CRALaw - Labor Law Pre Week (2019)

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.
UPDATED
LAST-MINUTE
PRE-WEEK NOTES
FOR THE
2019 BAR EXAM IN LABOR LAW
Based on the topics prescribed

in the 2019 SYLLABUS
Prof. Joselito Guianan Chan

Professor of Law, Bar Reviewer, Book Author & Legal Practitioner
Chan Robles Online Bar Review

www.chanroblesbar.com
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MAJOR TOPIC 1
GENERAL PROVISIONS
A.
BASIC POLICY ON LABOR
1. Under Article 3 of Labor Code:
a) Full protection to labor;

b) Promotion of full employment;
c) Promotion of equal work opportunities regardless of sex, race or creed;
d) Regulation of the relations between workers and employers;
e) Protection of the rights of workers to:
1. self-organization;
2. collective bargaining;
3. security of tenure; and
4. just and humane conditions of work.
2. Under Article XIII, Section 3 of the Constitution:
a) Full protection to labor, local and overseas, organized and unorganized;

b) Promotion of full employment;
c) Promotion of equality of employment opportunities for all;
d) Guarantee of the rights of all workers to:
1. self-organization;
2. collective bargaining and negotiations;
3. peaceful concerted activities, including the right to strike in accordance with law;
4. security of tenure;
5. humane conditions of work;
6. a living wage;
7. participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
e) Promotion of the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
f) Regulation of the relations between workers and employers, recognizing the right of labor to its just share
in the fruits of production and the right of enterprises to reasonable returns to investments, and to
expansion and growth.
B.
CONSTRUCTION IN FAVOR OF LABOR
1. Under Article 1702 of the Civil Code.
“Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.”
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2. Article 4 of the Labor Code.
“Article 4. Construction in Favor of Labor. – All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.”
3. Follow this rule in interpreting and construing:
a. DOUBTS OR AMBIGUITIES IN LABOR CONTRACTS such as employment contract and collective

bargaining agreement (CBA);
b. DOUBTS OR AMBIGUITIES IN EVIDENCE in labor cases.
.
C.
CONSTITUTIONAL AND CIVIL CODE PROVISIONS
RELATING TO LABOR LAW
1. Selected Constitutional Provisions.
 Under Article II (Declaration of Principles and State Policies):
a. “Section 18. The State affirms labor as a primary social economic force. It shall protect the rights
of workers and promote their welfare.”
This provision is invoked by the Supreme Court when it affirms the interest, rights and welfare of labor.
Example: When the SC nullifies a patently illegal provision in an employment contract or when it
invalidates a Quitclaim executed by a worker because of unconscionably low consideration.
 Under Article III (Bill of Rights):
a. Freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble
and petition the government for redress of grievances.
THIS FREEDOM GUARANTEED UNDER ARTICLE III, SECTION 4 OF THE CONSTITUTION

IS RELEVANT ONLY IN CONNECTION WITH PICKETING AND NOT IN RELATION TO
STRIKE WHICH HAS A DIFFERENT CONSTITUTIONAL BASIS (ARTICLE XIII, SECTION 3).
b. Right of public and private sector employees to form unions, associations, or societies for
purposes not contrary to law shall not be abridged.
THIS IS KNOWN AS “FREEDOM OF ASSOCIATION.” THIS PROVISION IS THE BASIS FOR

THE EMPLOYEES’ RIGHT TO SELF-ORGANIZATION.
c. Non-impairment of obligations of contracts.
THE CONCEPT OF THIS RIGHT IN POLITICAL LAW IS SIMILAR IN LABOR LAW.
d. Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.
THIS CAN BE INVOKED IN LABOR CASES AT ALL LEVELS, to wit:
(1) Before quasi-judicial or administrative bodies, such as:

a) Labor Arbiters, NLRC;
b) Med-Arbiters/BLR;
c) DOLE Regional Directors/DOLE Secretary; and
d) Voluntary Arbitrators.
(2) Before judicial bodies, such as:

a) Court of Appeals; and
b) Supreme Court,
when labor cases reach these higher level courts.
e. Prohibition against involuntary servitude.
THIS PRINCIPLE IS RELEVANT ONLY IN THREE (3) SITUATIONS: NAMELY: (1)

RESIGNATION AND (2) RETURN-TO-WORK ORDER IN NATIONAL INTEREST CASES. THIS
MEANS THAT:
(1) AN EMPLOYEE HAS THE RIGHT TO RESIGN SINCE HE CANNOT BE FORCED TO

WORK AGAINST HIS WILL;
(2) THE MOMENT AN ASSUMPTION OF JURISDICTION ORDER (AJO) IS ISSUED BY THE
DOLE SECRETARY IN NATIONAL INTEREST CASES, A STRIKER CAN BE ORDERED
TO RETURN TO WORK EVEN AGAINST HIS WILL IN CASE AT THE TIME OF SUCH
ISSUANCE OF THE AJO, THERE WAS ALREADY AN ON-GOING STRIKE; and
(3) WHEN EMPLOYEES ARE CALLED UPON TO RENDER MILITARY OR CIVIC DUTY.
 Under Article XIII (Social Justice and Human Rights):

Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall
also participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
2. Selected Civil Code Provisions.

 Article 1700 of the Civil Code:
“Art. 1700. The relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good. Therefore, such
contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and similar subjects.”
In Davao Integrated Port Stevedoring Services v. Abarquez, March 19, 1993. It was held that a CBA, as a
labor contract within the contemplation of Article 1700 of the Civil Code, is not merely contractual in nature but
impressed with public interest, thus, it must yield to the common good.
Similarly, an employment contract or any other labor contract is treated as not merely contractual in nature
similar to an ordinary contract like a lease contract because it is impressed with public interest. Consequently, all labor
laws are deemed read or incorporated therein even if not so expressly provided or stipulated in its provisions.
 Article 1702 of the Civil Code. (See discussion above of Article 1702 of the Civil Code, in relation to
Article 4 of the Labor Code regarding the rule on interpretation and construction provisions of law and labor
contracts).
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SYLLABUS
MAJOR TOPIC 2
PRE-EMPLOYMENT
A.
ILLEGAL RECRUITMENT
 Who may commit illegal recruitment?

Illegal recruitment may be committed by any of the following
(1) By Non-Licensee or Non-holder of authority; or
(2) By ANY PERSON, regardless of whether a non-licensee, non-holder, licensee or holder of
authority,
 What are illegal recruitment acts that can be committed by No. 1 above (NON-LICENSEE or NON-
HOLDER OF AUTHORITY)?
When what is committed by such NON-LICENSEES or NON-HOLDERS OF AUTHORITY is
any of the acts of recruitment allowed only to be done by licensees or holders of authority such as the act
of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad, whether for
profit or not.
In other words, had they possessed of license or authority, their commission of any of the foregoing
acts could have been valid and not constitutive of illegal recruitment.
NOTE: The non-licensee or non-holder of authority is presumed to be engaged in such recruitment if
he, in any manner, offers or promises for a fee employment abroad to two or more persons.
 What are acts of illegal recruitment when committed by ANY PERSON, whether a NON-LICENSEE,
NON-HOLDER OF AUTHORITY or even by a LICENSEE or HOLDER OF AUTHORITY?
(a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule
of allowable fees prescribed by the DOLE Secretary, or to make a worker pay or acknowledge any
amount greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to recruitment or
employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code, or
for the purpose of documenting hired workers with the POEA, which include the act of reprocessing
workers through a job order that pertains to non-existent work, work different from the actual
overseas work, or work with a different employer whether registered or not with the POEA;
(d) To induce or attempt to induce a worker already employed to quit his employment in order to offer
him another unless the transfer is designed to liberate a worker from oppressive terms and conditions
of employment;
(e) To influence or attempt to influence any person or entity not to employ any worker who has not
applied for employment through his agency or who has formed, joined or supported, or has contacted
or is supported by any union or workers' organization;
(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality
or to the dignity of the Republic of the Philippines;
(g) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as
may be required by the Secretary of Labor and Employment;
(h) To substitute or alter to the prejudice of the worker, employment contracts approved and
verified by the DOLE from the time of actual signing thereof by the parties up to and including the
period of the expiration of the same without the approval of the DOLE;
(i) For an officer or agent of a recruitment or placement agency to become an officer or member of the
Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the
management of travel agency;
(j) To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations, or for any other reasons, other than those authorized under the Labor Code
and its implementing rules and regulations;
(k) Failure to actually deploy a contracted worker without valid reason as determined by the Department
of Labor and Employment;
(l) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.”
PROHIBITED ACTIVITIES
IN RELATION TO ILLEGAL RECRUITMENT
 What are the PROHIBITED ACTIVITIES in connection with recruitment for overseas employment?
Besides illegal recruitment, the law additionally provides that it shall also be unlawful for any person or
entity to commit the following prohibited acts:
(1) Grant a LOAN to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which
will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or
through a guarantor or accommodation party, post-dated checks in relation to the said loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a LOAN
only from specifically designated institutions, entities or persons;
(3) Refuse to condone or renegotiate a LOAN incurred by an overseas Filipino worker after the latter's employment
contract has been prematurely terminated through no fault of his or her own;
(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo
HEALTH EXAMINATIONS only from specifically designated medical clinics, institutions, entities or
persons, except in the case of a seafarer whose medical examination cost is shouldered by the
principal/shipowner;
(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo
TRAINING, SEMINAR, INSTRUCTION OR SCHOOLING of any kind only from specifically designated
institutions, entities or persons, except for recommendatory trainings mandated by principals/shipowners
where the latter shoulder the cost of such trainings;
(6) For a SUSPENDED RECRUITMENT/MANNING AGENCY to engage in any kind of recruitment activity
including the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker or deduct
from his or her salary the payment of the cost of INSURANCE fees, premium or other insurance related
charges, as provided under the compulsory worker's INSURANCE coverage.
LICENSE VS. AUTHORITY
 What is a “license” for overseas recruitment?
“License” refers to the document issued by the DOLE Secretary authorizing a person, partnership or
corporation to operate a private recruitment or manning agency.
 What is an “authority” for overseas employment?
“Authority” refers to the document issued by the DOLE Secretary authorizing the officers, personnel, agents
or representatives of a licensed recruitment or manning agency to conduct recruitment and placement activities in a
place stated in the license or in a specified place.
ELEMENTS OF ILLEGAL RECRUITMENT
 What are the elements of illegal recruitment?

The essential elements of illegal recruitment vary in accordance with the following classifications:
(1) Simple illegal recruitment;
(2) When committed by a syndicate; or
(3) When committed in large scale.
When illegal recruitment is committed under either Nos. 2 or 3 above or both, it is considered an offense
involving economic sabotage.
SIMPLE ILLEGAL RECRUITMENT
 What are the 2 elements of simple illegal recruitment?
(1) The offender has no valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; and
(2) He undertakes either any activity within the meaning of “recruitment and placement” defined under
Article 13(b), (see above enumeration) or any prohibited practices (see above enumeration) under Article
34 of the Labor Code.
 Can a recruiter be a natural or juridical person?
Yes.
 What are some relevant principles on illegal recruitment?
1. Mere impression that a person could deploy workers overseas is sufficient to constitute illegal recruitment. But if
no such impression is given, the accused should not be convicted for illegal recruitment.
2. Mere promise or offer of employment abroad amounts to recruitment.
3. There is no need to show that accused represented himself as a licensed recruiter.
4. Referrals may constitute illegal recruitment.
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5. It is illegal recruitment to induce applicants to part with their money upon false misrepresentations and promises in
assuring them that after they paid the placement fee, jobs abroad were waiting for them and that they would be
deployed soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as required by law is not considered as “recruitment and
placement” as this phrase is contemplated under the law.
8. Actual receipt of fee is not an element of the crime of illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10. Absence of receipt is not essential to hold a person guilty of illegal recruitment.
11. Conviction for illegal recruitment may be made on the strength of the testimonies of the complainants.
12. Absence of documents evidencing the recruitment activities strengthens, not weakens, the case for illegal
recruitment.
13. Only one person recruited is sufficient to convict one for illegal recruitment.
14. Non-prosecution of another suspect is immaterial.
15. Execution of affidavit of desistance affects only the civil liability but has no effect on the criminal liability for
illegal recruitment.
16. Defense of denial cannot prevail over positive identification. Positive identification where categorical and
consistent and not attended by any showing of ill motive on the part of the eyewitnesses on the matter prevails
over alibi and denial. Between the categorical statements of the prosecution witnesses, on the one hand, and bare
denials of the accused, on the other hand, the former must prevail.
ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC SABOTAGE
 When is illegal recruitment considered a crime involving economic sabotage?
1. When committed by a syndicate; or

2. When committed in large scale.
NOTE: THE FIGURE THREE (3) MAKES THE DIFFERENCE, THUS:

 3 OR MORE RECRUITERS REGARDLESS OF NO. OF RECRUITEES = BY A SYNDICATE
 3 OR MORE RECRUITEES REGARDLESS OF NO. OF RECRUITERS = IN LARGE SCALE
 When is illegal recruitment committed by a syndicate?
If it is carried out by a group of three (3) or more persons conspiring or confederating with one another.
 Elements of illegal recruitment by a syndicate.
The essential elements of the crime of illegal recruitment committed by a syndicate are as follows:
1. There are at least three (3) persons who, conspiring and/or confederating with one another, carried out
any unlawful or illegal recruitment and placement activities as defined under Article 13(b) or committed
any prohibited activities under Article 34 of the Labor Code; and
2. Said persons are not licensed or authorized to do so, either locally or overseas.
The law does not require that the syndicate should recruit more than one (1) person in order to constitute the crime of illegal
recruitment by a syndicate. Recruitment of one (1) person would suffice to qualify the illegal recruitment act as having been committed by a
syndicate.
 When is illegal recruitment considered in large scale?
If committed against three (3) or more persons individually or as a group.

 Elements of illegal recruitment in large scale.
The elements of illegal recruitment in large scale, as distinguished from simple illegal recruitment, are as
follows:
1. The accused engages in the recruitment and placement of workers as defined under Article 13(b) or
committed any prohibited activities under Article 34 of the Labor Code; and
2. The accused commits the same against three (3) or more persons, individually or as a group.
 Distinguished from illegal recruitment by a syndicate.
As distinguished from illegal recruitment committed by a syndicate, illegal recruitment in large scale may be
committed by only one (1) person. What is important as qualifying element is that there should be at least three (3)
victims of such illegal recruitment, individually or as a group.
 Recruitment in large scale or by a syndicate is malum prohibitum and not malum in se.
ILLEGAL RECRUITMENT VS. ESTAFA
 Can a person be charged and convicted separately for illegal recruitment and estafa involving one and the
same act of recruitment?
Yes. It is clear that conviction under the Labor Code does not preclude conviction for estafa or other crimes
under other laws.
Some relevant principles:
 Same evidence to prove illegal recruitment may be used to prove estafa.
 Conviction for both illegal recruitment and estafa is not double jeopardy.
NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY

AND FOREIGN EMPLOYER
 What is the nature of the liability between local recruiter and its foreign principal?
The nature of their liability is “solidary” or “joint and several” for any and all claims arising out of the
employment contract of OFWs.
 Is the solidary liability of corporate officers with the recruitment agency “automatic” in character?
No. In order to hold the officers of the agency solidarily liable, it is required that there must be proof of their
culpability therefor. Thus, it was held in the 2013 case of Gagui v. Dejero,1 that while it is true that R.A. 8042 and the
Corporation Code provide for solidary liability, this liability must be so stated in the decision sought to be implemented.
Absent this express statement, a corporate officer may not be impleaded and made to personally answer for the liability
of the corporation.
 What are some relevant principles on the persons liable for illegal recruitment?
1. Employees of a licensed recruitment agency may be held liable for illegal recruitment as principal by direct
participation, together with his employer, if it is shown that he actively and consciously participated in illegal
recruitment.
2. Good faith and merely following orders of superiors are not valid defenses of an employee.
3. A manager of a recruitment/manning agency is not a mere employee. As such, he receives job applications,
interviews applicants and informs them of the agency’s requirement of payment of performance or cash bond
prior to the applicant’s deployment. As the crewing manager, he was at the forefront of the company’s
recruitment activities.
THEORY OF IMPUTED KNOWLEDGE
 What is meant by this theory?
Knowledge of the agent is deemed knowledge of the principal but not the other way around.
The theory of imputed knowledge is a rule that any information material to the transaction, either possessed by
the agent at the time of the transaction or acquired by him before its completion, is deemed to be the knowledge of the
principal, at least insofar as the transaction is concerned, even though the knowledge, in fact, is not communicated to
the principal at all.
Sunace International Management Services, Inc. v. NLRC2 - The High Court here has the opportunity to
discuss the application of the theory of imputed knowledge. The OFW (Divina), a domestic helper in Taiwan, has
extended her 12-month contract, after its expiration, for two (2) more years after which she returned to the Philippines.
It was established by evidence that the extension was without the knowledge of the local recruitment agency, petitioner
Sunace. The Court of Appeals, however, affirmed the Labor Arbiter’s and NLRC’s finding that Sunace knew of and
impliedly consented to the extension of Divina’s 2-year contract. It went on to state that “It is undisputed that [Sunace]
was continually communicating with [Divina’s] foreign employer.” It thus concluded that “[a]s agent of the foreign
principal, ‘petitioner cannot profess ignorance of such extension as obviously, the act of the principal extending
complainant (sic) employment contract necessarily bound it.’”
In finding that the application by the CA of this theory of imputed knowledge was misplaced, the High Court
ruled that this theory ascribes the knowledge of the agent, Sunace, to the principal, employer Xiong, not the other way
around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent, Sunace. There
being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment contract
extension, it cannot be said to be privy thereto. As such, Sunace and its owner cannot be held solidarily liable for any of
Divina’s claims arising from the 2-year employment extension. As the New Civil Code provides: “Contracts take effect
only between the parties, their assigns, and heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision of law.”
TERMINATION OF CONTRACT OF MIGRANT WORKER

WITHOUT JUST OR VALID CAUSE
 Can an OFW acquire regularity of employment?
1 G.R. No. 196036, Oct. 23, 2013.

2 G.R. No. 161757, Jan. 25, 2006.
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No. The prevailing rule is that OFWs are contractual (fixed-term only), not regular, employees. In fact, they
can never attain regularity of employment. The nature of their employment is always fixed-term.
 What are some relevant principles?
1. Indefinite period of employment of OFWs is not valid as it contravenes the explicit provision of the
POEA Rules and Regulations on fixed-period employment.
2. OFWs do not become regular employees by reason of nature of work, that is, that they are made to
perform work that is usually necessary and desirable in the usual business or trade of the employer. The
exigencies of their work necessitate that they be employed on a contractual basis. This notwithstanding the
fact that they have rendered more than twenty (20) years of service.
3. Regular employment does not result from the series of re-hiring of OFWs.
4. The fixed-period employment of OFWs is not discriminatory against them nor does it favor foreign
employers. It is for the mutual interest of both the seafarer and the employer why the employment status must be contractual
only or for a certain period of time.
5. The expiration of the employment contracts of OFWs marks its ending.
 What is the effect of hiring a seafarer for overseas employment but assigning him to local vessel?
As held in OSM Shipping Philippines, Inc. v. NLRC,1 the non-deployment of the ship overseas did not
affect the validity of the perfected employment contract. After all, the decision to use the vessel for coastwise shipping
was made by petitioner only and did not bear the written conformity of private respondent. A contract cannot be
novated by the will of only one party. The claim of petitioner that it processed the contract of private respondent with
the POEA only after he had started working is also without merit. Petitioner cannot use its own misfeasance to defeat
his claim.
 What is the effect of non-deployment of OFW to overseas employment?
Petitioner-seafarer, in Santiago v. CF Sharp Crew Management, Inc.2 was not deployed overseas despite
the signing of a POEA-approved employment contract. One of his contentions is that such failure to deploy was an act
designed to prevent him from attaining the status of a regular employee. The Supreme Court, however, disagreed and
ruled that “seafarers are considered contractual employees and cannot be considered as regular employees under the Labor Code. Their
employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. The
exigencies of their work necessitate that they be employed on a contractual basis.”
 What is the doctrine of processual presumption?
“Presumed-identity approach” or “processual presumption” is an International Law doctrine which dictates that where a
foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as Philippine
law. Thus, under this situation, Philippine labor laws should apply in determining the issues presented in a case.
 Is due process under Philippine law applicable to termination of employment of OFWs?
Yes. In the absence of proof of applicable foreign law, OFWs are entitled to due process in accordance with
Philippine laws.
 Is the Agabon doctrine applicable to OFWs who are dismissed for cause but without due process?
Yes. The Agabon doctrine of awarding indemnity in the form of nominal damages in cases of valid termination
for just or authorized cause but without procedural due process also applies to termination of OFWs.
 Who has the burden of proof to show that the dismissal of the OFW is legal?
Burden of proof devolves on both recruitment agency and its foreign principal.
 Are OFWs entitled to the reliefs under the Labor Code?
No. They are not entitled to such reliefs under Article 279 as reinstatement or separation pay in lieu of
reinstatement or full backwages. REASON: Because their employment is fixed-term in nature. The nature of their claim
therefore is purely monetary, such as the payment of the salary for the unexpired portion of the employment contract in
case their dismissal is declared illegal.
 What are the reliefs to which OFWs are entitled?
They are entitled to the reliefs provided under Section 10 of R.A. No. 8042, as amended, to wit:
(1) All salaries for the unexpired portion of the contract;

(2) Full reimbursement of placement fees and deductions made with interest at 12% per annum.
As pointed out above, all the reliefs available to an illegally dismissed OFW are always monetary in nature.
It must be noted that under the 2009 Serrano doctrine, (Serrano v. Gallant Maritime Services, Inc.,),3 an
illegally dismissed OFW is now entitled to all the salaries for the entire unexpired portion of their employment
1 G.R. No. 138193, March 5, 2003.

2 G.R. No. 162419, July 10, 2007.
3 G.R. No. 167614, March 24, 2009.
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contracts, irrespective of the stipulated term or duration thereof. The underlined phrase in Section 10 below has
been declared unconstitutional in this case:
“In case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled to
the full reimbursement of his placement fee and the deductions made with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.”
However, R.A. No. 10022 (March 8, 2010), which amended R.A. No. 8042 (Migrant Workers and Overseas
Filipinos Act of 1995), has replicated and re-enacted the same unconstitutional provision exactly as above quoted.
The question is: was the unconstitutionality of the above-underlined part of the provision cured by such
replication or re-enactment in the amendatory law?
The 2014 en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles,1 answered this in the
negative. The said provision was thus declared still unconstitutional and null and void despite its replication in R.A.
No. 10022.
 What are some principles in regard to monetary awards to OFWs?
1. Monetary award to OFW is not in the nature of separation pay or backwages but a form of indemnity.
2. Only salaries are to be included in the computation of the amount due for the unexpired portion of the contract.
Overtime, holiday and leave pay and allowances are not included. However, this rule on exclusion of allowance
does not apply in case it is encapsulated in the basic salary clause.
3. Entitlement to overtime pay of OFWs. - As far as entitlement to overtime pay is concerned, the correct
criterion in determining whether or not sailors are entitled to overtime pay is not whether they were on board and
cannot leave ship beyond the regular eight (8) working hours a day, but whether they actually rendered service in
excess of said number of hours. An OFW is not entitled to overtime pay, even if guaranteed, if he failed to present
any evidence to prove that he rendered service in excess of the regular eight (8) working hours a day.
4. In case of unauthorized deductions from OFW’s salary, he shall be entitled to the full reimbursement of the
deductions made with interest at 12% per annum. This is in addition to the full reimbursement of his placement
fee with the same interest of 12% per annum plus his salaries for the unexpired portion of his employment
contract if he is terminated without just, valid or authorized cause as defined by law or contract.
BAN ON DIRECT HIRING
 What is direct hiring?
“Direct Hiring” refers to the process of directly hiring workers by employers for overseas employment as
authorized by the DOLE Secretary and processed by the POEA, including:
1. Those hired by international organizations;

2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure overseas employment opportunity with an employer
without the assistance or participation of any agency.
 Does the POEA Administrator or the DOLE Secretary or DOLE Regional Director have the power to issue
closure order?
Yes. If upon preliminary examination or surveillance, the DOLE Secretary, the POEA Administrator or
DOLE Regional Director is satisfied that such danger or exploitation exists, a written order may be issued for the
closure of the establishment being used for illegal recruitment activity.
 Does the DOLE Secretary have the power to issue warrant of arrest and search and seizure orders?
No. Salazar v. Achacoso,2 declared that the exercise by the DOLE Secretary of his twin powers to issue arrest
warrant and search and seizure orders provided under Article 38[c] of the Labor Code is unconstitutional. Only regular
courts can issue such orders.
B.
EMPLOYMENT OF NON-RESIDENT ALIENS
 What is an ALIEN EMPLOYMENT PERMIT (AEP)?

AEP - a document issued by the DOLE Secretary through the DOLE-Regional Director who has jurisdiction
over the intended place of work of the foreign national, authorizing the foreign national to work in the Philippines.
 Who are required to procure AEP?
All foreign nationals who intend to engage in gainful employment in the Philippines are required to apply for
AEP.
1 G.R. No. 170139, Aug. 05, 2014. The foreign employer alleged in this case that respondent’s dismissal was due to inefficiency in her work and negligence in her duties.
2 G.R. No. 81510, March 14, 1990.
9
“Gainful employment” refers to a state or condition that creates an employer-employee relationship between
the
Philippine-based company and the foreign national where the former has the power to hire or dismiss the
foreign national from employment, pays the salaries or wages thereof and has authority to control the performance or
conduct of the tasks and duties.
 What are the categories of foreign nationals EXEMPTED from securing AEP?
a. All members of the diplomatic service and foreign government officials accredited by and with reciprocity
arrangement with the Philippine government;
b. Officers and staff of international organizations of which the Philippine government is a member, and their
legitimate spouses desiring to work in the Philippines;
c. Owners and representatives of foreign principals whose companies are accredited by the POEA, who come to
the Philippines for a limited period and solely for the purpose of interviewing Filipino applicants for
employment abroad;
d. Foreign nationals who come to the Philippines to teach, present and/or conduct research studies in universities
and colleges as visiting, exchange or adjunct professors under formal agreements between the universities or
colleges in the Philippines and foreign universities or colleges; or between the Philippine government and
foreign government, provided that the exemption is on a reciprocal basis;
e. Permanent resident foreign nationals and probationary or temporary resident visa holders under Section 13 (a-
f) of the Philippine Immigration Act of 1940 and Section 3 of the Alien Social Integration Act of 1995
(R.A. 7917);
f. Refugees and Stateless Persons recognized by DOJ pursuant to Article 17 of the UN Convention and Protocol
Relating to status of Refugees and Stateless Persons; and
g. All foreign nationals granted exemption by law.
 What are the categories of foreign nationals EXCLUDED from securing AEP?
a. Members of the governing board with voting rights only and do not intervene in the management of the
corporation or in the day to day operation of the enterprise.
b. President and Treasurer, who are part-owners of the company.
c. Those providing consultancy services who do not have employers in the Philippines.
d. Intra-corporate transferee who is a manager, executive or specialist as defined below in accordance with
Trade Agreements and an employee of the foreign service supplier for at least one (1) year continuous
employment prior to deployment to a branch, subsidiary, affiliate or representative office in the Philippines.
i. an Executive: a natural person within the organisation who primarily directs the management of the
organisation and exercises wide latitude in decision-making and receives only general supervision or
direction from higher level executives, the board of directors, or stockholders of the business; an
executive would not directly perform tasks related to the actual provision of the service or services of
the organisation;
ii. a Manager: a natural person within the organisation who primarily directs the
organisation/department/subdivision and exercises supervisory and control functions over other
supervisory, managerial or professional staff; does not include first-line supervisors unless employees
supervised are professionals; does not include employees who primarily perform tasks necessary for the
provision of the service; or
iii. a Specialist: a natural person within the organisation who possesses knowledge at an advanced level of
expertise essential to the establishment/provision of the service and/or possesses proprietary
knowledge of the organisation's service, research equipment, techniques or management; may include,
but is not limited to, members of a licensed profession.
All other intra-corporate transferees not within these categories as defined above are required to secure an
AEP prior to their employment in the Philippines.
e. Contractual service supplier who is a manager, executive or specialist and an employee of a foreign service
supplier which has no commercial presence in the Philippines:
i. who enters the Philippines temporarily to supply a service pursuant to a contract between his/her
employer and a service consumer in the Philippines;
ii. must possess the appropriate educational and professional qualifications; and
iii. must be employed by the foreign service supplier for at least one year prior to the supply of service in
the Philippines.
f. Representative of the Foreign Principal/Employer assigned in the Office of Licensed Manning Agency
(OLMA) in accordance with the POEA law, rules and regulations.
 What is the period of validity of an AEP?
One (1) year is the validity of an AEP.

Exception: When employment contract provides otherwise but not to exceed three (3) years.
The AEP may be renewed subject to the conditions imposed by law.
------------oOo------------
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SYLLABUS
MAJOR TOPIC 3
LABOR STANDARDS
A.
CONDITIONS OF EMPLOYMENT
1.
COVERAGE
 Who are covered by the labor standards provisions of the Labor Code?
Employees in ALL establishments, whether operated for profit or not, are covered by the law on labor
standards.
 Who are excluded?
The following are excluded from the coverage of the law on labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Workers paid by results;
e. Non-agricultural field personnel; and
f. Members of the family of the employer.
2.
HOURS OF WORK
a.
PRINCIPLES IN DETERMINING HOURS WORKED
 What are compensable hours worked?
The following shall be considered as compensable hours worked:
a) All time during which an employee is required to be on duty or to be at the employer’s premises
or to be at a prescribed workplace; and
b) All time during which an employee is suffered or permitted to work.
“Fair day’s wage for a fair day’s labor,” remains the basic factor in determining the employees’
wages and backwages.
b.
NORMAL HOURS OF WORK
 What is the total normal hours of work per day?
Eight (8) hours daily.

 What is overtime work?
Any work in excess of said eight (8) normal hours is considered overtime work.
 May normal working hours be reduced?
Yes, provided that no corresponding reduction is made on the employee’s wage or salary equivalent to an 8-
hour work day. In instances where the number of hours required by the nature of work is less than 8 hours, such
number of hours should be regarded as the employee’s full working day.
 What are flexible working hours?
“Flexible work arrangements” refer to alternative arrangements or schedules other than the traditional or standard
work hours, workdays and workweek. The effectivity and implementation of any of the flexible work arrangements
should be temporary in nature.
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Under R.A. No. 8972, otherwise known as “The Solo Parents’ Welfare Act of 2000,” solo parents are allowed to
work on a flexible schedule. The phrase “flexible work schedule” is defined in the same law as the right granted to a solo
parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the
employer.
i.
POWER INTERRUPTIONS/BROWNOUTS
 What are the effects of power interruptions/brownouts?
The following are the effects of work interruption due to brownouts:
a. Brown-outs of short duration but not exceeding twenty (20) minutes shall be treated as worked
or compensable hours whether used productively by the employees or not.
b. Brown-outs running for more than twenty (20) minutes may not be treated as hours worked
provided any of the following conditions are present:
1. The employees can leave their workplace or go elsewhere whether within or without the work
premises; or
2. The employees can use the time effectively for their own interest.
c. In each case, the employer may extend the working hours of his employees outside the regular
schedules to compensate for the loss of productive man-hours without being liable for overtime
pay.
c.
MEAL PERIODS
(Article 85, Labor Code)
 What is the rule on time-off for regular meal?
Every employer is required to give his employees, regardless of sex, not less than one (1) hour (or 60 minutes)
time-off for regular meals.
 Is meal break compensable?
Being time-off, it is not compensable hours worked. In this case, the employee is free to do anything he wants, except
to work. If he is required, however, to work while eating, he should be compensated therefor.
d.
NIGHT SHIFT DIFFERENTIAL
 How is it reckoned and computed?
Night shift differential is equivalent to 10% of employee's regular wage for each hour of work performed
between 10:00 p.m. and 6:00 a.m. of the following day.
 What is the distinction between night shift differential pay and overtime pay?
When the work of an employee falls at night time, the receipt of overtime pay shall not preclude the right to
receive night differential pay. The reason is the payment of the night differential pay is for the work done during the
night; while the payment of the overtime pay is for work in excess of the regular eight (8) working hours.
 How is Night Shift Differential Pay computed?
1. Where night shift (10 p.m. to 6 a.m.) work is regular work.

a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic hourly rate.
b. On a rest day, special day or regular holiday: Plus 10% of the regular hourly rate on a rest day,
special day or regular holiday or a total of 110% of the regular hourly rate.
2. Where night shift (10 p.m. to 6 a.m.) work is overtime work.
a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of
the overtime hourly rate on an ordinary day.
b. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day
or special day or regular holiday.
3. For overtime work in the night shift. Since overtime work is not usually eight (8) hours, the
compensation for overtime night shift work is also computed on the basis of the hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of 110% of 125% of basic
hourly rate.
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b. On a rest day or special day or regular holiday. Plus 10% of 130% of regular hourly rate on said
days or a total of 110% of 130% of the applicable regular hourly rate.
e.
OVERTIME
 What are some basic principles on overtime work?
1. Work rendered after normal eight (8) hours of work is called “overtime work.”
2. In computing overtime work, "regular wage" or "basic salary" means "cash" wage only without deduction for
facilities provided by the employer.
3. "Premium pay" means the additional compensation required by law for work performed within eight (8)
hours on non-working days, such as regular holidays, special holidays and rest days.
4. "Overtime pay" means the additional compensation for work performed beyond eight (8) hours.
5. Illustrations on how overtime is computed:
a. For overtime work performed on an ORDINARY DAY, the overtime pay is plus 25% of the basic
hourly rate.
b. For overtime work performed on a REST DAY OR ON A SPECIAL DAY, the overtime pay
is plus 30% of the basic hourly rate which includes 30% additional compensation as provided in Article 93 [a] of
the Labor Code.
c. For overtime work performed on a REST DAY WHICH FALLS ON A SPECIAL DAY, the
overtime pay is plus 30% of the basic hourly rate which includes 50% additional compensation as provided in
Article 93 [c] of the Labor Code.
d. For overtime work performed on a REGULAR HOLIDAY, the overtime pay is plus 30% of the
basic hourly rate which includes 100% additional compensation as provided in Article 94 [b] of the Labor Code.
e. For overtime work performed on a REST DAY WHICH FALLS ON A REGULAR
HOLIDAY, the overtime pay is plus 30% of the basic hourly rate which includes 160% additional
compensation.
 What is the distinction between PREMIUM PAY and OVERTIME PAY?
“Premium pay” refers to the additional compensation required by law for work performed within the eight (8)
normal hours of work on non-working days, such as rest days and regular and special holidays.
“Overtime pay” refers to the additional compensation for work performed beyond the eight (8) normal hours
of work on a given day. An employee is entitled to both premium pay and overtime pay if he works on a non-working
day and renders overtime work on the same day.
 What is built-in overtime pay?
In case the employment contract stipulates that the compensation includes built-in overtime pay and the same
is duly approved by the DOLE, the non-payment by the employer of any overtime pay for overtime work is justified and
valid.
 What is emergency overtime work? (Article 89, Labor Code).
a. General rule.
The general rule is that no employee may be compelled to render overtime work against his will. The reason is
that this will constitute involuntary servitude.
b. Exceptions when employee may be compelled to render overtime work:
1. When the country is at war or when any other national or local emergency has been declared by the
National Assembly or the Chief Executive;
2. When overtime work is necessary to prevent loss of life or property or in case of imminent danger to
public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods,
typhoons, earthquake, epidemic or other disasters or calamities;
3. When there is urgent work to be performed on machines, installations or equipment, or in order to avoid
serious loss or damage to the employer or some other causes of similar nature;
4. When the work is necessary to prevent loss or damage to perishable goods;
5. When the completion or continuation of work started before the 8th hour is necessary to prevent serious
obstruction or prejudice to the business or operations of the employer; and
6. When overtime work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.
 May an employee validly refuse to render overtime work under any of the afore-said circumstances?
No. When an employee refuses to render emergency overtime work under any of the foregoing conditions, he
may be dismissed on the ground of insubordination or willful disobedience of the lawful order of the employer.
 Can overtime pay be waived?
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No. The right to claim overtime pay is not subject to a waiver. Such right is governed by law and not merely by
the agreement of the parties.
f.
COMPUTATION OF ADDITIONAL COMPENSATION
(RATES ONLY)
1. How is premium pay for REGULAR HOLIDAYS computed?

• If the employee did not work, he/she shall be paid 100 percent of his/her salary for that day.
Computation: (Daily rate + Cost of Living Allowance) x 100%. The COLA is included in the
computation of regular holiday pay.
• If the employee worked, he/she shall be paid 200 percent of his/her regular salary for that day for the
first eight hours. Computation: (Daily rate + COLA) x 200%. The COLA is also included in
computation of regular holiday pay.
• If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional
30 percent of his/her hourly rate on said day. Computation: Hourly rate of the basic daily wage x 200% x
130% x number of hours worked.
• If the employee worked during a regular holiday that also falls on his/her rest day, he/she shall be
paid an additional 30 percent of his/her daily rate of 200 percent. Computation: (Daily rate + COLA) x
200%] + (30% [Daily rate x 200%)].
• If the employee worked in excess of eight hours (overtime work) during a regular holiday that also
falls on his/her rest day, he/she shall be paid an additional 30 percent of his/her hourly rate on said day.
Computation: (Hourly rate of the basic daily wage x 200% x 130% x 130% x number of hours worked);
Simplified Computation:
a. If work is rendered on an employee’s regular workday -
 If unworked – 100%
 If worked – 1st 8 hours – 200%
 Work in excess of 8 hours – plus 30% of hourly rate on said day
b. If it is an employee’s rest day -
 If unworked – 100%
 If worked – first 8 hours – plus 30% of 200%
2. How is premium pay for SPECIAL (NON-WORKING) DAYS OR SPECIAL HOLIDAYS

computed?
• If the employee did not work, the “no work, no pay” principle shall apply, unless there is a favorable
company policy, practice, or CBA granting payment on a special day.
• If the employee worked, he/she shall be paid an additional 30 percent of his/her daily rate on the first
eight hours of work. Computation: [(Daily rate x 130%) + COLA).
• If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional
30 percent of his/her hourly rate on said day. Computation: (Hourly rate of the basic daily wage x 130% x
130% x number of hours worked).
• If the employee worked during a special day that also falls on his/her rest day, he/she shall be paid
an additional fifty percent of his/her daily rate on the first eight hours of work. Computation: [(Daily rate
x 150%) + COLA].
• If the employee worked in excess of eight hours (overtime work) during a special day that also falls
on his/her rest day, he/she shall be paid an additional 30 percent of his/her hourly rate on said day.
Computation: (Hourly rate of the basic daily wage x 150% x 130% x number of hours worked).
Simplified Computation:
a. If unworked -
 No pay, except if there is a company policy, practice, or collective bargaining agreement (CBA) which grants
payment of wages on special days even if unworked.
b. If worked -
 First 8 hours – plus 30% of the daily rate of 100%
c. If falling on the employee’s rest day and if worked -
 First 8 hours – plus 50% of the daily rate of 100%
3. What are the effects of absences on the computation of holiday pay?
1. Employees on leave of absence with pay - entitled to holiday pay when they are on leave of absence
with pay.
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2. Employees on leave of absence without pay on the day immediately preceding the regular
holiday - may not be paid the required holiday pay if they have not worked on such regular holiday.
3. Employees on leave while on SSS or employee’s compensation benefits - Employers should grant
the same percentage of the holiday pay as the benefit granted by competent authority in the form of
employee’s compensation or social security payment, whichever is higher, if they are not reporting for
work while on such benefits.
4. When day preceding regular holiday is a non-working day or scheduled rest day - should not be
deemed to be on leave of absence on that day, in which case, employees are entitled to the regular holiday
pay if they worked on the day immediately preceding the non-working day or rest day.
FACILITIES VS. SUPPLEMENTS
 What are facilities?

“Facilities” include articles or services for the benefit of the employee or his family but does not include tools
of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employer’s
business. They are items of expense necessary for the laborer’s and his family’s existence and subsistence which form
part of the wage and when furnished by the employer, are deductible therefrom, since if they are not so furnished, the
laborer would spend and pay for them just the same.
 What are supplements?
The term “supplements” means extra remuneration or special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages.
 What are the distinctions between facilities and supplements?
The benefit or privilege given to the employee which constitutes an extra remuneration over and above his
basic or ordinary earning or wage is supplement; and when said benefit or privilege is made part of the laborer’s basic
wage, it is a facility. The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave)
given but its purpose. Thus, free meals supplied by the ship operator to crew members, out of necessity, cannot be
considered as facilities but supplements which could not be reduced having been given not as part of wages but as a
necessary matter in the maintenance of the health and efficiency of the crew during the voyage.
 What is the rule on deductibility of facilities and supplements?
Facilities are deductible from wage but not supplements.
g.
REST PERIODS
1.
WEEKLY REST DAY
 What is the duration of weekly rest period?
It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a
rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days.
 Is the employer’s prerogative to determine the rest period of its employees subject to limitations?
Yes. The employer shall determine and schedule the weekly rest day of his employees subject to CBA and to
such rules and regulations as the DOLE Secretary may provide. However, the employer shall respect the preference of
employees as to their weekly rest day when such preference is based on religious grounds.
2.
EMERGENCY REST DAY WORK
 When can an employer require work on a rest day?
The employer may require any of its employees to work on their scheduled rest day for the duration of the
following emergency and exceptional conditions:
a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake,
epidemic or other disaster or calamity, to prevent loss of life and property, or in case of force majeure or
imminent danger to public safety;
b. In case of urgent work to be performed on machineries, equipment, or installations, to avoid serious loss
which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the employees have to work continuously for seven (7) days in a
week or more, as in the case of the crew members of a vessel to complete a voyage and in other similar
cases; and
15
f. When the work is necessary to avail of favorable weather or environmental conditions where performance
or quality of work is dependent thereon.
h.
HOLIDAYS
1. What are the regular and special holidays?

(a) Regular Holidays
New Year's Day - January 1
Maundy Thursday - Movable Date
Good Friday - Movable Date
Eidul Fitr - Movable Date
Eidul Adha - Movable Date
Araw ng Kagitingan - Monday nearest April 9
Labor Day - Monday nearest May 1
Independence Day - Monday nearest June 12
National Heroes Day - Last Monday of August
Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
Rizal Day - Monday nearest December 30
(b) Nationwide Special Holidays
Ninoy Aquino Day - Monday nearest August 21
All Saints’ Day - November 1
Feast of Immaculate
Conception of Mary - December 8
Last Day of the Year - December 31
2. How many are the guaranteed paid regular holidays?
There are twelve (12) paid regular holidays in a year. This is important for purposes of reckoning certain
divisors and computation of employee benefits. The provision on holiday pay is mandatory, regardless of whether an
employee is paid on a monthly or daily basis.1
3. What is the Holiday Pay Rule?
“Holiday pay” refers to the payment of the regular daily wage for any unworked regular holiday.2 The Holiday
Pay Rule, therefore, applies to entitlement to holiday pay during regular holidays and not during special non-working
days. Thus, every employee covered by the Holiday Pay Rule is entitled to the minimum wage rate (Daily Basic Wage
and COLA). This means that the employee is entitled to at least 100% of his minimum wage rate even if he did not
report for work, provided he is present or is on leave of absence with pay on the workday immediately preceding the
holiday. Should the worker work on that day, such work performed on that day would merit at least twice or two
hundred percent (200%) of the wage rate of the employee.3
4. What is the coverage of the Holiday Pay Rule? Who are exempted employees?
As a general rule, the holiday pay benefit is applicable to all employees. The following, however, are not
covered by this benefit as they are considered exempted employees:
1. Government employees, whether employed by the National Government or any of its political subdivisions,
including those employed in government-owned and/or controlled corporations with original charters or
created under special laws;
2. Those of retail and service establishments regularly employing less than ten (10) workers;
3. Kasambahay and persons in the personal service of another;
4. Managerial employees, if they meet all of the following conditions:
4.1. Their primary duty is to manage the establishment in which they are employed or of a department or
subdivision thereof;
4.2. They customarily and regularly direct the work of two or more employees therein; and
4.3. They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to hiring, firing, and promotion, or any other change of status of other employees
are given particular weight.
5. Officers or members of a managerial staff, if they perform the following duties and responsibilities:
5.1. Primarily perform work directly related to management policies of their employer;
5.2. Customarily and regularly exercise discretion and independent judgment;
5.3. (a) Regularly and directly assist a proprietor or managerial employee in the management of the
establishment or subdivision thereof in which he or she is employed; or (b) execute, under general
supervision, work along specialized or technical lines requiring special training, experience, or
knowledge; or (c) execute, under general supervision, special assignments and tasks; and
5.4. Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which
are not directly and closely related to the performance of the work described in paragraphs 5.1, 5.2, and
5.3 above.
1 Insular Bank of Asia and America Employees’ Union (IBAAEU) v. Inciong, G.R. No. L-52415, Oct. 23, 1984, 132 SCRA 663; Chartered Bank Employees Association v. Ople, G.R.
No. L-44717, Aug. 28, 1985, 138 SCRA 273; Mantrade/FMMC Division Employees and Workers Union v. Bacungan, G.R. No. L-48437, Sept. 30, 1986, 144 SCRA 510.
2 No. 2 [A], Id.; Section 3, Rule IV, Book III, Rules to Implement the Labor Code; DOLE Memorandum Circular No. 01, March 8, 2004.
3 No. 2 [C], Id.; Section 4, Rule IV, Book III, Rules to Implement the Labor Code.
16
6. Field personnel and other employees whose time and performance are unsupervised by the employer,
including those who are engaged on task or contract basis, purely commission basis or those who are paid a
fixed amount for performing work irrespective of the time consumed in the performance thereof.1
i.
SERVICE INCENTIVE LEAVE
1. What is service incentive leave?
Every covered employee who has rendered at least one (1) year of service is entitled to a yearly service incentive
leave of five (5) days with pay.
The term “at least one year of service” should mean service within twelve (12) months, whether continuous
or broken, reckoned from the date the employee started working, including authorized absences and paid regular
holidays, unless the number of working days in the establishment as a matter of practice or policy, or that provided in
the employment contract, is less than twelve (12) months, in which case, said period should be considered as one (1) year
for the purpose of determining entitlement to the service incentive leave benefit.
2. Who are excluded from its coverage?
All employees are covered by the rule on service incentive leave except:
1. Government employees, whether employed by the National Government or any of its political
subdivisions, including those employed in government-owned and/or controlled corporations with original
charters or created under special laws;
2. Persons in the personal service of another;
3. Managerial employees, if they meet all of the following conditions:
3.1. Their primary duty is to manage the establishment in which they are employed or of a department or
subdivision thereof;
3.2. They customarily and regularly direct the work of two or more employees therein; and
3.3. They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to hiring, firing, and promotion, or any other change of status of other
employees are given particular weight.
4. Officers or members of a managerial staff, if they perform the following duties and responsibilities:
4.1. Primarily perform work directly related to management policies of their employer;
4.2. Customarily and regularly exercise discretion and independent judgment;
4.3. (a) Regularly and directly assist a proprietor or managerial employee in the management of the
establishment or subdivision thereof in which he or she is employed; or (b) execute, under general
supervision, work along specialized or technical lines requiring special training, experience, or
knowledge; or (c) execute, under general supervision, special assignments and tasks; and
4.4. Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in paragraphs 4.1,
4.2, and 4.3 above;
5. Field personnel and those whose time and performance are unsupervised by the employer,2 including those
who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in the performance thereof;3
6. Those already enjoying this benefit;
7. Those enjoying vacation leave with pay of at least five (5) days; and
8. Those employed in establishments regularly employing less than ten (10) employees.4
3. Are KASAMBAHAYS entitled to SIL?
Yes, but the grant of 5-day SIL to domestic workers or kasambahays is not based on Article 95 of the Labor
Code but on the following provision of R.A. 10361:5
“SEC. 29. Leave Benefits. – A domestic worker who has rendered at least one (1) year of service shall be
entitled to an annual service incentive leave of five (5) days with pay: Provided, That any unused portion of said
annual leave shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be
convertible to cash.”6
4. Are unavailed service incentive leaves commutable to cash?
Yes. The service incentive leave is commutable to its money equivalent if not used or exhausted at the end of
the year.
j.
SERVICE CHARGE
1. What is the newest law on service charges?
1 No. 2 [B], 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.
2 No. 7 [A], 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE; See also Article 82, Labor Code; Section 1, Rule V, Book III,
Rules to Implement the Labor Code.
3 Section 1 (d), Rule V (Service Incentive Leave), Book III, Rules to Implement the Labor Code.
4 No. 7 [A], 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE; See also Article 82, Labor Code; Section 1, Rule V, Book III,
Rules to Implement the Labor Code.
5 Otherwise known as “Domestic Workers Act” or “Batas Kasambahay” and approved by President Benigno S. Aquino III on January 18, 2013.
6 See Section 7, Rule IV, Implementing Rules and Regulations of R.A. No. 10361 which provides: “SECTION 7. Service Incentive Leave. - A Kasambahay who has rendered at least
one (1) year of service shall be entitled to an annual service incentive leave of at least five (5) days with pay.
“Any unused portion of said annual leave shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be convertible to cash.”
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R.A. No. 11360 which was approved on August 07, 2019. It amended Article 96 of the Labor Code. It thus
now states:
"ART. 96. Service Charges. - All service charges collected by hotels, restaurants and similar
establishments shall be DISTRIBUTED COMPLETELY AND EQUALLY AMONG THE
COVERED WORKERS EXCEPT MANAGERIAL EMPLOYEES.
"In the event that the minimum wage is increased by law or wage order, service charges paid
to the covered employees shall not be considered in determining the employer's compliance
with the increased minimum wage.
"To facilitate resolution of any dispute between the management and the employees on the
distribution of service charges, a grievance mechanism shall be established. If no grievance
mechanism is established or if inadequate, the grievance shall be referred to the regional
office of the Department of Labor and Employment which has jurisdiction over the
workplace for conciliation.
"For purposes of this Article, managerial employees refer to any person vested with powers or
prerogatives to lay down and execute management policies or hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees or to effectively recommend such managerial
actions."
2. What are the kinds of establishment covered by the law on service charge?
The rules on service charge apply only to establishments collecting service charges, such as hotels, restaurants,
lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling houses, and similar enterprises,
including those entities operating primarily as private subsidiaries of the government.
3. Who are the employees covered by this law?
With the latest amendatory law cited above, all service charges collected by hotels, restaurants and similar
establishments shall be distributed completely and equally among the covered workers except managerial employees.
4. Who are not covered?
Specifically excluded from coverage are managerial employees, referring to any person vested with powers or
prerogatives to lay down and execute management policies or hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or to effectively recommend such managerial actions.
k.
13TH MONTH PAY
 Who are covered by the 13th month pay law?

Only rank-and-file employees, regardless of their designation or employment status and irrespective of the
method by which their wages are paid, are entitled to the 13th month pay benefit. Managerial employees are not
entitled to 13th month pay.
 What is the minimum period of service required in a calendar year to be entitled to 13th month pay?
To be entitled to the 13th month pay benefit, it is imposed as a minimum service requirement that the
employee should have worked for at least one (1) month during a calendar year.
 When should 13th month pay be paid?
It must be paid not later than December 24 of every year.
 Who are excluded from its coverage?
The following employers are not covered by the 13th month pay law:
1. The government and any of its political subdivisions, including government-owned and controlled
corporations, except those corporations operating essentially as private subsidiaries of the government.
2. Employers already paying their employees 13th month pay or more in a calendar year or its equivalent at
the time of the issuance of the Revised Guidelines.
3. Employers of those who are paid on purely commission, boundary, or task basis, and those who are
paid a fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis, in which case, the employer
shall be covered by the Revised Guidelines insofar as such workers are concerned. Workers paid on piece-
rate basis shall refer to those who are paid a standard amount for every piece or unit of work produced
that is more or less regularly replicated without regard to the time spent in producing the same.
 Are domestic workers or Kasambahays covered?
Yes. They are now covered under the Kasambahay Law.
 Are extras, casuals and seasonal employees entitled to 13th month pay?
Yes, they are entitled thereto.
 Is 13th month pay part of wage?
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13th month pay which is in the nature of additional income, is based on wage but not part of wage.
 What is the minimum amount of the 13th month pay?
The minimum 13th month pay should not be less than one-twelfth (1/12) of the total basic salary earned
by an employee within a calendar year.
 What is meant by “basic salary” or “basic wage”?
“Basic salary” or “basic wage” contemplates work within the normal eight (8) working hours in a day. This means
that the basic salary of an employee for purposes of computing the 13th month pay should include all remunerations or
earnings paid by the employer for services rendered during normal working hours.
For purposes of computing the 13th month pay, “basic salary” should be interpreted to mean not the amount actually
received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given
calendar year.
B.
WAGES
1.
PAYMENT OF WAGES
 What is the basic distinction between wage and salary?

The term “wage” is used to characterize the compensation paid for manual skilled or unskilled labor.
“Salary,” on the other hand, is used to describe the compensation for higher or superior level of employment.
 What is the distinction in respect to execution, attachment or garnishment?
In cases of execution, attachment or garnishment of the compensation of an employee received from work
issued by the court to satisfy a judicially-determined obligation, a distinction should be made whether such
compensation is considered “wage” or “salary.” Under Article 1708 of the Civil Code, if considered a “wage,” the
employee’s compensation shall not be subject to execution or attachment or garnishment, except for debts incurred for
food, shelter, clothing and medical attendance. If deemed a “salary,” such compensation is not exempt from execution
or attachment or garnishment. Thus, the salary, commission and other remuneration received by a managerial employee
(as distinguished from an ordinary worker or laborer) cannot be considered wages. Salary is understood to relate to a
position or office, or the compensation given for official or other service; while wage is the compensation for labor.
 What are the attributes of wage?
“Wage” has the following attributes:
1) It is the remuneration or earnings, however designated, for work done or to be done or for services rendered or
to be rendered;
2) It is capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the same;
3) It is payable by an employer to an employee under a written or unwritten contract of employment for work
done or to be done or for services rendered or to be rendered; and
4) It includes the fair and reasonable value, as determined by the DOLE Secretary, of board, lodging, or other
facilities customarily furnished by the employer to the employee. “Fair and reasonable value” shall not include any
profit to the employer or to any person affiliated with the employer.
 What is basic wage?
“Basic wage” means all the remuneration or earnings paid by an employer to a worker for services rendered
on normal working days and hours but does not include cost-of-living allowances, profit-sharing payments, premium
payments, 13th month pay or other monetary benefits which are not considered as part of or integrated into the regular
salary of the workers.
Further, as held in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, the following
should be excluded from the computation of “basic salary,” to wit: payments for sick, vacation and maternity
leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays.
 What is minimum wage?
The minimum wage rates prescribed by law shall be the basic cash wages without deduction therefrom of
whatever benefits, supplements or allowances which the employees enjoy free of charge aside from the basic pay.
 What is statutory minimum wage?
The term “statutory minimum wage” refers simply to the lowest basic wage rate fixed by law that an employer
can pay his workers.
 What is regional minimum wage rate?
The term “regional minimum wage rates” refers to the lowest basic wage rates that an employer can pay
his workers, as fixed by the Regional Tripartite Wages and Productivity Boards (RTWPBs), and which shall not
be lower than the applicable statutory minimum wage rates.
 What are included/excluded in the term “wage rate”?
19
The term "wage rate" includes cost-of-living allowances as fixed by the RTWPB, but excludes other
wage-related benefits such as overtime pay, bonuses, night shift differential pay, holiday pay, premium pay, 13th month
pay, premium pay, leave benefits, among others.
 Can COLA be integrated into the minimum wage?
Yes. The cost-of-living allowance (COLA) may be ordered integrated into the minimum wage by the Regional
Tripartite Wages and Productivity Board (“RTWPB” or “Regional Board”).
 What is COLA?
COLA is not in the nature of an allowance intended to reimburse expenses incurred by employees in the
performance of their official functions. It is not payment in consideration of the fulfillment of official duty. As defined,
“cost of living” refers to “the level of prices relating to a range of everyday items” or “the cost of purchasing the goods
and services which are included in an accepted standard level of consumption.” Based on this premise, COLA is a
benefit intended to cover increases in the cost of living.
 What is the “NO WORK, NO PAY” principle?
The “no work, no pay” or “fair day’s wage for fair day’s labor” means that if the worker does not work, he
is generally not entitled to any wage or pay. The exception is when it was the employer who unduly prevented him from
working despite his ableness, willingness and readiness to work; or in cases where he is illegally locked out or illegally
suspended or illegally dismissed, or otherwise illegally prevented from working, in which event, he should be entitled to
his wage.
2.
PROHIBITIONS REGARDING WAGES
(See Articles 112 to 119 of the Labor Code)
(1) NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY EMPLOYEES OF THEIR WAGES.

No employer is allowed to limit or otherwise interfere with the freedom of any employee to dispose of his
wages and no employer shall in any manner oblige any of his employees to patronize any store or avail of the services
offered by any person.
(2) WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; EXCEPTION.
The general rule is that laborer’s wages are not subject to execution or attachment. The exception is when such
execution or attachment is made for debts incurred for food, shelter, clothing and medical attendance.
(3) PROHIBITION ON DEDUCTIONS FROM WAGES.
 May employer deduct from wage of employees?

The general rule is that an employer, by himself or through his representative, is PROHIBITED from
making any deductions from the wages of his employees. The employer is not allowed to make unnecessary
deductions without the knowledge or authorization of the employees.
 Are there EXCEPTIONS to this rule?
Yes.
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the DOLE Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor Code;
(e) Deductions made for agency fees from non-union members who accept the benefits under the CBA
negotiated by the bargaining union. This form of deduction does not require the written authorization of
the non-bargaining union member concerned;
(f) Deductions for value of meal and other facilities;
(g) Deductions for premiums for SSS, PhilHealth, employees’ compensation and Pag-IBIG;
(h) Withholding tax mandated under the National Internal Revenue Code (NIRC);
(i) Withholding of wages because of the employee’s debt to the employer which is already due;
(j) Deductions made pursuant to a court judgment against the worker under circumstances where the wages
may be the subject of attachment or execution but only for debts incurred for food, clothing, shelter and
medical attendance;
(k) When deductions from wages are ordered by the court;
(4) PROHIBITION AGAINST DEPOSIT REQUIREMENT.
Article 114 of the Labor Code prohibits the employer to require that workers should make a deposit from
which deductions shall be made for the reimbursement of loss of tools, materials or equipment supplied by him, or any
damages thereto.
PERMISSIBLE DEDUCTIONS FOR LOSS OR DAMAGES.
If the employer is engaged in a trade, occupation or business where there is such practice of making deductions
or requiring deposits to answer for the reimbursement of loss of or damage to tools, materials or equipment supplied by
the employer to the employee.
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(5) PROHIBITION ON WITHHOLDING OF WAGES.

Article 116 of the Labor Code prohibits any person, whether employer or not, directly or indirectly, to
withhold any amount from the wages of a worker.
Under Article 1706 of the Civil Code, withholding of the wages, except for a debt due, is not allowed to be
made by the employer.
Moreover, under Article 1709 of the same Code, the employer is not allowed to seize or retain any tool or
other articles belonging to the laborer.
(6) KICKBACKS.
Article 116 of the Labor Code also prohibits “kickback” which consists in the act of any person, whether
employer or not, directly or indirectly, to induce a worker to give up any part of his wages by force, stealth, intimidation,
threat or by any other means whatsoever, without the worker’s consent.
(7) PROHIBITION AGAINST DEDUCTION TO ENSURE EMPLOYMENT.
Article 117 of the Labor Code prohibits any person, whether the employer himself or his representative or an
intermediary, to require that a deduction be made or to actually make any deduction from the wages of any employee or
worker, for the benefit of such employer or his representative or an intermediary, as consideration of a promise of
employment or, when already employed, for the continuation of such employment or retention therein.
(8) RETALIATORY ACTIONS BY EMPLOYER.
Article 118 of the Labor Code prohibits the employer:
(a) to refuse to pay the wages and benefits of an employee; or
(b) to reduce his wages and benefits; or
(c) to discharge him from employment; or
(d) to discriminate against him in any manner;
on account and by reason of said employee’s:
(1) act of filing any complaint or institution of any proceeding under Title II [Wages], Book III of the Labor
Code; or
(2) act of testifying in said proceedings or when he is about to testify therein.
(9) FALSE STATEMENT, REPORT OR RECORD.
Article 119 of the Labor Code prohibits any person, whether employer or not, to make any false statement,
report or record required to be filed or kept in accordance with and pursuant to the provisions of the Labor Code,
knowing such statement, report or record to be false in any material respect.
Examples: Payrolls, time records, employment records and production records, among others.
3.
WAGE DISTORTION; CONCEPT
a.
WAGE ORDER
 What is a Wage Order?

The term “Wage Order” refers to the order promulgated by the Regional Tripartite Wages and Productivity
Board (Regional Board) pursuant to its wage fixing authority.
 When is it proper to issue a Wage Order?
Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts
and based on the prescribed standards and criteria, shall proceed to determine whether a Wage Order should be issued.
Any such Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper
of general circulation in the region.
 What are the standards/criteria for minimum wage fixing?
In the determination of regional minimum wages, the Regional Board shall, among other relevant factors,
consider the following:
(1) Needs of workers and their families
1) Demand for living wages;
2) Wage adjustment vis-à-vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2) Capacity to pay
1) Fair return on capital invested and capacity to pay of employers;
2) Productivity.
(3) Comparable wages and incomes
1) Prevailing wage levels.
(4) Requirements of economic and social development
1) Need to induce industries to invest in the countryside;
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2) Effects on employment generation and family income;

3) Equitable distribution of income and wealth along the imperatives of economic and social
development.
 What are the methods of fixing the minimum wage rates?
There are two (2) methods, to wit:
1. “Floor-Wage” method which involves the fixing of a determinate amount to be added to the prevailing
statutory minimum wage rates. This was applied in earlier wage orders; and
2. “Salary-Cap” or “Salary-Ceiling” method where the wage adjustment is to be applied to employees
receiving a certain denominated salary ceiling. In other words, workers already being paid more than the
existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage
increase.
The “Salary-Cap” or “Salary-Ceiling” method is the preferred mode.
The distinction between the two (2) methods is best shown by way of an illustration. Under the “Floor Wage
Method,” it would be sufficient if the Wage Order simply set P15.00 as the amount to be added to the prevailing statutory
minimum wage rates; while in the “Salary-Ceiling Method,” it would be sufficient if the Wage Order states a specific salary,
such as P250.00, and only those earning below it shall be entitled to the wage increase.
b.
WAGE DISTORTION
 What is wage distortion?

“Wage distortion” contemplates a situation where an increase in prescribed wage rates results in either of the
following:
1. Elimination of the quantitative differences in the rates of wages or salaries; or
2. Severe contraction of intentional quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure
based on the following criteria:
a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One
visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a
significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the
other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from
the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new
entrants and old hires, there exists a wage distortion. xxx. The concept of wage distortion assumes an existing grouping
or classification of employees which establishes distinctions among such employees on some relevant or legitimate
basis. This classification is reflected in a differing wage rate for each of the existing classes of employees.
 What are the elements of wage distortion?
The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary
rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country.
Normally, a company has a wage structure or method of determining the wages of its employees. In a problem
dealing with “wage distortion,” the basic assumption is that there exists a grouping or classification of employees that
establishes distinctions among them on some relevant or legitimate bases.
Involved in the classification of employees are various factors such as the degrees of responsibility, the skills
and knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate
for each of the existing classes of employees reflects this classification.
 What is the formula for rectifying or resolving wage distortion?
Following is the formula for the correction of wage distortion in the pay scale structures:
Minimum Wage = % x Prescribed Increase = Distortion Adjustment
Actual Salary
The above formula was held to be just and equitable.
4.
NON-DIMINUTION OF BENEFITS
 What is the applicability of the non-diminution rule in Article 100 of the Labor Code?
Albeit Article 100 is clear that the principle of non-elimination and non-diminution of benefits apply only to
the benefits being enjoyed “at the time of the promulgation” of the Labor Code, the Supreme Court has consistently
cited Article 100 as being applicable even to benefits granted after said promulgation. It has, in fact, been treated as the
22
legal anchor for the declaration of the invalidity of so many acts of employers deemed to have eliminated or diminished
the benefits of employees.
The 2014 case of Wesleyan University-Philippines v. Wesleyan University-Philippines Faculty and Staff
Association,1 succinctly pointed out that the Non-Diminution Rule found in Article 100 of the Labor Code explicitly
prohibits employers from eliminating or reducing the benefits received by their employees. This rule, however, applies
only if the benefit is based on any of the following:
(1) An express policy;
(2) A written contract; or
(3) A company practice.
There is not much controversy if the benefit involved is provided for under Nos. 1 and 2 above. Thus, if it is
expressly laid down in a written policy unilaterally promulgated by the employer, the employer is duty-bound to adhere
and comply by its own policy. It cannot be allowed to renege from its commitment as expressed in the policy.
If the benefit is granted under a written contract such as an employment contract or a collective bargaining
agreement (CBA), the employer is likewise under legal compulsion to so comply therewith.
On No. 3 above, please see discussion below.
4.1.
COMPANY PRACTICE
 What is company practice?
Company practice is a custom or habit shown by an employer’s repeated, habitual customary or succession of
acts of similar kind by reason of which, it gains the status of a company policy that can no longer be disturbed or
withdrawn.
To ripen into a company practice that is demandable as a matter of right, the giving of the benefit should not
be by reason of a strict legal or contractual obligation but by reason of an act of liberality on the part of the
employer.
 What are the criteria that may be used to determine existence of company practice?
Since there is no hard and fast rule which may be used and applied in determining whether a certain act of the
employer may be considered as having ripened into a practice, the following criteria may be used to determine whether
an act has ripened into a company practice:
(1) The act of the employer has been done for a considerable period of time;
(2) The act should be done consistently and intentionally; and
(3) The act should not be a product of erroneous interpretation or construction of a doubtful or difficult
question of law or provision in the CBA.
(See the 2013 case of Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc.2)
1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A CONSIDERABLE PERIOD OF
TIME.
If done only once as in the case of Philippine Appliance Corporation (Philacor) v. CA,3 where the CBA
signing bonus was granted only once during the 1997 CBA negotiation, the same cannot be considered as having ripened
into a company practice.
In the following cases, the act of the employer was declared company practice because of the considerable
period of time it has been practiced:
(a) Davao Fruits Corporation v. Associated Labor Unions.4 - The act of the company of freely and
continuously including in the computation of the 13th month pay, items that were expressly excluded by
law has lasted for six (6) years, hence, was considered indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana.5 - The act of including non-basic benefits such as paid
leaves for unused sick leave and vacation leave in the computation of the employees’ 13th month pay for at
least two (2) years was considered a company practice.
(c) The 2010 case of Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU,6
also ruled as company practice the act of petitioner of granting for thirty (30) years, its workers the
mandatory 13th month pay computed in accordance with the following formula: Total Basic Annual
Salary divided by twelve (12) and Including in the computation of the Total Basic Annual Salary the
following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday;
night premium pay; and vacation and sick leaves for each year.
1 G.R. No. 181806, March 12, 2014.

