fact that a new corporate

7.5 Whistle Blowing; Illegal Dismissal; Manager in Bad Faith Becomes Personally Liable 8 QUITCLAIM; PUBLIC POLICY PROTECTS LABOR
• After resigning and executing a quitclaim, may an employee still file a claim
Guillermo v Uson against the employer?
Facts: Complainant (Uson) alleged that he was dismissed because he “exposed the practice • Generally, once an employee resigns and executes a quitclaim in favor of the
of the President/General Manager of dictating and undervaluing the shares of stock of the employer, he is estopped from filing any further money claim against the
corporation.” employer arising from his employment, However, when the voluntariness of the
execution of the quitclaim or release is put in issue, or when it is proved that
Doctrine: Justice Peralta reviewed instructively the prevailing rulings about lifting of corporate there is an unwritten agreement entitling the employee to other remuneration
mask and imposing personal liability on the responsible manager that acted in bad faith. or benefits, then such a money claim of the employee may still be given due
course.
7.5a Officers Actively Managing the Corporation • Even if voluntarily executed, agreements are invalid if they are contrary to
• Which manager is personally liable? Only the “responsible officer,” i.e. the person public policy.
directly responsible for and who “acted in bad faith” in committing the illegal • The subordinate position of the employee vis-à-vis management renders him
dismissal or any act violative of the Labor Code, is held solidarily liable, in cases especially vulnerable to its blandishments and importunings, and even
wherein the corporate veil is pierced. intimidations. These may result in the employee’s improvidently if reluctantly
• In the absence of a clearly identifiable officer(s) directly responsible for the legal signing over benefits to which he is clearly entitled.
infraction, the Court considers the President of the corporation as such officer. • It, however, does not mean that quitclaims and waivers are illegal and always
disallowed. It can be upheld if the element of validity are present.
7.5b Liability May be Imposed During Execution
• May the personal liability be imposed on a manager not named as respondent? 8.1 Not All Waivers are Against Public Policy; Elements of Validity of Waivers and Quitclaims
May such liability be imposed during execution of the final judgement?
• In the cases of Claparols and A.C. Ranson, persons who were not originally Periquet v NLRC and the PNCC
impleaded in the case were, even during execution, held to be solidarily liable with Facts: Petitioner was dismissed as toll collector by PNCC for willful breach of trust and
the employer or corporation for the latter’s unpaid obligations to complainant- unauthorized possession of accountable toll tickets allegedly found in her purse during a
employees. These included a newly-formed corporation which was considered a surprise inspection. She claims that she has been framed; she filed a complaint for illegal
mere conduit or alter ego of the originally impleaded corporation, and/or the dismissal. She did not demand reinstatement but instead entered into a compromise
officers or stockholders of the latter corporation. agreement where she waived her right to reinstatement and received the sum of P14K as her
• Liability attached, especially to the responsible officers, even after final judgement backwages. She, however, applied for reemployment with PNCC and was accepted as
and during execution, when there was a failure to collect from the employer Xerox machine operator. She then wrote the new management of the agreement and asked
corporation the judgement debt awarded to its workers. that the rights granted her by the decision earlier be recognized because the waiver she had
signed was invalid. She accepted an additional amount and signed another Quitclaim and
7.6 Limited Liability of Indirect Employer Release. Nine years after, she filed a motion for issuance of a writ of execution of the decision
• Arts. 106, 107 and 109 hold an employer jointly and severally liable with its contractor (note that in the first case the LA ruled in favor of petitioner).
or subcontractor, as if it were the direct employer. The liability under these articles,
however, does not extend to the payment of backwages and separation pay of Doctrine: Not all waivers and quitclaims are invalid as against public policy. If the agreement
employees who were constructively or illegally dismissed by the contractor where it was voluntarily entered into and represents a reasonable settlement, it is binding on the
is not shown that the principal/indirect employer had conspired with the contractor parties and may not later be disowned simply because of a change of mind. It is only where
in effecting the illegal dismissal. there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or
• The solidary liability for payment of backwages and separation pay is limited under the terms of settlement are unconscionable on its face, that the law will step in to annul the
art 106 “to the extent of the work performed under the contract”; under art 107, to questionable transaction.
“the performance of any work, task, job or project,” and under art 109 “to the
extend of their civil liability under this Chapter (on payment of wages.)” Summary: Requisites of Effectual Quitclaim
• An order to pay backwages and separation pay is invested with a punitive 1. The employee executed the deed of quitclaim voluntarily.
character, such that an indirect employer should not be made liable without a 2. There is no fraud or deceit on the part on any of the parties.
finding that it had committed or conspired in the illegal dismissal. 3. The consideration of the quitclaim is credible and reasonable
4. The contract is not contrary to law, public order, public policy, morals or good
Sentinel Security Agency v NLRC custom or prejudicial to a third person with a right recognized by law.
Doctrine: Philamlife (Client) did not, as it could not, illegally dismiss the complainants. Thus, it
should not be held liable for separation pay and backwages. But even if the Client is not 8.2 “Dire Necessity” does not Nullify Quitclaim
responsible for the illegal dismissal of the complainants, it is jointly and severally liable with the • “Dire Necessity” is not an acceptable ground for annulling the releases, especially
agency for the complainant’s service incentive leave pay. The two are solidarily liable for the since it has not been shown that the employees had been forced to execute them.
proper wages prescribed by the Labor Code, pursuant to Arts. 106, 107, and 109. Under these
provisions, the indirect employer, who is the Client in the case at bar, is jointly and severally
liable with the contractor for the workers’ wages, in the same manner and extent that it is
liable to its direct employees.

TITLE I entitled to separation pay, unless there is a stipulation for payment of such in the employment
contract or CBA, or payment of the amount is sanctioned by established employer practice
TERMINATION OF EMPLOYMENT (CONT’D) or policy.

PART 7. TERMINATION OF EMPLOYEE AND SUSPENSION OF OPERATION In one case, the NLRC’s finding that there is a company policy/practice of paying separation
pay to its resigning employees, is supported by substantial evidence. That upon resignation
ARTICLE 300. [285] TERMINATION BY EMPLOYEE from petitioner corporation, the concerned employees were given certain sums of money
a. An employee may terminate without just cause the employee-employer relationship by occasioned by their separation from the company.
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 4. CONSTRUCTIVE DISMISSAL; FORCED RESIGNATION
damages. • Constructive discharge because continued employment is rendered impossible,
b. An employee may put an end to the relationship without serving any notice on the unreasonable, or unlikely, as an offer involving demotion in rank and a diminution in
employer for any of the following just causes: pay is basically an employer’s act amounting to dismissal but made to appear as if
1. Serious insult by the employer or his representative on the honor and person of it were not.
the employee; • There is constructive dismissal when an employee is reassigned or demoted in rank
2. Inhuman and unbearable treatment accorded the employee by the employer or his pay is lessened when there is no valid reason to do so.
or his representative; • Where a lawyer-teacher was asked by the school president to either stop acting as
3. Commission of a crime or offense by the employer or his representative against counsel in a certain case or be forced to resign, there is constructive dismissal. The
the person of the employee or any of the immediate members of his family; resignation was not voluntary and only made due to the unjustified pressure on the
and teacher. It amounted to dismissal without cause.
4. Other causes analogous to any of the foregoing. • Where an employee is forced to resign in an effort for the employer to avoid paying
separation pay, there is constructive dismissal.
1. RESIGNATION AND RESIGNATION NOTICE
• RESIGNATION – is the voluntary act of an employee who “finds himself in a situation 4.1 CONSTRUCTIVE DISMISSAL EVEN WITHOUT QUITTING; PREVENTIVE SUSPENSION BEYOND 30
where he believes that personal reason cannot be sacrificed in favor of the DAYS AMOUNTS TO CONSTRUCTIVE DISMISSAL
exigency of the service, then he has no other choice but to dissociate himself from
his employment”. Hyatt Taxi Services v. Catinoy (2001)
• The employer has no control over resignations and so the notification requirement Facts: Two union officers had a fist fight inside the union office, against the company rules and
was devised in order to insure that no disruption of work would be involved by union by laws. Hyatt placed them on preventive suspension for 30 days, but after its lapse,
reason of the resignation. Catinoy reported to work but was not allowed to resume his duties.
• The rule requiring an employee to stay or complete the 30-day period prior to the
effectivity of his resignation becomes discretionary on the part of management as Doctrine: Constructive dismissal does not always involve forthright dismissal or diminution in
an employee who intends to resign may be allowed a shorter period before his rank. There was constructive dismissal when the suspension went beyond the 30 day period of
resignation becomes effective. suspension, and the employee must be reinstated to his former position because suspension
beyond the maximum period amounts to constructive dismissal.
2. WITHDRAWAL OF RESIGNATION
• Resignation is withdrawable even if the employee has called it “irrevocable.” But
after it is accepted or approved by the employer, its withdrawal needs the NOTE – An employee is deemed constructively dismissed when his status is changed from
employer’s consent. regular to casual.

