RESEARCH ASSIGNMENT -

DOCTRINES IN LABOR RELATIONS

COMPILED AND SUBMITTED BY:

GERALINE MAE Z. RAMONES

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LABOR RELATIONS are the laws, rules and regulations which govern the relationship between employees and their
employers, promote the right of the employees to self-organization and collective bargaining, strikes and picketing,
penalize unfair labor practice, and provide modes for settlement of labor disputes, such as conciliation, mediation,
grievance machinery, voluntary arbitration and compulsory arbitration. They are covered by Books V-VII of the
Labor Code. (Cecilio D. Duka, Labor Laws and Social Legislations: A Barrister’s Companion, 2016).

ATTAINMENT OF A HARMONIOUS LABOR-MANAGEMENT RELATIONSHIP

Industrial peace cannot be achieved if the employees are denied their just participation in the discussion of
matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442) was amended by Republic
Act No. 6715, it was already declared a policy of the State, "(d) To promote the enlightenment of workers
concerning their rights and obligations . . . as employees." This was, of course, amplified by Republic Act No 6715
when it decreed the "participation of workers in decision and policy making processes affecting their rights, duties
and welfare." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as
during the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum,
p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code
was formulated, the attainment of a harmonious labor-management relationship and the then already existing
state policy of enlightening workers concerning their rights as employees demand no less than the observance of
transparency in managerial moves affecting employees' rights. (Philippine Airlines, Inc. (PAL) vs. National Labor
Relations Commission, Labor Arbiter Isabel P. Ortiguerra and Philippine Airlines Employees Association (PALEA).
G.R. No. 85985. August 13, 1993. Justice Melo. Third Division.)

PRINCIPLE OF NON-OPPRESSION

Capital and labor not to act oppressively against each other or impair the interest and convenience of the public.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers.
(Agabon vs. National Labor Relations Commission. G.R. No. 158693 November 17, 2004 Justice Ynares-Santiago. En
Banc.)

CHAIRMAN AND MEMBERS OF THE NLRC ARE NOT AMONG THE OFFICERS MENTIONED IN THE FIRST SENTENCE
OF SECTION 16, ARTICLE VII WHOSE APPOINTMENTS REQUIRES CONFIRMATION BY THE COMMISSION ON
APPOINTMENTS

The only issue to be resolved by the Court in the present case is whether or not Congress may, by law, require
confirmation by the Commission on Appointments of appointments extended by the president to government
officers additional to those expressly mentioned in the first sentence of Sec. 16, Art. VII of the Constitution whose
appointments require confirmation by the Commission on Appointments.

To resolve the issue, we go back to Mison where the Court stated:

. . . there are four (4) groups of officers whom the President shall appoint. These four (4) groups, to which we will
hereafter refer from time to time, are:

First, the heads of the executive departments, ambassadors, other public ministers and consuls, officers of the
armed forces from the rank of colonel or naval captain, and other officers whose appointments are vested in him
in this Constitution;

Second, all other officers of the Government whose appointments are not otherwise provided for by law;

Third, those whom the president may be authorized by law to appoint;

Fourth, officers lower in rank whose appointments the Congress may by law vest in the President alone.
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Mison also opined:

In the course of the debates on the text of Section 16, there were two (2) major changes proposed and approved
by the Commission. These were (1) the exclusion of the appointments of heads of bureaus from the requirement
of confirmation by the Commission on Appointments; and (2) the exclusion of appointments made under the
second sentence of the section from the same requirement. . . .

The second sentence of Sec. 16, Art. VII refers to all other officers of the government whose appointments are not
otherwise provided for by law and those whom the President may be authorized by law to appoint.

Indubitably, the NLRC Chairman and Commissioners fall within the second sentence of Section 16, Article VII of the
Constitution, more specifically under the "third groups" of appointees referred to in Mison, i.e. those whom the
President may be authorized by law to appoint. Undeniably, the Chairman and Members of the NLRC are not
among the officers mentioned in the first sentence of Section 16, Article VII whose appointments requires
confirmation by the Commission on Appointments. To the extent that RA 6715 requires confirmation by the
Commission on Appointments of the appointments of respondents Chairman and Members of the National Labor
Relations Commission, it is unconstitutional because:

1) it amends by legislation, the first sentence of Sec. 16, Art. VII of the Constitution by adding thereto
appointments requiring confirmation by the Commission on Appointments; and

2) it amends by legislation the second sentence of Sec. 16, Art. VII of the Constitution, by imposing the
confirmation of the Commission on Appointments on appointments which are otherwise entrusted only with
the President.

Deciding on what laws to pass is a legislative prerogative. Determining their constitutionality is a judicial function.
The Court respects the laudable intention of the legislature. Regretfully, however, the constitutional infirmity of
Sec. 13 of RA 6715 amending Art. 215 of the Labor Code, insofar as it requires confirmation of the Commission on
Appointments over appointments of the Chairman and Member of the National Labor Relations Commission
(NLRC) is, as we see it, beyond redemption if we are to render fealty to the mandate of the Constitution in Sec. 16,
Art. VII thereof.

Supreme Court decisions applying or interpreting the Constitution shall form part of the legal system of the
Philippines. No doctrine or principle of law laid down by the Court in a decision rendered en banc or in division
may be modified or reversed except by the Court sitting en banc. (Peter John D. Calderon vs. Bartolome Carale, in
his capacity as Chairman of the National Labor Relations Commission, Edna Bonto Perez, Lourdes C. Javier, Ernesto
G. Ladrido III, Musib M. Buat, Domingo H. Zapanta, Vicente S.E. Veloso III, Ireneo B. Bernardo, Irenea E. Ceniza,
Leon G. Gonzaga, jr., romeo b. putong, rogelio i. rayala, RUSTICO L. Diokno, Bernabe S. Batuhan and Oscar N.
Abella, in their capacity as Commissioners of the National Labor Relations Commission, and Guillermo Carague, in
his capacity as Secretary of Budget and Management. G.R. No. 91636. April 23, 1992. Justice Padilla. En Banc.)

Non-confirmation by the Commission on Appointments of the new NLRC Commissioners who were appointed
under Republic Act 6715 did not make their appointment null and void. In Calderon vs. Carale, 208 SCRA 254, we
held that the Chairman and members of the National Labor Relations Commission are not among the officers
mentioned in Section 16, Article VII of the 1987 Constitution whose appointments require confirmation by the
Commission on Appointments. Therefore, their acts are valid. In any case, the petitioners raised this issue only in
their present petition, after their motion for reconsideration was denied by the Commission. They are estopped
from repudiating the jurisdiction of the NLRC which they had already recognized. (U-Sing Button and Buckle
Industry and Sy Ban vs. National Labor Relations Commission, Labor Arbiter Daisy G. Cauton-Barcelona and Cecilia
Naya. G.R. No. 94754. May 11, 1993. Justice Griño-Aquino. First Division.)

IF THERE IS A REASONABLE CAUSAL CONNECTION BETWEEN THE CLAIM ASSERTED AND THE EMPLOYER-
EMPLOYEE RELATIONS, THEN THE CASE IS WITHIN THE JURISDICTION OF THE LABOR COURTS
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The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code, as amended by Section 9 of
Republic Act (R.A.) No. 6715, to wit:

ART. 217. Jurisdiction of Labor Arbiters and the Commission-- (a) Except as otherwise provided under this Code the
Labor Arbiter shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after
the submission of the case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involvingwages, rates of pay,
hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code including questions involving the legality of strikes
and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims,
arising from employer-employee relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (₱5,000.00) regardless of whether accompanied with a
claim for reinstatement.

While we have upheld the present trend to refer worker-employer controversies to labor courts in light of the
aforequoted provision, we have also recognized that not all claims involving employees can be resolved solely by
our labor courts, specifically when the law provides otherwise. For this reason, we have formulated the
"reasonable causal connection rule," wherein if there is a reasonable causal connection between the claim
asserted and the employer-employee relations, then the case is within the jurisdiction of the labor courts; and in
the absence thereof, it is the regular courts that have jurisdiction. Such distinction is apt since it cannot be
presumed that money claims of workers which do not arise out of or in connection with their employer-employee
relationship, and which would therefore fall within the general jurisdiction of the regular courts of justice, were
intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor
Arbiters on an exclusive basis.

It merely seeks to recover damages based on the parties' contract of employment as redress for respondent's
breach thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs
to the regular courts. More so must this be in the present case, what with the reality that the stipulation refers to
the post-employment relations of the parties.

Where the resolution 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, such claim
falls outside the area of competence of expertise ordinarily ascribed to the LA and the NLRC. (Indophil Textile Mills,
Inc. vs. Engr. Salvador Adviento. G.R. No. 171212. August 4, 2014. Justice Peralta. Third Division.)

The Labor Arbiter has jurisdiction over claims for actual, moral, exemplary, and other forms of damages arising
from employer-employee relations., Art. 217 (a) (4) Labor Code) Hence, a claim for liquidated damages for breach
of contractual obligation which is intrinsically a civil dispute and a cause of action based on quasi-delict or tort
which has no reasonable connection with any of the claims enumerated in Art. 217 of the Labor Code are beyond
the jurisdiction of the Labor Arbiter and within the jurisdiction of the regular courts. (Doroteo Ocheda vs. The
Honorable Court of Appeals and The Heirs of Eduardo Santos. G.R. 85517. October 16, 1992. Justice Davide, Jr.
Third Division.)

THE NLRC SHALL HAVE EXCLUSIVE APPELLATE JURISDICTION OVER ALL CASES DECIDED BY LABOR ARBITERS

The NLRC shall have exclusive appellate jurisdiction over all cases decided by labor arbiters as provided in Article
217(b) of the Labor Code. In short, the jurisdiction of the NLRC in illegal dismissal cases is appellate in nature. x x x
Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions to issue writs
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of injunction, considering that Section 1 of Rule XI of the New Rules of Procedure of the NLRC makes injunction
only an ancillary remedy in ordinary labor disputes". (Philippine Airlines, Inc. vs. National Labor Relations
Commission, Ferdinand Pineda and Godofredo Cabling. G.R. No. 120567. March 20, 1998. Justice Martinez. Second
Division.)
THE BUREAU OF LABOR RELATIONS AND THE LABOR RELATIONS DIVISIONS IN THE REGIONAL OFFICES OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT SHALL HAVE ORIGINAL AND EXCLUSIVE AUTHORITY TO ACT

Pursuant to Article 226 of the Labor Code, as amended, which provides pertinently in part, thus: The Bureau of
Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor and
Employment shall have original and exclusive authority to act, at their own initiative or upon request of either or
both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except those
arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of
grievance procedure and/or voluntary arbitration. (Employees Union of Bayer Phils., FFW and Juanito S. Facundo,
in his capacity as President vs. Bayer Philippines, Inc., Dieter J. Lonishen (President), Asuncion Amistoso (HRD
Manager), Avelina Remigio and Anastacia Villareal. G.R. No. 162943. December 6, 2010. Justice Villarama. Third
Division.)

BLR SHALL HAVE ORIGINAL AND EXCLUSIVE AUTHORITY TO ACT ON ALL INTER-UNION AND INTRA-UNION
CONFLICTS

Since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive authority to act on
all inter-union and intra-union conflicts, there should be no more doubt as to its jurisdiction. As defined, an intra-
union conflict would refer to a conflict within or inside a labor union, while an inter-union controversy or dispute is
one occurring or carried on between or among unions. More specifically, an intra-union dispute is defined under
Section (z), Rule I of the Rules Implementing Book V of the Labor Code, viz: (z) Intra-Union Dispute refers to any
conflict between and among union members, and includes all disputes or grievances arising from any violation of
or disagreement over any provision of the constitution and by-laws of a union, including cases arising from
chartering or affiliation of labor organizations or from any violation of the rights and conditions of union
membership provided for in the Code. (Emilio E. Diokno, Vicente R. Alcantara, Antonio Z. Vergara, JR., Dante M.
Tong, Jaime C. Mendoza, Romeo M. Macapulay, Roberto M. Masiglat, Leandro C. Atienza, Romulo Aquino, Jesus
Samia, Gaudencio Camit, Dante Parao, Alberto Mabugat, Edgardo Villanueva, Jr., Francisco Escoto, Edgardo
Sevilla, Felicito Macasaet, and Jose Z. Tullo vs. Hon. Hans Leo J. Cacdac, in his capacity as director of the Bureau of
Labor Relations, DOLE, Manila, Med-Arbiter Tranquilino C. Reyes, Edgardo Daya, Pablo Lucas, Leandro M. Tabilog,
Reynaldo Espiritu, Jose Vito, Antonio de Luna, Armando Yalung, Edwin Layug, Nards Pabilona, Reynaldo Reyes,
Evangeline Escall, Alberto Alcantara, Rogelio Cervitillo, Marcelino Morelos, Faustino Ermino, Jimmy S. Ong, ALfredo
Escall, Nardito C. Alvarez, Jaime T. Valeriano, Johnson S. Reyes, Gaudencio Jimenez, Jr., Gavino R. Vidanes, Arnaldo
G. Tayao, Bonifacio F. Cirujano, Edgardo G. Cadvona, Maximo A. Caoc, Jose O. Maclit, Jr., Luzmindo D. Acorda, Jr.,
Lemuel R. Ragasa, and Gil G. de Vera. G.R. No. 168475. July 4, 2007. Justice Chico-Nazario. Third Division.)

JURISDICTION OVER MONEY CLAIMS IN CASES OF REHABILITATION PROCEEDINGS AND LIQUIDATION

Clearly, the applicable law is PD 902-A, as amended; that upon the appointment [by the SEC] of a management
committee or a rehabilitation receiver, all actions for claims against the corporation pending before any court,
tribunal or board shall ipso jure be suspended. The justification for the automatic stay of all pending actions for
claims is to enable the management committee or the rehabilitation receiver to effectively exercise its/his powers
free from any judicial or extra-judicial interference that might unduly hinder or prevent the rescue of the debtor
company. To allow such other actions to continue would only add to the burden of the management committee or
rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the
corporation instead of being directed toward its restructuring and rehabilitation. Parenthetically, the
rehabilitation of a financially distressed corporation benefits its employees, creditors, stockholders and, in a larger
sense, the general public. And in considering whether to rehabilitate or not, the SEC gives preference to the
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interest of creditors, including employees. The reason is that shareholders can recover their investments only
upon liquidation of the corporation, and only if there are assets remaining after all corporate creditors are paid.

Article 217 of the Labor Code should be construed not in isolation but in harmony with PD 902-A, according to the
basic rule in statutory construction that implied repeals are not favored. Indeed, it is axiomatic that each and
every statute must be construed in a way that would avoid conflict with existing laws. Tue, the NLRC has the
power to hear and decide labor disputes, but such authority is deemed suspended when PD 902-A is put into effect
by the Securities and Exchange Commission.

The preferential right of workers and employees under Article 110 of the Labor Code may be invoked only upon
the institution of insolvency or judicial liquidation proceedings. Indeed, it is well-settled that a declaration of
bankruptcy or a judicial liquidation must be present before preferences over various money claims may be
enforced. But debtors’ resort to preference of credit - giving preferred creditors the right to have their claims paid
ahead of those of other claimants - only when their assets are insufficient to pay their debts fully. The purpose of
rehabilitation proceedings is precisely to enable the company to gain a new lease on life and thereby allow
creditors to be paid their claims from its earnings. In insolvency proceedings, on the other hand, the company
stops operating, and the claims of creditors are satisfied from the assets of the insolvent corporation. The present
case involves the rehabilitation, not the liquidation, of petitioner-corporation. Hence, the preference of credit
granted to workers or employees under Article 110 of the Labor Code is not applicable. (Rubberworld (Phils.), Inc.
vs. NLRC. G.R. No. 126773. April 14, 1999. Justice Panganiban. Third Division.)

It then becomes easy to accept the hypothesis that the date when the claim arose, or when the action is filed, is of
no moment. As long as the corporation is under a management committee or a rehabilitation receiver, all actions
for claims against it --- for money or otherwise --- must yield to the greater imperative of corporate rehabilitation,
excepting only, as already mentioned, claims for payment of obligations incurred by the corporation in the
ordinary course of business. Enforcement of writs of execution issued by judicial or quasi-judicial tribunals, since
such writs emanate from actions for claims, must, likewise, be suspended. (Malayan Insurance Company, Inc. vs.
Victorias Milling Company, Inc. G.R. No. 167768. April 17, 2009. Justice Nachura. Third Division.)

MONEY CLAIMS OF OVERSEAS FILIPINO WORKERS

Full reimbursement of placement fee with interest of twelve (12%) per annum, plus his salaries for the unexpired
portion of his employment contract. The clause, "or for three (3) months for every year of the unexpired term,
whichever is less" in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is declared
unconstitutional and, therefore, null and void. (Sameer Overseas Placement Agency, Inc vs. Joy C. Cabiles. G.R. No.
170139. August 5, 2014. Justice Leonen. En Banc.)

With respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a collective
bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or
panel of arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt to submit
the dispute to either the NLRC or to voluntary arbitration. Justice Peralta. Third Division.)

CONTEMPT POWERS OF NATIONAL LABOR RELATIONS COMMISSION AND LABOR ARBITERS

Article 218 of the Labor Code, the NLRC (and the labor arbiters) may hold any offending party in contempt, directly
or indirectly, and impose appropriate penalties in accordance with law. The penalty for direct contempt consists of
either imprisonment or fine, the degree or amount depends on whether the contempt is against the Commission
or the labor arbiter. The Labor Code, however, requires the labor arbiter or the Commission to deal with indirect
contempt in the manner prescribed under Rule 71 of the Rules of Court.

Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt
proceedings before the trial court. This mode is to be observed only when there is no law granting them contempt
powers. As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or
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has jurisdiction to hold the offending party or parties in direct or indirect contempt. (Robosa vs. National Labor
Relations Commission (First Division). G.R. No. 176085. February 8, 2012. Justice Brion. Second Division.)

TESTS IN DETERMINING INTRA CORPORATE DISPUTE

 Relationship Test
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. (Matling Industrial and Commercial
Corporation vs. Coros. G.R. No. 157802. October 13, 2010. Justice Bersamin. Third Division.)

 Controversy Test
The dispute must be rooted in the existence of an intra-corporate relationship, and must refer to the
enforcement of the parties' correlative rights and obligations under the Corporation Code, as well as the
internal and intra-corporate regulatory rules of the corporation, in order to be an intra-corporate dispute.
These are essentially determined through the allegations in the complaint which determine the nature of the
action. (Gulfo vs. Ancheta. G.R. No. 175301. August 15, 2012. Justice Brion. Second Division.)

INJUCTIONS AND REQUISITES BEFORE ISSUANCE OF RESTRAINING ORDER OR INJUNCTION MAY BE ISSUED EX-
PARTE

Article 254 of the Code provides that "No temporary or permanent injunction or restraining order in any case
involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise
provided in Articles 218 and 264 . . ." Article 264 lists down specific "prohibited activities" which may be forbidden
or stopped by a restraining order or injunction. Article 218 inter alia enumerates the powers of the National Labor
Relations Commission and lays down the conditions under which a restraining order or preliminary injunction may
issue, and the procedure to be followed in issuing the same.

Among the powers expressly conferred on the Commission by Article 218 is the power 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 or render ineffectual any decision in favor of such party . . ."

As a rule, such restraining orders or injunctions do not issue ex parte, but only after compliance with the following
requisites, to wit:
a) a hearing held "after due and personal notice thereof has been served, in such manner as the Commission
shall direct, to all known persons against whom relief is sought, and also to the Chief Executive and other
public officials of the province or city within which the unlawful acts have been threatened or committed
charged with the duty to protect complainant's property;"
b) reception at the hearing of "testimony of witnesses, with opportunity for cross-examination, in support of the
allegations of a complaint made under oath," as well as "testimony in opposition thereto, if offered . . .;
c) a finding of fact by the Commission, to the effect:
(1) That prohibited or unlawful acts have been threatened and will be committed and will be continued unless
restrained, but no injunction or temporary restraining order shall be issued on account of any threat,
prohibited or unlawful act, except against the person or persons, association or organization making the
threat or committing the prohibited or unlawful act or actually authorizing or ratifying the same after
actual knowledge thereof;
(2) That substantial and irreparable injury to complainant's property will follow;
(3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial
of relief than will be inflicted upon defendants by the granting of relief;
(4) That complainant has no adequate remedy at law; and
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(5) That the public officers charged with the duty to protect complainant's property are unable or unwilling to
furnish adequate protection.

However, a temporary restraining order may be issued ex parte under the following conditions:
a) the complainant "shall also allege that, unless a temporary restraining order shall be issued without notice, a
substantial and irreparable injury to complainant's property will be unavoidable;
b) there is "testimony under oath, sufficient, if sustained, to justify the Commission in issuing a temporary
injunction upon hearing after notice;"
c) the "complainant shall first file an undertaking with adequate security in an amount to be fixed by the
Commission sufficient to recompense those enjoined for any loss, expense or damage caused by the
improvident or erroneous issuance of such order or injunction, including all reasonable costs, together with a
reasonable attorney's fee, and expense of defense against the order or against the granting of any injunctive
relief sought in the same proceeding and subsequently denied by the Commission;" and
d) the "temporary restraining order shall be effective for no longer than twenty (20) days and shall become void
at the expiration of said twenty (20) days.

The reception of evidence "for the application of a writ of injunction may be delegated by the Commission to any
of its Labor Arbiters who shall conduct such hearings in such places as he may determine to be accessible to the
parties and their witnesses and shall submit thereafter his recommendation to the Commission." (Ilaw at Buklod
ng Manggagawa (IBM) vs. National Labor Relations Commission (First Division), Hon. Carmen Talusan and San
Miguel Corporation. G.R. No. 91980. June 27, 1991. Justice Narvasa. First Division.)

A preliminary injunction "is usually granted when it is made to appear that there is a substantial controversy
between the parties and one of them is committing an act or threatening the immediate commission of an act that
will cause irreparable injury or destroy the status quo of the controversy before a full hearing can be had on the
merits of the case." Indeed, an injunction is granted by a court in order to prevent an injury or to stop the
furtherance of an injury until the merits of the case can be fully adjudged. (Philippine Airlines, INC. vs. PAL
Employees Savings & Loan Association, Inc. G.R. No. 201073, February 10, 2016. Justice Perez. Third Division.)

TECHNICAL RULES NOT BINDING

In labor cases, the deciding authority should use every reasonable means to speedily and objectively ascertain the
facts, without regard to technicalities of law and procedure. Technical rules of evidence are not strictly binding in
labor cases. (Spic N Span Services Corporation vs. Gloria Paje, Lolita Gomez, Miriam Catacutan, Estrella Zapata,
Gloria Sumang, Juliet Dingal, Myra Amante, and Fe S. Bernando. G.R. No. 174084. August 25, 2010. Justice Brion.
Third Division.)

Under Section 4(c), Rule VI of the NLRC Rules, the NLRC shall limit itself to reviewing and deciding only the issues
that were elevated on appeal. The NLRC, while not totally bound by technical rules of procedure, is not licensed to
disregard and violate the implementing rules it implemented. Nonetheless, technicalities should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the parties. Technical rules are
not binding in labor cases and are not to be applied strictly if the result would be detrimental to the working man.
This Court may choose not to encumber itself with technicalities and limitations consequent to procedural rules if
such will only serve as a hindrance to its duty to decide cases judiciously and in a manner that would put an end
with finality to all existing conflicts between the parties. (Timoteo H. Sarona vs. National Labor Relations
Commission, Royale Security Agency (formerly Sceptre Security Agency) and Cesar S. Tan. G.R. No. 185280. January
18, 2012. Justice Reyes. Second Division.)

STANDARDS FOR DETERMINING THE VALIDITY OF A WAIVER, RELEASE AND QUITCLAIM

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into
and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because
of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or
DOCTRINES IN LABOR RELATIONS PAGE 8

gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking. (Rizal Commercial Banning Corporation vs.
Leonardo Bithao. G.R. No. 162240. August 29, 2006. Justice Quisumbing. Third Division.)

While the law looks with disfavor upon releases and quitclaims by employees who are inveigled or pressured into
signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver
representing a voluntary settlement of a laborer's claims should be respected by the courts as the law between the
parties. (Hypte R. Aujero vs. Philippine Communications Satellite Corporation. G.R. No. 193484. January 18, 2012.
Justice Reyes. Second Division.)

To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that
the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are
unconscionable on their face are invalid. (Lambo vs. National Labor Relations Commission, 317 SCRA 420, G.R. No.
111042 October 26, 1999. Justice Mendoza. Second Division.)

A COMPROMISE AGREEMENT IS BINDING BETWEEN THE PARTIES AND BECOMES THE LAW BETWEEN THEM

A compromise agreement should not be contrary to law, morals, good customs and public policy. While it is true
that a compromise agreement is binding between the parties and becomes the law between them, it is also a rule
that to be valid, a compromise agreement must not be contrary to law, morals, good customs and public policy.
(Wenphil Corporation vs. Almer R. Abing and Anabelle M. Tuazon. G.R. No. 207983. April 7, 2014. Justice Brion.
Second Division.)

ONLY LAWYERS ARE ALLOWED TO APPEAR BEFORE THE LABOR ARBITER AND RESPONDENT COMMISSION;
EXCEPTIONS

The general rule is that only lawyers are allowed to appear before the labor arbiter and respondent Commission in
cases before them. The Labor Code and the New Rules of Procedure of the NLRC, nonetheless, lists three (3)
exceptions to the rule, viz:

Section 6. Appearances.-- x x x.
A non-lawyer may appear before the Commission or any Labor Arbiter only if:
(a) he represents himself as party to the case;
(b) he represents the organization or its members, provided that he shall be made to present written
proof that he is properly authorized; or
(c) he is a duly-accredited member of any legal aid office duly recognized by the Department of Justice or
the Integrated Bar of the Philippines in cases referred thereto by the latter. x x x.

A non-lawyer may appear before the labor arbiters and the NLRC only if: (a) he represents himself as a party to the
case; (b) he represents an organization or its members, with written authorization from them; or (c) he is a duly
accredited member of any legal aid office duly recognized by the Department of Justice or the Integrated Bar of the
Philippines in cases referred to by the latter. (Kanlaon Construction Enterprises Co., Inc. vs. National Labor
Relations Commission, 5th Division, and Benjamin Reluya, Jr., Edgardo Genayas, Ernesto Canete, Protacio Rosales,
Nestor Benoya, Rodolfo Gongob, Dario Binoya, Benjamin Basmayor, Abelardo Sacura, Florencio Sacura, Isabelo
Mira, Nemesio Lacar, Joseph Cabigkis, Rodrigo Cillon, Virgilio Quizon, Guarino Evangelista, Alejandro Gata,
Benedicto Calago, Nilo Gata, Dionisio Permacio, Juanito Salud, Ador Rimpo, Felipe Oraez, Julieto Tejada, Teotimo
Lacio, Onofre Quizon, Rudy Alvarez, Cresencio Flores, Alfredo Permacio, Cresencio Alviar, Hernani Surila, Diosdado
DOCTRINES IN LABOR RELATIONS PAGE 9

Solon, Cenon Alburo, Zacarias Ortiz, Eusebio Bustillo, Gregorio Bago, Jerry Vargas, Eduardo Bueno, Pascual Hudaya,
Rogelio Nietes, and Reynaldo Nietes, G.R. No. 126625. September 23, 1997. Justice Puno. Second Division.)