2 G.R. No. 176985, April 1, 2013; See also Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union (NMS-IND-APL), G.R. No.
185556, March 28, 2011, 646 SCRA 501, 527; TSPIC Corporation v. TSPIC Employees Union (FFW), G.R. No. 163419, Feb. 13, 2008, 545 SCRA 215, 226.
3 G.R. No. 149434, June 3, 2004.
4 G.R. No. 85073, Aug. 24, 1993, 225 SCRA 562.
5 G.R. No. 152456, April 28, 2004, 438 SCRA 239.
6 G.R. No. 188949, July 26, 2010.
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2. THE ACT SHOULD BE DONE CONSISTENTLY AND INTENTIONALLY.

The following cases may be cited to illustrate this principle:
(a) Tiangco v. Leogardo, Jr.,1 where the employer has consistently been granting fixed monthly emergency
allowance to the employees from November, 1976 but discontinued this practice effective February, 1980
insofar as non-working days are concerned based on the principle of “no work, no pay.” The Supreme Court
ruled that the discontinuance of said benefit contravened Article 100 of the Labor Code which prohibits
the diminution of existing benefits.
3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS INTERPRETATION OR
CONSTRUCTION OF A DOUBTFUL OR DIFFICULT QUESTION OF LAW OR PROVISION
IN THE CBA.
The general rule is that if it is a past error that is being corrected, no vested right may be said to have arisen
therefrom nor any diminution of benefit may have resulted by virtue of the correction thereof. The error, however, must
be corrected immediately after its discovery; otherwise, the rule on non-diminution of benefits would still apply.
The following cases would illuminate this principle:
(a) Globe Mackay Cable and Radio Corporation v. NLRC,2 where the Supreme Court ruled on the proper
computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner corporation,
pursuant to Wage Order No. 6 (effective October 30, 1984), increased the COLA of its monthly-paid
employees by multiplying the P3.00 daily COLA by 22 days which is the number of working days in the
company. The union disagreed with the computation, claiming that the daily COLA rate of P3.00 should
be multiplied by 30 days which has been the practice of the company for several years. The Supreme
Court, however, upheld the contention of the petitioner corporation. It held that the grant by the
employer of benefits through an erroneous application of the law due to absence of clear administrative
guidelines is not considered a voluntary act which cannot be unilaterally discontinued.
(b) TSPIC Corp. v. TSPIC Employees Union [FFW],3 where the Supreme Court reiterated the rule
enunciated in Globe-Mackay, that an erroneously granted benefit may be withdrawn without violating the
prohibition against non-diminution of benefits. No vested right accrued to individual respondents when
TSPIC corrected its error by crediting the salary increase for the year 2001 against the salary increase
granted under Wage Order No. 8, all in accordance with the CBA. Hence, any amount given to the
employees in excess of what they were entitled to, as computed above, may be legally deducted by TSPIC
from the employees’ salaries.
But if the error does not proceed from the interpretation or construction of a law or a provision in the CBA,
the same may ripen into a company practice.
Example:
(a) Hinatuan Mining Corporation and/or the Manager v. NLRC,4 where the act of the employer in
granting separation pay to resigning employees, despite the fact that the Labor Code does not grant it, was
considered an established employer practice.
C.
LEAVES
1.
SERVICE INCENTIVE LEAVE
(See discussion above under the topic of
CONDITIONS OF EMPLOYMENT)
2.
MATERNITY LEAVE
 What is the new 105-DAY EXPANDED MATERNITY LEAVE LAW (R.A. NO. 11210)?
On February 20, 2019, President Rodrigo Duterte approved R.A. No. 11210, otherwise known as the “105-Day
Expanded Maternity Leave Law.”5 This is the prevailing law on maternity leave benefit.
 Who are the women entitled to maternity leave?
All covered females, regardless of civil status, employment status, and the legitimacy of her child, are entitled to
maternity leave.
 What is the period of leave?
Under the old law: 60 days – for normal delivery; and 78 days – for caesarian delivery
Under the new law:
1 G.R. No. L-57636, May 16, 1983, 122 SCRA 267; 207 Phil. 2235.
2 G.R. No. 74156, June 29, 1988, 163 SCRA 71.
3 G.R. No. 163419, Feb. 13, 2008.
4 G.R. No. 117394, Feb. 21, 1997.
5 This law is entitled “An Act Increasing the Maternity Leave Period to One Hundred Five (105) Days for Female Workers with an Option to Extend for an Additional Thirty (30) Days
without Pay, and Granting an Additional Fifteen (15) Days for Solo Mothers and For Other Purposes.”
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1. Paid leave benefit granted to a qualified female worker in both the PUBLIC SECTOR and the
PRIVATE SECTOR (which is covered by the SSS, including those in the informal economy), for
the duration of:
Maternity Benefit LIVE CHILDBIRTH, regardless of MISCARRIAGE AND

the mode of delivery EMERGENCY TERMINATION OF
PREGNANCY
Period of maternity leave 105 days of paid leave 60 days of paid leave
For female worker qualified as a Additional fifteen (15) days of paid None
solo parent under R.A. No. 8972, or leave
the "Solo Parents' Welfare Act of
2000"
EXTENDED MATERNITY LEAVE: Available only in case of live None

An option to extend for an additional childbirth
thirty (30) days without pay
FREQUENCY OF THE GRANT In every instance of live childbirth, In every instance of pregnancy,
regardless of frequency miscarriage or emergency
termination of pregnancy,
regardless of frequency
ALLOCATION OF MATERNITY A female worker entitled to Not available

LEAVE CREDITS to the child's maternity leave benefits may, at her
father or alternate caregiver option, allocate up to seven (7) days
of said benefits to the child's father
or alternate caregiver
NOTE: This discussion on the 2019 new maternity benefits law is being made here only for
academic purposes. It is highly unlikely that a question will be asked on this in the 2019 bar
exam because this law was passed way beyond the cut-off date of June 30, 2018.
 What is the amount granted under the old law?

Daily maternity benefit equivalent to 100% of her average daily salary credit for sixty (60) days or seventy-
eight (78) days in case of caesarian delivery/
 What is the number of delivery or miscarriage covered under the old law?
The maternity benefits shall be paid only for the first four (4) deliveries or miscarriages.
 Is an unmarried woman entitled to maternity leave benefit under both old and new law?
Yes. For as long as a woman is pregnant, she is entitled to maternity leave benefit regardless of whether she is
married or unmarried.
3.
PATERNITY LEAVE
 What is paternity leave benefit?
“Paternity leave” covers a married male employee allowing him not to report for work for seven (7)
CALENDAR days but continues to earn the compensation therefor, on the condition that his spouse has delivered a
child or suffered miscarriage for purposes of enabling him to effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born child.
“Delivery” includes childbirth or any miscarriage.
“Spouse” refers to the lawful wife. For this purpose, “lawful wife” refers to a woman who is legally married to
the male employee concerned.
“Cohabiting” refers to the obligation of the husband and wife to live together.
 What is the covered total number of deliveries?
Every married employee in the private and public sectors is entitled to a paternity leave of seven (7) calendar
days with full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting.
Paternity leave benefits are granted to the qualified employee after the delivery by his wife, without prejudice to
an employer allowing an employee to avail of the benefit before or during the delivery, provided that the total number
of days should not exceed seven (7) calendar days for each delivery.
 Is an unavailed paternity leave benefit convertible to cash?
No. In the event that the paternity leave benefit is not availed of, said leave shall not be convertible to cash.
4.
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SOLO PARENT LEAVE

(R.A. No. 8972)
 What is the solo parent leave?
This is the leave benefit granted to a male or female solo parent to enable him/her to perform parental duties
and responsibilities where his/her physical presence is required.
 How many days may be availed of as solo parent leave?
The solo parent leave shall not be more than seven (7) WORKING days every year to a solo parent who has
rendered service of at least one (1) year, to enable him/her to perform parental duties and responsibilities where
his/her physical presence is required. This leave shall be non-cumulative.
It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any
other leave benefits provided under existing laws or agreements.
 Who is a solo parent?
The term "solo parent" refers to any individual who falls under any of the following categories:
(1) A woman who gives birth as a result of rape and other crimes against chastity even without a final
conviction of the offender: Provided, That the mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto separation
from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the children;
(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment
of marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the
children;
(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least
one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having
others care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of the death,
abandonment, disappearance or prolonged absence of the parents or solo parent.
 What is the effect of change of status of the solo parent?
A change in the status or circumstance of the parent claiming benefits under the law, such that he/she is no
longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits.
 Who are considered children under this law?
"Children" refer to those living with and dependent upon the solo parent for support who are unmarried,
unemployed and not more than eighteen (18) years of age, or even over eighteen (18) years but are incapable of self-
support because of mental and/or physical defect/disability.
 Is an unavailed parental leave convertible to cash?
No. In the event that the parental leave is not availed of, said leave shall not be convertible to cash unless
specifically agreed upon previously.
5.
LEAVE BENEFITS FOR WOMEN WORKERS
UNDER R.A. 9710 AND R.A. 9262
a.
SPECIAL LEAVES FOR WOMEN WORKERS
(R.A. No. 9710)
 What is this special leave benefit?
A special leave benefit for women was granted under R.A. No. 9710, otherwise known as “The Magna Carta of
Women” [August 14, 2009]. Thus, any female employee in the public and private sector regardless of age and civil status
shall be entitled to a special leave of two (2) months with full pay based on her gross monthly compensation subject
to existing laws, rules and regulations due to surgery caused by gynecological disorders under the following terms
and conditions:
1. She has rendered at least six (6) months continuous aggregate employment service for the last twelve (12)
months prior to surgery;
2. In the event that an extended leave is necessary, the female employee may use her earned leave credits; and
3. This special leave shall be non-cumulative and non-convertible to cash.
“Gynecological disorders” refer to disorders that would require surgical procedures such as, but not limited
to, dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian
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tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. Gynecological surgeries shall also
include hysterectomy, ovariectomy, and mastectomy.
 Is this leave similar to maternity leave?
No. This leave should be distinguished from maternity leave benefit, a separate and distinct benefit, which may
be availed of in case of childbirth, miscarriage, complete abortion or emergency termination of pregnancy.
A woman, therefore, may avail of this special leave benefit in case she undergoes surgery caused by
gynecological disorder and at the same time maternity benefit as these two leaves are not mutually exclusive.
b.
LEAVE FOR VICTIMS OF VIOLENCE
AGAINST WOMEN AND CHILDREN
(R.A. No. 9262)
 What is this kind of leave?
This special leave is granted to a woman employee who is a victim under this law. It is for a total of ten (10)
days of paid leave of absence, in addition to other paid leaves under the law. It is extendible when the necessity arises
as specified in the protection order. Its purpose is to enable the woman employee to attend to the medical and legal
concerns relative to said law. This leave is not convertible to cash.
 What is the requirement for its entitlement?
At any time during the application of any protection order, investigation, prosecution and/or trial of the
criminal case, a victim of Violence Against Women and their Children (VAWC) who is employed shall be entitled to said
paid leave of up to ten (10) days. The Punong Barangay/kagawad or prosecutor or the Clerk of Court, as the case may
be, shall issue a certification at no cost to the woman that such an action is pending, and this is all that is required for
the employer to comply with the 10-day paid leave.
D.
SPECIAL GROUPS OF EMPLOYEES
1.
WOMEN
a.
DISCRIMINATION
 What are acts of discrimination under the Labor Code?

(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe
benefits, to a female employee as against a male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to promotion, training opportunities, study
and scholarship grants solely on account of their sexes.
 What are acts of discrimination under the Magna Carta of Women?
R.A. No. 9710, otherwise known as “The Magna Carta of Women,” is a comprehensive women’s human rights law
that seeks to eliminate discrimination against women by recognizing, protecting, fulfilling and promoting the rights of
Filipino women, especially those in marginalized sector.
Based on the definition of the term “Discrimination Against Women” in R.A. No. 9710, the following are
considered discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or
nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a basis
of equality of men and women, of human rights and fundamental freedoms in the political, economic,
social, cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative measure, or practice, that directly or indirectly
excludes or restricts women in the recognition and promotion of their rights and their access to and
enjoyment of opportunities, benefits or privileges;
3. A measure or practice of general application that fails to provide for mechanisms to offset or address sex or
gender-based disadvantages or limitations of women, as a result of which women are denied or restricted in
the recognition and protection of their rights and in their access to and enjoyment of opportunities,
benefits, or privileges; or women, more than men, are shown to have suffered the greater adverse effects of
those measures or practices; and
4. Discrimination compounded by or intersecting with other grounds, status, or condition, such as ethnicity,
age, poverty or religion.
Additionally, women are guaranteed their right to decent work. The State shall progressively realize and ensure
decent work standards for women that involve the creation of jobs of acceptable quality in conditions of freedom,
equity, security and human dignity.
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b.
STIPULATION AGAINST MARRIAGE
 Is the prohibition against marriage valid?

Article 136 of the Labor Code considers as an unlawful act of the employer to require as a condition for or
continuation of employment that a woman employee shall not get married or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated. It is likewise an unlawful act of the employer,
to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
 What are the relevant jurisprudence on prohibition against marriage?
1. Philippine Telegraph and Telephone Company (PT&T) v. NLRC.1 - It was declared here that the
company policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination afforded all women
workers by our labor laws and by no less than the Constitution.
2. Star Paper Corp. v. Simbol.2 - The following policies were struck down as invalid for violating the
standard of reasonableness which is being followed in our jurisdiction, otherwise called the “Reasonable
Business Necessity Rule”:
“1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of
relationship, already employed by the company.
“2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly
relationship during the course of their employment and then decided to get married, one of them should
resign to preserve the policy stated above.”
3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.3 In this case, the
prohibition against marriage embodied in the following stipulation in the employment contract was held as
valid:
“10. You agree to disclose to management any existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign voluntarily from the Company as
a matter of Company policy.”
The Supreme Court ruled that the dismissal based on this stipulation in the employment contract is a valid
exercise of management prerogative. The prohibition against personal or marital relationships with employees of
competitor companies upon its employees was held reasonable under the circumstances because relationships of that
nature might compromise the interests of the company. In laying down the assailed company policy, the employer only
aims to protect its interests against the possibility that a competitor company will gain access to its secrets and
procedures. Simply put, the reason behind the validity of such a policy is the avoidance of CONFLICT OF INTEREST.
c.
PROHIBITED ACTS
 What are the prohibited acts against women under the Labor Code?
Article 137 of the Labor Code and its implementing rule consider unlawful the followings acts of the employer:
1. To discharge any woman employed by him for the purpose of preventing such woman from enjoying
maternity leave, facilities and other benefits provided under the Labor Code;
2. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her
pregnancy;
3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may
again be pregnant;
4. To discharge any woman or any other employee for having filed a complaint or having testified or
being about to testify under the Labor Code; or
5. To require as a condition for or continuation of employment that a woman employee shall not get married
or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of marriage.
d.
SEXUAL HARASSMENT
(ANTI-SEXUAL HARASSMENT ACT)
(R.A. No. 7877)
 What are the 3 situations contemplated under this law?

R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations, namely:
(1) employment;
1 G.R. No. 118978, May 23, 1997, 272 SCRA 596, 605.
2 G.R. No. 164774, April 12, 2006.
3 G.R. No. 162994, Sept. 17, 2004.
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(2) education; and

(3) training environment.
 Can sexual harassment be committed also against a man?
Yes. Sexual harassment is not the sole domain of women as men may also be subjected to the same despicable
act. Said law does not limit the victim of sexual harassment to women.
 Who are the persons who may be held liable for sexual harassment?
Work, education or training-related sexual harassment is committed by any employer, employee, manager,
supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having
authority, influence or moral ascendancy over another in a work or training or education environment, demands,
requests or otherwise requires any sexual favor from another, regardless of whether the demand, request or requirement
for submission is accepted by the object of said act.
Further, any person who directs or induces another to commit any act of sexual harassment as defined in the
law, or who cooperates in the commission thereof by another without which it would not have been committed, shall
also be held liable under the law.
 How is sexual harassment committed in a work-related or employment environment?
In a work-related or employment environment, sexual harassment is committed when:
1. The sexual favor is made a condition in the hiring or in the employment, re-employment or continued
employment of said individual or in granting said individual favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or
classifying the employee which in any way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;
2. The above acts would impair the employee’s rights or privileges under existing labor laws; or
3. The above acts would result in an intimidating, hostile, or offensive environment for the employee.
 What are the duties of the employer in regard to sexual harassment complaints?
It is the duty of the employer to prevent or deter the commission of acts of sexual harassment and to provide
the procedures for the resolution or prosecution of acts of sexual harassment.
The employer or head of office is required to:
1. Promulgate appropriate rules and regulations, in consultation with and jointly approved by the employees or
students or trainees, through their duly designated representatives, prescribing the procedure for the
investigation of sexual harassment cases and the administrative sanctions therefor. The said rules and
regulations issued shall include, among others, guidelines on proper decorum in the workplace and
educational or training institutions.
2. Create a committee on decorum and investigation of cases on sexual harassment. The committee shall
conduct meetings, as the case may be, with officers and employees, teachers, instructors, professors,
coaches, trainors and students or trainees to increase understanding and prevent incidents of sexual
harassment. It shall also conduct the investigation of alleged cases constituting sexual harassment.
2.
MINORS
(R.A. 7610, as amended by R.A. 9231)
 Who is a “child” or “working child”?

For legal purposes, the term “child” refers to any person less than eighteen (18) years of age.
A “working child” refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work or economic activity that is not “child labor;” and
ii. when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the responsibility of his/her parents or legal guardian and where
only members of the child’s family are employed; or
(b) in “public entertainment or information” which refers to artistic, literary, and cultural performances
for television show, radio program, cinema or film, theater, commercial advertisement, public relations
activities or campaigns, print materials, internet, and other media.
 What are the working hours of a child?
The term “hours of work” includes (1) all time during which a child is required to be at a prescribed workplace,
and (2) all time during which a child is suffered or permitted to work. Rest periods of short duration during working
hours shall be counted as hours worked.
The following hours of work shall be observed for any child allowed to work under R.A. No. 9231 and its
Implementing Rules:
(a) For a child below 15 years of age, the hours of work shall not be more than twenty (20) hours per week,
provided that the work shall not be more than four (4) hours at any given day;
(b) For a child 15 years of age but below 18, the hours of work shall not be more than eight (8) hours a day,
and in no case beyond forty (40) hours a week; and
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(c) No child below 15 years of age shall be allowed to work between eight (8) o’clock in the evening and six
(6) o’clock in the morning of the following day and no child 15 years of age but below 18 shall be
allowed to work between ten (10) o’clock in the evening and six (6) o’clock in the morning of the
following day.
 What is the prohibition of employing minors in certain undertakings and advertisements?
No child below 18 years of age is allowed to be employed as a model in any advertisement directly or
indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products, gambling or any form of
violence or pornography.
3.
KASAMBAHAY
(R.A. No. 10361, otherwise known as
“Domestic Workers Act” or “Batas Kasambahay” )
 What is the coverage of the Kasambahay Law?
R.A. No. 10361 applies to all domestic workers employed and working within the country. It shall cover all
parties to an employment contract for the services of the following Kasambahay, whether on a live-in or live-out
arrangement, such as, but not limited to:
(a) General househelp;
(b) Yaya;
(c) Cook;
(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one household on an occupational basis.
 Who are EXCLUDED from its coverage?
The following are not covered:
(a) Service providers;
(b) Family drivers;
(c) Children under foster family arrangement; and
(d) Any other person who performs work occasionally or sporadically and not on an occupational basis.
 Who is a domestic worker or kasambahay?
“Domestic worker” or “kasambahay” refers to any person engaged in domestic work within an
employment relationship, whether on a live-in or live-out arrangement, such as, but not limited to, general househelp,
"yaya", cook, gardener, or laundry person, but shall exclude service providers, family drivers, children who are under
foster family arrangement, or any person who performs domestic work only occasionally or sporadically and not on an
occupational basis.
This term shall not include children who are under foster family arrangement which refers to children who
are living with a family or household of relative/s and are provided access to education and given an allowance
incidental to education, I.e., "baon", transportation, school projects, and school activities.
Because of these new terminologies prescribed in the law, the use of the term “househelper” may no longer be
legally correct.
 Is the employment contract required to be in writing?
Yes. The employment contract must be in writing and should contain the conditions set by law.
 What are the rights and privileges of a kasambahay?
The rights and privileges of the Kasambahay are as follows:
(a) Minimum wage;
(b) Other mandatory benefits, such as the daily and weekly rest periods, service incentive leave, and 13th
month pay;
(c) Freedom from employers' interference in the disposal of wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract;
(I) Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural practices.
The foregoing rights and privileges are discussed below.
 What is the minimum wage of kasambahay?
30
The minimum wage1 of the kasambahay as of December 2017 shall not be less than the following:
(a) ₱3,500 a month for those employed in the NCR;

(b) ₱2,500 to ₱4,000 a month for those employed in chartered cities and first class municipalities; and
(c) ₱1,800 to ₱3,000 a month for those employed in other municipalities.2
 Are the minimum wages subject to review by the RTWPBs or Regional Boards?
Yes. After one (1) year from the effectivity of the Kasambahay Law, and periodically thereafter, the
Regional Tripartite and Productivity Wage Boards (RTPWBs) shall review, and if proper, determine and adjust the
minimum wage rates of domestic workers.”
 What are some important principles on wage of kasambahay?
 Frequency of payment of wages. - The wages of the Kasambahay shall be paid at least once a month.
This is so because the minimum wage rates are on a monthly basis.
 The equivalent minimum daily wage rate of the Kasambahay shall be determined by dividing the
applicable minimum monthly rate by thirty (30) days.
 The amount of the minimum wage depends on the geographical area where the Kasambahay works.
 Payment of wages:
1. To whom paid. - It should be made on time directly to the Kasambahay to whom they are due in cash at least
once a month.
2. Deductions, prohibition; when allowed. - The employer, unless allowed by the Kasambahay through a
written consent, shall make no deductions from the wages other than that which is mandated by law such as for
SSS, PhilHealth or Pag-IBIG contributions.
3. Mode of payment. - It should be paid in cash and not by means of promissory notes, vouchers, coupons,
tokens, tickets, chits, or any object other than the cash wage as provided for under this Act.
4. Pay slip. – The employer shall at all times provide the Kasambahay with a copy of the pay slip containing the
amount paid in cash every pay day, and indicating all deductions made, if any. The copies of the pay slip shall
be kept by the employer for a period of three (3) years.
5. Prohibition on interference in the disposal of wages. – It shall be unlawful for the employer to interfere
with the freedom of the Kasambahay in the disposition of his/her wages, such as:
(a) Forcing, compelling, or obliging the Kasambahay to purchase merchandise, commodities or
other properties from the employer or from any other person; or
(b) Making use of any store or services of such employer or any other person.
6. Prohibition against withholding of wages. – It shall be unlawful for an employer, directly or indirectly, to
withhold the wages of the Kasambahay. If the Kasambahay leaves without any justifiable reason, any unpaid
salary for a period not exceeding fifteen (15) days shall be forfeited. Likewise, the employer shall not induce the
Kasambahay to give up any part of the wages by force, stealth, intimidation, threat or by any other means
whatsoever.
 What are important terms and conditions of employment of kasambahay?
The following is a rundown of the basic terms and conditions that should be observed in the employment of a
Kasambahay:
a. Employable age. - Children whose age is below 15 years are absolutely prohibited to work as
Kasambahay.
b. Normal daily hours of work. – Because R.A. No. 10361 does not contain any provision on the number of
normal hours of work that a Kasambahay should render in a day but merely prescribes said daily rest period
of eight (8) hours per day, it may be concluded that the Kasambahay should work for at least a total of
sixteen (16) hours per day as normal hours of work. However, it must be noted that the Labor Code does
not contain any provision on the normal hours of work of househelpers. Article 1695 of the Civil Code,
however, specifically provides that househelpers shall not be required to work for more than ten (10)
hours a day. Since R.A. No. 10361, a special law, is the most recent piece of legislation, it should prevail
over the general provision of the Civil Code.
c. Normal daily hours of work for working child-kasambahay is eight (8) hours per day.
d. 13th month pay. - The Kasambahay who has rendered at least one (1) month of service is entitled to a
13th month pay which shall not be less than one-twelfth (1/12) of his/her total basic salary earned in a
calendar year. The 13th month pay shall be paid not later than December 24 of every year or upon
separation from employment.
e. Daily rest period. – The Kasambahay shall be entitled to an aggregate daily rest period of eight (8)
hours.
1 Current Minimum Wage for Kasambahay as of December 2017.

2 No. 1 [E], 2019 Handbook on Workers’ Statutory Monetary Benefits, issued by the Bureau of Working Conditions, DOLE.
31
f. Weekly rest period. - The Kasambahay shall be entitled to at least twenty-four (24) consecutive hours
of rest in a week. The employer and the Kasambahay shall agree in writing on the schedule of the weekly
rest day but the preference of the Kasambahay, when based on religious grounds, shall be respected.
g. Service incentive leave. - A Kasambahay who has rendered at least one (1) year of service shall be entitled
to an annual service incentive leave of at least five (5) days with pay. Any unused portion of said annual
leave shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be convertible
to cash.
h. Social security benefits. - A Kasambahay who has rendered at least one (1) month of service shall be
covered by the Social Security System (SSS), Employees Compensation Commission (ECC), Philippine
Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund or Pag-IBIG, and shall
be entitled to all the benefits in accordance with their respective policies, laws, rules and regulations.
i. Obligation of employer to register and enroll with SSS, PhilHealth, and Pag-IBIG. - As employer of
the Kasambahay, he/she shall register himself/herself with, and enroll the latter as his/her employee to the
SSS, PhilHealth, and Pag-IBIG.
j. Deposits for loss or damage. - It shall be unlawful for the employer or any other person to require a
Kasambahay to make deposits from which deductions shall be made for the reimbursement of loss or
damage to tools, materials, furniture and equipment in the household.
k. Standard of treatment. - The Kasambahay shall be treated with respect by the employer or any member of
the household. He/she shall not be subjected to any kind of abuse, including repeated verbal or
psychological, nor be inflicted with any form of physical violence or harassment or any act tending to
degrade his/her dignity, as defined under the Revised Penal Code, Violence Against Women and their
Children Law (R.A. No. 9262), Special Protection of Children Against Child Abuse, Exploitation and
Discrimination Act (R.A. No. 7610) as amended by R.A. No. 9231, Anti-Trafficking in Persons Act of 2003
(R.A. No. 9208), and other applicable laws.
l. Board, lodging and medical attendance. - The employer shall provide for the basic necessities of the
Kasambahay, to include the following:
(1) At least three (3) adequate meals a day, taking into consideration the Kasambahay's religious beliefs
and cultural practices;
(2) Humane sleeping condition that respects the person's privacy for live-in arrangement; and
(3) Appropriate rest and medical assistance in the form of first-aid medicines, in case of illnesses and
injuries sustained during service without loss of benefits.
m. Opportunities for education and training. - The Kasambahay shall be afforded the opportunity to finish
basic education, which shall consist of elementary and secondary education. He/she may be allowed access to alternative
learning systems and, as far as practicable, higher education or technical vocational education and training.
n. Membership in labor organization. - The Kasambahay shall have the right to join a labor organization of
his/her own choosing for purposes of mutual aid and collective negotiation.
r. Health and safety. - The employer shall safeguard the safety and health of the Kasambahay in accordance
with the standards which the DOLE shall develop through the Bureau of Working Conditions (BWC) and the
Occupational Safety and Health Center (OSHC) within six (6) months from the promulgation of this IRR. The said
standards shall take into account the peculiar nature of domestic work.
s. Prohibition on debt bondage. - It shall be unlawful for the employer or any person acting on his/her
behalf to place the Kasambahay under debt bondage. “Debt bondage” refers to the rendering of service by the
Kasambahay as security or payment for a debt where the length and nature of service is not clearly defined or when the
value of the service is not reasonably applied in the payment of the debt.
t. Assignment to non-household work. - The employer shall not assign the Kasambahay to work, whether in
full or part-time, in a commercial, industrial or agricultural enterprise at a wage rate lower than that provided for
agricultural or non-agricultural workers.
If so assigned, the Kasambahay will no longer be treated as such but as a regular employee of the
establishment.
 What are the rules on termination of Kasambahay?
a. Pre-termination of employment. – The following rules shall be observed:
(1) In case the duration of employment is specified in the contract, the Kasambahay and the employer may
mutually agree upon notice to terminate the contract of employment before the expiration of its term.
(2) In case the duration is not determined by stipulation or by nature of service, the employer or the
Kasambahay may give notice to end the employment relationship five (5) days before the intended
termination of employment.
b. Termination of employment initiated by the Kasambahay. - The Kasambahay may terminate the
employment relationship at any time before the expiration of the contract for any of the following causes:
(1) Verbal or emotional abuse of the Kasambahay by the employer or any member of the household;
(2) Inhuman treatment including physical abuse of the Kasambahay by the employer or any member of the
household;
32
(3) Commission of a crime or offense against the Kasambahay by the employer or any member of the
household;
(4) Violation by the employer of the terms and conditions of the employment contract and other standards set
forth in the law;
(5) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the household; and
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary due, not exceeding the equivalent of 15 days’ work,
shall be forfeited. In addition, the employer may recover from the Kasambahay deployment expenses, if any, if the
services have been terminated within six (6) months from employment.
c. Termination of employment initiated by the employer. - An employer may terminate the employment
of the Kasambahay at any time before the expiration of the contract for any of the following causes:
(1) Misconduct or willful disobedience by the Kasambahay of the lawful order of the employer in connection
with the former's work;
(2) Gross or habitual neglect or inefficiency by the Kasambahay in the performance of duties;
(3) Fraud or willful breach of the trust reposed by the employer on the Kasambahay;
(4) Commission of a crime or offense by the Kasambahay against the person of the employer or any immediate
member of the employer's family;
(5) Violation by the Kasambahay of the terms and conditions of the employment contract and other standards
set forth under the law;
(6) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the household; and
(7) Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other than the above, he/she shall pay the Kasambahay
the earned compensation plus indemnity in the amount equivalent to fifteen (15) days’ work.
d. Invalid ground for termination. - Pregnancy and marriage of the Kasambahay are not valid grounds for
termination of employment.
e. Employment Certification. - Upon the termination of employment, the employer shall issue the
Kasambahay, within five (5) days from request, a certificate of employment indicating the nature, duration of the service
and work description.
4.
HOMEWORKERS
 What are important terms that should be noted in employment of homeworkers?

a. “Industrial homeworker” – It refers to a worker who is engaged in industrial homework.
b. “Industrial homework” – It refers to a system of production under which work for an employer or
contractor is carried out by a homeworker at his/her home. Materials may or may not be furnished by the employer or
contractor. It differs from regular factory production principally in that, it is a decentralized form of production where
there is ordinarily very little supervision or regulation of methods of work.
c. “Home” - It means any nook, house, apartment or other premises used regularly, in whole or in part, as a
dwelling place, except those situated within the premises or compound of an employer, contractor/subcontractor and
the work performed therein is under the active or personal supervision by or for the latter.
d. “Field personnel” – It refers to a non-agricultural employee who regularly performs his duties away from
the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
e. “Employer.” – It refers to any natural or artificial person who, for his own account or benefit, or on behalf
of any person residing outside the Philippines, directly or indirectly, or through any employee, agent, contractor,
subcontractor or any other person:
1. delivers or causes to be delivered any goods, articles or materials to be processed or fabricated in or about a
home and thereafter to be returned or to be disposed of or distributed in accordance with his direction; or
2. sells any goods, articles or materials for the purpose of having such goods or articles processed in or about a
home and then repurchases them himself or through another after such processing.
f. “Contractor” or “subcontractor” - It refers to any person who, for the account or benefit of an employer,
delivers or causes to be delivered to a homeworker, goods or articles to be processed in or about his home and thereafter
to be returned, disposed of or distributed in accordance with the direction of the employer.
g. “Processing” - It refers to manufacturing, fabricating, finishing, repairing, altering, packing, wrapping or
handling in any way connected with the production or preparation of an article or material.
 How is homework paid?
Immediately upon receipt of the finished goods or articles, the employer is required to pay the homeworker or
the contractor or subcontractor, as the case may be, for the work performed less the corresponding homeworker’s share
of SSS, PhilHealth and ECC premium contributions which should be remitted by the contractor or subcontractor or
employer to the SSS with the employer’s share. However, where payment is made to a contractor or subcontractor, the
homeworker should likewise be paid immediately after the goods or articles have been collected from the workers.
 What are prohibited homeworks?
33
No homework shall be performed on the following:

1. Explosives, fireworks and articles of like character;
2. Drugs and poisons; and
3. Other articles, the processing of which requires exposure to toxic substances.
5
NIGHT WORKERS
(R.A. No. 10151)
 What is the new law on night work?
R.A. No. 10151 [June 21, 2011].
a. Significance of the law.

R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and Article 131 [Exceptions] of the Labor
Code and accordingly renumbered the same articles. Additionally, it has inserted a new Chapter V of Title III of Book
III of the Labor Code entitled “Employment of Night Workers” which addresses the issue on nightwork of all
employees, including women workers. Chapter V covers newly renumbered Articles 154 up to 161 of the Labor Code.
b. Coverage of the law.
The law on nightwork applies not only to women but to all persons, who shall be employed or permitted or
suffered to work at night, except those employed in agriculture, stock raising, fishing, maritime transport and inland
navigation, during a period of not less than seven (7) consecutive hours, including the interval from midnight to
five o'clock in the morning, to be determined by the DOLE Secretary, after consulting the workers’
representatives/labor organizations and employers.
c. Night worker, meaning.
"Night worker" means any employed person whose work covers the period from 10 o'clock in the evening to
6 o'clock the following morning provided that the worker performs no less than seven (7) consecutive hours of
work.
d. Mandatory facilities.
(1) Suitable first-aid and emergency facilities as provided for under Rule 1960 (Occupational Health Services)
of the Occupational Safety and Health Standards (OSHS);
(2) Lactation station in required companies pursuant to R.A. No. 10028 (The Expanded Breastfeeding
Promotion Act of 2009);
(3) Separate toilet facilities for men and women;
(4) Facility for eating with potable drinking water; and
(5) Facilities for transportation and/or properly ventilated temporary sleeping or resting quarters, separate
for male and female workers, shall be provided except where any of the following circumstances is
present:
i. Where there is an existing company guideline, practice or policy, CBA or any similar agreement
between management and workers providing for an equivalent or superior benefit; or
ii. Where the start or end of the night work does not fall within 12 midnight to 5 o'clock in the
morning; or
iii. Where the workplace is located in an area that is accessible 24 hours to public transportation;
iv. Where the number of employees does not exceed a specified number as may be provided for by the
DOLE Secretary in subsequent issuances.
e. Maternity leave benefits under existing laws cannot be diminished.
6.
APPRENTICES AND LEARNERS
 What are important apprenticeship-related terms?
“Apprenticeship” means practical training on the job supplemented by related theoretical instructions
involving apprenticeable occupations and trades as may be approved by the DOLE Secretary. It is a training within
employment with compulsory related theoretical instructions involving a contract between an apprentice and an
employer or an enterprise on an approved apprenticeable occupation.
An “apprentice” is a worker who is covered by a written apprenticeship agreement with an individual
employer or any of the entities recognized under the law. He is a person undergoing training for an approved
apprenticeable occupation during an established period and covered by an apprenticeship agreement.
An “apprenticeable occupation” means any trade, form of employment or occupation approved for
apprenticeship by the DOLE Secretary, which requires for proficiency, more than three (3) months of practical
training on the job supplemented by related theoretical instructions. It is an occupation officially endorsed by a
tripartite body and approved for apprenticeship by TESDA.
An “apprenticeship agreement” is an employment contract wherein the employer binds himself to train the
apprentice and the apprentice in turn accepts the terms of the training and agrees to work for the employer for a
recognized apprenticeable occupation, emphasizing the rights, duties and responsibilities of each party.
 What are important learnership-related terms?
34
“Learnership” refers to any practical training on learnable occupation which may or may not be supplemented
by related theoretical instructions.
“Learner” refers to a person hired as a trainee in semi-skilled and other industrial occupations which are non-
apprenticeable and which may be learned through practical training on the job for a period not exceeding three (3)
months, whether or not such practical training is supplemented by theoretical instructions.
“Learnership agreement” refers to the employment and training contract entered into between the employer
and the learner.
 What are the distinctions between learnership and apprenticeship?
The following are the distinctions:
Criteria Learnership Apprenticeship
Practical training Practical training on-the-job Practical training on-the-job
Training agreement Learnership Agreement Apprenticeship Agreement
Learnable occupations consisting of Apprenticeable occupations or any

semi-skilled and other industrial trade, form of employment or
Occupation. occupations which are non- occupation approved for apprenticeship
apprenticeable by the DOLE Secretary
Theoretical May or may not be supplemented Should always be supplemented by

instructions by related theoretical instructions related theoretical instructions
Ratio of theoretical Normal ratio is 100 hours of Normal ratio is 100 hours of theoretical
instructions and on- theoretical instructions for every instructions for every 2,000 hours of
the-job training 2,000 hours of practical or on-the- practical or on-the-job training
job training
Duration of training Practical training on the job for a Practical training on the job of more
period not exceeding three (3) than three (3) months but not over
months six (6) months
Circumstances No similar provision in the Labor Code

Article 74 of the Labor Code,
justifying hiring of
expressly prescribes the pre-
trainees
requisites before learners may be
validly employed, to wit:
(a) When no experienced workers

are available;
(b) The employment of learners is

necessary to prevent
curtailment of employment
opportunities; and
(c) The employment does not

create unfair competition in
terms of labor costs or impair
or lower working standards.
Limitation on the A participating enterprise is allowed No similar cap

number of trainees to take in learners only up to a
maximum of twenty percent (20%)
of its total regular workforce
Option to employ The enterprise is obliged to hire The enterprise is given only an
the learner after the lapse of the “option” to hire the apprentice as an
learnership period employee.
Wage rate Seventy-five percent (75%) of the Seventy-five percent (75%) of the
statutory minimum wage. statutory minimum wage.
Qualifications No qualifications expressly

Article 59 of the Labor Code requires
mentioned in the law the apprentice:
(a) Be at least fourteen (14) years
of age;
(b) Possess vocational aptitude and

capacity for appropriate tests;
and
(c) Possess the ability to

comprehend and follow oral and
35
written instructions.
 How is the conflict in the age requirement for apprentices resolved?

The age prescribed for apprentices under Article 59 is 14 years of age.
However, the Implementing Rules set the age requirement at fifteen (15) years of age.
Notably, there is a difference in the age requirement between the 14-year old prescribed in the law and the 15-
year old enunciated in the Implementing Rules. Generally, the well-settled rule of legal hermeneutics dictates that if there is
a conflict between the law and its implementing rule or regulation, the provision of the former should prevail over the
latter. The implementing rule cannot certainly operate to amend the law. Consequently, the minimum age requirement
should have been fourteen (14) years of age except for the fact that the age requirement in the said Implementing Rules is
based on and more congruent with latest legislation, more particularly, the 2003 law, R.A. No. 9231,1 where it is
provided that:
(1) All persons under eighteen (18) years of age shall be considered as a “child”; and
(2) Children below fifteen (15) years of age shall not be employed except if he/she falls under any of the
exceptions2 mentioned and enumerated in the law.3
Apprenticeship is not one of the exceptions, therefore, this prohibition on employing an apprentice below the
age of fifteen (15) years applies to apprentices. Consequently, the proper age qualification is fifteen (15) years but not
because of the Implementing Rules’ provision as mentioned above but by reason of R.A. No. 9231.
7.
PERSONS WITH DISABILITIES
 What is the applicable law to PWDs?
R.A. No. 7277,4 otherwise known as the “Magna Carta for Disabled Persons.” The provisions on handicapped
workers found in the Labor Code (Articles 78 to 81) are no longer applicable.
 What are important definitions related to PWDs?
1. “Persons with Disability” or “PWD” are those suffering from restriction or different abilities, as a result
of a mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being.
2. “Impairment” refers to any loss, diminution or aberration of psychological, physiological, or anatomical
structure or function.
3. “Disability” means (1) a physical or mental impairment that substantially limits one or more psychological,
physiological or anatomical functions of an individual or activities of such individual; (2) a record of such an
impairment; or (3) being regarded as having such an impairment.
4. “Handicap” refers to a disadvantage for a given individual, resulting from an impairment or a disability that
limits or prevents the function or activity that is considered normal given the age and sex of the individual.
5. “Marginalized Persons with Disability” refer to persons with disability who lack access to rehabilitative
services and opportunities to be able to participate fully in socio-economic activities and who have no means
of livelihood and whose incomes fall below the poverty threshold.
 What is meant by EQUAL OPPORTUNITY FOR EMPLOYMENT?
Under the law,5 PWDs are entitled to equal opportunity for employment. Consequently, no PWD shall be
denied access to opportunities for suitable employment. A qualified employee with disability shall be subject to the same
terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able-bodied person.
1 Entitled “AN ACT PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND AFFORDING STRONGER PROTECTION FOR THE WORKING
CHILD, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 7610, AS AMENDED, OTHERWISE KNOWN AS THE ‘SPECIAL PROTECTION OF CHILDREN AGAINST
CHILD ABUSE, EXPLOITATION AND DISCRIMINATION ACT’ approved on December 19, 2003.
2 The exceptions, as enumerated in Section 12 of R.A. No. 7610, as amended by Section 2 of R.A. No. 9231 are as follows:
(1) When a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/her family are employed: Provided, however, That
his/her employment neither endangers his/her life, safety, health, and morals, nor impairs his/her normal development: Provided, further, That the parent or legal guardian shall
provide the said child with the prescribed primary and/or secondary education; or
(2) Where a child's employment or participation in public entertainment or information through cinema, theater, radio, television or other forms of media is essential: Provided, That the
employment contract is concluded by the child's parents or legal guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of
Labor and Employment: Provided, further, That the following requirements in all instances are strictly complied with:
(a) The employer shall ensure the protection, health, safety, morals and normal development of the child;cralaw
(b) The employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration, and the duration and
arrangement of working time; and
(c) The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child.
In the above exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and
Employment which shall ensure observance of the above requirements.
3 Article 59, Labor Code; Section 11, Rule VI, Book II, Rules to Implement the Labor Code.
4 Approved on March 24, 1992.
5 Under R.A. No. 7277, otherwise known as the “Magna Carta for Disabled Persons” [now known as “Magna Carta for Persons with Disability”.
36
Five percent (5%) of all casual emergency and contractual positions in the Departments of Social Welfare and
Development, Health, Education and other government agencies, offices or corporations engaged in social development
shall be reserved for PWDs.1
 Are PWDs eligible for apprenticeship and learnership?
Yes. Under R.A. No. 7277, it is provided that subject to the provisions of the Labor Code, as amended, PWDs
shall be eligible as apprentices or learners; provided that their handicap is not as much as to effectively impede the
performance of job operations in the particular occupation for which they are hired and provided further that after the
lapse of the period of apprenticeship, if found satisfactory in the job performance, they shall be eligible for employment.
 What is the applicable wage rate to PWDs?
Under R.A. No. 7277, the wage rate of PWDs is 100% of the applicable minimum wage.
a.
DISCRIMINATION
 What are the forms of prohibited discriminatory acts against PWDs in terms of employment?
No entity, whether public or private, shall discriminate against a qualified PWD by reason of disability in regard
to job application procedures, the hiring, promotion, or discharge of employees, employee compensation, job training,
and other terms, conditions and privileges of employment. The following constitute acts of discrimination:
(a) Limiting, segregating or classifying a job applicant with disability in such a manner that adversely affects
his work opportunities;
(b) Using qualification standards, employment tests or other selection criteria that screen out or tend to screen
out a PWD unless such standards, tests or other selection criteria are shown to be job-related for the
position in question and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration that:
(1) have the effect of discrimination on the basis of disability; or
(2) perpetuate the discrimination of others who are subject to common administrative control.
(d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits, to a
qualified employee with disability, by reason of his disability, than the amount to which a non-disabled
person performing the same work is entitled;
(e) Favoring a non-disabled employee over a qualified employee with disability with respect to promotion,
training opportunities, and study and scholarship grants solely on account of the latter’s disability;
(f) Re-assigning or transferring an employee with a disability to a job or position he cannot perform by reason
of his disability;
(g) Dismissing or terminating the services of an employee with disability by reason of his disability unless the
employer can prove that he impairs the satisfactory performance of the work involved to the prejudice of
the business entity; provided, however, that the employer first sought to provide reasonable
accommodations for persons with disability;
(h) Failing to select or administer in the most effective manner employment tests which accurately reflect the
skills, aptitude or other factor of the applicant or employee with disability that such tests purports to
measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if any;
and
(i) Excluding PWD from membership in labor unions or similar organizations.
b.
INCENTIVES FOR EMPLOYERS
 What are the incentives for employers who employ PWDs?

To encourage the active participation of the private sector in promoting the welfare of PWDs and to ensure
gainful employment for qualified persons with disability, adequate incentives shall be provided to private entities which
employ PWDs.
Private entities that employ PWDs who meet the required skills or qualifications, either as a regular employee,
apprentice or learner, shall be entitled to an additional deduction from their gross income equivalent to twenty-five
percent (25%) of the total amount paid as salaries and wages to persons with disability; provided, however, that such
entities could present proof as certified by the Department of Labor and Employment (DOLE) that PWDs are under
their employ and provided further that the employee with disability is accredited with the DOLE and the Department of
Health as to his disability, skills and qualifications.
Private entities that improve or modify their physical facilities in order to provide reasonable accommodation
for PWDs shall also be entitled to an additional deduction from their net taxable income equivalent to fifty percent
(50%) of the direct costs of the improvements or modifications.
------------oOo------------
1 Section 5, Chapter 1, Title II, R.A. No. 7277.

37
SYLLABUS
MAJOR TOPIC 4
SOCIAL WELFARE LEGISLATION
A.
SSS LAW
(R.A. No. 8282)
R.A. 8282, REPEALED BY R.A. 11199.

The 2019 Labor Law Syllabus still prescribed R.A. No. 8282 as the reference for the discussion of the SSS Law.
However, on February 07, 2019, President Duterte approved R.A. No. 11199,1 otherwise known as the “Social Security
Act of 2018,” which expressly repealed2 R.A. No. 8282.
This topic therefore will be discussed in accordance with R.A. No. 8282 since the RA No 11199 was passed
way beyond the cut-off date of June 30, 2019 by the Supreme Court Bar Examinations Committee.
 Who are covered employers?
a. An employer or any person who uses the services of another person in business, trade, industry or any
undertaking.
b. A social, civic, professional, charitable and other non-profit organizations which hire the services of
employees are considered “employers.”
c. A foreign government, international organization or its wholly-owned instrumentality such as an embassy in
the Philippines, may enter into an administrative agreement with the SSS for the coverage of its Filipino
employees.
 Who are compulsorily covered employees?
a. A private employee, whether permanent, temporary or provisional, who is not over 60 years old.
b. A domestic worker or kasambahay who has rendered at least one (1) month of service.
c. A Filipino seafarer upon the signing of the standard contract of employment between the seafarer and the
manning agency which, together with the foreign ship owner, act as employers.
d. An employee of a foreign government, international organization or their wholly-owned instrumentality
based in the Philippines, which entered into an administrative agreement with the SSS for the coverage of
its Filipino workers.
e. The parent, spouse or child below 21 years old of the owner of a single proprietorship business.
 Are self-employed persons covered?
Yes. A self-employed person, regardless of trade, business or occupation, with an income of at least P1,000 a
month and not over 60 years old, should register with the SSS. Included, but not limited to, are the following self-
employed persons:
a. Self-employed professionals;
b. Business partners, single proprietors and board directors;
c. Actors, actresses, directors, scriptwriters and news reporters who are not under an employer-employee
relationship;
d. Professional athletes, coaches, trainers and jockeys;
e. Farmers and fisherfolks; and
f. Workers in the informal sector such as cigarette vendors, watch-your-car boys, hospitality girls, among
others.
Unless otherwise specified, all provisions of the law, R.A. No. 8282, applicable to covered employees shall also
be applicable to the covered self-employed persons.
A self-employed person shall be both employee and employer at the same time.
 Who may be covered voluntarily?
1. Separated Members
A member who is separated from employment or ceased to be self-employed/OFW/non-working spouse
and would like to continue contributing.
2. Overseas Filipino Workers (OFWs)
A Filipino recruited in the Philippines by a foreign-based employer for employment abroad or one who
legitimately entered a foreign country (i.e., tourist, student) and is eventually employed.
3. Non-working spouses of SSS members
1 R.A. No. 11199 is entitled “AN ACT RATIONALIZING AND EXPANDING THE POWERS AND DUTIES OF THE SOCIAL SECURITY COMMISSION TO ENSURE THE LONG-
TERM VIABlLITY OF THE SOCIAL SECURITY SYSTEM, REPEALING FOR THE PURPOSE REPUBLfC ACT NO. 1161, AS AMENDED BY REPUBLIC ACT NO. 8282,
OTHERWISE KNOWN AS THE ‘SOCIAL SECURITY ACT OF 1997.’”
2 R.A. No. 11199 embodies the following provision: “SEC. 33. Repealing Clause. - Republic Act No. 1161 and Republic Act No. 8282 and all other laws, proclamations, executive
orders, rules and regulations or parts thereof inconsistent with this Act are hereby repealed, modified or amended accordingly: Provided, That no person shall be deemed to be
vested with any property or other right by virtue of the enactment or operation of this Act.”
38
A person legally married to a currently employed and actively paying SSS member who devotes full time in
the management of household and family affairs may be covered on a voluntary basis, provided there is the
approval of the working spouse. The person should never have been a member of the SSS. The
contributions will be based on 50 percent (50%) of the working spouse’s last posted monthly salary credit
but in no case shall it be lower than P1,000.
 What is the effective date of coverage?
For compulsory coverage:
1. For employer - Compulsory coverage of the employer shall take effect on the first day of his operation or
on the first day he hires employee/s. The employer is given only 30 days from the date of employment of
employee to report the person for coverage to the SSS.
2. For employee - Compulsory coverage of the employee shall take effect on the first day of his employment.
3. For self-employed - The compulsory coverage of the self-employed person shall take effect upon his
registration with the SSS or upon payment of the first valid contribution, in case of initial coverage.
For voluntary coverage:
1. For an OFW – upon first payment of contribution, in case of initial coverage.
2. For a non-working spouse – upon first payment of contribution.
3. For a separated member – on the month he/she resumed payment of contribution.
 Who are excluded employers?
Government and any of its political subdivisions, branches or instrumentalities, including corporations owned
or controlled by the Government with original charters.
 Who are excluded employees?
Workers whose employment or service falls under any of the following circumstances are not covered:
(1) Employment purely casual and not for the purpose of occupation or business of the employer;
(2) Service performed on or in connection with an alien vessel by an employee if he is employed when such
vessel is outside the Philippines;
(3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof;
(4) Service performed in the employ of a foreign government or international organization, or their wholly-
owned instrumentality: Provided, however, That this exemption notwithstanding, any foreign government,
international organization or their wholly-owned instrumentality employing workers in the Philippines or
employing Filipinos outside of the Philippines, may enter into an agreement with the Philippine
Government for the inclusion of such employees in the SSS except those already covered by their
respective civil service retirement systems: Provided, further, That the terms of such agreement shall conform
with the provisions of R.A. No. 8282 on coverage and amount of payment of contributions and benefits:
Provided, finally, That the provisions of this Act shall be supplementary to any such agreement; and
(5) Such other services performed by temporary and other employees which may be excluded by regulation of
the Social Security Commission. Employees of bona-fide independent contractors shall not be deemed
employees of the employer engaging the service of said contractors.
 What are the classifications of benefits?
The SSS benefits may be classified into two (2) as follows:
(a) Social security benefits:
1) Sickness
2) Maternity
3) Retirement
4) Disability
5) Death and funeral.
(b) Employees’ compensation benefits.
 Who are primary beneficiaries?
The following are primary beneficiaries:
1. The dependent spouse until he or she remarries;
2. The dependent legitimate, legitimated or legally adopted, and illegitimate children who are not yet
21 years of age.
The dependent illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated or
legally adopted children. However, in the absence of the dependent legitimate, legitimated children of the
member, his/her dependent illegitimate children shall be entitled to 100% of the benefits
 Who are secondary beneficiaries?
The following are secondary beneficiaries:
1. The dependent parents, in the absence of the primary beneficiaries.
2. Any other person designated by the member as his/her secondary beneficiary, in the absence of all the
foregoing primary beneficiaries and dependent parents.
B.
GSIS LAW
(R.A. No. 8291)
39
 Who are compulsorily required to become members of the GSIS?

1. All government personnel, whether elective or appointive, irrespective of status of appointment, provided
they are receiving fixed monthly compensation and have not reached the mandatory retirement age of 65 years, are
compulsorily covered as members of the GSIS and shall be required to pay contributions.
2. However, employees who have reached the retirement age of 65 or more shall also be covered, subject to the
following rules:
An employee who is already beyond the mandatory retirement age of 65 shall be compulsorily covered and be
required to pay both the life and retirement premiums under the following situations:
a. An elective official who at the time of election to public office is below 65 years of age and will be 65 years
or more at the end of his term of office, including the period/s of his re-election to public office thereafter
without interruption.
b. Appointive officials who, before reaching the mandatory age of 65, are appointed to government position
by the President of the Republic of the Philippines and shall remain in government service at age beyond
65.
c. Contractual employees including casuals and other employees with an employee-government agency
relationship are also compulsorily covered, provided they are receiving fixed monthly compensation and
rendering the required number of working hours for the month.
 What are the classes of membership in the GSIS?
Membership in the GSIS is classified either by type or status of membership.
 As to type of members, there are regular and special members:
(a) Regular Members – are those employed by the government of the Republic of the Philippines, national
or local, legislative bodies, government-owned and controlled corporations (GOCC) with original
charters, government financial institutions (GFIs), except uniformed personnel of the Armed Forces of
the Philippines, the Philippine National Police, Bureau of Jail Management and Penology (BJMP) and
Bureau of Fire Protection (BFP), who are required by law to remit regular monthly contributions to the
GSIS.
(b) Special Members – are constitutional commissioners, members of the judiciary, including those with
equivalent ranks, who are required by law to remit regular monthly contributions for life insurance
policies to the GSIS in order to answer for their life insurance benefits defined under RA 8291.
 As to status of membership, there are active and inactive members.
(a) Active member – refers to a member of the GSIS, whether regular or special, who is still in the
government service and together with the government agency to which he belongs, is required to pay
the monthly contribution.
(b) Inactive member – a member who is separated from the service either by resignation, retirement,
disability, dismissal from the service, retrenchment or, who is deemed retired from the service under this
Act.
 When does membership become effective?
The effective date of membership shall be the date of the member’s assumption to duty on his original
appointment or election to public office.
 What is the effect of separation from the service?
A member separated from the service shall continue to be a member, and shall be entitled to whatever benefits
he has qualified to in the event of any contingency compensable under the GSIS Law.
 Who are excluded from the compulsory coverage of the GSIS Law?
The following employees are excluded from compulsory coverage:
(a) Uniformed personnel of the Armed Forces of the Philippines (AFP), Philippine National Police (PNP),
Bureau of Fire Protection (BFP) and Bureau of Jail Management and Penology (BJMP);
(b) Barangay and Sanggunian Officials who are not receiving fixed monthly compensation;
(c) Contractual Employees who are not receiving fixed monthly compensation; and
(d) Employees who do not have monthly regular hours of work and are not receiving fixed monthly
compensation.
 What are the kinds of benefits under the GSIS Law?

The following are the benefits under the GSIS Law:
(a) Compulsory Life Insurance Benefits under the Life Endowment Policy (LEP)
(b) Compulsory Life Insurance Benefits under the Enhanced Life Policy (ELP)
(c) Retirement Benefits
(d) Separation Benefit
(e) Unemployment Benefit
(f) Disability Benefits
(g) Survivorship Benefits
(h) Funeral Benefits
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 Who are beneficiaries under the GSIS Law?

There are two (2) kinds of beneficiaries under the GSIS Law as follows:
1. Primary beneficiaries — The legal dependent spouse until he/she remarries and the dependent children.
2. Secondary beneficiaries — The dependent parents and, subject to the restrictions on dependent children,
the legitimate descendants.
 Who are dependents under the GSIS Law?
Dependents shall be the following:
(a) the legitimate spouse dependent for support upon the member or pensioner;
(b) the legitimate, legitimated, legally adopted child, including the illegitimate child, who is unmarried, not
gainfully employed, not over the age of majority, or is over the age of majority but incapacitated and incapable
of self-support due to a mental or physical defect acquired prior to age of majority; and
(c) the parents who are dependent upon the member for support.
Gainful Occupation — Any productive activity that provided the member with income at least equal to the
minimum compensation of government employees.
C.
DISABILITY AND DEATH BENEFITS
1.
LABOR CODE1
 What is the State Insurance Fund [SIF]?
The State Insurance Fund (SIF) is built up by the contributions of employers based on the salaries of their
employees as provided under the Labor Code.
There are two (2) separate and distinct State Insurance Funds: one established under the SSS for private sector
employees; and the other, under the GSIS for public sector employees. The management and investment of the Funds
are done separately and distinctly by the SSS and the GSIS. It is used exclusively for payment of the employees’
compensation benefits and no amount thereof is authorized to be used for any other purpose.
 What are the agencies involved in the implementation of the Employees Compensation Program (ECP)?
There are three (3) agencies involved in the implementation of the Employees’ Compensation Program
(ECP). These are: (1) The Employees’ Compensation Commission (ECC) which is mandated to initiate, rationalize
and coordinate policies of the ECP and to review appealed cases from (2) the Government Service Insurance System
(GSIS) and (3) the Social Security System (SSS), the administering agencies of the ECP.
 Who are covered by the ECP?
a. General coverage. – The following shall be covered by the Employees’ Compensation Program (ECP):
1. All employers;
2. Every employee not over sixty (60) years of age;
3. An employee over 60 years of age who had been paying contributions to the System (GSIS/SSS) prior to
age sixty (60) and has not been compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS and should be compulsorily covered by both
Systems.
b. Sectors of employees covered by the ECP. - The following sectors are covered under the ECP:
1. All public sector employees including those of government-owned and/or controlled corporations and
local government units covered by the GSIS;
2. All private sector employees covered by the SSS; and
3. Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer, natural or juridical, is engaged in any trade,
industry or business undertaking in the Philippines; otherwise, they shall not be covered by the ECP.
 When is the start of coverage of employees under the ECP?
The coverage under the ECP of employees in the private and public sectors starts on the first day of their
employment.
 What are the benefits under the ECP?
The following are the benefits provided under the Labor Code:
a. Medical Benefits
b. Disability Benefits
1. Temporary total disability
2. Permanent total disability
3. Permanent partial disability
c. Death Benefit
d. Funeral Benefit
1 Relevant provisions: Articles 172 [166] to 215 [208-A], Title II, Book IV of the Labor Code.
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2.
POEA-STANDARD EMPLOYMENT CONTRACT
(POEA-SEC)
I.
MONETARY CLAIMS OF SEAFARERS
FOR SICKNESS AND DISABILITY BENEFITS
1. APPLICABLE LAW IN CASES INVOLVING THE POEA-SEC.

By express provision of Section 31 of the 2010 POEA-SEC, “[a]ny unresolved dispute, claim or grievance
arising out of or in connection therewith, including the annexes thereof, shall be governed by the laws of the Republic of
the Philippines, international conventions, treaties and covenants to which the Philippines is a signatory.” This provision
signifies that the terms agreed upon by the parties pursuant to the POEA-SEC are to be read and understood in
accordance with Philippine laws, particularly, Articles 197 [191],1 198 [192]2 and 199 [193]3 of the Labor Code and the
applicable implementing rules and regulations in case of any dispute, claim or grievance.
2. OFW’S BENEFIT CLAIMS VIS-À-VIS BENEFITS IN THE LABOR CODE.
It must be underscored that the claims for disability, death and burial benefits involving OFWs over which the
Labor Arbiters of the NLRC have jurisdiction, are not the same as the claims against the State Insurance Fund under
Title II, Book IV of the Labor Code for the same benefits, over which the Employees’ Compensation Commission
(ECC) has jurisdiction.
3. THE LABOR CODE’S CONCEPT OF PTD APPLIES TO CLAIMS OF SEAFARERS.
Permanent total disability (PTD) means the inability to do substantially all material acts necessary to the
prosecution of a gainful occupation without serious discomfort or pain and without material injury or danger to life. In
disability compensation, it is not the injury per se which is compensated but the incapacity to work. The concept of this
kind of disability under Article 198 [192] of the Labor Code is applicable to the permanent total disability of seafarers.
Consequently, was ruled in Kestrel Shipping,4 that it is now well-settled that the provisions of the Labor Code and
Amended Rules on Employees’ Compensation (AREC) implementing Title II, Book IV of the Labor Code on disabilities are
applicable to the case of seafarers such that the POEA-SEC is not the sole issuance that governs their rights in the event
of work-related death, injury or illness.
4. REQUISITES FOR COMPENSABILITY OF INJURY OR ILLNESS.
For disability to be compensable under Section 20 (A) of the 2010 POEA-SEC, two elements must concur:
(1) The injury or illness must be work-related; and
(2) The work-related injury or illness must have existed during the term of the seafarer's employment
contract.
The same provision defines a work-related illness as "any sickness as a result of an occupational disease listed
under Section 32-A of [the POEA-SEC] with the conditions set therein satisfied." There should be a "reasonable linkage
between the disease suffered by the employee and his work." Meanwhile, illnesses not mentioned under Section 32 of
the 2010 POEA-SEC are disputably presumed as work-related. Notwithstanding the presumption of work-relatedness of
an illness under Section 20 (A) (4), the seafarer must still prove by substantial evidence that his work conditions caused
or, at least, increased the risk of contracting the disease. This is because awards of compensation cannot rest entirely on
bare assertions and presumptions. In order to establish compensability of a non-occupational disease, reasonable proof
of work-connection is sufficient - direct causal relation is not required. It is thus this probability of connection, and not
the ultimate degree of certainty, that is the test of proof of compensation proceedings.
5. REQUISITES FOR COMPENSABILITY OF OCCUPATIONAL DISEASE.
In order for an occupational disease and the resulting disability or death to be compensable, Section 32-A
of the 2010 POEA-SEC requires that all of the following conditions, as supported by substantial evidence, must be
established:
1. The seafarer's work must involve the risks described in the POEA-SEC;
2. The disease was contracted as a result of the seafarer's exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors necessary to contract it;
and
4. There was no notorious negligence on the part of the seafarer.
6. SEAFARER HAS BURDEN OF PROOF IN DISABILITY CLAIMS.
The seafarer must still prove his entitlement to disability benefits by substantial evidence of his
illness' work-relatedness and that the ailment was acquired during the term of his contract. He must show that
he experienced health problems while at sea, the circumstances under which he developed the illness, as well as the
symptoms associated with it.
7. PRINCIPLE OF WORK-RELATEDNESS.
1 Temporary total disability.