Intertrod Maritime v NLRC 5. NOT CONSTRUCTIVE DISMISSAL: VALID TRANSFER

Doctrine: Resignations, once accepted and being the sole act of the employee, may not be
withdrawn without the consent of the employer. Once an employee resigns and his Japan Air Lines Local Employees Assoc. vs. Arbitrator
resignation is accepted, he no longer has any right to the job. If the employee later changes Facts: Quiocho was transferred from her original position as a passenger service agent at the
his mind, he must ask for approval of the withdrawal of his resignation from his employer, as if NAIA Check in counter to senior accounting clerk at the main office after her rudeness and
he were reapplying for the job. It will then be up to the employer to determine whether or not unprofessional behavior became the subject of numerous complaints. The arbitrator held that
his service would be continued. If the employer does not accept, the employee cannot claim her transfer was valid and legal.
illegal dismissal for the employer has the right to determine who his employees will be. To say
that an employee who has resigned is illegally dismissed, it to encroach upon the right of the Doctrine: Her transfer was a remedial, not disciplinary, measure. It was intended to forestall
employers to hire persons who will be of service to them. further damage to JAL customer relations and maintain the goodwill of its clients upon which
its business essentially thrives. It was a valid and justified exercise of management prerogative,
3. RESIGNATION PAY not constructive dismissal.
• Is an employee who voluntarily resigned his job entitled to separation pay?

Travelaire & Tours Corp v NLRC & N. Medelyn

5.1 NOT CONSTRUCTIVE DISMISSAL: VOLUNTARY RESIGNATION MAY A REGULAR EMPLOYEE BE PLACED ON FLOATING STATUS FOR 6 MONTHS DESPITE NO
SUSPENSION OF OPERATIONS?
Concrete Aggregate v. NLRC
Summary: The general manager informed Solita that the company would undergo Sentinel Security Agency v. NLRC (1998)
reorganization and that she was transferred to a new department. When she learned of this, Facts: The agency contended that the law allows the company 6 months to have the
she handed in a resignation letter and was given separation pay, and signed a quitclaim and employees concerned retained on floating status, thus the complaint for illegal dismissal was
waiver. Later, she filed a complaint for illegal dismissal. premature.

Doctrine: Floating status requires the dire exigency of the employee’s bona fide suspension of
5.2 NOT CONSTRUCTIVE DISMISSAL: RESIGNATION TO AVOID DISMISSAL operations, business, or undertaking. In security agencies, this happens when the clients don’t
• There is nothing illegal in the practice of allowing an employee to resign instead of renew contracts and there’s a surplus of employees without work. However here, the client
being dismissed for just cause, so as not to smear his reputation and employment renewed its contract and there was no surplus of guards. There was no suspension of
record. operations, bona fide or not.
• Where the quitclaim and release of an employee is signed by an employee who is
also a lawyer, it can’t be said to have been coerced. Since bona fide suspension of operations for a period not exceeding 6 months does not
5.3 CONSTRUCTIVE DISMISSAL: WHO HAS THE BURDEN OF PROOF? terminate employment, no notice of termination needs to be given to either the DOLE or
• The employee alleging constructive dismissal has the burden to prove that his employee.
forced resignation was in fact involuntary.
• Shortening from 30 to 15 days the period required for the employee to notify the Placing a property manager on floating status until such a time that another project is secured
employer does not prove forced or constructive dismissal. Waiving or shortening the does not amount to constructive dismissal provided the floating status does not exceed 6
period is at the employer’s discretion. months. The period that the employer was looking for a new project can be considered a
6. INTENTION TO RESIGN suspension of operation. Filing a complaint for illegal dismissal before the expiration of 6
• An employee may be deemed to have resigned from his position and such months is considered premature.
resignation may be accepted and made effective by the management, even
though the employee did not mention the word resign or resignation. ARTICLE 302. [287] RETIREMENT
• In the Philippine Star case, a reporter and assistant to the publisher sent a
Any employee may be retired upon reaching the retirement age established in the collective
memorandum to the Philippine Star CEO expressing his frustrations and
bargaining agreement or other applicable employment contract.
disappointments in the office. He had a sarcastic tone and made resentful
comments. The company responded by saying it accepted his resignation, but the
In case of retirement, the employee shall be entitled to receive such retirement benefits as he
reporter said it wasn’t a resignation letter.
may have earned under existing laws and any collective bargaining agreement and other
o The SC held that the reporter resigned through his memorandum.
agreements: Provided, however, That an employee's retirement benefits under any collective
Common sense dictates that if he intended to keep his job he should
bargaining and other agreements shall not be less than those provided therein.
have used tempered language and a less confrontational tone.
In the absence of a retirement plan or agreement providing for retirement benefits of
ARTICLE 301. [286] WHEN EMPLOYMENT NOT DEEMED TERMINATED employees in the establishment, an employee upon reaching the age of sixty (60) years or
The bonafide suspension of the operation of a business or undertaking for a period not more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement
exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not age, who has served at least five (5) years in the said establishment, may retire and shall be
terminate employment. In all such cases, the employer shall reinstate the employee to his entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of
former position without loss of seniority rights if he indicates his desire to resume his work not service, a fraction of at least six (6) months being considered as one whole year.
later than one (1) month from the resumption of operations of his employer or from his relief
from the military or civic duty. Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall
mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent
1. SUSPENSION OF OPERATIONS: “FLOATING STATUS” of not more than five (5) days of service incentive leaves.
• Bona fide suspension of operations for a period not exceeding 6 months or the
fulfillment by the employee of a military or civic duty does not terminate An underground mining employee upon reaching the age of fifty (50) years or more, but not
employment. beyond sixty (60) years which is hereby declared the compulsory retirement age for
• “Floating status” of an employee should only last for a legally prescribed amount of underground mine workers, who has served at least five (5) years as underground mine
time. If it lasts longer than 6 months, he may be considered illegally dismissed from worker, may retire and shall be entitled to all the retirement benefits provided for in this Article.
the service. He would then be entitled to benefits for his separation, and this will Retail, service and agricultural establishments or operations employing not more than ten (10)
apply to the 2 kinds of work suspension, that is, either of the entire business or of a employees or workers are exempted from the coverage of this provision.
specific component thereof.
• Sebugero case (under retrenchment) construed Art. 301 as an instance of Violation of this provision is hereby declared unlawful and subject to the penal provisions
temporary retrenchment or lay off. under Article 288 of this Code.