SURETY BOND WHICH IS REQUIRED FOR THE PERFECTION OF AN APPEAL TO THE NLRC

Anent the surety bond which is required for the perfection of an appeal to the NLRC, Article 223 of the Labor Code,
as amended by R.A. No. 6715 (The New Labor Relations Law), as well as Section 7 of the NLRC's Interim Rules,
clearly provides that:

Sec. 223. Appeal. - . . . .

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the judgment appealed from.

Section 7 of the NLRC, Interim Rules provides:

For purposes of the bond required under Article 223 of the Labor Code as amended, the monetary award
computed as of the date of the promulgation of the decision appealed from shall be the basis of the bond.
For this purpose, moral and exemplary damages shall not be included in fixing the amount of the bond.

Pending the review of the appropriate guidelines for accreditation bonds posted by bonding companies
duly accredited by the regular court shall be acceptable.

The equivalence thus expressly prescribed between the amount of the appeal bond and the monetary award, less
moral and exemplary damages, made in the decision sought to be appealed not only underscores the fact that the
obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence
that would defeat or diminish recovery under the judgement if subsequently affirmed; it also validates and
justifies, at least prima facie, an interpretation that would limit the amount of the bond to the aggregate of the
sums awarded other than in the concept of moral and exemplary damages.

An appeal is a purely statutory right, and whoever would avail of it must strictly comply with the requisites,
particularly as these are clearly spelled out in the Rules. (U-Sing Button and Buckle Industry and Sy Ban vs. National
Labor Relations Commission, Labor Arbiter Daisy G. Cauton-Barcelona and Cecilia Naya. G.R. No. 94754. May 11,
1993. Justice Griño-Aquino. First Division.)

Article 223 of the Labor Code provides that an appeal from a decision of the Labor Arbiter must be made within
ten calendar days from receipt of a copy of the decision by the aggrieved party; and if the decision involves a
monetary award, an appeal by the aggrieved party may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the
monetary award. In addition, Section 6, Rule VI of the New Rules of Procedure of the NLRC provides that the
Commission may, in justifiable cases and upon motion of the aggrieved party, reduce the amount of the bond.
Further, the filing of the motion to reduce bond does not stop the running of the period to perfect appeal.

Time and again, this Court has ruled that while the above-mentioned rule treats the filing of a cash or surety bond
in the amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional requirement to
perfect an appeal, the bond requirement on appeals involving awards is sometimes given a liberal interpretation in
line with the desired objective of resolving controversies on the merits. (Postigo vs. Philippine Tuberculosis Society,
Inc. G.R. No. 155146. January 24, 2006. Justice Quisumbing. Third Division.)

While it has been settled that the posting of a cash or surety bond is indispensable to the perfection of an appeal in
cases involving monetary awards from the decision of the LA, the Rules of Procedure of the NLRC nonetheless
allows the reduction of the bond upon a showing of (a) the existence of a meritorious ground for reduction, and (b)
DOCTRINES IN LABOR RELATIONS PAGE 10

the posting of a bond in a reasonable amount in relation to the monetary award. (Philippine Touristers, Inc. and/or
Alejandro R. Yague, Jr. vs. Mas Transit Workers Union-Anglo-KMU and its Members, G.R. No. 201237. September 3,
2014. Justice Perlas- Bernabe. First Division.)

While the bond requirement on appeals involving a monetary award has been relaxed in certain cases, this can
only be done where there was substantial compliance with the rules or where the appellants, at the very least,
exhibited willingness to pay by posting a partial bond. (Magdala Multipurpose vs. KMLMS. G.R. 191138- 39.
October 19, 2011. Justice Velasco, Jr. Third Division.)

While Article 223 of the Labor Code and Section 3(a), Rule VI of the then New Rules of Procedure of the NLRC
require the party intending to appeal from the LA’s ruling to furnish the other party a copy of his memorandum of
appeal, the Court has held that the mere failure to serve the same upon the opposing party does not bar the NLRC
from giving due course to an appeal. Such failure is only treated as a formal lapse, an excusable neglect, and,
hence, not a jurisdictional defect warranting the dismissal of an appeal. Instead, the NLRC should require the
appellant to provide the opposing party copies of the notice of appeal and memorandum of appeal. (Lei Sheryll
Fernandez vs. Botica Claudio represented by Guadalupe Jose. G.R. No. 205870. August 13, 2014. Justice Perlas-
Bernabe. Second Division.)

The condition of posting a cash or surety bond is not a meaningless requirement – it is meant to assure the
workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of
the former’s appeal. Such aim is defeated if the bond issued turned out to be invalid due to the surety company’s
expired accreditation. (Mount Carmel College Employees Union (MCCEU)/Rumolo S. Bascar, et al. vs. Mount
Carmel College, Incorporated. G.R. No. 187621. September 24, 2014. Justice Reyes. Third Division.)

While it has been settled that the posting of a cash or surety bond is indispensable to the perfection of an appeal in
cases involving monetary awards from the decision of the LA, the Rules of Procedure of the NLRC nonetheless
allows the reduction of the bond upon a showing of (a) the existence of a meritorious ground for reduction, and (b)
the posting of a bond in a reasonable amount in relation to the monetary award. Thus, when the appellant
employer prayed for the reduction of the bond in view of serious liquidity problems evidenced by audited financial
statements, while simultaneously posting a surety bond which is more than 10% of the full judgment award, the
bond may be reduced and the appeal is considered perfected. (Philippine Touristers, Inc. and/or Alejandro R.
Yague, Jr. vs. Mas Transit Workers Union-Anglo-KMU and its Members, G.R. No. 201237. September 3, 2014.
Justice Perlas- Bernabe. First Division.)

The NLRC should not entertain the appeal, as the same was not perfected due to failure to file a bond. “An appeal
may be perfected only upon the posting of cash or surety bond, issued by reputable bonding company duly
accredited by the Commission the amount equivalent to the monetary award in the judgment appealed from”.
(Aba vs. NLRC. G.R No. 122627. July 28, 1999. Justice Bellosillo. Second Division.)

Art. 223 of the Labor Code is clear that an award by the LA for reinstatement shall be immediately executory even
pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement (Pioneer
Texturizing Corp. vs. NLRC, G.R. No. 118651, October 16, 1997. Justice Francisco. En Banc.)

AVAILABILITY OF JUDICIAL REVIEW OF THE NLRC’S DECISION

Appeal from the decision of the Labor Arbiter is brought by ordinary appeal to the NLRC within 10 calendar days
from receipt of the decision. (Vir-jen Shipping and Marine Services vs. NLRC. G.R. No. 58011-12. July 20, 1982.
Justice Barredo. Second Division.)

The 10-day period is reckoned from receipt by counsel of the final decision, order or award. This applies to both
appeals from the LA to NLRC and NLRC to CA. (Sy vs. Fairland Knitcraft. G.R. No. 182915. December 12, 2011.
Justice Del Castillo. First Division.)
DOCTRINES IN LABOR RELATIONS PAGE 11

This 10-day period is both mandatory and jurisdictional in nature. (Charter Chemical & Coating Corp vs. Tan. G.R.
No. 163891. May 21, 2009. Justice Carpio. First Division.)

The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme Court
were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the proper
vehicle for judicial review of decisions of the NLRC. The use of the word appeal in relation thereto and in the
instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action for
certiorari are both modes of judicial review addressed to the appellate courts. The important distinction between
them, however, and with which the Court is particularly concerned here is that the special civil action of certiorari
is within the concurrent original jurisdiction of this Court and the Court of Appeals; whereas to indulge in the
assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would subvert,
the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495. Incidentally, it was
noted by the sponsor therein that some quarters were of the opinion that recourse from the NLRC to the Court of
Appeals as an initial step in the process of judicial review would be circuitous and would prolong the proceedings.
Under such guarantee, the Supreme Court can then apply strictly the axiom that factual findings of the Court of
Appeals are final and may not be reversed on appeal to the Supreme Court. A perusal of the records will reveal
appeals which are factual in nature and may, therefore, be dismissed outright by minute resolutions.

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law, on this score
we add the further observations that there is a growing number of labor cases being elevated to this Court which,
not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or
ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose, aside from the
increased number of its component divisions; and that there is undeniably an imperative need for expeditious
action on labor cases as a major aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in strict observance of
the doctrine on the hierarchy of courts as the appropriate forum for the relief desired. (St. Martin Funeral Home
vs. NLRC, et al. G.R. No. 130866. September 16, 1998. Justice Regalado. En Banc.)

BARANGAY CONCILIATION IS NOT APPLICABLE TO LABOR DISPUTES

Labor cases are not subject to barangay conciliation since ordinary rules of procedure are merely suppletory in
character vis-à-vis labor disputes which are primarily governed by labor laws. The provisions of 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 are not applicable to labor cases. Requiring conciliation of labor disputes before the
barangay courts would defeat the very salutary purposes of the law. Instead of simplifying labor proceedings
designed at expeditious settlement or referral to the proper court or office to decide it finally, the position taken
by the petitioner would only duplicate the conciliation proceedings and unduly delay the disposition of the labor
case. (Montoya vs. Escayo. G.R. No. 82211-12. March 21, 1989. Justice Sarmiento. Second Division.)

IMMEDIATELY EXECUTORY NATURE OF REINSTATEMENT PENDING APPEAL

To be sure, the Court has divergent views on the immediately executory nature of reinstatement pending appeal
particularly where the reinstatement order is reversed on appeal. On one hand, the Court has ruled that  even if
the Labor Arbiters reinstatement order is reversed on appeal, it is the employer’s obligation to reinstate and pay
the wages of the dismissed employee during the period of appeal until reversal by the NLRC. However, if the
employee has been reinstated during the period of appeal and such reinstatement order is reversed with finality,
the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he
actually rendered services during the period.
DOCTRINES IN LABOR RELATIONS PAGE 12

On the other hand, the Court has held that if the decision of the Labor Arbiter is later reversed on appeal upon the
finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on
payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted
from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing
laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to
work during the pendency of the appeal, then the employee is entitled to the compensation received for actual
services rendered without need of refund.

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a
dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies
and enhances the provisions of the 1987 Constitution on labor and the working-man.

If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of
which is merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions
reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their only
source of livelihood, their only means of support for their family their very lifeblood. To Us, this special
circumstance is far better than any other which a judge, in his sound discretion, may determine. In short, with
respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its
execution pending appeal.

Clearly, the principle of unjust enrichment does not apply. First, the provision on reinstatement pending appeal is in
accord with the social justice philosophy of our Constitution. It is meant to afford full protection to labor as it aims
to stop (albeit temporarily, since the appeal may be decided in favor of the employer) a continuing threat or danger
to the survival or even the life of the dismissed employee and his family. Second, the provision on reinstatement
pending appeal partakes of a special law that must govern the instant case. The provision of the Civil Code on
unjust enrichment, being of general application, must give way.

The necessity for a writ of execution under Article 224 applies only to final and executory decisions which are not
within the coverage of Article 223.

It cannot relate to an award or order of reinstatement still to be appealed or pending appeal which Article 223
contemplates. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The
legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending
appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order. (Juanito A. Garcia and Alberto J. Dumago vs. Philippine Airlines, Inc.
G.R. No. 164856. Justice Quisumbing. Second Division.)

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a
dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies
and enhances the provisions of the 1987 Constitution on labor and the working-man. These provisions are the
quintessence of the aspirations of the workingman for recognition of his role in the social and economic life of the
nation, for the protection of his rights, and the promotion of his welfare. These duties and responsibilities of the
State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully
underscore labor as a primary social and economic force, which the Constitution also expressly affirms with equal
intensity. Labor is an indispensable partner for the nation's progress and stability.
DOCTRINES IN LABOR RELATIONS PAGE 13

Since the decision is immediately executory, it is the duty of the employer to comply with the order of
reinstatement, which can be done either actually or through payroll reinstatement. As provided under Article 223
of the Labor Code, this immediately executory nature of an order of reinstatement is not affected by the existence
of an ongoing appeal. The employer has the duty to reinstate the employee in the interim period until a reversal is
decreed by a higher court or tribunal.

In the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor, the reinstated
employee has no duty to return or reimburse the salary he received during the period that the lower court or
tribunal’s governing decision was for the employee’s illegal dismissal.

Otherwise, the situation would run counter to the immediately executory nature of an order of reinstatement.

Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the
"refund doctrine" 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.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll
reinstatement and simply find work elsewhere in the interim, if any is available.1âwphi1 Notably, the option of
payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work.

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 reversal by
the higher court. It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and
the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their
dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer
must pay the employee’s salaries. (Wenphil Corporation vs. Almer R. Abing and Anabelle M. Tuazon. G.R. No.
207983. April 7, 2014. Justice Brion. Second Division.)

EFFECT OF REVERSAL OF REINSTATEMENT ORDER

 Actually reinstated - 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. (Bergonio, Jr. vs. South East
Asian Airlines. G.R. No. 195227. April 21, 2014. Justice Brion. Second Division.)

 Payroll reinstatement: 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 reversed the labor arbitration ruling of illegal
DOCTRINES IN LABOR RELATIONS PAGE 14

dismissal. (Wenphil Corporation vs. Almer R. Abing and Anabelle M. Tuazon. G.R. No. 207983. April 7, 2014.
Justice Brion. Second Division.)

ACQUISITION OF LEGAL PERSONALITY OF A LABOR UNION

Article 212(h) of the Labor Code defines a legitimate labor organization as "any labor organization duly registered
with the Department of Labor and Employment, and includes any branch or local thereof." It is important to
determine whether or not a particular labor organization is legitimate since legitimate labor organizations have
exclusive rights under the law which cannot be exercised by non-legitimate unions, one of which is the right to be
certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for
purposes of collective bargaining. These rights are found under Article 242 of the Labor Code. Ordinarily, a labor
organization attains the status of legitimacy only upon the issuance in its name of a Certificate of Registration by
the Bureau of Labor Relations pursuant to Articles 234 and 235 of the Labor Code. x x x The foregoing procedure is
not the only way by which a labor union may become legitimate, however. When an unregistered union becomes a
branch, local or chapter of a federation, some of the aforementioned requirements for registration are no longer
required. Section 3, Rule II, book V of the Implementing Rules of the Labor Code governs the procedure for union
affiliation. x x x Paragraph (a) refers to a local or chapter of a federation which did not undergo the rudiments of
registration while paragraph (b) refers to an independently registered union which affiliated with a federation.
Implicit in the foregoing differentiation is the fact that a local or chapter need not be independently registered. By
force of law (in this case, Article 212 [h]), such local or chapter becomes a legitimate labor organization upon
compliance with the aforementioned provisions of Section 3 (a) and (e), without having to be issued a Certificate of
Registration in its favor by the BLR. x x x Absent compliance with these mandatory requirements, the local or
chapter does not become a legitimate labor organization. Corollarily, the satisfaction of all these requirements by
the local or chapter shall vest upon it the status of legitimacy with all its concomitant statutory privileges, one of
which is the right to be certified as the exclusive representative of all the employees in an appropriate bargaining
unit. (San Miguel Foods, Inc.-Cebu B-Meg Feed Plant, vs. Hon. BIenvenido E. Laguesma, Undersecretary of DOLE
and Ilaw at Buklod ng Manggagawa (IBM). G.R. No. 116172. October 10, 1996. Justice Hermosisima, Jr. First
Division.)

Article 212(g) of the Labor Code defines a labor organization as any union or association of employees which exists
in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and
conditions of employment. Upon compliance with all the documentary requirements, the Regional Office or
Bureau shall issue in favor of the applicant labor organization a certificate indicating that it is included in the roster
of legitimate labor organizations. Any applicant labor organization shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the
certificate of registration. (Sta. Lucia East Commercial Corporation vs. Hon. Secretary of Labor and Employment
and Sta. Lucia East Commercial Corporation Workers Association (CLUP Local Chapter). G.R. No. 162355. August
14, 2009. Justice Carpio. First Division.)

Ordinarily, a labor organization attains the status of legitimacy only upon the issuance in its name of a Certificate of
Registration by the Bureau of Labor Relations pursuant to Articles 234 and 235 of the Labor Code, viz.:

Art. 234. Requirements of registration. — Any applicant labor organization, association or group of unions
or workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law
to legitimate labor organizations upon issuance of the certificate of registration based on the following
requirements:
DOCTRINES IN LABOR RELATIONS PAGE 15

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes
of the organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it.

Art. 235. Action on application. — The Bureau shall act on all applications for registration within thirty (30)
days from filing.

All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its president.

The foregoing procedure is not the only way by which a labor union may become legitimate, however. When an
unregistered union becomes a branch, local or chapter of a federation, some of the aforementioned requirements
for registration are no longer required. 8 Section 3, Rule II, Book V of the Implementing Rules of the Labor Code
governs the procedure for union affiliation, the relevant portions of which provide:

Sec. 3. Union Affiliation: Direct Membership with National Union. — An affiliate of a labor federation or
national union may be a local or chapter thereof or an independently registered union.

(a) The labor federation or national union concerned shall issue a charter certificate indicating the
creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of
Labor Relations within thirty (30) days from issuance of such charter certificate.

(b) An independently registered union shall be considered an affiliate of a labor federation or national
union after submission to the Bureau of the contract or agreement of affiliation within thirty (30) days
after its execution.

xxx xxx xxx

DOCTRINES IN LABOR RELATIONS PAGE 16

(e) The local or chapter of a labor federation or national union shall have and maintain a constitution and
by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed.

Paragraph (a) refers to a local or chapter of a federation which did not undergo the rudiments of registration while
paragraph (b) refers to an independently registered union which affiliated with a federation. Implicit in the
foregoing differentiation is the fact that a local or chapter need not be independently registered. By force of law (in
this case, Article 212 [h]), such local or chapter becomes a legitimate labor organization upon compliance with the
aforementioned provisions of Section 3 (a) and (e), without having to be issued a Certificate of Registration in its
favor by the BLR. (San Miguel Foods, Inc. Cebu B-Meg Feed Plant vs. Hon. Bienvenido E. Laguesma, Undersecretary
of DOLE and Ilaw at Buklod ng Manggagawa (IBM). G.R. No. 116172 October 10, 1996. Justice Hermosisima. First
Division.)

LABOR UNION AS EMPLOYER

The mere fact that the respondent is a labor union does not mean that it cannot be considered an employer of the
persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor
organization. (Bautista vs. Inciong. G.R. No. L-52824. March 16, 1988. Justice Gutierrez, Jr. Third Division.)

THE LEGITIMACY OF A LABOR ORGANIZATION CANNOT BE COLLATERALLY ATTACKED IN A PETITION FOR

CERTIFICATION ELECTION

Such legal personality may not be subject to a collateral attack but only through a separate action instituted
particularly for the purpose of assailing it. This is categorically prescribed by Section 5, Rule V of the Implementing
Rules of Book V, which states as follows:

SEC. 5. Effect of registration. The labor organization or workers association shall be deemed registered and vested
with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot
thereafter be subject to collateral attack but may be questioned only in an independent petition for cancellation in
accordance with these Rules.

Hence, to raise the issue of the respondent unions legal personality is not proper in this case. The pronouncement
of the Labor Relations Division Chief, that the respondent union acquired a legal personality x x x cannot be
challenged in a petition for certification election.

The discussion of the Secretary of Labor and Employment on this point is also enlightening, thus:

. . . Section 5, Rule V of D.O. 9 is instructive on the matter. It provides that the legal personality of a union cannot
be the subject of collateral attack in a petition for certification election, but may be questioned only in an
independent petition for cancellation of union registration. This has been the rule since NUBE v. Minister of Labor,
110 SCRA 274 (1981). What applies in this case is the principle that once a union acquires a legitimate status as a
labor organization, it continues as such until its certificate of registration is cancelled or revoked in an independent
action for cancellation.

Equally important is Section 11, Paragraph II, Rule IX of D.O. 9, which provides for the dismissal of a petition for
certification election based on the lack of legal personality of a labor organization only in the following instances:
(1) appellant is not listed by the Regional Office or the BLR in its registry of legitimate labor organizations; or (2)
appellants legal personality has been revoked or cancelled with finality. Since appellant is listed in the registry of
legitimate labor organizations, and its legitimacy has not been revoked or cancelled with finality, the granting of its
petition for certification election is proper.
DOCTRINES IN LABOR RELATIONS PAGE 17

[T]he legal personality of a legitimate labor organization x x x cannot be subject to a collateral attack. The law is
very clear on this matter. x x x The Implementing Rules stipulate that a labor organization shall be deemed
registered and vested with legal personality on the date of issuance of its certificate of registration. Once a
certificate of registration is issued to a union, its legal personality cannot be subject to a collateral attack. In may be
questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the
Implementing Rules. (Legend International Resorts Limited vs. Kilusang Manggagawa ng Legenda (KML-
Independent). G.R. No. 169754. February 23, 2011. Justice Del Castillo. First Division.)

Once a union acquires legitimate status as a labor organization, it continues to be recognized as such until its
certificate of registration is cancelled or revoked in an independent action for cancellation. (San Miguel
Corporation Employees Union Philippine Transport and General Workers Organization (SMCEUPTGWO) vs. San
Miguel Packaging Products Employees Union Pambansang Diwa ng Manggagawang Pilipino (SMPPEUPDMP). G.R.
No. 171153. September 12, 2007. Justice Chico- Nazario. Third Division.)

After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It
may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book IV
of the "Rules to Implement the Labor Code" (Implementing Rules). (Tagaytay Highlands International Golf Club
Incorporated vs. Tagaytay Highlands Employees Union-PGTWO. G.R. No. 142000. January 22, 2003. Justice Carpio
Morales. Third Division.)

REGISTRATION OF LABOR ORGANIZATIONS IN SEC

To be considered a legitimate labor organization with the right to enjoy all the rights and privileges recognized by
law, it is necessary that it be registered and permitted to operate as required by law. The fact that a labor union
has organized itself under the Corporation Law as a non-stock corporation and has obtained a certificate of
incorporation from the Securities and Exchange Commission is of no moment, for such incorporation has only the
effect of giving to it juridical personality before the regular courts of justice. Such incorporation cannot be availed
of by it to enjoy the rights and privileges granted by law to a legitimate labor organization. (Philippine Land-Air-Sea
Labor Union (PLASLU), Inc. vs. Court of Industrial Relations and Pepsi-Cola Bottling Company (Cebu Branch). G.R.
Nos. L-5664 & L-5698. September 17, 1953. Justice Bautista-Angelo. En Banc.)

THE SUBMISSION OF THE REQUIRED DOCUMENTS AND PAYMENT OF REGISTRATION FEE) BECOMES THE
BUREAU'S BASIS FOR APPROVAL OF THE APPLICATION FOR REGISTRATION

In the case of union registration, the rationale for requiring that the submitted documents and papers be certified
under oath by the secretary or treasurer, as the case may be, and attested to by the president is apparent. The
submission of the required documents (and payment of P50.00 registration fee) becomes the Bureau's basis for
approval of the application for registration. Upon approval, the labor union acquires legal personality and is
entitled to all the rights and privileges granted by the law to a legitimate labor organization. The employer
naturally needs assurance that the union it is dealing with is a bona-fide organization, one which has not submitted
false statements or misrepresentations to the Bureau. The inclusion of the certification and attestation
requirements will in a marked degree allay these apprehensions of management. Not only is the issuance of any
false statement and misrepresentation a ground for cancellation of registration (see Article 239 (a), (c) and (d)); it
is also a ground for a criminal charge of perjury.

The certification and attestation requirements are preventive measures against the commission of fraud. They
likewise afford a measure of protection to unsuspecting employees who may be lured into joining unscrupulous or
fly-by-night unions whose sole purpose is to control union funds or to use the union for dubious ends.

In the case of union affiliation with a federation, the documentary requirements are found in Rule II, Section 3 (e),
Book V of the Implementing Rules, which we again quote as follows: "(c) The local or chapter of a labor federation
or national union shall have and maintain a constitution and by-laws, set of officers and books of accounts. For
DOCTRINES IN LABOR RELATIONS PAGE 18

reporting purposes, the procedure governing the reporting of independently registered unions, federations or
national unions shall be observed".

Since the "procedure governing the reporting of independently registered unions" refers to the certification and
attestation requirements contained in Article 235, paragraph 2, it follows that the constitution and by-laws, set of
officers and books of accounts submitted by the local and chapter must likewise comply with these requirements.
The same rationale for requiring the submission of duly subscribed documents upon union registration exists in the
case of union affiliation. Moreover, there is greater reason to exact compliance with the certification and
attestation requirements because, as previously mentioned, several requirements applicable to independent union
registration are no longer required in the case of the formation of a local or chapter. The policy of the law in
conferring greater bargaining power upon labor unions must be balanced with the policy of providing preventive
measures against the commission of fraud. (Phoenix Iron and Steel Corporation vs. Secretary of Labor and
Employment and PISCOR Workers Union — Alliance of Nationalist and Genuine Labor Organizations (PISCOR-
ANGLO). G.R. No. 112141. May 16, 1995. Justice Bellosillo. First Division.)

At any rate, the Labor Code and its implementing rules do not require that the number of members appearing on
the documents in question should completely dovetail. For as long as the documents and signatures are shown to
be genuine and regular and the constitution and by-laws democratically ratified, the union is deemed to have
complied with registration requirements. (Heritage Hotel Manila vs. Pinag-Isang Galing at Lakas ng mga
Manggagawa sa Heritage Manila (PIGLAS-Heritage). G.R. No. 177024. October 30, 2009. Second Division. Justice
Abad.)

After a labor organization has filed the necessary papers and documents for registration, it becomes mandatory for
the Bureau of Labor Relations to check if the requirements under Article 234 have been sedulously complied with.
If its application for registration is vitiated by falsification and serious irregularities, especially those appearing on
the face of the application and the supporting documents, a labor organization should be denied recognition as a
legitimate labor organization. (Progressive Development Corp.-Pizza Hut vs. Laguesma. G.R. No. 115077. April 18,
1997. Justice Kapunan. First Division.)

ALL REQUISITE DOCUMENTS AND PAPERS SHALL BE CERTIFIED UNDER OATH BY THE SECRETARY OR THE
TREASURER OF THE ORGANIZATION, AS THE CASE MAY BE, AND ATTESTED TO BY ITS PRESIDENT

The requirement that the union secretary certify under oath all documents and papers filed in support of an
application for union registration is imposed by Article 235 of the Labor Code, to wit:
 
Art. 235. Action on application. The Bureau shall act on all applications for registration within thirty (30)
days from filing.
 
All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its president.

Indeed, all that Article 235 requires is that the secretary’s certification be  under oath. It does not prescribe a
specific manner of its notarization. Based on its interpretation of Article 235, the BLR, in its October 14,
1998 Advisory, allows for the wholesale notarization of a unions application for registration and recognizes the
effects thereof even on the attachments, including the secretary’s certification. This is a reasonable interpretation
considering that the form of notarization contemplated in said Advisory adequately serves the purpose of Article
235, which is to forestall fraud and misrepresentation. More importantly, such interpretation of the BLR is
accorded great weight by the Court for it is said agency which is vested with authority and endowed with expertise
to implement the law in question. (Dong Seung Incorporated vs. Bureau of Labor Relations, Hans Leo J. Cacdac,
DOCTRINES IN LABOR RELATIONS PAGE 19

Director and NAMAWU Local 188 Dong Seung  Workers Union. G.R. No. 162356. April 14, 2008. Justice Austria-
Martinez. Third Division.)