2 Permanent total disability.
3 Permanent partial disability.
4 Kestrel Shipping Co., Inc. v. Munar, G.R. No. 198501, Jan. 30, 2013.
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The principle of work-relatedness of an injury or illness means that the seafarer's injury or illness has a
possible connection to one's work, and thus, allows the seafarer to claim disability benefits therefor.
The 2010 POEA-SEC defines a work-related injury as an "injury resulting in disability or death arising out of and in
the course of employment," and a work-related illness as "any sickness resulting to disability or death as a result of an occupational
disease listed under Section 32-A of this Contract with the conditions set therein satisfied.”
For illnesses not mentioned under Section 32, the 2010 POEA-SEC creates a disputable presumption in favor
of the seafarer that these illnesses are work-related. However, the presumption does not necessarily result in an
automatic grant of disability compensation. The claimant, on due process grounds, still has the burden to present
substantial evidence that his work conditions caused or at least increased the risk of contracting the illness. This is
because awards of compensation cannot rest entirely on bare assertions and presumptions. In order to establish
compensability of a non-occupational disease, reasonable proof of work-connection is sufficient – direct causal relation
is not required. Thus, probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings.
8. INJURY OR ILLNESS MUST OCCUR DURING TERM OF CONTRACT.
As earlier quoted, Section 20 (A) of the 2010 POEA-SEC categorically reads:
“The liabilities of the employer when the seafarer suffers work-related injury or illness during the
term of his contract are as follows: xxx”
Based on this provision, an injury or illness is compensable when, first, it is work-related and, second, the
injury or illness existed during the term of the seafarer’s employment contract. The correct approach in adjudging claims of
seafarers for death and disability benefits is to determine whether the claimants have proven the requisites of
compensability under Section 32-A of the 2010 POEA-SEC. This provision states that for an occupational disease
and the resulting disability or death to be compensable, all of the following conditions need to be satisfied:
(1) The seafarer's work must involve the risks described therein;
(2) The disease was contracted as a result of the seafarer's exposure to the described risks;
(3) The disease was contracted within a period of exposure and under such other factors necessary to
contract it; and
(4) There was no notorious negligence on the part of the seafarer.
9. DISABILITY ARISING FROM ACCIDENT.
Raised as issue in NFD International,1 is whether or not the incident where respondent figured should be classified
as accident or an injury. On May 16, 2003, when respondent had been on board the vessel M/V Shinrei for seven months
as Third Officer, the Captain and Chief Officer ordered him to carry 25 fire hydrant caps from the deck to the engine
workshop, then back to the deck to refit the caps. The next day, while carrying a heavy basketful of fire hydrant caps,
respondent felt a sudden snap on his back, with pain that radiated down to the left side of his hips. He immediately
informed the ship captain about his condition, and he was advised to take pain relievers. As the pain was initially tolerable,
he continued with his work. After a few days, the pain became severe, and respondent had difficulty walking. The Court
held that the snap on the back of respondent was not an accident, but an injury sustained by respondent from carrying the
heavy basketful of fire hydrant caps, which injury resulted in his disability. The injury cannot be said to be the result of an
accident, that is, an unlooked for mishap, occurrence, or fortuitous event, because the injury resulted from the
performance of a duty. Although respondent may not have expected the injury, yet, it is common knowledge that carrying
heavy objects can cause back injury, as what happened in this case. Hence, the injury cannot be viewed as unusual under
the circumstances, and is not synonymous with the term “accident” as defined above.
10. NON-COMPENSABILITY OF SELF-INFLICTED INJURY.
Section 20 (D) of the 2010 POEA-SEC is clear, viz.:
“SECTION 20. COMPENSATION AND BENEFITS
xxx
“D. No compensation and benefits shall be payable in respect of any injury, incapacity, disability or
death of the seafarer resulting from his willful or criminal act or intentional breach of his duties; Provided, however,
that the employer can prove that such injury, incapacity, disability or death is directly attributable to the
seafarer.”
From the above provision, the onus probandi falls on the employer to establish or substantiate its claim that the
seafarer's injury was caused by his willful or intentional act with the requisite quantum of evidence.
II.
EXISTENCE AND EXTENT OF SEAFARER’S DISABILITY,
HOW DETERMINED AND DECLARED
1. PRE-EMPLOYMENT MEDICAL EXAMINATION (PEME); NON-COMPENSABILITY OF

DISABILITY FROM PRE-EXISTING ILLNESS.
Pursuant to Section 20 (A) of the 2010 POEA-SEC, the employer is liable for disability benefits when the
seafarer suffers from a work-related injury or illness during the term of his contract. In this regard, Section 20 (E)
thereof mandates the seafarer to disclose all his pre-existing illnesses or conditions in his PEME; failing which shall
disqualify him from receiving disability compensation,2 viz.:
xxx
1 NFD International Manning Agents, Inc. v. Illescas, G.R. No. 183054, Sept. 29, 2010.
2 Ventura, Jr. v. Crewtech Shipmanagement Philippines, Inc., G.R. No. 225995, Nov. 20, 2017.
43
“E. A seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment
Medical Examination (PEME) shall be liable for misrepresentation and shall be disqualified from any
compensation and benefits. This is likewise a just cause for termination of employment and imposition of
appropriate administrative sanctions.”
At the outset, it bears to point out that Section 20 (E) of the 2010 POEA-SEC speaks of an instance where an
employer is absolved from liability when a seafarer suffers a work-related injury or illness on account of the latter's
willful concealment or misrepresentation of a pre-existing condition or illness. Thus, the burden is on the employer to
prove such concealment of a pre-existing illness or condition on the part of the seafarer to be discharged from any
liability. In this regard, an illness shall be considered as pre-existing if prior to the processing of the POEA contract, any
of the following conditions is present, namely:
(a) The advice of a medical doctor on treatment was given for such continuing illness or condition; or
(b) The seafarer had been diagnosed and has knowledge of such illness or condition but failed to disclose the
same during the PEME, and such cannot be diagnosed during the PEME.
2. THE 120-DAY/240-DAY TREATMENT PERIOD RULE.
a. Significance of the period.
Pursuant to Section 20 (A) of the 2010 POEA-SEC, when a seafarer suffers a work-related injury or illness in
the course of employment, the company-designated physician is obligated to arrive at a definite assessment of the
former's fitness or degree of disability within a period of 120 days from repatriation. During the said period, the
seafarer shall be deemed on TEMPORARY TOTAL DISABILITY and shall receive his basic wage until he is
declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or
totally, as his condition is defined under the POEA-SEC and by applicable Philippine laws. However, if the 120-day
period is exceeded and no definitive declaration is made because the seafarer requires further medical attention,
then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of
the employer to declare within this period that a permanent partial or total disability already exists.
But before the company-designated physician may avail of the allowable 240-day extended treatment period,
he must perform some significant act to justify the extension of the original 120-day period. Otherwise, the law grants
the seafarer the relief of permanent total disability benefits due to such non-compliance.
Case law thus states that without a valid final and definitive assessment from the company-designated
physician within the 120-day/240-day period, the law already steps in to consider petitioner's disability as total and
permanent. Thus, a temporary total disability becomes total and permanent by operation of law. Consequently, in a
case where it was only after the lapse of more than six (6) months that the company-designated physician issued a
certification declaring the seafarer to be entitled to a disability rating of Grade 10, going beyond the period of 120 days,
without justifiable reason, the Court held that his disability was correctly adjudged to be permanent and total.
b. Summary of Rules on the periods to assess the seafarer.
The 2015 case of Elburg,1 and later reiterated in a number of cases,2 summarized the rules on the periods when
the company-designated physician must, as a duty, assess the seafarer and issue a final medical assessment, as follows:
1. The company-designated physician must issue a final medical assessment on the seafarer’s disability grading
within a period of 120 days from the time the seafarer reported to him;
2. If the company-designated physician fails to give his assessment within the period of 120 days without any
justifiable reason, then the seafarer’s disability becomes permanent and total;
3. If the company-designated physician fails to give his assessment within the period of 120 days with a
sufficient justification (e.g., seafarer required further medical treatment or seafarer was uncooperative3), then
the period of diagnosis and treatment shall be extended to 240 days. The employer has the burden to prove
that the company-designated physician has sufficient justification to extend the period; and
4. If the company-designated physician still fails to give his assessment within the extended period of 240
days, then the seafarer’s disability becomes permanent and total, regardless of any justification.
The above rule was further refined in the 2015 case of Marlow Navigation Philippines, Inc. v. Osias,4 where the
Court declared – and this is the current rule - as follows:
(1) that mere inability to work for a period of 120 days does not entitle a seafarer to permanent and total
disability benefits;
(2) that the determination of the fitness of a seafarer for sea duty is within the province of the company-
designated physician, subject to the periods prescribed by law;
(3) that the company-designated physician has an initial 120 days to determine the fitness or disability of the
seafarer; and
(4) that the period of treatment may only be extended to 240 days if a sufficient justification exists
such as when further medical treatment is required or when the seafarer is uncooperative.
For as long as the 120-day period under the Labor Code and the POEA-SEC and the 240-day period under
the IRR co-exist, the Court must bend over backwards to harmoniously interpret and give life to both of the stated
periods. Ultimately, the intent of our labor laws and regulations is to strive for social justice over the diverging interests
of the employer and the employee.
1 Elburg Shipmanagement Phils., Inc. v. Quiogue, Jr., G.R. No. 211882, July 29, 2015, 764 SCRA 431.
2 Such as Gere v. Anglo-Eastern Crew Management Phils., Inc., G.R. Nos. 226656 & 226713, April 23, 2018; Magsaysay Mitsui OSK Marine, Inc. v. Buenaventura, G.R. No. 195878,
Jan. 10, 2018.
3 An example of uncooperativeness is the case of Marlow Navigation Philippines, Inc. v. Osias, supra, where Osias, based on the evidence presented, did not fully comply with the
prescribed medical therapy.
4 G.R. No. 215471, Nov. 23, 2015.
44
c. Conditions required for the claim for total and permanent disability benefits to prosper.
In sum, according to the 2019 case of Torillos,1 in order for a seafarer’s claim for total and permanent
disability benefits to prosper, any of the following conditions should be present:
(a) The company-designated physician failed to issue a declaration as to his fitness to engage in sea duty or
disability even after the lapse of the 120-day period and there is no indication that further medical
treatment would address his temporary total disability, hence, justify an extension of the period to 240
days;
(b) 240 days had lapsed without any certification issued by the company designated physician;
(c) The company-designated physician declared that he is fit for sea duty within the 120-day or 240-day
period, as the case may be, but his physician of choice and the doctor chosen under Section 20 (B) (3) of
the POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially permanently disabled but other
doctors who he consulted, on his own and jointly with his employer, believed that his disability is not only
permanent but total as well;
(e) The company-designated physician recognized that he is totally and permanently disabled but there is a
dispute on the disability grading;
(f) The company-designated physician determined that his medical condition is not compensable or work-
related under the POEA-SEC but his doctor-of-choice and the third doctor selected under Section 20 (B)
(3)2 of the POEA-SEC found otherwise and declared him unfit to work;
(g) The company-designated physician declared him totally and permanently disabled but the employer refuses
to pay him the corresponding benefits; and
(h) The company-designated physician declared him partially and permanently disabled within the 120-day or
240-day period but he remains incapacitated to perform his usual sea duties after the lapse of said periods.
3. POST-EMPLOYMENT MEDICAL EXAMINATION.
a. Mandatory submission for post-employment medical examination by a company-designated
physician.
Section 20 (A) (3) of the 2010 POEA-SEC, reads:
“COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
“The liabilities of the employer when the seafarer suffers work-related injury or illness during the term
of his contract are as follows:
xxx
“For this purpose, the seafarer shall submit himself to a post-employment medical examination by
a company-designated physician within three working days upon his return except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as
compliance. In the course of the treatment, the seafarer shall also report regularly to the company-designated
physician specifically on the dates as prescribed by the company-designated physician and agreed to by the seafarer.
Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right
to claim the above benefits.”
It is clear from the foregoing that for a seafarer’s claim for disability to prosper, it is mandatory and must be
strictly observed that within three (3) working days from his repatriation, he is examined by a company-
designated physician. Non-compliance with this mandatory requirement results in the forfeiture of the right to claim
for compensation and disability benefits. Consequently, the complaint filed by a non-compliant seafarer should be
dismissed outright.
b. Exceptions.
This rule is not absolute, however. It admits of exception as (1) when the seafarer is incapacitated to report to
the employer upon his repatriation; and (2) when the employer inadvertently or deliberately refused to submit the
seafarer to a post-employment medical examination by a company-designated physician.
4. RIGHT OF SEAFARER TO SEEK A SECOND OPINION.
a. When right to seek second opinion accrues.
The seafarer has the right to seek a second opinion once the company-designated physician makes a definitive
and final assessment within the 120-day period; otherwise, no such obligation devolves on the seafarer to consult his
own doctor.
5. THE THIRD DOCTOR RULE - MANDATORY PROCEDURE IN JOINTLY ENGAGING A THIRD
DOCTOR.
a. Referral to a third-party doctor, when required.
The conflicting findings of the company's doctor and the seafarer's physician often stir suits for disability
compensation. As an extrajudicial measure of settling their differences, the POEA-SEC gives the parties the option of
agreeing jointly on a third doctor whose assessment shall break the impasse and shall be the final and binding diagnosis.3
While it is the company-designated doctor who is given the responsibility to make a conclusive assessment on
the degree of the seafarer's disability and his capacity to resume work within 120/240 days, the parties, however, are free
1 Torillos v. Eastgate Maritime Corporation, G.R. Nos. 215904 & 216165, Jan. 10, 2019.
2 Id.
3 C.F. Sharp Crew Management, Inc. v. Castillo, G.R. No. 208215, April 19, 2017.
45
to disregard the findings of the company doctor as well as the chosen doctor of the seafarer, in case they cannot agree
on the disability gradings issued and jointly seek the opinion of a third-party doctor pursuant to Section 20 (A) (3) of the
2010 POEA-SEC which states:
“COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
“The liabilities of the employer when the seafarer suffers work-related injury or illness during the term
of his contract are as follows:
3. xxx
“If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be
agreed jointly between the Employer and the seafarer. The third doctor's decision shall be final and
binding on both parties.”
In other words, the referral to a third doctor is mandatory when:
(1) there is a valid and timely assessment by the company-designated physician; and
(2) the appointed doctor of the seafarer refuted such assessment.
6. MEDICAL ABANDONMENT AND PREMATURE FILING OF COMPLAINT FOR DISABILITY
CLAIM.
The act of a seafarer in refusing to undergo medical treatment or in refusing to continue his medical treatment
with the company-designated physician is called “medical abandonment” which would result in the denial of his disability
claim. Moreover, the filing of a complaint for disability claim before the lapse of the 120-day/240-day treatment period
will result in its dismissal on the ground of prematurity as at that point, the cause of action may be said to have not yet
accrued as a matter of right.
7. RULE IN CASE OF CONFLICT OF OPINIONS.
In any case, the Supreme Court underscored in Nazareno1 that “the bottomline is this: In a situation where the
certification of the company-designated physician would defeat the OFW’s claim while the opinion of the independent
physicians would uphold such claim, the Court adopts the findings favorable to the OFW. The law looks tenderly on the
laborer. Where the evidence may be reasonably interpreted in two divergent ways, one prejudicial and the other
favorable to him, the balance must be tilted in his favor consistent with the principle of social justice.”
8. EFFECT OF MISREPRESENTATION ON DISABILITY CLAIMS.
Misrepresentation on the part of the claimant would defeat the claim for total permanent disability. In Ayungo,2
petitioner did not disclose that he had been suffering from hypertension and/or had been actually taking medications
therefor (i.e., Lifezar) during his PEME. As the records would show, the existence of Ayungo’s hypertension was only
revealed after his repatriation, as reflected in the Medical Report dated March 26, 2008 and reinforced by subsequent
medical reports issued by Metropolitan Medical Center. To the Court’s mind, Ayungo’s non-disclosure constitutes
fraudulent misrepresentation which, pursuant to Section 20 (E) of the 2000 POEA-SEC, disqualifies him from claiming
any disability benefits from his employer.
III.
MONETARY CLAIMS OF SEAFARERS
FOR DEATH BENEFITS
1. REQUISITES.
To be entitled to death compensation benefits from the employer, the death of the seafarer:
(1) must be work-related; and
(2) must happen during the term of the employment contract.
1.1. 1ST REQUISITE: DEATH MUST BE WORK-RELATED.
a. Meaning of work-related death.
While the 2010 and the earlier 2000 POEA-SEC do not expressly define what a “work-related death” means,
it is evident from Part B (4) as above-quoted that the said term refers to the seafarer’s death resulting from a work-
related injury or illness. This denotation complements the definitions accorded to the terms “work-related injury”
and “work-related illness” under the 2010 POEA-SEC as follows:
“Definition of Terms:
“For purposes of this contract, the following terms are defined as follows:
xxx
“16. Work-Related Illness - any sickness as a result of an occupational disease listed under Section 32~A of this Contract
with the conditions set therein satisfied.
“17. Work-Related Injury - injury arising out of and in the course of employment.
What is clear from the foregoing is that work-related injury is one resulting in disability or death arising out
of and in the course of employment. Thus, there is a need to show that the injury resulting to disability or death must
arise (1) out of employment; and (2) in the course of employment.
1.2. 2ND REQUISITE: DEATH MUST OCCUR DURING TERM OF EMPLOYMENT.
a. The death should happen during employment.
1 G.R. No. 209201, Nov. 19, 2014.

2 Ayungo v. Beamko Shipmanagement Corporation, G.R. No. 203161, Feb. 26, 2014.
46
b. If death happens after termination of employment, no death benefits should, as a general rule, be
paid.
c. Exception when death after termination of employment is compensable.
Section 32-A of the POEA-SEC considers the possibility of compensation for the death of the seafarer
occurring after the termination of the employment contract on account of a work-related illness. But for death under this
provision to be compensable, the claimant must satisfy all of the following conditions:
(1) The seafarer's work must involve the risks described in the POEA-SEC;
(2) The disease was contracted as a result of the seafarer's exposure to the described risks;
(3) The disease was contracted within a period of exposure and under such other factors necessary to contract
it; and
(4) There was no notorious negligence on the part of the seafarer.
In fulfilling these requisites, substantial evidence must be presented which is more than a mere scintilla; it must
reach the level of relevant evidence as a reasonable mind might accept as sufficient to support a conclusion.
d. Medical repatriation as an exception.
The Supreme Court clarified in Canuel,1 that while the general rule is that the seafarer’s death should occur
during the term of his employment, the seafarer’s death occurring after the termination of his employment due to
his medical repatriation on account of a work-related injury or illness constitutes an exception thereto. This is
based on a liberal construction of the 2000 POEA-SEC2 as impelled by the plight of the bereaved heirs who stand to be
deprived of a just and reasonable compensation for the seafarer’s death, notwithstanding its evident work-connection.
e. Non-medical repatriation cases where death occurred after repatriation, hence, death benefits
denied.
2. DEATH CAUSED BY THE SEAFARER HIMSELF, NOT COMPENSABLE.
a. Death by suicide.
In the following cases, the death by suicide was likewise held not compensable:
(1) TSM Shipping (Phils.), Inc. v. De Chavez,3 where the seafarer was found dead inside his cabin bathroom
hanging by the shower cord and covered with blood.
(2) Wallem Maritime Services, Inc. v. Pedrajas,4 where the seafarer hanged himself on the Upper Deck B of the
vessel with a rope tied to his neck.
(3) Great Southern Maritime Services Corp. v. Surigao,5 where the seafarer was found dead inside the bathroom of
his hospital room with a belt tied around his neck.
(4) Maritime Factors, Inc. v. Hindang,6 where the seafarer’s body was found hanging by a strap on his neck in a
kneeling position inside the locker (wardrobe) of his cabin.
------------oOo------------
1 Anita Canuel v. Magsaysay Maritime Corporation, G.R. No. 190161, Oct. 13, 2014.
2 Now 2010 POEA-SEC.
3 G.R. No. 198225, Sept. 27, 2017.
4 G.R. No. 192993, Aug. 11, 2014.
5 G.R. No. 183646, Sept. 18, 2009, 616 Phil. 758.
6 G.R. No. 151993, Oct. 19. 2011.
47
SYLLABUS
MAJOR TOPIC 5
LABOR RELATIONS
A.
RIGHT TO SELF-ORGANIZATION
1.
COVERAGE
a.
PERSONS WHO CAN EXERCISE
 Who are eligible to join, form or assist a labor organization for purposes of collective bargaining?
 In the private sector:
1. All persons employed in commercial, industrial and agricultural enterprises;
2. Employees of government-owned and/or controlled corporations without original charters established
under the Corporation Code;
3. Employees of religious, charitable, medical or educational institutions, whether operating for profit or
not;
4. Front-line managers, commonly known as supervisory employees [See discussion below];
5. Alien employees [See discussion below];
6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with the principals but with the contractors
 In the public sector:
All rank-and-file employees of all branches, subdivisions, instrumentalities, and agencies of government,
including government-owned and/or controlled corporations with original charters, can form, join or assist
employees’ organizations of their own choosing.
 Are front-line managers or supervisors eligible to join, form or assist a labor organization?
Yes, but only among themselves. They cannot join a rank-and-file union.
 Do alien employees have the right to join a labor organization?
No, except if the following requisites are complied with:
(1) He should have a valid working permit issued by the DOLE; and
(2) He is a national of a country which grants the same or similar rights to Filipino workers OR which has
ratified either ILO Convention No. 87 or ILO Convention No. 98 (ON THE RIGHT TO SELF-
ORGANIZATION OF WORKERS) as certified by the Philippine Department of Foreign Affairs (DFA).
 Do members of cooperatives have the right to join, form or assist a labor organization?
No, because they are co-owners of the cooperative.
 What about employees of a cooperative?
Yes, because they have employer-employee relationship with the cooperative.
 What about members who are at the same time employees of the cooperative?
No, because the prohibition covers employees of the cooperative who are at the same time members thereof.
 Can employees of job contractors join, form or assist a labor organization?
Yes, but not for the purpose of collective bargaining with the principal but with their direct employer – the job
contractor.
 Are self-employed persons allowed to join, form or assist a labor organization?
Yes, for their mutual aid and protection but not for collective bargaining purposes since they have no
employers but themselves. BUT AS AND BY WAY OF DISTINCTION, THEIR LABOR ORGANIZATION IS
CALLED “WORKERS’ ASSOCIATION.”
This rule applies as well to ambulant, intermittent and other workers, rural workers and those without any definite employers.
The reason for this rule is that these persons have no employers with whom they can collectively bargain.
b.
PERSONS WHO CANNOT EXERCISE
48
 Who are the persons that are not allowed to form, join or assist labor organizations?
a. In the private sector.
1. Top and middle level managerial employees; and
2. Confidential employees.
b. In the public sector.
The following are not eligible to form employees’ organizations:
1. High-level employees whose functions are normally considered as policy-making or managerial or whose
duties are of a highly confidential nature;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.
CONFIDENTIAL EMPLOYEE RULE
 Who are confidential employees?

Within the context of labor relations, “confidential employees” are those who meet the following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and effectuate management policies specifically in the
field of labor relations.
The two (2) criteria above are cumulative and both must be met if an employee is to be considered a
“confidential employee” that would deprive him of his right to form, join or assist a labor organization.
 What is the doctrine of necessary implication?
Under the confidential employee rule, a rank-and-file employee or a supervisory employee, is elevated to the
position of a managerial employee, under another doctrine called the DOCTRINE OF NECESSARY
IMPLICATION, hence, he is treated as if he is a managerial employee because of his access to confidential
information related to labor relations. THE DOCTRINE OF NECESSARY IMPLICATION IS THEREFORE
THE LEGAL BASIS FOR INELIGIBILITY OF CONFIDENTIAL EMPLOYEE TO JOIN A UNION.
For example, not all secretaries to top officials of the company may be considered as confidential employees,
unless they have access to confidential information related to labor relations, such as when they transcribe or
type/encode the counter-proposals of management on the proposals of the SEBA in a CBA negotiation. That access to
such counter-proposals is the type of access contemplated under this rule.
2.
INELIGIBILITY OF MANAGERIAL EMPLOYEES;
RIGHT OF SUPERVISORY EMPLOYEES
 Are managerial employees allowed unionize?
There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
The first two above are absolutely prohibited; but the third, being supervisors, are allowed but only among
themselves.
 Are confidential employees allowed to join, form or assist a labor organization?
No, under the confidential employee rule.
“Confidential employees” are those who meet the following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and effectuate management policies specifically in the
field of labor relations. If not related to labor relations, an employee can never be considered as
confidential employee as would deprive him of his right to self-organization.
The two (2) criteria are cumulative and both must be met if an employee is to be considered a “confidential
employee” that would deprive him of his right to form, join or assist a labor organization.
3.
EFFECT OF INCLUSION AS MEMBERS OF EMPLOYEES
OUTSIDE OF THE BARGAINING UNIT
COMMINGLING or MIXED MEMBERSHIP

 Is COMMINGLING or MIXED MEMBERSHIP of supervisors and rank-and-file union in one union
allowed? Is it a ground to cancel its registration?
49
No. It is not allowed. However, it bears noting that in case there is commingling or mixed membership of
supervisors and rank-and-file employees in one union, the new rule enunciated in Article 256 [245-A] of the Labor Code,
unlike in the old law, is that it cannot be invoked as a ground for the cancellation of the registration of the union. The
employees so improperly included are automatically deemed removed from the list of members of said union. In other
words, their removal from the said list is by operation of law.
4.
NON-ABRIDGEMENT1
(OF RIGHT TO SELF-ORGANIZATION)
1. LEGAL BASIS.
Article 257 [246] speaks of the principle of non-abridgment of the right to self-organization as follows:
“Article 257 [246]. Non-Abridgment of Right to Self-Organization. – It shall be unlawful for any
person to restrain, coerce, discriminate against or unduly interfere with employees and workers in their exercise
of the right to self-organization. Such right shall include the right to form, join, or assist labor
organizations for the purpose of collective bargaining through representatives of their own choosing
and to engage in lawful concerted activities for the same purpose or for their mutual aid and protection,
subject to the provisions of Article 279 [264] of this Code.”
More aptly, Article 257 [246] describes the legal concept of the “right to self-organization,” which, as a legal
proposition, includes two (2) basic rights, namely:
(1) “To form, join, or assist labor organizations for the purpose of collective bargaining through
representatives of their own choosing;” and
(2) “To engage in lawful concerted activities for the same purpose or for their mutual aid and
protection, subject to the provisions of Article 279 [264] of [the Labor] Code.”
5.
AFFILIATION AND DISAFFILIATION
1. UNIONVIS-À-VIS ITS MEMBERS.

The relationship between the union and its members is that of principal and agent, the former being the agent
while the latter, the principal.
2. MOTHER UNION VIS-À-VIS AFFILIATE OR LOCAL CHAPTER/CHARTERED LOCAL
The federation or national union (also called “Mother Union”), acting for and in behalf of its affiliate, has the
status of an agent while the affiliate or local chapter/chartered local remains the principal – the basic unit of the
association.
3. PURPOSE OF AFFILIATION
The purpose of affiliation is to further strengthen the collective bargaining leverage of the affiliate. No doubt,
the purpose of affiliation by a local union with a mother union is to increase by collective action its bargaining power in
respect of the terms and conditions of labor.
4. RIGHT TO DISAFFILIATE.
The right of the affiliate union to disaffiliate from its mother federation or national union is a constitutionally-
guaranteed right which may be invoked by the former at any time. It is axiomatic that an affiliate union is a separate and
voluntary association free to serve the interest of all its members - consistent with the freedom of association guaranteed
in the Constitution.
5. DISTINCTIONS AS TO AFFILIATION & DISAFFILIATION.
The following are the distinctions between independently registered union and local chapter/chartered local,
insofar as their relationship with the federation or national union is concerned:
1 This is how this word “Abridgement” is spelled in the 2019 Syllabus. Note that in Article 257 [246] of the Labor Code, this word is spelled as “Non-Abridgment.”
50
Independently Local Chapter or Chartered

Criteria
Registered Union Local
Proper term to describe

the relationship with
Affiliation Chartering
federation or national
union
Proper denomination of
Affiliate 1 Local Chapter or Chartered Local2
the union
Nature of contractual
Principal-Agent Principal-Agent
relationship with
federation or national Principal – Affiliate Union Principal - Local Chapter/Chartered Local
union Agent – Federation or National Union Agent – Federation or National Union
Proof of relationship Contract of Affiliation Charter Certificate
Since it is a creation of the federation or

Effect of Does not affect in any way its national union, its legal personality is
affiliation/chartering independent legal personality dependent upon and coterminous with its
association with its creator – the
federation or national union
Does not affect legal personality Ceases to have any legal personality
Effect of Disaffiliation since it has its own independent Exception: If prior to disaffiliation, it has
registration secured independent registration
6. SOME PRINCIPLES ON AFFILIATION.

 Independent legal personality of an affiliate union is not affected by affiliation.
 The affiliate union is a separate and distinct voluntary association owing its creation to the will of its members. It
does not give the mother union the license to act independently of the affiliate union.
 The fact that the affiliate union is not a legitimate labor organization does not affect the principal-agent relationship.
 Affiliate union becomes subject of the rules of the federation or national union.
 The appendage of the acronym of the federation or national union after the name of the affiliate union in the
registration with the DOLE does not change the principal-agent relationship between them. Such inclusion of the
acronym is merely to indicate that the local union is affiliated with the federation or national union at the time of
the registration. It does not mean that the affiliate union cannot independently stand on its own.
7. SOME PRINCIPLES ON DISAFFILIATION.
 Disaffiliation does not divest an affiliate union of its legal personality.
 Disaffiliation of an affiliate union is not an act of disloyalty.
 Disaffiliation for purposes of forming a new union does not terminate the status of the members thereof as
employees of the company. By said act of disaffiliation, the employees who are members of the local union did not
form a new union but merely exercised their right to register their local union. The local union is free to disaffiliate
from its mother union.
 Disaffiliation should be approved by the majority of the union members.
 Disaffiliation terminates the right to check-off federation dues.
B.
BARGAINING UNIT
 What is a bargaining unit?
A “bargaining unit” refers to a group of employees sharing mutual interests within a given 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 unit. It may also refer to the group or cluster of jobs or positions within the
employer’s establishment that supports the labor organization which is applying for registration.
(a)
TEST TO DETERMINE
AN APPROPRIATE BARGAINING UNIT
 What are the four tests to determine appropriate bargaining unit?
Based on jurisprudence, there are certain tests which may be used in determining the appropriate collective
bargaining unit, to wit:
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine or will of the members;
(3) Collective bargaining history doctrine; and
1 An “affiliate” refers to:

(1) An independent union affiliated with a federation or a national union; or
(2) A local chapter or chartered local which has been subsequently granted independent registration but did not disaffiliate from the federation or national union which created it.
(Section 1 [a], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]).
2 Technically, a local chapter created through the mode of chartering by a mother union under Article 241 [234-A] of the Labor Code, cannot be properly called an “affiliate” if it has not
acquired any independent registration of its own.
51
(4) Employment status doctrine.

1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be represented by the collective bargaining agent must have
community or mutuality of interest in terms of employment and working conditions as evinced by the type of work they
perform. It is characterized by similarity of employment status, same duties and responsibilities and substantially similar
compensation and working conditions.
St. James School of Quezon City v. Samahang Manggagawa sa St. James School of Quezon City.1 -
Respondent union sought to represent the rank-and-file employees (consisting of the motor pool, construction and
transportation employees) of petitioner-school’s Tandang Sora campus. Petitioner-school opposed it by contending that
the bargaining unit should not only be composed of said employees but must include administrative, teaching and office
personnel in its five (5) campuses. The Supreme Court disagreed with said contention. The motor pool, construction
and transportation employees of the Tandang Sora campus had 149 qualified voters at the time of the certification
election, hence, it was ruled that the 149 qualified voters should be used to determine the existence of a quorum during
the election. Since a majority or 84 out of the 149 qualified voters cast their votes, a quorum existed during the
certification election. The computation of the quorum should be based on the rank-and-file motor pool, construction
and transportation employees of the Tandang Sora campus and not on all the employees in petitioner’s five (5)
campuses. Moreover, the administrative, teaching and office personnel are not members of the union. They do not
belong to the bargaining unit that the union seeks to represent.
Other cases:
(1) San Miguel Corporation v. Laguesma,2 involving a petition of the union which seeks to represent the
sales personnel in the various Magnolia sales offices in Northern Luzon. Petitioner company, however, opposed it by
taking the position that each sales office should constitute one bargaining unit. In disagreeing with this proposition of
petitioner, the High Court said: “What greatly militates against this position (of the company) is the meager number of sales
personnel in each of the Magnolia sales office in Northern Luzon. Even the bargaining unit sought to be represented by
respondent union in the entire Northern Luzon sales area consists only of approximately fifty-five (55) employees.
Surely, it would not be for the best interest of these employees if they would further be fractionalized. The adage ‘there is
strength in number’ is the very rationale underlying the formation of a labor union.”
(2) San Miguel Corporation Supervisors and Exempt Employees Union v. Laguesma,3 involving the
issue of validity of constituting as one CBU of employees working in San Miguel’s three (3) plants located in three (3)
different places, namely: (1) in Cabuyao, Laguna, (2) in Otis, Pandacan, Metro Manila, and (3) in San Fernando,
Pampanga. It was declared that geographical location is immaterial and therefore can be completely disregarded if the
communal or mutual interest of the employees are not sacrificed. The distance among the 3 plants is not productive of
insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to
impede the operations of a single bargaining representative.
(3) Similar to this case is University of the Philippines v. Ferrer-Calleja,4 where all non-academic rank-and-
file employees of the University of the Philippines in its various campuses, to wit: (1) Diliman, Quezon City; (2) Padre
Faura, Manila; (3) Los Baños, Laguna; and (4) the Visayas, were allowed to participate in a certification election as one
bargaining unit.
2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe doctrine because this principle was first
enunciated in the United States case of Globe Machine and Stamping Co.,5 where it was ruled, in defining the
appropriate bargaining unit, that in a case where the company’s production workers can be considered either as a single
bargaining unit appropriate for purposes of collective bargaining or as three (3) separate and distinct bargaining units, the
determining factor is the desire of the workers themselves. Consequently, a certification election should be held
separately to choose which representative union will be chosen by the workers.
International School Alliance of Educators [ISAE] v. Quisumbing.6 - The Supreme Court ruled here that
foreign-hired teachers do not belong to the bargaining unit of the local-hires because the former have not indicated their
intention to be grouped with the latter for purposes of collective bargaining. Moreover, the collective bargaining history
of the school also shows that these groups were always treated separately.
3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history and affinity of the employees in
determining the appropriate bargaining unit. However, the existence of a prior collective bargaining history has been
held as neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit.
National Association of Free Trade Unions v. Mainit Lumber Development Company Workers
Union.7 - It was ruled here that there is mutuality of interest among the workers in the sawmill division and logging
division as to justify their formation of a single bargaining unit. This holds true despite the history of said two divisions
being treated as separate units and notwithstanding their geographical distance from each other.
4. EMPLOYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on the employment status of the employees is
considered an acceptable mode. For instance, casual employees and those employed on a day-to-day basis, according to
1 G.R. No. 151326, Nov. 23, 2005.

2 G.R. No. 100485, Sept. 21, 1994.
3 G.R. No. 110399, Aug. 15, 1997, 277 SCRA 370, 380-381.
4 G.R. No. 96189, July 14, 1992, 211 SCRA 451.
5 3 NLRB 294 (1937).
6 G.R. No. 128845, June 1, 2000.
7 G.R. No. 79526, Dec. 21, 1990.
52
the Supreme Court in Philippine Land-Air-Sea Labor Union v. CIR, 1 do not have the mutuality or community of
interest with regular and permanent employees. Hence, their inclusion in the bargaining unit composed of the latter is
not justified. Confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or
have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such,
the rationale behind the ineligibility of managerial employees to form, assist or join a labor union equally applies to them.
Hence, they cannot be allowed to be included in the rank-and-file employees’ bargaining unit. The rationale for this
inhibition is that if these managerial employees would belong to or be affiliated with a union, the latter might not be
assured of their loyalty to the union in view of evident conflict of interest. The union can also become company-
dominated with the presence of managerial employees in its membership.
C.
BARGAINING REPRESENTATIVE
(A.K.A. SEBA OR BARGAINING AGENT)
 What is a SEBA?
A Sole and Exclusive Bargaining Agent (SEBA) or commonly referred to as “exclusive bargaining representative” or
“exclusive bargaining agent” refers to a legitimate labor organization duly certified as the sole and exclusive bargaining
representative or agent of all the employees in a bargaining unit.
 What are the modes of determining the sole and exclusive bargaining agent?
The following are the modes:

1. Request for SEBA Certification;
2. Certification election;
3. Consent election;
4. Run-off election;
5. Re-run election.
(a)
REQUEST FOR SEBA CERTIFICATION
(Repealed and Replaced “VOLUNTARY RECOGNITION”)
 Is voluntary recognition still a proper mode of selecting a SEBA?

No more, because of its repeal and being replaced by the new mode called “REQUEST FOR SEBA
CERTIFICATION” per Department Order No. 40-I-15, Series of 2015, (Sept. 7, 2015).
 What should the employer do if a request for recognition or a demand for CBA negotiation is made by a
union which has not been certified as the SEBA?
The employer so requested cannot now extend voluntary recognition but may still validly file a petition for
certification election (PCE) under Article 270 [258] of the Labor Code, in order to determine if the requesting union has
the majority support of the employees in the bargaining unit which it seeks to represent or where it intends to operate.
 What are the situations involved in this new mode of “REQUEST FOR SEBA CERTIFICATION”?
THREE SCENARIOS INVOLVING A REQUEST FOR CERTIFICATION.
There are three (3) scenarios conceived under the Rules on this mode, namely:
(1) Request for certification in unorganized establishment with only one (1) legitimate union;
(2) Request for certification in unorganized establishment with more than one (1) legitimate labor
organization; and
(3) Request for certification in organized establishment.
The foregoing scenarios are discussed below.
FIRST SCENARIO: Request for certification in an UNORGANIZED establishment with only one (1)
legitimate union.
a. Validation process.
If the DOLE Regional Director finds the establishment unorganized with only one (1) legitimate labor
organization in existence, he/she should call a conference within five (5) working days for the submission of the
following:
1. The names of employees in the covered bargaining unit who signify their support for the SEBA certification,
provided that said employees comprise at least majority of the number of employees in the covered
bargaining unit; and
2. Certification under oath by the president of the requesting union or local that all documents submitted are
true and correct based on his/her personal knowledge.
The submission shall be presumed to be true and correct unless contested under oath by any member of the
bargaining unit during the validation conference. For this purpose, the employer or any representative of the
employer shall not be deemed a party-in-interest but only as a bystander to the process of certification.
1 G.R. No. L-14656, Nov. 29, 1960.

53
If the requesting union or local fails to complete the requirements for SEBA certification during the
conference, the Request should be referred to the Election Officer for the conduct of certification election.1
b. Action on the submission – when SEBA Certification should be issued.
If the DOLE Regional Director finds the requirements complete, he/she should issue, during the conference, a
Certification as SEBA enjoying the rights and privileges of an exclusive bargaining agent of all the employees in the
covered bargaining unit.2
The DOLE Regional Director should cause the posting of the SEBA Certification for 15 consecutive days in at
least 2 conspicuous places in the establishment or covered bargaining unit.
c. Effect of certification.
Upon the issuance of the Certification as SEBA, the certified union or local shall enjoy all the rights and
privileges of an exclusive bargaining agent of all the employees in the covered CBU.
SECOND SCENARIO: Request for certification in unorganized establishment with more than one (1)
legitimate labor organization.
If the DOLE Regional Director finds the establishment unorganized with more than one (1) legitimate labor
organization, he/she should refer the same to the Election Officer for the conduct of certification election.3 The
certification election shall be conducted in accordance with the Rules.
THIRD SCENARIO: Request for certification in organized establishment.
If the Regional Director finds the establishment organized, he/she should refer the same to the Mediator-
Arbiter for the determination of the propriety of conducting a certification election.
(b)
CERTIFICATION ELECTION
 What is certification election?
“Certification election” refers to the process of determining through secret ballot the sole and exclusive bargaining
agent of the employees in an appropriate bargaining unit for purposes of collective bargaining or negotiations.
 Who may file a petition for certification election?
The petition may be filed by:
1. A legitimate labor organization which may be:
(a) an independent union; or
(b) a national union or federation which has already issued a charter certificate to its local chapter
participating in the certification election; or
(c) a local chapter which has been issued a charter certificate by the national union or federation.
2. An employer, when requested by a labor organization to bargain collectively and its majority status is in
doubt.
 What are the rules prohibiting the filing of petition for certification election (bar rules)?
a. General rule.
The general rule is that in the absence of a CBA duly registered in accordance with Article 231 of the Labor
Code, a petition for certification election may be filed at any time.
b. Bar rules.
No certification election may be held under the following rules:
1. Statutory bar rule;
2. Certification year bar rule;
3. Negotiations bar rule;
4. Bargaining deadlock bar rule; or
5. Contract bar rule.
1. STATUTORY BAR RULE.
The Labor Code does not contain any provision on this rule but the Rules to Implement the Labor Code embody a
rule that bars the filing of a PCE within a period of one (1) year from the date of a valid conduct of a certification,
consent, run-off or re-run election where no appeal on the results thereof was made. If there was such an appeal from
the order of the Med-Arbiter, the running of the one-year period is deemed suspended until the decision on the appeal
has become final and executory.
This is called the statutory bar rule which finds its roots from a similar rule in the United States. Thus, an
election cannot be held in any bargaining unit in which a final and valid election was concluded within the preceding 12-
month period.
2. CERTIFICATION YEAR BAR RULE.
1 Id., pursuant to Rule IX of the Rules.

2 Section 4.1., Rule VII, Ibid.
3 Section 5, Rule VII, Ibid.
54
Under this rule, a petition for certification election (PCE) may not be filed within one (1) year:
1. From the date a union is certified as SEBA by virtue of a REQUEST FOR SEBA CERTIFICATION; or
2. From the date a valid certification, consent, run-off or re-run election has been conducted within the
bargaining unit.
If after this one year period, the SEBA did not commence collective bargaining with the employer, a PCE
may be filed by a rival union to challenge the majority status of the certified SEBA.
3. NEGOTIATIONS BAR RULE.
Under this rule, no PCE should be entertained while the sole and exclusive bargaining agent (SEBA) and the
employer have commenced and sustained negotiations in good faith within the period of one (1) year from the date of a
valid certification, consent, run-off or re-run election or from the date of voluntary recognition.
Once the CBA negotiations have commenced and while the parties are in the process of negotiating the terms
and conditions of the CBA, no challenging union is allowed to file a PCE that would disturb the process and unduly
forestall the early conclusion of the agreement.
4. BARGAINING DEADLOCK BAR RULE.
Under this rule, a PCE may not be entertained when a bargaining deadlock to which an incumbent or certified
bargaining agent is a party has been submitted to conciliation or arbitration or has become the subject of a valid notice
of strike or lockout.
Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v. Trajano. - The bargaining deadlock-
bar rule was not applied here because for more than four (4) years after it was certified as the exclusive bargaining agent
of all the rank-and-file employees, it did not take any action to legally compel the employer to comply with its duty to
bargain collectively, hence, no CBA was executed. Neither did it file any unfair labor practice suit against the employer
nor did it initiate a strike against the latter. Under the circumstances, a certification election may be validly ordered and
held.
5. CONTRACT BAR RULE.
Under this rule, a PCE cannot be filed when a CBA between the employer and a duly recognized or certified
bargaining agent has been registered with the Bureau of Labor Relations (BLR) in accordance with the Labor Code.
Where the CBA is duly registered, a petition for certification election may be filed only within the 60-day freedom period
prior to its expiry. The purpose of this rule is to ensure stability in the relationship of the workers and the employer by
preventing frequent modifications of any CBA earlier entered into by them in good faith and for the stipulated original
period.
When contract bar rule does not apply.
The contract-bar rule does not apply in the following cases:
1. Where there is an automatic renewal provision in the CBA but prior to the date when such automatic
renewal became effective, the employer seasonably filed a manifestation with the Bureau of Labor Relations
of its intention to terminate the said agreement if and when it is established that the bargaining agent does
not represent anymore the majority of the workers in the bargaining unit.
2. Where the CBA, despite its due registration, is found in appropriate proceedings that: (a) it contains
provisions lower than the standards fixed by law; or (b) the documents supporting its registration are
falsified, fraudulent or tainted with misrepresentation.
3. Where the CBA does not foster industrial stability, such as contracts where the identity of the representative
is in doubt since the employer extended direct recognition to the union and concluded a CBA therewith less
than one (1) year from the time a certification election was conducted where the “no union” vote won. This
situation obtains in a case where the company entered into a CBA with the union when its status as
exclusive bargaining agent of the employees has not been established yet.
4. Where the CBA was registered before or during the last sixty (60) days of a subsisting agreement or during
the pendency of a representation case. It is well-settled that the 60-day freedom period based on the
original CBA should not be affected by any amendment, extension or renewal of the CBA for purposes of
certification election.
 What are the requisites for the validity of the petition for certification election?
The following requisites should concur:
1. The union should be legitimate which means that it is duly registered and listed in the registry of legitimate
labor unions of the BLR or that its legal personality has not been revoked or cancelled with finality.
2. In case of organized establishments, the petition for certification election is filed during (and not before
or after) the 60-day freedom period of a duly registered CBA.
3. In case of organized establishments, the petition complied with the 25% written support of the members
of the bargaining unit.
4. The petition is filed not in violation of any of the four (4) bar rules [See above discussion thereof].
 What are the two (2) kinds of majorities (DOUBLE MAJORITY RULE)?
The process of certification election requires two (2) kinds of majority votes, viz.:
1. Number of votes required for the validity of the process of certification election itself. In order to
have a valid certification election, at least a majority of all eligible voters in the appropriate bargaining
unit must have cast their votes.
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2. Number of votes required to be certified as the collective bargaining agent. To be certified as the
sole and exclusive bargaining agent, the union should obtain a majority of the valid votes cast.
 What are some pertinent principles on certification election?
 The pendency of a petition to cancel the certificate of registration of a union participating in a certification election
does not stay the conduct thereof.
 The pendency of an unfair labor practice case filed against a labor organization participating in the certification
election does not stay the holding thereof.
 Direct certification as a method of selecting the exclusive bargaining agent of the employees is not allowed. This is
because the conduct of a certification election is still necessary in order to arrive in a manner definitive and certain
concerning the choice of the labor organization to represent the workers in a collective bargaining unit.
 The “No Union” vote is always one of the choices in a certification election. Where majority of the valid votes cast
results in “No Union” obtaining the majority, the Med-Arbiter shall declare such fact in the order.
 Only persons who have direct employment relationship with the employer may vote in the certification election,
regardless of their period of employment.
b.1.
IN AN UNORGANIZED ESTABLISHMENT
 What is meant by “unorganized establishment”?
As distinguished from “organized establishment,” an “unorganized establishment” is an employer entity where
there is no recognized or certified collective bargaining union or agent.
A company or an employer-entity, however, may still be considered an unorganized establishment even if there
are unions in existence therein for as long as not one of them is duly certified as the sole and exclusive bargaining
representative of the employees in the particular bargaining unit it seeks to operate and represent.
Further, a company remains unorganized even if there is a duly recognized or certified bargaining agent for
rank-and-file employees, for purposes of the petition for certification election filed by supervisors. The reason is that the
bargaining unit composed of supervisors is separate and distinct from the unionized bargaining unit of rank-and-file
employees. Hence, being unorganized, the 25% required minimum support of employees within the bargaining unit of
the supervisors need not be complied with.
 How should certification election be conducted in an unorganized establishment?
In case of a petition filed by a legitimate organization involving an unorganized establishment, the Med-
Arbiter is required to immediately order the conduct of a certification election upon filing of a petition for certification
election by a legitimate labor organization.
b.2.
IN AN ORGANIZED ESTABLISHMENT
 What are the requisites for the conduct of a certification election in an organized establishment?
The Med-Arbiter is required to automatically order the conduct of a certification election by secret ballot in an
organized establishment as soon as the following requisites are fully met:
1. That a petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE
within the 60-day freedom period;
2. That such petition is verified; and
3. That the petition is supported by the written consent of at least twenty-five percent (25%) of all the
employees in the bargaining unit.
c.
RUN-OFF ELECTION
 What is a run-off election?
A “run-off election” refers to an election between the labor unions receiving the two (2) highest number
of votes in a certification election or consent election with three (3) or more unions in contention, where such
certification election or consent election results in none of the contending unions receiving the majority of
the valid votes cast; provided, that the total number of votes for all contending unions, if added, is at least
fifty percent (50%) of the number of valid votes cast.
 When is it conducted?
If the above conditions that justify the conduct of a run-off election are present and there are no
objections or challenges which, if sustained, can materially alter the election results, the Election Officer
should motu proprio conduct a run-off election within ten (10) days from the close of the election proceeding
between the labor unions receiving the two highest number of votes.
ILLUSTRATION.
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To illustrate, in a certification election involving four (4) unions, namely: Union A, Union B, Union
C, and Union D, where there are 100 eligible voters who validly cast their votes, and the votes they each
garnered are as follows: Union A – 35; Union B – 25; Union C – 10; Union D - 15; and No Union - 15, a
run-off election may be conducted between Union A and Union B because:
(1) Not one of the unions mustered the majority vote of 51 votes but Union A and Union B got
the first two highest number of votes;
(2) If all the votes for the contending unions are added up, it will result in at least 50% of the valid
votes cast (Union A – 35; Union B – 25; Union C – 10; Union D - 15 for a total of 85 or
85%); and
(3) There are no objections or challenges which, if sustained, can materially alter the results of the
election.
THE “NO UNION” CHOICE SHOULD NO LONGER BE INCLUDED.
For obvious reason, the choice of “No Union” should no longer be included in the run-off election.
d.
RE-RUN ELECTION
1. MEANINF OF RE-RUN ELECTION.
“‘Re-run election’ refers to an election conducted to break a tie between contending unions,
including between ‘no union’ and one of the unions. It shall likewise refer to an election
conducted after a failure of election has been declared by the Election Officer and/or
affirmed by the Mediator-Arbiter.”
2. GROUNDS CITED IN THE RULES FOR RE-RUN ELECTION.
Based on the above-quoted rule, there are 2 situations contemplated thereunder that justify the
conduct of a re-run election, to wit:
(1) To break a tie; or
(2) To cure a failure of election.
3. RULE IN CASE OF FAILURE OF ELECTION.
In failure of election, the number of votes cast in the certification or consent election is less than the
majority of the number of eligible voters and there are no challenged votes that could materially change the results of
the election. For example, in a CBU composed of 100 employees, the majority of 100, which is 51, should
validly cast their votes in the election; otherwise, if less than 51 employees have validly cast their votes, there
is here a failure of election.
e.
CONSENT ELECTION
 What is consent election?
A “consent election” refers to the process of determining through secret ballot the sole and exclusive
bargaining agent (SEBA) of the employees in an appropriate bargaining unit for purposes of collective bargaining and
negotiation. It is voluntarily agreed upon by the parties, with or without the intervention of the DOLE.
 What are the distinctions between consent election and certification election?
Consent election is but a form of certification election. They may be distinguished from each other in the following
manner:
(1) The former is held upon the mutual agreement of the contending unions; while the latter does not require the
mutual consent of the parties as it is conducted upon the order of the Med-Arbiter (Mediator-Arbiter).
(2) The former may be conducted with or without the control and supervision of the DOLE; while the latter is
always conducted under the control and supervision of the DOLE.
(3) The former is being conducted as a voluntary mode of resolving labor dispute; while the latter, although non-
adversarial, is a compulsory method of adjudicating a labor dispute.
(4) The former is given the highest priority; while the latter is resorted to only when the contending unions fail or
refuse to submit their representation dispute through the former. This is so because under the Implementing Rules,
as amended, even in cases where a PCE is filed, the Med-Arbiter (Mediator-Arbiter), during the preliminary
conference and hearing thereon, is tasked to determine the “possibility of a consent election.” It is only when the
contending unions fail to agree to the conduct of a consent election during the preliminary conference that the
Med-Arbiter (Mediator-Arbiter) will proceed with the process of certification election by conducting as many
hearings as he may deem necessary up to its actual holding. But in no case shall the conduct of the certification
election exceed 15 days from the date of the scheduled preliminary conference/hearing after which time, the
PCE is considered submitted for decision.
(5) The former necessarily involves at least two (2) or more contending unions; while the latter may only involve one
(1) petitioner union.
(6) The former may be conducted in the course of the proceeding in the latter or during its pendency.
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D.
RIGHTS OF LABOR ORGANIZATION
1.
CHECK-OFF, ASSESSMENT, AGENCY FEES
1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL ASSESSMENTS.

The following requisites must concur in order for union dues and special assessments for the union’s incidental
expenses, attorney’s fees and representation expenses to be valid, namely:
(a) Authorization by a written resolution of the majority of all the members at a general membership
meeting duly called for the purpose;
(b) Secretary’s record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the employees concerned.
3. ASSESSMENT FOR ATTORNEY’S FEES, NEGOTIATION FEES AND SIMILAR CHARGES.
The rule is that no such attorney’s fees, negotiation fees or similar charges of any kind arising from the
negotiation or conclusion of the CBA shall be imposed on any individual member of the contracting union. Such fees
may be charged only against the UNION FUNDS in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary is deemed null and void. Clearly, what is prohibited is
the payment of attorney’s fees when it is effected through forced contributions from the workers from their
own funds as distinguished from the union funds.
4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.
“Check-off” means a method of deducting from the employee’s pay at prescribed periods, any amount due for
fees, fines or assessments. It is a process or device whereby the employer, on agreement with the union recognized as
the proper bargaining representative, or on prior authorization from its employees, deducts union dues and assessments
from the latter’s wages and remits them directly to the union.
5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.
The law strictly prohibits the check-off from any amount due an employee who is a member of the union, of
any union dues, special assessment, attorney’s fees, negotiation fees or any other extraordinary fees other than for
mandatory activities under the Labor Code, without the individual written authorization duly signed by the employee.
Such authorization must specifically state the amount, purpose and beneficiary of the deduction. The purpose of the
individual written authorization is to protect the employees from unwarranted practices that diminish their
compensation without their knowledge or consent.
6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT REQUIRED.
In the following cases, individual written authorization is not required:
a. Assessment from non-members of the bargaining agent of “agency fees” which should be equivalent to
the dues and other fees paid by members of the recognized bargaining agent, if such non-members accept
the benefits under the CBA.
b. Deductions for fees for mandatory activities such as labor relations seminars and labor education
activities.
c. Deductions for withholding tax mandated under the National Internal Revenue Code.
e. Deductions for withholding of wages because of employee’s debt to the employer which is already due.
f. Deductions made pursuant to a judgment against the worker under circumstances where the wages may
be the subject of attachment or execution but only for debts incurred for food, clothing, shelter and
medical attendance.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for PhilHealth, SSS, Pag-IBIG, employees’
compensation and the like.
AGENCY FEES
1. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO ACCEPT OR NOT THE BENEFITS
OF THE CBA.
There is no law that compels a non-bargaining union member to accept the benefits provided in the CBA. He
has the freedom to choose between accepting and rejecting the CBA itself by not accepting any of the benefits flowing
therefrom. Consequently, if a non-bargaining union member does not accept or refuses to avail of the CBA-based
benefits, he is not under any obligation to pay the “agency fees” since, in effect, he does not give recognition to the
status of the bargaining union as his agent.
2. LIMITATION ON THE AMOUNT OF AGENCY FEE.
The bargaining union cannot capriciously fix the amount of agency fees it may collect from its non-members.
Article 248(e) of the Labor Code expressly sets forth the limitation in fixing the amount of the agency fees, thus:
(1) It should be reasonable in amount; and
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(2) It should be equivalent to the dues and other fees paid by members of the recognized collective bargaining
agent.
Thus, any agency fee collected in excess of this limitation is a nullity.
3. NON-MEMBERS OF THE SEBA NEED NOT BECOME MEMBERS THEREOF.
The employees who are not members of the certified bargaining agent which successfully concluded the CBA
are not required to become members of the latter. Their acceptance of the benefits flowing from the CBA and their act
of paying the agency fees do not make them members thereof.
4. CHECK-OFF OF AGENCY FEES.
“Check-off” of agency fees is a process or device whereby the employer, upon agreement with the bargaining
union, deducts agency fees from the wages of non-bargaining union members who avail of the benefits from the CBA
and remits them directly to the bargaining union.
5. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND CHECK-OFF OF AGENCY FEES.
The right of the bargaining union to demand check-off of agency fees accrues from the moment the non-
bargaining union member accepts and receives the benefits from the CBA. This is the operative fact that would trigger
such liability.
6. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-BARGAINING UNION MEMBERS
REQUIRED.
To effect the check-off of agency fees, no individual written authorization from the non-bargaining union
members who accept the benefits resulting from the CBA is necessary.
7. EMPLOYER’S DUTY TO CHECK-OFF AGENCY FEES.
It is the duty of the employer to deduct or “check-off” the sum equivalent to the amount of agency fees from
the non-bargaining union members' wages for direct remittance to the bargaining union.”
8. MINORITY UNION CANNOT DEMAND FROM THE EMPLOYER TO GRANT IT THE RIGHT
TO CHECK-OFF OF UNION DUES AND ASSESSMENTS FROM THEIR MEMBERS.
The obligation on the part of the employer to undertake the duty to check-off union dues and special
assessments holds and applies only to the bargaining agent and not to any other union/s (called “Minority Union/s”).
2.
COLLECTIVE BARGAINING
a.
DUTY TO BARGAIN COLLECTIVELY
1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.

The “duty to bargain collectively” means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages,
hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances
or questions arising under such agreement and executing a contract incorporating such agreements if requested by either
party but such duty does not compel any party to agree to a proposal or to make any concession.
The duty does not compel any party to agree blindly to a proposal nor to make concession. While the
law imposes on both the employer and the bargaining union the mutual duty to bargain collectively, the employer is not
under any legal obligation to initiate collective bargaining negotiations.
2. TWO (2) SITUATIONS CONTEMPLATED.
The duty to bargain collectively involves two (2) situations, namely:
1. Duty to bargain collectively in the absence of a CBA under Article 251 of the Labor Code.
2. Duty to bargain collectively when there is an existing CBA under Article 253 of the Labor Code.

WHEN THERE IS ABSENCE OF A CBA
1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO CBA YET.
The duty to bargain collectively when there has yet been no CBA in the bargaining unit where the bargaining
agent seeks to operate should be complied with in the following order:
First, in accordance with any agreement or voluntary arrangement between the employer and the bargaining
agent providing for a more expeditious manner of collective bargaining; and
Secondly, in its absence, in accordance with the provisions of the Labor Code, referring to Article 250 thereof
which lays down the procedure in collective bargaining.
WHEN THERE IS A CBA
1. CONCEPT.
When there is a CBA, the duty to bargain collectively shall mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the
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agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo
and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties.
2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to its expiration is called the “freedom
period.” It is denominated as such because it is the only time when the law allows the parties to freely serve a notice to
terminate, alter or modify the existing CBA. It is also the time when the majority status of the bargaining agent may be
challenged by another union by filing the appropriate petition for certification election.
3. AUTOMATIC RENEWAL CLAUSE.
a. Automatic renewal clause deemed incorporated in all CBAs.
Pending the renewal of the CBA, the parties are bound to keep the status quo and to treat the terms and
conditions embodied therein still in full force and effect during the 60-day freedom period and/or until a new agreement
is negotiated and ultimately concluded and reached by the parties. This principle is otherwise known as the “automatic
renewal clause” which is mandated by law and therefore deemed incorporated in all CBAs.
For its part, the employer cannot discontinue the grant of the benefits embodied in the CBA which just expired
as it is duty-bound to maintain the status quo by continuing to give the same benefits until a renewal thereof is reached by
the parties. On the part of the union, it has to observe and continue to abide by its undertakings and commitments
under the expired CBA until the same is renewed.
4. KIOK LOY DOCTRINE.
This doctrine is based on the ruling In Kiok Loy v. NLRC, 1 where the petitioner, Sweden Ice Cream Plant,
refused to submit any counter-proposal to the CBA proposed by its employees’ certified bargaining agent. The High
Court ruled that the employer had thereby lost its right to bargain the terms and conditions of the CBA. Thus, the CBA
proposed by the union was imposed lock, stock and barrel on the erring company.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad faith consisting of the employer’s
refusal to bargain with the collective bargaining agent by ignoring all notices for negotiations and requests for counter-
proposals. Such refusal to send a counter-proposal to the union and to bargain on the economic terms of the CBA
constitutes an unfair labor practice under Article 248(g) of the Labor Code.
OTHER CASES AFTER KIOK LOY.
 Divine Word University of Tacloban v. Secretary of Labor and Employment, Sept. 11, 1992.
 General Milling Corporation v. CA, Feb. 11, 2004.
b.
COLLECTIVE BARGAINING AGREEMENT (CBA)
1. CBA.
A “Collective Bargaining Agreement” or “CBA” for short, refers to the negotiated contract between a duly
recognized or certified exclusive bargaining agent of workers and their employer, concerning wages, hours of work and
all other terms and conditions of employment in the appropriate bargaining unit, including mandatory provisions for
grievances and arbitration machineries. It is executed not only upon the request of the exclusive bargaining
representative but also by the employer.
2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.

Prior to any collective bargaining negotiations between the employer and the bargaining union, the following
requisites must first be satisfied:
1. Employer-employee relationship must exist between the employer and the members of the bargaining
unit being represented by the bargaining agent;
2. The bargaining agent must have the majority support of the members of the bargaining unit
established through the modes sanctioned by law; and
3. A lawful demand to bargain is made in accordance with law.
3. SOME PRINCIPLES ON CBA.
 CBA is the law between the parties during its lifetime and thus must be complied with in good faith.
 Being the law between the parties, any violation thereof can be subject of redress in court.
 CBA is not an ordinary contract as it is impressed with public interest.
 Automatic Incorporation Clause – law is presumed part of the CBA.
 The benefits derived from the CBA and the law are separate and distinct from each other.
 Workers are allowed to negotiate wage increases separately and distinctly from legislated wage increases.
The parties may validly agree in the CBA to reduce wages and benefits of employees provided such
reduction does not go below the minimum standards.
1 G.R.No. L-54334, Jan. 22, 1986, 141 SCRA 179, 188.

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 Ratification of the CBA by majority of all the workers in the bargaining unit makes the same binding on all
employees therein.
 Employees entitled to CBA benefits. The following are entitled to the benefits of the CBA:
(1) Members of the bargaining union;
(2) Non-members of the bargaining union but are members of the bargaining unit;
(3) Members of the minority union/s who paid agency fees to the bargaining union; and
(4) Employees hired after the expiration of the CBA.
 Pendency of a petition for cancellation of union registration is not a prejudicial question before CBA
negotiation may proceed.
 CBA should be construed liberally. If the terms of a CBA are clear and there is no doubt as to the intention of
the contracting parties, the literal meaning of its stipulation shall prevail.
1.
MANDATORY PROVISIONS OF CBA
1. MANDATORY STIPULATIONS OF THE CBA.
The Syllabus mentions 4 provisions that are mandatorily required to be stated in the CBA, to wit:
1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration will be denied by the BLR.
E.
UNFAIR LABOR PRACTICE
(ULP)
1.
NATURE, ASPECTS
1. WHEN AN ACT CONSTITUTES ULP.
At the outset, it must be clarified that not all unfair acts constitute ULPs. While an act or decision of an
employer or a union may be unfair, certainly not every unfair act or decision thereof may constitute ULP as defined and
enumerated under the law.
The act complained of as ULP must have a proximate and causal connection with any of the following 3
rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical signification of the term “unfair labor
practice.”
2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO THE EXERCISE OF THE RIGHT
TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.
The only ULP which is the exception as it may or may not relate to the exercise of the right to self-organization
and collective bargaining is the act described under Article 248 [f], i.e., to dismiss, discharge or otherwise prejudice
or discriminate against an employee for having given or being about to give testimony under the Labor Code.
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions related to ULP, to wit:
1. Article 258 [247] which describes the concept of ULPs and prescribes the procedure for their prosecution;
2. Article 259 [248] which enumerates the ULPs that may be committed by employers;
3. Article 260 [249] which enumerates the ULPs that may be committed by labor organizations;
4. Article 274 [261] which considers violations of the CBA as no longer ULPs unless the same are gross in
character which means flagrant and/or malicious refusal to comply with the economic provisions thereof.
5. Article 278(c) [263(c)] which refers to union-busting, a form of ULP, involving the dismissal from
employment of union officers duly elected in accordance with the union constitution and by-laws, where
the existence of the union is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor organization. Article 259 [248] describes the ULPs
that may be committed by an employer; while Article 260 [249] enumerates those which may be committed by a labor
organization.
On the part of the employer, only the officers and agents of corporations, associations or partnerships who
have actually participated in or authorized or ratified ULPs are criminally liable.
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On the part of the union, only the officers, members of governing boards, representatives or agents or
members of labor associations or organizations who have actually participated in or authorized or ratified the ULPs are
criminally liable.
5. ELEMENTS OF ULP.
1. There should exist an employer-employee relationship between the offended party and the offender; and
2. The act complained of must be expressly mentioned and defined in the Labor Code as an unfair labor
practice.
Absent one of the elements aforementioned will not make the act an unfair labor practice.
6. ASPECTS OF ULP.
Under Article 258 [247], a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual, moral and exemplary damages, attorney’s
fees and other affirmative reliefs. Generally, these civil claims should be asserted in the labor case before the Labor
Arbiters who have original and exclusive jurisdiction over unfair labor practices. The criminal aspect, on the other
hand, can only be asserted before the regular court.
2.
ULP BY EMPLOYERS
I.
INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. TEST OF INTERFERENCE, RESTRAINT OR COERCION.
The terms “interfere,” “restrain” and “coerce” are very broad that any act of management that may reasonably tend
to have an influence or effect on the exercise by the employees of their right to self-organize may fall within their
meaning and coverage. According to the Supreme Court in Insular Life Assurance Co., Ltd., Employees
Association-NATU v. Insular Life Assurance Co., Ltd.,1 the test of whether an employer has interfered with or
restrained or coerced employees within the meaning of the law is whether the employer has engaged in conduct which may
reasonably tend to interfere with the free exercise of the employees’ rights. It is not necessary that there be direct evidence that
any employee was in fact intimidated or coerced by the statements or threats of the employer if there is a reasonable
inference that the anti-union conduct of the employer does have an adverse effect on the exercise of the right to self-
organization and collective bargaining.
2. TOTALITY OF CONDUCT DOCTRINE.
In ascertaining whether the act of the employer constitutes interference with, restraint or coercion of the
employees’ exercise of their right to self-organization and collective bargaining, the “totality of conduct doctrine” may be
applied.
The totality of conduct doctrine means that expressions of opinion by an employer, though innocent in themselves,
may be held to constitute an unfair labor practice because of the circumstances under which they were uttered, the
history of the particular employer’s labor relations or anti-union bias or because of their connection with an established
collateral plan of coercion or interference. An expression which may be permissibly uttered by one employer, might, in
the mouth of a more hostile employer, be deemed improper and consequently actionable as an unfair labor practice. The
past conduct of the employer and like considerations, coupled with an intimate connection between the employer’s
action and the union affiliation or activities of the particular employee or employees taken as a whole, may raise a
suspicion as to the motivation for the employer’s conduct. The failure of the employer to ascribe a valid reason therefor
may justify an inference that his unexplained conduct in respect of the particular employee or employees was inspired by
the latter’s union membership and activities.
In General Milling,2 the Supreme Court considered the act of the employer in presenting the letters from
February to June 1993, by 13 union members signifying their resignation from the union clearly indicative of the
employer’s pressure on its employees. The records show that the employer presented these letters to prove that the
union no longer enjoyed the support of the workers. The fact that the resignations of the union members occurred
during the pendency of the case before the Labor Arbiter shows the employer’s desperate attempt to cast doubt on the
legitimate status of the union. The ill-timed letters of resignation from the union members indicate that the employer
had interfered with the right of its employees to self-organization. Because of such act, the employer was declared guilty
of ULP.
3. INTERFERENCE IN THE EMPLOYEE’S RIGHT TO SELF-ORGANIZATION.
a. Interference is always ULP.
The judicial dictum is that any act of interference by the employer in the exercise by employees of their right to
self-organization constitutes an unfair labor practice. This is the very core of ULP.
In Hacienda Fatima v. National Federation of Sugarcane Workers – Food and General Trade,3 the
Supreme Court upheld the factual findings of the NLRC and the Court of Appeals that from the employer’s refusal to
bargain to its acts of economic inducements resulting in the promotion of those who withdrew from the union, the use
1 G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.

2 General Milling Corporation v. CA, G.R. No. 146728, Feb. 11, 2004.
3 G.R. No. 149440, Jan. 28, 2003.
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of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but
conclude that the employer did not want a union in its hacienda - a clear interference in the right of the workers to self-
organization. Hence, the employer was held guilty of unfair labor practice.
It was likewise held in Insular Life1 that it is an act of interference for the employer to send individual letters
to all employees notifying them to return to work at a time specified therein, otherwise new employees would be
engaged to perform their jobs. Individual solicitation of the employees or visiting their homes, with the employer or his
representative urging the employees to cease their union activities or cease striking, constitutes ULP. All the above-
detailed activities are ULPs because they tend to undermine the concerted activity of the employees, an activity to which
they are entitled free from the employer's molestation.
b. Formation of a union is never a valid ground to dismiss.
c. It is ULP to dismiss a union officer or an employee for his union activities.
II.
YELLOW DOG CONTRACT
1. WHAT IS A YELLOW DOG CONTRACT?
It is one which exacts from workers as a condition of employment that they shall not join or belong to a
labor organization, or attempt to organize one during their period of employment or that they shall withdraw
therefrom in case they are already members of a labor organization.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a labor organization;
(2) A promise by the employee that he will not join a union; and
(3) A promise by the employee that upon joining a labor organization, he will quit his employment.
The act of the employer in imposing such a condition constitutes unfair labor practice under Article 248(b) of
the Labor Code. Such stipulation in the contract is null and void.
3. ORIGIN OF THE TERM “YELLOW DOG.”