TITLE II: RETIREMENT FROM SERVICE • Where the employee and employer agree that the benefit of the employee will be
higher than what is stipulated in the CBA, the agreement between them and not
the CBA has been held to be controlling as the “applicable employment contract.”
1. PREVIOUS LAW AND ITS AMENDMENTS • Cessation from work before retirement age is not retirement, thus no retirement
• The old provision was amended because the SC interpreted it as not a source of benefit accrues.
retirement benefit if there was no CBA or voluntary company policy granting the
benefit. 2.3. EMPLOYER’S OPTION
• According to the Llora Motors ruling, the entitlement to retirement benefits accrues • Where the CBA itself gives the option to retire to either the employer or employee,
under (a) law or (b) under CBA or employment contract. There is no obligation the provision is valid. The employer’s act of retiring an employee of retriable age as
imposed upon employers beyond what is established in the law, which provide for defined in the CBA is a valid exercise of the option.
schemes by which benefits accrue under a broader social security system that o The employer does not need to consult the employee before doing so.
provides for a broad range of benefits. o The SoL cannot impose a prior consultation requirement if the CBA does
not impose any.
1.1. AMENDMENTS BY RA 7641 AND RA 8558
• RA 7641 overturned the effects of the Llora Motors ruling, and was passed in 1992 2.4. MINIMUM 5 YEARS SERVICE
and took effect on January 7, 1993. • The implementing rules mention the 5 year minimum service rule relative to optional
• Further amendments in RA 8558 were approved in February 1998 which lowered the retirement but not in reference to mandatory retirement.
retirement age of underground mine workers to 50, thereby amending the SSS law. o A verba legis construction of the law gives the interpretation that the 5
year minimum is only required for optional retirement, not compulsory
1.2. COVERAGE retirement.
• The retirement pay law coers private sector employees who have served at least 5 • Azucena: 5 years service also required for compulsory retirement.
years and reached age 60 (optional retirement) or 65 (compulsory). o Retirement pay is a gesture of recognition and reward for years spent with
• COVERED: full time or part time employees, whether regular or non-regular. the enterprise. It’s a reward for loyalty and long term employees. There’s
• NOT COVERED: Government employees, employees in retail, service, agricultural no sense rewarding long-term service if it’s not a prerequisite for
establishments not employing more than 10 persons. compulsory retirees as well.

2. RETIREMENT DEFINED 3. IS COMPULSORY RETUREMENT BELOW AGE 60 ALLOWABLE?

• A withdrawal from office, public station, business, occupation, or public duty. It is • Pantranco North Express v. NLRC (1996) dealt with a case of a CBA provision which
the result of a bilateral act of the parties, a voluntary agreement between the allowed compulsory retirement after 25 years of service, even before reaching 60
employer and the employee whereby the employee after reaching a certain age, years.
agrees and/or consents to sever his employment with the employer. • The provision permits employers and employees to fix the applicable retirement age
• Pension and retirement plans in private employment have been adopted to secure at below 60 years. A provision in the CBA for compulsory retirement after 25 years of
loyalty and efficiency, increase continuity of service and decrease labor turnover by service is legal and enforceable so long as the parties agree to be governed by the
giving employees a sense of security for their twilight years when their earning CBA.
capacity will be inevitably reduced. • Similarly valid is a non-contributory retirement plan under which the employer may
• Employers and employees are free to stipulate on retirement benefits provided it retire an employee, regardless of age, after 20 years of service. The retirement plan,
does not fall below statutory minimums. made known to employees and accepted by them, forms part of the employment
contract.
2.1. CONDITIONS FOR ENTITLEMENT TO RETIREMENT, NOT CONTINUING • A stipulation in the CBA that a pilot is to retire after reaching 20,000 flying hours even
• Retirement ends employment, thus the employer cannot demand continuing before 60 years is also valid.
service from the retiree as a condition to the receipt and enjoyment of the • Compulsorily retiring an employee pursuant to the CBA before the age of 60 is NOT
retirement benefit. ULP even if the employee is an active union officer.

2.2. TWO KINDS OF RETIREMENT: EMPLOYEE’S OPTION 3.1. EMPLOYEE’S ASSENT TO RETIREMENT PLAN
• Compulsory • Before the employee may be compulsorily retired by the employer, the employer
o Takes place at age 65 must prove the employee freely assented to the plan.
• Optional
o Determined by the CBA, employment contract, or employer’s retirement Jaculbe v. Siliman University (2007) Jaculbe v. Siliman University (2007)
plan
Facts: Jaculbe was 57 years old. She had worked for 35 years. Under the retirement plan, an
• Absent any provision on optional retirement in the CBA, contract, or retirement plan,
employee is authomatically retired upon reaching age 65 or after 35 years of service. May she
an employee may optionally retire upon reaching 60 years of ae or more, but not
be compelled to retire?
beyond 65, provided he has served at least 5 years in the concerned establishment.
o The prerogative to exercise optional retirement is lodged in the employee.
Held: Yes, provided the employer proves she freely assented to the retirement plan and its
o However, where an employee complained of being compulsorily retired
provision on retirement age/term. However, she never gave free assent to the plan and was
before he turned 65, his acceptance of the retirement benefits and other
merely compelled to make contributions to the plan under pain of being forced to resign or
benefits is deemed as the employee having opted to retire.
be fired. She still was 8 years away from compulsory retirement and could still serve at her post
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 175

as evidenced by the board of trustees seriously considering rehiring her after they retired her. 6. RETIREMENT BENEFITS ASIDE FROM SEPARATION PAY; DISTINCTION

Employee’s assent may be evinced by silence such as when the new retirement plan is made University of the East v. University of the East Faculty Assoc. (1987)
by the management, registered with the BIR, and subsequently incorporated into the CBA for Facts: UE said there is only one mode of termination of employment with one and the same
the rank and file union with no comments. employer and set of employees. Faculty members of phased out units cannot be
simultaneously considered retired and severed from the service. To give both benefits would
amount to double enrichment. The issue was whether the separated teachers were entitled to
4. NEW RETIREMENT LAW GIVEN RETROACTIVE EFFECT
both benefits.
Oro Enterprises v. NLRC (1994)
Doctrine: The court ruled that employees can claim both retirement and separation pay
Facts: Oro says that RA 7641 can only apply prospectively and not retroactively to an simultaneously. Separation pay arising from forced termination is different from the retirement
employee who retired 3 years before the law went into effect. benefit given as a contractual right after many years of service, but they do not exclude each
other.
Doctrine: RA 7641 is social legislation, and there is little doubt about the fact that the law can
apply to labor contracts still existing at the time the statute took effect and its benefits can be
reckoned not only from the date of its enactment but retroactively to the time the contracts • Separation pay is required in the cases in [298] and [299] of the Labor Code which
started. include retrenchment. It has been held to be a statutory right designed to provide
the employee with the wherewithal during the period he is looking for other
However, the statute cannot be applied retroactively here since the employee already employment.
voluntarily resigned and the case was just pending with the labor arbiter when the law was • Retirement benefits where not mandated by law, may be granted by agreement of
enacted, and the law itself provides the minimum age to be 60 years, which the employee the employees and their employer or as a voluntary act on the part of the
did not yet reach employer. It is meant to be a reward for the employee to help him enjoy his twilight
years after all the years he served the enterprise.
4.1. CONDITIONS FOR RETROACTIVE APPLICATION 6.1. COMPANY POLICY OR CBA MAY MAKE SEPARATION PAY AND RETIREMENT BENEFITS
MUTUALLY EXCLUSIVE
Conditions for retroactive application of retirement benefit laws • In the Otis Company case, the Court examined the CBA which contained provisions
(1) The claimant for retirement benefits was still am employee when the statute took making the separation pay and retirement benefits mutually exclusive. It held that if
effect; the company wished to make it so, the provision should have been clearly included
(2) The claimant was in compliance with the requirements for eligibility under the in the CBA to avoid ambiguity.
statute for such retirement benefits. • The employer cannot avoid paying the other benefit where he did not clearly
express in the contract or CBA that the employee by accepting one is disqualified
5. AMOUNT OF RETIREMENT PAY from taking the other benefit.
• ½ month pay per year of service
• Expanded to include
Salomon et al. v. Association of International Shipping Lines Inc. (2005)
o salary for 15 days
Facts: The employees contend that they are entitled to retirement benefits under the CBA
o 1/12 of 13th month pay
which does not exclude them from claiming both retirement benefits and separation pay. AISI
o Cash value of service incentive leave
says they are not entitled to retirement benefits because they were dismissed for cause, and
§ ––> Totals 22.5 days
their CBA excludes those dismissed for cause from entitlement to retirement benefits. The
• Multiplied by the number of years of service
employees also signed quitclaims.
o A fraction of 6 months is considered 1 year.
• Retirement pay package can be improved upon by voluntary company policy,
Doctrine: The employees were properly excluded. The CBA expressly stated that when the
employment contract, or CBA.
employee is dismissed for cause, they are entitled to only separation pay or optional
• Covered workers paid by results or without fixed monthly salary, the basis for their
retirement pay if there was service for 15 years. Absent any indication that the quitclaims
salary for 15 days will be their average daily salary
were coerced, the CBA must be followed.
o Total salary or earnings in the last 12 months from the date of retirement,
divided by the number of actual working days in the period.
• Retirement benefit under Art. 302 is separate from the benefit under the social • The Salomon case in a footnote tells CBA drafters to be precise in their language to
security law. prevent divergent interpretations and disharmonious litigation.
• Upon optional or compulsory retirement, the employee is also entitled to 13th month
pay for that calendar year and the cash equivalent of accrued leave benefits if 6.2. GRATIUTY PAY VS. RETIREMENT BENEFIT
demandable. • Gratuity pay is separate and distinct from retirement benefit. It is paid purely out of
generosity. It is paid for past services or favor rendered purely out of the generosity
of the grantor or giver. It is not intended to pay a worker for actual service or
performance. It’s a reward to employees who rendered satisfactory service to the
company.