REGISTRATION OF UNION AND PROHIBITION ON CERTIFICATION ELECTION

Article 231 and 232 of the Labor Code read:

Art. 231. — Registry of unions and file of collective agreements. - . . . .

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

Art. 232. — Prohibition on Certification Election. — The Bureau shall not entertain any petition for
certification election or any other action which may disturb the administration of duly registered existing
collective bargaining agreement affecting the parties except under Articles 253, 253-A and 256 of this
Code.

Corollary thereto, Article 253-A of the same Code reads:

Art. 253-A. — Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition questioning agent shall be
entertained and no certification election shall be conducted by the Department of Labor and Employment
outside the sixty-day period immediately before the date of expiry of such five year term of the Collective
Bargaining Agreement.

It appears that the procedural requirement of filing the CBA within 30 days from date of execution under Article
231 was not met. The subject CBA was executed on November 28, 1989. It was ratified on December 8, 1989, and
then filed with DOLE for registration purposes on March 14, 1990. Be that as it may, the delay in the filing of the
CBA was sufficiently explained, i.e., there was an inter-union conflict on who would succeed to the presidency of
DOCTRINES IN LABOR RELATIONS PAGE 20

ILO-PHILS. The CBA was registered by the DOLE only on May 4, 1990. It would be injudicious for us to assume, as
what petitioner did, that the said CBA was filed only on April 30, 1990, or five (5) days before its registration, on
the unsupported surmise that it was done to suit the law that enjoins Regional Offices of Dole to act upon an
application for registration of a CBA within five (5) days from its receipt thereof. In the absence of any substantial
evidence that DOLE officials or personnel, in collusion with private respondent, had antedated the filing date of the
CBA, the presumption on regularity in the performance of official functions hold.

More importantly, non-compliance with the cited procedural requirement should not adversely affect the
substantive validity of the CBA between ILO-PHILS and the Transunion Corporation-Glassware Division covering the
company's rank and file employees. A collective bargaining agreement is more than a contract. It is highly
impressed with public interest for it is an essential instrument to promote industrial peace. Hence, it bears the
blessings not only of the employer and employees concerned but even the Department of Labor and Employment.
To set it aside on technical grounds is not conducive to the public good. (Trade Unions of the Philippines/February
Six Movement TUPAS/FSM), vs. Hon. Bienvenido Laguesma, Transunion Corporation-Glass Division, and Integrated
Labor Organization (ILO-Philippines). G.R. No. 95013. September 21, 1994. Justice Puno. Second Division.)

A LABOR UNION HAS THE REQUISITE PERSONALITY TO SUE

A labor union has the requisite personality to sue on behalf of its members for their individual money claims. It
would be an unwarranted impairment of the right to self-organization through formation of labor associations if
thereafter such collective entities would be barred from instituting action in their representative capacity. So
marked is the respect under the Constitution and the statutes to such a right to self-organization as a result of
which it may enter into collective bargaining agreements. Once such a collective contract is entered into, its
benefits extend to all the laborers and employees in the collective bargaining unit. That would include those who
do not belong to the labor organization that was chosen to represent the employees. (La Carlota Sugar Central vs.
Court of Industrial Relations, National Sugar Workers Union (PAFLU) and Jose Villanueva. G.R. No. L-20203. May
19, 1975. Justice Fernando. Second Division.)

LEGAL PERSONALITY OF LOCAL OR CHAPTER

The local chapter, as its principal, should also be a legitimate labor organization in good standing.   In the case of
union affiliation with a federation, the documentary requirements are found in Rule II, Section 3(e), Book V of the
implementing Rules, which we again quote as follows:

(c) The local or chapter of a labor federation or national union shall have and maintain a constitution and by-
laws, set of officers and books of accounts. For reporting purposes, the procedure governing the reporting
of independently registered unions, federations or national unions shall be observed.
DOCTRINES IN LABOR RELATIONS PAGE 21

Since the "procedure governing the reporting of independently registered unions" refers to the certification and
attestation requirements contained in Article 235, paragraph 2, it follows that the constitution and by-laws, set of
officers and books of accounts submitted by the local and chapter must likewise comply with these requirements.
The same rationale for requiring the submission of duly subscribed documents upon union registration exists in the
case of union affiliation. Moreover, there is greater reason to exact compliance with the certification and
attestation requirements because, as previously mentioned, several requirements applicable to independent union
registration are no longer required in the case of the formation of a local or chapter. The policy of the law in
conferring greater bargaining power upon labor unions must be balanced with the policy of providing preventive
measures against the commission of fraud. A local or chapter therefore becomes a legitimate labor organization
only upon submission of the following to the BLR: 1) A charter certificate, within 30 days from its issuance by the
labor federation or national union, and 2) The constitution and by-laws, a statement on the set of officers, and the
books of accounts all of which are certified under oath by the secretary or treasurer, as the case may be, of such
local or chapter, and attested to by its president.

Absent compliance with these mandatory requirements, the local or chapter does not become a legitimate labor
organization. (Lopez Sugar Corporation vs. Hon. Secretary of Labor and Employment, National Congress of unions
in the Sugar Industry of the Philippines (NACUSIP) and Commercial and Agro-Industrial Labor Organization (CAILO).
G.R. No. 93117 August 1, 1995. Justice Vitug. Third Division.)

LOCAL UNION DOES NOT OWE ITS EXISTENCE TO THE FEDERATION WITH WHICH IT IS AFFILIATED

A local union may disaffiliate at any time from its mother federation, absent any showing that the same is
prohibited under its constitution or rule. Such, however, does not result in it losing its legal personality altogether.
A local labor union is a separate and distinct unit primarily designed to secure and maintain an equality of
bargaining power between the employer and their employee-members. A local union does not owe its existence to
the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the
will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it
give the mother federation the license to act independently of the local union. It only gives rise to a contract of
agency where the former acts in representation of the latter. (Cirtek Employees Labor Union-Federation of Free
Workers vs. Cirtek Electronics, Inc. G.R. No. 190515. June 6, 2011. Justice Carpio Morales. Third Division)

It is well settled that labor unions may disaffiliate from their mother federations to form a local or independent
union only during the 60-day freedom period immediately preceding the expiration of the CBA. The power and
freedom of a local union to disaffiliate from its mother union or federation is axiomatic. A local union is, after all, a
separate and voluntary association that under the constitutional guarantee of freedom of expression is free to
serve the interests of its members. Such right and freedom invariably include the right to disaffiliate or declare its
autonomy from the federation or mother union to which it belongs, subject to reasonable restrictions in the law or
the federation’s constitution. The right to disaffiliate was upheld before the onset of the freedom period when it
became apparent that there was a shift of allegiance on the part of the majority of the union members.

A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union, being a
separate and voluntary association, is free to serve the interests of all its members including the freedom to
disaffiliate or declare its autonomy from the federation which it belongs when circumstances warrant, in
accordance with the constitutional guarantee of freedom of association.
DOCTRINES IN LABOR RELATIONS PAGE 22

The purpose of affiliation by a local union with a mother union [or] a federation "x x x is to increase by collective
action the bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units
of association, free to serve their own and the common interest of all, subject to the restraints imposed by the
Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the
terms laid down in the agreement which brought it into existence."

Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime and such
disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the federation's constitution
prohibiting disaffiliation or the declaration of autonomy of a local union, a local may dissociate with its parent
union.

Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints
imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon
the terms laid down in the agreement which brought such affiliation into existence. (National Union of Bank
Employees (NUBE) vs. Philnabank Employees Association (PEMA). G.R. No.174287. August 12, 2013. Justice Peralta.
Third Division.)

THE INCLUSION IN THE UNION OF DISQUALIFIED EMPLOYEES IS NOT AMONG THE GROUNDS FOR CANCELLATION
OF REGISTRATION

The inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion
is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c)
of Article [247] of the Labor Code. Thus, for purposes of de-certifying a union, it is not enough to establish that the
rank-and-file union includes ineligible employees in its membership. Pursuant to paragraphs (a) and (b) of Article
247 of the Labor Code, it must be shown that there was misrepresentation, false statement or fraud in connection
with: (1) the adoption or ratification of the constitution and by-laws or amendments thereto; (2) the minutes of
ratification; (3) the election of officers; (4) the minutes of the election of officers; and (5) the list of voters.44
Failure to submit these documents together with the list of the newly elected-appointed officers and their postal
addresses to the BLR may also constitute grounds for cancellation, lack of mutuality of interests, however, is not
among said grounds. (De Ocampo Memorial Schools, Inc. vs. Bigkis Manggagawa sa De Ocampo Memorial School,
Inc. G.R. No. 192648. March 15, 2017. Justice Jardeleza. Third Division.)

The inclusion in the union of disqualified employees is not among the grounds for cancellation of registration,
unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in
Sections (a) to (c) of Article 239 of the Labor Code. (Sta. Lucia East Commercial Corporation vs. Hon. Secretary of
Labor and Employment and Sta. Lucia East Commercial Corporation Workers Association (CLUP Local Chapter). G.R.
No. 162355. August 14, 2009. Justice Carpio. First Division.)

A STATE MAY NOT COMPEL ORDINARY VOLUNTARY ASSOCIATIONS TO ADMIT THERETO ANY GIVEN INDIVIDUAL

Although, generally, a state may not compel ordinary voluntary associations to admit thereto any given individual,
because membership therein may be accorded or withheld as a matter of privilege, the rule is qualified in respect
of labor unions holding a monopoly in the supply of labor, either in a given locality, or as regards a particular
employer with which it has a closed-shop agreement. The reason is that . . . The closed shop and the union shop
cause the admission requirements of trade union to become affected with the public interest. Likewise, a closed
shop, a union shop, or maintenance of membership clauses cause the administration of discipline by unions to be
affected with the public interest.
DOCTRINES IN LABOR RELATIONS PAGE 23

Consequently, it is well settled that such unions are not entitled to arbitrarily exclude qualified applicants for
membership, and a closed-shop provision would not justify the employer in discharging, or a union in insisting
upon the discharge of, an employee whom the union thus refuses to admit to membership, without any
reasonable ground therefor. Needless to say, if said unions may be compelled to admit new members, who have
the requisite qualifications, with more reason may the law and the courts exercise the coercive power when the
employee involved is a long standing union member, who, owing to provocations of union officers, was impelled to
tender his resignation, which he forthwith withdrew or revoked. Surely, he may, at least, invoke the rights of those
who seek admission for the first time, and cannot arbitrarily be denied readmission. (Francisco Salunga. vs. Court
of Industrial Relations; San Miguel Brewery, Inc. and Miguel Noel; National Brewery & Allied Industries Labor Union
of the Philippines (NABAILUP-PAFLU); John De Catillo and Cipriano Cid. G.R. No. L-22456. September 27, 1967.
Justice Concepcion. En Banc.)

SYSTEM OF CHECK-OFF IS PRIMARILY FOR THE BENEFIT OF THE UNION

A check-off 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 or agency fees from
the latter's wages and remits them directly to the union. Its desirability to a labor organization is quite evident; by
it, it is assured of continuous funding. Indeed, this Court has acknowledged that the system of check-off is primarily
for the benefit of the union and, only indirectly, of the individual laborers. When so stipulated in a collective
bargaining agreement, or authorized in writing by the employees concerned - the Labor Code and its Implementing
Rules recognize it to be the duty of the employer to deduct sums equivalent to the amount of union dues from the
employees' wages for direct remittance to the union, in order to facilitate the collection of funds vital to the role of
the union as representative of employees in a bargaining unit if not, indeed, to its very existence.  And it may be
mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the local
union which continues to represent the employees under the terms of a CBA, and not to the parent association
from which it has disaffiliated. The legal basis of check-off is thus found in statute or in contract. Statutory
limitations on check-offs generally require written authorization from each employee to deduct wages; however, a
resolution approved and adopted by a majority of the union members at a general meeting will suffice when the
right to check-off has been recognized by the employer, including collection of reasonable assessments in
connection with mandatory activities of the union, or other special assessments and extraordinary
fees. Authorization to effect a check-off of union dues is coterminous with the union affiliation or membership of
employees. On the other hand, the collection of agency fees in an amount equivalent to union dues and fees, from
employers who are not union members, is recognized by Article 248 (e) of the Labor Code. No requirement of
written authorization from the non-union employees is imposed. The employee's acceptance of benefits resulting
from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's
entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor
statutory, but quasi-contractual, deriving from the established principle that non-union employees may not
unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union.

No provision of law makes the employer directly liable for the payment to the labor organization of union dues and
assessments that the former fails to deduct from its employees' salaries and wages pursuant to a check-off
stipulation. The employer's failure to make the requisite deductions may constitute a violation of a contractual
commitment for which it may incur liability for unfair labor practice. But it does not by that omission, incur liability
to the union for the aggregate of dues or assessments uncollected from the union members, or agency fees from
non-union employees. Check-offs in truth impose an extra burden on the employer in the form of additional
administrative and bookkeeping costs. It is a burden assumed by management at the instance of the union and for
DOCTRINES IN LABOR RELATIONS PAGE 24

its benefit, in order to facilitate the collection of dues necessary for the latter's life and sustenance. But the
obligation to pay union dues and agency fees obviously devolves not upon the employer, but the individual
employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee
to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions and
remit the collections to the union. The principle of unjust enrichment necessarily precludes recovery of union dues
- or agency fees - from the employer, these being, to repeat, obligations pertaining to the individual worker in
favor of the bargaining union. Where the employer fails or refuses to implement a check-off agreement, logic and
prudence dictate that the union itself undertake the collection of union dues and assessments from its members
(and agency fees from non-union employees); this, of course, without prejudice to suing the employer for unfair
labor practice. (Holy Cross of Davao College, Inc. vs. Hon. Jerome Joaquin, in his capacity as Voluntary Arbitrator,
and Holy Cross of Davao College Union  Kalipunan ng Manggagawang Pilipino  (KAMAPI). G.R. No. 110007. October
18, 1996. Justice Narvasa. Third Division)

VALIDITY OF THE SPECIAL ASSESSMENT FOR UNIONS

Article 241 has three (3) requisites for the validity of the special assessment for unions incidental expenses,
attorneys’ fees and representation expenses. These are: 1) authorization by a written resolution of the majority of
all the members at the general membership meeting called for the purpose; (2) secretary’s record of the minutes
of the meeting; and (3) individual written authorization for check off duly signed by the employees concerned.
Clearly, attorneys’ fees may not be deducted or checked off from any amount due to an employee without his
written consent. (Gabriel, et al. vs. The Honorable Secretary of Labor and Employment. G.R. No. 115949.
March 16, 2000. Justice Quisumbing. Third Division.)

LEGITIMATE LABOR ORGANIZATIONS HAVE EXCLUSIVE RIGHTS UNDER THE LAW

It is important to determine whether or not a particular labor organization is legitimate since legitimate labor
organizations have exclusive rights under the law which cannot be exercised by non-legitimate unions, one of
which is the right to be certified as the exclusive representative of all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining. These rights are found under Article 242 of the Labor Code, to
wit:

Art. 242. Rights of legitimate labor organizations. — A legitimate labor organization shall have the right:

(a) To act as the representative of its members for the purpose of collective bargaining;

(b) To be certified as the exclusive representative of all the employees in an appropriate collective
bargaining unit for purpose of collective bargaining;

(c) To be furnished by the employer, upon written request, with his annual audited financial statement,
including the balance sheet and the profit and loss statement, within thirty (30) calendar days from
the date of receipt of the request, after the union has been duly recognized by the employer or
DOCTRINES IN LABOR RELATIONS PAGE 25

certified as the sole and exclusive bargaining representative of the employees in the bargaining unit,
or within sixty (60) calendar days before the expiration of the existing collective bargaining
agreement, or during the collective bargaining negotiation;

(d) To own property, real or personal, for the use and benefit of the labor organization and its members;

(e) To sue and be sued in its registered name; and

(f) To undertake all other activities designed to benefit the organization and its members, including
cooperative, housing welfare and other projects not contrary to law. (San Miguel Foods, Inc. Cebu B-
Meg Feed Plant vs. Hon. Bienvenido E. Laguesma, Undersecretary of DOLE and Ilaw at Buklod ng
Manggagawa (IBM). G.R. No. 116172 October 10, 1996. Justice Hermosisima. First Division.)

STATE’S POLICY OF PROMOTING UNIONISM

Article II, Section 18 of the 1987 Constitution provides:

 
The State affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare.

One of the rights sought to be protected is the right of workers to self-organization and to form, join, or assist
labor organizations of their own choosing. (Articles 3 and 243, Labor Code) In this regard, the Labor Code also
declares as a policy of the State the fostering of a free and voluntary organization of a strong and united labor
movement. (Article 211(A)(c), Labor Code).

Consequently, the Labor Code declares that 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, which
includes 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. (Article 246, Labor Code)

The Constitution guarantees the fundamental right of all workers to self-organization.  The right to self-organization
is a species of the broader constitutional right of the people to form unions, associations, or societies for purposes
not contrary to law, which right shall not be abridged.
 
The right of workers to self-organization is protected under the Labor Code which provides that workers shall have
the right to self-organization and to form, join, or assist labor organizations of their own choosing for purpose of
collective bargaining. The Code proscribes the abridgment of this right, stating that: 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.
 
The right of workers to self-organization means that workers themselves voluntarily organize, without compulsion
from outside forces. Self-organization means voluntary association without compulsion, threat of punishment, or
threat of loss of livelihood. Workers who self-organize are workers who on their own volition freely and voluntarily
form or join a union. (Bank of Philippine Islands vs. BPI Employees union-Davao Chapter Federation of Unions in
BPI Unibank. G.R. No. 164301. Justice Carpio. En Banc.)
DOCTRINES IN LABOR RELATIONS PAGE 26

ONE UNION ONE COMPANY POLICY

The proliferation of unions in an employer unit is discouraged as a matter of policy unless there are compelling
reasons which would deny a certain class of employees the right to self-organization for purposes of collective
bargaining. (Philtranco Service Enterprises vs. Bureau of Labor Relations. G.R. No. 85343. June 28, 1989. Justice
Gutierrez, Jr. Third Division.)

RIGHT TO JOIN INCLUDES RIGHT TO ABSTAIN

The right to join a union includes the right to abstain from joining any union , for a right comprehends at least two
broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act
for himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join or
refrain from joining an association. In as much as what both the Constitution and the Labor Code have recognized
and guaranteed to the employee is the right to join associations of his choice, it would be absurd to say that the
law also imposes, in the same breath, upon the employee the duty to join associations.

Indeed, the right to abstain from joining labor organizations may be curtailed or restricted by union security
agreements, such as the Union Shop Clause. However, being, in a sense, a derogation of the freedom or right NOT
to join any labor organization, this Honorable Courts strict and restrictive enforcement of union security
agreements is clearly warranted and justified. (Bank of Philippine Islands vs. BPI Employees union-Davao Chapter
Federation of Unions in BPI Unibank. G.R. No. 164301. Justice Carpio. En Banc.)

COMPULSORY MEMBERSHIP IS ANATHEMA TO SELF-ORGANIZATION

The right to self-organize includes the right not to exercise such right. Freedom to associate necessarily includes
the freedom not to associate. Thus, freedom to join unions necessarily includes the freedom not to join unions.
Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor
organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain membership
therein. The right to form or join a labor organization necessarily includes the right to refuse or refrain from
exercising said right. It is self-evident that just as no one should be denied the exercise of a right granted by law, so
also, no one should be compelled to exercise such a conferred right.

What the Constitution and Industrial Peace Act recognize and guarantee is the right to form or join associations.
Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature
and contents of a right, it can be safely said that whatever theory one subscribes to, a right comprehends at least
two broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may
act for himself without being prevented by law; second, power, whereby an employee may, as he pleases, join or
refrain from joining an association. It is therefore the employee who should decide for himself whether he should
join or not an association; and should he choose to join, he himself makes up his mind as to which association he
would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his
membership with said organization at any time x x x. It is clear, therefore, that the right to join a union includes the
right to abstain from joining any union. Inasmuch as what both the Constitution and the Industrial Peace Act have
DOCTRINES IN LABOR RELATIONS PAGE 27

recognized, and guaranteed to the employee, is the right to join associations of his choice, it would be absurd to
say that the law also imposes, in the same breath, upon the employee the duty to join associations. The law does
not enjoin an employee to sign up with any association. 

Thus, it is the worker who should personally decide whether or not to join a labor union. The union, the
management, the courts, and even the State cannot decide this for the worker, more so against his will.
 
The State encourages union membership to protect an individual employee from the power of the employer. A
union is an instrumentality utilized to achieve the objective of protecting the rights of workers. (Bank of Philippine
Islands  vs. BPI Employees union-Davao Chapter Federation of Unions in BPI Unibank. G.R. No. 164301. Justice
Carpio. En Banc.)

His individual freedom is surrendered for the benefit of all members. He accepts the will of the majority of the
members in order that he may derive the advantages to be gained from the concerted action of all. Just as the
enactments of the legislature bind all of us, to the constitution and by-laws of the union (unless contrary to good
morals or public policy, or otherwise illegal), which are duly enacted through democratic processes, bind all of the
members. If a member of a union dislikes the provisions of the by-laws, he may seek to have them amended or
may withdraw from the union; otherwise he must abide by them. It is not the function of courts to decide the
wisdom or propriety of legitimate by-laws of a trade union.

On joining a labor union, the constitution and by-laws become a part of the member's contract of membership
under which he agrees to become bound by the constitution and governing rules of the union so far as it is not
inconsistent with controlling principles of law. The constitution and by-laws of an unincorporated trade union
express the terms of a contract, which define the privileges and rights secured to, and duties assumed by, those
who have become members. The agreement of a member on joining a union to abide by its laws and comply with
the will of the lawfully constituted majority does not require a member to submit to the determination of the
union any question involving his personal rights.

The power of a voluntary association to discipline its members is not found in the general law of the land, but rests
upon the agreement of the members as expressed in its constitution and by-laws, to which every member joining
the association is deemed to assent. Membership in such association, therefore, imports consent to the discipline
of the association if carried out in good faith and without malice, through the methods prescribed by the laws of
the association, and in accordance with the principles of natural justice. (Ang Malayang Manggagawa ng Ang
Tibay Enterprises, et al. vs. Ang Tibay, et al. G.R. No. L-8259. December 23, 1957. Justice Bautista Angelo. En Banc.)

RELIGIOUS OBJECTORS

The right of members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious
beliefs, does not bar the members of that sect from forming their own union. The public respondent correctly
observed that the "recognition of the tenets of the sect ... should not infringe on the basic right of self-organization
granted by the constitution to workers, regardless of religious affiliation." (Kapatiran sa Meat and Canning
Division vs. Ferrer-Calleja. G.R. No. 82914. June 20, 1988. Justice Griño-Aquino. First Division.)

MEMBERS OF RELIGIOUS SECTS WHICH PROHIBIT THEIR MEMBERS FROM JOINING LABOR UNIONS

To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an exception,
when it added to Section 4 (a) (4) of the Industrial Peace Act the following proviso: “but such agreement shall not
cover members of any religious sects which prohibit affiliation of their members in any such labor organization”.
Republic Act No. 3350 merely excludes ipso jure from the application and coverage of the closed shop agreement
the employees belonging to any religious sects which prohibit affiliation of their members with any labor
organization. What the exception provides, therefore, is that members of said religious sects cannot be compelled
DOCTRINES IN LABOR RELATIONS PAGE 28

or coerced to join labor unions even when said unions have closed shop agreements with the employers; that in
spite of any closed shop agreement, members of said religious sects cannot be refused employment or dismissed
from their jobs on the sole ground that they are not members of the collective bargaining union.

The purpose of Republic Act No. 3350 was to insure freedom of belief and religion, and to promote the general
welfare by preventing discrimination against those members of religious sects which prohibit their members from
joining labor unions, confirming thereby their natural, statutory and constitutional right to work, the fruits of which
work are usually the only means whereby they can maintain their own life and the life of their dependents. It
cannot be gainsaid that said purpose is legitimate. The questioned Act also provides protection to members of said
religious sects against two aggregates of group strength from which the individual needs protection. The individual
employee, at various times in his working life, is confronted by two aggregates of power—collective labor, directed
by a union, and collective capital, directed by management. The union, an institution developed to organize labor
into a collective force and thus protect the individual employee from the power of collective capital, is,
paradoxically, both the champion of employee rights, and a new source of their frustration. Moreover, when the
Union interacts with management, it produces yet a third aggregate of group strength from which the individual
also needs protection—the collective bargaining relationship. It cannot be denied, furthermore, that the means
adopted by the Act to achieve that purpose—exempting the members of said religious sects from coverage of
union security agreements—is reasonable.

The Act does not require as a qualification, or condition, for joining any lawful association membership in any
particular religion or in any religious sect; neither does the Act require affiliation with a religious sect that prohibits
its members from joining a labor union as a condition or qualification for withdrawing from a labor union. Joining
or withdrawing from a labor union requires a positive act. Republic Act No. 3350 only exempts members with such
religious affiliation from the coverage of closed shop agreements. So, under this Act, a religious objector is not
required to do a positive act—to exercise the right to join or to resign from the union. He is exempted ipso jure
without need of any positive act on his part. (Victoriano vs. Elizalde Rope Workers’ Union. G.R. No. L-25246
September 12, 1974. Justice Zaldiva. En Banc.)

NO DISCRIMINATION COMMITTED WHEN UNION EMPLOYEES ARE DIFFERENT AND DISTINCT FROM THE NON-
UNION EMPLOYEES

There can be no discrimination committed by petitioner thereby as the situation of the union employees are
different and distinct from the non-union employees. Indeed, discrimination per se is not unlawful. There can be
no discrimination where the employees concerned are not similarly situated. (Wise and Co., Inc. vs. Wise & Co.,
Inc. Employees Union, 178 SCRA 536, G.R. No. 87672 October 13, 1989 Justice Gancayco First Division.)

EMPLOYEES IN THE PUBLIC SERVICE MAY NOT ENGAGE IN STRIKES OR IN CONCERTED AND UNAUTHORIZED
STOPPAGE OF WORK

Employees in the public service may not engage in strikes or in concerted and unauthorized stoppage of work; that
the right of government employees to organize is limited to the formation of unions or associations, without
including the right to strike.

Specifically, the right of civil servants to organize themselves was positively recognized in Association of Court of
Appeals Employees vs. Ferrer-Caleja. But, as in the exercise of the rights of free expression and of assembly, there
are standards for allowable limitations such as the legitimacy of the purpose of the association, [and] the
overriding considerations of national security.

As regards the right to strike, the Constitution itself qualifies its exercise with the provision in accordance with law.
This is a clear manifestation that the state may, by law, regulate the use of this right, or even deny certain sectors
such right. Executive Order 180 which provides guidelines for the exercise of the right of government workers to
organize, for instance, implicitly endorsed an earlier CSC circular which enjoins under pain of administrative
sanctions, all government officers and employees from staging strikes, demonstrations, mass leaves, walkouts and
DOCTRINES IN LABOR RELATIONS PAGE 29

other forms of mass action which will result in temporary stoppage or disruption of public service by stating that
the Civil Service law and rules governing concerted activities and strikes in government service shall be observed.