The term “yellow dog” traces its roots to certain commentaries made by the labor press in the United States
sometime in 1921. An example is the following editor’s comment of the United Mine Workers' Journal: “This agreement
has been well named. It is yellow dog for sure. It reduces to the level of a yellow dog any man that signs it, for he signs
away every right he possesses under the Constitution and laws of the land and makes himself the truckling, helpless slave
of the employer.”2 Simply put, it is so-called “yellow dog” because the employees were deemed to have to cower before
their "masters" to get a job.3
III.
CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. GENERAL RULE.
As a general rule, the act of an employer in having work or certain services or functions being performed by
union members contracted out is not per se an unfair labor practice. This is so because contracting-out of a job, work or
service is clearly an exercise by the employer of its business judgment and its inherent management rights and
prerogatives. Hiring of workers is within the employer’s inherent freedom to regulate its business and is a valid exercise
of its management prerogative subject only to special laws and agreements on the matter and the fair standards of
justice. The employer cannot be denied the faculty of promoting efficiency and attaining economy by a study of what
units are essential for its operation. It has the ultimate right to determine whether services should be performed by its
personnel or contracted to outside agencies.
2. WHEN CONTRACTING-OUT BECOMES ULP.
It is only when the contracting out of a job, work or service being performed by union members will interfere
with, restrain or coerce employees in the exercise of their right to self-organization that it shall constitute an unfair labor
practice. Thus, it is not unfair labor practice to contract out work for reasons of business decline, inadequacy of
facilities and equipment, reduction of cost and similar reasonable grounds.
IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d] of Article 259 [248] considers it an unfair labor practice to initiate, dominate, assist or otherwise
interfere with the formation or administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters. Such union is called “company union” as its formation, function or
administration has been assisted by any act defined as unfair labor practice under the Labor Code.
V.
DISCRIMINATION
1. COVERAGE OF PROHIBITION.
1 Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life Assurance Co., Ltd., G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
2 Joel I. Seidman, The Yellow Dog Contract, The Johns Hopkins Press, 1932, Ch. 1, pp.11-38.
3 USLegal.com at http://definitions.uslegal.com/y/yellow-dog-contract/; Last accessed: February 14, 2017.
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What is prohibited as unfair labor practice under the law is to discriminate in regard to wages, hours of work,
and other terms and conditions of employment in order to encourage or discourage membership in any labor
organization.
4. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY ACT.
In Manila Pencil Co., Inc. v. CIR,1 it was ruled that even assuming that business conditions justify the
dismissal of employees, it is a ULP of employer to dismiss permanently only union members and not non-
unionists.
In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa Manila Railroad Co.,2 the non-
regularization of long-time employees because of their affiliation with the union while new employees were
immediately regularized was declared an act of discrimination.
VI.
FILING OF CHARGES OR GIVING OF TESTIMONY
1. CONCEPT.
Under paragraph [f] of Article 259 [248] of the Labor Code, it is an unfair labor practice for an employer to
dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give
testimony under the Labor Code.
2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO EMPLOYEE’S EXERCISE OF THE
RIGHT TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.
It must be underscored that Article 259(f) [248 (f)] is the only unfair labor practice that need not be related to
the exercise by the employees of their right to self-organization and collective bargaining.
In Itogon-Suyoc Mines, Inc. v. Baldo,3 it was declared that an unfair labor practice was committed by the
employer when it dismissed the worker who had testified in the hearing of a certification election case despite its prior
request for the employee not to testify in the said proceeding accompanied with a promise of being reinstated if he
followed said request.
VII.
CBA-RELATED ULPs
1. THREE (3) CBA-RELATED ULPs.
Article 259 [248] enunciates three (3) CBA-related unfair labor practices, to wit:
1. To violate the duty to bargain collectively as prescribed in the Labor Code.
2. To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement
of any issue in collective bargaining or any other dispute.
3. To violate a collective bargaining agreement.
VII-A.
PAYMENT OF NEGOTIATION AND ATTORNEY’S FEES
1. WHEN PAYMENT CONSIDERED ULP.
Article 259 (h) [248(h)] of the Labor Code considers as an unfair labor practice the act of the employer in
paying negotiation fees or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute.
VII-B.
VIOLATION OF THE CBA
1. CORRELATION.
Article 259 (i) [248(i)] of the Labor Code should be read in relation to Article 261 thereof. Under Article 261, as
amended, violations of a CBA, except those which are gross in character, shall no longer be treated as an unfair labor
practice and shall be resolved as grievances under the CBA. Gross violations of CBA shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
2. CASE LAW.
The act of the employer in refusing to implement the negotiated wage increase stipulated in the CBA, which
increase is intended to be distinct and separate from any other benefits or privileges that may be forthcoming to the
employees, is an unfair labor practice.
Refusal for a considerable number of years to give salary adjustments according to the improved salary scales in
the CBA is an unfair labor practice.
3.
ULP OF LABOR ORGANIZATIONS
I.
RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1 G.R. No. L-16903, Aug. 31, 1965, 14 SCRA 955.

2 G.R. No. L-19728, July 30, 1964.
3 G.R. No. L-17739, Dec. 24, 1964.
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1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR COERCE EMPLOYEES IN THE
EXERCISE OF THEIR RIGHT TO SELF-ORGANIZE.
Under Article 260(a) [249 (a)], it is ULP for a labor organization, its officers, agents or representatives to
restrain or coerce employees in the exercise of their right to self-organization. Compared to similar provision of Article
248(a) of the Labor Code, notably lacking is the use of the word “interfere” in the exercise of the employees’ right to self-
organize. The significance in the omission of this term lies in the grant of unrestricted license to the labor organization,
its officers, agents or representatives to interfere with the exercise by the employees of their right to self-organization.
Such interference is not unlawful since without it, no labor organization can be formed as the act of recruiting and
convincing the employees is definitely an act of interference.
II.
DISCRIMINATION
Under Article 260(b) [249 (b)], it is ULP for a labor organization, its officers, agents or representatives:
(1) To cause or attempt to cause an employer to discriminate against an employee, including discrimination
against an employee with respect to whom membership in such organization has been denied.
(2) To terminate an employee’s union membership on any ground other than the usual terms and conditions
under which membership or continuation of membership is made available to other members.
III.
DUTY OF UNION TO BARGAIN COLLECTIVELY
1. CONCEPT.
Under Article 260(c) [249 (c)], it is ULP for a duly certified sole and exclusive bargaining union, its officers,
agents or representatives to refuse or violate the duty to bargain collectively with the employer. This is the counterpart
provision of Article 259(g) [248 (g)] respecting the violation by the employer of its duty to bargain collectively.
2. PURPOSE.
The obvious purpose of the law is to ensure that the union will negotiate with management in good faith and
for the purpose of concluding a mutually beneficial agreement regarding the terms and conditions of their employment
relationship.
IV.
FEATHERBEDDING DOCTRINE
1. CONCEPT.
Article 260(d) [249 (d)] is the “featherbedding” provision in the Labor Code. Patterned after a similar provision in
the Taft-Hartley Act,1 “featherbedding” or “make-work” refers to the practice, caused and induced by a union, of hiring
more workers than are needed to perform a given work, job or task or to adopt work procedures which is evidently
senseless, wasteful, inefficient and without legitimate justifications since it is meant purely for the purpose of employing
additional workers than are necessary.
This is resorted to by the union as a response to the laying-off of workers occasioned by their obsolescence
because of the introduction of machines, robots or new and innovative technological changes and improvements in the
workplace or as required by minimum health and safety standards, among other reasons. Its purpose is to unduly secure
the jobs of the workers.
Because of these lay-offs, the unions are constrained to resort to some featherbedding practices. Accordingly,
they usually request that the technological changes be introduced gradually, or not at all, or that a minimum number of
personnel be retained despite such changes. They resort to some ways and methods of retaining workers even though
there may be little work left for them to do and perform. It therefore unnecessarily maintains or increases the number of
employees used or the amount of time consumed to work on a specific job, work or undertaking. By so increasing the
demand for workers, featherbedding obviously keeps wages higher.
2. REQUISITES.
The requisites for featherbedding are as follows:
(1) The labor organization, its officers, agents or representatives have caused or attempted to cause an
employer either:
(a) to pay or agree to pay any money, including the demand for fee for union negotiations; or
(b) to deliver or agree to deliver any things of value;
(2) Such demand for payment of money or delivery of things of value is in the nature of an exaction; and
(3) The services contemplated in exchange for the exaction are not actually performed or will not be
performed.
V.
DEMAND OR ACCEPTANCE
OF NEGOTIATION FEES OR ATTORNEY’S FEES
1. CONCEPT.
1 It is the Labor Management Relations Act of 1947, better known as the “Taft–Hartley Act,” which was enacted on June 23, 1947. It amended the National Labor Relations Act, 29
U.S. Code § 158 - Unfair labor practices, Sec. 8[b] [6] thereof, which states: “to cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other
thing of value, in the nature of an exaction, for services which are not performed or not to be performed[.]”
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Under Article 260(e) [249 (e)], it is ULP for a labor organization, its officers, agents or representatives to ask
for or accept negotiation fees or attorney’s fees from employers as part of the settlement of any issue in collective
bargaining or any other dispute.
VI.
VIOLATION OF THE CBA
1. CONCEPT.
Under Article 260(f) [249 (f)], it is ULP for a labor organization, its officers, agents or representatives to violate
a CBA.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 259(i) [248 (i)] regarding the employer’s act of violating a CBA. But
it must be noted that under Article 261 of the Labor Code, violation of the CBA is generally considered merely a
grievable issue. It becomes an unfair labor practice only if the violation is gross in character which means that there is
flagrant and/or malicious refusal to comply with the economic (as distinguished from non-economic) stipulations in the
CBA. This principle applies not only to the employer but to the labor organization as well.
VII.
CRIMINAL LIABILITY FOR ULPs OF LABOR ORGANIZATION
1. PERSONS LIABLE.
Article 260 [249] is explicit in its provision on who should be held liable for ULPs committed by labor
organizations. It states that only the officers, members of governing boards, representatives or agents or members of
labor associations or organizations who have actually participated in, authorized or ratified unfair labor practices shall be
held criminally liable.
F.
PEACEFUL CONCERTED ACTIVITIES
A.
FORMS OF CONCERTED ACTIVITIES
1. FORMS OF CONCERTED ACTIVITIES.
There are three (3) forms of concerted activities, namely:
1. Strike;
2. Picketing; and
3. Lockout.
1.
BY LABOR ORGANIZATION
1. Strike; and
2. Picketing.
1. STRIKE.
“Strike” means any temporary stoppage of work by the concerted action of the employees as a result of an
industrial or labor dispute.
2. PICKETING.
“Picketing” is the act of workers in peacefully marching to and fro before an establishment involved in a
labor dispute generally accompanied by the carrying and display of signs, placards and banners intended to inform the
public about the dispute.
2.
BY EMPLOYER
1. LOCKOUT.
“Lockout” means the temporary refusal by an employer to furnish work as a result of an industrial or labor
dispute.
It consists of the following:
1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the employer.
3. The employer’s act of excluding employees who are union members.
a.
REQUISITES FOR A VALID STRIKE
1. PROCEDURAL BUT MANDATORY REQUISITES FOR A VALID STRIKE.
A strike, in order to be valid and legal, must conform to the following procedural requisites:
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1st requisite - It must be based on a valid and factual ground;

2nd requisite - A notice of strike must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the
taking of the strike vote by secret balloting, informing said office of the decision to conduct a
strike vote, and the date, place, and time thereof;
4th requisite - A strike vote must be taken where a majority of the members of the union obtained by secret
ballot in a meeting called for the purpose, must approve it;
5th requisite - A strike vote report should be submitted to the NCMB-DOLE at least seven (7) days before
the intended date of the strike;
6th requisite - Except in cases of union-busting, the cooling-off period of 15 days, in case of unfair labor
practices of the employer, or 30 days, in case of collective bargaining deadlock, should be fully
observed; and
7th requisite - The 7-day waiting period/strike ban reckoned after the submission of the strike vote report to
the NCMB-DOLE should also be fully observed in all cases.
All the foregoing requisites, although procedural in nature, are mandatory and failure of the union to comply
with any of them would render the strike illegal.
I.
FIRST REQUISITE:
EXISTENCE OF VALID AND FACTUAL GROUND/S
1. VALID GROUNDS.
The law recognizes only 2 grounds in support of a valid strike, viz.:
1. Collective bargaining deadlock (Economic Strike); and/or

2. Unfair labor practice (Political Strike).
A strike not based on any of these two grounds is illegal.

2. SOME PRINCIPLES ON THE FIRST REQUISITE.
 Violation of CBA, except when gross, is not an unfair labor practice, hence, may not be cited as ground
for a valid strike. Ordinary violation of a CBA is no longer treated as an unfair labor practice but as a mere
grievance which should be processed through the grievance machinery and voluntary arbitration.
 Inter-union or intra-union dispute is not a valid ground.
 Violation of labor standards is not a valid ground.
 Wage distortion is not a valid ground.
II.
SECOND REQUISITE:
FILING OF A NOTICE OF STRIKE
1. NOTICE OF STRIKE.
No labor organization shall declare a strike without first having filed a notice of strike.
III.
THIRD REQUISITE:
SERVICE OF A 24-HOUR PRIOR NOTICE
In Capitol Medical Center, Inc. v. NLRC, it was imposed as additional requisite that a 24-hour notice must
be served to the NCMB-DOLE prior to the taking of the strike vote by secret balloting, informing it of the union’s
decision to conduct a strike vote as well as the date, place, and time thereof.
IV.
FOURTH REQUISITE:
CONDUCT OF A STRIKE VOTE
1. MAJORITY APPROVAL OF THE STRIKE.
No labor organization shall declare a strike without the necessary strike vote first having been obtained and
reported to the NCMB-DOLE. A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that
purpose. This process is called “strike vote balloting.”
A STRIKE WITHOUT THE MAJORITY SUPPORT OF THE UNION MEMBERS IS CALLED A
“WILDCAT STRIKE.”
2. PURPOSE.
The purpose of a strike vote is to ensure that the decision to strike broadly rests with the majority of the union
members in general and not with a mere minority.
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3. DURATION OF THE VALIDITY OF THE MAJORITY APPROVAL OF A STRIKE.

The majority decision to stage a strike is valid for the duration of the dispute based on substantially the same
grounds considered when the strike vote was taken.
V.
FIFTH REQUISITE:
SUBMISSION OF THE STRIKE VOTE TO NCMB-DOLE
1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.

The evident intention of the law in mandatorily requiring the submission of the strike vote report is to afford
the NCMB of opportunity to verify the truth and veracity of the majority vote by the union members in support of the
intended strike.
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
The strike vote report should be submitted to the NCMB-DOLE at least seven (7) days before the actual
staging of the intended strike, subject to the observance of the cooling-off periods provided under the law.
VI.
SIXTH REQUISITE:
OBSERVANCE OF THE COOLING-OFF PERIOD
1. GENERAL RULE.
The cooling-off periods provided under the law before the intended date of the actual mounting of the strike
are as follows:
1. In case of bargaining deadlock, the cooling-off period is thirty (30) days from the filing of the notice of
strike; or
2. In case of unfair labor practice, the cooling-off period is fifteen (15) days from the filing of the notice of
strike.
2. EXCEPTION: IN CASE OF UNION-BUSTING.
In case of dismissal from employment of union officers (not ordinary members) duly elected in accordance
with the union constitution and by-laws which may constitute union-busting because the existence of the union is
threatened by reason of such dismissal, the 15-day cooling-off period does not apply and the union may take action
immediately after the strike vote is conducted and the results thereof duly submitted to the regional branch of the
NCMB.
In cases of union-busting, only the 15-day cooling-off period need not be observed; all the other requisites
must be fully complied with.
3. RECKONING OF THE COOLING-OFF PERIODS.
The start of the cooling-off periods should be reckoned from the time the notice of strike is filed with the
NCMB-DOLE, a copy thereof having been served on the other party concerned.
4. PURPOSE OF THE COOLING-OFF PERIODS.
The purpose of the cooling-off periods is to provide an opportunity for mediation and conciliation of the
dispute by the NCMB-DOLE with the end in view of amicably settling it.
VII.
SEVENTH REQUISITE:
7-DAY WAITING PERIOD OR STRIKE BAN
1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.
The seven (7) day waiting period is intended to give the NCMB-DOLE an opportunity to verify whether the
projected strike really carries the approval of the majority of the union members.
2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.
The 7-day waiting period or strike ban is a distinct and separate requirement from the cooling-off period
prescribed by law. The latter cannot be substituted for the former and vice-versa.
The cooling-off period is counted from the time of the filing of the notice of strike. The 7-day waiting
period/strike ban, on the other hand, is reckoned from the time the strike vote report is submitted to the NCMB-
DOLE.
Consequently, a strike is illegal for failure to comply with the prescribed mandatory cooling-off period and the
7-day waiting period/strike ban after the submission of the report on the strike vote.
3. BOTH MUST BE COMPLIED WITH SEPARATELY AND DISTINCTLY FROM EACH OTHER.
The requirements of cooling-off period and 7-day waiting period/strike ban must both be complied with. The
labor union may take the strike vote and report the same to the NCMB-DOLE within the statutory cooling-off period.
In this case, the 7-day waiting period/strike ban should be counted from the day following the expiration of the cooling-
off period. A contrary view would certainly defeat and render nugatory the salutary purposes behind the distinct
requirements of cooling-off period and the waiting period/strike ban.
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The NCMB Primer on Strike, Picketing and Lockout,1 issued by the NCMB, the agency of government directly
tasked with the implementation and enforcement of this particular legal provision and requirement, is very clear on this
point, thus:
“In the event the result of the strike/lockout vote ballot is filed within the cooling-off
period, the 7-day requirement shall be counted from the day following the expiration of the
cooling-off period.”2
In other words, the seven (7) days should be added to the cooling-off period of fifteen (15) days, in case of
unfair labor practice, or thirty (30) days, in case of collective bargaining deadlock and it is only after the lapse of the total
number of days after adding the two (2) periods that the strike/lockout may be lawfully and validly staged.
Example: In a case where the notice of strike grounded on ULP is filed on March 1, 2018, and the strike vote
is taken within the cooling-off period, say, on March 5, 2018 and the strike vote report showing majority support for the
intended strike is submitted to the NCMB-DOLE the following day, March 6, 2018, the question is when can the union
legally stage the strike?
Following the above principle, the answer obviously is on March 24, 2018 or any day thereafter. This is so
because the 15-day cooling-off period for ULP expires on March 16 and adding the 7-day strike ban which “should be
counted from the day following the expiration of the cooling-off period,” the 7th day would be on March 23, 2018.
Obviously, the strike cannot be conducted on the 7th day but rather after the lapse of the 7-day period; hence, it is only
on MARCH 24, 2018 onwards that the union may lawfully conduct the strike.
4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY WAITING PERIOD.

 Deficiency of even one (1) day of the cooling-off period and 7-day strike ban is fatal.
 One-day strike without complying with the 7-day strike ban is illegal.
b.
REQUISITES FOR A VALID LOCKOUT
1. SUBSTANTIALLY SIMILAR REQUISITES AS IN STRIKE.
With a slight, insignificant variation, the procedural but mandatory requisites for a valid strike discussed above
are substantially similar to those applicable for valid lockout. For purposes of ease and clarity, the same are presented as
follows:
 1st requisite - It must be based on a valid and factual ground;
 2nd requisite - A notice of lockout must be filed with the NCMB-DOLE;
 3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the
taking of the lockout vote by secret balloting, informing said office of the decision to conduct a lockout vote,
and the date, place, and time thereof;
 4th requisite - A lockout vote must be taken where a majority of the members of the Board of Directors of
the corporation or association or of the partners in a partnership obtained by secret ballot in a meeting called
for the purpose, must approve it;
 5th requisite - A lockout vote report should be submitted to the NCMB-DOLE at least seven (7) days
before the intended date of the lockout;
 6th requisite - The cooling-off period of 15 days, in case of unfair labor practices of the labor organization,
or 30 days, in case of collective bargaining deadlock, should be fully observed; and
 7th requisite - The 7-day waiting period/lockout ban reckoned after the submission of the lockout vote
report to the NCMB-DOLE should also be fully observed in all cases.
c.
REQUISITES FOR LAWFUL PICKETING
1. THE REQUISITES FOR A VALID STRIKE ARE NOT APPLICABLE TO PICKETING.
The seven (7) requisites for a valid strike discussed above do not apply to picketing.
2. REQUISITES FOR LAWFUL PICKETING.

The most singular requirement to make picketing valid and legal is that it should be peacefully conducted.
Based on the foregoing provision, the requisites may be summed up as follows:
1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or intimidation attendant thereto;
3. The ingress to (entrance) or egress from (exit) the company premises should not be obstructed; and
4. Public thoroughfares should not be impeded.
3. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION AND THE LAW.

Unlike a strike which is guaranteed under the Constitutional provision on the right of workers to conduct
peaceful concerted activities under Section 3, Article XIII thereof, the right to picket is guaranteed under the
freedom of speech and of expression and to peaceably assemble to air grievances under Section 4, Article III (Bill
of Rights) thereof.
1 2nd Edition, December 1995.

2 No. 6 thereof.
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4. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE CONDUCT OF THE PICKET.
In the event the picketers employ discourteous and impolite language in their picket, such may not result in, or
give rise to, libel or action for damages.
5. PICKETING VS. STRIKE.
(a) To strike is to withhold or to stop work by the concerted action of employees as a result of an industrial or
labor dispute. The work stoppage may be accompanied by picketing by the striking employees outside of the company
compound.
(b) While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its
incidents to inform the public of what is happening in the company being picketed.
(c) A picket simply means to march to and fro in front of the employer’s premises, usually accompanied by the
display of placards and other signs making known the facts involved in a labor dispute. It is but one strike activity
separate and different from the actual stoppage of work.
Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA).1 - While the right of employees
to publicize their dispute falls within the protection of freedom of expression and the right to peaceably assemble to air
grievances, these rights are by no means absolute. Protected picketing does not extend to blocking ingress to and
egress from the company premises. That the picket was moving, was peaceful and was not attended by actual
violence may not free it from taints of illegality if the picket effectively blocked entry to and exit from the
company premises.
6. WHEN PICKET CONSIDERED A STRIKE.
In distinguishing between a picket and a strike, the totality of the circumstances obtaining in a case should be
taken into account.
Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils., Inc.2 - Petitioners contend
that what they conducted was a mere picketing and not a strike. In disagreeing to this contention, the High Court
emphasized that it is not an issue in this case that there was a labor dispute between the parties as petitioners had
notified the respondent of their intention to stage a strike, and not merely to picket. Petitioners’ insistence to stage a
strike is evident in the fact that an amended notice of strike was filed even as respondent moved to dismiss the first
notice. The basic elements of a strike are present in this case: 106 members of petitioner Union, whose respective
applications for leave of absence on September 21, 1999 were disapproved, opted not to report for work on said date,
and gathered in front of the company premises to hold a mass protest action. Petitioners deliberately absented
themselves and instead wore red ribbons and carried placards with slogans such as: “YES KAMI SA STRIKE,”
“PROTESTA KAMI,” “SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN,” “CBA-’WAG BABOYIN,”
“STOP UNION BUSTING.” They marched to and fro in front of the company’s premises during working
hours. Thus, petitioners engaged in a concerted activity which already affected the company’s operations. The mass
concerted activity obviously constitutes a strike. Moreover, the bare fact that petitioners were given a Mayor’s permit is
not conclusive evidence that their action/activity did not amount to a strike. The Mayor’s description of what activities
petitioners were allowed to conduct is inconsequential. To repeat, what is definitive of whether the action staged by
petitioners is a strike and not merely a picket is the totality of the circumstances surrounding the situation.
Petitioner union in the 2011 case of Leyte Geothermal Power Progressive Employees Union-ALU-TUCP
v. Philippine National Oil Company – Energy Development Corporation,3 contends that there was no stoppage of
work; hence, they did not strike. Euphemistically, petitioner union avers that it “only engaged in picketing,” and
maintains that “without any work stoppage, [its officers and members] only engaged in xxx protest activity.” The
Supreme Court, however, ruled that it was a strike and not picketing or protest activity that petitioner union staged. It
found the following circumstances in support of such finding:
(1) Petitioner union filed a Notice of Strike on December 28, 1998 with the DOLE grounded on respondent’s
purported unfair labor practices, i.e., “refusal to bargain collectively, union busting and mass termination.” On even date,
petitioner Union declared and staged a strike.
(2) The DOLE Secretary intervened and issued a Return-to-Work Order dated January 4, 1999, certifying the
labor dispute to the NLRC for compulsory arbitration. The Order indicated the following facts: (1) filing of the notice of
strike; (2) staging of the strike and taking control over respondent’s facilities of its Leyte Geothermal Project on the
same day petitioner union filed the notice of strike; (3) attempts by the NCMB to forge a mutually acceptable solution
proved futile; (4) in the meantime, the strike continued with no settlement in sight placing in jeopardy the supply of
much needed power supply in the Luzon and Visayas grids.
(3) Petitioner union itself, in its pleadings, used the word “strike.”
(4) Petitioner union’s asseverations are belied by the factual findings of the NLRC, as affirmed by the CA thus:
“The failure to comply with the mandatory requisites for the conduct of strike is both admitted and clearly shown on
record. Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off period was not observed and
that the 7-day strike ban after the submission of the strike vote was not complied with since there was no strike vote
taken.”
1 G.R. No. 170830, Aug. 11, 2010.

2 G.R. Nos. 164302-03, Jan. 24, 2007.
3 G.R. No. 170351, March 30, 2011.
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In fine, petitioner union’s bare contention that it did not hold a strike cannot trump the factual findings of the
NLRC that petitioner union indeed struck against respondent. In fact, and more importantly, petitioner union failed to
comply with the requirements set by law prior to holding a strike.
d.
WHEN IS A STRIKE CONSIDERED ILLEGAL?
A strike is illegal if it is declared and staged:
1) Without complying with the procedural but mandatory requisites (See 7 requisites above).
2) For unlawful purpose such as to compel the dismissal of an employee or to force recognition of the union
or for trivial and puerile purpose or to circumvent contracts and judicial orders.
3) Based on non-strikeable or invalid grounds such as:
a) Inter-union or intra-union disputes.
b) Simple violation of CBA in contrast to gross violation thereof which is deemed ULP.
c) Violation of labor standards.
d) Legislated wage orders (wage distortion).
4) Without first having bargained collectively.
5) In violation of the “no strike, no lockout” clause in the CBA.
6) Without submitting the issues to the grievance machinery or voluntary arbitration or failing to exhaust the
steps provided therein.
7) While conciliation and mediation proceeding is on-going at the NCMB.
8) Based on issues already brought to voluntary or compulsory arbitration.
9) During the pendency of a case involving the same ground/s cited in the notice of strike.
10) In defiance of an assumption or certification or return-to-work order.
11) In violation of a temporary restraining order or an injunction order.
12) After the conversion of the notice of strike into a preventive mediation case.
13) Against the prohibition by law.
14) By a minority union.
15) By an illegitimate union.
16) By dismissed employees.
17) In violation of the company code of conduct which prohibits “inciting or participating in riots, disorders,
alleged strikes or concerted actions detrimental to [Toyota’s] interest,” The penalty for which is dismissal.
18) As protest rallies in front of government offices such as in the following cases:
Toyota Motor Phils. Corp. Workers Association [TMPCWA] v. NLRC,1 where the Supreme Court
ruled that the protest rallies staged by the employees from February 21 to 23, 2001 in front of the offices
of the Bureau of Labor Relations (BLR) and the DOLE Secretary constitute illegal strike and not
legitimate exercise of their right to peaceably assemble and petition the government for redress of
grievances. It was illegal for having been undertaken without satisfying the mandatory pre-requisites for a
valid strike under Article 263 of the Labor Code.
The ruling in Toyota was cited in Solidbank Corporation v. Gamier, 2 as basis in declaring the protest
action of the employees of petitioner Solidbank which was staged in front of the Office of the DOLE
Secretary in Intramuros, Manila, as constitutive of illegal strike since it paralyzed the operations of the
bank. The protest action in this case was conducted because of the CBA deadlock.
19) As welga ng bayan which is in the nature of a general strike as well as an extended sympathy strike.
3.
ASSUMPTION OF JURISDICTION
(BY THE DOLE SECRETARY OR ALTERNATIVELY, AT HIS DISCRETION, CERTIFICATION OF THE LABOR
DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION)
1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A LABOR DISPUTE.
Article 278(g) [263(g)] of the Labor Code provides that when in the opinion of the DOLE Secretary, the
labor dispute causes or will likely to cause a strike or lockout in an industry indispensable to the national
interest, he is empowered to do either of 2 things:
1. He may assume jurisdiction over the labor dispute and decide it himself; or
1 G.R. Nos. 158786 &158789, Oct. 19, 2007.

2 G.R. No. 159460, Nov. 15, 2010.
71
2. He may certify it to the NLRC for compulsory arbitration, in which case, it will be the NLRC which shall
hear and decide it.
This power may be exercised by the DOLE Secretary even before the actual staging of a strike or lockout
since Article 278(g) [263(g)] does not require the existence of a strike or lockout but only of a labor dispute involving
national interest.
2. WHAT CONSTITUTES A NATIONAL INTEREST CASE?
The Labor Code vests in the DOLE Secretary the discretion to determine what industries are indispensable to
the national interest. Accordingly, upon the determination by the DOLE Secretary that such industry is indispensable to
the national interest, he has authority to assume jurisdiction over the labor dispute in the said industry or certify it to the
NLRC for compulsory arbitration.
Past issuances of the DOLE Secretary have not made nor attempted to mention specifically what the industries
indispensable to the national interest are. It was only in Department Order No. 40-H-13, Series of 2013, that certain
industries were specifically named, thus:
“Section 16. Industries Indispensable to the National Interest. – For the guidance of the workers
and employers in the filing of petition for assumption of jurisdiction, the following industries/services are hereby
recognized as deemed indispensable to the national interest:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply services such as bottling and refilling
stations;
d. Air traffic control; and
e. Such other industries as may be recommended by the National Tripartite Industrial Peace
Council (TIPC).”
Obviously, the above enumerated industries are not exclusive as other industries may be considered
indispensable to the national interest based on the appreciation and discretion of the DOLE Secretary or as may be
recommended by TIPC.
3. DIFFERENT RULE ON STRIKES AND LOCKOUTS IN HOSPITALS, CLINICS AND MEDICAL
INSTITUTIONS.
As a general rule, strikes and lockouts in hospitals, clinics and similar medical institutions should be avoided.
In case a strike or lockout is staged, it shall be the duty of the striking union or locking-out employer to provide
and maintain an effective skeletal workforce of medical and other health personnel whose movement and services shall
be unhampered and unrestricted as are necessary to insure the proper and adequate protection of the life and health of
its patients, most especially emergency cases, for the duration of the strike or lockout.
The DOLE Secretary may immediately assume, within twenty four (24) hours from knowledge of the
occurrence of such a strike or lockout, jurisdiction over the same or certify it to the NLRC for compulsory arbitration.
4. SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION POWER OF THE DOLE SECRETARY.
 Prior notice and hearing are not required in the issuance of the assumption or certification order.
 The DOLE Secretary may seek the assistance of law enforcement agencies like the Philippine National Police to
ensure compliance with the provision thereof as well as with such orders as he may issue to enforce the same.
5. RETURN-TO-WORK ORDER.
a. It is a STATUTORY PART AND PARCEL of assumption/certification order even if not expressly
stated therein.
The moment the DOLE Secretary assumes jurisdiction over a labor dispute involving national interest or
certifies it to the NLRC for compulsory arbitration, such assumption or certification has the effect of automatically
enjoining the intended or impending strike or, if one has already been commenced, of automatically prohibiting its
continuation. The mere issuance of an assumption or certification order automatically carries with it a return-to-work
order, even if the directive to return to work is not expressly stated therein. It is thus not necessary for the DOLE
Secretary to issue another order directing the strikers to return to work.
It is error therefore for striking workers to continue with their strike alleging absence of a return-to-work order
since Article 263(g) is clear that once an assumption/certification order is issued, strikes are enjoined or, if one has
already taken place, all strikers should immediately return to work.
b. Nature of return-to-work order.
Return-to-work order is compulsory and immediately executory in character. It should be strictly complied
with by the parties even during the pendency of any petition questioning its validity in order to maintain the status quo
while the determination is being made. Filing of a motion for reconsideration does not affect the enforcement of a
return-to-work order which is immediately executory.
c. Some principles on return-to-work order.
 The issue of legality of strike is immaterial in enforcing the return-to-work order.
 Upon assumption or certification, the parties should revert to the status quo ante litem which refers to the
state of things as it was before the labor dispute or the state of affairs existing at the time of the filing of the
case. It is the last actual, peaceful and uncontested status that preceded the actual controversy.
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 To implement the return-to-work order, the norm is actual reinstatement. However, payroll
reinstatement in lieu of actual reinstatement may properly be resorted to when special circumstances
exist that render actual reinstatement impracticable or otherwise not conducive to attaining the purposes of
the law.
Example:
University of Sto. Tomas v. NLRC, where the teachers ordered to return to work could not be given back
their academic assignments since the return-to-work order of the DOLE Secretary was issued in the middle
of the first semester of the academic year. The Supreme Court affirmed the validity of the payroll
reinstatement order of the NLRC and ruled that the NLRC did not commit grave abuse of discretion in
providing for the alternative remedy of payroll reinstatement. It observed that the NLRC was only trying its
best to work out a satisfactory ad hoc solution to a festering and serious problem.
3.1.
NATURE OF ASSUMPTION ORDER
OR CERTIFICATION ORDER
1. A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an extraordinary authority granted to the President
and to his alter ego, the DOLE Secretary, the exercise of which should be strictly limited to national interest cases. It is in
the nature of a police power measure. This is done for the promotion of the common good considering that a
prolonged strike or lockout can be inimical to the national economy. It is to protect the NATIONAL INTEREST
and not for the protection of labor nor of capital.
3.2.
EFFECT OF DEFIANCE OF
ASSUMPTION OR CERTIFICATION ORDERS
ON EMPLOYMENT OF DEFIANT WORKERS
1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.

The defiance by the union, its officers and members of the Labor Secretary's assumption of jurisdiction or
certification order constitutes a valid ground for dismissal.
The following are the justifications:
1. A strike that is undertaken after the issuance by the DOLE Secretary of an assumption or certification
order becomes a prohibited activity and thus illegal. The defiant striking union officers and members,
as a result, are deemed to have lost their employment status for having knowingly participated in an
illegal strike.
2. From the moment a worker defies a return-to-work order, he is deemed to have abandoned his job.
3. By so defying, the workers have forfeited their right to be readmitted to work.
2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER THEY ARE OFFICERS OR ORDINARY

MEMBERS, ARE DEEMED DISMISSED.
Once the DOLE Secretary assumes jurisdiction over a labor dispute or certifies it to the NLRC for compulsory
arbitration, such jurisdiction should not be interfered with by the application of the coercive processes of a strike or
lockout. Any defiance thereof is a valid ground for the loss of employment status.
3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER, NOT MATERIAL.
The length of time within which the return-to-work order was defied by the strikers is not significant in
determining their liability for the legal consequences thereof. The following cases are illustrative of this rule:
a. University of San Agustin Employees’ Union-FFW v. The CA.1 - The period of defiance was less than
nine (9) hours from 8:45 a.m. to 5:25 p.m. on September 19, 2003.
b. Federation of Free Workers v. Inciong. 2 - The period of defiance was only nine (9) days.
4. SOME PRINCIPLES ON DEFIANCE OF THE ASSUMPTION/CERTIFICATION ORDER.
 The assumption/certification order may be served at any time of the day or night.
 No practice of giving 24 hours to strikers within which to return to work. There is no law or jurisprudence
recognizing this practice.
 The defiant strikers could be validly replaced.
 The refusal to acknowledge receipt of the assumption/certification orders and other processes is an apparent
attempt to frustrate the ends of justice, hence, invalid. The union cannot be allowed to thwart the efficacy of the
said orders issued in the national interest through the simple expediency of refusing to acknowledge receipt thereof.
1 G.R. No. 169632, March 28, 2006.

2 G.R. No. L-49983, April 20, 1992.
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3.3.
LIABILITY OF UNION OFFICERS
FOR DECLARATION OF ILLEGALITY OF STRIKE
3.4.
LIABILITY OF ORDINARY WORKERS
FOR COMMISSION OF ILLEGAL ACTS IN THE COURSE OF STRIKE
1. PARTICIPATION IN LAWFUL STRIKE.

An employee who participates in a lawful strike is not deemed to have abandoned his employment. Such
participation should not constitute sufficient ground for the termination of his employment even if a replacement has
already been hired by the employer during such lawful strike.
2. PARTICIPATION IN ILLEGAL STRIKE.
a. Distinction in the liability between union officers and ordinary union members.
1. Union officers.
The mere declaration of illegality of the strike will result in the termination of all union officers who
knowingly participated in the illegal strike. Unlike ordinary members, it is not required, for purposes of termination,
that the officers should commit an illegal act during the strike.
However, absent any showing that the employees are union officers, they cannot be dismissed based solely
on the illegality of the strike.
To illustrate how the “knowing participation” of union officers may be ascertained and established, the
following factors were taken into account in another 2011 case, Abaria v. NLRC,1 which led to the declaration that
they knowingly participated in the illegal strike:
(1) Their persistence in holding picketing activities despite the declaration by the NCMB that their union was
not duly registered as a legitimate labor organization and notwithstanding the letter from the federation’s legal counsel
informing them that their acts constituted disloyalty to the national federation; and
(2) Their filing of the notice of strike and conducting a strike vote despite the fact that their union has no legal
personality to negotiate with their employer for collective bargaining purposes.
2. Ordinary union members.

The mere finding or declaration of illegality of a strike will not result in termination of ordinary union
members. For an ordinary union member to suffer termination, it must be shown by clear evidence that he has
committed illegal acts during the strike.
b. Reason for the distinction.

The reason for this distinction is that the union officers have the duty to guide their members to respect the
law. If instead of doing so, the officers urged the members to violate the law and defy the duly constituted authorities,
their dismissal from the service is a just penalty or sanction for their unlawful act. Their responsibility as main players in
an illegal strike is greater than that of the ordinary union members and, therefore, limiting the penalty of dismissal only
to the former for their participation in an illegal strike is in order.
c. Some principles on illegality of a strike.

 The fact that the employees are signatories to the CBA does not in itself sufficiently establish their status
as union officers during the illegal strike. Neither were their active roles during the bargaining negotiations
be considered as evidence of their being union officers.
 Only the union officers during the period of illegal strike are liable. If the employees acted as union
officers after the strike, they may not be held liable and, therefore, could not be terminated in their
capacity as such.
 Shop stewards are union officers, hence, they should be terminated upon the declaration of the illegality
of the strike.
 Union officers may be dismissed despite the fact that the illegal strike was staged only for 1 day or
even for less than 10 hours. This holds true in cases of defiance of the assumption/ certification order
issued in national interest cases.
 If the dispositive portion of the decision failed to mention the names of union officers, resort
should be made to the text of the decision.
 No wholesale dismissal of strikers allowed. The employer cannot just unceremoniously dismiss a
hundred of its employees in the absence of clear and convincing proof that these people were indeed guilty
of the acts charged and then, afterwards, go to court to seek validation of the dismissal it whimsically
executed. That certainly cannot be allowed.
3. PARTICIPATION IN THE COMMISSION OF ILLEGAL ACTS DURING A STRIKE.
1 G.R. Nos. 154113, 187778, 187861 & 196156, Dec. 7, 2011, 661 SCRA 686.
74
a. Legality or illegality of strike, immaterial.

As far as liability for commission of illegal acts during the strike is concerned, the issue of legality or illegality of
the strike is irrelevant. As long as the union officer or member commits an illegal act in the course of the strike,
be it legal or illegal, his employment can be validly terminated.
b. Meaning of “illegal acts.”
The term “illegal acts” under Article 264(a) may encompass a number of acts that violate existing labor or
criminal laws, such as the following:
(1) Violation of Article 264(e) of the Labor Code which provides that “[n]o person engaged in picketing shall
commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the
employer’s premises for lawful purposes, or obstruct public thoroughfares.”
(2) Commission of crimes and other unlawful acts in carrying out the strike.
(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or NLRC in connection
with the assumption of jurisdiction or certification order under Article 263(g) of the Labor Code.
This enumeration is not exclusive as jurisprudence abounds where the term “illegal acts” has been interpreted
and construed to cover other breaches of existing laws.
Liability for illegal acts should be determined on an individual basis. For this purpose, the individual
identity of the union members who participated in the commission of illegal acts may be proved thru affidavits and
photographs. Simply referring to them as “strikers,” or “complainants in this case” is not enough to justify their
dismissal.
d. Some principles on commission of illegal acts in the course of the strike.
 Only members who are identified as having participated in the commission of illegal acts are liable.
Those who did not participate should not be blamed therefor.
 To effectively hold ordinary union members liable, those who participated in the commission of illegal acts
must not only be identified but the specific illegal acts they each committed should be described
with particularity.
 If violence was committed by both employer and employees, the same cannot be cited as a ground to
declare the strike illegal.
------------oOo------------
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SYLLABUS
MAJOR TOPIC 6
POST EMPLOYMENT
A. EMPLOYER-
EMPLOYEE RELATIONSHIP
1.
TESTS TO DETERMINE EXISTENCE OF
EMPLOYER-EMPLOYEE RELATIONSHIP
Four-Fold Test
 What is the 4-fold test of existence of employer-employee relationship?
1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
4. Exercise of the power to control the employee’s conduct.
These tests, however, are not fool-proof as they admit of exceptions.
 What is the control test or also known as the MEANS AND METHOD CONTROL TEST?
The 4th test above, the control test, is the controlling test which means that the employer controls or has
reserved the right to control the employee not only as to the result of the work to be done but also as to the means
and methods by which the same is to be accomplished.
The three (3) terms: (1) means, (2) methods and (3) results are the critical elements of the control test, thus:
Situation 1: If the employer controls the means and methods of performing the job, work or service, including
the results thereof, then the arrangement is one of employer-employee relationship.
Situation 3: If the so-called employer does not control such means and methods but is only interested in the
results thereof, then the arrangement is called “independent job contracting” or “contractualization”, the party
controlling the means and methods is called the independent contractor and the party interested only in the results is
called the principal/client/indirect employer/statutory employer.
Two-Tiered Test
 What is the 2-tiered test of employment relationship?
The two-tiered test enunciated in Francisco v. NLRC,1 is composed of:
(1) The putative employer’s power to control the employee with respect to the means and methods by which the
work is to be accomplished [control test]; and
(2) The underlying economic realities of the activity or relationship [broader economic reality test].2
Employment relationship under the control test is determined under the same concept as discussed above, that is, by
asking whether “the person for whom the services are performed reserves the right to control not only the end to be achieved
but also the manner and means to be used in reaching such end.”3
Under the economic reality test, the proper standard of economic dependence is whether the worker is dependent
on the alleged employer for his continued employment in that line of business.4
These 2-tiered test applies to cases where there are several parties alleged to be employers of one individual. The
determinant factor is economic dependency of such individual. In other words, under the economic reality test, the question to
ask is - among the parties alleged to be the employer, to whom is the individual economically dependent?
Following the broader economic reality test, the Supreme Court found petitioner in Orozco v. The Fifth Division of
the Hon. CA,5 who is a columnist in the Philippine Daily Inquirer (PDI), not an employee of PDI but an independent
contractor. Thus:
“Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate working
in various women’s organizations. Likewise, she herself admits that she also contributes articles to other publications.
Thus, it cannot be said that petitioner was dependent on respondent PDI for her continued employment in
respondent’s line of business.
“The inevitable conclusion is that petitioner was not respondent PDI’s employee but an independent
contractor, engaged to do independent work.”
1 G.R. No. 170087, Aug. 31, 2006.

2 Id.
3 Id.
4 Id.
5 G.R. No. 155207, Aug. 13, 2008.
76
 Is it necessary to have a written contract of employment in order to establish employer-employee

relationship?
No. It may be an oral or written contract. A written contract is not necessary for the creation and validity of the
relationship.
The only exception is in the case of Kasambahay where, under the Kasambahay Law, it is required that the
contract of employment should be in writing.
2.
KINDS OF EMPLOYMENT
 What is the general classification of employment?

There are five (5) classifications of employment:
(a) Regular employees referring to those who have been “engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer”;
(b) Project employees referring to those “whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee”;
(c) Seasonal employees referring to those who work or perform services which are seasonal in nature, and the
employment is for the duration of the season;
(d) Casual employees referring to those who are not regular, project, or seasonal employees;
(e) Fixed-term employees whose term is freely and voluntarily determined by the employer and the employee.
NOTE: This is not provided in the Labor Code.
But in the 2019 Syllabus, the following were added to the enumeration of the Kinds of Employment:
1. Probationary
2. Security guards
3. Floating status
We shall therefore include a discussion on these three below.
 What is the default employment?

The default employment is regular employment. This means that generally, in the absence of any specific
agreement to the contrary, the employer-employee relationship is deemed to be regular in nature. Therefore, in order to
make the employment some other kind of employment, such as project, seasonal, casual, fixed-term or probationary,
there must be a written contract of employment stipulating the specific kind of employment.
So, therefore, if there is no written employment contract, the employment should be deemed REGULAR.
However, even if there is a written employment contract, if it is not clear that the parties have stipulated such other
kinds of employment (such as project, seasonal, casual, fixed-term or probationary), the employment relationship will
still be considered REGULAR employment which, as earlier stated, is the default employment.
a.
PROBATIONARY EMPLOYMENT
 Is the period of 6 months in the law on probationary employment (Article 296 [281], LC) the minimum or
maximum period?
The answer is it is neither the minimum nor the maximum period of probationary employment. The 6-month
period is mentioned in the law for purposes of setting the standard period. Proof that it is not the maximum is the
case of Buiser v. Leogardo where the probationary period of 18 months was considered reasonable. In other
words, probationary period may be for a day, a week, a month or several months, depending on the reasonable
discretion of management.
 How is probationary period, say, of 6 months computed?
The 6-month probationary period should be reckoned “from the date of appointment up to the same
calendar date of the 6th month following.”
 May probationary period be extended?
Yes, but only upon the mutual agreement in writing by the employer and the probationary employee.
 What is the effect of allowing a probationary employee to work beyond the probationary period?
He is considered a regular employee.
 What is the effect if there is no written contract providing for probationary employment?
If there is no written contract, the employee is considered a regular employee from day one of his employment.
And even if there is one, he is deemed regular if there is no stipulation on probationary period.
 What is the distinction between probationary employment and fixed-term employment?
77
The distinction lies in the intention of the parties. If the parties intend to make their relationship regular after
the lapse of the period, say of 6 months, then what is contemplated is probationary employment; if there is no such
intention of the parties, then, what they have entered into is simply a fixed-term contract.
 What are the grounds to terminate probationary employment?
Under Article 281, a probationary employee may be terminated only on three (3) grounds, to wit:
1. For a just cause; or
2. For authorized cause; or
3. When the probationary employee fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the start of the employment.
 Is procedural due process required in termination of probationary employment?
Yes, but only in the case of Numbers 1 and 2 above.
Due process for Number 3 is different and unique in the sense that it requires simply the service of a written
notice of termination, not verbal, informing the probationary employee of the termination of his probationary
employment and attaching thereto the result of the performance evaluation conducted on him. As clearly pointed out
above, it is a fundamental requirement that the reasonable standards expected of the employee during his probationary
employment was made known to him at the time of his engagement. Necessarily, at the termination thereof, the
supposed performance evaluation should be presented to him. As a matter of due process, an employee has the right to
know whether he has met the standards for which his performance was evaluated. Should he fail, he also has the right to
know the reasons therefor.
 When should termination of probationary employment be made?
Termination to be valid must be done prior to lapse of probationary period. Termination a day or a few days
after the lapse of the probationary period cannot be done without just or authorized cause as he has already become a
regular employee by that time.
b.
REGULAR EMPLOYMENT
 How does one become a regular employee?

Under the Labor Code, regular employment may be attained in either of three (3) ways, namely:
1. By nature of work. - The employment is deemed regular when the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer.
2. By period of service. - The employment is reckoned as regular when the employee has rendered at least
one (1) year of service, whether such service is continuous or broken, with respect to the activity in which
he is employed and his employment shall continue while such activity exists.
3. By probationary employment. - The employment is considered regular when the employee is allowed to
work after a probationary period.
 Is the manner or method of paying wage material in determining regularity of employment?
No. The manner and method of payment of wage or salary is immaterial to the issue of whether the employee
is regular or not. So, the fact that an employee is paid on a daily basis or monthly basis is inconsequential on the
regularity issue.
c.
PROJECT EMPLOYMENT
 What is the litmus test of project employment?

The litmus test of project employment, as distinguished from regular employment, is whether or not the
project employees were assigned to carry out a specific project or undertaking, the duration and scope of which
were specified at the time the employees were engaged for that project.
A true project employee should be assigned to a project which begins and ends at determined or determinable
times and be informed thereof at the time of hiring.
 What are the 6 indicators of project employment?
Either one or more of the following circumstances, among others, may be considered as indicator/s that an
employee is a project employee:
1. The duration of the specific/identified undertaking for which the worker is engaged is reasonably
determinable.
2. Such duration, as well as the specific work/service to be performed, are defined in an employment
agreement and is made clear to the employee at the time of hiring.
3. The work/service performed by the employee is in connection with the particular project or
undertaking for which he is engaged.
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4. The employee, while not employed and awaiting engagement, is free to offer his services to any
other employer.
5. A report of the termination of employment in the particular project/undertaking is submitted to the
DOLE Regional Office having jurisdiction over the workplace, within thirty (30) days following the date of
his separation from work.
6. An undertaking in the employment contract by the employer to pay completion bonus to the project
employee as practiced by most construction companies.
 Is length of service material in determining validity of project employment?
No. Length of service is not a controlling determinant of employment tenure.
 What are some principles on project employment?
1. Project employees should be informed of their status as such at inception of the employment relationship.
2. There must be a written contract of project employment stating the duration of the project employment as
well as the particular work or service to be performed. A written project employment contract is an
indispensable requirement.
3. Intervals in employment contracts indicate project employment.
4. Continuous, as opposed to intermittent, rehiring shows that employee is regular.
5. “Project-to-project” basis of employment is valid.
On termination of project employment.
1. Project employees enjoy security of tenure only during the term of their project employment.
2. Project employees have presumably become regular employees if they are allowed to work beyond the
completion of the project or any phase thereof to which they were assigned or after the “day certain” which
they and their employer have mutually agreed for its completion. Having become regular employees, they
can no longer be terminated on the basis of the completion of the project or any phase thereof to which
they were deployed.
d.
SEASONAL EMPLOYMENT
 Can a seasonal employee become a regular seasonal employee?
Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services that are seasonal in nature; and
2. They must have also been employed for more than one (1) season.
 Can a regular seasonal worker file an illegal dismissal case in the event he is not hired for the next season?
Yes. The reason is, being a regular seasonal employee, the employer should re-hire him in the next season.
During off-season, his employment is deemed suspended and he is considered as being on leave of absence without pay.
e.
CASUAL EMPLOYMENT
 What is the most important distinguishing feature of casual employment?
The most important distinction is that the work or job for which he was hired is merely incidental to the
principal business of the employer and such work or job is for a definite period made known to the employee at the
time of engagement.
Capule v. NLRC, Yakult Philippines, Inc., G.R. No. 90653, Nov. 12, 1990.
Private respondent company is engaged in the manufacture of cultured milk which is sold under the brand
name “Yakult.” Petitioners were hired to cut cogon grass and weeds at the back of the factory building used by
private respondents. They were not required to work on fixed schedule and they worked on any day of the
week on their own discretion and convenience. They were held to be casual employees because cutting cogon
grass and weeds is but incidental to the principal business of the company.
 When does a casual employee become regular?
Casual employee becomes regular after one year of service by operation of law. The one (1) year period should be
reckoned from the hiring date. Repeated rehiring of a casual employee makes him a regular employee.
f.
FIXED-TERM EMPLOYMENT
 What are the requisites in order for fixed-term employment to be valid?
The two (2) requisites or criteria for the validity of a fixed-term contract of employment are as follows:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without
any force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms
with no moral dominance whatever being exercised by the former on the latter.
 Is fixed-term employment valid if the job is directly related to the principal business of the employer?
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Yes. Fixed-term employment is the only exception to the rule that one becomes regular if he is made to perform
activities directly related to the principal business of the employer (Regularity by virtue of nature of work)
Thus, it was ruled in Philippine Village Hotel v. NLRC,1 that the fact that private respondents were required to render
services necessary or desirable in the operation of petitioner’s business for the duration of the one-month dry-run
operation period, did not in any way impair the validity of their contracts of employment which specifically stipulated
that their employment was only for one (1) month.
 When does a fixed-term employee become regular?
1. When he is allowed to work beyond the agreed fixed term.
2. When there are successive renewals of fixed-period contracts.
 What is the 555 Doctrine?
The 555 Doctrine is a scheme of the employer in hiring workers on a uniformly fixed 5-month basis and replacing
them upon the expiration of their contracts with other workers with the same employment status circumvents their
right to security of tenure.
g.
FLOATING STATUS
1. A NEW TOPIC.
The “Floating Status” Doctrine is a new topic prescribed in the 2019 Syllabus. This topic is included in the
enumeration therein as one of the kinds of employment. This may bring about confusion since this doctrine, in no way,
has anything to do with the main topic of “Kinds of Employment.”
2. LACK OF APPLICABLE PROVISION IN THE LABOR CODE.
At the outset, it bears reiterating that although placing an employee like a security guard on “floating” status (or
sometimes called temporary “off-detail” status) is considered a temporary retrenchment measure, the Supreme Court,
in Exocet v. Serrano,2 recognized the fact that there is similarly no provision in the Labor Code which treats of a
temporary retrenchment or lay-off. Neither is there any provision which provides for its requisites or its duration.
Nevertheless, since an employee cannot be laid-off indefinitely, the Court has applied Article 301 [286] of the Labor
Code by analogy to set the specific period of temporary lay-off to a maximum of six (6) months. This provision states:
“Article 301 [286]. When Employment Not Deemed Terminated. – The bona-fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a
military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee
to his former position without loss of seniority rights if he indicates his desire to resume his work not later than
one (1) month from the resumption of operations of his employer or from his relief from the military or civic
duty.”
Clearly from the foregoing article, the concept of “floating status” does not find any direct connection or relation,
except for the six (6)-month period provided therein which has been held as the defining cut-off period that can be used
as a consonant basis in determining the reasonableness of the length of time when an employee could be deprived of
work under this doctrine.
3. “FLOATING” STATUS DOCTRINE AS APPLIED TO SECURITY GUARDS.
Applying Article 301 [286] by analogy, the Supreme Court has consistently recognized that security guards may
be temporarily sidelined by their security agency as their assignments primarily depend on the contracts entered into by
the latter with third parties. This is called the “floating status” doctrine which is based on and justified under the said
article. This status, as applied to security guards, is the period of time when security guards are in between assignments
or when they are made to wait after being relieved from a previous post until they are transferred to a new one. In
security agency parlance, being placed “off-detail” or on “floating” status means “waiting to be posted.”
4. INSTANCES WHICH JUSTIFY APPLICATION OF DOCTRINE.
“Floating status” takes place under any of the following circumstances:
(1) When the security agency’s clients decide not to renew their contracts with the agency, resulting in a
situation where the available posts under its existing contracts are less than the number of guards in its
roster; or
(2) When contracts for security services stipulate that the client may request the agency for the replacement of
the guards assigned to it even for want of cause and there are no available posts under the agency’s existing
contracts to which the replaced security guards may be placed.
As far as No. 2 above is concerned, the Supreme Court has recognized the fact that clients of the security
agency have the right to request for the removal of any of the security guards supplied by the latter to the former
without need to justify the same. The reason for this is the lack of any employment relationship between the security
guards and the client.
Also, under No. 2 above, a relief and transfer order may be issued by the security agency to the security guard
concerned in order to effect it. This order in itself does not sever employment relationship between a security guard and
1 G.R. No. 105033, Feb. 28, 1994.

2 Exocet Security and Allied Services Corporation v. Armando D. Serrano, G.R. No. 198538, Sept. 29, 2014.
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his agency. And the mere fact that the transfer would be inconvenient for the former does not by itself make the transfer
illegal.
5. APPLICABILITY TO OTHER EMPLOYEES.
While the “floating status” rule is traditionally applicable to security guards who are temporarily sidelined from
duty while waiting to be transferred or assigned to a new post or client,1 Article 301 [286] has been applied as well to
other industries when, as a consequence of the bona-fide suspension of the operation of a business or undertaking, an
employer is constrained to put employees on “floating status” for a period not exceeding six (6) months.2
Thus, it may also be applied to employees of legitimate contractors or subcontractors under a valid
independent contracting or subcontracting arrangement under Article 106 of the Labor Code. The same form of
dislocation and displacement also affects their employees every time contracts of services are terminated by their clients
or principals. In the meantime that the dislocated employees are waiting for their next assignment, they may be placed
on “off detail” or “floating” status following the same concept applicable to security guards.
For example, in JPL Marketing Promotions v. CA,3 this principle was applied to merchandisers hired by petitioner
company which is engaged in the business of recruitment and placement of workers. After they were notified of the
cancellation of the contract of petitioner with a client where they were assigned and pending their reassignment to other
clients, the merchandisers are deemed to have been placed under “floating status” for a period of not exceeding six (6)
months under Article 301 [286]. Such notice, according to the Court, should not be treated as a notice of termination
but a mere note informing them of the termination of the client’s service contract with petitioner company and their
reassignment to other clients. The 30-day notice rule under Article 298 [283] does not therefore apply to this case.
This was likewise applied to the case of:
(1) A bus driver in Valdez v. NLRC4 who was placed on floating status after the air-conditioning unit of the
bus he was driving suffered a mechanical breakdown; and
(2) A Property Manager in Nippon Housing Phil., Inc. v. Leynes,5 pending her assignment to another project for
the same position.
6. SOME PRINCIPLES ON “FLOATING STATUS” DOCTRINE.
(1) When an employee like a security guard is placed on a “floating” status, he is not entitled to any salary, financial
benefit or financial assistance provided by law during the 6-month period thereof.
(2) As a general rule, “floating status” beyond 6 months amounts to illegal/constructive dismissal. This is so because
“floating status” is not equivalent to dismissal so long as such status does not continue beyond a reasonable time
which means six (6) months. After 6 months, the employee should be recalled for work, or for a new assignment;
otherwise, he is deemed terminated.
(3) The security guard who refused to be re-assigned may be dismissed for insubordination.
(4) Multiple “floating status” amount to constructive dismissal.
(5) “Floating status” is distinct from preventive suspension. In the case of “floating status,” the employee is out of work
because his employer has no available work or job to assign him to. He is thus left with no choice but to wait for
at least six (6) months before he could claim having been constructively dismissed, should his employer fail to
assign him to any work or job within said period. In the case of preventive suspension, the employee is out of
work because he has committed a wrongful act and his continued presence in the company premises poses a
serious and imminent threat to the life or property of the employer or of his co-workers. Without this kind of
threat, preventive suspension is not proper. Further, the period of preventive suspension under the said
provisions of the Implementing Rules should not exceed thirty (30) days.
(6) A complaint filed before the lapse of the 6-month period of floating status is premature, the employee not having
been deemed constructively dismissed at that point. Thus, a complaint filed twenty-nine (29) days after the
security guard was placed on floating status was declared as having been prematurely filed.
(7) However, the filing of a complaint for constructive dismissal prior to the lapse of the 6-month period of “floating
status” will not be held premature in cases where the intent to terminate the employee is evident even prior to the
lapse of said period.
(8) No procedural due process is required before an employee is placed under “floating status.” The reason is that there
is no termination of employment to speak of at that point.
h.
SECURITY GUARDS
1. NEW TOPIC.
The topic of Security Guards is newly introduced in the 2019 Syllabus. There is no single provision in the Labor
Code on security guards; hence, it is a source of wonder for the Syllabus to consider this topic under “Kinds of
Employment” alongside such topics as regular, casual, probationary, project, seasonal and fixed-term employments.
Perhaps, the reason for its inclusion therein is for the bar candidate to be able to address the issue of the employment
status of security guards and other private security personnel in relation to their employer, the security agency, and to the
principal/client, to whom they have been assigned or farmed out.
2. DEPARTMENT ORDER NO. 150, SERIES OF 2016.
1 Nippon Housing Phil., Inc. v. Leynes, G.R. No. 177816, Aug. 3, 2011.
2 JPL Marketing Promotions v. CA, G.R. No. 151966, July 8, 2005.
3 G.R. No. 151966, July 8, 2005.
4 G.R. No. 125028, Feb. 9, 1998, 286 SCRA 87.
5 G.R. No. 177816, Aug. 3, 2011, 655 SCRA 77.
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In any case, there is one issuance on security guards which may be relevant for purposes of preparing for the
bar exams and that is, Department Order No. 150, Series of 2016, entitled “Revised Guidelines Governing the Employment and
Working Conditions of Security Guards and other Private Security Personnel in the Private Security Industry” issued by the DOLE
Secretary on February 09, 2016.
More specifically, this Department Order was issued for the purpose of ensuring compliance with mandated
employment benefits and working conditions for security guards and other private security personnel in the private
security industry. It applies to all private security, detective, investigative agencies or operators, their principals or clients,
and all companies employing security guards and other private security personnel.
3. EMPLOYMENT OF SECURITY GUARDS – PERFECT EXAMPLE OF JOB CONTRACTING.
The employment of security guards is the perfect example of job contracting or commonly known as
“contractualization” where the following trilateral relationship between the following parties exists:
(1) “Principal” refers to any individual, company, cooperative, or establishment, including government
agencies and government-owned and controlled-corporations, who or which puts out or farms out a
security and/or detective job, service, or work to a private Security Service Contractor (SSC).
(2) Contractor called “Security Service Contractor (SSC)” or “Private Security Agency (PSA)” which
refers to any person, association, partnership, firm, or private corporation engaged in contracting,
recruitment, training, furnishing, or posting of security guard and other private security personnel to
individuals, corporations, offices and organizations, whether private or public, for their security needs as the
Philippine National Police (PNP) may approve.
(3) Contractor’s employees supplied or farmed out to the Principal called:
(a) "Security Guard" which refers to any person who offers or renders personal service to watch or
secure a residence, business establishment, building, compound, any other area or property; or inspects,
monitors, or performs body checks or searches of individuals or baggage and other forms of security
inspection.
(b) “Private Security Personnel” which refers to natural persons, including private detectives, security
consultants and security officers, employed by private security agency or firm, to render security
and/or detective services.
Consequently, the following terms of job contracting equally apply to the employment of security guards:
(1) "Trilateral Relationship" which refers to the relationship in contracting or subcontracting
arrangement where there is a contract for a specific security job, work, or service between the
principal and the SSC/PSA, and a contract of employment between the latter and its security guards.
There are three (3) parties involved in these arrangements: the principal who decides to farm out a
security job, work, or service to a security service contractor; the SSC/PSA who has the capacity to
independently undertake the performance of the security job, work, or service; and the security guards
and other private security personnel engaged by the SSC/PSA to accomplish the security job, work, or
service.
(2) “Service Agreement” which refers to the contract between the principal and the SSC/PSA
containing the terms and conditions governing the performance or completion of security service, job,
or work being farmed out for a definite or predetermined period.
4. CONTRACTUAL RELATIONSHIPS OF THE TRIPARTITE PARTIES.

The contractual relationships between and among the three (3) parties in the trilateral relationship are as
follows:
(1) Between principal/client and SSC/PSA – governed by the Security Agreement;
(2) Between SSC/PSA and security guards and other private security personnel – governed by the
Employment Contract;
(3) Between principal/client and security guards and other private security personnel – NO
CONTRACTUAL RELATIONSHIP
5. DISCUSSION OF JOB CONTRACTING BELOW EQUALLY APPLIES TO EMPLOYMENT OF
SECURITY GUARDS.
To avoid duplication and for simplicity in the discussion of this topic, the more comprehensive discussion of
job contracting below shall apply to and cover the employment of security guards. Consequently, we shall no longer
belabor the readers of this material with a separate disquisition of this topic.
3.
LEGITIMATE SUBCONTRACTING VS. LABOR-ONLY CONTRACTING
 What is meant by trilateral relationship?

As distinguished from employment relationship which is “bilateral” in nature, involving as it does only two
(2) parties, namely: (1) the employer, and (2) the employee, in legitimate job contracting, it is “trilateral” in character,
there being three (3) parties involved, to wit:
1. The principal who farms out a job, work or service to a contractor;
2. The contractor who has the capacity to independently undertake the performance of the job, work or
service; and
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3. The contractor’s workers engaged by the contractor and farmed out to the principal to accomplish the
job, work or service.
 What are the contracts involved in this trilateral relationship?
Only two (2) contracts are involved, namely:
1) Service Agreement between the principal and the contractor wherein the obligation arising therefrom is
civil in nature and thus cognizable by the regular courts.
2) Employment contract between the contractor and its workers supplied to the principal.
 Is there any employment relationship and/or contractual relationship between the principal and the
contractor’s workers farmed out to the principal?
None. There is no employment relationship nor any form of contractual relationship of whatsoever nature
between the principal and the workers supplied by the contractor. Hence, the principal can ask the contractor
to remove any of the latter’s employees assigned or farmed out to it anytime without need to observe due
process.
a.
LEGITIMATE JOB CONTRACTING
 What are the elements of legitimate job contracting?

(NOTE: The following THREE (3) words are very important: MANNER & METHOD and
RESULT in determining the elements of legitimate job contracting arrangement).
(a) The contractor is engaged in a distinct and independent business and undertakes to perform the job or
work on its own responsibility, according to its own manner and method;
(b) The contractor has substantial capital to carry out the job farmed out by the principal on his own
account, manner and method, investment in the form of tools, equipment, machinery and
supervision;
(c) In performing the work farmed out, the contractor is free from the control and/or direction of the
principal in all matters connected with the performance of the work EXCEPT as to the result
thereto; and
(d) The Service Agreement ensures compliance with all the rights and benefits for all the employees of
the contractor under labor laws.
Absence of any of the foregoing requisites makes it a labor-only contracting arrangement.