• Retirement benefits on the other hand are intended to help the employee enjoy his 8. EXTENSION OF SERVICE OF RETIREE
remaining years of life, releasing him from the burden of worrying about his finances, • Upon reaching compulsory retirement age, the employee’s employment in public
and are a form of reward for loyalty to the employer. or private service is deemed terminated. The matter of extension of service is
addressed to the sound discretion of the employer, who is the best judge as to the
7. UNJUSTIFIED DENIAL OF RETIREMENT BENEFIT grounds warranting a grant or denial of extension of service of an employee or
official.
E. Razon Jr. v. NLRC (1990) 9. FINANCIAL ASSISTANCE FOR AN UNCOVERED RETIREE
Facts: Razon claims that management has discretion to approve or disapprove an • Financial assistance based on “compassionate justice” was granted to an
employee’s claim for retirement benefit under the retirement plan which states that “any employee who was not dismissed but who had to retire without coverage of the
official and employee who is 65 years old and upon discretion of the management, shall be company’s retirement plan. A Php 200,000 grant was not considered arbitrary or
qualified to compulsory retirement with benefits as provided in the plan.” Since the employee, excessive considering the circumstances (24 years of service, no blemish in the
who had worked for 20 years for Razon, was found to be guilty of breach of trust since he lost record).
vital books of account, Razon claims it had ground to terminate the employee without 10. IS IT LEGAL TO RETIRE UNION MEMBERS, THEN REHIRE THEM WITH LOWER PAY?
retirement benefits. • What must be considered: is it a matter of survival? Is it a product of free
agreement?
Doctrine: Management discretion may not be exercised arbitrarily or capriciously especially
with regard to implementation of the retirement plan. Insular Hotel Employees Union v. Waterfront Insular Hotel Davao (2010)
Summary: A Davao hotel notified DOLE it would suspend operations for 6 months due to
losses. The union president proposed to the management measures to prevent the hotel’s
The words “upon discretion of management” is not synonymous with absolute or unlimited
closure and keep the union member’s jobs, including the suspension of the CBA for 10 years;
discretion. It cannot be exercised capriciously or arbitrarily. The employee has a vested
payment of retirement benefit to some employees, subject to rehiring at a certain rate;
interest in the retirement fund and its benefit became a part of his employment package. It
discontinuance of fringe benefits; outsourcing some jobs. The management and union signed
constituted a continuing consideration for services rendered. The employer cannot deny the
a MOA and the retained employees signed a reconfirmation of employment containing the
benefit either even if after dismissing the employee he sought employment elsewhere. He
new terms. The SC upheld the MOA. The court held that Art. 100 does not prohibit a union
reached mandatory retirement age and was qualified to retire with benefits. Ironically,
from offering and agreeing to reduce wages and benefits of employees. The diminution was
instead of enjoying the assurance and fruits of his retirement he is forced to seek
decided bilaterally with the union and management, not unilaterally by management, and
reemployment to survive, if Razon had their way. He does not deserve this kind of ending.
had the support of union members. Strictly in this case, under these circumstances, the court
upheld the arrangement.
7.1. SEPARATION DISGUISED AS RETIREMENT

S. Villena v. NLRC (1991) BOOK SEVEN

Facts: Mr. Villena started working with BLTB Co. as a bus conductor when he was 25, and rose TRANSITORY AND FINAL PROVISIONS
up the ranks to traffic operations manager at age 57. He received a letter from the company TITLE I
advising him he was compulsorily retired effective immediately, the reason being the
company had been suffering losses and he had to be let go. He filed a case for illegal
dismissal against BLTB. PENAL PROVISIONS AND LIABILITIES
Doctrine: The “compulsory retirement” of Villena was a dismissal in violation of law, for failure ARTICLE 303. [288] PENALTIES
to follow the legal procedure for retrenchment. It was not shown why Villena, only 57 years old Except as otherwise provided in this Code, or unless the acts complained of hinge on a
with 32 years of service, was singled out. It appears therefore that the compulsory retirement question of interpretation or implementation of ambiguous provisions of an existing collective
was a mere scheme employed by BLTB to terminate his employment without compliance to bargaining agreement, any violation of the provisions of this Code declared to be unlawful or
the due process requirements of law and without regard to his security of tenure. penal in nature shall be punished with a fine of not less than One Thousand Pesos (P1,000.00)
nor more than Ten Thousand Pesos (P10,000.00), or imprisonment of not less than three months
Villena was held to have been illegally dismissed, and entitled to full compensation for the nor more than three years, or both such fine and imprisonment at the discretion of the court.
remaining 3 years of work. Upon reaching age 60 he may be retired and entitled to receive
normal retirement benefits under the retirement plan or policy of the company, or the IRR of In addition to such penalty, any alien found guilty shall be summarily deported upon
the labor code. completion of service of sentence.