The Court can concede hypothetically that the protest rally and gathering in question did not involve some specific
material demand. But then the absence of such economic-related demand, even if true, did not, under the
premises, make such mass action less of a prohibited concerted activity. For, as articulated earlier, any collective
activity undertaken by government employees with the intent of effecting work stoppage or service disruption in
order to realize their demands or force concessions, economic or otherwise, is a prohibited concerted mass action
and doubtless actionable administratively. In the absence of statute, public employees do not have the right to
engage in concerted work stoppages for any purpose. (Manila Public School Teachers Association, Fidel Fababier,
Merlin Anonuevo, Minda Galang and other teacher-members so numerous similarly situated, vs. The Hon. Perfecto
Laguio, Jr., in his capacity as Presiding Judge of the Regional Trial Court of Manila, Branch 18, Hon. Isidro Cariño, in
his capacity as Secretary of Education, Culture and Sports and the Hon. Erlinda Lolarga, in her capacity as Manila
City Schools Superintendent. G.R. No. 95445. August 6, 1991. Justice Narvasa. En Banc; Roberto A. Jacinto vs.
Honorable Court of Appeals and Metropolitan Bank and Trust Company. G.R. No. 80043. June 6, 1991. Justice
Davide, Jr. Third Division; Government Service Insurance System (GSIS) and Winston F. Garcia, in his capacity as
GSIS President & General Manager vs. Kapisanan ng mga Manggagawa sa GSIS. G.R. No. 170132. December 6,
2006. Justice Garcia. Second Division.)

REASONS FOR INELIGIBILITY - CONFLICT OF INTEREST

What is pointed out under the law, is that employees who discharge managerial functions, as well as the
supervisory employees who do not yet fall within the definition of managerial employees, are prohibited from
organizing themselves into a labor union constituted for the purpose of acting as a collective bargaining unit. To
sanction the recognition of the Supervisors Union of private respondents, which paradoxically or inadvertently
received a registration certificate from the Ministry of Labor, would be for this Court to accept and tolerate a
manifest violation of the Labor Code. The rationale for this inhibition has been stated to be, because 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 interests. The Union can also become company- dominated with
the presence of managerial employees in Union membership. (Bulletin Publishing Corporation vs. Hon. Augusto S.
Sanchez, Cresenciano B. Trajano, Primitiva C. Baterbonia, Rolando G. Olalia, Isidro S. Molina, Eduardo C. Morales,
Zacarias F. Flores, JR., Pedro M. Gallo, Loreto F. Mijares, Luis B. Ilagan, Ernesto O. Valdez, Eugenio L. Rivera,
Benjamin B. Bernas, Loreto D. De Los Reyes, Bonifacio A. Sotelo, Fe F. Arre, Felipe R. Olarte, Raymond T. Rivera,
Stewart C. Cacho, Dominador V. Curay, Fernando S. Lazaro, Ernesto L. Bautista, Vicente O. Abanilla, Jose B. Bernal,
Ramiro A. Nebres, Alcantara S. De La Paz and Luis F. Garcia, respondents. G.R. No. 74425. October 7, 1986. Justice
Alampay. Second Division.)

SEPARATIONS OF UNIONS DOCTRINE

The Court construes Article 245 to mean that, as in Section 3 of the Industrial Peace Act, supervisors shall not be
given an occasion to bargain together with the rank-and-file against the interests of the employer regarding terms
and conditions of work.

Thus, if the intent of the law is to avoid a situation where supervisors would merge with the rank and-file or where
the supervisors' labor organization would represent conflicting interests, then a local supervisors' union should not
be allowed to affiliate with the national federation of union of rank-and-file employees where that federation
actively participates in union activity in the company.

The prohibition against a supervisors' union joining a local union of rank-and-file is replete with jurisprudence. The
Court emphasizes that the limitation is not confined to a case of supervisors wanting to join a rank-and-file local
DOCTRINES IN LABOR RELATIONS PAGE 30

union. The prohibition extends to a supervisors' local union applying for membership in a national federation the
members of which include local unions of rank-and-file employees. The intent of the law is clear especially where,
as in the case at bar, the supervisors will be co-mingling with those employees whom they directly supervise in
their own bargaining unit.

Supervisors are not prohibited from forming their own union. What the law prohibits is their membership in a
labor organization of rank-and-file employees (Art. 245, Labor Code) or their joining a national federation of rank-
and-file employees that includes the very local union which they are not allowed to directly join. (Atlas
Lithographic Services, Inc. vs. Undersecretary Bienvenido E. Laguesma (Department of Labor and Employment) and
Atlas Lithographic Services, Inc. Supervisory, Administrative, Personnel, Production, Accounting and Confidential
Employees Association-Kaisahan ng Manggawang pilipino (KAMPIL-Katipunan). G.R. No. 96566 January 6, 1992.
Justice Gutierrez. Third Division.)

The determination of whether union membership comprises managerial and/or supervisory employees is a factual
issue that is best left for resolution in the inclusion-exclusion proceedings, which has not yet happened in this case
so still premature to pass upon. In case of alleged inclusion of disqualified employees in a union, the proper
procedure for an employer like petitioner is to directly file a petition for cancellation of the union’s certificate of
registration due to misrepresentation, false statement or fraud under the circumstances enumerated in Article 239
of the Labor Code, as amended. (Holy Child Catholic School vs. Sto. Tomas. G.R. No. 179146. July 23, 2013. Justice
Peralta. En Banc.)

UNFAIR LABOR PRACTICE REFERS TO ACTS THAT VIOLATE THE WORKERS RIGHT TO ORGANIZE

Unfair labor practice refers to acts that violate the workers right to organize. The prohibited acts are related to the
workers right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how
unfair, are not unfair labor practices. (Philcom Employees Union vs. Philippine Global Communications and Philcom
Corporation. G.R. No. 144315. July 17, 2006, Justice Carpio. Third Division.)

An employer is not considered guilty of unfair labor practice if it merely complied in good faith with the request of
the certified union for the dismissal of employees expelled from the union pursuant to the union security clause in
the Collective Bargaining Agreement. (National Union of Workers in Hotels, Restaurants and Allied Industries
Manila Pavilion Hotel Chapter vs. National Labor Relations Commission and Acesite Philippines Hotel Corporation.
G.R. No. 179402. September 30, 2008. Justice Chico-Nazario. Third Division.)

While we recognize the right of the employer to terminate the services of an employee for a just or authorized
cause, nevertheless, the dismissal of employees must be made within the parameters of law and pursuant to the
tenets of equity and fair play. The employer’s right to terminate the services of an employee for just or authorized
cause must be exercised in good faith. More importantly, it must not amount to interfering with, restraining or
coercing employees in the exercise of their right to self-organization because it would amount to, as in this case,
unlawful labor practice under Article 248 of the Labor Code. (Colegio De San Juan De Letran vs. Association of
Employees and Faculty of Letran. G.R. No. 141471. September 18, 2000. Justice Kapunan. First Division.)

It is an unfair labor practice for an employer operating under a collective bargaining agreement to negotiate or
attempt to negotiate with his employees individually in connection with changes in the agreement. And the basis
of the prohibition regarding individual bargaining with the strikers is that although the union is on strike, the
employer is still under obligation to bargain with the union as the employees’ bargaining representative. (The
Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd. G.R. No. L-
25291 January 30, 1971.Justice Castro. En Banc.)
A “runaway shop” is defined as an industrial plant moved by its owners from one location to another to escape
union labor regulations or state laws, but the term is also used to describe a plant removed to a new location in
order to discriminate against employees at the old plant because of their union activities. It is one wherein the
employer moves its business to another location or it temporarily closes its business for anti-union purposes. A
“runaway shop” in this sense, is a relocation motivated by anti-union animus rather than for business reasons. In
DOCTRINES IN LABOR RELATIONS PAGE 31

this case, however, Ionics was not set up merely for the purpose of transferring the business of Complex. At the
time the labor dispute arose at Complex, Ionics was already existing as an independent company. As earlier
mentioned, it has been in existence since July 5, 1984. It cannot, therefore, be said that the temporary closure in
Complex and its subsequent transfer of business to Ionics was for anti-union purposes. The Union failed to show
that the primary reason for the closure of the establishment was due to the union activities of the employees.
(Complex Electronics Employees Association vs. NLRC. G.R. No. 121315 & G.R. No. 122136. July 19, 1999. Justice
Kapunan. First Division.)

Unfair labor practice refers to “acts that violate the workers’ right to organize.” The prohibited acts are related to
the workers’ right to self-organization and to the observance of a CBA. Without that element, the acts, even if
unfair, are not unfair labor practices. Both the NLRC and the CA found that petitioner was unable to prove its
charge of unfair labor practice. It was the Union that had the burden of adducing substantial evidence to support
its allegations of unfair labor practice, which burden it failed to discharge. (General Santos Coca-Cola Plant Free
Workers Union-Tupas vs. Coca-Cola Bottlers Phils., Inc. (General Santos City). G.R. No. 178647 February 13, 2009
Justice Nachura First Division)

To constitute ULP, however, violations of the CBA must be gross. Gross violation of the CBA, under Article 261 of
the Labor Code, means flagrant and/or malicious refusal to comply with the economic provisions thereof.
Evidently, the University cannot be faulted for ULP as it in good faith merely heeded the above-said request of
Union members. (Arellano University Employees and Workers Union vs. Court of Appeals. G.R. No. 139940
September 19, 2006. Justice Carpio-Morales. Third Division.)

BURDEN OF PROOF – ULP

The general principle is that one who makes an allegation has the burden of proving it. While there are exceptions
to this general rule, in the case of ULP, the alleging party has the burden of proving such ULP. (UST Faculty Union
vs. University of Santo Tomas. G.R. No. 180892 April 7, 2009. Justice Velasco Jr,. Second Division.)

TOTALITY OF CONDUCT DOCTRINE

The culpability of employer’s remarks is to be evaluated not only on the basis of their implications, but against the
background of and in conjunction with collateral circumstances. Under this doctrine, expressions of opinion by an
employer though innocent in themselves, frequently were held to be culpable because of:
1. The circumstances under which they were uttered;
2. The history of the particular employer’s labor relations or anti-union bias, and;
3. Their connection with an established collateral plan of coercion or interference. (The Insular Life Assurance-
NATU vs. The Insular Life Co. Ltd. G.R. No. L-25291. January 30, 1971. Justice Castro. En Banc.)

TEST OF INTERFERENCE IN THE RIGHT TO SELF-ORGANIZATION

The test of whether an employer has interfered with and coerced employees in the exercise of their right to self-
organization is whether the employer has engaged in conduct which, it may reasonably be said, tends to interfere
with the free exercise of employees’ rights—it is not necessary that there be direct evidence that any employee
was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that
anti-union conduct of the employer does have an adverse effect on self-organization and collective bargaining
(UST Faculty Union vs. University of Santo Tomas. G.R. No. 180892. April 7, 2009. Justice Velasco Jr,. Second
Division.)
DOCTRINES IN LABOR RELATIONS PAGE 32

Their right to self-organization must be upheld in the absence of an express provision of law to the contrary. It
cannot be curtailed by a collective bargaining agreement. (Southern Philippines Federation of Labor (SPFL) vs.
Calleja. G.R. No. 80882. April 24, 1989. Justice Gutierrez, Jr. Third Division.)

A CBA IS THE LAW BETWEEN THE COMPANY AND THE UNION

A CBA is the law between the company and the union and compliance therewith is mandated by the express policy
to give protection to labor. Said policy should be given paramount consideration unless otherwise provided for by
law. A CBA provision for a closed shop is a valid form of union security and it is not a restriction on the right or
freedom of association guaranteed by the Constitution. However, in the implementation of the provisions of the
CBA, both parties thereto should see to it that no right is violated or impaired. (Alex Ferrer, Rafael Ferrer Henry
Diaz, Domingo Bancolita, Gil De Guzman, and Federation of Democratic Labor Unions, (FEDLU) vs. National Labor
Relations Commission (Second Division), Hui Kam Chang (In his capacity as General Manager of Occidental Foundry
Corporation), Occidental Foundry Corporation, Macedonio S. Velasco (In his capacity as representative of the
Federation of Free Workers), Genaro Capitle, Jesus Tumagan, Ernesto Barroga, Pedro Llena, Godofredo Pacheco,
Marcelino Castillo, George Ignas, Pio Domingo, and Jaime Baynado. G.R. No. 100898. July 5, 1993. Justice Melo.
Third Division.)

Collective bargaining which is defined as negotiations towards a collective agreement,6 is one of the democratic
frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to
create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union
and is characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code makes it an unfair
labor practice for an employer to refuse "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 grievance or question arising under such an agreement and
executing a contract incorporating such agreement, if requested by either party. (Kiok Loy, doing business under
the name and style Sweden Ice Cream Plant vs. National Labor Relations Commission (NLRC) and Pambansang
Kilusan ng Paggawa (KILUSAN). G.R. No. L-54334.January 22, 1986. Justice Cuevas. Second Division.)

The general rule is that when a CBA already exists, its provision shall continue to govern the relationship between
the parties, until a new one is agreed upon. The rule necessarily presupposes that all other things are equal. That
is, that neither party is guilty of bad faith. However, when one of the parties abuses this grace period by purposely
delaying the bargaining process, a departure from the general rule is warranted. (General Milling Corporation vs.
Court of Appeals. G.R. No. 146728. February 11, 2004. Justice Quisumbing. Second Division.)

NON-POSTING OF CBA IS A DEFECT

Specifically, the CBA was not posted for at least five days in two conspicuous places in the establishment before
ratification, to enable the workers to clearly inform themselves of its provisions. Moreover, the CBA submitted to
the MOLE did not carry the sworn statement of the union secretary, attested by the union president, that the CBA
had been duly posted and ratified, as required by Section 1, Rule 9, Book V of the Implementing Rules and
Regulations. These requirements being mandatory, non-compliance therewith rendered the said CBA ineffective.
(Associated Trade Unions (ATU) vs. Trajano. G.R.No. L-75321. June 20, 1988. Justice Cruz. First Division.)

MECHANICS OF COLLECTIVE BARGAINING ARE SET IN MOTION ONLY WHEN THE JURISDICTIONAL
PRECONDITIONS HAVE BEEN COMPLIED

Mechanics of collective bargaining are set in motion only when the jurisdictional preconditions have been
complied with. We have previously held that the mechanics of collective bargaining are set in motion only when
the following jurisdictional preconditions are present, namely, (1) possession of the status of majority
representation by the employees’ representative in accordance with any of the means of selection and/or
designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to bargain
DOCTRINES IN LABOR RELATIONS PAGE 33

under Article 251, paragraph (a) of the New Labor Code. (Associated Labor Union (ALU) vs. Ferrer-Calleja. G.R. No.
77282 May 5, 1989. Justice Regalado. Second Division.)

While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to
initiate contract negotiation.7 The mechanics of collective bargaining is set in motion only when the following
jurisdictional preconditions are present, namely, (1) possession of the status of majority representation of the
employees' representative in accordance with any of the means of selection or designation provided for by the
Labor Code; (2) proof of majority representation; and (3) a demand to bargain under Article 251, par. (a) of the
New Labor Code. (Kiok Loy, doing business under the name and style Sweden Ice Cream Plant vs. National Labor
Relations Commission (NLRC) and Pambansang Kilusan ng Paggawa (KILUSAN). G.R. No. L-54334.January 22, 1986.
Justice Cuevas. Second Division.)

FAILURE TO POST THE COLLECTIVE BARGAINING AGREEMENT IN AT LEAST TWO (2) CONSPICUOUS PLACES IN
THE ESTABLISHMENT IS AN INFIRMITY

An additional infirmity of the collective bargaining agreement involved was the failure to post the same in at least
two (2) conspicuous places in the establishment at least five days before its ratification. In the first place, the
posting of copies of the collective bargaining agreement is the responsibility of the employer which can easily
comply with the requirement through a mere mechanical act. The fact that there were “no impartial members of
the unit” is immaterial. The purpose of the requirement is precisely to inform the employees in the bargaining unit
of the contents of said agreement so that they could intelligently decide whether to accept the same or not. The
assembly of the members of ALU wherein the agreement in question was allegedly explained does not cure the
defect. (Associated Labor Union (ALU) vs. Ferrer-Calleja. G.R. No. 77282 May 5, 1989. Justice Regalado. Second
Division.)

THE DUTY TO BARGAIN COLLECTIVELY MEANS THE PERFORMANCE OF A MUTUAL OBLIGATION TO MEET AND
CONVENE PROMPTLY AND EXPEDITIOUSLY IN GOOD FAITH

The duty to bargain collectively is defined under Article 252 of the Labor Code to, viz.: ARTICLE 252. 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 agreements 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 agreement. It has been held that the crucial question whether or not a party has met his statutory duty
to bargain in good faith typically turns on the facts of the individual case. There is no per se test of good faith in
bargaining. Good faith or bad faith is an inference to be drawn from the facts. The effect of an employer’s or a
union’s actions individually is not the test of good faith bargaining, but the impact of all such occasions or actions,
considered as a whole.

After all, the employer’s duty to negotiate in good faith with its employees consists of matching the latter’s
proposals, if unacceptable, with counterproposals, and of making every reasonable effort to reach an agreement.
There must be common willingness After all, the employer’s duty to negotiate in good faith with its employees
consists of matching the latter’s proposals, if unacceptable, with counterproposals, and of making every
reasonable effort to reach an agreement. There must be common willingness. (Guagua National Colleges vs.
Guagua National Colleges Faculty Labor Union. G.R. No. 204693. July 13, 2016. Justice Del Castillo. Second Division)

LOCK, STOCK AND BARREL RULE

Employer refused to submit any counter proposal to the CBA proposed by its employees’ certified bargaining
agent. We ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. (Kiok
Loy, doing business under the name and style Sweden Ice Cream Plant vs. National Labor Relations Commission
DOCTRINES IN LABOR RELATIONS PAGE 34

(NLRC) and Pambansang Kilusan ng Paggawa (KILUSAN). G.R. No. L-54334.January 22, 1986. Justice Cuevas.
Second Division.)

REPRESENTATION PROVISION OF A CBA – FIVE (5) YEARS

The law mandates that the representation provision of a CBA should last for five years. (General Milling
Corporation vs. Court of Appeals. G.R. No. 146728. February 11, 2004. Justice Quisumbing. Second Division.)

EXTENSION OF CBA

While the parties may agree to extend the CBA’s original five-year term together with all other CBA provisions, any
such amendment or term in excess of five years will not carry with it a change in the unions exclusive collective
bargaining status. By express provision of the above-quoted Article 253-A, the exclusive bargaining status cannot
go beyond five years and the representation status is a legal matter not for the workplace parties to agree upon. In
other words, despite an agreement for a CBA with a life of more than five years, either as an original provision or
by amendment, the bargaining unions exclusive bargaining status is effective only for five years and can be
challenged within sixty (60) days prior to the expiration of the CBA’s first five years.

In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a term of
three (3) years or one which does not coincide with the said five-year term and said agreement is ratified by
majority of the members in the bargaining unit, the subject contract is valid and legal and therefore, binds the
contracting parties. The same will however not adversely affect the right of another union to challenge the
majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5)
year term of the CBA. (FVC Labor Union-Philippine Transport and General Workers Organization (FVCLU-PTGWO)
vs. Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General Labor Organizations
(SANAMA-FVC-SIGLO). G.R. No. 176249. November 27, 2009. Justice Brion. Second Division.)

EXTENSION OF CBA VALID UP TO TEN (10) YEARS

Insofar as representation is concerned, a CBA has a term of five years, while the other provisions, except for
representation, may be negotiated not later than three years after the execution. The assailed PAL-PALEA
agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe
financial situation faced by the employer, with the peculiar and unique intention of not merely promoting
industrial peace at PAL, but preventing the latter’s closure. We find no conflict between said agreement and Article
253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and
predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said
agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein
negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the parties from
waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same. In the instant
case, it was PALEA, as the exclusive bargaining agent of PAL’s ground employees, that voluntarily entered into the
CBA with PAL. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case was the
unions exercise of its right to collective bargaining. The right to free collective bargaining, after all, includes the
right to suspend it. We do not agree that the agreement violates the five-year representation limit mandated by
Article 253-A. Under said article, the representation limit for the exclusive bargaining agent applies only when
there is an extant CBA in full force and effect. In the instant case, the parties agreed to suspend the CBA and put in
abeyance the limit on the representation period. It is a valid exercise of the freedom to contract. Under the
principle of inviolability of contracts guaranteed by the Constitution, the contract must be upheld. (Rivera vs.
Espiritu. G.R. No. 135547 January 23, 2002Justice Quisumbing. Second Division.)

RETROACTIVITY OF CBA
DOCTRINES IN LABOR RELATIONS PAGE 35

In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties.
On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of
the mutual agreement of the parties but by intervention of the government. Despite the silence of the law, the
Court rules herein that CBA arbitral awards granted after six months from the expiration of the last CBA shall
retroact to such time agreed upon by both employer and the employees or their union. Absent such an agreement
as to retroactivity, the award shall retroact to the first day after the six-month period following the expiration of
the last day of the CBA should there be one. In the absence of a CBA, the Secretary’s determination of the date of
retroactivity as part of his discretionary powers over arbitral awards shall control. (Manila Electric Company vs.
Quisumbing. G.R. No. 127598. February 22, 2000. Justice Ynares-Santiago. Special First Division.)

LAST IN FIRST OUT RULE

The Last In First Out (LIFO) rule under the CBA is explicit. It is ordained that in cases of retrenchment resulting in
termination of employment in line of work, the employee who was employed on the latest date must be the first
one to go. The provision speaks of termination in the line of work. This contemplates a situation where employees
occupying the same position in the company are to be affected by the retrenchment program. Since there ought to
be a reduction in the number of personnel in such positions, the length of service of each employee is the
determining factor, such that the employee who has a longer period of employment will be retained. ( Maya Farms
Employees Organization, Maya Realty and Livestock Supervisory Union, Maya Farms Employees Association, and
Maya Farms, Inc. Supervisory Union vs. National Labor Relations Commission, Maya Realty & Livestock, Inc., Maya
Farms, Inc., and Liberty Flour Mills, INC. G.R. No. 106256. December 28, 1994. First Division.)

AUTOMATIC RENEWAL CLAUSE

Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic
provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute
a bar to a filing of a petition for certification election. When there is a representational issue, the status quo
provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an
absurd situation where the union members will be forced to maintain membership by virtue of the union security
clause existing under the CBA and, thereafter, support another union when filing a petition for certification
election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to
self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or
compromised. (PICOP Resources, Incorporated (PRI) vs. Dequilla. G.R. No. 172666. December 07, 2011. Justice
Mendoza. Third Division.)

PRINCIPLE OF SUBSTITUTION AND SUBSTITUTIONARY DOCTRINE

The principle of substitution, formulated by the National Labor Relations Board, counterpart of our Court of
Industrial Relations, means that where there occurs a shift in employees’ union allegiance after the execution of a
collective bargaining contract with their employer, the employees can change their agent—the labor union, but
the collective bargaining contract which in still subsisting, continues to bind the employees up to its expiration
date. They may, however, bargain for the shortening of said expiration date. And the only consideration for the
“substitutionary” doctrine is the employees’ interest in the existing bargaining agreement; the agent’s (Union’s)
interest never enters into the picture.

The “substitutionary doctrine” provides that the employees cannot revoke the validly executed collective
bargaining contract with their employer by the simple expedient of changing their bargaining agent. The new agent
DOCTRINES IN LABOR RELATIONS PAGE 36

must respect the contract. The employees, thru their new bargaining agent, cannot renege on the collective
bargaining contract, except to negotiate with management for the shortening hereof.

The “Substitutionary doctrine” cannot be invoked to support the claim that a newly certified collective bargaining
agent automatically assumes all personal undertakings, such as the no-strike stipulation in this case, assumed by
the deposed union. When the BBWU bound itself and its officers not to strike, it could not bind all the rival unions
because the BBWU was the agent only of the employees, not of the other unions which possess distinct
personalities. (Benguet Consolidated, Inc. vs. BCI Employees & Workers Union-PAFLU. G.R. No. L-24711. April 30,
1968. Justice Bengzon. En Banc.)

FUNDAMENTAL FACTORS IN DETERMINING THE APPROPRIATE COLLECTIVE BARGAINING UNIT

A bargaining unit is a group of employees of a given employer, comprised of all or less than all of the entire body of
employees, consistent with equity to the employer, indicated to be the best suited to serve the reciprocal rights
and duties of the parties under the collective bargaining provisions of the law.

The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the
employees (Globe Doctrine); (2) affinity and unity of the employees interest, such as substantial similarity of work
and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior
collective bargaining history; and (4) similarity of employment status. (Sta. Lucia East Commercial Corporation vs.
Hon. Secretary of Labor and Employment and Sta. Lucia East Commercial Corporation Workers Association (CLUP
Local Chapter). G.R. No. 162355. August 14, 2009. Justice Carpio. First Division.)

COMMUNITY OF INTEREST DOCTRINE OR SUBSTANTIAL MUTUAL INTEREST RULE

The employees sought to be represented by the collective bargaining agent must have substantial mutual interests
in terms of employment and working conditions as evinced by the type of work they performed. (San Miguel
Corporation Employees Union-PTGWO vs. Confesor. G.R. No. 111262 September 19, 1996. Justice Kapunan. First
Division.)

GLOBE DOCTRINE

Considering the will of the employees in determining what union should represent them. (Mechanical Department
Labor Union sa Philippine National Railways vs. Court of Industrial Relations and Samahan ng mga Manggagawa
sa Caloocan Shops. G.R. No. L-28223. August 30, 1968. Justice Reyes. En Banc.)

EMPLOYMENT STATUS

The employment status of the employees to be affected, that is to say, the positions and categories of work to
which they belong, and the unity of the employees' interest. And this is so because the basic test of a bargaining
unit's acceptability is whether it will best assure to all employees is whether it will be assure to all employees the
exercise of their collective bargaining rights. (Philippine Land-Air-Sea Labor Union (PLASLU) vs. Court of Industrial
Relations, et al. G.R. No. L-14656. November 29, 1960. Justice Gutierrez David. En Banc.)

PRIOR COLLECTIVE BARGAINING HISTORY

DOCTRINES IN LABOR RELATIONS PAGE 37

The principle called collective bargaining history enunciates that the prior collective bargaining history and affinity
of the employees should be considered in determining the appropriate bargaining unit. However, the Supreme
Court has categorically ruled that the existence of a prior collective bargaining history is neither decisive nor
conclusive in the determination of what constitutes an appropriate bargaining unit. (San Miguel Foods,
Incorporated vs. San Miguel Corporation Supervisors and Exempt Union. G.R. No. 146206. August 1, 2011. Justice
Peralta. Third Division.)

This Court has categorically ruled that the existence of a prior collective bargaining history is neither decisive nor
conclusive in the determination of what constitutes an appropriate bargaining unit. However, employees in two
corporations cannot be treated as a single bargaining unit even if the businesses of the two corporations are
related. (Sta. Lucia East Commercial Corporation vs. Hon. Secretary of Labor and Employment and Sta. Lucia East
Commercial Corporation Workers Association (CLUP Local Chapter). G.R. No. 162355. August 14, 2009. Justice
Carpio. First Division.)

PARTIES TO CBA ARE REQUIRED TO INCLUDE PROVISIONS FOR A MACHINERY FOR THE RESOLUTION OF
GRIEVANCES

In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination
on the basis of evidence and arguments presented by such parties who have bound themselves to accept the
decision of the arbitrator as final and binding. Arbitration may be classified, on the basis of the obligation on which
it is based, as either compulsory or voluntary. Compulsory arbitration is a system whereby the parties to a dispute
are compelled by the government to forego their right to strike and are compelled to accept the resolution of their
dispute through arbitration by a third party. The essence of arbitration remains since a resolution of a dispute is
arrived at by resort to a disinterested third party whose decision is final and binding on the parties, but in
compulsory arbitration, such a third party is normally appointed by the government. Under voluntary arbitration,
on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in their
collective agreement, to an impartial third person for a final and binding resolution.

In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein
provisions for a machinery for the resolution of grievances arising from the interpretation or implementation of
the CBA or company personnel policies. For this purpose, parties to a CBA shall name and designate therein a
voluntary arbitrator or a panel of arbitrators, or include a procedure for their selection, preferably from those
accredited by the National Conciliation and Mediation Board (NCMB). (Luzon Development Bank vs. Association of
Luzon Development Bank Employees. G.R. No. 120319. October 6, 1995. Justice Romero. En Banc.)

Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission
agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement
DOCTRINES IN LABOR RELATIONS PAGE 38

since arbitration is the final resort for the adjudication of the disputes (Ludo and Luym Corp. vs. Saornido. G.R. No.
140960. January 20, 2003. Justice Quisumbing. Second Division.)

It is the National Conciliation and Mediation Board that shall designate the VA panel based on the selection
procedure provided by the CBA (Manila Central Line Free Workers Union vs. Manila Central Line Corp. G.R. No.
10938. June 15, 1998. Justice Mendoza. Second Division.)

There is nothing in the law that prohibits Labor Arbiters from also acting as voluntary arbitrators as long as the
parties agree to have him hear and decide their dispute. (Manila Central Line Free Workers Union vs. Manila
Central Line Corp. G.R. No. 10938. June 15, 1998. Justice Mendoza. Second Division.)

DECLARED POLICY OF THE STATE TO PROMOTE AND EMPHASIZE THE PRIMACY OF VOLUNTARY ARBITRATION

Pursuant to Article 261 of the Labor Code, such a grievance falls under the original and exclusive jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators. Even if otherwise, the dispute would still fall under the said
jurisdiction pursuant to Article 262 of the same Code since the parties agreed in their CBA that practically all
disputes, including bargaining deadlock, shall be referred to grievance machinery that ends in voluntary
arbitration. After all, it is the declared policy of the State to promote and emphasize the primacy of voluntary
arbitration as a mode of settling labor or industrial disputes.

There is a need for an express stipulation in the CBA that unfair labor practices should be resolved in the ultimate
by the voluntary arbitrator or panel of voluntary arbitrators since the same fall within a special class of disputes
that are generally within the exclusive original jurisdiction of the Labor Arbiter by express provision of the law.
“Absent such express stipulation, the phrase ‘all disputes’ [or ‘any other matter or dispute’ for that matter] should
be construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e.,
disputes relating to contract-interpretation, contract-implementation, or interpretation or enforcement of
company personnel policies. [Unfair labor practices cases] — not falling within any of these categories — should
then be considered as a special area of interest governed by a specific provision of law.” (Guagua National
Colleges vs. Guagua National Colleges Faculty Labor Union. G.R. No. 204693. July 13, 2016. Justice Del Castillo.
Second Division.)

PETITION FOR CERTIFICATION ELECTION MAY BE FILED AT ANY TIME, IN THE ABSENCE OF A COLLECTIVE
BARGAINING AGREEMENT

A petition for certification election may be filed at any time, in the absence of a collective bargaining agreement.
Otherwise put, the rule prohibits the filing of a petition for certification election in the following cases: (1) during
the existence of a collective bargaining agreement except within the freedom period; (2) within one (1) year from
the date of issuance of declaration of a final certification election result; or (3) during the existence of a bargaining
deadlock to which an incumbent or certified bargaining agent is a party and which had been submitted to
conciliation or arbitration or had become the subject of a valid notice of strike or lockout. The Deadlock Bar Rule
simply provides that a petition for certification election can only be entertained if there is no pending bargaining
deadlock submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout.
The principal purpose is to ensure stability in the relationship of the workers and the management. (National
Congress of Unions in the Sugar Industry of the Philippines vs. Trajano. G.R. No. 67485 April 10, 1992Justice
Medialdea First Division)

Section 3, Rule V, Book V of the Omnibus Rules Implementing the Labor Code as amended. Said section provides as
follows: “When to file—In the absence of collective bargaining agreement duly registered in accordance with
DOCTRINES IN LABOR RELATIONS PAGE 39

Article 231 of the Code, a petition for certification election may be filed any time. However, no certification
election may be held within one year from the date of issuance of a final certification election result”. The phrase
“final certification election result” means that there was an actual conduct of election i.e., ballots were cast and
there was a counting of votes. In this case, there was no certification election conducted precisely, because the
first petition was dismissed, on the ground of a defective petition which did not include all the employees who
should be properly included in the collective bargaining unit. (R. Transport Corporation vs. Laguesma. G.R. No.
106830. November 16, 1993. Justice Quiason. First Division.)

CERTIFICATION ELECTION – DETERMINATION OF UNION AND VALID SUSPENSION

The certification election is the most democratic and expeditious method by which the laborers can freely
determine the union that shall act as their representative in their dealings with the establishment where they are
working. (Port Workers Union of the Phils. (PWUP) vs. Laguesma. G.R. Nos. 94929-30. March 18, 1992. Justice Cruz.
First Division.)

A union election is held pursuant to the union’s constitution and bylaws, and the right to vote in it is enjoyed only
by union members. A union election should be distinguished from a certification election, which is the process of
determining, through secret ballot, the sole and exclusive bargaining agent of the employees in the appropriate
bargaining unit, for purposes of collective bargaining. Specifically, the purpose of a certification election is to
ascertain whether or not a majority of the employees wish to be represented by a labor organization and, in the
affirmative case, by which particular labor organization. (UST Faculty Union vs. Bitonio, Jr. G.R. No. 131235
November 16, 1999. Justice Panganiban. Third Division.)

A certification election is the process of determining the sole and exclusive bargaining agent of the employees in
an appropriate bargaining unit for purposes of collective bargaining. Collective bargaining, refers to the negotiated
contract between a legitimate labor organization and the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit. (National Union of Workers in Hotels, Restaurants and
Allied Industries-Manila Pavilion Hotel Chapter vs. Secretary of Labor and Employment. G.R. No. 181531. July 31,
2009. Justice Carpio Morales. Second Division.)

In order to allow the employer to validly suspend the bargaining process there must be a valid petition for
certification election raising a legitimate representation issue. Hence, the mere filing of a petition for certification
election does not ipso facto justify the suspension of negotiation by the employer. The petition must first comply
with the provisions of the Labor Code and its Implementing Rules. Foremost is that a petition for certification
election must be filed during the sixty-day freedom period. (Colegio De San Juan De Letran vs. Association of
Employees and Faculty of Letran. G.R. No. 141471. September 18, 2000. Justice Kapunan. First Division.)

CONTRACT-BAR RULE PROHIBITS THE FILING OF A PETITION FOR CERTIFICATION ELECTION DURING THE
EXISTENCE OF A COLLECTIVE BARGAINING AGREEMENT

The contract-bar rule under Section 3, Rule 5, Book V of the Implementing Rules and Regulations. This rule simply
provides that a petition for certification election or a motion for intervention can only be entertained within sixty
days prior to the expiry date of an existing collective bargaining agreement. Otherwise put, the rule prohibits the
filing of a petition for certification election during the existence of a collective bargaining agreement except within
the freedom period, as it is called, when the said agreement is about to expire. The purpose, obviously, is to ensure
stability in the relationships of the workers and the management by preventing frequent modifications of any
collective bargaining agreement earlier entered into by them in good faith and for the stipulated original period.
Associated Trade Unions (ATU) vs. Trajano. G.R. No. L-75321 June 20, 1988. Justice Cruz. First Division)

Basic to the contract bar rule is the proposition that the delay of the right to select representatives can be justified
only where stability is deemed paramount. Excepted from the contract bar rule are certain types of contracts
which do not foster industrial stability, such as contracts where the identity of the representative is in doubt. Any
DOCTRINES IN LABOR RELATIONS PAGE 40

stability derived from such contracts must be subordinated to the employees’ freedom of choice because it does
not establish the type of industrial peace contemplated by the law. (Associated Labor Union (ALU) vs. Ferrer-
Calleja. G.R. No. 77282 May 5, 1989. Justice Regalado. Second Division.)

The contract-bar rule cannot be invoked where there has been a valid decertification of a collective bargaining
agreement. “a principle in labor law that a collective bargaining agreement of reasonable duration is, in the
interest of the stability of industrial relations, a bar to certification elections. (Philippine Labor Alliance Council
(PLAC) vs. Bureau of Labor Relations. G.R. No. L-41288 January 31, 1977. Justice Fernando. Second Division.)

The “Contract Bar Rule” under Section 3, Rule XI, Book V, of the Omnibus Rules Implementing the Labor Code,
provides that: “If a collective bargaining agreement has been duly registered in accordance with Article 231 of the
Code, a petition for certification election or a motion for intervention can only be entertained within sixty (60) days
prior to the expiry date of such agreement.” The rule is based on Article 232, in relation to Articles 253, 253-A and
256 of the Labor Code. No petition for certification election for any representation issue may be filed after the
lapse of the sixty-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite
the lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until
a new CBA shall have been validly executed. Hence, the contract bar rule still applies. The purpose is to ensure
stability in the relationship of the workers and the company by preventing frequent modifications of any CBA
earlier entered into by them in good faith and for the stipulated original period.

Clearly, the petition was filed outside the sixty-day freedom period. Hence, the filing thereof was barred by the
existence of a valid and existing collective bargaining agreement. Consequently, there is no legitimate
(representation issue and, as such, the filing of the petition for certification election did not constitute a bar to the
ongoing negotiation. (Colegio De San Juan De Letran vs. Association of Employees and Faculty of Letran. G.R. No.
141471. September 18, 2000. Justice Kapunan. First Division.)

Deviation from the contract-bar rule is justified only where the need for industrial stability is clearly shown to be
imperative. Subject to this singular exception, contracts where the identity of the authorized representative of the
workers is in doubt must be rejected in favor of a more certain indication of the will of the workers. As we stated in
Philippine Association of Free Labor Union vs. Estrella, any stability that does not establish the type of industrial
peace contemplated by the law must be subordinated to the employees’ freedom to choose their real
representative. (Port Workers Union of the Phils. (PWUP) vs. Laguesma. G.R. Nos. 94929-30. March 18, 1992.
Justice Cruz. First Division.)

EMPLOYER HAS NO RIGHT TO INTERFERE IN THE ELECTION AND IS MERELY REGARDED AS A BYSTANDER

The employer, which has offered the most tenacious resistance to the holding of a certification election. This must
not be so for the choice of a collective bargaining agent is the sole concern of the employees. The employer has no
right to interfere in the election and is merely regarded as a bystander. (R. Transport Corporation vs. Laguesma.
G.R. No. 106830. November 16, 1993. Justice Quiason. First Division.)

INQUIRY INTO THE VALIDITY OF THE ELECTION OF ONE COMPETING GROUP IN A UNION

It is not the duty or obligation of an employer to inquire into the validity of the election of one competing group in
a union—such issue is properly an intra-union controversy subject to the jurisdiction of the med-arbiter of the
Department of Labor and Employment (DOLE). (UST Faculty Union vs. University of Santo Tomas. G.R. No. 180892
April 7, 2009. Justice Velasco Jr. Second Division.)

DIRECT CERTIFICATION IS NO LONGER ALLOWED

By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct certification originally
allowed under Article 257 of the Labor Code has apparently been discontinued as a method of selecting the
exclusive bargaining agent of the workers. This amendment affirms the superiority of the certification election over
DOCTRINES IN LABOR RELATIONS PAGE 41

the direct certification which is no longer available now under the change in said provision. We have said that
where a union has filed a petition for certification election, the mere fact that no opposition is made does not
warrant a direct certification. (Central Negros Electric Cooperative, Inc. vs. Secretary of Labor and Employment.
G.R. No. 94045. September 13, 1991. Justice Regalado. Second Division.)

DOUBLE-MAJORITY RULE

It is well-settled that under the so-called "double majority rule," for there to be a valid certification election,
majority of the bargaining unit must have voted AND the winning union must have garnered majority of the valid
votes cast. (National Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel Chapter
vs. Secretary of Labor and Employment. G.R. No. 181531. July 31, 2009. Justice Carpio Morales. Second Division.)

EMPLOYEES ARE ENTITLED TO VOTE IN CERTIFICATION ELECTION

Employees are entitled to vote in certification election regardless of the period or status of their employment. (R.
Transport Corporation vs. Laguesma. G.R. No. 106830. November 16, 1993. Justice Quiason. First Division.)

All employees should be given an opportunity to make known their choice of who shall be their bargaining
representative. Such provision, however, does not clothe the employer with the personality to question the
certification election. To resolve any doubt on the matter, certification election, to repeat, is the most appropriate
means of ascertaining its will. It is true that there may be circumstances where the interest of the employer calls
for its being heard on the matter. An obvious instance is where it invokes the obstacle interposed by the contract-
bar rule. This case certainly does not fall within the exception. Sound policy dictates that as much as possible,
management is to maintain a strictly hands-off policy. (Notre Dame of Greater Manila vs. Laguesma, 433 SCRA
225, G.R. No. 149833. June 29, 2004. Justice Panganiban. First Division.)

In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or
permanent are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the
"labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall
be the exclusive representative of the employees in such unit for purposes of collective bargaining." Collective
bargaining covers all aspects of the employment relation and the resultant CBA negotiated by the certified union
binds all employees in the bargaining unit. Hence, all rank and file employees, probationary or permanent, have a
substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their
employment status as basis for eligibility in supporting the petition for certification election. The law refers to "all"
the employees in the bargaining unit. All they need to be eligible to support the petition is to belong to the
"bargaining unit."

The significance of an employee's right to vote in a certification election cannot thus be overemphasized. For he
has considerable interest in the determination of who shall represent him in negotiating the terms and conditions
of his employment. (National Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel
Chapter vs. Secretary of Labor and Employment. G.R. No. 181531. July 31, 2009. Justice Carpio Morales. Second
Division.)

In a certification election, all employees belonging to the appropriate bargaining unit can vote. Therefore, a union
member who likewise belongs to the appropriate bargaining unit is entitled to vote in said election. However, the
reverse is not always true; an employee belonging to the appropriate bargaining unit but who is not a member of
the union cannot vote in the union election, unless otherwise authorized by the constitution and bylaws of the
union. Verily, union affairs and elections cannot be decided in a non-union activity. (UST Faculty Union vs. Bitonio,
Jr. G.R. No. 131235 November 16, 1999. Justice Panganiban. Third Division.)

In a certification election all rank-and-file employees in the appropriate bargaining unit are entitled to vote. This
principle is clearly stated in Art. 255 of the Labor Code which states that the “labor organization designated or
selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of
DOCTRINES IN LABOR RELATIONS PAGE 42

the employees in such unit for the purpose of collective bargaining.” Collective bargaining covers all aspects of the
employment relation and the resultant CBA negotiated by the certified union binds all employees in the bargaining
unit. Hence, all rank-and-file employees, probationary or permanent, have a substantial interest in the selection of
the bargaining representative. The Code makes no distinction as to their employment status as basis for eligibility
in supporting the petition for certification election. The law refers to “all” the employees in the bargaining unit. All
they need to be eligible to support the petition is to belong to the “bargaining unit.” (Airtime Specialists, Inc. vs.
Ferrer-Calleja. G.R. Nos. 80612-16. December 29, 1989. Justice Paras. Second Division.)

Only members of the union can participate in the election of union officers. The question however of eligibility to
vote may be determined through the use of the applicable payroll period and employee's status during the
applicable payroll period. The payroll of the month next preceding the labor dispute in case of regular employees
and the payroll period at or near the peak of operations in case of employees in seasonal industries. (Tancinco vs.
Ferrer-Calleja. G.R. No. 78131. January 20, 1988. Justice Gancayco. First Division.)

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 or consent election with three (3) or more choices, where such a certified or consent election results
in none of the three (3) or more choices receiving the majority of the valid votes cast; provided that the total
number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast (National
Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel Chapter vs. Secretary of Labor
and Employment. G.R. No. 181531. July 31, 2009. Justice Carpio Morales. Second Division.)

EFFECT OF A NO-UNION WINNING THE ELECTION

The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the
employees in the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the
affirmative case, by which particular labor organization. If the results of the election should disclose that the
majority of the workers do not wish to be represented by any union, then their wishes must be respected, and no
union may properly be certified as the exclusive representative of the workers in the bargaining unit in dealing
with the employer regarding wages, hours and other terms and conditions of employment. The minority
employees — who wish to have a union represent them in collective bargaining — can do nothing but wait for
another suitable occasion to petition for a certification election and hope that the results will be different. They
may not and should not be permitted, however, to impose their will on the majority — who do not desire to have a
union certified as the exclusive workers' benefit in the bargaining unit — upon the plea that they, the minority
workers, are being denied the right of self-organization and collective bargaining. As repeatedly stated, the right of
self-organization embraces not only the right to form, join or assist labor organizations, but the concomitant,
converse right NOT to form, join or assist any labor union. (Reyes vs. Trajano. G.R. No. 84433. June 2, 1992. Justice
Narvasa. Second Division.)
STRIKE MEANS ANY TEMPORARY STOPPAGE OF WORK

A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial
or labor dispute. A labor dispute, in turn, includes any controversy or matter concerning terms or conditions of
employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or
arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate
relation of the employer and the employee. The fact that the conventional term ‘strike’ was not used by the
striking employees to describe their common course of action is inconsequential, since the substance of the
situation and not its appearance, will be deemed controlling.” The term “strike” has been elucidated to encompass
not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy, or
sabotage plant equipment and facilities, and similar activities. (Toyota Motor Phils. Corp. Workers Association
(TMPCWA) vs. National Labor Relations Commission. G.R. Nos. 158786 & 158789, G.R. Nos. 158798-99. October 19,
2007. Justice Velasco. Second Division.)
DOCTRINES IN LABOR RELATIONS PAGE 43

A STRIKE IS THE MOST POWERFUL WEAPON OF WORKERS

A strike is the most powerful weapon of workers in their struggle with management in the course of setting their
terms and conditions of employment. Because it is premised on the concept of economic war between labor and
management, it is a weapon that can either breathe life to or destroy the union and its members, and one that
must also necessarily affect management and its members. In light of these effects, the decision to declare a strike
must be exercised responsibly and must always rest on rational basis, free from emotionalism, and unswayed by
the tempers and tantrums of hot heads; it must focus on legitimate union interests. To be legitimate, a strike
should not be antithetical to public welfare, and must be pursued within legal bounds. The right to strike as a
means of attaining social justice is never meant to oppress or destroy anyone, least of all, the employer. Since
strikes affect not only the relationship between labor and management but also the general peace and progress of
the community, the law has provided limitations on the right to strike. (Phimco Industries, Inc. vs. Phimco
Industries Labor Association (PILA). G.R. No. 170830. August 11, 2010. Justice Brion. Third Division.)

CATEGORIES OF ILLEGAL STRIKES

There are six (6) categories of illegal strikes, viz.: first, when it is contrary to a specific prohibition of law, such as
strike by employees performing governmental functions, second, when it violates a specific requirement of law,
third, when it is declared for an unlawful purpose; fourth, when it employs unlawful means in the pursuit of its
objective, fifth, when it is declared in violation of an existing injunction, and sixth, when it is contrary to an existing
agreement, such as a no-strike clause or conclusive arbitration clause.—Noted authority on labor law, Ludwig
Teller, lists six (6) categories of an illegal strike, viz.: (1) [when it] is contrary to a specific prohibition of law, such as
strike by employees performing governmental functions; or (2) [when it] violates a specific requirement of law[,
such as Article 263 of the Labor Code on the requisites of a valid strike]; or (3) [when it] is declared for an unlawful
purpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or (4)
[when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers
[for example, prohibited acts under Art. 264(e) of the Labor Code]; or (5) [when it] is declared in violation of an
existing injunction[, such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art.
263 of the Labor Code]; or (6) [when it] is contrary to an existing agreement, such as a no-strike clause or
conclusive arbitration clause. (Toyota Motor Phils. Corp. Workers Association (TMPCWA) vs. National Labor
Relations Commission. G.R. Nos. 158786 & 158789, G.R. Nos. 158798-99. October 19, 2007. Justice Velasco. Second
Division.)

REQUIREMENTS FOR A VALID STRIKE

Article 263 of the Labor Code, as amended by Republic Act (R.A.) No. 6715, and Rule XXII, Book V of the Omnibus
Rules Implementing the Labor Code outline the following procedural requirements for a valid strike: 1) A notice of
strike, with the required contents, should be filed with the DOLE, specifically the Regional Branch of the NCMB,
copy furnished the employer of the union; 2) A cooling-off period must be observed between the filing of notice
and the actual execution of the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of
unfair labor practice. However, in the case of union busting where the union’s existence is threatened, the cooling-
off period need not be observed. x x x x x x x x x 4) Before a strike is actually commenced, a strike vote should be
taken by secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike requires the secret-
ballot approval of majority of the total union membership in the bargaining unit concerned. 5) The result of the
strike vote should be reported to the NCMB at least seven (7) days before the intended strike or lockout, subject to
the cooling-off period. It is settled that these requirements are mandatory in nature and failure to comply
therewith renders the strike illegal. (Pilipino Telephone Corporation vs. Pilipino Telephone Employees Association
(PILTEA). G.R. No. 160058 & G.R. No. 160094. June 22, 2007 Justice Puno. First Division.)

Procedurally, for a strike to be valid, it must comply with Article 263 of the Labor Code, which requires that: (a) a
notice of strike be filed with the Department of Labor and Employment (DOLE) 30 days before the intended date
thereof, or 15 days in case of unfair labor practice; (b) a strike vote be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose; and
DOCTRINES IN LABOR RELATIONS PAGE 44

(c) a notice be given to the DOLE of the results of the voting at least seven days before the intended strike.
(Phimco Industries, Inc. vs. Phimco Industries Labor Association (PILA). G.R. No. 170830. August 11, 2010. Justice
Brion. Third Division.)

The cooling-off period in Art. 264(c), LC and the 7-day strike ban after the strike-vote report prescribed in Art.
264(f) of the LC were meant to be mandatory. The law provides that “the labor union may strike” should the
dispute “remain unsettled until the lapse of the requisite number of days from the filing of the notice”, this clearly
implies that the union may not strike before the lapse of the cooling-off period. The cooling-off period is for the
MOLE to exert all efforts at mediation and conciliation to effect a voluntary settlement. The mandatory character
of the 7-day strike ban is manifest in the provision that “in every case” the union shall furnish the DOLE with the
results of the voting “at least 7 days before the intended strike.” This period is to give time to verify that a strike
vote was actually held. (National Federation of Sugar Workers (NFSW) vs. Ovejera, et al. G.R. No. L-59743. May 31,
1982. Justice Plana. En Banc.)

Purpose of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the meeting for the
said notice: 1. Inform the NCMB of the intent of the union to conduct a strike vote; 2. Give the NCMB ample time
to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of
violence and/or irregularities; 3. Ample time to prepare for the deployment of the requisite personnel ( Capitol
Medical Center vs. NLRC. G.R. No. 147080. April 26, 2005. Justice Callejo, Sr. Second Division.)

“NO STRIKE, NO LOCKOUT” PROVISION IN THE COLLECTIVE BARGAINING AGREEMENT

It is settled that a “no strike, no lockout” provision in the Collective Bargaining Agreement (CBA) “may [only] be
invoked by [an] employer when the strike is economic in nature or one which is conducted to force wage or other
agreements from the employer that are not mandated to be granted by law. It [is not applicable when the strike] is
grounded on unfair labor practice.” (Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union.
G.R. No. 204693. July 13, 2016. Justice Del Castillo. Second Division.)

SLOWDOWN IS A “STRIKE ON THE INSTALLMENT PLAN”

The concept of a slowdown is a “strike on the installment plan.” It is a willful reduction in the rate of work by
concerted action of workers for the purpose of restricting the output of the Er, in relation to a labor dispute; as an
activity by which workers, without a complete stoppage of work, retard production or their performance of duties
and functions to compel management to grant their demands.

Such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the Ees “continue to
work and remain at their positions and accept the wages paid to them,” they at the same time “select what part of
their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the Er’s damage, to
do other work;” in other words, they “work on their own terms” (Interphil Laboratories Employees Union-FFW vs.
Interphil Laboratories, Inc., G.R. No. 142824, December 19, 2001).
WHAT CONSTITUTES UNION BUSTING

To constitute union busting under Article 263 of the Labor Code, there must be: 1) a dismissal from employment of
union officers duly elected in accordance with the union constitution and by-laws; and 2) the existence of the
union must be threatened by such dismissal. In the case at bar, the second notice of strike filed by the Union
merely assailed the “mass promotion” of its officers and members during the CBA negotiations. Surely, promotion
is different from dismissal. (Pilipino Telephone Corporation vs. Pilipino Telephone Employees Association (PILTEA).
G.R. No. 160058 & G.R. No. 160094. June 22, 2007. Justice Puno. First Division.)
DOCTRINES IN LABOR RELATIONS PAGE 45

SANCTIONS TO STRIKERS

Art. 264(a) sanctions the dismissal of a union officer who knowingly participates in an illegal strike or who
knowingly participates in the commission of illegal acts during a lawful strike. It is clear that the responsibility of
union officials is greater than that of the members. They are tasked with the duty to lead and guide the
membership in decision making on union activities in accordance with the law, government rules and regulations,
and established labor practices. The leaders are expected to recommend actions that are arrived at with
circumspection and contemplation, and always keep paramount the best interests of the members and union
within the bounds of law. If the implementation of an illegal strike is recommended, then they would mislead and
deceive the membership and the supreme penalty of dismissal is appropriate. On the other hand, if the strike is
legal at the beginning and the officials commit illegal acts during the duration of the strike, then they cannot evade
personal and individual liability for said acts.

Art. 264(a) of the Labor Code provides that a member is liable when he knowingly participates in an illegal act
“during a strike.” While the provision is silent on whether the strike is legal or illegal, we find that the same is
irrelevant. As long as the members commit illegal acts, in a legal or illegal strike, then they can be terminated.
However, when union members merely participate in an illegal strike without committing any illegal act, are they
liable? This was squarely answered in Gold City Integrated Port Service, Inc. v. NLRC, 245 SCRA 627 (1995), where it
was held that an ordinary striking worker cannot be terminated for mere participation in an illegal strike. This was
an affirmation of the rulings in Bacus v. Ople, 132 SCRA 690 (1984), and Progressive Workers Union v. Aguas, 150
SCRA 429 (1987), where it was held that though the strike is illegal, the ordinary member who merely participates
in the strike should not be meted loss of employment on the considerations of compassion and good faith and in
view of the security of tenure provisions under the Constitution. In Esso Philippines, Inc. v. Malayang Manggagawa
sa Esso (MME), 75 SCRA 73 (1977), it was explained that a member is not responsible for the union’s illegal strike
even if he voted for the holding of a strike which became illegal. (Toyota Motor Phils. Corp. Workers Association
(TMPCWA) vs. National Labor Relations Commission. G.R. Nos. 158786 & 158789, G.R. Nos. 158798-99. October 19,
2007. Justice Velasco. Second Division.)

RULE OF VICARIOUS LIABILITY

Under [the rule of vicarious liability], mere membership in a labor union serves as basis of liability for acts of
individuals, or for a labor activity, done on behalf of the union. The union member is made liable on the theory
that all the members are engaged in a general conspiracy, and the unlawful acts of the particular members are
viewed as necessary incidents of the conspiracy. It has been said that in the absence of statute providing
otherwise, the rule of vicarious liability applies. Even the Industrial Peace Act, however, which was in effect from
1953 to 1974, did not adopt the vicarious liability concept. It expressly provided that: No officer or member of any
association or organization, and no association or organization participating or interested in a labor dispute shall
be held responsible or liable for the unlawful acts of individual officers, members, or agents, except upon proof of
actual participation in, or actual authorization of, such acts or of ratifying of such acts after actual knowledge
thereof. Replacing the Industrial Peace Act, the Labor Code has not adopted the vicarious liability rule. Thus, the
rule on vicarious liability of a union member was abandoned and it is only when a striking worker “knowingly
participates in the commission of illegal acts during a strike” that he will be penalized with dismissal. (Toyota
Motor Phils. Corp. Workers Association (TMPCWA) vs. National Labor Relations Commission. G.R. Nos. 158786 &
158789, G.R. Nos. 158798-99. October 19, 2007. Justice Velasco. Second Division.)
CONVERSION DOCTRINE

Initially the strike staged by the Union was meant to compel the Company to grant it certain economic benefits set
forth in its proposal for collective bargaining. The strike was an economic one, and the striking employees would
have a tight to be reinstated if, in the interim, the employer had not hired other permanent workers to replace
them. For it is recognized that during the pendency of an economic strike an employer may take steps to continue
and protect his business by supplying places left vacant by the strikers, and is not bound to discharge those hired
for that purpose upon election of the strikers to resume their employment. But the strike changed its character
DOCTRINES IN LABOR RELATIONS PAGE 46

from the time the Company refused to reinstate complainants because of their union activities after it had offered
to admit all the strikers and in fact did readmit the others. It was then converted into an unfair labor practice
strike. (Consolidated Labor Association of the Philippines vs. Marsman & Co., Inc. G.R. No. L-17038. July 31, 1964.
Justice Makalintal. En Banc.)

A strike cannot be converted into a pure and simple lockout by the mere expedient of filing before the trial court a
notice of offer to return to work during the pendency of the labor dispute between the union and the employer.
(Rizal Cement Workers Union vs. CIR, G.R. No. L-18442, November 30, 1962. Justice Paredes. En Banc.)

It is possible to change an economic strike into a ULP strike. (Consolidated Labor Association of the Phil. vs.
Marsman. G.R. No. L-17038. July 31, 1964. Justice Makalintal. En Banc.)

It is in pursuance of the NCMB’s duty under the Rules Implementing the Labor Code to exert “all efforts at
mediation and conciliation to enable the parties to settle the dispute amicably” and in line with the state policy of
favoring voluntary modes of settling labor disputes. And a strike mounted by the union after the NCMB dropped
the notice of strike from its docket of notice of strikes and during the pendency of preventive mediation
proceedings would be illegal (San Miguel Corporation vs. NLRC et al. G.R. No. 119293. June 10 ,2003. Justice
Azcuna. First Division.)

STRIKE STAGED IN GOOD FAITH

A strike staged by the workers, inspired by good faith, does not automatically make the same illegal. In Ferrer vs.
Court of Industrial Relations, the belief of the strike is that the management was committing unfair labor practice
was properly considered in declaring an otherwise premature strike, not unlawful and in affirming the order of the
Labor Court for the reinstatement without backwages of said employees. (Bacus vs. Ople. G.R. No. L-56856.
October 23, 1984. Justice Cuevas. Second Division.)

STRIKE AND PICKET

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. While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its
incidents to inform the public of what is happening in the company struck against. A picket simply means to march
to and from the employer’s premises, usually accompanied by the display of placards and other signs making
known the facts involved in a labor dispute. It is a strike activity separate and different from the actual stoppage of
work. 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. (Phimco Industries, Inc. vs. Phimco Industries Labor
Association (PILA). G.R. No. 170830. August 11, 2010. Justice Brion. Third Division.)

WHAT ARE CONSIDERED “ILLEGAL ACTS” UNDER ART. 264(A)

No precise meaning was given to the phrase “illegal acts.” It may encompass a number of acts that violate existing
labor or criminal laws, such as the following: (1) Violation of Art. 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; and (3) Violation of any order, prohibition,
or injunction issued by the DOLE Secretary or NLRC in connection with the assumption of jurisdiction/certification
Order under Art. 263(g) of the Labor Code. As earlier explained, this enumeration is not exclusive and it may cover
other breaches of existing laws. It must be proved that the striking employee committed illegal acts during the
strike and the striker who participated in the commission of illegal acts must be identified. (Toyota Motor Phils.
DOCTRINES IN LABOR RELATIONS PAGE 47

Corp. Workers Association (TMPCWA) vs. National Labor Relations Commission. G.R. Nos. 158786 & 158789, G.R.
Nos. 158798-99. October 19, 2007. Justice Velasco. Second Division.)

ILLEGAL STRIKES AND PICKETS

Despite the validity of the purpose of a strike and compliance with the procedural requirements, a strike may still
be held illegal where the means employed are illegal. The means become illegal when they come within the
prohibitions under Article 264(e) of the Labor Code which provides: “No 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.” While the strike undisputably had not been marred by
actual violence and patent intimidation, the picketing that respondent PILA officers and members undertook as
part of their strike activities effectively blocked the free ingress to and egress from PHIMCO’s premises, thus
preventing non-striking employees and company vehicles from entering the Phimco Industries, Inc. (PHIMCO)
compound. Pickets may not aggressively interfere with the right of peaceful ingress to and egress from the
employer’s shop or obstruct public thoroughfares; picketing is not peaceful where the sidewalk or entrance to a
place of business is obstructed by picketers parading around in a circle or lying on the sidewalk. Article 264(e) of
the Labor Code tells us that picketing carried on with violence, coercion or intimidation is unlawful. According to
American jurisprudence, what constitutes unlawful intimidation depends on the totality of the circumstances.
Force threatened is the equivalent of force exercised. There may be unlawful intimidation without direct threats or
overt acts of violence. Words or acts which are calculated and intended to cause an ordinary person to fear an
injury to his person, business or property are equivalent to threats. The manner in which the respondent union
officers and members conducted the picket in the present case had created such an intimidating atmosphere that
non-striking employees and even company vehicles did not dare cross the picket line, even with police
intervention. Those who dared cross the picket line were stopped. The compulsory arbitration hearings bear this
out. (Phimco Industries, Inc. vs. Phimco Industries Labor Association (PILA). G.R. No. 170830. August 11, 2010.
Justice Brion. Third Division.)

This Court has held that strikes staged in violation of agreements providing for arbitration are illegal, since these
agreements must be strictly adhered to and respected if their ends are to be achieved. The rationale of the
prohibition under Article 264 is that once jurisdiction over the labor dispute has been properly acquired by
competent authority, that jurisdiction should not be interfered with by the application of the coercive processes of
a strike. Indeed, it is among the chief policies of the State to promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation, and conciliation, as modes of settling
labor, or industrial disputes. In Alliance of Government Workers v. Minister of Labor, 124 SCRA 1 (1983), Chief
Justice Fernando declared that the principle behind labor unionism in private industry is that industrial peace
cannot be secured through compulsion by law. Relations between private employers and their employees rest on
an essentially voluntary basis, subject to the minimum requirements of wage laws and other labor and welfare
legislation. Even if the strike were to be declared valid because its objective or purpose is lawful, the strike may still
be declared invalid where the means employed are illegal. Permissible activities of the picketing workers do not
include obstruction of access of customers. (Sukhothai Cuisine and Restaurant vs. Court of Appeals. G.R. No.
150437 July 17, 2006 Justice Austria Martinez First Division.)

LOCKOUT

Lockout is the temporary refusal of employer to furnish work as a result of an industrial or labor dispute. It may be
manifested by the employer’s act of excluding employees who are union members. (Complex Electronics
Employees Association vs. NLRC. G.R. No. 121315 & G.R. No. 122136. July 19, 1999. First Division Justice. Kapunan.)
RIGHT TO STRIKE OR LOCKOUT NOT ABSOLUTE

The exercise of these rights is subject to reasonable restrictions pursuant to the police power of the State. It has
been held that the right to strike, because of the more serious impact upon the public interest, is more vulnerable
to regulation that the right to organize and select representatives for purposes of collective bargaining. (National
Federation of Sugar Workers (NFSW) vs. Ovejera, et al. G.R. No. L-59743. May 31, 1982. Justice Plana. En Banc.)
DOCTRINES IN LABOR RELATIONS PAGE 48

Even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal.
Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities which are
injurious to the right to property renders a strike illegal. And so is picketing or the obstruction to the free use of
property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence,
and coercion as to constitute nuisance. (Soriano Aviation vs. Employees Association of A. Soriano Aviation. G.R. No.
166879. August 14, 2009. Justice Carpio Morales. Second Division.)

RIGHT TO PICKET NOT AN ABSOLUTE RIGHT

While peaceful picketing is entitled to protection as an exercise of free speech, the courts are not without power
to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute,
including those with related interests, and to insulate establishments or persons with no industrial connection or
having interest totally foreign to the context of the dispute (Liwayway Pub., Inc. vs. Permanent Concrete Workers
Union. G.R. No. L-25003. October 23, 1981. Justice Guerrero. First Division.)

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 vs. Coca-Cola Bottlers Phils., Inc. G.R. Nos.
164302-03. January 24, 2007. Justice Calleja. Third Division.)

Despite the validity of the purpose of a strike and compliance with the procedural requirements, a strike may still
be held illegal where the means employed are illegal. The means become illegal when they come within the
prohibitions under Art.264(e)of the Labor Code. Protected picketing does not extend to blocking ingress to and
egress from the company premises, and, the fact 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. (Phimco Industries, Inc. vs. Phimco Industries Labor Association (PILA). G.R. No. 170830. August
11, 2010. Justice Brion. Third Division.)

The right to strike, while constitutionally recognized, is not without legal constrictions. Art. 264(a) of the LC, as
amended, provides that no strike or lockout shall be declared after assumption of jurisdiction by the President or
the Secretary or after certification or submission of the dispute to compulsory or voluntary arbitration or during
the pendency of cases involving the same grounds for the strike or lockout. The court has consistently ruled that
once the Secretary of Labor assumes jurisdiction over a labor dispute, such jurisdiction should not be interfered
with by the application of the coercive processes of a strike or lockout. A strike that is undertaken despite the
issuance by the Secretary of Labor of an assumption order and/or certification is a prohibited activity and thus
illegal. (Solidbank Corporation vs. Ernesto U. Gamier/ Solid Bank Union. G.R. No. 159460. November 15, 2010.
Justice Villarama, Jr. Third Division.)

SOLE’s ASSUMPTION OF JURISDICTION IS IN RELATION TO THE NATIONAL INTERESTS

Art. 263(g) of the Labor Code is both an extraordinary and a pre-emptive power to address an extraordinary
situation (a strike or lockout in an industry indispensable to the national interest). As the term “assume
jurisdiction” connotes the intent of the law is to give the Secretary of the Department of Labor and Employment
full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout—
it includes and extends to all questions and controversies arising from or related to the dispute, including cases
over which the Labor Arbiter has exclusive jurisdiction (Bagong Pagkakaisa ng Manggagawa ng Triumph
International vs. Secretary of the Department of Labor and Employment. G.R. No. 167401. July 5, 2010. Justice
Brion. Third Division.)
The rationale for the Secretary of the Department of Labor and Employment’s assumption of jurisdiction can
justifiably rest on his own consideration of the exigency of the situation in relation to the national interests
(Capitol Medical Center vs. Trajano. G.R. No. 155690. June 30, 2005. Justice Sandoval-Gutierrez. Third Division.)

RETURN-TO-WORK ORDER
DOCTRINES IN LABOR RELATIONS PAGE 49

A return-to-work order is a valid statutory part and parcel of the assumption of jurisdiction and certification orders
given the predictable prejudice the strike could cause not only to the parties but more especially to the national
interest. Stated otherwise, the assumption of jurisdiction and the certification to the NLRC has the effect of
automatically enjoining the strike or lockout, whether actual or intended, even if the same has not been
categorically stated or does not appear in the assumption or certification order. It is not a matter of option or
voluntariness but of obligation. It must be discharged as a duty even against the worker’s will. The worker must
return to his job together with his co-workers so that the operation of the company can be resumed and it can
continue serving the public and promoting its interest. It is executory in character and shall be strictly complied
with by the parties even during the pendency of any petition questioning their validity precisely to maintain the
status quo while the determination is being made. (Union of Filipro Employees vs. Nestle Philippines, Inc. G.R. No.
88710-13. December 19, 1990. Justice Medialdea. First Division.)

INNOCENT BYSTANDER RULE

The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech
guaranteed by the constitution. If peacefully carried out, it cannot be curtailed even in the absence of employer-
employee relationship. The right is, however, not an absolute one. While peaceful picketing is entitled to
protection as an exercise of free speech, we believe the courts are not without power to confine or localize the
sphere of communication or the demonstration to the parties to the labor dispute, including those with related
interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign
to the context of the dispute. Thus, the right may be regulated at the instance of third parties or “innocent
bystanders” if it appears that the inevitable result of its exercise is to create an impression that a labor dispute
with which they have no connection or interest exists between them and the picketing union or constitutes an
invasion of their rights. An “innocent bystander,” who seeks to enjoin a labor strike, must satisfy the court that
aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any
connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context
thereof. (MSF Tire and Rubber, Inc. vs. Court of Appeals. G.R. No. 128632. August 5, 1999. Justice Mendoza.
Second Division.)

DOCTRINE OF MANAGEMENT PREROGATIVE

Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to
his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods,
the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline,
dismissal, and recall of employees. The only limitations to the exercise of this prerogative are those imposed by
labor laws and the principles of equity and substantial justice.

While the law imposes many obligations upon the employer, nonetheless, it also protects the employer’s right to
expect from its employees not only good performance, adequate work, and diligence, but also good conduct and
loyalty. In fact, the Labor Code does not excuse employees from complying with valid company policies and
reasonable regulations for their governance and guidance.

Concerning the transfer of employees, these are the following jurisprudential guidelines:
(a) a transfer is a movement from one position to another of equivalent rank, level or salary without break in the
service or a lateral movement from one position to another of equivalent rank or salary;
(b) the employer has the inherent right to transfer or reassign an employee for legitimate business purposes;
(c) a transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of
punishment or is a demotion without sufficient cause;
(d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee. (Peckson vs. Robinsons Supermarket Corporation. G.R. No. 198534. July 03, 2013. Justice Reyes.
First Division.)
DOCTRINES IN LABOR RELATIONS PAGE 50

The right to self-organization of employees must not be interfered with by the employer on the pretext of
exercising management prerogative of disciplining its employees. (Colegio De San Juan De Letran vs. Association
of Employees and Faculty of Letran. G.R. No. 141471. September 18, 2000. Justice Kapunan. First Division.)

There can be no discrimination committed by petitioner thereby as the situation of the union employees are
different and distinct from the non-union employees. Indeed, discrimination per se is not unlawful. There can be no
discrimination where the employees concerned are not similarly situated. (Wise and Co., Inc. vs. Wise & Co., Inc.
Employees Union. G.R. No. 87672. October 13, 1989. Justice Gancayco First Division.)

In general, management has the prerogative to discipline its employees and to impose appropriate penalties on
erring workers pursuant to company rules and regulations. (Deles, Jr. vs. National Labor Relations Commission.
G.R. No. 121348. March 9, 2000. Justice Quisumbing. Second Division.)

The employers right to conduct the affairs of his business, according to its own discretion and judgment, is well-
recognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline in its employees and to impose penalties, including
dismissal, upon erring employees. This is a management prerogative, where the free will of management to
conduct its own affairs to achieve its purpose takes form. The only criterion to guide the exercise of its
management prerogative is that the policies, rules and regulations on work-related activities of the employees
must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the
offense involved and to the degree of the infraction. (St. Michael’s Institute vs. Santos. G.R. No. 145280. December
4, 2001. Justice De Leon, Jr. Second Division.)

Verily, it is an established principle that an employer cannot be compelled to continue in employment, an

employee guilty of acts inimical to the interests of the employer and justifying loss of confidence in him. The right
of the company to dismiss its employees is a measure of self-protection. (Reyes vs. Minister of Labor. G.R. No. L-
48705. February 9, 1989. Justice Paras. Second Division.)

While the Constitution is committed to the policy of social justice and the protection of the working class, it should
not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its
rights which are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those
with less privileges in life, the Supreme Court has inclined, more often than not, toward the worker and upheld his
cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law
and doctrine. (Philippine Rural Construction Movement (PRRM) vs. Pudgar. G.R. No. 169227. July 05, 2010. Justice
Brion. Third Division.)

Corporation must be accorded reasonable latitude in determining who among erring officers or employees should
be punished by the company and to what extent. (Soriano vs. National Labor Relations Commission. G.R. No.
75510. October 27, 1987. Justice Feliciano. Third Division.)

It is the employer’s prerogative to prescribe reasonable rules and regulations necessary or proper for the conduct
of its business or concern, to provide certain disciplinary measures to implement said rules and to assure that the
same be complied with. At the same time, it is one of the fundamental duties of the employee to yield obedience
to all reasonable rules, orders, and instructions of the employer, and willful or intentional disobedience thereof, as
a general rule, justifies rescission of the contract of service and the peremptory dismissal of the employee. (St.
Luke's Medical Center vs. Quebral. G.R. No. 193324. July 23, 2014. Justice Villarama, Jr. First Division.)

In general, management has the prerogative to discipline its employees and to impose appropriate penalties on
erring workers pursuant to company rules and regulations. (Philippine Airlines, Inc. vs. National Labor Relations
Commission (4th Division). G.R. No. 115785. August 4, 2000. Justice Pardo. First Division.)
DOCTRINES IN LABOR RELATIONS PAGE 51

Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from one office
or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other
privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. To determine the validity of the transfer of employees, the
employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does
it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail
to overcome this burden of proof, the employee's transfer shall be tantamount to constructive dismissal.
(Pharmacia and Upjohn, Inc. vs. Albayda. G.R. No. 172724. August 23, 2010. Justice Peralta. Second Division.)

It is the employer’s prerogative to prescribe reasonable rules and regulations necessary or proper for the conduct
of its business or concern, to provide certain disciplinary measures to implement said rules and to assure that the
same be complied with. At the same time, it is one of the fundamental duties of the employee to yield obedience
to all reasonable rules, orders, and instructions of the employer, and willful or intentional disobedience thereof, as
a general rule, justifies rescission of the contract of service and the peremptory dismissal of the employee. In order
that the willful disobedience by the employee may constitute a just cause for terminating his employment, the
orders, regulations, or instructions of the employer must be: (1) reasonable and lawful; (2) sufficiently known to
the employee; and (3) in connection with the duties which the employee has been engaged to discharge. A rule
prohibiting employees from using company vehicles for private purpose without authority from management is,
from our viewpoint, a reasonable one. (Family Planning Organization of the Philippines., Inc. vs. National Labor
Relations Commission. G.R. No. 75907. March 23, 1992. Justice Medialdea. First Division.)

EMPLOYER-EMPLOYEE RELATIONSHIP FOUR-FOLD TEST

(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer’s power to control the employees conduct.

It is the so-called control test which constitutes the most important index of the existence of the employer-
employee relationship that is, whether 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. Stated otherwise, an employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end to be achieved but also the means to be used
in reaching such end. (Pacific Consultants International Asia, Inc. vs. Schonfeld. G.R. No. 166920. February 19,
2007. Justice Callejo, Sr. Third Division.)

The control test is the most important test our courts apply in distinguishing an employee from an independent
contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well
the less control the hirer exercises, the more likely the worker is considered an independent contractor. (Sonza vs.
ABS-CBN Broadcasting Corporation. G.R. No. 138051. June 10, 2004. Justice Carpio. First Division.)

ABSENT THE JURISDICTIONAL REQUISITE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP, PUBLIC RESPONDENT IS

WITHOUT JURISDICTION TO HEAR AND DECIDE THE CASE WITH RESPECT TO PETITIONER

While the jurisdiction over controversies involving agricultural workers has been transferred from the Court of
Agrarian Relations to the Labor Arbiters under the Labor Code as amended, the said transferred jurisdiction is
however, not without limitations. The dispute or controversy must still fall under one of the cases enumerated
under Article 217 of the Labor Code, which cases, as ruled in San Miguel, supra., arise out of or are in connection
with an employer-employee relationship. While the jurisdiction over controversies involving agricultural workers
has been transferred from the Court of Agrarian Relations to the Labor Arbiters under the Labor Code as amended,
the said transferred jurisdiction is however, not without limitations. The dispute or controversy must still fall under
one of the cases enumerated under Article 217 of the Labor Code, which cases, as ruled in San Miguel, supra., arise
DOCTRINES IN LABOR RELATIONS PAGE 52

out of or are in connection with an employer-employee relationship. (Hawaiian-Philippine Company vs. Gulmatico.
G.R. No. 106231. November 16, 1994. Justice Bidin. Third Division.)

The better approach would therefore be to adopt a two-tiered test involving:

(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; and
(2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration the
totality of circumstances surrounding the true nature of the relationship between the parties. This is especially
appropriate in this case where there is no written agreement or terms of reference to base the relationship on;
and due to the complexity of the relationship based on the various positions and responsibilities given to the
worker over the period of the latter’s employment. (Francisco vs. National Labor Relations Commission. G.R. No.
170087 August 31, 2006. Justice Ynares-Santiago. First Division.)

The determination of the relationship between employer and employee depends upon the circumstances of the
whole economic activity, such as:
(1) the extent to which the services performed are an integral part of the employer’s business;
(2) the extent of the worker’s investment in equipment and facilities;
(3) the nature and degree of control exercised by the employer;
(4) the worker’s opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise;
(6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in that line of
business. (Francisco vs. National Labor Relations Commission. G.R. No. 170087 August 31, 2006. Justice
Ynares-Santiago. First Division.)

In determining the existence of an employer-employee relationship, the following elements must be considered:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
the power to control the employee’s conduct. Of these elements, the most important criterion is whether the
employer controls or has reserved the right to control the employee not only as to the result of the work but also
as to the means and methods by which the result is to be accomplished. (Lambo vs. National Labor Relations
Commission. G.R. No. 111042 October 26, 1999. Justice Mendoza. Second Division.)

CONTRACT OF PERPETUAL EMPLOYMENT

A contract of perpetual employment deprives management of its prerogative to decide whom to hire, fire and
promote, and renders inutile the basic precepts of labor relations. While management may validly waive it
prerogatives, such waiver should not be contrary to law, public order, public policy, morals or good customs. An
absolute and unqualified employment for life in the mold of petitioners’ concept of perpetual employment is
contrary to public policy and good customs, as it unjustly forbids the employer from terminating the services of an
employee despite the existence of a just or valid cause. It likewise compels the employer to retain an employee
despite the attainment of the statutory retirement age, even if the employee has become a non-performing asset
or, worse, a liability to the employer. (Sorreda vs. Cambridge Electronics Corporation. G.R. No. 172927. February
11, 2010. Justice Corona. Third Division.)

DETERMINATION OF REGULAR EMPLOYMENT

DOCTRINES IN LABOR RELATIONS PAGE 53

The primary standard, therefore, of determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one
year, even if the performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to
the business. Hence, the employment is also considered regular, but only with respect to such activity and while
such activity exists. (Moises de Leon vs. National Labor Relations Commission. G.R. No. 70705. August 21, 1989.
Justice Fernan. Third Division.)

The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual
business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered
and its relation to the general scheme under which the business or trade is pursued in the usual course. It is
distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the
particular business or trade. But, although the work to be performed is only for a specific project or seasonal,
where a person thus engaged has been performing the job for at least one year, even if the performance is not
continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as
being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer.
The employment of such person is also then deemed to be regular with respect to such activity and while such
activity exists. (Pacquing vs. Coca-Cola Philippines. G.R. No. 157966. January 31, 2008. Justice Austria-Martinez.
Third Division.)

STANDARD FOR REGULARIZATION

Verily, basic knowledge and common sense dictate that the adequate performance of one’s duties is, by and of
itself, an inherent and implied standard for a probationary employee to be regularized; such is a regularization
standard which need not be literally spelled out or mapped into technical indicators in every case. In this regard, it
must be observed that the assessment of adequate duty performance is in the nature of a management
prerogative which when reasonably exercised – as Abbott did in this case – should be respected. A probationary
employee, like a regular employee, enjoys security of tenure. However, in cases of probationary employment,
aside from just or authorized causes of termination, an additional ground is provided under Article 295 of the
Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in
accordance with the reasonable standards made known by the employer to the employee at the time of the
engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated
for any of the following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular employee
in accordance with reasonable standards prescribed by the employer.

Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the
employer fails to inform the probationary employee of the reasonable standards upon which the regularization
would be based on at the time of the engagement, then the said employee shall be deemed a regular employee,
viz.:

(d) In all cases of probationary employment, the employer shall make known to the employee the standards under
which he will qualify as a regular employee at the time of his engagement. Where no standards are made
known to the employee at that time, he shall be deemed a regular employee.

In other words, the employer is made to comply with two (2) requirements when dealing with a probationary
employee: first, the employer must communicate the regularization standards to the probationary employee; and
second, the employer must make such communication at the time of the probationary employee’s engagement. If
the employer fails to comply with either, the employee is deemed as a regular and not a probationary employee.
DOCTRINES IN LABOR RELATIONS PAGE 54

Keeping with these rules, an employer is deemed to have made known the standards that would qualify a
probationary employee to be a regular employee when it has exerted reasonable efforts to apprise the employee
of what he is expected to do or accomplish during the trial period of probation. This goes without saying that the
employee is sufficiently made aware of his probationary status as well as the length of time of the probation. The
exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of maids, cooks,
drivers, or messengers. (Abbott Laboratories, Philippines vs. Alcaraz. G.R. No. 192571. July 23, 2013. Justice Perlas-
Bernabe. En Banc.)

PROBATIONARY EMPLOYMENT TEST

Probationary Employment must be expressly agreed upon. If here is no such agreement, the employment is
considered regular. (Sampaguita Auto Transport Corporation vs. National Labor Relations Commission. G.R. No.
197384. January 30, 2013. Justice Brion. Second Division.)

The computation of the 6-month probationary period is reckoned from the date of appointment up to the same
calendar date of the 6th month following. (Alcira vs. National Labor Relations Commission. G.R. No. 149859. June
9, 2004. Justice Corona. Third Division.)

An employee who is allowed to work after a probationary period shall be considered a regular employee. (Colegio
del Santisimo Rosario vs. Rojo. G.R. No. 170388. September 4, 2013. Justice Del Castillo. Second Division.)

EXTENSION OF PROBATIONARY EMPLOYMENT

Probationary employment may validly be extended beyond the prescribed six-month period by agreement of the
employer and the employee. By voluntarily agreeing to an extension of the probationary period, Dequila in effect
waived any benefit attaching to the completion of said period if he still failed to make the grade during the period
of extension. The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no
public policy protecting the employee and the security of his tenure is served by prescribing voluntary agreements
which, by reasonably extending the period of probation, actually improve and further a probationary employee's
prospects of demonstrating his fitness for regular employment. (Mariwasa Manufacturing, Inc. vs. Leogardo, Jr.
G.R. No. 74246. January 26, 1989. Justice Narvasa. First Division.)

It is true that by way of exception, the period of probationary employment may exceed six months when the
parties so agree, such as when the same is established by company policy, or when it is required by the nature of
the work, none of these exceptional circumstances were proven in the present case. Hence, respondent whose
employment exceeded six months is undoubtedly a regular employee of petitioner. (San Miguel Corporation vs.
Del Rosario. G.R. Nos. 168194 & 168603. December 13, 2005. Justice Ynares-Santiago. First Division.)

DOUBLE PROBATION

The Hotel's system of double probation a transparent scheme to circumvent the plain mandate of the law and
make it easier for it to dismiss its employees even after they shall have already passed probation. The policy of the
Constitution is to give the utmost protection to the working class when subjected to such maneuvers as the one
attempted by the petitioners. This Court is fully committed to that policy and has always been quick to rise in
defense of the rights of labor. (Holiday Inn Manila vs. National Labor Relations Commission. G.R. No. 109114.
September 14, 1993. Justice Cruz. First Division.)

TERMINATION OF PROBATIONARY EMPLOYMENT

Unlike under the first ground for the valid termination of probationary employment which is for just cause, the
second ground does not require notice and hearing. Due process of law for this second ground consists of making
the reasonable standards expected of the employee during his probationary period known to him at the time of his
probationary employment. By the very nature of a probationary employment, the employee knows from the very
DOCTRINES IN LABOR RELATIONS PAGE 55

start that he will be under close observation and his performance of his assigned duties and functions would be
under continuous scrutiny by his superiors. It is in apprising him of the standards against which his performance
shall be continuously assessed where due process regarding the second ground lies, and not in notice and hearing
as in the case of the first ground. (Philippine Daily Inquirer, Inc. vs. Magtibay. G.R. No. 164532. July 24, 2007. First
Division. Justice Garcia.)

CASUAL EMPLOYMENT

Article 280 of the Labor Code, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed
and his employment shall continue while such activity exists. Also, under the law, a casual employee is only casual
for one year, and it is the passage of time that gives him a regular status. (Kasapian ng Malayang Manggagawa sa
Coca-Cola (KASAMMA-CCO)-CFW Local vs Court of Appeals. G.R. No. 159828. April 19, 2006. Justice Chico-Nazario.
First Division.)

PROJECT EMPLOYMENT TEST

The principal test in determining whether particular employees are "project employees" distinguished from
"regular employees" is whether the "project employees" are assigned to carry out "specific project or
undertaking," the duration (and scope) of which are specified at the time the employees are engaged for the
project. "Project" in the realm of business and industry refers to a particular job or undertaking that is within the
regular or usual business of employer, but which is distinct and separate and identifiable as such from the
undertakings of the company. Such job or undertaking begins and ends at determined or determinable times.

The following must concur:

1) There is a continuous rehiring of project employees even after cessation of a project; and
2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual
business or trade of the employer.

However, the length of time during which the employee was continuously re-hired is not controlling, but merely
serves as a badge of regular employment. (Maraguinot, Jr. vs. National Labor Relations Commission (Second
Division). G.R. No. 120969. January 22, 1998. Justice Davide, Jr. First Division.)

Test to determine whether employees are project employees as distinguished from regular employees the
principal test for determining whether particular employees are properly characterized as "project employees" as
distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a
"specific project or undertaking," the duration (and scope) of which were specified at the time the employees were
engaged for that project. (ALU-TUCP vs. National Labor Relations Commission. G.R. No. 109902. August 2, 1994.
Justice Feliciano. En Banc.)

SEASONAL EMPLOYMENT

Performed activities which were usually necessary and desirable in the usual trade or business and had been
repeatedly hired for the same undertaking every season. (Universal Robina Sugar Milling Corporation vs. Acibo.
G.R. No. 186439. January 15, 2014. Justice Brion. Second Division.)

FIXED PERIOD EMPLOYMENT

Employees’ employment contract specifies that the same will last only for a definite period. freedom of the parties
to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general admonition
against stipulations contrary to law, morals, good customs, public order or public policy. (Brent School, Inc. vs.
Zamora. G.R. No. L-48494. February 5, 1990. Justice Narvasa. En Banc.)
DOCTRINES IN LABOR RELATIONS PAGE 56

CATEGORIES OF EMPLOYEES PAID BY RESULTS

There are two categories of employees paid by results—(1) those whose time and performance are supervised by
the employer, and, (2) those whose time and performance are unsupervised.—There is no dispute that petitioners
were employees of private respondents although they were paid not on the basis of time spent on the job but
according to the quantity and the quality of work produced by them. There are two categories of employees paid
by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of
control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to
this category especially if he performs his work in the company premises.); and (2) those whose time and
performance are unsupervised. (Here, the employer’s control is over the result of the work. Workers on pakyao
and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment
is generally practiced in garment factories where work is done in the company premises, while payment on pakyao
and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is
performed in bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e., supervised
employees. (Lambo vs. National Labor Relations Commission. G.R. No. 111042 October 26, 1999. Justice Mendoza.
Second Division.)

The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a fixed
term or period would be valid where the employee “has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer.” The definition seems a non sequitur. From
the premise—that the duties of an employee entail “activities which are usually necessary or desirable in the usual
business or trade of the employer”—the conclusion does not necessarily follow that the employer and employee
should be forbidden to stipulate any period of time for the performance of those activities. There is nothing
essentially contradictory between a definite period of an employment contract and the nature of the employee’s
duties set down in that contract as being “usually necessary or desirable in the usual business or trade of the
employer.” The concept of the employee’s duties as being “usually necessary or desirable in the usual business or
trade of the employer” is not synonymous with or identical to employment with a fixed term. Logically, the
decisive determinant in term employment should not be the activities that the employee is called upon to
perform, but the day certain agreed upon by the parties for the commencement and termination of their
employment relationship, a day certain being understood to be “that which must necessarily come, although it
may not be known when.” Seasonal employment, and employment for a particular project are merely instances of
employment in which a period, where not expressly set down, is necessarily implied. (Brent School, Inc. vs.
Zamora. G.R. No. 48494. February 5, 1990. Justice Narvasa. En Banc.)

Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article
280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the
employee’s right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as defined therein should be
construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily 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 where 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 over the latter. Unless thus limited in its purview, the
law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless
and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. (Brent School, Inc. vs.
Zamora. G.R. No. 48494. February 5, 1990. Justice Narvasa. En Banc.)

BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ) AND MEIORIN TEST

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless
the employer can show that sex, religion, or national origin is an actual qualification for performing the job. The
qualification is called a bona fide occupational qualification (BFOQ).
DOCTRINES IN LABOR RELATIONS PAGE 57

The Supreme Court of Canada adopted the so-called Meiorin Test in determining whether an employment policy is
justified. Under this test, (1) the employer must show that it adopted the standard for a purpose is rationally
connected to the performance of the job; (2) the employer must establish that the standard is reasonably
necessary to the accomplishment of that work-related purpose; and (3) the employer must establish that the
standard is reasonably necessary in order to accomplish the legitimate work-related purpose. In order to justify a
BFOQ, the employer must prove that (1) the employment qualification is reasonably related to the essential
operation of the job involved; and (2) that 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. BFOQ is valid
provided it reflects an inherent quality reasonably necessary for satisfactory job performance. (Yrasuegui vs.
Philippine Airlines. G.R. No. 168081. October 17, 2008. Justice Reyes. Third Division.)

Under American jurisprudence, job requirements which establish employer preference or conditions relating to
the marital status of an employee are categorized as a "sex-plus" discrimination where it is imposed on one sex
and not on the other. Further, the same should be evenly applied and must not inflict adverse effects on a racial or
sexual group which is protected by federal job discrimination laws. Employment rules that forbid or restrict the
employment of married women, but do not apply to married men, have been held to violate Title VII of the United
States Civil Rights Act of 1964, the main federal statute prohibiting job discrimination against employees and
applicants on the basis of, among other things, sex.

Further, it is not relevant that the rule is not directed against all women but just against married women. And,
where the employer discriminates against married women, but not against married men, the variable is sex and
the discrimination is unlawful. Upon the other hand, 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. (Philippine Telegraph and Telephone Company vs. National
Labor Relations Commission and Grace De Guzman. G.R. No. 118978. May 23, 1997. Justice Regalado. Second
Division.)

IN SELECTING THE EMPLOYEES TO BE DISMISSED, A FAIR AND REASONABLE CRITERION MUST BE USED

The characterization of an employee's services as no longer necessary or sustainable, and therefore properly
terminable, is an exercise of business judgment on the part of the employer. The wisdom or soundness of such
characterization or decision is not subject to discretionary review on the part of the Labor Arbiter nor the NLRC
provided, of course, that violation of law or arbitrary or malicious action is not shown It is not enough for a
company to merely declare that it has become overmanned. It must produce adequate proof that such is the
actual situation in order to justify the dismissal of the affected employees for redundancy. Furthermore, we have
laid down the principle that in selecting the employees to be dismissed, a fair and reasonable criterion must be
used, such as but not limited to: (a) less preferred status (e. g., temporary employee), (b) efficiency, and (c)
seniority. (Golden Thread Knitting Industries, Inc. vs. National Labor Relations Commission. G.R. No. 119157. March
11, 1999. Justice Bellosillo. Second Division.)

PROVISION WHICH GOVERNS THE DISMISSAL OF EMPLOYEES IS COMPREHENSIVE ENOUGH TO INCLUDE

RELIGIOUS CORPORATIONS

The State, through the Labor Arbiter and the National Labor Relations Commission, has the right to take
cognizance of the case and to determine whether employer rightfully exercised its management prerogative to
dismiss an employee.
DOCTRINES IN LABOR RELATIONS PAGE 58

Grounds invoked for petitioner’s dismissal, namely: misappropriation of denominational funds, willful breach of
trust, serious misconduct, gross and habitual neglect of duties and commission of an offense against the person of
his employer’s duly authorized representative, are all based on Article 282 of the Labor Code which enumerates
the just causes for termination of employment. By this alone, it is palpable that the reason for petitioner’s
dismissal from the service is not religious in nature. Coupled with this is the act of the SDA in furnishing NLRC with
a copy of petitioner’s letter of termination. As aptly stated by the OSG, this again is an eloquent admission by
private respondents that NLRC has jurisdiction over the case. Aside from these, SDA admitted in a certification
issued by its officer, Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years. SDA even
registered petitioner with the Social Security System (SSS) as its employee. As a matter of fact, the worker’s
records of petitioner have been submitted by private respondents as part of their exhibits. From all of these it is
clear that when the SDA terminated the services of petitioner, it was merely exercising its management
prerogative to fire an employee which it believes to be unfit for the job. As such, the State, through the Labor
Arbiter and the NLRC, has the right to take cognizance of the case and to determine whether the SDA, as employer,
rightfully exercised its management prerogative to dismiss an employee. This is in consonance with the mandate of
the Constitution to afford full protection to labor.

Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to
include religious corporations, such as the SDA, in its coverage. Article 278 of the Labor Code on post-employment
states that “the provisions of this Title shall apply to all establishments or undertakings, whether for profit or not.–
Obviously, the cited article does not make any exception in favor of a religious corporation. This is made more
evident by the fact that the Rules Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the
Termination of Employment and Retirement, categorically includes religious institutions in the coverage of the law.
(Austria vs. National Labor Relations Commission. G.R. No. 124382 August 16, 1999. Justice Kapunan. First
Division.)

REQUISITES FOR ABANDONMENT TO EXIST

For abandonment to exist, it is essential that (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 to sever the
employer-employee relationship manifested by some overt acts. (Golden Thread Knitting Industries, Inc. vs.
National Labor Relations Commission. G.R. No. 119157. March 11, 1999. Justice Bellosillo. Second Division.)

Mere absence does not suffice to constitute abandonment. The absence must be accompanied by overt acts
unerringly showing that the employee simply does not want to work anymore. (Cruz vs. National Labor Relations
Commission. G.R. No. 116384. February 7, 2000. Justice Purisima. Third Division.)

Article 283, in turn, specifies the authorized causes for the termination of employment, viz.:
(a) installation of labor-saving devices;
(b) redundancy;
(c) retrenchment to prevent losses; and
(d) closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of law.

In addition, Article 284 provides that an employer would be authorized to terminate the services of an employee
found to be suffering from any disease if the employee’s continued employment is prohibited by law or is
prejudicial to his health or to the health of his fellow employees. (Edge Apparel, Inc. vs. NLRC, Fourth Division. G.R.
No. 121314. February 12, 1998. Justice Vitug. First Division.)

THE LAW ALLOWS AN EMPLOYER TO DOWNSIZE HIS BUSINESS TO MEET CLEAR AND CONTINUING ECONOMIC
THREATS
DOCTRINES IN LABOR RELATIONS PAGE 59

The law allows an employer to downsize his business to meet clear and continuing economic threats. Thus, this
Court has upheld reductions in the work force to forestall business losses or stop the hemorrhaging of capital. The
right of management to dismiss workers during periods of business recession and to install labor saving devices to
prevent losses is governed by Art. 283 of the Labor Code, as amended. Under this provisions, retrenchment and
redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the
business. In exercising its right, however, management must faithfully comply with the substantive and procedural
requirements laid down by law and jurisprudence.

The requirements for valid retrenchment which must be proved by clear and convincing evidence are:
(1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred,
are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably
imminent as perceived objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
(3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least 1/2
month pay for every year of service, whichever is higher;
(4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its
interest and not to defeat or circumvent the employees' right to security of tenure; and
(5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status (i.e., whether they are temporary, casual, regular or managerial
employees), efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

The condition of business losses is normally shown by audited financial documents like yearly balance sheets and
profit and loss statements as well as annual income tax returns. It is our ruling that financial statements must be
prepared and signed by independent auditors. Unless duly audited, they can be assailed as self-serving
documents. But it is not enough that only the financial statements for the year during which retrenchment was
undertaken, are presented in evidence. For it may happen that while the company has indeed been losing, its
losses may be on a downward trend, indicating that business is picking up and retrenchment, being a drastic move,
should no longer be resorted to. Thus, the failure of the employer to show its income or loss for the immediately
preceding year or to prove that it expected no abatement of such losses in the coming years, may bespeak the
weakness of its cause. It is necessary that the employer also show that its losses increased through a period of
time and that the condition of the company is not likely to improve in the near future.

It should be observed that Article 283 of the Labor Code uses the phrase retrenchment to prevent losses. In its
ordinary connotation, this phrase means that retrenchment must be undertaken by the employer before losses are
actually sustained. We have, however, interpreted the law to mean that 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. (Asian Alcohol Corporation vs. National Labor Relations Commission.
G.R. No. 131108. March 25, 1999. Justice Puno. Second Division.)

REDUNDANCY EXISTS WHEN THE SERVICE CAPABILITY OF THE WORK IS IN EXCESS OF WHAT IS REASONABLY
NEEDED TO MEET THE DEMANDS ON THE ENTERPRISE

Redundancy exists when the service capability of the work is in excess of what is reasonably needed to meet the
demands on the enterprise. A redundant position is one rendered superfluous by any number of factors, such as
overhiring of workers, decreased volume of business, dropping of a particular line previously manufactured by the
company or phasing out of a service activity priorly undertaken by the business. Under these conditions, the
employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its
business.

For the implementation of a redundancy program to be valid, the employer must comply with the following
requisites:
DOCTRINES IN LABOR RELATIONS PAGE 60

(1) written notice served on both the employees and the Department of Labor and Employment at least one
month prior to the intended date of retrenchment;
(2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher;
(3) good faith in abolishing the redundant positions; and
(4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly
abolished. (Asian Alcohol Corporation vs. National Labor Relations Commission. G.R. No. 131108. March 25,
1999. Justice Puno. Second Division.)

CLOSURE OR CESSATION OF OPERATION OF AN ESTABLISHMENT OR UNDERTAKING NOT DUE TO SERIOUS

BUSINESS LOSSES OR REVERSES

Where the closure was due to business losses the Labor Code does not impose any obligation upon the employer
to pay separation benefits, for obvious reasons. Art. 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to losses. (North Davao Mining Corporation vs. National Labor
Relations Commission. G.R. No. 112546. March 13, 1996. Justice Panganiban. En Banc.)

It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking not due
to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of
all business operations and the cessation of only part of a company’s business. (Cheniver Deco Print Technics
Corporation vs. National Labor Relations Commission. G.R. No. 122876. February 17, 2000. Justice Quisumbing.
Second Division.)

DOCTRINE OF STRAINED RELATIONS

The doctrine of strained relations cannot be used recklessly or applied loosely to deprive an illegally dismissed
employee of his means of livelihood and deny him reinstatement. Hence, the existence of strained relations
between the parties is not clearly established. We have ruled that the doctrine of “strained relations” cannot be
used recklessly or applied loosely to deprive an illegally dismissed employee of his means of livelihood and deny
him reinstatement. While the Court acknowledges that, in the natural course of events, a certain degree of
hostility is engendered by litigation, it will not by itself constitute sufficient proof of the existence of strained
relations to rule out the possibility of reinstatement. (Pheschem Industrial Corporation vs. Moldez. G.R. No.
161158. May 9, 2005. Justice Puno. Second Division.)

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it releases the employer
from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Strained
relations must be demonstrated as a fact, however, to be adequately supported by evidence — substantial
evidence to show that the relationship between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy. (Golden Ace Builders vs. Talde. G.R. No. 187200. May 5, 2010. Justice
Carpio Morales. First Division.)

Strained relationship may be invoked only against employees whose positions demand trust and confidence, or
whose differences with their employer are of such nature or degree as to preclude reinstatement. In the instant
case, however, the relationship between petitioner, an ordinary employee, and management was clearly on an
impersonal level. Petitioner did not occupy such a sensitive position as would require complete trust and
confidence, and where personal ill will would foreclose his reinstatement. (Advan Motor, Inc. vs. Veneracion. G.R.
No. 190944. December 13, 2017. Leonardo-De Castro. First Division.)

TOTALITY OF INFRACTIONS DOCTRINE

DOCTRINES IN LABOR RELATIONS PAGE 61

The totality of infractions or number of violations committed during the period of employment shall be considered
in determining the penalty to be imposed on the erring employee. The offenses committed by him should not be
taken singly and separately but in their totality. Fitness for continued employment cannot be compartmentalized
into tight little cubicles of aspects of character, conduct and ability separate and independent of each other.
(Alvarez vs. Golden Tri Bloc, Inc. G.R. No. 202158. September 25, 2013. Justice Reyes. First Division.)
PROPORTIONALITY RULE

Infractions committed by an employee should merit only the corresponding penalty demanded by the
circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and
must be imposed in connection with the disciplinary authority of the employer. (Sagales vs. Rustan’s Commercial
Corporation. G.R. No. 166554. November 27, 2008. Justice R.T. Reyes. Third Division.)

It was certainly within the petitioner Bank’s prerogative to impose on the respondent what it considered the
appropriate penalty under the circumstances pursuant to its company rules and regulations. (China Banking
Corporation vs. Borromeo. G.R. No. 156515. October 19, 2004. Justice Callejo, Sr. Second Division.)

DOCTRINE OF INCOMPATIBILITY

Where the employee has done something that is contrary or incompatible with the faithful performance of his
duties his employer has a just cause for terminating his employment. (Manila Chauffeur’s' League vs. Bachbach
Motor Co. G.R. No. L-47138. June 17, 1940. Justice Concepcion. En Banc.)

TWIN NOTICE REQUIREMENTS TO JUSTIFY A VALID DISMISSAL FROM EMPLOYMENT

Under the Labor Code, there are twin requirements to justify a valid dismissal from employment: (a) the dismissal
must be for any of the causes provided in Article 282 of the Labor Code (substantive aspect) and (b) the employee
must be given an opportunity to be heard and to defend himself (procedural aspect). The procedural aspect
requires that the employee be given two written notices before she is terminated consisting of a notice which
apprises the employee of the particular acts/omissions for which the dismissal is sought and the subsequent notice
which informs the employee of the employers decision to dismiss him. (Colegio de San Juan de Letran-Calamba vs.
Villas G.R. No. 137795. March 26, 2003. Justice Corona. Third Division.)

Under Article 282 of the Labor Code, as amended, the following are deemed just causes to terminate an employee:
(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 authorize representative; and (e) Other causes analogous to the foregoing.
(Santos, Jr. vs. National Labor Relations Commission. G.R. No. 115795. March 6, 1998. Justice Romero. Third
Division.)

The employee concerned must be notified of the employer's intent to dismiss him and of the reason or reasons for
the proposed dismissal. The hearing affords the employee an opportunity to answer the charge or charges against
him and to defend himself therefrom before dismissal is effected. Observance to the letter of company rules on
investigation of an employee about to be dismissed is not mandatory. It is enough that there is due notice and
hearing before a decision to dismiss is made. But even if no hearing is conducted, the requirement of due process
would have been met where a chance to explain a party's side of the controversy had been accorded him. If an
employee may be considered illegally dismissed because he was not accorded fair investigation, the more reason
there is to strike down as an inexcusable and disdainful rejection of due process a situation where there is no
investigation at all. The need for the observance of an employee's right to procedural due process in termination
cases cannot be overemphasized. After all, one's employment, profession, trade, or calling is a "property right" and
the wrongful interference therewith gives rise to an actionable wrong. Verily, a man's right to his labor is property
within the meaning of constitutional guarantees which he cannot be deprived of without due process. While the
DOCTRINES IN LABOR RELATIONS PAGE 62

law recognizes the right of an employer to dismiss employees in warranted cases, it frowns upon arbitrariness as
when employees are not accorded due process. Neither can the manner of dismissal be considered within the
ambit of managerial prerogatives, for while termination of employment is traditionally considered a management
prerogative, it is not an absolute prerogative subject as it is to limitations founded in law, the CBA, or general
principles of fair play and justice. (Ferrer vs. National Labor Relations Commission. G.R. No. 100898. July 5, 1993.
Justice Melo. Third Division.)
The need for a company investigation is founded on the consistent ruling of this Court that the twin requirements
of notice and hearing which are essential elements of due process must be met in employment-termination cases.
Observance to the letter of company rules on investigation of an employee about to be dismissed is not
mandatory. It is enough that there is due notice and hearing before a decision to dismiss is made. But even if no
hearing is conducted, the requirement of due process would have been met where a chance to explain a party's
side of the controversy had been accorded him. The need for the observance of an employee's right to procedural
due process in termination cases cannot be overemphasized. After all, one's employment, profession, trade, or
calling is a "property right" and the wrongful interference therewith gives rise to an actionable wrong. Verily, a
man's right to his labor is property within the meaning of constitutional guarantees which he cannot be deprived
of without due process. (Ferrer vs. National Labor Relations Commission G.R. No. 100898 July 5, 1993. Justice Melo.
Third Division.)

Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of
termination of employment under the Labor Code; and second, procedural––the manner of dismissal.

(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind
of assistance that management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in
order to enable the employees to intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them;
(2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees a
written notice of termination indicating that: (1) all circumstances involving the charge against the employees
have been considered; and (2) grounds have been established to justify the severance of their employment.
(King of Kings Transport, Inc. vs. Mamac. G.R. No. 166208. June 29, 2007. Justice Velasco Jr., Second Division.)

This Court has held in the past that a formal or trial-type hearing is not at all times and in all instances essential to
due process, the requirements of which are satisfied where parties are afforded fair and reasonable opportunity to
explain their side of the controversy at hand. (Llora Motors, Inc. vs. Drilon. G.R. No. 82895 November 7, 1989.
Justice Feliciano. Third Division.)

In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases:
(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.
DOCTRINES IN LABOR RELATIONS PAGE 63

(b) A formal hearing or conference becomes mandatory only when requested by the employee in writing or
substantial evidentiary disputes exist or a company rule or practice requires it, or 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 the implementing rules and regulations. (Perez vs. Philippine Telegraph and Telephone
Company. G.R. No. 152048. April 07, 2009. Justice Corona. En Banc.)
IN CASES OF REGULAR EMPLOYMENT, THE EMPLOYER SHALL NOT TERMINATE THE SERVICES OF AN EMPLOYEE
EXCEPT FOR A JUST CAUSE OR WHEN AUTHORIZED BY THIS TITLE

Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.

As implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor Relations
Commission, it would seem that the Mercury Drug Rule which limited the award of back wages of illegally
dismissed workers to three (3) years "without deduction or qualification" to obviate the need for further
proceedings in the course of execution, is no longer applicable.

A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the entire period
he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is that the employer may,
however, deduct any amount which the employee may have earned during the period of his illegal termination.
Computation of full back wages and presentation of proof as to income earned elsewhere by the illegally dismissed
employee after his termination and before actual reinstatement should be ventilated in the execution proceedings
before the Labor Arbiter concordant with Section 3, Rule 8 of the 1990 new Rules of Procedure of the National
Labor Relations Commission. (Ferrer vs. National Labor Relations Commission. G.R. No. 100898 July 5, 1993. Justice
Melo. Third Division.)

This Court has explained that security of tenure is a right of paramount value. Precisely, it is given specific
recognition and guarantee by the Constitution no less. The State shall afford protection to labor and 'shall assure
the rights of workers to x x x security of tenure. This Court has explained further: It stands to reason that a right so
highly ranked as security of tenure should not lightly be denied on so nebulous a basis as mere speculation.
(Alfredo F. Laya, Jr. vs. Court of Appeals, National Labor Relations Commission, Philippine Veterans Bank and
Ricardo A. Balbido, Jr. G.R. No. 205813. January 10, 2018. Justice Carpio. En Banc.)

MISCONDUCT TO BE A JUST CAUSE FOR TERMINATION MUST BE SERIOUS

Misconduct is improper or wrongful conduct. It is the transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of
judgment. Under Article 282 of the Labor Code, the misconduct, to be a just cause for termination, must be
serious. This implies that it must be of such grave and aggravated character and not merely trivial or unimportant.
Examples of serious misconduct justifying termination, as held in some of our decisions, include: sexual
harassment (the managers act of fondling the hands, massaging the shoulder and caressing the nape of a
secretary); fighting within company premises; uttering obscene, insulting or offensive words against a superior;
misrepresenting that a student is his nephew and pressuring and intimidating a co-teacher to change that students
failing grade to passing. (Colegio de San Juan de Letran-Calamba vs. Villas. G.R. No. 137795. March 26, 2003.
Justice Corona. Third Division.)

TEACHERS MUST ADHERE TO THE EXACTING STANDARDS OF MORALITY AND DECENCY

Having an extra-marital affair is an affront to the sanctity of marriage, which is a basic institution of society. Even
our Family Code provides that husband and wife must live together, observe mutual love, respect and fidelity.This
DOCTRINES IN LABOR RELATIONS PAGE 64

is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family.
Our laws, in implementing this constitutional edict on marriage and the family underscore their permanence,
inviolability and solidarity.

As a teacher, petitioner serves as an example to his pupils, especially during their formative years and stands in
loco parentis to them. To stress their importance in our society, teachers are given substitute and special parental
authority under our laws.
Consequently, it is but stating the obvious to assert that teachers must adhere to the exacting standards of
morality and decency. There is no dichotomy of morality. A teacher, both in his official and personal conduct, must
display exemplary behavior. He must freely and willingly accept restrictions on his conduct that might be viewed
irksome by ordinary citizens. In other words, the personal behavior of teachers, in and outside the classroom, must
be beyond reproach.

Accordingly, teachers must abide by a standard of personal conduct which not only proscribes the commission of
immoral acts, but also prohibits behavior creating a suspicion of immorality because of the harmful impression it
might have on the students. Likewise, they must observe a high standard of integrity and honesty.

From the foregoing, it seems obvious that when a teacher engages in extra-marital relationship, especially when
the parties are both married, such behavior amounts to immorality, justifying his termination from employment.

Having concluded that immorality is a just cause for dismissing petitioner, it is imperative that the private
respondent prove the same. Since the burden of proof rests upon the employer to show that the dismissal was for
a just and valid cause, the same must be supported by substantial evidence. (Santos, Jr. vs. National Labor
Relations Commission. G.R. No. 115795. March 6, 1998. Justice Romero. Third Division.)

AN EMPLOYEE WHO CANNOT GET ALONG WITH HIS CO-EMPLOYEES IS DETRIMENTAL TO THE COMPANY FOR HE
CAN UPSET AND STRAIN THE WORKING ENVIRONMENT

An employee who cannot get along with his co-employees is detrimental to the company for he can upset and
strain the working environment. Without the necessary teamwork and synergy, the organization cannot function
well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its
organization. When personal differences between employees and management affect the work environment, the
peace of the company is affected. Thus, an employee’s attitude problem is a valid ground for his termination.[18] It
is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly,
compliance with the twin requirement of notice and hearing must also be proven by the employer. (Heavylift
Manila, Inc. vs. Court of Appeals. G.R. No. 154410. October 20, 2005. Justice Quisumbing. Third Division.)

PRIOR CLEARANCE RULE

On the matter of the clearance requirement of the law, Article 278 Section (b) of the Labor Code, then in force,
states: “Article 278. x x x. “x x x. “(b) With or without a collective agreement, no employer may shut down his
establishment or dismiss or terminate the employment of employees with at least one year of service during the
last two years, whether such service is continuous or broken, without prior written authority issued in accordance
with such rules and regulations as the Secretary may promulgate. “x x x. Moreover, Rule XIV Section 2 of the Rules
Implementing the Labor Code which was still in force at that time, likewise provides: “Sec. 2. Shutdown or
dismissal without clearance. —Any shutdown or dismissal without prior clearance shall be conclusively presumed
to be termination of employment without a just cause. The Regional Director shall, in such case, order the
immediate reinstatement of the employee and the payment of his wages from the time of the shutdown or
dismissal until the time of reinstatement.” The prior clearance rule was not a “trivial technicality.” This
requirement is part of due process which must not be denied the employee. It was designed to insure that the
employer’s prerogative to dismiss or lay-off an employee is exercised without abuse of discretion or arbitrariness.
It is worth noting that the petitioner’s application for clearance to terminate the employment of the private
respondent was filed with the MOLE (now DOLE) on June 11, 1981 specifically stating that the application was for
DOCTRINES IN LABOR RELATIONS PAGE 65

private respondent’s termination effective July 4, 1981. Hence, the said clearance was obtained prior to the
operative act of termination and therefore, the complaint for illegal dismissal citing lack of prior clearance as a
ground filed by private respondent is without basis. (Family Planning Organization of the Philippines., Inc. vs.
National Labor Relations Commission. G.R. No. 75907. March 23, 1992. Justice Medialdea. First Division.)

THE RIGHT OF AN EMPLOYER TO DISMISS EMPLOYEES ON THE GROUND OF LOSS OF TRUST AND CONFIDENCE
MUST NOT BE EXERCISED ARBITRARILY

The right of an employer to dismiss employees on the ground of loss of trust and confidence must not be exercised
arbitrarily and without just cause. For loss of trust and confidence to be a valid ground for dismissal of an
employee, it must be substantial and founded on clearly established facts sufficient to warrant the employees
separation from employment. Loss of confidence must not be used as a subterfuge for causes which are improper,
illegal or unjustified; it must be genuine, not a mere afterthought, to justify earlier action taken in bad faith.
Because of its subjective nature, this Court has been very scrutinizing in cases of dismissal based on loss of trust
and confidence because the same can easily be concocted by an abusive employer. Thus, when the breach of trust
or loss of confidence theorized upon is not borne by clearly established facts, such dismissal on the ground of loss
and confidence cannot be allowed. (Cruz vs. National Labor Relations Commission. G.R. No. 116384. February 7,
2000. Justice Purisima. Third Division.)

A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of,
some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some
fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee
himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article 283
does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is
initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor
saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement
a retrenchment program. The clear-cut distinction between a dismissal for just cause under Article 282 and a
dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of
separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay. For
these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes
under Article 282, and when based on one of the authorized causes under Article 283. Accordingly, it is wise to
hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the
notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was,
in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause
under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer
because the dismissal process was initiated by the employers exercise of his management prerogative. (Jaka Food
Processing Corporation vs. Pacot. G.R. No. 151378. March 28, 2005. Justice Garcia. En Banc.)

CONSTRUCTIVE DISMISSAL HAD ALREADY SET IN WHEN THE SUSPENSION WENT BEYOND THE MAXIMUM
PERIOD ALLOWED BY LAW

Clearly, constructive dismissal had already set in when the suspension went beyond the maximum period allowed
by law. Section 4, Rule XIV, Book V of the Omnibus Rules provides that preventive suspension cannot be more than
the maximum period of 30 days. Hence, we have ruled that after the 30-day period of suspension, the employee
must be reinstated to his former position because suspension beyond this maximum period amounts to
constructive dismissal. (Hyatt Taxi Services Inc. vs. Rustom M. Catinoy. G.R. No. 143204. June 26, 2001. Justice
Gonzaga-Reyes. Third Division.)

HOBSON’S CHOICE

This means no choice at all; choice between accepting what is offered or having nothing at all. It was in reality a
Hobson’s choice. All that the private respondents were offered was a choice on the means or method of
DOCTRINES IN LABOR RELATIONS PAGE 66

terminating their services but never as to the status of their employment. In short, they were never asked if they
wanted to work for petitioner. They either had to voluntarily retire, be retrenched with benefits or be dismissed
without receiving any benefit at all. (Asufrin, Jr. vs. San Miguel Corporation. G.R. No. 156658. March 10, 2004.
Justice Ynares-Santiago. First Division.)

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. Constructive dismissal is, therefore, a dismissal in disguise. As such, the law recognizes and
resolves this situation in favor of employees in order to protect their rights and interests from the coercive acts of
the employer.31 In fact, the employee who is constructively dismissed may be allowed to keep on coming to work.
(McMer Corporation, Inc. vs. National Labor Relations Commission. G.R. No. 193421. June 4, 2014. Justice Peralta.
Third Division.)

FLOATING STATUS

"Floating status" means an indefinite period of time when private respondents do not receive any salary or
financial benefit provided by law. those who have been out of work or "floating status" for a period exceeding six
(6) months to have been terminated from the service without just cause thus entitling them to the corresponding
benefits for such separation. The "floating status" of such an employee should last only for a reasonable time. In
this case, respondent labor arbiter correctly held that when the "floating status" of said employees lasts for more
than six (6) months, they may be considered to have been illegally dismissed from the service. Thus, they are
entitled to the corresponding benefits for their separation. (Agro Commercial Security Services Agency, Inc. vs.
National Labor Relations Commission. G.R. Nos. 82823-24. July 31, 1989. Justice Gancayco. First Division.)

IN ILLEGAL DISMISSAL CASES, IT IS THE EMPLOYER WHO HAS THE BURDEN OF PROOF

It bears stressing that in illegal dismissal cases, it is the employer who has the burden of proof. (Hyatt Taxi Services
Inc. vs. Rustom M. Catinoy. G.R. No. 143204. June 26, 2001. Justice Gonzaga-Reyes. Third Division.)

The law imposes many obligations on the employer such as providing just compensation to workers, observance of
the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law
also recognizes the right of the employer to expect from its workers not only good performance, adequate work
and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be inimical to his interests. (Agabon vs. National Labor
Relations Commission. G.R. No. 158693 November 17, 2004 Justice Ynares-Santiago. En Banc.)

The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases
involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for
violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full
backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized
cause. Serrano was confronting the practice of employers to “dismiss now and pay later” by imposing full
backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the
Labor Code which states: ART. 279. Security of Tenure.— In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his actual reinstatement. This means that
the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of
backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed.
DOCTRINES IN LABOR RELATIONS PAGE 67

The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to
revisit the doctrine.

After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we
believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and
hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was
for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed
in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to
employees, but to employers as well. (Agabon vs. National Labor Relations Commission. G.R. No. 158693
November 17, 2004 Justice Ynares-Santiago. En Banc.)

THE GENERAL RULE IS THAT WHEN JUST CAUSES FOR TERMINATING THE SERVICES OF AN EMPLOYEE UNDER
ART. 282 OF THE LABOR CODE EXIST, THE EMPLOYEE IS NOT ENTITLED TO SEPARATION PAY

The general rule is that when just causes for terminating the services of an employee under Art. 282 of the Labor
Code exist, the employee is not entitled to separation pay. The apparent reason behind the forfeiture of the right
to termination pay is that lawbreakers should not benefit from their illegal acts. The dismissed employee, however,
is entitled to “whatever rights, benefits and privileges [s/he] may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy or practice” or under the Labor Code and
other existing laws. This means that the employee, despite the dismissal for a valid cause, retains the right to
receive from the employer benefits provided by law, like accrued service incentive leaves. With respect to benefits
granted by the CBA provisions and voluntary management policy or practice, the entitlement of the dismissed
employees to the benefits depends on the stipulations of the CBA or the company rules and policies.

As in any rule, there are exceptions. One exception where separation pay is given even though an employee is
validly dismissed is when the court finds justification in applying the principle of social justice well entrenched in
the 1987 Constitution. In Phil. Long Distance Telephone Co. (PLDT) v. NLRC, 164 SCRA 671 (1988), the Court
elucidated why social justice can validate the grant of separation pay, thus: The reason is that our Constitution is
replete with positive commands for the promotion of social justice, and particularly the protection of the rights of
the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact,
instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of
Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social
justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor,
hand in hand with management, in the advancement of the national economy and the welfare of the people in
general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than
sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause.

The courts should not grant separation pay based on social justice serious misconduct (which is the first ground for
dismissal under Art. 282) or acts that reflect on the moral character of the employee. What is unclear is whether
the ruling likewise precludes the grant of separation pay when the employee is validly terminated from work on
grounds laid down in Art. 282 of the Labor Code other than serious misconduct. (Toyota Motor Phils. Corp.
Workers Association (TMPCWA) vs. National Labor Relations Commission. G.R. Nos. 158786 & 158789, G.R. Nos.
158798-99. October 19, 2007. Justice Velasco. Second Division.)

A LEGALLY DISMISSED EMPLOYEE IS NOT ENTITLED TO SEPARATION PAY

Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language
of Article 279 of the Labor Code that [a]n employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Exceptionally, separation pay is granted to a legally
dismissed employee as an act social justice, or based on equity. In both instances, it is required that the dismissal
DOCTRINES IN LABOR RELATIONS PAGE 68

(1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee. (Yrasuegui vs.
Philippine Airlines. G.R. No. 168081. October 17, 2008. Justice Reyes. Third Division.)

SEPARATION PAY NEED NOT BE PAID TO AN EMPLOYEE WHO VOLUNTARILY RESIGNS

Generally, separation pay need not be paid to an employee who voluntarily resigns. However, an employer who
agrees to expend such benefit as an incident of the resignation should not be allowed to renege in the
performance of such commitment.

Voluntary resignation is defined as the act of an employee, who finds himself in a situation in which he believes
that personal reasons cannot be sacrificed in favor of the exigency of the service; thus, he has no other choice but
to disassociate himself from his employment. (Alfaro vs. Court of Appeals. G.R. No. 140812. August 28, 2001.
Justice Panganiban. Third Division.)

Resignation is the voluntary act of an employee who "finds himself in a situation where he believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, then he has no other choice but to disassociate
himself from his employment." The employer has no control over resignations and so, the notification requirement
was devised in order to ensure that no disruption of work would be involved by reason of the resignation. This
practice has been recognized because "every business enterprise endeavors to increase its profits by adopting a
device or means designed towards that goal."

Resignations, once accepted and being the sole act of the employee, may not be withdrawn without the consent of
the employer.

Once an employee resigns and his resignation is accepted, he no longer has any right to the job. If the employee
later changes his mind, he must ask for approval of the withdrawal of his resignation from his employer, as if he
were re-applying for the job. It will then be up to the employer to determine whether or not his service would be
continued. If the employer accepts said withdrawal, the employee retains his job. If the employer does not, as in
this case, the employee cannot claim illegal dismissal for the employer has the right to determine who his
employees will be. To say that an employee who has resigned is illegally dismissed, is to encroach upon the right of
employers to hire persons who will be of service to them. (Intertrod Maritime, Inc. and Troodos Shipping Co. vs.
National Labor Relations Commission and Ernesto De La Cruz. G.R. No. 81087. June 19, 1991. Justice Panganiban.
Second Division.)

IT IS HIGH TIME THAT EMPLOYER AND EMPLOYEE CEASE TO VIEW EACH OTHER AS ADVERSARIES AND INSTEAD
RECOGNIZE THAT THEIRS IS A SYMBIOTIC RELATIONSHIP

The working relationship between employers and employees, thus endangering the business that they both want
to succeed. The more progressive and truly effective means of dispute resolution lies in mediation, conciliation,
and arbitration, which do not increase tension but instead provide relief from them. In the end, an atmosphere of
trust and understanding has much more to offer a business relationship than the traditional enmity that has long
divided the employer and the employee. (Toyota Motor Phils. Corp. Workers Association (TMPCWA) vs. National
Labor Relations Commission. G.R. Nos. 158786 & 158789, G.R. Nos. 158798-99. October 19, 2007. Justice Velasco.
Second Division.)

TERMINATION OF AN EMPLOYMENT WITHOUT JUST CAUSE, NOT AN UNLAWFUL PRACTICE

The confusion arises over the use of the term “illegal dismissal” which creates the impression that termination of
an employment without just cause constitutes an offense. It must be noted, however that unlike in cases of
commission of any of the prohibited activities during strikes or lockouts under Article 265, unfair labor practices
under Articles 248, 249 and 250 and illegal recruitment activities under Article 38, among others, which the Code
itself declares to be unlawful, termination of an employment without just or valid cause is not categorized as an
DOCTRINES IN LABOR RELATIONS PAGE 69

unlawful practice. (Callanta vs. Carnation Philippines, Inc. G.R. No. L-70615. October 28, 1986. Justice Fernan.
Second Division.)

RELIEFS PRINCIPALLY SOUGHT BY AN EMPLOYEE ILLEGALLY DISMISSED FROM EMPLOYMENT

Besides, the reliefs principally sought by an employee who was illegally dismissed from his employment are
reinstatement to his former position without loss of seniority rights and privileges, if any, backwages and damages,
in case there is bad faith in his dismissal. As an affirmative relief, reinstatement may be ordered, with or without
backwages.

While ordinarily, reinstatement is a concomitant of backwages, the two are not necessarily complements, nor is
the award of one a condition precedent to an award of the other. And, in proper cases, backwages may be
awarded without ordering reinstatement. In either case, no penalty of fine nor imprisonment is imposed on the
employer upon a finding of illegality in the dismissal.

It is true that the “backwages” sought by an illegally dismissed employee may be considered, by reason of its
practical effect, as a “money claim.” However, it is not the principal cause of action in an illegal dismissal case but
the unlawful deprivation of one’s employment committed by the employer in violation of the right of an employee.
Backwages is merely one of the reliefs which an illegally dismissed employee prays the labor arbiter and the NLRC
to render in his favor as a consequence of the unlawful act committed by the employer. The award thereof is not
private compensation or damages but is in furtherance and effectuation of the public objectives of the Labor Code.
Even though the practical effect is the enrichment of the individual, the award of backwages is not in redress of a
private right, but, rather, is in the nature of a command upon the employer to make public reparation for his
violation of the Labor Code. (Callanta vs. Carnation Philippines, Inc. G.R. No. L-70615. October 28, 1986. Justice
Fernan. Second Division.)

REINSTATEMENT AND BACKWAGES ARE TWO SEPARATE RELIEFS

We point out that reinstatement and backwages are two separate reliefs available to an illegally dismissed
employee. The normal consequences of a finding that an employee has been illegally dismissed are: first, that the
employee becomes entitled to reinstatement to his former position without loss of seniority rights; and second,
the payment of backwages covers the period running from his illegal dismissal up to his actual reinstatement.
These two reliefs are not inconsistent with one another and the labor arbiter can award both simultaneously.

Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot be a substitute for the
payment of backwages. In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay should be granted. In effect, an illegally dismissed
employee should be entitled to either reinstatement – if viable, or separation pay if reinstatement is no longer be
viable, plus backwages in either instance. The rationale for such policy of distinction was vividly explained in Santos
v. NLRC under these terms:

Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or non-
availability of one does not carry with it the inappropriateness or non-availability of the other.
DOCTRINES IN LABOR RELATIONS PAGE 70

Payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal;
separation pay, in contrast, is oriented towards the immediate future, the transitional period the dismissed
employee must undergo before locating a replacement job. It was grievous error amounting to grave abuse of
discretion on the part of the NLRC to have considered an award of separation pay as equivalent to the aggregate
relief constituted by reinstatement plus payment of backwages under Article 280 of the Labor Code. The grant of
separation pay was a proper substitute only for reinstatement; it could not be an adequate substitute both for
reinstatement and for backwages.

Separation pay is granted where reinstatement is no longer advisable because of strained relations between the
employee and the employer. Backwages represent compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for computing separation pay is usually the length of the
employee’s past service, while that for backwages is the actual period when the employee was unlawfully
prevented from working.

A principle and policy of the law that cannot be watered down by any lesser agreement except perhaps when
backwages are already earned entitlements that the employee chooses to surrender for a valuable consideration
(and even then, the consideration must at least be equitable). This legal policy emphasizes, too, the rule that
separation pay cannot be a substitute for backwages but only for reinstatement. The award of separation pay is
not inconsistent with the payment of backwages. Thus, until a higher court’s or tribunal’s reversal of the finding
that an employee had been illegally dismissed, the employee would be entitled to receive his reinstatement salary
or backwages during the period of appeal until such reversal. This is in line with the Labor Code’s policy that an
order of reinstatement, which can either be actual or through the payroll, is immediately executory and is not
affected by the period of appeal. Backwages of the dismissed employee should be granted during the period of
appeal until reversal by a higher court. (Wenphil Corporation vs. Almer R. Abing and Anabelle M. Tuazon. G.R. No.
207983. April 7, 2014. Justice Brion. Second Division.)

RA 7641 OR THE RETIREMENT PAY LAW SHALL APPLY TO ALL EMPLOYEES IN THE PRIVATE SECTOR

RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are paid. They shall include part-time
employees, employees of service and other job contractors and domestic helpers or persons in the personal
service of another.

The law does not cover employees of retail, service and agricultural establishments or operations employing not
more than (10) employees or workers and 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.

SEC. 2. Nothing in this Act shall deprive any employee of benefits to which he may be entitled under
existing laws or company policies or practices.

In addition, Rule II of the Rules Implementing Book VI of the Labor Code provides as follows:

SEC. 8. Relation to agreements and regulations. Nothing in this Rule shall justify an employer from
withdrawing or reducing any benefits, supplements or payments as provided in existing laws, individual or
collective agreements or employment practices or policies.
DOCTRINES IN LABOR RELATIONS PAGE 71

Employees of government-owned and controlled corporations with special charters are covered under the Civil
Service. On the other hand, employees of government-owned and controlled corporations under the Corporation
Code are governed by the provisions of the Labor Code.

Rep. Act No. 7641 which is an amendment to the Labor Code. The accommodation under Rep. Act No. 1820
extending GSIS coverage to PTSI employees did not take away from petitioners the beneficial coverage afforded by
Rep. Act No. 7641. Hence, the retirement pay payable under Article 287 of the Labor Code as amended by Rep. Act
No. 7641 should be considered apart from the retirement benefit claimable by the petitioners under the social
security law or, as in this case, the GSIS law. (Postigo vs. Philippine Tuberculosis Society. G.R. No. 155146. January
24, 2006. Justice Quisumbing. Third Division.)

ENTITLEMENT OF EMPLOYEES TO RETIREMENT BENEFITS MUST SPECIFICALLY BE GRANTED UNDER EXISTING

LAWS

It is settled that entitlement of employees to retirement benefits must specifically be granted under existing laws,
a collective bargaining agreement or employment contract, or an established employer policy. No law or collective
bargaining agreement or other applicable contract, or an established company policy was existing during
respondents’ employment entitling them to the P200,000 lump-sum retirement pay (Kimberly-Clark Philippines,
Inc. vs. Dimayuga. G.R. No. 177705 September 18, 2009. Justice Carpio-Morales. Second Division.)

RECEIPT OF RETIREMENT BENEFITS DOES NOT BAR THE RETIREE FROM RECEIVING SEPARATION PAY

The receipt of retirement benefits does not bar the retiree from receiving separation pay. Separation pay is a
statutory right designed to provide the employee with the wherewithal during the period that he/she is looking for
another employment. On the other hand, retirement benefits are intended to help the employee enjoy the
remaining years of his life, lessening the burden of worrying about his financial support, and are a form of reward
for his loyalty and service to the employer. Hence, they are not mutually exclusive. However, this is only true if
there is no specific prohibition against the payment of both benefits in the retirement plan and/or in the Collective
Bargaining Agreement (CBA). (Santos vs. Servier Philippines, Inc.G.R. No. 166377. November 28, 2008. Justice
Nachura. Third Division.)

EMPLOYER HAS NO OBLIGATION TO SET UP A RETIREMENT SCHEME

Article 287 does not in itself purport to impose any obligation upon employers to set up a retirement scheme for
their employees over and above that already established under existing laws, like the Social Security Act. (GVM
Security and Protective Agency vs. NLRC. G.R. No. 102157. July 23, 1993. Justice Quiason. First Division.)

Retirement benefits are intended to help the employee enjoy the remaining years of his life, lessening the burden
of worrying for his financial support, and are a form of reward for his loyalty and service to the employer.
Retirement benefits, where not mandated by law, may be granted by agreement of the employees and their
employer or as a voluntary act on the part of the employer. Republic Act No. 7641 is a curative social legislation. It
precisely intends to give the minimum retirement benefits to employees not entitled to the same under collective
bargaining and other agreements. It also applies to establishments with existing collective bargaining or other
agreements or voluntary retirement plans whose benefits are less than those prescribed in said law.

Republic Act No. 7641 states that “any employee may be retired upon reaching the retirement age x x x”; and “[i]n
case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements.” The Implementing Rules
provide that Republic Act No. 7641 applies to “all employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are paid, except to those specifically
exempted x x x.” And Secretary Quisumbing’s Labor Advisory further clarifies that the employees covered by
Republic Act No. 7641 shall “include part-time employees, employees of service and other job contractors and
domestic helpers or persons in the personal service of another.” The only exemptions specifically identified by
DOCTRINES IN LABOR RELATIONS PAGE 72

Republic Act No. 7641 and its Implementing Rules are: (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; and (2) employees of retail, service and agricultural establishments or operations regularly
employing not more than 10 employees. (De La Salle-Araneta University vs. Bernardo. G.R. No. 190809. February
13, 2017. Justice Leonardo-De Castro. First Division.)

For the availment of the retirement benefits under Article 302 [287] of the Labor Code, as amended by Republic
Act No. 7641, the following requisites must concur: (1) the employee has reached the age of 60 years for optional
retirement or 65 years for compulsory retirement; (2) the employee has served at least five years in the
establishment; and (3) there is no retirement plan or other applicable agreement providing for retirement benefits
of employees in the establishment. (De La Salle-Araneta University vs. Bernardo. G.R. No. 190809. February 13,
2017. Justice Leonardo-De Castro. First Division.)

PRESCRIPTION OF OFFENSES AND CLAIMS

Criminal Offenses penalized under the Labor Code and its Implementing Rules and Regulations – three (3) years
from the date of commission or discovery thereof. The Labor Code, however, does not contain any provisions on
the mode of computation of the three-year prescriptive period it established. (People vs. Duque. G.R. No. 100285.
August 13, 1992. Justice Feliciano Third Division.)

An action for damages involving a plaintiff separated from his employment for alleged unjustifiable causes is one
for “injury to the rights of the plaintiff, and must be brought within four [4] years.” It is a principle in American
jurisprudence which, undoubtedly, is well-recognized in this jurisdiction that one’s employment, profession, trade
or calling is a “property right,” and the wrongful interference therewith is an actionable wrong. The right is
considered to be property within the protection of a constitutional guaranty of due process of law. When one is
arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of
one’s dismissal from employment constitutes, in essence, an action predicated “upon an injury to the rights of the
plaintiff,” as contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years. A
strict application of said provisions will not destroy the enforcement of fundamental rights of the employees. As a
statutory provision on limitations of actions, Articles 291 and 292 go to matters of remedy and not to the
destruction of fundamental rights. As a general rule, a statute of limitation extinguishes the remedy only. Although
the remedy to enforce a right may be barred, that right may be enforced by some other available remedy which is
not barred. (Callanta vs. Carnation Philippines, Inc. G.R. No. L-70615. October 28, 1986. Justice Fernan. Second
Division.)

Money Claims, including incremental proceeds arising from tuition fees under PD 451
 General Rule: 3 years from the time the cause of action accrued; otherwise forever barred ( Labor Code, Art.
291)
 Exception: Promissory Estoppel (Manuel L. Quezon University Association vs. Manuel L. Quezon Educational
Institution, Inc. (MLQU). G.R. No. 82312, 19 April 1989. Justice Griño-Aquino. First Division.)

Illegal Dismissal – Four (4) years. It commences to run from the date of formal dismissal. (Mendoza vs. National
Labor Relations Commission. G.R. No. 122481. March 5, 1998. Justice Martinez. Second Division.)

Claim for backwages

Four (4) years - Since an award of backwages is merely consequent to a declaration of illegal dismissal. (George A.
Arriola vs. Pilipino Star Ngayon, Inc. and Miguel G. Belmonte. G.R. No. 175689. August 13, 2014. Justice Leonen.
Third Division.)

SSS Violations
Twenty (20) years from the time of delinquency is known or the assessment is made or the benefit accrues as the
case may be. (Republic Act No. 8282) (Lo vs. Court of Appeals. G.R. No. 128667. December 17, 1999. Justice
Mendoza. Second Division.)
DOCTRINES IN LABOR RELATIONS PAGE 73