Therefore:
 If the first party has control over the manner and method of performing the job or work, including its
result, and the second party who supplied the workers to the first party to perform the job or work has
no such control over such manner and method, then the first party is the direct employer of the
workers supplied by the second party to perform the job or work and the second party shall not be
considered as a legitimate “contractor” but a “labor-only contractor.”
 Contrarily, if the first party has NO control over the manner and method of performing the job or
work as such control thereover is reposed on the second party, and the first party’s interest pertains only
to the result of the performance of the job or work, then there exists here a legitimate job contracting
arrangement where the first party is considered the principal and the second party, the contractor.
Example:
Principal – ABC University

Contractor – XYZ Security Agency
Contractor’s Employees – Security Guards assigned by Contractor to Principal
Scenario 1: If it is ABC University that controls the manner and method of performing the job or work
of XYZ Security Agency’s security guards (such as when it is ABC University, that (1) sets the schedule of
the Security Guards; (2) makes the assignments to their respective posts; (3) monitors their
attendance/absences; (3) supervises their every action and performance of their duties, and the like), then,
ABC University is the direct employer of the guards and the XYZ Security Agency is but a labor-only
contractor.
Scenario 2: If it is XYZ Security Agency which controls such manner and method of performing the
job or work of the Security Guards it assigned to ABC University, and ABC University is interested only in
the result of the arrangement (such as the safety of the students, teachers and employees, safeguard of
school property and premises, peace and tranquility inside its campus, etc.), then, there is here legitimate
job contracting arrangement where ABC University is the principal, XYZ Security Agency is the
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contractor, and the Security Guards, the contractor’s employees.

 What is the amount of SUBSTANTIAL CAPITAL required under the new Rules?
According to Department Order No. 174, Series of 2017 (issued on March 16, 2017), the following
consists of substantial capital:
1. In the case of corporations, partnerships or cooperatives – paid-up capital stocks/shares of at least
P5 Million; or
2. In the case of single proprietorship - a net worth of at least P5 Million.
 NOTE: “Substantial capital” and “investment in tools, etc.” are two separate requirements.
“Substantial capital” and “investment in tools, equipment, implements, machineries and work premises” should be treated
as two (2) distinct and separate requirements in determining whether there is legitimate job contracting
arrangement. It is enough that only one of these two requisites is complied with to make the job contracting
arrangement legitimate and valid.
 May individuals engage in legitimate job contracting?
Yes. Legitimate job contracting may not only be engaged by corporations, partnerships or single proprietorships.
Individuals may become legitimate job contractors themselves for as long as they have SPECIAL SKILLS,
TALENTS or EXPERTISE which are considered equivalent of the requirement regarding “INVESTMENT IN
TOOLS.”
 Are individuals engaged as legitimate job contractors required to fulfill the requisites of legitimate job
contracting as afore-described?
NO. They need not be registered as independent contractors with DOLE; they need not have substantial capital
(such as the P5 Million stated above). All that they are required is to have their tools consisting of SPECIAL
SKILLS, TALENT or EXPERTISE.
 What are examples of individuals as independent contractors?
1. Sonza v. ABS-CBN Broadcasting Corporation1 - TV and radio talents and others with special talents and
skills may not be employees but legitimate independent contractors.
2. Orozco v. The Fifth Division of the Honorable Court of Appeals2 - A newspaper columnist is not an
employee but an independent contractor of the newspaper publishing the column.
3. Jose Mel Bernarte v. Philippine Basketball Association3 - Basketball referee is an independent contractor.
4. Semblante and Pilar v. CA, Gallera de Mandaue, et al.4 - Cockpit masiador and sentenciador are
independent contractors.
5. Escasinas v. Shangri-la’s Mactan Island Resort5 - A doctor may be engaged as an independent contractor.
b.
LABOR-ONLY CONTRACTING
 Is labor-only contracting allowed under the law?

NO, it is absolutely prohibited.
 What are the elements of labor-only contracting?
(a) The contractor does not have either (i) SUBSTANTIAL CAPITAL or (ii) INVESTMENTS
in the form of tools, equipment, machineries, supervision, work premises, among others, AND the
contractor's employees recruited and placed are performing activities which are directly related to
the main business operation of the principal;
or
(b) The contractor does not exercise the right to control over the performance of the work of the
employee.
NOTE: There is labor-only contracting even if only one of the two (2) elements above is present. Further, an
unregistered contractor is presumed to be a labor-only contractor. Registration as independent contractor should be
made with the DOLE.
 What are the EFFECTS of labor-only contracting?
1 G.R. No. 138051, June 10, 2004.

2 G.R. No. 155207, Aug. 13, 2008.
3 G.R. No. 192084, Sept. 14, 2011.
4 G.R. No. 196426, Aug. 15, 2011.
5 G.R. No. 178827, March 4, 2009.
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1. The labor-only contractor will be treated as the agent or intermediary of the principal. Since the act of an
agent is the act of the principal, representations made by the labor-only contractor to the employees will
bind the principal.
2. The principal will become the direct employer as if it directly employed the workers supplied by the labor-
only contractor to undertake the contracted job or service. The principal will be responsible to them for all
their entitlements and benefits under labor laws.
3. The principal and the labor-only contractor will be solidarily treated as the direct employer.
 What are the distinctions between legitimate job contracting and labor-only contracting?
The chief distinctions between legitimate job contracting, on the one hand, and the prohibited labor-only
contracting, on the other, may be summed up as follows:
1. In the former, no employer-employee relationship exists between the contractual employees of the job
contractor and the principal; while in the latter, an employer-employee relationship is created by law between
the principal and the employees supplied by the labor-only contractor.
2. In the former, the principal is considered only an “indirect employer”; while in the latter, the principal is
considered the “direct employer” of the employees supplied by the labor-only contractor.
3. In the former, the solidary obligation of the principal and the legitimate job contractor is only for a
limited purpose, that is, to pay the wages of the contractor’s employees supplied to the principal.. Other
than this obligation of paying the wages, the principal is not responsible for any claim made by the
contractor’s employees; while in the latter, the principal becomes solidarily liable with the labor-only
contractor to the latter’s employees in the same manner and extent that the principal is liable to employees
directly hired by him/her.
 What are OTHER ILLICIT FORMS OF EMPLOYMENT IN D.O. 174, Series of 2017, (IN ADDITION
TO LABOR-ONLY CONTRACTING)?
The following are considered as such (formerly called “PROHIBITIONS” under previous Department
Orders):
a) When the principal farms out work to a “Cabo” which term refers to a person or group of persons or to a
labor group which, under the guise of a labor organization, cooperative or any entity, supplies workers to an
employer, with or without any monetary or other consideration, whether in the capacity of an agent of the
employer or as an ostensible independent contractor.
b) Contracting out of job or work through an “In-house Agency” which term refers to a contractor which is
owned, managed, or controlled, directly or indirectly, by the principal or one where the principal
owns/represents any share of stock, and which operates solely or mainly for the principal.
c) Contracting out of job or work through an “In-house Cooperative” which merely supplies workers to the
principal. An “In-house Cooperative” refers to a cooperative which is managed, or controlled directly or
indirectly by the principal or one where the principal or any of its officers owns/represents any equity or
interest, and which operates solely or mainly for the principal.
d) Contracting out of a job or work by reason of a strike or lockout, whether actual or imminent.
e) Contracting out of a job or work being performed by union members and such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization as provided in Article
259 [248] of the Labor Code, as amended.
f) Requiring the contractor's/subcontractor's employees to perform functions which are currently being
performed by the regular employees of the principal.
g) Requiring the contractor's/subcontractor's employees to sign, as a precondition to employment or
continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards
including minimum wages and social or welfare benefits; or a quitclaim releasing the principal or
contractor from liability as to payment of future claims; or require the employee to become
member of a cooperative.
h) Repeated hiring by the contractor/subcontractor of employees under an employment contract of short
duration.
i) Requiring employees under a contracting/subcontracting arrangement to sign a contract fixing the
period of employment to a term shorter than the term of the Service Agreement, unless the contract
is divisible into phases for which substantially different skills are required and this is made known to the
employee at the time of engagement.
j) Such other practices, schemes or employment arrangements designed to circumvent the right of workers
to security of tenure.
 SAME EFFECT AS LABOR-ONLY CONTRACTING.
The foregoing illicit acts do not constitute labor-only contracting but the effect is similar to labor-only
contracting in that the principal is deemed the direct employer of the contractor's employees.
B.
TERMINATION BY EMPLOYER
 What is meant by TWO-FOLD DUE PROCESS requirement?

Dismissal of employees requires the observance of the two-fold due process requisites, namely:
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1. Substantive aspect which means that the dismissal must be for any of the (1) just causes provided under
the Labor Code or the company rules and regulations promulgated by the employer; or (2) authorized
causes under the Labor Code; and
2. Procedural aspect which means that the employee must be accorded both STATUTORY DUE
PROCESS AND CONTRACTUAL DUE PROCESS.
 What is the distinction between JUST CAUSES and AUTHORIZED CAUSES?
A dismissal based on a just cause means that the employee has committed a wrongful act or omission; while a
dismissal based on an authorized cause means that there exists a ground which the law itself allows or authorizes to be
invoked to justify the termination of an employee even if he has not committed any wrongful act or omission, such as
installation of labor-saving devices, redundancy, retrenchment, closure or cessation of business operations or
disease.
a.
JUST CAUSES
 What are the just causes under the Labor Code?

The just causes in the Labor Code are found in the following provisions thereof:
(1) Article 297 [282] - (Termination by the Employer) which provides for the following grounds:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
(2) Article 279(a) [264(a)] - (Prohibited Activities) which provides for the termination of the following:
(a) Union officers who knowingly participate in an illegal strike and therefore deemed to have lost their
employment status.
(b) Any employee, union officer or ordinary member who knowingly participates in the commission of
illegal acts during a strike (irrespective of whether the strike is legal or illegal), is also deemed to have lost
his employment status.
(3) Article 278(g) [263(g)] - (National Interest Cases) where strikers who violate orders, prohibitions and/or
injunctions as are issued by the DOLE Secretary or the NLRC, may be imposed immediate disciplinary
action, including dismissal or loss of employment status.
(4) Article 259(e) [248(e)] - (Union Security Clause) where violation of the union security agreement in the
CBA may result in termination of employment. Under this clause, the bargaining union can demand from
the employer the dismissal of an employee who commits a breach of union security arrangement, such as
failure to join the union or to maintain his membership in good standing therein. The same union can also
demand the dismissal of a member who commits an act of disloyalty against it, such as when the member
organizes a rival union.
 Is dismissal based on Company Code of Discipline or Company Rules and Regulations illegal?
No.
In Sampaguita Auto Transport Corporation v. NLRC, the Supreme Court pronounced that the Court of
Appeals erred in ruling that the dismissal of private respondent, a bus driver of petitioner, was illegal because the
“grounds upon which petitioners based respondent’s termination from employment, viz.: ‘hindi lahat ng schedule nailalabas,’
[‘]mababa ang revenue ng bus, laging kasama an[g] asawa sa byahe’ and ‘maraming naririnig na kwento tungkol sa kanya, nag-uutos ng
conductor para kumita sa hindi magandang paraan[,]’ xxx are not among those enumerated under Article 297 [282] of the
Labor Code as just causes for termination of employment.” The irregularities or infractions committed by private
respondent in connection with his work as a bus driver constitute serious misconduct or, at the very least, conduct
analogous to serious misconduct, under the above-cited Article 297 [282] of the Labor Code. The requirement in the
company rules that: ‘3. to obey traffic rules and regulations as well as the company policies. 4. to ensure the
safety of the riding public as well as the other vehicles and motorist (sic)’ is so fundamental and so universal that
any bus driver is expected to satisfy the requirement whether or not he has been so informed.
I.
SERIOUS MISCONDUCT
1. REQUISITES.
For misconduct or improper behavior to be a just cause for dismissal, the following requisites must concur:
1. It must be serious; and
2. It must relate to the performance of the employee’s duties; and
3. It must show that he has become unfit to continue working for the employer.
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All the above three (3) requisites must concur.

2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
• Serious misconduct implies that it must be of such grave and aggravated character and not merely trivial or
unimportant.
• Simple or minor misconduct would not justify the termination of the services of an employee.
• Possession or use of shabu or other drugs is a valid ground to terminate employment.
• Immorality, as a general rule, is not a just ground to terminate employment. The exception is when such
immoral conduct is prejudicial or detrimental to the interest of the employer.
• Immoral act committed beyond office hours is a valid ground to terminate employment.
• Sexual intercourse inside company premises constitutes serious misconduct.
• The act of a 30-year old lady teacher in falling in love with a 16-year old student is not immoral.
• Fighting is a ground for termination but only the instigator or aggressor and not the victim who was
constrained to defend himself should be dismissed.
• Challenging superiors to a fight is a just cause for termination.
• Assaulting another employee is a just cause for termination.
• Utterance of obscene, insulting or offensive words constitutes serious misconduct.
• Gambling within company premises is a serious misconduct.
• Rendering service to business rival is a just cause to terminate employment.
• Selling products of a competitor is a just cause for termination.
• Organizing a credit union by employees in a bank is a serious misconduct.
• Deceiving a customer for personal gain is a just cause for termination.
• Contracting work in competition with employer constitutes serious misconduct.
• Intoxication which interferes with the employee’s work constitutes serious misconduct.
• The act of a teacher in pressuring a colleague to change the failing grade of a student is serious misconduct.
• Sexual harassment is a just ground to dismiss.
• Sleeping while on duty is a ground for termination.
• Dismissal is too harsh a penalty for eating while at work.
• Pilferage or theft of company-owned property is a just cause to terminate.
• Theft of funds or property not owned by employer is not a ground to terminate.
• Act of falsification is a valid ground to terminate employment.
• Punching-in of time cards of other employees is a just cause for termination.
II.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable rules, orders and instructions of the
employer. In order to validly invoke this ground, the following requisites must be complied with, to wit:
1. The employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by
a wrongful and perverse attitude; and
2. The order violated must be based on a reasonable and lawful company rule, regulation or policy and made
known to the employee and must pertain to the duties for which he has been engaged to discharge.
2. SOME PRINCIPLES ON INSUBORDINATION.

 Making false allegations in complaint does not constitute insubordination.
 Failure to answer memo to explain constitutes willful disobedience.
 Another notice is required in case of termination on the ground of failure to answer memo to explain.
 Refusal to undergo random drug testing constitutes both serious misconduct and insubordination.
 Refusal to render overtime to meet production deadline constitutes insubordination.
 Refusal to comply with a lawful transfer constitutes insubordination.
III.
GROSS AND HABITUAL NEGLECT OF DUTIES
1. REQUISITES.
The following are the requisites:
(1) There must be negligence which is gross and/or habitual in character; and
(2) It must be work-related as would make him unfit to work for his employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF DUTIES.
 Simple negligence is not sufficient to terminate employment.
 The negligence must be gross in character which means absence of that diligence that an ordinarily prudent man
would use in his own affairs.
 As a general rule, negligence must be both gross and habitual to be a valid ground to dismiss.
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 Habituality may be disregarded if negligence is gross or the damage or loss is substantial. “Habitual negligence” implies
repeated failure to perform one’s duties for a period of time, depending upon the circumstances.
 Actual damage, loss or injury is not an essential requisite.
 Gross negligence may result to loss of trust and confidence.
 Absences, if authorized, cannot be cited as a ground to terminate employment.
 Tardiness or absenteeism, if not habitual, cannot be cited as a ground to terminate employment.
 Tardiness or absenteeism, if habitual, may be cited as a ground to terminate employment.
 Tardiness or absenteeism, if habitual, may be tantamount to serious misconduct.
 Absences or tardiness due to emergency, ailment or fortuitous event are justified and may not be cited as just cause
to terminate employment.
 Unsatisfactory or poor performance, inefficiency and incompetence are considered just causes for dismissal
only if they amount to gross and habitual neglect of duties.
IV.
ABANDONMENT OF WORK
1. CONCEPT.
Abandonment is not provided for in the Labor Code but it is jurisprudentially considered a form of neglect of
duty; hence, a just cause for termination of employment under Article 297(b) [282(b)] of the Labor Code.
2. REQUISITES.
To constitute abandonment, two (2) elements must concur, namely:
1) The employee must have failed to report for work or must have been absent without valid or justifiable
reason; and
2) There must have been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act.
3. SOME PRINCIPLES ON ABANDONMENT.
 Mere absence is not enough to constitute abandonment.
 Clear intention to sever employment relationship is necessary.
 Due process in abandonment cases consists only of the service of 2 notices to the employee, viz.:
a. First notice directing the employee to explain why he should not be declared as having abandoned his job; and
b. Second notice to inform him of the employer’s decision to dismiss him on the ground of abandonment.
 No hearing is required to validly dismiss an employee for abandonment.
 Notices in abandonment cases must be sent to employee’s last known address per record of the company. The
employer need not look for the employee’s current whereabouts.
 Immediate filing of a complaint for illegal dismissal praying for reinstatement negates abandonment.
 Lapse of time between dismissal and filing of a case is not a material indication of abandonment. Hence, lapse of 2
years and 5 months or 20 months or 9 months or 8 months before filing the complaint for illegal dismissal is not
an indication of abandonment. Under the law, the employee has a 4-year prescriptive period within which to
institute his action for illegal dismissal.
 Filing of a case to pre-empt investigation of the administrative case is tantamount to abandonment.
 When what is prayed for in the complaint is separation pay and not reinstatement, the filing of complaint
does not negate abandonment.
 It is abandonment when what is prayed for in the complaint is separation pay and it was only in the position paper
that reinstatement was prayed for.
 Employment in another firm coinciding with the filing of complaint does not indicate abandonment.
 Offer of reinstatement by employer during proceedings before Labor Arbiter and refusal by employee does not
indicate abandonment but more of a symptom of strained relations between the parties.
 An employee may be absolved from the charge of abandonment of work but adjudged guilty of AWOL. These two
grounds are separate and distinct from each other.
 An employee who failed to report for work after the expiration of the duly approved leave of absence is considered
to have abandoned his job.
 An employee who failed to comply with the order for his reinstatement is deemed to have abandoned his work.
 An employee who, after being transferred to a new assignment, did not report for work anymore is deemed to have
abandoned his job.
 An employee who deliberately absented from work without leave or permission from his employer for the purpose
of looking for a job elsewhere is deemed to have abandoned his work.
 Imprisonment or detention by military does not constitute abandonment.
 Absence to evade arrest is not a valid justification. To do so would be to place an imprimatur on the employee’s
attempt to derail the normal course of the administration of justice.
V.
FRAUD
1. REQUISITES.
The following are the requisites of this ground:
1. There must be an act, omission, or concealment;
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2. The act, omission or concealment involves a breach of legal duty, trust, or confidence justly reposed;
3. It must be committed against the employer or his/her representative; and
4. It must be in connection with the employees' work.1
2. SOME PRINCIPLES ON FRAUD.

 Failure to deposit collection constitutes fraud.
 Lack of damage or losses is not necessary in fraud cases. The fact that the employer did not suffer losses from the
dishonesty of the dismissed employee because of its timely discovery does not excuse the latter from any culpability.
 Lack of misappropriation or shortage is immaterial in case of unauthorized encashment of personal checks by teller
and cashier.
 Restitution does not have absolutory effect.
VI.
WILLFUL BREACH OF TRUST AND CONFIDENCE
1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the following requisites must be satisfied:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and confidence, which means that the act that betrays the
employer’s trust must be real, i.e., founded on clearly established facts;
(3) The employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly and purposely,
without justifiable excuse; and
(4) The act must be in relation to his work which would render him unfit to perform it.
2. GUIDELINES.
As a safeguard against employers who indiscriminately use “loss of trust and confidence” to justify arbitrary
dismissal of employees, the Supreme Court, in addition to the above elements, came up with the following guidelines for
the application of the doctrine:
(1) The loss of confidence must not be simulated;
(2) It should not be used as a subterfuge for causes which are illegal, improper or unjustified;
(3) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
(4) It must be genuine, not a mere afterthought, to justify earlier action taken in bad faith.
The foregoing guidelines have been prescribed by the Supreme Court due to the subjective nature of this
ground which makes termination based on loss of trust and confidence prone to abuse.
3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST AND CONFIDENCE.

 Employee’s position must be reposed with trust and confidence.
 “Position of trust and confidence” is one where a person is entrusted with confidence on delicate matters, or with
the custody, handling, or care and protection of the employer’s property.
 Two (2) classes of positions of trust. The first class consists of managerial employees or those who, by the
nature of their position, are entrusted with confidential and delicate matters and from whom greater fidelity to duty
is correspondingly expected. They refer to those vested with the powers or prerogatives to lay down and execute
management policies and/or to hire, transfer suspend, lay-off, recall, discharge, assign or discipline employees or to
effectively recommend such managerial actions. Their primary duty consists of the management of the
establishment in which they are employed or of a department or a subdivision thereof.
The second class consists of fiduciary rank-and-file employees who, though rank-and-file, are routinely charged
with the custody, handling or care and protection of the employer's money or property, or entrusted with
confidence on delicate matters, and are thus classified as occupying positions of trust and confidence. Included
under this class are “cashiers, auditors, property custodians, or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of [the employer’s] money or property.”
 Rules on termination of managerial and supervisory employees different from those applicable to rank-
and-file employees. Thus, with respect to rank-and-file personnel, loss of trust and confidence as a ground for
valid dismissal requires proof of involvement in the alleged events in question and that mere uncorroborated
assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere
existence of a basis for believing that he has breached the trust of his employer would suffice for his dismissal.
 There must be “some basis” for the loss of trust and confidence which means that there is reasonable ground to
believe, if not to entertain the moral conviction, that the concerned employee is responsible for the misconduct
and that the nature of his participation therein rendered him absolutely unworthy of trust and confidence
demanded by his position.
 Dismissal due to feng shui mismatch is not a valid ground to lose trust and confidence.
 Command responsibility of managerial employees is a ground to dismiss.
 Confidential employee may be dismissed for loss of trust and confidence.
 Grant of promotions and bonuses negates loss of trust and confidence.
 Long years of service, absence of derogatory record and small amount involved are deemed inconsequential
insofar as loss of trust and confidence is concerned.
 Dropping of criminal charges or acquittal in a criminal case arising from the same act does not affect the validity of
dismissal based on loss of trust and confidence.
1 Per latest DOLE Department Order No. 147-15, series of 2015, September 07, 2015.
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 Full restitution does not absolve employee of offense which resulted in the loss of trust and confidence.
VII.
COMMISSION OF CRIME OR OFFENSE
1. REQUISITES.
The following are the requisites for the valid invocation of this ground:
1. A crime or offense was committed by the employee;
2. It was committed against any of the following persons:
(a) His employer;
(b) Any immediate member of his employer’s family; or
(c) His employer’s duly authorized representative.
2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR OFFENSE.
 Because of its gravity, work-relation is not necessary. Neither is it necessary to show that the commission of the
criminal act would render the employee unfit to perform his work for the employer.
VIII.
OTHER ANALOGOUS CAUSES
1. ANALOGOUS CAUSES UNDER ESTABLISHED JURISPRUDENCE.
The following may be cited as analogous causes:
1) Violation of company rules and regulations.
2) Theft of property owned by a co-employee, as distinguished from theft of property owned by the employer.
3) Incompetence, inefficiency or ineptitude.
4) Failure to attain work quota.
5) Failure to comply with weight standards of employer.
6) “Attitude problem” is analogous to loss of trust and confidence.
IX.
TERMINATION DUE TO ENFORCEMENT OF
UNION SECURITY CLAUSE
 What is a union security clause?

The “union security clause” is a stipulation in a CBA which allows the parties thereto to enter into an agreement
requiring compulsory membership in the sole and exclusive bargaining agent (SEBA) which successfully negotiated
said CBA as a condition for continued employment with the exception of employees who are already members of other
union/s at the time of the signing of the CBA. Hence, they cannot be compelled to resign from their minority union/s
to join the SEBA.
 What are the effects of application of this clause?
The following are the effects:
a. On members of the SEBA. They are not allowed to resign or terminate their membership therefrom. Any
member of the SEBA who resigns or is expelled therefrom may be recommended to the employer by the
SEBA for termination of his employment.
b. On non-members of the SEBA but members of the minority union/s. They are not bound by the
union security clause if they are members of the minority or other unions at the time of the signing of the
CBA. Hence, they cannot be compelled to resign from their union/s in order to join the SEBA.
c. On non-members of the SEBA or of any minority union/s. If not a member of the SEBA or any other
unions in the bargaining unit at the time of the signing of the CBA by reason of the fact that he is
excepted from the coverage of the bargaining unit, the employee cannot be compelled to join the
SEBA. (E.g., Religious objectors and confidential employees under the Confidential Employee Rule).
d. On new employees hired after the signing of the CBA containing the union security clause. They
can be compelled to join the SEBA. If they refuse, they can be recommended for termination by the SEBA
to the employer as such refusal is deemed a violation of this clause.
 Is there an exception to this rule?
Yes. An employee cannot be compelled to join any union based on religious ground (Religious Objectors).
For example: members of the Iglesia ni Kristo (INK) cannot be compelled to join a union; hence, they are not bound by
the union security doctrine.
 Can religious objectors be denied membership in a union or be disallowed from participating in a
certification election?
No. Religious objectors, if they choose to, cannot be denied membership in a union or prevented from
participating in a certification election.
 What are the requisites in order to validly terminate employees based on this clause?
(1) The union security clause is applicable;
(2) The bargaining union is requesting for the termination of employment due to enforcement of the union
security provision in the CBA; and
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(3) There is sufficient evidence to support the union’s decision to expel the employee from the union.
(Alabang Country Club, Inc. v. NLRC,1).
All the foregoing requisites should be complied with to justify the termination of employment.
 Is the employer required to observe due process before terminating an employee who is recommended by
the SEBA for termination due to violation of the union security clause?
Yes, the employer should afford both substantive and procedural due process to the employee. It cannot
terminate his employment merely on the basis of the recommendation of the union.
 Can the employer adopt the due process afforded by the SEBA to the employee in expelling him from his
membership in the SEBA?
No. The employer cannot adopt the due process afforded by the SEBA as its own due process for the simple
reason that such due process concerns the termination of membership of the employee from the SEBA. The due
process in above-cited Alabang Country Club, Inc. v. NLRC,2 is required for a different purpose - to terminate his
employment.
OTHER PRINCIPLES `ON TERMINATION
Per Department Order No. 147-15, Series Of 2015
(07 September 2015)
3
 An employee found positive for use of dangerous drugs shall be dealt with administratively which shall be a
ground for suspension or termination.4
 An employee shall not be terminated from work based on actual, perceived or suspected HIV status.5
 An employee shall not be terminated on basis of actual, perceived or suspected Hepatitis B status.6
 An employee who has or had tuberculosis shall not be discriminated against. He/she shall be entitled to work for as
long as they are certified by the company's accredited health provider as medically fit and shall be restored to work as
soon as his/her illness is controlled.7
 An employee may also be terminated based on the grounds provided for under the CBA.
b.
AUTHORIZED CAUSES
 What are the 2 classes of authorized cause termination?

Under the Labor Code, authorized causes are classified into two (2) classes, namely:
(1) Business-related causes. – Referring to the grounds specifically mentioned in Article 298 [283], to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations NOT due to serious business losses or financial reverses;
and
e. Closure or cessation of business operations due to serious business losses and financial reverses.
(2) Health-related causes. – Referring to disease covered by Article 299 [284] of the Labor Code.
 What are the two (2) kinds of requisites in the case of business-related causes?
1. COMMON requisites applicable to all the authorized causes; and

2. UNIQUE requisites applicable to each of the authorized causes.
 What are the COMMON REQUISITES applicable to the BUSINESS-RELATED causes under Article
298 [283]?
The following are the five (5) common requisites applicable to the ALL the business-related causes:
1. There is good faith in effecting the termination;

2. The termination is a matter of last resort, there being no other option available to the employer after
resorting to cost-cutting measures;
1 G.R. No. 170287, Feb. 14, 2008.

2 G.R. No. 170287, Feb. 14, 2008.
3 See Section 6 thereof. (Other Causes of Termination.) xxx
4 DOLE Department Order No. 53, Series of 2003 in relation to the IRR of R.A. 9165.
5 DOLE Department Order No. 102, Series of 2010.
6 DOLE Department Advisory No.5, Series of 2010 Part III C1. par. c.
7 DOLE Department Order No. 75, Series of 2005.
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3. Two (2) separate written notices are served on both the affected employees and the DOLE at least one
(1) month prior to the intended date of termination;
4. Separation pay is paid to the affected employees, to wit:
(a) If based on (1) installation of labor-saving device, or (2) redundancy. - One (1) month pay or at
least one (1) month pay for every year of service, whichever is higher, a fraction of at least six (6)
months shall be considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due serious business losses or financial
reverses. - One (1) month pay or at least one-half (½) month pay for every year of service, whichever is
higher, a fraction of at least six (6) months shall be considered as one (1) whole year.
(c) If closure is due to serious business losses or financial reverses, NO separation pay is required to be
paid.
(d) In case the CBA or company policy provides for a higher separation pay, the same must be followed
instead of the one provided in Article 298 [283].
5. Fair and reasonable criteria in ascertaining what positions are to be affected by the termination, such as,
but not limited to: nature of work; status of employment (whether casual, temporary or regular); experience;
efficiency; seniority; dependability; adaptability; flexibility; trainability; job performance; discipline; and
attitude towards work. Failure to follow fair and reasonable criteria in selecting who to terminate would
render the termination invalid.
NOTE: SENIORITY is not the principal nor the only criterion. The other criteria mentioned above which
are lifted from jurisprudence, are of equal importance.
 What are the UNIQUE REQUISITES applicable to each of the BUSINESS-RELATED causes under
Article 298 [283]?
In addition to the COMMON REQUISITES above, the following are the UNIQUE REQUISITES of each of
the authorized causes:
I.
INSTALLATION OF LABOR-SAVING DEVICE
 What are the additional requisites unique to this ground?

In addition to the five (5) common requisites above, the unique requisites are as follows:
1. There must be introduction of machinery, equipment or other devices; and

2. The purpose for such introduction must be valid such as to save on cost, enhance efficiency and other
justifiable economic reasons.1
II.
REDUNDANCY
The additional requisites are as follows:
1. There must be superfluous positions or services of employees;

2. The positions or services are in excess of what is reasonably demanded by the actual requirements of the
enterprise to operate in an economical and efficient manner; and
3. There must be an adequate proof of redundancy such as but not limited to the new staffing pattern,
feasibility studies/proposal, on the viability of the newly created positions, job description and the approval
by the management of the restructuring.
III.
RETRENCHMENT
Per latest issuance of the DOLE, the following are the additional requisites:
1. The retrenchment must be reasonably necessary and likely to prevent business losses;
2. The losses, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent;
3. The expected or actual losses must be proved by sufficient and convincing evidence; and
4. The retrenchment must be in good faith for the advancement of its interest and not to defeat or circumvent
the employees' right to security of tenure.
This is the only business-related cause under Article 298 [283] which requires proof of losses or imminent
losses. The other grounds of closure or cessation of business operations may be resorted to with or without losses.
 What are some relevant principles on retrenchment?
1 Per latest DOLE Department Order No. 147-15, series of 2015, September 07, 2015.
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 The fact that there has been economic or other crisis besetting a particular sector or the country as a whole is
not sufficient justification for retrenchment.
 The phrase “retrenchment to prevent losses” means that retrenchment may be undertaken by the employer
before the losses anticipated are actually sustained or realized. The employer need not keep all his employees
until after his losses shall have materialized. Otherwise, the law could be vulnerable to attack as undue taking of
property for the benefit of another.
 Best evidence of losses - financial statements audited by independent auditors (not by internal
auditors).
 Best evidence of losses in a government-controlled corporation - financial statements audited by COA.
 Income tax returns, not valid since they are self-serving documents.
 Mere affidavit on alleged losses is not sufficient.
 Retrenchment effected long after the business losses is not valid.
 Profitable operations in the past do not affect the validity of retrenchment.
 Retrenchment due to liquidity problem is not valid.
 Sharp drop in income is not a ground to justify retrenchment. A mere decline in gross income cannot in any
manner be considered as serious business losses. It should be substantial, sustained and real.
 Litany of woes, in the absence of any solid evidence that they translated into specific and substantial losses that
would necessitate retrenchment, will not suffice to justify retrenchment.
 Rehiring of retrenched employees does not necessarily indicate illegality of retrenchment.
 In an enterprise which has several branches nationwide, profitable operations in some of them will not
affect the validity of the retrenchment if overall, the financial condition thereof reflects losses.
IV.
CLOSURE OR CESSATION OF BUSINESS OPERATIONS
 Can an employer close its business even if it is not suffering from business losses?
Yes. In fact, closure involves two (2) situations:
(a) When NOT due to serious business losses or financial reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is required. No such requirement is imposed in the
second.
 What are some relevant principles on closure?

 Principle of closure under Article 283 applies in cases of both total and partial closure or cessation of business
operations. Management may choose to close only a branch, a department, a plant, or a shop.
 Closure of department or section and hiring of workers supplied by independent contractor as replacements is
valid.
 Relocation of business may amount to cessation of operations.
 Closure of business to merge or consolidate with another or to sell or dispose all of its assets, held valid.
 Audited financial statements necessary only in closure due to losses.
V.
DISEASE
 What are the newest doctrines on termination due to disease?

The newest doctrines are the ones enunciated in Deoferio and Fuji on the matter of due process as discussed
below. The due process applicable to disease, although an authorized cause, is similar to the one applicable to just cause
termination and not to authorized cause termination.
1. THE DEOFERIO DOCTRINE ON THE REQUISITES.

Disease is one of the authorized causes to terminate employment. In the 2014 case of Deoferio v. Intel
Technology Philippines, Inc.,1 the Supreme Court divided into two, the requisites that must be complied with before
termination of employment due to disease may be justified, namely:
(1) Substantive requisites; and
(2) Procedural requisites.
1.1. THE DEOFERIO RULE ON SUBSTANTIVE REQUISITES.
The following are the three (3) substantive requisites:
(1) An employee has been found to be suffering from any disease;

(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health of his
co-employees; and
(3) A competent public health authority issues a medical certificate that the disease is of such nature or at such
a stage that it cannot be cured within a period of six (6) months even with proper medical treatment.2
1.2. THE DEOFERIO RULE ON PROCEDURAL REQUISITES.
1 G.R. No. 202996, June 18, 2014.

2 Per Deoferio v. Intel Technology Philippines, Inc., supra.
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Deoferio, finally pronounced the rule that the employer must furnish the employee two (2) written notices in
terminations due to disease, namely:
(1) The notice to apprise the employee of the ground for which his dismissal is sought; and
(2) The notice informing the employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense.
 In other words, due process in termination due to disease is similar to due process for just cause
termination but different from authorized cause termination under Article 298 [283].
2. THE FUJI RULE – THE EMPLOYEE SHOULD BE GIVEN THE CHANCE TO PRESENT
COUNTERVAILING MEDICAL CERTIFICATES.
Subsequent to Deoferio, another 2014 case, Fuji Television Network, Inc. v. Arlene S. Espiritu,1 has further
expounded on the due process requirement in termination due to disease, this time by categorically specifying the right
of the ailing employee to present countervailing evidence in the form of medical certificates to prove that his dismissal
due to disease is not proper and therefore illegal.
Respondent Arlene was petitioner’s news correspondent/producer “tasked to report Philippine news to Fuji
through its Manila Bureau field office.” She was successively given yearly fixed-term employment contracts until she was
diagnosed with lung cancer sometime in January 2009 when the Chief of News Agency of Fuji informed her “that the
company will have a problem renewing her contract” since it would be difficult for her to perform her job. She,
however, “insisted that she was still fit to work as certified by her attending physician.” Subsequently, Arlene and Fuji
signed a non-renewal contract where it was stipulated that her contract would no longer be renewed after its expiration
on May 31, 2009 and that the parties release each other from liabilities and responsibilities under the employment
contract. Arlene received her unpaid salaries and bonuses but she affixed her signature on the non-renewal contract with
the initials “U.P.” for “under protest.” The day after Arlene signed the non-renewal contract, she filed a complaint for
illegal dismissal and attorney’s fees with the Labor Arbiter, alleging that she was forced to sign the non-renewal contract
when Fuji came to know of her illness and that Fuji withheld her salaries and other benefits for March and April 2009
when she refused to sign. Arlene claimed that she was left with no other recourse but to sign the non-renewal contract,
and it was only upon signing that she was given her salaries and bonuses, in addition to separation pay equivalent to 4
years.
The Supreme Court declared respondent Arlene as having been constructively dismissed. It was likewise held
here that respondent was not afforded due process, thus:
“There is no evidence showing that Arlene was accorded due process. After informing her employer
of her lung cancer, she was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her duties because of chemotherapy. It
did not ask her how her condition would affect her work. Neither did it suggest for her to take a leave,
even though she was entitled to sick leaves. Worse, it did not present any certificate from a competent
public health authority. What Fuji did was to inform her that her contract would no longer be renewed,
and when she did not agree, her salary was withheld. Thus, the Court of Appeals correctly upheld the
finding of the National Labor Relations Commission that for failure of Fuji to comply with due
process, Arlene was illegally dismissed.”
 What are some salient points to consider under this ground of disease?
 If the disease or ailment can be cured within the period of six (6) months with proper medical treatment, the
employer should not terminate the employee but merely ask him to take a leave of absence. The employer should
reinstate him to his former position immediately upon the restoration of his normal health.
 In case the employee unreasonably refuses to submit to medical examination or treatment upon being requested
to do so, the employer may terminate his services on the ground of insubordination or willful disobedience of
lawful order.
 A medical certificate issued by a company’s own physician is not an acceptable certificate for purposes of
terminating an employment based on Article 284, it having been issued not by a “competent public health
authority,” the person referred to in the law.
 A “competent public health authority” refers to a government doctor whose medical specialization
pertains to the disease being suffered by the employee. For instance, if the employee suffers from
tuberculosis, the medical certificate should be issued by a government-employed pulmonologist who is competent
to make an opinion thereon. If the employee has cardiac symptoms, the competent physician in this case would
be a cardiologist.
 The medical certificate should be procured by the employer and not by the employee.
3.
DUE PROCESS
(a) Twin-Notice Requirement
(b) Hearing
PRELIMINARY CLARIFICATORY STATEMENT ON DUE PROCESS
1 Fuji Television Network, Inc. v. Arlene S. Espiritu, G.R. Nos. 204944-45, Dec. 03, 2014.
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At the outset, there is a need to point out the following distinction:

(1) Due process required to be complied with by the employer in terminating the employee’s employment
(COMPANY-LEVEL DUE PROCESS); and
(2) Due process required to be observed by the labor authorities/tribunals/courts (Labor Arbiter/NLRC/CA) in
hearing and deciding labor cases brought before them for adjudication and decision (COURT-LEVEL DUE
PROCESS).
No. 1 above requires compliance with both the statutory and contractual due process as discussed below; while
No. 2 above requires observance of the constitutional due process.
It is No. 1 above that is prescribed in the Syllabus, hence, discussion herein will focus thereon.
 What is the latest rule on due process?
Due process means compliance with BOTH STATUTORY DUE PROCESS and CONTRACTUAL
DUE PROCESS.
CONSTITUTIONAL DUE PROCESS is not applicable (Per Agabon doctrine).
Statutory due process refers to the one prescribed in the Labor Code (Article 292[b] 277[b]); while
contractual due process refers to the one prescribed in the Company Rules and Regulations (Per Abbott Laboratories
doctrine).
Contractual due process was enunciated in the 2013 en banc ruling in Abbott Laboratories, Philippines v.
Pearlie Ann F. Alcaraz.1 Thus, it is now required that in addition to compliance with the statutory due process, the
employer should still comply with the due process procedure prescribed in its own company rules. The employer’s
failure to observe its own company-prescribed due process will make it liable to pay an indemnity in the form of
nominal damages, the amount of which is equivalent to the P30,000.00 awarded under the Agabon doctrine.
 Are the twin-notice requirement and hearing required in all cases of termination?
No. The two-notice requirement and hearing are required only in case of just cause termination BUT NOT
IN AUTHORIZED CAUSE TERMINATION (EXCEPT ON THE GROUND OF DISEASE PER DEOFERIO
DOCTRINE as discussed above).
 What is the order in which the twin-notice requirement and hearing are implemented by the employer?
The requirement should be implemented in the following order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
 What is the King of Kings Transport doctrine on just cause procedural due process?
Based on this doctrine which was enunciated in the 2007 case of King of Kings Transport, Inc. v.
Mamac,2 the following requirements should be complied with in just cause termination:
(1) First written notice.
The first written notice to be served on the employee should:
a) Contain the specific causes or grounds for termination against him;
b) Contain a directive that the employee is given the opportunity to submit his written explanation within
the reasonable period of FIVE (5) CALENDAR DAYS from receipt of the notice:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer;
4) to gather data and evidence; and
5) to decide on the defenses he will raise against the complaint.
c) Contain a detailed narration of the facts and circumstances that will serve as basis for the charge against
the employee. This is required in order to enable him to intelligently prepare his explanation and
defenses. A general description of the charge will not suffice.
d) Specifically mention which company rules, if any, are violated and/or which among the grounds under
Article 282 is being charged against the employee.
(2) Hearing required,
After serving the first notice, the employer should schedule and conduct a hearing or conference wherein the
employee will be given the opportunity to:
1) explain and clarify his defenses to the charge/s against him;
2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the management.
1 G.R. No. 192571, July 23, 2013.

2 G.R. No. 166208, June 29, 2007.
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During the hearing or conference, the employee is given the chance to defend himself personally, with the
assistance of a representative or counsel of his choice. Moreover, this conference or hearing could be used by the parties
as an opportunity to come to an amicable settlement.
NOTE: See Lopez doctrine and Perez doctrine below
3) Second written notice.
After determining that termination of employment is justified, the employer shall serve the employees a
written notice of termination indicating that:
1) all circumstances involving the charge/s against the employee have been considered; and
2) grounds have been established to justify the severance of his employment.
 What is the LOPEZ doctrine on right to counsel?

Per the 2011 Lopez doctrine, which is the prevailing rule, the right to counsel is neither
indispensable nor mandatory. It becomes mandatory only in two (2) situations:
(1) When the employee himself requests for counsel; or
(2) When he manifests that he wants a formal hearing on the charges against him, in
which case, he should be assisted by counsel. (See Lopez v. Alturas Group of Companies).
 What is the PEREZ doctrine on hearing?

The 2009 Perez doctrine enunciates the new guiding principle on the hearing requirement. It has interpreted
the term “ample opportunity to be heard” as follows:
(a) “Ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in a
hearing, conference or some other fair, just and reasonable way.
(b) A formal hearing or conference is no longer mandatory. It becomes mandatory only under any of the
following circumstances:
(1) When requested by the employee in writing; or
(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.
(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or
conference” requirement in its Implementing Rules and Regulations. This is how the Supreme Court resolved
the conflict in the following provisions of the Labor Code and its implementing rules:
The Perez doctrine is now the prevailing rule as shown by a catena of cases which cited it after its
promulgation.
 Are the twin-notice requirement and hearing applicable to authorized cause termination?
No. Due process in authorized cause termination is deemed complied with upon the separate and simultaneous
service of a written notice of the intended termination to both:
(1) the employee to be terminated; and

(2) the appropriate DOLE Regional Office, at least one (1) month before the intended date of the
termination specifying the ground/s therefor and the undertaking to pay the separation pay required under
Article 283 of the Labor Code.
For obvious reason, hearing is not required.
However, as earlier discussed above, the foregoing due process is DIFFERENT from the authorized cause of
disease as held in Deoferio and Fuji which held that just cause due process is the one that should be followed.
 Are the twin-notice requirement and hearing applicable to abandonment as a just cause to terminate
employment?
No. Although considered as a just cause to terminate employment, the procedural due process requirement for
abandonment is different. Obviously, no hearing is required (since the employee has already abandoned his job) but the
following notices should be complied with:
1) First notice asking the employee to explain why he should not be declared as having abandoned his job;
and
2) Second notice informing him of the employer’s decision to dismiss him on the ground of abandonment.
 What are the seven (7) standard situations in termination cases?
The rules on termination of employment in the Labor Code and pertinent jurisprudence are applicable to seven
(7) different situations, namely:
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1. The dismissal was for a just cause under Article 282, for an authorized cause under Article 283, or for health
reasons under Article 284, and due process was observed – This termination is LEGAL.
2. The dismissal was without a just or authorized cause but due process was observed – This termination is
ILLEGAL.
3. The dismissal was without a just or authorized cause and due process was not observed – This termination is
ILLEGAL.
4. The dismissal was for a just or authorized cause but due process was not observed – This termination is
LEGAL.
5. The dismissal was for a non-existent cause – This termination is ILLEGAL.
6. The dismissal was not supported by any evidence of termination – This termination is NEITHER LEGAL
NOR ILLEGAL as there is no dismissal to speak of. Reinstatement is ordered not as a relief for illegal
dismissal but on equitable ground.
7. The dismissal was brought about by the implementation of a law – This termination is LEGAL.
C.
TERMINATION BY EMPLOYEE
i.
RESIGNATION
 What are the two (2) kinds of resignation under the Labor Code (Article 300 [285])?
(a) Voluntary resignation - without just cause; or
(b) Involuntary resignation - with just cause.
 What are the distinctions between the two?
(a) On service of written notice (resignation letter).
Voluntary Resignation requires the submission of a written resignation letter at least thirty (30) days before its
effectivity date; while in Involuntary Resignation, no such written resignation letter is required since it is being made
by the employee for just cause (see just causes below).
(b) On the consequence of failure to serve a written notice.
In Voluntary Resignation, the failure to serve the written resignation letter within the said 30-day period would make
the resigning employee liable for damages; while in Involuntary Resignation, since there is no similar requirement of
service of prior written notice, hence, there is no adverse consequence for such failure to the involuntarily
resigning employee.
(c) On whether there is illegal or constructive dismissal.
There can be no constructive dismissal in the case of Voluntary Resignation, the same having been voluntarily and
freely tendered by the employee; however, it is different in the case of Involuntary Resignation, since it always
amounts to constructive dismissal. (See discussion below).
 What are the requisites for resignation WITHOUT JUST CAUSE?

(a) The resigning employee should tender a written (not verbal) notice of the termination (commonly known as
“resignation letter”);
(b) Service of such notice to the employer at least one (1) month in advance; and
(c) Written acceptance by the employer of the resignation.
 What is involuntary resignation (WITH JUST CAUSE)?

The following are the just causes that may justify the termination by the employee of the employment relationship
without need to comply with the 30-day prior written notice requirement:
(a) Serious insult by the employer or his representative on the honor and person of the employee;
(b) Inhuman and unbearable treatment accorded the employee by the employer or his representative;
(c) Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and
(d) Other causes analogous to any of the foregoing.
ii.
CONSTRUCTIVE DISMISSAL
 When is there constructive dismissal?
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued employment is rendered impossible, unreasonable
or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an employer which becomes unbearable to the
employee that it could foreclose any choice by him except to forego his continued employment.
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 What is the test of constructive dismissal?

The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt
compelled to give up his position under the circumstances. It is an act amounting to dismissal but made to appear as if it
were not. In fact, the employee who is constructively dismissed may be allowed to keep on coming to
work. Constructive dismissal is, therefore, a DISMISSAL IN DISGUISE. The law recognizes and resolves this
situation in favor of the employees in order to protect their rights and interests from the coercive acts of the employer.
 What are examples of constructive dismissal or forced resignation?
 Denying to the workers entry to their work area and placing them on shifts “not by weeks but almost by month”
by reducing their workweek to three days.
 Barring the employees from entering the premises whenever they would report for work in the morning without
any justifiable reason, and they were made to wait for a certain employee who would arrive in the office at
around noon, after they had waited for a long time and had left.
 Sending to an employee a notice of indefinite suspension which is tantamount to dismissal.
 Imposing indefinite preventive suspension without actually conducting any investigation.
 Changing the employee’s status from regular to casual constitutes constructive dismissal.
 Preventing the employee from reporting for work by ordering the guards not to let her in. This is clear notice of
dismissal.
 What is the distinction between illegal dismissal and constructive dismissal?
In illegal dismissal, the employer openly shows his intention to dismiss the employee. In fact, the employer, in
compliance with due process, asks the employee to explain why he should not be dismissed for committing a wrongful
act and he is given due process prior to terminating him.
In contrast, in constructive dismissal, the employer will never indicate that he is terminating the employee. He
will even allow the employee to report to his work every day. But he will do any of the three (3) acts mentioned above
that indicates his intention to get rid of the services of the employee. This is the reason why it is called “dismissal in
disguise.”
D.
PREVENTIVE SUSPENSION
 When is preventive suspension proper to be imposed?
Preventive suspension may be legally imposed against an errant employee only while he is undergoing an
investigation for certain serious offenses. Consequently, its purpose is to prevent him from causing harm or injury to
the company as well as to his fellow employees, hence, his actual presence in the workplace would not be desirable for
the meaningful conduct of the investigation of his case. Its imposition is thus justified only in cases where the
employee’s continued presence in the company premises during the investigation poses a serious and
imminent threat to the life or property of the employer or of the employee’s co-workers. Without this threat,
preventive suspension is not proper.
 What are some relevant principles in preventive suspension?
 Preventive suspension is not a penalty. This is different from PUNITIVE SUSPENSION which is
imposed as a penalty less harsh than dismissal.
 Preventive suspension, by itself, does not signify that the company has already adjudged the employee guilty of
the charges for which she was asked to answer and explain.
 Preventive suspension is neither equivalent nor tantamount to dismissal.
 If the basis of the preventive suspension is the employee’s absences and tardiness, the imposition of preventive
suspension on him is not justified as his presence in the company premises does not pose any such serious or
imminent threat to the life or property of the employer or of the employee’s co-workers simply “by incurring
repeated absences and tardiness.”
 Preventive suspension does not mean that due process may be disregarded.
 Preventive suspension should only be for a maximum period of thirty (30) days. After the lapse of the 30-day
period, the employer is required to reinstate the worker to his former position or to a substantially equivalent
position.
 During the 30-day preventive suspension, the worker is not entitled to his wages and other benefits. However,
if the employer decides, for a justifiable reason, to extend the period of preventive suspension beyond said 30-
day period, he is obligated to pay the wages and other benefits due the worker during said period of extension.
In such a case, the worker is not bound to reimburse the amount paid to him during the extension if the
employer decides to dismiss him after the completion of the investigation.
 Extension of period must be justified. During the 30-day period of preventive suspension, the employer is
expected to conduct and finish the investigation of the employee’s administrative case. The period of thirty (30)
days may only be extended if the employer failed to complete the hearing or investigation within said period
due to justifiable grounds. No extension thereof can be made based on whimsical, capricious or unreasonable
grounds.
 Preventive suspension lasting longer than 30 days, without the benefit of valid extension, amounts to
constructive dismissal.
 Indefinite preventive suspension amounts to constructive dismissal.
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E.
RELIEFS FOR ILLEGAL DISMISSAL
 What are the reliefs under the Labor Code, particularly under Article 294 [279] thereof?
Under this article, an illegally dismissed employee is entitled to the following reliefs:
(1) Reinstatement without loss of seniority rights and other privileges;
(2) Full backwages, inclusive of regular allowances; and
(3) Other benefits or their monetary equivalent.
 What are the other reliefs that are not provided in the Labor Code but are granted in illegal dismissal cases?
The following reliefs that are awarded in illegal dismissal cases are missing in Article 279:
(1) Award of separation pay in lieu of reinstatement.
(2) Award of penalty in the form of nominal damages in case of termination due to just or authorized
cause but without observance of procedural due process.
(3) Reliefs to illegally dismissed employee whose employment is for a fixed period. The proper relief is only
the payment of the employee’s salaries corresponding to the unexpired portion of the employment
contract.
(4) Award of damages and attorney’s fees.
(5) Award of financial assistance in cases where the employee’s dismissal is declared legal but because of
long years of service, and other considerations, financial assistance is awarded.
(6) Imposition of legal interest on separation pay, backwages and other monetary awards.
1.
REINSTATEMENT
 What are the Labor Code’s provisions on reinstatement?
The Labor Code grants the remedy of reinstatement in various forms and situations. Its provisions recognizing
reinstatement as a relief are as follows:
1. Article 229 [223] which provides for reinstatement of an employee whose dismissal is declared illegal by the
Labor Arbiter. This form of reinstatement is self-executory and must be implemented even during the pendency of the
appeal that may be instituted by the employer. (NOTE: See discussion of this topic under Major Topic “VIII. Jurisdiction and
Reliefs; A. Labor Arbiter”, infra).
2. Article 278(g) [263(g)] which provides for automatic return to work of all striking or locked-out employees,
if a strike or lockout has already taken place, upon the issuance by the DOLE Secretary of an assumption or certification
order in national interest cases. The employer is required to immediately resume operation and readmit all workers under
the same terms and conditions prevailing before the strike or lockout.
3. Article 292(b) [277(b)] which empowers the DOLE Secretary to suspend the effects of termination
pending the resolution of the termination dispute in the event of a prima facie finding by the appropriate official of the
DOLE before whom such dispute is pending that the termination may cause a serious labor dispute or is in
implementation of a mass lay-off. Such suspension of the effects of termination would necessarily results in the
reinstatement of the dismissed employee while the illegal dismissal case is being heard and litigated.
4. Article 294 [279] which grants reinstatement as a relief to an employee whose dismissal is declared illegal in
a final and executory judgment.
5. Article 301 [286] which involves bona-fide suspension of operation for a period not exceeding six (6) months
or the rendition by an employee of military or civic duty. It is required under this provision that the employer should
reinstate its employees upon resumption of its operation which should be done before the lapse of said six-month
period of bona-fide suspension of operation or after the rendition by the employees of military or civic duty.
b.
SEPARATION PAY IN LIEU OF REINSTATEMENT
 Is separation pay applicable only to reinstatement as an alternative remedy?

Yes. Separation pay, as a substitute remedy, is only proper for reinstatement but not for backwages.
This remedy is not found in the Labor Code but is granted in case reinstatement is no longer possible or
feasible, such as when any of the following circumstances exists:
(1) Where the continued relationship between the employer and the employee is no longer viable due to the
strained relations and antagonism between them (Doctrine of Strained Relations).
(2) When reinstatement proves impossible, impracticable, not feasible or unwarranted for varied reasons and
thus hardly in the best interest of the parties such as:
(a) Where the employee has already been replaced permanently as when his position has already been taken
over by a regular employee and there is no substantially equivalent position to which he may be
reinstated.
(b) Where the dismissed employee’s position is no longer available at the time of reinstatement for reasons
not attributable to the fault of the employer.
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(c) When there has been long lapse or passage of time that the employee was out of employer’s employ
from the date of the dismissal to the final resolution of the case or because of the realities of the
situation.
(d) By reason of the injury suffered by the employee.
(e) The employee has already reached retirement age under a Retirement Plan.
(f) When the illegally dismissed employees are over-age or beyond the compulsory retirement age and their
reinstatement would unjustly prejudice their employer.
(3) Where the employee decides not to be reinstated as when he does not pray for reinstatement in his
complaint or position paper but asked for separation pay instead.
(4) When reinstatement is rendered moot and academic due to supervening events, such as:
(a) Death of the illegally dismissed employee.
(b) Declaration of insolvency of the employer by the court.
(c) Fire which gutted the employer’s establishment and resulted in its total destruction.
(d) In case the establishment where the employee is to be reinstated has closed or ceased operations.
(5) To prevent further delay in the execution of the decision to the prejudice of private respondent.
(6) Other circumstances such as (a) when reinstatement is inimical to the employer’s interest; (b) reinstatement
does not serve the best interests of the parties involved; (c) the employer is prejudiced by the workers’
continued employment; or (d) that it will not serve any prudent purpose as when supervening facts
transpired which made execution unjust or inequitable.
 What is the amount of separation pay in lieu of reinstatement?
Per prevailing jurisprudence, the following are the components of separation pay in lieu of reinstatement>
(1) The amount equivalent to at least one (1) month salary or to one (1) month salary for every year of service,
whichever is higher, a fraction of at least six (6) months being considered as one (1) whole year.
(2) Allowances that the employee has been receiving on a regular basis.
 What is the period covered?
From start of employment up to the date of finality of decision except when the employer has ceased its
operation earlier, in which case, the same should be computed up to the date of closure.
 What is the salary rate to be used in computing it?
The salary rate prevailing at the end of the period of putative service should be the basis for computation
which refers to the period of imputed service for which the employee is entitled to backwages.
 What are some important principles on separation pay in lieu of reinstatement?
1. Award of separation pay and backwages are not inconsistent with each other. Hence, both may be
awarded to an illegally dismissed employee. The payment of separation pay is in addition to payment
of backwages.
2. Reinstatement cannot be granted when what is prayed for by employee is separation pay in lieu
thereof.
BACKWAGES
 What is the Bustamante doctrine?
In 1996, the Supreme Court changed the rule on the reckoning of backwages. It announced a new doctrine in
the case of Bustamante v. NLRC,1 which is now known as the Bustamante doctrine. Under this rule, the term “full
backwages” should mean exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the
concerned employee during the period of his illegal dismissal.
 What are the components of backwages?
The components of backwages are as follows:
1. Salaries or wages computed on the basis of the wage rate level at the time of the illegal dismissal and not
in accordance with the latest, current wage level of the employee’s position.
2. Allowances and other benefits regularly granted to and received by the employee should be made part of
backwages.
 What are some principles on backwages?

 Salary increases during period of unemployment are not included as component in the computation of
backwages.
 Dismissed employee’s ability to earn is irrelevant in the award of backwages.
 In case reinstatement is ordered, full backwages should be reckoned from the time the compensation was
withheld (which, as a rule, is from the time of illegal dismissal) up to the time of reinstatement, whether actual
or in the payroll.
 If separation pay is ordered in lieu of reinstatement, full backwages should be computed from the time of
illegal dismissal until the finality of the decision. The justification is that along with the finality of the Supreme
Court’s decision, the issue on the illegality of the dismissal is finally laid to rest.
1 G.R. No. 111651, Nov. 28, 1996, 265 SCRA 61.

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 If the illegally dismissed employee has reached the optional retirement age of 60 years, his backwages should
only cover the time when he was illegally dismissed up to the time when he reached 60 years. Under Article 287,
60 years is the optional retirement age.
 If the employee has reached 65 years of age or beyond, his full backwages should be computed only up to said
age. The contention of the employer that backwages should be reckoned only up to age 60 cannot be sustained.
 If employer has already ceased operations, full backwages should be computed only up to the date of the
closure. To allow the computation of the backwages to be based on a period beyond that would be an injustice
to the employer.
 Any amount received during payroll reinstatement is deductible from backwages.
LIMITED BACKWAGES
 When is the award of backwages limited?
(1) When the dismissal is deemed too harsh a penalty;
(2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer dismissed the employee.
Thus, the backwages will not be granted in full but limited to 1 year, 2 years or 5 years [per jurisprudence].
F.
MONEY CLAIMS ARISING FROM
EMPLOYER-EMPLOYEE RELATIONSHIP
 What are the legal bases of employee’s money claims?

The monetary claims that may be asserted by employees may be based on any of the following:
(1) Labor Code;
(2) Other special laws;
(3) Jurisprudence;
(4) Employment contracts;
(5) Voluntary employer policy or practice; or
(6) Collective bargaining agreements (CBAs).
Examples of No. 1 above are the labor standards benefits provided therein, such as claims for overtime, night
differential, holidays, rest days, service incentive leave, service charges, employees’ compensation benefits, separation pay
in case of termination due to authorized causes, and retirement benefits.
Examples of No. 2 are the wage increases mandated under R.A. No. 67271 and the regional wage orders issued
pursuant thereto, P.D. No. 851 [13th Month Pay Law], R.A. No. 7641 [Retirement Pay Law],2 social security benefits
from R.A. No. 11199 [Social Security Act of 2018],3 R.A. No. 11223 [Universal Health Care Act],4 and R.A. No. 9679
[Pag-IBIG Law].5
Examples of No. 3 are the monetary reliefs accorded illegally dismissed employees that are not found in the
Labor Code nor in any other law, such as (1) separation pay in lieu of reinstatement; (2) indemnity in the form of
nominal damages in case of termination due to just or authorized cause but without affording the employee procedural
due process; (3) payment of salaries corresponding to the unexpired portion of the employment contract in cases of
fixed-term employment; (4) financial assistance in cases where the employee’s dismissal is declared legal but there are
circumstances justifying this award, such as long years of service, unblemished record of service, compassionate justice
and other considerations; (5) legal interest on separation pay, backwages and other monetary awards.
Nos. 4, 5 and 6 involve monetary claims arising from the benefits granted by the employer to the employees,
either voluntarily or unilaterally in employment contracts or company policies or practices, or through collective
negotiations and mutual agreements, such as those granted under CBAs. These benefits are varied and too numerous to
enumerate them here; suffice it to state that the bottomline policy of the law is that these benefits should not be below
the minimum standards and limits provided by law.
G.
RETIREMENT
 Who are covered under the retirement pay law?
The following employees are eligible to avail of retirement benefits under Article 302 [287] of the Labor Code:
1) All employees in the private sector, regardless of their position, designation or status and irrespective of the
method by which their wages are paid;
2) Part-time employees;
3) Employees of service and other job contractors;
4) Domestic workers/kasambahays or persons in the personal service of another;
5) Underground mine workers;
1 Otherwise known as the “Wage Rationalization Act.”

2 Signed into law by President Rodrigo Duterte on February 07, 2019.
3 The provisions of this law are now part of the Labor Code as its Article 302 [287].
4 Approved by President Rodrigo Duterte on February 20, 2019.
5 Otherwise known as the “Home Development Mutual Fund Law of 2009, otherwise known as Pag-IBIG (Pagtutulungan sa kinabukasan: Ikaw, Bangko, Industriya at Gobyerno)
Fund.”
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6) Employees of government-owned and/or controlled corporations organized under the Corporation Code
(without original charters).
 Who are excluded?
Article 302 [287], as amended, does not apply to the following employees:
1. Employees of the national government and its political subdivisions, including government-owned and/or
controlled corporations, if they are covered by the Civil Service Law and its regulations.
2. Employees of retail, service and agricultural establishments or operations regularly employing not more
than ten (10) employees. These terms are defined as follows:
a) “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or
household use. It shall lose its retail character qualified for exemption if it is engaged in both retail and
wholesale of goods.
b) “Service establishment” is one principally engaged in the sale of service to individuals for their own
or household use and is generally recognized as such.
c) “Agricultural establishment/operation” refers to an employer which is engaged in agriculture. This
term refers to all farming activities in all branches and includes, among others, the cultivation and
tillage of soil, production, cultivation, growing and harvesting of any agricultural or horticultural
commodities, dairying, raising of livestock or poultry, the culture of fish and other aquatic products in
farms or ponds, and any activities performed by a farmer or on a farm as an incident to, or in
conjunction with, such farming operations, but does not include the manufacture and/or processing of
sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products.
 What are the two (2) types of retirement under the law (Article 302 [287] of the Labor Code)?
(1) Optional retirement upon reaching the age of sixty (60) years.
(2) Compulsory retirement upon reaching the age of sixty-five (65) years.
It is the employee who exercises the option under No. 1 above. At age 65, there is no more option of the
employee to speak of. He has to retire as this age is considered compulsory retirement age.
 May a different retirement age requirement be provided in a Retirement Plan?

The optional and compulsory retirement schemes provided under Article 302 [287] come into play only in the
absence of a retirement plan or agreement setting forth other forms of optional or compulsory retirement schemes.
Thus, if there is a retirement plan or agreement in an establishment providing for an earlier or older age of retirement
(but not beyond 65 which has been declared the compulsory retirement age), the same shall be controlling.
 What are the rules on retirement at an earlier age?
a. To be valid, retirement at an earlier age must be voluntarily consented to by the employee.
In Alpha Jaculbe v. Silliman University,1 the Supreme Court ruled that in order for retirement at an earlier age to be
valid, it must be shown that the employee’s participation in the plan is voluntary. An employer is free to impose a
retirement age of less than 65 for as long as it has the employees’ consent. Stated conversely, employees are free to accept
the employer’s offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented
by the employer.
Following Jaculbe, the retirement of petitioner in Lourdes Cercado v. Uniprom, Inc.2 at the age of 47, after having
served respondent company for 22 years, pursuant to its Employees’ Non-Contributory Retirement Plan, which provides that
employees who have rendered at least 20 years of service may be retired at the option of the company, was declared
illegal because it was not shown that she has given her consent thereto. Not even an iota of voluntary acquiescence to
respondent’s early retirement age option is attributable to petitioner. The assailed retirement plan was not embodied in a
CBA or in any employment contract or agreement assented to by petitioner and her co-employees. On the contrary, it
was unilaterally and compulsorily imposed on them.
The same holding was made in the 2018 en banc case of Alfredo F. Laya, Jr. v. Philippine Veterans Bank,3 where
petitioner, who was hired by respondent bank as its Chief Legal Counsel with a rank of Vice President, was compulsorily
retired under the following retirement policy of the bank:
“Section 2. Early Retirement. A Member may, with the approval of the Board of Directors, retire early on
the first day of any month coincident with or following his attainment of age 50 and completion of at least 10
years of Credited Service.”
According to petitioner Laya, he was made aware of the retirement plan of respondent bank only after he had
long been employed and was shown a photocopy of the Retirement Plan Rules and Regulations. His letter of
appointment mentioned, among others, his “Membership in the Provident Fund Program/Retirement Program” but the Court
considered the mere mention thereof not sufficient to inform him of the contents or details of the retirement program.
To construe from the petitioner's acceptance of his appointment that he had acquiesced to be retired earlier than the
compulsory age of 65 years would, therefore, not be warranted. This is because retirement should be the result of the
bilateral act of both the employer and the employee based on their voluntary agreement that the employee agrees to
sever his employment upon reaching a certain age.4
That the petitioner might be well aware of the existence of the retirement program at the time of his
engagement did not suffice. His implied knowledge, regardless of duration, did not equate to the voluntary acceptance
1 G.R. No. 156934, March 16, 2007.