TITLE II • In a case, the cause of action was said to accrue when the company, despite the
passing of several years, finally categorically denied a claim for unsent money
PRESCRIPTION OF OFFENSES AND CLAIMS orders in a letter. The period was counted from the time of the categorical denial.
• In another case, it was held that where the employer’s own action prevents the
ARTICLE 305. [290] OFFENSES employees from interposing their claims, it’s the height of injustice to deny the claims
Offenses penalized under this Code and the rules and regulations issued pursuant thereto shall on the ground of prescription.
prescribe in three (3) years.
Rivera v. Unilab (2009)
All unfair labor practice arising from Book V shall be filed with the appropriate agency within Facts: Januaria Rivera worked for Unilab even past her compulsory retirement after 30 years of
one (1) year from accrual of such unfair labor practice; otherwise, they shall be forever service in 1988. In 1992 she made a claim for retirement pay differential for the subsequent
barred. work she undertook, since after she retired, Unilab changed its retirement plan’s terms from 1
month pay to 1.5 months pay for every year of service. In 1996, Unilab denied her claim in a
ARTICLE 306. [291] MONEY CLAIMS letter since the proviso applied prospectively to those not yet retired. In 1996, she filed suit to
All money claims arising from employer-employee relations accruing during the effectivity of recover the differential arguing that the claim already prescribed.
this Code shall be filed within three (3) years from the time the cause of action accrued;
otherwise they shall be forever barred.
Doctrine: The day the action may be brought is the day a claim started as a legal possibility.
All money claims accruing prior to the effectivity of this Code shall be filed with the Here, the only day the claim started as a legal possibility was when Unilab denied her claim
appropriate entities established under this Code within one (1) year from the date of with finality in a letter dated 1996. The prescriptive period is to be counted from then, and not
effectivity, and shall be processed or determined in accordance with the implementing rules from 1992, when the policy changed.
and regulations of the Code; otherwise, they shall be forever barred.
1.3. MONEY CLAIMS BASED ON A FOREIGN LAW
Workmen's compensation claims accruing prior to the effectivity of this Code and during the • Cadalin vs. POEA
period from November 1, 1974 up to December 31, 1974, shall be filed with the appropriate • The courts of the forum will not enforce any foreign claim obnoxious to the forum’s
regional offices of the Department of Labor not later than March 31, 1975; otherwise, they public policy. To enforce the one year prescriptive period under the Amiri Decree
shall forever be barred. The claims shall be processed and adjudicated in accordance with would contravene the public policy in favor of labor.
the law and rules at the time their causes of action accrued. • However since the claims were also filed after 3 years from the accrual of the cause
of action, the court could not grant relief to the employees.
ARTICLE 307. [292] INSTITUTION OF MONEY CLAIMS 1.4. FILING AFTER 3 YEARS – PROMISSORY ESTOPPEL
Money claims specified in the immediately preceding Article shall be filed before the • A promise by the employer, relied upon the employee, may justify the filing of the
appropriate entity independently of the criminal action that may be instituted in the proper complaint beyond 3 years.
courts.
Accessories Specialists v. Alabanza (2008)
Pending the final determination of the merits of money claims filed with the appropriate entity, Facts: Jones worked for 22 years and was requested by the company to resign involuntarily
no civil action arising from the same cause of action shall be filed with any court. This provision due to company losses. He agreed to do so if he was paid for his last 18 months salaries,
shall not apply to employees' compensation cases which shall be processed and determined separation and 13th month pay. He was told, however, that his claims would be settled after
strictly in accordance with the pertinent provisions of this Code. the rank and file were paid. Relying on the promise he did not file a complaint but just made
several demands. He died before the 5th anniversary of his involuntary resignation. His widow
1. PRESCRIPTIVE PERIOD FOR MONEY CLAIMS filed the complaint against the company, but the company said the claim already
• ALL money claims arising from employer-employee relations accruing during prescribed.
effectivity of Labor Code are covered by the 3 year prescriptive period
o Not covered by the civil code, a general law, which provides 10 yrs. Doctrine: A promise by the employer, relied upon the employee, may justify the filing of the
1.1. BACKWAGES AND DAMAGES complaint beyond 3 years. Promissory estoppel may arise from the making of a promise, even
• The 3 year prescriptive period does not apply to money claims arising from illegal without consideration, if it was intended that the promise should be relied upon, and if a
dismissal like backwages and damages. refusal to enforce it would virtually sanction the perpetration of fraud or result in some other
• Civil code prescriptive periods apply here – an action or action for damages upon injustice. It presupposes the existence of a promise on the part of one against whom estoppel
injury to the rights of plaintiff must be instituted within 4 years. is claimed. The promise must be plain, unambiguous, and specific.
1.2. RECKONING OF THE 3 YEAR PRESCRIPTIVE PERIOD; ACCRUAL OF A CAUSE OF
ACTION Elements of promissory estoppel
• The date a cause of action accrues determines the prescriptive period. (1) A promise was reasonably expected to induce action or forbearance;
(2) Such promise did, in fact, induce such action or forbearance;
3 elements of cause of action (3) Party suffered detriment as a result.
(1) Right in favor of plaintiff by whatever law under which it arises or is created;
(2) Obligation on the part of the defendant to respect or not to violate such right;
(3) Act or omission on the part of the defendant to the plaintiff.
ACAMPADO | ACOP | AGUILA | ALONZO | BABELONIA | BALBANERO | BUCU | CAANDOY | CABRERA | CAPATI | CATALAN | CIGARAL | CUERPO | ENCARNACION | ENDALUZ | FERNANDEZ | FRANCISCO | GALANG | GO | GO BIAO | IÑIGO
JAVIER | LEACHON | LIM | MAÑALAC | MIRADOR | MURIA | ONG | PANGILINAN, L | PANGILINAN, J |QUITO | ROMERO | SALAZAR | SALUD | SANTOS, R | SANTOS, K |SARMIENTO | TIAMBENG | UY | YRREVERRE
LABOR LAW II | ATTY. AZUCENA | BLOCK B2020| 178

1.5. MONEY CLAIM THAT ACCRUED BEFORE THE LABOR CODE • Guilt or innocence in a criminal case is not determinative of the existence of a just
• 1 yr. prescriptive period in 2nd paragraph is counted from the date of effectivity of or authorized cause for dismissal.
the labor code. The Labor Code shall take effect 6 months after its promulgation on
May 1, 1974. 4.3. EFFECT OF FILING THEN WITHDRAWING COMPLAINT
• Filing an illegal dismissal complaint interrupts the running of the prescriptive period.
2. AWARD FOR MONETARY BENEFITS MAY EXCEED 3 YEARS However if the complaint is dismissed or voluntarily withdrawn, the dismissal or
• Where there is a finding of illegal dismissal, the money value of Service Incentive voluntary withdrawal is erased. The tolling of the prescriptive period leaves the
Leave is one of the employee’s recoverable benefits. complaining workers in the same position as if no case had been filed at all.
o SIL is clearly demandable after 1 year of service whether continuous or
broken, and is one of the benefits which would have accrued had the 5. LACHES
employee not been illegally dismissed. • Laches is the failure or neglect for an unreasonable or unexplained length of time to
o It would be fair and legal to have its computation be up to the date of do that which by exercising due diligence, could or should have been done earlier.
reinstatement. • “sleeping on one’s right” can defeat an action such as a complaint for alleged
• Benefits should be computed for each year of service to the date of his actual illegal dismissal
reinstatement. o If one has a right to assert, he should assert it in due time. Delay weakens
• To limit awards to 3 years is to unduly restrict entitlement of employee. his action.
• The recoverable SIL cannot date back earlier than Dec. 16, 1975 because the • Laches cannot be taken against the complainant if there is valid reason for the
amendment only took effect to include this benefit on that date. delay in filing the action, for example if the employee had to wait for the decision
on the complaint which was submitted to the grievance machinery.
3. MONEY CLAIMS INCLUDE INCREMENTAL PROCEEDS FROM TUITION FEE INCREASES
• The 3 year prescriptive period for money claims arising from an employer-employee TITLE III TRANSITORY AND FINAL PROVISIONS
relationship fixed by the Labor Code also applies to claims for incremental proceeds
arising from tuition fee increases under PD 451 (law which allows DEPED to review CODAL PROVISIONS ON TRANSITORY AND FINAL PROVISIONS
the increase in tuition fees of private schools).
ARTICLE 308. [293] Application of Law Enacted Prior to this Code. — All actions or claims
• In the Cebu Institute of Technology vs. Ople case (1984) the claims of the faculty
accruing prior to the effectivity of this Code shall be determined in accordance with the laws
union were held to have prescribed since the subject years were 1974-75, while the
in force at the time of their accrual.
complaint was filed only in 1979.
ARTICLE 309. [294] Secretary of Labor to Initiate Integration of Maternity Leave Benefits.—
4. ACTION FOR REINSTATEMENT PRESCRIBES IN 4 YEARS
Within six (6) months after this Code takes effect, the Secretary of Labor shall initiate such
• An action for reinstatement prescribes in 4 years, for injury to the plaintiff’s rights
measures as may be necessary for the integration of maternity leave benefits into the Social
(Civil Code Art. 1146)
Security System, in the case of private employment, and the Government Service Insurance
• One’s employment is a property right and wrongful interference therewith is an
System, in the case of public employment.
actionable wrong. It is within the constitutional guarantee of due process of law.
One cannot be unjustly and arbitrarily deprived of it.
ARTICLE 310. [295] Funding of the Overseas Employment Development Board and National
Seamen's Board.— Referred to in Articles 17 and 20, respectively, of this Code shall initially be
4.1. WHEN DOES THE PERIOD BEGIN
funded out of the unprogrammed fund of the Department of Labor and the National
Manpower and Youth Council.
Baliwag Tranport v. Ople (1989)
Facts: Romeo, a bus driver, hit a train in 1974. His employer sued the railroad company and ARTICLE 311. [296] Termination of the Workmen's Compensation Program. — The Bureau of
Romeo was absolved of contributory negligence, but was suspended by Baliwag. When he Workmen's Compensation, Workmen's Compensation Commission, and Workmen's
asked for reinstatement after renewing his license, Romeo was asked to wait until the criminal Compensation Units in the regional offices of the Department of Labor shall continue to
case was decided. When it was dismissed he again requested for reinstatement but was exercise the functions and the respective jurisdictions over workmen's compensation cases
ignored. He filed a formal demand letter and instituted a complaint against Baliwag in 1980. vested upon them by Act No. 3428, as amended, otherwise known as the Workmen's
The RDO dismissed the complaint on the ground of prescription as it counted from 1974. Compensation Act until March 31, 1976. Likewise, the term of office of incumbent members of
the Workmen's Compensation Commission, including its Chairman and any commissioner
Doctrine: Since the cause of action requires not only a right of plaintiff and duty not to violate deemed retired as of December 31, 1975, as well as the present employees and officials of
the right of the respondent, but also an act or omission by defendant in violation of the the Bureau of Workmen's Compensation, Workmen's Compensation Commission and the
former, there is no COA until the party obligated refuses to comply with the duty. Romeo’s Workmen's Compensation Units shall continue up to that date. Thereafter, said offices shall be
COA only accrued in 1980 when Baliwag specifically denied his demand for reinstatement. considered abolished and all officials and personnel thereof shall be transferred to and
mandatorily absorbed by the Department of Labor, subject to Presidential Decree No. 6,
Letters of Instructions Nos. 14 and 14-A and the Civil Service Law and rules.
4.2. PRESCRIPTIVE PERIOD NOT SUSPENDED BY CRIMINAL CASE
• The filing of criminal case against the employee does not have the effect of Such amount as may be necessary to cover the operational expenses of the Bureau of
suspending or interrupting the prescriptive period for filing of an action for illegal Workmen's Compensation and the Workmen's Compensation Units, including the salaries of
dismissal. incumbent personnel for the period up to March 31, 1976 shall be appropriated from the