2 G.R. No. 188154, Oct. 13, 2010.
3 Alfredo F. Laya, Jr. v. Philippine Veterans Bank and Ricardo A. Balbido, Jr., G.R. No. 205813, Jan. 10, 2018.
4 Id., citing Robina Farms Cebu v. Villa, G.R. No. 175869, April 18, 2016.
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required by law in granting an early retirement age option to the employee. The law demanded more than a passive
acquiescence on the part of the employee, considering that his early retirement age option involved conceding the
constitutional right to security of tenure.
Having thus automatically become a member of the retirement plan through his acceptance of employment as
Chief Legal Officer of respondent bank, the petitioner could not withdraw from the plan except upon his termination
from employment.
Further, the retirement plan, having been established for respondent bank and approved by its president more
than five years prior to petitioner's employment, was in the nature of a contract of adhesion, in respect to which the
petitioner was reduced to mere submission by accepting his employment, and automatically became a member of the
plan. With the plan being a contract of adhesion, to consider him to have voluntarily and freely given his consent to the
terms thereof as to warrant his being compulsorily retired at the age of 60 years is factually unwarranted.
To stress, company retirement plans must not only comply with the standards set by the prevailing labor laws
but must also be accepted by the employees as commensurate to their faithful services to the employer within the
requisite period. Although the employer could be free to impose a retirement age lower than 65 years for as long its
employees consented, the retirement of the employee whose intent to retire was not clearly established, or whose
retirement was involuntary is to be treated as a discharge.
In another 2018 case, Manila Hotel Corporation v. Rosita De Leon,1 the same ruling was made that an employee, in
this case a managerial employee, cannot be compulsorily retired at an earlier age without her express assent thereto. In
this case, respondent was retired under the retirement provision of the rank-and-file CBA which provides that an
employee's retirement is compulsory when he or she reaches the age of 60 or has rendered 20 years of service, whichever
comes first. Respondent was only 57 at the time she was compulsorily retired but had already rendered 34 years of
service as Assistant Credit and Collection Manager/Acting General Cashier. Besides holding that as managerial
employee, she is not covered by the CBA, the Court noted that there was nothing in petitioner hotel’s submissions
showing that respondent had assented to be covered by the CBA's retirement provisions. Thus, in the absence of an
agreement to the contrary, managerial employees cannot be allowed to share in the concessions obtained by the labor
union through collective negotiation.
Moreover, the rulings in Laya and Cercado were invoked in holding that respondent De Leon was in effect,
illegally dismissed. All told, an employee in the private sector who did not expressly agree to an early retirement cannot
be retired from the service before he reaches the age of 65 years. "Acceptance by the employee of an early retirement age option
must be explicit, voluntary, free and uncompelled." "The law demanded more than a passive acquiescence on the part of the employee,
considering that his early retirement age option involved conceding the constitutional right to security of tenure."
b. Retiring at an earlier age will amount to illegal dismissal if employee did not consent thereto.
In accordance with Jaculbe, Cercado, Laya and De Leon, the employee’s retirement at an earlier age based solely on
a provision of a retirement plan which was not freely assented to by him would be tantamount to illegal dismissal.
c. By mutual agreement, employers may be granted the sole and exclusive prerogative to retire
employees at an earlier age or after rendering a certain period of service.
Cainta Catholic School v. Cainta Catholic School Employees Union [CCSEU],2 where the Supreme Court upheld the
exercise by the school of its option to retire employees pursuant to the existing CBA where it is provided that the
school has the option to retire an employee upon reaching the age limit of sixty (60) or after having rendered at
least twenty (20) years of service to the school, the last three (3) years of which must be continuous. Hence, the
termination of employment of the employees, arising as it did from an exercise of a management prerogative granted by
the mutually-negotiated CBA between the school and the union is valid.
 What is the minimum years of service required for entitlement under the law?
Five (5) years is the minimum years of service that must be rendered by the employee before he can avail of
the retirement benefits upon reaching optional or compulsory retirement age under Article 287.
 What is the retirement age of underground mine workers?
The rule is different. The optional retirement age of underground mine workers is 50 years of age; while the
compulsory retirement age is 60 years old.
 What is the minimum number of years of service required of underground mine workers?
Minimum years of service is also 5 years.
 Are the retirement benefits of underground mine workers similar to ordinary retirees?
Yes. In fact, other than the retirement age, all other requirements as well as benefits provided in the law are
applicable to underground mine workers.
a.
AMOUNT OF RETIREMENT PAY
 What is the amount of retirement pay under the law?
a. One-half (½) month salary.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee, upon reaching the optional or compulsory retirement age specified in Article 287, shall be
entitled to retirement pay equivalent to at least one-half (½) month salary for every year of service, a fraction of at least
six (6) months being considered as one (1) whole year.
1 G.R. No. 219774, July 23, 2018.

2 G.R. No. 151021, May 4, 2006.
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b. Components of one-half (½) month salary.

For purposes of determining the minimum retirement pay due an employee under Article 287, the term “one-
half month salary” shall include all of the following:
(1) Fifteen (15) days salary of the employee based on his latest salary rate.
(2) The cash equivalent of five (5) days of service incentive leave;
(3) One-twelfth (1/12) of the 13th month pay due the employee; and
(4) All other benefits that the employer and employee may agree upon that should be included in the
computation of the employee’s retirement pay.
c. “One-half (½) month salary” means 22.5 days.
“One-half [½] month salary” is equivalent to “22.5 days” arrived at after adding 15 days plus 2.5 days
representing one-twelfth [1/12] of the 13th month pay plus 5 days of service incentive leave.
 What are some principles on retirement benefits?
 1/12 of 13th month pay and 5 days of service incentive leave (SIL) should not be included if the employee was
not entitled to 13th month pay and SIL during his employment.
Example: R & E Transport, Inc. v. Latag,1 where it was held that employees who are not entitled to 13th
month pay and SIL pay while still working should not be paid the entire “22.5 days” but only the fifteen (15) days salary.
In other words, the additional 2.5 days representing one-twelfth [1/12] of the 13th month pay and the five (5) days of
SIL should not be included as part of the retirement benefits.
The employee in this case was a taxi driver who was being paid on the “boundary” system basis. It was
undisputed that he was entitled to retirement benefits after working for fourteen (14) years with R & E Transport, Inc.
However, he was not entitled to the 13th month pay since Section 3 of the Rules and Regulations Implementing P.D.
No. 851 exempts from its coverage employers of those who are paid on purely boundary basis. He was also not entitled
to the 5-day service incentive leave pay pursuant to the Rules to Implement the Labor Code which expressly excepts
field personnel and other employees whose performance is unsupervised by the employer.
But in the 2010 case of Serrano v. Severino Santos Transit,2 which involves a bus conductor (petitioner) who
worked for 14 years for respondent bus company which did not adopt any retirement scheme. It was held herein that
even if petitioner as bus conductor was paid on commission basis, he falls within the coverage of R.A. 7641 (Retirement
Pay Law, now Article 287 of Labor Code). This means that his retirement pay should include the cash equivalent of the
5-day SIL and 1/12 of the 13th month pay for a total of 22.5 days. The affirmance by the Court of Appeals of the reliance
by the NLRC on R & E Transport case was held erroneous. For purposes of applying the law on SIL as well as on
retirement, there is a difference between drivers paid under the “boundary system” and conductors paid on commission
basis. This is so because in practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the
“boundary” or fee they pay to the owners or operators of the vehicles. Conductors, on the other hand, are paid a certain
percentage of the bus’ earnings for the day. It bears emphasis that under P.D. No. 851 and the SIL Law, the exclusion
from its coverage of workers who are paid on a purely commission basis is only with respect to field personnel.
b.
RETIREMENT BENEFITS OF
WORKERS PAID BY RESULTS
 What are the retirement benefits of workers paid by results?
For covered workers who are paid by results and do not have a fixed monthly rate, the basis for the
determination of the salary for fifteen (15) days shall be their average daily salary (ADS). The ADS is the average salary
for the last twelve (12) months reckoned from the date of their retirement, divided by the number of actual working days
in that particular period.
RETIREMENT BENEFITS OF PART-TIME WORKERS
 How should the retirement benefits of part-time workers be computed?

Applying the principles under Article 287, as amended, the components of retirement benefits of part-time
workers may also be computed at least in proportion to the salary and related benefits due them.
c.
ENTITLEMENT OF EMPLOYEES
DISMISSED FOR JUST CAUSE TO RETIREMENT BENEFITS
General rule – Entitled because employee has acquired vested right over the retirement benefits.
Razon, Jr. v. NLRC, May 7, 1990.
Exception - Where just cause termination is cited in the retirement plan as reason to validly deny claim for
retirement benefits.
1 G.R. No. 155214, Feb. 13, 2004.

2 G.R. No. 187698, Aug. 9, 2010.
104
 San Miguel Corporation v. Lao, July 11, 2002.
Here, the company’s retirement plan prohibits the award of retirement benefits to an employee
dismissed for just cause, a proscription that binds the parties to it.
RETIREMENT BENEFITS VS. SEPARATION PAY
a. When both retirement pay and separation pay must be paid.
Aquino v. NLRC, Feb. 11, 1992.
In this case, the Supreme Court ordered the payment to the retrenched employees of both the
separation pay for retrenchment embodied in the CBA as well as the retirement pay provided
under a separate Retirement Plan. The reason is that these two are not mutually exclusive. There is
nothing in the CBA nor in the Retirement Plan that states that an employee who had received
separation pay would no longer be entitled to retirement benefits or that collection of retirement
benefits was prohibited if the employee had already received separation pay
b. When separation pay may be charged to retirement pay.
 Ford Philippines Salaried Employees Association v. NLRC, Dec. 11, 1987.
It is provided in the retirement plan that the retirement, death and disability benefits paid in the plan
are considered integrated with and in lieu of termination benefits under the Labor Code, thus,
the retirement fund may be validly used to pay such termination or separation pay because of closure
of business.
c. When employees are entitled to only one form of benefit.
 Cipriano v. San Miguel Corporation, Aug. 21, 1968.
The retirement plan provides that the employee shall be entitled to either the retirement benefit
provided therein or the separation pay provided by law, whichever is higher, the employee cannot be
entitled to both benefits.
RETIREMENT PAY UNDER THE LABOR CODE OR RETIREMENT PLAN

IS SEPARATE AND DISTINCT FROM THE RETIREMENT PAY UNDER THE SSS,
GSIS AND PAG-IBIG.
------------oOo------------
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SYLLABUS
MAJOR TOPIC 7
MANAGEMENT PREROGATIVE
 What are management prerogatives?

Management prerogatives are granted to the employer to regulate every aspect of their business, generally
without restraint in accordance with their own discretion and judgment. This privilege is inherent in the right of
employers to control and manage their enterprise effectively. Such aspects of employment include hiring, work
assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision
of workers, working regulations, transfer of employees, lay-off of workers and the discipline, dismissal and recall of
workers.
 What are the limitations to the exercise of these prerogatives?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the rights of labor.
For example, an employer cannot prescribe more than 8 hours as normal working hours in a day because there
is a law which limits it to 8 hours. In the same vein, the employer cannot insist that an employee should observe 8 hours
as the daily normal working hours if there is a stipulation in the CBA, employment contract, or there is an employer
policy or practice that the normal working hours is only 7 hours per day.
A.
DISCIPLINE
 What are the components of the right to discipline?
The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
3) Right to determine who to punish;
4) Right to promulgate rules and regulations;
5) Right to impose penalty; proportionality rule;
6) Right to choose which penalty to impose; and
7) Right to impose heavier penalty than what the company rules prescribe.
The proportionality rule simply means that the penalty to be imposed should be commensurate to the offense
committed. For example, dismissal for committing tardiness or absence for the first time is too harsh a penalty. A
warning, a reprimand would suffice for the first offense, punitive suspension of a day or two, for the second offense, a
longer suspension for a third offense, and finally, dismissal for a fourth offense.
For committing serious offenses, such as stealing a company-owned property, or stabbing a co-employee,
because of their nature, would certainly deserve the imposition of the supreme penalty of dismissal, and not just a
warning, a reprimand or punitive suspension.
B.
TRANSFER OF EMPLOYEES
 What are the various kinds of transfer?
a. Two (2) kinds of transfer. - A transfer means a movement:
1. From one position to another of equivalent rank, level or salary, without a break in the service; or
2. From one office to another within the same business establishment.
 What are the salient points to consider in transfer?

 The exercise of the prerogative to transfer or assign employees from one office or area of operation to another
is valid provided there is no demotion in rank or diminution of salary, benefits and other privileges. The
transfer should not be motivated by discrimination or made in bad faith or effected as a form of punishment or
demotion without sufficient cause.
 Commitment made by the employee like a salesman in the employment contract to be re-assigned
anywhere in the Philippines is binding on him.
 Even if the employee is performing well in his present assignment, management may reassign him to a
new post.
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 The transfer of an employee may constitute constructive dismissal when:

1) When the transfer is unreasonable, inconvenient or prejudicial to the employee;
2) When the transfer involves a demotion in rank or diminution of salaries, benefits and other privileges; and
3) When the employer performs a clear act of discrimination, insensibility, or disdain towards the employee,
which forecloses any choice by the latter except to forego his continued employment.
 The refusal of an employee to be transferred may be held justified if there is a showing that the transfer was
directed by the employer under questionable circumstances. For instance, the transfer of employees during
the height of their union’s concerted activities in the company where they were active participants is
illegal.
 An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination or
willful disobedience of a lawful order of an employer under Article 282 of the Labor Code.
 Refusal to transfer due to parental obligations, additional expenses, inconvenience, hardship and
anguish is not valid. An employee could not validly refuse lawful orders to transfer based on these
grounds.
 Refusal to transfer to overseas assignment is valid.
 Refusal to transfer consequent to promotion is valid.
 Transfer to avoid conflict of interest is valid.
 A transfer from one position to another occasioned by the abolition of the position is valid.
C.
PRODUCTIVITY STANDARD
 How may productivity standards be imposed?
The employer has the prerogative to prescribe the standards of productivity which the employees should
comply. The productivity standards may be used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass the productivity standards or quota are usually given
additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed for failure to meet the productivity
standards or quota.
Illustrative cases:
In International School Manila v. International School Alliance of Educators (ISAE),1 the teacher was
held guilty of gross inefficiency meriting her dismissal on the basis of the Court’s finding that she failed to measure up to
the standards set by the school in teaching Filipino classes.
In Reyes-Rayel v. Philippine Luen Thai Holdings Corp.,2 the validity of the dismissal of petitioner who
was the Corporate Human Resources (CHR) Director for Manufacturing of respondent company, on the ground of
inefficiency and ineptitude, was affirmed on the basis of the Court’s finding that petitioner, on two occasions, gave
wrong information regarding issues on leave and holiday pay which generated confusion among employees in the
computation of salaries and wages.
In Realda v. New Age Graphics, Inc.,3 petitioner, a machine operator of respondent company, was
dismissed on the ground, among others, of inefficiency. In affirming the validity of his dismissal, the Supreme Court
reasoned:
“xxx (T)he petitioner’s failure to observe Graphics, Inc.’s work standards constitutes inefficiency that
is a valid cause for dismissal. Failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean
failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable
period, or by producing unsatisfactory results.”
D.
BONUS
 What is the rule on its demandability and enforceability?
Bonus, as a general rule, is an amount granted and paid ex gratia to the employee.
It cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting
bonuses or other benefits aside from the employees’ basic salaries or wages. If there is no profit, there should be no
bonus. If profit is reduced, bonus should likewise be reduced, absent any agreement making such bonus part of the
compensation of the employees.
 When is bonus demandable and enforceable?
It becomes demandable and enforceable:
(2) If it has ripened into a company practice;
(3) If it is granted as an additional compensation which the employer agreed to give without any condition
such as success of business or more efficient or more productive operation, hence, it is deemed part of
wage or salary.
1 G.R. No. 167286, Feb. 5, 2014.

2 G.R. No. 174893, July 11, 2012.
3 G.R. No. 192190, April 25, 2012.
107
(4) When considered as part of the compensation and therefore demandable and enforceable, the
amount is usually fixed. If the amount thereof is dependent upon the realization of profits, the bonus is
not demandable and enforceable.
E.
CHANGE OF WORKING HOURS
 What is the extent of the exercise of this prerogative?

Employers have the freedom and prerogative, according to their discretion and best judgment, to regulate and
control the time when workers should report for work and perform their respective functions.
Manila Jockey Club Employees Labor Union – PTGWO, v. Manila Jockey Club, Inc.1 - The validity of
the exercise of the same prerogative to change the working hours was affirmed in this case. It was found that while
Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m.
to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI thereof expressly reserves to respondent the prerogative
to change existing methods or facilities and to change the schedules of work. Consequently, the hours of work of
regular monthly-paid employees were changed from the original 9:00 a.m. to 5:00 p.m. schedule to 1:00 p.m. to 8:00 p.m.
when horse races are held, that is, every Tuesday and Thursday. The 9:00 a.m. to 5:00 p.m. schedule for non-race days
was, however, retained. Respondent, as employer, cited the change in the program of horse races as reason for the
adjustment of the work schedule. It rationalized that when the CBA was signed, the horse races started at 10:00
a.m. When the races were moved to 2:00 p.m., there was no other choice for management but to change the work
schedule as there was no work to be done in the morning. Evidently, the adjustment in the work schedule is justified.
F.
BONA FIDE OCCUPATIONAL QUALIFICATIONS
I.
THE BFOQ RULE
1. CONCEPT.
The employer has the prerogative to impose certain qualifications based on such criteria as race, sex, age,
national origin, civil or marital status, physical appearance (such as a requirement on “pleasing personality” or height and
weight) and the like.
2. MEIORIN TEST.
This three-step test is used to determine whether an employment policy is justified. Under this test, an
employer can justify the impugned standard by establishing on the balance of probabilities:
a. That the employer adopted the standard for a purpose rationally connected to the performance of the job;
b. That the employer adopted the particular standard in an HONEST AND GOOD FAITH BELIEF that it
was necessary to the fulfilment of that legitimate work-related purpose; and
c. That the standard was REASONABLY necessary to the accomplishment of that legitimate work-related
purpose.
3. STAR PAPER TEST.
Consequently, in Star Paper Corp. v. Simbol, April 12, 2006, the Supreme Court held that in order to justify a
BFOQ, the employer must prove two (2) factors:
(1) The employment qualification is reasonably related to the essential operation of the job involved; and
(2) There is factual basis for believing that all or substantially all persons meeting the qualification would
be unable to properly perform the duties of the job.
In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ.2 BFOQ is
valid “provided it reflects an inherent quality reasonably necessary for satisfactory job performance.”3 This is otherwise known as
the “Reasonable Business Necessity Rule.”
4. SPECIFIC TOPICS.
I. CIVIL STATUS/MARITAL STATUS QUALIFICATION
II. PHYSICAL APPEARANCE QUALIFICATION
III. AGE QUALIFICATION
I.
CIVIL STATUS/MARITAL STATUS QUALIFICATION
1. RELEVANT CASES.
As far as the qualification of civil status or marital status is concerned, the following cases are relevant:
(1) PT & T v. NLRC;4
(2) Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.;1 and
1 G.R. No. 167760, March 7, 2007.

2 Id. at 243.
3 Philippine Telegraph and Telephone Company v. NLRC, supra.
4 G.R. No. 118978, May 23, 1997, 272 SCRA 596, 605.
108
(3) Star Paper Corp. v. Simbol.2

2. THE PT & T CASE.
 The employer invoked concealment of civil status as ground to terminate the private respondent employee.
 In the job application form, she indicated in the portion for civil status that she was single although she had
contracted marriage a few months earlier.
 It appears that the employee had made the same representation in the two successive reliever agreements which
she signed.
 The company has a policy of not accepting married women for employment.
2.1. APPLICATION OF THE BFOQ RULE in the PT & T CASE.
The Supreme Court ruled that the company policy violates the right against discrimination afforded all women
workers under Article 136 of the Labor Code.
“[A] requirement that a woman employee must remain unmarried could be justified as a ‘bona fide
occupational qualification,’ or BFOQ, where the particular requirements of the job would justify the
same, but not on the ground of a general principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided it reflects an inherent quality
reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage rule
applicable to both male and female flight attendants, was regarded as unlawful since the restriction
was not related to the job performance of the flight attendants.”
3. THE DUNCAN CASE.
In Duncan, the contract of employment expressly prohibited an employee from having a relationship with an
employee of a competitor company. It provides:
“10. You agree to disclose to management any existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign voluntarily from the Company as a
matter of Company policy.”
3.1. APPLICATION OF THE BFOQ RULE in the DUNCAN CASE.
The company (Glaxo) has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors. It considered the prohibition against personal or marital
relationships with employees of competitor companies upon Glaxo’s employees reasonable under the circumstances
because relationships of that nature might compromise the interests of Glaxo. In laying down the assailed company
policy, the Court recognized that Glaxo only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
4. THE STAR PAPER CASE.
The employees in Star Paper were terminated on various occasions, on the basis of the following company
policy, viz.:
“1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of
relationship, already employed by the company.
“2. In case two of our employees (both singles [sic], one male and another female) developed a friendly
relationship during the course of their employment and then decided to get married, one of them should
resign to preserve the policy stated above.”
According to the employer, said rule is only intended to carry out its no-employment-for-relatives-within-the-
third-degree-policy which is within the ambit of the prerogatives of management. The Supreme Court, however,
disagreed. It ruled that said policy failed to comply with the standard of reasonableness which is being followed in our
jurisdiction.
4.1. APPLICATION OF THE BFOQ RULE in the STAR PAPER CASE.
The Court did not find a reasonable business necessity in the policy. Respondents were hired after they were
found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the
marriage could be detrimental to their business operations. The policy is premised on the mere fear that employees
married to each other will be less efficient. If the questioned rule is upheld without valid justification, the employer can
create policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to
security of tenure.
II.
PHYSICAL APPEARANCE QUALIFICATION
1. THE YRASUEGUI CASE.
This case involves the physical appearance or attribute of an employee which, in this case, is petitioner’s weight.
For several times spanning a total period of five (5) years, petitioner, an international flight steward of respondent PAL,
was given the opportunity to reduce his weight to the acceptable level in accordance with the weight standards but he
failed to measure up therewith. He was thus terminated for his continued obesity. In his illegal dismissal case, one of the
issues raised is whether petitioner’s dismissal for obesity can be predicated on the BFOQ defense.
1.1. APPLICATION OF THE BFOQ RULE in the YRASUEGUI CASE.
1 G.R. No. 162994, Sept. 17, 2004.

2 G.R. No. 164774, April 12, 2006.
109
Citing Star Paper Corp. and Duncan, the Court ruled that BFOQ is a proper defense that justified petitioner’s
dismissal grounded on his obesity.
The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In
order to achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on
board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its
employees. In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is
flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger
confidence on their ability to care for the passengers when something goes wrong.
III.
AGE QUALIFICATION
1. ANTI-AGE DISCRIMINATION IN EMPLOYMENT ACT.

R.A. No. 10911 [July 21, 2016], otherwise known as the “Anti-Age Discrimination in Employment Act” prohibits
discrimination against any individual in employment on account of age. This law was lately implemented by DOLE
Department Order No. 170, Series of 2017 [February 02, 2017].
a. Coverage.
The law shall apply to all employers, publishers, labor contractors or subcontractors, and labor organizations,
whether or not registered.
b. Prohibitions.
Under this law, the following are the prohibited discriminatory acts related to employment on account of age:
(a) It shall be unlawful for an employer to:
(1) Print or publish, or cause to be printed or published, in any form of media, including the internet, any
notice of advertisement relating to employment suggesting preferences, limitations, specifications and
discrimination based on age;
(2) Require the declaration of age or birth date during the application process;
(3) Decline any employment application because of the individual’s age;
(4) Discriminate against an individual in terms of compensation, terms and conditions or privileges of
employment on account of such individual’s age;
(5) Deny any employee’s or worker’s promotion or opportunity for training because of age;
(6) Forcibly layoff an employee or worker because of old age; or
(7) Impose early retirement on the basis of such employee’s or worker’s age.1
(b) It shall be unlawful for a labor contractor or subcontractor, if any, to refuse to refer for employment or
otherwise discriminate against any individual because of such person’s age.
(c) It shall be unlawful for a labor organization to:
(1) Deny membership to any individual because of such individual’s age;
(2) Exclude from its membership any individual because of such individual’s age; or
(3) Cause or attempt to cause an employer to discriminate against an individual in violation of the Rules.
(d) It shall be unlawful for a publisher to print or publish any notice of advertisement relating to employment
suggesting preferences, limitations, specifications, and discrimination based on age.2
c. Exceptions.
It shall be lawful for an employer to set age limitations in employment if:
(a) Age is a bona fide occupational qualification (BFOQ) reasonably necessary in the normal operation of a
particular business or where the differentiation is based on reasonable factors other than age;
(b) The intent is to observe the terms of bona fide seniority system that is not intended to evade the purpose of
the Rules.
(c) The intent is to observe the terms of a bona fide employee retirement or a voluntary early retirement plan
consistent with the purpose of the Rules; Provided, That such retirement or voluntary retirement plan is in
accordance with the Labor Code, as renumbered, and other related laws; or
(d) The action is duly certified by the DOLE Secretary after consultation with the stakeholders in accordance
with the purpose of the Rules.
For purposes of the foregoing exceptions, an employer who invokes the qualifications as provided herein,
shall submit a report prior to its implementation to the DOLE Regional Office which has jurisdiction over
the workplace. The submission of the report shall be a presumption that the age limitation is in accordance
with the Rules unless proven otherwise by the court.
Failure to submit said report shall give rise to the presumption that the employer is not allowed to set age
limitation.3
1 Section 5, Id.; Section 4, Id.

2 Id.; Id.
3 Section 6, Id.; Section 5, Id.
110
d. Employment age of children.

The age requirement in the employment of children shall be governed by R.A. No. 9231 and its Implementing
Rules and Regulations, Article 138 of the Labor Code as renumbered, and other applicable laws, rules and regulations.
Upon hiring, the employer may require the child or the guardian to show proof of the child's age for purposes
of compliance with minimum employable age under existing laws.1
G.
POST-EMPLOYMENT RESTRICTIONS
I.
NON-COMPETE CLAUSE
 Is a non-compete clause valid?
Yes. The employer and the employee are free to stipulate in an employment contract prohibiting the employee
within a certain period from and after the termination of his employment, from:
(1) starting a similar business, profession or trade; or
(2) working in an entity that is engaged in a similar business that might compete with the employer.
The non-compete clause is agreed upon to prevent the possibility that upon an employee’s termination or
resignation, he might start a business or work for a competitor with the full competitive advantage of knowing and
exploiting confidential and sensitive information, trade secrets, marketing plans, customer/client lists, business practices,
upcoming products, etc., which he acquired and gained from his employment with the former employer. Contracts
which prohibit an employee from engaging in business in competition with the employer are not necessarily void for
being in restraint of trade.
 What are the requisites in order for a non-compete clause to be valid?

A non-compete clause is not necessarily void for being in restraint of trade as long as there are reasonable
limitations as to three (3) things: time, place and trade.
Example:
The non-compete clause (called “Non-Involvement Provision”) in the 2007 case of Daisy B. Tiu v. Platinum
Plans Philippines, Inc., provides as follows:
“8. NON-INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her
engagement with EMPLOYER and in case of separation from the Company, whether voluntary or for cause, he/she
shall not, for the next TWO (2) years thereafter, engage in or be involved with any corporation, association or entity,
whether directly or indirectly, engaged in the same business or belonging to the same pre-need industry as the
EMPLOYER. Any breach of the foregoing provision shall render the EMPLOYEE liable to the EMPLOYER in the
amount of One Hundred Thousand Pesos (P100,000.00) for and as liquidated damages.”
Starting on January 1, 1993, petitioner worked for respondent as Senior Assistant Vice-President and Territorial
Operations Head in charge of its Hongkong and Asean operations under a 5-year contract of employment containing
the afore-quoted clause. On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became
the Vice-President for Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need industry.
Consequently, respondent sued petitioner for damages before the RTC of Pasig City. Respondent alleged, among others,
that petitioner’s employment with Professional Pension Plans, Inc. violated the above-quoted non-involvement clause in
her contract of employment. Respondent thus prayed for P100,000 as compensatory damages; P200,000 as moral
damages; P100,000 as exemplary damages; and 25% of the total amount due plus P1,000 per counsel’s court appearance,
as attorney’s fees.
Petitioner countered that the non-involvement clause was unenforceable for being against public order or
public policy: First, the restraint imposed was much greater than what was necessary to afford respondent a fair and
reasonable protection. Petitioner contended that the transfer to a rival company was an accepted practice in the pre-need
industry. Since the products sold by the companies were more or less the same, there was nothing peculiar or unique to
protect. Second, respondent did not invest in petitioner’s training or improvement. At the time petitioner was recruited,
she already possessed the knowledge and expertise required in the pre-need industry and respondent benefited
tremendously from it. Third, a strict application of the non-involvement clause would amount to a deprivation of
petitioner’s right to engage in the only work she knew.
In affirming the validity of the Non-Involvement Clause, the Supreme Court ratiocinated as follows:
“xxx A non-involvement clause is not necessarily void for being in restraint of trade as long as there are
reasonable limitations as to time, trade, and place.
“In this case, the non-involvement clause has a time limit: two years from the time petitioner’s
employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner from
engaging in any pre-need business akin to respondent’s. It is limited as to place since the prohibition covers only
Hongkong and Asean operations.
“More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in
charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and highly sensitive
marketing strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would
1 Section 6, Department Order No. 170, Series of 2017.

111
make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, we find
the non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and
reasonable protection to respondent.
“Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent P100,000 as
liquidated damages. While we have equitably reduced liquidated damages in certain cases, we cannot do so in this
case, since it appears that even from the start, petitioner had not shown the least intention to fulfill the non-involvement
clause in good faith.”
II.
OTHER POST-EMPLOYMENT PROHIBITIONS
1. CONFIDENTIALITY AND NON-DISCLOSURE CLAUSE.

The confidentiality and non-disclosure clause reflects the commitment of the employee that he shall not, either
during the period of his employment with the employer or at any time thereafter, use or disclose to any person, firm or
corporation any information concerning the business or affairs of his employment, for his own benefit or to the
detriment of the employer. This clause may also cover Former Employer Information and Third Party Information.
2. NON-SOLICITATION CLAUSE.
To protect the legitimate business interests of the employer, including its business relationships, the employee
under this clause, may, directly or indirectly, be prohibited from soliciting or approaching, or accept any business from
any person or entity who shall, at any time within a fixed period preceding the termination of his employment, have been
(a) a client, talent, producer, designer, programmer, distributor, merchandiser, or advertiser of the Company, (b) a party
or prospective party to an agreement with the employer, or (c) a representative or agent of any client, talent, producer,
designer, programmer, distributor, merchandiser, or advertiser of the employer for the purpose of offering to that
person or entity goods or services which are of the same type as or similar to any goods or services supplied by the
employer at termination.
3. NON-RECRUITMENT OR ANTI-PIRACY CLAUSE.
This clause prohibits the recruitment by the employee of personnel or employees of the employer for a certain
period after his termination of employment, either on his own account or in conjunction with or on behalf of any other
person.
4. INVENTIONS ASSIGNMENT CLAUSE (INTELLECTUAL PROPERTY CLAUSE).
In industries engaged in research and development and related activities, this clause requires the employee, within a
certain period, to disclose in confidence to the employer and its subsidiaries and to assign all inventions, improvements,
designs, original works of authorship, formulas, processes, compositions of matter, computer software programs,
databases, mask works and trade secrets, whether or not patentable, copyrightable or protectible as trade secrets
(collectively, the “Inventions”), which the employee may solely or jointly conceive or develop or reduce to practice, or
cause to be conceived or developed or reduced to practice, during the period of his employment with the employer.
------------oOo------------
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SYLLABUS
MAJOR TOPIC 8
JURISDICTION AND RELIEFS
PRELIMINARY CONSIDERATIONS
ON PROCEDURE AND JURISDICTION
1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
The existence of employer-employee relationship between the parties-litigants, or a reasonable causal
connection to such relationship is a jurisdictional pre-requisite for the exercise of jurisdiction over a labor dispute by the
Labor Arbiters or any other labor tribunals.
2. THE CAUSE OF ACTION MUST ARISE FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause of action did not arise out of or was not incurred
in connection with the employer-employee relationship, Labor Arbiters and other labor tribunals have no jurisdiction
thereover.
Actions between employers and employees where the employer-employee relationship is merely incidental are
within the exclusive original jurisdiction of the regular courts.
3. REASONABLE CAUSAL CONNECTION RULE – THE RULE IN CASE OF CONFLICT OF
JURISDICTION BETWEEN LABOR COURT AND REGULAR COURT.
Under this rule, if there is a reasonable causal connection between the claim asserted and the employer-
employee relations, then the case is within the jurisdiction of labor courts.
In the absence of such nexus, it is the regular courts that have jurisdiction.
4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC who/which are vested with the power to
determine the existence of employer-employee relationship.
The following have also the power to make similar determination:
(1) DOLE Secretary and the DOLE Regional Directors;
(2) Med-Arbiter;
(3) Social Security Commission (SSC).
5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY EXERCISE JURISDICTION EVEN ABSENT
THE EMPLOYMENT RELATIONSHIP.
In Santiago v. CF Sharp Crew Management, Inc.,1 it was held that a seafarer who has already signed a
POEA-approved employment contract but was not deployed overseas and, therefore, there is no employer-employee
relationship, may file his monetary claims case with the Labor Arbiter. This is because the jurisdiction of Labor Arbiters
is not limited to claims arising from employer-employee relationships. Under Section 10 of R. A. No. 8042 (Migrant
Workers and Overseas Filipinos Act of 1995), as amended, the Labor Arbiter may exercise jurisdiction over the claims of
OFWs arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment, including claims for actual, moral, exemplary and other forms of damage. (See also
the 2012 case of Bright Maritime Corporation v. Fantonial2).
6. LABOR ARBITERS HAVE JURISDICTION EVEN IF THE CASE IS FILED BY THE HEIRS OF THE
OFW.
This was the ruling in Medline Management, Inc. v. Roslinda.3 As heirs, the wife and son of Juliano
Roslinda, the deceased OFW, have the personality to file the claim for death compensation, reimbursement of medical
expenses, damages and attorney's fees before the Labor Arbiter of the NLRC.
7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY CONCILIATION.

Labor cases are not subject to the conciliation proceedings prescribed under P.D. No. 1508 requiring the
submission of disputes before the Barangay Lupong Tagapayapa prior to their filing with the court or other government
offices. Instead of simplifying labor proceedings designed at expeditious settlement or referral to the proper courts or
offices to decide them finally, the conciliation of the issues before the Barangay Lupong Tagapayapa would only duplicate
the conciliation proceedings and unduly delay the disposition of labor cases.
1 G.R. No. 162419, July 10, 2007.

2 G.R. No. 165935, Feb. 8, 2012.
3 G.R. No. 168715, Sept. 15, 2010.
113
General Table of Jurisdiction

NLRC BLR DOLE VA NCMB
Supreme Court Supreme Court Supreme Court Supreme Court
Rule 45 Rule 45 Rule 45 Rule 45
Court of Appeals Court of Appeals Court of Appeals Court of Appeals
Rule 65 Rule 65 Rule 65 Rule 43
Motion for Motion for Motion for Reconsideration Motion for
Reconsideration Reconsideration Reconsideration
Appeal to Appeal to Appeal to Automatic Elevation to No appeal or certiorari (NCMB is not a
NLRC BLR Director DOLE Secretary Voluntary Arbitrator quasi-judicial body)
Med-Arbiter DOLE Director (or Med- Grievance Machinery `NCMB Conciliator-Mediator
Labor Arbiter (or DOLE Regional Arbiter) 2
Director) 1
For easy interplay of jurisdiction,

the five (5) columns above represent the following:
First column – The NLRC Column

Second column – The BLR Column
Third Column – The DOLE Column
Fourth Column – The Voluntary Arbitration Column
Fifth Column – The NCMB Column
---------------------------------------------------------------------------
A. LABOR
ARBITER
1. THE LABOR ARBITER.

The Labor Arbiter is an official in the Arbitration Branch of the National Labor Relations Commission
(NLRC) who hears and decides cases falling under his original and exclusive jurisdiction as provided by law.
2. LABOR ARBITERS HAVE NO INJUNCTIVE POWER; ONLY THE COMMISSION (NLRC) HAS
THIS POWER.
Previously, Labor Arbiters are possessed of injunctive power. This grant of injunctive power, however, was
deleted in recent NLRC Rules. The Labor Arbiter thus has no more injunctive power. Only the Commission (NLRC)
has that power.
1.
JURISDICTION
1. NATURE OF JURISDICTION OF LABOR ARBITERS - ORIGINAL AND EXCLUSIVE.
The jurisdiction conferred by Article 224 [217] upon the Labor Arbiters is both original and exclusive, meaning,
no other officers or tribunals can take cognizance of, or hear and decide, any of the cases therein enumerated.
2. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE JURISDICTION OF LABOR ARBITERS.
The following cases are the exceptions when the Labor Arbiters may not exercise their original and exclusive
jurisdiction:
1. In assumed cases. When the DOLE Secretary or the President exercises his power under Article 278(g)
[263(g)] of the Labor Code to assume jurisdiction over national interest cases and decide them himself.
2. In certified cases. When the NLRC exercises its power of compulsory arbitration over similar national
interest cases that are certified to it by the DOLE Secretary pursuant to the exercise by the latter of his
certification power under the same Article 278(g) [263(g)].
3. In cases arising from CBA. - When cases arise from the interpretation or implementation of collective
bargaining agreements and from the interpretation or enforcement of company personnel policies which
shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary
arbitration, as may be provided in said agreements.
4. In cases submitted for voluntary arbitration. - When the parties agree to submit the case to voluntary
arbitration before a Voluntary Arbitrator or panel of Voluntary Arbitrators who, under Articles 274 [261]
and 275 [262] of the Labor Code, are also possessed of original and exclusive jurisdiction to hear and decide
cases mutually submitted to them by the parties for arbitration and adjudication.
3. RUNDOWN OF ALL CASES FALLING UNDER THE JURISDICTION OF THE LABOR ARBITERS.
More particularly, Labor Arbiters shall have original and exclusive jurisdiction to hear and decide the following
cases involving all workers, whether agricultural or non-agricultural:
1. Under Article 224 [217] of the Labor Code:
1 Refers to appeals from decisions of DOLE Regional Directors in certain cases which should be made to the BLR Director and not to the DOLE Secretary.
2 Refers to appeals from decisions of Med-Arbiters in certification election cases which should be made to the DOLE Secretary and not to the BLR Director.
114
(a) Unfair labor practice cases;

(b) Termination disputes (Illegal dismissal cases);
(c) Money claims exceeding P5,000.00.
(d) Claims for actual, moral, exemplary and other forms of damages arising from employer-employee
relations; and
(e) Cases involving the legality of strikes and lockouts.
NOTE: Claims for employees’ compensation, SSS, PhilHealth (Medicare) and maternity benefits do not fall
under the jurisdiction of the Labor Arbiter because these fall under the jurisdiction of other government agencies.
2. Under Article 124 of the Labor Code, as amended by R.A. No. 6727:
Disputes involving legislated wage increases and wage distortion in unorganized establishments not
voluntarily settled by the parties pursuant to R.A. No. 6727.
3. Under Article 128(b) of the Labor Code, as amended by R.A. No. 7730:
 Contested cases under the exception clause in Article 128(b) of the Labor Code.
4. Under Article 233 [227] of the Labor Code:

 Enforcement of compromise agreements when there is non-compliance by any of the parties
thereto, pursuant to Article 227 of the Labor Code.
5. Under Article 276 [262-A] of the Labor Code:

 Issuance of writ of execution to enforce decisions of Voluntary Arbitrators or panel of Voluntary
Arbitrators, in case of their absence or incapacity, for any reason.
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022:

 Money claims of OFWs arising out of employer-employee relationship or by virtue of any law or contract,
including claims death and disability benefits and for actual, moral, exemplary and other forms of
damages.
7. Other cases as may be provided by law.
I.
JURISDICTION OVER UNFAIR LABOR PRACTICE CASES
1. SOME PRINCIPLES ON JURISDICTION OVER ULPs.
 The Labor Arbiter has jurisdiction over all ULPs whether committed by the employers or the labor organizations.
 The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the criminal aspect being lodged with the
regular courts.
II.
JURISDICTION OVER ILLEGAL DISMISSAL CASES
1. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION CASES.
 The validity of the exercise of jurisdiction by Labor Arbiters over illegal dismissal cases is not dependent on
the kind or nature of the ground cited in support of the dismissal; hence, whether the dismissal is
for just cause or authorized cause, it is of no consequence.
 In case of conflict of jurisdiction between Labor Arbiter and the Voluntary Arbitrator over termination
cases, the former’s jurisdiction shall prevail for the following reasons:
(1) Termination of employment is not a grievable issue that must be submitted to the grievance machinery
or voluntary arbitration for adjudication. The jurisdiction thereover remains within the original and
exclusive ambit of the Labor Arbiter and not of the Voluntary Arbitrator.
(2) Even if the CBA provides that termination disputes are grievable, the same is merely discretionary on
the part of the parties thereto.
(3) Once there is actual termination, jurisdiction is conferred upon Labor Arbiters by operation of law.
(4) Interpretation of CBA and enforcement of company personnel policies are merely corollary to an illegal
dismissal case.
(5) Article 217 is deemed written into the CBA being an intrinsic part thereof.
 In other words, the Voluntary Arbitrator will only have jurisdiction over illegal dismissal cases when there is
express agreement thereon by the parties to the CBA, i.e., the employer and the bargaining agent, to
submit the termination case to voluntary arbitration. Absent the mutual express agreement of the parties,
Voluntary Arbitrator cannot acquire jurisdiction over termination cases.
 The express agreement must be stated in the CBA or there must be enough evidence on record
unmistakably showing that the parties have agreed to resort to voluntary arbitration.
115
III.
JURISDICTION OVER MONEY CLAIMS CASES
1. CLASSIFICATION OF MONEY CLAIMS.
Money claims falling within the original and exclusive jurisdiction of the Labor Arbiters may be classified as
follows:
1. Any money claim, regardless of amount, when asserted in an illegal dismissal case (where the
remedy of reinstatement is proper). Here, the money claim is but an accompanying remedy subordinated
to the principal cause of action, i.e., illegal dismissal; or
2. Any money claim exceeding the amount of ₱5,000.00 per claimant.
If the amount does not exceed ₱5,000.00, it is, under Article 129, the DOLE Regional Director who has
jurisdiction to take cognizance thereof. Therefore, the amount of ₱5,000.00 becomes important only when the
principal cause of action is MONETARY CLAIM.
3. SOME PRINCIPLES ON JURISDICTION OVER MONEY CLAIMS.
 Award of statutory benefits even if not prayed for is valid.
 Claim for notarial fees by a lawyer employed by a company is within the jurisdiction of the Labor Arbiter.
(a)
JURISDICTION OF LABOR ARBITER VS. DOLE REGIONAL DIRECTOR
1. LABOR ARBITERS HAVE NO JURISDICTION OVER SMALL MONEY CLAIMS LODGED UNDER
ARTICLE 129.
As earlier emphasized, under Article 129 of the Labor Code, DOLE Regional Directors have jurisdiction over
claims amounting to ₱5,000 or below, provided the following requisites concur:
1. The claim must arise from employer-employee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee does not exceed ₱5,000.00.
2. IN INSPECTION OF ESTABLISHMENT CASES UNDER ARTICLE 128 (VISITORIAL AND
ENFORCEMENT POWER), THE DOLE REGIONAL DIRECTORS HAVE JURISDICTION
REGARDLESS OF WHETHER OR NOT THE TOTAL AMOUNT OF CLAIMS PER EMPLOYEE
EXCEEDS ₱5,000.00.
a. Requisites.
For the valid exercise by the DOLE Secretary or any of his duly authorized representatives (DOLE Regional
Directors) of the visitorial and enforcement powers provided under Article 128(b), the following requisites should
concur:
(1) The employer-employee relationship should still exist;
(2) The findings in question were made in the course of inspection by labor inspectors; and
(3) The employees have not yet initiated any claim or complaint with the DOLE Regional Director under
Article 129, or the Labor Arbiter under Article 217.
3. HOWEVER, JURISDICTION OVER CONTESTED CASES UNDER THE EXCEPTION CLAUSE IN
ARTICLE 128(b) OF THE LABOR CODE INVOLVING INSPECTION OF ESTABLISHMENTS
BELONGS TO THE LABOR ARBITERS AND NOT TO DOLE REGIONAL DIRECTORS.
a. Relation of paragraph (b) of Article 128 to the jurisdiction of Labor Arbiters.
The Labor Arbiters have jurisdiction over contested cases under the exception clause in Article 128(b), which
states: “xxx. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not considered in
the course of inspection.”
In interpreting the afore-quoted provision of the exception clause, three (3) elements must concur to divest the
Regional Directors or their representatives of jurisdiction thereunder, to wit:
(a) That the employer contests the findings of the labor regulations officer and raises issues thereon;
(b) That in order to resolve such issues, there is a need to examine evidentiary matters; and
(c) That such matters are not verifiable in the normal course of inspection.
The 2009 case of Meteoro v. Creative Creatures, Inc.,1 best illustrates the application of the exception
clause. Here, it was held that the Court of Appeals aptly applied the “exception clause” because at the earliest
opportunity, respondent company registered its objection to the findings of the labor inspector on the ground that there
was no employer-employee relationship between petitioners and respondent company. The labor inspector, in fact,
noted in his report that “respondent alleged that petitioners were contractual workers and/or independent and talent
1 G.R. No. 171275, July 13, 2009.

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workers without control or supervision and also supplied with tools and apparatus pertaining to their job.” In its
position paper, respondent again insisted that petitioners were not its employees. It then questioned the Regional
Director’s jurisdiction to entertain the matter before it, primarily because of the absence of an employer-employee
relationship. Finally, it raised the same arguments before the Secretary of Labor and the appellate court. It is, therefore,
clear that respondent contested and continues to contest the findings and conclusions of the labor inspector. To resolve
the issue raised by respondent, that is, the existence of an employer-employee relationship, there is a need to examine
evidentiary matters.
IV.
JURISDICTION OVER CLAIMS FOR DAMAGES
1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR DAMAGES.

It is now a well-settled rule that claims for damages as well as attorney’s fees in labor cases are cognizable by
the Labor Arbiters, to the exclusion of all other courts. Rulings to the contrary are deemed abandoned or modified
accordingly.
2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS (OFWs).
Claims for actual, moral, exemplary and other forms of damages that may be lodged by overseas Filipino
workers are cognizable by the Labor Arbiters.
V.
JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS
1. JURISDICTIONAL INTERPLAY IN STRIKE OR LOCKOUT CASES.

Based on the Labor Code, below is an outline of the interplay in jurisdiction among them.
1. Filing of a notice of strike or lockout with NCMB. - A union which intends to stage a strike or an
employer which desires to mount a lockout should file a notice of strike or notice of lockout, as the case may be, with
the NCMB and not with any other office. It must be noted, however, that the NCMB, per Tabigue v. International
Copra Export Corporation,1 is not a quasi-judicial body; hence, the Conciliators-Mediators of the NCMB do not
have any decision-making power. They cannot issue decisions to resolve the issues raised in the notice of strike or
lockout. Their role is confined solely to the conciliation and mediation of the said issues, although they can suggest to
the parties that they submit their dispute to voluntary arbitration through the Voluntary Arbitrators accredited by the
NCMB.
2. Filing of a complaint to declare the illegality of the strike or lockout with the Labor Arbiter or
Voluntary Arbitrator or panel of Voluntary Arbitrator. - In case a party wants to have the strike or lockout declared
illegal, a complaint should be filed either with the Labor Arbiter under Article 224(a)(5) [217(a)(5)] of the Labor Code or,
upon mutual agreement of the parties, with the Voluntary Arbitrator or panel of Voluntary Arbitrators under Article 275
[262] of the same Code. The issue of illegality of the strike or lockout cannot be resolved by the Conciliators-Mediators
of the NCMB as earlier pointed out and discussed.
3. Filing of an injunction petition with the Commission (NLRC). - In case illegal acts violative of Article
279 [264] are committed in the course of the strike or lockout, a party may file a petition for injunction directly with the
Commission (NLRC) under Article 225(e) [218(e)] of the Labor Code for purposes of securing a temporary restraining
order (TRO) and injunction. The Labor Arbiters or Voluntary Arbitrators are not possessed of any injunctive power
under the Labor Code. In other words, the aggrieved party, despite the pendency of the case for the declaration of the
illegality of the strike or lockout with the Labor Arbiter or Voluntary Arbitrator, as the case may be, may directly go to
the Commission to secure the injunctive relief.
4. Assumption of jurisdiction by the DOLE Secretary. – Under Article 278(g) [263(g)] of the Labor Code,
the DOLE Secretary has the power to assume jurisdiction over labor disputes which, in his opinion, may cause or likely
to cause a strike or lockout in industries indispensable to the national interest (so-called “national interest” cases).
Once he makes the assumption, he shall decide all the issues related to the labor dispute himself, to the exclusion of all
other labor authorities.
5. Certification of the labor dispute to the NLRC. - Under the same provision of Article 278(g) [263(g)] of
the Labor Code, the DOLE Secretary has the option of not assuming jurisdiction over the labor dispute in national
interest cases. Instead, he may certify it to the NLRC for compulsory arbitration, in which case, it will be the NLRC
which shall hear and decide all the issues subject of the certification order.
In case at the time of the said assumption or certification, there is a pending case before the Labor Arbiter or
Voluntary Arbitrator on the issue of illegality of the strike or lockout, the same shall be deemed subsumed in the
assumed or certified case. Resultantly, it is no longer the Labor Arbiter or the Voluntary Arbitrator who should decide
the said case but the DOLE Secretary, in the case of assumed cases, or the NLRC, in the case of certified cases.
6. Assumption of jurisdiction over a national interest case by the President. - The President of the
Philippines is not precluded from intervening in a national interest case by exercising himself the powers of his alter ego,
the DOLE Secretary, granted under Article 278(g) [263(g)] by assuming jurisdiction over the same for purposes of
settling or terminating it.
7. Submission of a national interest case to voluntary arbitration. - Despite the pendency of the assumed
or certified national interest case, the parties are allowed to submit any issues raised therein to voluntary arbitration at
1 G.R. No. 183335, Dec. 23, 2009; See also Hotel Employees Union-NFL v. Waterfront Insular Hotel Davao, G.R. Nos. 174040-41, Sept. 22, 2010.
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any stage of the proceeding, by virtue of Article 278(h) [263(h)] which provides that “(b)efore or at any stage of the compulsory
arbitration process, the parties may opt to submit their dispute to voluntary arbitration.”
The foregoing interplay explains why Article 278(i) [263(i)] makes specific reference to the President of the
Philippines, the Secretary of Labor and Employment, the Commission (NLRC) or the Voluntary Arbitrator in
connection with the law on strike, lockout and picketing embodied in Article 278 [263]. The only labor official not so
mentioned therein but who has a significant role to play in the interaction of labor officials and tribunals in strike or
lockout cases, is the Labor Arbiter. This is understandable in the light of the separate express grant of jurisdiction to the
Labor Arbiters under Article 224(a)(5) [217(a)(5)] as above discussed.
VI.
JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE DISTORTION
1. CASES IN ORGANIZED ESTABLISHMENTS.

Jurisdiction is with the Voluntary Arbitrator.
2. CASES IN UNORGANIZED ESTABLISHMENTS.
Jurisdiction is with Labor Arbiter.
VII.
JURISDICTION OVER ENFORCEMENT OR ANNULMENT
OF COMPROMISE AGREEMENTS
1. LEGAL BASIS.
Article 233 [227] clearly embodies the following provisions on compromise agreements:
“Article 233 [227]. Compromise Agreements. - Any compromise settlement, including those involving
labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office
of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations
Commission or any court shall not assume jurisdiction over issues involved therein except in case of
non-compliance thereof or if there is prima facie evidence that the settlement was obtained through
fraud, misrepresentation, or coercion.”
Clear from the foregoing provision that, although the compromise agreement may have been entered into by the
parties before the Bureau of Labor Relations (BLR) or the DOLE Regional Office, it is the Labor Arbiter who has
jurisdiction to take cognizance of the following issues related thereto, to the exclusion of the BLR and the DOLE
Regional Directors:
(1) To enforce the compromise agreement in case of non-compliance therewith by any of the parties thereto; or
(2) To nullify it if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation,
or coercion.
VIII.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
1. DECISIONS OF VOLUNTARY ARBITRATORS.

Article 276 [262-A] of the Labor Code prescribes the procedures that Voluntary Arbitrators or panel of
Voluntary Arbitrators should follow in adjudicating cases filed before them. Once a decision has been rendered in a case
and subsequently becomes final and executory, it may be enforced through the writ of execution issued by the same
Voluntary Arbitrator or panel of Voluntary Arbitrators who rendered it, addressed to and requiring certain public
officers to execute the final decision, order or award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.
In situations, however, where the Voluntary Arbitrator or the panel of Voluntary Arbitrators who rendered the
decision is absent or incapacitated for any reason, Article 276 [262-A] grants jurisdiction to any Labor Arbiter in the
region where the winning party resides, to take cognizance of a motion for the issuance of the writ of execution filed by
such party and accordingly issue such writ addressed to and requiring the public officers mentioned above to execute the
final decision, order or award of the Voluntary Arbitrator or panel of Voluntary Arbitrators.
IX.
JURISDICTION OVER CASES OF OFWs
1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY CLAIMS OF OFWs.

All claims of OFWs with a sign of peso are cognizable by the Labor Arbiters, including claims for disability and
death benefits.
2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE JURISDICTION OVER MONEY CLAIMS IF
THERE EXISTS A CBA.
If there is a CBA between the foreign employer and the bargaining union of the OFWs, the jurisdiction over
monetary claims of OFWs belongs to the Voluntary Arbitrator and not to the Labor Arbiter.
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3. OFW-RELATED CASES OVER WHICH THE POEA, AND NOT THE LABOR ARBITERS, HAS
JURISDICTION.
The Philippine Overseas Employment Administration (POEA) has original and exclusive jurisdiction to hear and
decide:
(a) All cases which are administrative in character, involving or arising out of violation of rules and regulations
relating to licensing and registration of recruitment and employment agencies or entities, including refund
of fees collected from workers and violation of the conditions for the issuance of license to recruit
workers.
(b) Disciplinary action cases and other special cases which are administrative in character, involving
employers, principals, contracting partners and Filipino migrant workers.
No. 1 above covers recruitment violations or violations of conditions of license; while No. 2 above involves (a)
disciplinary action cases against foreign principals or employers, and (a) disciplinary action cases against land-based
OFWs and seafarers.
X.
OTHER ISSUES OVER WHICH
LABOR ARBITERS HAVE JURISDICTION
1. JURISDICTION OVER CERTAIN ISSUES AS PROVIDED IN JURISPRUDENCE.
In accordance with well-entrenched jurisprudence, the issues, claims or cases of the following fall under the
jurisdiction of the Labor Arbiters:
(a) Employees in government-owned and/or controlled corporations;
(b) Alien parties;
(c) Priests and ministers;
(d) Employees of cooperatives;
(e) Counter-claims of employers against employees.
X-1.
JURISDICTION OVER CASES INVOLVING EMPLOYEES
OF GOVERNMENT-OWNED AND/OR CONTROLLED CORPORATIONS
1. PREVAILING RULE.
The hiring and firing of employees of government owned and/or controlled corporations without original charters
are covered by the Labor Code and, therefore, the Labor Arbiters have jurisdiction over illegal dismissal and other cases
that may be filed under this law; while those with original charters are basically governed by the Civil Service Law, rules and
regulations and, therefore, jurisdiction on any of the cases that may be initiated under this law is vested in the Civil
Service Commission (CSC)1
X-2.
JURISDICTION OVER DISPUTES
INVOLVING ALIEN PARTIES
1. CHOICE OF LAW BY PARTIES.

A basic policy of contract is to protect the expectations of the parties.2 Such party expectations are protected
by giving effect to the parties’ own choice of the applicable law.3 The choice of law must, however, bear some
relationship to the parties or their transaction.4 A manning agency, for instance, cannot be faulted for complying with
the applicable foreign law. By so complying, it has discharged its monetary obligation to the employee.5
2. WHEN PHILIPPINE LAW PREVAILS.
Pakistan International Airlines Corporation v. Ople, Sept. 28, 1990.
 Two contracts of employment were executed in Manila between Pakistan International Airlines Corporation
and two Filipino flight attendants.
 Paragraph 10 of the contracts provides:
 The terms thereof shall be construed and governed by the laws of Pakistan; and
 Only the courts of Karachi, Pakistan shall have jurisdiction to consider any matter arising out of or
under the agreement.
 They were dismissed prior to expiration of contracts.

ISSUE: Which law should apply and which court has jurisdiction over the dispute.
1 Zamboanga City Water District v. Buat, G.R. No. 104389, May 27, 1994.
2 Reese, Choice of Law in Torts and Contracts, 16 Columbia Journal of Transnational Law, 1, 21 [1977].
3 Fricke v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957].
4 Asia International Builder Corp. v. Mondejar, G.R. No. 105029-32, Dec. 05, 1994.
5 Omanfil International Manpower Development Corporation v. NLRC, G.R. No. 130339, Dec. 22, 1998, 300 SCRA 455.
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HELD: Philippine law should apply and that the Philippine court has jurisdiction:
 Philippine labor laws and regulations apply to the subject matter of this case, i.e., the employer-
employee relationship between petitioner PIA and private respondents. The relationship is much
affected with public interest and cannot be subject of agreement that what should apply thereto should
be some other law.
 Philippine court has jurisdiction because:
 The contract was executed and performed partially in the Philippines;
 Private respondents are Philippine citizens and residents and based in the Philippines in between
their assigned flights to the Middle East and Europe.
 Petitioner, although a foreign corporation, is licensed to do business (and is actually doing business
in the Philippines) and hence, is a resident in the Philippines.
X-3.
JURISDICTION OVER LABOR CASES
INVOLVING PRIESTS AND MINISTERS
1. WHEN LABOR ARBITERS HAVE JURISDICTION.

The fact that a case involves as parties thereto the church and its religious minister does not ipso facto give the
case a religious significance. If what is involved is a labor case, say illegal dismissal, the relationship of the church, as
employer, and the priest or minister, as employee is a purely secular matter not related to the practice of faith, worship
or doctrines of the church. Hence, Labor Arbiters may validly exercise jurisdiction over said labor case.
The religious minister in Austria v. Hon. NLRC,1 was not excommunicated or expelled from the membership of
the church but was terminated from employment based on the just causes provided in Article 297 [282] of the Labor
Code. Indeed, the matter of terminating an employee which is purely secular in nature is different from the ecclesiastical
act of expelling a member from the religious congregation. As such, the State, through the Labor Arbiter and the NLRC,
has the right to take cognizance of the case to determine whether the church, as employer, rightfully exercised its
management prerogative to dismiss the religious minister as its employee.
2. ECCLESIASTICAL AFFAIR, MEANING.
An “ecclesiastical affair” is one that concerns doctrine, creed, or form of worship of the church, or the adoption
and enforcement within a religious association of needful laws and regulations for the government of its membership,
and the power of excluding from such association those deemed unworthy of membership.2 Based on this definition, an
ecclesiastical affair involves the relationship between the church and its members and relates to matters of faith, religious
doctrines, worship and governance of the congregation. To be concrete, examples of these so-called ecclesiastical affairs
to which the State cannot meddle, are proceedings for excommunication, ordination of religious ministers,
administration of sacraments and other activities with attached religious significance.3
X-4.
JURISDICTION OVER CASES OF
EMPLOYEES OF COOPERATIVES
1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST EMPLOYEES FILED BY THE LATTER
BEFORE THE LABOR ARBITERS.
Almost all labor cases decided by labor courts involve claims asserted by the workers. The question that may be
propounded is whether the employers can assert counter-claims against their employees before the Labor Arbiters. The
Supreme Court answered this poser in the affirmative.
Bañez v. Hon. Valdevilla.4 - The jurisdiction of Labor Arbiters and the NLRC is comprehensive enough to
include claims for all forms of damages “arising from the employer-employee relations.” By this clause, Article 217
should apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the
basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a
counter-claim in the illegal dismissal case. This is in accord with paragraph 6 of Article 217(a), which covers “all other
claims, arising from employer-employee relations.”
But such counter-claim, being a factual issue, must be asserted before the Labor Arbiter; otherwise, it can no
longer be passed upon by a reviewing court.
XI.
ISSUES AND CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION
1
. LABOR ARBITERS HAVE NO JURISDICTION OVER CERTAIN ISSUES AND CASES.
The following issues or cases do not fall under the jurisdiction of Labor Arbiters:
(a) Claims for damages arising from breach of a non-compete clause and other post-employment
prohibitions;
(b) Claims for payment of cash advances, car, appliance and other loans of employees;
(c) Dismissal of corporate officers and their monetary claims;
1 Austria v. Hon. NLRC, G.R. No. 124382, Aug. 16, 1999.

2 Black’s Law Dictionary, 5th Ed., [1979], p. 460.
3 Id.
4 G.R. No. 128024, May 9, 2000, 331 SCRA 584.
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(d) Cases involving entities immune from suit;

(e) Cases falling under the doctrine of forum non conveniens;
(f) Quasi-delict or tort cases;
(g) Criminal and civil liabilities arising from violations of certain provisions of the Labor Code;
(h) Constitutionality of CBA provisions.
XI-A.
CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-COMPETE CLAUSE AND
OTHER POST-EMPLOYMENT PROHIBITIONS
1. JURISDICTION IS LODGED WITH THE REGULAR COURTS.

In case of violation of the non-compete clause and similar post-employment bans or prohibitions, the
employer can assert his claim for damages against the erring employee with the regular courts and not with the labor
courts.
XI-B.
EMPLOYER’S CLAIMS FOR CASH ADVANCES, CAR, APPLIANCE
AND OTHER PERSONAL LOANS OF EMPLOYEES
1. LABOR ARBITERS HAVE NO JURISDICTION.

With respect to resolving issues involving loans availed of by employees from their employers, it has been the
consistent ruling of the Supreme Court that the Labor Arbiters have no jurisdiction thereover but the regular courts.
Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of
justice and not to the Labor Arbiter and the NLRC. In such situations, resolutions of the dispute requires expertise, not in
labor management relations nor in wage structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily
ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies
disappears.”
The following loans may be cited:
a. Cash loans/advances are in the nature of simple collection of a sum of money brought by the employer,
as creditor, against the employee, as debtor. The fact that they were employer and employee at the time of
the transaction does not negate the civil jurisdiction of the trial court. The case does not involve
adjudication of a labor dispute but recovery of a sum of money based on our civil laws on obligation and
contract.
b. Car loans such as those granted to sales or medical representatives by reason of the nature of their work.
The employer’s demand for payment of the employees’ amortizations on their car loans, or, in the
alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It involves debtor-
creditor relations, rather than employee-employer relations.
c. Appliance loans concern the enforcement of a loan agreement involving debtor-creditor relations founded
on contract and do not in any way concern employee relations. As such it should be enforced through a
separate civil action in the regular courts and not before the Labor Arbiter.
d. Loans from retirement fund also involve the same principle as above; hence, collection therefor may only
be made through the regular courts and not through the Labor Arbiter or any labor tribunal.
XI-C.
DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS
1. LABOR ARBITERS HAVE NO JURISDICTION.

The dismissal of a director or corporate officer is an intra-corporate dispute cognizable by the Regional Trial
Court and not by the Labor Arbiter.
2. DISTINCTIONS BETWEEN CORPORATE OFFICERS & EMPLOYEES:
CORPORATE OFFICERS EMPLOYEES
 Refer only to those expressly mentioned  Refer to all other officers not
in the 2019 Revised Corporation Code mentioned in the 2019 Revised
and bylaws, to wit: president, secretary Corporation Code and bylaws.
and treasurer and such other officers as
may be provided for in the bylaws.
(NOTE: Section 24 of R.A. No. 11232 [Feb.
20, 2019], otherwise known as the 2019
Revised Corporation Code added a fifth in
the list: Compliance Officer, if the
corporation is vested with public
interest).
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 They are elected or appointed by the  They are generally employed not
directors or stockholders, and those by the action of the directors or
who are given that character either by stockholders but by the managing
the 2019 Revised Corporation Code or officer of the corporation who also
by the bylaws. determines the compensation to be
paid to such employees.
----------------------------------------------------
----------------------------------------------------
 RTC has jurisdiction in case of
dismissal.  Labor Arbiter has jurisdiction in
case of dismissal.
 Reason: INTRA-CORPORATE
 Reason: LABOR CASE
3. MATLING DOCTRINE.
Matling Industrial and Commercial Corp. v. Ricardo R. Coros, G.R. No. 157802, Oct. 13, 2010
After his dismissal by Matling as its Vice President for Finance and Administration, respondent Coros filed on
August 10, 2000, a complaint for illegal dismissal against Matling and some of its corporate officers (petitioners). The
petitioners moved to dismiss the complaint, raising the ground, among others, that the complaint pertained to the
jurisdiction of the SEC due to the controversy being intra-corporate inasmuch as the respondent was a member of
Matling’s Board of Directors aside from being its Vice-President for Finance and Administration prior to his
termination. The respondent opposed petitioners’ motion to dismiss, insisting that his status as a member of Matling’s
Board of Directors was doubtful, considering that he had not been formally elected as such; that he did not own a single
share of stock in Matling, considering that he had been made to sign in blank an undated indorsement of the certificate
of stock he had been given in 1992; that Matling had taken back and retained the certificate of stock in its custody; and
that even assuming that he had been a Director of Matling, he had been removed as the Vice President for Finance and
Administration, not as a Director, a fact that the notice of his termination dated April 10, 2000 showed.
In ruling that Coros’ dismissal was not an intra-corporate dispute but a labor case, the Court employed the
following two-tiered test to determine whether a dispute constitutes an intra-corporate controversy or not, namely:
(1) The status or relationship of the parties (Relationship Test); and
(2) The nature of the question that is the subject of their controversy (Nature of
Controversy Test).
This test simply dictates that before the RTC can take cognizance of a case, the controversy must pertain to any
of the following relationships:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners, members or officers;
c) between the corporation, partnership or association and the State as far as its franchise, permit or license to
operate is concerned; and
d) among the stockholders, partners or associates themselves.1
The fact that in Matling, the parties involved are the corporation and Coros, its director and stockholder and at
the same time its Vice President, does not necessarily place the dispute within the ambit of the jurisdiction of the RTC.
The better policy to be followed in determining jurisdiction over a case should be to consider concurrent factors such as
the status or relationship of the parties OR the nature of the question that is the subject of their controversy. In
the absence of any one of these factors, the RTC will not have jurisdiction. Furthermore, it does not necessarily follow
that every conflict between the corporation and its stockholders would involve such corporate matters as only the RTC
can resolve in the exercise of its judicial powers.
Matling thus prescribes that the criteria for distinguishing between corporate officers who may be ousted from
office at will, on one hand, and ordinary corporate employees who may only be terminated for just cause, on the other
hand, do not depend on the nature of the services performed, but on the manner of creation of the office. In respondent
Coros’ case, he was supposedly at once an employee, a stockholder, and a director of Matling. The circumstances
surrounding his appointment to office must be fully considered to determine whether the dismissal constituted an intra-
corporate controversy or a labor termination dispute. It must also be considered whether his status as director and
stockholder had any relation at all to his appointment and subsequent dismissal as Vice President for Finance and
Administration. Obviously enough, the respondent was not appointed as Vice President for Finance and Administration
because of his being a stockholder or director of Matling. He had started working for Matling on September 8, 1966, and
had been employed continuously for 33 years until his termination on April 17, 2000, first as a bookkeeper, and his
climb in 1987 to his last position as Vice President for Finance and Administration had been gradual but steady.2 Even
though he might have become a stockholder of Matling in 1992, his promotion to the position of Vice President for
Finance and Administration in 1987 was by virtue of the length of quality service he had rendered as an employee of
Matling. His subsequent acquisition of the status of director/stockholder had no relation to his promotion. Besides, his
status of director/stockholder was unaffected by his dismissal from employment as Vice President for Finance and
Administration.
1 See also Reyes v. Hon. RTC, Branch 142, G.R. No. 165744, Aug. 11, 2008, 583 Phil. 591.
2 The following is the sequence of respondent Coros’s rising from the ranks: 1966– Bookkeeper; 1968–Senior Accountant; 1969 –Chief Accountant; 1972–Office Supervisor; 1973–
Assistant Treasurer; 1978–Special Assistant for Finance; 1980–Assistant Comptroller; 1983–Finance and Administrative Manager; 1985–Asst. Vice President for Finance and
Administration; 1987 to April 17, 2000–Vice President for Finance and Administration.
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4. OTHER SIGNIFICANT CASES.

a. Cosare v. Broadcom Asia, Inc., G.R. No. 201298, Feb. 5, 2014.
In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not the regular courts, has original
jurisdiction over the illegal dismissal case filed by petitioner Cosare who was an incorporator of respondent Broadcom
and was holding the position of Assistant Vice President for Sales (AVP for Sales) and Head of the Technical
Coordination at the time of his termination. The following justifications were cited in support of this ruling:
(1) The mere fact that a person was a stockholder and an officer of the company at the time the subject
controversy developed does not necessarily make the case an intra-corporate dispute.
(2) A person, although an officer of the company, is not necessarily a corporate officer thereof.
(3) General Information Sheet (GIS) submitted to SEC neither governs nor establishes the nature of office.
(4) The Nature of the Controversy Test: The mere fact that a person was a stockholder at the time of the filing of
the illegal dismissal case does not make the action an intra-corporate dispute.
b. Malcaba v. Prohealth Pharma Philippines, G.R. No. 209085, June 6, 2018.
 Malcaba had been employed with ProHealth since it started in 1997.