unprogrammed funds of the Department of Labor.

ARTICLE 312. [297] Continuation of Insurance Policies and Indemnity Bonds. — All workmen's
compensation insurance policies and indemnity bonds for self-insured employers existing upon
the effectivity of this Code shall remain in force and effect until the expiration dates of such
policies or the lapse of the period of such bonds, as the case may be, but in no case beyond
December 31, 1974. Claims may be filed against the insurance carriers and/or self-insured
employers for causes of action which accrued during the existence of said policies or
authority to self-insure.

ARTICLE 313. [298] Abolition of the Court of Industrial Relations and the National Labor
Relations Commission. — The Court of Industrial Relations and the National Labor Relations
Commission established under Presidential Decree No. 21 are hereby abolished. All
unexpended funds, properties, equipment and records of the Court of Industrial Relations,
and such of its personnel as may be necessary, are hereby transferred to the Commission and
to its regional branches. All unexpended funds, properties and equipment of the National
Labor Relations Commission established under Presidential Decree No. 21 are transferred to
the Bureau of Labor Relations. Personnel not absorbed by or transferred to the Commission
shall enjoy benefits granted under existing laws.

ARTICLE 314. [299] Disposition of Pending Cases. — All cases pending before the Court of
Industrial Relations and the National Labor Relations Commission established under
Presidential Decree No. 21 on the date of effectivity of this Code shall be transferred to and
processed by the corresponding labor relations divisions or the National Labor Relations
Commission created under this Code having cognizance of the same in accordance with the
procedure laid down herein and its implementing rules and regulations. Cases on labor
relations on appeal with the Secretary of Labor or the Office of the President of the Philippines
as of the date of effectivity of this Code shall remain under their respective jurisdictions and
shall be decided in accordance with the rules and regulations in force at the time of appeal.
All workmen's compensation cases pending before the Workmen's Compensation Units in the
regional offices of the Department of Labor and those pending before the Workmen's
Compensation Commission as of March 31, 1975, shall be processed and adjudicated in
accordance with the law, rules and procedure existing prior to the effectivity of the
Employees Compensation and State Insurance Fund.

ARTICLE 315. [300] Personnel Whose Services are Terminated. — Personnel of agencies or any
of their subordinate units whose services are terminated as a result of the implementation of
this Code shall enjoy the rights and protection provided in Sections 5 and 6 of Republic Act
numbered fifty-four hundred and thirty five and such other pertinent laws, rules and
regulations. In any case, no lay-off shall be effected until funds to cover the gratuity and/or
retirement benefits of those laid off are duly certified as available.

ARTICLE 316. [301] Separability Provisions. — If any provision or part of this Code, or the
application thereof to any person or circumstance, is held invalid, the remainder of this code,
or the application of such provision or part to other persons or circumstances, shall not be
affected thereby.

ARTICLE 317. [302] Repealing Clause. — All labor laws not adopted as part of this Code either
directly or by reference are hereby repealed. All provisions of existing laws, orders, decrees,
rules and regulations inconsistent herewith are likewise repealed.

Done in the City of Manila, this 1st day of May in the year of our Lord, nineteen hundred and
seventy-four.