 He was one of its incorporators and a member of the Board of Directors.
 He held 1,000,000 shares in the corporation.
 He was initially the Vice President for Sales then became President in 2005.
 He was President at the time of his dismissal.
Both Labor Arbiter and NLRC ruled that Malcaba was illegally dismissed.
The CA and the SC held that the Labor Arbiter and NLRC have no jurisdiction and their judgments
were void since he is a corporate officer and his termination is intra-corporate in nature; hence, jurisdiction
thereover belongs to the RTC.
As a matter of equity, Malcaba was ordered to RETURN P4,937,420 awarded to him by the Labor
Arbiter by way of separation pay, backwages and 13th month pay.
c. Cacho v. Balagtas, G.R. No. 202974, February 7, 2018.
 Balagtas was elected as North Star's Executive Vice President and Chief Executive Officer.
 She filed an illegal dismissal case and the Labor Arbiter awarded her separation pay, full backwages and
P3 M moral damages, P2 M exemplary damages and 10% attorney’s fees.
 NLRC ruled that Balagtas was a corporate officer at the time of her dismissal and not a mere employee.
 The CA reversed it but the SC affirmed the NLRC’s ruling that what is involved here is an intra-
corporate dispute and not a labor case because:
(1) The Executive Vice President position is one of the corporate offices provided in petitioner North
Star's By-laws (one or more vice presidents).
(2) Respondent Balagtas was appointed by the Board as petitioner North Star's Executive Vice
President.
XI-D.
LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT
1. IMMUNE ENTITIES CANNOT BE SUED FOR LABOR LAW VIOLATIONS.
In this jurisdiction, the generally accepted principles of international law are recognized and adopted as part of
the law of the land. Immunity of a State and international organizations from suit is one of these universally recognized
principles. It is on this basis that Labor Arbiters or other labor tribunals have no jurisdiction over immune entities.
2. ILLUSTRATIVE CASE.
In Department of Foreign Affairs v. NLRC,1 involving an illegal dismissal case filed against the Asian
Development Bank (ADB), it was ruled that said entity enjoys immunity from legal process of every form and therefore
the suit against it cannot prosper. And this immunity extends to its officers who also enjoy immunity in respect of all
acts performed by them in their official capacity. The Charter and the Headquarters Agreement granting these
immunities and privileges to the ADB are treaty covenants and commitments voluntarily assumed by the Philippine
government which must be respected.
3. EXCEPTION TO THE RULE.
There is an exception to the immunity rule as exemplified by the case of United States v. Hon. Rodrigo,2
where it was held that when the function of the foreign entity otherwise immune from suit partakes of the nature of a
proprietary activity, such as the restaurant services offered at John Hay Air Station undertaken by the United States
Government as a commercial activity for profit and not in its governmental capacity, the case for illegal dismissal filed by a
Filipino cook working therein is well within the jurisdiction of Philippine courts. The reason is that by entering into the
1 G.R. No. 113191, Sept. 18, 1996, 262 SCRA 39, 43-44.
2 G.R. No. 79470, Feb. 26, 1990, 182 SCRA 644, 660.
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employment contract with the cook in the discharge of its proprietary functions, it impliedly divested itself of its sovereign
immunity from suit.
4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming such diplomatic immunity since estoppel does
not operate to confer jurisdiction to a tribunal that has none over a cause of action.
XI-E.
DOCTRINE OF FORUM NON CONVENIENS
1. REQUISITES.
This doctrine is an international law principle which has been applied to labor cases. The following are the
requisites for its applicability:
(1) That the Philippine court is one to which the parties may conveniently resort;
(2) That the Philippine court is in a position to make an intelligent decision as to the law and the facts; and
(3) That the Philippine court has or is likely to have power to enforce its decision.
2. APPLICATION TO LABOR CASES.
a. Case where doctrine was rejected.
Petitioners’ invocation of this principle was rejected in Pacific Consultants International Asia, Inc. v.
Schonfeld.1 Petitioners’ insistence was based on the fact that respondent is a Canadian citizen and was a repatriate. In so
rejecting petitioners’ contention, the Supreme Court cited the following reasons that do not warrant the application of
the said principle: (1) the Labor Code does not include forum non conveniens as a ground for the dismissal of
the complaint; and (2) the propriety of dismissing a case based on this principle requires a factual
determination; hence, it is properly considered as a defense.
b. Case where doctrine was applied.
This doctrine was applied in the case of The Manila Hotel Corp. and Manila Hotel International Limited
v. NLRC,2 where private respondent Marcelo Santos was an overseas worker employed as a printer in a printing press
in the Sultanate of Oman when he was directly hired by the Palace Hotel, Beijing, People’s Republic of China to work in
its print shop. This hotel was being managed by the Manila Hotel International Ltd., a foreign entity registered under the
laws of Hong Kong. Later, he was terminated due to retrenchment occasioned by business reverses brought about by
the political upheaval in China (referring to the Tiananmen Square incident) which severely affected the hotel’s
operations.
In holding that the NLRC was a seriously inconvenient forum, the Supreme Court noted that the main aspects
of the case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link that the
Philippines has with the case is that the private respondent employee (Marcelo Santos) is a Filipino citizen. The Palace
Hotel and MHICL are foreign corporations. Consequently, not all cases involving Filipino citizens can be tried here.
Respondent employee was hired directly by the Beijing Palace Hotel, a foreign employer, through correspondence sent
to him while he was working at the Sultanate of Oman. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government. Hence, the NLRC is an inconvenient forum given that all the
incidents of the case - from the time of recruitment, to employment to dismissal - occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL, are not nationals of
the Philippines. Neither are they “doing business in the Philippines.” Likewise, the main witnesses, Mr. Shmidt (General
Manager of the Palace Hotel) and Mr. Henk (Palace Hotel’s Manager) are non-residents of the Philippines.
Neither can an intelligent decision be made as to the law governing the employment contract as such was
perfected in foreign soil. This calls to fore the application of the principle of lex loci contractus (the law of the place where
the contract was made). It must be noted that the employment contract was not perfected in the Philippines. Private
respondent employee signified his acceptance thereof by writing a letter while he was in the Sultanate of Oman. This
letter was sent to the Palace Hotel in the People’s Republic of China. Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in Beijing, People’s Republic of China. The
NLRC was not in a position to determine whether the Tiananmen Square incident truly adversely affected the operations
of the Palace Hotel as to justify respondent employee’s retrenchment.
Even assuming that a proper decision could be reached by the NLRC, such would not have any binding effect
against the employer, the Palace Hotel, which is a corporation incorporated under the laws of China and was not even
served with summons. Jurisdiction over its person was not acquired. This is not to say that Philippine courts and
agencies have no power to solve controversies involving foreign employers. Neither could it be said that the Supreme
Court does not have power over an employment contract executed in a foreign country. If the respondent employee
were an “overseas contract worker”, a Philippine forum, specifically the POEA, not the NLRC, would protect him. He
is not an “overseas contract worker”, a fact which he admits with conviction.
XI-F.
CONSTITUTIONALITY OF LABOR CONTRACT STIPULATIONS
1. THE HALAGUEÑA DOCTRINE.
In Halagueńa v. Philippine Airlines, Inc.,3 it was pronounced that it is not the Labor Arbiter but the regular
court which has jurisdiction to rule on the constitutionality of labor contracts such as a CBA. Petitioners were female
1 G.R. No. 166920, Feb. 19, 2007.

2 G.R. No. 120077, Oct. 13, 2000.
3 G.R. No. 172013, Oct. 2, 2009.
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flight attendants of respondent Philippine Airlines (PAL) and are members of the Flight Attendants and Stewards
Association of the Philippines (FASAP), the sole and exclusive bargaining representative of the flight attendants, flight
stewards and pursers of respondent. The July 11, 2001 CBA between PAL and FASAP provides that the compulsory
retirement for female flight attendants is fifty-five (55) and sixty (60) for their male counterpart.
Claiming that said CBA provision is discriminatory against them, petitioners filed against respondent a Special
Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary
Injunction with the Regional Trial Court (RTC) of Makati City.
In ruling that the RTC has jurisdiction, the Supreme Court cited the following reasons:
(1) The case is an ordinary civil action, hence, beyond the jurisdiction of labor tribunals.
(2) The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of
the Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of
Discrimination Against Women (CEDAW). The power to apply and interpret the constitution and
CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction.
(3) Not every controversy or money claim by an employee against the employer or vice-versa is within the
exclusive jurisdiction of the Labor Arbiter. Actions between employees and employer where the employer-
employee relationship is merely incidental and the cause of action proceeds from a different source of
obligation are within the exclusive jurisdiction of the regular courts. Here, the employer-employee
relationship between the parties is merely incidental and the cause of action ultimately arose from different
sources of obligation, i.e., the Constitution and CEDAW.
2.
REQUIREMENTS TO PERFECT APPEAL TO NLRC
I.
APPEAL IN GENERAL
1. APPEAL, MEANING AND NATURE.
The term “appeal” refers to the elevation by an aggrieved party to an agency vested with appellate authority of
any decision, resolution or order disposing the principal issues of a case rendered by an agency vested with original
jurisdiction, undertaken by filing a memorandum of appeal.
2. SOME PRINCIPLES ON APPEAL.
 Appeals under Article 223 apply only to appeals from the Labor Arbiter’s decisions, awards or orders to the
Commission (NLRC).
 There is no appeal from the decisions, orders or awards of the NLRC. Clearly, therefore, Article 223 of the Labor
Code is not the proper basis for elevating the case to the Court of Appeals or to the Supreme Court. The proper
remedy from the decisions, awards or orders of the NLRC to the Court of Appeals is a Rule 65 petition for certiorari
and from the Court of Appeals to the Supreme Court, a Rule 45 petition for review on certiorari.
 Appeal from the NLRC to the DOLE Secretary and to the President had long been abolished.
 Appeal is not a constitutional right but a mere statutory privilege. Hence, parties who seek to avail of it must
comply with the statutes or rules allowing it.
 A motion for reconsideration is unavailing as a remedy against a decision of the Labor Arbiter. The Labor Arbiter
should treat the said motion as an appeal to the NLRC.
 A “Petition for Relief” should be treated as appeal.
 Affirmative relief is not available to a party who failed to appeal. A party who does not appeal from a decision
of a court cannot obtain affirmative relief other than the ones granted in the appealed decision.
3. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).

The appeal to the NLRC may be entertained only on any of the following grounds:
a. If there is a prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
b. If the decision, order or award was secured through fraud or coercion, including graft and corruption;
c. If made purely on questions of law; and/or
d. If serious errors in the findings of fact are raised which, if not corrected, would cause grave or irreparable
damage or injury to the appellant.
 NLRC has certiorari power.
The first ground above regarding prima facie evidence of abuse of discretion on the part of the Labor Arbiter is
actually an exercise of certiorari power by the NLRC. The case of Triad Security & Allied Services, Inc. v. Ortega,1
expressly recognized this certiorari power of the NLRC. Clearly, according to the 2012 case of Auza, Jr. v. MOL
Philippines, Inc.,2 the NLRC is possessed of the power to rectify any abuse of discretion committed by the Labor
Arbiter.
II.
PERFECTION OF APPEAL
1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION.
1 G.R. No. 160871, Feb. 6, 2006.

2 G.R. No. 175481, Nov. 21, 2012.
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To reiterate, the perfection of an appeal shall stay the execution of the decision of the Labor Arbiter except
execution for reinstatement pending appeal.
2. PERFECTION OF APPEAL, MANDATORY AND JURISDICTIONAL.
The perfection of appeal within the period and in the manner prescribed by law is jurisdictional and non-
compliance with the legal requirements is fatal and has the effect of rendering the judgment final and executory, hence,
unappealable.
3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as follows:
(1) Observance of the reglementary period;
(2) Payment of appeal and legal research fee;
(3) Filing of a Memorandum of Appeal;
(4) Proof of service to the other party; and
(5) Posting of cash, property or surety bond, in case of monetary awards.
The foregoing are discussed below.
III.
REGLEMENTARY PERIOD
1. THREE (3) KINDS OF REGLEMENTARY PERIOD.
The reglementary period depends on where the appeal comes from, viz.:
1. Ten (10) calendar days – in the case of appeals from decisions of the Labor Arbiters under Article 223 of
the Labor Code;
2. Five (5) calendar days – in the case of appeals from decisions of the Labor Arbiters in contempt cases; and
3. Five (5) calendar days – in the case of appeals from decisions of the DOLE Regional Director under
Calendar days and not working days.
The shortened period of ten (10) days fixed by Article 223 contemplates calendar days and not working days.
The same holds true in the case of the 5-day reglementary period under Article 129 of the Labor Code. Consequently,
Saturdays, Sundays and legal holidays are included in reckoning and computing the reglementary period.
2. EXCEPTIONS TO THE 10-CALENDAR DAY OR 5-CALENDAR DAY REGLEMENTARY PERIOD
RULE.
The following are the specific instances where the rules on the reckoning of the reglementary period have not
been strictly observed:
1) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in which case, the appeal may be filed in the
next working day.
2) When NLRC exercises its power to “correct, amend, or waive any error, defect or irregularity whether in substance or
form” in the exercise of its appellate jurisdiction, as provided under Article 218(c) of the Labor Code, in
which case, the late filing of the appeal is excused.
3) When technical rules are disregarded under Article 221.
4) When there are some compelling reasons that justify the allowance of the appeal despite its late filing such
as when it is granted in the interest of substantial justice.
3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.
 The reglementary period is mandatory and not a “mere technicality.”
 The failure to appeal within the reglementary period renders the judgment appealed from final and executory
by operation of law. Consequently, the prevailing party is entitled, as a matter of right, to a writ of execution and the
issuance thereof becomes a ministerial duty which may be compelled through the remedy of mandamus.
 The date of receipt of decisions, resolutions or orders by the parties is of no moment. For purposes of appeal, the
reglementary period shall be counted from receipt of such decisions, resolutions, or orders by the counsel or
representative of record.
 Miscomputation of the reglementary period will not forestall the finality of the judgment. It is in the interest of
everyone that the date when judgments become final and executory should remain fixed and ascertainable.
 Date of mailing by registered mail of the appeal memorandum is the date of its filing.
 Motion for extension of time to perfect an appeal is not allowed. This kind of motion is a prohibited pleading.
 Motion for extension of time to file the memorandum of appeal is not allowed.
 Motion for extension of time to file appeal bond is not allowed.
IV.
APPEAL FEE AND LEGAL RESEARCH FEE
1. PAYMENT OF APPEAL FEE AND LEGAL RESEARCH FEE, MANDATORY AND

JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee and legal research fee is both mandatory and
jurisdictional. An appeal is perfected only when there is proof of payment of the appeal fee. It is by no means a mere
technicality. If not paid, the running of the reglementary period for perfecting an appeal will not be tolled.
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V.
MEMORANDUM OF APPEAL
1. REQUISITES.
The requisites for a valid Memorandum of Appeal are as follows:
1. The Memorandum of Appeal should be verified by the appellant himself in accordance with the Rules of
Court, as amended;
2. It should be presented in three (3) legibly typewritten or printed copies;
3. It shall state the grounds relied upon and the arguments in support thereof, including the relief prayed for;
4. It shall contain a statement of the date the appellant received the appealed decision, award or order; and
5. It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research fee;
(ii) posting of a cash or surety bond (in case of monetary awards); and
(iii) proof of service upon the other party.
2. REQUIREMENTS NOT JURISDICTIONAL.
The aforesaid requirements that should be complied with in a Memorandum of Appeal are merely a rundown
of the contents of the required appeal memorandum to be submitted by the appellant. They are not jurisdictional
requirements.
3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.
 Mere notice of appeal without complying with the other requisites aforestated shall not stop the running
of the period for perfecting an appeal.
 Memorandum of appeal is not similar to motion for reconsideration.
 Lack of verification in a memorandum of appeal is not a fatal defect. It may easily be corrected by
requiring an oath.
 An appeal will be dismissed if signed only by an unauthorized representative.
 Only complainants who signed the memorandum of appeal are deemed to have appealed the Labor
Arbiter’s decision. The prevailing doctrine in labor cases is that a party who has not appealed cannot obtain from
the appellate court any affirmative relief other than those granted, if any, in the decision of the lower tribunal.
VI.
PROOF OF SERVICE TO ADVERSE PARTY
1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.
While it is required that in all cases, the appellant shall furnish a copy of the Memorandum of Appeal to the
other party (appellee), non-compliance therewith, however, will not be an obstacle to the perfection of the appeal; nor
will it amount to a jurisdictional defect on the NLRC’s taking cognizance thereof.
VII.
POSTING OF BOND
1. WHEN POSTING OF BOND REQUIRED.
Only in case the decision of the Labor Arbiter or the DOLE Regional Director (under Article 129 of the Labor
Code) involves a monetary award, that an appeal by the employer may be perfected only upon the posting of a bond,
which shall either be in the form of (1) cash deposit, (2) surety bond or (3) property bond, equivalent in amount to
the monetary award, but excluding the amount of damages (moral and exemplary) and attorney’s fees. In other
words, only monetary awards (such as unpaid wages, backwages, separation pay, 13th month pay, etc.) are
required to be covered by the bond. Moral and exemplary damages and attorney’s fees are excluded.
2. SOME PRINCIPLES ON POSTING OF BOND.
 Posting of bond is mandatory and jurisdictional.
 The cash or surety bond required for the perfection of appeal should be posted within the reglementary
period. If a party failed to perfect his appeal by the non-payment of the appeal bond within the 10-calendar day
period provided by law, the decision of the Labor Arbiter becomes final and executory upon the expiration of the
said period.
 In case the employer failed to post a bond to perfect its appeal, the remedy of the employee is to file a
motion to dismiss the appeal and not a petition for mandamus for the issuance of a writ of execution.
 Surety bond must be issued by a reputable bonding company duly accredited by the Commission (NLRC) or the
Supreme Court.
 The 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.
 Posting of a bank guarantee or bank certification is not sufficient compliance with the bond requirement.
It is not equivalent to nor can be considered compliance with the cash, surety or property bond.
 Cooperatives are not exempted from posting bond.
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 Government is exempt from posting of bond; government-owned and/or controlled corporations, however,
are not exempt therefrom.
 Bond is not required for the NLRC to entertain a motion for reconsideration. An appeal bond is required
only for the perfection of an appeal of a Labor Arbiter’s decision involving a monetary award.
 Bond is not required to file a Rule 65 petition for certiorari.
3. JUSTIFICATIONS FOR NON-POSTING OF BOND.
 No monetary award, no bond required. The rule is clear that when the judgment of the Labor Arbiter does not
involve any monetary award, no appeal bond is necessary.
 There is no duty to post a bond if the monetary award is not specified in the decision. The Labor Arbiter’s
decision or order should state the amount awarded. If the amount of the monetary award is not contained or fixed
in the judgment, the appeal bond is not required to be posted.
 In case of conflict between the body and the fallo of the decision, the latter should prevail.
VII-A.
RULE ON REDUCTION OF APPEAL BOND
1. REQUISITES WHEN THE AMOUNT OF APPEAL BOND MAY BE REDUCED.
(1) The motion should be filed within the reglementary period;
(2) The motion to reduce bond should be based on meritorious grounds; and
(3) The motion should be accompanied by a partial bond, the amount of which should be reasonable in
relation to the monetary awards.
2. THE MCBURNIE DOCTRINE: NEW GUIDELINES FOR FILING AND ACCEPTANCE OF

MOTIONS TO REDUCE BOND.
The 2013 en banc decision rendered in the case of Andrew James Mcburnie v. Eulalio Ganzon,1 has
enunciated the following guidelines that must be observed in the matter of the filing and acceptance of motions to
reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure:
(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions:
(1) there is meritorious ground; and
(2) a bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2) above, a motion shall be accompanied by the posting
of a provisional cash or surety bond equivalent to ten percent (10%) of the monetary award subject of the
appeal, exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day reglementary
period to perfect an appeal from the Labor Arbiter’s decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final
amount of bond that shall be posted by the appellant, still in accordance with the standards of meritorious
grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount
of the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of the
NLRC order within which to perfect the appeal by posting the required appeal bond.
This Mcburnie ruling has completely overhauled the rules on motion to reduce bond. Before its advent, the issue
of what amount to post by way of partial or provisional bond has continued to hound the party litigants and the courts.
Now, the fixing of “ten percent (10%) of the monetary award subject of the appeal, exclusive of damages and attorney's
fees” as the “reasonable amount” that should be posted has completely eradicated any and all controversies thereon. In
other words, no more motion for reduction of bond accompanied by said 10% requirement would be denied outright on
the ground of insufficiency or inadequacy of the partial or provisional bond.
What is left for the determination by the NLRC, using its sound judgment and discretion, are only the issues of
(1) the reasonable final amount of the bond; and (2) what constitute “meritorious grounds.” This determination is
important since “in all cases, the reduction of the appeal bond shall be justified by meritorious grounds and
accompanied by the posting of the required appeal bond in a reasonable amount.”2
3.
REINSTATEMENT PENDING APPEAL
1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT ASPECT OF LABOR ARBITER’S
DECISION, IMMEDIATELY EXECUTORY EVEN PENDING APPEAL; NO WRIT OF EXECUTION
REQUIRED.
According to the Pioneer Texturizing doctrine,3 an order of reinstatement issued by the Labor Arbiter under
Article 229 [223] of the Labor Code is self-executory or immediately executory even pending appeal. This means that the
perfection of an appeal shall stay the execution of the decision of the Labor Arbiter except execution of the reinstatement
pending appeal.
1 G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17, 2013.
2 Andrew James Mcburnie v. Eulalio Ganzon, G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17, 2013.
3 Pioneer Texturizing Corporation v. NLRC, G.R. No. 118651, Oct. 16, 1997, 280 SCRA 806.
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2. REINSTATEMENT PENDING APPEAL, APPLICABLE ONLY TO THE REINSTATEMENT ORDER

ISSUED BY THE LABOR ARBITER; WRIT OF EXECUTION REQUIRED WHEN
REINSTATEMENT IS ORDERED BY NLRC ON APPEAL, OR SUBSEQUENTLY BY THE COURT
OF APPEALS OR SUPREME COURT, AS THE CASE MAY BE.
By way of distinction, the rule on reinstatement pending appeal applies only to the order of reinstatement
issued by the Labor Arbiter and to no other. This means that if the reinstatement order is issued by the NLRC on
appeal, or by the Court of Appeals or by the Supreme Court, there is a need to secure a writ of execution from the
Labor Arbiter of origin to enforce the reinstatement of the employee whose dismissal is declared illegal.
3. TWO (2) OPTIONS OF EMPLOYER.
To implement the reinstatement aspect of a Labor Arbiter’s decision, there are only two (2) options available to
the employer, to wit:
1. Actual reinstatement. - The employee should be reinstated to his position which he occupies prior to his
illegal dismissal under the same terms and conditions prevailing prior to his dismissal or separation or, if no
longer available, to a substantially-equivalent position; or
2. Payroll reinstatement. – The employee should be reinstated in the payroll of the company without
requiring him to report back to his work.
4. DUTY OF EMPLOYER TO NOTIFY EMPLOYEE ORDERED REINSTATED.
It is required that in case the decision of the Labor Arbiter includes an order of reinstatement, it should
contain:
(a) A statement that the reinstatement aspect is immediately executory; and
(b) A directive for the employer to submit a report of compliance within ten (10) calendar days from receipt
of the said decision.
Disobedience of this directive clearly denotes a refusal to reinstate. The employee need not file a motion for
the issuance of the writ of execution since the Labor Arbiter is mandated thereafter to motu proprio issue the writ. With
the new rules in place, there is hardly any difficulty in determining the employer’s intransigence in immediately
complying with the order.
5. INSTANCES WHEN WRIT OF EXECUTION OF LABOR ARBITER’S REINSTATEMENT ORDER
STILL REQUIRED.
Under the 2011 NLRC Rules of Procedure, there are two (2) instances when a writ of execution should still be
issued immediately by the Labor Arbiter to implement his order of reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the prescribed directive to submit a report of compliance within ten (10)
calendar days from receipt of the decision; or
(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy the reinstatement wages as they
accrue until actual reinstatement or reversal of the order of reinstatement.
6. SOME PRINCIPLES ON REINSTATEMENT PENDING APPEAL.
 The Labor Arbiter cannot exercise option of employer by choosing payroll reinstatement pending appeal.
 If the former position is already filled up, the employee ordered reinstated under Article 223 should be admitted
back to work in a substantially equivalent position.
 Reinstatement to a position lower in rank is not proper.
 Reinstatement cannot be refused on the basis of the employment elsewhere of the employee ordered reinstated.
 The failure of the illegally dismissed employee who was ordered reinstated to report back to work does not give
the employer the right to remove him, especially when there is a reasonable explanation for his failure.
 No reinstatement pending appeal should be made when antipathy and antagonism exist.
 If reinstatement is not stated in the Labor Arbiter’s decision (neither in the dispositive portion nor in the text
thereof), reinstatement is not warranted.
 Employer has no way of staying execution of immediate reinstatement. He cannot post bond to prevent its
execution.
 Reinstatement pending appeal applies to all kinds of illegal dismissal cases, regardless of the grounds
thereof.
 Reinstatement pending appeal does not apply when the dismissal is legal but reinstatement is ordered for
some reasons like equity and compassionate justice.
 The failure of employee ordered reinstated pending appeal to report back to work as directed by the employer
does not give the employer the right to remove him, especially when there is a reasonable explanation for his
failure.
 When former position is already filled up, the employee ordered reinstated pending appeal should be reinstated to
a substantially equivalent position.
 Reinstatement to a position lower in rank is not proper.
 In case of two successive dismissals, the order of reinstatement pending appeal under Article 223 issued in
the first case shall apply only to the first case and should not affect the second dismissal. According to
Sevilla v. NLRC, the Labor Arbiter was correct in denying the third motion for reinstatement filed by the
petitioner because what she should have filed was a new complaint based on the second dismissal. The
second dismissal gave rise to a new cause of action. Inasmuch as no new complaint was filed, the Labor
Arbiter could not have ruled on the legality of the second dismissal.
 Reinstatement pending appeal is not affected by the reinstated employee’s employment elsewhere.
 Effect of grant of achievement award during reinstatement pending appeal.
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In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc.,1 it was pronounced that the act of
respondent CCBPI in giving an award of a Certificate of Achievement to petitioner for his exemplary sales
performance during his reinstatement ordered by the Labor Arbiter, while respondent’s appeal with the NLRC was
still pending, constitutes recognition of petitioner’s abilities and accomplishments. It indicates that he is a
responsible, trustworthy and hardworking employee of CCBPI. It constitutes adequate proof weighing in his favor.
B.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)
1. NATURE.
The NLRC is an administrative quasi-judicial body. It is an agency attached to the DOLE solely for program and
policy coordination only. It is in charge of deciding labor cases through compulsory arbitration.
2. COMPOSITION OF THE NLRC.
The NLRC is composed of a Chairman and twenty-three (23) members called “Commissioners.”
The NLRC has tripartite composition. Eight (8) members thereof should be chosen only from among the
nominees of the workers sector and another eight (8) from the employers sector. The Chairman and the seven (7)
remaining members shall come from the public sector, with the latter to be chosen preferably from among the
incumbent Labor Arbiters.
3. COMMISSION EN BANC.
The Commission sits en banc only for the following purposes:
(1) To promulgate rules and regulations governing the hearing and disposition of cases before any of its
divisions and regional branches; and
(2) To formulate policies affecting its administration and operations.
The NLRC does not sit en banc to hear and decide cases. The banc has no adjudicatory power. The
Commission exercises its adjudicatory and all other powers, functions, and duties through its eight (8)
Divisions.
4. NLRC’S EIGHT (8) DIVISIONS.
The NLRC is divided into eight (8) divisions, each one is comprised of three (3) members. Each Division shall
consist of one (1) member from the public sector who shall act as its Presiding Commissioner and one (1) member each
from the workers and employers sectors, respectively.
The various Divisions of the Commission have exclusive appellate jurisdiction over cases within their
respective territorial jurisdictions.
1.
JURISDICTION
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds of jurisdiction:
1. Exclusive original jurisdiction; and
2. Exclusive appellate jurisdiction.
2. EXCLUSIVE ORIGINAL JURISDICTION.
The NLRC exercises exclusive and original jurisdiction over the following cases:
a. Petition for injunction in ordinary labor disputes to enjoin or restrain any actual or threatened
commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any
labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any
party.
b. Petition for injunction in strikes or lockouts under Article 264 of the Labor Code.
c. Certified cases which refer to labor disputes causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, certified to it by the Secretary of Labor and Employment for
compulsory arbitration by virtue of Article 263(g) of the Labor Code.
d. Petition to annul or modify the order or resolution (including those issued during execution proceedings)
of the Labor Arbiter.
3. EXCLUSIVE APPELLATE JURISDICTION.
The NLRC exercises exclusive appellate jurisdiction over the following:
a. All cases decided by the Labor Arbiters.
b. Cases decided by the DOLE Regional Directors or hearing officers involving small money claims under
c. Contempt cases decided by the Labor Arbiters.
2.
EFFECT OF NLRC REVERSAL OF
1 G.R. No. 180972, Jan. 20, 2014.

130
LABOR ARBITER’S ORDER OF REINSTATEMENT
1. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS ACTUALLY

REINSTATED.
The BERGONIO Rule:
Bergonio, Jr. v. South East Asian Airlines, April 21, 2014.
 After reversal of Labor Arbiter’s decision, the employer’s duty to reinstate the dismissed employee in the
actual service or in the payroll is effectively terminated. The employee, in turn, is not required to return the
wages that he had received prior to the reversal of the LA’s decision.
2. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS REINSTATED

IN THE PAYROLL.
The GENUINO Doctrine:
Marilou S. Genuino v. NLRC, Citibank, N.A., Dec. 4, 2007.
 The Refund Doctrine in Genuino no longer applies, per Garcia Doctrine (See below).
The WENPHIL Rule: (The prevailing rule)

Wenphil Corporation v. Abing, April 7, 2014.
 The period for computing the backwages due to the dismissed employees during the period of appeal should
END on the date that a higher court (in this case the CA) reversed the labor arbitration ruling of illegal
dismissal.”
3. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS NEITHER

REINSTATED TO HIS FORMER POSITION OR IN THE PAYROLL.
3.1. ENTITLEMENT TO REINSTATEMENT WAGES.
 The employee is entitled to reinstatement salaries/wages, allowances and benefits under the following
doctrines:
(1) ROQUERO doctrine (Roquero v. Philippine Air Lines, Inc., April 22, 2003); and
(2) GARCIA doctrine (Garcia v. Philippine Airlines, Inc., Jan. 20, 2009 [En Banc]).
Based on the foregoing doctrines, from the moment an employee is ordered reinstated by the Labor Arbiter on
the basis of the finding that his dismissal is illegal, up to the time that an appellate tribunal like the NLRC, Court of
Appeals and Supreme Court, as the case may be, reverses the said finding, the employee is generally entitled to his so-
called “reinstatement wages.”
3.1.1. ROQUERO DOCTRINE.
The Roquero doctrine, enunciates the rule that in cases where an employee is ordered reinstated by the Labor
Arbiter and the employer fails or refuses to obey the reinstatement order but initiates an appeal, the employer’s success
in having the decision of the Labor Arbiter’s decision reversed on appeal will not exculpate him from the liability to pay
the reinstatement wages of the employee reckoned and computed from the time the employee was ordered reinstated by
the Labor Arbiter until the date of its reversal on appeal.
In this case of Roquero, the dismissal of petitioners Roquero and Pabayo was held valid by the Labor Arbiter.
On appeal to the NLRC, the Labor Arbiter’s decision was reversed and consequently, petitioners were ordered
reinstated. They did not appeal from that decision of the NLRC but filed a motion for the issuance of a writ of
execution of the order of reinstatement. The Labor Arbiter granted the motion but respondent PAL refused to comply
with the said order on the ground that it has filed a Petition for Review before the Supreme Court. Subsequently, the CA
reversed the decision of the NLRC and ruled that the dismissal of petitioners was valid. The Supreme Court later
affirmed the CA’s decision but it held that the unjustified refusal by PAL to reinstate Roquero who, unlike Pabayo, has
not amicably settled his case, entitles him to the payment of his reinstatement wages effective from the time PAL failed
to reinstate him despite the issuance of the writ of execution. Thus, it was mandatory for PAL to actually reinstate
Roquero or reinstate him in the payroll. Having failed to do so, the former must pay the latter the salaries he is entitled
to, as if he was reinstated, from the time of the decision of the NLRC until the finality of the decision of the Supreme
Court.
Following Roquero, it is now the norm that even if the order of reinstatement of the Labor Arbiter is reversed
on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until its reversal by the NLRC, or the Court of Appeals or the Supreme Court, as the case may be.
If the employee has been reinstated during the appeal period and such reinstatement order is subsequently reversed on
appeal with finality, the employee is not required to reimburse whatever salaries he has received for he is entitled to such,
more so if he actually rendered services during the said period.
3.1.2. GARCIA DOCTRINE.
a. Modification of the Roquero and Genuino doctrines.
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The Roquero and Genuino doctrines have been modified by the Garcia doctrine. In this case, while respondent
Philippine Airlines (PAL) was undergoing rehabilitation receivership, an illegal dismissal case was filed by petitioners
against respondent PAL which was decided by the Labor Arbiter in their favor thus ordering PAL to, inter alia,
immediately comply with the reinstatement aspect of the decision. On appeal, the NLRC reversed the ruling of the
Labor Arbiter and held that their dismissal was valid. The issue of whether petitioners may collect their reinstatement
wages during the period between the Labor Arbiter’s order of reinstatement pending appeal and the NLRC decision
overturning that of the Labor Arbiter, now that respondent PAL has terminated and exited from rehabilitation
proceedings, was resolved in the negative by the Supreme Court. The following ratiocinations were cited:
(1) Re: modification of the Genuino doctrine. - The “refund doctrine” in Genuino should no longer be
observed because it easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a
dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received
during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is
mirage of a stop-gap leading the employee to a risky cliff of insolvency. Further, the Genuino ruling not only disregards
the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. Under such
scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event
of a reversal of the Labor Arbiter’s decision ordering reinstatement, the employer gets back the same amount without
having to spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the
“posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement.”
(2) Re: modification of the Roquero doctrine. – The Roquero doctrine was reaffirmed but with the
modification that “[a]fter the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault
on the part of the employer.”
b. Two-fold test under the Garcia doctrine.
Under Garcia, the test to determine the liability of the employer (who did not reinstate the employee pending
appeal) to pay the wages of the dismissed employee covering the period from the time he was ordered reinstated by the
Labor Arbiter to the reversal of the Labor Arbiter’s decision either by the NLRC, the Court of Appeals or the High
Court, is two-fold, to wit:
(1) There must be actual delay or the fact that the order of reinstatement pending appeal was not executed
prior to its reversal; and
(2) The delay must not be due to the employer’s unjustified act or omission. If the delay is due to the
employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the
reversal of the Labor Arbiter’s decision.
In Garcia, there was actual delay in reinstating petitioners but respondent PAL was justified in not complying
with the reinstatement order of the Labor Arbiter because during the pendency of the illegal dismissal case, the SEC
placed respondent PAL under an Interim Rehabilitation Receiver who, after the Labor Arbiter rendered his decision, was
replaced with a Permanent Rehabilitation Receiver. It is settled that upon appointment by the SEC of a rehabilitation
receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be
suspended. Resultantly, respondent PAL’s “failure to exercise the alternative options of actual reinstatement and
payroll reinstatement was thus justified. Such being the case, respondent’s obligation to pay the salaries pending appeal,
as the normal effect of the non-exercise of the options, did not attach.”
2. RECKONING OF THE PERIOD COVERED BY ACCRUED REINSTATEMENT WAGES.
To clarify, employees ordered reinstated by the Labor Arbiter are entitled to accrued reinstatement wages only
from the time the employer received a copy of the Labor Arbiter’s decision declaring the employees’ termination
illegal and ordering their reinstatement up to the date of the decision of the appellate tribunal overturning that of
the Labor Arbiter. It is not accurate therefore to state that such entitlement commences “from the moment the
reinstatement order was issued up to the date when the same was reversed by a higher court without fear of refunding
what he had received.”
4. SOME PRINCIPLES ON REINSTATEMENT WAGES.
 Employer is not liable to pay any reinstatement backwages if reinstatement is ordered not by the Labor Arbiter but
by the NLRC on appeal and it was not executed by writ and its finding of illegal dismissal is later reversed by the
Court of Appeals and/or Supreme Court.
 Payroll-reinstated employee is entitled not only to reinstatement wages but also to other benefits during the
period of payroll reinstatement until the illegal dismissal case is reversed by a higher tribunal.
 Award of additional backwages and other benefits from the time the Labor Arbiter ordered reinstatement until
actual or payroll reinstatement is proper and valid.
C.
JUDICIAL REVIEW OF LABOR RULINGS
1.
COURT OF APPEALS
Rule 65, Rules of Court
132
1. RULE 65 PETITION FOR CERTIORARI, THE ONLY MODE OF ELEVATING A LABOR CASE TO
THE COURT OF APPEALS.
The only mode by which a labor case decided by any of the following labor authorities/tribunals may reach the
Court of Appeals is through a Rule 65 petition for certiorari.
(a) the DOLE Secretary;
(b) the Commission (NLRC); and
(c) the Director of the Bureau of Labor Relations (BLR) in cases decided by him in his appellate jurisdiction
(as distinguished from those he decides in his original jurisdiction which are appealable to the DOLE
Secretary).
The remedy of ordinary appeal to the Court of Appeals is not available from their decisions, orders or awards.
The reason for this rule is that their decisions, orders or awards are final and executory and therefore inappealable.
2. THE ONLY EXCEPTION.

The only exception to the foregoing rule is in the case of decisions, orders or awards issued by the Voluntary
Arbitrator or panel of Voluntary Arbitrators which may be elevated to the Court of Appeals by way of an ordinary
appeal under a Rule 43 petition for review.
3. FILING OF MOTION FOR RECONSIDERATION OF THE DECISION OF THE DOLE

SECRETARY, THE COMMISSION (NLRC) OR THE BLR DIRECTOR, A PRE-REQUISITE TO
FILING OF RULE 65 PETITION FOR CERTIORARI.
The rule on the filing of a Motion for Reconsideration of the decision of the DOLE Secretary, the NLRC and
the BLR Director is mandatory and jurisdictional. Failure to comply therewith would result in the dismissal of the
Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule that a motion for reconsideration is a pre-requisite
for the filing of a special civil action for certiorari.
The reason for this rule is that in labor cases, a motion for reconsideration is the plain and adequate
remedy from an adverse decision of the DOLE Secretary, the NLRC and the BLR Director.
 THE PHILTRANCO DOCTRINE: a motion for reconsideration should be filed even though it is not
required or even prohibited by the concerned government office. This was the rule enunciated in the 2014
case of Philtranco Service Enterprises, Inc. v. Philtranco Workers Union-Association of Genuine Labor
Organizations (PWU-AGLO).1 Thus, while a government office may prohibit altogether the filing of a
motion for reconsideration with respect to its decisions or orders, the fact remains that certiorari inherently
requires the filing of a motion for reconsideration which is the tangible representation of the opportunity given
to the office to correct itself. Unless it is filed, there could be no occasion to rectify. Worse, the remedy of
certiorari would be unavailing. Simply put, regardless of the proscription against the filing of a motion for
reconsideration, the same may be filed on the assumption that rectification of the decision or order must be
obtained and before a petition for certiorari may be instituted.
4. CERTIORARI PETITION MAY BE FILED EVEN IF THE DECISION OF THE DOLE

SECRETARY, THE COMMISSION (NLRC), OR THE BLR DIRECTOR HAS ALREADY BECOME
FINAL AND EXECUTORY.
This rule applies to the decisions rendered by the DOLE Secretary, the NLRC or the BLR Director (in cases
which he decided in his appellate jurisdiction).
If the CA grants the petition and nullifies their decisions on the ground of grave abuse of discretion amounting
to excess or lack of jurisdiction, such decisions are, in contemplation of law, null and void ab initio; hence, they never
became final and executory.
2.
JUDICIAL REVIEW OF DECISIONS
OF VOLUNTARY ARBITRATORS
1. DECISIONS, FINAL AND EXECUTORY.

As a general rule, decisions or awards of Voluntary Arbitrators are final, inappealable and executory after ten
(10) calendar days from receipt of a copy thereof by the parties.
2. ORDINARY APPEAL UNDER RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE –
VOLUNTARY ARBITRATORS ARE OF THE SAME LEVEL AS RTC JUDGES.
Being a quasi-judicial agency, the decisions and awards of a Voluntary Arbitrator are appealable by way of a
petition for review to the Court of Appeals under Revised Administrative Circular No. 1-95 which provides for a uniform
procedure for appellate review of all adjudications of quasi-judicial entities and which is now embodied in Section 1, Rule
43 of the 1997 Rules of Civil Procedure.
The ruling in Luzon Development Bank v. Association of Luzon Development Bank Employees,2 in
effect, equates the decisions or awards of the Voluntary Arbitrator to those of the Regional Trial Court (RTC). Hence, in
a petition for certiorari from the awards or decisions of the Voluntary Arbitrator, the Court of Appeals has concurrent
jurisdiction with the Supreme Court.
1 G.R. No. 180962, Feb. 26, 2014. Although this case involves a decision of the DOLE Secretary, the principle enunciated herein equally applies to the NLRC.
2 G.R. No. 120319, October 6, 1995.
133
In Alcantara, Jr. v. CA,1 it was held that Luzon Development Bank is still a good law.
3. PERIOD OF APPEAL.
A conflict in the reckoning of the reglementary period within which to elevate a case on appeal from the Voluntary
Arbitrator to the CA exists between the law, Article 276 [262-A] of the Labor Code, on the one hand, and the Rules of Court,
particularly Section 4, Rule 43 thereof, on the other.
Article 276 [262-A] provides, insofar as pertinent, as follows:
“The award or decision of the Voluntary Arbitrator or Panel of Voluntary Arbitrators shall contain the facts
and the law on which it is based. It shall be final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties.”2
Section 4, Rule 43 of the Rules of Court, on the other hand, provides for a 15-day reglementary period for filing an
appeal, thus:
“Section 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award,
judgment, final order or resolution, or from the date of its last publication, if publication is required by law for its
effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper
motion and the payment of the full amount of the docket fee before the expiration of the reglementary period, the Court
of Appeals may grant an additional period of fifteen (15) days only within which to file the petition for review. No
further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days.”3
3.1. THE GUAGUA DOCTRINE - CLARIFICATION OF THE RULE ON APPEAL.

Finally, the en banc decision in the 2018 case of Guagua National Colleges v. CA,4 has laid to rest the above
conflict. The Court declared that the variable rulings notwithstanding, the period now to be followed in appealing the
decisions or awards of the Voluntary Arbitrators or Panel of Arbitrators should be as follows:
(1) The 10-calendar day period stated in Article 276 [262-A] should be understood as the period within
which the party adversely affected by the ruling of the Voluntary Arbitrators or Panel of Arbitrators may
file a motion for reconsideration; and
(2) Only after the resolution of the motion for reconsideration may the aggrieved party appeal to the CA by
filing the petition for review under Rule 43 of the Rules of Court within 15 days from notice pursuant to
Section 4 of Rule 43.
3.
SUPREME COURT
Rule 45, Rules of Court
1. RULE 45 PETITION FOR REVIEW ON CERTIORARI, THE ONLY MODE BY WHICH A LABOR
CASE MAY REACH THE SUPREME COURT.
Since the Court of Appeals has jurisdiction over the petition for certiorari under Rule 65 that may be filed before
it from the decisions of the NLRC or the DOLE Secretary or the BLR Director (in cases decided by him in his appellate
jurisdiction), any alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment which are
reviewable by means of a timely appeal to the Supreme Court and not by a special civil action of certiorari.
If the aggrieved party fails to do so within the reglementary period and the decision accordingly becomes final
and executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his deliberate inaction.
A petition for certiorari under Rule 65 cannot be a substitute for a lost appeal under Rule 45; hence, it should
be dismissed.
2. THE NEYPES DOCTRINE (FRESH PERIOD RULE) - FRESH PERIOD FROM DENIAL OF
MOTION FOR RECONSIDERATION.
In the 2013 case of Elizabeth Gagui v. Dejero,5 petitioner successively filed two Motions for Reconsideration
of the CA’s decision but both were denied. Petitioner elevated the case to the Supreme Court under Rule 45. In their
comment, respondents alleged that the instant petition had been filed 15 days after the prescriptive period of appeal
under Section 2, Rule 45 of the Rules of Court. In her reply, petitioner countered that she has a fresh period of 15 days
from the date she received the Resolution of the CA to file the instant Rule 45 petition. In affirming the contention of
petitioner, the Supreme Court cited the en banc ruling in the case of Neypes v. CA6 which standardized the appeal
periods, thus:
“To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their
cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the
Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for
reconsideration.
“Henceforth, this ‘fresh period rule’ shall also apply to Rule 40 governing appeals from the Municipal Trial
Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the Court of
1 G.R. No. 143397, Aug. 6, 2002.

2 Underscoring supplied.
3 Id.
4 Guagua National Colleges v. CA, G.R. No. 188492, Aug. 28, 2018.
5 G.R. No. 196036, Oct. 23, 2013.
6 G.R. No. 141524, Sept. 14, 2005.
134
Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of Appeals and Rule 45 governing
appeals by certiorari to the Supreme Court. The new rule aims to regiment or make the appeal period uniform, to
be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or
partial) or any final order or resolution.”
Consequently, since petitioner in Gagui received the CA Resolution denying her two Motions for
Reconsideration only on 16 March 2011, she had another 15 days within which to file her Petition, or until 31 March
2011. This Petition, filed on 30 March 2011, fell within the prescribed 15-day period.
D.
BUREAU OF LABOR RELATIONS (BLR)
1.
JURISDICTION
1. LABOR OFFICIALS CONCERNED.

As far as labor relations cases are concerned, the following officials are involved in their adjudication:
(1) Mediators-Arbiters (Med-Arbiters);
(2) DOLE Regional Directors; and
(3) BLR Director.
2. MED-ARBITER.
The term “Med-Arbiter” refers to an officer in the DOLE Regional Office or in the BLR authorized to hear and
decide representation cases, inter-union or intra-union disputes and other related labor relations disputes.
While the Labor Code refers to this official as “Med-Arbiter,” it should, however, be construed to mean
“Mediator-Arbiter.” Most recent DOLE issuances have specifically changed such reference to “Mediator-Arbiter” in their
provisions. This is but proper since the word “Med” obviously is an abbreviation of the word “Mediator.”
3. DOLE REGIONAL DIRECTOR.
The Regional Directors are the duly authorized representatives of the DOLE Secretary in the DOLE regional offices.
They are in charge of the administration and enforcement of labor standards within their respective territorial jurisdictions.1
Although, like the Med-Arbiters, they are not also specifically mentioned in said article, it is a known procedural rule, however,
that in addition to their jurisdiction over cases falling under Articles 1282 and 1293 of the Labor Code, they also have
jurisdiction over certain specified cases contemplated under Article 232 [226] of the same Code such as disputes concerning
union registration and cancellation of union registration as well as CBA registration or deregistration cases.
4. BLR DIRECTOR.
The BLR is headed by a Director who hears and decides certain specified cases over which he has either original or
appellate jurisdiction. In many cases, his name, instead of the BLR, is usually the one impleaded as public respondent in
certiorari petitions to the CA or subsequent appeals to the Supreme Court. Thus, one would encounter countless cases filed
against such luminaries like Pura-Ferrer Calleja, Cresenciano B. Trajano, Benedicto Ernesto R. Bitonio Jr., and Hans Leo J.
Cacdac, among others, who are sued in their capacity as BLR Directors.
III.
CASES COGNIZABLE
The following are the general classifications of the cases falling under the jurisdiction of the said officials, to wit:
(a) Inter-union disputes;
(b) Intra-union disputes; and
(c) Other related labor relations disputes.
III-A.
INTER-UNION AND INTRA-UNION DISPUTES
1. INTER-UNION OR REPRESENTATION DISPUTE.
An “inter-union dispute” or “representation dispute” is one occurring or carried on between or among unions. It refers to a
case involving a petition for certification election filed by a duly registered labor organization which is seeking to be recognized
as the sole and exclusive bargaining agent (SEBA) of the rank-and-file employees or supervisory employees, as the case may be,
in the appropriate bargaining unit of a company, firm or establishment. If there are two or more legitimate unions involved, it
also refers to any conflict between and among them concerning the issue of which of them should be certified as the SEBA for
purposes of collective bargaining with the employer. Broadly, it covers any other conflict or dispute between legitimate labor
unions.
2. INTRA-UNION OR INTERNAL UNION DISPUTE.
1 See Article 128, Labor Code.

2 Visitorial and enforcement powers of the DOLE Secretary and his duly authorized representatives, the DOLE Regional Directors.
3 See Article 129, Labor Code, involving monetary claims of ₱5,000 or less.
135
An “intra-union dispute” or “internal union dispute” refers to a conflict within or inside a labor union. It may refer to any
conflict between and among officers and/or members of one particular union, including grievances arising from any violation
of the rights and conditions of membership, violation of or disagreement over any provision of the union’s constitution and
by-laws,1 issues over control, supervision and management of its internal affairs, or disputes arising from chartering or
affiliation of a union.
3. RUNDOWN OF INTER-UNION AND INTRA-UNION CASES.
In accordance with the Labor Code’s Implementing Rules, as amended in 2015,2 the following is a rundown of all
possible inter-union/intra-union disputes:
a) Cancellation of registration of a labor organization filed by its members or by another labor organization;
b) Conduct of election of union and workers’ association officers or nullification of election of union and workers'
association officers;
c) Audit/accounts examination of union or workers' association funds;
d) Deregistration of collective bargaining agreements;
e) Validity/invalidity of union affiliation or disaffiliation;
f) Validity/invalidity of acceptance/non-acceptance for union membership;
g) Validity/invalidity of impeachment/expulsion of union and workers' association officers and members;
h) Validity/invalidity of Request for SEBA Certification3 (Replacing “Voluntary Recognition” as a mode of securing sole and
exclusive bargaining agent status);
i) Opposition to application for union and CBA registration;
j) Violations of or disagreements over any provision in a union or workers' association constitution and by-laws;
k) Disagreements over chartering or registration of labor organizations and collective bargaining agreements;
I) Violations of the rights and conditions of union or workers' association membership;
m) Violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements;4
and
n) Such other disputes or conflicts involving the rights to self-organization, union membership and collective
bargaining -
1) Between and among legitimate labor organizations; or
2) Between and among members of a union or workers’ association.
III-B.
OTHER RELATED LABOR RELATIONS DISPUTES
1. MEANING OF “OTHER RELATED LABOR RELATIONS DISPUTES.”
“Other related labor relations dispute” refers to any conflict between a labor union and the employer or any individual,
entity or group that is not a labor union or workers’ association.5
More specifically, it may refer to any of the following:
(a) Any conflict between:
(1) a labor union and an employer, or
(2) a labor union and a group that is not a labor organization; or
(3) a labor union and an individual who is not a member of such union;
(b) Cancellation of registration of unions and workers’ associations filed by individuals other than its members, or
group that is not a labor organization; and
(c) A petition for interpleader involving labor relations.6
IV.
ORIGINAL AND EXCLUSIVE JURISDICTION
OF MED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-described, a discussion of the respective jurisdictions of the Med-Arbiters,
DOLE Directors and BLR Director over these cases may now be made with greater clarity.
1.
MED-ARBITERS
The cases falling under the original and exclusive jurisdiction of the Med-Arbiters are as follows:
(1) Inter-union disputes (representation or certification election conflicts), such as:
(a) Request for SEBA certification when made in an unorganized establishment with only one1 or more
than one (1) legitimate union2 or in an organized establishment;3 or
1 Section 1 [bb], Rule I, Book V, Ibid.; Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.
2 See Section 1, Rule XI, Book V of the Rules to Implement the Labor Code, as previously amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008] which
designated this section as “Section 1(A)”, and as further amended by Section 18, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled “Further Amending
Department Order No. 40, Series of 2003, Amending the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.”
3 This is in the nature of an inter-union dispute which may be occasioned by the introduction of a new mode of securing the status of sole and exclusive bargaining agent (SEBA). The
Labor Code’s Implementing Rules, particularly its RULE VII on “Voluntary Recognition” was actually repealed and replaced by a completely new provision entitled “REQUEST FOR
SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA) CERTIFICATION” This was introduced by the amendatory provision of Section 3, Department Order No. 40-I-15, Series of
2015 [September 07, 2015], Ibid.
4 Disputes over the interpretation or implementation of the CBA are considered as grievable issues cognizable by and should be processed through the grievance machinery and
voluntary arbitration provided in the CBA itself. (See Articles 273 [260] and 274 [261], Labor Code).
5 Section 1 [rr], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].
6 Section 1[B] (formerly Section 2), Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].
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(b) Petition for certification election, consent election, run-off election or re-run election;
(2) Intra-union disputes;
(3) Other related labor relations disputes;4
(4) Injunction cases;5 and
(5) Contempt cases.6
On No. 1[a] above, the Mediator-Arbiter will have jurisdiction over a Request for SEBA Certification if it is made
in an organized establishment as well as in instances where it is made in an unorganized establishment with more
than one (1) legitimate organization. Under this situation, the DOLE Regional Director, before whom the said Request is
filed, is required to refer it to the Mediator-Arbiter for the determination of the propriety of conducting a certification
election; consequently, the Mediator-Arbiter would now have the jurisdiction to take cognizance of the certification
election.7
2.
DOLE REGIONAL DIRECTORS
The DOLE Regional Directors have original and exclusive jurisdiction over numerous cases.8 But not all of them are
relevant to or connected with the three (3) classes of cases9 expressly mentioned in Article 232 [226]. Only the following cases
cognizable by them are related thereto or connected therewith by virtue of laws and rules:
(1) Visitorial cases under Article 289 [274],10 involving examination of books of accounts of independent
unions, local chapters/chartered locals and workers’ associations;
(2) Union registration-related cases, such as:
a) Applications for union registration of independent unions, local chapters and workers’ associations;11
b) Denial of application for registration12 of said unions;13
c) Petitions for revocation or cancellation of registration14 of said unions;15
(3) Denial of registration of single-enterprise16 CBAs or petitions for deregistration thereof;17 and
(4) Request for SEBA certification when made in an unorganized establishment with only one (1) legitimate
union.18
1 In case the Request is made in an unorganized establishment with only one (1) legitimate union, and the requesting union or local fails to complete the requirements for SEBA
certification during the validation conference before the DOLE Regional Director, in which event, such Request should be referred to the Election Officer for the conduct of
certification election (Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. The election
should be conducted in accordance with Rule IX thereof.), which necessarily would mean that such certification election should now be conducted under the jurisdiction of the
Mediator-Arbiter to whom the Election Officer is duty-bound to report the outcome of the election proceeding. Certainly, the ensuing certification election cannot be conducted under
the directive of the DOLE Regional Director without the participation of the Mediator-Arbiter who, under the law, is the one possessed of the original and exclusive jurisdiction over
certification election cases, including the proclamation of the winning SEBA. (See Section 21, Rule IX, Book V, Rules to Implement the Labor Code, as ordered renumbered by
Section 17, Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. This section was originally numbered Section 20, per Department Order No. 40-03, Series of 2003,
[Feb. 17, 2003], but it was subsequently re-numbered to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008]).
2 Section 5, Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of 2015 [September 07, 2015].
3 Section 6, Rule VII, in relation to Rules VIII and IX, Ibid.
4 Section 1 [ii], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]; Section 4, Rule XI, Book V of the
Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008]. See also Article 226, Labor Code; Policy Instructions No. 6;
Villaor v. Trajano, G.R. No. 69188, Sept. 23, 1986.
5 Med-Arbiters have the authority to issue temporary restraining orders (TROs) and writs of injunction in appropriate cases. Section 5, Rule XVI, Book V of the Omnibus Rules
Implementing the Labor Code states: “Sec 5. Injunctions. -- No temporary injunctions or restraining order in any case involving or growing out of a labor dispute shall be issued by any
court or other entity. On the other hand, the Office of the President, the Secretary of Labor, the Commission, the Labor Arbiter or Med-Arbiter may enjoin any or all acts involving or
arising from any case pending before any of said offices or officials which if not restrained forthwith may cause grave or irreparable damage to any of the parties to the case or
seriously affect social or economic stability.”
6 Section 4, Rule XVI, Book V, Rules to Implement the Labor Code.
8 All the cases cognizable by the DOLE Regional Directors are as follows: (a) Visitorial (inspection) cases under Article 37; (b) Visitorial (inspection) and enforcement cases under
Article 128; (c) Visitorial cases under Article 289 [274], involving examination of books of accounts of independent unions, local chapters/chartered locals and workers’ associations;
(d) Occupational safety and health violations; (e) Small money claims cases arising from labor standards violations in an amount not exceeding ₱5,000.00 and not accompanied with
a claim for reinstatement under Article 129; (f) Cases related to private recruitment and placement agencies (PRPAs) for local employment, such as: (1) Applications for license or
denial thereof; (2) Complaints for suspension or cancellation of license by reason of administrative offenses; (3) Complaints for illegal recruitment; and (4) Petition for closure of
agency; (g) Cases submitted for voluntary arbitration in their capacity as Ex-Officio Voluntary Arbitrators (EVAs) under Department Order No. 83-07, Series of 2007; (h) Union
registration-related cases, such as: 1) Applications for union registration of independent unions, local chapters and workers’ associations; 2) Petition for denial of application for
registration of said unions; 3) Petitions for revocation or cancellation of registration of said unions; (i) Notice of merger, consolidation, affiliation and change of name of said unions
and or petition for denial thereof; (j) CBA-related cases, such as: 1) Application for registration of single-enterprise CBAs or petition for deregistration thereof; 2) Petition for denial
of registration of single-enterprise CBAs or denial of deregistration thereof; and (k) Request for SEBA certification when made in an unorganized establishment with only one (1)
legitimate union.
9 These are (1) inter-union disputes; (2) intra-union disputes; and (3) Other related labor relations disputes.
10 “Article 289 [274]. Visitorial power. The Secretary of Labor and Employment or his duly authorized representative is hereby empowered to inquire into the financial activities of
legitimate labor organizations upon the filing of a complaint under oath and duly supported by the written consent of at least twenty percent (20%) of the total membership of the labor
organization concerned and to examine their books of accounts and other records to determine compliance or non-compliance with the law and to prosecute any violations of the law
and the union constitution and by-laws: Provided, That such inquiry or examination shall not be conducted during the sixty (60)-day freedom period nor within the thirty (30) days
immediately preceding the date of election of union officials.” (As amended by Section 31, Republic Act No. 6715, March 21, 1989).
11 Section 3, Rule II of the Med-Arbitration Rules states: “SEC. 3. Jurisdiction of the Regional Director.- The Regional Director shall exercise original and exclusive jurisdiction over
application for union registration, petitions for cancellation of union registration and complaints for examination of unions books of accounts.” See also Section 1, Rule II,
Rules of Procedure on Mediation-Arbitration.
12 See Article 243 [236] of the Labor Code which provides: “Art. 243 [236]. Denial of registration; appeal. The decision of the Labor Relations Division in the regional office denying
registration may be appealed by the applicant union to the Bureau within ten (10) days from receipt of notice thereof.”
13 Referring to independent unions, local chapters and workers’ associations, as distinguished from federations, national unions, industry unions, trade union centers and their local
chapters/chartered locals, affiliates and member organizations whose application for registration as well as denial or cancellation or revocation of registration is cognizable by the BLR
Director in his original and exclusive jurisdiction [infra].
14 Specifically cited as exception to Med-Arbiter’s jurisdiction is cancellation of union registration, per Section 1 [ii], Rule I, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].

15 Section 3, Rule II of the Med-Arbitration Rules, supra; See also Section 4, Rule XI, Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03,
Series of 2008 [October 30, 2008].

16 As distinguished from cases involving multi-empoyer CBAs which fall under the original jurisdiction of the BLR Director.
17 Section 4 [formerly Section 5], Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as re-
numbered by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].
18 Section 4, Rue VII, Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. Under this situation, the DOLE Regional Director, before whom the Request for SEBA
Certification is filed, should refer the Request for SEBA Certification to the Mediator-Arbiter for the determination of the propriety of conducting a certification election, in which case,
the Mediator-Arbiter now has the jurisdiction to decide the certification election issue. (Section 6, Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of
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On No. 1 above, it is imperative to point out that although by nature, this is an intra-union dispute, the rules,
however, treat this separately from those generally applicable to intra-union disputes1 and accordingly vest jurisdiction
thereover in the DOLE Regional Directors and not in the Med-Arbiters.
Barles v. Bitonio2 is clear on this point. It was held here3 that while intra-union conflicts, such as examinations of
accounts are under the jurisdiction of the BLR, however, the Rules of Procedure on Mediation-Arbitration purposely and expressly
separated or distinguished examinations of union accounts from the genus of intra-union conflicts and provided a different
procedure for their resolution. Consequently, original jurisdiction over complaints for examinations of union accounts is vested
not in the Med-Arbiter but in the DOLE Regional Director. This is apparent from Section 34 thereof.
But there is a need to point out though that the foregoing rule applies only when the request for examination of
books of accounts concerns only those of independent unions, local chapters/chartered locals and workers’
associations. If what is involved are those of federations, national unions, industry unions or trade union centers, and
their local chapters/chartered locals, affiliates and member organizations, the jurisdiction thereover is vested with the
BLR Director and not with the DOLE Regional Director.
On No. 2[a] above, as far as workers’ associations are concerned, if they operate in more than one region, the
application for registration should be filed with the BLR or the Regional Offices, but either way, it should be processed by the
BLR. This is so in order to have a unified resolution of the merits of the application by one, single agency.
5
On No. 4 above, when the Request for SEBA Certification is made in an unorganized establishment with only
one (1) legitimate union, it should be filed with the DOLE Regional Director who will make an immediate determination on
whether there is majority support by the members of the bargaining unit to the requesting union. Once the majority support is
confirmed and the requesting union does not fail to complete the requirements for SEBA certification during the validation
conference, the requesting union is immediately certified by the DOLE Regional Director as the SEBA without conducting a
certification election.
As a consequence of this latest change in the Rules, it may be said that the DOLE Regional Director, in a way, is now
empowered to rule on a “representation” issue which, technically speaking, falls under and is covered by the general class of
“inter-union disputes” that falls within the jurisdiction of the Mediator-Arbiter. In fact, the very Request itself speaks of “SEBA
Certification,” a relief that is not the consequence of “Voluntary Recognition” - the original remedy intended to be replaced by
this Request mode.
For it is clear that under the previous repealed rule on voluntary recognition, the DOLE Regional Director never
issues a “SEBA Certification”; what is done is the mere recording6 of the “Notice of Voluntary Recognition” jointly
submitted by the employer and the union to the DOLE Regional Office which issued the recognized labor union’s certificate of
registration or, in the case of local chapter, where the charter certificate and the other documents required under Article 241
[234-A] were submitted and filed.7 Since it is crystal clear under existing laws, rules and jurisprudence that it is the Mediator-
Arbiter who has the original and exclusive jurisdiction to issue a “SEBA Certification” under any of the modes8 of selecting a
SEBA, it is not surprising if the issue of the validity of the exercise of similar power to issue the SEBA Certification by the
DOLE Regional Director would be raised in an appropriate proceeding.
But the rule is quite clear that the Mediator-Arbiter would acquire original jurisdiction over the Request for SEBA
Certification under the following situations:
(1) In case the Request is made in an unorganized establishment with only one (1) legitimate union, and the
requesting union or local fails to complete the requirements for SEBA certification during the validation conference before the DOLE
Regional Director, in which event, such Request should be referred to the Election Officer9 for the conduct of certification
election10 which necessarily would mean that such certification election should now be conducted under the jurisdiction of the
Mediator-Arbiter to whom the Election Officer is duty-bound to report the outcome of the election proceeding.11 Certainly,
2015 [September 07, 2015]). Note must be made that when the Request for SEBA Certification is made in an unorganized establishment with more than one (1) legitimate labor
organization, the Med-Arbiter takes over from the DOLE Regional Director in the matter of hearing and resolving the issue of certification election.
1 See Section 3, Rule XIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], thus, a request for examination
of books of accounts pursuant to Article 289 [274], in the absence of allegations pertaining to a violation of Article 250 [241], should not be treated as an intra-union dispute.
2 G.R. No. 120220, June 16, 1999.
3 Citing La Tondena Workers Union v. Secretary of Labor, G.R. No. 96821, Dec. 9, 1994, 239 SCRA 117.
application for union registration, petitions for cancellation of union registration and complaints for examination of unions books of accounts.”
5 See 2nd paragraph, Section 1, Rule III, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]; See also Section 1, Rule II,

6 Under the previous repealed provision, it is stated that where the notice of voluntary recognition is sufficient in form, number and substance and where there is no other registered
labor union operating within the bargaining unit concerned, the DOLE Regional Office, through the Labor Relations Division shall, within ten (10) days from receipt of the notice,
record the fact of voluntary recognition in its roster of legitimate labor unions and notify the labor union concerned. (See the repealed provision of Section 3, Rule VII, Book V, Rules to
Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]).
Where the notice of voluntary recognition is insufficient in form, number and substance, the DOLE Regional Office shall, within the same period, notify the labor union of its findings
and advise it to comply with the necessary requirements. Where neither the employer nor the labor union failed to complete the requirements for voluntary recognition within thirty (30)
days from receipt of the advisory, the DOLE Regional Office shall return the notice of voluntary recognition together with all its accompanying documents without prejudice to its re-
submission. (Section 3, Rule VII, Book V, Ibid.).
7 Section 1, Rule VII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].
8 Besides this mode, the other modes of selecting or designating a SEBA are certification election, consent election, run-off election, and lately, re-run election.
9 “Election Officer” refers to an officer of the Bureau of Labor Relations or the Labor Relations Division in the Regional Office authorized to conduct certification elections, election of
union officers and other forms of elections and referenda. (Section 1 [o], Rule I, and Sections 2-5, Rule XII, Book V, Rules to Implement the Labor Code, as amended by Department
Order No. 40-03, Series of 2003, [Feb. 17, 2003]). It is the Election Officer who shall have control of the pre-election conference and election proceedings. (Section 1, Rule IX, Book
V, Ibid.).
10 Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. The election should be
conducted in accordance with Rule IX thereof.