Labor Relations Policy & Definitions
100% (3)
Labor Relations Policy & Definitions
52 pages
Labor Relations Azucena
No ratings yet
Labor Relations Azucena
53 pages
Labor Relations Book 5
100% (1)
Labor Relations Book 5
36 pages
Labor Law Essentials for Professionals
No ratings yet
Labor Law Essentials for Professionals
407 pages
Primer On Strike, Picketing and Lockout
No ratings yet
Primer On Strike, Picketing and Lockout
21 pages
Labor Relations Reviewer - Atty. Ungos
100% (7)
Labor Relations Reviewer - Atty. Ungos
138 pages
PIL Review Notes
No ratings yet
PIL Review Notes
31 pages
Labor Relations (Azucena Vol. II) Finals
91% (11)
Labor Relations (Azucena Vol. II) Finals
52 pages
Labor Review Week 3 and Week 4 Full Text Cases PDF
No ratings yet
Labor Review Week 3 and Week 4 Full Text Cases PDF
629 pages
Labor Relations Case Digest Part I
No ratings yet
Labor Relations Case Digest Part I
8 pages
Labor Relations Notes
100% (2)
Labor Relations Notes
207 pages
Labor Law Definitions & NLRC Jurisdiction
100% (2)
Labor Law Definitions & NLRC Jurisdiction
29 pages
Labor Standards by Ungos
No ratings yet
Labor Standards by Ungos
18 pages
Course Syllabus (Labor Relations Law)
No ratings yet
Course Syllabus (Labor Relations Law)
10 pages
Labor Relations Reviewer by Buddy Poquiz
No ratings yet
Labor Relations Reviewer by Buddy Poquiz
18 pages
De Castro-Labor Law From Atty. R. Sarmiento
No ratings yet
De Castro-Labor Law From Atty. R. Sarmiento
10 pages
Golden Notes 2019 Labor Law and Social Legislationpdf PDF Free
No ratings yet
Golden Notes 2019 Labor Law and Social Legislationpdf PDF Free
326 pages
Labor Law 1 Course Syllabus and Cases - DAA - 09062021
No ratings yet
Labor Law 1 Course Syllabus and Cases - DAA - 09062021
20 pages
Labor Law Mem Aid
No ratings yet
Labor Law Mem Aid
100 pages
UST GN 2011 - Labor Law Proper
100% (8)
UST GN 2011 - Labor Law Proper
191 pages
Key Notes On LABOR Standards and Related Labor Cases
No ratings yet
Key Notes On LABOR Standards and Related Labor Cases
36 pages
Chapter Ii Definitions Art. 212. Definitions.: Labor Relations
No ratings yet
Chapter Ii Definitions Art. 212. Definitions.: Labor Relations
7 pages
2012 Bar Exam Labor Law Notes
No ratings yet
2012 Bar Exam Labor Law Notes
20 pages
Finals Reviewer - Labor Standards
100% (2)
Finals Reviewer - Labor Standards
36 pages
Labor Code - January 2010
No ratings yet
Labor Code - January 2010
79 pages
Labrel Based On Azucena
No ratings yet
Labrel Based On Azucena
145 pages
Labor Relations Guide
No ratings yet
Labor Relations Guide
52 pages
Azucena Labrel Summary
No ratings yet
Azucena Labrel Summary
52 pages
Labor Relations Azucena Vol II PDF
100% (1)
Labor Relations Azucena Vol II PDF
164 pages
Book Five Labor Relations Title I Policy and Definitions Policy Art. 211. Declaration of Policy
No ratings yet
Book Five Labor Relations Title I Policy and Definitions Policy Art. 211. Declaration of Policy
3 pages
Labor Relations Azucena Vol
No ratings yet
Labor Relations Azucena Vol
53 pages
Labor Relations
100% (1)
Labor Relations
122 pages
Labor Relations Guide
No ratings yet
Labor Relations Guide
122 pages
Viii. Labor Relations
No ratings yet
Viii. Labor Relations
11 pages
Labor Relations Notes
100% (2)
Labor Relations Notes
52 pages
Labor Relations Azucena Vol II PDF
100% (5)
Labor Relations Azucena Vol II PDF
52 pages
Labor Relations Azucena Vol II
No ratings yet
Labor Relations Azucena Vol II
52 pages
Labor Relations Azucena Vol II
100% (1)
Labor Relations Azucena Vol II
52 pages
Book Five Labor Relations Title I Policy and Definitions Chapter I POLICY Art. 211. Declaration of Policy
No ratings yet
Book Five Labor Relations Title I Policy and Definitions Chapter I POLICY Art. 211. Declaration of Policy
3 pages
Labor Relations Notes
No ratings yet
Labor Relations Notes
8 pages
General Principles Labor Relations
No ratings yet
General Principles Labor Relations
4 pages
Labor II Trans Prelims 2
No ratings yet
Labor II Trans Prelims 2
198 pages
Labor Relations: Self-Organization Representation Collective Bargaining ULP and Strike
No ratings yet
Labor Relations: Self-Organization Representation Collective Bargaining ULP and Strike
180 pages
C2017 Labor Midterms Reviewer FOR PRINTING PDF
No ratings yet
C2017 Labor Midterms Reviewer FOR PRINTING PDF
60 pages
2012 Bar Reviewer in Labor Law
No ratings yet
2012 Bar Reviewer in Labor Law
106 pages
Labor Relation Management1
No ratings yet
Labor Relation Management1
54 pages
Labor II Midterm Notes
No ratings yet
Labor II Midterm Notes
10 pages
Labor Relations Policy Guide
No ratings yet
Labor Relations Policy Guide
31 pages
Labor Relations
100% (1)
Labor Relations
180 pages
HRM Chap 10
No ratings yet
HRM Chap 10
7 pages
Chapter 13 Labor and Management
No ratings yet
Chapter 13 Labor and Management
14 pages
Labor Final Draft New
No ratings yet
Labor Final Draft New
22 pages
Labor Relations
No ratings yet
Labor Relations
18 pages
Labor Law: 1. Constitutional Provisions
No ratings yet
Labor Law: 1. Constitutional Provisions
76 pages
Labor Relations Part I - Basic Concepts
No ratings yet
Labor Relations Part I - Basic Concepts
10 pages
Labor Relations Reviewer 2016 (San Beda Memory Aid)
92% (12)
Labor Relations Reviewer 2016 (San Beda Memory Aid)
41 pages
Docit - Tips - Labor-Relations-Reviewer-2016-San-Beda-Memory-Aid - 2 PDF
No ratings yet
Docit - Tips - Labor-Relations-Reviewer-2016-San-Beda-Memory-Aid - 2 PDF
41 pages
Labor Relations Reviewer 2016 San Beda Memory Aid PDF
100% (2)
Labor Relations Reviewer 2016 San Beda Memory Aid PDF
41 pages
Labor Relations and Wage Policies
No ratings yet
Labor Relations and Wage Policies
34 pages
Labor Law Bar Reviewer Atty Manuel
100% (1)
Labor Law Bar Reviewer Atty Manuel
118 pages
Articles of Incorporation and by Laws Non Stock Corporation
100% (10)
Articles of Incorporation and by Laws Non Stock Corporation
10 pages
Notes On The Revised Corporation Code
100% (11)
Notes On The Revised Corporation Code
34 pages
Obligations and Contracts Hector de Leon
80% (64)
Obligations and Contracts Hector de Leon
905 pages
The Corporation Code Reviewer PDF
89% (45)
The Corporation Code Reviewer PDF
28 pages
P30,000 Promissory Note Terms
92% (26)
P30,000 Promissory Note Terms
2 pages
Joint Affidavit of Two Disinterested Persons, One and The Same Person
90% (83)
Joint Affidavit of Two Disinterested Persons, One and The Same Person
1 page
Legal Ethics Golden Notes
86% (14)
Legal Ethics Golden Notes
203 pages
Civil Law Bar Exam Questions
98% (50)
Civil Law Bar Exam Questions
391 pages
DC 15 Series of 2024
100% (8)
DC 15 Series of 2024
14 pages
Taxation Law Golden Notes
100% (11)
Taxation Law Golden Notes
456 pages
Promissory Note - Template
85% (20)
Promissory Note - Template
2 pages
Special Power of Attorney - To Process Documents
76% (50)
Special Power of Attorney - To Process Documents
2 pages
Suggested Answer in Remedial Law Bar 2023
82% (11)
Suggested Answer in Remedial Law Bar 2023
43 pages
BOARD RESOLUTION Sample
89% (35)
BOARD RESOLUTION Sample
1 page
2023 UP BOC Labor Law Reviewer
90% (10)
2023 UP BOC Labor Law Reviewer
176 pages
Rules of Court CODAL PDF
100% (31)
Rules of Court CODAL PDF
196 pages
Civil Law Golden Notes
88% (32)
Civil Law Golden Notes
846 pages
Labor Standards Reviewer
94% (31)
Labor Standards Reviewer
36 pages
5 2024 Golden Notes Labor Law and Social Legislations
100% (3)
5 2024 Golden Notes Labor Law and Social Legislations
479 pages
Persons and Family Relations Reviewer
92% (24)
Persons and Family Relations Reviewer
64 pages
Nachura Notes Local Governments
100% (18)
Nachura Notes Local Governments
34 pages
Criminal Law Principles & Repeal Effects
89% (18)
Criminal Law Principles & Repeal Effects
94 pages
EH403 Revised Corporation Code Midterms Reviewer
96% (24)
EH403 Revised Corporation Code Midterms Reviewer
88 pages
Labor Laws & Social Legislation Guide
100% (1)
Labor Laws & Social Legislation Guide
15 pages
Corporation Law Complete
92% (12)
Corporation Law Complete
130 pages
Criminal Law - 2022 Ust Golden Notes (Confidential)
100% (26)
Criminal Law - 2022 Ust Golden Notes (Confidential)
525 pages
DIVINA Corporation Law
100% (10)
DIVINA Corporation Law
349 pages
Sample Affidavit of Self-Adjudication by Sole Heir
82% (28)
Sample Affidavit of Self-Adjudication by Sole Heir
1 page
Authorization Letter
88% (72)
Authorization Letter
2 pages
Complaint For Forcible Entry
100% (8)
Complaint For Forcible Entry
6 pages
Of Becoming Successful
No ratings yet
Of Becoming Successful
3 pages
Unit-6 BS-XII RK Singla
No ratings yet
Unit-6 BS-XII RK Singla
33 pages
Employee Benefits Insights 2024
No ratings yet
Employee Benefits Insights 2024
49 pages
ETPL129 Salary NOVEMBER2024
No ratings yet
ETPL129 Salary NOVEMBER2024
1 page
Types of Management Styles
No ratings yet
Types of Management Styles
2 pages
Staffing Shortages
No ratings yet
Staffing Shortages
4 pages
Piedmont Offer Letter (09.2019)
No ratings yet
Piedmont Offer Letter (09.2019)
3 pages
Test Human Resource Class
No ratings yet
Test Human Resource Class
28 pages
The Influence of Work Environment On Employee Engagement of Local Government Unit in Municipality of Candelaria Zambales
No ratings yet
The Influence of Work Environment On Employee Engagement of Local Government Unit in Municipality of Candelaria Zambales
15 pages
BBK Webinar Prevailing Wages
No ratings yet
BBK Webinar Prevailing Wages
22 pages
Serrano v. Gallant Maritime (G.R. No. 167614, March 24, 2009)
No ratings yet
Serrano v. Gallant Maritime (G.R. No. 167614, March 24, 2009)
14 pages
Switching Careers
No ratings yet
Switching Careers
319 pages
Impacts of Layoff
No ratings yet
Impacts of Layoff
16 pages
Leave Application
No ratings yet
Leave Application
1 page
Excel Salary Slip Format Download
No ratings yet
Excel Salary Slip Format Download
2 pages
HR Policies
No ratings yet
HR Policies
36 pages
Combined PPUG Advert - Breckridge - 2025
No ratings yet
Combined PPUG Advert - Breckridge - 2025
3 pages
Project Proposal Team Building
No ratings yet
Project Proposal Team Building
13 pages
OECD Women Leadership 2016 Report
No ratings yet
OECD Women Leadership 2016 Report
36 pages
Military Leadership in Business
No ratings yet
Military Leadership in Business
4 pages
Compensation Administration 2022
No ratings yet
Compensation Administration 2022
52 pages
Superannuation Form
No ratings yet
Superannuation Form
3 pages
Hypothesis Testing
No ratings yet
Hypothesis Testing
3 pages
This Study Resource Was: The Royal Bank of Scotland Group, The Human Capital Strategy
No ratings yet
This Study Resource Was: The Royal Bank of Scotland Group, The Human Capital Strategy
4 pages
Legal Notice To Employer Demanding Dues Payable To The Employee Including Gratuity
No ratings yet
Legal Notice To Employer Demanding Dues Payable To The Employee Including Gratuity
4 pages
Labour QN 2
No ratings yet
Labour QN 2
5 pages
03-F10 Planned Job Observation
100% (1)
03-F10 Planned Job Observation
1 page
Dental Practitioner Application Guide
No ratings yet
Dental Practitioner Application Guide
3 pages
2023 Global Skills Report India and Asia Pacific 1692165380
No ratings yet
2023 Global Skills Report India and Asia Pacific 1692165380
5 pages
Bhavesh Yadav
No ratings yet
Bhavesh Yadav
1 page

Labor Law

Uploaded by

Labor Law

Uploaded by

LABOR LAW II | ATTY.

AZUCENA | BLOCK B2020| 1

LABOR LAW II BOOK REVIEWER

j. "Bargaining representative" means a legitimate labor organization or any officer or

Q: Is college dean a corporate officer of the University?

8.2 Double Indemnity: 8.7 Employer’s Complaint for damages

1 N.B. Take note of the rules in Section 8 still!

6. DUE PROCESS INCLUDES IMPARTIALITY OF THE APPEAL BODY

1.6 Periods generally mandatory

6.8 Bond Accepted Conditionally 9. PROCEEDINGS BEFORE THE COMMISSION

14.4 Petition for Certiorari; Not Barred by Finality of Judgment

Alternative remedies of a third-party claimaint:

5. REGISTRATION REQUIREMENTS 5.5. CHARTERED LOCAL (CN-CD)

5.5c Submission of Confirming Documents 5.5j Withdrawal by Members

3.1 Exception to Exception: Association, not Union

Victoriano v. Elizalde (Upheld the Constitutionality of R.A. No. 3350) Ariza v. CA

1.2 No Signing Bonus 3. CERTIFICATION ELECTION IN GOVERNMENT CORPORATION

7.4 FOURTH SWING 7.4.c Who are Confidential Employees

• When it is resorted to by a combination of employers to prevent employment of Constructive Discharge

(g) To violate the duty to bargain collectively as prescribed by this Code;

Abaria v NLRC CONVERSION TO INDEPENDENT FRANCHISE OR OPERATION

COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT Philippine Airlines v. NLRC

Three methods to determine the bargaining union 3.1 FACT FINDING

1.3 APPEAL FROM VA TO CA

Sukhotai Cuisine and Restaurarnt v. CA Violation of a Valid Order

The Conversion Doctrine

14.7 Certification to NLRC University of San Agustin v CA

I. PICKETING Phimco Industries, Inc. v. Phimco Industries Labor Association

1.5 Picketing of Neutral Parties or “Innocent Bystanders” 1.9 Untruthful Picketing

Bascon et al. vs. CA, et al., 2.6a Rallies as Illegal Strike

2.2 Suspension Instead of Dismissal 2.5 Union Members

PAL vs. Brillantes and PALEA Chua vs. NLRC

Ferrer vs. Court of Industrial Relations 6. FORFEITURE OF REINSTATEMENT

11. REITERATION: NO BACKWAGES; BASCON, AN ERROR • As to abandonment:

Capule, et al. v NLRC ● Outsourcing of Union Member’s Jobs: Is this Allowed?

5.4d Overseas seafarers are contractuals Manila Hotel Corp. v. NLRC

month undesignated by name is understood to consist of 30 days. Hence, 30 x 6 =

FIXED-TERM EMPLOYMENT PROBATION 3.9 Is it proper to reinstate a probationary employee?

Basic Rights of the Employer: JUST CAUSES OF DISMISSAL

• May an employee disobey inconvenient transfer? • Summary: Inconvenient Transfer

Theft of Company Property Pecuniary Gain

Must the Analogous Causes be Anticipated in Company Regulations? Ollendorf v. Abrahamson

2. INTRODUCTION OF LABOR-SAVING DEVICES SPI Technologies v. Mapua

Caltex v. NLRC overtime pay.

5.7a Expiration of Lease 6.1b Simulated Sale: Illegal Termination

PART 5. c. A written notice of termination served on the employee indicating

Negros Slashers, Inc. v Alvin Teng

3. Observance of due process: Substantive and Procedural

Procedures Additional Factors as ruled in Deoferio vs. Intel Technology

Philippine Tobacco Flue-Curing v. NLRC 4.2 Payroll Reinstatement as an Option

Wenphil v. Abing 4.6 Exception to Immediate Reinstatement

Intertrod Maritime v NLRC 5. NOT CONSTRUCTIVE DISMISSAL: VALID TRANSFER

Travelaire & Tours Corp v NLRC & N. Medelyn

2. RETIREMENT DEFINED 3. IS COMPULSORY RETUREMENT BELOW AGE 60 ALLOWABLE?

S. Villena v. NLRC (1991) BOOK SEVEN

unprogrammed funds of the Department of Labor.

You might also like