11 Under the Rules, within 24 hours from the final canvass of votes, there being a valid election, the Election Officer shall transmit the records of the case to the Med-Arbiter who shall,
within the same period from receipt of the minutes and results of election, issue an order proclaiming the results of the election and certifying the union which obtained the majority of
the valid votes cast as the sole and exclusive bargaining agent in the subject bargaining unit, xxx. (The provision entitled “Proclamation and certification of the result of the election”
should now be denominated as Section 21, Rule IX, Book V, Rules to Implement the Labor Code, by virtue of the re-numbering ordered by Section 17, Department Order No. 40-I-
15, Series of 2015 [September 07, 2015]. This section was originally numbered Section 20, per Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], but it was
subsequently re-numbered to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008]. This latest 2015 re-numbering was effected through said Section 17
which states: “Sections subsequent to inserted new provisions and/or renumbered sections are renumbered accordingly.”).
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the ensuing certification election cannot be conducted under the directive of the DOLE Regional Director without the
participation of the Mediator-Arbiter who, under the law,1 is the one possessed of the original and exclusive jurisdiction over
certification election cases, including the proclamation of the winning SEBA.2
(2) In case the Request is made in an unorganized establishment with more than one (1) legitimate union, in
which event, the DOLE Regional Director is required to refer the Request directly to the Election Officer for the conduct of a
certification election3 which should be in accordance with the Rules4 that state, in its Section 2, Rule VIII, that the “(Request)
shall be heard and resolved by the Mediator-Arbiter.” Resultantly, it is still the Mediator-Arbiter who should take cognizance
of the Request which, in this case, is the equivalent of the Petition for Certification Election over which he exercises original
jurisdiction.
(3) In case the Request is made in an organized establishment, in which case, the Regional Director should refer the
same to the Mediator-Arbiter for the determination of the propriety of conducting a certification election.5
3.
BLR DIRECTOR
ORIGINAL AND EXCLUSIVE JURISDICTION.
At the outset, it must be stressed that reference in the law and pertinent rules to “BLR”, as far as the issue of
jurisdiction is concerned, should appropriately mean “BLR Director.” This is as it should be because “BLR” is a generic term
that includes not only the Med-Arbiters and DOLE Regional Directors but the BLR Director himself. More significantly, there
is jurisprudential variance in the cases cognizable by the BLR Director, in relation to Med-Arbiters and DOLE Regional
Directors, hence, referring to the cases properly falling under the jurisdiction of the “BLR Director” as such would be more
appropriate and less confusing than simply referring to them as falling under the jurisdiction of the “BLR.”
The BLR Director exercises two (2) kinds of jurisdiction, namely: original and appellate.6 The following cases fall
under the first:
(1) Complaints and petitions involving the application for registration, revocation or cancellation of registration of
federations, national unions, industry unions, trade union centers and their local chapters/chartered locals,
affiliates and member organizations;7
(2) Request for examination of books of accounts of said labor organizations8 under Article 289 [274] of the
Labor Code;
(3) Intra-union disputes involving said labor organizations;9
(4) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for denial
thereof;10
(5) Registration of multi-employer11 CBAs or petitions for deregistration thereof;12
(6) Contempt cases.
As far as No. 3 above is concerned, the 2010 case of Atty. Montaño v. Atty. Verceles,13 is relevant. Petitioner14 here
claimed that under the Implementing Rules,15 it is the DOLE Regional Director and not the BLR (Director) who has jurisdiction
over intra-union disputes involving federations which, in this case, pertains to the election protests in connection with the
election of officers of the federation (Federation of Free Workers [FFW]). In finding no merit in petitioner’s contention, the
High Court pointed out that Article 226 of the Labor Code clearly provides that the BLR (Director) and the Regional Directors
of DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes include the conduct or
nullification of election of union and workers’ association officers. There is, thus, no doubt as to the BLR (Director)’s
jurisdiction over the instant dispute involving member-unions of a federation arising from disagreement over the provisions of
the federation’s constitution and by-laws. It agreed with the following observation of the BLR (Director):
“Rule XVI lays down the decentralized intra-union dispute settlement mechanism. Section 1 states that any complaint
in this regard ‘shall be filed in the Regional Office where the union is domiciled.’ The concept of domicile in labor relations
regulation is equivalent to the place where the union seeks to operate or has established a geographical presence for purposes
of collective bargaining or for dealing with employers concerning terms and conditions of employment.
“The matter of venue becomes problematic when the intra-union dispute involves a federation, because the
geographical presence of a federation may encompass more than one administrative region. Pursuant to its authority
under Article 232 [226], this Bureau exercises original jurisdiction over intra-union disputes involving federations. It
is well-settled that FFW, having local unions all over the country, operates in more than one administrative region.
1 Article 232 [226], Labor Code.

2 See Section 21, Rule IX, Book V, Rules to Implement the Labor Code, as ordered renumbered by Section 17, Department Order No. 40-I-15, Series of 2015 [September 07, 2015].
This section was originally numbered Section 20, per Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], but it was subsequently re-numbered to Section 19, per
Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].
3 Section 5, Rule VII, Rules to Implement the Labor Code, as amended by Department Order No. 40-I-15, Series of 2015 [September 07, 2015].
4 Referring to Rule IX of the Rules to Implement the Labor Code, as amended by Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. Note must be made that when
the Request for SEBA Certification is made in organized establishment, in which case, the Regional Director should refer the same to the Mediator-Arbiter for the determination of the
propriety of conducting a certification election. (Section 6, Rule VII, Ibid. in accordance with Rules VIII and IX, Ibid.).
6 The appellate jurisdiction of the BLR Director is discussed in another section below.
7 As distinguished from petitions for cancellation of registration of independent unions, local chapters and workers’ associations, as provided in Section 3, Rule II of the Med-Arbitration
Rules which states: “SEC. 3. Jurisdiction of the Regional Director.- The Regional Director shall exercise original and exclusive jurisdiction over application for union registration,
petitions for cancellation of union registration and complaints for examination of unions books of accounts.” See also Section 4, Rule XI, Book V of the Rules to Implement
the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008] and Section 1, Rule II, Rules of Procedure on Mediation-Arbitration.
8 Referring to federations, national unions, industry unions and trade union centers, as distinguished from independent unions, local chapters and workers’ associations.
9 Id.
10 Section 5, Rule IV, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003] and as further amended by
Department Order No. 40-D-05, Series of 2005, Sept. 13, 2005.
11 As distinguished from cases involving single-enterprise CBAs which fall under the jurisdiction of the DOLE Regional Director.
12 Section 4, Rule XI, Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008].
13 G.R. No. 168583, July 26, 2010.
14 Petitioner was elected the National Vice President of FFW in the National Convention held at Subic International Hotel, Olongapo City over the strong opposition and protest of
respondent Atty. Ernesto C. Verceles, a delegate to the convention and president of University of the East Employees Association (UEEA-FFW) which is an affiliate union of FFW.
15 See Section 6 of Rule XV, in relation to Section 1 of Rule XIV of Book V of the Rules to Implement the Labor Code.
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Therefore, this Bureau maintains original and exclusive jurisdiction over disputes arising from any violation of or
disagreement over any provision of its constitution and by-laws.”1
V.
APPELLATE JURISDICTION OF THE BLR DIRECTOR
AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY
1. NECESSITY FOR JURISDICTIONAL DISTINCTIONS.
The distinctions pointed out above between the respective jurisdictions of the Med-Arbiters, DOLE Regional
Directors and the BLR Director acquire significance in determining which of the cases over which they exercise jurisdiction
may be appealed to the BLR Director and those that may be appealed to the DOLE Secretary, both of whom, based on law
and jurisprudence, are possessed of exclusive appellate jurisdiction over certain cases decided by the Med-Arbiters, DOLE
Regional Directors and BLR Director.
The Supreme Court had occasion to distinguish the appellate jurisdiction of the BLR Director from that of the
DOLE Secretary in the case of Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union.2 Accordingly, the appellate
jurisdiction of the DOLE Secretary is limited only to the review of decisions rendered by the BLR Director in the exercise of
his exclusive and original jurisdiction. The DOLE Secretary has no jurisdiction over decisions of the BLR Director rendered in
the exercise of his appellate jurisdiction over decisions made by Med-Arbiters and DOLE Regional Directors in the exercise of
their respective original and exclusive jurisdictions, the reason being that such decisions are final and inappealable.
2. APPEALS FROM DECISIONS OF MED-ARBITERS.
Decisions in the cases falling under the original and exclusive jurisdiction of the Med-Arbiters are appealable as follows:
(1) Inter-union disputes (representation or certification election conflicts) – to DOLE Secretary3
(a) Request for SEBA certification when made in an unorganized establishment with only one4 or more than
one (1) legitimate union5 or in an organized establishment – to DOLE Secretary
(b) Petition for certification election, consent election, run-off election or re-run election - to DOLE Secretary
(2) Intra-union disputes6 – to BLR Director
(3) Other related labor relations disputes - to BLR Director
(4) Injunction cases - to BLR Director
(5) Contempt cases - to BLR Director
2.1. DIFFERENT RULE RE APPELLATE JURISDICTION OVER MED-ARBITER’S DECISIONS IN
INTER-UNION DISPUTES.
a. Legal basis.
While generally, the decisions of the Med-Arbiters are appealable to the BLR Director, excepted therefrom are their
decisions in inter-union disputes7 which are appealable directly to the DOLE Secretary by virtue of Article 272 [259]8 of the
Labor Code.
b. Variance in the rule on appeal in unorganized and organized establishments.
The rule on appeal in certification election cases in unorganized establishments is different from that of organized
establishments, to wit:
(1) Appeal in unorganized establishments. - The order granting the conduct of a certification election in an
unorganized establishment is not subject to appeal. Any issue arising from its conduct or from its results is proper subject of a
protest. Appeal may only be made to the DOLE Secretary in case of denial of the petition within ten (10) calendar days from
receipt of the decision of denial.9
(2) Appeal in organized establishments. - The order granting the conduct of a certification election in an organized
establishment and the decision dismissing or denying the petition for certification election may be appealed to the DOLE
Secretary within ten (10) calendar days from receipt thereof.10
3. APPEALS FROM DECISIONS OF DOLE REGIONAL DIRECTORS.
1 Emphasis supplied.
2 G.R. No. 131374, Jan. 26, 2000.
3 This is by virtue of Article 272 [259] of the Labor Code. This article is entitled “Appeal from Certification Election Orders” and it provides as follows: “Article 259. Appeal from
Certification Election Orders. – Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and
Employment on the ground that the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the conduct of the election have been violated.
Such appeal shall be decided within fifteen (15) calendar days.” Prior to the amendment of Article 272 [259] by R.A. No. 6715, the decisions of the Med-Arbiter in certification election
cases are appealable to the BLR. Now, they are appealable to the DOLE Secretary. (A’ Prime Security Services, Inc. v. Hon. Secretary of Labor, G.R. No. 91987, July 17, 1995). It
must be emphasized that as far as intra-union disputes are concerned, the decisions of the Med-Arbiters thereon remain appealable to the BLR. (See Section 1 [1], Rule III, NCMB
Manual of Procedures for Conciliation and Preventive Mediation Cases).
4 In case the Request is made in an unorganized establishment with only one (1) legitimate union, and the requesting union or local fails to complete the requirements for SEBA
certification during the validation conference before the DOLE Regional Director, in which event, such Request should be referred to the Election Officer for the conduct of certification
election (Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. The election should be
conducted in accordance with Rule IX thereof.), which necessarily would mean that such certification election should now be conducted under the jurisdiction of the Mediator-Arbiter
to whom the Election Officer is duty-bound to report the outcome of the election proceeding. Certainly, the ensuing certification election cannot be conducted under the directive of
the DOLE Regional Director without the participation of the Mediator-Arbiter who, under the law, is the one possessed of the original and exclusive jurisdiction over certification
election cases, including the proclamation of the winning SEBA. (See Section 21, Rule IX, Book V, Rules to Implement the Labor Code, as ordered renumbered by Section 17,
Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. This section was originally numbered Section 20, per Department Order No. 40-03, Series of 2003, [Feb. 17,
2003], but it was subsequently re-numbered to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008]).
6 Section 1 [1], Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases.
7 Otherwise known as representation or certification election conflicts.
8 Supra.
9 Section 18 [formerly Section 17], Rule VIII, Book V, of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008].
10 Id.
140
a. Decisions appealable to the BLR Director.

Not all decisions, awards or orders rendered by the DOLE Regional Directors are appealable to the BLR Director.
Only decisions in the following cases relevant and related to labor relations, are appealable to the BLR Director:
(1) Visitorial cases under Article 289 [274], involving examination of books of accounts of independent unions,
local chapters/chartered locals and workers’ associations;1
(2) Union registration-related cases, such as:
a) Denial of applications2 for union registration of independent unions, local chapters and workers’
associations;
b) Revocation or cancellation3 of registration of said unions;
(3) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for denial
thereof;4
(4) CBA-related cases, such as:
a) Application for registration of single-enterprise5 CBAs or petition for deregistration thereof;6
b) Petition for denial of registration of single-enterprise CBAs or denial of petition deregistration thereof.
As far as No. 1 above is concerned, appellate authority over decisions of the DOLE Regional Directors involving
examinations of union accounts is expressly conferred on the BLR Director under the Rules of Procedure on Mediation-
Arbitration,7 to wit:
“RULE II
MED-ARBITRATION
“SEC. 3. Jurisdiction of the Regional Director. - The Regional Director shall exercise original and exclusive jurisdiction
over application for union registration, petitions for cancellation of union registration and complaints for examination of union books of
accounts.
SEC. 4. Jurisdiction of the Bureau.-
xxx
“(b) The Bureau shall exercise appellate jurisdiction over all cases originating from the Regional Director involving
union registration or cancellation of certificates of union registration and complaints for examination of union books of accounts.”8
The language of the law is categorical. Any additional explanation on the matter is superfluous. It is thus clear then
that the DOLE Secretary has no appellate jurisdiction over decisions of DOLE Regional Directors involving petitions for
examinations of union accounts.9
b. Cases not appealable to the BLR Director but to some other labor officials.
For greater clarity in presentation and to avoid any confusion, it is worthy to mention that the decisions of the
DOLE Regional Directors in the following cases which are not related to labor relations are appealable to the DOLE Secretary
and not to the BLR Director:
(a) Visitorial (inspection) cases under Article 37;10
(b) Visitorial (inspection) and enforcement cases11 under Article 128, (either routine or initiated through a
complaint);12
(c) Occupational safety and health violations;13
(d) Cases related to private recruitment and placement agencies (PRPAs) for local employment, such as:
1) Applications for license or denial thereof;
2) Complaints for suspension or cancellation of license by reason of administrative offenses;
3) Complaints for illegal recruitment; and
1 The BLR Director, not the DOLE Secretary, has the appellate authority over decisions of the DOLE Regional Directors involving examinations of union accounts as provided under
Rule II of the Rules of Procedure on Mediation-Arbitration, issued on April 10, 1992, to wit: “SEC. 3. Jurisdiction of the Regional Director. - The Regional Director shall exercise original
and exclusive jurisdiction over application for union registration, petitions for cancellation of union registration and complaints for examination of unions books of accounts. SEC. 4.
Jurisdiction of the Bureau.- xxx “(b) The Bureau shall exercise appellate jurisdiction over all cases originating from the Regional Director involving union registration or cancellation of
certificates of union registration and complaints for examination of union books of accounts.”
3 See Article 245 [238] of the Labor Code which provides: “Art. 245 [238]. Cancellation of registration; appeal. The certificate of registration of any legitimate labor organization, whether
national or local, shall be cancelled by the Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements
herein prescribed.”

5 As distinguished from cases involving multi-employer CBAs which fall under the original jurisdiction of the BLR Director.
7 Issued on April 10, 1992.
8 Italics and underlining supplied.
9 Barles v. Bitonio, G.R. No. 120220, June 16, 1999.
10 “Article 37. Visitorial Power. - The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or
entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title.” (Referring to Tile I [Recruitment and Placement
of Workers], Book I, Labor Code).
11 Visitorial cases involve inspection of establishments to determine compliance with labor standards; while enforcement cases involve issuance of compliance orders and writs of
execution.
12 Based on the 2nd paragraph of Article 128(b), Labor Code, which states: “An order issued by the duly authorized representative of the Secretary of Labor and Employment under this
Article may be appealed to the latter. xxx” (As amended by Republic Act No. 7730, June 2, 1994). Additionally, it is provided in Section 1, Rule IV, of the Rules on the Disposition of
Labor Standards Cases in the Regional Offices, thus: “Section 1. Appeal. – The order of the Regional Director shall be final and executory unless appealed to the Secretary of Labor
and Employment within ten (10) calendar daysfrom receipt thereof.” The grounds for the appeal are provided in Section 2 thereof, thus: “Grounds for appeal. – The aggrieved party
may appeal to the Secretary the Order of the Regional Director on any of the following grounds: (a) there is a prima facie evidence of abuse of discretion on the part of the Regional
Director; (b) the Order was secured through fraud, coercion or graft and corruption; (c) the appeal is made purely on questions of law; and (d) serious errors in the findings of facts
were committed which, if not corrected, would cause grave irreparable damageor injury to the appellant.” (See also Section 2, in relation to Section 3(a), Rule X, Book III of the Rules
to Implement the Labor Code}.
13 Section 6(a) of Rule VI [Health and Safety Cases] of the Rules on the Disposition of Labor Standards Cases in the Regional Offices which provides: Section 6. Review by the
Secretary. - (a) The Secretary at his own initiative or upon the request of the employer and/or employee, may review the order of the Regional Director which shall be immediately
final and executory unless stayed by the Secretary upon posting by the employer of a reasonable cash or performance bond as fixed by the Regional Director.” See also the 2nd
paragraph of Article 128(b), Labor Code.
141
4) Petition for closure of agency.1

Additionally, their decisions on small money claims cases arising from labor standards violations in an amount not
exceeding ₱5,000.00 and not accompanied with a claim for reinstatement under Article 129 are appealable to the NLRC.
VI.
REMEDIES FROM DECISIONS OF
BLR DIRECTOR AND DOLE SECRETARY
RENDERED IN THEIR APPELLATE JURISDICTION
1. APPEALS END WITH BLR DIRECTOR AND DOLE SECRETARY.
Notably, the remedy of appeal involved in the cases contemplated under Article 232 [226] is available only up to the
level of either the BLR Director or the DOLE Secretary, as the case may be. Appeal to the CA from their decisions rendered in
their respective appellate jurisdictions is not available; the only remedy being the filing of an original special civil action for
certiorari under Rule 65 of the Rules of Court.2
In the case of decisions rendered by the BLR Director in his appellate jurisdiction, they can no longer be appealed to
the DOLE Secretary because another appeal to the DOLE Secretary is not tenable anymore, the BLR Director’s decisions
thereon having already become final and executory.3
2. REMEDY FROM CA DECISIONS TO THE SUPREME COURT.
There is only one mode to elevate labor cases from the CA to the Supreme Court and that is, through Rule 45
petition for review on certiorari.
E.
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB)
1.
NATURE OF PROCEEDINGS
1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.

NCMB is not a quasi-judicial agency, according to the 2009 case of Tabigue v. International Copra Export
Corporation. 4
“Quasi-judicial function” is a term which applies to the action, discretion, etc. of public administrative
officers or bodies, who are required to investigate facts or ascertain the existence of facts, hold hearings, and draw
conclusions from them as a basis for their official action and to exercise discretion of a judicial nature.
2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMB’S RULINGS CANNOT BE ELEVATED TO, AND
COGNIZABLE BY, THE COURT OF APPEALS.
Rule 43 of the Rules of Court applies only to awards, judgments, final orders or resolutions of or authorized by
any quasi-judicial agency in the exercise of its quasi-judicial functions. Hence, NCMB’s decision, not having been rendered
by a quasi-judicial body, cannot be elevated to the Court of Appeals under said rule.
2.
CONCILIATION VS. MEDIATION
1. CONCILIATION AND MEDIATION, MEANING.
Both the terms “conciliation” and “mediation” refer to a process whereby a third person usually called Conciliator
(in case of conciliation) or Mediator (in case of mediation), intervenes in a dispute involving two or more conflicting
parties for the purpose of reconciling their differences or persuading them into adjusting or settling their dispute. The
Conciliator or Mediator normally does not make or render any decision, his role being confined to the functions afore-
described.
3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.
Generally, there are no marked distinctions between conciliation and mediation. The reason is that in both
cases, a neutral third party (called Conciliator or Mediator) is tasked to assist two or more opposing parties in finding
appropriate resolution to a dispute.
In the NCMB, the hearing officer is called Conciliator-Mediator. There is no separate classification between
conciliators and mediators. When the Conciliator-Mediator performs his task, he does not make any distinction when he
is acting as Conciliator or as Mediator.
In other jurisdictions, the principal distinction between conciliation and mediation lies on the extent
of the power and authority granted to the neutral third party.
1 Section 62, Department Order No. 141-14, Series of 2014, Nov. 20, 2014.
2 Section 23, Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]; National Federation of Labor [NFL]
v. Laguesma, G.R. No. 123426, March 10, 1999.
3 Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union, G.R. No. 131374, Jan, 26, 2000.
4 G.R. No. 183335, Dec. 23, 2009.
142
In mediation, the Mediator normally facilitates a deliberation or discussion of the issues between the parties.
He may or may not offer any opinions on the strength and weaknesses of each party's positions and arguments. Thus,
mediation may be classified into two, namely:
1. Facilitative Mediation where the Mediator does not make or offer any opinion; or
2. Evaluative Mediation where the Mediator offers an opinion which is not binding on the parties.
It bears stressing, however, that regardless of which of the 2 methods above is chosen, the Mediator is not
empowered to impose his will on the parties.
In conciliation, the Conciliator is given more power and authority in that he may not only offer an opinion on
the issues at hand but may actually make a binding opinion thereon provided the parties stipulate in advance to this effect.
His opinion is based on the facts and the law involved in the controversy before him.
It may thus be observed that conciliation is more formal than mediation in the sense that the Conciliator’s
opinion, unlike the Mediator’s, may be binding on the parties, although it may be merely temporary in character.
3.
PREVENTIVE MEDIATION
1. PREVENTIVE MEDIATION AS A REMEDY.

“Preventive mediation,” as a remedy, is not found in the Labor Code. But under the law which created the NCMB,
it is expressly stated that one of its functions is to provide preventive mediation to disputing parties.
The term “preventive mediation case” refers to the potential or brewing labor dispute which is the subject of a
formal or informal request for conciliation and mediation assistance sought by either or both parties in order to remedy,
contain or prevent its degeneration into a full blown dispute through amicable settlement.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(1) By filing a notice or request of preventive mediation, as distinguished from a notice of strike/lockout;
or
(2) By conversion of the notice of strike/lockout into a preventive mediation case.
3. AUTHORITY TO CONVERT A NOTICE OF STRIKE/LOCKOUT INTO A PREVENTIVE

MEDIATION CASE.
The NCMB has the authority to convert a notice of strike/lockout filed by the union/employer into a
preventive mediation case under any of the following circumstances:
1. When the issues raised in the notice of strike/lockout are not strikeable in character.
2. When the party which filed the notice of strike/lockout voluntarily asks for the conversion.
3. When both parties to a labor dispute mutually agree to have it subjected to preventive mediation
proceeding.
Such authority is in pursuance of the NCMB’s duty to exert all efforts at mediation and conciliation to enable
the parties to settle their dispute amicably and in line with the State policy of favoring voluntary modes of settling labor
disputes.
4. CONVERSION OF A NOTICE OF STRIKE OR NOTICE OF LOCKOUT INTO A PREVENTIVE
MEDIATION CASE RESULTS IN ITS DISMISSAL.
Once the notice of strike is converted into a preventive mediation case, the notice is deemed dropped from the
dockets as if no notice of strike has been filed. Since there is no more notice of strike to speak about, any strike
subsequently staged by the union after the conversion is deemed not to have complied with the requirements of a valid
strike and therefore illegal.
The same rule applies in the case of lockout by an employer.
5. RELEVANT CASES.
A case in point is Philippine Airlines, Inc. v. Secretary of Labor and Employment,1 where the strike was
declared illegal for lack of a valid notice of strike in view of the NCMB’s conversion of said notice into a preventive
mediation case.
It is clear, according to San Miguel Corporation v. NLRC,2 that the moment the NCMB orders the
preventive mediation in a strike case, the union thereupon loses the notice of strike it had filed. Consequently, if it still
defiantly proceeds with the strike while mediation is on-going, the strike is illegal.
F.
DOLE REGIONAL DIRECTORS
1.
JURISDICTION
1. ROLE OF THE DOLE REGIONAL DIRECTORS.
1 G.R. No. 88210, Jan. 23, 1991, 193 SCRA 223.

2 G.R. No. 119293, June 10, 2003.
143
The DOLE has a total of 16 Regional Offices nationwide each one of them is headed by a Regional Director. The
DOLE Regional Directors are the duly “authorized representatives” of the DOLE Secretary referred to in Article 128 of the Labor
Code which grants to them both visitorial and enforcement powers. They are in charge of the administration and
enforcement of labor standards within their respective territorial jurisdictions.1
2. JURISDICTION OF THE DOLE REGIONAL DIRECTORS.
The DOLE Regional Directors have original and exclusive jurisdiction over the following cases:
(a) Visitorial (inspection) cases under Article 37;2
(b) Visitorial (inspection) and enforcement cases3 under Article 128,4 (either routine or initiated through a
complaint);
(c) Visitorial cases under Article 289 [274],5 involving examination of books of accounts of independent
unions, local chapters/chartered locals and workers’ associations;
(d) Occupational safety and health violations;6
(e) Small money claims cases arising from labor standards violations in an amount not exceeding ₱5,000.00 and not
accompanied with a claim for reinstatement under Article 129;
(f) Cases related to private recruitment and placement agencies (PRPAs) for local7 employment, such as:
1) Applications for license or denial thereof;8
2) Complaints for suspension or cancellation of license by reason of administrative offenses;9
3) Complaints for illegal recruitment;10 and
4) Petition for closure of agency;11
(g) Cases submitted for voluntary arbitration in their capacity as Ex-Officio Voluntary Arbitrators (EVAs) under
Department Order No. 83-07, Series of 2007.12
(h) Union registration-related cases, such as:
1) Applications for union registration of independent unions, local chapters and workers’ associations;13
2) Petitions for denial of application for registration14 of said unions;15
3) Petitions for revocation or cancellation of registration16 of said unions;17
(i) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for denial
thereof;18
(j) CBA-related cases, such as:
1) Application for registration of single-enterprise19 CBAs or petition for deregistration thereof;20
2) Petition for denial of registration of single-enterprise CBAs or denial of petition for deregistration thereof; and
(k) Request for SEBA certification when made in an unorganized establishment with only one (1) legitimate
union.21
I.
LABOR STANDARDS ENFORCEMENT CASES
1. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS - THE ESTABLISHMENT AND
NOT THE EMPLOYEES THEREIN.
1 See Section 3, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Offices [Sept. 16, 1987]; Atilano v. De la Cruz, G.R. No. 82488, Feb. 28, 1990, 182 SCRA
886; San Miguel Corporation v. The Hon. CA, G.R. No. 146775, Jan. 30, 2002.
2 “Article 37. Visitorial Power. - The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or
entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title.” (Referring to Tile I [Recruitment and Placement
of Workers], Book I, Labor Code).
3 Visitorial cases involve inspection of establishments to determine compliance with labor standards; while enforcement cases involve issuance of compliance orders and writs of
execution.
4 Article 128 is entitled “Visitorial and Enforcement Power.”
5 Article 289 [274] is entitled “Visitorial Power.”
6 Section 6 of Rule VI [Health and Safety Cases] of the Rules on the Disposition of Labor Standards Cases in the Regional Offices.
7 As distinguished from recruitment and placement of workers for overseas employment which falls under the jurisdiction of the Philippine Overseas Employment Administration
(POEA).
8 Section 8, Department Order No. 141-14, Series of 2014 (Revised Rules and Regulations Governing Recruitment and Placement for Local Employment), Nov. 20, 2014; See
previous provision on this matter in Section 36, Rule VII, Rules And Regulations Governing Private Recruitment and Placement Agency for Local Employment, June 5, 1997. See
also National Federation of Labor v. Laguesma, G.R. No. 123426, March 10, 1999.
9 Section 54, in relation to Section 51, Department Order No. 141-14, Series of 2014, Ibid.
10 Section 45, Department Order No. 141-14, Series of 2014, Ibid.
11 Section 47, Department Order No. 141-14, Series of 2014, Ibid.
12 Issued by former DOLE Secretary, now Associate Justice of the Supreme Court, Arturo D. Brion on June 8, 2007.
application for union registration, petitions for cancellation of union registration and complaints for examination of unions books of accounts.” See also Section 1, Rule II,
15 Referring to independent unions, local chapters and workers’ associations, as distinguished from federations, national unions, industry unions, trade union centers and their local
chapters/chartered locals, affiliates and member organizations whose application for registration as well as denial or cancellation or revocation of registration is cognizable by the BLR
Director in his original and exclusive jurisdiction [infra].
16 See Article 245 [238] of the Labor Code which provides: “Art. 245 [238]. Cancellation of registration; appeal. The certificate of registration of any legitimate labor organization, whether
national or local, shall be cancelled by the Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements
herein prescribed.”
17 Section 3, Rule II of the Med-Arbitration Rules, supra; See also Section 4, Rule XI, Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03,
Series of 2008 [October 30, 2008].


19 As distinguished from cases involving multi-empoyer CBAs which fall under the original jurisdiction of the BLR Director.
21 Under this situation, the DOLE Regional Director, before whom the Request for SEBA Certification is filed, should refer the Request for SEBA Certification to the Mediator-Arbiter for
the determination of the propriety of conducting a certification election, in which case, the Mediator-Arbiter now has the jurisdiction to decide the certification election issue. (Section 6,
Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of 2015 [September 07, 2015]). Note must be made that when the Request for SEBA Certification is
made in an unorganized establishment with more than one (1) legitimate labor organization, the Med-Arbiter takes over from the DOLE Regional Director in the matter of hearing and
resolving the issue of certification election.
144
The subject of the visitorial and enforcement powers granted to the DOLE Secretary or his duly authorized
representatives under Article 128 is the establishment which is under inspection and not the employees thereof.
Consequently, any awards granted are not confined to employees who signed the complaint inspection but are
equally applicable to all those who were employed by the establishment concerned at the time the complaint
was filed, even if they were not signatories thereto. The reason is that the visitorial and enforcement powers are
relevant to, and may be exercised over, establishments, not over individual employees thereof, to determine
compliance by such establishments with labor standards laws. Necessarily, in case of an award from such
violation by the establishment, all its existing employees should be benefited thereby. It must be stressed,
however, that such award should not apply to those who resigned, retired or ceased to be employees at the time the
complaint was filed.
2. ORIGINAL JURISDICTION.
The DOLE Regional Directors exercise original jurisdiction over the following:
(a) Cases involving inspection of establishments to determine compliance with labor standards (Visitorial Power); and
(b) Cases involving issuance of compliance orders and writs of execution (Enforcement Power).
3. VISITORIAL POWER OF REGIONAL DIRECTORS UNDER ARTICLE 128(a).

Pursuant to their visitorial power under Article 128(a), the DOLE Regional Directors shall have:
(a) access to employer’s records and premises at any time of the day or night, whenever work is being
undertaken therein; and
(b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact, condition or matter which may be necessary to
determine violations or which may aid in the enforcement of the Labor Code and of any labor law,
wage order, or rules and regulations issued pursuant thereto.
4. ENFORCEMENT POWER OF REGIONAL DIRECTORS UNDER ARTICLE 128(b).
The statutory basis of the authority of the DOLE Regional Directors to administer and enforce labor standards
is found in Article 128(b) of the Labor Code, as amended.
Pursuant thereto, the DOLE Regional Director, in cases where the employer-employee relationship still exists, shall have
the power:
a. to issue compliance orders to give effect to the labor standards provisions of the Labor Code and other
labor legislations based on the findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection.
b. to issue writs of execution to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and enforcement officer and
raises issues supported by documentary proofs which were not considered in the course of inspection, in
which case, the contested case shall fall under the jurisdiction of the Labor Arbiter to whom it should be
endorsed by the Regional Director.
c. to order stoppage of work or suspension of operations of any unit or department of an establishment
when non-compliance with the law or implementing rules and regulations poses grave and imminent danger
to the health and safety of workers in the workplace. Within 24 hours, a hearing shall be conducted to determine
whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the
violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or
wages during the period of such stoppage of work or suspension of operation.
d. to require employers, by appropriate regulations, to keep and maintain such employment records as may
be necessary in aid of his visitorial and enforcement powers under the Labor Code.
II.
SMALL MONEY CLAIMS CASES
1. JURISDICTION OVER CLAIMS NOT EXCEEDING P5,000.
The DOLE Regional Director has original jurisdiction over small money claims cases arising from labor
standards violations in the amount not exceeding P5,000.00 and not accompanied with a claim for reinstatement under
Article 129 contemplates the recovery of wages and other monetary claims and benefits, including legal interest,
owing to an employee arising from employer-employee relations provided the claim does not exceed P5,000.00. Note
must be made that under R.A. No. 10361, otherwise known as the Domestic Workers Act or Batas Kasambahay, jurisdiction
over all labor-related disputes involving a kasambahay, including all money claims, illegal dismissal and other issues, is now
lodged entirely with the DOLE Regional Director. The Labor Arbiter has no more jurisdiction over small money claims of
₱5,000.00 or less. Consequently, any appeal therefrom should be done to the DOLE Secretary. (See Section 37, Chapter VII of
R.A. No. 10361 and Section 1, Rule XI of this law’s Implementing Rules and Regulations).
2. REQUISITES FOR THE VALID EXERCISE OF JURISDICTION BY DOLE REGIONAL DIRECTORS
UNDER ARTICLE 129.
The following requisites must all concur, to wit:
(1) The claim is presented by an employee;
(2) The claimant, no longer being employed, does not seek reinstatement; and
(3) The aggregate money claim of the employee does not exceed P5,000.00.
145
In the absence of any of the aforesaid three (3) requisites, the Labor Arbiters have original and exclusive
jurisdiction over all claims arising from employer-employee relations, other than claims for employees’ compensation,
social security, PhilHealth and maternity benefits.
III.
CASES SUBMITTED TO REGIONAL DIRECTORS AND ASSISTANT REGIONAL
DIRECTORS FOR VOLUNTARY ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO
VOLUNTARY ARBITRATORS (EVAs)
1. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants have jurisdiction over the following cases:
(a) All grievances arising from the interpretation or implementation of the CBA;
(b) All grievances arising from the interpretation or enforcement of company personnel policies which remain
unresolved after exhaustion of the grievance procedure;
(c) Cases referred to them by the DOLE Secretary under the DOLE’s Administrative Intervention for
Dispute Avoidance (AIDA) initiative (provided under DOLE Circular No. 1, Series of 2006); and
(d) Upon agreement of the parties, any other labor dispute may be submitted to the EVAs for voluntary
arbitration.
G.
DOLE SECRETARY
1. POWERS OF THE DOLE SECRETARY.

The DOLE Secretary, being the head of the Department of Labor and Employment, is possessed of a number
of powers, some of which are mentioned in the syllabus, to wit:
1. Visitorial and enforcement powers;
2. Power to suspend the effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.
2. CASES FALLING UNDER THE DOLE SECRETARY’S ORIGINAL JURISDICTION.
The DOLE Secretary has original jurisdiction over the following cases:
(1) Petition to assume jurisdiction over labor disputes affecting industries indispensable to the national interest
(national interest cases);1
(2) Petition to certify national interest cases to the NLRC for compulsory arbitration;2
(3) Petition to suspend effects of termination;3
(4) Administrative Intervention for Dispute Avoidance (AIDA) cases;4
(5) Voluntary arbitration cases;5 and
(6) Contempt cases.6
1.
VISITORIAL AND ENFORCEMENT POWERS
1. THREE (3) KINDS OF POWER UNDER ARTICLE 128.
Article 128 of the Labor Code, as amended, basically enunciates the three (3) kinds of power which the DOLE
Secretary and/or the Regional Directors, his duly authorized representatives, may exercise in connection with the
administration and enforcement of the labor standards provisions of the Labor Code and of any labor law, wage order or
rules and regulations issued pursuant thereto.
The three (3) kinds of power are as follows:
1) Visitorial power:
2) Enforcement power: and
3) Appellate power or power of review.
2. WHO EXERCISE THE POWERS.
Nos. 1 and 2 above are exercised under the original jurisdiction of the DOLE Regional Directors.
This has been earlier discussed under the separate topic of “VII. PROCEDURE AND JURISDICTION, E.
DOLE Regional Directors, 1. Jurisdiction”, supra. Hence, the same will no longer be touched under the instant topical
discussion.
The appellate power in No. 3 above may only be exercised by the DOLE Secretary in respect to any decision,
order or award issued by the DOLE Regional Directors.
1 See paragraph (g) of Article 278 [263], Labor Code.

2 Id.
3 See paragraph (b) of Article 292 [277], Labor Code.
4 This is a new form of dispute settlement introduced by the DOLE Secretary under DOLE Circular No. 1, Series of 2006, issued on August 11, 2006 by former DOLE Secretary Arturo
D. Brion, later a distinguished member of the Highest Court. This was issuedin line with the objectives of R.A. No. 9285, otherwise known as the “Alternative Dispute Resolution Act of
2004” [approved on April 2, 2004], Executive Order No. 523 dated April 07, 2006 and the mandate of the DOLE to promote industrial peace.
5 As mandated under DOLE Circular No. 1, Series of 2006, Ibid.
6 As provided under Article 231 [225] which states: Article 231 [225]. Contempt powers of the Secretary of Labor. In the exercise of his powers under this Code, the Secretary of Labor
may hold any person in direct or indirect contempt and impose the appropriate penalties therefor.
146
3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.

The visitorial and enforcement powers granted to the DOLE Secretary and the DOLE Regional Directors who
are his duly authorized representatives, are quasi-judicial in nature.
4. IT IS THE REGIONAL DIRECTORS WHO HAVE ORIGINAL JURISDICTION TO EXERCISE THE
VISITORIAL AND ENFORCEMENT POWERS UNDER ARTICLES 37, 128 AND 274.
In the instances contemplated under Articles 37, 128 and 274, it is the DOLE Regional Directors, the DOLE
Secretary’s duly authorized representatives commonly referred to in these three (3) articles, who have the original
jurisdiction to exercise the visitorial power granted therein.
5. THE ROLE OF THE DOLE SECRETARY IN THE EXERCISE OF VISITORIAL AND
ENFORCEMENT POWERS IS APPELLATE IN NATURE.
It is clear from the above disquisition that the original jurisdiction over the exercise of the visitorial and
enforcement powers belongs to the DOLE Regional Directors, as the duly authorized representatives of the DOLE
Secretary.
The role of the DOLE Secretary is confined to the exercise of his appellate jurisdiction over the decisions,
orders and awards of the DOLE Regional Directors in cases brought before them for adjudication under Articles 128
and 274.
2.
POWER TO SUSPEND EFFECTS OF TERMINATION
1. GROUNDS.
The DOLE Secretary may suspend the effects of termination pending resolution of the dispute in the event of a
prima facie finding by the appropriate official of the DOLE before whom the dispute is pending that:
1. the termination may cause a serious labor dispute; and/or
2. the termination is in implementation of a mass lay-off.
2. RATIONALE FOR SUSPENDING THE EFFECTS OF TERMINATION.
The obvious purpose behind this rule is to bring the parties back to the status quo ante litem, that is, their state of
relationship prior to the termination. In this way, the workers will be litigating the issue of the validity or legality of their
termination on more or less equal footing with the employer since they will be immediately reinstated and accordingly
not be deprived of their wages while the litigation is on-going.
3. REINSTATEMENT PENDING RESOLUTION OF THE TERMINATION DISPUTE.
Suspension of the effects of termination will necessarily result in the immediate reinstatement of the terminated
employees. An order of reinstatement pending resolution of the case may thus be issued by the DOLE Secretary
pursuant to this power.
4. DISTINGUISHED FROM DOLE SECRETARY’S POWER OF ASSUMPTION OR CERTIFICATION
IN NATIONAL INTEREST CASES.
a. Different power of the DOLE Secretary.
This power of the DOLE Secretary granted under Article 277(b) should be distinguished from his power to
assume or certify labor disputes involving industries indispensable to the national interest under Article 263(g). The
following distinctions may be cited:
First, the exercise of the power to suspend the effects of termination involves only the issue of termination of
employment which may cause a serious labor dispute or is in implementation of a mass lay-off; while the power to
assume or certify labor disputes is applicable to all labor disputes, irrespective of the grounds therefor, provided such
labor disputes will cause or likely to cause strikes or lockouts in industries indispensable to the national interest.
Second, the former requires the conduct of preliminary determination of the existence of prima facie evidence
that the termination may cause a serious labor dispute or is in implementation of a mass lay-off to be conducted by the
appropriate official of the DOLE before whom the termination dispute is pending; while the latter does not require such
preliminary prima facie determination. In fact, prior notice and hearing are not required before the DOLE Secretary may
issue an assumption or certification order.
Third, the “serious labor dispute” contemplated under the former may or may not involve a strike or lockout;
while the labor dispute referred to in the latter will cause or likely to cause a strike or lockout.
Fourth, the former may be exercised in cases of termination of employment for as long as any of the two (2)
grounds mentioned in Article 277(b) exists, irrespective of the nature of the business of the employer; while the latter
may only be exercised in industries indispensable to the national interest.
Fifth, the remedy under the former is immediate reinstatement pending resolution of the termination case;
while in the latter, the remedy is the automatic return to work of the strikers or locked-out employees, if the strike or
lock-out is on-going at the time of the issuance of the assumption/certification order or the enjoining of the strike or
lockout, if one has not taken place, pending the resolution of the issues raised in the notice of strike or lockout.
3.
ASSUMPTION OF JURISDICTION
147
The DOLE Secretary is granted under Article 263(g) of the Labor Code, the extraordinary police power of
assuming jurisdiction over a labor dispute which, in his opinion, will cause or likely to cause a strike or lockout in an
industry indispensable to the national interest, or the so-called “national interest” cases. Alternatively, he may certify
the labor dispute to the NLRC for compulsory arbitration.
4.
APPELLATE JURISDICTION
I.
VARIOUS APPEALS TO THE DOLE SECRETARY
UNDER THE LABOR CODE AND APPLICABLE RULES
1. OFFICES FROM WHICH APPEALS MAY ORIGINATE.
Appeals to the DOLE Secretary may originate from any of the following offices:
(1) DOLE Regional Directors;
(2) Med-Arbiters;
(3) Director of the Bureau of Labor Relations (BLR); and
(4) Philippine Overseas Employment Administration (POEA).
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.
The following decisions, awards or orders are not appealable to the Office of the DOLE Secretary:
(1) Those rendered by Labor Arbiters that are appealable to the Commission (NLRC) which has exclusive
appellate jurisdiction thereover;
(2) Those rendered by the Commission (NLRC) since they can be elevated directly to the CA by way of a Rule
65 certiorari petition;
(3) Those rendered by the BLR Director in the exercise of his appellate jurisdiction since they can be brought
directly to the CA under Rule 65 certiorari petition;
(4) Those rendered by DOLE Regional Directors under Article 129 of the Labor Code since they are
appealable to the NLRC;
(5) Those issued by DOLE Regional Directors in their capacity as Ex-Officio Voluntary Arbitrators (EVAs)
since they can be brought directly to the CA under Rule 43 of the Rules of Court; and
(6) Those rendered by Voluntary Arbitrators which are appealable directly to the CA under Rule 43 of the
Rules of Court.
II.
APPEALS FROM DOLE REGIONAL DIRECTORS
1. CASES APPEALABLE TO DOLE SECRETARY.
Not all decisions, awards or orders rendered by the DOLE Regional Directors are appealable to the DOLE
Secretary. Only those issued in the following cases are so appealable:
(a) Labor standards enforcement cases under Article 128;
(b) Occupational safety and health violations; and
(c) Complaints against private recruitment and placement agencies (PRPAs) for local employment.
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.
As earlier pointed out, the following cases decided by the DOLE Regional Directors are not appealable to the
DOLE Secretary but to some other agencies/tribunals indicated below:
(a) Decisions in small money claims cases arising from labor standards violations in the amount not exceeding
P5,000.00 and not accompanied with a claim for reinstatement under Article 129 are appealable to the
NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors for voluntary arbitration in their capacity as
Ex-Officio Voluntary Arbitrators (EVAs) under Department Order No. 83-07, Series of 2007 may be elevated
directly to the Court of Appeals by way of a Rule 43 petition. This is so because the DOLE Regional
Directors, in so deciding, are acting as Voluntary Arbitrators; hence, what should apply are the rules on
appeal applicable to voluntary arbitration.
III.
APPEALS FROM DECISIONS OF
MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR DIRECTOR
(NOTE: See discussion above in connection with
the jurisdiction of the Bureau of Labor Relations [BLR])
V.
APPEALS FROM DECISIONS OF POEA
1. CASES APPEALABLE TO THE DOLE SECRETARY.
The decisions in the following cases rendered by the Philippine Overseas Employment Administration (POEA)
in its original jurisdiction are appealable to the DOLE Secretary:
(a) Recruitment violations and other related cases. - All cases which are administrative in character,
involving or arising out of violation of rules and regulations relating to licensing and registration of
148
recruitment and employment agencies or entities, including refund of fees collected from workers and
violation of the conditions for the issuance of license to recruit workers.
(b) Disciplinary action cases and other special cases which are administrative in character, involving
employers, principals, contracting partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction over money claims of OFWs, or those arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages. The jurisdiction over these claims
was transferred to the Labor Arbiters of the NLRC by virtue of Section 10 of R.A. No. 8042, as amended. Hence,
appeals therefrom may be instituted to the Commission (NLRC).
5.
DOLE SECRETARY’S VOLUNTARY ARBITRATION POWERS
1. AIDA.
a. New rule on voluntary settlement of cases by the DOLE Secretary.
A new form of dispute settlement by the DOLE Secretary was introduced by DOLE Circular No. 1, Series of
2006. Called Administrative Intervention for Dispute Avoidance (AIDA), this is a new administrative procedure for
the voluntary settlement of labor disputes in line with the objectives of R.A. No. 9285, Executive Order No. 523 and the
mandate of the DOLE to promote industrial peace.
b. Nature of administrative intervention by DOLE Secretary.
This recourse is separate from the established dispute resolution modes of mediation, conciliation and
arbitration under the Labor Code, and is an alternative to other voluntary modes of dispute resolution such as the
voluntary submission of a dispute to the Regional Director for mediation, to the NCMB for preventive mediation, or to
the intervention of a regional or local tripartite peace council for the same purpose.
c. Parties who may request for DOLE Secretary’s intervention.
Either or both the employer and the certified collective bargaining agent (or the representative of the
employees where there is no certified bargaining agent) may voluntarily bring to the Office of the DOLE Secretary,
through a Request for Intervention, any potential or ongoing dispute defined below.
d. Potential or on-going dispute.
A potential or on-going dispute refers to:
(a) a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor unrest; and
(c) is not the subject of any complaint or notice of strike or lockout at the time a Request for Intervention is
made.
2. VOLUNTARY ARBITRATION BY DOLE SECRETARY.
If the intervention through AIDA fails, either or both parties may avail themselves of the remedies provided
under the Labor Code. Alternatively, the parties may submit their dispute to the Office of the DOLE Secretary for
voluntary arbitration. Such voluntary arbitration should be limited to the issues defined in the parties' submission to
voluntary arbitration agreement and should be decided on the basis of the parties' position papers and submitted
evidence. The Office of the DOLE Secretary is mandated to resolve the dispute within sixty (60) days from the parties'
submission of the dispute for resolution.
3. DOES THE DOLE SECRETARY ASSUME THE ROLE OF VOLUNTARY ARBITRATOR ONCE HE
ASSUMES JURISDICTION OVER A LABOR DISPUTE?
In the 2014 case of Philtranco Service Enterprises, Inc. v. Philtranco Workers Union-Association of
Genuine Labor Organizations (PWU-AGLO),1 this poser was answered in the negative. A notice of strike was filed
by respondent union which, after failure of conciliation and mediation by the NCMB, was referred by the Conciliator-
Mediator to the Office of the DOLE Secretary who thereby assumed jurisdiction over the labor dispute. The case was
resolved by the Acting DOLE Secretary in favor of respondent union. A motion for reconsideration was filed by
petitioner company. The DOLE Secretary, however, declined to rule on the motion citing a DOLE regulation,
applicable to voluntary arbitration, which provided that the Voluntary Arbitrators’ decisions, orders, resolutions or
awards shall not be the subject of motions for reconsideration. The DOLE Secretary took the position that when he
assumed jurisdiction over the labor dispute, he was acting as a Voluntary Arbitrator. Petitioner subsequently filed a Rule
65 certiorari petition with the CA. The CA, however, dismissed petitioner company’s Rule 65 certiorari petition on the
ground, among others, that the decision of the DOLE Secretary, having been rendered by him in his capacity as
Voluntary Arbitrator, is not subject to a Rule 65 certiorari petition but to a Rule 43 petition for review which properly
covers decisions of Voluntary Arbitrators.
Before the Supreme Court, petitioner asserted that, contrary to the CA’s ruling, the case is not a simple
voluntary arbitration case. The character of the case, which involves an impending strike by petitioner’s employees; the
nature of petitioner’s business as a public transportation company, which is imbued with public interest; the merits of its
case; and the assumption of jurisdiction by the DOLE Secretary – all these circumstances removed the case from the
coverage of Article 262, and instead placed it under Article 263, of the Labor Code. For its part, respondent union
1 G.R. No. 180962, Feb. 26, 2014. Although this case involves a decision of the DOLE Secretary, the principle enunciated herein equally applies to the NLRC.
149
argued that the DOLE Secretary decided the assumed case in his capacity as Voluntary Arbitrator; thus, his decision,
being that of a Voluntary Arbitrator, is only assailable via a petition for review under Rule 43.
The Supreme Court, however, pronounced that:
“It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-02-028-07, the Secretary of Labor
did so in a limited capacity, i.e., as a voluntary arbitrator. The fact is undeniable that by referring the case to the
Secretary of Labor, Conciliator-Mediator Aglibut conceded that the case fell within the coverage of Article 263 of the
Labor Code; the impending strike in Philtranco, a public transportation company whose business is imbued with
public interest, required that the Secretary of Labor assume jurisdiction over the case, which he in fact did. By
assuming jurisdiction over the case, the provisions of Article 263 became applicable, any representation to the contrary
or that he is deciding the case in his capacity as a voluntary arbitrator notwithstanding.”
Consequently, the Supreme Court reversed and set aside the CA ruling and reinstated the case and directed the
CA “to resolve the same with deliberate dispatch.”
H.
GRIEVANCE MACHINERY
1.
SUBJECT MATTER OF GRIEVANCE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A “grievance” or “grievable issue” is any question raised by either the employer or the union regarding any of the
following issues or controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Violation of any provisions of the CBA or company personnel policies.
2. VALIDITY AND BINDING EFFECT OF DECISIONS OF GRIEVANCE COMMITTEE.
A member of the bargaining union who brought his grievable issue for resolution by the Grievance Committee
is bound by whatever disposition the latter may render thereon.
ELEVATION OF GRIEVANCE TO VOLUNTARY ARBITRATION

1. UNRESOLVED GRIEVANCES.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from
the date of their submission for resolution should automatically be referred to voluntary arbitration prescribed in the
CBA.
The various internal procedural steps or stages of resolving grievances under the grievance machinery in a CBA
should be fully exhausted before resort to voluntary arbitration may be made. The 7-calendar day period is usually
reckoned from the date of their submission for resolution to the last step of the internal grievance machinery. Simply
stated, only after exhausting all the internal procedures and only after the lapse of this period that unsettled or
unadjusted grievances should automatically be referred to voluntary arbitration enunciated in the CBA.
2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN DISREGARD OF VOLUNTARY
ARBITRATION AFTER DECISION IS RENDERED BY GRIEVANCE COMMITTEE.
Before a party is allowed to seek the intervention of the court, it is a precondition that he should have availed
of all the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can
still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes
within his jurisdiction, then such remedy should be exhausted first before the court’s judicial power can be sought. The
premature invocation of the court’s judicial intervention is fatal to one’s cause of action.” Indeed, the underlying
principle of the rule on exhaustion of administrative remedies rests on the presumption that when the administrative
body, or grievance machinery, is afforded a chance to pass upon the matter, it will decide the same correctly.
I.
VOLUNTARY ARBITRATION
1. VOLUNTARY ARBITRATION.
“Voluntary arbitration” refers to the mode of settling labor-management disputes in which the parties select a
competent, trained and impartial third person who is tasked to decide on the merits of the case and whose decision is
final and executory. It is a third-party settlement of a labor dispute involving the mutual consent by the representatives
of the employer and the labor union involved in a labor dispute to submit their case for arbitration.
2. VOLUNTARY ARBITRATOR.
a. Who is a Voluntary Arbitrator?
A “Voluntary Arbitrator” refers to:
(1) any person who has been accredited by the National Conciliation and Mediation Board (“NCMB” or
“Board”) as such; or
(2) any person named or designated in the CBA by the parties as their Voluntary Arbitrator; or
150
(3) one chosen by the parties with or without the assistance of the NCMB, pursuant to a selection procedure
agreed upon in the CBA; or
(4) one appointed by the NCMB in case either of the parties to the CBA refuses to submit to voluntary
arbitration.
This term includes a panel of Voluntary Arbitrators.
3. VOLUNTARY ARBITRATOR ACTS IN QUASI-JUDICIAL CAPACITY.
Although not a part of a government unit or a personnel of the Department of Labor and Employment, a
Voluntary Arbitrator, by the nature of his functions, acts in a quasi-judicial capacity. He is a means by which government
acts, or by which a certain government act or function is performed. He performs a state function pursuant to a
governmental power delegated to him under the Labor Code. The landmark case of Luzon Development Bank v.
Association of Luzon Development Bank Employees,1 clearly declared that a Voluntary Arbitrator, whether
acting solely or in a panel, enjoys in law the status of a quasi-judicial agency.
1.
JURISDICTION
1. ORIGINAL AND EXCLUSIVE JURISDICTION.
a. In general.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have exclusive and original jurisdiction over
the following cases:
(1) Unresolved grievances arising from the interpretation or implementation of the collective bargaining
agreement (CBA).
(2) Unresolved grievances arising from the interpretation or enforcement of company personnel policies.
(3) Violations of the CBA which are not gross in character.
(4) Other labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of the
parties.
(5) National interest cases.
(6) Wage distortion issues arising from the application of any wage orders in organized establishments.
(7) Unresolved grievances arising from the interpretation and implementation of the Productivity Incentive
Programs under R.A. No. 6971.
2.
JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 275 [262] of the Labor Code, upon agreement of the parties, the Voluntary Arbitrator or panel of
Voluntary Arbitrators may also hear and decide all other labor disputes, including unfair labor practices and
bargaining deadlocks. For this purpose, before or at any stage of the compulsory arbitration process, parties to a labor
dispute may agree to submit their case to voluntary arbitration.
3.
JURISDICTION OVER NATIONAL INTEREST CASES
Article 278(g) [263(g)] of the Labor Code which involves the DOLE Secretary’s power of assumption of
jurisdiction or certification to the NLRC of labor disputes affecting industries indispensable to the national interest, also
provides that “[b]efore or at any stage of the compulsory arbitration process, the parties may opt to submit their
dispute to voluntary arbitration.”
This means that even if the case has already been assumed by the DOLE Secretary or certified to the NLRC
for compulsory arbitration, or even during its pendency therewith, the parties thereto may still withdraw the case from
the DOLE Secretary or NLRC, as the case may be, and submit it to a Voluntary Arbitrator for voluntary arbitration
purposes.
4.
JURISDICTION OVER WAGE DISTORTION CASES
 Jurisdiction over wage distortion cases depends on whether the establishment is organized or unorganized.
In organized establishments, the employer and the union are required to negotiate to correct the wage
distortion. Any dispute arising from such wage distortion should be resolved through the grievance procedure under the
CBA and if it remains unresolved, through voluntary arbitration.
In unorganized establishments, where there are no CBAs or recognized or certified collective bargaining
unions, the jurisdiction is with the Labor Arbiter.
SOME PRINCIPLES.
1) Cases cognizable by Voluntary Arbitrators in their original jurisdiction but ERRONEOUSLY filed with Labor
Arbiters, DOLE Regional Offices or NCMB should be disposed of by referring them to the Voluntary
Arbitrators or panel of Voluntary Arbitrators mutually chosen by the parties.
1 G.R. No. 120319, Oct. 6, 1995.

151
2) Cases cognizable by Voluntary Arbitrators but filed with regular courts should be dismissed.
3) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE DOES NOT INVOLVE THE
PARTIES TO A CBA – REFERRING TO THE EMPLOYER AND THE BARGAINING UNION -
IT IS NOT SUBJECT TO VOLUNTARY ARBITRATION. While individual or group of employees,
without the participation of the union, are granted the right to bring grievance directly to the
employer, they cannot submit the same grievance, if unresolved by the employer, for voluntary
arbitration without the union’s approval and participation. The reason is that it is the union which is
the party to the CBA, and not the individual or group of employees. - This rule was lately affirmed in the
2009 case of Tabigue v. International Copra Export Corporation. Pursuant to Article 260 of the Labor
Code, the parties to a CBA shall name or designate their respective representatives to the grievance machinery
and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators
designated in advance by parties to a CBA. Consequently only disputes involving the union and the
company shall be referred to the grievance machinery or voluntary arbitrators.”
5.
REMEDIES
1. RELIEFS AND REMEDIES THAT MAY BE GRANTED BY VOLUNTARY ARBITRATORS.
Besides the procedural remedies discussed above, the Voluntary Arbitrator or panel of Voluntary Arbitrators
may grant the same reliefs and remedies granted by Labor Arbiters under Article 279 of the Labor Code, such as:
(1) In illegal dismissal cases:
(a) Actual reinstatement;
(b) Separation pay in lieu of reinstatement, in case reinstatement becomes impossible, non-feasible or
impractical;
(c) Full backwages;
(d) Moral and exemplary damages; and
(e) Attorney’s fees.
(2) Monetary awards in monetary claims cases in which case, the decision should specify the amount
granted and the formula used in the computation thereof.
J.
PRESCRIPTION OF ACTIONS
1. MONEY CLAIMS CASES.
a. Prescriptive period is three (3) years under Article 291 of the Labor Code. - The prescriptive period of
all money claims and benefits arising from employer-employee relations is 3 years from the time the cause of
action accrued; otherwise, they shall be forever barred.
b. All other money claims of workers prescribe in 3 years. - Article 291 contemplates all money claims
arising from employer-employee relationship, including:
1. Money claims arising from the CBA.
2. Incremental proceeds from tuition increases.
3. Money claims of Overseas Filipino Workers (OFWs).
Note must be made that in the 2010 case of Southeastern Shipping v. Navarra, Jr.,1 the 1-year prescriptive
period in Section 28 of POEA-SEC was declared null and void. The reason is that Article 291 of the Labor Code is
the law governing the prescription of money claims of seafarers, a class of overseas contract workers. This law prevails
over said Section 28.
2. ILLEGAL DISMISSAL CASES.
a. Legal basis is not Article 291 of the Labor Code but Article 1146 of the Civil Code. - The 3-year
prescriptive period in Article 291 solely applies to money claims but not to illegal dismissal cases which are
not in the nature of money claims. The prescriptive period of illegal dismissal cases is 4 years under Article
1146 of the Civil Code.
3. UNFAIR LABOR PRACTICE (ULP) CASES.
a. Prescriptive period of ULP cases is 1 year (Article 290, Labor Code). - The prescriptive period for all
complaints involving unfair labor practices is one (1) year from the time the acts complained of were
committed; otherwise, they shall be forever barred.
b. Pre-requisite for prosecution of criminal cases. - Before a criminal action for ULP may be filed, it is a
condition sine qua non that a final judgment finding that an unfair labor practice act was committed by the
respondent should first be secured or obtained in the labor case initiated before the Labor Arbiter or the
Voluntary Arbitrator, as the case may be. Final judgment is one that finally disposes of the action or
proceeding. For instance, if the remedy of appeal is available but no appeal is made, then, the judgment is
deemed final and executory. If an appeal is made, then the final judgment rendered by the last tribunal, say
the Supreme Court, to which the case was elevated should be the reckoning factor.
c. Interruption of prescriptive period of offenses. - As far as ULP cases are concerned, the running of the
one (1) year prescriptive period is interrupted during the pendency of the labor proceeding.
1 G.R. No. 167678, June 22, 2010.

152
d. Evidentiary value of the final judgment in the labor case. - In ULP cases, the final judgment in the
labor case cannot be presented as evidence of the facts proven therein or as evidence of the guilt of the
respondent therein. Its evidentiary or probative value is confined merely in proving the fact of compliance
with the condition sine qua non prescribed by law, i.e., that a final judgment has been secured in the labor
proceeding finding that an unfair labor practice act was in fact committed by the respondent.
4. OFFENSES PENALIZED UNDER THE LABOR CODE AND ITS IMPLEMENTING RULES AND
REGULATIONS (IRR).
a. Prescriptive period is 3 years (Article 290, Labor Code). - The prescriptive period of all criminal offenses
penalized under the Labor Code and the Rules to Implement the Labor Code is three (3) years from the time of
commission thereof.
b. Consequence of non-compliance with prescriptive period under Article 290. - Failure to initiate or file
the criminal action or complaint within the prescriptive period shall forever bar such action.
c. Illegal dismissal is not an “offense” under Article 290. - The act of the employer in dismissing an
employee without cause, although a violation of the Labor Code and its implementing rules, does not
amount to an “offense” as this term is understood and contemplated under Article 290.
5. ILLEGAL RECRUITMENT CASES.
a. Simple illegal recruitment cases. – The prescriptive period is five (5) years.
b. Illegal recruitment cases involving economic sabotage. – The prescriptive period is twenty (20) years.
GOOD LUCK AND GOD BLESS!

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ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Based on the topics prescribed

Prof. Joselito Guianan Chan

Chan Robles Online Bar Review

1. Under Article 3 of Labor Code:

a) Full protection to labor;

2. Under Article XIII, Section 3 of the Constitution:

a) Full protection to labor, local and overseas, organized and unorganized;

1. Under Article 1702 of the Civil Code.

2. Article 4 of the Labor Code.

3. Follow this rule in interpreting and construing:

a. DOUBTS OR AMBIGUITIES IN LABOR CONTRACTS such as employment contract and collective

1. Selected Constitutional Provisions.

 Under Article II (Declaration of Principles and State Policies):

 Under Article III (Bill of Rights):

THIS FREEDOM GUARANTEED UNDER ARTICLE III, SECTION 4 OF THE CONSTITUTION

THIS IS KNOWN AS “FREEDOM OF ASSOCIATION.” THIS PROVISION IS THE BASIS FOR

c. Non-impairment of obligations of contracts.

THE CONCEPT OF THIS RIGHT IN POLITICAL LAW IS SIMILAR IN LABOR LAW.

d. Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.

THIS CAN BE INVOKED IN LABOR CASES AT ALL LEVELS, to wit:

(1) Before quasi-judicial or administrative bodies, such as:

(2) Before judicial bodies, such as:

e. Prohibition against involuntary servitude.

THIS PRINCIPLE IS RELEVANT ONLY IN THREE (3) SITUATIONS: NAMELY: (1)

(1) AN EMPLOYEE HAS THE RIGHT TO RESIGN SINCE HE CANNOT BE FORCED TO

 Under Article XIII (Social Justice and Human Rights):

2. Selected Civil Code Provisions.

 Who may commit illegal recruitment?

LICENSE VS. AUTHORITY

 What is a “license” for overseas recruitment?

ELEMENTS OF ILLEGAL RECRUITMENT

 What are the elements of illegal recruitment?

SIMPLE ILLEGAL RECRUITMENT

 What are the 2 elements of simple illegal recruitment?

 Can a recruiter be a natural or juridical person?

ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC SABOTAGE

 When is illegal recruitment considered a crime involving economic sabotage?

1. When committed by a syndicate; or

NOTE: THE FIGURE THREE (3) MAKES THE DIFFERENCE, THUS:

 When is illegal recruitment considered in large scale?

If committed against three (3) or more persons individually or as a group.

ILLEGAL RECRUITMENT VS. ESTAFA

NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY

THEORY OF IMPUTED KNOWLEDGE

 What is meant by this theory?

TERMINATION OF CONTRACT OF MIGRANT WORKER

 Can an OFW acquire regularity of employment?

1 G.R. No. 196036, Oct. 23, 2013.

 What is the doctrine of processual presumption?

(1) All salaries for the unexpired portion of the contract;

1 G.R. No. 138193, March 5, 2003.

BAN ON DIRECT HIRING

 What is direct hiring?

1. Those hired by international organizations;

 What is an ALIEN EMPLOYMENT PERMIT (AEP)?

 What is the period of validity of an AEP?

One (1) year is the validity of an AEP.

 What are compensable hours worked?

The following shall be considered as compensable hours worked:

 What is the total normal hours of work per day?

Eight (8) hours daily.

 What are the effects of power interruptions/brownouts?

The following are the effects of work interruption due to brownouts: