COVERAGE

LABOR LAW AND SOCIAL LEGISLATION

2015 BAR EXAMINATIONS

Table of Contents
I. Fundamental Principles and Policies 7
A. Constitutional provisions 7
1. Article II, Secs. 9, 10, 11, 13, 14, 18, 20 7
2. Article III, Secs. 1, 4, 7, 8, 10, 16, 18(2) 8
3. Article XIII, Secs. 1, 2, 3, 13, 14 9
B. Labor Code 21
1. Article 4 21
2. Article 255 22
II. Recruitment and Placement 23
A. Recruitment of local and migrant workers 23
1. Illegal recruitment (Sec. 5, R.A. No. 10022) 24
a) License vs. authority 25
b) Illegal recruitment in large scale 26
c) Illegal recruitment as economic sabotage 26
d) Liabilities 26
2. Direct Hiring 28
B. Regulation and enforcement 28
1. Suspension or cancellation of license or authority (Art. 35, Labor Code) 28
2. Remittance of foreign exchange earnings 29
3. Prohibited activities 30
III. Labor Standards 31
A. Hours of work 32
1. Coverage/Exclusions (Art. 82, Labor Code) 32
2. Normal hours of work 32
a) Compressed work week 33
3. Overtime work, overtime pay 33
4. Night work (R.A. No. 10151), Night shift differential 38
B. Wages 40
1. Wage vs. salary 40

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 2. Minimum wage defined, Minimum wage setting 41
3. Minimum wage of workers paid by results 41
4. Commissions 42
5. Deductions from wages 43
6. Wage Distortion/Rectification 44
C. Rest Periods (Weekly rest day, Emergency rest day work) 46
D. Holiday Pay/ Premium Pay 47
1. Coverage, exclusion 47
2. Teachers, piece-workers, takay, seasonal workers, seafarers 48
E. Leaves 51
1. Maternity Leave 51
2. Paternity Leave 52
F. Service Charge 53
G. Thirteenth Month Pay 53
H. Separation Pay 54
I. Retirement Pay 58
a. Eligibility 59
b. Amount 60
J. Women Workers 60
a. Provisions against discrimination 60
b. Stipulation against marriage 61
c. Prohibited acts 63
d. Anti-Sexual Harassment Act (R.A. No. 7877) 64
K. Employment of Minors (Labor Code and R.A. No. 7678, R.A. No. 9231) 68
L. Househelpers (Labor Code as amended by R.A. No. 7655, An Act Increasing
the Minimum Wage of Househelpers; see also – Household Service
under the Civil Code) 71
M. Employment of Homeworkers 74
N. Apprentices and Learners 76
O. Persons with disability (R.A. No. 7277, as amended by R.A. No. 9442) 76
a. Definition 76
b. Rights of persons with disability 76
c. Prohibition on discrimination against persons with disability 76
IV. Termination of Employment 77
A. Employer-employee relationship 78

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 1. Four-fold test 83
2. Kinds of employment 91
a. Probationary 91
b. Regular 94
c. Project employment 99
d. Seasonal 101
e. Casual 102
f. Fixed-term 103
3. Job contracting 103
a. Articles 106 to 109 of the Labor Code 103
b. Effects of Labor-Only Contracting 103
c. Trilateral relationship in job contracting 103
B. Dismissal from employment 108
1. Just Causes 108
2. Authorized Causes 121
3. Due Process (Twin-notice requirement, Hearing; meaning of
opportunity to be heard) 129
C. Reliefs for Illegal Dismissal 137
1. Reinstatement (Pending appeal (Art. 223, Labor Code), Separation pay
in lieu of reinstatement) 138
2. Backwages (Computation, Limited backwages) 144
V. Management Prerogative 147
A. Discipline 150
B. Transfer of employees 151
C. Productivity standard 154
D. Grant of bonus 154
E. Rules on Marriage between employees of competitor-employers 156
F. Post-employment ban 156
VI. Social Welfare Legislation (P.D. 626) 156
A. SSS Law (R.A. No. 8282) 156
1. Coverage 157
2. Exclusions from coverage 161
3. Benefits 162
4. Beneficiaries 165

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B. GSIS Law (R.A. No. 8291) 167
1. Coverage 167
2. Exclusions from coverage 170
3. Benefits 170
4. Beneficiaries 171
C. Limited Portability Law (R.A. No. 7699) 172
D. Employee’s compensation – coverage and when compensable 172
VII. Labor Relations Law 173
A. Right to self-organization 173
1. Who may unionize for purposes of collective bargaining (Who cannot form,
join or assist labor organizations) 175
2. Bargaining unit 184
a) Test to determine the constituency of an appropriate
bargaining unit 187
b) Voluntary recognition (Requirements) 188
c) Certification election 188
(i) In an unorganized establishment 194
(ii) In an organized establishment 195
d) Run-off election 198
(i) Requirements
e) Re-run election 200
f) Consent election 200
g) Affiliation and disaffiliation of the local union from the mother union
(i) Substitutionary doctrine 200
h) Union dues and special assessments 201
(i) Requirements for validity 201
i) Agency fees (Requisites for assessment) 202
B. Right to collective bargaining 204
1. Duty to bargain collectively 204
a) When there is absence of a CBA 204
b) When there is a CBA 204
2. Collective Bargaining Agreement (CBA) 208
a) Mandatory provisions of CBA (Grievance procedure,
Voluntary arbitration, No strike-no lockout clause,
Labor management council) 211

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 b) Duration 211
(i) For economic provisions 211
(ii) For non-economic provisions 212
(iii) Freedom period 212
3. Union Security 213
a) Union security clauses; closed shop, union shop, maintenance of
membership shop, etc. 213
b) Check-off; union dues, agency fees 218
4. Unfair Labor Practice in collective bargaining 219
a) Bargaining in bad faith 220
b) Refusal to bargain 221
c) Blue sky bargaining 222
d) Surface bargaining 222
5. Unfair Labor Practice (ULP) 224
a) Nature of ULP 224
b) ULP of employers 224
c) ULP of labor organizations 229
C. Right to peaceful concerted activities 230
1. Forms of concerted activities 231
2. Who may declare a strike or lockout? 236
3. Requisites for a valid strike 237
4. Requisites for a valid lockout 240
5. Requisites for lawful picketing 241
6. Assumption of jurisdiction by the DOLE Secretary or Certification of the
labor dispute to the NLRC for compulsory arbitration 243
7. Nature of assumption order or certification order 246
8. Effect of defiance of assumption or certification orders 247
9. Illegal strike 251
a) Liability of union officers 251
b) Liability of ordinary workers 251
c) Liability of employer 253
10. Injunctions (Requisites for labor injunctions, “Innocent bystander rule”) 255
VIII. Procedure and Jurisdiction 256
A. Labor Arbiter (Jurisdiction, Reinstatement pending appeal, Requirements
to perfect appeal to NLRC) 256

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 a) versus Regional Director 266
B. National Labor Relations Commission (NLRC) 266
1. Jurisdiction 266
2. Remedies 270
C. Bureau of Labor Relations – Med-Arbiters (Jurisdiction (original and appellate)) 271
D. National Conciliation and Mediation Board 271
1. Nature of proceedings 271
2. Conciliation vs. Mediation 271
E. DOLE Regional Directors 273
1. Jurisdiction 273
F. DOLE Secretary 275
1. Visitorial and enforcement powers 275
2. Power to suspend/effects of termination 278
3. Assumption of jurisdiction 278
G. Grievance Machinery and Voluntary Arbitration 280
1. Subject matter of grievance 281
2. Voluntary Arbitrator 282
a) Jurisdiction 282
H. Prescription of actions 284

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I. Fundamental Principles and Policies
A. Constitutional provisions
1. Article II, Secs. 9, 10, 11, 13, 14, 18, 20
Q: What is the foundation of the agrarian reform program under the 1987 Constitution? Who
are the direct beneficiaries of the program?
Answers:
The 1987 Constitution enunciates in Article II as one of the state policies that “(t)he State shall
promote comprehensive rural development and agrarian reform."
In Article XII of the Constitution, in dealing with the national economy and patrimony, it is also
stated that “(t)he State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, x x x"
Then in Article XIII of the Constitution, in dealing with social justice and human rights, there is this
provision, among others:'The State shall, by law, undertake an agrarian reform program founded
on the right of farmers and regular farm-workers, who are landless, to own directly or collectively
the lands they till or in the case of other farmworkers, to receive a just share of the fruits thereof. To
this end. the State shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining the retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary landsharing."
Taken togetner, the above provisions could be considered as the foundation of the agrarian reform
program.
Under the Comprehensive Agrarian Reform Law, the lands covered by the Comprehensive Agrarian
Refonn Program shall be distributed as much as possible to landless residents of the same
barangay. or in the absence thereof, landless residents of the same municipality in the following
order of priority:
a) agricultural lessees and share tenants:
b) regular farm workers;
c) seasonal farm workers;
d) other farm workers;
e) actual tillers or occupants of public lands;
f) collectives or cooperatives of the above beneficiaries; and
g) others directly working on the land.
The children of landowners, who are qualified to be awardees of not more than three (3) hectares,
shall be given preference in the distribution of the land of their parents. Actual tenant-tillers in the
landholding shall not be ejected or removed therefrom.

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Beneficiaries under Presidential Decree No. 27 who have culpubly sold, disposed of, or abandoned
their land are disqualified to become beneficiaries under the CARP.
A basic qualification of a beneficiary shall be his willingness, aptitude, and ability to cultivate and
make the land as productive as possible. The DAR shall adopt a system of monitoring the record or
performance of each beneficiary, so that any beneficiary guilty of negligence or misuse of the land
or any support extended to him shall forfeit his right to continue as such beneficiary. The DAR shall
submit periodic reports on the performance of the beneficiaries to the CARP.
If, due to the landowner’s retention rights or to the number of tenants, lessees, or workers on the
land, there is not enough land to accommodate any or some of them, they may be granted
ownership of other lands available for distribution under the CARL, at the option of the beneficiar-
ies.
Farmers already in place and those not accommodated in the distribution of privately-owned lands
will be given preferential rights in the distribution of lands from the public domain.

2. Article III, Secs. 1, 4, 7, 8, 10, 16, 18(2)

Q: Distinguish Just compensation under the Comprehensive Agrarian Reform Law of 1988
from just compensation under the Bill of Rights? How it is determined under the former?
Answers:
In the Bill of Rights, it is provided that private property shall not be taken for public use without
just compensation.
In the provisions of the 1987 Constitution on agrarian reform, it is provided that in the just
distribution of all agricultural lands, the same shall be subject, among others, to the payment of just
compensation.
The concepts of just compensation in the Bill of Rights and in agrarian reform are similar in the
sense that in both situations, the person who is deprived of his property should be given the fair
and full equivalent value of the property that is taken from him. In both situations, ultimately, it is
the courts which may determine ultimately just compensation.
Under the CARL, however, the Land Bank of the Philippines shall compensate the landowner in
such amount as may agreed upon by the landowner and the Department of Agrarian Reform and
the Land Bank of the Philippines.
Also, under the CARL, compensation could be in cash and in government financial instruments like
Land Bank of the Philippines bonds. At the option of the landowner, the compensation may be in
shares of stock in government owned and controlled corporations, or in tax credits. The
Comprehensive Agrarian Reform Law provides that in deter- mining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use of income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and the
farmworkers and by the Government to the property as well as the non-payment of taxes or loans

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secured from any government financing Institution on the said land shall be considered as
additional factors to determine its valuation.

3. Article XIII, Secs. 1, 2, 3, 13, 14

Q: What are the salient features of the protection to labor provision of the Constitution?
[5%] (1998 Bar Question)
SUGGESTED ANSWER:
The salient features of the Protection to Labor provision of the Constitution (Article XIII. Section 3}
are as follows:
1. Extent of Protection - Full protection to labor;
2. Coverage of Protection - Local and overseas, organized and unorganized;
3. Employment Policy - Full employment and equality of employment opportunities for all;
4. Guarantees
4.1. Unionism and Method of Determination Conditions of Employment - Right of all
workers to self-organization, collective bargaining and negotiations.
4.2. Concerted Activities - Right to engage in peaceful concerted activities, including the
right to strike in accordance with law.
4.3. Working Conditions - Right to security of tenure, humane conditions of work and a
living wage.
4.4. Decision Making Processes - Right to participate in policy and decision, making
processes affecting their rights and benefits as way to provide by law.
5. Share In Fruits of Production - Recognition of right of labor to ita just share in fruits of
production.

ANOTHER SUGGESTED ANSWER;

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

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on investments, and to expansion and growth.

Q: What are the three (3) general classifications of labor statutes? Describe and give an
example of each classification. (1995 Bar Question)
Answer:
The three (3) general classifications of labor statutes are:
a) Labor Relations Laws;
b) Labor Standards Laws: and
c) Social Security Laws.
Labor Relations Laws are those labor statutes that deal with the relations of labor and
management, like the laws on unions, collective bargaining, unfair labor practices, strikes, lockouts
and picketing.
Labor Standards are those labor statutes that prescribe standards relating to terms and
conditions of employment for compliance by employers, like the laws on hours of work, weekly rest
periods, holiday pay, wages, and laws dealing with women, minors, househelpers, and industrial
homeworkers.
Social security laws are those labor statutes that provide protection not only to a worker but
also to members of his family in case of loss of income or when there is need for medical care
brought about by contingencies like sickness, disability, death, and old age. Examples of social
security laws are the Social Security Law, Revised Government Service Insurance Act, the Articles of
the Labor Code on Employees Compensation, the State Insurance Fund, and the National Health
Insurance Act.

Another way of classifying labor statutes may be:

a) Labor Legislation like the Labor Code:
b) Social Legislation, like the Social Security Law and Agrarian Law (Comprehensive Agrarian
Reform Law); and
c) Social Security Laws may also be referred to as Welfare Legislation.

Q: How do the provisions of the law on labor relations interrelate, if at all, with the
provisions pertaining to labor standards? (2005 Bar Question)
SUGGESTED ANSWER:
Labor relations law focuses its provisions on the collective aspects of employer-employee
relationship. Its legal provisions deal with employees organizing unions and how through these
unions, employees are able to have collective bargaining with their employer.
On the other hand, labor standards law focuses on the terms and conditions of employment of
employees as individual employees or those legal provisions dealing with wages, hours of work and
other terms and conditions of employment.
There may be instances when the provisions of labor relations law may interrelate with provisions
of labor standards law. Thus, a CBA which is dealt with in labor relations law may have provisions

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that improves upon the minimum terms and conditions of employment prescribed in labor
standards law, like a CBA providing for a higher minimum wage, or for the computation of a higher
overtime pay or the payment of holiday pay not only for regular holidays but also for certain special
holidays.

Q: Is there any distinction between labor legislation and social legislation?

Answer:
Labor legislation is sometimes distinguished from social legislation by the former referring to labor
statutes, like Labor Relations Law and Labor Standards, and the latter to Social Security Laws.
Labor legislation focuses on the rights of the worker in the workplace. Social legislation is a broad
term and may include not only laws that give social security protection, but also those that help the
worker secure housing and basic necessities. The Comprehensive Agrarian Reform law could also
be considered a social legislation.

Alternative Answer:
Yes. Labor Legislation is limited in scope, and deals basically with the rights and duties of
employees and employers. Social Legislation is more encompassing and includes such subjects as
agrarian relations, housing and human settlement, protection of women and children, etc. All labor
laws are social legislation, but not all social legislation is labor law.

Q: What is the concept of liberal approach in interpreting the Labor Code and its
Implementing Rules and Regulations in favor of labor? 2.5% (2006 Bar Question)
SUGGESTED ANSWER:
In carrying out and interpreting the Labor Code’s provisions and its implementing regulations, the
workingman's welfare should be the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and compassionate spirit of the law as
provided in Article 4 of the Labor Code as amended, which states that “all doubts in the
implementation and interpretation of the provisions of the Labor Code including its implementing
rules and regulations shall be resolved in favor of labor," as well as the Constitutional mandate that
the State shall afford full protection to labor and promote full employment opportunities for all
(PLOT v. NLRC, 276 SCRA 1 [1997]).

Q: May social justice as a guiding principle in labor law be so used by the courts in sympathy
with the working man if it collides with the equal protection clause of the Constitution?
Explain. (2005 Bar Question)
SUGGESTED ANSWER:
Yes. The State is bound under the Constitution to afford full protection to Labor; and when
conflicting interests collide and they are to be weighed on the scales of social justice, the law should
accord more sympathy and compassion to the less privileged workingman. (Fuentes v. NLRC. 266
SCRA 24 119971) However, it should be borne in mind that social justice ceases to be an effective
instrument for the “equalization of the social and economic forces” by the State when it is used to
shield wrongdoing. (Corazon Jamer v. NLRC, 278 SCRA 632 [1997])

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ANOTHER SUGGESTED ANSWER:
No, social justice as a guiding principle in law may not be used by the courts if it collides with the
equal protection clause of the Constitution. Social justice is not a magic wand applicable in all
circumstances. Not all labor cases will be automatically decided in favor of the worker. Management
has also rights which are entitled to recognition and protection; justice must be dispensed
according to facts and law; and social justice is not designed to destroy or oppress the employer.
Social justice as a guiding principle in Labor Law can be implemented side by side with the equal
protection clause of the Constitution.
In implementation of the principle of social justice, the Constitution commands that the State shall
afford protection to labor. Thus Labor Law may be pro-labor in the sense that labor is given certain
benefits not given to management. But this is not necessarily violative of the equal protection clause
of the Constitution because said clause allows reasonable classification.

Q: Clarito, an employee of Juan, was dismissed for allegedly stealing Juan’s wristwatch. In the
illegal dismissal case instituted by Clarito, the Labor Arbiter, citing Article 4 of the Labor
Code, ruled in favor of Clarito upon finding Juan’s testimony doubtful. On appeal, the NLRC
reversed the Labor Arbiter holding that Article 4 applies only when the doubt involves
“implementation and interpretation” of the Labor Code provisions. The NLRC explained that
the doubt may not necessarily be resolved in favor of labor since this case involves the
application of the Rules on Evidence, not the Labor Code. Is the NLRC correct? Reasons. (3%)
(2009 Bar Question)
SUGGESTED ANSWER:
The NLRC is not correct. It is a well settled doctrine that if doubts exist between the evidence
presented by the employer and the employee, the scale of justice must be tilted in favor of the latter.
It is a time honored rule that in controversies between laborer and master, doubts necessarily
arising from the evidence, or in the implementation of the agreement and writing should be
resolved in favor of the laborer.

ANOTHER SUGGESTED ANSWER:

No, the NLRC is not correct. Art. 221 of the Labor Code read: “In any proceeding before the
Commission....the rules of evidence prevailing in Courts of law....shall not be controlling and it is the
spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall
use every and reasonable means to ascertain the facts in each case speedily and objectively without
regard to technicalities of law and procedure, all in the interest of due process.” The question of
doubt is not important in this case.

Q: Article 4 of the Labor Code provides that in case of doubt in the implementation and
interpretation of the provisions of the Code and its Implementing Rules and Regulations, the
doubt shall be resolved in favor of labor. Article 1702 of the Civil Code also provides that in
case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.
Mica-Mara Company assails the validity of these statutes on the ground that they violate its

12
constitutional right to equal protection of the laws. (1995 Bar Question)
1. Is the contention of Mica Mara Company tenable? Discuss fully.
Answer:
No, the Constitution provides that the state shall afford full protection to labor. Furthermore, the
State affirms labor as a primary economic force. It shall protect the rights of workers and promote
their welfare.

Alternative Answer:
a) No, because a law which promotes a constitutional mandate does not violate the equal
protection clause. The constitutional mandate is for the State to afford full protection to labor such
that, when conflicting interests of labor and capital are to be weighed on the scales of justice, the
heavier influence of the latter should be counter-balanced by the sympathy the law should accord
the underprivileged.
b) The contention of Mica-Mara Company is not tenable. The constitutional right to equal
protection of the laws is not violated by reasonable classification. Thus, it is constitutionally
possible to treat workers differently from employers.
The social justice principle embodied in the Constitution could be the basis for treating
workers more favorably than employers, in the implementation and interpretation of the
provisions of the Labor Code and of its implementing rules and regulations.

Q: Differentiate labor standards law from labor relations law. Are the two mutually
exclusive? (1997 Bar Question)
Answer:
Labor standards law is that labor law which prescribes terms and conditions of employment like
Book in, Book IV, Title I and Book VI of the Labor Code. These Books of the Labor Code deal with
working conditions, wages, working conditions for women, minors, househelpers and home-
workers, medical and dental services, occupational health and safety, termination and retirement.
On the other hand, labor relations law is that labor law which regulates the relations between
employers and workers like Book V of the Labor Code which deals with labor organizations,
collective bargaining, unfair labor practices and strikes and lockouts.
Labor standards laws and labor relations laws are not mutually exclusive; they are complement to
each other. Thus, the law on strikes and lockouts which is an example of labor relations law
includes some provisions on the security of tenure of workers who go on strike or who are locked
out. These provisions are examples of labor standards law.

Q: What are the rights of an employer and an employee? (1996 Bar Question)
Answer:
The Constitution in Art. XIII, Section 3 provides for the following rights of employers and
employees:
A. Employers Right to a reasonable return on investments, and to expansion and growth.

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1. To a just share in the fruits of production;
2. Right to self organization, collective bargaining and negotiations and peaceful concerted ac-
tivities, including the right to strike in accordance with law;
3. To security of tenure, humane conditions of work, and a living wage; and
4. To participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.

Alternative Answer:
In an employer-employee relationship, it is the right of the employer to use the services of an
employee who is under his (employer’s) orders as regards the employment. On the other hand, it is
the right of the employee to receive compensation for the services he renders for the employer.

Q: Which takes precedence in conflicts arising between employers’ MANAGEMENT

PREROGATIVE and the employees’ right to security of tenure? Why?
Answer:
The employee's right to security of tenure takes precedence over the employer's management
prerogative. Thus, an employer's management prerogative includes the right to terminate the
services of an employee but this management prerogative is limited by the Labor Code which
provides that the employer can terminate an employee only for a just cause or when authorized by
law. This limitation on management prerogative is because no less than the Constitution recognizes
and guarantees an employee’s right to security of tenure. (Art. 279. Labor Code: Art. XIII, Sec. 3.
Constitution)

Q: Enumerate at least four (4) policies enshrined in Section 3, Article XIII of the Constitution
that are not covered by Article 3 of the Labor Code on declaration of basic policy. (2%) (2009
Bar Question)
SUGGESTED ANSWER:
Four (4) policies enshrined in Section 3, Article XIII of the 1987 Constitution which are not covered
by Article 3 of the Labor Code on declaration of basic policy are:
1. All workers shall have the right to peaceful concerted activities, including the right to strike
in accordance with law.
2. They shall be entitled to a living wage.
3. They shall participate in policy and decision making processes affecting their rights and
benefits as may be provided by law.
4. The state shall promote the principle of shared responsibility between workers and
employers.

Q: In her State of the Nation Address, the President stressed the need to provide an investor-
friendly business environment so that the country can compete in the global economy that

14
now suffers from a crisis bordering on recession. Responding to the call, Congress passed
two innovative legislative measures, namely: (1) a law abolishing the security of tenure
clause in the Labor Code; and (2) a law allowing contractualization in all areas needed in the
employer’s business operations. However, to soften the impact of these new measures, the
law requires that all employers shall obtain mandatory unemployment insurance coverage
for all their employees.
The constitutionality of the two (2) laws is challenged in court. As judge, how will you rule?
(5%) (2009 Bar Question)
SUGGESTED ANSWER:
The first innovative measure, on abolition of the security of tenure clause in the Labor Code, is
unconstitutional as it goes against the entitlement of workers to security of tenure under Section 3,
Article XIII of the 1987 Constitution.
The second innovative measure, on a law allowing contractualization in all areas needed in the
employer’s business operations, is legal. Article 106 of the Labor Code already allows the Secretary
of Labor and Employment not to make appropriate distinction between labor-only and job
contracting. This means that the Secretary may decide, through implementing regulation, not to
prohibit labor-only contacting, which is an arrangement where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and place by such person are
performing activities which are directly related to the principal business of the employer.
Hence, it would be legal for Congress to do away with the prohibition on labor-only contracting and
allow contractualization in all areas needed in the employer’s business operations. Assuming, of
course, that contractual workers are guaranteed their security of tenure.

Q: Explain the extent of the workers’ right to participate in policy and decision-making
process as provided under Article XIII, Section 3 of the Philippine Constitution. Does, it
include membership in the Board of Directors of a corporation? (3%) (2008 Bar Question)
SUGGESTED ANSWER:
b) The workers’ right to participate in policy and decision making processes of the
establishment where they are employed in so far as said processes affect their rights, benefits and
welfare as embodied in Section 3 of Article XIII of the Constitution is reiterated in Art. 255 of the
Labor Code where it is provided that for the purpose of implementing such right, workers and
employers may form labor management councils provided that the representatives of workers in
such labor management councils shall be elected by the majority of all the employees in said
establishment. It is clear from the aforementioned Article of the Labor Code that the right of
workers to participate in policy and decision making processes as provided in Article XIII, Section 3
of the Constitution does not include membership in the Board of Directors of a Corporation but this
could be the proper subject of a Collective Bargaining Agreement.

ANOTHER SUGGESTED ANSWER:

b) In Manila Electric Company v. Quisumbing 302 SCRA 173[1999], the Supreme Court
recognized the right of the union to participate in policy formulation and decision-making process
on matters affecting the Union members’ rights, duties and welfare. However, the Court held that
such participation of the union in committees of employer Meralco is not in the nature of a co-

15
management control of the business of Meralco. Impliedly, therefore, workers’ participatory right
in policy and decision-making processes does not include the right to put a union member in the
Corporation’s Board of Directors.

Q: Armstrong Corporation, a foreign corporation intends to engage in the exploration of

Philippine natural resources. Mr. Antonio Reyes offered the forest land he owns to the
president of the corporation. May Armstrong Corporation enter into a financial and
technical assistance agreement (FTAA) with Mr. Reyes to explore, develop, and utilize the
land? Explain. 5% (2006 Bar Question)
SUGGESTED ANSWER:
No, Armstrong Corporation may not enter into an FTAA with Mr. Reyes for the exploration of
natural resources found on his forest land. Even assuming that Mr. Reyes could validly own forest
land (like an industrial tree plantation), all natural resources found therein are owned by the State
under the Regalian doctrine. The exploration, development and utilization of natural resources
shall be under the full supervision and control of the State (Article XII, Sec. 2, Constitution). An
FTAA for large-scale exploration, development and exploitation of natural resources may only be
negotiated with the DENR Secretary, executed and approved by the President.

Q: Because of alleged “unfair labor practices" by the management of GFI System, a

government-owned and controlled financial corporation, Its employees walked out from
their jobs and refused to return to work until the management would grant their union
official recognition and start negotiations with them.
The leaders of the walk-out were dismissed, and the other participants were suspended for
sixty days. In arguing their case before the Civil Service Commission, they cited the principle
of social justice for workers and the right to self- organization and collective action,
including the right to strike. They claimed that the Constitution shielded them from any
penalty because their walk-out was a concerted action pursuant to their rights guaranteed
by the basic law.
Is the position taken by the walk-out leaders and participants legally correct? Reason
briefly. (5%) (2005 Bar Question)
SUGGESTED ANSWER:
The position taken by the walk-out leaders and participants is not legally correct. They are
government employees, and as such, they do not have the right to strike. According to the actual
wording of Section 3 of Article XIII of the Constitution, the State "shall guarantee the rights of all
workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities including the right to strike in accordance with law."
Thus, the last clause of the above-quoted provision of the Constitution makes it very clear: the right
to strike is not constitutional, it is statutory because the right should be "in accordance with law”.
And there is as yet no law giving government employees the right to strike.

ANOTHER SUGGESTED ANSWER:

No. What Art. XIII, Sec. 3 of the 1987 Constitution guarantees is "the right to strike in accordance
with law.”

16
Assuming that what we have is a chartered government-owned and controlled corporation, they
cannot, under EO 180 and related jurisprudence, stage such walk-out which is basically a case of
strike.
Even if GFI was organized under the corporation law, still no such walk-out is allowed without the
employees’ complying with the requirements of a valid strike, among which is that said strike or
walk-out should be validly grounded on a (a) deadlock in collective bargaining, or (b) unfair labor
practice, either of which is not present here.

Q: Deeds of release, waivers and quitclaims are always valid and binding. (2%) (2010 Bar
Question)
SUGGESTED ANSWER:
FALSE. Deeds of release, waivers and quitclaims are not always valid and binding. An agreement is
valid and binding only if: (a) the parties understand the terms and conditions of their settlement;
(b) it was entered into- freely and voluntarily by them; and (c) it is contrary to law, morals, and
public policy.

ALTERNATIVE ANSWER:
FALSE. Not all deeds of release, waivers and quitclaims are valid and binding. The Supreme Court,
in Periquet v. NLRC( 186 SCRA 724 [1990]) and affirmed in Solgus Corporation v. Court of Appeals
(514 SCRA 522 [2007]), provided the following guideposts in determining the validity of such
release, waivers and quitclaims:
“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. 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.”

Q: Because of continuing financial constraints, XYZ, Inc. gave its employees the option to
voluntarily resign from the company. A was one of those who availed of the option. On
October 5, 2007, he was paid separation benefits equivalent to seven (7) months pay for his
six (6) years and seven (7) months of service with the company and he executed a waiver
and quitclaim. A week later, A filed against XYZ, Inc. a complaint for illegal dismissal. While
he admitted that he was not forced to sign the quitclaim, he contended that he agreed to
tender his voluntary resignation on the belief that XYZ, Inc. was closing down its business.
XYZ, Inc., however continued its business under a different company name, he claimed.
Rule on whether the quitclaim executed by A (Gabriel) is valid or not. Explain. (3%) (2010
Bar Question)
SUGGESTED ANSWER:
The quitclaim executed by A is valid and binding.
Generally, deeds of release, waiver or quitclaims cannot bar employees from demanding benefits to
which they are legally entitled or from contesting the legality of their dismissal, since quitclaims are
looked upon with disfavor and are frowned upon as contrary to public policy. However, where the

17
person making the waiver has done so voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as
being a valid and binding undertaking (Francisco Soriano, Jr. v. NLRC, et al., 530 SCRA 526 [2007]).
A elected to voluntarily resign, and accepted a credible and reasonable separation benefits package.
In exchange, A executed a waiver and quitclaim.
A’s resignation could not have possibly been vitiated by any fraud or misrepresentation on the part
of XYZ, Inc. The company offered its voluntary resignation package because of continuing financial
constraints, and not preliminary to closure of business. A’s belief is not the kind of proof required
that will show he was defrauded, his consent vitiated, and therefore the termination of his
employment illegal.

ALTERNATIVE ANSWER:
The quitclaim is invalid. The signing of the quitclaim was based on a wrong premise, and the
employer was deceitful by not divulging full information. The subsequent re-opening of the
business under another name is an indication of bad faith and fraud.

Q: Can a final and executory judgment be compromised under a “Release and-Quitclaim" for
a lesser amount? (3%) (1999 Bar Question)
SUGGESTED ANSWER:
Yes, as long as the "Release and Quitclaim” is signed by the very same person entitled to receive
whatever is to be paid under the final and executory judgment that was the subject of the
compromise agreement and that the “Release and Quitclaim” was signed voluntarily.
In Alba Patio de Makati v. NLRC: A final and executory judgment can no longer be altered, even if
the modification is meant to c'orrect what is perceived to be an erroneous conclusion of fact or law,
and regardless of whether the modification is attempted to be made by the court rendering it or by
the highest court of the land. Moreover, a final and executory judgment cannot be negotiated, hence,
any act to subvert It is contemptuous.
It was incumbent upon the counsel for the complainant to have seen to it that the interest of all
complainants was protected. The quitclaim and the release in the preparation of which he assisted
clearly worked to the grave disadvantage of the complainants. To render the decision of this Court
meaningless by paying the backwages of the affected employees in a much lesser amount clearly
manifested a willful disrespect of the authority of this Court as the final arbiter of cases brought to
it.
A final and executory judgment cannot be compromised under a “Release and Quitclaim" if said
“Release and Quitclaim is clearly to the grave disadvantage of the affected employees by paying
them much lesser amounts than what they were entitled to receive under the judgment. (See Alba
Patio de Makati vs. NLRC, 201 SCRA 355).

Q: Under the Labor Code, is the right of first preference a lien on the property of the
insolvent debtor in favor of the workers? Explain. (1995 Bar Question)
Answer:
The right of first preference in favor of workers is not a lien on the property of the insolvent debtor.

18
The preference could be exercised only in the event of bankruptcy or liquidation of an employer's
business.

Alternative Answer:
A preference does not attach to specific properties. Lien creates charges on a particular property.
The right of first preference as regards unpaid wages recognized by the Labor Code does not
constitute a lien on the property of the Insolvent debtor In favor of the workers. It is but a
preference of credit in their favor, a preference in application.
The Labor Code does not purport to create a lien in favor of workers or employees for unpaid
wages either upon all of the properties or upon any particular property owned by their employer.

Distinguish the mortgage created under the Civil Code from the right of first preference
created by the Labor Code as regards the unpaid wages of workers. Explain. (1995 Bar
Question)
Answer:
A mortgage directly subjects the property upon which it is imposed, whoever the possessor may be.
to the fulfillment of the obligation for which it was constituted.
It creates a real right which is enforceable against the whole world. It is therefore a lien on an
identified real property.
Mortgage credit is a special preferred credit under the Civil Code in the classification of credits.
The preference given by the Labor Code when not attached to any specific property, is an ordinary
preferred credit.

Alternative Answer:
If the asset of an employer which has become bankrupt or has been liquidated has been mortgaged,
the proceeds of the sale of said mortgaged asset is first subject to the lien of the person to whom the
property is mortgaged. Said lien is superior to the first preference enjoyed by the workers pursuant
to the Labor Code.

Q: Premiere Bank, a banking corporation, being the creditor- mortgagee of XYZ & Co., a
garment firm, foreclosed the hypothecated assets of the latter. Despite the foreclosure, XYZ
& Co. continued its business operations. A year later, the bank took possession of the
foreclosed property. The garment firm’s business operations ceased without a declaration of
bankruptcy. Jose Gaspar, an employee of XYZ & Co., was dismissed from employment due to
the cessation of business of the firm. He filed a complaint against XYZ & Co. and the bank.
The Labor Arbiter, after hearing, so found the company liable, as claimed by Jose Gaspar, for
separation pay. Premiere Bank was additionally found subsidiarily liable upon the thesis
that the satisfaction of labor benefits due to the employee is superior to the right of a
mortgagee of property. Was the Labor Arbiter correct in his decision? (2005 Bar Question)
SUGGESTED ANSWER:
No. The preference of credits established in Art. 110 of the Labor Code cannot be invoked in the

19
absence of any insolvency proceedings, declaration of bankruptcy, or judicial liquidation. (DBP v.
Santos. 171 SCRA 138 [19891] ).

ANOTHER SUGGESTED ANSWER:

No. What Art. 110 of the Labor Code establishes is not a lien but a preference of credit in favor of
employees. Unlike a lien, a preference of credit does not create a charge upon any particular
property of the debtor. (Development Bank of the Philippines v. Secretary of Labor, 179 SCRA 630
f1989]).

ANOTHER SUGGESTED ANSWER:

The Decision of the Labor Arbiter holding Premiere Bank (as foreclosing mortgagee-creditor)
subsidiarily liable for a money obligation of XYZ & Co, (as mortgagor) to Gaspar, its employee, has
no legal basis.
1. There is no privity of relationship between the Bank and Gaspar. The relationship, upon
which the obligation to pay a sum of money is based, is between XYZ (the mortgagor) and Gaspar as
its employee arising from the Labor Code provision requiring an employer to pay separation pay,
re: other causes of employment.
2. At both times - Labor Arbiter Decision to pay separation pay and foreclosure - XYZ & Co.
was an existing business entity and neither bankrupt or in liquidation, although its business
operations after the foreclosure ceased.
3. The decision of the Labor Arbiter for XYZ & Co. to pay a sum of money to Gaspar was based
on an action in personam, not in rem, enforceable against any party. (Sundowner Corporation vs.
Drilon, 180 SCRA 14 f19891)
4. The reference in the Decision to “labor benefits due to an employee is superior to the right
of a mortgagee of property” is misplaced. The preferential claim rule has no basis and runs contrary
to law and jurisprudence.

Q: The Independence Bank of the Philippines (IBP) is the mortgage creditor of San Juan
Trading Company (SJTC). For failure of SJTC to pay its obligations, IBP foreclosed the
former’s mortgaged properties and in the bidding acquired the properties as the highest
bidder. SJTC’s workers, whose claims for separation pay, unpaid wages and other benefits
could not be satisfied, filed an action against IBP to enforce their claims, contending that
they enjoyed preference in respect of separation pay, wages and other benefits due them
prior to the cessation of SJTC's operations.
Will the action of the workers against IBP prosper? Explain.
Suggested Answer:
The action of the workers against IBP will not prosper. It is true that the Labor Code provides: In
the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first
preference as regards their wages and other monetary claims, any provisions of law to the contrary
notwithstanding. Such unpaid wages and monetary claim shall be paid in full before claims of the
government and other creditors may be paid. But, here, the mortgaged property is no longer owned

20
by SJTC. The first preference of the workers can only be enforced against the judgement debtor,
meaning SJTC, and not against IBC who now owns the mortgaged property which has been fore-
closed. (Development Dank of the Philippines vs. Minister of Labor and Employment, et al.. G.R. No.
75801, March 20,1991)

Q: XYZ Company filed a petition for bankruptcy before a Regional Trial Court. Among the list
of creditors are the Philippine National Bank (PNB), various suppliers, the Bureau of
Internal Revenue (BIR) for payment of back taxes and the Union in representation of the
employees for unpaid wages, leaves and bonuses.
(a) With regards to the other creditors, particularly the PNB and BIR, what is the
standing of the employees claims?
(b) Would it make any difference if there is no judicial declaration of bankruptcy?
Answer:
(a) In Republic v. Peralta, the claims of the 'Government, like the taxes that should be paid to the
BIR, should first be paid before the money claims of the workers. But if, the question is now
resolved under Rep. Act No. 6715, it is now provided that “unpaid wages and monetary claims (of
workers) shall be paid in full before the claims of the Government and the other creditors may be
paid.
(b) If there is no judicial declaration of bankruptcy, the claim of the Union in representation of
the employees for unpaid wages, leaves and bonuses will be given preference after there is a finding
by a Labor Arbiter, hearing the case as a money claim, that an employer is bankrupt.

B. Labor Code
1. Article 4
Q: In what manner do the labor laws show its solicitous compassionate policy towards the
working man? Explain your answer.
Answer:
Labor laws show solicitous compassionate policy towards the working man by providing that all
doubts in the implementation and interpretation of labor laws including its implementing rules and
regulations shall be resolved in favor of labor. Thus, among others, the Constitution recognizes that
workers are entitled to security of tenure, humane conditions of work and a living wage. Labor laws
should be liberally interpreted to ensure that the above rights are given to workers. Many times, an
employee commits an offense that is a valid ground for disciplinary action but law and
jurisprudence do not automatically provide for the termination of the guilty employee because
termination may be too harsh a penalty, his employment may, more often than not be the sole
source of his means of livelihood. (Art. 4, Labor Code; Art. XIII. Sec. 3. Constitution)

Q: Phil-Norksgard Company. Inc., a domestic corporation engaged in the optics business,

imported from Sweden highly sophisticated and sensitive instruments for its laboratory. To
Install the instruments and operate them, the company intends to employ Boija Anders, a
Swedish technician sojourning as a tourist in the Philippines.

21
As lawyer of the company, what measures will you take to ensure the legitimate employment
of Boija Anders and at the same time protect Philippine labor. Discuss fully. (1995 Bar
Question)
Answer:
To ensure the legitimate employment of Borja Anders, a non-resident alien, I will apply at the
Department of Labor and Employment for the issuance of an employment permit claiming that
there is no one in the Philippines who can do the work that Anders is being asked to do.
At the same time, to protect Philippine labor. 'I will see to it that Anders will have an understudy
who will learn by working with Anders, how to install and operate the highly sophisticated and
sensitive instruments from Sweden.
To protect Philippine Labor, the Labor Code provides that the alien employee shall not transfer to
another job or change his employer without prior approval of the Secretary of Labor.

2. Article 255
Q: a) What is the principle of codetermination? (2007 Bar Question)
SUGGESTED ANSWER:
a) The principle of codetermination is one which grants to the workers the right to participate in
policy and decision-making processes affecting their rights and benefits. (Art. 255, Labor Code)

FIRST ALTERNATIVE ANSWER:

By the principle of codetermination, the workers have a right to participate in the decision making
process of employers on matters affecting their rights and benefits, through collective bargaining
agreements, grievance machineries, voluntary modes of settling disputes and conciliation
proceedings mediated by government.

SECOND ALTERNATIVE ANSWER:

Codetermination is a term identified with workers’ participation in the determination of business
policy. Under the German model, the most common form of codetermination, employees of some
firms are allocated control rights by law, in the form of board seats. It is based on the conviction
that democratic legitimacy cannot be confined to government but must apply to all sectors of
society. Besides corporate control rights, the German system deals with dual channels of
representation of employees by unions (at the industry-wide, and macroeconomic level) and works
councils (at the firm level).

b) What, if any, is the basis under the Constitution for adopting it? (2007 Bar Question)
SUGGESTED ANSWER:
Art. XIII, Sec. 3 of the Constitution guarantees labor their right to participate in decision and policy-
making processes affecting their rights, duties and welfare.

22
FIRST ALTERNATIVE ANSWER:
The adoption of codetermination is based on the police power of the state and the constitutional
mandate to the State “to promote, the principle of shared responsibility between the workers and
the employers.” The Constitution expressly provides that:“It shall guarantee the rights of all
workers to xxx collective bargaining and negotiations, xxx. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.” (Art. XIII,
Sec. 3, 1987 Constitution)

Q: What is tripartism? What is the binding effect of an agreement entered into in a tripartite
conference?
Answer:
Tripartism in labor relations is the policy of the State enunciated in the Labor Code (in Art.
275) which is implemented by consulting with representatives of workers and employers in the
consideration and adoption of voluntary codes of principles designed to promote industrial peace
ba.sed on social justice or to align labor movement relations with priorities in economic and social
development.
The codes of principles adopted at tripatite conferences are voluntary. They do not have a
legal binding effect on workers and employers. But because these codes are considered and
adopted by representatives of workers and employers, they are likely to be complied with
voluntarily by workers and employers.

Alternative Answer:
Should not bind unions and employers’ organizations that were not represented in the
tripartite conference because they were not parties or signatories to any agreement arrived at in
the conference.

II. Recruitment and Placement

A. Recruitment of local and migrant workers
Q: On December 12, 2008, A signed a contract to be part of the crew of ABC Cruises, Inc.
through its Philippine manning agency XYZ. Under the standard employment contract of the
Philippine Overseas Employment Administration (POEA), his employment was to commence
upon his actual departure from the port in the point of hire, Manila, from where he would
take a flight to the USA to join the cruise ship “MS Carnegie”. However, more than three
months after A secured his exit clearance from the POEA for his supposed departure on
January 15,2009, XYZ still had not deployed him for no valid reason. Is A entitled to relief?
Explain. (3%) (2010 Bar Question)
ALTERNATIVE ANSWER:
YES. Even if no departure took place, the contract of employment has already been perfected which
creates certain rights and obligations, the breach of which may give rise to a cause of action against
the erring party:
(1) A can file a complaint for Recruitment Violation for XYZ’s failure to deploy him within the

23
prescribed period without any valid reason, a ground for the imposition of administrative sanctions
against XYZ under Section 2, Rule I, Part V of the 2003 POEA Rules on Employment of Seafarers.
(2) At the same time, A can file a case for illegal recruitment under Section 6(L) of Rep. Act No.
8042 (cf: Section 11 Rule I, Part V of the 2003 POEA Rules on Employment of Seafarers)
(3) A may likewise file a complaint for breach of contract, and claim damages therefore before
the NLRC, despite absence of employer-employee relationship. Section 10 of Rep. Act No. 8042
conferred jurisdiction on the Labor Arbiter not only on claims arising out of EER, but also by virtue
of any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages. (Santiago vs. CF Sharp Crew Management,
527 SCRA 165 [2007]).

1. Illegal recruitment (Sec. 5, R.A. No. 10022)

Q: Discuss the types of illegal recruitment under the Labor Code. (2007 Bar Question)
SUGGESTED ANSWER:
Under the Labor Code, as amended by Republic Act No. 8042 otherwise known as the “Overseas
Filipinos and Migrant workers Act of 1995”, there are two types of illegal recruitment, particularly
simple illegal recruitment and illegal recruitment which is considered as an offense involving
economic sabotage. Illegal recruitment as an offense involving economic sabotage is committed
under the following qualifying circumstances, to wit:
When illegal recruitment is committed by a syndicate, that is when it is carried out by a group of
three (3) or more persons conspiring and/or confederating with one another; or
When illegal recruitment is committed in large scale that is when it is committed against three (3)
or more persons whether individually or as a group.

FIRST ALTERNATIVE ANSWER:

Under the Labor Code, illegal recruitment refers to any recruitment activity undertaken by non-
licensees or non-holders of authority. It includes the acts of canvassing, enlisting, contracting,
transporting, utilizing, hiring, procuring, referrals, contract services and advertising (Art. 13(b),
Arts. 34 & 38, Labor Code).
The following prohibited acts are also considered acts of illegal recruitment when undertaken by
non-licensees or non-holders of authority:
a. Charging or accepting directly or indirectly, any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay
any amount greater than that actually received by him as a loan or advance;
b. Furnishing or publishing any false notice or information or document in felation to
recruitment or employment;
c. Giving any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under this Code;
d. Inducing or attempting to induce a worker already employed to quit his employment in
order to offer him to another unless the transfer is designed to liberate the worker from
oppressive terms and conditions of employment;

24
 e. Influencing or to attempting to influence any person or entity not to employ any worker
who has not applied for employment through his agency;
f. Engaging in the recruitment or placement of workers in jobs harmful to public health or
morality or to the dignity of the Republic of the Philippines;
g. Obstructing or attempting to obstruct inspection by the Secretary of Labor or by his duly
authorized representatives;
h. Failing to file reports on the status of employment, placement vacancies, remittance of
foreign exchange earnings, separation from jobs, departures and such other matters or
information as may e required by the secretary of labor;
i. Becoming an officer or member of the Board of any corporation engaged in travel agency or
to be engaged direct or indirectly in the management of a travel agency; and
k. Withholding or denying travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under this code and its
implementing rules and regulations. (RA 8042, Migrant Workers & Overseas Filipinos Act of
1995)

a) License vs. authority

Q: Marino Palpak, Eddie Angeles and Jose Berdugo advertised in the Manila Bulletin the
following information: “20 Teachers wanted for Egypt. Apply at No. 123 Langit. Manila."
Salvacion Inocente applied and was made to pay minimal fees to cover administrative
expenses and the cost of her passport and visa. For one reason or another, Salvacion did not
get the job and filed a complaint with the POEA. Marino, Eddie and Jose admitted having no
license or authority but claimed that they are not covered by the Labor Code since they are
not engaged in the recruitment and placement for profit and, at any rate, only one
prospective worker was involved.
May Marino, Eddie and Jose be prosecuted? If so, for what specific offense/s?
Answers:
Marino Eddie and Jose can be prosecuted. Recruitment and placement by persons without a license
or authority constitute illegal activities. Marino, Eddie and Jose were engaged in recruitment and
placement when they advertised that 20 teachers were wanted to Egypt. Advertising for
employment is one of the acts considered as recruitment and placement in the Labor Code.
That they were not engaged in recruitment and placement for profit does not mean that the
conditions for a person to engage in recruitment and placement found in the Labor Code are not
applicable to them. The Code applies to any recruitment or placement, whether for profit or not.
The fact that only one prospective worker was involved does not mean that they were not engaged
in recruitment or placement. They were. The reference in the Code that any person who offers
employment to “two or more persons” as being engaged in recruitment and placement does not
mean that there must be at least two persons involved. This reference is merely evidentiary.
They may be prosecuted for these specific offenses:
They already charged fees even if they have not yet obtained employment for the applicant.

25
Q: A Recruitment and Placement Agency declared voluntary bankruptcy. Among its assets is
its license to engage in business.
Is the license of the bankrupt agency an asset which can be sold in public auction by the
liquidator? [5%] (1998 Bar Question)
SUGGESTED ANSWER:
No, because of the non-transferability of the license to engage in recruitment and placement.
The Labor Code (in Article 29) provides that no license to engage in recruitment and placement
shall be used directly or indirectly by any person other than the one in whose favor it was issued
nor may such license be transferred, conveyed or assigned to any other person or entity.
It may be noted that the grant of a license is a governmental act by the Department of Labor and
Employment based on personal qualifications, and citizenship and capitalization requirements.
(Arts. 27-28, Labor Code)

b) Illegal recruitment in large scale

c) Illegal recruitment as economic sabotage
Q:
A. When is illegal recruitment considered a crime of economic sabotage? Explain briefly.
(3%)
B. Is a corporation, seventy percent (70%) of the authorized and voting capital of which
is owned and controlled by Filipino citizens, allowed to engage in the recruitment and
placement of workers, locally or overseas? Explain briefly. (2%)
SUGGESTED ANSWER:
A. According to Art. 28 of the Labor Code, illegal recruitment is considered a crime of
economic sabotage when committed by a syndicate or in large scale.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme which is an act of illegal recruitment.
Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
B. No. A corporation, seventy percent (70%) of the authorized arid, voting capital stock of
which is owned and controlled by Filipino citizens cannot be permitted to participate in the
recruitment and placement of workers, locally or overseas, because Art 27 of the Labor Code
requires at least seventy-five percent (75%).

d) Liabilities
Q: Maryrose Ganda's application for the renewal of her license to recruit workers for
overseas employment was still pending with the Philippine Overseas Employment
Administration (POEA). Nevertheless, she recruited Alma and her three sisters. Ana. Joan
and Mavic, for employment as housemaids in Saudi Arabia. Mary-rose represented "to the

26
sisters that she had a license to recruit workers for overseas employment. Maryrose also
demanded and received P30, 000.00 from each of them for her services. However,
Maryrose's application for the renewal of her license was denied, and consequently falJed to
employ the four sisters in Saudi Arabia.
The sisters charged Maryrose with large scale illegal recruitment. Testifying in her defense,
Maryrose declared that she acted in good faith because she believed that her application for
the renewal of her license would be approved. Maryrose adduced in evidence the Affidavits
of Desistance which the four private complainants had executed after the prosecution rested
its case, In the said affidavits, they acknowledged receipt of the refund by Maryrose of the
total amount of PI20.000,00 and indicated that they were no longer interested to pursue the
case against Maryrose.
Resolve the case with reasons. (5%) (2005 Bar Question)
SUGGESTED ANSWER:
Maryrose is still criminally liable for large scale illegal recruitment, Good faith is not a defense in
illegal recruitment as defined in Sec, 6 of R.A. 8042. Illegal recruitment is malum prohibitum.
Refund of the PI20.000.00 she received does not likewise extinguish her criminal liability. If at all, It
satisfies only her availability. The affidavit of desistance, moreover, does not bar Maryrose's
prosecution, The criminal offense Is not extinguished by such desistance. Besides, affidavit of
desistance, as a rule, is frowned upon.

Q: A was approached for possible overseas deployment to Dubai by X, an interviewer of job

applicants for Alpha Personnel Services, Inc., an overseas recruitment agency. X required A
to submit certain documents (passport, NBI clearance, medical certificate) and to pay
P25,000 as processing fee. Upon payment of the said amount to the agency cashier, A was
advised to wait for his visa. After five months, A visited the office of Alpha Personnel
Services, Inc. during which X told him that he could no longer be deployed for employment
abroad. A was informed by the Philippine Overseas Employment Administration (POEA) that
while Alpha Personnel Sendees, Inc. was a licensed agency, X was not registered as its
employee, contrary to POEA Rules and Regulations. Under POEA Rules and Regulations, the
obligation to register personnel with the POEA belongs to the officers of a recruitment
agency. (2010 Bar Question)
A. May X be held criminally liable for illegal recruitment? Explain. (2%)
SUGGESTED ANSWER:
NO. X performed his work with the knowledge that he works for a licensed recruitment agency. He
is in no position to know that the officers of said recruitment agency failed to register him as its
personnel (People v. Chowdury, 325 SCRA 572 [20Q0] J. The fault not being attributable to him, he
may be considered to have apparent authority to represent Alpha on recruitment for overseas
employment.

B. May the officers having control, management or direction of Alpha Personnel

Services, Inc. be held criminally liable for illegal recruitment? Explain. (3%)
SUGGESTED ANSWER:
Yes. Alpha, being a licensed recruitment agency, still has obligations to A for processing his papers

27
for overseas employment. Under Section 6(m) of Rep. Act No. 8042, failure to reimburse expenses
incurred by the worker in connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually take place without the worker’s fault,
amounts to illegal recruitment.

Q: A was recruited to work abroad by Speedy Recruitment Agency as a technician for a Saudi
Arabian construction firm, with a monthly salary of $650.00. When she got to the
construction site, the employer compelled her to sign another contract that referred her to
another employer for a salary of $350.00. She worked for the second employer and was paid
$350.00 until her two-year contract expired. Upon her return to the Philippines, she filed a
case against the agency and the two employers. May the agency validly raise the defense that
it was not privy to the transfer of A to the second employer? Explain. (3%) (2010 Bar
Question)
SUGGESTED ANSWER:
NO. Speedy’s obligation to A is joint and several with the principal employer (Sec. 10, Rep. Act No.
8042).
The liability of the principal/employer and the recruitment/placement agency for any and all
claims for money claims shall be joint and several, which undertaking shall form part of A’s
employment contract, and condition precedent for its approval. This liability shall continue during
the entire period or duration of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a foreign country of said contract (Sec.
10, Rep. Act No. 8042).

2. Direct Hiring
Q: TRUE or FALSE. As a general rule, direct hiring of Overseas Filipino Workers (OFWs) is not
allowed. (2%) (2010 Bar Question)
SUGGESTED ANSWER:
TRUE. Art. I5 of the Labor Code provides that no employer may hire a Filipino worker for overseas
employment except through the Boards and entities authorized by the Department of Labor and
Employment (DOLE) except direct-hiring by members of the diplomatic corps, international
organizations and such other employers as may be allowed by the DOLE.
Another exemption is ‘‘Name Hire,” which refers to a worker who is able to secure an overseas
employment opportunity with an employer without the assistance or participation of any agency.

B. Regulation and enforcement

1. Suspension or cancellation of license or authority (Art. 35, Labor Code)
Q: Concerned Filipino contract workers in the Middle East reported to the Department of
Foreign Affairs (DFA) that XYZ, a private recruitment and placement agency, is covertly
transporting extremists to, terrorist training camps abroad. Intelligence agencies of the
government allegedly confirmed the report.
Upon being alerted by the DFA, the Department of Labor and Employment issued orders
cancelling the licenses of XYZ, and imposing an immediate travel ban on its recruits for the

28
Middle East. XYZ appealed to the Office of the President to reverse and set aside the DOLE
orders, citing damages from loss of employment of its recruits, and violations of due process
including lack of notice and hearing by DOLE. The DOLE in its answer claimed the existence
of an emergency in the Middle East which required prompt measures to protect the life and
limb of OFWs from a clear and present danger posed by the ongoing war against terrorism.
Should the DOLE orders be upheld or set aside? (5%). (2005 bar Question)
SUGGESTED ANSWER:
B. 1. The DOLE order cancelling the licenses of XYZ is void because a report that an agency is
covertly transporting extremists is not a valid ground for cancellation of a Certificate of Registration
(Art. 239, Labor Code) and there is failure of due process as no hearing was conducted prior to the
cancellation (Art. 238, Labor Code).
2. The DOLE order imposing the travel ban is valid because it is a valid exercise of police power to
protect the national interest (Sec. 3, Art. XIll, Constitution on full protection to labor safety of
workers) and on the rule making authority of the Secretary of Labor (Art. 5. Labor Code; Phil. Assn.
of Service Exporters v. Drilon, 163
SCRA 386 [1988]).

ANOTHER SUGGESTED ANSWER:

The DOLE orders should be set aside. It is true that the Migrant Workers and Overseas Filipinos Act,
particularly Its Section 5, could be the basis of the power, of DOLE to effect a ban on the deployment
of OFWs by XYZ, If the ban, however " is for the purpose of preventing XYZ from transporting
extremists to terrorist training camps abroad, this is a -police and national security, problem better
dealt with by the police or the Office of the National Security Adviser.
More importantly, the cancellation of the license of XYZ requires notice and hearing. Absent such
notice and hearing, the order of cancellation of the Secretary of Labor and Employment is null and
void because of the denial of due process.

2. Remittance of foreign exchange earnings

Q: Can an overseas worker refuse to remit his earnings to his dependents and deposit the
same in the country where he works to gain more interests? Explain. 5% (2006 Bar
Question)
SUGGESTED ANSWER:
No. Art. 22 of the Labor Code provides that it shall be mandatory for all Filipino workers abroad to
remit a portion of their foreign exchange earnings to their families, dependents and/or
beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of
Labor and Employment.

ANOTHER SUGGESTED ANSWER:

The answer must be qualified. While Article 22 of the Labor Code provides that it shall be
mandatory for all Filipino workers abroad to remit a portion of foreign exchange earnings to
beneficiaries in the Philippines, such an imposition can be implemented “in accordance with rules
and regulations prescribed by the Secretary of Labor.” There are currently no rules issued by the

29
Secretary pertaining to Article 22. There was a mandatory remittance provision in the 1991 POEA
Rules and Regulations, but such provision was deleted in the 2002 POEA Rules and Regulations.
The answer is likewise, “no” if the overseas worker signs an employment contract with a
mandatory remittance provision. Such is the case of seafarers, where the standard practice is to
have a provision on mandatory remittance provision amounting to 80% of their salary.

ANOTHER SUGGESTED ANSWER:

No. Art. 22 of the Labor Code provides that it shall be mandatory for all Filipino workers abroad to
remit a portion of their foreign exchange earnings to their families, dependents, and/or
beneficiaries in the country in accordance with the rules and regulations prescribed by the
Secretary of Labor and Employment.
Executive Order No. 857 prescribe the percentage of foreign exchange remittance from 50% to 80%
of the basic salary, depending on the worker's kind of job.
An overseas worker, therefore, cannot refuse to remit his earnings.

3. Prohibited activities
Q: Cite five grounds for disciplinary action by the Philippine Overseas Employment
Administration (POEA) against overseas workers. (2007 Bar Question)
SUGGESTED ANSWER:
Under the Section 1(A) and (B), Rule III, Part VII of the 2002 POEA Rules and Regulations Governing
the Recruitment and Employment of Land-based Overseas Workers, the following are the grounds
for disciplinary action against overseas workers:
A. Pre-Employment Offenses
1. Using, providing, or submitting false information or documents for purposes of job
application or employment;
2. Unjustified refusal to depart for the worksite after all employment and travel
documents have been duly approved by the appropriate government agency/ies.
B. Offenses during Employment
1. Commission of a felony or crime punishable by Philippine Laws or by the laws of the
host country;
2. Unjustified breach of employment contract;
3. Embezzlement of company funds or monies and/or properties of a fellow worker
entrusted for delivery to kin or relatives in the Philippines; and
4. Violation/s of the sacred practices of the host country.
Further, under Section 1(A) and (B), Rule II Part VI of the 2003 Rules and Regulations
Governing the Recruitment and Employment of Seafarers, the following are the grounds for
disciplinary action against seafarers:
A. Pre-Employment Offenses
1. Submission/furnishing or using false information or documents or any form of
misrepresentation for the purpose of job application or employment;

30
 2. Unjust refusal to join ship after all employment and travel documents have been duly
approved by the appropriate government agencies.
B. Offenses During Employment
1. Smuggling or violation of any custom rules and regulations of the Philippines and
foreign port;
2. Desertion;
3. Absence without leave;
4. Sleeping on post while on duty;
5. Insubordination;
6. Drunkenness;
7. Creating trouble outside the vessel’s premises;
8. Gambling;
9. Violation of company policies and regulations;
10. Incompetency and inefficiency;
11. Inciting mutiny, malicious destruction of ship’s
12. property or any activity which will hamper the efficient operation of the vessel;
13. Concerted action to breach approved contracts;
14. Any activity which tends to destroy harmonious relationship of the company;
15. Grave abuse of authority;
16. Other gross misbehaviors prejudicial to good order and discipline;
17. Negligence causing damage, loss, spoilage or deterioration of vessel’s stocks and
property;
18. Connivance with or cuddling of stowaway;
19. Willfully making false statements, reports, certification or spurious seafarer’s
documents for personal gain with or with intent to misled or defraud the company;
20. Any other case as to cast aspersion on the good name of the company and vessel;
21. Violation of safety and environmental rules/ regulations; and
22. Failure to observe the drug and alcohol policy of the company.

III. Labor Standards

Q: What is the requirement in order that a compromise agreement involving labor standards
cases be considered duly executed?
Answer:
For a compromise agreement involving labor standards cases to be considered duly executed, such
compromise agreement should be voluntarily agreed upon by the parties with the assistance of the

31
Bureau of Labor Relations or the regional office of the Department of Labor and Employment. (Art.
227, Labor Code)

A. Hours of work
1. Coverage/Exclusions (Art. 82, Labor Code)
Q: Lito Kuiangkuiang and Bong Urongsulong are employed as truck drivers of Line Movers.
Inc. Usually. Lito is required by the personnel manager to just stay at the head office after
office hours because he could be called to drive the trucks. While at the head office, Lito
merely waits in the manager’s reception room. On the other hand, Bong is allowed to go
home after office hours but is required to keep his cellular phone on so that he could be
contacted whenever his services as driver becomes necessary.
Would the hours that Lito and Bong are on call be considered compensable working hours?
Answer:
The hours of Lito and Bong while on call can be considered compensable hours. The applicable rule
is: "An employee who is required to remain on call in the employer's premises or so close thereto
that he cannot use the time effectively and gainfully for his own purpose shall be considered as
working while on call. An employee who is not required to leave word at his home or with company
officials where be may be reached is not working while on call." Here, Bong is required to stay at the
office after office hours so he could be called to drive the trucks of the Company. As for Bong, he is
required to keep his cellular phone so that he could be contacted whenever his services as driver as
needed. Thus, the waiting time of Lito and Bong should be considered are compensable hours.
Note: It could be argued that in the case of Bong who is not required to stay in the office but is
allowed to go home, if he is not actually asked by cellular phone to report to the office to drive a car,
he can use his time effectively and gainfully to his own purpose, thus, the time that he is at home
may mean that there are not compensable hours.

2. Normal hours of work

Q: Gil Bates, a computer analyst and programmer of Hard Drive Company, works eight hours
a day for five days a week at the main office providing customers information technology
assistance.
On Saturdays, however, the company requires him to keep his cellular phone open from 8:00
A.M. to 5:00 P.M. so that the Management could contact him in case of heavy work load or
emergency problems needing his expertise.
May said hours on Saturdays be considered compensable working hours "while on call? If so,
should said compensation be reported to the Social Security System? (5%) (2005 Bar
Question)
SUGGESTED ANSWER:
Said hours on Saturdays should be considered as compensable working hours “while on call". In
accordance with the Rules and Regulations Implementing the Labor Code, an employee who is not
required to leave word at his home or with company officials as to where he may be reached is not
working while on call. But in the question, Gil Bates was required to keep his cell phone open from
8:00 A.M. to 5:00 P.M. Therefore, Bates should be considered as working while on call, if he cannot

32
use effectively and gainfully for his own purpose the time from 8:00 A.M. to 5:00 P.M. on Saturdays
when he is required to keep his cellphone open.
The compensation actually received by Bates for working while on call on Saturdays should be
reported to the Social Security System because under the Social Security Law, compensation means
"all actual remuneration for employment.”

ANOTHER SUGGESTED ANSWER:

If Gil Bates can effectively utilize the Saturdays in his own interest even "while on call", said hours
on Saturdays are not compensable. However, if during said hours on Saturdays, Bates is actually
required to attend to urgent work to the extent of leaving what he is doing, then the same are
compensable, working hours to the extent of the actual hours of work rendered by him.
The compensation paid by the company to Bates for said hours worked on Saturdays should be
reported to the SSS. This is so because the basis of computing the SSS contribution includes all
actual, remuneration, including allowances and cash value of any compensation paid in any medium
other than cash.

a) Compressed work week

Q: Under what conditions may a "compressed work week" schedule be legally authorized as
an exception to the "eight-hour a day" requirement under the Labor Code? (4%)
State your answers and your reasons therefor. (2005 Bar Question)
SUGGESTED ANSWER:
A "compressed work week" schedule may be authorized under the following conditions:
1) The employee voluntarily agrees to it.
2) There is no diminution in their weekly or monthly take home pay or fringe benefits.
3) The benefits are more than or at least commensurate or equal to what is due the
employees without the compressed work week.
4) Overtime pay will be due and demandable when they are required to work on those
days which should have ceased to be working days because of the compressed work
week schedule.
5) No strenuous physical exertion or that they are given adequate rest periods.
6) It must be for a temporary duration as determined by the Department of Labor.

3. Overtime work, overtime pay

Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
xxx
xxx
xxx
[d] A waiver of the right to claim overtime pay is contrary to law. (2009 Bar Question)

33
SUGGESTED ANSWER:
True. As a general rule, overtime compensation cannot be waived, whether expressly or impliedly;
and stipulation to the contrary is against the law. (Pampanga Sugar Dev. Co., Inc. v. CIR, 114 SCRA
725 [1982].) An exception would be the adoption of a compressed work week on voluntary basis,
subject to the guidelines of Department Order No. 02, Series of 2004.

Q: A case against an employer company was filed charging it with having violated the
prohibition against offsetting undertime for overtime work on another day. The
complainants were able to show that, pursuant to the Collective Bargaining Agreement
(CBA), employees of the union had been required to work “overtime" on Saturday but were
paid only at regular rates of pay on the thesis that they were not required to complete, and
they did not in fact complete, the eight-hour work period daily from Monday through Friday.
Given the circumstances, the employer contended that the employees were not entitled to
overtime compensation, i.e., with premium rates of pay. Decide the controversy. (2005 Bar
Question)
SUGGESTED ANSWER:
The employer is correct. While Art. 88 of the Labor Code clearly provides that undertime work on
any other particular day shall not be offset by overtime work on any other day, this rule is
inapplicable in this case pertaining to Saturday work which in reality does not constitute overtime
work as Saturday is stiil a working day under the law and there is no CBA stipulation against it.

ANOTHER SUGGESTED ANSWER:

Art. 88 of the Labor Code provides that undertime work on any particular day shall not be offset by
overtime work on any other day. The CBA being the law between the parties and the Union having
shown that the employees rendered overtime work on Saturday, the contention of the employer is
not tenable. The employer cannot use the undertime of Monday through Friday to offset the
overtime on Saturday. Hence, the employees are entitled to overtime compensation, i.e. premium
rates of pay on Saturday.

Q: Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution dependent for
its existence on contributions and donations from well-wishers. She renders work eleven
(11) hours a day but has not been given overtime pay since her place of work is a charitable
institution. Is Socorro entitled to overtime pay? Explain briefly. (5%)
SUGGESTED ANSWER:
Yes. Socorro is entitled to overtime compensation. She does not fall under any of the exceptions to
the coverage of Art. 82, under the provisions of Hours of Work. The Labor Code is equally applicable
to non-profit institutions. A covered employee who works beyond eight (8) hours is entitled to
overtime compensation.

Q: Danilo Flores applied for the position of driver in the motorpool of Gold Company, a
multinational corporation. Danilo was informed that he would frequently be working
overtime as he would have to drive for the company's executives even beyond the ordinary
eight-hour work day. He was provided with a contract of employment wherein he would be

34
paid a monthly rate equivalent to 35 times his daily wage, regular sick and vacation leaves. 5
day-leave with pay every month and time off with pay when the company’s executives using
the cars do not need Danilo’s service for more than eight hours a day, in lieu of overtime.
Are the above provisions of the contract of employment in conformity with, or violative of,
the law?
Answer:
Except for the provision that Danilo shall have time off with pay when the company's executives
using the cars do not need Danilo's service for more than eight hours a day, in lieu of overtime, the
provisions of the contract of employment of Danilo are not violative of any labor law because they
instead improve upon the present provisions of pertinent labor laws.
Thus, the monthly rate equivalent to 35 times the daily wage may be sufficient to include overtime
pay.
There is no labor law requiring the payment of sick and vacation leaves except the provision for a
five-day service incentive leave in the Labor Code.
The 5-day-leave with pay every month has no counterpart in Labor Law and is very generous.
As for the provision in Danilo's contract of employment that he shall receive time off with pay in
lieu of overtime, this violates the provision of the Labor Code which states that undertime work on
any particular day shall not be offset by overtime work on any other day. Permission given to the
employer to go on leave on some other day of the week shall not exempt the employer from paying
the additional compensation required by the Labor Code.

Q: Pedro Sisid is a seaman who was employed in 1990 by Kuhol Ocean Transport. In May
1993, he was discharged and correspondingly paid vacation pay, terminal pay and overtime
pay for the number of hours he actually rendered service in excess of his eight (8) working
hours a day. Pedro Sisid, however, is dissatisfied with his overtime pay contending that he is
on board the vessel 24 hours a day. or even beyond his eight (8) working hours which
circumstance renders him on call whenever his service is needed. Therefore, he insists that
he be paid 16 hours a day by way of overtime. Is the contention of seaman Pedro Sisid
tenable? Why?
Answer:
No. The contention of seaman Sisid is not tenable.
The fact that he is on board the vessel 24 hours a day does not mean that beyond his eight working
hours, he could be also considered as working because he is on call, and thus, is entitled to overtime
pay. Because he is a seaman, this circumstance means he is on board his vessel while at sea. But he
is not thereby on call as to be entitled to overtime pay because when it is not his working time, he
can, if he chooses to do so, use said non-working time effectively and gainfully for his own purpose.

35
Alternative Answer:
No, there being a record of actual overtime services rendered. An estimated period of overtime is
valid as a basis for payment of overtime, only in a case where overtime services are actually being
rendered regularly but no record of the hours were kept.

Q: A manufacturing company operates on a 6-day workweek. It employs 200 workers whose

regular workday is 8 hours. On May 1. 1990, the company and Union “M", the employees;
bargaining agent, agreed that the workday be 7 hours from Monday to Wednesday and 9
hours from Thursday to Saturday. The agreement was ratified by all the employees. In 1991
Union “M" lost its majority status and Union “P" was certified as bargaining representative.
Union “P" filed a claim against the Company for unpaid overtime pay of the 200 employees
from May 1. 1990 when they started working 9 hours per day, 3 days a week. Invoking the
1990 agreement, the Company moved to dismiss the claim of Union “P".
Decide with reasons.
Suggested Answer:
The claim of Union “P" is valid. The Labor Code is very clear: Undertime work on any particular day
shall not be offset by overtime work on any other day. (Article 88, Labor Code)
The right arising from the above provision, meaning, entitlement to overtime pay for one hour for
working 9 hours per day, 3 days a week. (Article 87, Labor Code) cannot be considered as waived
by a CBA even if the CBA is ratified by the employees concerned. The waiver in this instance is
against the law, morals, and public policy. The law must prevail over the CBA.

Q: Ping Gabo is the Chief Engineer of the National Publishing Corp. with a monthly salary of
P3.000.00. He works over eight (8) hours daily from Monday to Saturday. In May. June and
July 1991, he rendered, each month, ten (10) hours beyond his regular work schedule.
Is he entitled to overtime pay and holiday pay? Why?
Answer:
The entitlement of Gabo to overtime pay and holiday pay is dependent on whether he is a
managerial employee or not. If he Is a managerial employee, he is not entitled to overtime pay and
holiday pay. The Labor Code provides that the provisions that grant overtime pay and holiday pay
shall not apply, among others, to managerial employees.
A managerial employee is defined by the Code as referring to those whose primaiy duty consists of
the management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff.
Gabo, as Chief Engineer, appears to be a managerial employee. On the other hand, his monthly pay
is rather low for a managerial employee. Despite his title, his duty may not consist of a management
of department or of a subdivision thereof.

36
Q: After working from 10 a.m. to 5 p.m. on a Thursday as one of 5,000 employees in a beer
factory, A hurried home to catch the early evening news and have dinner with his family. At
around 10 p.m. of the same day, the plant manager called and ordered A to fill in for C who
missed the second shift. (2010 Bar Question)
A. May A validly refuse the plant manager’s directive? Explain. (2%)
SUGGESTED ANSWER:
YES. A may validly refuse to fill in for C. A may not be compelled to perform overtime work
considering that the plant manager’s directive is not for an emergency overtime work, as
contemplated under Article 89 of the Labor Code.

B. Assuming that A was made to work from 11 p.m. on Thursday until 2 a.m. on Friday,
may the company argue that, since he was two hours late in coming to work on Thursday
morning, he should only be paid for work rendered from 1 a.m. to 2 a.m.? Explain. (3%)
SUGGESTED ANSWER:
NO. Undertime is not off-set by overtime (Art. 88, Labor Code).

Q: The Overseas Construction Company, a domestic corporation with a recruitment license,

hired two thousand Filipino workers and assigned them to its construction project in
Kuwait. They were given free housing, work clothing and food.
The master employment contract approved for them by the Philippine Overseas
Employment Administration (POEA) stipulated that they were to work at the overseas
jobsite for twelve (12) hours per day and that they were accordingly to be paid wages higher
than the POEA-approved schedule of pay rates. The individual employment contracts also
contained the same stipulations. And during the pre-departure briefings at the company’s
Mandaluyong plant site, the workers were told about these stipulations. By actual compu-
tation, the wages paid at the overseas jobsite were at least twenty-five percent (25%) more
than the POEA-approved rates. Moreover, the record shows that the workers did not always
render the full twelve (12) hours of work stipulated in the employment contract.
Back home after completing their one-year overseas assignment, the workers engaged your
services as their lawyer to prosecute a complaint with the POEA for recovery of unpaid
overtime work. What would your advice be?
Answer:
Before I give an advise, I will first find the answer to this basic question: Were the workers actually
paid for their overtime work when they received wages that were at least twenty-five percent
(25%) more than the POEA-approved rates?
The answer is No if the 25% added to the POEA- approved rate (which we assume is a rate for a day
of eight (8) hours work) is only 25% of such POEA-approved daily wage rate. This is because what
should be paid to the workers for the four (4) hours that they work overtime in their twelve (12)
hour day (a 12-hour work day is 4 hours in excess of an 8-hour work day) should be 50% more of
such POEA- approved rate. The four (4) hours of work is 50% of the normal weight (8) hours of
work a day plus 25% of such additional 50% for purposes of paying the overtime rate.
There is also the night differential pay to take into account because a 12-hour shift will include
working hours from 10:00 p.m. to 6:00 a.m. If the higher-than-the POEA- approved rate is

37
computed as indicated above, I will advise the workers not to sue for they have already been paid
for their overtime work.
If the higher-than-the-POEA-approved rates is not, however, computed as indicated above, the fact
that the POEA-approved the contracts and that the workers agreed to the rates they receive will not
be a bar to a complaint for unpaid overtime pay, the right to which cannot be waived.

Another Suggested Answer:

The rate approved by the POEA has built-in overtime pay. Thus, there is no basis for the
claim for overtime pay.

Q: Ricardo Diestro is an accounting clerk in Aqua Sport Trading Company, receiving three
thousand pesos a month as basic salary. In addition, he gets a free lunch valued at thirty
pesos per day and free uniforms. Diestro frequently worked overtime, for which the payroll
clerk computed for him his extra overtime pay on the basis of his basic monthly salary.
When Diestro failed to receive a pay increase, he started questioning the basis for computing
his overtime pay. He argued that the cost of the free lunch and the value of his t-shirts should
be included. His claims having been denied, he filed a complaint with the Regional Office of
the Department of Labor.
Decide. (1987 Bar Question)
Answer:
Diestro is not entitled to have his overtime pay computed not only on the basis of his basic salary
but also on the basis of the cost of the free lunch and the value of the T-shirts given by the Company
added to the basic salary.
The Labor Code (in Art. 90) provides that for purposes of computing overtime and other additional
remuneration, the “regular wage” of an employee shall include the cash wage only, without
deduction on account of facilities provided by the employer. The value of the free lunch and the t-
shirts is not “cash wages.”

4. Night work (R.A. No. 10151), Night shift differential

Q: Can an employer and an employee enter into an agreement reducing or increasing the
minimum percentage provided for night differential pay, overtime pay, and premium pay?
5% (2006 Bar Question)
SUGGESTED ANSWER:
An employer and employee can enter into a contract increasing night differential pay, overtime pay,
and premium pay benefits, as this is beneficial to the worker and no fraud or vice of consent could
be inferred from it.
An employer and employee could not, however, enter into a contract reducing the minimum pay for
the above-stated benefits, as these would be against public policy and therefore void ab initio.

Q: As a tireman in a gasoline station, open twenty four (24) hours a day 'with only five (5)
employees, Goma worked from 10:00 P.M. until 7:00 A.M. of the following day. He claims he

38
is entitled to night shift differential. Is he correct? Explain briefly. (3%)
SUGESTED ANSWER:
Yes. Under Art. 86 of the Labor Code, night shift differential shall be paid to every employee for
work performed between 10:00 o’clock in the evening to six o’clock in the morning.
Therefore, Goma Is entitled to night shift differential for work performed from 10:00 pm until 6:00
am of the day following, but not from 6:00 am to 7:00 am of the same day.
The Omnibus Rules Implementing the Labor Code (In Book ill, Rule lI dealing with night shift
differential) provides that its provisions on night shift differential shall NOT apply to employees of
“retail and service establishments regularly employing not more than five (5) workers”. Because of
this provision, Goma is not entitled to night shift differential because the gasoline station where he
works has only five employees.

Q: Republic Drug Co. has 1,000 employees, including 50 managerial personnel, 90

supervisors and 150 sale representatives. The regular workday in the Company is from 8:00
a.m. to 5:00 p.m. The sales representatives register their presence with the timekeeper at
8:00 A.M. every day before they go to their respective sales territories. They are paid a basic
salary plus commission. Sixty of the sales representatives are members of the Republic
Salesmen Union which sent to the Company a set of bargaining proposals, including a
demand for payment of overtime pay of the sales representatives for working beyond 5:00
P.M. everyday. The Company refused to consider the bargaining proposals and rejected the
demand for overtime pay for the reason that the sales representatives are not entitled
thereto. The Union filed an unfair labor practice case against the Company for refusal to
bargain, and after complying with the legal requirements declared a strike.
a) Was the Company legally justified in rejecting the Union’s demand for overtime pay?
Reason.
Suggested Answer:
The Company was legally justified.
Under the Labor Code, (in Article 82). “field personnel" are among those classes of workers who are
not entitled to overtime pay, and the phrase “field personnel” includes sales representatives who.
like other field personnel, are non- agricultural employee who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty.

Alternative Answer:
If the demand for overtime pay is in the nature of a proposal made in the collective bargaining table
and the only reason for rejecting such demand is that “the sales representatives are not entitled
thereto,” this is not a legal justification for rejecting outright the Union's demand for overtime pay.
It is true that under the Labor Code, field personnel - and this phrase includes sales representatives
are not entitled to overtime pay.

39
But it is precisely as regards benefits that are not rights under the law that collective bargaining is
used by Labor to secure these benefits that are over and above what the law gives.
On the other hand, the rejection by the Company of the Union’s demand for overtime pay is not per
se illegal. The Labor Code provides that the duty to bargain collectively does not compel any party
to agree to a proposal or to make any concession. (Article 252, Labor Code).

B. Wages
1. Wage vs. salary
Q:
1) Distinguish “salary" from “wages."
2) Are these subject to attachment and execution?
Answer:
The term “wages" applies to compensation for manual labor, skilled or unskilled, while salary
denotes a compensation for a higher degree of employment. (Goa vs. Court of Appeals. 140 SCRA
304).

Alternative Answer:
1) “Wages" are those paid to any employee as his remuneration or earnings payable by an
employer for work done or to be done, or for services rendered or to be rendered.
On the other hand, “salary" is used in the law that provides for a 13th-month pay. In this
law, basic salary includes all remuneration or earnings paid by an employer to his employees for
services rendered, but does not include allowances or monetary benefits which are not considered
or integrated as part of the regular or basic salary. (Art. 97(f). Labor Code; Sec. 2(b), P.D. No. 851)
2) Under Article 1708 of the Civil Code, only “wages" are exempt from attachment or
execution. Salaries are not exempt from attachment or execution. (Goa vs. Court of Appeals, 140
SCRA 304).

Q: How much attorney's fees may a lawyer assess a culpable party in cases of unlawful
withholding of wages?
Answer;
In cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees
equivalent to ten percent (10%) of the amount of wages recovered. (Art. III, Labor Code)

Q: Are the principal officers of a corporation liable in their personal capacity for non-
payment of unpaid wages and other monetary benefits due its employees? (1997 Bar
Question)
Answer:
As a general rule, the obligations incurred by the principal officers and employees of a corporation

40
are not theirs but the direct accountabilities of the corporation they represent. However, solidary
liabilities may at times be incurred but only when exceptional circumstances warrant such as,
generally, in the following cases: when directors and trustees or in appropriate cases, the officers of
a corporation:
(a) vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith or with gross
negligence in directing the corporate affairs; (c) are guilty of conflict of interest to the prejudice of
the corporation, its stockholders or members, and other persons.
In labor cases, the Supreme Court has held corporate directors and officers solidarity liable with the
corporation for the termination of employment of employees done with malice or bad faith. (Sunto
u. NLRC, 127 SCRA 390; General Bank and Trust Co. v. Court of Appeals, 135 SCRA 659).

Alternative Answer:
No. Unless they are guilty of malice or bad faith In connection with the non-payment of unpaid
wages and other monetary benefits due to employees.

2. Minimum wage defined, Minimum wage setting

Q: A lady worker was born with a physical deformity, specifically, hard of hearing, speech
impaired and color blind. However, these deficiencies do not impair her working ability.
Can the employer classify the lady worker as a handicapped worker so that her daily wage
will only be seventy-five percent (75%) of the applicable daily minimum wage? [5%]
SUGGESTED ANSWER:
No, the employer cannot classify the lady worker as a handicapped worker because according to the
facts in the question, her deficiencies do not impair her working ability. If her earning capacity is
therefore not also impaired, then she cannot be considered a handicapped worker.
Because of the above fact, the employer shall not pay her less than the applicable daily minimum
wage. (See Article 78 of the Labor Code)

ANOTHER SUGGESTED ANSWER:

Yes, the employer can classify the lady worker as a handicapped worker because her earning
capacity maybe impaired by her physical deficiencies. As such handicapped worker, the employer
may enter into an employment agreement with her whereby the rate to be paid to her may be les*
than the applicable legal minimum wage but not less than 75% of such wage.

3. Minimum wage of workers paid by results

Q: Nemia earns P7.00 for every manicure she does in the barber shop of a friend which has
nineteen (19) employees. At times she takes home P 175.00 a day and at other times she
earns nothing. She now claims holiday pay. Is Nemia entitled to this benefit? Explain briefly.
(5%)
SUGGESTED ANSWER:
No, Nemia is not entitled to holiday pay.

41
Art. 82 of the Labor Code provides that workers who are paid by results are, among others, not
entitled to holiday pay. Nemia is a worker who is paid by results. She earns P7.00 for every
manicure she does.

ANOTHER SUGGESTED ANSWER:

Yes. Nemia is entitled to holiday pay.
The Supreme Court has ruled: “As to the other benefits, namely, holiday pay, premium pay,
13m month pay, and service incentive leave which the labor arbiter failed to rule on but which the
petitioners prayed for in their complaint, we hold that petitioners are so entitled to these benefits.
Three (3) factors lead us to conclude that petitioners, although piece rate workers, were regular
employees of private respondents. First as to the nature of the petitioner’s tasks, their job of
repacking snack food was necessary or desirable in the usual business of private respondents, who
were engaged in the manufacture and selling of such food products; second, petitioners worked for
private respondents throughout the year, their employment not having been dependent on a
specific project or season; and third, the length of time that petitioners worked for private
respondents. Thus, while petitioner’s mode of compensation was on a “per piece basis” the status
and nature of their employment was that of regular employees.” [Labor Congress of the Philippines
v. NLRC, 290 SCRA 509(1998)]

4. Commissions
Q: A, a driver for a bus company, sued his employer for non-payment of commutable service
incentive leave credits upon his resignation after five years of employment. The bus
company argued that A was not entitled to service incentive leave since he was considered a
field personnel and was paid on commission basis and that, in any event, his claim had
prescribed. If you were the Labor Arbiter, how would you rule? Explain. (6%) (2010 Bar
Question)
SUGGESTED ANSWER:
I will grant the prayer of A.
Payment on commission basis alone does not prove that A is a field personnel. There must be proof
that A is left to perform his work unsupervised by his employer. Otherwise, he is not a field
personnel, thus entitled to commutable service incentive leave (SIL) credits [Auto Bus v. Bautista,
458 SCRA 578 [2005]).
His action has not yet prescribed. In Auto Bus v. Bautista (supra.), the Supreme Court recognized
that SIL is such a unique labor standard benefit, because it is commutable. An employee may claim
his accrued SIL throughout the years of his service with the company upon his resignation,
retirement, or termination. Therefore, when A resigned after five years, his right of action to claim
ALL of his SIL benefits accrued at the time when the employer refused to pay him his rightful SIL
benefits. (Art. 291, Labor Code).

ALTERNATIVE ANSWER:
The money claim as cause of action has prescribed because the claim was filed after five (5) years
from date of negotiation. Art. 291 of the Labor Code provides that all money claims arising from
employer- employee relations occurring during the effectivity of the Code shall be filed within three

42
(3) years from that time the cause of action has accrued, otherwise, they shall be forever barred.

5. Deductions from wages

Q: A worked as a roomboy in La Mallorca Hotel. He sued for underpayment of wages before
the NLRC, alleging that he was paid below the minimum wage. The employer denied any
underpayment, arguing that based on long standing, unwritten policy, the Hotel provided
food and lodging to its housekeeping employees, the costs of which were partly shouldered
by it and the balance was charged to the employees. The employees’ corresponding share in
the costs was thus deducted from their wages. The employer concluded that such valid
deduction naturally resulted in the payment of wages below the prescribed minimum. If you
were the Labor Arbiter, how would you rule? Explain. (3%) (2010 Bar Question)
SUGGESTED ANSWER:
I will rule in favor of A.
Even if food and lodging were provided and considered as facilities by the employer, the employer
could not deduct such facilities from its workers’ wages without compliance with law (Mayon Hotel
& Restaurant v. Adana, 458 SCRA 609 [2005]).
In Mabeza v. NLRC (271 SCRA 670 [1997]), the Supreme Court held that the employer simply
cannot deduct the value from the employee’s wages without satisfying the following: (a) proof that
such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is
voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and
reasonable value.

Q: In accordance with the provisions of the collective bargaining agreement, the Republic
Labor Union (RLU) submitted to the Zenith Drug Company a union board resolution
authorizing the deduction from the wage of each of the union’s two thousand members a
special assessment in the sum of twenty pesos to help pay for the expenses of the RLU
president during his observation tour of New Zealand
When the company honored the authorization and implemented the deductions, more than
a thousand of the employees complained and sought your assistance. What legal advice
would you give and what action would you take on behalf of the employees?
Answer:
I will advise the complaining employees that they should file a complaint against the Company for
making the illegal deductions of P20.00 from their wages.
According to the Labor Code (in Art. 113) of the legal deductions that an employer may make from
the wages of his employees are: (a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the amount paid by him as
premium on the insurance; (b) For union dues, in cases where the right of the worker or his union
to check-off has been recognized by the employer or authorized in writing by the individual worker
concerned; and (c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
The deductions made by the employer are not for union dues.

43
Another Suggested Answer:
I will advise the complaining employees that they should file a complaint against the members of
the union board of directors for violating the rights and conditions of membership in a labor
organization by levying a special assessment without its being authorized by a written resolution of
majority of all union members at a general membership meeting called for the purpose. (Art. 241
(2).

6. Wage Distortion/Rectification
Q: What is wage distortion? Can a labor union invoke wage distortion as a valid ground to go
on strike? Explain. (2%) (2009 Bar Question)
SUGGESTED ANSWER:
Wage distortion refers to a situation where an increase in the prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service and other logical
bases of differentiation. (Art. 124, Labor Code)
No. the existence of wage distortion is not a valid ground for staging a strike because Art. 124 of the
Labor Code provides for a specific method or procedure for correcting wage distortion. In Ilaw at
Buklod ng Manggagawa vs. NLRC, (198 SCRA 586, 594-5 [1991]), the Cour said.

Q: What procedural remedies are open to workers who seek correction of wage distortion?
(2%) (2009 Bar Question)
SUGGESTED ANSWER:
The Procedural Remedies of Wage Distortion disputes are provided in Art. 242 of the Labor Code,
as follows.
1. Organized establishment - follow the grievance procedure as provided for in the CBA,
ending in voluntary arbitration.
2. Unorganized establishments - employer and workers, with the aid of the NCMB shall
endeavor to correct the wage distortion, and if they fail, to submit the issue to the NLRC for
compulsory arbitration.

Q: When is there a wage distortion? (2006 Bar Question)

SUGGESTED ANSWER:
There is wage distortion where an increase e in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.

44
ANOTHER SUGGESTED ANSWER:
Wage distortion arises when (4) essential elements are present:
a. An existing hierarchy of positions with corresponding salary rates;
b. A significant change or increase in the salary rate of a lower pay class without a
corresponding increase in the salary of a higher one;
c. The elimination of the distinction between two groups or classes; and
d. The distortion exists in the same region of the country (Prubankers Association v.
Prudential Bank and Trust Co., 302 SCRA 74 [1999]).

Q: How should a wage distortion be settled? (2006 Bar Question)

SUGGESTED ANSWER:
Any dispute arising from wage distortion shall be resolved through the grievance procedure as
provided in the applicable collective bargaining agreement and, if the dispute remains unresolved,
then through voluntary arbitration.
In cases where there are no collective bargaining agreements or recognized labor unions, the
employers and workers shall endeavor to correct such wage distortions. Any dispute arising
therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains
unresolved after ten (10) calendar days of conciliation, the issue of wage distortion shall be
referred to the appropriate branch of the National Labor Relations Commission (NLRC).

Q: Can the issue of wage distortion be raised in a notice of strike? Explain. 10% (2006 Bar
Question)
SUGGESTED ANSWER:
In Ilaw ng Manggagawa v. NLRC, 198 SCRA 586 (1991), the Supreme Court held that any issue
involving wage distortion shall not be a ground for a strike or lockout. The legislative intent is to
solve wage distortion problems through voluntary negotiation or arbitration.

Q: How should a wage distortion be resolved (1) In case there is a collective bargaining
agreement and (2) in case there is none? Explain briefly. (3%)
SUGGESTED ANSWER:
According to Art 124 of the Labor Code, in case there Is a collective bargaining agreement, a dispute
arising from wage distortions shall be resolved through the grievance machinery provided in the
CBA, and if remains unresolved, through voluntary arbitration. In case there is no collective
bargaining agreement the employers and workers shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through the National Conciliation and foodSation Board
and if it remains unresolved after ten calendar days of conciliations, then the dispute is referred to
the appropriate branch of the National Labor Relations Commission.

Q:
(a) Define Wage Distortion.

45
(b) May a wage distortion, alleged by the employees but rejected by the employer to be
such, be a valid ground for staging a strike?
Answer:
(a) A wage distortion is that brought about where an increase in the prescribed wage rates
results in the elimination or severe contraction of intentional quantitative differences in wage or
salary rates between and among employee groups in an establishment as to effectively obliterate
the distinctions embodied in such wage rates based on skills, length of service and other logical
bases of differentiation.
(b) No. the existence of wage distortion is not a valid ground for a strike because Art. 124 of the
Labor Code provides for a specific method of procedure for correcting wage distortion. In Raw at
Buklod ng Manggagawa vs. NLRC, 198 SCRA 586, the Court said:-
It goes without saying that these joint or coordinated activities may be forbidden or restricted by
law or contract. For the particular instance of "distortions of the wage structure within an
establishment" resulting from the application of any prescribed wage increase by virtue of a law or
wage order, Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive
procedure for the correction thereof, thereby implicitly excluding strikes or lockouts or other
concerted activities as modes of settlement of the issue.

Alternative Answer:
(b) A wage distortion, alleged by the employees but rejected by the employer can be a valid
ground for staging a strike if it happens that in rejecting the allegation of wage distortion, the
employer refuses to consider the issue under the grievance procedure provided for in the
applicable CBA and later on through Voluntary Arbitration. These acts of the employer could be
considered as a violation of its duty to bargain collectively which is unfair labor practice (ULP). A
ULP strike is legal.

C. Rest Periods (Weekly rest day, Emergency rest day work)

Q: A Ladies Dormitory run or managed by a charitable non-profit organization claims that it
is exempt from the coverage of the Weekly Rest Period provision of the Labor Code. Is the
claim valid? (5%) (1998 Bar Question)
SUGGESTED ANSWER:
No. The claim is not valid. The provisions on weekly rest periods in the Labor Code cover every
employer, whether operating for profit or not. (See Article 91 of the Labor Code)

Q: Lawyer Antonio Martin recently formed a law partnership with five other lawyer-friends
of his. They hired two office secretaries, an accounting clerk-cashier, one bookkeeper, and
two messengers. You are among three associate attorneys. The workweek is Monday to
Friday. There is no vacation leave but sick leave is 15 days for every year of continuous and
satisfactory service.
Managing partner Martin is preparing a set of personnel policies in terms and conditions of
employment for the staff and has asked you to give him a brief memo on the questions listed
below.

46
(a) Should the law firm schedule a rest day for the employees, including you?
(b) xxx
Explain fully. (1987 Bar Question)
Answer:
(a) There is no need under the Labor Code to schedule a rest day. The Code (in Art. 91)
requires an employer to provide each of his employees a weekly rest day after every six consecutive
normal work days. Here, the work week is such that it is for five days. The Saturdays and Sundays
when the employees are not required to work more than satisfy the required weekly rest day.
(b) xxx

D. Holiday Pay/ Premium Pay

1. Coverage, exclusion
Q: A, a worker of ABC Company, was on leave with pay on March 31, 2010. He reported for
work on April 1 and 2, Maundy Thursday and Good Friday, respectively, both regular
holidays. Is A entitled to holiday pay for the two successive holidays? Explain. (3%) (2010
Bar Question)
SUGGESTED ANSWER:
YES. A is entitled to holiday pay equivalent to two hundred percent (200%) of his regular daily
wage for the two successive holidays that he worked (Section 6[a], Rule IV, Book III of the Omnibus
Rules implementing the Labor Code).

Q: During the open forum following your lecture before members of various unions affiliated
with a labor federation, you were asked the following questions:
(a) Araw ng Kagitingan and Good Friday are among the 10 paid regular holidays under
Article 94 of the Labor Code. How much will an employee receive when both holidays fall on
the same day? (4%) (2005 Bar Question)
SUGGESTED ANSWER:
The employee will receive 200% of his regular dally wage when both regular holidays fall on the
same day and he does not work. The law provides that he shall receive his regular dally wage for
each regular holiday. The employee will receive 100% for Araw ng Kagitingan and 100% for Good
Friday, If he works on that day, he is entitled to 400% of his regular daily wage; otherwise, there
will be diminution of benefits [Asian Transmission Corp. v. Court of Appeals, 425 SCRA 478 (2004)],

Q: Nemia earns P7.00 for every manicure she does in the barber shop of a friend which has
nineteen (19) employees. At times she takes home P 175.00 a day and at other times she
earns nothing. She now claims holiday pay. Is Nemia entitled to this benefit? Explain briefly.
(5%)
SUGGESTED ANSWER:
No, Nemia is not entitled to holiday pay.
Art. 82 of the Labor Code provides that workers who are paid by results are, among others, not

47
entitled to holiday pay. Nemia is a worker who is paid by results. She earns P7.00 for every
manicure she does.

ANOTHER SUGGESTED ANSWER:

Yes. Nemia is entitled to holiday pay.
The Supreme Court has ruled: “As to the other benefits, namely, holiday pay, premium pay, 13 m
month pay, and service incentive leave which the labor arbiter failed to rule on but which the
petitioners prayed for in their complaint, we hold that petitioners are so entitled to these benefits.
Three (3) factors lead us to conclude that petitioners, although piece rate workers, were regular
employees of private respondents. First as to the nature of the petitioner’s tasks, their job of
repacking snack food was necessary or desirable in the usual business of private respondents, who
were engaged in the manufacture and selling of such food products; second, petitioners worked for
private respondents throughout the year, their employment not having been dependent on a
specific project or season; and third, the length of time that petitioners worked for private
respondents. Thus, while petitioner’s mode of compensation was on a “per piece basis” the status
and nature of their employment was that of regular employees.” [Labor Congress of the Philippines
v. NLRC, 290 SCRA 509(1998)]

Q: On orders of his superior, Efren, a high-speed sewing machine technician, worked on May
1, Labor Day. If he worked eight (8) hours on that day, how much should he receive if his
daily rate is P400.00? (2%)
SUGGESTED ANSWER:
Efren should receive P800.00. Art 92 of the Labor Code provides that the employer may require an
employee to work on any regular holiday but such employee shall be paid compensation equivalent
to twice his regular rate.

Q: This year, National Heroes Day (August 2.5) falls on a Sunday. Sunday is the rest day of
Bonifacio whose daily rate is P500.00.
A. If Bonifacio is required by his employer to work on that day for eight (8) hours, how
much should he be paid for his work? Explain. (3%)
B. If he works for ten (10) hours on that day, how much should he receive for his work?
Explain. (2%)
SUGGESTED ANSWER:
A. For working on his scheduled rest day, according to Art. 93(a), Bonifacio should be paid
P500.00 (his daily rate) plus P150.00 (30% of his daily rate) = P650.00. This amount of P650.00
should be multiplied by 2 = P1, 300.00. This is the amount that Bonifacio as employee working on
his scheduled rest day which is also a regular holiday, should receive. Art. 94(c) of the Labor Code
provides that an employee shall be paid a compensation equivalent to twice his regular rate for
work on any regular holiday. The “regular rate” of Bonifacio on May 1, 2002 is with an additional
thirty percent because the cay is also his scheduled rest day.
B. P1.300.00 which is the amount that Bonifacio is to receive for working on May 1, 2002
should be divided by 8 to determine his hourly rate of P162.50. This hourly rate should be
multiplied by 2 (the number of hours he worked overtime). Thus, the amount that Bonifacio is

48
entitled to receive for his overtime work on May 1, 2002 is P325.00.

Q: Ping Gabo is the Chief Engineer of the National Publishing Corp. with a monthly salary of
P3.000.00. He works over eight (8) hours daily from Monday to Saturday. In May. June and
July 1991, he rendered, each month, ten (10) hours beyond his regular work schedule.
Is he entitled to overtime pay and holiday pay? Why?
Answer:
The entitlement of Gabo to overtime pay and holiday pay is dependent on whether he is a
managerial employee or not. If he Is a managerial employee, he is not entitled to overtime pay and
holiday pay. The Labor Code provides that the provisions that grant overtime pay and holiday pay
shall not apply, among others, to managerial employees.
A managerial employee is defined by the Code as referring to those whose primaiy duty consists of
the management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff.
Gabo, as Chief Engineer, appears to be a managerial employee. On the other hand, his monthly pay
is rather low for a managerial employee. Despite his title, his duty may not consist of a management
of department or of a subdivision thereof.

Q: Lawyer Antonio Martin recently formed a law partnership with five other lawyer-friends
of his. They
Q: All the 30 employees of Aliw Trading, Inc., are monthly salaried, and have been such since
L974, when the Labor Code of the Philippines took effect. Whenever they would work
overtime, the accounting department would compute the daily equivalent of the employee’s
monthly salary by using 301 days as divisor. However, for deductions due to absences not
otherwise covered by the 15-day vacation leave policy of the company, the divisor used is
313 days. The workweek is Monday to Saturday.
In 1985, the employees filed a complaint for nonpayment of holiday pay and service
incentive leave after years of unsuccessfully trying to convince Aliw Trading management to
grant holiday pay and the five-day service incentive leave. In the past, whenever a demand
for payment of holiday pay was presented by the employees, management would invariably
deny liability but on the other hand would give a nominal salary adjustment. (9187 Bar
Question)
(a) If you were counsel for Aliw Trading, what defenses would you raise?
(b) If you were the labor arbiter hearing the case, how would you resolve the issues?
Answer:
(a) As counsel for Aliw Trading, I will contend: As regards holiday pay, when the Company uses
313 as the divisor in computing the daily equivalent of an employee’s monthly salary, (in computing
deductions due to absences not covered by its 15-day vacation leave policy) the Company thereby
considers that only the 52 weekly rest days (which are Sundays) are the only days not considered
as paid; and that the regular holidays are therefore considered as paid even if they are unworked
days. So, there is no need to again pay holiday pay.

49
As to the 5-day service incentive leave, I will contend that the Labor Code (in Art. 95(b) provides
that the provision on service incentive leaves shall not apply to those already enjoying the benefit,
namely, those enjoying vacation leaves with pay at leave five (5) days.
The Company here has a 15-day vacation policy and should, therefore, be already deemed as giving
the 5-day service incentive leave.
(b) As the Labor Arbiter, I will rule that the Company is liable to pay holiday pay. We will base
this ruling on the ground that the Company uses 301 as a divisor in computing the daily equivalent
of an employee's monthly salary (in computing overtime pay). Thus, the Company considers both
the 52 weekly rest days and 12 holidays as unpaid days. Thus, the Company should pay holiday pay.
As for the service incentive leave, I will rule that with its 15-day vacation leave policy, the Company,
pursuant to the Labor Code, (in Art. 94(b) is already giving the 5-day service incentive leave to its
employees.

2. Teachers, piece-workers, takay, seasonal workers, seafarers

Q: TRX, a local shipping firm, maintains a fleet of motorized boats plying the island
barangays of AP. a coastal town. At day's end the boat operators/crew members turn over to
the boat owner their cash collections from cargo fees and passenger fares, less the expenses
for diesel fuel, food, landing fees and spare parts.
Fifty percent (50%) of the monthly income or earnings deiived from the operations of the
boats are given to the boatmen by way of compensation. Deducted from the individual
shares of the boatmen are their cash advance and peso value of their absences, if any.
Are these boatmen entitled to overtime pay, holiday pay, and 13th month pay? (5%) (2005
Bar Question)
SUGGESTED ANSWER:
If the boatmen are considered employees, like jeepney drivers paid on a boundary system, the
boatmen are not entitled to overtime and holiday pay because they are workers who are paid by
results. Said workers, under the Labor Code are not entitled, among others, to overtime pay and
holiday pay.
In accordance with the Rules and Regulations implementing the 13 th month pay law, however, the
boatmen are entitled to the 13th month pay. Workers who are paid by results are to be paid their
13th month pay.

ANOTHER SUGGESTED ANSWER:

No. The arrangement between the boat owner and the boat operators/crew members partook of
the nature of a joint venture. The boatmen did not receive, fixed compensation as they shared only
in the cash collections from cargo fees and passenger fares, less expenses for fuel, food, landing fees
and spare parts. It appears that there was neither right of control nor actual exercise of such right
on the part of the beat owner over the boatmen. It is clear that there was no employer-employee
relationship between the beat owner and the boatmen. As such, these boatmen are not entitled to
overtime pay, holiday pay and 13th month pay.

50
E. Leaves
1. Maternity Leave
Q: AB, single and living-in with CD (a married man), is pregnant with her fifth child. She
applied for maternity leave but her employer refused the application because she is not
married. Who is right? Decide (2007 Bar Question)
SUGGESTED ANSWER:
AB is right. The Social Security Law, which administers the Maternity Benefit Program, does not
require that the relationship between the father and the mother of the child be legitimate. The law
is compensating the female worker because of her maternal function and resultant loss of
compensation. The law is morality free.

ALTERNATIVE ANSWER:
Neither party is correct. The employer cannot refuse the application on the ground that she is only
living with CD, as a legitimate marriage is not a precondition for the grant of maternity leave.
Neither is AB correct, since maternity leave is only available for the first four deliveries or
miscarriages.

Q: Mans Weto had been an employee of Nopolt Assurance Company for the last ten (10)
years. His wife of six (6) years died last year. They had four (4) children. He then fell in love
with Jovy, his co-employee and they got married.
In October this year, Weto's new wife is expected to give birth to her first child. He has
accordingly filed his application for paternity leave, conformably with the provisions of the
Paternity Leave Law which took effect in 1996. The HRD manager of the assurance firm
denied his application, on the ground that Weto had already used up his entitlement under
that law. Weto argued that he has a new wife who will be giving birth for the first time,
therefore, his entitlement to paternity leave benefits would begin to run anew.
xxx
(b) Is Jovy entitled to maternity leave benefits? (6%)
SUGGESTED ANSWER:
(b) Yes, if Jovy, as a female employee, has paid at least three (3) monthly contributions in the
twelve-month period immediately preceding the semester of her childbirth (Sec, 14-A, R.A. 1161, as
amended); otherwise; she is not entitled to the benefit.

Q: Lydia Cancio was on her sixth and last month as a probationary employee of the Banco
Seguridad when she was confirmed to be pregnant. Being unmarried and wanting to become
a regular employee, she initially kept her pregnancy a secret from her employer. She was
subsequently appointed a regular employee on the first month of her pregnancy.
Because of morning sickness, however, Lydia frequently absented herself from work. After
two more months, the personnel manager told her that her habitual absences had become so
intolerable that she would have to go. Replying that her absences were caused by her
pregnancy, Lydia asked for a leave of absence, which was denied. She nevertheless went on
leave and was dismissed for going on leave without prior permission.

51
Lydia filed a complaint for illegal dismissal, praying that she be reinstated. The Bank
contested the complaint on the ground that she was not dismissed because of her pregnancy
but because of her absence without leave.
Decide. (1987 Bar Question)
Answer:
The dismissal is illegal. The Labor Code (in Art. 137(2) very clearly provides: It shall be unlawful for
any employer to discharge (a) woman (employee) on account of her pregnancy, or while on leave or
in confinement due to her pregnancy.
Of course, in the case, the woman employee asked for leave of absence because of her pregnancy
but this request was denied and she went on leave anyway.
The employer should have granted her request for leave, the request being made because of her
pregnancy.
Dismissal after she went on leave without prior permission is too harsh a punishment for the
pregnant woman who was absent without leave.

2. Paternity Leave
Q: Mans Weto had been an employee of Nopolt Assurance Company for the last ten (10)
years. His wife of six (6) years died last year. They had four (4) children. He then fell in love
with Jovy, his co-employee and they got married.
In October this year, Weto's new wife is expected to give birth to her first child. He has
accordingly filed his application for paternity leave, conformably with the provisions of the
Paternity Leave Law which took effect in 1996. The HRD manager of the assurance firm
denied his application, on the ground that Weto had already used up his entitlement under
that law. Weto argued that he has a new wife who will be giving birth for the first time,
therefore, his entitlement to paternity leave benefits would begin to run anew.
(a) Whose contention is correct, Weto or the HRD manager?
SUGGESTED ANSWER:
(a) The contention of Weto is correct. The law provides that every married male is entitled to a
paternity leave of seven (7) days for the first four (4) deliveries of the legitimate spouse with whom
he is cohabiting (Section 2, RA6187). Jovyis Weto's legitimate spouse with whom he is cohabiting.
The fact that Jovy is his second wife and that Weto had 4 children with his first wife is beside the
point. The important fact is that this is the first child of Jovy with Weto. The law did not distinguish
and we should therefore not distinguish.
The paternity leave was intended to enable the husband to effectively lend support to his wife in
her period of recovery and/or in the nursing of the newly born child (Sec. 3, RA 8187). To deny
Weto this benefit would be to defeat the rationaie for the law.

ANOTHER SUGGESTED ANSWER:

The HRD manager is correct. Since it is conceded that Weto earlier availed of four (4) paternity
leaves when his first wife gave birth to their four (4) children, he clearly "already used up his
entitlement under the law". His new wife's giving birth for the first time would not, matter as the

52
benefit given by. Section 2 of R.A. 8187 is an exhaustible benefit granted to a father "for the first
four (4) deliveries of the legitimate spouse with whom he is cohabiting".

Q: How many times may a male employee go on Paternity Leave? Can he avail himself of this
benefit, for example, 50 days after the first delivery by his wife? (3%)
SUGGESTED ANSWER:
A male employee may go on Paternity Leave up to four (4) children. (Sec. 2, RA 8187) On the
question of whether or not he can avail himself of this benefit 50 days after the delivery of his wife,
the answer is: Yes, he can because the Rules Implementing Paternity Leave Act says that the
availment should not be later than 60 days after the date of delivery.

F. Service Charge
G. Thirteenth Month Pay
Q: What would be your advice to your client, a manufacturing company, who asks for your
legal opinion on whether or not the 13th Month Pay Law (Presidential Decree No. 851)
covers a casual employee who is paid a daily wage? [5%]
SUGGESTED ANSWER:
I will advise the manufacturing company to pay the casual employee 13th Month Pay if such casual
employee has worked for at least one (1) month during a calendar year.
The law on the 13th Month Pay provides that employees are entitled to the benefit of said law
regardless of their designation or employment status.
The Supreme Court ruled in Jackson Building Condominium Corporation v. NLRC, 246 SCRA 329,
(1995) interpreting P.D. No. 851, as follows:
xxx employees are entitled to the thirteenth-month pay benefits regardless of their designation and
irrespective of the method by which their wages are paid.

Q: Concepcion Textile Co. included the overtime pay, night-shift differential pay, and the like
in the computation of its employees' 13th-month pay. Subsequently, with the promulgation
of the decision of the Supreme Court in the case of San Miguel Corporation vs. Inciong (103
SCRA 139) holding that these other monetary claims should not be included in the
computation of the 13th-month pay. Concepcion Textile Co. sought to recover under the
principle of solutio indebitii overpayment of its employees' 13th-month pay, by debiting
against future 13th-month payments whatever excess amounts it had previously made.
1) Is the Company’s action tenable?
2) With respect to the payment of the 13th-month pay after the San Miguel Corporation
ruling, what arrangement, if any, must the Company make in order to exclude from the 13th-
month pay all earnings and remunerations other than the basic pay.
Answer:
1) The Company’s action is not tenable. The principle of solutio indebiti which is a civil law
concept Is not applicable in labor law. Thus, solutio indebiti is not applicable to the instant case.
(Davao Fruits Corporations vs. National Labor Relations Commission, et at. 225 SCRA, 562)

53
Alternative Answers:
a) The Company’s action would be tenable if payment was done by mistake, in which case
recovery can be done under the principle of solutio indebiti But if there was no mistake, the
Company's action would be untenable because it would violate Article 100 of the Labor Code which
prohibits elimination or diminution of benefits.
b) No. The Company’s action is not tenable. The grant by Concepcion Textile Co. of a better
formula, more favorable to the employee, constituted a valid offer by the company as the offeror
and the employees as the offeree. There having been a meeting of the minds of the parties, the
rights and obligations arising therefrom were valid. Thus, any amount received by virtue thereof
could not be recovered, much less taken away unilaterally. The principle does not apply to the case
at bar.

2) Alter the 1981 San Miguel ruling, the High Court decided the case of Philippine Duplicators
Inc. vs. NLRC, on 11 November 1993. Accordingly, management may undertake to exclude sick
leave, vacation leave, maternity leave, premium pay for regular holiday, night differential pay and
cost of living allowance. Sales commissions, however, should be included based on the settled rule
as earlier enunciated in Songco vs. NLRC, 183 SCRA 610.

H. Separation Pay
Q: Company "A" was engaged in the manufacture of goods using the by-products of coconut
trees and employed some fifty workers who lived in the coconut plantation in Quezon
Province. The land upon which A conducted its operation was subjected to land reform
under R.A. 6657 for distribution to the tenants and residents of the land. Consequently, A
had to close its operations and dismiss its workers. The union representing the employees
demanded that A pay the dismissed workers separation pay under Art. 283 of the Labor
Code that requires, among others, the payment of separation pay to employees in cases of
"closing or cessation of operations of the establishment or undertaking". Is the union is
claim correct or not? Why? (5%) (2001 Bar Question)
SUGGESTED ANSWER:
The union's claim is not correct.
In the case of National Federation of Labor vs. NLRC, G.R. No. 12771.8, March 2, 2000, the Supreme
Court ruled that there is no obligation to pay separation pay if the closure is not a 'unilateral and
voluntary act of the employer.
In the question, the closure was brought about not by a unilateral and voluntary act of the employer
but due to the act of government in the implementation of the Comprehensive Agrarian Reform
Law.

Q: Robert Suarez is a salesman for Star Pharmaceuticals. Star Pharmaceuticals has applied
with the Department of Labor and Employment for clearance to terminate (by way of
retrenchment) the services of Suarez due to financial losses. Robert Suarez, aside from his
monthly salary, receives commissions on the sales he makes. He also receives allowances.
The existing CBA between Star Pharmaceuticals and the union, of which Robert Suarez is a

54
member, states that any employee separated from employment for causes not due to the
fault of the employee shall receive from the company a retirement gratuity in an amount
equivalent to one month’s salary per year of service.
Robert Suarez contends that in computing his separation pay, his sales commission and his
allowances should be included in the monthly salary. Do you agree? (1997 Bar Question)
Answer:
I agree, with some conditions.
In computing separation pay, the monthly salary should include commissions because commissions
received by a salesman is part of his salary.
But for allowances to be included as part of salary, they should be for services rendered or to be
rendered, like a cost of living allowance. But transportation and representation allowances are not
considered as part of salary because they are to meet expenses for transportation and
representation. Thu s. cost of living allowances, but not transportation or representation
allowances, shall be included as part of salary in the computation of separation pay.
Note: Re: allowances as part of salary, in Santos us. NLRC, 154 SCRA 166, the Supreme Court said:
"in the computation of backwages and separation pay, account must be taken not only of basic
salary but also her transportation and emergency living allowances."

Q: Daisy, the branch manager of Tropical Footwear Inc. was dismissed for serious
misconduct. She filed a complaint for illegal dismissal and damages. The Labor Arbiter
sustained Daisy’s dismissal but awarded her separation pay based on social Justice and as an
act of compassion considering her 10-year service with the company.
Was the award of the separation pay proper? Explain. (1996 Bar Question)
Answer:
No. the award of separation pay is not proper because the employee was terminated for serious
misconduct and payment of separation pay will be to reward an employee for a wrongdoing. In
PhiLippine Long Distance Telephone Co., vs NLRC, 164 SCRA 671 (1988).
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or
those reflecting his moral character.
The policy of social justice is not intended to countenance wrongdoing. Compassion for the poor is
an imperative of every human society but only when the recipient is not a rascal claiming an
undeserved privilege. Those who invoke social justice may do so only if their hands are clean and
their motives blameless.
A contrary rule would have the effect of rewarding rather than punishing the erring employee for
his offense.

Alternative Answer:
The award of the separation pay was not proper.
According to the Labor Code, separation pay is to be paid to an employee whose employment is
terminated due to the Installation of labor saving devices, redundancy, retrenchment to prevent

55
losses or the closing or cessation of operation of the establishment or undertaking. When an
employer terminates the services of an employee who has been found to be suffering from any
disease, the employee is also to be paid separation pay.
But on the basis of equity, the Supreme Court has ruled that an employee whose employment has
been terminated for just cause may nevertheless, for humanitarian reasons, be granted financial
assistance in the form of separation pay. But also according to the Supreme Court, a terminated
employee is not deserving of said financial assistance if her termination is due to serious
misconduct.
In the case, Daisy was dismissed because of serious misconduct. Thus, she should not be paid
separation pay.

Q: Pedro Tiongco was a salesman for ten years of Lakas Appliance Company (LAC). Due to
business reverses, the Company laid off Tiongco and three other salesmen and offered them
separation pay based on their monthly basic salary of P5,700.00. The three salesmen
accepted their separation pay and signed individual quitclaims stating, among others, that
they have no more claims or causes of action whatsoever against LAC. The quitclaims were
duly notarized. Tiongco refused to accept his separation pay and instead, demanded that the
said pay should be computed on the basis of his monthly basic salary and his sales commis-
sions. Upon LAC’s rejection of Tiongco’s demand. Tiongco filed the appropriate complaint
with the Labor Arbiter.
a) As Labor Arbiter, how will you resolve Tiongco’s complaint? Reasons.
Suggested Answer:
As Labor Arbiter, I will grant the demand that Tiongco be paid his separation pay computed on the
basis of his monthly basic salary and his sales commissions. The sales commissions under the Labor
Code is part of the ‘‘wage’’ that the salesmen are entitled to receive for services rendered. Wages
may be fixed or ascertained on a time, task, piece or commission basis. (Article 97. Labor Code.
Songeo. el al.. vs. NLRC. G.R. No. 50999, March 23, 1990)

b) If Tiongco obtains a favorable decision will the three other salesmen be entitled to
separation pay differential? Reasons.
Suggested Answer:
No. If the acceptance of their separation pay by the t hree other salesmen and their signing
individual quitclaims that stated that they have no more claims or causes of actions whatsoever
against LAC (where the quitclaims were even duly notarized) is voluntarily, they can no longer'ask
for a recomputation of their separation pay according to the favorable decision secured by Tiongco.
The salesmen signed quitclaim that are not contrary to law morals or public policy. Not all
quitclaims are invalid as against public policy if they are voluntarily entered into and represents a
reasonable settlement. (Periquel v. NLRC, 186 SCRA 724)

Q: Buster Sison, a 55-year old employee of Telecom Facilities, Inc., wanted to retire. He

56
talked to the personnel manager, who agreed. The necessary papers were drawn up, and
Sison was paid retirement benefits equivalent to 75% of his last basic monthly salary for
every year of service. Sison enjoyed post-retirement life for more than three years, until his
retirement benefits were exhausted. Expecting to get more from Telecom, Sison filed a
complaint for recovery of separation pay under the Labor Code.
Decide. (1987 Bar Question)
Answer:
Sison is not entitled to separation pay under the Labor Code. The Labor Code (in Arts. 283 ad 284)
provides the instances when the employer is to pay separation pay, namely, when he terminates the
employment of an employee because of the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation not due to serious business
losses, or when an employee has been found to be suffering from any disease and his continued
employment is prohibited by law or is prejudicial to his health as well as the health of his co--
employees.
Sison’s termination was not brought by any of the above authorized causes. He voluntarily retired,
and he accepted what was paid him by the Company which paid retirement benefits not because it
was under legal obligation to do so, there being no CBA or any agreement providing for such
payment. •
Because of all the above, he is not entitled to separation pay.
If he waited so that he retired at age 60, he could have taken advantage of a provision in the Rules
and Regulations for the payment of termination pay equivalent to at least one-half month salary for
every year of service, but this is even less than 75% he received when he retired at age 55.

Q: Linder what circumstances or instances may an employee who is found to have been
illegally dismissed and, therefore, entitled to reinstatement, be nevertheless. NOT ordered
reinstated but merely awarded (a) separation pay in lieu of reinstatement and (b) back
wages? At what rate would the separation pay be? What would be the maximum limit for the
back wages?
Answers:
In a number of Supreme Court decision, it has been ruled that an employee who is found to have
been illegally dismissed shall be awarded separation pay in lieu of reinstatement If reinstatement is
no longer viable in view of the strained relations between the employee and his employer. In a case,
the Supreme Court also ruled that since reinstatement was no longer feasible in view of the
advanced age of the employees who were illegally dismissed, they should instead received
separation pay.
The rate of separation pay is one month salary for every year of service. The Supreme Court has
also ruled that in the computation of separation pay account must be taken not only of the basis
salary of the employee but also his allowances.
In decisions applying the law before Rep. Act No. 6715, the Supreme Court ruled that the maximum
limit for back wages shall be three years.

57
The law has been changed by Rep. Act No. 6715. Back wages are now to be computed from the time
the compensation of the employee was withheld from him up to the time of his actual
reinstatement. Thus, in applying the amendment Introduced by Rep. Act No. 6715, this means that
back wages will now be paid for the entire period up to the actual reinstatement of the employees,
even if the period is over three years.

I. Retirement Pay
Q: As a rule, when is retirement due? (2007 Bar Question)
SUGGESTED ANSWER:
Article 287 provides for two types of retirement:
(a) optional retirement - which may be availed of by an employee reaching the age of 60 years;
(b) compulsory retirement - which may be availed of by an employee upon reaching the age of
65 years. In both instances, the law imposes the minimum service requirement of 5 years with the
establishment.

Q: When is retirement due for underground miners? (2007 Bar Question)

SUGGESTED ANSWER:
Pursuant to R.A. 8558, in the absence of a retirement plan or other applicable agreement providing
for retirement benefits of underground mine employees in the establishment, any such employee
may retire upon reaching the age of 50 years or more if he has served for at least 5 years as
underground mine employee or in underground mine of the establishment.

Q: A Collective Bargaining Agreement (CRA) between Company A and its employees provides
for optimal retirement benefits for employees who have served the company for over 25
years regardless of age, equivalent to one-and- one-half months pay per year of service
based on the employee’s last pay. The CBA further provides that “employees whose services
are terminated, except for cause, shall receive said retirement benefits regardless of age or
service record with the company or to the applicable separation pay provided by law,
whichever is higher." The Company, due to poor business conditions, decided to cease
operations and gave its employees the required one month’s advance notice as well as notice
to DOLE, with the further advice that each employee may claim his corresponding separation
or retirement benefits whichever is higher after executing the required waiver and
quitclaim.
Dino Ramos and his co-employees who have all rendered more than 25 years of service,
received their retirement benefits. Soon after, Ramos and others similarly situated
demanded for their separation pay. The Company refused, claiming that under the CBA they
cannot receive both benefits.
Who is correct, the employees or the Company?
Answer:

58
The employees are correct. In the absence of a categorical provision in the Retirement Plan and the
CBA that an employee who receives separation pay is no longer, entitled to retirement benefits, the
employee is entitled to the payment of both benefits pursuant to the social justice policy. [Conrado
M. Aquino, et aL v. National Labor Relations Commission, et al., G.R No. 87653, 11 February 1992)

Alternative Answer:
a) The Company is correct. The CBA clearly provides that employees who are terminated are
entitled to retirement benefits or separation pay, whichever is higher. The CBA, therefore, does not
give the employees a right to both retirement pay and separation pay. Hence, they cannot be
entitled to both. The exclusion of one by the other is deductible not only from the term “or” but also
by the qualifying phrase “whichever is higher”. This phrase would be immaterial if the employees
were entitled to both.
b) Dino and his co-employees were correct.
In the case of University of the East vs. NLRC, it was clarified that the retirement benefits arising
from the CBA is an Obligation Ex Contractu while separation pay under Art. 284 is an Obligation Ex-
Lege.
Thus, the Company should grant both benefits to those who were separated due to CLOSURE and at
the same time were qualified to retire. (Cipriano v. San Miguel, 24 SCRA 703)

a. Eligibility
Q: Ricky Marvin had worked for more than ten (10) years in 1GB Corporation. Under the
terms of the personnel policy on retirement, any employee who had reached the age of 65
and completed at least ten (10) years of service would be compulsorily retired and paid 30
days’ pay for every year of service.
Ricky Marvin, whose immigrant visa to the USA had just been approved, celebrated his 60th
birthday recently. He decided to retire and move to California where the son who petitioned
him had settled. The company refused to grant him any retirement benefits on the ground
that he had not yet attained the compulsory retirement age of 65 years as required by its
personnel policy; moreover, it did not have a policy on optional or early retirement.
Taking up the cudgels for Ricky Marvin, the union raised the issue in the grievance
machinery as stipulated in the CBA. No settlement was arrived at and the matter was
referred to voluntary arbitration.
If you were the Voluntary Arbitrator, how would you decide? Briefly explain the reasons for
your award. (5% ) (2005 Bar Question)
SUGGESTED ANSWER:
(1) I will grant Ricky Marvin the retirement benefits under Art. 287 of the Labor Code.
Art. 287 of the Labor Code, as the minimum standard in law, allows an employee an optional
retirement upon reaching the age of 60 years provided he rendered at least 5 years of service -
requirements that Ricky Marvin met under the facts of the case.

59
b. Amount
Q: Ukol was compulsorily retired by his employer, Kurot Bottling Corporation, upon the
formeris reaching 65 years of age having rendered 30 years of service. Since there was no
CBA, B. Ukol was paid his retirement benefits computed 15 days' pay for every year of
service, based on B. Ukolis highest salary during each year of his employment. Not satisfied,
B. Ukol filed action with the Arbitration Branch of the NLRC claiming that his retirement
benefits were not computed properly. Is B. Ukol's claim meritorious? What are the
components of his retirement benefits? (2%). (2001 Bar Question)
SUGGESTED ANSWER:
Ukol's claim is meritorious. His retirement benefit is to be computed in accordance with Article 287,
which reads: "In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee may retire ... and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six
months being considered as one whole year. The same Article then explains that the term one-half
(1/2) month salary means fifteen days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves.
The components of retirement pay are:
1. 15 days pay
2. 1/12 of 13th month pay, and
3. Cash equivalent of not more than five {5) days of service incentive leave.

Q: What exception(s) do(es) the law on retirement benefits provide(s) if any? (3%). (2001
Bar Question)
SUGGESTED ANSWER:
Retail, service and agricultural establishments or operations employing not more than ten (10)
employees or workers are exempted from the coverage of the provision on retirement benefits in
the Labor Code.
Also, where there is a retirement plan of the employer that grants more than what the Labor Code
grants.

J. Women Workers
a. Provisions against discrimination
Q: At any given time, approximately ninety percent (90%) of the production workforce of a
semi-conductor company are females. Seventy-five percent (75%) of the female workers are
married and of child-bearing years. It is imperative that the Company must operate with a
minimum number of absences to meet strict delivery schedules. In view of the very high
number of lost working hours due to absences for family reasons and maternity leaves, the
Company adopted a policy that it will employ married women as production workers only if
they are at least thirty-five (35) years of age.
Is the policy violative of any law? [5%] (1998 Bar Question)
SUGGESTED ANSWER:

60
Yes, it is violative of Article 140 of the Labor Code which provides that no employer shall
discriminate against any person in respect to terms and conditions of employment on account of his
age.

ANOTHER SUGGESTED ANSWER:

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

STILL ANOTHER SUGGESTED ANSWER:

It may be noted that the policy is directed only to married women. This may violate the spirit of
Article 136 of the Labor Code which provides that it shall be unlawful for an employer to require as
a condition of employment or continuation of employment that a woman shall not get married.

Q: Can an individual, the sole proprietor of a business enterprise, be said to have violated the
Anti-Sexual Harassment Act of 1995 if he clearly discriminates against women in the
adoption of policy standards for employment and promotions in the enterprise? Explain.
(2005 Bar Question)
SUGGESTED ANSWER:
When an employer discriminates against women in the adoption of policy standards for
employment and promotion in his enterprise, he is not guilty of sexual harassment. Instead, the
employer is guilty of discrimination against women employees which is declared to be unlawful by
the Labor Code.
For an employer to commit sexual harassment, he - as a person of authority, influence or moral
ascendancy - should have demanded, requested or otherwise required a sexual favor from his
employee whether the demand, request or requirement for submission is accepted by the object of
said act.
In the question, no such act was committed by the sole proprietor.

b. Stipulation against marriage

Q: Dinna Ignacio was hired by Stag Karaoke Club as a guest relations officer. Dinna was also
required to sing and dance with guests of the club.
In Dinna Ignacio’s employment contract, which she signed, the following stipulations
appeared:
Compensation : Tips and commissions coming from guests shall be
subjected to 15% deduction.
Hours of work : 5 P.M. up to 2 AM. Daily Including Sundays and Holidays

61
Other conditions : Must maintain a body weight of 95 lbs., remain single.
Marriage or pregnancy will be considered as a valid
ground for a termination of employment.
A year later. Dinna Ignacio requested to go on leave because she would be getting married to
one of the club's regular guests. The management of the club dismissed her.
Dinna filed a complaint for illegal dismissal, night shift differential pay, backwages, overtime
pay and holiday pay. Discuss the merits of Dinna’s complaint.
Answer:
The first issue to be resolved is: Is Dinna Ignacio an employee of the Star Karaoke Club? Yes, she is
an employee per the provision of the Labor Code that states: "Any woman who is permitted or
suffered to work, with or without compensation, in any night club, cocktail lounge, massage clinic,
bar or similar establishment, under the effective control or supervision of the employer for a
substantial period shall be considered an employee of such establishment for purposes of labor and
social legislation"(Art. 138). In Dinna’s conditions of employment have all the aforesaid
characteristics.
She has been illegally dismissed. The Labor Code expressly provides, that "It shall be unlawful for
an employer to require as a condition of employment or continuation of employment that a woman
employee shall not get married, or to stipulate expressly or tacitly that upon getting married a
woman employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her marriage." (Art.
136)
Because of her illegal dismissal, she is entitled to backwages from the time her compensation was
withheld from her to the time of her actual reinstatement.
Dinna is not entitled to night differential pay, overtime pay and holiday pay because she belongs to
one of those classes of employees who are not covered by the provision of the Labor Code providing
for these benefits. She is a worker paid by results, since her compensation is determined by the tips
and commission that she receives from her guests.

Q: Fil-Aire Aviation Company (FIL-AIRE) is a new airline company recruiting flight

attendants for its domestic flights. It requires that the applicant be single, not more than 24
years old attractive, and familiar with three (3) major Visayan dialects, viz: Ilongo, Cebuano
and Waray. Lourdes. 23 years old was accepted as she possessed all the qualifications. After
passing the probationary period. Lourdes disclosed that she got married when she was 18
years old but the marriage was already in the process of being annulled on the ground that
her husband was afflicted with a sexually transmissible disease at the time of the celebration
of their marriage. As a result of this revelation. Lourdes was not hired as a regular flight
attendant. Consequently, she filed a complaint against FIL-AIRE alleging that the pre-
employment qualifications violate relevant provisions of the Labor Code and are against
public policy.
Is the contention of Lourdes tenable? Discuss fully. (1995 Bar Question)
Answer:
The contention of Lourdes is tenable. When she was not hired as a regular flight attendant by FIL-
AIRE because she disclosed that she got married when she was 18 years old, the airline company

62
violated the provision of the Labor Code which states:
“It shall be unlawful for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate expressly or tacitly that
upon getting married a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her
marriage."

c. Prohibited acts
Q: Lydia Cancio was on her sixth and last month as a probationary employee of the Banco
Seguridad when she was confirmed to be pregnant. Being unmarried and wanting to become
a regular employee, she initially kept her pregnancy a secret from her employer. She was
subsequently appointed a regular employee on the first month of her pregnancy.
Because of morning sickness, however, Lydia frequently absented herself from work. After
two more months, the personnel manager told her that her habitual absences had become so
intolerable that she would have to go. Replying that her absences were caused by her
pregnancy, Lydia asked for a leave of absence, which was denied. She nevertheless went on
leave and was dismissed for going on leave without prior permission.
Lydia filed a complaint for illegal dismissal, praying that she be reinstated. The Bank
contested the complaint on the ground that she was not dismissed because of her pregnancy
but because of her absence without leave.
Decide. (1987 Bar Question)
Answer:
The dismissal is illegal. The Labor Code (in Art. 137(2) very clearly provides: It shall be unlawful for
any employer to discharge (a) woman (employee) on account of her pregnancy, or while on leave or
in confinement due to her pregnancy.
Of course, in the case, the woman employee asked for leave of absence because of her pregnancy
but this request was denied and she went on leave anyway.
The employer should have granted her request for leave, the request being made because of her
pregnancy.
Dismissal after she went on leave without prior permission is too harsh a punishment for the
pregnant woman who was absent without leave.

Q: (2000 Bar Question)

a) An exclusive school for girls, run by a religious order, has a policy of not employing
unwed mothers, women with live-in partners, and lesbians. Is the policy violative of any
provision of the Labor Code on employment of women? (3%)
b) The same school dismissed two female faculty members on account of pregnancy out
of wedlock. Did the school violate any provision of the Labor Code on employment of
women? (3%)
SUGGESTED ANSWER:
a) No, the policy does not violate the Labor Code. The practice is a valid exercise of

63
management function. Considering the nature and reason for existence of the school, It may adopt
such policy as will advance its laudable objectives. In fact, the policy accords with the constitutional
precept of inculcating ethical and moral values in schools. The school policy does not discriminate
against women solely on account of sex (Art. 135, Labor Code) nor are the acts prohibited under
Art. 137 of the Labor Code.
b) The school violated Art. 137 (2) of the Labor Code which states that: “It shall be unlawful for
any employer to discharge such woman on account of pregnancy". The pregnancy here could
obviously have resulted from love and such only lends substance to the saying that “the heart has
reasons of its own which reason does not know", a matter that cannot “be so casually equated with
immorality". [Chua-Qua v. Clave, 189 SCRA 117(1990)]

ALTERNATIVE ANSWER:
No, because to tolerate pregnancy out of wedlock will be a blatant contradiction of the
school’s laudable mission which, as already stated, accords with high constitutional precepts.
This answer does not contradict the ruling in Chua- Qua where the teacher merely fell in love with a
bachelor student and the teacher, also single, did not get pregnant out of wedlock.

d. Anti-Sexual Harassment Act (R.A. No. 7877)

Q: Atty. Renan, a CPA-lawyer and Managing Partner of an accounting firm, conducted the
orientation seminar for newly-hired employees of the firm, among them, Miss Maganda.
After the seminar, Renan requested Maganda to stay, purportedly to discuss some work
assignment. Left alone in the training room, Renan asked Maganda to go out with him for
dinner and ballroom dancing. Thereafter, he persuaded her to accompany him to the
mountain highway in Antipolo for sight-seeing. During all these, Renan told Maganda that
most, if not all, of the lady supervisors in the firm are where they are now, in very productive
and lucrative posts, because of his favorable endorsement.
[a] Did Renan commit acts of sexual harassment in a work-related or employment
environment? Reasons. (3%)
SUGGESTED ANSWER:
Atty. Renan is guilty of sexual harassment. This conclusion is predicated upon the following
consideration:
1. Atty. Renan has authority, influence or moral ascendancy over Miss Maganda;
2. While the law calls for a demand, request or requirement of a sexual favor, it is not
necessary that the demand, request or requirement of a sexual favor be articulated in a categorical
oral or written statement. It may be discerned, with equal certitude from the acts of the offender.
(Domingo vs. Rayala, 546 SCRA 90 [2008]);
3. The acts of Atty. Renan towards Miss Maganda resound with deafening clarity the unspoken
request for a sexual favor, regardless of whether it is accepted or not by Miss Maganda.
4. In sexual harassment, it is not essential that the demand, request or requirement be made
as a condition for continued employment or promotion to a higher position. It is enough that Atty.
Renan’s act result in creating an intimidating, hostile or offensive environment for Miss Maganda.

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Q: As a condition for her employment. Josephine signed an agreement with her employer
that she will not get married, otherwise, she will be considered resigned or separated from
the service.
Josephine got married. She asked Owen, the personnel manager, if the company can
reconsider the agreement. He told Josephine he can do something about it, insinuating some
sexual favors. She complained to higher authorities but to no avail. She hires you as her
counsel. What action or actions will you take? Explain. 5%. (2006 Bar Question)
SUGGESTED ANSWER:
As counsel for Josephine, I will file a complaint for work-related sexual harassment which, as in the
case at bar, occurs when a person who has authority, influence or moral ascendancy over another
demands, requests or otherwise requires any sexual favor from the latter as a condition for, inter
alia, the continued employment of said individual (Sec. 3, RA 7877).
I will likewise file a complaint for illegal dismissal citing Art. 136 of the Labor Code which provides
that it is unlawful for an employer to require as a condition of continued employment or
continuation of employment that a woman employee shall not get married, or to stipulate expressly
or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or
to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage.

ANOTHER SUGGESTED ANSWER:

I shall advise my client to file a complaint with the grievance machinery (if the establishment is
organized) or with the company’s Committee on Decorum and Investigation (organized or
unorganized) tasked to investigate sexual harassment cases. The personnel manager Owen can
definitely be held administratively liable for his action.
I shall also advise my client to file a criminal case for sexual harassment pursuant to Republic Act
No. 7877 .

ANOTHER SUGGESTED ANSWER:

I will not take any action at all because “insinuating some sexual favor" is not an act of sexual
harassment which require “demands, requests, or otherwise require any sexual favor from the
other. (Sec. 3, R.A. No. 7877).

Q: Carissa. a comely bank teller, was due for her performance evaluation which is conducted
every six months. A rating of "outstanding" is rewarded with a merit increase. She was given
a "below average" rating in the last two periods. According to the bank's personnel policy, a,
third rating of "below average" will result in termination. Mr. Perry Winkle called Carissa
into his office a few days before submitting her performance ratings. He entitled her to
spend the night with him in his rest house. She politely declined. Undaunted, Mr. Winkle
renewed his invitation, and Carissa again declined. He then warned her to "watch out"
because she might regret, it later on. A few days later, Carissa found that her third and last
rating was again "below average." Carissa then filed a complaint for sexual harassment
against Mr. Winkle with the Department of Labor and Employment, in his counter-affidavit,
he claimed that he was enamored with Carissa. He denied having demanded, much less
received any sexual favors from her in consideration of giving her an "outstanding' rating.

65
He also alleged that the complaint was premature because Carissa failed to refer the matter
to the Committee on Decorum and Discipline for investigation and resolution before the case
against him was filed. In her reply affidavit, Carissa claimed that there was no need for a
prior referral to the Committee on Decorum and Discipline of her complaint.
Resolve the case with reasons. (5%) (2005 Bar Question)
SUGGESTED ANSWER:
I will hold Mr. Perry Winkle guilty of sexual harassment. This resolution is predicated
mainly upon the following considerations:
1) Mr. Perry Winkle exercises authority, Influence or moral ascendancy over Carissa;
2) Mr. Winkle's insistence in inviting Carissa "to spend the night with him in his rest house" is
pregnant with sexual meaning as to imply the request or demand for a sexual favor;
3) My. Winkle’s warning of "watch out" clearly manifests that the refusal of such sexual favor
would jeopardize Carissa's continued employment; and
4) 4, Mr. Winkle's invitation for such sexual favor will clearly result in an intimidating, hostile,
or otherwise offensive working environment for Carissa, Carissa is correct in stating that there was
no need for a prior referral of her complaint to the Committee on Decorum and Discipline, because
nothing in the law shall preclude the victim of sexual harassment from instituting a separate and
independent action for damages and other affirmative relief (Section 6, R.A. No. 7877).

Q: Pedrito Masculado. a college graduate from the province, tried his luck in the city and
landed a job as utility / maintenance man at the warehouse of a big shopping mall. After
working as a casual employee for six months, he signed a contract for probationary
employment for six months. Being well-built and physically attractive, his supervisor, Mr.
Hercules Barak, took special interest to befriend him. When his probationary period was
about to expire, he was surprised when one afternoon after working hours, Mr. Barak
followed him to the men's comfort room. After seeing that no one else was around, Mr. Barak
placed his arm over Pedrito's shoulder' and softly said: "You have great potential to become
regular employee and I think I can give you a favorable recommendation. Can you come over
to my condo unit on Saturday evening so we can have a little drink? I'm alone, and I'm sure
you want to stay longer with the company."
Is Mr. Barak liable for sexual harassment committed in a work-related or employment
environment? (5%) (2005 Bar Question)
SUGGESTED ANSWER:
Yes, the elements of sexual harassment are all present. The act of Mr. Barak was committed in a
workplace. Mr. Barak. as supervisor of Pedrito Masculado, has' authority, influence and moral
ascendancy over Masculado. Given the specific circumstances mentioned in the question like Mr.
Barak following Masculado to the comfort room, etc. Mr. Barak was requesting a sexual favor from
Masculado for a favorable recommendation regarding the latter's employment. It is not impossible
for a male, who is a homosexual, to ask for a sexual favor from another male.

ANOTHER SUGGESTED ANSWER:

66
 I do not see any sexual favor being solicited. Having a "little drink" in Mr. Barak's Condo
Unit, as condition for a "favorable recommendation is not one of the prohibited acts enumerated in
Sec. 3 (a) of R.A. 7877, otherwise known as the Anti-Sexual Harassment Act of 1995.

Q:
a) A Personnel Manager, while interviewing an attractive female applicant for
employment, stared directly at her for prolonged periods, albeit in a friendly manner.’ After
the interview, the manager accompanied the applicant to the door, shook her hand and
patted her on the shoulder. He also asked the applicant if he could invite her for dinner and
dancing at some future time. Did the Personnel Manager, by the above acts, commit sexual
harassment? Reason. (3%) (2000 Bar Question)
SUGGESTED ANSWER:
a) Yes, because the Personnel Manager, a man, is in a position to grant or not to grant a favor
(a job) to the applicant. Under the circumstances, inviting the applicant for dinner or dancing
creates a situation hostile or unfriendly to the applicant’s chances for a job if she turns down the
invitation. (Sec. 3 (a) (3), R.A. No. 7877, Anti-Sexual Harassment Act].

ALTERNATIVE ANSWER:
a) There is no sexual harassment because there was no solicitation of sexual favor in exchange
of employment. Neither was there any intimidating, hostile or offensive environment for the
applicant.

b) In the course of an interview, another female applicant inquired from the same
Personnel Manager if she had the physical attributes required for tire position she applied
for. The Personnel Manager replied: “You will be more attractive if you will wear micro-mini
dresses without the undergarments that ladies nomKdly wear. ” Did the Personnel Manager,
by the above reply, commit an act of sexual harassment? Reason. (3%) (2000 Bar Question)
SUGGESTED ANSWER:
b) No, the Personnel Managers reply to the applicant's question whether she qualifies for the
position she is applying for does not constitute sexual harassment. The Personnel Manager did not
ask for or insinuate a request for a sexual favor in return for a favorable action on her application
for a job. But the Manager’s statement may be offensive if attire or physical look is not a criterion
for the job being applied for.

ALTERNATIVE ANSWER:
(b) Yes. The remarks would result in an offensive or hostle environment for the employee.
Moreover, the remarks did not give due regard to the applicants' feelings and it is a chauvinistic
disdain of her honor, justifying the finding of sexual harassment. (Villarama v. NLRC, 236 SCRA 280
(1994)].

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K. Employment of Minors (Labor Code and R.A. No. 7678, R.A. No. 9231)
Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
xxx
[b] Employment of children below fifteen (15) years of age in any public or
private establishment is absolutely prohibited.
SUGGESTED ANSWER:
False. Children below fifteen (15) years of age (can be employed) “when he/she works
directly under the sole responsibility of his/her parents or guardian, and his employment does not
in any way interfere with his schooling.”

Q: Determine whether the following minors should be prohibited from being hired and from
performing their respective duties indicated hereunder: 5% (2006 Bar Question)
1. A 17-year old boy working as a miner at the Walwaldi Mining Corporation.
SUGGESTED ANSWER:
Yes, he should be prohibited from being hired and from performing the duties of a miner
because such constitutes hazardous work under D.O. No. 04 Series of 1999. Art. 139 (c) of the Labor
Code expressly prohibits the employment of persons below 18 years of age in an undertaking which
is hazardous or deleterious in nature as determined by the Secretary of Labor.
2. An 11-year old boy who is an accomplished singer and performer in different
parts of the country.
SUGGESTED ANSWER:
No, he should not be prohibited from being hired and from performing as a singer. Under
Art. VIII Sec. 12 par. 2 of RA 7610 as amended by RA 7658, this constitutes an exception to the
general prohibition against the employment of children below 15 years of age, provided that the
following requirements are strictly complied with: (a) the employer shall ensure the protection,
health, safety and morals of the child; (b) the employer shall institute measures to prevent the
child’s exploitation or discrimination taking into account the system and level of remuneration, and
the duration and arrangement of working time; and (c) the employer shall formulate and
implement, subject to the approval and supervision of competent authorities, a continuing program
for training and skill acquisition of the child. Moreover, the child must be directly under the sole
responsibility of his parents or guardian and his employment should not in any way interfere with
his schooling.
3. A 15-year old girl working as a library assistant in a girls’ high school.
SUGGESTED ANSWER:
No, she should not be prohibited from working as a library assistant because the
prohibition in the Labor Code against employment of persons below 18 years of age merely
pertains to employment in an undertaking which is hazardous or deleterious in nature as identified
in the guidelines issued by the DOLE Secretary. Working as a library assistant is not one of
undertakings identified to be hazardous under D.O. No. 04 Series of 1999.
4. A 16-year old girl working as a model promoting alcoholic beverages.

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SUGGESTED ANSWER:
Yes, she should be prohibited from working as a model promoting alcoholic beverages. RA
7610 categorically prohibits the employment of child models in all commercials or advertisements
promoting alcoholic beverages and intoxicating drinks, among other things.
5. A 17 -year old boy working as dealer in a casino
SUGGESTED ANSWER:
Yes, he should be prohibited from working as a dealer in a casino, because Art. 140 of the
Labor Code prohibits the employment of persons below 18 years of age in an undertaking which is
hazardous or deleterious in nature as identified in the guidelines issued by the DOLE Secretary.
Working as a dealer in a casino is classified as hazardous under D.O. No. 04 Series of 1999 as it
exposes children to physical, psychological or sexual abuses.

Q: Discuss the statutory restrictions on the employment of minors? (2007 Bar Question)
SUGGESTED ANSWER:
Article 140 of the Labor Code provides that employers shall not discriminate against any person in
respect to terms and conditions of employment on account of his age.
The employer is duty-bound to submit a report to DOLE of all children under his employ, with a
separate report on children found to be handicapped after a conduct of medical examination.
Moreover, an employer in any commercial, industrial, or agricultural establishment or enterprise is
required to keep a register of all children under his employ, indicating therein their respective
dates of birth; and a separate file on written consent of their respective parents/guardians, another
file for their educational and medical certificates, and a separate file for special work permits issued
by Secretary of DOLE. For children employed as domestic, the head of the family shall give the
domestic an opportunity to complete at least elementary education. (Arts. 110, 108, and 109, PD
603 of the Revised Penal Code)
Art. 272 provides that no person shall retain a minor in service against his will, in payment of a debt
incurred by an ascendant, guardian or person entrusted with the custody of the said minor.
Art. 278 enumerates various acts of exploitations of minors prohibited under the law, to wit:
1. Any person who shall cause any boy or girl under 16 years of age to perform any
dangerous feat of balancing physical strength or contortion.
2. Any person who, being an acrobat, gymnast, rope-walker, diver, wild animal tamer or
circus manager or engaged in a similar calling, shall employ in exhibitions of these kinds
of children under 16 years of age who are not his children or descendants.
3. Any person engaged in any of the callings enumerated in the next paragraph who shall
employ any descendant of his under 12 years of age in such dangerous exhibitions.
4. Any ascendant, guardian, teacher or person entrusted in any capacity with the care of a
child under 16 years of age, who shall deliver such child graciously to any person
following any of the callings enumerated in par. 2 hereof, or to any habitual vagrant or
beggar.

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PD 603: Child and Youth Welfare Code
Art. 107 of Child and Youth Welfare Code provides that children below 16 years of age may only be
employed to perform light work which is not harmful to their safety, health or normal development,
and which is not prejudicial to their studies.
RA 9231, amending RA 6710
RA 6710 included a provision allowing a minor below 15 years of age to participate in public
entertainment or information through cinema, theater, radio or television, provided the contract is
concluded by the child’s parents or legal guardian, with the express agreement of the child, and
approval of DOLE. The employer is charged to secure a work permit for the child with DOLE prior
to engaging the child to work. The employer is also required to: (a) ensure the protection, health,
safety, morals and normal development of the child; (b) institute measures to prevent the child’s
exploitation and discrimination taking into account the system and level of remuneration, and the
duration and arrangement of working time; and (c) formulate and implement a continuing program
for training and skills acquisition of the child.
The Department of Education is charged to promulgate a course design under its non-formal
program aimed at promoting the intellectual, moral and vocational efficiency to working children
who have not undergone or finished elementary or secondary education.

Q: You were asked by 3 paint manufacturing company regarding the possible employment as
a mixer of a person, aged seventeen (17), who shall be directly under the care of the section
supervisor. What advice would you give? Explain briefly. (2%)
SUGGESTED ANSWER:
I will advise the paint manufacturing company that it cannot hire a person who is aged seventeen
(17). Art. 139 (c) of the Labor Code provides that a person below eighteen (18) years of age shall
not be allowed to work in an undertaking which is hazardous or deleterious in nature as
determined by the Secretary of Labor. Paint manufacturing has been classified by the Secretary of
Labor as a hazardous work.

Q: A spinster school teacher took pity on one of her pupils, a robust and precocious 12-year
old boy whose poor family could barely afford the cost of his schooling. She lives alone at her
house near the school after her housemaid left. In the afternoon, she lets the boy do various
chores such as cleaning, fetching water and all kinds of errands after school hours. She gives
him rice and P30.00 before the boy goes home at 7:00 every night. The school principal
learned about it and charged her with violating the law which prohibits the employment of
children below 15 years of age. In her defense, the teacher stated that the work performed
by her pupil is not hazardous and she invoked the exception provided in the Department
Order of DOLE for the engagement of persons in domestic and household service.
Is her defense tenable? Reason. (5%) (2005 Bar Question)
SUGGESTED ANSWER:
No, her defense is not tenable. Under Article 139 of the Labor Code on "minimum employable age",
no child below 15"years of age shall be employed except when he works directly under the sole
responsibility of his parents or guardian, the provisions of the alleged Department Order of DOLE to
the contrary notwithstanding. A mere Department Order cannot prevail over the express
prohibitory provisions of the Labor Code.

70
[Note: Sec. 3, RA9231 allows a child below 15 years of age to work for not more than 20 hours a
week; provided, that the work shall not be more than four (4) hours at any given day; provided.
further, that he does not work between 8 o'clock in the evening and 6 o'clock in the morning of the
following day; and provided, finally, that the work is not hazardous or deleterious to his health or
morals. THIS IS A RECENT LAW APPROVED ON JULY 28, 2003, which is beyond the cut-off period of
the Bar Exams]

L. Househelpers (Labor Code as amended by R.A. No. 7655, An Act Increasing the Minimum
Wage of Househelpers; see also – Household Service under the Civil Code)
Q: Albert, a 40-year old employer, asked his domestic helper, Inday, to give him a private
massage. When Inday refused, Albert showed her Article 141 of the Labor Code, which says
that one of the duties of a domestic helper is to minister to the employer’s personal comfort
and convenience.
[a] Is Inday’s refusal tenable? Explain. (3%) (2009 Bar Question)
xxx
SUGGESTED ANSWER:
Yes. Inday’s refusal to give her employer a “private massage” is in accordance with law because the
nature of the work of a domestic worker must be in connection with household chores. Massaging
is not a domestic work.

Q: May a househelp be assigned to non-household work? (2007 BarQuestion)

SUGGESTED ANSWER:
A househelp may be assigned to non-household work' but a househelper assigned to work
in a commercial, industrial or agricultural enterprise should have a wage or salary rate not lower
than that provided for agricultural or non-agricultural workers as prescribed by law.

FIRST ALTERNATIVE ANSWER:

No. Pursuant to Article 141 of the Labor Code, a househelper is defined as a person who renders
domestic or household services exclusively to a household employer. “Domestic or household
service” is defined as service in the employer’s home, which is usually necessary or desirable for the
maintenance and enjoyment thereof, and includes ministering to the personal comfort and
convenience of the members of the employer’s household, including services of family drivers.
(Rule XIII, Section 1(b), Book 3 of the Labor Code)
A househelper cannot be assigned non-household work because to do so would place that person
outside the ambit of the special Labor Code provisions on househelpers. In such a situation, terms
and conditions of employment would differ.

Q: Inday was employed by mining company X to perform laundry service at its staffhouse.
While attending to her assigned task, she slipped and hit her back on a stone. Unable to
continue with her work, she was permitted to go on leave for medication, but thereafter she
was not allowed to return to work. She filed a complaint for illegal dismissal but her
employer X contended that Indav was not a regular employee but a mere househelp. Decide.

71
(2007 Bar Question)
SUGGESTED ANSWER:
Inday is a regular employee. Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended,
the terms “househelper” or “domestic servant” are defined as follows:
“The term “househelper as used herein is synonymous to the term “domestic servant” and shall
refer to any person, whether male or female, who renders services in and about the employer’s
home and which services are usually necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family.”
The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of
the employer’s family. The definition cannot be interpreted to include househelp or laundrywomen
working in staffhouses of a company, like Inday who attends to the needs of the company’s guest
and other persons availing of said facilities. The criteria is the personal comfort and enjoyment of
the family of the employer in the home of said employer. While it may be true that the nature of the
work of a househelper, domestic servant or laundrywoman in a home or in a company staffhouse
may be similar in nature, the difference in their circumstances is that in the former instance they
are actually serving the family while in the latter case, whether it is a corporation or a single
proprietorship engaged in business or industry or any other agricultural or similar pursuit, service
is being rendered in the staffhouses or within he premises of the business of the employer. In such
instance, they are employees of the company or employed in the business concerned entitled to the
privileges of a regular employee.
The mere fact that the househelper or domestic servant is working within the premises of the
business of the employer and in relation to or in connection with its business, as in its staffhouses
for its guest or even for its officers and employees, warrants the conclusion that such househelper
or domestic servant is and should be considered as a regular employee of the employer and not as a
mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of
the Labor Code, as amended. (Apex Mining Company, Inc. v. NLRC, 196 SCRA 251(1991]).

Q: Nova Banking Corporation has a rest house and recreational facility in the highlands of
'Tagaytay City for the use of its top executives and corporate clients. The rest house staff
includes a caretaker, two cooks and laundrywoman.
All of them are reported to the Social Security System as domestic or household employees
of the rest house and recreational facility and not of the bank. Can the bank legally consider
the caretaker, cooks and laundrywoman as domestic employees of the rest house and not of
the bank? (3%)
SUGGESTED ANSWER:
No, they are not domestic employees. They are bank employees because the rest house and
recreational facility are business facilities as they are for use of the top executives and clients of the
bank. [Art. 141, Labor Code; Apex Mining Co., Inc. v. NLRC, 196 SCRA 251 (1991)-, Traders Royal
Bank v. NLRC, G.R. No. 127864, December 22, 19991.

Q: The weekly work schedule of a driver is as follows:

Monday, Wednesday, Friday - Drive the family car to bring and fetch the children to and from
school.

72
Tuesday, Thursday, Saturday - Drive the family van to fetch merchandise from suppliers and
deliver the same to a boutique in a mall owned by the family.
Is the driver a househelper? [3%)
The same driver claims that for work performed on Tuesday. Thursday and Saturday, he
should be paid the minimum daily wage of a driver of a commercial establishment.
Is the claim of the driver valid? [2%] (1998 Bar Question)
SUGGESTED ANSWER:
The driver is a househelper. A person is a househelpers or is engaged in domestic or household
service if he/she renders services in the employer's home which are usually necessary or desirable
for the maintenance and enjoyment thereof and includes ministering to the personal comfort and
convenience of the members of the employer's household including the services of family drivers.
A family driver who drives the family van to fetch merchandise from suppliers and delivers the
same to a boutique in a mall owned by the family for whom he works should be paid the minimum
daily wage of a driver in a commercial establishment.
The Labor Code (in Article 143) provides that no househelper shall be assigned to work in a
commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided
by law for agricultural or non-agricultural workers.

Q: Rosa Cartagena, a 14-year-old orphan, was hired as a domestic helper by Elvira Pacheco, a
friend of Rosa’s aunt, who could no longer support her. The aunt and Elvira agreed that Rosa
would serve the Pachecos for three years, with the clear understanding that the Pachecos
would see her through high school.
The Pachecos never sent Rosa to high school. After two years of unfulfilled promises for her
education, Rosa went back to her aunt, who confronted Elvira about her breach of their
agreement. The aunt demanded that Rosa be paid the cash equivalent of the three years of
high school education that Rosa was denied. Elvira contended that Rosa quit before the end
of the fixed employment period and, therefore, is not entitled to anything. The aunt filed a
complaint against the Pachecos.
If you were the labor arbiter, how would you decide the case? (1987 Bar Question)

Answer:
As the Labor Arbiter, assuming Rosa’s aunt as her guardian, I will hold that Rosa’s quitting was
justifiable and that the Pachecos should pay the cash equivalent of at least two (2) years of high
school education.
Rosa’s quitting is justifiable. The Labor Code (in Art. 142) provides that the original contract of
domestic service shall not last for more than two (2) years. The original contract of Rosa with the
Pachecos was fixed for three (3) years. Thus, this contract should be considered as only for two (2)
years. Rosa, therefore, may not be considered as terminating the contract before the expiration of
its term. She left after two (2) years.
She also left for a justifiable reason. Her employers were not complying with what they agreed they
shall do under the contract, namely, to see her through high school.
Under the Labor Code (in Art. 146), it is the legal obligation of the employer to give to his

73
househelper who is under the age of eighteen (18) years (Rosa is fourteen (14) years old) an
opportunity for at least elementary education. Further, the Code (in the same Art.) provides that the
cost of such education shall be part of the househelpers compensation, unless there is a stipulation
to the contrary.
But what Rosa here is claiming is the cost of high school and not just elementary education. There is
no law prohibiting the employer from obligating himself to give more than just elementary
education, which the employer did in the case. Thus, the employer should comply with what he
agreed to do under the contract he entered into.

M. Employment of Homeworkers
Q: Albert, a 40-year old employer, asked his domestic helper, Inday, to give him a private
massage. When Inday refused, Albert showed her Article 141 of the Labor Code, which says
that one of the duties of a domestic helper is to minister to the employer’s personal comfort
and convenience.
xxx
[b] Distinguish briefly, but clearly, a “househelper” from a “homeworker.” (2%) (2009
Bar Question)
SUGGESTED ANSWER:
Art. 141. - Domestic Helper - one who performs services in the employers house which is usually
necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the
personal comfort and convenience of the members of the employer’s household, including the
services of a family driver.
Art. 153.- Homeworker -is an industrial worker who works in his/her home processing raw
materials into finished products for an employer. It is a decentralized form of production with very
limited supervision or regulation of methods of work.

Q: Mrs. Josie Juan is the confidential secretary of the Chairman of the Board of the bank. She
is presently on maternity leave. In an arrangement where the Chairman of the Board can still
have access to her services, the bank allows her to work in her residence during her leave.
For this purpose, the bank installed a fax machine in her residence, and gave her a cellphone
and a beeper. Is Mrs. Juan a homeworker under the law? Explain. (3%) (2000 Bar Question)
SUGGESTED ANSWER:
No, she is actually an office worker. She is not an industrial homeworker who accepts work
to be fabricated or processed at home for a contractor, which work, when finished, will be returned
to or repurchased by said contractor. [Art. 155, Labor Code)

Q: Ngipin Toothpaste Co., Inc. manufactured and sold toothpaste in the market.' It
considered labor contracting as a cost reduction move. The plan was for the company to con-
tinue manufacturing the toothpaste in its facilities up to the stage where it was already
packed in labelled plastic tubes and capped. These would then be taken to the homes of
women in a militant squatter area near the plant. The women would be given the filled tubes
and flat, die-cut cardboard pieces with indented folds printed with the label. These “flats”
cost P0.30 per piece. The women would form the boxes, apply paste to one side so it would

74
hold together as a box, and then put the filled tubes into it. Management thought it was a
good idea as it would give employment and help bring the women into the money economy.
The job was not hard to learn. The women would do all the work at home in their free time.
The company’s personnel staff took up the concept with the leader of the squatter women’s
group who agreed it was a good idea. They showed her how the job was to be done. She
learned the work immediately. She said that the women would be willing to accept the home
work, but they would insist on being paid in accord with the law. She also told the company’s
representatives that to help reduce their headaches in the operation, she was willing to be
their main contractor and she would sub-contract the work to her neighbors. She also said
that she wants that the housewives whom she engages be allowed to use the labor of the
children in their homes to increase the number of the boxes that they can assemble, and the
tubes that they can box.
Management was concerned about boxes that would be very dirty as these would be “spoils”.
They had no idea what sort of legal problems they should resolve, and compensation
arrangements they must make with the women or the lady volunteering to be the main
contractor, so they consulted you as a lawyer. (1988 Bar Question)
Management asks for your advice on the following matters:
(a) Would the women who are engaged to form the boxes and pack toothpaste tubes into
them be considered employees of the company? Reasons.
(b) Can the woman workers use their children regardless of age, to help them perform
their tasks? Reasons.
(c) May the company deduct spoilage costs ofT0.30 per very dirty box and the value of
tubes lost or not accounted for it is provided for in the contract for piece work?
Answer:
(a) The more specific name of the women here could be “industrial homeworkers.” In here, the
workers receives articles or materials to be processed or fabricated in or about a house and
thereafter, these articles and materials are returned after they processed or fabricated. (Art. 153).
As such industrial homeworkers, they are not employee because their so-called employer does not
have control over those they (the industrial homeworkers) will do their work. But the Labor Code
(Art. 154) provides that regulations or orders should be issued to assure the minimum terms and
conditions of employment applicable to industrial homeworkers.
(b) If the child here works directly under the sole responsibility of his parent or guardians, and
their employment does not in any way interfere with their schooling, they could work regardless of
their young age.
(c) The Labor Code (in Art. 114) provides that no employer shall require his worker to make
deposits from which deductions shall be made for the reimbursement of loss or damage to tools,
materials or equipment supplied by the employer, except where the employer is engaged in such
trades, occupation or business where the practice of making deduction or requiring deposits is a
recognized one or is necessary or desirable as determined by the Secretary of Labor in appropriate
rules and regulations. Thus, if the Secretary of Labor has adopted the necessary rules and
regulations mentioned above, the deduction for spoilage will be legal.

75
N. Apprentices and Learners
O. Persons with disability (R.A. No. 7277, as amended by R.A. No. 9442)
a. Definition
Q: Ana Cruz has a low IQ. She has to be told at least three times before she understands her
daily work assignment. However, her work output is at least equal to the output of the least
efficient worker in her work section. Is Ms. Cruz a handicapped worker? Explain. (5%) (2000
Bar Question)
SUGGESTED ANSWER:
No, low IQ or low efficiency does not make the worker “handicapped” in the contemplation of law.
Handicap means such physical or mental infirmity that impairs capacity to work. The deficiency
may also be due to age or injury. (Art. 78, Labor Code).

b. Rights of persons with disability

Q: A lady worker was born with a physical deformity, specifically, hard of hearing, speech
impaired and color blind. However, these deficiencies do not impair her working ability.
Can the employer classify the lady worker as a handicapped worker so that her daily wage
will only be seventy-five percent (75%) of the applicable daily minimum wage? [5%]
SUGGESTED ANSWER:
No, the employer cannot classify the lady worker as a handicapped worker because according to the
facts in the question, her deficiencies do not impair her working ability. If her earning capacity is
therefore not also impaired, then she cannot be considered a handicapped worker.
Because of the above fact, the employer shall not pay her less than the applicable daily minimum
wage. (See Article 78 of the Labor Code)

c. Prohibition on discrimination against persons with disability

Q: For humanitarian reasons, a bank hired several handicapped workers to count and sort
out currencies. Their employment contract was for six (6) months. The bank terminated
their employment on the ground that their contract has expired prompting them to file with
the Labor Arbiter a complaint for illegal dismissal. Will their action prosper? 5% (2006 Bar
Question)
SUGGESTED ANSWER:
Yes, their action will prosper. They are doing necessary or desirable jobs and are qualified for the
job, and therefore they should be treated like other qualified able-bodied employees (Bernardo v.
NLRC and Far East Bank, 310 SCRA 186 [1999]). They cannot be terminated simply because of the
expiration of the contract. The nature of their work gives them the status of regular employees.
What determines regularity is not the employment contract but the nature of the job (A.M. Oreta
and Co. Inc. v. NLRC, 176 SCRA 218 [1989]).

ANOTHER SUGGESTED ANSWER:

No. their action will not prosper. The employment contract in this case is an example of a fixed-term

76
employment contract, i.e. one to which the parties by free choice have assigned a specific date of
termination. It is not per se illegal or against public policy. To be valid, it must be shown that the
fixed period was knowingly and voluntarily agreed upon by the parties. There should have been no
force, duress, or improper pressure brought to bear upon the employee. Neither should there be
any other circumstance that vitiates the employee’s consent. Moreover, the employer and employee
must have dealt with each other on more or less equal terms with no moral dominance being
exercised by the employer over the employee. Should the contract in the case at bar be shown to
comply with the aforementioned requirements, the action for illegal dismissal will not prosper;
otherwise, it should (Brent School v. Zamora, 181 SCRA 702 [1990]).

ANOTHER SUGGESTED ANSWER:

Yes, the employer can classify the lady worker as a handicapped worker because her earning
capacity maybe impaired by her physical deficiencies. As such handicapped worker, the employer
may enter into an employment agreement with her whereby the rate to be paid to her may be les*
than the applicable legal minimum wage but not less than 75% of such wage.

IV. Termination of Employment

Q: FACTS: International Motors Corporation (IMC) undertook a reorganization of the
company and right-sizing of its personnel complement due to the current financial crisis.
The affected employees were given the option to resign with corresponding generous
benefits attending such option. The said employees opted to resignation on account of these
negotiated benefits; and after receipt of which, they executed quitclaims in favor of IMC.
Immediately thereafter, the employees voluntarily resigned for valuable consideration and
that, in any case, they have executed quitclaims in favor of the company. The employees,
however, claimed that they were forced to resign, and that they executed the quitclaims only
because of dire necessity. (1999 Bar Question)
1. Is the company guilty of illegal dismissal? Why?(3%)
SUGGESTED ANSWER:
NO. The company is not guilty of illegal dismissal since the facts clearly indicate that the “employees
were given the option to resign with corresponding generous benefits attending such option” and
that these employees "opted for resignation on account of these negotiated benefits”. Nothing in the
facts indicate that their consent to the waiver of benefits under the Labor Code was vitiated by
fraud, violence, undue influence or any other vice or defect.

ALTERNATIVE ANSWER:
The company is not guilty of illegal dismissal.
According to the facts of the case, the employees opted to resign voluntarily, considering the
generous benefits given to them in connection with such resignation.
Voluntary resignation cannot be considered as illegal dismissal. (Samaniego v. NLRC, 198 SCRA
111)

2. Can the quitclaim be annulled on the ground of “dire necessity”? Why? (2%)

77
SUGGESTED ANSWER:
A quitclaim case can be annulled on the ground of its being entered into involuntarily by employees
because of “dire necessity”. Thus, if it was dire necessity that forced a worker tc sign a quitclaim
even if the amount of money given to him by the employer was very much less than what the
workers was entitled to receive, then the quitclaim was not voluntary, and thus, the said quitclaim
Is null and void. In a case (Veloso v. DOLE, 200 SCRA 201) the Supreme Court held that “dire
necessity" is not an acceptable ground for annulling the releases, especially since it has not been
shown that the employees had been forced to execute them. It has not been proven that the
considerations for the quitclaims were unconscionably low and that the petitioners had been
tricked into accepting them.

A. Employer-employee relationship
Q: What are the rights of an employer and an employee? (1996 Bar Question)
Answer:
The Constitution in Art. XIII, Section 3 provides for the following rights of employers and
employees:
A. Employers Right to a reasonable return on investments, and to expansion and growth.
5. To a just share in the fruits of production;
6. Right to self organization, collective bargaining and negotiations and peaceful concerted ac-
tivities, including the right to strike in accordance with law;
7. To security of tenure, humane conditions of work, and a living wage; and
8. To participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.

Alternative Answer:
In an employer-employee relationship, it is the right of the employer to use the services of an
employee who is under his (employer’s) orders as regards the employment. On the other hand, it is
the right of the employee to receive compensation for the services he renders for the employer.

Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
[a] The relations between employer and employee are purely contractual in nature. (2%)
(2010 Bar Question)
SUGGESTED ANSWER:
FALSE. Some aspects of the relations between employer and employee are determined by certain
labor standards.

ALTERNATIVE ANSWER:
FALSE. The Constitution, Labor Code, Civil Code and other social legislations are replete with
provisions that define employment relationship even without contract, with the intention of

78
insuring that all the rights of labor are protected.
Article 1700 of the Civil Code provides that “[T]he relations between capital and labor are not
merely contractual. They are so impressed with public interest that labor contracts must yield to
the common good.”
In Article 106 of the Labor Code, the principal is deemed as a direct employer in labor-only
contracting, despite absence of contractual relationship between the worker and the principal
reduced in writing.
Equity likewise affords the aggrieved party relief in a case where an agent was given apparent
authority by the employer to represent it to third persons, such as in a relationship between
hospitals and doctors practicing medicine in its establishment (Nogtales v. Capitol Medical Center,
511 SCRA 204 [2006]).

Q: Banco de Manila and the Ang Husay Janitorial and Pest Control Agency entered Into an
Independent Contractor Agreement with the usual stipulations; specifically, the absence of
employer-employee relationship, and the relief from liability clauses. Can the Bank, as a
client, and the Agency, as an independent contractor, stipulate that no employer-employee
relationship exists between the Bank and the employees of the Agency who may be assigned
to work in the Bank? Reason. (5%) (2000 Bar Question)
SUGGESTED ANSWER:
They can so stipulate if the relationship is indeed job contracting. Yet the stipulation cannot prevail
over the facts and the laws. The existence of employer-employee relationship is determined by facts
and law and not by stipulation of the parties. [Insular Life Assurance Co., Ltd. u. NLRC, 287 SCRA
476 (1998); Tabas v. California Manufacturing Co.. Inc.. 169 SCRA 497 (1989)).

ALTERNATIVE ANSWER:
Yes, they can stipulate provided that the contract of independent contractor is valid in accordance
with Art. 106 of the Labor Code.

Q: Richie, a driver-mechanic, was recruited by Supreme Recruiters (SR) and its principal,
Mideast Recruitment Agency (MRA), to work in Qatar for a period of two (2) years.
However, soon after the contract was approved by POEA, MRA advised SR to forego Richie’s
deployment because it had already hired another Filipino driver-mechanic, who had just
completed his contract in Qatar. Aggrieved, Richie filed with the NLRC a complaint against SR
and MRA for damages corresponding to his two years’ salary under the POEA- approved
contract.
SR and MRA traversed Richie’s complaint, raising the following arguments:
xxx
[b] Because Richie was not able to leave for Qatar, no employer-employee relationship was
established between them; (2%) and
xxx
Rule on the validity of the foregoing arguments with reasons.

79
SUGGESTED ANSWER:
An employer-employee relationship already existed between Richie and MRA. MRA and SR, as an
agent of MRA, already approved and selected and engaged the services of Richie.

Q: What property right is conferred upon an employee once there is an employer-employee

relationship? Discuss briefly. 5% (2006 Bar Question)
SUGGESTED ANSWER:
The right to employment and the right to continue in one's employment constitute the
property right conferred upon an employee once there is an employer- employee relationship.
Thus, the very important constitutional right that "no person may be deprived of life, liberty or
property without due process of law” is violated when an employer terminates the employment of
an employee without due process of law because said employment is a property right of the latter.

ANOTHER SUGGESTED ANSWER:

In Callanta. v. NLRC, 145 SCRA 270 (1986), the Court ruled: “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.”

Q: Clean Manpower Inc. (CMI) had provided janitorial services to the National Economic
Development Authority (NEDA) since April 1988. Its service contract was renewed every
three months. However, in the bidding held on July 1992, CMI was disqualified and excluded.
In 1993, six janitors of CMI formerly assigned at NEDA filed a complaint for underpayment,
of wages. Both CMI and NEDA were impleaded as respondents for failure to comply with NCR
Wage Orders Nos. 01 and 02, which took effect on November 1, 1990 and January 2, 1992,
respectively.
Should NEDA, a government agency subject to budgetary constraints, be held liable
solidarity with CMI for the payment of salary differentials due the complainants? Cite the
legal basis of your answer. (5%) (2005 Bar Question)
SUGGESTED ANSWER:
NEDA shall be held solidarity liable with CMI for the payment of salary differentials due to the complainants,
because NEDA is the indirect employer of said complainants. The Labor Code provides that xxx (A) person,
partnership, association or corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project" xxx “shall be jointly and severally liable with
his contractor or subcontractor to such employees (of the contractor or subcontractor) to the extent of work
performed under the contract xxx," (Arts. 106 and 107, Labor Code)

Q: Ruben Padilla entered into a written agreement with Gomburza College to work for the
latter in exchange for the privilege of studying in said institution. Ruben's work was
confined to keeping clean the lavatory facilities of the school. One schoo lday, Ruben got into
a fistfight with a classmate, Victor Monteverde, as a result of which the latter sustained a
fractured arm

80
Victor Monteverde held a civil case for damages against Ruben Padilla, impleading
Gomburza College due to the latter's alleged liability as an employer of Ruben Padilla.
Under the circumstances, could Gomburza College be held liable by Victor Monteverde as an
employer of Ruben Padilla? (1997 Bar Question)
Answer:
Gomburza College is not liable for the acts of Ruben Padilla because there is no employer-
employee relationship between them. As provided in the Rules and Regulations implementing the
Labor Code "there is no employer-employee relationship between students on one hand, and
schools, colleges, or universities on the other, where students work with the latter in exchange for
the privilege to study free of charge, provided the students are given real opportunity, including
such facilities as may be reasonable and necessary to finish their chosen courses under such
arrangement."

Alternative Answer:
Gomburza College canbe held liable by Victor Monteverde as an employer of Ruben Padilla.
Applying the control test, the College is the employer of Padilla because in the latter's work of
keeping clean the lavatory facilities of the school, he is under the control of the College as regards
his employment.
However, Ruben Padilla was not acting within his assigned tasks. Art. 2180. New Civil Code
provides: The obligation imposed by Art. 2176 (Quasi-delicts) is demand- able xxx (also from)
employers (who) shall be liable for the damages caused by their employees xxx acting within the
scope of their assigned tasks, even though the former are not engaged in any business or industry."
It could be argued that Ruben Padilla was not acting within the scope of his assigned tasks; thus, his
employer, Gomburza College is not liable.

Q: FACTS: Teofilo Lacson was one of more than one hundred (100) employees who were
terminated from employment due to the closure of LBM Construction Corporation (LBM).
LBM was a sister company of Lastimoso Construction. Inc. and RL Realty & Development
Corporation. All three (3) entitles formed what came to be known as the Lastimoso Group of
Companies. The three (3) corporations were owned and controlled by members of the
Lastimoso Family: their incorporators and directors all belonged to the Lastimoso family.
The three (3) corporations were engaged in the same line of business, under one
management, and used the same equipment including manpower services.
Teofilo Lacson and his co-employees filed a complaint with the Labor Arbiter against LBM.
RL Realty and Lastimoso Construction to hold them jointly and severally liable for
backwages and separation pay.
Lastimoso Construction. Inc. and RL Realty & Development Corporation interposed a Motion
to dismiss contending that they are juridical entities with distinct and separate personalities
from LBM Construct ion Corporation and therefore, they cannot be held jointly and severally
liable for the money claims of workers who are not their employees.
Rule on the Motion to Dismiss. Should it be granted or denied? Why? (5%) (1999 Bar
Question)
SUGGESTED ANSWER:

81
It is very clear that even If LBM Construction Company, Lastimoso Construction Company, Inc. and
RL Realty & Development Corporation all belong to the Lastimoso family and are engaged In the
same line of business under one management and used the same equipment including manpower
services, these corporations were separate juridical entities.
Thus, only the LBM Construction Corporation is the employer of Teofilo Lacson. The other
corporation do not have any employer-employee relations with Lacson.
The case in question does not include any fact that would justify piercing the veil of corporate
fiction of the other corporations in order to protect the rights of workers.
In a case (Concept Builders, Inc. v. NLRC, 257 SCRA 149), the Supreme Court ruled that it is a
fundamental principle of corporation law that a corporation is an entity separate and distinct from
its stockholders and from other corporations to which it maybe connected.
But this separate and distinct personality of a corporation is merely a fiction created by law for
convenience and to promote justice. So, when the notion of separate juridical personality is used to
defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to
defeat the labor laws, this separate personality of the corporation may be disregarded or the veil of
corporate fiction pierced.

ALTERNATIVE ANSWER:
Motion to Dismiss should be denied. In the case at bar, the Labor Arbiter would be justified in
piercing the corporate veil and considering the three (3) corporations as one and the same entity as
the employer of Teofilo Lacson because based on the facts "the three corporations were owned and
controlled by members of the Lstimoso family; their incorporators and directors all belonged to the
Lastimoso family. The three (3) corporations were engaged in the same line of business, under one
management and used the same equipment including manpower services.” The facts show that "the
notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an association of persons, or in the case of two
corporations, will merge them into one."

Q: Is it required that an employer-employee relationship exists between an employer and

the employees in the appropriate bargaining unit before a certification election can be
ordered? If so why? (5%) (1998 Bar Question)
SUGGESTED ANSWER:
Yes, it is required that an employer-employee relationship is existing between the employer and the
employees in the appropriate bargaining unit before a certification election can be ordered for the
simple reason that a certification election is held for the purpose of determining which labor
organization shall be the exclusive collective bargaining representative of the employees in an
appropriate bargaining unit. There could be no collective bargaining between persons who do not
have any employer-employee relationship.

ANOTHER SUGGESTED ANSWER:

Yea, the Supreme Court has ruled that the existence of an employer-employee relationship is
required before a certification election can be held.
The Supreme Court in Allied Force Waters Union v. Compania Maritima, 19 SCRA 258 (1967),

82
ruled-
xxx There being no employer-employee relationship between the parties disputants, there is
neither “a duty to bargain collectively" to speak of. And there being no such duty, to hold
certification elections would be pointless. There is no reason to select a representative to negotiate
when there can be no negotiations in the first place. Where there is no duty to bargain collectively,
it is not proper to hold certification elections in connection therewith.

Q: Mr. Aristedes Epol was elected as President, Chief Executive Officer, and Board Chairman
of Transnational Insurance Corp. on May 31, 1988. At that time, he owned 51% of the
company’s voting stock. Under the By-Laws of the company he had a one-year term of office
from June 1, 1988 to June 1, 1989. On July 15, 1988, Mr. Ramos agreed with the other
stockholders to re-organize the composition of officers by having the Board declare all
positions of officers vacant, elect a new set of officers, with himself as President and Chief
Executive. Mr. Epol would be re-elected only to the ceremonial post of Board Chairman, Mr.
Epol got a Notice of Special Meeting of the Board to elect a new set of corporate officers. He
consults you as lawyer.
He asks if he is covered by the Labor Code and Constitutional guarantees of security of
tenure of workers. He theorizes that since he was elected for a fixed one-year term, he
enjoys tenure for the term.
(a) What is you view? Reasons.
Mr. Epol, despite your opinion, observes that the Constitutional issue was not raised in those
cases. He is adamant that you seek recourse to prevent his removal as President and Chief
Executive Officer before his term expires.
(b) Where will you file the case?
Answer:
(a) Mr. Epol is not covered by the Labor Code and Constitutional guarantees of security of
tenure or workers. He is not an employee. He is a corporate officer and his tenure is subject to the
Constitution and by-laws of the corporation and of the Corporation Code.
(b) I will file the case before the Securities and Exchange Commission which has jurisdiction
over the case. Whether or not Mr. Ramos and the other stockholders legally re-organized out Mr.
Epol is an intra-corporate dispute. Since it is an intra-corporate dispute which is involved, it is the
SEC which has jurisdiction.

1. Four-fold test
Q: When does an employer-employee relationship exist? (1996 Bar Question)
Answer:
The Supreme Court, in a long line of decisions has consistently ruled that the following are the
elements of an employer-employee relationship:
a. Selection and engagement of the employee:
b. Payment of wages;
c. Power of discipline and dismissal; and

83
d. Power to control the employee’s conduct as regards his employment.

Alternative Answer:
An employer-employee relationship exists when a person (an employer) who carries on a business,
trade, industry, undertaking, or activity of any kind uses the services of another person (an
employee) who, receiving compensation, is under the employer's orders as regards the
employment.

(a) The receiver could be considered the “employer” of GFC’s workers. According to the Labor
Code (in Art. 212(c) an “employer” includes any person acting in the interest of an employer,
directly or indirectly.” The receiver here is acting in the interest of GFC.

Q: The Smarly Food Company is engaged in the restaurant and catering business. Having
invested a substantial amount of money to establish its business, the company decided to
avoid its legal responsibilities in connection with the selection of employees, their social
security and other labor relations problems. To this end, the company engaged the services
of Jack Perez, doing business under the name of San Jacinto Manpower Agency, to supply it
with cooks, waiters, waitresses, dishwashers, and other workers. Jack Perez does not have a
separate regular business office. He operates his business from his own house. Under this
economic arrangement, Jack Perez pays the wages of the workers assigned to the company
directly and reports said workers to the Social Security System as his own employees. He
charges the Smarty Food Company a monthly fee depending on the number of workers
serving the company. After two years, all the workers assigned by Jack Perez to the company
Joined the United Restaurant Workers Union. Soon thereafter, the labor union sought
recognition from the Smarty Food Company and requested for collective bargaining negotia-
tions. Thereupon, the company terminated its service contract with the San Jacinto
Manpower Agency and prevented the latter's workers from entering the company premises.
To keep its business going, the Smarly Food Company secured its manpower needs from
another service agency. The labor union then filed a complaint for unfair labor practice
under Article 248(a) of the Labor Code against the Smarty Food Company.
Has the Smarty Food Company succeeded in avoiding its labor relations obligations to the
workers of San Jacinto Manpower Agency? Is the company guilty of unfair labor practice?
Give your reasons.
Answer:
Smarty Food Company has not succeeded in avoiding its labor relations obligation to the
workers of San Jacinto Manpower Agency. Under the facts of the case in the question, the cooks,
waiters, waitresses, dishwashers and other workers supplied by San Jacinto Manpower Agency are
employees of Smarty Food Company and not of the Agency because said workers are performing
activities which are directly related to the principal business of Smarty Food Company which is
engaged in the restaurant and catering business. It is also noted that the Agency does not have
substantial capital or investment in the form of tools, equipment machineries and work premises. It

84
does not have a separate regular business office and merely operates its business from the house of
the owner/operator of the Agency. Thus, under the above circumstances, under the Labor Code
(Art. 106) the Agency is engaged in "labor only" contracting arid should therefore be considered
merely as an agent of the employer, meaning Smarty Food Company.
Because of the fact that Smarty Food Company is the employer of the cooks, waiters,
waitresses, dishwashers and other workers, the Company was guilty of unfair labor practice when
it terminated their services by terminating its service contract with the Agency. The Company
thereby discriminated against its workers to discourage membership in any labor organization
which is an unfair labor practice. The Company also committed an unfair labor practice when it
violated its duty to bargain collectively by refusing to meet with the United Workers Restaurant
Workers Union which was organized by the workers of the Company.

Q: The Pizza Corporation (PizCorp) and Ready Supply Cooperative (RSC) entered into a
“service agreement” where RSC, in consideration of service fees to be paid by PizCorp, will
exclusively supply PizCorp with a group of RSC motorcycle- owning cooperative members
who will henceforth perform PizCorp’s pizza delivery service. RSC assumes - under the
agreement - full obligation for the payment of the salaries and other statutory benefits of its
members deployed to PizCorp. The parties also stipulated that there shall be no employer-
employee relationship between PizCorp and the RSC members. However, if PizCorp is
materially prejudiced by any act of the delivery crew that violates PizCorp’s directives and
orders, PizCorp can directly impose disciplinary sanctions on, including the power to
dismiss, the erring RSC member/s.
a) Is the contractual stipulation that there is no employer-employee relationship
binding on labor officials? Why? Explain fully. (3%) (2008 Bar Question)
SUGGESTED ANSWER:
a) The contractual stipulation that there is no employer-employee relationship between
PizCorp and the RSC members is not binding on labor officials because what determines the
existence or non-existence of employer-employee relationship is the actual factual situation
between PizCorp and RSC members and not what is stipulated in the contract.

ANOTHER SUGGESTED ANSWER:

a) The agreement between PizCorp and RSC, that there is, or will not be, an employer-
employee relationship between the RSC motorcycle-owning cooperative members performing
delivery services is not binding on labor officials because “the test of employer-employee
relationship is law and not agreement between the parties” (Insular Life etc., v. NLRC, 287 SCRA
476[1998).

b) Based on the test/s for employer-employee relationship, determine the issue of

who is the employer of the RSC members. (4%) (2008 Bar Question)
SUGGESTED ANSWER:
b) Using the control test, the employer of the RSC members is PizCorp. According to the facts,
the RSC members are supposed to make their deliveries in accordance with PizCorp directives and

85
orders. In addition, the PizCorp can directly impose disciplinary sanction, including the power to
dismiss the RSC members.

Q: Complainants had worked five (5) years as waitresses in a cocktail lounge owned by the
respondent. They did not receive any salary directly from the respondent but shared in all
services charges collected for food and drinks to the extent of 75%. With respondent’s prior
permission, they could sit with and entertain guests inside the establishment and
appropriate for themselves the tips given by guests. After five (5) years, the complainants’
individual shares in the collected service charges dipped to below minimum wage level as a
consequence of the lounge’s marked business decline. Thereupon, complainants asked
respondent to increase their share in the collected service charges to 85%, or the minimum
wage level, whichever is higher.
Respondent terminated the services of the complainants who countered by filing a
consolidated complaint or unlawful dismissal, with prayer for 85% of the collected services
or the minimum wage for the appropriate periods, whichever is higher. Decide. (6%) (2008
Bar Question)
SUGGESTED ANSWER:
The waitresses were employees of the owner of the cocktail lounge. Article 138 of the Labor Code
provides: “Any woman who is permitted or suffered to work, with or without compensation, in any
night club, cocktail lounge, massage clinic, bar or similar establishment, under the effective control
or supervision of the employer for a substantial period of time as determined by the Secretary of
Labor, shall be considered as an employee of such establishment for purposes of labor and social
legislation.”
Thus, the said waitresses are employees with the right to security of tenure and cannot be
dismissed just because they filed complaint against the owner of the cocktail lounge.
And as such waitresses, who are considered employees of the cocktail lounge, they are at the very
least entitled to receive the applicable minimum wage.

ANOTHER SUGGESTED ANSWER:

Complainants are not employees of the cocktail lounge, hence, they are not entitled to coverage of
the Labor Code. There is no finding that they are “under the effective control or supervision of the
employer for a substantial period time as determined by the Secretary of Labor.” The Labor Code
reads
“Art. 138. Classification of certain workers. Any worker who is permitted to work, with or without
compensation, in any night clubs, cocktail lounge, massage clinic, bar or similar establishment,
under the effective control or supervision of the employer for a substantial period of time as
determined by the Secretary of Labor, shall be considered an employee, of such establishment for
purposes of labor and social legislation.”

Q: Don Jose, a widower, owns a big house with a large garden. One day, his househelper and
gardener left after they were scolded. For days, Don Jose, who lives alone in compound to
look for someone who could water the plants in the garden and clean the house. He chanced
upon Mang Kiko on the street and asked him to water the plants and clean the house.

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Without asking any question. Mang Kiko attended to the plants in the garden and cleaned
the house. He finished the work in two days.
a) Is there an employer-employee relationship between Don Jose and Mang Kiko?
xxx
Answer:
There is an employer-employee relationship between Don Jose and Mang Kiko because Mang Kiko,
assuming payment of compensation, was rendering services for Don Jose and was under the orders
of Don Jose as regards employment.
xxx

Q: Metro Grocery Inc. arranged with Mr. Juan Dado, a Barangay Chairman, to provide the
grocery with workers who will work as cashiers, bag boys, shelf counter helpers and
sanitation workers. The grocery will pay Mr. Dado an amount equivalent to the direct and
hidden costs of the wages of each worker assigned, plus ten percent (10%) to cover the
administrative costs related to their arrangement. Mr. Dado, in turn, will pay directly the
workers their wages. As far as the workers are concerned, Mr. Dado is their employer. A
group of concerned workers consulted you if Mr. Dado is really under the law their
employer.
a) How will you analyze the problem in order to formulate your answer? (3%)
b) What is the legal significance, if any, of the question of the concerned workers as to
who is their employer? (3%) (2000 Bar Question)
SUGGESTED ANSWER:
a) I will analyze the problem by applying the four-fold test of employer-employee
relationship. I will examine if Mr. Dado exercises power of control or supervision over the workers’
manner and method of doing their work. Control is the most important factor in examining
employer-employee relationship. The other factors are hiring, payment of wages, and power to
dismiss. I will also examine whether there was job contracting or labor-only contracting.

ALTERNATIVE ANSWER:
a) My analytical framework will be an analysis of the law on Independent contractor and
labor only contracting.
If there is a valid independent contractor situation, Mr. Dado will be the direct employer, and the
Metro Grocery will be the Indirect employer.
If there is a labor-contractor only relationship, the Metro Grocery will be the employer as it directly
hired the employees.

SUGGESTED ANSWER:
b) The legal significance is the determination of employee-employer relationship, which gives
rise to certain rights and obligation of both employer and employee, such as SSS membership, union
membership, security of tenure, etc.

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Q: Zapato Custom-made Shoes, Inc. (ZaCSI) made shoes to customer specification and
repaired them. As a service to customers, a shoe shine stand was operated on its premises.
There were 10 shoe shine boys at the stand. They owned their shoe shine boxes with
cleaning agent polish, brushes, and rags. Walk-in customers willing to wait were led by the
shoe shine boys to a seat at the stand where he waited while the boy shined the shoes. After
the shoes were cleaned, the boy asked the customer to pay to the receptionist. Customers
not willing to wait left the shoes with the stand’s receptionist who gave a receipt with the
price for the service and pick-up date and time indicated. The boys were free to get shoes to
be shined from the receptionist when there were no waiting walk-ins. For each pair shined,
the boys got markers corresponding to the price for their service. ZaCSI’s staff did not
interfere with, nor supervise, how the boys went about their tasks. At day’s end, the markers
held by each boy were tallied and paid for. The boys signed a receipt to acknowledge full
payment for work done.
A labor federation organized ZaCSI and filed a petition for a consent election. The boys,
sympathizing with the workers, joined the union. At the pre-election conference, the lawyer
for ZaCSI moved to exclude the boys as voters.
(a) As Med-Arbiter handling the case, rule on the objection.
(b) Would your ruling be different if in this case, ZaCSI provided the boys with the shoe
shine boxes and their contents? Explain. (1988 Bar Question)
Answer:
(a) As Med-arbiter, I will rule that the shoe shine boys should be excluded as voters in the
consent election. The shoe shine boy are not employees of ZaCSI and thus could not be considered
as employees belonging to bargaining unit who will designate or select a bargaining representative.
They are not empoloyees of ZACSI because according to the given facts, they are not under the
control of ZaCSI which is an essential element for the existence of employer-employee relationship.
In the statement of facts, it is said that “ZaCSI’s staff did not interfere with, nor supervise how the
boys went about their task.”
(b) My ruling will not be different even if ZaCSI provided the boys with the shoe shine boxes
and their contents. ZaCSI, by this act, is not yet exercising control over them. It is the existence or
non-existence of control that is determinative of the existence of employer-employee relationship.

Q: Pandoy, an electronics technician, worked within the premises of Perfect Triangle, an

auto accessory shop. He filed a complaint for illegal dismissal, overtime pay and other
benefits against Perfect Triangle, which refused to pay his claims on the ground that Pandoy
was not its employee but was an independent contractor. It was common practice for shops
like Perfect Triangle to collect the service fees from customers and pay the same to the
independent contractors at the end of each week. The auto shop explained that Pandoy was
like a partner who worked within its premises, using parts provided by the shop, but
otherwise Pandoy was free to render service in the other auto shops. On the other hand,
Pandoy insisted that he still was entitled to the benefits because he was loyal to Perfect
Triangle-, it being a fact that he did not perform work for anyone else. Is Pandoy correct?
Explain briefly. (5%)
SUGGESTED ANSWER:
Pandoy Is not correct.

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He is not an employee because he does not meet the fourfold test for him to be an employee of
Perfect Triangle. Ail that he could claim is: he worked within the premises of Perfect Triangle.
Pandoy was NOT engaged as an employee by Perfect Triangle. He was NOT paid wages by Perfect
Triangle. Perfect Triangle does NOT have the power to dismiss him although Perfect Triangle may
not continue to allow him to work within its premises. And most important of all, Pandoy was NOT
under the control of Perfect Triangle as regards the work he performs for customers.
The Supreme Court has ruled: “In stark contrast to the Company’s regular employees, there are
independent, free-lance operators who are permitted by the Company to position themselves
proximate to the Company premises. These independent operators are allowed by the Company to
wait on Company customers who would be requiring their services. In exchange for the privileges
of favorable recommendation by the Company and immediate access to the customers in need of
their services, these independent operators allow the Company to collect their service fee from the
customer and this fee is given back to the independent operator at the end of the week. In effect,
they do not earn fixed wages from the Company as their variable fees are earned by them from the
customers of the Company. The Company has no control over and does not restrict the
methodology or the means and manner by which these operators perform their work. These
operators are not supervised by any employee of the Company since the results of their work is
controlled by the customers who hire them. Likewise, the Company has no control as an employer
over these operators. They are not subject to the regular hours and days of work and may come and
go as they wish. They are not subject to any disciplinary measures from the Company, save merely
for the inherent rules of general behavior and good conduct.” [Ushio Marketing v. NLRC, 294 SCRA
673(1998)]

Q: Malyn Vartan is a well-known radio-N talk show host. She signed a contract with XYZ
Entertainment Network to host a one-hour daily talk show where she interviews various
celebrities on topical subjects that she herself selects. She was paid a monthly remuneration
of P300.000.00. The program had been airing for almost two years when sponsors'
advertising revenues dwindled, constraining the network to cancel the show upon the
expiration of its latest contract with Ms. Vartan. The talk-show host protested the
discontinuance of her monthly talent fee, claiming that it was tantamount to her illegal
dismissal from the network since she has already attained the status of a regular employee.
(2005 Bar Question)
(a) As the network's legal counsel, how would you justify its decision to cancel Ms.
Vartan's program which in effect terminated her services in the process?
SUGGESTED ANSWER:
(a) As the network's legal counsel, I will argue that no employer employee relationship exists
between the network and Ms. Vartan. Reference has to be made to the terms and conditions
provided under the contract and the parties shall be governed by the provisions of the New Civil
Code. In the case of Jay Sonza v. ABS-CBN, 431 SCRA583 (2004) it was held that a TN and radio
talent is not an employee of the network company. Similarly in this case, Ms. Vartan cannot be
considered an employee of the network. Under the control test, the network had no control on the
manner and means through which Ms. Vartan will perform her work. She herself selects the topical
subjects in her interviews. She is also paid an extraordinary huge amount of P300,OOO for her to be
considered a mere employee.

(b) As counsel for the-talk-show host, how would you argue your case? (6%)

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SUGGESTED ANSWER:
(b) As counsel for Ms, Vartan, I will argue that an employer-employee relationship exists, and
that she is a regular employee of the Network because of the nature of her work in relation to the
nature of the business of the Network. Her' work is usually necessary or desirable in the usual,
trade or business of the employer (Art. 280, Labor Code). I will invoke the four-fold test of
employer- employee relationship, i.e. (1) selection and engagement of employee: (2) payment of
wages; (3) power to dismiss; and (4) power of control.

Q: "X' is a bona fide service contractor providing manpower services to various

companies, possessing the necessary capital and equipment needed to effectively carry out
its commitments. "Y” is an employee of "X" and assigned to work as a janitor in Company "Z".
In the course of Y’s assignment, Z's supervisors and employees would give verbal
instructions to Y as to how and where to perform his work. X pays Y salary. Subsequently, Y’s
services were terminated by X. Y sued Z for illegal dismissal. May Y’s case against Z prosper?
Why? (2%). (2001 Bar Question)
SUGGESTED ANSWER:
Y’s case against Z will not prosper, because Z is not the employer of Y. The employer of "Y" is "X".
"Y" would be an employee of "Z" if "X" here is a labor-only contractor but X is not a labor-only
contractor. Re possesses the necessary capital and equipment needed to effectively carry out its
commitment as a service contractor.
Applying the control test, the fact that "Z's" supervisors and employees give verbal instructions to Y
as to how and where to perform his work does not necessarily mean that thereby he is under the
control of Z as regards his employment as long as X, as service contractor, actually directs the work
of Y. It should also be noted that X pays the salary of Y as the employee of the former.

ANOTHER SUGGESTED ANSWER:

Yes, Y’s case against Company "Z" will prosper. Company "Z" will be deemed the direct employer
because the Company directly and specifically controlled the manner by which the work should be
done and, and by doing so also the result/ (See Traders Royal Bank vs. NLRC, December 2, 1999).
The presence of the element or factor of control, which is the most important factor in determining
the existence of an employer-employee relationship is present. In Religious of the Virgin Mary vs.
NLRC, G.R. No. 103606, October 13, 1999, the Supreme Court, ruled:
As this Court has consistently ruled, the power of control is the most decisive factor in determining
the existence of employer- employee relationship.

Q: FACTS: Asia Security & Investigation Agency (ASIA) executed a one-year contract with the
Baron Hotel (BARON) for the former to provide the latter with twenty (2,0) security guards
to safeguard the persons and belongings of hotel guests, among others. The security guards
filled up Baron application form and submitted the executed forms directly to the Security
Department of Baron. The pay slips of the security guards bore Baron’s logo and showed that
Baron deducted therefrom the amounts for SSS premiums, medicare contributions and
withholding taxes. Assignments of security guards, who should be on duty or on call, promo-
tions, suspensions, dismissals and award citations for meritorious services were all done

90
upon approval by Baron’s chief Security officer.
After the expiration of the contract with Asia, Baron did not renew the same and instead
executed another contract for-security services with another agency. Asia placed the
affected security guards on “floating status" on “no work no pay” basis. Having been
displaced from work, the Asia security guards filed a case against the Baron Hotel for illegal
dismissal, overtime pay, minimum wage differentials, vacation leave and sick leave benefits,
and 13th month pay.
Baron Hotel denied liability alleging that Asia is the employer of the security guards and
therefore, their complaint for illegal dismissal and payment of money claims should be
directed against Asia. Nevertheless, Baron filed a Third Party Complaint against Asia. (1999
Bar Question)
1. Is there an employer-employee relationship between the Baron Hotel, on one hand,
and the Asia security guards, on the other hand? Explain briefly. (3%)
SUGGESTED ANSWER:
As a general rule, the security guards of a private security guard agency are the employees of the
latter and not of the establishment that has entered into a contract with the private security guard
agency for security services.
But under the facts in the question, Baron Hotel appear to have hired the security guards, to have
paid their wages, to have the power to promote, suspend or dismiss the security guards and the
power of control over them, namely, the security guards were under orders of Baron Hotel as
regard their employment.
Because of the above-mentioned circumstances, Baron Hotel is the employer of the security guards.

2. Assuming that ASIA is the employer, is the act of ASIA in placing the security guards
on "floating status" lawful? Why? (2%)
SUGGESTED ANSWER:
It is lawful for a private security guard agency to place its security guard on a “floating status’’ if it
has no assignment to give to said security guards.
But if the security guards are placed on a “floating status” for more than six (6) months, the security
guards may consider themselves as having been dismissed.

2. Kinds of employment
a. Probationary
Q: On January 3, 1988, Sea Breeze Restaurant, Inc. (SBRI) hired Juan Reyes as a probationary
kitchen helper. He received and cleaned food ingredients delivered by suppliers and stored
them in freezers, cleaned kitchenware and utensils, and kept the kitchen tidy. On July 1,
1988, he was sent to the company’s doctor for a complete medical examination. Thereafter,
he continued working. On July 8, 1988, the doctor submitted his report finding Juan to have
minimal pulmonary tuberculosis (TB).
The manager consults you as the labor adviser of the company, and asks if Juan’s
employment can be terminated as his presence was a hazard to the health of other workers
and customers of the restaurant.

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(a) Within the time frame of the problem, was there any change in Juan’s employment
status?
(b) When did the change occur?
(c) Why did it occur?
(d) Can the company still terminate Juan as a probationer?
(e) Under what conditions may Juan be terminated considering his health? Explain.
(f) Based on your analysis of the factual and legal situation, what course of action would
you advise the company to take?
Answer:
(a) There was a change in the employment status of Juan, from probationary to regular
employment.
(b) July 4,1988, after his six-month probationary period.
(c) The Labor Code (Art. 281) provides that “an employee who is allowed to work after a
probationary period shall be considered a regular employee.”
(d) The company can terminate Juan, but no longer as a probationary employee, but as a
regular employee since his six (6) month probationary period has expired.
(e) Juan may be terminated considering the fact that he has minimal pulmonary tuberculosis.
The Labor Code (Art. 284) provides that an employer may terminate the services of an employee
who has been found to be suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well his co-employees.”
(f) Based on my analysis outlined above, I will advise the Company to dismiss the
employee but pursuant to the Rules and Regulations implementing the Labor Code, the Company
should not terminate the employment of its employee on the ground of his disease unless there is a
certification by a competent public health authority that the disease is of such nature or at such a
stage that it cannot be cured within a period of six (6) months even with proper medical treatment.

Q: Mr. X was hired by Y Company on probation for six months as general utility worker. On
the expiration of the probationary period, Mr. X was informed by Y Co. that his work was
unsatisfactory and failed to meet the required standard. To give him a chance to improve his
performance, Y Co. instead of terminating Mr. X’s services, extended, with X’s written
consent, the probation period for another three months. This extension notwithstanding, his
performance did not improve, on account of which, Y Co. terminated Mr. X's services at the
end of the extended period. Mr. X filed a case for illegal dismissal contending that he was
already regular at the time of his dismissal pursuant to Art. 281 of the Labor Code, the
particular portion of which provides:
“xxx. An employee who is allowed to work after a probationary period shall be considered a
regular employee."
Therefore, he could not have been lawfully dismissed for failure to meet company standards
as a probationary worker. Decide with reason.
Answer;

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Mr. X could not argue that because his probationary period was extended beyond six months he
was now a regular employee and thus could no longer be terminated except for Just cause or when
authorized by law.
The fact is that the probationary period of Mr. X was extended beyond six months with his consent.
It was to give him an opportunity to improve his performance.
Thus, it was legal for Y Company to terminate Mr. X for his failure to meet company standard as a
probationary worker.
The Labor Code provides that probationary employment shall not exceed six (6) months. But the
Supreme Court has ruled that said probationary period could be extended with the consent of the
probationary employee lo give him an opportunity to improve his performance. (Art. 281. Labor
Code)

Q: During their probationary employment, eight (8) employees were berated and insulted by
their supervisor. In protest, they walked out. The supervisor shouted at them to go home
and never to report back to work. Later, the personnel manager required them to explain
why they should not be dismissed from employment for abandonment and failure to qualify
for the positions applied for. They filed a complaint for illegal dismissal against their
employer.
As a Labor Arbiter, how will you resolve the case? 10% (2006 Bar Question)
SUGGESTED ANSWER:
I will rule in favor of management.
First of all, there was no abandonment because there was no intention not to return to work. It was
just that the 8 employees were berated and insulted and even told never to report back to work. It
was but natural for them to feel demoralized, but there was never an indication to abandon their
employment.
The probationary workers could, however, be terminated for failing to meet probationary
standards. If the reasons for the supervisor’s berating and insulting behavior were poor or
substandard performance on the part of the workers, their probationary employment could be
legally terminated.

ANOTHER SUGGESTED ANSWER:

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

ANOTHER SUGGESTED ANSWER:

As Labor Arbiter, I will rule that the complaint for illegal dismissal is premature.
What the supervisor did - he told the eight (8) employees to go home and never to report back to

93
work - did not have the effect of terminating the employment of said employees. As supervisor, he
is not a managerial employee with the power, among others, to discharge employees.

Q: The services of an employee were terminated upon the completion of the probationary
period of employment for failure to quality for the position. The employee filed a complaint
for Illegal Dismissal on the ground that the employer failed to inform him in writing the
reasonable standards for regular employment.
Will the complaint for Illegal Dismissal prosper? [5%] (1998 Bar Question)
SUGGESTED ANSWER:
Yes, the Complaint for Illegal Dismissal will prosper. The Labor Code provides:
Art. 281. Probationary employment. - xxx The services of an employee who has been engaged on
8 probationary basis may be terminated xxx when he falls to qualify as a regular employee in
accordance with reasonable standards made known to the employee at the time of his engagement.
The Supreme Court in A.M. Greta and Co., Inc. v. NLRC, 176 SCRA 218 (1989), ruled:
The law is clear to the effect that in all cases involving employees engaged on probationary basis,
the employer shall make known to the employee at the time he is hired, the standards by which he
will qualify as a regular employee.
The failure of the employer to inform the employee of the qualification for regularization is fatal.
The failure violates the rules of fair play which is a cherished concept in labor law.

ANOTHER SUGGESTED ANSWER:

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

b. Regular
Q: A was hired in a sugar plantation performing such tasks as weeding, cutting and loading
canes, planting cane points, fertilizing and cleaning the drainage. Because his daily presence
in the field was not required, A also worked as a houseboy at the house of the plantation
owner. For the next planting season, the owner decided not to hire A as a plantation worker
but as a houseboy instead. Furious, A filed a case for illegal dismissal against the plantation
owner. Decide with reason. (3%) (2010 Bar Question)
SUGGESTED ANSWER:
A is a regular seasonal employee. Therefore, he cannot be dismissed without just or valid cause.
The primary standard for determining regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual trade or business of the
employer (Pier 8 Arrastre & Stevedoring Services, Inc., et al. v. Jeff B. Boclot, 534 SCRA 431 [2007]).
Considering that A, as plantation worker, performs work that is necessary and desirable to the

94
usual business of the plantation owner, he is therefore a regular seasonal employee and is entitled
to reinstatement upon onset of the next season unless he was hired for the duration of only one
season (Hacienda Bino v. Cuenca, 456 SCRA 300 [2005]).
Converting A to a mere houseboy at the house of the plantation owner amounts to an act of
severing his employment relations as its plantation worker (Angeles v. Fernandez, 513 SCRA 378
[2007]).

ALTERNATIVE ANSWER:
It is management prerogative to determine what kind of worker is needed by the plantation. Of
course, if the prerogative is exercised and results in redundancy, there must be payment of
separation pay under Article 283 of the Labor Code.

Q: Kitchie Tempo was one of approximately 500 production operators at HlTEC

Semiconductors, Inc., an export-oriented enterprise whose business depended on orders for
computer chips from overseas. She was hired as a contractual employee four years ago. Her
contracts would be for a duration of five (5) months at a time usually after a one-month
interval. Her re-hiring was contingent on her performance for the immediately preceding
contract.
Six months after the expiration of her last contract, Kitchie went to HITEC's personnel
department to inquire why she was not yet being recalled for another temporary contract.
She was told that her performance during her last stint was "below average."
Since there was no union to represent her. Kitchie seeks your advice as labor lawyer about
her chances of getting her job back. What will our advice be? (5%) (2005 Bar Question)
SUGGESTED ANSWER:
Kitchie’s "below average" rating will not matter. She was a regular employee from day 1 of her
service as her work was evidently usually necessary or desirable to HITEC's usual business. Under
par. 1of Art. 280, Kitchie is a regular (not casual) employee.
Also, Kitchie obtained permanent regular employment .when she was repeatedly re hired by HITEC.
As a permanent regular employee, working for an indefinite period, Kitchie is, entitled to the reliefs
of reinstatement and full backwages as mandated in Art. 279 of the Labor Code.
A "below average" rating would matter if Kitchie was made to undergo probationary employment,
or was a probationary employee under Art. 281 of the Code. She was not obviously, she was a
qualified and competent production operator; She would not have been repeatedly re-hired if she
were not that qualified and competent.
I will thus, advise her to sue for illegal dismissal, with prayer for regularization in addition to the
reliefs of reinstatement and full backwages provided for in Art. 279 of the Labor Code.

Q: Julius Lagat, a truck driver, was hired by Merdeka Trucking Company which is engaged in
the business of hauling farm produce, fertilizer and other cargo for an agribusiness company
on a non-seasonal and continuing basis. Lagat’s contract stipulated that it was effective for
six months from date of execution, renewable for the same period. Upon expiration of the
renewed contract. Lagat was advised by Merdeka that his services were terminated. Lagat

95
filed a complaint for illegal dismissal against Merdeka which contended that Lagat had no
cause of action as his employment was for a definite and specific period.
You are the Labor Arbiter. Decide with reasons.
Suggested Answer:
As Labor Arbiter, I will decide in favor of Lagat. From the circumstances of the case, it is apparent,
that the six month period was imposed to preclude the employee from acquiring security of tenure.
The contract that Merdeka had with Lagat can be considered as circumventing the law that gives to
a worker the right to security of tenure, considering that Lagat was a truck driver in a business that
was not seasonal and was on a continuing basis. If the work was seasonal, then he would have been
legally employed for a specific period, namely, per season. (Cielo vs. NLRC. 193 SCRA 410)
This should also be noted. Lagat’s contract was a renewed contract. This means that at the veiy
least, he was already employed for six months after which the contract was renewed. So, if the first
six months period was considered a probationary period, Lagat has now worked after the
probationary period. Thus, he is now a regular employee and clearly with the right to security of
tenure. (Article 281. Labor Code)

Q: Borloloy & Co. is engaged in the construction business which hired the services of
Ispongklong as mason and Agaton as carpenter in 1977. Every time their services are
needed, Ispongklong and Agaton are issued notices of employment by Borloloy & Co. in the
following tenor:
“This is to inform you that you have been hired at Lahar Bldg., as mason and carpenter
respectively at a monthly salary/daily or hourly of PI2.40. Your employment shall be
deemed automatically terminated either at the completion of the project or upon the
completion of the work requiring your respective services to start May 12, 1977.
ACCEPTED:
Such an arrangement continued wherein both Agaton and Ispongklong became members of
a work pool from where Borloloy & Co. draws manpower to work on various projects. After
each project they have been assigned to is completed, Borloloy & Co. reported the names of
Ispongklong and Agaton to the Social Security System for registration.
In 1987 (or after ten years of service) they received a notice from Borloloy & Co. informing
them that their services are no longer needed. Ispongklong and Agaton immediately filed a
case for illegal dismissal alleging that they are regular and permanent workers of Borloloy &
Co. having worked for it for ten (10) years hence prayed for reinstatement and back wages.
Borloloy & Co. on the other hand, claims that Agaton and Ispongklong are project employees
whereby their employment is automatically terminated either at the completion of the
phase of work requiring their respective service as stated in their respective Notice of
Employment the sample test of which is quoted above. If you are the Labor Arbiter assigned
to the case, how will you decide the controversy?
Answer:

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As Labor Arbiter, I will promulgate a decision finding the dismissal of Agaton and Ispongklong
illegal. Ispongklong and Agaton ceased to be project employees when they became members of a
work pool from where their employer draws manpower to work on various projects. Thus, as
regular employees, they can be terminated only if there is just cause or otherwise authorized by
law. (Art. 280, Labor Code)

Q: A Construction Group hired Engineer "A" as a Project Engineer in 1987. He was assigned
to five (5) successive separate projects. All five (5) Contracts of Employment he signed,
specified the name of the project, its duration, and the temporary-project nature of the
engagement of his services. Upon completion of the fifth (5th) project in August 1998, his
services were terminated. He worked for a total of ten (10) years (1987-1998) in the five (5)
separate projects.
Six months after his separation, the Group won a bid for a large construction project. The
Group did not engage the services of Engineer "A" as a Project Engineer for this new project:
Instead, it engaged the services of Engineer "B". Engineer “A" claims that by virtue of the
nature of his functions, i.e.. Engineer in a Construction Group, and his long years of service
he had rendered to the Group, he is a regular employee and not a project engineer at the
time he was first hired. Furthermore, the hiring of Engineer “B" showed that there is a
continuing need for his services.
Is the claim of Engineer “A" correct? [5%] (1998 Bar Question)
SUGGESTED ANSWER:
The claim of Engineer "A” that he is a regular employee and not a project, employee is not correct.
The Labor Code provides:
Art. 280. Regular and casual employment. - An employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except, where the employment has been fixed for a
specific project or undertaking the completion of which has been determined at the time of the
engagement of the employee, (underscoring supplied)
In all the five (5) successive contracts of employment of Engineer "A” the name of the project, its
duration, and the temporary project nature of the engagement of his services are clearly stated;
hence, Engineer “A” falls within the exemption of Art. 280.
The Supreme Court has ruled as follows:
Manansag v. NLRC, 218 SCRA 722 (1993)
The fact that the petitioners worked for several projects of private respondent company is no basis
to consider them as regular employees. By the very nature of their employer's business, they will
always remain project empl03'ees regardless of the number of projects in which they have worked.
De Ocampo v. NLRC, 186 SCRA 361 (1990)
(Project employees] are not considered regular employees, their services, being needed only when
there are projects to be undertaken. The rationale for this rule, is that if a project has already been
completed, it would be unjust to require the employer to maintain them in the payroll while they
are doing absolutely nothing except waiting for another project.

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ANOTHER SUGGESTED ANSWER:
The claim of Engineer “A” is not correct. The fact that he has been working for Construction Group
for a total of ten (10) years does not make him a regular employee when it is very clear from the
Contracts of Employment he signed that he was always being engaged as a project employee.
The tenure of a project employee is co-terminus with the project in connection with which his
services were engaged. Thus, after the end of the project, the employer-employee relationship
ceases to exist. Such project employee has no legal right to insist that he should be employed by the
Construction Group for a subsequent project of said Group.

Q: Damian Damaso was one of 75 machinists of City Re- builders Machine Shop (CRMS). He
had worked as a lathe operator there since February 15, 1975. Lathe men process metal to
fine tolerances of thousandths of an inch. If tolerances are not met, work is re-done at great
cost. Defective work released to customers cause breakdown on equipment in which they
are used. Juan worked an average of 300 days per year at a daily wage of 1*100.00 plus the
COLA mandated by law. If there are no rejects on what he processes, he got a¥15 bonus for
each item done right. In the last 2.months, 10% of his output either needed re-work or were
rejected. He claimed his lathe was defective. However, the second shift man using the same
machine produced work meeting standards. Damian did not earn any bonuses, and received
a written warning. Feeling oppressed, he went to the Kamao ng Manggagawa, a registered
labor federation to ask for advice on the mechanics of organizing a union, and worker rights
and duties when they organize.
You are a labor organization adviser of Kamao.
xxx
A supervisor of the CRMS saw Damian leave Kamao’s headquarters. Sensing that Damian
would organize a union, he reported what he saw to management. Damian did not know he
was seen. Management acted on the report. The next day, his foreman found Damian’s work
of unacceptable quality and below output standards. He was given a second warning. The
following day, work exceeding allowed tolerances were again found. He was suspended for a
week and thus, was unable to start organizing a union. When he came back, his work was
again found deficient and 50% was rejected and condemned as waste. He was given a 15-day
notice of termination on August 1, 1988, to take effect on August 16, 1988 and paid for 15
days of accumulated leave; banned from entering company premises effective immediately;
and given termination pay equal to 12 days’ wages per year of service, computed on his daily
wage for 13 years. He reported what had happened to Kamao. The matter was referred to
you again for assistance. (1988 Bar Question)
(a) Damian wants to know if he was unlawfully terminated. Explain.
(b) Damian asks you if he had been given all his terminal entitlements.
Answer:
(a) Damian was unlawfully terminated. There could be just cause for his termination if his work
is of unacceptable quality and below’ output standards which could be considered as gross and
habitual neglect of duties which is a just cause for termination. But the facts show that CRMS was
intent on terminating Damian not because of his poor performance but because he was organizing a
union. Thus, the act of CRMS is an unfair labor practice. The dismissal is illegal.
(b) If there is just cause for the termination of Damian, CRMS has no obligation to pay him any

98
terminal entitlement, like termination pay. But, he should be paid whatever rights may have
accrued, like, in this case, the pay to 15 days of accumulated leave.
If there is no just cause for the termination of Damian, he has the right to reinstatement without
loss of seniority rights and to his backwages computed from the time his compensation was
withheld from him up to the time of his reinstatement (Art. 279).

c. Project employment
Q: Distinguish the project employees from regular employees. (1996 Bar Question)
Answer:
A regular employee is one engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer. On the other hand, a project employee is one whose
employment is fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee. (See Art. 280 of the Labor
Code)

Q: How is a project worker different from a casual or contractual worker? Briefly explain
your answers, (6% )
SUGGESTED ANSWER:
A project worker is employed for a specific project or undertaking the completion or termination of
which is determined at the time of his engagement. His work need not be incidental to the business
of the employer. His employment may exceed 1 year without necessarily making him a regular
employee.
A casual employee is engaged to perform a job, work, or service which is incidental to the business
of the employer; moreover, the definite period of his employment is made known to him at the time
of his engagement, His continued employment after the lapse of one year makes him a regular
employee. Under the Social Security Law, employment that is purely casual and not for the purpose
of occupation or business of the employer is not under the coverage of the aforesaid law.
A "project worker", on the other hand, is a specific term used to designate workers in the
construction industry hired to perform a specific undertaking for a fixed period which is co-
terminus with a project or phase thereof determined at the time of the engagement of the employee
(Policy Instruction No, 19. DOLE), and it is mandatorily required that a termination report be
submitted to the nearest public employment office upon the completion of the construction project
[Aurora Land Projects Corp. v. NLRC. 266 SCRA 48 (Jan, 2. 1997)]; There is no such requirement (or
an ordinary contractual worker.

Q: Design Consultants, Inc. was engaged by the PNCC to supervise the construction of the
South Expressway Extension. Design Consultants, Inc. hired Omar as a driver for two (2)
years. After his two-year contract expired, he was extended another contract for nine (9)
months. These contracts were entered into during the various stages and before the
completion of the extension project. Omar claims that because of these repeated contracts,
he is now a regular employee of Design Consultants, Inc. Is he correct? Explain briefly. (5%)
SUGGESTED ANSWER:

99
Yes. The principal test for determining whether a particular employee is a “project employee” as
distinguished from a “regular employee” is whether or not the “project employee” was assigned to
carry out a “specific projector undertaking,” the duration and scope of which were specified at the
time the employee was engaged for the projects.
In the problem given, there is no showing that Omar was informed that he was to be assigned to a
“specific project or undertaking.” Neither has it been established that he was informed of the
duration and scope of such project or undertaking at the time of his engagement. [Philex Mining
Corp. v. NLRC, 312 SCRA 119 (1999)]
Moreover, the re-hiring of Omar is sufficient evidence of the necessity or the indispensability of his
services to the company’s business. [Aurora Land Projects Corp v. NLRC, 266 SCRA 48(1997)]
Hence, Omar is correct in claiming that he is a regular employee of Design Consultants, Inc.

ANOTHER SUGGESTED ANSWER:

Omar is not correct. Omar is a project employee as defined by Art. 280 of Labor Code. He was hired
for a specific project with fixed periods of employment, specifically: two (2) years for the first
contract, and nine (9) months for the second contract. A project employee who is hired for a specific
project only is not a regular employee notwithstanding an extension of the project provided that
the contract of project employment clearly specifies the project and the duration thereof.
[Palomares v. NLRC, 277 SCRA 439 (1997))

Q: Aldrich Zamora, a welder, was hired on February 1972 by Asian Contractors Corporation
(ACC) for a project. He was made to sign a contract stipulating that his services were being
hired for the completion of the project, but not later than December 30, 1972, whichever
comes first.
After December 1972, Zamora, being a man of many talents, was hired for different projects
of ACC in various capacities, such as carpenter, electrician and plumber. In all of these
engagements. Zamora signed a contract similar to his first contract except for the estimated
completion dates of the project for which he was hired.
What is Zamora's status with ACC? is he a contract worker, a project employee, a temporary
or a regular employee? State your reason.
Answer:
Zamora could be a project employee if his work is coterminous with the project for which he was
hired.
But in the case, Zamora was rehired after the completion of every project throughout the period of
his employment with the company which ranged for quite a long time. Thus, he should be
considered a regular employee. (Philippine National Construction Corporation vs. National Labor
Relations Commission, et aL, G.R No. 95816, 27 October 1972. J. Grlno-Aqu ino)

Alternative Answer:
a) Zamora is a regular employee because he was engaged to work in various projects of ACC
for a considerable length of time, on an activity that is usually necessary desirable in the usual
business or trade of ACC. (Mehitabel Furniture vs. NLRC, 220 SpRA 602)

100
b) Zamora is a regular employee. Article 280 of the Labor Code declares with unmistakable
clarity: “THE PROVISIONS OF WRITTEN AGREEMENT TO THE CONTRARY NOTWITHSTANDING,
xxx an employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer.”
He is not a CONTRACT or TEMPORARY WORKER because even the provisions of the
simulated contracts were not followed when his Job was used continuously. He is not a project
employee, as the term is understood in Art. 280 or under Policy Instruction No. 20.

Q: Martillo and other similarly-situated project workers demanded that the increases be
extended to them, inasmuch as they should now be considered regular employees and
members of the bargaining unit. (2006 Bar Question)
(a) If you were ABC's legal counsel, how would you respond to this demand?
SUGGESTED ANSWER:
(a) As legal counsel for ABC, I would argue that the employment of Martillo was fixed for a specific
project or undertaking, the completion or termination of which has been determined at the time of
his engagement. Rendering 14 months of work does not make him a regular employee, when to
begin with, he was employed for a specific project, i.e., which is the construction of a particular 40-
storey building. The rule on more than 1 year of service making the employment regular applies
only to casual employees, hence, Mariano does not belong to the bargaining unit of regular
employees.

d. Seasonal
Q: Super Comfort Hotel employed a regular pool of “extra waiters” who are called or asked to
report for duty when the Hotel’s volume of business is beyond the capacity of he regularly
employed waiters to undertake. Pedro has been an “extra waiter” for more than 10 years. He
is also called upon to work on weekends, on holidays and when there are big affairs at the
hotel.
What is Pedro’s status as an employee under the Labor Code? Why? Explain your answer
fully. (6%) (2008 Bar Question)
SUGGESTED ANSWER:
Pedro has acquired the status of a regular employee. Pedro was engaged to perform activities which
are necessary or desirable in the usual business or trade of the employer.
Moreover, Pedro has been “extra waiter” for more than 10 years. Under the law, any employee who
has rendered service 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 (Art. 280, Labor Code).

ANOTHER SUGGESTED ANSWER:

Pedro is a regular, but seasonal worker. He is regular because as waiter, he was engaged to perform
activities which are usually necessary or desirable in the usual business or trade of employer Super
Comfort Hotel. However, his security of tenure is coterminous with the seasonal need for which he

101
was hired (Art. 280, 1st par., Labor Code).

e. Casual
Q: Savoy Department Store (SDS) adopted a policy of hiring salesladies on five-month cycles.
At the end of a saleslady’s five-month term, „ another person is hired as replacement.
Salesladies attend to store customers, wear SDS uniforms, report at specified hours, and are
subject to SDS workplace rules and regulations. Those who refuse the 5-month employment
contract are not hired.
The day after the expiration of her 5-month engagement, Lina wore her SDS white and blue
uniform and reported for work but was denied entry into the store premises. Agitated, she
went on a hunger strike and stationed herself in front of one of the gates of SDS. Soon
thereafter, other employees whose 5-month term had also elapsed joined Lina’s hunger
strike. (2008 Bar Question)
a) Lina and 20 other salesladies filed a complaint for illegal dismissal, contending
that they are SDS’ regular employees as they performed activities usually
necessary or desirable in the usual business or trade of SDS and thus, their
constitutional right to security of tenure was violated when they were dismissed
without a valid, just or authorized cause. SDS, in defense, argued that Lina, et al.
agreed- prior to engagement – to a fixed period employment and thus waived
their right to a full-term tenure. Decide the dispute (4%)
SUGGESTED ANSWER:
a) I would rule in favor of Lina, et al. In Pure Foods Corporation v. NLRC (283 SCRA
135(1997]), the scheme of the employer in hiring workers on a uniformly fixed contract basis of 5
months and replacing them upon the expiration of their contracts with other workers with the
same employment status was found to have been designed to prevent “casual” employees from
attaining the status of a regular employee.
ANOTHER SUGGESTED ANSWER:
a) The Complaint of Lina and 20 other employees should be dismissed. Under existing
jurisprudence, there is no dismissal to speak of when the term of fixed-period employments
expires. As such, there is no violation of the right to security of tenure of these fixed-period
employees even if they performed activities usually necessary or desirable in the usual trade of
business, because they knew beforehand that their contract is to expire after five (5) months.

ANOTHER SUGGESTED ANSWER:

I will resolve the illegal dismissal case in favor of SDS. In Brent, the Supreme Court En Banc held
that while fixed term employment has already been repealed by the various amendments to the
Labor Code, the Civil Code still allows fixed term employment. Such kind of employment is valid as
long as it is established that: (1) the fixed period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstance vitiating his consent; and (2) the employer
and employee dealt with each other on more or less equal terms with no moral dominance on the
latter.
Since admittedly, Lina, et al. agreed, prior to their engagement, to the fixed term employment, and It
appearing that their consent was not vitiated, and considering further that it has not been argued

102
that the parties dealt with each other on less equal terms, it then follows that Lina, et al’s fixed term
employment is valid. No illegal dismissal can take place upon expiration of such fixed term
employment.

Q: A Carpenter is employed by a private university in Manila. Is the carpenter a regular or a

casual employee? Discuss fully. (2007 Bar Question)
SUGGESTED ANSWER:
If the employment of the carpenter is sporadic and brief in nature or occasional, his employment is
casual especially because the work he is performing is not in the usual course of the school’s trade
or business. However, if the carpenter has rendered services for at least one year, whether
continuous or broken, he becomes a regular employee by operation by law, with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
(Article 280, Labor Code; See also Philippine Geothermal, Inc. v. NLRC, 189 SCRA 211 [1990]);
Kimberly Independent Labor Union, etc. v. Drilon, 185 SCRA 190 [1990]).

FIRST ALTERNATIVE ANSWER:

A carpenter employed by a university is a casual employee. The carpenter is engaged to perform a
job, work or service which is mostly incidental to the business of the employer, and such job, work
or service is for a definite period made known to the employee at the time of engagement:
Provided, that any employee who has rendered at least one year of service, whether such service is
continuous or not, 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.

f. Fixed-term
Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
[a] Seafarers who have worked for twenty (20) years on board the same vessel are
regular employees. (2009 Bar Question)
SUGGESTED ANSWER:
FALSE. Seafarers as overseas Filipino workers are fixed-term employees whose continued rehiring
should not be interpreted as a basis for regularization but rather as a series of contract renewals
sanctioned under the doctrine set by Millares vs. NLRC (Gu-Miro v. Adorable, 437 SCRA 162
[2004]).

3. Job contracting
a. Articles 106 to 109 of the Labor Code
b. Effects of Labor-Only Contracting
c. Trilateral relationship in job contracting
Q:
1) What is a “labor-only" contract?

103
2) Distinguish the liabilities of an employer who engages the services of a bona fide
“independent contractor" from one who engages a “labor-only" contractor?
Answer:
1) “Labor-only" contract is a contract between an employer and a person who supplies
workers to such employer where the person supplying workers does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities which are directly related to
the principal business of such employer. (Art. 106, Labor Code)
2) A person who engages the services of a bona fide “Independent contractor" for the
performance of any work, task, job or project is the indirect employer of the employees who have
been hired by the Independent contractor to perform said work, task, Job or project.
In the event that the independent contractor fails to pay the wages of his employees, an indirect
employer, in the same manner and extent that he is liable to employees directly employed by him, is
jointly and severally liable with the independent contractor to the employees of the latter to the
extent of the work performed under the contract.
As for the person who engages the services of a "labor only" contractor, the latter is considered
merely as.an agent of the former who shall be responsible to the workers hired by the “labor only"
contractor in the same manner and extent as if he directly employed such workers.

Alternative Answers:
a) An employer who engages the services of a bona fide “independent contractor" is solidarity
liable with his contractor or sub-contractor only for non-payment or underpayment of wages and
other labor standards provisions of the Labor Code, whereas an employer who engages a “labor-
only" contractor is liable for all benefits, terms and conditions of employment that it normally
grants to its regular or direct employees.
b) An employer who deals with a bona-fide independent contractor shall be liable only
subsidiarity, if the contractor or sub-contractor fails to pay the wages to the workers in accordance
with the Labor Code.
Upon the other hand, an employer who deals with a “labor-only" contractor shall be primarily
responsible to the workers in the same manner and extent as if the latter were directly employed
by him. (Arts 106-107, Labor Code)

Q: Distinguish between “job contracting" and “labor-only contracting." (1997 Bar Question)
Answer:
When a person, not being an employer, contracts with an independent contractor for the
performance of any work, task, job or project, there is "job contracting.” When the independent
contractor does the work that is contracted out, he is not under the control of the person who
contracted out the work to be done.
In "labor-only contracting", a person supplies workers to an employer. Said person does not have
substantial capital or Investments in the form of tools, equipment, machineries, work premises,
among others, and the workers recruited and placed by such person are performing activities
related to the principal business of the employer to whom the workers are supplied.

104
Q: Jolli-Mac Restaurant Company (Jolli-Mac) owns and operates the largest food chain in the
country. It engaged Matiyaga Manpower Services, Inc. (MMSI), a job contractor registered
with the Department of Labor and Employment, to provide its restaurants the necessary
personnel, consisting of cashiers, motorcycle deliver}' boys and food servers, in its
operations. The Service Agreement warrants, among others, that MMSI has a paid-up capital
of P2,000,000.00; that it would train and determine the qualification and fitness of all
personnel to be assigned to Jolli-Mac; that it would provide these personnel with proper
Jolli-Mac uniforms; and that it is exclusively responsible to these personnel for their
respective salaries and all other mandatory statutory benefits.
After the contract was signed, it was revealed, based on research conducted, that MMSI had
no other clients except Jolli-Mac, and one of its major owners was a member of the Board of
Directors of Jolli-Mac. (2009 Bar Question)
[a] Is the Service Agreement between Jolli-Mac and MMSI legal and valid? Why or why
not? (3%)
SUGGESTED ANSWER:
No. It is not legal and valid because MMSI is engaged in labor-only contracting. For one, the workers
supplied by MMSI to Jolli-Mac are performing services which are directly related to the principal
business of Jolli-Mac. This is so because the duties performed by the workers are integral steps in or
aspects of the essential operations of the principal. (Baguio, et al. v. NLRC, et al., 202 SCRA 465
[1991]; Kimberly Independent Labor Union, etc. v. Drillon, 185 SCRA 190 [1990]. For another,
MMSI was organized by Jolli-Mac itself to supply its personnel requirements. (San Miguel
Corporation v. MAERC Integrated Services, Inc., et al., 405 SCRA 579 [2003]).

ANOTHER SUGGESTED ANSWER:

The Service Agreement is valid. The law, Art. 106, does not invalidate an Independent Contractors
Agreement because the Independent Contractor has only one (1) client, or that the employer of the
independent contractor is one of the major owners of the employing establishment. MMSI, is an
independent business, adequately capitalized and assumed all the responsibilities of a legitimate
Independent Contractor.

[b] If the cashiers, delivery boys and food servers are not paid their lawful salaries,
including overtime pay, holiday pay, 13,h month pay, and sendee incentive leave pay, against
whom may these workers file their claims? Explain. (2%)
SUGGESTED ANSWER:
They may file their claims against Jolli-Mac. A finding that MMSI is a “labor-only” contractor is
equivalent to declaring there is an employer-employee relationship between Jolli-Mac and the
workers of MMSI. (Associated Anglo-American Tobacco Corp. v. Clave, 189 SCRA 127 [1990],
Industrial Timber Corp. v. NLRC, 169 SCRA 341 [1989]). The liability of Jolli-Mac vis-a-vis the
workers of MMSI is for a comprehensive purpose, i.e., not only for the unpaid wages but for all
claims under the Labor Code and ancillary laws. (San Miguel Corp. v. Maerc Integrated Services, Inc.,
et al., 405 SCRA 579 [2003]).

105
ANOTHER SUGGESTED ANSWER:
The employers can file their claims against Jolli- Mac pursuant to Art. 106 of the Labor Code which
reads: “Contractor or .subcontractor—x x x In the event that the contractor or subcontractor fails to
pay the wages of his employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent, that he is liable to employee directly
employed by him.”
Even if the RSC has a paid up capitalization of PI,000,000.00 it is not engaged in labor-only
contracting, or permissible job contracting. It is engaged simply in recruiting. RSC merely provides
PizCorp the former’s motorcycle-owning members to deliver the product of PizCorp in accordance
with PizCorp’s directives and orders.

Q: The Pizza Corporation (PizCorp) and Ready Supply Cooperative (RSC) entered into a
“service agreement” where RSC, in consideration of service fees to be paid by PizCorp, will
exclusively supply PizCorp with a group of RSC motorcycle- owning cooperative members
who will henceforth perform PizCorp’s pizza delivery service. RSC assumes - under the
agreement - full obligation for the payment of the salaries and other statutory benefits of its
members deployed to PizCorp. The parties also stipulated that there shall be no employer-
employee relationship between PizCorp and the RSC members. However, if PizCorp is
materially prejudiced by any act of the delivery crew that violates PizCorp’s directives and
orders, PizCorp can directly impose disciplinary sanctions on, including the power to
dismiss, the erring RSC member/s.
xxx
xxx
c) RSC is engaged in “labor-only” contracting.
SUGGESTED ANSWER:
It is not enough to show substantial capitalization or investment in the form of tools, equipment,
machinery and work premises. In addition, the following factors have to be considered: (a) whether
the contractor is carrying on an independent business; (b) the nature and extent of the work; (c)
the skill required; (d) the term and duration of the relationship; (e) the right to assign the
performance of specified pieces of work; (f) the control and supervision of the workers; (g) the
power of employer with respect to the hiring, firing and payment of workers of the contractor; (h)
the control and supervision of the workers; (g) the power of employer with respect to the hiring,
firing and payment of workers of the contractor; (h) the control of the premises; (j) the mode,
manner and terms of payment (Alexander Vinoya v. NLRC, Regent Food Corporation and/or Ricky
See, 324 SCRA 469[2000]; Osiasl. Corporal, Sr., et al. v. NLRC, Lao Enteng Company, Inc. and/or
Trinidad IMO Ong, 341 SCRA 658[2000]).

Q: Antonio Antuquin, a security guard, was caught sleeping on the job while on duty at the
Yosi Cigarette Factory, As a result, he was dismissed from employment by the Wagan
Security Agency, an independent contractor. At the time of his dismissal, Antonio had been
serving as a watchman in the factory for many years, often at stretches of up to 12 hours,
even on Sundays and holidays, without overtime, nighttime and rest da~ benefits, He
thereafter filed a complaint for illegal dismissal and non-payment of benefits against Yosi
Cigarette Factory, which he claimed was his actual and direct employer.

106
As the Labor Arbiter assigned to hear the case, how would you correctly resolve the
following:
(a) Antonio's charge of illegal dismissal; and
(b) x x x (2005 Bar Question)
SUGGESTED ANSWER:
(a) This is a case involving permissible job contracting. Antonio's charge of illegal dismissal against
Yosi Cigarette Factory will not prosper. Wagan Security Agency, an independent contractor, is
Antonio's direct employer. Yosi is only Antonio's indirect employer (Art. 109, Labor Code). By force
of law, there is in reality no employer-employee relationship between Yosi and Antonio. [Baguio, et
al. v. NLRC,et al. 202 SCRA 465 (Oct. 4, 1991)].
(b) x x x

Q: Sta. Monica Plywood Corporation entered into a contract with Arnold for the milling of
lumber as well as the hauling of waste wood products. The company provided the equipment
and tools because Arnold had neither tools and equipment nor capital for the job. Arnold, on
the other hand, hired his friends, relatives and neighbors for the job. Their wages were paid
by Sta. Monica Plywood Corp. to Arnold, based on their production or the number of workers
and the time used in certain areas of work. All work activities and schedules were fixed by
the company.
A. Is Arnold a job contractor? Explain briefly. (2%)
B. Who is liable for the claims of the workers hired by Arnold? Explain briefly. (3%)
SUGGESTED ANSWER:
A. No. In two cases decided by the Supreme Court, it was held that there is “job contracting”
where (1) the contractor carries on an independent business and undertakes the contract work in
his own account, under his own responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof; and (2) the contractor has substantial
capital or investment in the form of tools, equipment, machineries, work premises and other
materials which are necessary in the, conduct of his business. [Lim v. NLRC, 303 SCRA 432 (1999);
Baguio v. NLRC, 202 SCRA 465(1991)]
In the problem given, Arnold did not have sufficient capital or investment for one. For another
Arnold was not free from the control and direction of Sta. Monica Plywood Corp. because all work
activities and schedules were fixed by the company.
Therefore, Arnold is not a job contractor. He is engaged in labor-only contracting.
B. Sta. Monica Plywood Corp. is liable for the claims of the workers hired by Arnold. A finding
that Arnold is a labor only contractor is equivalent to declaring that there exist an Employer -
employee relationship between Sta. Monica Plywood Corp. and workers hired by Arnold. This is so
because Arnold is considered a mere agent of Sta. Monica Plywood Corp. [Lim v. NLRC, 303 SCRA
432, (1999); Baguio et. al. v. NLRC, 202 SCRA 465 (1991)]

107
B. Dismissal from employment
1. Just Causes
Q: Marimar is a teacher in Santibanez High School. She is the class adviser of the senior batch
where Sergio is enrolled. Since it is the policy of the school to extend remedial instructions
to its students, Sergio is imparted such Instructions in school by Marimar after regular class
hours. In the course thereof. Marimar and Sergio fell in love with each other and shortly
after got married. Marimar is 31 years old while Sergio is only 16.
Santibanez High School thereafter seeks to terminate the employment of Marimar for
abusive and unethical conduct unbecoming of a dignified school teacher and that her
continued employment is Inimical to the best interest and would downgrade the high moral
values of the school. Marimar, according to the school, recklessly took advantage of her
position as a teacher by luring a graduating student under her advisory section and 15 years
her junior into an amorous relationship, in violation of the Code of Ethics for teachers which
states, among others, that a “school official or teacher should never take advantage of
his/her position to court a pupil or student." While no one directly saw Marimar and Sergio
doing any intimate acts inside the classroom, the school nonetheless maintains that the
marriage between the two is the best proof which confirms the suspicion that Marimar and
Sergio indulged in amorous relations inside the classroom after class hours.
Marimar, on the other hand, contends that there is nothing wrong with a teacher falling in
love with her pupil and consequently, contracting marriage with him.
How would you decide the case. Explain. (1996 Bar Question)
Answer:
The fact that Marimar and Sergio got married is not by itself sufficient proof that Marimar, as a 31
year old teacher, took advantage of her position to court Sergio, a 16-year old student, whom she
was tutoring after regular class hours. Thus, Marimar could not be considered as violating the
school’s Code of Ethics which could have been a valid cause for her termination. Marimar’s falling in
love with her student cannot be considered serious misconduct which is a Just cause for
termination of employment.
Of course, if it is proven that Marimar and Sergio indulged in amorous relations inside the
classroom after class hours, this would constitute serious misconduct on the part of Marimar as a
teacher and could be just cause for the termination of her employment.
The case should be decided in favor of Marimar, the school teacher. The school failed to adduce
evidence in support of its claim of immoral conduct on the part of Marimar; hence, its claim “that
the marriage between the two (teacher and student) is best proof which confirm the suspicion that
Marimar and Sergio indulged in amorous relations inside the classroom after office hours" is a
gratuitous statement. Furthermore, marriage between two parties of disparate ages, even as
between an older teacher and a younger student is not an immoral act.
In Chua Qua v. Clave, 189 SCRA 117 (1990) a case which is exactly similar to the problem, the
Supreme Court ruled:
[Where] there is no substantial evidence of the imputed immoral acts, it follows that the alleged
violation of the Code of Ethics would have no basis. If the two eventually fell in love, despite the
disparity on their ages and academic levels, this only lends substance, to the truism that the heart
has reasons of its own which reason does not know. But, definitely, yielding to this gentle and
universal emotion is not to be casually equated with immorality. The deviation of the circumstances
of their marriage from the usual societal pattern cannot be considered as a defiance of

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contemporary social norms.

Q: A was an able seaman contracted by ABC Recruitment Agency for its foreign principal,
Seaworthy Shipping Company (SSC). His employment contract provided that he would serve
on board the Almieda II for eight (8) months with a monthly salary of US $450. In connection
with his employment, he signed an undertaking to observe the drug and alcohol policy which
bans possession or use of all alcoholic beverages, prohibited substances and unprescribed
drugs on board the ship. The undertaking provided that: (1) disciplinary action including
dismissal would be taken against anyone in possession of the prohibited substances or who
is impaired by the use of any of these substances, and (2) to enforce the policy, random test
sampling would be done on all those on board the ship.
On his third month of service while the Almieda Uwas docked at a foreign port, a
random drug test was conducted on all members of the crew and A tested positive for
marijuana. He was given a copy of the drug test result. In compliance with the company’s
directive, he submitted his written explanation which the company did not find satisfactory.
A month later, he was repatriated to the Philippines.
Upon arrival in the Philippines, A filed with the National Labor Relations Commission
(NLRC) a complaint against the agency and the principal for illegal dismissal with a claim for
salaries for the unexpired portion of his contract. (2010 Bar Question)
A. Was A’s dismissal valid? Explain. (3%)
SUGGESTED ANSWER:
NO, A’s dismissal was not valid. A was not found to be “in possession of the prohibited substance”
nor was he “impaired by the use” thereof. Being “tested positive for marijuana” is not a ground for
“disciplinary action” under the “undertaking” he signed.

ALTERNATIVE ANSWER:
YES, A’s dismissal was valid. He was tested positive for marijuana. This is in violation of the drug
and alcohol policy, which bans possession, or use of all alcoholic beverages, prohibited substances
and un-prescribed drugs on board the ship.

B. Is his claim for salaries for the unexpired portion of his contract tenable? Explain.
(3%)
SUGGESTED ANSWER:
YES. Section 10 of Rep. Act No. 8042 (as amended by Rep. Act No. 10022) provides that in
case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, or any unauthorized deductions from the migrant worker’s salary, the worker shall
be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for three (3) years
for every year of the unexpired term, whichever is less (cf. Serrano v. Gallant Maritime, 582 SCRA
254 [2009]).

ALTERNATIVE ANSWER:

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NO. Under Rep. Act No. 8042, money claim can be made only if there is dismissal without just or
authorized cause.

Q: Sergio, an employee of Encantado Philippines, Inc. (EPI), was at the company canteen
when Corazon, a canteen helper, questioned him for his use of somebody else’s identification
card (ID). Sergio flared up and shouted at Corazon “Wala kang pakialam! Kung gusto mo.
itapon ko itong mga pagkain ninyo!”. When Sergio noticed that some people where staring at
him rather menacingly, he left the canteen but returned a few minutes later to remark
challengingly “Sino ba ang nagagalit" Sergio then began smashing some food items that were
on display for sale in the canteen, after which he slapped Corazon which caused her to fall
and suffer contusions. The incident prompted Corazon to file a written complaint with
Gustavo, the personnel manager of EPI against Sergio.
Gustavo required Sergio to explain in writing why no disciplinary action should be taken
against him. In his written explanation, Sergio admitted his misconduct but tried to explain
it away by saying that he was under the influence of liquor at the time of the incident.
Gustavo thereafter issued a letter of termination from the employment of Sergio for serious
misconduct.
Sergio now files a complaint for illegal dismissal, arguing that his acts did not constitute
serious misconduct that would justify his dismissal.
Decide. (1996 Bar Question)
Answer:
The acts of Sergio constituted serious misconduct. Thus, there was just cause for his termination.
The fact that he was under the influence of liquor at the time that he did what he did does not
mitigate instead it aggravates, his misconduct being under the influence of liquor while at work is
by itself serious misconduct.

Alternative Answer:
The dismissal is not justified because the serious misconduct committed by the employee is not Ln
connection with his work. Art. 282(g) of the Labor Code was interpreted by the Supreme Court in
Aris Philippines, Inc. v. NLRC, as follows:
"It is not disputed that private respondent has done, indeed he admitted to have committed, a
serious misconduct. In order to constitute a “just cause" for dismissal, however, the act complained
of must be related to the performance of the duties of the employee such as would show him to be
thereby unfit to continue working for the employer."

Q: Pepe Santos was an international Flight steward of FlySafe Airlines. Under FSA’s Cabin
Crew Administration Manual, Santos must maintain, given his height and body frame, a
weight of 150 to 170 pounds.
After 5 years as a flight steward, Santos began struggling with his weight; he weighed 200
lbs., 30 pounds over the prescribed maximum weight. The Airline gave him a one- year
period to attain the prescribed weight, and enrolled him in several weight reduction
programs. He consistently failed to meet his target. He,was given a 6-month grace period,
after which he still failed to meet the weight limit. FSC thus send him a Notice of

110
Administrative Charge for violation of company standards on weight requirements. He
stated in his answer that, for medical reasons, he cannot have a rapid weight loss. A
clarificatory hearing was held where Santos fully explained his predicament. The
explanation did not satisfy FSA and so it decided to terminate Santos’s service for violation
of company standards.
Santos Filed a complaint for illegal dismissal, arguing that the company’s weight
requirement policy is unreasonable and that his case is not a disciplinary but a medical issue
(as one gets older, the natural tendency is to grow heavier). FSA defended its policy as a valid
exercise of management prerogative and from the point of view of passenger safety and
extraordinary diligence required by law of common carriers; it also posited that Santos’
failure to achieve his ideal weight constituted gross and habitual neglect of duty, as well s
willful disobedience to lawful employer orders. The Labor arbiter found the dismissal illegal
for there was neither gross and habitual neglect of duty nor willful disobedience.
Is the Labor Arbiter correct? Why or why not? Explain fully. (6%) (2008 Bar Question)
SUGGESTED ANSWER:
The Labor Arbiter is correct. There is no gross and habitual neglect because it appears that Pepe
was trying to meet the weight limit, but just could not do so. His acts or omissions were not willfully
or intentionally done with conscious indifference to the consequences of such acts or omissions.
There was no willful disobedience because Pepe’s actions or omissions were not motivated by a
wrongful or perverse attitude. Besides, the rigid requirement of meeting the 170-pound maximum
weight limit is not reasonable, considering a person who could just be a few pounds over shall
already be terminated. At worst, Pepe could be suspended or reprimanded for his inability to reach
the weight limit. Dismissal would be too harsh a penalty to impose.

ANOTHER SUGGESTED ANSWER:

The Labor Arbiter is not correct in finding the dismissal of Santos illegal.
Pepe Santos, right at the commencement of his employment at FSA as flight steward, knew that he
must maintain, given his height and body frame, a weight of 130 to 170 pounds.
The FSA, through its Cabin Crew Administrative Manual, told Santos, that given his height and body
frame, he must maintain his weight between 130 and 170 pounds. This pre-requisite is an exercise
of management prerogative. When Santos became a flight steward at FSA, he accepted his
employment with this prerequisite which is not violative of any law but is instead positively based
on passenger safety and extraordinary diligence required by law of common carrier.
Thus, the termination of Santos was for a valid reason: He was no longer complying with a pre-
requisite which was in his contract of employment from the very beginning.

Q: Atty. Renan, a CPA-lawyer and Managing Partner of an accounting firm, conducted the
orientation seminar for newly-hired employees of the firm, among them, Miss Maganda.
After the seminar, Renan requested Maganda to stay, purportedly to discuss some work
assignment. Left alone in the training room, Renan asked Maganda to go out with him for
dinner and ballroom dancing. Thereafter, he persuaded her to accompany him to the
mountain highway in Antipolo for sight-seeing. During all these, Renan told Maganda that
most, if not all, of the lady supervisors in the firm are where they are now, in very productive
and lucrative posts, because of his favorable endorsement.

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 xxx
[b] The lady supervisors in the firm, slighted by Renan’s revelations about them,
succeeded in having him expelled from the firm. Renan then filed with the Arbitration
Branch of the NLRC an illegal dismissal case with claims for damages against the firm. Will
the case prosper? Reasons. (2%) (2009 Bar Question)
SUGGESTED ANSWER:
Yes, serious misconduct is a ground for termination of employment. The term “misconduct” denotes
intentional wrongdoing or deliberate violation of a rule of law or standard of behavior.

ANOTHER SUGGESTED ANSWER:

No. The case for illegal dismissal with damages filed in the Office of Labor Arbiter will not prosper.
Renan was terminated for serious misconduct which is a just cause under Art. 282 of the Labor
Code. The act of Renan is grave and aggravated in character, and committed in connection with his
work (Echaverria v. Venutek Media, 516 SCRA 72 [2007], and indicates that he has become unfit to
continue working for his employer. (Torreda v. Toshiba Info. Equipment, Inc. Phils., 515 SCRA 133
[20007]).

Q: Gabriela Liwanag has been working as bookkeeper at Great foods. Inc., which operates a
chain of high-end restaurants throughout the country, since 1970 when it was still a small
eatery at Binondo. In the early part of the year 2003. Gabriela. Who was already 50 years old,
reported for work after a week-long vacation in her province. It was the height of the SARS
(Severe Acute Respiratory Syndrome) scare, and management learned that the first
confirmed SARS death case in the Philippines. A “balikbayan" nurse from Canada, is a
townmate of Gabriela. Immediately, a memorandum was issued by management terminating
the services of Gabriela on the ground that she is a probable carrier of SARS virus and that
her continued employment is prejudicial to the health of her co-employees.
Is the action taken by the employer justified? (5%) (2005 Bar Question)
SUGGESTED ANSWER:
The employer's act of terminating the employment of Gabriela is not justified. There is no showing
that said employee is sick with SARS, or that she associated or had contact with the deceased nurse.
They are merely townmates. Furthermore, there is no certification by a competent public health
authority that the disease is of such a nature or such a stage that it cannot be cured within a period
of six (6) months even with proper medical treatment. (Implementing Rules, Book VI, Rule I, Sec. 8,
Labor Code).

Q: A, B, C and D (treasurer, accountant, elementary department Principal, and secretary of

the Director, respectively), regular employees of a private educational institution, were
administratively charged for their participation in a picket held in front of the campus after
office hours. Several faculty members, non-academic stall and students joined the peaceful
prayer rally organized by disgruntled employees to protest certain alleged abuses of the
incumbent School Director. Subsequently, the rank- and-file employees succeeded in
forming the first and only union of the School.
During the investigation, the administration discovered that two (2) days prior to the rally,

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A, B, C and D attended the meeting of the School's employees' association which planned the
protest activity. Two well-known organizers/leaders of a national labor federation were also
present.
A, B, C and D were dismissed by the School on the ground of violating the Labor Code which
prohibits managerial employees to “join, assist or form any labor organization.”
Is the contention of the School tenable? Is the dismissal of A, B, C and D valid? Explain. (5%)
(2005 Bar Question)
SUGGESTED ANSWER:
The dismissal of A, B, C and D on the ground that they violated the Labor Code provision which
states that managerial employees "are not eligible to join, assist or form any labor organization" is
not valid. The Labor Code does not provide for any sanction for the aforesaid acts. These acts could
not be considered as just cause for the termination of employment, either.

ANOTHER SUGGESTED ANSWER:

The dismissal of the managerial employees is invalid. The dismissal of the management employees
because of union activities, no matter how erroneous or tenous may be the basis of the exercise, is a
violation of the constitutional and statutory guaranteed rights of self-organization, and an act of
unfair labor practice. (Sec. 3, Art. XIII, Constitution; Art. 243, Labor Code. See also Art. 248 (a),
Labor Code).

Q: Oscar Pimentel was an agent supervisor, rising from the ranks, in a corporation engaged
in real estate. In order to promote the business, the company issued a memorandum to all
agent supervisors requiring them to submit a feasibility study within their respective areas
of operation. All agent supervisors complied except Oscar. Reminded by the company to
comply with the memorandum, Oscar explained that being a drop-out in school and
uneducated, he would be unable to submit the required study. The company found the
explanation unacceptable and terminated his employment. Aggrieved, Oscar filed a
complaint for illegal dismissal against the company. Decide the case. (2005 Bar Question)
SUGGESTED ANSWER:
For failure to comply with the memorandum to submit a feasibility study on his area of operation,
Oscar cannot be terminated (presumably for insubordination or willful disobedience) because the
same envisages the concurrence of at least two requisites: (1) the employee’s assailed conduct must
have been willful or intentional, the willfulness being characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, or lawful, made known to the
employee and must pertain to the duties which he had been engaged to discharge.
In the case at bar, at least two requisites are absent, namely: (1) Oscar did not willfully disobey the
memorandum with a perverse attitude; and (2) the directive to make a feasibility study did not
pertain to his duties. Hence, the termination from employment of Oscar Pimentel is not lawful.

Q: May an ordinary rank-and-file employee be terminated for loss of trust and confidence? If
so, what proof is required? If not, why not? (2%) (1999 Bar Question)
SUGGESTED ANSWER:

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An ordinary rank and file employee may be terminated for loss of trust and confidence as long as
loss of trust and confidence is brought about objectively due to a willful breach by the employee of
the trust reposed in him by his employer or duly authorized representative, and said willful breach
is proven by substantial evidence.
When adequately proven, the dual grounds of breach of trust and loss of confidence constitute valid
and ample bases to warrant termination of an errant employee. As a general rule, however,
employers are allowed a wider altitude of discretion in terminating the employment of managerial
personnel or those of similar rank performing functions which by their nature requires the
employer's full trust and confidence, than in the case of an ordinary rank-and-file employee, whose
termination on the basis of these same grounds requires proof of involvement in the events in
question; mere uncorroborated assertions and accusations by the employer will not suffice. (Manila
Midtown Commercial Corporation v. Nuwhrain, 159 SCRA 212).

Q: Domingo, a bus conductor of San Juan Transportation Company, intentionally did not
issue a ticket to a female passenger, Kim, his long-time crush. As a result, Domingo was
dismissed from employment for fraud or willful breach of trust. Domingo contests his
dismissal, claiming that he is not a confidential employee and, therefore, cannot be
dismissed from the service for breach of trust. Is Domingo correct? Reasons. (2%) (2009 Bar
Question)
SUGGESTED ANSWER:
Domingo as bus conductor holds a position wherein he was reposed with the employer’s trust and
confidence. In Bristol Mgers Squibb (Phils.) v. Baban (574 SCRA 198 [2008]), the Court established
a second class of positions of trust that involve rank-and-file employees who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money. A bus conductor
falls under such second class of persons. This does not mean, however, that Domingo should be
dismissed. In Etcuban v. Sulpicio Lines (448 SCRA 516 [2005]), the Court held that where the
amount involved is miniscule, an employee may not be dismissed for loss of trust and confidence.

Q: Roman had been a driver of Double-Ten Corporation for ten (10) years. As early as his
fifth year in the service he was a ready commended as a Model Employee and given a salary
increase. On his seventh year, he became a steward of his labor union. Since then he became
disputatious and obstinate and his performance fell below par. One day his manager told
him to pick up some documents from a certain bank which were needed to close a business
transaction. Roman did not obey. He said he had an important personal engagement.
Moreover, he did not want to drive a vehicle that was not airconditioned. When his
immediate supervisor asked him in the afternoon to drive an airconditioned car, Roman
again refused. He said he did not want to drive as he wanted to leave the office early.
Roman was asked to explain. After hearing his explanation, Roman was dismissed for willful
disobedience. Roman filed a case for illegal dismissal against the Double-Ten Corporation
with prayer for reinstatement and full back wages without loss of seniority rights, plus
moral and exemplary damages and attorney's fees. Roman contended that since there was
no emergency situation and there were other drivers available, his refusal to drive for the
manager, and later for his supervisor, was not serious enough to warrant his dismissal. On
the other hand, he claimed that he was being punished because of his activities as a steward
of his union.
If you were the Labor Arbiter, would you sustain Roman? Discuss fully. (1995 Bar Question)

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Answer:
If I were the Labor Arbiter, I will not sustain Roman. It is true that it would be an unfair labor
practice for an employer to discriminate against his employee for the latter’s union activities.
But in the case, the Corporation is not discriminating against Roman because he is a union official.
When the Manager of Roman told him to pick up some documents from a certain bank, this was a
lawful order and when Roman did not obey the order, he was disobedient; and when he disobeyed
a similar request made later in the afternoon of same day, he was guilty of willful disobedience to
do what management asked him to do. This is just cause for his termination.

Alternative Answer:
a) No. The existence-of an emergency situation is irrelevant to the charge of willful
disobedience; an opposite principle would allow a worker to shield himself under his self-designed
concept of “non-emergency situation" to deliberately defy the directive of the employer.
Roman was given adequate opportunity under the circumstances to answer the charge. His
explanation was taken into consideration in arriving at the decision to dismiss him.
b) If it can be established that the true and basic motive for the employer's act is derived from
the employee's union affiliation or activities, the allegation by the employer of another reason
whatever its substance of validity, is unavailing. Thus, the dismissal could be considered illegal.

Q: Julie is a branch manager of Bangko Bangkarute National, rising from the ranks through
her 21 years of employment. On November 25. 1992, she filed an application for a total 60
days leave of absence; 15 days with pay (regular annual vacation leave), starting December 1
to 15. and 45 days without pay (personal leave), starting December 16 to January 30. which
she submitted to the Vice President for Branch Banking Department, for approval.
Unfortunately, the Vice President for the Branch Banking Department, disapproved her
request for personal leave without pay of 45 days, citing as reason the anticipated heavy
work load brought about by the onset of the Christmas season. Nonetheless, he approved her
regular annual leave with pay of 15 days. Realizing that the leave granted her (15 days) is
not sufficient she filed a motion for reconsideration only by way of formality since she is
bent on taking a leave for 60 days, irrespective of whether the bank management allows her
personal leave without pay for 45 days. Without waiting for the decision of the Vice
President for branch banking division, which denied her Motion for Reconsideration. Julie
proceeded to take her leave commencing on Dec. 1, 1992.
Having exhausted her 60 days leave of absence, she reported back for work but was
presented a letter dated Dec. 16, 1992, from the Vice President for Branch Banking Division,
informing her of her termination effective December 16. 1992. She filed a case for illegal
dismissal and prayed for reinstatement and damages against Bangko Bangkarute National.
1) Is the severance of Julie’s employment for a just cause? Explain.
2) Is she entitled to reinstatement? Why?
3) Are damages recoverable from Bangko Bangkarute National?
Answer:

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1) The severance of Julie’s employment is for a Just cause. She is guilty of willful
disobedience of the lawful order of her employer, or her representative in connection with her
work. As a branch manager of the Bank, Julie is a high official, who should be a good example to the
employees on how lawful orders of the employer are to be observed and obeyed.
The refusal of the Bank to grant her request for personal leave without pay for 45 days was not
whimsical or arbitrary. There was reason for the refusal, that is, the anticipated heavy workload
brought about by the onset of the Christmas season.
There was willful disobedience on the part of Julie. Her filing a motion for reconsideration was only
by way of formality, since she was bent on taking a leave for 60 days irrespective of whether the
Bank management allows her personal leave without pay for 45 days.

Alternative Answers:
a) There is basis for the Bank to terminate the services of Julie on the ground of its loss
of confidence in her. As a branch manager of the Bank, Julie should show concern that the
anticipated workload brought about by the onset of the Christmas season is satisfactorily
dealt with by the Bank. Yet, inspite of Julie being told about this problem, she was still bent
on taking a leave for 60 days irrespective of whether the Bank allows her personal leave
without pay for 45 days.
b) Basically, the problem is entitlement to personal leave of 45 days on the part of the
employee. If she is entitled by reason of company regulations or company practice, the
employer being a bank, the denial may have been arbitrary and is invalid. If so, her
dismissal is without a just cause, for availment of a right cannot be a ground for discipline.
She would therefore be entitled to reinstatement. However, no damages should be due from
the bank, unless it is clear that it had ratified the action taken by the bank, vice-president.
He should shoulder the damages instead.
On the other hand, if the claim of personal leave is entirely without legal basis, then
the employee was AWOL for 45 days which is serious misconduct, hence, a just cause for
dismissal. Even then, in the light of her long service plus a valid justification for personal
leave (such as urgent medical treatment abroad), the dismissal would be for insufficient
cause and would be too harsh, hence, she would be entitled to reinstatement without back
wages.

Answer:
2) She is not entitled to reinstatement because her dismissal was legal, it being for Just cause.

Alternative Answers:
a) She would be entitled to reinstatement since her dismissal is considered too harsh a
penalty for the offense she committed.
b) Julie is not entitled to reinstatement. The “strained relations" rule applies in this
case. Julie, a branch manager of the bank, occupies a highly responsible and confidential
position, which requires a consistent level of confidence.

116
3) She cannot claim damages from the Bank. There is no basis for a claim for damages. It may
be noted that she was not given the required due process by the Bank before her dismissal. She Is
therefore entitled to an indemnity of PI.000.

Q: “A” is an audit clerk in the Seafront Financing Company. One day he had an argument with
his immediate superior after the latter accused him of having failed to record and check a
certain transaction a week earlier which resulted in the loss of P100, 000. The argument led
to a fist- fight with both protagonists sustaining serious injuries that required
hospitalization. One and a half months later, “A” returned to work but was immediately
given by the same superior a dismissal letter on the ground of loss of confidence, grave
misconduct and fighting with his superior. “A” later sued the company for illegal dismissal.
He also claimed for reinstatement and backwages. Decide.
Answer:
There may be just cause for the termination of the employment of “A”. After all, he is guilty of a
serious misconduct if he fought his superior after the latter accused him of having failed to record
and check a transaction which resulted in a loss of P100,000 for the company. This is also a factual
basis for loss of confidence since it is a willful breach of trust by the employee of the trust reposed
in him by his employer. The foregoing is a just cause for the termination of employment.
However, the Company should first give “A” the ample opportunity to be heard and defend himself
with the assistance of his representatives if he so desires in accordance with company rules and
regulations promulgated pursuant to the guidelines set by the DOLE.
Unless the Company gives to “A” the ample opportunity to be heard and to defend himself, its
termination of “A” will be illegal, and “A” will be entitled to reinstatement and backwages.

Q: Jose and Pedro were utility workers employed by Yellow Farms. Inc. On 13 January 1984,
they were picked up by the company's guards in connection with the theft of polyethylene
bags belonging to the company. They were detained at the Baybay Municipal Jail. Initial
investigation of the police yielded no prima facie case against them, resulting in their
release. However, after further investigation. an amended complaint was formally filed
against them and two others, charging them with theft before the Municipal Court. The
Company terminated Jose and Pedro due to loss of confidence. Consequently, the two filed a
complaint of illegal dismissal on the ground that their dismissal based on the criminal
complaint did not justify their termination. Is the filing of the criminal complaint against
Jose and Pedro sufficient ground for their termination? What is the quantum of proof
necessary to terminate an employee for loss of confidence? What if the criminal complaint
was dismissed on the ground of reasonable doubt?
Answer:
The mere filing of the criminal complaint against Jose and Pedro would not be sufficient ground for
their termination. because while it is true that the criminal complaint could be properly filed only if
there was a prima facie case against said employees, this fact does not in turn automatically mean
that there is already substantial evidence to prove that there is Just cause for their termination.

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The quantum of evidence necessary to terminate an employee for loss of confidence is that of
substantial evidence.
Even if the criminal complaint was dismissed on the ground of reasonable doubt. Jose and Pedro
could still be dismissed as long as there is substantial evidence to prove that they have committed
acts that could be an objective basis for loss of confidence.

Alternative Answer:
Yes, the filing of a criminal complaint is sufficient ground, since such complaint is founded upon
prima facie evidence of their guilt of theft. In dismissal for loss of confidence, it is sufficient if there
is substantial evidence to believe that the employee is guilty of theft. This standard is equivalent to
a prima facie finding of guilt in criminal procedure.
Mere dismissal on the ground that proof beyond reasonable doubt was adduced, will not entitle the
employees to reinstatement. In criminal law the higher standard will not necessarily negative the
existence of the lower standard of proof of substantial evidence of guilt.

Q: Julian Ramos started with Philippine Mines, Inc. as a laborer in 1965. He rose to become a
shift supervisor. Company rules and regulations governing employee conduct within its
mine compound and the residential area and barracks for workers provide that the
commission of a third offense in any year, even if the first two were merely punished with
warning, reprimand, or suspension, would result in dismissal.
By June 10, 1987, Julian had been warned once and reprimanded once. On July 15, 1987,
Julian quarreled with a company guard in the mine’s residential area. Investigated by the
personnel manager, Julian admitted the offense. He was dismissed on July 17, 1987 for
violating company rules and regulations and gross misconduct. He filed a case for illegal
dismissal with backwages on July 22, 1987. The parties stipulated on the above facts before
the Labor Arbiter and submitted the case for decision. (1988 Bar Question)
(a) You are the Labor Arbiter. Decide the case.
(b) If instead of quarreling with a guard, he was caught taking scrap lumber from the
premises of the mine and taking it home for fuel, would your answer be the same? Explain
Answer:
(a) I will decide the case, ruling that the dismissal is illegal, if the quarrel which Julian had with
a company guard was just a small quarrel, say, just an exchange of words, after which Julian and the
company guard parted as friends. It would be too harsh; it could be violation of the security of
tenure of an employee, especially in this case, of an employee who has been with the Company for
over 20 years, to punish him with dismissal just because he has committed a third offense within a
year. It should also be noted that the quarrel was in the miners residential area and not in the
working area of the miners. This “third offense” rules of the company, rules and regulations should
not be literally implemented. It is serious misconduct that is a just cause for termination. Thus, if
the quarrel was a serious one: it was Julian who provoked the quarrel; he inflicted physical injuries
on the security guard, then the quarrel could be just cause for termination.

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(b) I would rule that the act of Julian taking scrap lumber from the premises of the Mine and
taking it home for fuel will be a just cause for terminating him. It is noted that Julian is a shift
supervisor. He should be a model for other employee. Thus, I will consider his act of taking home
scrap lumber as serious misconduct.

Q:
1) Distinguish between the substantive and the procedural requirements for the
dismissal of an employee.
2) May a court order the reinstatement of a dismissed employee even if the prayer of
the complaint did not include such relief?
Answer:
1) This is the substantive requirement for the valid dismissal of an employee: There should be
a just cause for the termination of an employee or that the termination is authorized by law. m
This is the procedural requirement: The employer should furnish the employee whose employment
is sought to be terminated a written notice containing a statement of the causes for termination and
the employer should afford the employee to be terminated ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires. (Arts. 279 and 277 (b).
Labor Code)
2) So long as there is a finding that the employee was illegally dismissed, the court can order
the reinstatement of an employee even if the complaint does not include a prayer for reinstatement,
unless, of course, the employee has waived his right to reinstatement; By law an employee who is
unjustly dismissed is entitled to reinstatement, among others.
The mere fact that the complaint did not pray for reinstatement will not prejudice the employee,
because technicalities of law and procedure are frowned upon in labor proceedings. (General
Baptist Bible College vs. NLRC, 219 SCRA 549).

Q: Diosdado, a carpenter, was hired by Building Industries Corporation (BIC), and assigned
to build a small house in Alabang. His contract of employment specifically referred to him as
a “project employee,” although it did not provide any particular date of completion of the
project.
Is the completion of the house a valid cause for the termination of Diosdado’s employment?
If so, what are the due process requirements that the BIC must satisfy? If not, why not? (3%)
(2009 Bar Question)
SUGGESTED ANSWER:
The completion of the house should be valid cause for termination of Diosdado’s employment.
Although the employment contract may not state a particular date, but if it did specify that the
termination of the parties* employment relationship was to be on a “day certain” - the day when the
phase of work would be completed - the employee cannot be considered to have been a regular
employee (Filipinos Pre-Fabricated Building systems v. Puente, 453 SCRA 820 [2005]).
To satisfy due process requirement, under DOLE Department Order No. 19, series of 1993, the
employer is required to report to the relevant DOLE Regional Office the fact of termination of
project employees as a result of the completion of the project or any phase thereof in which one is
employed.

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ANOTHER SUGGESTED ANSWER:
No. The completion of the house is not a valid cause for termination of employment of Diosdado,
because of the failure of the BIC to state “the specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee.” (Labor
Code, Art. 280). There being no valid termination of employment, there is no need to comply with
the requirements of procedural due process.

Q: Inday was employed by Herrera Home Improvements, Inc. (Herrera Home) as interior
decorator. During the first year of her employment, she did not report for work for one
month. Hence, her employer dismissed her from the service. She filed with the Labor Arbiter
a complaint for illegal dismissal alleging she did not abandon her work and that in
terminating her employment, Herrera Home deprived her of her right to due process. She
thus prayed that she be reinstated to her position.
Inday hired you as counsel. In preparing the position paper to be submitted to the Labor
Arbiter, explain the standards of due process which should have been observed by Herrera
Home in terminating your client's employment. 5% (2006 Bar Question)
SUGGESTED ANSWER:
The Labor Code provides the following procedure to be observed in terminating the services of an
employee based on just causes as defined in Art. 282 of the Code:
a) A written notice must be served on the employee specifying the ground or grounds for
termination and giving him reasonable opportunity within which to explain his side:
b) A hearing or conference shall be conducted during which the employee concerned, with the
assistance of counsel if he so desires, is given an opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and
c) A written notice of termination must be served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.

Q: "A" worked for company "B" as a rank and file employee until April 1990 when A's
services were terminated due to loss of confidence in A. However, before effecting A’s
dismissal, B accorded A due process including full opportunity to answer the charges against
him in the course of the investigation. Was B justified in dismissing A after the investigation?
Why? (5%) (2001 Bar Question)
SUGGESTED ANSWER:
In the case of PLDT vs. NLRC, (G.R. No. 106947, February 11, 1999), the Supreme Court ruled that
the basic requisite for dismissal on the ground of loss of confidence is that the employee concerned
must be one holding a position of trust and confidence.
Rank-and-file employees may only be dismissed for loss of confidence if the same is because of a
willful breach of trust by a rank and file employee of the trust reposed in him by his employer or
duly authorized representative (Art. 282(c), Labor Code).

ANOTHER SUGGESTED ANSWER:

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"B" is justified in dismissing "A" for loss of confidence after according him the right to procedural
due process. However, the following guidelines must be observed, as ruled in Nokom vs. NLRC, G.R.
No. 140034, July 18, 2000:
a. loss of confidence should not be simulated;
b. it should not be used as subterfuge for causes which are improper, illegal or unjustified;
c. it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
d. it must be genuine, not a mere after thought to justify their action.

2. Authorized Causes
Q: Distinguish between dismissal of an employee for just cause and termination of
employment for authorized cause. Enumerate examples of just cause and authorized cause.
(5%) (2000 Bar Question)
SUGGESTED ANSWER:
Dismissal for a just cause is founded on faults or misdeeds of the employee. Separation pay, as a
rule, will not be paid. Examples: serious misconduct, willful disobedience, commission of crime,
gross and habitual neglect, fraud and other causes analogous to the foregoing. (Art. 282, Labor
Code).
Termination for authorized causes is based on business exigencies or measures adopted by the
employer, not constituting faults of the employee.
Payment of separation pay at varying amounts is required. Examples: redundancy, closure,
retrenchment, installation of labor saving device and authorized cause. [Art. 283-284, Labor Code).

Q: Enumerate and discuss briefly:

1. xxx
2. What are the authorized causes for a valid dismissal by the employer of an employee?
Why are they distinct from the just causes? (5%) (2005 Bar Question)
SUGGESTED ANSWER:
The authorized causes for a valid dismissal are distinct from just causes because where the
dismissal of an employee is based on just causes, these just causes are acts committed by the
employee which provide the basis for his dismissal. On the other hand, where the dismissal is based
on authorized causes, these authorized causes are the results of the proper exercise by the
employer of his management prerogatives. . If a valid dismissal is based on just causes, there is no
liability on the part of the employer, although sometimes, financial assistance to be given to the
dismissed employee is asked of the employer. If a valid dismissal is based on authorized causes, the
employer has to pay separation pay except In case of closure or cessation of operation due to
serious business losses or financial reverses.

Q: Juan and Pedro were regular employees of Rose Manufacturing Company for 20 years. On
May 31, 1984, both were dismissed by the company for dishonesty and fraud. They sued for
reinstatement and backwages. The labor arbiter ordered the reinstatement of Juan and
Pedro and the payment of their backwages. During the pendency of its appeal to the National

121
Labor Relations Commission (NLRC). The company undertook a reorganization of its various
departments where, among others, the positions of Juan and Pedro were eliminated as
redundant. On April 30, 1989, the NLRC affirmed the labor arbiter’s award and ordered the
reinstatement of Juan and Pedro and payment of backwages covering five years. You are
asked by the company to question the ruling of the NLRC before the Supreme Court. What
would be your main arguments?
Answer:
I will question the ruling of the NLRC before the Supreme Court with the following as my main
arguments:
1. The order to reinstate Juan and Pedro is no longer correct because of the supervening
event, namely, the reorganization at the company that included, among others, the elimination of
the positions of Juan and Pedro which were considered redundant. Redundancy is an authorized
cause for the termination of employment. (Art. 283, Labor Code).
2. The award of backwages covering five years is not correct. The Supreme Court has been
consistently applying the so-clled Mercury Drug ruling that limits the backwages to a three year
period.

Alternative Answer:
I will charge the NLRC and the Labor Arbiter with abuse of discretion amounting to lack of
jurisdiction for ordering the reinstatement and the payment of back wages to them. Assuming that
the dishonesty and fraud of Juan and Pedro have been established as facts, their dismissal is for just
cause.

Q: ABC Tomato Corporation, owned and managed by three (3) elderly brothers and two (2)
sisters, has been in business for 40 years. Due to serious business losses and financial
reverses during the last five (5) years, they decided to close the business. (2006 Bar
Question)
1. As counsel for the corporation, what steps will you take prior to its closure? 2.5%
SUGGESTED ANSWER:
As counsel for the corporation, I will see to it that the corporation shall serve a written notice on its
intended date of closing or cessation of operation on the workers of the corporation and the
Department of Labor and Employment at least one month before the intended date of the closure or
cessation of operation.

2. Are the employees entitled to separation pay? 2.5%

SUGGESTED ANSWER:
The employees of the corporation are not entitled to separation pay because Article 283 of the
Labor Code expressly provides that if the closure or cessation of operation of an establishment is
due to serious business losses or financial reverses, the employees are not entitled to separation
pay.

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If the reason for the closure is due to old age of the brothers and sisters:
1. Is the closure allowed by law? 2.5%
SUGGESTED ANSWER:
Yes, the closure is allowed by law. For a bona fide reason, an employer can lawfully close shop at
any time. Just as no law forces anyone to go into business, no law can compel anybody to continue
the same. It would be stretching the intent and spirit of the law if the Court interferes with
management’s prerogative to close or cease its business operations just because the business is not
suffering from any loss or because of the desire to provide workers continued employment
(Alahang Country Club, Inc. vs. NLRC, 466 SCRA 329 [2005]).

2. Are the employees entitled to separation benefits? 2.5%

SUGGESTED ANSWER:
The employees of the corporation are entitled to separation pay because the Labor Code expressly
provides that the only time that they are not entitled to separation pay is when the closure or
cessation of operation is due to serious business losses or financial reverses.

Q: What conditions must prevail and what requirements, if any, must an employer comply
with to justify/effect a valid retrenchment program? (2%) (2001 Bar Question)
SUGGESTED ANSWER:
In the case of Asian Alcohol Corp. vs. NLRC, G.R. No. 131108, March 25, 1999, the Supreme Court
stated that the requirements for a valid retrenchment must be proved by clear and convincing
evidence: (1) that the retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and real or if
only expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to 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
one 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.

Q: What conditions must prevail and what requirements, If any, must an employer comply
with to justify/effect a valid redundancy program? (2%). (2001 Bar Question)
SUGGESTED ANSWER:
In the case of Asian Alcohol Corp. (supra), the Supreme Court stated that 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 previously undertaken by the
business. Under these conditions, the employer has no legal obligation to keep in its payroll more

123
employees than are necessary for the operation of its business.

For the implementation of a redundancy program to be valid, the employer must comply with the
following requisites: (1) 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.

Q: Is the seniority rule or "last in first out" policy to be strictly followed in effecting a
retrenchment or redundancy program? (1%). (2001 Bar Question)
SUGGESTED ANSWER:
Again, in Asian Alcohol Corp., the Supreme Court stated that with regard the policy of "first in, last
out" in choosing which positions to declare as redundant or whom to retrench to prevent further
business losses, there is no law that mandates such a policy. The reason is simple enough. A hoot of
relevant factors come into play in determining cost efficient measures and in choosing the
employees who will be retained or separated to save the company from closing shop. In
determining these issues, management plays a pre-eminent role. The characterization of positions
as redundant is an exercise of business judgment on the part of the employer. It will be upheld as
long as it passes the test of arbitrariness

Q: Aside from the just causes enumerated in Article 282 of the Labor Code for the
termination of employment, state three (3) lawful or authorized causes for the dismissal of
an employee. (2%)
SUGGESTED ANSWER:
A. According to Art. 283 of the Labor Code, the lawful or authorized causes for the termination
of an employee are:
1. installation of labor saving devices
2. redundancy
3. retrenchment to prevent losses or;
4. closing or cessation of operation of the establishment or undertaking, unless the closing Is
for the purpose of circumventing the provisions of the Labor Code. Art 284 also provides that an
employer may terminate the services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is prejudicial to his health as well
as to the health of his co-employees.

Q: Soon after the Aslan meltdown began in October 1997, ABC Realty and Management
Corporation undertook a downsizing program and terminated nearly a third of its regular
workforce. The affected employees questioned their termination arguing that the action was
precipitate in that ABC had not proved that it sustained any losses. Is the claim of the
employees correct? Explain your answer. (3%). (2001 Bar Question)

124
SUGGESTED ANSWER:
The claim of the employees may or may not be correct.
When the Corporation undertook its "downsizing" program, it may have terminated its employees
on either one of two grounds, namely, redundancy or retrenchment.
For redundancy, there is no requirement of losses, whereas in retrenchment, substantial losses,
actual or anticipated, is a requirement. (Article 283, Labor Code). In Atlantic Gulf and Pacific
Company vs. NLRC, G.R. No. 127516, May 28, 1999, the Supreme Court ruled:
"... it is necessary to distinguish redundancy from retrenchment... Redundancy exists when the
services of an employee are in excess of what is required by an enterprise. Retrenchment on the
other hand, is resorted to primarily to avoid or minimize business losses."
In Escareal vs. NLRC, 213 SCRA 472 (1992), the Supreme Court ruled that the law does not require
financial loss as a basis for redundancy.

Q: (2000 Bar Question)

a) Can redundancy exist where the same is due to the company’s failure to properly
forecast its manpower requirements? (3%)
b) Can redundancy exist where the work performed by twelve (12) workers can be
performed as efficiently by ten (10) workers by increasing the speed of a machine without
detriment to the health and safety of the workers? (3%)
SUGGESTED ANSWER:
a) Yes, redundancy exists when a position has become an excess or superfluous which, in turn,
may be caused by reorganization, closure of a section or department, or adoption of labor-saving
arrangements. Poor forecasting does not invalidate redundancy. Forecasting after all is not fail-free.
[Wiltshire File Co.,Inc. v. NLRC, 193 SCRA 665 (1991)].
b) Yes, redundancy can exist where work efficiency has been improved mechanically thus
resulting in excessive or superfluous manpower. (Wiltshire File Co., Inc. v. NLRC, 193 SCRA 665
(1991)].

Q:The Company Legal Counsel advised the Board of Directors as follows: "A company cannot
retrench to prevent losses until actual losses occur. The Company must wait until the end of
the Business Year when its Books of Accounts, Profit and Loss Statement showing the actual
loss and Balance Sheet have been audited by an independent auditing firm."
Is the legal advice of counsel correct? [5%] (1998 Bar Question)
SUGGESTED ANSWER:
The legal advice is not correct. The Labor Code (in Article 283) provides that retrenchment may be
resorted to “to prevent losses" Thus, there could be legal basis for retrenchment even before actual
losses as long as the losses are imminent and serious.

ANOTHER SUGGESTED ANSWER:

The advise of the Company Legal Counsel that an employer cannot retrench to prevent losses until

125
actual losses occur is not correct. The Labor Code provides:
Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate
the employment of any employee xxx retrenchment to prevent losses.
The Law does not require that retrenchment can be undertaken by an employer only after an actual
business loss occurs. The Supreme Court in Lopez Sugar Corporation v. Federation of Free Workers,
189 SCRA 179 (1990), said:
In its ordinary connotation, the phrase “to prevent losses" means that the retrenchment or
termination ot some employees is authorized to be undertaken by the employer sometime before
the losses anticipated are actually sustained or realized. It is not, in other words, the intention of the
lawmaker to compel the employer to stay his hand and keep all his employees until sometime after
losses shall have in fact materialized; if such an Intent were expressly written into law, the law may
well be vulnerable to constitutional attack as taking property from one man to another, (un-
derscoring supplied)

Q: Coronet Records Phil. (CRP) manufactures audio/video record players, compact discs,
video discs, cassettes and the like. CRP’s shareholdings is 40% foreign and 60% domestic.
CRP signed a Collective Bargaining Agreement (CBA) with its rank-and-file workers for three
years starting from January 1, 1990 and ending on December 31. 1993.
Before the expiration of the CBA. CRP decided to sell all its assets to Lyra Music Corporation
effective September 30. 1993. In this regard, notice was sent on August 30. 1993 to each
employee advising them of the sale of the Company's assets to Lyra Music Corporation and
the closure of the company’s operations effective September 30. 1993. CRP, likewise,
requested that each employee receive his separation pay equivalent to one-and-one-half (1
& 1/2) month’s pay per year of service, exclusive of all unused leaves which were also
converted to cash, and his 13th-month pay for 1993.
The employees received their respective separation pay under protest and thereafter filed
an action against CRP and Lyra Music Corporation for unfair labor practice (ULP). The
Arbiter ruled in favor of the workers and ordered Lyra Music Corporation to absorb the
former workers of CRP. Was the Labor Arbiter correct in his decision?
Answer:
No. The Labor Arbiter is not correct. As held in the case of San Felipe Neri School of Mandaluyong
vs. NLRC, when there is a legitimate sale of a company’s assets, the buyer in good faith cannot be
legally compelled to absorb the employees of the seller in good faith. In the case at bar, the
employees of the CRP were validly terminated based on Article 284. e.g. closure of operations and
separation pay was paid at a rate much higher than the law.
Furthermore, the case filed by the employees was UNFAIR LABOR PRACTICE. It is highly irregular
to order absorption of employees in a ULP case.

Q:
(1) Y Corporation suffered business reverses and it was forced to cease operations and

126
dismiss all its employees. Said employees filed a complaint with the National Labor Relations
Commission fob illegal dismissal and payment of separation pay. Decide with reasons.
(2) Suppose it was found by the labor arbiter that the corporation did not suffer
business losses. It was also found that the corporation went on with its operations. May an
illegally dismissed employee be ordered reinstated despite his strained relationship with
the corporation? What may be awarded to the employee? Explain your answers.
Answers:
(1) When Y Corporation dismissed all its employees because it ceased operations, the dismissal
was legal. Cessation of operations of. an establishment or undertaking is one of the authorized
causes for the termination of employees. (Art. 283. Labor Code). But considering the facts of the
case in question, the employer is not under legal obligation to pay separation pay since the
cessation of operations was due to business reverses. Nevertheless, the employer should serve a
written notice on the workers at least one (1) month before the intended date of the cessation of
operation.
A POINT TO CONSIDER: The bar examinee may state that there shall be payment of separation pay
only if the cessation of operation is due to serious business losses or financial reverses. The
question did not describe the business reverses as serious. So. the bar examinee may state that
there should be payment of separation pay.

(2) There are some Supreme Court decisions ruling that even if there is no legal basis for the
termination of an employee, he may not be reinstated because of strained relationship between the
employer and the employee. Instead. he should be given separation pay. (an example of these cases
is Hernandez vs. National Labor Relations Commission, G.R. No. 84302, Aug. 10. 1989. where the
Supreme Court said: “Inasmuch as the charge against petitioner has not been substantiated, the
inevitable result is that this Court must declare the dismissal as unwarranted and. therefore, illegal.
Considering, however, that the relationship between petitioner and private respondent has been
severely strained by reason of their respective imputation of bad faith against each other, this Court
believes that to order reinstatement at this juncture will no longer serve any prudent purpose.")
Under the facts of the case given in the question, however, it is respectfully submitted that the
above ruling of the Supreme Court should not apply. In the case, the employer acted in bad faith. He
claimed business losses. It was found that there were no such business losses. He said he will cease
operations. Instead, he actually went on with the operations. On the basis of these proofs of bad
faith, the employer should reinstate the illegally dismissed employee pursuant to the Labor Code
which specifically provides for the reinstatement of an unjustly dismissed employee.
A POINT TO CONSIDER: A bar examinee may state that there is need to prove serious business
losses or financial reverses so that thereby, there may be authorized cause for termination. (Camara
Shoes v. Kapisanan ng Manggagawa sa Camara Shoes. G.R. No. 63208-09, May 5. 1989)

Q: Buster Sison, a 55-year old employee of Telecom Facilities, Inc., wanted to retire. He
talked to the personnel manager, who agreed. The necessary papers were drawn up, and
Sison was paid retirement benefits equivalent to 75% of his last basic monthly salary for
every year of service. Sison enjoyed post-retirement life for more than three years, until his
retirement benefits were exhausted. Expecting to get more from Telecom, Sison filed a
complaint for recovery of separation pay under the Labor Code.

127
Decide. (1987 Bar Question)
Answer:
Sison is not entitled to separation pay under the Labor Code. The Labor Code (in Arts. 283 ad 284)
provides the instances when the employer is to pay separation pay, namely, when he terminates the
employment of an employee because of the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation not due to serious business
losses, or when an employee has been found to be suffering from any disease and his continued
employment is prohibited by law or is prejudicial to his health as well as the health of his co--
employees.
Sison’s termination was not brought by any of the above authorized causes. He voluntarily retired,
and he accepted what was paid him by the Company which paid retirement benefits not because it
was under legal obligation to do so, there being no CBA or any agreement providing for such
payment.
Because of all the above, he is not entitled to separation pay.
If he waited so that he retired at age 60, he could have taken advantage of a provision in the Rules
and Regulations for the payment of termination pay equivalent to at least one-half month salary for
every year of service, but this is even less than 75% he received when he retired at age 55.

Q: Daisy’s Department Store hired Leo as a checker to apprehend shoplifters. Leo later
became Chief of the Checkers Section and acquired the status of a regular employee By way
of a cost- cutting measure, Daisy's decided to abolish the entire Checkers Section. The
services of Leo, along with those of his co-employees working in the same section, were
terminated on the same day. A month after the dismissal of Leo, Daisy’s engaged the services
of another person as an ordinary checker and with a salary much lower than that which Leo
used to receive. Given the above factual settings (nothing more having been established),
could the dismissal of Leo be successfully assailed by him? (2005 Bar Question)
SUGGESTED ANSWER:
Yes. Given the factual setting in the problem, and since ‘‘nothing more (have) been established”, the
dismissal of Leo can be successfully assailed by him. This is so because the burden of proof is upon
the employer to show compliance with the following requisites for reduction of personnel:
1. Losses or expected losses should be substantial and not merely de minimis;
2. The expected losses must be reasonably imminent, and such imminence can be perceived
objectively and in good faith by the employer.
3. It must be necessary and likely to prevent the expected losses. The employer must have
taken other measures to cut costs other than labor costs; and
4. Losses if already realized, or the expected losses must be proved by sufficient and
convincing evidence. (Lopez Sugar Corp. v. Federation of Sugar Workers. 189 SCRA 179 [19901]).
Moreover, the notice requirements to be given by Daisy's Department Store to DOLE and
the employees concerned 30 days prior to the intended date of termination, as well as the requisite
separation pay, were not complied with.

ANOTHER SUGGESTED ANSWER:

128
Yes. The authorized cause to dismiss due to redundancy or retrenchment under Art. 283 of the
Labor Code has been disproved by Daisy’s engaging the services of a substitute checker at a^alary
much lower than that which Leo used to receive. Also, it appears that the one (1) month notice rule
required in said law was not complied with. Such being the case, the twin requirements for a valid
dismissal under Arts. 277 (b) and 283 of the Code have clearly not been complied with. That no
separation pay was paid Leo, in violation of Art. 283 of the Code, his dismissal can all the more be
successfully assailed.

3. Due Process (Twin-notice requirement, Hearing; meaning of opportunity to be heard)

Q: FACTS: Joseph Vilriolo (JV), a cashier of Seaside Sunshine Supremart (SSS), was found
after an audit, to have cash shortages on his monetary accountability covering a period of
about five months in the total amount of P48.000.00. SSS served upon JV the written charge
against him via a memorandum order of preventive suspension, giving JV 24 hours to submit
his explanation. As soon as JV submitted his written explanation within the given period, the
same was deemed unsatisfactory by the company and JV was peremptorily dismissed
without any hearing.
The day following his termination from employment, JV filed a case of illegal dismissal
against SSS. During the hearing before the Labor Arbiter, SSS proved by substantial evidence
JVs misappropriation of company funds and various infractions detrimental to the business
of the company. JV, however, contended that his dismissal was illegal because the company
did not comply with the requirements of due process.
xxx
2. If you were the Labor Arbiter, how would you decide the case? Explain briefly (3%)
(1999 Bar Question)
SUGGESTED ANSWER:
I will decide that the termination of JV was legal. It was for just cause. JV's misappropriation of
company funds and various infractions detrimental to the business of the company duly proven by
substantial evidence constitute a willful breach by JV of the trust reposed in him by his employer
which is a just cause for termination. (See Article 282)
But I will award him indemnity of, say PI, 000, for the failure of the employer to give him due
process.

Q: The general manager of Junk Food Manufacturing Corporation dismissed Andrew Tan, a
rank-and-file employee on the ground of insubordination. The general manager served on
Andrew Tan the letter cf termination effective upon receipt which was on 08 March 1992.
Shocked by his unexpected dismissal. Andrew Tan confronted the general manager and hit
the latter on the head with a leap pipe.
Junk Food Manufacturing filed a complaint in court against Andrew Tan for less serious
physical injuries. Somehow, Andrew Tan was acquitted by the court assigned to hear the
criminal case. A few days following his acquittal, or on 01 March 1996, Andrew Tan filed
complaint against the company for Illegal dismissal, reinstatement and the payment of
backwages and damages. (1997 Bar Question)
(a) Was the complaint filed by Andrew Tan for illegal dismissal within the reglementary
period granted by law?

129
(b) What reliefs may Andrew Tan be entitled to if the Labor Arbiter finds Just cause for
termination but that the requirements of notice and hearing are not complied with?
Answer:
(a) Yes. The complaint was filed within four (4) years from the date Andrew Tan was
dismissed by his employer. Illegal dismissal, as a cause of action, prescribes after four (4) years
from the time the cause of action, namely, illegal dismissal took place. This is pursuant to the Civil
Code which provides that actions upon an injury to the rights of a person should be initiated within
four years from the time the right of the action accrues. (Art. 1146 of the Civil Code)
(b) Andrew Tan would be entitled to an Indemnity of PI.000 to P 10,000 from his employer for
the latter's non-compliance of the requirements of notice and hearing in cases of termination of
employment. (Wenphil Philippines v. NLRC, 176 SCRA 66)

Q: Juan Santos is a regular employee of Far East Development Company. During office hours,
he quarelled with a co-employee. Santos was holding a knife and when his supervisor Olivia
Garcia tried to pacify him, he chased her instead with the knife but he was held back by
cooler heads. On the ground of gross misconduct and insubordination, he was dismissed
from the service. He filed a complaint for illegal dismissal with the labor arbiter. The labor
arbiter required Santos and his employer to file their position papers. On the basis of the
position papers submitted, the labor arbiter found that the dismissal was for lawful cause
and thus, the complaint was dismissed. On appeal to the National Labor Relations
Commission, the said decision was reversed on the ground that Santos was not afforded due
process by his employer before he was dismissed. Hence, he was ordered reinstated with
backwages from the date of his separation to the date of his reinstatement without
qualification or deduction.
The employer elevated the case lo the Supreme Court. He argued that even if there was no
due process in the dismissal of Santos, at the hearing before the labor arbiter, it was found
that the dismissal was for a just cause and therefore Santos was not entitled to
reinstatement. Santos, on the other hand, challenged the proceedings before the labor
arbiter on the ground that no hearing was conducted and that the decision was reached only
on the basis of position papers submitted and hence, in violation of due process.
(1) Is the employer's contention valid? Explain.
(2) Is the contention of Santos correct? Explain.
Answers:
(1) The employer's contention is valid. It is true that under the facts of the case in the
question, the employer failed to give due process to Santos before the latter was dismissed since the
employer did not give Santos the required written notice of his termination and the reason or
reasons for his termination. The employer did not give Santos the required opportunity to defend
himself.
But on the basis of the position papers submitted, the labor arbiter found that the dismissal
was lawful cause since Santos was indeed guilty of serious misconduct and willful disobedience
which are just causes for termination.

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 The fact that Santos was not afford due process by the employer does not mean that thereby
the employer cannot dismiss Santos, if there is just cause for his termination.
(2) In Wenph.il Corporation v. National Labor Relations Commission et al, G.A. No. 80587,
Feb. 8, 1989, the Supreme Court said: "By the same token, the conclusion of the public respondent
NLRC on appeal that private respondent was not afforded due process before he was dismissed is
binding on this Court. Indeed, it is well taken and supported by the records. However, it can not
justify a ruling that private respondent should be reinstated with back wages as the public
respondent NLRC so decreed. Although belatedly, private respondent was afforded due process
before the labor arbiter wherein the just cause of his dismissal had been established. With such
finding, it would be arbitrary and unfair to order his reinstatement with back wages."
The contention of Santos is not correct. The Labor Codes provides (in Art. 221) that in any
proceeding before the National Labor Relations Commission or any labor arbiter, the rules of
evidence prevailing in courts oflaw or equity shall not be controlling and that it is in the spirit and
intention of the Code that the Commission and the labor arbiters shall use every and all reasonable
means to ascertain the fact in each case speedily, and objectively, without regard to technicalities of
law on procedure, all in the interest of due process.
Considering the above provision in the Labor Code, in many decisions, the Supreme Court
has held that it is proper for a labor arbiter to decide a case on the basis of the position papers
submitted by the parties. (Example: Robusta Agro Marine Products Inc. u. Corobalem. G.R.
No.80500, July 5. 1989).

Alternative Answers:
(1) The employer's contention is valid if a just cause was found by the labor arbiter on the
merits on the basis of admission in the pleadings, meaning the position papers.
(2) The contention of Santos is not correct if the pleadings meaning the position papers did not
tender any issue of fact. Such issue could be the subject of a hearing and presentation of evidence. If
the pleadings tendered an issue of fact, then a hearing would be required by due process.

Q: Alfredo was dismissed by management for serious misconduct. He filed suit for illegal
dismissal, alleging that although there may be just cause, he was not afforded due process by
management prior to his termination. He demands reinstatement with full backwages.
[a] What are the twin-requirements of due process which the employer must observe in
terminating or dismissing an employee? Explain. (3%)
SUGGESTED ANSWER:
The twin requirements of due process are notice and hearing to be given to the worker. There is
likewise a two- notice requirement rule, with the first notice pertaining to specific causes or
grounds for termination and a directive to submit a written explanation within a reasonable period.
“The second notice pertains to notice of termination. Pursuant to Perez v. Philippine Telegraph and
Telephon Company (G.R. No. 152048, 7 April 2009), the Court held that a hearing or conference is
not mandatory, as long as the employee is given “ample opportunity to be heard”, i.e. any
meaningful opportunity (verbal or written) to answer the charges against him or her and submit
evidence in support of the defense, whether in a hearing, conference, or some other fair, just and

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equitable way.

Q: Gary, a salesman of Astro Chemical Company (ASTRO), was reported to have committed
some serious anomalies in his sale and distribution of company products. ASTRO designated
its Chief Legal Officer to investigate Gary. Instead of submitting to the investigation. Gary
filed a petition to enjoin the investigation on the ground that ASTRO would appear to be his
accuser, prosecutor, and judge at the same time.
Will the petition to enjoin the investigation prosper? Discuss fully. (1995 Bar Question)
Answer:
The petition to enjoin the investigation will not prosper. It is inevitable that in disciplinary cases,
the employer would appear to be accuser, prosecutor, andjudge at the same time since it is the
employer who charges an employee for the commission of an offense; he is also the person who
directs the investigation to determine whether the charge against the employee is true or not and
he is the one who will judge if the employee is to be penalized or not. But if the employee is given
ample opportunity to defend himself, he could not validly claim that he was deprived of his right to
due process of law.

Alternative Answer:
No. The employer is merely complying with the legal mandate to afford the employee due process
by giving him the right to be heard and the chance to answer the charges against him and
accordingly to defend himself before dismissal is effected-.

Q: FACTS: On September 3. 1998, the National Bureau of Investigation (NBI) extracted from
Joko Diaz— without the assistance of counsel — a sworn statement which made it appear
that Joko, in cahoots with another employee, Reuben Padilla, sold ten (10) cash registers
which had been foreclosed by North-South Bank for P50.000.00 and divided the proceeds
therefrom in equal shares between the two of them.
On September 10, 1998, Joko was requested by Rolando Bato, the bank manager, to appear
before the Disciplinary Board for an investigation in the following tenor: “You are requested
to come on Thursday, September 14, 1998, at 11:00 a.m. the Board Room, without counsel or
representative, in connection with the investigation of the foreclosed cash registers which
you sold without authority.”
Mr. Bato himself conducted the investigation, and two (2) days thereafter, he dismissed Joko.
The bank premised its action in dismissing Joko solely on the latter's admission of the
offense imputed to him by the NBI in its interrogation on September 3, 1998. Aside from this
sworn statement, no other evidence was presented by the bank to establish the culpability of
Joko in the fraudulent sale of the banks foreclosed properties. (1999 Bar Question)
1. Is the dismissal of Joko Diaz by North-South Bank legally justified? Explain briefly.
(3%)
SUGGESTED ANSWER:
The dismissal of Joko Diaz by North-South Bank is not legally justified.
Diaz was not given the required due process by the Bank. He should have been given a written

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notice that he was being terminated and a statement of the causes for his termination.
He was instead given a just notice about an investigation relative to an incident.
It was also contrary to law for the Bank to tell Diaz that he should attend the investigation “without
counsel or representative. Instead, he should have been afforded as provided In the Labor Code (in
Article 277[b]) ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires.
If the evidence that was the basis for the termination of Joko Diaz was only his own statement
’'extracted” from him by the NBI when Joko was without the assistance of counsel, then the
statement cannot be substantial evidence for Joko’s termination.

ALTERNATIVE ANSWER:
NO. Under Sec, 12 of Art. in of the 1987 Constitution any “confession or admission obtained in
violation of Sec. 12 and 17 shall be Inadmissible in evidence against him”. Since the sole basis for his
dismissal was the confession procured by the NBI in violation of his right to counsel which is
inadmissible for any purpose and any proceeding including an administrative case, his dismissal is
illegal. Diaz's termination is likewise illegal because he was deprived of his light to due process
since during the investigation he was required to attend without counsel or representative.

2. Can Reuben Padilla’s participation in the fraudulent sale of the bank's foreclosed
properties be made to rest solely on the unilateral declaration of Joko Diaz? Why? (2%)
SUGGESTED ANSWER:
No. The unilateral declaration of Joko, where Joko has not been subjected to cross-examinations
cannot be considered as substantial evidence; it is just hearsay.

ALTERNATIVE ANSWER:
No. The unilateral declaration of Joko is not enough. Such declaration must be corroborated by
other competent and convincing evidence. At the very least, what the Bank should do should be to
confront Reuben Padilla with the declaration of Joko (Century Textile Mills, Inc. vs, NLRC, 161 SCRA
628).

Q: Mariano, Dondon and Pongpong were members of the United Labor Organization, a duly
registered local union. During a meeting, the union expelled them for disloyalty. They were
not notified of the specific accusations against them or given any opportunity to refute the
charges in any hearing or investigation. The union immediately informed their employer,
the XYZ CORPORATION, of their expulsion from the union and recommended their dismissal
in accordance with the closed-shop agreement in the CBA.
a) May the XYZ CORPORATION look into the facts of the expulsion before affecting
termination of their employment?
Answer:

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Yes, XYZ Corporation may look, in fact, it should look into the facts of the expulsion before effecting
termination of their employment.
The Labor Code expressly provides that the employer should not only furnish the worker whose
employment is sought to be terminated a written notice containing a statement of the causes for
termination. The employee should also be afforded the opportunity to be heard and to defend
himself.

b) If the corporation decided to investigate the circumstances of the expulsion and

found out that the union acted arbitrarily in expelling them from its ranks, may it refuse to
terminate their employment?
Answer:
The employer may refuse to terminate the employment of Mariano, Dondon and Pongpong. The
closed-shop agreement in the CBA can be the basis for terminating an employee only if the
employees have been validly expelled from union membership.

Q: FACTS: Joseph Vilriolo (JV), a cashier of Seaside Sunshine Supremart (SSS), was found
after an audit, to have cash shortages on his monetary accountability covering a period of
about five months in the total amount of P48.000.00. SSS served upon JV the written charge
against him via a memorandum order of preventive suspension, giving JV 24 hours to submit
his explanation. As soon as JV submitted his written explanation within the given period, the
same was deemed unsatisfactory by the company and JV was peremptorily dismissed
without any hearing.
The day following his termination from employment, JV filed a case of illegal dismissal
against SSS. During the hearing before the Labor Arbiter, SSS proved by substantial evidence
JVs misappropriation of company funds and various infractions detrimental to the business
of the company. JV, however, contended that his dismissal was illegal because the company
did not comply with the requirements of due process. (1999 Bar Question)
1. Did SSS comply with the requirements of procedural due process in the dismissal
from employment of J'V? Explain briefly (2%)
SUGGESTED ANSWER:
In connection with the right to due process in the termination of an employee, the Labor Code (in
Article 277(b)) requires that the employer furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination and shall afford
ample opportunity to be heard and to defend himself with the assistance of his representative if he
so desires.
SSS did not comply with the above described requirements for due process. The memorandum
order was for the preventive suspension of JV, not a notice for his termination and the causes of his
termination.

Q: Assuming the existence of valid grounds for dismissal, what are the requirements before
an employer can terminate the services of an employee? [5%] (1998 Bar Question)

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SUGGESTED ANSWER:
The employee being terminated should be given due process by the employer.
For termination of employment based on any of the just causes for termination, the requirements of
due process that the employer must comply with are:
A written notice should be served on the employee specifying the ground or grounds for
termination' and giving to said employee reasonable opportunity within which to explain his side.
A hearing or conference should be held during which the employee concerned, with the assistance
of counsel if the employee so desires, is given the opportunity to respond to the charge, present his
evidence and present the evidence presented against him.
A written notice of termination, if termination is the decision of the employer, should be served on
the employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination.
For termination of employment based on authorized causes, the requirements of due process shall
be deemed complied with upon service of a written notice to the employee and the appropriate
Regional Office of the Department of Labor & Employment at least thirty (30) days before the
effectivity of the termination specifying the ground or grounds for termination.

ANOTHER SUGGESTED ANSWER:

Assuming that there is a valid ground to terminate employment, the employer must comply with
the requirement of procedural due process - written notice of intent to terminate stating the cause
for termination; Hearing; and Notice of Termination.
The Labor Code reads:
A. Notice and Hearing
Art. 277. Miscellaneous provisions. - xxx
(a) xxx The employer shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative if he so
desires ...
The Supreme Court ruled in Salaw v. NLRC, 202 SCRA 7 (1991)
xxx Not only must the dismissal be for a valid or unauthorized cause as provided by law xxx but the
rudimentary requirements of due process - notice and hearing - must also be observed before an
employee must be dismissed.
B. Two (2) Notice Requirements -
The Supreme Court in Tanala v. NLRC, 252 SCRA 314 (1996), and in a long line of earlier cases,
ruled:
xxx This Court has repeatedly held that to meet the requirements of due process, the law requires
that an employer must furnish the workers sought to be dismissed with two written notices before
termination of employment can be legally effected, that is, (1) a notice which apprises the employee
of the particular acta or omissions for which his dismissal is sought; and (2) subsequent notice,
after due hearing, which informs the employee of the employers decision to dismiss him.

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Q: Juan Dukha, a bill collector of Ladies Garments Company, was dismissed because he did
not remit his collections. He filed a case against his company for illegal dismissal. During the
hearing, the President of the Company admitted that Juan was never formally investigated
for his dishonesty; neither was he informed of the nature of the charge against him. He was
simply barred from entering company premises by the security guards upon instruction of
management.
Juan Dukha asks for immediate reinstatement with full back wages and without loss of
seniority rights. (1995 Bar Question)
1. Will the complaint of Juan Dukha for illegal dismissal prosper? Explain.
Answer:
Yes, there may be just cause for terminating Juan Dukha. But he was not accorded the required due
process of law.

Alternative Answer:
The complaint of Juan Dukha for Illegal dismissal will prosper in the sense that the complaint will
be heard by a Labor Arbiter. His being barred from entering company premises is tantamount to
dismissal. In the hearings, the employer will have the burden of proving that there is just cause for
terminating Juan, possibly on the basis of willful breach of trust. On the other hand, Juan will be
given the opportunity to prove that his failure to remit his collection is not because of dishonesty.

2. Assuming that he cannot be reinstated, what right can he immediately assert against
his employer? Explain.
Answer:
Assuming that Juan cannot be reinstated because there is Just cause for his dismissal, he would
nevertheless be entitled to an indemnity from his employer, because he was denied due process of
law by said employer.

Alternative Answer:
Juan can pursue the case of illegal dismissal before a Labor Arbiter where he will assert the right to
defend himself i.e., to explain his failure to remit his collections.

3. Suppose Juan Dukha proved during the hearing that he was robbed of his collections
and, consequently, the Labor Arbiter decided in his favor. In the meantime, the Ladies
Garments Company appealed to the National Labor Relations Commission (NLRC).
Pending appeal, what rights are available to Juan relative to the favorable decision of the
Labor Arbiter? Explain.
Answer:
Juan can ask for immediate reinstatement pending resolution of the appeal filed by the company
with the NLRC. At the option of his employer, he may be admitted back to work or merely
reinstated in the payroll.

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Q: Atty. Oliza heads the legal department of Company X with the rank and title of Vice-
President. During his leave of absence, his assistant took over as acting head of the legal
department. Upon his return, Atty. Oliza was informed in writing that his services were no
longer needed, it appearing that the Company had lost so many cases by default due to his
incompetence. Atty. Oliza filed a case for illegal dismissal.
1) Will his case prosper?
2) Pending hearing, may Atty. Oliza ask the Secretary of Labor to suspend the effects of
the termination of the services of an employee and to order his temporary reinstatement?

Answer:
1) His case will prosper. He was not given procedural due process. He was not given the
required notice, namely, a written notice containing a statement of the causes for termination, and
he was not afforded ample opportunity to be heard and to defend himself.
But if, before the Labor Arbiter, in a hearing of the case of illegal dismissal that Atty. Oliza may have
filed, he is found to be grossly Incompetent, this is Just cause for his dismissal. (Art. 277(b), Labor
Code)

Alternative Answer:
Yes. The examinee submits that Atty. Ollza's case will prosper. Well-settled is the rule that even
managerial employees are entitled to the constitutional guarantee of security of tenure. In the case
at bar, there was a clear deprivation of Atty. Oliza’s right to due process. The blanket accusation of
“incompetence" hardly qualifies as compliance with the substantive requirements for an
employee’s dismissal. The written notice that his services were no longer needed also fall short of
the procedural requirements of notice and opportunity to be heard, the twin ingredients of due
process.

Answer:
2) The Labor Code gives the Secretary of Labor and Employment the power to suspend the
effects of a termination made by an employer pending resolution of a labor dispute in the event of a
prima facie finding by the Department of Labor and Employment before whom such dispute is
pending that the termination may cause serious labor dispute or is in implementation of a mass lay-
off.
The termination of Atty. Oliza does not cause a serious labor dispute considering that he is a
managerial employee. It is not in implementation of a mass lay-off. Thus, pending hearing, the
Secretary of Labor and Employment may not suspend the effects of the termination and order his
temporary reinstatement. (Art. 277(b))

C. Reliefs for Illegal Dismissal

Q: What damages can an illegally dismissed employee collect from his employer? (2%).
(2001 Bar Question)

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SUGGESTED ANSWER:
An illegally dismissed employee may collect from his employer actual or compensatory damages,
moral damages and exemplary damages, aa well as attorney's fees as damages.

ANOTHER SUGGESTED ANSWER:

Moral and exemplary damages are only proper where the employee has been harassed and
arbitrarily terminated by the employer. Nueva Ecija vs. Electric Cooperative Employees Association
(G.R. No. 116066, January 24, 2000; Cruz vs. NLRC, G.R. No. 16384, February 7, 2000; Philippine
Aeolus etc., vs. Chua (G.R. No. 124617, April 28, 2000; and Lucas vs. Royo, G.R. No. 136185, October
30, 2000).

Q: Give at least five (5) instances when an illegally dismissed employee may not be
reinstated. (1995 Bar Question)
Answer:
Five (5) instances when an illegally dismissed employee may not be reinstated:
a) When the position held by the illegally dismissed employee has been abolished and there is
no substantially equivalent position for said employee;
b) When the employer has ceased to operate;
c) When the employee no longer wishes to be reinstated;
d) When strained relations between the employer and the employee have developed and
e) When the employer has lost his trust and confidence in the employee who is holding a
position of trust and confidence.
In addition to the above, an illegally dismissed employee may not be reinstated:
a) When he is already entitled to retire at the time he is to be reinstated;
b) When he is already dead;
c) When reinstatement will not serve the interest of the parties; and
d) When he has obtained regular and substantially equivalent employment elsewhere.

1. Reinstatement (Pending appeal (Art. 223, Labor Code), Separation pay in lieu of
reinstatement)
Q: Cite four (4) instances when an illegally dismissed employee may be awarded separation
pay in lieu of reinstatement. (3%) (2009 Bar Question)
SUGGESTED ANSWER:
These four instances are:
(i) in case the establishment where the employee is to be reinstated has closed or ceased
operations;
(ii) where the company has been declared insolvent;
(iii) former position no longer exists at the time of reinstatement for reason not attributable to

138
the fault of the employer; and
(iv) where the employee decides not to be reinstated as when he does not pray for
reinstatement in his complaint or position paper.

Q: A strike was staged in Mella Corporation because of a deadlock in CEA negotiations over
certain economic provisions. During the strike, Mella Corporation hired replacements for
the workers who went on strike. Thereafter, the strikers decided to resume their
employment.
Can Mella Corporation be obliged to reinstate the returning workers to their previous
positions? (1997 Bar Question)
Answer:
Yes. Mella Corporation can be obligated to reinstate the returning workers to their previous
positions. Workers who go on strike do not lose their employment status except when, while on
strike, they knowingly participated in the commission of illegal acts. The Labor Code expressly
provides: Mere participation of a worker in a lawful strike should not constitute sufficient ground
for termination of his employment, even if a replacement had been hired by the employer during
such lawful strike.

Q: Discuss briefly the instances when non-compliance by the employer with a reinstatement
order of an illegally dismissed employee is allowed. (2007 Bar Question)
SUGGESTED ANSWER:
Despite a reinstatement order, an employer may not reinstate an employee in the following
instances: (a) when the position or any substantial equivalent thereof no longer exists; (b) when
reinstatement has been rendered moot and academic by supervening events, such as insolvency of
the employer as declared by the court or closure of the business; or (c) the existence of strained
relations between the employer and the illegally dismissed employee, provided the matter is raised
before the Labor Arbiter.

FIRST ALTERNATIVE ANSWER:

When reinstatement is not feasible due to the strained employer-employee relationship; or
that the reinstatement is rendered moot by the bona fide closure of business; or when the position
previously held by the employee no longer exists and there is no equivalent position available; or
that the employee is sick with an illness that cannot be cured within 6 months, or that the employee
has reached the age of retirement; or that the employee himself refuses to be reinstated for one
reason or another; in view of the expiration of the 4-year prescriptive period; RA 8042 (Migrant
Workers and Overseas Act) does not allow reinstatement to overseas Filipinos workers especially
seamen. In these instances, separation pay in lieu of reinstatement may be ordered at the rate of
one month or one month for ever year of service, a fraction of at least 6 months equivalent to one
year, whichever is higher.

Q: What is meant by "payroll reinstatement" and when does it apply? (4%) (2005 Bar
Question)

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SUGGESTED ANSWER:
Payroll reinstatement is a form of reinstatement which an employer may opt to exercise in
lieu of an actual reinstatement. Here, the illegally dismissed employee is to receive his basic pay
without the obligation of rendering any service to the employer. This occurs when a Labor Arbiter
decides that an employee was illegally dismissed and as a consequence awards reinstatement,
pursuant to Article 279 of the Labor Code. Such award of reinstatement, according to Art. 223 of the
Code, is immediately executory even pending appeal.

Q: Juan Dukha, a bill collector of Ladies Garments Company, was dismissed because he did
not remit his collections. He filed a case against his company for illegal dismissal. During the
hearing, the President of the Company admitted that Juan was never formally investigated
for his dishonesty; neither was he informed of the nature of the charge against him. He was
simply barred from entering company premises by the security guards upon instruction of
management.
Juan Dukha asks for immediate reinstatement with full back wages and without loss of
seniority rights. (1995 Bar Question)
xxx
xxx
4. Suppose Juan Dukha proved during the hearing that he was robbed of his collections
and, consequently, the Labor Arbiter decided in his favor. In the meantime, the Ladies
Garments Company appealed to the National Labor Relations Commission (NLRC).
Pending appeal, what rights are available to Juan relative to the favorable decision of the
Labor Arbiter? Explain.
Answer:
Juan can ask for immediate reinstatement pending resolution of the appeal filed by the company
with the NLRC. At the option of his employer, he may be admitted back to work or merely
reinstated in the payroll.

Q: Linder what circumstances or instances may an employee who is found to have been
illegally dismissed and, therefore, entitled to reinstatement, be nevertheless, NOT ordered
reinstated but merely awarded (a) separation pay in lieu of reinstatement and (b) back
wages? At what rate would the separation pay be? What would be the maximum limit for the
back wages?
Answers:
In a number of Supreme Court decision, it has been ruled that an employee who is found to have
been illegally dismissed shall be awarded separation pay in lieu of reinstatement if reinstatement is
no longer viable in view of the strained relations between the employee and his employer. In a case,
the Supreme Court also ruled that since reinstatement was no longer feasible in view of the
advanced age of the employees who were illegally dismissed, they should instead receive
separation pay.

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The rate of separation pay is one month salary for every year of service. The Supreme Court has
also ruled that in the computation of separation pay account must be taken not only of the basis
salary of the employee but also his allowances.
In decisions applying the law before Rep. Act No. 6715, the Supreme Court ruled that the maximum
limit for back wages shall be three years.
The law has been changed by Rep. Act No. 6715. Back wages are now to be computed from the time
the compensation of the employee was withheld from him up to the time of his actual
reinstatement. Thus, in applying the amendment Introduced by Rep. Act No. 6715, this means that
back wages will now be paid for the entire period up to the actual reinstatement of the employees,
even if the period is over three years.

Q: Johnny Torres is an employee of M.C.U, hospital having worked therein as janitor for 12
years. Sometime in March 1993, he was suspected of conniving with some medical students
in the theft of laboratory equipment for which reason, the management of M.C.U Hospital
ordered his employment terminated for loss of confidence. Johnny Torres filed before the
Arbitration Branch of the NLRC a case of illegal dismissal against the hospital. After hearing,
the Labor Arbiter cleared Johnny Torres of any involvement in the theft and rendered a
decision declaring the order of dismissal illegal thereby ordering the hospital to reinstate
Johnny Torres to his former position and to pay him full backwages, which he would have
received were it not for the illegal dismissal.
MCU Hospital filed a Motion for Reconsideration alleging that the Labor Arbiter gravely
abused his discretion in ordering a reinstatement which is no longer possible under the
“strained relations" principle, a hostility that developed between the parties as a result of
the litigation. Is the legal argument poised by MCU Hospital tenable?
Answer:
The legal argument poised by MCU Hospital is not tenable. An employer cannot use “strained
relations" as a valid reason for not reinstating an employee who has been illegally dismissed, if such
strained relations arose from a worker filing a case of illegal dismissal against his employer. When
he filed the case, the employee was only asserting his constitutional right to security of tenure.

Alternative Answer:
The principle of “strained relations" does not apply on this case, Johnny Torres a janitor, does not
occupy a confidential or responsible position. The rule cannot be applied universally. Otherwise,
reinstatement can never be possible simply because some hostility is engendered between the
parties as a result of litigation.

Q: The Septuagint Company, Inc., through its general manager, dismissed Juan Suntok, a
rank-and-file employee, on the ground of loss of confidence. The company served on his the
notice of termination effective on the date of receipt, which was 8 September 1986. Taken

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aback by his sudden dismissal, Juan confronted the general manager and hit him on the face
with a cast of iron pipe. The company filed a complaint against him for less serious physical
injuries. On 1 September 1990, a week after he was acquitted by the court which tried the
criminal case, Juan filed a complaint for illegal dismissal, seeking reinstatement and
payment of back wages.
a) On the basis of the facts given, was the dismissal of Juan valid?
Answer:
The dismissal of Juan was not valid. The ground for his dismissal is mere allegation of “loss of
confidence." Such allegation is not sufficient unless there are facts that provide the objective basis
of loss of confidence. It should also be noted that Juan was not given any opportunity to be heard
and to defend himself.

b) If the Labor Arbiter finds that the dismissal was illegal for being without just cause, what
relief/s may be granted to Juan?
Answer:
Juan is entitled to these reliefs, namely reinstatement without loss of seniority and other privileges
and full backwages, inclusive of allowances, and to other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.

c) If the Labor Arbiter finds that there was just cause for the termination of Juan's
employment, but that the requirement of notice and hearing was not complied with,
what relief/s may be granted to Juan?
Answer:
The relief to be granted to Juan is indemnity if the amount of PI.000.00.

d) Was the complaint for illegal dismissal filed within the reglementary period?
Answers:
It was filed within the reglementaiy period. Juan filed his complaint for illegal dismissal within four
(4) years from the date of his dismissal which is the prescriptive period for filing cases of illegal
dismissal. An action for illegal dismissal prescribes in four years under the Civil Code, It being an
action predicated “upon an injury to the rights of the plaintiff."

Q: FACTS: In the illegal dismissal case filed by Sharon Cometa against Up & Down Company,
the labor Arbiter rendered a decision directing her immediate reinstatement and payment
of full backwages. The Company appealed to the NLRC. Following her lawyer's advise that the
reinstatement aspect of the decision is immediately executory. Sharon went to the HRD
Office of the Company and demanded immediate reinstatement. When the Company refused,

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her lawyer. Atty. Maximiano Anunciacion, filed a motion to cite the employer in contempt.
Acting on the motion, the NLRC ordered the payroll reinstatement of Sharon Cometa. (1999
Bar Question)
1. Can the company or any of its officials be cited for contempt for refusing to reinstate
Sharon Cometa? Why? (3%)
SUGGESTED ANSWER:
Yes. The company or any of its officials can be cited for contempt. It is rioted that in his decision, the
Labor Arbiter specifically directed the immediate reinstatement of Sharon Cometa. This directive
under the Labor Code (Article 223) is immediately executory, even pending appeal. (Pioneer
Texturizing Corporation v. NLRC, 280 SCRA 806)

ALTERNATIVE ANSWER:
Yes. Under Art. 223 of the Labor Code, an employer has two options in order for him to comply with
an order of reinstatement, which is immediately executory, even pending appeal. Firstly, he can
admit the dismissed employee back to work under the same terms and conditions prevailing prior
to his dismissal or separation or to a substantially equivalent position if the former position is
already filled up. Secondly, the employer can be reinstated in the payroll. Failing to exercise any of
the above options, the employer can be compelled under PAIN OF CONTEMPT, to pay instead the
salary of the employee effective from the date the employer failed to reinstate despite an executory
writ of execution served upon him. Under Art. 218 of the Labor Code, the NLRC has the power to
cite persons for direct and indirect contempt.

ANOTHER ALTERNATIVE ANSWER

In a case (Maranaw Hotel Corp. v. NLRC, 238 SCRA 1ST), the Supreme Court said that although the
reinstatement aspect of a Labor Arbiter's decision was immediately executory, it does not follow
that it is self- executory. There must still be a writ of execution issued motu proprio or upon motion
of the interested party. (See Article 224)

2. May the NLRC order the payroll reinstatement of Sharon Cometa? Why? (2%)
SUGGESTED ANSWER:
The NLRC may NOT order the payroll reinstatement of Sharon Cometa. The Labor Code (Article
223) provides that in the Immediate reinstatement of a dismissed employee, the employee shall be
admitted back to work under the same terms and conditions prevailing prior to the employee's
dismissal or, at the option of the employer, merely reinstated in the payroll. Thus, the reinstatement
of the employee in the payroll is at the option of the employer and not of the NLRC or the Labor
Arbiter who have the power only to direct reinstatement.

Q: Southseas Garments Corporation suspended its operations and laid off its 500 workers in
December 1, 1986, after it received word that the contracts being negotiated abroad did not
materialize and the current work being done had been finished.
On May 2, 1987, the company resumed operations. Most of the workers reported for work
after having been given notice to report. Clara Libunao, a sewing machine operator, did not

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receive any notice but learned of the resumption of work from a fellow worker. On May 16,
1987, she notified the company that she would like to resume work. The company refused to
accept her back, presumably because she was already 60 years old.
Clara filed a complaint for illegal dismissal. Decide. (1987 Bar Question)
Answer:
Clara was illegally dismissed. In the case, the suspension of operations of the Corporation was for a
period not exceeding six (6) months. It was actually only for five (5) months. Thus, in accordance
with the Labor Code (in Art. 286), there was no termination of employment. In such a case, the em-
ployer shall reinstate to his former position without loss of seniority rights any employee who
indicates his desire to resume his work not later than one (1) month from the resumption of
operations of his employer. Clara notified the Corporation that she would like to resume work on
May 16 or within one (1) month from the resumption of the operations of the Corporation on May
2.

Another Suggested Answer:

Clara cannot complain that she has been illegally dismissed, if the refusal of the company to accept
her back is because she was already 60 years old.
Implementing the Labor Code, the Rules and Regulation provides that in the absence of a CBA or
other applicable agreement concerning terms and conditions of employment which provides for a
retirement age at an older age, an employee may be retired upon reaching the age of sixty (60)
years.
Thus, the company may consider her retired after she- became 60 years old. Therefore, there is no
illegal dismissal.

2. Backwages (Computation, Limited backwages)

Q: An employee was ordered reinstated with backwages. Is he entitled to the benefits and
increases granted during the period of his lay-off? Explain briefly. (3%)
SUGGESTED ANSWER:
Yes. An employee who is ordered reinstated with backwages is entitled to the benefits and
increases granted during the period of his lay-off. The Supreme Court has ruled: “Backwages are
granted for earnings a worker lost due to his illegal dismissal and an employer is obliged to pay an
illegally dismissed employee the whole amount of salaries plus all other benefits and bonuses and
general increases to which the latter should have been normally entitled had he not been
dismissed.” [Sigma Personnel Services v. NLRC, 224 SCRA 181 (1993)]

Q: Distinguish between an award for back wages and an award for unpaid wages.
Answer:
An award for backwages is to compensate an employee who has been illegally dismissed, for the
wages, allowances and other benefits or their monetary equivalent, which said employee did not
receive from the time he was illegally dismissed up to the time of his actual reinstatement.
On the other hand, an award for unpaid wages is for an employee who has actually worked but has

144
not been paid the wages he is entitled to receive for such work done. (Arts. 279 and 97(f). Labor
Code)

Alternative Answer:
An award of backwages is given to an employee who is unjustly dismissed. The cause of action here
is the unjust dismissal. On the other hand, an award of unpaid wages is given to an employee who
has not been paid his salaries or wages for services actually rendered. The cause of action here is
non-payment of wages or salaries. (General Baptist Bible College vs. NLRC 219 SCRA 549).

Q: Baldo was dismissed from employment for having been absent without leave (AWOL) for
eight (8) months. It turned out that the reason for his absence was his incarceration after he
was mistaken as his neighbor’s killer. Eventually acquitted and released from jail, Baldo
returned to his employer and demanded reinstatement and full backwages. Is Baldo entitled
to reinstatement and backwages? Explain your answer. (3%) (2009 Bar Question)
SUGGESTED ANSWER:
Yes. Baldo is entitled to reinstatement. Although he shall not be entitled to backwages during the
period of his detention, but only from the time the company refused to reinstate him. (Magtoto v.
NLRC, 140 SCRA 58 [1985]).

ANOTHER SUGGESTED ANSWER:

No. Baldo is not entitled to reinstatement and backwages. The dismissal was for cause, i.e., AWOL.
Baldo failed to timely inform the employer of the cause of his failure to report for work; hence,
prolonged absence is a valid ground to terminate employment.

Q: May the general manager of a company be held jointly and severally liable for backwages
of an illegally dismissed employee? (2%)
SUGGESTED ANSWER:
Yes. If it is shown that he acted in bad faith, or without or In excess of authority, or was
motivated by personal ill-will in dismissing the employee, the general manager may be held jointly
and severally liable for the backwages of an illegally dismissed employee. [ARB Construction C. v.
Court of Appeals, 332 SCRA 427, (2000), Lim v. NLRC, 303 SCRA 432, (1999)]

ANOTHER SUGGESTED ANSWER:

Yes. The General Manager may be held jointly and severally liable for back wages of an
illegally dismissed employee if he or she actually authorized or ratified the wrongful dismissal of
the employee under the rule of respondent superior. In case of illegal dismissal, corporate directors
and officers are solidarily liable with the corporation where termination of employment are done
with malice or bad faith. {Bogo- Medellin Sugar Planters Assoc., Inc. v. NLRC, 296 SCRA 108, (1998)]

Q: What economic components constitute backwages for a rank and file employee? Are these
components equally applicable to a managerial employee? (5%) (2001 Bar Question)

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SUGGESTED ANSWER:
The Labor Code (Art. 279) provides that an employee who is unjustly dismissed from work is
entitled to reinstatement and also to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to his actual reinstatement.
An employee is entitled to all the above benefit regardless of whether he is a rank-and-file
employee or a managerial employee.
However, backwages may also include the 13th month pay which are paid to rank-and-file
employees, as well as benefits arising from a CBA given only to employees in the bargaining unit.
Managerial employees cannot be given the same since they sue ineligible to join a labor
organization.

Q: "A" was hired by company ”B" In January 1980 until A was illegally dismissed on April 30,
1990 as found by a Labor Arbiter who ordered reinstatement and full backwages from April
30, 1990 until A's reinstatement. The Arbiter's decision was promulgated on April 29, 1995.
B appealed claiming, among others, that the award for backwages was excessive in that it
went beyond three-year rule set forth in Mercury Drug u. CIR (56 SCRA 696). Is B's contention
tenable? Why? (5%) (2001 Bar Question)
SUGGESTED ANSWER:
No, the contention of "B" is not tenable.
Rep. Act No. 6715, which was enacted in 1989, in effect set aside the three-year rule set forth in
Mercury Drug us. CLR (56 SCRA 696) when it provided that the full backwages that an unjustly
dismissed employee shall receive shall be computed from the time his compensation was withheld
from him. up to the time of his actual reinstatement.
The word "actual" was inserted in the law by Rep. Act No. 6715. Thus, in accordance with the
aforesaid law, an unjustly dismissed employee shall receive his full backwages computed from the
time his compensation was withheld from him up to the time of his actual reinstatement even if this
period is more than three years.

ANOTHER SUGGESTED ANSWER:

No, the contention of "B" is net tenable. The Supreme Court (In Ferrer vs. NLRC, July 5, 1993)
abandoned the Mercury Drug Rule and in 1996 Bustamante vs. NLRC, 265 SCRA 61 the Supreme
Court said:
[Quoting Article 279 of the Labor Code] Under the above quoted provision, it became mandatory to
award backwages to illegally dismiss regular employees. The law specifically declared that the
award of backwages was to be computed from the time compensation was withheld from the
employee up to the time of his reinstatement.
xxx
The clear legislative intent of the amendment in RJL No. 6715 is to give more benefits to the
workers than was previously given them under the Mercury Drug rule. In other words, the
provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from
ambiguity, and, therefore, must be applied without attempted or strained interpretation.

146
Q: "A", an employee of Company "B", was found to' have been illegally dismissed and was
ordered to be reinstated and paid backwages from the time of dismissal until actual
reinstatement. The case was elevated all the way to the Supreme Court. By the time the
Supreme Court's decision became final and executory. B had closed down and was in the
process of winding up. Nonetheless, B paid A his backwages and separation pay. A
complained that B’s computation was erroneous in that A's allowances was not included. Is A
correct in his claim? For what reason(s)? (2%) (2001 Bar Question)
SUGGESTED ANSWER:
A is correct. After its amendment by Rep. Act No. 6715, the backwages that an employee who has
been unjustly dismissed is entitled to receive is not limited to bis full backwages but also includes
his allowances and the other benefits ox- their monetary equivalent.

ANOTHER SUGGESTED ANSWER:

I& the ease of Consolidated Rural Bank vs. NLRC, G.R. No. 123810, January 20, 1999, the Supreme
Court .ruled that allowances of the employee should be included in the computation of backwages.

V. Management Prerogative
Q: Which takes precedence in conflicts arising between employers’s MANAGEMENT
PREROGATIVE and the employees right to security of tenure? Why?
Answer:
The employee's right to security of tenure takes precedence over the employer's management
prerogative. Thus, an employer's management prerogative includes the right to terminate the
services of an employee but this management prerogative is limited by the Labor Code which
provides that the employer can terminate an employee only for a just cause or when authorized by
law. This limitation on management prerogative is because no less than the Constitution recognizes
and guarantees an employee’s right to security of tenure. (Art. 279. Labor Code: Art. XIII, Sec. 3.
Constitution)

Q: Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with the union
of rank-and-file employees consisting, among others, of bartenders, waiters, roomboys,
housemen and stewards. During the lifetime of the CBA, Harbor View Hotel, for reasons of
economy and efficiency, decided to abolish the position of housemen and stewards who do
the cleaning of the hotel’s public areas. Over the protest of the Union, the Hotel contracted
out the aforementioned job to the City Service Janitorial Company, a bonafide independent
contractor which has a substantial capital in the form of janitorial tools, equipment,
machineries and competent manpower. Is the action of the Harbor View Hotel legal and
valid?
Answer:

147
The action of Harbor View Hotel is legal and valid.
The valid exercise of management prerogative, discretion and judgment encompasses all aspects of
employment, including the hiring, work assignments, working methods, time, place and manner of
work, tools to be used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers, and the discipline, dismissal and recall
of workers, except as provided for, or limited by special laws.
Company policies and regulations are. unless shown to be gross oppressive or contrary to law,
generally binding and valid on the parties and must be complied with until finally revised or
amended unilaterally or preferably through negotiation or by competent authority. (San Miguel
Corporation us. Reynaldo R. Ubaldo and Emmanuel Noel A. Cruz, Chairman and Member
respectively ojthe Voluntary Arbitration Panel, et aL G.R. No. 92859, 1 February 1993. J. Campos. Jr..
218 SCRA.293)

Alternative Answer:
a) The action of the Harbor View Hotel is legal and valid. Contracting out services or functions
being performed by union members is not illegal per se. In fact, it is the prerogative of management
to adopt cost-saving measures to ensure economy and efficiency. Contracting out services or
functions being performed by union members becomes illegal only when it interferes with,
restrains or coerces employees in the exercise of their right to self-organization.

b) The action of Harbor View Hotel would, at first glance, appear to be an unfair labor practice
under Article 248(c), e.g., “to contract out services or functions being performed by union members
if such will interfere with, restrain or coerce employees in the exercise of their right to self-
organization.”
Considering, however, that in the case at bar. there is no showing that the contracting out of
services would violate the employees right to self-organization, it is submitted that the hotel’s
action is a valid exorcise of its management prerogatives and the right to make business judgments
in accordance with law.

Q: Flight attendant A, five feet and six inches tall, weighing 170 pounds ended up weighing
220 pounds in two years. Pursuant to the long standing Cabin and Crew Administration
Manual of the employer airline that set a 147-pound limit for A’s height, management sent A
a notice to “shape up or ship out” within 60 days. At the end of the 60-day period, A reduced
her weight to 205 pounds. The company finally served her a Notice of Administration Charge
for violation of company standards on weight requirements. Should A be dismissed? Explain.
(3%) (2010 Bar Question)
SUGGESTED ANSWER:
NO. While the weight standards for cabin crew may be a valid company policy in light of its nature
as a common carrier, the airline company is now estopped from enforcing the Manual as ground for
dismissal against A.
It hired A despite her weight of 170 pounds, in contravention of the same Manual it now invoked.

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The Labor Code gives to an airline the power to determine appropriate minimum age and other
standards for requirement or termination in special occupations such as those of flight attendants
and the like. Weight standards for cabin crew is a reasonable imposition by reason of flight safety
[Yrasuegui v. PAL, 569 SCRA 467 [2008]). However, A had already been employed for two (2) years
before the airline company imposed on her this weight regulation, and an incident did the airline
company raise which rendered her amiss of her duties.

Q: Bulacan Medical Hospital (BMH) entered into a Collective Bargaining Agreement (CBA)
with its Union, wherein it is expressly stipulated in the Management Prerogative Clause that
BMH shall, in the exercise of its management prerogatives, have the sole and exclusive right
to promulgate, amend and modify rules and regulations for the employees within the
bargaining unit. A year after the contract was signed, BMH issued its Revised Rules and
Regulations and furnished a copy thereof to the Union for dissemination to all employees
covered by the CBA. The Union wrote BMH demanding that the Revised Rules and
Regulations be first discussed with them before its implementation. BMH refused. So. the
Union filed an action for unfair labor practice (ULP) against BMH.
1) Is the Union correct?
2) Assuming that the CBA was signed or executed before the 1987 Constitution was
ratified, would your answer to the preceding question be different?
Answer:
1) The Union is correct. A provision in the collective bargaining agreement concerning
management prerogatives, may not be interpreted as cession of the employees’ right to participate
in the deliberation of matters which may affect their right and the formulation of policies relative
thereto, such as the formulation of a code of discipline.
A line must be drawn between management prerogatives regarding business operations per se and
those which affect the rights of the employees, and in treating the latter, management should see to
it that its employees are at least properly informed of its decisions or modes of action.
The attainment of a harmonious labor-management relationship and the 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. vs. National
Labor Relations Commission, et al, G.R. No. 85985, 13 August 1993. J. Melo. 225 SCRA 258. 301.)

Alternative Answer:
a) The Union is correct. Workers have the right to participate in policy and decision-making
processes affecting their rights, benefits and welfare. (Art. 255).
b) Yes. The Union is correct in asking for discussion of the revised rules prior to their
effectivity. The reason is Art. XIII. Sec. 3 of the 1987 Constitution, allowing workers the right to
participate 'in policy and decision-making on matters related to their welfare and benefits.
The Union's remedy however should not be to file a ULP case but to initiate a GRIEVANCE
proceeding, and if unresolved, submit the matter to voluntary arbitration.

2) The answer would be the same even if the CBA was signed or executed before the
ratification of the 1987 Constitution because it has always been the policy of the State to promote

149
the enlightenment of workers concerning their rights and obligations as employees. (Art. 211; PAL
vs. NLRC, GR 85985. August 13. 1993)

A. Discipline
Q: Universal Milling Company (UNIVERSAL) and Mara’s Canteen (MARA’S) executed an
agreement that UNIVERSAL employees patronizing MARA’S could buy food on credit and
enjoy a 25% discount provided that they present their Identification Card (ID) and wear
their company uniform.
Nikko, an employee of UNIVERSAL, used the ID of Galo, a co-employee, in buying food at
MARA’S. An alert employee of MARA’S discovered the misrepresentation of Nikko but not
without engaging him Ln a heated argument. Nikko boxed MARA’S employee resulting in
serious physical injuries to the latter. UNIVERSAL dismissed Nikko from the company. Nikko
sued UNIVERSAL for illegal dismissal.
As Labor Arbiter, how would you decide the case? Discuss fully. (1995 Bar Question)
Answer:
There is ground for disciplining Nikko. In presenting the ID of a co-employee to buy food at Mara’s
at a discount and engaging in a fist fight, these acts of Nikko constitute misconduct. But it is not the
kind of serious misconduct that could be the basis of dismissal. It will be noted that the fight did not
take place at the workplace.

Alternative Answer:
The facts are not clear whether the canteen is within the company premises. If it is, then the act of
Nikko in boxing Mara’s employee may be considered as a valid ground for disciplinary action.
However, in this case, the penalty of dismissal is not commensurate to the misconduct allegedly
committed.

Q: Bulacan Medical Hospital (BMH) entered into a Collective Bargaining Agreement (CBA)
with its Union, wherein it is expressly stipulated in the Management Prerogative Clause that
BMH shall, in the exercise of its management prerogatives, have the sole and exclusive right
to promulgate, amend and modify rules and regulations for the employees within the
bargaining unit. A year after the contract was signed, BMH issued its Revised Rules and
Regulations and furnished a copy thereof to the Union for dissemination to all employees
covered by the CBA. The Union wrote BMH demanding that the Revised Rules and
Regulations be first discussed with them before its implementation. BMH refused. So. the
Union filed an action for unfair labor practice (ULP) against BMH.
1. Is the Union correct?
2. Assuming that the CBA was signed or executed before the 1987 Constitution was
ratified, would your answer to the preceding question be different?
Answer:
1. The Union is correct. A provision in the collective bargaining agreement concerning
management prerogatives, may not be interpreted as cession of the employees’ right to participate
in the deliberation of matters which may affect their right and the formulation of policies relative

150
thereto, such as the formulation of a code of discipline.
A line must be drawn between management prerogatives regarding business operations per se and
those which affect the rights of the employees, and in treating the latter, management should see to
it that its employees are at least properly informed of its decisions or modes of action.
The attainment of a harmonious labor-management relationship and the 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. vs. National
Labor Relations Commission, et al, G.R. No. 85985, 13 August 1993. J. Melo. 225 SCRA 258. 301.)

Alternative Answer:
a. The Union is correct. Workers have the right to participate in policy and decision-making
processes affecting their rights, benefits and welfare. (Art. 255).
b. Yes. The Union is correct in asking for discussion of the revised rules prior to their
effectivity. The reason is Art. XIII. Sec. 3 of the 1987 Constitution, allowing workers the right to
participate 'in policy and decision-making on matters related to their welfare and benefits.
The Union's remedy however should not be to file a ULP case but to initiate a GRIEVANCE
proceeding, and if unresolved, submit the matter to voluntary arbitration.

2) The answer would be the same even if the CBA was signed or executed before the
ratification of the 1987 Constitution because it has always been the policy of the State to promote
the enlightenment of workers concerning their rights and obligations as employees. (Art. 211; PAL
vs. NLRC, GR 85985. August 13. 1993)

B. Transfer of employees
Q: Mansueto was hired by the Philippine Packing Company (PPC) sometime in 1960 as an
hourly paid research field worker at its pineapple plantation in Bukidnon. In 1970, he was
transferred to the general crops plantation in Misamis Oriental. Mansueto was promoted to
the position of a monthly paid regular supervisor four years after.
Subsequently, research activity in Misamis Oriental was phased out in March of 1982 for
having become unnecessary. Mansueto thereafter received a written memorandum from the
PPC, reassigning him to the Bukidnon plantation effective April 1, 1982, with assurance that
his position of supervisor was still there for him to hold.
Mansueto tried to persuade the PPC management to reconsider his transfer and if this was
not possible, to at least consider his position as redundant so that he could be entitled to
severance pay. PPC did not accept Mansueto's proposal.
When Mansueto continuously failed to report for work at the Bukidnon plantation, PPC
terminated his employment by reason of his refusal to accept his new assignment.
Mansueto claims that his reassignment is tantamount to an illegal constructive dismissal.
Do you agree with Mansueto? Explain. (1996 Bar Question)
Answer:
There is no constructive dismissal by the mere act of transferring an employee. The employee’s

151
contention cannot be sustained simply because a transfer causes inconvenience. There is no
constructive dismissal where, as in Philippine Japan Active Carbon Corp., us. NLRC, 171 SCRA 164
(1989), the Court ruled that constructive dismissal means:
A quitting because continued employment is rendered impossible, unreasonable or unlikeable; as,
an offer involving a demotion in rank and a diminution in pay.
The transfer will not substantially alter the terms and conditions of employment of the Supervisor.
The right to transfer an employee is part of the employer’s managerial function.
Furthermore, the Court ruled that an employee has no vested right to a position, and in justifiable
cases employment may be terminated.
An employer's right to security of tenure does not give him such a vested right to his position as
would deprive the Company of its prerogative to change his assignment or transfer him where he
will be most useful. When his transfer is not unreasonable, not inconvenient, nor prejudicial to him
and it does not involve a demotion in rank or a diminution of his salaries, benefits, and other
privileges, the employee may not complain that it amounts to a constructive dismissal.

Q: FACTS: Mariet Demetrio was a clerk-typist in the Office of the President of a multi-
national corporation. One day she was berated by the President of the company, the latter
shouting invectives at her in the presence of employees and visitors for a minor infraction
she committed. Mariet was reduced to tears out of shame and felt so bitter about the
incident that she filed a civil case for damages against the company president before the
regular courts. Soon thereafter, Mariet received a memorandum transferring her to the
Office of the General Manager without demotion in rank or diminution in pay. Mariet refused
to transfer.
With respect to the civil suit for damages, the company lawyer filed a Motion to Dismiss for
lack of jurisdiction considering the existence of an employer-employee relationship and
therefore, it is claimed that the case should have been filed before the Labor Arbiter. (1999
Bar Question)
1. Will Mariet Demetrio’s refusal to transfer constitute the offense of
insubordination? Explain briefly. (2%)
SUGGESTED ANSWER:
Mariet Demetrio's transfer constitutes the offense of insubordination. The transfer is a lawful order
of the employer.
It is the employer's prerogative, based on its assessment and perception of its employees'
qualifications, aptitudes, and competence, to move its employees around in the various areas of its
business operations in order to ascertain where they will function with maximum bene- fit to the
company. An employee’s right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or transfer him
where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries,
benefits, and other privileges, the employee may not refuse to obey the order of transfer.
(Philippine Japan Active Carbon Corp. V. NLRC, 171 SCRA 164)

2. Rule on the Motion to Dismiss. Should it be granted or denied? Explain briefly

(3%).

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SUGGESTED ANSWER:
The Motion to Dismiss should be denied.
It is a regular court and not a Labor Arbiter that has jurisdiction on the suit for damages.
The damages are not arising from the employer- employee relations which would have placed the
suit under the jurisdiction of a Labor Arbiter. The suit arises from the fact that the President of the
company shouted invectives at Mariet Demetrio in the presence of employees and visitors. Her
complaint for damages is against an officer of the Company based on slanderous language allegedly
made by the latter. This falls under the jurisdiction of the ordinary courts. There is here a simple
action for damages for tortious acts allegedly committed by the defendant. Such being the case, the
governing statute is the Civil Code and not the Labor Code. (Medina v. Castro- Bartolome, 116 SCRA
597)

ALTERNATIVE ANSWER:
The Motion to dismiss should be granted.
According to the Labor Code (in Article 217 (a) 4), the Labor Arbiter has original and exclusive
jurisdiction to hear and decide, among others, claims for actual, moral, exemplary and other forms
of damages arising from the employer-employee relations.
The claim for damages in the case in question arose from the fact that the President of the Company
shouted invectives at Mariet Demetrio in the presence of employees and visitors for a minor
infraction she committed. If the infraction has something to do with her work, then, the claim for
damages could be considered as arising from employer-employee relations. Thus, the claim is
under the exclusive jurisdiction of the Labor Arbiter.

Q: George Clinton, an American, was hired as marketing assistant by Perot Drug Company in
its main office in Cleveland. Ohio. Because of his good performance, Clinton was appointed
manager of the Company’s branch in Manila. After two years in Manila, Clinton was advised
of his promotion and transfer to Cleveland as director for international marketing. Because
of his refusal to be promoted and transferred “for family reasons", Clinton was dismissed by
the Company. Clinton sought your advice. As his counsel, answer the following:
a) What Clinton's cause of action, if any, against Perot Drug Company?
Suggested Answer:
The course of action of Clinton against Perot Drug Company is that of illegal dismissal. When the
Company dismissed him for his refusal to be promoted and transferred “for family reason", he
could claim he was being dismissed without just cause.

b) If he has a cause of action, where will you file the appropriate petition — in the U.S.
or in the Philippines?
Suggested Answer:

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1 will file the case of illegal dismissal in the Philippines where Clinton was working when he was
dismissed. The Company can be sued in the Philippines because it is doing business in the country
by having a branch in Manila.

c) Will your petition, if you decide to file one, proper? Answer with reasons.
Suggested Answer:
The petition will prosper. The refusal of Clinton to be promoted and transferred to Cleveland is not
just cause. His refusing a promotion - his refusing to receive the gift that the Company was offering,
namely, his promotion - cannot be considered as willful disobedience of a lawful order of his
employer. Thus, there is not just cause for the dismissal of Clinton

C. Productivity standard
Q: Union “X” is the majority union of the rank and file employees at Slipper Mart Company. It
amended its by-laws to include among the obligations of its members “to refuse to work with
non-union members.” Slipper Mart wants the amendment to be declared null and void
considering that not all its rank and file employees belong to Union “X” and its enforcement
will cause work stoppage in the company. Give your opinion on the validity of the
amendment.
Answer:
The provision of the by-laws of the union that made it among the obligations of its members ‘‘to
refuse to work with non-union members” cannot be implemented at the Slipper Mart Company. It is
management’s prerogative to determine who shall work together in a company.

Alternative Answer:
The act is an unfair labor practice on the part of the union because it could have the effect of
compelling the employer to compel its employees to join Union “X”, thus, in effect restraining or
coercing employees in the exercise of their right to self-organization.

D. Grant of bonus
Q: What is a bonus? When is it demandable as a matter of right? Explain.
Answer:
A bonus is money given in addition to an employee’s usual compensation.
It may be given as a gratuity, as an act of liberality. But a bonus is demandable as a matter of right if
it is made a legal obligation by law or in a collective bargaining agreement or in a contract of
employment or by its having been given for such a long time such that the receipt of a bonus has
ripened into a right.

Alternative Answer:
A bonus is an amount granted and paid to an employee for his industry and loyalty which

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contributed to the employer's success and realization of profit.
(1) Grant of bonus is a prerogative, not an obligation of the employer; and
(2) It is entirely dependent on the employer's capacity to pay.
Normally discretionary, it becomes part of the regular compensation by reason of long and regular
concession or when the bonus is included as among the benefits granted in a CBA.

Q: XYZ Employees Association filed a complaint against ABC Bank for wrongful diminution of
benefits. It alleged that the bank had been providing for a mid-year bonus equivalent to one-
month basic pay and a Christmas bonus equivalent to one-month basic pay since 1971. Upon
the effectivity of Presidential Decree (P.D.) No. 851 in 1975 which granted the 13 th month
pay, the bank started giving its employees a one-month basic pay as mid-year bonus, one-
month basic pay as Christmas bonus, and one-month basic pay as 13th month pay. In 1980,
the bank was placed under conservatorship and by virtue of a monetary board resolution of
the Central Bank, the bank only gave one month basic pay mandated by P.D. 851, and it no
longer gave its employees the traditional mid-year and Christmas bonuses. Could ABC Bank
be compelled, given the circumstances, to continue paying its employees the traditional mid-
year and Christmas bonuses in addition to the 13th month pay? (2005 Bar Question)
SUGGESTED ANSWER:
No. The grant of a bonus is a prerogative, not an obligation, of the employer. (Traders Royal Bank v.
NLRC, 189 SCRA 274 PI9901). The matter of giving a bonus over and above that which is required
by law is entirely dependent on the financial capability of the employer to give it. (Businessday v.
NLRC. 221 SCRA 9 f19931).
Hence, given the circumstances, ABC Bank cannot be compelled to continue paying its employees
the traditional mid-year and Christmas bonuses in addition to the 13th month pay.

Q: The projected bonus for the employees of Suerte Co. was 50% of their monthly
compensation. Unfortunately, due to the slump in the business, the president reduced the
bonus to 5 % of their compensation. Can the company unilaterally reduce the amount of
bonus? Explain briefly. (2%)
SUGGESTED ANSWER:
Yes. The granting of a bonus is a management prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient.
An employer, like Suerte Co., cannot be forced to distribute bonuses when it can no longer afford to
pay. To hold otherwise would be to penalize the employer for his past generosity. [Producers Bank
of the Phil. V. NLRC, 355 SCRA 489, (2001)]

ANOTHER SUGGESTED ANSWER:

It depends. If there is a legal obligation on the part of Suerte Co. to pay a bonus of its employees
equivalent to 50% of their monthly compensation, because said obligation is included in a collective
bargaining agreement, then Suerte Co. cannot reduce the bonus to 5% of their monthly
compensation. But if the payment of the bonus is not a legal obligation but only a voluntary act on
the part of the employer, said employer, unilaterally, can only reduce the bonus from 50% to 5% of

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the monthly compensation of its employees; the employer can, in fact, not give any bonus at all.

E. Rules on Marriage between employees of competitor-employers

Q: A was working as a medical representative of RX pharmaceutical company when he met
and fell in love with B, a marketing strategist for Delta Drug Company, a competitor of RC. On
several occasions, the management of RX called A’s attention to the stipulation in his
employment contract that requires him to disclose any relationship by consanguinity or
affinity with co-employees or employees of competing companies in light of a possible
conflict of interest. A seeks your advice on the validity of the company policy. What would be
your advice? (3%) (2010 Bar Question)
SUGGESTED ANSWER:
The company policy is valid. However, it does not apply to A. As A and B are not yet married,
no relationship by consanguinity or affinity exists between them. The case of Duncan v. Glaxo
Wellcome (438 SCRA 343 [2004]) does not apply in the present case.

F. Post-employment ban
Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
[a] An employment contract prohibiting employment in a competing company within
one year from separation is valid. (2009 Bar Question)
SUGGESTED ANSWER:
True. An employment contract prohibiting employment in a competing company within a
reasonable period of one year from separation is valid. The employer has the right to guard its
trade secrets, manufacturing formulas, marketing strategies and other confidential programs and
information.

VI. Social Welfare Legislation (P.D. 626)

A. SSS Law (R.A. No. 8282)
Q: In 1960, Juan hired Pablo to drive for the former’s lumber company. In 1970, Pablo got
sick and was temporarily laid-off. In 1972, Pablo recovered and resumed working for the
same lumber company, now run by Juan's wife since Juan had already passed away. In 1996,
Pablo retired. When Pablo applied for retirement benefits with the SSS that same year, he
discovered that the lumber company never enrolled him as an employee, much less remitted
his contributions that were deducted from his salary. The lumber company agreed to pay for
Pablo's contributions plus penalties but maintained that most of Pablo’s claims had already
prescribed under Art. 1150 of the Civil Code. (Art. 1150 provides "The time for prescription
of all kinds of actions, when there is no special provision which ordains otherwise, shall be
counted from the day they may be brought."). Is the Lumber Company’s contention correct?
Why? (3%). (2001 Bar Question)
SUGGESTED ANSWER:
The lumber company's contention is not correct.

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The Social Security Law (in Sec. 22(b) provides that the right to institute the necessary action
against an employer may be commenced within twenty (20) years from the time the delinquency is
known or the assessment is made by the SSS, or from the time the benefit accrues, as the case may
be.

1. Coverage
Q: State the respective coverages of (a) the Social Security Law; x x x (1997 Bar Question)
Answer:
(a) Coverage of SSS (Sec. 9, RA 8282) shall be compulsory upon all employees not over sixty
years of age and their employers.
Filipinos recruited in the Philippines by foreign-based employers for employment abroad maybe
covered by the SSS on a voluntary basis.
Coverage in the SSS shall also be compulsory upon all self-employed persons earning PI, 800 or
more per annum.
xxx

Q: Seventy (70) private security guards of TAPANG SECURITY AGENCY CORPORATION,

assigned to guard the mining area of DAVAO GOLD CORPORATION, filed a complaint against
both their direct employer. TAPANG SECURITY, and their indirect employer. DAVAO GOLD,
when they discovered they could not avail of the benefits of the Social Security System law
for the failure of respondents TAPANG or DAVAO GOLD to remit its contributions to the
System.
By way of answer to the complaint. TAPANG claims that there is no employer-employee
relationship, since it has only two (2) office employees whose duties are to monitor their
assignment and hours of work and to pay the salaries under the agency contract of the
security guards from the funds remitted by DAVAO GOLD, keeping a certain percentage of
the amount for office expenses and supervisory fees, the true and real employer being
DAVAO GOLD. On the other hand, DAVAO GOLD maintains that it has no employer-employee
relationship with TAPANG’s security guards assigned to secure its mining area since it has
no control over hiring/dismissal of its guards. TAPANG is a duly licensed security agency and
a bona fide independent contractor.
1) Who is deemed an “employee" for purposes of coverage under the SSS law?
2) Under the above facts whose duty is it to bring the security guards for compulsory
coverage pursuant to the SSS law? Discuss.
Answer:
1) A person is deemed an employee" for purposes of coverage under the Social Security Law if such
person performs services for an employer in which either or both mental and physical efforts are
used and who received compensation for such services, where there is an employer-employee
relationship. Also, a self-employed person is both an employee and employer at the same time. (Sec.
8(d). Social Security Law). It is the duty of Tapang Security Agency Coip. to bring the security

157
guards for compulsory coverage pursuant to the SSS law. Said law expressly provides that
employees of bona fide independent contractors shall not be deemed employees of the employer
engaging the services of said contractors. (Sec. 8(j), Social Security Law)

Alternative Answers:
a) The Social Security Law defines an employer as one who uses the services of another
person who is under his orders as regards the employment. Under the facts of the case, it is very
clear that it is Davao Gold that has control of the security guards. The security guards are under the
orders of Davao Gold as regards their employment, meaning how they perform their work. It could
be said that Tapang Security Agency Corp. was acting only like a labor-only contractor and thus,
was just an agent of Davao Gold who is the real employer. (Sec. 8(e), Social Security Law and Art.
106, Labor Code)
b) If a company enters into a contract of services with a security agency whereby the latter
htred security guards to work with the said company, then that company becomes the indirect
employer of the guards hired by said security agency. The company and the security agency become
jointly and severally liable to the security guards. Hence, it is the duty, of both the direct and
indirect employer to bring the security guards for compulsory coverage pursuant to the SSS law.

Q: Sapatilya Company, a manufacturer of wooden shoes started its operations on January 1,

1989. As of June 15, 1989, the company had in its payroll a general manager, an assistant
general manager, three supervisors and forty rank and file employees, all of whom started
with the company on January 1, 1989. On July 1, 1989, the company also had ten casual
employees who had been with the company since February 16, 1989 and twelve contractual
employees whose contracts of employment with the company is for the period from August
1, 1989 to September 30, 1989,. Who among the aforementioned employees are under
coverage of the Social Security Law? When did their coverage under the said law take effect?
Answer:
All of the foregoing employees are covered by the Social Security Law, except the ten (10) casual
employees. The coverage of the Social Security System is very comprehensive; it covers “all”
employees not over sixty years of age except, among others those whose “employment is purely
casual and not for the purpose of occupation or business of the employer.” But the casual employees
in the question may not even be casual under the Social Security Law because they have been with
the company since February 16, 1989. How could they be with the Company that long if their em-
ployment is not for the purpose of occupation or business of the employer?
The coverage of the Social Security Law takes effect on the day of the employment of the employee.

Q: Can a member of a cooperative be deemed an employee for purposes of compulsory'

coverage under the Social Security Act? Explain. (2%) (2009 Bar Question)
SUGGESTED ANSWER:
Yes, an employee of a cooperative, not over sixty (60) years of age is, under the SSS Law, subject to
compulsory coverage. The Section 8(d) SSS Law defines an employee as - “Sec. 8(d)— any person
who performs services for an employer in which either or both mental and physical efforts are used
and who receives compensation for such service, where there is an employer- employee

158
relationship.”

Q: Don Jose, a widower, owns a big house with a large garden. One day, his househelper and
gardener left after they were scolded. For days, Don Jose, who lives alone in compound to
look for someone who could water the plants in the garden and clean the house. He chanced
upon Mang Kiko on the street and asked him to water the plants and clean the house.
Without asking any question. Mang Kiko attended to the plants in the garden and cleaned
the house. He finished the work in two days.
xxx
b) Are they compulsorily covered by the Social Security System?
Answer:
No. In their employer-employee relationship, Don Jose and Mang Kiko are not compulsory covered
by the Social Security System because Mang Kiko is rendering domestic sendees in a private home
which is one of the kinds of employment excluded from the compulsory coverage of the Social
Security System.

Q: AB, single and living-in with CD (a married man), is pregnant with her fifth child. She
applied for maternity leave but her employer refused the application because she is not
married. Who is right? Decide (2007 Bar Question)
SUGGESTED ANSWER:
AB is right. The Social Security Law, which administers the Maternity Benefit Program does not
require that the relationship between the father and the mother of the child be legitimate. The law
is compensating the female worker because of her maternal function and resultant loss of
compensation. The law is morality free.

FIRST ALTERNATIVE ANSWER:

Neither party is correct. The employer cannot refuse the application on the ground that she is only
living with CD, as a legitimate marriage is not a precondition for the grant of maternity leave.
Neither is AB correct, since maternity leave is only available for the first four deliveries or
miscarriages.

Q: Pablo was a farm-hand, in a plantation owned by ABC & Co., working approximately 6
days a week for a good 15 years. Upon Pablo's death, his widow filed a claim for burial grant
and pension benefits with the Social Security System (SSS) The claim was denied on the
ground that Pablo had not been a registered member-employee. Pablo’s widow filed a
petition before the SSS asking that ABC & Co. be directed to pay the premium contributions
of Pablo and that his name be reported for SSS coverage. ABC & Co. countered that Pablo was
hired to plow, harrow and burrow, using his own carabao and other implements and
following his own schedule of work hours, without any supervision from the company. If
proven, would this factual setting advanced by ABC & Co. be a valid defense against the
petition? (2005 Bar Question)

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SUGGESTED ANSWER:
ABC & Co. has a valid defense.
Pablo should be an employee of ABC & Co. to be under the compulsory coverage of the SSS. To be an
employee, Pablo should be under the control of ABC & Co. as regards his employment. But the facts
show that he was not under the control of ABC & Co. as regards his employment. Among others, he
had his own schedule of work hours, without any supervision from the company. Thus, he is an
independent contractor and not an employee. An independent contractor is not under the
compulsory coverage of the SSS. He maybe covered as a self-employed person. But then as such,
ABC & Co. has no legal obligation to report Pablo for coverage under the SSS because ABC & Co. is
not Pablo’s employer.

ANOTHER SUGGESTED ANSWER:

It is not a valid defense, for Pablo could be considered an employee of ABC & Co. The elements of
hiring, payment of wages, power to dismiss and power to control are presumed from the fact that
Pabio is working 6 days a week, for * 5 years now. Pablo's use of his plow, harrow, burrow, carabao
and other implements and his having his own schedule of work hours withoutany supervision from
the company do not erase the element of control on the part of ABC & Co. because under the
“control test”, it is enough that the employer’s right to control exists. It is not necessary that the
same be exercised by the employer, it is enough that such right to control exists. (Religious of the
Virgin Mary v. NLRC, 316 SCRA 614, 629 [9991]).

Q: The Collective Bargaining Agreement of the Golden Corporation Inc. and the Golden
Corporation Workers Union provides a package of welfare benefits far superior in
comparison with those provided for in the Social Security Act of 1997. The welfare plan of
the company is funded solely by the employer with no contributions from the employees.
Admittedly, it is the best welfare plan in the Philippines. The company and the union jointly
filed a petition with the Social Security System for exemption from coverage. Will the
petition for exemption from coverage prosper? Reason. (5%) (2000 Bar Question)
SUGGESTED ANSWER:
No, because coverage under the SSS is compulsory where employer-employee relations exist.
However, if the private plan is superior to that of the SSS, the plan may be integrated with the SSS
plan. Still, it is integration and net exemption from SSS law. [Philippine Blooming Mills Co.,. Inc. v.
Social Security System, 17 SCRA 107 (1966): R.A. No. 1161 as amended by R.A. No. 8282].

Q: FACTS: Marvin Patrimonio is a caddy rendering caddying services for the members and
guests of the Barili Golf &I Country Club. As such caddy, he is subject to Barili golfs rules and
regulations governing Caddies regarding conduct, dress, language, etc. However, he does not
have to observe any working hours, he is free to leave anytime he pleases: and he can stay
away for as long as he likes. Nonetheless, if he is found remiss in the observance of club
rules, he can be disciplined by being barred from the premises of Barili Golf.
Is Marvin within the compulsory coverage of the Social Security System? Why? (5%) (1999
Bar Question)
SUGGESTED ANSWER:

160
Because he is not an employee of the Barili Golf & Country Club, Marvin is not within the
compulsory coverage of the Social Security System. Marvin is not an employee of the club because
under the specific circumstances of his relations with the club, he is not under the orders of the club
as regards employment which would have made him an employee of the club. (See Manila Golf 8t
Country Club, Inc. v, LAC, 237 SCRA 207)
But Marvin is within the compulsory coverage of the SSS as a self-employed person. (See Section 3-
A, Social Security Law of 1957)

Q: Tito Paciencioso is an employee of a foundry shop in Malabon, Metro Manila. He is barely

able to make ends meet with his salary of P4.000.00 a month. One day, he asked his
employer to stop deducting from his salary his SSS monthly contribution, reasoning out that
he is waiving his social security coverage.
If you were Tito’s employer, would you grant his request? Why? (6%)
SUGGESTED ANSWER:
No. As Tito’s employer, I am bound by law to remit to SSS Tito’s monthly contribution. The SSS law
covers any person natural, juridical, domestic or foreign, carrying in the Philippines trade, business,
industry, undertaking or activity and uses the services of another under his order as regards
employment (Sec. 89[c]).
The compulsory coverage of employers and employees under the SSS law is actually a legal
imposition on the employers and employees, designed to provide social security to workingmen.
Membership in SSS is in compliance with a lawful exercise of the police power of the State, and may
not be Waived by agreement of any party (Phil. Blooming Mills, Co., Inc. v. SSS, 17 SCRA
1077(1966]).

2. Exclusions from coverage

Q: Big Foot Company of Paete, Laguna, has been in the business of manufacturing wooden
sandals for export since 5 November 1980. On 5 January 1994 it employed an additional
labor complement of thirty workers, two supervisors and two department managers. On 5
February 1994 it hired five carpenters to fix the roof and walls of its factory which were
destroyed by typhoon “Huanlng."
Who among the aforementioned persons are compulsorily covered by the Social Security
Law and when should they be considered effectively covered? Discuss fully. (195 Bar
Question)
Answer:
Assuming that all of them were not yet over sixty years of age, the additional labor complement of
thirty workers, two supervisors and two department managers were compulsorily covered by the
Social Security Law on 5 January 1994 when they were employed. According to said law, workers
are covered on the day of their employment.
But the five carpenters which the company hired to fix the roof and walls of its factory were not
under the compulsory coverage of the Social Security Law because said carpenters are casual
employees. The Social Security Law provides that employment purely casual and not for the
purpose of occupation or the business of the employer are not under its compulsory coverage.

161
Q: The owners of FALCON Factory, a company engaged in the assembling of automotive
components, decided to have their building renovated. Fifty (50) persons, composed of
engineers, architects and other construction workers, were hired by the company for this
purpose. The work was estimated to be completed in three (3) years. The employees
contended that since the work would be completed after more than one (1) year, they should
be subject to compulsory coverage under the Social Security Law. Do you agree with their
contention? Explain your answer fully. (5%)
SUGGESTED ANSWER:
No. Under Section 8 (j) of RA 1161, as amended, employment of purely casual and not for the
purpose of the occupation or business of the employer are excepted from compulsory coverage.
An employment is purely casual if it is not for the purpose of occupation or business of the
employer.
In the problem given, Falcon Factory is a company engaged in the assembling of automotive
components.
The fifty (50) persons (engineers, architects and construction workers) were hired by Falcon
Factory to renovate its building. The work to be performed by these fifty (50) people is not in
connection with the purpose of the business of the factory. Hence, the employ of these fifty (50)
persons is purely casual. They are, therefore, excepted from the compulsory coverage of the SSS
law.
I agree with the contention that the employees hired by the owners of FALCON factory as
construction workers in the renovation of its building should be under the compulsory coverage of
the Social Security Law.
It is true that in connection with FALCON Factory, which is engaged in the assembling of
automotive components, the construction workers may be considered casual employees because
their employment is not for the purpose of occupation of business of FALCON Factory. As such, In
accordance with Section 8(j) of the Social Security Law, they are excepted form the compulsory
coverage of the Social Security System.
But they could also be considered project employees of FALCON Factory and as such could be under
the compulsory coverage of the SSS, applying Art 4 of the Labor Code that provides that all doubts
in the implementation and interpretation of the provisions of Labor Law shall be resolved in favor
of labor. The employees here therefore, should be considered as under the compulsory coverage of
the SSS.

3. Benefits
Q: Ms. Sara Mira Is an unwed mother with three children from three different fathers. In
1999, she became a member of the Social Security System. In August 2000, she suffered a
miscarriage, also out of wedlock, and again by a different father. Can Ms. Mira claim
maternity benefits under the Social Security Act of 1997? Reason. (5%) (2000 Bar Question)
SUGGESTED ANSWER:
Yes, she can claim maternity benefit. Entitlement thereto is not dependent on the claimant's being
legally married. (Sec. 14-A, Social Security Act of 1997).

Q: A, single, has been an active member of the Social Security System for the past 20 months.

162
She became pregnant out of wedlock and on her 7th month of pregnancy, she was informed
that she would have to deliver the baby through caesarean section because of some
complications. Can A claim maternity benefits? If yes, how many days can she go on
maternity leave? If not, why is she not entitled? (3%) (2010 Bar Question)
SUGGESTED ANSWER:
YES. The SSS Law does not discriminate based on the civil status of a female member-employee. As
long as said female employee has paid at least three (3) monthly contributions in the twelve-month
period immediately preceding the semester of her childbirth, she can avail of the maternity benefits
under the law.
Since A gave birth through C-section, she is entitled to one hundred percent (100%) of her average
salary credit for seventy-eight (78) days, provided she notifies her employer of her pregnancy and
the probable date of her childbirth, among others (See Section 14-A, Rep. Act No. 8282).
The same maternity benefits are ensured by Sec. 22 (b)(2) of the Magna Carta of Women (Rep. Act
No. 9710).

Q: Carol de la Cruz is the secretary of the proprietor of an auto dealership in Quezon City. She
resides in Caloocan City. Her office hours start at 8 a.m. and end at 5 p.m. On July 30, 2008, at
7 a.m. while waiting for public transport at Rizal Avenue Extension as has been her routine,
she was sideswiped by a speeding taxicab resulting in her death. The father of Carol filed a
claim for employee’s compensation with the Social Security System. Will the claim prosper?
Why? (6%) (2008 Bar Question)
SUGGESTED ANSWER:
Yes, the claim will prosper.
In a line of cases, it has been held that an injury sustained by the employee while on his way to or
from his place of work, and which is otherwise compensable, is deemed to have arisen out of and in
the course of his employment (Lentejas v. Employees’ Compensation Commission, 197SCRA
44[1991]).
Carol died while going to her place of work. As held in the case of Alano v. Employees’
Compensation Commission (158 SCRA 669(1988]), she was at the place where her job necessarily
required her to be if she was to reach her place of work on time. There was nothing private or
personal about Carol’s place being at the place of the accident. She was there because her
employment required her to be there.

ANOTHER SUGGESTED ANSWER:

The claim will not prosper as a claim for employees compensation will prosper only in the event of
work- connected disability or death and the death of Carol dela Cruz will be considered as work
connected only if it was because of “any accident arising out of and in the course of employment.”
This was not the case of Carol dela Cruz. She was not yet working when the accident that caused her
death took place.

Q: Samson Security Agency (SAMSON) undertook to provide 24 hours security service to

Jarillo Realty (JARILLO) in the latter’s construction operations. The contract between

163
SAMSON and JARILLO expressly stipulated that Samson’s security guards are its employees
and not that of JARILLO. SAMSON undertook to hold JARILLO free from any liability
whatsoever resulting from injuries which its (SAMSON’s) guards may suffer or be exposed to
suffer as guards of JARILLO’s construction operations.
To facilitate payment, JARILLO undertook to pay directly to the guards the agreed wages,
which are subsequently deducted from the monthly payments to SAMSON under its contract
with JARILLO. JARILLO, in turn, charges SAMSON for the equipment supplied to the guards'
such as uniforms, pistols and ammunition and cost of training of guards JARILLO wants
replaced.
During a storm, several scaffoldings of JARILLO fell and killed two (2) guards whose families
later sued JARILLO. JARILLO, in turn, impleaded SAMSON as third-party defendant before the
Arbiter.
Decide who should be held liable.
Answer:
Liability lies against the State Insurance Fund administered by the SSS. This is a case of death in
connection with the employees’ work.
Jarillo is deemed to be the employer of the guards in view of the direct payment of wages to the
guards. Thus, if there are benefits arising from employer-employee relationship, Jarillo should be
held answerable.
NOTE: The law involved, namely the law on employees compensation and State Insurance Fund was expressly
excluded from this year’s bar examination in Labor and Social Legislation.

Q: Philippine Daily News prints and publishes The Daily News, copies of which are circulated
through dealers in Metro Manila. These dealers, who are single proprietors exclusively
distributing The Daily News but handling competing dailies for a fixed amount per copy sold,
engage the services of newsboys. These newsboys are given a specified number of copies to
sell every day within a six hour period in the morning. After this period, the newsboys are
free to sell other newspapers or go to school or engage in other activities. Each newsboy is
paid fifty centavos for every copy sold.
As counsel for Philippine Daily News, would you advise your client to report the dealers and
the newsboys as its employees pursuant to the Social Security Act? (1987 Bar Question)
Answer:
The System should not have denied the application for sickness benefits under the Social Security
Act.
The Act in Sec. 14(b) provides that sickness benefits shall begin to be paid only after all sick leaves
of absence with full pay to the credit of the employee shall have been exhausted.
In the case, such sick leaves with full pay to the credit of the employee were exhausted when the
10-day company sick leaves were exhausted.
The remaining five days of the 15-day sick leave under the CBA were to be accumulated and
convertible into cash when employment is terminated for any cause although the accumulated sick

164
leaves maybe used upon prior application with and approval of the Company. These conditions
means that the 5-day sick leaves cannot be automatically used. Thus, it could not be first exhausted
before the payment of sickness benefits under the Social Security Act.

4. Beneficiaries
Q: Pedro Tortilla and his employer were covered by the Social Security System. Tortilla was
legally married to Orpha de la Cruz, a plain housewife with whom he had two minor,
unmarried and unemployed children. But for two years, he had been living with his
common-law wife, Dora Tea, with whom he had two minor, unmarried and unemployed chil-
dren. His jobless father stayed with him. In his SSS record, he designated as beneficiary his
best friend, a 20- year-old student who was totally dependent on him for support. In a car
accident. Tortilla, Orpha de la Cruz and their two children died.
Who are entitled to the death benefits?
Answer:
The Social Security Law defines beneficiaries as “the dependent spouse until he remarries and
dependent children, who shall be primary beneficiaries. In their absence, the dependent parents
and, subject to the restrictions imposed on dependant children, the legitimate descendants and
illegitimate children who shall be the secondary beneficiaries. In the absence of any of the
foregoing, any other person designated by the covered employee as secondary beneficiary."
Applying the above provision, when Tortilla died, he died with the persons who are his primary
beneficiaries.
Thus, Tortilla's secondary beneficiaris namely, his dependent jobless father and illegitimate
children, who were minor, unmarried and unemployed are entitled to death benefits under the
Social Security Law.
Under the law, the common law wife is not among those who could be a beneficiary, either as
primary or secondary beneficiary;
As for the 20-year old student who was Tortilla's best friend, because he was designated by Tortilla
as beneficiary, he could have been entitled to death benefits, in the absence of either primary and
secondary beneficiaries, which is not the case, however, in the question given.

Q: Eduardo Serangco. an SSS member for 20 years, died on May 1, 1992. The records of the
SSS show that Serangco designated as his beneficiaries Marietta Uy. wife; Gloria Serangco.
daughter, bom June 30. 1979; and Jose Serangco, son, bom July 16, 1981. On May 10. 1992,
the SSS granted Marietta Uy funeral benefits. On May 16, 1992. Josefa Costa filed a claim for
death benefits alleging that she was married to the late Eduardo Serangco on October 15,
1982 and depended upon him for support. She attached to her claim, copy of a marriage
contract duly certified and sealed by the civil registrar of Pasig, Rizal. Marietta Uy opposed
Josefa Costa’s claim, contending that she and her children, Gloria and Jose Serangco, are

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entitled to death benefits because they were the primary beneficiaries designated by the
deceased Serangco.
To whom shall the SSS award death benefits? Why?
Answer:
The primary beneficiaries of a deceased employee are the dependent spouse until he/she remarries
and dependent children.
On the other hand, a dependent spouse is the legitimate spouse dependent for support upon the
employee and dependent children are legitimate, legitimated or legally adopted children, who are
unmarried, not gainfully employed and not over twenty one years of age, or over twenty one years
of age, provided that they are congenitally incapacitated and incapable of self-support. (Article 8(e),
(k). Social Security Law)
Considering the above provisions of the Social Security Law, Gloria and Jose Serangco are
dependent children because they are still not over twenty one years of age assuming that they are
also unmarried and are not gainfully employed.
The legitimate wife of the deceased employee is Marietta Uy and not Josefa Costa. The marriage of
the deceased employee to Costa is bigamous. Thus, Marietta is primary beneficiary together with
her children Gloria and Jose. As such primary beneficiaries, the SSS should award to them the death
benefits arising from the death of Eduardo Serangco.

Q: A is an employee of B who in turn registered A with the Social Security System as required
by law. Unfortunately, B did not remit A’s contributions to the System. In the course of his
employment, A met a serious accident requiring his hospitalization.
(1) Suppose he decides to retire from the firm because of the accident, is he entitled to
recover retirement benefits under the System? Explain your answer.
(2) Suppose that he died because of the accident, are his heirs entitled to death benefits
under the System? Explain your answer.
Answer:
(1) A is entitled to receive benefits from the Social Security System even if his employer did not
remit A’s contribution to the System because the Social Security Law provides (in Sec. 22(b) that
the failure or refusal of the employer to pay or remit contributions shall not prejudice the right of
the covered employee to the benefits of the coverage.
But A is not entitled to retirement benefits in the form of a monthly pension unless at the time of
the accident, he has reached the age of sixty years and has paid at least 120 monthly contributions
prior to the semester of the accident. (Sec. 12-B, Social Security Law).
(2) The heirs are not entitled, but his primary beneficiaries or in the absence of primary
beneficiaries, his secondary beneficiaries are entitled.

Q: Leonardo Marasigan started working for Madrid Development Corporation in August

1984 when it was being organized and had no fixed offices. The company did not ask for his

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Social Security registration number, nor did it report him to the SSS. He died a year later, and
his widow filed a claim for death benefits with the Social Security System. While following up
the claim, the widow discovered that it was only in November 1985 when he was reported by
his employer to the Social Security System and the premiums covering the entire period
from August 1984 were remitted.
Leonardo’s widow came to you for assistance. What would your legal advice be? (1987 Bar
Question)
Answer:
I will advise Leonardo’s widow that as the primary beneficiary, she is entitled to receive the death
benefits from the Social Security System.
Leonardo may have died in August 1985, and it was only in November 1985 when he was reported
by his employer to the System. But premiums covering the entire period from August 1984 when
remitted. Besides, according to the Social Security Act (in Sec. 24), the fact that the SSS has not
previously received a report about an employee from his employer or a contribution paid in his
name by his employer, is not fatal to his right to benefits.
Leonardo had 12 monthly contributions in the 12 months that he was covered by the System before
he died. He, therefore, has not paid at least thirty six (36) monthly contributions prior to the
semester of death which under the Social Security Act (Sec. B) would have entitled the widow as
primary beneficiary to a monthly pension. Nevertheless, according to the same provision of the Act,
the widow, as primary beneficiary, is entitled to a lump sum benefit equivalent to thirty five times
the monthly pension.

B. GSIS Law (R.A. No. 8291)

Q: Is it necessary for an employee to litigate in order to establish and enforce his right to
compensation? Explain. (1995 Bar Question)
Answer:
No. All that an employee does to claim employee's compensation, is to file a claim for said benefits
with the SSS (for those in the private sector) or GSIS (for those in the public sector).
In the event that the claim is denied on the SSS/GSIS level, claimant may appeal to the Employees
Compensation Commission where he may prove the causal connection between injury and nature
of work.

1. Coverage
Q: State briefly the compulsory coverage of the Government Service Insurance Act. (2%)
(2009 Bar Question)
SUGGESTED ANSWER:
The following are compulsorily covered by the GSIS pursuant to Sec. 3 of R.A. No. 8291.
1. All employees receiving compensation who have not reached the compulsory retirement
age, irrespective of employment status.
2. Members of the judiciary and constitutional commissions for life insurance policy

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Q: State the respective coverages of x x x (b) the Revised Government Service Insurance Act
and the Employees Compensation Act. (1997 Bar Question)
Answer:
xxx
(b) Membership in the Government Service Insurance System (Art. 3, RA8291) shall be
compulsory for all permanent employees below 60 years of age upon appointment to permanent
status, and for all elective officials for the duration of their tenure.
Any person, whether elected or appointed. In the service of an employer is a covered employee if he
receives compensation for such service.
(c) Coverage in the State Insurance Fund (Art. 168.' Labor Code) shall be compulsory upon all
employers and their employees not over sixty (60) years of age; Provided, that an employee who is
over (60) years of age and paying contributions to qualify for the retirement or life insurance
benefit administered by the System shall be subject to compulsory coverage.
The Employees Compensation Commission shall ensure adequate coverage of Filipino employees
employed abroad, subject to regulations as it may prescribe. (Art. 170)
Any person compulsorily covered by the GSIS Including the members of the Armed Forces of the
Philippines, and any person employed as casual, emergency, temporary, substitute or contractual,
or any person compulsorily covered by the SSS are covered by the Employees Compensation
Program.

Q: Odeck, a policeman, was on leave for a month. While resting in their house, he heard two
of his neighbors fighting with each other. Odeck rushed to the scene intending to pacify the
protagonists. However, he was shot to death by one of the protagonists. Zhop, a housemaid,
was Odeck's surviving spouse whom he had abandoned for another woman years back.
When she learned of Odeck's death, Zhop filed a claim with the GSIS for death benefits.
However, her claim was denied because (a) when Odeck was killed, he was on leave; and (b)
she was not the dependent spouse of Odeck when he died.
Resolve with reasons whether GSIS is correct in denying' the claim. (5%) (2005 Bar
Question)
SUGGESTED ANSWER:
The GSIS is not correct in denying the claim, because Odeck was on leave when he was killed. The
law only requires that the GSIS member was in the service at the time of his death so that his
beneficiaries may claim survivorship benefits. Odeck was still in the service. He was just on leave.
He intends to report back to work after his leave.

ANOTHER SUGGESTED ANSWER:

The GSIS is correct in denying the claim because Zhop was not the dependent spouse. Though she
may still be the legal spouse who at the same time may not have remarried, she is no longer
dependent of Odeck for support. Odeck left her years back. The law defines as primary beneficiary
the spouse who is a legal and dependent of the member for support.

ANOTHER SUGGESTED ANSWER:

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GSIS is wrong. Anent (a), for Zhop to be entitled to death benefit all that Sec. 21 (a). par. l(i} of the
GSIS law requires is that Odeck be "in the service at the time of his death". It does not require that
death occurs while Odeck is on duty. A leave of absence is in fact a benefit of an employee who is in
service. Therefore, Odeck was "in service" at the time of his death.
Regarding (b) what .section 21(a) provides is an entitlement of "primary beneficiaries", not
dependents. In this regard, Sec. 2 (g) defines a primary beneficiary to mean - "The legal dependent
spouse until he/she remarries xxx". Having been abandoned by Odeck does not necessarily mean
that Zhop no longer depends on Odeck's support. She in fact, needs it all the more.

Q: Efrenia Reyes was a classroom teacher assigned by the Department of Education. Culture
and Sports (DECS) in Panitan, Capiz. She has been in the government service since 1951 up to
November. 1985 when she retired at 55 due to poor health.
In March, 1982, while she was teaching her Grade 1 pupils the proper way of scrubbing and
sweeping the floor, she accidentally slipped. Herback hit the edge of a desk. She later
complained of weak lower extremities and difficulty in walking. After an X-ray examination,
she was found to be suffering from Pott's disease and was advised to undergo an operation.
In 1985, she filed with the GSIS a claim for disability benefits under Presidential Decree No.
626, as amended. The GSIS granted the claim and awarded Efrenia permanent partial
disability benefits.
After she underwent a surgical operation on her spine in November. 1985, her condition
worsened.
In 1990, Efrenia filed with the GSIS a petition for conversion of her disability status to
permanent total disabilities with corresponding adjustment of benefits. GSIS denied the
claim stating that after Efrenia's retirement, any progression of her ailment is no longer
compensable.
Is the GSIS correct in denying the claim. Explain.
Answer:
Considering that the disability of Reyes is work connected the provisions of the Labor Code dealing
with employees compensation should determine her right to benefits.
According to said provisions, if any employee under permanent partial disability suffers another
injury which results in a compensable disability greater than the previous injury, the State
Insurance Fund shall be liable for the income benefit of the new disability even after her retirement.
Was Reyes still an “employee” for the purpose of applying the above provision of the Labor Code?
Liberally construing said provision, Reyes may be considered still as an employee so that she could
receive additional benefits for the progression of her ailment.

Alternative Answers:
a) No. When an employee is constrained to retire at an early age due to his illness and the
illness persists even after retirement, resulting in his continued unemployment, such condition
amounts to total disability which should entitle him to the maximum benefits allowed by law. Her
disability which should entitle her to the maximum falls within the definition of permanent total
disability.

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b) No, the GSIS erred in denying the claim. Note,.that the original claim and grant of benefits
was based on Presidential Decree No. 626, or Book IV, Title II of the Labor Code: Employees
Compensation and State Insurance Fund. The same law does not provide for separation fee from
employment as a basis for denial of benefits.
The worsening of the school teacher’s condition is a direct result, or a continuing result of the first
injury which was deemed work-connected by the GSIS and hence compensable.
“Diopenes vs. GSIS. 205 SCRA 331 (1992), the Supreme Court cautioned against a too strict
interpretation of the law which may be detrimental to claimants and advised the GSIS of the
constitutional mandate on protection to labor and the promotion of social justice. Said the Court:
The GSIS and the ECC should be commended for their vigilance against unjustified claims that will
only deplete the funds intended to be disbursed for the benefit only of deserving disabled
employees. Nevertheless, we should caution against a too strict interpretation of the rules that will
result in the withholding of full assistance from those whose capabilities have been diminished if
not completely impaired as a compensation of their service in the government. A humanitarian
impulse dictated by no less than the Constitution itself under the social justice policy, calls for a
liberal and sympathetic approach to the legitimate appeals of disabled public servants. Compassion
for them is not a dole but a right.

2. Exclusions from coverage

3. Benefits
Q: Atty. CLM, a dedicated and efficient public official, was the top executive of a government
owned and controlled corporation (GOCC). While inspecting an ongoing project in a remote
village in Mindanao, she suffered a stroke and since then had been confined to a wheelchair.
At the time she stopped working because of her illness, in line of duty, Atty. CLM was only
sixty years old but she had been an active member of the GSIS for thirty years without any
break in her service record.
What benefits could she claim from the GSIS? Cite at least five benefits. (5%) (2005 Bar
Question)
SUGGESTED ANSWER:
The benefits Atty. CLM could claim from the GSIS are:
1. Employees compensation which shall include both income and medical and related benefits, including
rehabilitation;
2. Temporary total disability benefit;
3. Permanent total disability benefit;
4. Separation benefit; and
5. Retirement benefit.

Q: Juan Sipay was elected councilor of the municipality of San Felipe. On the second year of
his term, he left his legitimate wife. Josefa Asuwa, and their three minor, unmarried and
unemployed children and lived with a common-law wife, Maria Makupad, with whom he had
two minor, unmarried and unemployed children. Immediately after he completed his term.

170
Juan was appointed cashier in the office of the municipal treasurer of San Felipe. He was
dishonorably discharged from the service upon being convicted of malversation of public
funds. A year later, he died.
Who are entitled to the GSIS survivorship benefits?
Answer:
None. When Sipay was dishonorably discharged from the service, having been convicted of
malversation of public funds, he automatically forfeited his right to the benefits that he or his
beneficiaries could have been entitled to received from the GSIS. Thus, Sipay’s death did not give
rise to any right to survivorship benefits.

Q: Gregorio Reposo, a 59-year-old government employee and member of the Government

Service Insurance System could not wait for his retirement benefits and thought of enjoying
them in advance of his retirement at age 60 by borrowing 80% of the retirement benefits
from a friendly money lender, assigning to him the entire amount of his expected benefits.
He obtained the approval of the assignment from the GSIS.
Reposo spent the proceeds on a business venture that failed. A supplier sued Reposo for
unpaid materials and attempted to proceed against his retirement benefits.
Reposo seeks your assistance in an effort to shield his retirement benefits. What legal advice
would you give? (1987 Bar Question)
Answer:
I will advise him that because he had assigned the entire amount of his expected benefits to a
money lender from whom he borrowed money representing 80% of his retirement benefits, and
had obtained the approval of the assignment from GSIS, said benefits are now duly assigned to said
lender.
The Revised Government Service Insurance Act (in Sec. 33) provides that the benefits granted by
the Act shall not be subject, among others, to attachment, garnishment, levy or other processes.
This, however, shall not apply to obligations of the member to the System, or to the employer, or
when the benefits granted herein are assigned by the member with the authority of the System.
But as the above provision of the Act states, the retirement benefit is not subject to attachment,
garnishment, levy or other processes that the supplier may ask for.

4. Beneficiaries
Q: FACTS: Pitoy Mondero was employed as a public school teacher at the Marinduque High
School from July 1, 1983 until his untimely demise on May 27, 1997.
On April 27, 1997, a memorandum was issued by the school principal, which reads: “You are
hereby designated to prepare the MODEL DAM project, which will be the official entry of or
school the forthcoming Division Search for Outstanding Improvised Secondary'Science
Equipment forTeach- ers to be held in Manila on June 4, 1997. You are hereby instructed to
complete this MODEL DAM on or before the scheduled date of the contest."
Mordero complied with his superior’s instruction and constructed an improvised electric
microdam, which he took home to enable him to finish it before the deadline. On May 27,

171
1997, while working on the MODEL DAM Project in his house, he came to contact with a live
wire and was electrocuted. He was immediately brought to a clinic for emergency treatment
but was pronounced dead on arrival. The death certificate showed that he died of cardiac
arrest due to accidental electrocution. Pepay Palaypay (Pitoy Mordero's common-law wife
for more than twenty years) and a Pitoy Mordero Jr. (his only son) filed a claim for death
benefits with the Government Service Insurance System (GSIS), which was denied on the
ground that Pitoy Mordeno’s death did not arise out of and in the course of employment and
therefore not compensable because the accident occurred in his house and not in the school
premises.
1. Is Pepay Palaypay entitled to file a claim for death benefits with the GSIS? Why? (2%)
SUGGESTED ANSWER:
The beneficiaries of a member of the GSIS are entitled to the benefits arising from the death of said
member. Death benefits are called survivorship benefits under the GSIS Law.
Not being a beneficiary, Pepay Palaypay is not entitled to receive survivorship benefits. She is not a
beneficiary because she is a common-law wife and not a legal dependent spouse.

2. Is the cause of death of Pitoy Mordeno (cardiac arrest due to accidental electrocution
in his house) compensable? Why? (3%).
SUGGESTED ANSWER:
Yes. To be compensable under the GSIS Law, the death need not be work connected.

C. Limited Portability Law (R.A. No. 7699)

D. Employee’s compensation – coverage and when compensable
Q: What is the extent of an employer’s intervention in the compensation process and the
payment of benefits to employees under the State Insurance Fund? Explain. (1995 Bar
Question)
Answer:
The new law establishes a State Insurance Fund built up by the contributions of employers based
on the salaries of their employees. The employer does not intervene in the compensation process
and it has no control over the payment of benefits.
Unlike under the Workmen’s Compensation Act. employers are no longer directly liable for the
income and medical and related benefits that are to be paid to covered employees if they should
suffer from work connected injury or sickness or death. The payment of employees compensation is
now from the State Insurance Fund which is constituted from the contributions collected from
employers.

Q: State the respective coverages of x x x (b) the Revised Government Service Insurance Act
and the Employees Compensation Act. (1997 Bar Question)
Answer:
xxx

172
(b) Membership in the Government Service Insurance System (Art. 3, RA8291) shall be
compulsory for all permanent employees below 60 years of age upon appointment to permanent
status, and for all elective officials for the duration of their tenure.
Any person, whether elected or appointed. In the service of an employer is a covered employee if he
receives compensation for such service.
(c) Coverage in the State Insurance Fund (Art. 168.' Labor Code) shall be compulsory upon all
employers and their employees not over sixty (60) years of age; Provided, that an employee who is
over (60) years of age and paying contributions to qualify for the retirement or life insurance
benefit administered by the System shall be subject to compulsory coverage.
The Employees Compensation Commission shall ensure adequate coverage of Filipino employees
employed abroad, subject to regulations as it may prescribe. (Art. 170)
Any person compulsorily covered by the GSIS Including the members of the Armed Forces of the
Philippines, and any person employed as casual, emergency, temporary, substitute or contractual,
or any person compulsorily covered by the SSS are covered by the Employees Compensation
Program.

VII. Labor Relations Law

A. Right to self-organization
Q: What is the importance of labor organizations? (1996 Bar Question)
Answer:
A labor organization exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment. Employees may form labor
organizations for their mutual aid and protection. (See Arts. 212(a) and 243 of the Labor Code)

Alternative Answer:
The importance of labor unions are:
a) The enhancement of democracy and the promotion of social Justice and development.
b) As instrumentalities through which worker welfare may be promoted and fostered.
(Mactan Workers Union v. Aboitiz, 45 SCRA 577 (1972])
It is the instrumentality through which an individual laborer who is helpless as against a powerful
employer may, through concerted effort and activity, achieve the goal of economic well-being.
[Gullarno v. CIR. 52 SCRA307 [1993]).

Q: How does the government employees' right to self-organization differ from that of the
employees in the private sector? (1996 Bar Question)
Answer:
There is no substantial difference of the right of self-organization between workers in the private
sector and those in the public sector. In the public sector. Executive Order No. 180, the purpose of
self-organization is stated as “for the furtherance and protection of their interest." In the private
sector. Art. 243 of the Labor Code states “for the purpose of collective bargaining", and “for the

173
purpose of enhancing and defending their interests and for their mutual aid and protection."

Alternative Answer:
In government, managerial employees shall not be eligible to join the organization of rank-and-file
employees per Executive Order No. 180 but said law does not provide that they are not eligible to
join, assist or form any labor organization, meaning, they could join, assist or form any labor
organization of their own. In the private sector, managerial employees are not eligible to join, assist
or fonn any labor organization. (See Art. 243 of the Labor Code and Sec. 3 of Executive Order No.
180)

Q: A. Malou is the Executive Secretary of the Senior Vice- President of a bank while Ana is the
Legal Secretary of the bank's lawyer. They and other executive secretaries would like to join
the union of rank and file employees of the bank. Are they eligible to join the union? Why?
Explain briefly. (3%)
B. Mang Bally, owner of a shoe repair shop with nine (9) workers in his establishment,
received proposals for collective bargaining from the Bally Shoe Union. Mang Bally refused
to bargain with the workers for several reasons. First, his shoe business is just a service
establishment. Second, his workers are paid on a piecework basis (i.e.. per shoe repaired)
and not on a time basis. Third, he has less than ten (10) employees in the establishment.
Which reason or reasons is/are tenable? Explain briefly. (2%)
SUGGESTED ANSWER:
A. The following rules will govern the right of self- organization of Malou, Ana, and the other
Executive Secretaries;
1. No Right to Self-Organization — Confidential employees who act in a confidential capacity
to persons who formulate, determine, and effectuate management policies in the field of labor-
management relation. The two criteria are cumulative and both must be met. [San Miguel
Corporation Union v. Laguesma, 277 SCRA 370 (1997)]
2. With Right to Self-Organization — When the employee does not have access to confidential
labor relations information, there is no legal prohibition against confidential employees from
forming, assisting, or joining a labor organization. [Sugbuanon Rural Bank, Inc. v. Laguesma, 324
SCRA 425 (2000)]
No right of self-organization for Legal Secretaries — Legal Secretaries fall under the category of
confidential employees with no right to self-organization. [Pier & Arrastre Stevedoring Services, Inc.
v. Confesser, 241 SCRA 29* (1995)]

B. None. First, Mang Bally’s shoe business is a commercial enterprise, albeit a service establishment.
Second, the mere fact that the workers are paid on a piece- rate basis does not negate their status as
regular employees. Payment by piece is just a method of compensation and does not define the
essence of the relation. [Lambo v. NLRC, 317 SCRA 420 (1899)]. Third, the employees’ right to self-
organization is not delimited by their number.
The right to self-organization covers all persons employed in commercial, industrial and
agricultural enterprises and in religious, charitable, medical, or educational institutions whether
operating for profit or not [Art. 243, Labor Code]

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1. Who may unionize for purposes of collective bargaining (Who cannot form, join or assist
labor organizations )
Q:
A. Distinguish managerial employees from supervisory employees. (3%)
B. Do employees of a cooperative have a right to form a union? Explain briefly. (2%)
SUGGESTED ANSWER:
A. A managerial employee is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
disciple employees. Supervisory employees, on the other hand, are those who in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent judgment [Art. 212 (m),
Labor Code]
In a case, the Supreme Court said: “In the petition before us, a thorough dissection of the job
description of the concerned supervisory employees and section heads indisputably show that they
are not actually managerial but only supervisory employees since they do not lay down company
policies. PICOP’s contention that the subject section heads and unit managers exercise the authority
to hire and fire is ambiguous and quite misleading for the reason that any authority they exercise Is
not supreme but merely advisory In character. Theirs is not a final determination of the company
policies inasmuch as any action taken by them on matters relative to hiring, promotion, transfer,
suspension and termination of employees is still subject to confirmation and approval by their
respective superior. [See Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12, 17 (1992)]
Thus, where such power, which is in effect recommendatory In character, is subject to evaluation,
review and final action by the department heads and higher executives of the company, the same,
although present, is not effective and not an exercise of independent judgment as required by law.
[Philippine Appliance Corp. v. Laguesma, 226 SCRA 730, 737 (1993) citing Franklin Baker Company
of the Philippines v. Trajano, 157 SCRA 416, 422-433 (1988)]." (Paper Industries Corp. of the
Philippines v. Bienvenido E. Laguesma, 330 SCRA 295, (2000)]

A. Employees who are members of a cooperative cannot form a union because, as members,
they are owners and owners cannot bargain with themselves. However, employees who are not
members of the cooperative can form a union. [San Jose Electric Service Cooperative v. Ministry of
Labor, 173 SCRA 697 (1989)]

Q: Who are the managerial, supervisory and rank-and- file employees? (1996 Bar Question)
Answer:
“Managerial employee" is one who is vested with powers or prerogatives to lay down and execute
management policies or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline
employees Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of Independent judgment. All employees who are neither
managerial or supervisory employees are considered rank- and-file employees. (Art. 212(m) of the
Labor Code)

175
Q: Distinguish the rights of managerial employees from members of a managerial staff.
Answer:
Managerial employees have no collective bargaining rights because, they cannot join or form any
other labor organization while officers of a managerial staff are not prohibited from joining,
assisting or forming or arresting a supervisor’s union; hence, they can bargain collectively. (Art.
245, Labor Code; National Sugar Refineries Corp. vs. NLRC. 220 SCRA 452).

Alternative Answer:
Managerial employees, under Article 212(m) of the Labor Code are vested with the prerogatives to
lay down and execute management policies and/or to hire, fire, transfer, promote, lay-off and
discipline employees. They are not eligible for the right to self-organization for purposes of
collective bargaining.
Upon the other hand, members of managerial staff, under Article 82 of the Labor Code, are not
vested ’with the above-cited prerogatives. They are not entitled to overtime pay and other benefits
under Book III, Title I of the Code.

Q:
a) Do workers have a right not to join a labor organization? (3%)
b) Do the following workers have the right to self- organization? Reasons/basis (2%)
i. Employees of non-stock, non-profit organizations?
ii. Alien employees? (2000 Bar Question)
SUGGESTED ANSWER:
a) Yes, workers decide whether they will or will not become members of a labor organization.
That’s why a union’s constitution and by-laws need the members’ adoption and ratification.
Moreover, if they are members of a religious group whose doctrine forbids union membership,
their right not to be compelled to become union members has been upheld. However, if the worker
is not a “religious objector'’ and there is a union security clause, he may be required to Join the
union if he belongs to the bargaining unit. (Reyes v. Trajano, 209 SCRA 484 (1992)).

b)
(i) Even employees of non-stock non-profit organizations have the right to self-organization. This is
explicitly provided for in Art. 243 of the Labor Code.
A possible exception, however, are employee- members of non-stock non-profit cooperatives.
(ii) Alien employees with valid work permits in RP may exercise the right to self-organization on
the basis of parity or reciprocity, that is, if Filipino workers in the aliens’ country are given the same
right. (Art. 269, Labor Code).

Q:
1) Can an employer legally oppose the inclusion of confidential employees in the
bargaining unit of rank-and-file employees?

176
2) Would your answer be different if the confidential employees are sought to be
Included in the supervisory union?
Answer:
1) Yes. an employed can legally oppose the inclusion of confidential employees in the
bargaining unit of the rank-and-file. This issue has been settled in the case of Golden Farms vs.
Calleja, and reiterated in the case of Philips Industrial Dev. Inc. vs. NLRC.

Alternative Answers:
Yes, an employer can legally oppose the inclusion of the confidential employees in the bargaining
unit of rank-and-file employees because confidential employees are Ineligible to form, assist or join
a labor union.
By the nature of their functions, they assist and act in a confidential capacity to, or have access to
confidential matters of, persons who exercise managerial functions in the field of labor relations,
and the union might not be assured of their loyalty in view of evident conflict of interest.
An employer can legally oppose the inclusion of confidential employees in the bargaining unit of
rank -and- file employees because confidential employees are considered part of management.
(Philtranco vs. BLR, 174 SCRA 388).

2) The answer would be the same if confidential employees are sought to be included in the
supervisory union because confidential employees, being a part of management would not qualify
to Join, much less form a labor union. (Philtranco vs. BLR. 174 SCRA 388).

Alternative Answer:
My answer would remain the same, even If the confidential employees were sought to be included
in the supervisory union. Confidential employees would have the same adverse impact on the
bargaining unit of supervisors: Confidential employees' access to highly sensitive information may
become the source of undue advantage by the union over the employer. [Philips Industrial
Development Inc., vs. National Labor Relations Commission, et.al, G.R. No. 88957, 25 June 1992)

Q: The Labor Code treats differently in various aspects the employment of (i) managerial
employees, (ii) supervisory employees, and (iii) rank-and-file employees. State the basic
distinguishing features of each type of employment. (2005 Bar Question)
SUGGESTED ANSWER:
Under Book Three of the Labor Code, a managerial employee refers to one whose primary duty
consists of the management of the establishment in which he is employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff. A supervisor and a
rank and file employee can be considered as members of the managerial staff, and therefore, a
managerial employee if their primary duty consists of work directly related to management
policies; if they customarily and regularly exercise discretion and independent judgment; regularly
and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which they are employed or a subdivision thereof; or execute
under general supervision work along specialized or technical lines requiring special training,

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experience,-or knowledge; or execute under general supervision special assignments and tasks; and
who do not devote more than 20 percent of their hours worked in a work-week to activities which
are not directly and closely related to the performance of the work described above. AH others are
rank and file employees under said Book (Art. 82, Labor Code, Sec. 2 (c), Rule I, Bk. Ill, Omnibus
Rules Implementing the Labor Code).
Under Book Five of the Labor Code, “Managerial employee” is one who is vested with powers or
prerogatives to lay down, and execute management policies and/or to hire, transfer, suspend, lay-
off, recall, discharge, assign or discipline employees. A supervisory employee is one who, in the
interest of the employer, effectively recommends such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book (Art. 212 (M), Labor Code).
On the matter of right to self-organization, a managerial employee cannot exercise such right; while
a supervisor and a rank and file employee can (Arts. 245, 243, Labor Code).

Q: Company XYZ has two recognized labor unions, one for its rank-and-file employees
(RFLU), and one for supervisory employees (SELU). Of late, the company instituted a
restructuring program by virtue of which A, a rank-and-file employee and officer of RFLU,
was promoted to a supervisory position along with four (4) other colleagues, also active
union members and/or officers. Labor Union KMJ, a rival labor union seeking recognition as
the rank-and-file bargaining agent, filed a petition for cancellation of the registration of
RFLU on the ground that A and her colleagues have remained to be members of RFLU. Is the
petition meritorious? Explain. (3%) (2010 Bar Question)
SUGGESTED ANSWER:
No. Having been promoted to supervisory positions, A and her colleagues are no longer part of the
rank-and- file bargaining unit. They are deemed removed from membership of RFLU (Art. 245-A,
Labor Code as amended by Rep. Act No. 9481).

Q: A, an employee of XYZ Cooperative, owns 500 shares in the cooperative. He has been
asked to join the XYZ Cooperative Employees Association. He seeks your advice on whether
he can join the association. What advice will you give him? (3%) (2010 Bar Question)
SUGGESTED ANSWER:
A cannot join XYZ Cooperative Employees Association, because owning shares in XYZ Cooperative
makes him a co-owner thereof.
An employee-member of a cooperative cannot join a union and bargain collectively with his
cooperative for an “owner cannot bargain with himself and his co-owners” (Cooperative Rural
Bank, of Davao City, Inc. v. Calleja, 165 SCRA 725, 732 [1988]; San Jose City - Electric Service
Cooperative, Inc. v. Ministry of Labor, 173 SCRA697,701- 703 [1989]).

A. Should A be a member of the supervisory union? Explain.

SUGGESTED ANSWER:
YES, as long as A is not a confidential employee who has access to confidential matters on
labor relations (San Miguel Corporation Supervisors and Exempt Employees Union v. Laguesma,

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277 SCRA 370,374-375 [1997]).
If A performs supervisory functions, such as overseeing employees’ performance and with
power of recommendation, then A is a rightful member of the supervisory union. Otherwise, he may
not, because Samahang Manggagawa ng Terracota cannot represent A, A being not part of SMT’s
bargaining unit.

B. Assuming that A is ineligible to join the union, should the registration of Samahang
Manggagawa ng Terracota be cancelled? Explain. (3%)
SUGGESTED ANSWER:
NO. Rep. Act No. 9481 introduced a new provision, Art. 245-A, which provides that mixed
membership is not a ground for cancellation of a union's registration, but said employees
wrongfully joined are deemed removed from said union.

Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%) (2009 Bar Question)
xxx
[b] All confidential employees are disqualified to unionize for the purpose of collective
bargaining.
SUGGESTED ANSWER:
False. Not all confidential employees are disqualified to unionize for the purpose of collective
bargaining. Only confidential employees, who, because of the nature of their positions, have access
to confidential information affecting labor-management relations as an integral part of their
position are denied the right of self-organization for purpose of collective bargaining (San Miguel
Corporation Supervisors v. Laguesma, 277 SCRA 370 [1997]).

Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%) (2009 Bar Question)
xxx
xxx
[c] Government employees have the right to organize and join concerted mass actions
without incurring administrative liability.
SUGGESTED ANSWER:
False. Government employees have the right to organize, but they may be held liable for engaging in
concerted mass actions, it being a prohibited activity under CSC Law (E.O. 181). The right of
government employees to organize is limited to the formation of unions or associations without
including the right to strike. (Gesite v. CA, 444 SCRA 51 [2004]).

Q: The Confederation of Free Workers (CFW), a national labor federation, has an existing
collective bargaining agreement with Tanawan Leather Company covering the Company’s
rank-and-file employees who are direct members of CFW. The supervisors of the Company

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organized themselves into a union which they affiliated to CFW. CFW filed a petition in
behalf of the supervisors for certification election. The Company opposed the petition
asserting that CFW cannot represent the supervisors for collective bargaining purposes
because it also represents the rank-and-file employees.
You are the Med-Arbiter. Will you order the holding of a certification election? Reasons.
Suggested Answer:
I will not order the holding of a certification election if the supervisors of the Company have been
included by the existing CBA in the bargaining unit of the Company’s rank- and-file employees
before the effectivity of Republic Act No. 6715 where the supervisors may remain, in accordance
with the pertinent Rules and Regulations implementing the Labor Code.
But if the supervisors are not included by the existing CBA in the bargaining unit of the Company's
rank and file employees. I will order a certification election. But the Union that I will allow in the
ballot of the certification election will not be CFW. the national federation which has a direct
members the Company s rank and file employees. On the ballot of the certification election will
instead be the local Union organized by the supervisors. The Labor Code provides that supervisory
employees shall not be eligible for membership in a labor organization of the rank and file
employees but may form 01 join a separate labor organization of their own. Thus. CFW of which the
Company's rank and file employees are members, cannot be the Union to represent the supervisors
in collective bargaining. [Atlas Lithographic Services, Inc. us. Laguesma. et al., 205 SCRA 12)

Q: At what particular point does a labor organization acquire a legal personality?

(a) On the date the agreement to organize the union is signed by the majority of all its
members; or
(b) On the date the application for registration is duly filed with the Department of
Labor; or
(c) On the date appearing on the Certificate of Registration; or
(d) On the date the Certificate of Registration is actually issued; or
(e) None of the above.
Choose the correct answer. (2005 Bar Question)
SUGGESTED ANSWER:
On the date the Certificate of Registration is actually issued. Any applicant labor organization,
association or group of unions or workers shall acquire legal personality and shall be entitled to the
rights and privileges granted by law to legitimate labor organizations upon issuance of the
certificate of registration.

ANOTHER SUGGESTED ANSWER:

“On the date appearing on the Certificate of Registration.”
When the law provides that a “labor organization xxx shall acquire legal personality xxx upon
issuance of the certificate of registration”, the date appearing therein is legally presumed - under

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the rule on presumption of regularity - to be its date of issuance. Actual issuance is a contentious
evidentiary issue that can hardly be resolved, not to mention that the law does not speak of “actual”
issuance.

Q: A labor union lawyer opined that a labor organization is a private and voluntary
organization; hence, a union can deny membership to any and all applicants.
Is the opinion of counsel in accord with law? [5%] (1998 Bar Question)
SUGGESTED ANSWER:
No, the opinion of counsel is not in accord with law.
The Labor Code (in Article 249 (a and b) provides that a labor organization has the light to
prescribe its own rules for the acquisition or retention of membership, but it is an unfair labor
practice act for a labor organization to restrain or coerce employees in the exercise of their right to
self-organization. Thus, a labor organization cannot discriminate against any employee by denying
such employee membership in the labor organization on any ground other than the usual terms and
conditions under which membership or continuation of union membership is made available to
other members.

ANOTHER SUGGESTED ANSWER:

Yes, the legal opinion of counsel, on the nature of a Labor union and Its admission policy is in
accord with law, but must be qualified.
The Supreme Court ruled in Salunga v. CTR, 21 SCRA 216 (1967) as follows:
Generally, a state may not compel ordinary voluntary association to admit thereto any given
individual, because membership therein may be accorded or withheld as a matter of privilege.
The same case further ruled that the law can compel a labor union to admit an applicant for
membership when the union is -
The rule is qualified in respect of labor unions holding a monopoly in the supply of labor, either in a
given locality or as regards a particular employer with which it has a closed- shop agreement. The
reason is that [union security provisions] cause the admission requirements of trade unions to be
affected with public interest.

Q: A supervisor’s union filed a petition for certification election to determine the exclusive
bargaining representative of the supervisory employees of Farmers Bank. Included in the
list of supervisory employees attached to the petition are the Department Managers. Branch
Managers, Cashiers and Comptrollers. Farmers Bank questioned this list arguing that
Department Managers. Branch Managers, Cashiers and Comptrollers inherently possess the
powers enumerated in Art. 212, par. (m), of the Labor Code, i.e., the power and prerogative
to lay down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees. (1995 Bar Question)
1. Is the contention of Farmers Bank correct? Discuss fully.
Answer:
The contention of the Farmers Bank is not correct, if, on examination of the actual powers exercised

181
by the Department Managers. Bank Managers, Cashiers and Comptrollers, they are not vested with
powers or prerogatives to lay down and execute management policies or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees. If their powers are to carry out their duties
and responsibilities in accordance with the policies promulgated by the Board of Directors of the
Bank, or by external authorities, like the Central Bank then, they are not managerial but may be
supervisory personnel.
But this may be noted: The Bank officials mentioned in the case, have control, custody and/or
access to confidential matters. Thus, they are confidential employees and in accordance with earlier
Supreme Court decisions, as confidential employees, the Branch Manager, Cashier, Controller are
disqualified from joining or assisting the supervisor’s union of the Bank.

Answer:
The contention of the Farmers Bank is partially correct. The Department managers and Branch
managers, if they In fact have the powers implied by their titles, are managerial personnel. In
accordance with the Labor Code, managerial personnel are not eligible to join and form labor
unions.
On the other hand, cashiers who are in charge of money received or expended, and comptrollers
who examine and supervise expenditures, are not managerial personnel, and if they supervise
personnel, they could be supervisors, and are therefore to be Included in the bargaining unit of
supervisors.

Is there any statutory basis for the petition of the union? Explain.
Answer:
There is statutory basis for the petition of the supervisors’ union. Under the Labor Code,
supervisors have the right to form and join unions, but only unions of supervisory employees

Q: FACTS: Samahan ng mga Manggagawa sa Companya ng Tabaco (SMCT) filed a Petition for
Certification Election among the supervisory employees of the Tabaco Manufacturing
Company (Tabaco) before the NCR Regional Office of the Department of Labor and
Employment. It alleged, among other things, that it is a legitimate labor organization, a duly
chartered local of NAFLU; that Tabaco is an organized establishment; and that no
certification election has been conducted within one year prior to the filing of its petition for
certification election.
The Petition filed by SMCT showed that out of its 50 members, 15 were rank-and-
filers and two (2) were managers.
Tabaco filed a Motion to Dismiss on the ground that SMCT union is composed of
supervisoiy and rank-and-file employees and. therefore, cannot act as bargaining agent for
the proposed unit.
SMCT filed an opposition to the said Motion alleging that the infirmity, if any, in the
membership of the union can be remedied in the pre-election conference thru the exclusion-
Lnclusion proceedings wherein those employees who are occupying rank-and-file positions
will be excluded from the list of eligible voters. (1999 Bar Question)
1. Should the Motion to Dismiss filed by the Tabaco be granted or denied? Explain. (3%)

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SUGGESTED ANSWER:
The Motion to Dismiss filed by Tabaco should be granted.
According to the Labor Code (iri Article 245), supervisory employees shall not be eligible for
membership in a labor organization of rank-and-file employees but may join or form separate labor
organizations of their own.
Because of the above-mentioned provision of the Labor Code, a labor organization composed of
both rank- and-file and supervisory employees is no labor organization at all. It cannot, for any
guise or purpose, be a legitimate labor organization.
Not being a legitimate labor organization, it cannot possess the requisite personality to file a
petition for certification election.
(See Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Corp. Labor Union, 268 SCRA
573)

ALTERNATIVE ANSWER:
The Motion to Dismiss should be denied. In the first place, the general rule is that in a certification
election the employer is a mere bystander. An employer has no legal standing to question a
certification election as it is the sole concern of the workers. The exceptions to the general rule of
which are 1) when the existence of an employer-employee relationship is denied; and 2) when the
employer questions the legal personality of the union because of irregularities in its registration are
not present in this case.

2. Can the two (2) Managers be part of the bargaining unit? Why? (2%)
SUGGESTED ANSWER:
No, the two (2) Managers cannot be part of the bargaining unit composed of supervisory
employees.
A bargaining unit must effect a grouping of employees who have substantial, mutual interests in
v/ages, hours, working conditions and other subjects of collective bargaining. (San Miguel Corp.
Supervisors and Exempt Employees Union v. Laguesma, 227 SCRA 370)
The Labor Code (in Article 245 provides that managerial employees are not eligible to join, assist or
form any labor organization.
The above provision shows that managerial employees do not have the same Interests as the
supervisory employees which compose the bargaining unit where SMCT wishes to be the exclusive
collective bargaining representative.

Q: “Puwersa”, a labor federation, after having won in a certification election held in the
company premises, sent a letter to respondent company reminding it of its obligation to
recognize the local union the federation represents and to enter into a CBA with the local
union. Respondent Company replied that though it is willing, the rank-and-file employees
had already lost interest in joining the local union as they had dissolved it. “Puwersa” argued
that since it won in a certification election, it can validly perform its function as a bargaining
agent and represent the rank-and- file employees despite the union’s dissolution.

183
Is the argument of “Puwersa” tenable? Decide with reasons. (6%) (2008 Bar Question)
SUGGESTED ANSWER:
A new provision, Article 239-A is inserted into the Labor Code by RA 9481, as follows:
“ART. 239-A. Voluntary Cancellation of Registration. - The registration of a legitimate labor
organization may be cancelled by the organization itself: Provided, That at least two-thirds of its
general membership votes, in a meeting duly called for that purpose to dissolve the organization:
Provided, further, That an application to cancel registration is thereafter submitted by the board of
the organization, attested to by the president thereof.”
If indeed the local union was dissolved in accordance with the above provision of law, the argument
of “Puwersa” is not tenable. This is so because “Puwersa” only had the status of an agent, while the
local union remained the basic unit of the association [Liberty Cotton Mills Workers Union v.
Liberty Cotton Mills, Inc., 66 SCRA 52[1975J; cited in Filipino Pipe and Foundry Corp. v. NLRC, 318
SCRA 68[1999]).

ANOTHER SUGGESTED ANSWER:

No. Local unions do not owe their creation and existence to the national federation to which they
are affiliated, but to the will of their members. The act of voluntary dissolution already constitutes a
ground for cancellation for union registration under Article 239 as amended by Republic Act No.
9481. Hence, the collective bargaining agent’s legal personality has been extinguished, with
Puwersa reduced to being an agent without a principal.

ALTERNATIVE SUGGESTED ANSWER:

Yes, Puwersa is right. Article 256 of the Labor Code mandates that the “Labor union receiving the
majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers
in the unit.” On the assumption that it has been so certified, Puwersa is then correct in its argument
that “since it won in the certification election, it can validly perform its functions as a bargaining
agent and represent the rank- and-file employees despite the (local) union’s dissolution”. The
refusal of the company to bargain with Puwersa is violative of its duty to bargain collectively under
Arts. 251 and 252 of the Code, thereby subjecting it to the penalty of considering Puwersa’s
proposed CBA as the parties’ effective CBA. Such was the ruling of the Supreme Court in Divine
Word University of Tacloban vs. Secretary of Labor and Employment (213 SCRA 759 [1992]).

2. Bargaining unit
Q: Damian Damaso was one of 75 machinists of City Re- builders Machine Shop (CRMS). He
had worked as a lathe operator there since February 15, 1975. Lathe men process metal to
fine tolerances of thousandths of an inch. If tolerances are not met, work is re-done at great
cost. Defective work released to customers cause breakdown on equipment in which they
are used. Juan worked an average of 300 days per year at a daily wage of 1,100.00 plus the
COLA mandated by law. If there are no rejects on what he processes, he got a¥15 bonus for
each item done right. In the last 2.months, 10% of his output either needed re-work or were
rejected. He claimed his lathe was defective. However, the second shift man using the same
machine produced work meeting standards. Damian did not earn any bonuses, and received
a written warning. Feeling oppressed, he went to the Kamao ng Manggagawa, a registered
labor federation to ask for advice on the mechanics of organizing a union, and worker rights

184
and duties when they organize. (1988 Bar Question)
You are a labor organization adviser of Kamao.
(a) He asks how CRMS can be unionized.
(b) Outline to Damian the steps in forming a legitimate labor union.
Damian wants to know –
(a) If he can join the Kamao as a member;
(b) What his obligations would be if he is accepted; and
(c) If as a member, he can ask management to recognize Kamao as bargaining of CRMS
workers.
What will you tell Damian?
Answer:
I will tell Damian the following:
(a) CRMS can be unionized by the machinists organizing a union and having this union
registered with the Bureau of Labor Relations or affiliated with a registered labor organization so
that the union could be a legitimate labor organization which has rights under the Labor Code (Art.
242) including the right to act as the representative of its members for the purpose of collective
bargaining.
(b) The steps in forming a legitimate labor union are:
1. Workers form a union by adopting a Constitution and by-laws and later on electing
the officers provided for in the Constitution.
2. The union which is organized should be registered or affiliated with a registered
union so that it will be legitimate labor organization, acquires a 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:
(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.
(f) Damian can join Kamao, if he wishes to join the labor federation. There is no legal
obstacle against a worker directly joining a labor federation, if the labor federation’s
Constitution and By-Laws provide in such direct membership.
The obligations of Damian as a member of Kamao depend on what obligation the Constitution and
By-law's impose on its members which usually includes the payment of union dues.
Kamao can be recognized as the bargaining agent of CRMS workers if Kamao is designated or

185
selected as such bargaining agent by the majority the bargaining unit composed of the CRMS
workers. But it is not Damian who can ask management to recognize Kamao as bargaining agent; it
should be Kamao.

Q: Explain: (2007 Bar Question)

a) The Globe Doctrine
SUGGESTED ANSWER:
Under the Globe doctrine the bargaining units may be formed through separation of new units from
existing ones whenever plebiscites had shown the workers’ desire to have their own
representatives (Globe Machine and Stamping Co. 3 NLRB 294, applied in Democratic Labor Union
v. Cebu Stevedoring Co., 103 Phil. 1103 [1958]).

b) The Community of Interest Rule.

SUGGESTED ANSWER:
The Community of Interest Rule - The Community of Interest Rule states that in choosing the
appropriate bargaining unit, there must be a determination of the community of interests of
employees. A bargaining unit under DO 40-03 refers to a “group of employees sharing mutual
interests within a given employer unit, comprised of all or less than all of the entire body of
employees in the employer unit or any specific occupation or geographical grouping within such
employer unit. The test grouping is community or mutuality of interests, such as substantial
similarity of works and duties or of compensation and working conditions, because the basic test of
an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination
which will best assure to all employees the exercise of their collective bargaining rights.

Q: On what ground or grounds may a union member be expelled from the organization?
(3%)
SUGGESTED ANSWER:
Union members may be expelled from the labor organization only on valid grounds
provided for in the Union Constitution, By-Laws, or conditions for union membership.
Whenever appropriate for any violation of the rights as:
1. Refusal to pay union dues and special assessments;
2. Disloyalty to the union; and
3. Violation of the constitution and by-laws of the union.

Q: The modes of determining an exclusive bargaining agreement (agent) are:

a. voluntary recognition
b. certification election
c. consent election
Explain briefly how they differ from one another. 5% (2006 Bar Question)

186
SUGGESTED ANSWER:
a. There is voluntary recognition when in an unorganized establishment with only one
legitimate labor organization, the employer voluntarily recognizes the representation status of such
a union. Within thirty (30) days from such recognition, the employer and union shall submit a
notice of voluntary recognition with the Regional Office of the Department of Labor and
Employment which issued the recognized labor union’s certificate of registration or certificate of
creation of a chartered local.
b. Certification election refers to the process of determining through secret ballot the sole and
exclusive representative of the employees in an appropriate bargaining unit for purposes of
collective bargaining or negotiation. A certification election is ordered by the Department of Labor
and Employment, while a consent election is voluntarily agreed upon by the parties, with or
without the intervention by the Department.
c. When the process of determining through secret ballot the sole and exclusive
representative of the employees in an appropriate bargaining unit is not ordered by the
Department of Labor and Employment, but has been voluntarily agreed upon by the parties with or
without the intervention of the Department of Labor and Employment, then the process is a consent
election.

a) Test to determine the constituency of an appropriate bargaining unit

Q: Porfirio, Estela, Crisostomo, Marita, and Jose Ramirez were brothers and sisters. All were
stockholders, directors, and officers of the Pagaspas Marketing Co., Inc. *(PMCI). PMCI sold
office machines and supplies. It employed 20 sales persons, 10 delivery men, 20 service
personnel, and 10 administrative employees. On December 10, 1987, 45 rank and file
workers of the company formed and registered a labor union. They sent a letter to Pagaspas
demanding recognition as bargaining agent of all workers, enclosing check off authorization
forms of the union members, and a set of economic demands. PMCI refused to recognize the
union. The union president went to you, as labor adviser of the federation which they were
planning to affiliate with. (1988Bar Question)
(a) He wants your opinion on what the union may lawfully do to compel management to
come to the bargaining table at that point. What will your advice be?
(b) The union president tells you that they prefer to go on strike. He wants to know the
legal requirements that the union must comply with so the strike will be legal. What advice
will you give?
Answer:
(a) I will advise the union president to file a petition for certification so that after being
certified as the collective bargaining representative, the union could go back to PMCI and ask it to
bargain collectively with the Union. If PMCI persists in its refusal to bargain collectively, I will
advise the Union to file a case of unfair labor practice against PMCI since a refusal to bargain
collectively is a ULP.
(b) I will tell the Union president that these are the requisites that should be complied with if a
strike is to be legal: The union should file a notice of strike with the Bureau of Labor Relations
(assuming PMCI is in Metro Manila). A copy of the notice should also be served upon PMCI. The
Union should not actually go on strike until after 30 days (if the strikes is because of a deadlock) or
15 days (if the strike is because of the ULP committed by PMCI, i.e., its refusal to bargain
collectively) after filing a notice of strike.

187
b) Voluntary recognition (Requirements)
c) Certification election
Q: What is the purpose of a certification election?
Answer:
The purpose of a certification election is to determine the labor organization which shall be the
exclusive bargaining agent of the employees of an appropriate collective bargaining unit. A
certification election may also determine whether or not the employees wish to have a collective
bargaining representative because in a certification election, employees can vole for “no union."
Preliminarily. through a certification election, the members of an appropriate collective bargaining
unit may also be authoritatively determined. (Arts. 255. 256, 257. Labor Code)

Q: There are instances when a certification election is mandatory. What is the rationale for
such a legal mandate? (2005 Bar Question)
SUGGESTED ANSWER:
According to the Labor Code, in any establishment where there is no certified bargaining agent, a
certification election shall automatically be conducted by the Med-Arbiter upon the filing of a
petition by a legitimate labor organization.
In the above-described situation, a certification election is made mandatory because if there is no
certified bargaining agent as determined by a certification election, there could be no collective
bargaining in the said unorganized establishment.

Q: Can a “no-union" win in a certification election? 2.5% (2006 Bar Question)

SUGGESTED ANSWER:
Yes, because the objective in a certification election is to ascertain the majority representation of
the bargaining representative, if the employees desire to be represented at all by anyone. Hence,
“no union” is one of the choices in a certification election.

ANOTHER SUGGESTED ANSWER:

No, a “no-union" cannot win in a certification election. The purpose of a certification election is to
select an exclusive bargaining agent and a “no union” vote would precisely mean that the voter is
not choosing any of the contending unions. If the “no union” votes constitute a majority of the valid
votes cast, this fact will all the more mean that no union won in the certification election. A one-year
bar will consequently stop the holding of another certification election to allow the employer to
enjoy industrial peace for at least one year.

Q:
(a) Distinguish and/or explain the following terms:
1. direct certification;

188
 2. certification election;
3. consent election.
Answer:
(a) 1. There is direct certification if a Med-Arbiter certifies that a certain Union is the exclusive
collective bargaining representative of the employees of an appropriate bargaining unit without the
holding of a certification election, but merely on the basis of evidence presented in support of the
Union’s claim that it is the choice of the majority of the employees. Such evidence may consist of
affidavits made by a clear majority of the employees stating that they are members of and are
supporting the Union petitioning for direct certification to be their exclusive collective bargaining
representation.
2. A certification election is an election ordered by Med-Arbiter for the purpose of determining
the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit.
3. A consent election is an election agreed upon by the parties to determine the issue of
majority representation of all the workers of an appropriate collective bargaining unit.

(b) Where there is only one union claiming to be the bargaining representative, is it
proper to grant direct certification to said union?
Answer:
(b) It is proper to grant direct certification to said Union, but in addition to its being the only union
claiming to be the bargaining representative, it should submit evidence that it is the choice of a
majority of the employees in an appropriate bargaining unit, as the bargaining representative. The
Labor Code (in Art. 255) provides that the labor organization designated or selected by the majority
of the employees in an appropriate collective bargaining unit shall be the exclusive representative
of the employees in such unit for the purpose of collective bargaining.”

Alternative Answer:
It may not be proper to grant direct certification in view of the decision in the case of Colgate-
Palmolive where the Supreme Court said:
The constitutional mandate that the State shall “assure the rights of the workers to self-organiza-
tion, collective bargaining, security of tenure and just and humane conditions of work,” should be
achieved under a system of law such as the aforementioned provisions of the pertinent statutes.
When an overzealous official by-passes the law on the pretext of retaining a laudable objective, the
intendment or purpose of the law will lose its meaning as the law itself is disregarded. When the
Minister of Labor directly certifies the union, he in fact disregards this procedure and its legal
recruitment. There is failure to determine with legal certainty whether the Union enjoyed majority
representation.
The holding of a certification election at the proper time is not necessarily a mere formality where
there is a compelling legal reason not to directly and unilaterally certify a union whose legitimacy is
precisely the object of litigation in a pending cancellation case filed by a group of employees who
also claim majority status.
Even in a case where a union has filed a petition for certification elections, the mere fact that no
opposition is made does not warrant a direct certification. More so in a case when the required
proof is not presented in an appropriate proceeding and the basis of the direct certification is the

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union’s mere allegation in its position paper that it has 87 out of 117 regular employees. In other
words, the Minister may not merely rely on the self-serving assertion of a union that it enjoys the
support of the majority of the employees, without subjecting such assertion to the test of competing
claims. Colgate Palmolive Philippines, Inc. v. Bias Ople, G.R. 73681, 30 June 88, Second Division,
Paras, J.

Q: The Construction and Development Corporation has a total of one thousand and one
hundred (1,100) employees. In a certification election ordered by the Bureau of Labor
Relations to elect the bargaining representative of the employees, it was determined that
only one thousand (1,000) employees are eligible voters. In the election a total of nine
hundred (900) ballots was cast. There were fifteen (15) spoiled ballots and five (5) blank
ballots. A total of four hundred (400) votes was cast for ABC Labor Union, a total of two
hundred forty (240) votes was cast in favor of JVP Labor Union, and a total of two hundred
and forty (240) votes was in favor of RLG Labor Organization.
(a) Is there a valid certification election? Why?
(b) You are called upon to decide the case. Which labor union will you certify as the
collective bargaining representative of the employees of the company? Why?
Answers:
(a) There is a valid certification election. In the facts of the case in question, there is no bar to
the holding of the certification election.
The Labor Code provides (in Art. 256) that to have a valid certification election, at least a majority
of all eligible voters in the bargaining unit must have cast their votes in the election. In the facts of
the case in the question, 1,000 employees are eligible voters and 900 voters, which is very much
more than the majority (501) of the eligible voters cast their votes.
(b) As med-arbiter called upon to decide the case, I will not certify any labor union as the
collective bargaining representative of the company, because none of the labor unions who
participated in the certification election garnered a majority of the valid votes cast. According to the
Labor Code (in Art. 256), the labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agency of all the workers in the unit. The valid votes cast in the
certification election total 880 votes (900 votes cast minus 20 invalid votes. 15 of which were
spoiled ballots and 5 blank ballots). No labor union garnered at least 441 votes which is the
majority of 880 votes.

Q: In what instance may a petition for certification election be filed outside the freedom
period of a current collective bargaining agreement? (3%). (1999 Bar Question)
SUGGESTED ANSWER:
As a general rule, in an establishment where there is in force and effect a CBA, a petition for
certification election may be filed only during the freedom period of such CBA.
But to have the above-mentioned effect, the CBA should have been filed and registered with the
Department of Labor and Employment (See Article 231, 253-A and 256)
Thus, a CBA that has not been filed and registered with the Department of Labor and Employment

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cannot be a bar to a certification election and such election can be held outside of the freedom
period of such CBA.

ALTERNATIVE ANSWER:
A petition for certification election may be filed outside the freedom period of a current CBA if such
CBA is a new CBA that has been prematurely entered into, meaning, it was entered into before the
expiry date of the old CBA. The filing of the petition for certification election shall be within the
freedom period of the old CBA which is outside of the freedom period of the new CBA that had been
prematurely entered into.

Q: Are probationary employees entitled to vote in a certification election? Why? (2%).(1999

Bar Question)
SUGGESTED ANSWER:
In a certification election, all rank-and-file employees in the appropriate bargaining unit are
entitled to vote. This principle is clearly stated in Article 255 of the Labor Code which states that the
"labor organization designated or selected by the majority of the employees in such unit shall be the
exclusive representative of the employees in such unit for the purpose of collective bargaining."
Collective bargaining covers all aspects of the employment relation and the resultant CBA negoti-
ated 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 to vote in the petition for certification election. The law refers to "all" the employees in
the bargaining unit. All they need to be eligible to vote is to belong to the ‘‘bargaining unit." (Airtime
Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749)

ALTERNATIVE ANSWER:
Probationary employees may not be entitled to vote in a certification election where only regular
employees belong to a bargaining unit and probationary employees do not belong to such
bargaining unit. It is the belonging to a bargaining unit that entitles an employee to vote in a
certification election.

ANOTHER ALTERNATIVE ANSWER:

Yes. Any employee, whether employed for a definite period or not, shall, beginning on his first day
of service, be considered an employee for purposes of membership in any labor union (Art. 277(c)).

Q: PT & T Supervisory Employees Union filed a petition for the holding of a certification
election among the supervisory employees of the PT & T Company. The company moved to
dismiss the petition on the ground that Union members were performing managerial
functions and were not merely supervisory employees. The company also alleged that a
certified bargaining unit existed among its rank and file employees which barred the filing of
the petition.
1) Does the company have the standing to file the motion to dismiss? Explain.

191
2) If you were the Med-Arbiter how would you resolve the petition.
3) What is the proper remedy of an employer to ensure that the employees are
qualified to hold a certification election? (1996 Bar Question)
Answer:
1) No. the company has no standing to file the Motion to Dismiss as the employer has no right
to interfere in a purely union matter or concern. (Philippine Fruits and Vegetable Industries, Inc., us
Torres, 211 SCRA 95 (1992)
The Court would wish to stress once more the rule which it has consistently pronounced in many
earlier cases that a certification election is the sole concern of the workers and the employer is
regarded as nothing more than a bystander with no right to interfere at all in the election.
2) As the MedArbiter I will:
a. Deny, for lack of merit, the employer's Motion to dismiss the Union’s Petition for
Certification Election.
b. Proceed to hear the merits of the petition, especially:
1. the appropriation of the claimed bargaining unit;
2. inclusion and exclusion of voters, or the proposed voter list; and
3. if the petition is in order, to set the date, time and place of the election.
3) The employer has no remedy. The petition for certification election was initiated by the
Union; hence, the employer is a total stranger or a bystander in the election process. (Philippine
Fruits and Vegetable Industries, Inc. v. Torres, 211 SCRA 95 [1992]). To allow an employer to assert
a remedy is an act of interference in a matter which is purely a concern of the Union.

Alternative Answer:
1) The company does not have the standing to file a motion to dismiss the petition for
certification election, but it could move for the exclusion of the employees it alleged to be
managerial employees from the bargaining unit for which a petition for certification election has
been filed.
As a general rule, an employer has no standing in a petition for certification election
because the purpose of a certification election is to determine who should be the collective
bargaining representative of the employees. Thus, a certification election is the concern of the
employees and not of the employer.
But in the case at bar, the employer may have a standing because the petition for
certification election involves personnel which the employer alleges to be managerial employees.
And managerial employees under the Labor Code are not eligible to form, assist or join labor
organizations, implying that they cannot be part of the bargaining unit for which a petition for
certification election has been filed.
2) As the Med-Arbiter. I will order the holding of the certification election. The fact that there
is already a certified collective bargaining representative of the rank and file employees of the
Company is not a bar to the holding of a certification election for the determination of the collective
bargaining representative of the supervisory employees. But I will exclude those employees found
to be managerial from participating in the certification election.

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3) The proper remedy of an employer to ensure that only the employees are qualified to hold
a certification election is to move for the exclusion of those whom he alleges to be managerial
personnel.

Q: The Amalgamated Workers of the Philippines (AWP) was certified on July 1, 1992 as
bargaining representative of the rank-and-file employees of Company “X". The employees
are members of a local Company affiliated with AWP. On September 1. 1992, “X” received a
letter from the local union stating that it had disaffiliated from AWP. The employees had
disauthorized AWP as their bargaining representative and it (local union) will negotiate a
bargaining contract with “X" • When AWP sent its bargaining proposals to “X" on September
5, 1992, “X" informed AWP that it could not consider the proposals because the local union
had disaffiliated from AWP and the employees had disauthorized it to act as their
representative. AWP filed an unfair labor practice case against “X” for refusaldo bargain. “X"
invoked good faith as a defense.
Will AWP's complaint prosper? Why?
Suggested Answer:
AWP’s complaint will prosper. AWP was certified on July 1, 1992 as bargaining representative of
the rank and file employees of Company "X". Under the one-year rule, meaning that provided in the
Rules and Regulations implementing the Labor Code (Book V. Rule V, Sec. 3) which states that no
certification election may be filed within one year from the date of issuance of a final certification
election result, there could be no change of the collective bargaining representative within one year
from the date of its certification as such representative. Thus, the local union which disaffiliated
with AWP cannot take over from AWP the latter's status as collective bargaining representative.
(Balmar Farms, Inc. vs. NLRC. et al.. G.R. No. 73504. October 15. 1991)
It would be a different matter if the local union, as an affiliate of AWP. was certified as the collective
bargaining representative. Then. AWP cannot insist that it be the collective bargaining
representative after the local union disaffiliated from AWP. From the beginning, it is the local union
that was the collective bargaining representative and not AWP. (Tropical Hut Employees Union-
CGW, et al.. vs. Tropical Hut Food Market, Inc.. et al. G.R. L-43495-99, January' 30. 1990)

Q: (2000 Bar Question)

a) The Ang Sarap Kainan Workers Union appointed Juan Javier, a law student, as
bargaining representative. Mr. Javier is neither an employee of Ang Sarap Kainan Company
nor a member of the union. Is the appointment of Mr. Javier as a bargaining representative
in accord with law? Explain. (3%)
b) A Collective Bargaining Agreement was signed between the Ang Sarap Kainan
Company and the Ang Sarap Kainan Workers Union. Should the Collective Bargaining
Agreement be registered with, the Bureau of Labor Relations? If so, why? (3%)
SUGGESTED ANSWER:
a) Yes, the law does not require that the bargaining representative be an employee of the
company nor an-officer or member of the union. [Art. 212 (j), Labor Code)

193
b) So that the contract-bar rule may apply the CBA should be registered, assuming it has been
validly ratified and contains the mandatory provisions. (Art. 232, Labor Code).

Q: Is it required that an employer-employee relationship exists between an employer and

the employees in the appropriate bargaining unit before a certification election can be
ordered? If so why? (5%) (1998 Bar Question)
SUGGESTED ANSWER:
Yes, it is required that an employer-employee relationship is existing between the employer and the
employees in the appropriate bargaining unit before a certification election can be ordered for the
simple reason that a certification election is held for the purpose of determining which labor
organization shall be the exclusive collective bargaining representative of the employees in an
appropriate bargaining unit. There could be no collective bargaining between persons who do not
have any employer-employee relationship.

ANOTHER SUGGESTED ANSWER:

Yea, the Supreme Court has ruled that the existence of an employer-employee relationship is
required before a certification election can be held.
The Supreme Court in Allied Force Waters Union v. Compania Maritima, 19 SCRA 258 (1967),
ruled-
xxx There being no employer-employee relationship between the parties disputants, there is
neither “a duty to bargain collectively" to speak of. And there being no such duty, to hold
certification elections would be pointless. There is no reason to select a representative to negotiate
when there can be no negotiations in the first place. Where there is no duty to bargain collectively,
it is not proper to hold certification elections in connection therewith.

(i) In an unorganized establishment

Q: The PMG Stevedoring Company is a relatively new firm engaged in the stevedoring
business in the port of Cebu City. The company has 278 regular and permanent employees,
engaged in the loading and unloading of foreign and domestic vessels docking at the said
port. The Company also employs 55 supervisory personnel.
The AH Labor Organization filed a verified petition with the company stating, inter alia, that
it is a legitimate labor organization representing majority of the employees, and that there is
no bargaining agent in the unit. The union asked for recognition as the bargaining agent of
all the employees of the company.
The company replied that while it is not anti-union, it cannot, under the circumstances,
accede to the union demand on the ground that the petition is not supported by the written
consent of at least twenty-five percent (25%) of ail the employees and also because the
company-wide unit sought to be represented by the union is not an appropriate collective
bargaining unit.

194
After hearing, the med-arbiter ordered a certification election in the company-wide unit. Not
satisfied therewith, the company elevated the order to the Secretary of Labor and
Employment.
If you were the Secretary of Labor and Employment, how will you decide this case? Give your
reasons.
Answer:
As Secretary of Labor and Employment, I will affirm the order for a certification election made by
the Med Arbiter.
But I will amend the order. Instead of a certification election in a company wide unit, I will order a
certification election only for a bargaining unit composed of rank and file employees, or only for a
bargaining unit composed of supervisory employees, in whichever bargaining unit are found the
members of the petitioning labor organization.
The order for a certification election is proper even if the petition for certification election filed by
AH Labor Organization is not supported by at least 25% of the employees of the appropriate
collective bargaining unit. The petition for certification election is filed in an unorganized establish-
ment there being, as yet. no bargaining agent in PMG Stevedoring Company. A petition for
certification election in an unorganized establishment does not require the consent of at least 25%
of all the employees in the bargaining unit (Art. 257. Labor Code). This is a requirement only for
petitions filed in an organized establishment. (Art. 256, Labor Code)
But the bargaining unit cannot be company wide. Rep. Act No. 6715, in reaffirming the right of
supervisory employees to form a union, provides that they can only be members of unions whose
members are all supervisory employees. This restriction means that, unlike the situation before
Rep. Act No. 6715. supervisory employees and rank and file employees could no longer belong to
one union. Thus, as a result, a bargaining unit could no longer be composed of rank and file
employees and supervisor employees.
A POINT TO CONSIDER: A bar examinee may. however, assume that the reference to the bargaining
unit being a companywide unit means either a companywide unit of all rank and file employees or a
companywide unit of all supervisory employees.

Alternative Answer:
As Secretary, I would affirm the order of the med- arbiter. There is no bar to the election, and the
employees are entitled to a speedy determination of their bargaining representative so that they
could exercise their right to bargain collectively.

(ii) In an organized establishment

Q: The constituency of the bargaining unit in Complex Electronics Corporation consisted of
800 employees. Four unions - A, B, C. and D - vied to represent the employees for collective
bargaining purposes. In a certification election ordered by the Med-Arbiter, 700 employees

195
voted. Union A obtained 200 votes; Union B, 150 votes, Union C, 70 votes; and Union D, 30
votes. 250 employees voted "no union.”
a) Was there a valid election? Why?
Suggested Answer:
Yes, There was a valid election. The Labor Code requires that for a certification election to be valid,
at least a majority of all eligible voters in the unit must have cast their votes. (Article 256, Labor
Code) Here, the number of eligible voters was 800. Seven hundred (700) or more than a majority
voted. Thus, the election was valid.

b) Which union should be certified as bargaining representative of tire employees?

Why?
Suggested Answer:
No union could be certified as bargaining representative of employees. To be certified, a labor union
should receive a majority of valid votes cast of at least a majority of the 800 votes cast which should
be 401 votes. (Article 256, Labor Code) The union obtaining the highest number of votes is Union A.
It obtained only 200 votes, short of the majority by 201 votes.

c) Should a new election be conducted with all the four unions participating? Reasons.
Suggested Answer:
A new election should be conducted, but the Labor Code provides that it should be an election not
at all the four unions who participated in the election but a run-off election where only the labor
unions receiving the two highest numbers of votes will participate. This run-off election can be held
because in the earlier election, the total number of votes for all the contending unions was at least
fifty percent (50%) of the number of votes cast. Here. 450 votes or more than a majority of the 800
votes cast, were votes for all contending unions. (Article 256, Labor Code)

d) Suppose in the election. Union A obtained 300 votes. Union B, 30 votes. Union C. 10
votes and Union D, no votes and 360 voted no union. Should Union A be certified as
bargaining representative? Reasons.
Suggested Answer:
Here, the total number of votes cast was 700 votes. Union A can not be certified as bargaining
representative. It did not get the majority of the valid votes cast, namely 351 votes. Union A got only
300 votes.

Q: “Puwersa”, a labor federation, after having won in a certification election held in the
company premises, sent a letter to respondent company reminding it of its obligation to
recognize the local union the federation represents and to enter into a CBA with the local
union. Respondent Company replied that though it is willing, the rank-and-file employees
had already lost interest in joining the local union as they had dissolved it. “Puwersa” argued
that since it won in a certification election, it can validly perform its function as a bargaining

196
agent and represent the rank-and- file employees despite the union’s dissolution.
Is the argument of “Puwersa” tenable? Decide with reasons. (6%) (2008 Bar Question)
SUGGESTED ANSWER:
A new provision, Article 239-A is inserted into the Labor Code by RA 9481, as follows:
“ART. 239-A. Voluntary Cancellation of Registration. - The registration of a legitimate labor
organization may be cancelled by the organization itself: Provided, That at least two-thirds of its
general membership votes, in a meeting duly called for that purpose to dissolve the organization:
Provided, further, That an application to cancel registration is thereafter submitted by the board of
the organization, attested to by the president thereof.”
If indeed the local union was dissolved in accordance with the above provision of law, the argument
of “Puwersa” is not tenable. This is so because “Puwersa” only had the status of an agent, while the
local union remained the basic unit of the association [Liberty Cotton Mills Workers Union v.
Liberty Cotton Mills, Inc., 66 SCRA 52[1975J; cited in Filipino Pipe and Foundry Corp. v. NLRC, 318
SCRA 68[1999]).

ANOTHER SUGGESTED ANSWER:

No. Local unions do not owe their creation and existence to the national federation to which they
are affiliated, but to the will of their members. The act of voluntary dissolution already constitutes a
ground for cancellation for union registration under Article 239 as amended by Republic Act No.
9481. Hence, the collective bargaining agent’s legal personality has been extinguished, with
Puwersa reduced to being an agent without a principal.

ALTERNATIVE SUGGESTED ANSWER:

Yes, Puwersa is right. Article 256 of the Labor Code mandates that the “Labor union receiving the
majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers
in the unit.” On the assumption that it has been so certified, Puwersa is then correct in its argument
that “since it won in the certification election, it can validly perform its functions as a bargaining
agent and represent the rank- and-file employees despite the (local) union’s dissolution”. The
refusal of the company to bargain with Puwersa is violative of its duty to bargain collectively under
Arts. 251 and 252 of the Code, thereby subjecting it to the penalty of considering Puwersa’s
proposed CBA as the parties’ effective CBA. Such was the ruling of the Supreme Court in Divine
Word University of Tacloban vs. Secretary of Labor and Employment (213 SCRA 759 [1992]).

Q: Rank-and-file workers from Peacock Feathers, a company with 120 employees, registered
their independent labor organization with the Department of Labor and Employment
(DOLE) Regional Office. Management countered with a petition to cancel the union’s
registration on the ground that the minutes of ratification' of the union constitution and-by-
laws submitted to the DOLE were fraudulent. Specifically, management presented affidavits
of ten (10) out of forty (40) individuals named in the list of union members who participated
in the ratification, alleging that they were not present at the supposed January 1, 2010
meeting held for the purpose. The union argued that the stated date of the meeting should
have read “January 11, 2010,” instead of “January 1, 2010”, and that, at any rate, the other
thirty (30) union members were enough to register a union. Decide with reason. (3%) (2010
Bar Question)

197
SUGGESTED ANSWER:
Petition for cancellation is dismissed for want of merit.
The date specified therein is purely a typographical error as admitted by the union itself. There was
no willful or deliberate intention to defraud the union members that will vitiate their consent to the
ratification. To be a ground for the cancellation of union registration under the Labor Code, the
nature of the fraud must be grave and compelling enough to vitiate the consent of the majority of
union members (Mariwasa Siam Ceramics v. Secretary, 60S SCRA 706 [2009]).
Moreover, 20% of 120 is 24. So, even if the 10 union members disown their participation to the
ratification of the union constitution and by-laws, the union is correct in arguing that the 30 union
members suffice to uphold the legitimacy of its union (Art. 234, Labor Code).

d) Run-off election (Requirements)

Q: When does a "run-off election” occur? 2.5% (2006 Bar Question)
SUGGESTED ANSWER:
A “run-off’ or second election occurs when an election which provides for three (3) or more choices
results in no choice receiving a majority of the valid votes cast, and no objections or challenges have
been presented which, if sustained, can materially change the results; the election officer shall motu
proprio conduct a run-off election within (10) calendar days from the close of the election
proceedings between the labor unions receiving the (2) highest number of votes; provided that, the
total number of votes for all contending unions is at least fifty per cent (50%) of the number of
votes cast (Rule X, Dept. Order 40-03).

Q: Among the 400 regular rank-and-file workers of MNO Company, a certification election
was ordered conducted by the Med-Arbiter of the Region. The contending parties obtained
the following votes:
1. Union A - 70
2. Union B - 71
3. Union C 42
4. Union D - 33
5. No union - 180
6. Spoiled votes - 4
There were no objections or challenges raised by any party on the results of the
election.
xxx
xxx
[c] If you were the duly designated election officer in this case, what would you do
to effectively achieve the purpose of certification election proceedings? Discuss. (3%)
SUGGESTED ANSWER:
I will conduct a run-off election between the labor unions receiving the two highest number
votes. To have a run-off election, all the contending unions (3 or more choices required) must have
garnered 50% of the number of votes cast. In the present case, there are four (4) contending unions
and they garnered 216 votes. There were 400 vote cast. The votes garnered by the contending

198
unions is even more than 50% of the number of vote cast. Hence, a run-off election is in order.

Q: Distinguish between "Certification Election", “Consent Election," and "Run-off Election".

(6%) (2000 Bar Question)
SUGGESTED ANSWER:
Certification election requires a petition for a Certification Election filed by a union or employer. A
med-arbiter grants the petition and an election officer is designated by the regional director to
supervise the election. (Art. 256, 257,258, Labor Code).
Consent election is held by agreement of the unions with or without participation of the med-
arbiter. [Warren Manufacturing Workers Union v. Bureau of Labor Relations, 159 SCRA 387
(1988)].
Run-off election takes place between the unions who received the two highest number of votes
where not one of the unions obtained the majority of the valid votes cast, provided that the total
union votes is at least 50% of the votes cast. (Art. 256, Labor Code).

Q: In a certification election, three (3) unions participated. The election results were as
follows: Union “A” got 100 votes; Union “B” got 80 votes; Union “C” got 120 votes. The “NO-
UNION” got 150 votes. The aggregate number of votes cast was 450; the total number of
eligible voters was likewise 450.
(a) Which union, if any, should be certified?
(b) If a run-off election is necessary, which union(s) or choices should appear in the
ballot? Explain your answer.
Answer:
(a) No union should be certified. No union got a majority of the valid votes cast, which is 224
votes [Vi of 450 plus 1). The Labor Code (in Art. 256) provides that a union, to be certified as the
exclusive bargaining agent of the workers in a bargaining unit, should receive a majority of the valid
votes cast. '
(b) Since no union was certified, a run-off election should be held between Union “A” which got
100 votes and Union “C” which got 120 votes. They are unions who got the two highest number of
votes. The Labor Code (in Art. 256) provides that when an election which provides three or more
choices results in no choice receiving a majority of valid vote cast, a run-off election shall be
conducted between the labor union having the two highest number of votes.

Alternative Answer:
NO-UNION which got 150 votes and Union “C” which got 120 votes were the choices which got the
two highest number of votes. Thus, the run-off election should be between the NO-UNION and
Union “C”. The provision in Republic. Act No. 6715 the limits a run-off election to labor unions
excluding thereby the NO-UNION choice is unconstitutional. It violates the workers’ right to self-
organization which also includes the right not to join a labor union.

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e) Re-run election
f) Consent election
Q: Distinguish clearly but briefly between:
xxx
xxx
xxx
4. Consent election and certification election.
5. Social security and union security.
SUGGESTED ANSWERS:
4. "A certification election and a consent election are" both elections held to determine through
secret ballot the sole and exclusive representative of the" employees in an appropriate bargaining
unit for the purpose of collective bargaining or negotiations. There is this difference, however. A
certification election is ordered by the Department of Labor and Employment while a consent
election is voluntarily agreed upon by the parties, with or without the intervention of the Social
Security is the protection given by social insurance programs such as the programs of the SSS, GSIS
and PHIC undertaken pursuant to their respective charters, including the employees compensation
program provided for in the Labor Code. The aforesaid programs provide income benefits and/or
medical care when contingencies like sickness, (also maternity in the case of SSS) disability, death,
or retirement, including in the case of the GSIS, separation and unemployment benefits.
On the other hand, union security refers to a clause in a collective bargaining agreement whereby
the employer agrees to employ or continue in employment only workers who are members of the
exclusive collective bargaining representative of the employees of said employer in a bargaining
unit.

g) Affiliation and disaffiliation of the local union from the mother union
(i) Substitutionary doctrine
Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
xxx
xxx
xxx
[d] In the law on labor relations, the substitutionary doctrine prohibits a new collective
bargaining agent from repudiating an existing collective bargaining agreement. (2009 Bar
Question)
SUGGESTED ANSWER:
True. The existing collective bargaining agreement (in full force and effect) must be
honored by a new exclusive bargaining representative because of the policy of stability in labor
relations between an employer and the workers.

Q: (2000 Bar Question)

200
a) The Samahan ng Mga Manggagawa sa Pids and Co. Inc. lost its majority status in the
bargaining unit one year after the signing of the Collective Bargaining Agreement. Bickering
among all the three other unions in the bargaining unit were a daily occurrence, with each
union asserting majority status. To resolve this pestering problem, the Company and the
three other unions agreed to hold a consent election under the supervision of the Bureau of
Labor Relations. In the consent election. Pids and Co. Worker’s Union won, and was
accordingly recognized by the Company as the exclusive bargaining representative in the
bargaining unit. Is the Pids and Co. Workers Union bound by the Collective Bargaining
Agreement signed between the Company and the Sam ah an ng Mga Manggagawa Sa Pids and
Co. Inc.? Explain. (3%)
b) Shortly after the consent election, Pids and Co. Inc. sold the Groceries Division to
Metro Manila Grocery Inc. The employees of the sold division formed part of the bargaining
unit described in the Collective Bargaining Agreement, and all were absorbed by Metro
Manila Grocery Inc. Is Metro Manila Grocery' Inc. as the new employer, bound by the
Collective Bargaining Agreement existing at the time of the sale? Explain. (3%)
SUGGESTED ANSWER:
a) Yes, because the Collective Bargaining Agreement is not invalidated by the change of the
bargaining agent while the CBA is still effective. The “substitutionary doctrine" applies. [Benguet
Consolidated Inc. v. BCI Employees. 23 SCRA 465 (1968)].

b) No. There are no indications that the sale is simulated or intended to defeat the employees'
right to organize. A bonafide sale terminates the employment relationship between the selling
company and its employees. The CBA does not bind the purchaser in good faith because the CBA is a
personam contract, unless the buyer agrees to be bound. [Sundowner Dev. Corp. v. Drilon, 180
SCRA 14 (1989); Associated Labor Union v. NLRC, 204 SCRA 913 (1993)].

h) Union dues and special assessments

(i) Requirements for validity
Q: The union deducted P20.00 from Rogelio’s wages for January. Upon inquiry he learned
that it was for death aid benefits and that the deduction was made pursuant to a board
resolution of the directors of the union. Can Rogelio object to the deduction? Explain briefly.
(5%)
SUGGESTED ANSWER:
Yes. In order that the special assessment (death aid benefit) may be upheld as valid, the following
requisites must be complied with: (1) Authorization by a written resolution of the majority of all
the members at the general membership meeting duly called for the purpose; (2) Secretary’s record
of the meeting; and (3) Individual written authorization for the check-off duly signed by the
employee concerned. [ABS-CBN Supervisors Employees Union Members v. ABS-CBN Broadcasting
Corp. and Union Officers, 304 SCRA 489(1999)]
In the problem given, none of the above requisites were complied with by the union. Hence, Rogelio
can object to the deduction made by the union for being invalid.

Q: What requisites must a Union comply with before it can validly impose special

201
assessments against its members for incidental expenses, attorney’s fees, representation
expenses and the like? (3%) (2001 Bar Question)
SUGGESTED ANSWER:
The Labor Code (in Art. 241(n)) provides that "no special assessments or other extraordinary fees
may be levied upon the members of a labor organization unless authorized by a written resolution
of a majority of all the members at a general membership meeting duly called for the purpose."

ANOTHER SUGGESTED ANSWER:

In the case of ABC-CBN Employees Supervisors Union vs. ABS-CBN Boardcasting Corp., and Union
Officers, G.R. No. 106518, March 11, 1999, the Supreme Court ruled that the following are the
requisites:
1) Authorization by a written resolution of the majority of all the members at the general,
membership meeting duly called for the purpose;
2} Secretary’s record of the minutes of the meeting; and
3) Individual written authorization for check-off duly signed by the employee concerned. (See also:
Gabriel vs. Secretary of Labor, G.R. No. 115949, March 16, 2000).

i) Agency fees (Requisites for assessment)

Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
xxx
xxx
xxx
xxx
[e] Agency fees cannot be collected from a non-union member in the absence of a written
authorization signed by the worker concerned. (2009 Bar Question)
SUGGESTED ANSWER:
False. Agency fee can be collected from a union member even without his prior written
authorization as long as he receives the benefits of a CBA, and is a member of the appropriate
bargaining unit. (Arts. 248(e)& 241(o), Labor Code).

Q: Atty. Facundo Veloso was retained by Welga Labor Union to represent it in the collective
bargaining negotiations. It was agreed that Atty. Veloso would be paid in the sum of
P20.000.00 as attorney's fees for his assistance in the CBA negotiations.
After the conclusion of the negotiations. Welga Labor Union collected from its individual
members the sum of P100.00 each to pay for Atty. Veloso'sfees and another sum of PI00.00
each for services rendered by the union officers. Several members of the Welga Labor Union
approached you to seek advice on the following matters.
(a) Whether or not the collection of the amount assessed on the individual members to
answer for the Attorney’s fees was valid.

202
(b) Whether or not the assessment of PI00.00 from the individual members of the Welga
Labor Union for services rendered by the union officers In the CBA negotiations was valid.
Answer:
(a) The assessment of P 100.00 from each union member as attorney's fees - for union
negotiation, is not valid. Art. 222(b) of the Labor Code, reads:
"No attorneys fees, negotiation fees or similar charges of any kind arising from any collective
bargaining negotiations or conclusion of the collective agreement shall be imposed on any
individual member of the contracting union; Provided, however, that attorneys fees may be charged
against union funds in an amount to be agreed upon by the parties. Any contract, agreement or
arrangement of any sort to be contrary shall be null and void."
(b) The assessment of PI00.00 as negotiation fees charged to each individual union member
and payable to union officers is also not valid, for the same reason as stated above. The assessment
is an act violative of Art. 222(b).

Alternative Answer:
(a) The collection of the amount assessed on the individual members to answer for the
attorney's fees would be valid if it was authorized by a written resolution of a majority
of all the members in a general membership meeting called for the purpose.
(b) The assessment of PI00.00 from the individual members of the Welga Labor Union for
services rendered by the union officers in the CBA negotiations would be valid if it was
authorized by a written resolution of a majority of all the members in a general
membership meeting duly called for the purpose. (Art. 241(N)].

Q: In the general assembly meeting held on September 5, 1992, a BANK UNION with a
majority of its 1,500 rank- and-file members attending, ratified and confirmed the decision
of its UNION OFFICERS to engage the sendees of one ATTY. DAYOS to assist them in the
negotiation of a new 3-year Collective Bargaining Agreement (CBA). to replace the expiring
CBA. A contractual undertaking was signed by the UNION OFFICERS providing for the pay-
ment of attorney’s fees to ATTY. DAYOS in the amount equivalent to ten (10%) percent of the
total package benefits that may be secured from the BANK. The BANK was authorized to
deduct or check-off said attorney's fees and to turn over the proceeds directly to ATTY.
DAYOS.
After the conclusion and signing of the new CBA between the BANK UNION and the BANK
MANAGEMENT, many of the members of the BANK UNION who attended the general
assembly meeting on September 5. 1992. objected to the payment of ATTY. DAYOS'
attorney's fees for various reasons: (1) Some claimed that the UNION'S contract to pay
attorney's fees, negotiation fees or similar charges of any kind arising from any CBA
negotiations or conclusion of the CBA, imposed on the individual members of the contracting
UNION, was null and void; (2) Some also claimed that they never attended the UNION'S gen-
eral assembly meeting of September 5. 1992, and even if they were present, then they would
have opposed to the payment of attorney's fees to ATTY. DAYOS; (3) others claimed that
although they signed the resolution authorizing the payment of the attorney's fees, they

203
were withdrawing such authorizations. On the other hand, the UNION OFFICERS insisted on
paying UNION'S counsel 10% attorney's fees alleging that its rank and file members in their
general assembly meeting held on September 5. 1992, authorized and ratified their
contractual undertaking to pay 10% to ATTY'. DAYOS for services rendered.
1) Discuss and justify the stand or position of the recalcitrant or opposition UNION
members.
2) Discuss and justify the stand or position of the UNION OFFICERS and ATTY. DAYOS.
Answer:
1) The opposition Union members could contend that the Labor Code (in Art. 222(b)
categorically provides that no attorney’s fees, negotiation fees or similar charges of any kind arising
from collective bargaining negotiations or conclusion of the Collective Agreement shall be imposed
on any individual member of the contracting union and that any contract, agreement or
arrangement of any sort to the contrary shall be null and void.

Alternative Answer:
The opposition Union members could contend that the payment of attorney’s fees to Atty. Dayos
equivalent to ten (10%) percent of the total package of benefits imposed on the individual members
of the contracting union is in the nature of a special assessment that may not be levied upon
members of a labor organization unless authorized by a written resolution of a majority of all the
members at a general membership meeting called for the purpose. (Art. 241(n), Labor Code).
Members can withdraw their earlier authorization.
Re: the check-off for the attorney’s fees, because the same is not for mandatory activities, there
could be no check-off without individual written authorization duly signed by the employee. (Art.
241(0), Labor Code)

2) The Union officers and Atty. Dayos could contend that after a majority of the members of
the Union ratified and confirmed at a general assembly meeting the decision of the Union officers to
engage the services of Atty. Dayos to assist them in the negotiation of a new CBA, and in
implementation of such ratification and confirmation, the Union officers entered into a contract for
the purpose with Atty. Dayos, the contract was legal and after his rendition of services, the union
can pay Atty. Dayos his fees to be paid from the funds of the Union which was raised by special
assessment of Union members.
The Labor Code provides that attorney's fees may be charged against union funds in an amount to
be agreed upon by the parties. (Art. 222 (b))

B. Right to collective bargaining

1. Duty to bargain collectively
a) When there is absence of a CBA
b) When there is a CBA

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Q: Explain the automatic renewal clause of collective bargaining agreements. (3%) (2008
Bar Question)
SUGGESTED ANSWER:
The automatic renewal clause of Collective Bargaining Agreements means that although a
CBA has expired, it continues to have legal effects as between the parties until a new CBA has been
entered into (Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-Confessor, 241 SCRA 294
[1995]). This is so because the law makes it a duty of the parties to keep the status quo and to
continue in full effect the terms and conditions of the existing agreement until a new agreement is
reached by the parties (Art. 253, Labor Code).

Q: Company "A" and Union "B" negotiated the last two years of their five-year CBA on April 1.
1990 to xpire on March 31, 1992. Considering the amicable relations between the parties,
neither one moved for the extension or termination of the agreement.
Sometime in 1995, some disgruntled employees filed a complaint demanding that they be
paid the annual salary increases and other related annual increases specified in the CBA of
April 1990, citing the provision in Art. 253 of the Labor Code which requires the parties to
"xxx keep the status quo and to continue in full force and effect the terms and conditions of
the existing agreement during the 60 day period and/or until a new agreement is reached by
the parties".
A, however, maintained that the annual salary increases and related benefits specifically
provided for in the CBA were, pursuant to contract and law, effective only for the term
specified therein, namely, until March 31, 1992 only.
Who is correct? State the reason(s) for your answer. (5%) (2001 Bar Question)
SUGGESTED ANSWER:
The disgruntled employees are correct in their claim that the expired CBA remains in full force and
effect until a new CBA is signed in accordance with Article 253 of the Labor Code.
The SC ruled in New Pacific Timber and Supply Co., Inc. vs. NLRC, G.R. No. 124224, March 17, 2000;
Article 253 of the Labor Code explicitly provided that until a new Collective Bargaining Agreement
has been executed by and between the parties, they are duly bound to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement. The law does
not provide for any exception or qualification as to which of the economic provisions of the existing
agreement are to retain force and effect, therefore, it must be understood as encompassing all the
terms and conditions in the said agreement."

ANOTHER SUGGESTED ANSWER:

With Art. 253 of the Labor Code as basis, the disgruntled employees should be paid the annual
salary increases and other related annual increases provided in the 1990-1992 CBA even after the
expiration of said CBA as long as said CBA did not provide that said increases were to be paid only
for certain specific years.

Q: FACTS: Jenson & Jenson (J & J) is a domestic corporation engaged in the manufacturing of
consumer products. Its rank-and-file workers organized the Jenson Employees Union (JEU),
a duly registered local union affiliated with PAFLU, a national union. After having been

205
certified as the exclusive bargaining agent of the appropriate bargaining unit, JEU-PAFLU
submitted its proposals for a Collective Bargaining Agreement with the company.
In the meantime, a power struggle occurred within the national union PAFLU between its
National President. Manny Pakyao, and its National-Secretary General. Gabriel Miro. The
representation issue within PAFLU is pending resolution before the Office of the Secretary'
of Labor.
By reason of this intra-union dispute within PAFLU. J & J obstinately and consistently refused
to offer any counterproposal and to bargain collectively with JEU-FAFLU until the
representation issue within PAFLU shall have been resolved with finality. JEU-PAFLU filed a
Notice ot Strike. The Secretary of Labor subsequently assumed jurisdiction over the labor
dispute. (1999 Bar Question)
1. Will the representation issue that has arisen involving the national union PAFLU,
to which the duly registered local union JEU is affiliated, bar collective bargaining
negotiation with J & J? Explain briefly. (3%)
SUGGESTED ANSWER:
The representation issue that has arisen involving the national union PAFLU should not bar
collective bargaining negotiation with J and J. It is the local union JEU that has the right to bargain
with the employer J and J, and not the national union PAFLU.
It is immaterial whether the representation issue within PAFLU has been resolved with finality or
not. Said squabble could not possibly serve as a bar to any collective bargaining since PAFLU is not
the real party-in- interest to the talks; rather, the negotiations are confined to the corporation and
the local union JEU. Only the collective bargaining agent, the local union JEU, possesses the legal
standing to negotiate with the corporation. A duly registered local union affiliated with a national
union or federation does not lose its legal personality or independence (Adamson and. Adamson,
Inc. v. The Court of Industrial Relations and Adamson and Adamson Supervising Union (FFW), 127
SCRA 263 [1984]).

ALTERNATIVE ANSWER:
What is involved in the case in the question is a corporation engaged in the manufacturing of
consumer products. If the consumer products that are being manufactured are not such that a
strike against the company cannot be considered a strike in an industry indispensable for the
national interest, then the assumption of jurisdiction by the Secretary of Labor is not proper.
Therefore, he cannot legally exercise the powers of compulsory arbitration in the labor dispute.

Q: ABC company and U labor union have been negotiating for a new Collective Bargaining
Agreement (CBA) but failed to agree on certain economic provisions of the existing
agreement. In the meantime, the existing CBA expired. The company thereafter refused to
pay the employees their midyear bonus, saying that the CBA which provided for the grant of
midyear bonus to all company employees had already expired. Are the employees entitled to
be paid their midyear bonus? Explain your answer. (3%) (2010 Bar Question)
SUGGESTED ANSWER:
YES, under Article 253 of the Labor Code, the parties are duty-bound to maintain the status quo and
to continue in full force and effect the terms and conditions of the existing CBA until a new
agreement is reached by the parties.

206
Likewise, Art. 253-A provides for an automatic renewal clause of a CBA. Although a CBA has
expired, it continues to have legal effects as between the parties until a new CBA has been entered
into.
The same is also supported by the principle of holdover, which states that despite the lapse of the
formal effectivity of the CBA, the law stills considers the same as continuing in force and effect until
a new CBA shall have been validly executed (MERALCO v. Hon. Sec. of Labor, 337 SCRA 90 [2000]
citing National Congress of Unions in the Sugar Industry of the Philippines v. Ferrer-Calleja, 205
SCRA 478 [1992]).
The terms and conditions of the existing CBA remain under the principle of CBA continuity.

Q: The Company and Triple-X Union, the certified bargaining agent of rank-and-file
employees, entered into a Collective Bargaining Agreement (CBA) effective for the period
January 1, 2002 to December 31, 2007.
For the 4th and 5th years of the CBA, the significant improvements in wages and other
benefits obtained by the Union were:
1. Salary increases of PI,000 and PI,200 monthly, effective January 1, 2006 and January
1, 2007, respectively;
2. Vacation Leave and Sick Leave were adjusted from 12 days to 15 days annually for
each employee;
3. Medical subsidy of P3,000 per year for the purchase of medicines and hospitalization
assistance of P10,000 per year for actual hospital confinement;
4. Rice Subsidy of P600 per month, provided the employee has worked for at least 20
days within the particular month; and
5. Birthday Leave with Pay and Birthday Gift of PI,500.
As early as October 2007, the Company and the Union started negotiations to renew the CBA.
Despite mutual good faith and earnest efforts, they could not agree. However, no union filed
a petition for certification election during the freedom period. On March 30, 2008, no CBA
had been concluded. Management learned that the Union would declare a bargaining
deadlock on the next scheduled bargaining meeting.
As expected, on April 3, 2008, the Union declared a deadlock. In the afternoon of the same
day, management issued a formal announcement in writing, posted on the bulletin board,
that due to the CBA expiration on December 31,2007, all fringe benefits contained therein
are considered withdrawn and can no longer be implemented, effective immediately.
xxx
xxx
[c] Is management’s withdrawal of the fringe benefits valid? Reasons. (2%) (2009 Bar
Question)
SUGGESTED ANSWER:
No. Pending renewal of the CBA, the parties are bound to keep the status quo and to treat the terms
and conditions embodied therein still in full force and effect, until a new agreement is reached by
the union and management. This is part and parcel of the duty to bargain collectively in good faith
under Article 253, the Labor Code.

207
Q: Company "A" contracts out its clerical and janitorial services. In the negotiations of its
CBA, the union insisted that, henceforth, the company may no longer engage in contracting
out these types of services, which services the union claims to be necessary in the company's
business, without prior consultation. Is the union is stand valid or not? For what reason(s)?
(2%) (2001 Bar Question)
SUGGESTED ANSWER:
The union's stand is not valid. It is part of management prerogative, to contract out any work, task,
job or project except that it is an unfair labor practice to contract out services or functions
performed by union members when, such will interfere with, restrain or coerce employees in the
exercise of their rights to self- organization. (Art. 248(c) of the. Labor Code)

ANOTHER SUGGESTED ANSWER:

The union's stand that there must be a prior consultation by the employer with the union before
contracting out can be effected is valid. Article XJH, Section 3 of the Constitution, and Article 255 of
the Labor Code- guarantee the right of workers to participate. ID. policy and decision making
processes which affect their rights, and benefits. Job contracting will undoubtedly and directly
affect their rights, benefits and welfare. Philippine Airlines vs. NLRC, 255 SCRA 301 (1993), and
Manila Electric Company vs. Quisumbing, 302 SCRA 173 (1999).

2. Collective Bargaining Agreement (CBA)

Q: What is an appropriate bargaining unit for purposes of collective bargaining? (5%) (1998
Bar Question)
SUGGESTED ANSWER:
An appropriate bargaining unit is a group of employees of a given employer comprised of all or less
than all of the entire body of employees, which the collective interest of all the employees,
consistent with the interest of the employer, indicate to be the best suited to serve reciprocal rights
and duties of the parties under the collective bargaining provisions of the law. (See, e.g.t University
of the Philippines v. Ferrer-Calle/a, 211 SCRA 451 (1992).

Q: What jurisdictional pre-conditions must be present to set in motion the mechanics of a

collective bargaining? (1996 Bar Question)
Answer:
To set in motion the mechanics of collective bargaining, these jurisdictional pre-conditions must be
present, namely:
a. The employees in a bargaining unit should form a labor organization:
b. The labor organization should be a legitimate labor organization:
c. As such legitimate labor organization, it should be recognized or certified as the collective
bargaining representative of the employees of the bargaining unit; and
d. The labor organization as the collective bargaining representative should request the
employer to bargain collectively. (See Arts. 243, 234, 255 and 250 of the Labor Code)

208
Alternative Answer:
The mechanics of collective bargaining are set in motion only when the following jurisdictional pre-
conditions are met: (1) possession of the status of majority representation of the employees’
representative in accordance with any of the means of selection or designation provided for by the
Labor Code: 2) proof of majority of representation: and (3) a demand to bargain under Art. 251(g),
of the Labor Code. (Ktok Loy v. NLRC, 141 SCRA 179 (1986))

Q:
(a) What, if any, is the maximum term of a collective bargaining agreement under R.A.
6715?
Company America and the union entered into a five (5) year collective bargaining agreement
(CBA). Three (3) years thereafter, the Company received a demand letter from the union for
renegotiation of the terms and conditions of the CBA on the ground that the cost of living and
prices of the essential commodities have gone up by 30% since the CBA was concluded.
1. Was the five-year term of the CBA legal?
2. Is the Company obligated to renegotiate the CBA as demanded by the union? If your
reply is in the affirmative, state the extent of the Company’s obligations.
3. What are the remedies available to the Union in the event the Company refuses to
renegotiate the CBA? Does it include the right to strike?
Answer:
According to Republic Act No. 6715 (Article 253-A, of the Labor Code, as amended), the maximum
term of a collective bargaining agreement is 5 years, but except as to the representation aspect, all
other provisions of the agreement shall be renegotiated not later than three (3) years after its
execution.
(a) 1. The five year term of CBA is legal. This is provided for in Rep. Act No. 6715.
2. The company is obligated to renegotiate the CBA as demanded by the union. Rep. Act. No.
6715 provides that all the provisions of a CBA shall be renegotiated not later than three (3) years
after its execution except the representation aspect of the CBA.
3. The refusal of the company to renegotiate not later than three (3) years after the execution
of the CBA is a refusal to bargain collectively and is, therefore, an unfair labor practice. Thus, a case
of unfair labor practice may be filed against the employer with a Labor Arbiter.
The Union may go on an unfair labor practice strike considering that the employer is guilty of an
unfair labor practice if it refuses to renegotiate the CBA within three (3) years after its execution.

Q: A group of employees in XYZFactory belonging to a religious sect. in conformity with the

teachings and dictates of their religion, refused to join the labor union in the factory. The
labor union was able te negotiate a substantial wage increase in its collective bargaining
agreement with management. Aprovision therein stated that the wage increase would be
paid to the members of the union only in view of a "closed shop" union security clause in the
new agreement. The members of the sect protested and demanded that the wage increase be
extended to them. The officers of the union countered by demanding their termination from

209
the company pursuant to the "closed shop" provision in the just-concluded CBA. (2005 Bar
Question)
(a) Is the CBA provision valid?
SUGGESTED ANSWER:
No, the CBA provision is not valid. The benefits of a CBA are extendible to all employees regardless
of their membership in the union, because to withhold the same from non-union members would
be to discriminate against them. [National Brewery & A. Wed Industries Labor Union of the
Philippines v. San Miguel Brewery, Inc., 8 SCRA 805 (1963).

(b) Should the company comply with the union's demand of terminating the members of
tile religious sect? [6%)
SUGGESTED ANSWER:
No, the company should not comply with the union's demand. In the case of [Victonano v. Elizalde
Rope Workers' Union, 59 SCRA 54 (1974)] religious freedom is superior to the freedom to contract.
In the hierarchy of values, religious freedom takes a preferred position and the right to contract
must yield; accordingly, the CBA provision which is contractual in nature must not prevail over the
duty to respect the workers' constitutional right to religious freedom.

Q: Republic Drug Co. has 1,000 employees, including 50 managerial personnel, 90

supervisors and 150 sale representatives. The regular workday in the Company is from 8:00
a.m. to 5:00 p.m. The sales representatives register their presence with the timekeeper at
8:00 A.M. every day before they go to their respective sales territories. They are paid a basic
salary plus commission. Sixty of the sales representatives are members of the Republic
Salesmen Union which sent to the Company a set of bargaining proposals, including a
demand for payment of overtime pay of the sales representatives for working beyond 5:00
P.M. everyday. The Company refused to consider the bargaining proposals and rejected the
demand for overtime pay for the reason that the sales representatives are not entitled
thereto. The Union filed an unfair labor practice case against the Company for refusal to
bargain, and after complying with the legal requirements declared a strike.
xxx
b) Was the Company guilty of unfair labor practice? Was the Union’s strike legal?
Reasons.
Suggested Answer:
The Company is not guilty of unfair labor practice. The Republic Salesmen Union has a members
only 60 of the 150 sales representatives. This fact could mean that the Union is not the majority
union that is the collective bargaining representative of the sales representatives. (Article 255.
Labor Code)
Because the Union is not the collective bargaining representative, the Company did not commit an
unfair labor practice when it refused to bargain with said union. The duty of the employer to
bargain collectively arises only as regards the bargaining representative of the employees. (Article

210
252, Labor Code) Because the refusal to bargain under the above described circumstances is not an
unfair labor practice, the Union's strike was not legal.

Alternative Answer:
If the sales representatives constitute an appropriate collective bargaining unit in the Company,
and the Republic Salesman Union (SBU) was recognized or certified as the collective bargaining
representative in said bargaining unit, inspite of the fact that only 60 of the 150 sales
representative are members of SBU. (because SBU is nevertheless designated or selected by a
majority of the sales representatives) then, the Company is guilty of unfair labor practice when it
refused, at the very least, j ust to consider the bargaining proposals of the Union. The refusal to at
least just consider the bargaining proposals of the Union constitutes a refusal to bargain
collectively; thus, it is an unfair labor practice.
The strike, then, of the Union is legal because an unfair labor practice strike is legal.

a) Mandatory provisions of CBA (Grievance procedure, Voluntary arbitration, No strike-no

lockout clause, Labor management council)
Q: What matters are considered mandatory subjects of collective bargaining? (1996 Bar
Question)
Answer:
Wages, hours of work and all other terms and conditions of employment including proposals for
adjusting any grievances or questions arising from the collective bargaining agreement are
considered mandatory subjects of collective bargaining. (See Art. 252 of the Labor Code)

b) Duration
(i) For economic provisions
Q: The Company and Triple-X Union, the certified bargaining agent of rank-and-file
employees, entered into a Collective Bargaining Agreement (CBA) effective for the period
January 1, 2002 to December 31, 2007.
For the 4th and 5th years of the CBA, the significant improvements in wages and other
benefits obtained by the Union were:
1) Salary increases of PI,000 and PI,200 monthly, effective January 1, 2006 and January
1, 2007, respectively;
2) Vacation Leave and Sick Leave were adjusted from 12 days to 15 days annually for
each employee;
3) Medical subsidy of P3,000 per year for the purchase of medicines and hospitalization
assistance of P10,000 per year for actual hospital confinement;
4) Rice Subsidy of P600 per month, provided the employee has worked for at least 20
days within the particular month; and
5) Birthday Leave with Pay and Birthday Gift of PI,500.

211
As early as October 200*7, the Company and the Union started negotiations to renew the
CBA. Despite mutual good faith and earnest efforts, they could not agree. However, no union
filed a petition for certification election during the freedom period. On March 30, 2008, no
CBA had been concluded. Management learned that the Union would declare a bargaining
deadlock on the next scheduled bargaining meeting.
As expected, on April 3, 2008, the Union declared a deadlock. In the afternoon of the same
day, management issued a formal announcement in writing, posted on the bulletin board,
that due to the CBA expiration on December 31,2007, all fringe benefits contained therein
are considered withdrawn and can no longer be implemented, effective immediately.
xxx
xxx
xxx
[d] If you were the lawyer for the union, what legal recourse or action would you advise?
Reasons. (3%)
SUGGESTED ANSWER:
I would recommend the filing of an unfair labor practice case against the employer for
violating the duty to bargain collectively under Article 248(g) of the Labor Code. This arbitration
case also institutes the “deadlock bar” that shall prevent any other union from filing a petition for
certification election.

ANOTHER SUGGESTED ANSWER:

I will advice the Union to continue negotiations with the aid of the NCMB (Art. 250, Labor
Code), and to file a complaint for unfair labor practice, i.e., violation of an economic provision, gross
and serious in character under Articles 248(i) and Art. 261 of the Labor Code.

(ii) For non-economic provisions

(iii) Freedom period
Q: The Company and Triple-X Union, the certified bargaining agent of rank-and-file
employees, entered into a Collective Bargaining Agreement (CBA) effective for the period
January 1, 2002 to December 31, 2007.
For the 4th and 5th years of the CBA, the significant improvements in wages and other
benefits obtained by the Union were:
6. Salary increases of PI,000 and PI,200 monthly, effective January 1, 2006 and
January 1, 2007, respectively;
7. Vacation Leave and Sick Leave were adjusted from 12 days to 15 days annually for
each employee;
8. Medical subsidy of P3,000 per year for the purchase of medicines and
hospitalization assistance of P10,000 per year for actual hospital confinement;
9. Rice Subsidy of P600 per month, provided the employee has worked for at least 20
days within the particular month; and

212
10. Birthday Leave with Pay and Birthday Gift of PI,500.
As early as October 2007, the Company and the Union started negotiations to renew the CBA.
Despite mutual good faith and earnest efforts, they could not agree. However, no union filed
a petition for certification election during the freedom period. On March 30, 2008, no CBA
had been concluded. Management learned that the Union would declare a bargaining
deadlock on the next scheduled bargaining meeting.
As expected, on April 3, 2008, the Union declared a deadlock. In the afternoon of the same
day, management issued a formal announcement in writing, posted on the bulletin board,
that due to the CBA expiration on December 31,2007, all fringe benefits contained therein
are considered withdrawn and can no longer be implemented, effective immediately.
[a] When was the “freedom period” referred to in the foregoing narration of facts?
Explain. (2%) (2009 Bar Question)
SUGGESTED ANSWER:
The freedom period or the time within which a petition for certification election to challenge the
incumbent collective bargaining agent may be filed is from 60 days before the expiry date of the
CBA.

3. Union Security
a) Union security clauses; closed shop, union shop, maintenance of membership shop, etc.
Q: Reconcile the compulsory nature of the closed shop provision in a Collective Bargaining
Agreement with the constitutional guarantee of freedom of association. Discuss fully. (1995
Bar Question)
Answer:
Among the policies of the State In the field of labor relations is to promote trade unionism and to
foster the organization of a strong and united labor movement. Union security clauses, like a closed
shop agreement, is one way of implementing the aforementioned labor relations policy.
Implementing to some extent the concept of freedom of association, an employee who is already a
member of a union could not be compelled to become a member of a bargaining union, even if there
is a closed shop agreement.

Alternative Answer:
It could be argued that a closed shop provision in a Collective Bargaining Agreement, because it
requires that a person should first be a member of the bargaining union before he is employed, is
violative of the right to freedom of association, because said right subsumes not only a right to Join,
but also a right not to Join a union.
On the other hand, it could be argued that the exercise of the freedom of association means that
workers should Join unions. A closed shop agreement, as a union security clause, encourages the
joining of unions.

Q: (1997 Bar Question)

(a) Describe a “closed shop agreement, does it differ from an “agency shop agreement."

213
(b) Are the above agreements legal?
Answer:
(a) A "closed shop agreement" Ls that agreement embodied in a collective bargaining
agreement (CBA) whereby the employer binds itself not to hire any person unless he Is first a union
member of the collective bargaining representative. An "agency shop agreement" is different from a
closed shop agreement in that under the former, the employer does not bind itself not to hire a
person unless he is first a union member of the collective bargaining representative. Instead, the
employer binds itself to check off from those who are not union members of the collective
bargaining representative a reasonable fee equivalent to the dues and other fees paid by union
members if the non-union members accept the benefits of the CBA.
(b) The above agreements are legal or they are expressly allowed by the Labor Code.

Q: Explain the impact of the union security clause to the employees’ right to security of
tenure. (2%) (2009 Bar Question)
SUGGESTED ANSWER:
A valid union security clause when enforced or implemented for cause, after according the
worker his substantive and procedural due process rights (Alabang Country Club, Inc. v. NLRC, 545
SCRA 357 [2008]; does not violate the employee's right to security of tenure. Art. 248(e) of the
Labor Code allows union security clauses and a failure to comply with the same is a valid ground to
terminate employment. Union security clause are designed to strengthen unions and valid law
policy.

Q: Around 100 workers of a mill in a coconut plantation organized themselves for the
purpose of promoting their common interest and welfare. The workers’ association
prepared a petition for increasing the daily pay of its members in compliance with minimum
wage rates for their sector in the region and for granting benefits to which they are entitled
under the law.
However, the workers became restless and anxious after the owner-manager threatened
them with mass lay-off if the association would press for their demands. Most of its members
have worked in the mill for 10 to 15 years with no improvement in working conditions and
monetary benefits.
The leaders of the workers' association approached you and asked: What legal steps could
they take to protect their security of tenure? What advice could you give them? (5%) (2005
Bar Question)
SUGGESTED ANSWER:
I would advise them to register the workers’ association with the Department of Labor and
Employment. Then, have the workers' association file a. ULP case against the employer.

ANOTHER SUGGESTED ANSWER:

The workers are entitled to the constitutional (Art. XIII, Sec. 3, 1987 Constitution) and statutory
(Art. 279, Labor Code) guarantees of security of tenure. When this right to security of tenure is
violated, an action for illegal dismissal, is an available remedy.

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If they are dismissed because of union activities, an action for unfair labor practice can be filed (Sec.
3, Art. XIII, Constitution; Art. 243, Labor Code.) If successful, the workers will be entitled to full
backwages, including money value of benefits, and reinstatement without loss of seniority (Art.
279, Labor Code).

Q: Distinguish clearly but briefly between:

xxx
2. Company union and union shop. (2005 Bar Question)
3. Lock-out and closed shop.
SUGGESTED ANSWERS:
2. A company union is a union of employees dominated or under the control of the employer of said
employees. A union shop, on the other hand, refers to a union security clause in a collective
bargaining agreement whereby the employer agrees to terminate the employment of an employee
who has not become a "member of the union which Is the exclusive collective bargaining
representative of the employees in a bargaining unit within a certain period after the employment
of said employee or has ceased to become a union member.
3. Lockout refers to the temporary refusal of an employer to furnish work as a result of a labor or
Industrial dispute. Closed shop, on the other hand, refers to a union security clause in a collective
bargaining agreement whereby the employer agrees not to employ any person who is not a
member of the exclusive collective bargaining representative of the employees in a bargaining unit.

Q: MPH Labor Union is the duly certified bargaining representative of the rank-and-file
employees of MM Park Hotel since the 1970's. The collective bargaining agreement
contained union shop security provisions. After the signing of the 2000 - 2005 CBA, the
Union demanded the dismissal of 3 employees, XX. YY and ZZ, pursuant to the union security
clause in the CBA.
The Hotel Management replied that it was legally impossible to comply with the demand of
the Union. It might even be construed as unfair labor practice. For it appeared that XX, YY
and ZZ had been recently promoted as supervisors and resigned from the Union. But
according to the Union. The three submitted their resignations outside the freedom period
after the 1996 - 2000 CBA expired on June 30. 2000. The Union argued that the Hotel
Management could not skirt its obligation to respect and implement the union security
clause by promoting the three employees. That could be viewed as rewarding employees for
their disloyalty to the union, said the union officers. (2005 Bar Question)
A. Does the union security clause sufficiently justify the demand for dismissal of the
three employees or not? May the Hotel Management validly refuse the Union's demand?
(5%)
SUGGESTED ANSWER:
No. The Union Security Clause does not justify the dismissal of the promoted supervisors who were
formerly members of the rank- and-file union.
Yes. The Hotel Management may validity refuse to dismiss the supervisors.

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As supervisors, they are no longer covered by the CBA of the employer and the rank-and- file union.
The law does not require a promoted supervisor to resign upon promotion from their membership
in the rank-and- file.1e union; rather, by operation of law, they can no longer continue their
membership with the rank-and-file union.
Art. 245. Of the Labor Code provides that supervisory employees shall not be eligible for
membership in a labor organization 'of the rank-and-file employees but, may join, assist, or form
separate labor organizations of their own.

B. The CBA between the Company and the rank –and- file Union contained the
following provision:
"Section 3. MEAL ALLOWANCE. The Company agrees to grant a MEAL, ALLOWANCE of TEN
PESOS (PIO.OO) to all employees who render at least TWO (2) hours or more of actual
overtime work on a workday, and FREE MEALS, as presently practiced, not exceeding
TWENTY FIVE PESOS (P25.00) after THREE (3) hours of actual overtime work."
Dispute in the interpretation of the above provision arose as the Company asserts that the
phrase "after three (3) hours of actual overtime work " does not mean after exactly three (3)
hours of actual overtime work: it means after more than three (3) hours of actual overtime
work. The Union. On the other hand, maintained that "after three (3) hours of actual
overtime work" simply means after rendering exactly, or no less than three (3) hours of
actual overtime work.
Which interpretation do you think should prevail? (5%)
SUGGESTED ANSWER:
The interpretation of the union should prevail.
In a Supreme Court decision, it was ruled that the condition "after three (3) hours of actual
overtime work is satisfied after exactly three (3) hours of actual overtime work.

Q: Distinguish between “contract bar rule" and “dead lock bar rule". (3%) (1999 Bar
Question)
SUGGESTED ANSWER:
Under the “contract bar rule,” a certification election cannot be held if there is in force and in effect
a collective bargaining agreement that has been duly registered with the Department of Labor and
Employment except during the freedom period of such CBA which is the 60-day period prior to the
expiry date of said CBA. (See Articles 231, 253-A and 256)
Under the “deadlock bar rule" a certification election cannot be held if a bargaining deadlock to
which an Incumbent or certified bargaining agent is a party had been submitted to conciliation or
mediation or had become the subject of a valid notice of strike or lockout. (See Section 3, Rule XI,
Book V of the Implementing Rules and Regulations of the Labor Code)

Q: Yellow Bus Company has an existing collective bargaining agreement (CBA) with Union
“X”. During the 60-day “freedom period,” Union “A” filed a petition for certification election
claiming a majority of the rank and file employees of the company had joined it. Pending the
hearing of the petition, the company and Union “X” renegotiated and signed a new CBA

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which is admittedly better than the previous one. In view of this supervening event, the med-
arbiter dismissed the petition of Union "A” for being moot and academic. Is the dismissal of
the petition correct? Can the company and Union “X” claim the benefit of the “contract bar
rule?”
Answer:
The dismissal of the petition is not correct. The Company and Union “X” cannot claim the benefit of
the “contract bar rule.”
The Labor Code (in Art. 256) provides: “In organized establishments, when a verified petition
questioning the majority status of the incumbent bargaining agent is filed before the Department of
Labor and Employment within the sixty-day period before the expiration of the collective
bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when
the verified petition is supported by the written consent of at least twenty-five (25%) percent of all
the employees in the bargaining unit to ascertain the will of the employees in the appropriate bar-
gaining unit.”
Assuming that the petition of Union “A” was supported by at least 25% of the employees in the
bargaining unit, the Med-Arbiter should have automatically ordered a certification election since
the petition was duly filed during the freedom period.
But how about the supervening event, i.e. a new CBA has been signed? The Rules implementing the
Labor Code provides (in Book V, Rule V, Sec. 4) that the representation case shall not x x x be
adversely affected by a collective agreement submitted before or during the last 60 days of a
subsisting agreement or during the pendency of a representation case.

Q: What is the “automatic renewal clause" in a collective bargaining agreement? (2%) %)

(1999 Bar Question)
SUGGESTED ANSWER:
The “automatic renewal clause1’ in a CBA refers to that provision of the Labor Code (Article 253)
which states that “it shall be the duty of both parties (to a CBA) to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement during the 60-
day (freedom) period and/or until a new agreement is reached by the parties.”

Q: FACTS: In a certification election conducted by the Department of Labor, Associated

Workers Organization in Laguna (AWOL) headed by Cesar Montanyo, won over Pangkat ng
mga Manggagawa sa Laguna (PML), headed by Eddie Graciaa. Hence, AWOL was certified as
the exclusive bargaining agent of the rank-and-file employees of the Laguna Transportation
Company (LTC).
Shortly, thereafter, a Collective Bargaining Agreement was concluded by LTC and AWOL
which provided for a closed shop. Consequently, AWOL, demanded that Eddie Graciaa and all
the PML members be required to become members of AWOL as a condition for their
continued employment; other- wise, they shall be dismissed pursuant to the closed shop
provision of the CBA.
The union security clause of the CBA also provided for the dismissal of employees who have

217
not maintained their membership in the union. For one reason or another, Francis
Magallona, a member of AWOL, was expelled from the union membership for acts inimical to
the interest of the union. Upon receipt of the notice that Francis Magallona failed to maintain
his membership in good standing with AWOL, LTC summarily dismissed him from
employment.
1. Can Eddie Graciaa and all the PML members be required to become members of the
AWOL pursuant to the closed shop provision of the CBA? Why? (3%)
SUGGESTED ANSWER:
Eddie Gracia and all the PML members can not be required to become members of AWOL pursuant
to the closed shop provision of the CBA.
According to the Labor Code (Article 248(e), a closed shop provision cannot be applied to those
employees who are already members of another union at the time of the signing of the CBA,

2. Is the termination from employment of Francis Magallona by LTC lawful? Why? (2%)
SUGGESTED ANSWER:
Pursuant to the closed shop provision of the CBA entered into by AWOL with LTC, membership in
AWOL has become a condition of employment in LTC.
As long as the expulsion of Francis Magallona from AWOL was done in accordance with applicable
provisions of law and with the Constitution and By-laws of the AWOL, then it was lawful for LTC to
terminate Magallona.
Panel: The termination is unlawful (Ferrer v. NLRC).

b) Check-off; union dues, agency fees

Q: A is employed by XYZ Company where XYZ Employees Union (XYZ-EU) is the recognized
exclusive bargaining agent. Although A is a member of rival union XYR-MU, he receives the
benefits under the CBA that XYZ-EU had negotiated with the company.
XYZ-EU assessed A a fee equivalent to the dues and other fees paid by its members but A
insists that he has no obligation to pay said dues and fees because he is not a member of XYZ-
EU and he has not issued an authorization to allow the collection. Explain whether his claim
is meritorious. (3%) (2010 Bar Question)
SUGGESTED ANSWER:
NO. The fee exacted from A takes the form of an AGENCY FEE. This is sanctioned by Article 248 (e)
of the Labor Code.
The collection of agency fees in an amount equivalent to union dues and fees from employees who
are not union members is recognized under Article 248(e) of the Labor Code. The union may collect
such fees even without any written authorization from the non-union member employees, if said
employees accept the benefits resulting from the CBA. The legal basis of agency fees is quasi-
contractual (Del Pilar Academy v. Del Pilar Academy Employees Union, 553 SCRA 590 [2008]).

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Q: During the open forum following your lecture before members of various unions affiliated
with a labor federation, you were asked the following questions:
x xx
(c) May a rank-and-file employee, who is not a member of the union representing his
bargaining unit, avail of the wage increases which the union negotiated for its members?
(4%).
SUGGESTED ANSWER:
(b) Yes. The beneficiaries of a Collective Bargaining Agreement include Non-Union Members; other
Wise, there will be discrimination which is prohibited by law. [New Pacific Timber and Supply Co.,
Inc. v. NLRC, 328 SCRA 424 (2000)).

4. Unfair Labor Practice in collective bargaining

Q: On 01 August 1992, Pro-Knit, a corporation engaged in the manufacture of textile
garments, entered into a collective bargaining agreement with the Kamao Union in
representation of the rank and file employees of the corporation.
The CBA was effective up to 20 June 1995. The contract had an automatic renewal clause
which would allow the agreement after its expiry date to still apply until both parties would
have been able to execute a new agreement.
On 10 May 1995 Kamao Union submitted to Pro-Knit's management their proposals for the
renegotiation of a new CBA. Tire next day, Pro-Knit suspended negotiations while Kamao
Union since Pro-Knit had entered into a merger with Eagle Garments, a corporation also
engaged in the manufacture of textile garments. Eagle Garments assumed all the assets and
liabilities of Pro-Knit.
Kamao filed a complaint with the Regional Trial Court for specific performance and damages
with a prayer for preliminary injunction against Pro-Knit and Eagle Garments.
Pro-Knit and Eagle Garments filed a Motion to Dismiss based on lack of jurisdiction. How
would you rule on the Motion to Dismiss? (1997 Bar Question)
Answer:
I will grant the Motion to Dismiss. The act of Pro-knit suspending negotiations with Kamao Union
could be an unfair labor practice. It could be a violation of the duty to bargain collectively. As such,
the case is under the jurisdiction of a Labor Arbiter and not of a regular Court.

Alternative Answer:
I will deny the Union’s Motion to Dismiss. There is no labor dispute between the parties; hence, the
Regional Trial Court has Jurisdiction over the complaint. Art. 212 of the Labor Code,reads –
Labor dispute includes any controversy or matter concerning terms 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 relations of employer and employee.
In addition, the Company can claim that labor contracts are contracts in personam and do not
generally bind successors in interest except under special circumstances. In Sundowner

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Development Corporation v. Drilon, 180 SCRA 14, the Court said:
The rule is that unless expressly assumed, labor contracts such as xxx collective bargaining
agreements are not enforceable against a transferee of an enterprise, labor contracts being in
personam thus binding only between the parties.

a) Bargaining in bad faith

Q: Corporation “X” is engaged in a collective bargaining negotiation with the Union of its
employees. With respect to the demand for profit-sharing the corporation patiently but
consistently alleged that it cannot accept the said demand. The corporation and the union
several times to arrive at the proper resolution of the issue but the corporation would not
yield. Finally, the union filed an unfair labor practice case accusing the corporation of
bargaining in bad faith and refusing to accede to its demand of profit-sharing. Decide.
Answer:
Corporation “X” is not guilty of unfair labor practice.
The question gives as facts that the corporation and the union met several times to arrive at the
proper resolution of the issue as to whether or not there shall be profit sharing at the corporation.
In these meetings, the corporation patiently but consistently stated that it cannot accept the
demand for profit sharing. By these acts, the corporation bargained in good faith; it was showing
that it sincerely desired to reach an agreement with the union. Its not yielding to the demand for
profit sharing is not an unfair labor practice because the Labor Code (in Art. 252) expressly provide
that the duty to bargain collectively does not compel any party to agree to a proposal or to make
any concession.

Q: The Kilusang Kabisig, a newly-formed labor union claiming to represent a majority of the
workers in the Microchip Corporation, proceeded to present a list of demands to the
management for purposes of collective bargaining. The Microchips Corporation, a
multinational corporation engaged in the production of computer chips for export, declined
to talk with the union leaders, alleging that they had not as yet presented any proof of
majority status.
The Kilusang Kabisig then charged Microchip Corporation with unfair labor practice, and
declared a “wildcat" strike wherein means of ingress and egress were blocked and remote
and isolated acts of destruction and violence were committed.
xxx
(c) Was the company guilty of an unfair labor practice when it refused to negotiate with
the Kilusang Kabisig? (1997 Bar Question)
Answer:
x xx
(b) No. It is not an unfair labor practice (ULP) not to bargain with a union which has not
presented any proof of its majority status. The Labor Code imposes on an employer the duty to
bargain collectively only with a legitimate labor organization designated or selected by the majority
of the employees in an appropriate collective bargaining unit. It is not a ULP for an employer to ask
a union requesting to bargain collectively that such union first show proof of its being a majority
union.

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b) Refusal to bargain
Q: The Malipol Labor Union submitted to the management of the Malilito Co.. Inc. a set of
proposals for a collective bargaining agreement. A few days later, the Kapuspalad Labor
Union forwarded its own proposals, claiming to represent the majority of the rank-and-file
employees in the company. The company refused to bargain with either Malipol Labor Union
or Kapuspalad Labor Union.
Malipol Labor Union then filed a complaint for unfair labor practice, charging that the
Kapuspalad Labor Union is a company union. The company then filed with the Med- Arbiter
a petition for certification election.
a) Was the company’s refusal to bargain with either Malipol Labor Union or the
Kapuspalad Labor Union an unfair labor practice?
Answer:
The refusal of the Company to bargain with either Malipol Labor Union or the Kapuspalad Labor
Union is not an unfair labor practice. The refusal is justified. The Company is not certain as to which
of the two labor unions is the union representing the majority of the employees of the employer
belonging to the appropriate collective bargaining unit. It is the duty of the employer to bargain
collectively only with the labor union which is the representative of the employees, which in turn
the labor union designated or selected by the majority of the employees in an appropriate collective
bargaining unit.

b) Was the company’s petition for certification election proper? Will it prosper?
Answers:
The company's petition for certification election is proper. Under the Labor Code, an employer may
file a petition for certification election when there is a demand for collective bargaining.
But the petition may not immediately prosper.
Malipol Labor Union has charged that Kapuspalad Labor Union is a company union. This charge
brings about a prejudicial question which should first be resolved, before the certification election
may be held. A company union cannot be certified as a bargaining representative.

Q: Porfirio, Estela, Crisostomo, Marita, and Jose Ramirez were brothers and sisters. All were
stockholders, directors, and officers of the Pagaspas Marketing Co., Inc. *(PMCI). PMCI sold
office machines and supplies. It employed 20 sales persons, 10 delivery men, 20 service
personnel, and 10 administrative employees. On December 10, 1987, 45 rank and file
workers of the company formed and registered a labor union. They sent a letter to Pagaspas
demanding recognition as bargaining agent of all workers, enclosing check off authorization
forms of the union members, and a set of economic demands. PMCI refused to recognize the
union. The union president went to you, as labor adviser of the federation which they were
planning to affiliate with.

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 xxx
After complying with the legal requirements for a lawful strike, the union filed a notice of
strike. Conciliation produced no agreement. The workers struck and picketed the company’s
stores for 3 months with no results. During the strike, the Ramirezes formed a new
corporation, Maharlika Distributors, Inc. It leased a new store site, bought stocks from PMCI,
and hired the 15 workers who did not join the strike and 6 new workers. Later without filing
an application to close PMCI, it ceased operations.
The union filed a case for unfair labor practice, demanded the reinstatement of all workers
with backwages and sued PMCI and the members of the Ramirez family as individual
respondents for damages. The Ramirezes moved to dismiss the case against them as PMCI
was a corporate entity, so their inclusion as respondents in their personal capacities
violated the theory of independent corporate personality since there was no basis for
“piercing the corporate veil.”
If you were Counsel for the union, what arguments would you use in your Opposition to the
Motion to Dismiss? (1988Bar Question)
Answer:
The Ramirezes could be held personally liable because as members of the same family, they were
organizing another corporation to evade the liability that PMCI will have by virtue of its
commission of a ULP, i.e. refusing to bargain collectively with the union which was the bargaining
representatives of the employees. The act of Ramirezes is evidence of bad faith on their part which
in turn is a justification for piercing the corporate veil” to prevent injustice. (A.C. Ransom Case).

c) Blue sky bargaining

d) Surface bargaining
Q: Differentiate “surface bargaining” from “blue-sky bargaining”. (2%) (2010 Bar Question)
SUGGESTED ANSWER:
(1) SURFACE BARGAINING is defined as “going through the motions of negotiating” without any
legal intent to reach an agreement. The determination of whether a party has engaged in unlawful
surface bargaining is a question of the intent of the party in question, which can only be inferred
from the totality of the challenged party’s conduct both at and away from the bargaining table. It
involves the question of whether an employer’s conduct demonstrates an unwillingness to bargain
in good faith or is merely hard bargaining (Standard Chartered Bank Employees Union (NUBE)v.
Confesor, 432 SCRA 308 [2004]).
(2) BLUE-SKY BARGAINING is defined as “unrealistic and unreasonable demands in negotiations
by either or both labor and management, where neither concedes anything and demands the
impossible” (Standard Chartered Bank Employees Union (NUBE) v. Confesor, supra.).

Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
xxx
xxx
[a] A runaway shop is an act constituting unfair labor practice. (2009 Bar Question)

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SUGGESTED ANSWER:
False. A runaway shop is not automatically an unfair labor practice. It is an unfair labor practice if
the relocation that brought about the runaway shop is motivated by anti-union animus rather than
for business reasons.

ANOTHER SUGGESTED ANSWER:

True. The transfer 6f location of a strike bound establishment to another location (run-away shop)
can constitute an act of interference or restraint of the employees’ right to self-organization. There
is an inferred anti-union bias of the employer (Labor Code, Art. 248[a]). The provisions of Art.
248[a] should be broadly and liberally interpreted to achieve the policy objective of the law, i.e., to
enhance the workers right to self-organization and collectively bargain (Constitution, Art. XIII, Sec.
3 & Art. Ill, Sec. 8; Labor Code, Arts. 243, 244 8e 245; Caltex Filipino Managers, etc. v. C1R, 44 SCRA
350 [1972]).

Q: Ten sessions after the start of contract negotiations, the panel representatives of Island
Bank & Trust Company and the Island Bank Employees Association (IBEA) tacitly recognized
a deadlock had been reached. That was when the TBEA members started their daily “noise
barrage.”
At a signal, usually a whistle blown by a union member in every floor of the 15-storey offices
of the bank, cacophony of sounds could be heard reverberating throughout the building as
union members rang small bells they brought with them, hit metal pans and waste cans, or
simply clapped their hands and shouted. This exercise would last about five minutes.
Depositors at the bank’s lobby would get annoyed and leave; visitors at the other offices
expressed irritation and complained to management.
The bank wrote the IBEA that the “noise barrage” violated the current collective bargaining
agreement’s waiver of and prohibition against picketing and interruptions in operations
during the term of the agreement. The IBEA replied that picketing is a protected concerted
activity and that the agreement has expired since negotiations for a renewal had been in
progress.
The bank consulted you as its retained counsel. What would your legal advice be and what
legal action, if any, would you recommend? (1987 Bar Question)
Answer:
As retained counsel, I will advise the bank to file a ULP charge against IBEA.
The IBEA, by its “noise barrage” is committing “interruption in operations” during the term of the
CBA.
The CBA which prohibits such interruptions is still in force and in effect in spite of the fact that it
has expired. According to the Labor Code (in Art. 253) it shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period prior to the expiration date of the CBA during which the
parties could negotiate a new CBA and/or until a new CBA is reached by the parties. Thus, a CBA is
violated when the IBEA undertakes its “noise barrage” which are “interruptions of operations”
prohibited by the CBA. Such violation is a ULP.
IBEA is not engaged in picketing in its “noise barrage”? Picketing means giving publicity to the

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existence of, or the facts involved in a labor dispute, whether by advertising, speaking, patrolling or
by any method not involving fraud or violation. A “noise barrage,” therefore, cannot be considered
picketing as a protected concerted activity.

5. Unfair Labor Practice (ULP)

a) Nature of ULP
Q: Define unfair labor practice. (1996 Bar Question)
Answer:
Unfair labor practice means any unfair labor practice as expressly defined by the Labor
Code (Arts. 248 and 249 of the Labor Code). Essentially, an unfair labor practice is any act
committed by an employer or by a labor organization, its officers, agents or representatives which
has the effect of preventing the full exercise by employees of their rights to self-organization and
collective bargaining. (See Arts 248 and 249 of the Labor Code).

Q: Discuss in full the jurisdiction over the civil and criminal aspects of a case involving an
unfair labor practice for which a charge is pending with the Department of Labor and
Employment. (2007 Bar Question)
SUGGESTED ANSWER:
Unfair labor practices are not only violations of the civil rights of both labor and management but
are also criminal offenses against the State.
The civil aspect of all cases involving unfair labor practices, which may include claims for actual,
moral, exemplary and other forms of damages, attorney’s fee and other affirmative relief, shall be
under the jurisdiction of the Labor Arbiters.
However, no criminal prosecution shall be instituted without a final judgment, finding that an
unfair labor practice was committed, having been first obtained in the administrative proceeding.
During the pendency of such administrative proceeding, the running of the period for prescription
of the criminal offense herein penalized shall be interrupted. The final judgment in the
administrative proceeding shall not be binding in the criminal case nor be considered as evidence
of guilt but merely as proof of compliance of the requirements set forth by law. (Article 247, Labor
Code.)

b) ULP of employers
Q: The Company has a renewed collective bargaining agreement (CBA) with the Union, which
covers the bargaining unit of rank-and-file employees, including twenty (20) security guards
and has a term of five years effective January 1, 1992. In 1991. the Company had consultation
meetings with the Union on the abolition of the security guard section and the engagement
of the sendees of an independent security agency. On July 16. 1992, the Company abolished
the security guard section, contracted the services of Edsa Security Agency, and advised the
Union that the guards will be transfered to other positions in the Company with increase in
pay and transfer bonus. The Union objected to the abolition as it was in violation of the CBA.
The Company asserted that its action was an exercise of its management prerogatives after

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consultations with the Union in 1991 and intended to promote efficiency and economy. After
satisfying all requirements, the Union declared a strike. There is a provision in the CBA
recognizing in general terms management prerogatives.
a) Did the Company violate the CBA? Explain.
Suggested Answer:
The Company violated the CBA. It is noted that in the CBA, the bargaining unit covered not only the
rank and file employees. It also covered 20 security guards.
Yet, the Company was abolishing the security guard sector where these security guards belonged. It
may be noted that an employer commits an unfair labor practice if it contracts and services or
functions being performed by union members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization. (Article 248(c), Labor Code)
It is true that in 1991, there were consultation meetings with the Union on the abolition of the
security guard section and the engagement of the services of an independent security agency.
But yet, after these consultation meetings, the CBA that was entered into included the 20 security
guards in the bargaining unit of the CBA. There was thereby, an agreement to retain said security
guards.

Alternative Answer:
The Company did not violate the CBA. When it abolished the security guard section and engaged the
sendees of an independent security agency, the Company was merely exercising its management
prerogatives. It is an unfair labor practice for an employer to contract services or functions being
performed by union members, but only when such interferes with, restrains or coerces employees
in the exercise of their rights to self-organization. Here, the Company exercised its prerogative
Management ever in consultation with the Union and its objective was to promote efficiency and
economy.

b) Was the Union's strike legal? Explain.

Suggested Answer:
If the Company is guilty of unfair labor practice, then the strike of the Union has legal basis
and thus is legal.

Alternative Answer:
If the Company is not guilty of unfair labor practice, then, the strike of the Union is illegal,
because there will be no legal ground for the strike.

Q: Article 248(d) of the Labor Code states that it shall be unlawful for an employer to initiate,
dominate, assist in or otherwise interfere with the formation or administration of any labor

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organization, including the giving of financial or other support to it or to its organizers or
officers.
X Company, Inc. has been regularly contributing money to the recreation fund of the labor
union representing its employees. This fund, including the financial assistance given by the
employer, is used for refreshment and other expenses of the labor union whenever the
employees go on a picnic, on an excursion, or hold a Christmas party. Is the employer liable
for unfair labor practice under Article 248(d) of the Labor Code? Explain your answer.
Answer:
No. If the contributions of the employer benefit all the employees and there is no employee
discriminated against, there is no unfair labor practice. The contributions may be considered a
fringe benefit given by the employer.

Alternative Answer:
If the regular contributions are pursuant to a CBA provision, there is no unfair labor practice. If not
pursuant to a CBA violation, the assistance may constitute an unfair labor practice.

Another Alternative Answer:

If Art. 248(d) is strictly applied, the giving of money by the employer to the recreation fund of the
labor union is an unfair labor practice because said Article considers as an unfair labor practice “the
giving of financial or other support to it (meaning a union) or to its organizers or officers.” The
Article does not provide for a situation where such giving is not an unfair labor practice.

Q: Give three (3) examples of unfair labor practices on the part of the employer and three (3)
examples of unfair labor practices on the part of the labor union. (1996 Bar Question)
Answer:
Any three (3) from the following enumeration in the Labor Code:
ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit
any of the following unfair labor practice:
a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;
c) To contract out services or functions being performed by union members when such will
interfere with, restrain or coerce.employees in the exercise of their rights to self-organization;
d) To initiate, dominate, assist or otherwise interfere with the formation or administration of
any labor organization, including, the giving of financial or other support to it, or its organizations,
or supporters;
e) To discriminate in regard to wages, hours of work, and other terms and conditions of

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employment in order to encourage or discourage membership in any labor organization. Nothing in
this Code or in any other law shall stop the parties from requiring membership in a recognized
collective bargaining agent as a condition for employment, except those employees who are already
members of another union at the time of the signing of the collective bargaining agreement.
Provided, that the individual authorization required under Article 241, paragraph (o) of this Code
shall not apply to the non-members of the recognized collective bargaining agent;
f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for
having given or being about to give testimony under this Code;
g) To violate the duty to bargain collectively as prescribed by this Code;
h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute; or
i) To violate a collective bargaining agreement.

Q: Unions “A” and “B” are competing with one another to organize the employees of Ocean
Supermart. Inc. It was an uncertain contest until the President of Ocean Supermart issued a
written statement expressing the hope that the employees refrain from joining a union but
in the event they should decide to do so, stating his preference for Union “A”. In the
certification election Union “B” lost. Is there an unfair labor practice? Reasons.
Answer:
Ocean Supermart was guilty of unfair labor practice. The Labor Code (in Art. 248) provides that it is
unfair labor practice for an employer “To interfere with, restrain or coerce employees in the
exercise of their right to self-organization” and “for an employer to initiate, dominate, assist or
otherwise interfere in the formation or administration of any labor organization, including the
giving of financial or other support to it or its organizations or supporters.”
In the question given, Ocean Supermart issued a written statement expressing the hope that the
employees refrain from joining a union. It also express a preference for Union “A”. These statements
could be considered interference with the exercise by employees by the right to self-organize.
Giving support to a particular union is an act of company unionism therefore, was an unfair labor
practice.

Q: After years of harmonious employer-employee relations, the Moonbeam Textile Mfg. Co.
had its first union, the mili tant Kapisanan Ng Mga Unyonista (KMU). A certification election
was a certainty. The aggressiveness of the solicitation drive by the KMU was to be matched
by the intensity of the company’s neutralization efforts.
The company developed a multipronged neutralization plan. This called for department
managers and supervisors to talk to their subordinates, individually and in groups, telling
them about the company’s employee-oriented policies and about the burdens of
membership in a militant union. There would be posters on the plant walls and on
prominent places on the plant premises warning of the dangers of communism and accusing
KMU of being a communist front. Other posters would contain such teasers as “GO KMU AND
LOSE YOUR FREEDOM,” “MOONBEAM FILLS YOUR POCKETS, KMU EMPTIES IT,” “A VOTE FOR
KMU IS A VOTE FOR UNEMPLOYMENT.” After two weeks of this kind of campaign, the
company would announce the payment of the traditional annual across-the-board wage in-
creases but advanced by two months, while the year-end bonus would be increased by 50%

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over last year’s.
The company sought your advice about its neutralization plan. As company lawyer, what
advice will you give about the legality of the neutralization plan. Explain briefly. (1987 Bar
Question)
Answer:
I will advise the Company mat its neutralization plan and its implementation by the Company is an
unfair labor practice. The Company is there interfering with, restraining or coercing its employees
in the exercise of their right to self-organization, which is an unfair labor practice under the Labor
Code (in its Art. 248(a).
The right to self-organization does not only mean the right to form, join or assist labor
organizations. It also includes the right of employees to choose the labor organization which is to
represent them for purposes of collective bargaining and for mutual aid and protection.
In its neutralization plan, especially in its economic inducements, e.g. advance payment of wage
increases and increased bonus, the Company is interfering with, restraining or coercing its
employees of their right to choose in a certification election who shall be the collective bargaining
representative of its employees. This is clearly an unfair labor practice.

Q: The Bisig Ng Mga Manggagawa (BMM) and the Visayan Oil Mfg. Co. are parties to a
collective bargaining agreement containing a union security provision which stipulates that
“all employees within the bargaining unit shall join the UNION within 30 days from the
signing of the agreement.” On the date the agreement was signed, and in fact even before the
signing, the minority group of employees in the bargaining unit were members of the
Kapisanan Ng Mga Unyonista (KMU).
When the KMU members failed to join the BMM within the stipulated period of thirty days,
BMM demanded the termination of their employment. The company acceded to the demand
and dismissed the KMU members. The KMU filed a complaint for unfair labor practice,
alleging that the dismissals and the application of the union-security clause were contrary to
law.
Decide. (1987 Bar Question)
Answer:
When the Company acceded to the demand of BMM and dismissed the KMU members, an unfair
labor practice was committed.
A union security provision which stipulates that “all employees within the bargaining unit shall join
the UNION (meaning BMM which is the collective bargaining representative) within 30 days from
the signing of the agreement” is not violation of the Labor Code. It is authorized by the Code (in Art.
248(e) which provides that nothing in this Code or any other law shall stop the parties (to a CBA)
from requiring membership in a recognized collective bargaining agent as a condition for
employment. This is known as a union security clause.
This provision, however, also further provides that a union security clause cannot be applied to
those employees who are already members of another union at the time of the signing of the
collective bargaining agreement.
The union security clause cannot, therefore, be applied to KMU members who were members of
KMU on the date the CBA was signed, and in fact, even before the signing.

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Q: Rolando Cordero, messenger of Fast Tract Company for the past ten years, was
investigated administratively for taking a snack in Cubao before delivering an important
document to a customer. The customer at first complained about the delay but later forgave
Cordero in a handwritten note to him by the customer's manager.
Claiming that Fast Track, known nation-wide for its rapid delivery services, was placed in an
embarrassing position by Cordero’s conduct, the company insisted on his dismissal in
disregard of counsel’s advice. The personnel manager, however, succeeded in getting
Cordero to sign a release and quitclaim and to accept separation pay.
Cordero filed a complaint for unfair labor practice against Fast Track. His convincing
evidence was a revelation: it showed that everything that he was blamed for was a pretext to
dismiss him because it was he who started the organization of the Fast Track Employees
Union among the hundred or so messengers of the company. The company argued that the
release and quitclaim as well as acceptance of separation pay barred Cordero’s cause of
action.
Decide. (1987 Bar Question)
Answer:
The Company is guilty of unfair labor practice if it is a fact that Cordero was dismissed, not
because at one time, he first took a snack and was therefore delayed in delivering a document to a
customer. It is noted: the customer forgave him and told the Company about his being forgiven.
Thus, it is, therefore, evident that the above incident was only a pretext, that indeed the real reason
was because Cordero started to organize a union among his fellow messengers of the Company.
The dismissal is clearly a ULP. According to the Labor Code (in Art. 248(a) it is unlawful for an
employer to discriminate in regard to wages, hours or work and other terms and conditions of
employment in order to encourage or discourage membership in any labor organizations.
The fact that Cordero signed a release and quitclaim and accepted separation pay does not bar
Cordero’s cause of action. Employees sometimes sign releases and quitclaim and accept separation
pay. They urgently need the money that the separation pay represents their daily expenses. They
should not, therefore, be considered as waiving their right to complain against unfair labor practice
committed by their employers.

c) ULP of labor organizations

Q: Give three (3) examples of unfair labor practices on the part of the employer and three (3)
examples of unfair labor practices on the part of the labor union. (1996 Bar Question)
Answer:
Any three (3) from the following provisions of the Labor Code:
ART. 249. Unfair labor practices of labor organizations. It shall be unfair labor practice for a
labor organization. Its officers, agents or representatives:
a) To restrain or coerce employees in the exercise of their rights to self-organization.
However, a labor organization shall have the right to prescribe its own rules with respect to the
acquisition or retention of membership;
b) To cause or attempt to cause an employer to discriminate against an employee, including

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discrimination against an employee with .respect to whom membership in such organization has
been denied or to terminate an employee on any ground other than the usual terms and conditions
under which membership or continuation of membership is made available to other members;
c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the
representative of the employees;
d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any
money or other things of value, in the nature of an exaction, for services which are not performed or
not to be performed, including the demand for fee for union negotiations;
e) To ask for or accept negotiations of attorney's fees from employers as part of the
settlement of any issue in collective bargaining or any other dispute; or
f) To violate a collective bargaining agreement.

Q: Union “X” is the majority union of the rank and file employees at Slipper Mart Company. It
amended its by-laws to include among the obligations of its members “to refuse to work with
non-union members.” Slipper Mart wants the amendment to be declared null and void
considering that not all its rank and file employees belong to Union “X” and its enforcement
will cause work stoppage in the company. Give your opinion on the validity of the
amendment.
Answer:
The provision of the by-laws of the union that made it among the obligations of its members ‘‘to
refuse to work with non-union members” cannot be implemented at the Slipper Mart Company. It is
management’s prerogative to determine who shall work together in a company.

Alternative Answer:
The act is an unfair labor practice on the part of the union because it could have the effect of
compelling the employer to compel its employees to join Union “X”, thus, in effect restraining or
coercing employees in the exercise of their right to self-organization.

C. Right to peaceful concerted activities

Q: Freibourg Electronics Corporation which employs 400 rank-and-file employees, 80
supervisors and 20 managerial personnel, negotiated a collective bargaining agreement
with the Modemo Labor Union (MLU), the bargaining representative of the rank-and-file
employees. Because of deadlocked negotiations. MLU after complying with the legal re-
quirements declared a strike and picketed the Company's gates. The picketers obstructed
the free ingress into the engrees from the premises. Fearing that it might not meet its
commitments to European and American buyers, the Company appealed to the MLU to allow
entry of personnel who were willing to work. MLU rejected the appeal. On the tenth day of
the strike, a squad of policemen escorted the managerial and supervisory personnel and 100
rank-and-file employees entering the Company's premises to work. During the entry, 20
supervisors and 50 rank-and-file employees were beaten by the picketers.

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The MLU charged the Company and the policemen with violation of the anti-scab law under
the Labor Code. The Company, for its part, filed a petition to declare the strike and picketing
illegal.
As the Labor Arbiter, resolve MLU's charge and the Company's petition with reasons.
Suggested Answers:
The charge made by MLU that the Company and the policemen violated the anti-scab law under the
Labor Code has no basis. The Code provides that no public official or employee, including officers
and personnel of the New Armed Forces of the Philippines and the Integrated National Police, or
armed personnel, shall bring in, introduce or escort in any manner any individual who seeks to
replace strikers in entering or leaving the premises of a strike area, or work in place of strikers.
(Article 264(d), Labor Code)
The Company of the policemen did not violate the above provision of the Labor Code when a squad
of policemen escorted the managerial and supervisory personnel and 100 rank-and-file employees
in entering the Company’s premises to work because the above personnel and employees are old
employees, not new employees who will “replace” the strikers.
The Company’s petition to declare the strike and picketing illegal has basis. The picketers
committed an unlawful act when they obstructed the free ingress into and egress from the
Company premises. The beating up by the picketers of 20 supervisors and 50 rank and file
employees is also the basis for making the strike illegal.

Alternative Answer:
The Labor Code, (in Article 264(d). provides that "the police force shall keep out of the picket lines
unless actual violence or other criminal acts occur therein. In the case in the question, when a squad
of policemen escorted the personnel and employs in entering the Company's premises to work, the
policemen violated the above provision of the Labor Code by crossing the picket lines, when as yet
there was no actual violence, other criminal acts were not occurring.

1. Forms of concerted activities

Q: Distinguish clearly but briefly between:
4. Sympathy strike and general strike. (2005 Bar Question)
SUGGESTED ANSWERS:
1. In both a sympathy strike and in a general strike, there is a stoppage of work by the concerted
action of employees. In both kinds of strike, the strike is not the result of a labor or Industrial
dispute.
As the name implies, workers go on a sympathy strike to show their sympathy for certain workers
who are on strike. On the other hand, in a general strike, workers in the country or in a region,
province, or city or municipality go on a strike to publicly protest a certain policy or action taken by
the government. Thus, for instance, a general strike may be declared by workers to publicly protest
the stand of President Arroyo that she is against an Increase of the minimum wage at this time.

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Q: The day following the workers' voluntary return to work, the Company Production
Manager discovered an unusual and sharp drop in workers' output. It was evidently clear
that the workers are engaged in a work slowdown activity.
Is the work slowdown a valid form of strike activity? [5%] (1998 Bar Question)
SUGGESTED ANSWER:
A work slowdown is not a valid form of strike activity. If workers are to strike, there should be
temporary stoppage of work by the concerted action of employees as a result of an industrial or
labor dispute (See Article 212(o) of the Labor Code)

ANOTHER SUGGESTED ANSWER:

No, slowdown in not a valid form of strike activity. The Supreme Court in Ilaw at Buklod ng
Manggagawa NLRC, 198 SCRA 586 (1991) ruled -
The Court is in substantial agreement with the petitioner's concept of a slowdown as a "strike on
the installment plan”, as a willful reduction in the rate of work by concerted action of workers for
the purpose of restricting the output of the employer, in relation to a labor dispute, as an activity by
which workers, without a complete stoppage of work retard production or their performance of
their duties... The Court' also agrees that such slowdown Is generally condemned as inherently
illicit and unjustifiable, because while the employees "continue to work and remain at their
positions, and accept wages paid to them", they at the same time select what part of their alloted
tasks they care to perform of their own volition or refuse openly, or secretly, to the employers
damage, to do other work; in other words, they work on their own terms.
Likewise, a slowdown is not a valid form of concerted activity, absent a labor dispute between the
parties. The Labor Code reads –
Art.212. -xxx
(0) "Strike** means any temporary stoppage of work by the concerted action of employees as a
result of an industrial or labor dispute.

ANOTHER SUGGESTED ANSWER:

No. It is a prohibited activity. It can be said to be a violation of the duty to bargain collectively. The y
union is guilty of bad faith. The workers should resume operations under the same terms and
conditions prevailing prior to the strike.

Q: What do you understand by the “improved offer balloting?”

Answer:
A strike may be an economic strike, namely, it is a strike caused by a deadlock at the bargaining
table. A deadlock may arise because the offer of the employer, e.g., its offer of a 20% across-the-
board increase in wages and salaries, was not accepted by the Union who wanted a 50% increase.
After considering the matter, the employer may improve its offer, e.g. it offers a 35% increase.
This improved offer of the employer may be submitted to the union members on or before the 30th

232
day of the strike. The secret balloting that will determine whether a majority of the union members
accept the improved offer of the employer is the so-called “'improved offer balloting."
In case it is a lockout, and not a strike, what may be the subject matter of a secret balloting, this lime
among the members of the Board of Directors of the employer, may be the reduced offer of the
union, i.e., instead of asking for 50% across the board increase in wages and salaries, it may reduce
its demand to 25 % .

Q: (2000 Bar Question)

a) What is the rationale for the State regulation of strike activity and what are the
interests involved that the State must balance and reconcile? (3%)
b) Cite two (2) examples on how the law regulates the use of strike as a form of
concerted activity. (2%)
SUGGESTED ANSWER:
a) The first rationale is the constitutional provision that the right to strike is to be exercised “in
accordance with law”. Another rationale is the Civil Code provision that the relations between
employer*and employee are imbued with public interest and are subject to the provisions of special
law. A third rationale is the police power of the state.
The interests to be balanced are the rights of the workers, as primary socio-economic force,
to protection of the law, to security of tenure, to concerted activities, etc. These should be balanced
with the right of the employer to reasonable return on investment and to expansion and growth.
General welfare or the general peace and progress of society should also be considered. This is why
assumption of jurisdiction and certification to NLRC are allowed in “national interest" cases. (Art.
263, Labor Code: Raw at Buklod rig Manggagawa v. NLRC, 198 SCRA. 586 (1991); Lapanday
Workers Union u. NLRC, 248 SCRA 96 (1995)].
b) Examples: (1) procedural requirements should be observed, namely, filing of notice of
strike, observance of cooling-off period, taking of strike note, and report of the strike vote; (2) use
of violence, intimidation or coercion and blockade of ingress-egress are not allowed. (Art 263 (b)
(c) (f) (g), Labor Code).

Q: On the day that the Union could validly declare a strike, the Secretary of Labor issued an
order assuming jurisdiction over the dispute and enjoining the strike, or if one has
commenced, ordering the striking workers to immediately return to work. The retum-to-
work order required the employees to return to work within twenty-four hours and was
served at 8 a.m. of the day the strike was to start. The order at the same time directed the
Company to accept all employees under the same terms and conditions of employment prior
to the work stoppage. The Union members did not return to work on the day the Secretary’s
assumption order was served, nor on the next day; instead, they held a continuing protest
rally against the company’s alleged unfair labor practices. Because of the accompanying
picket, some of the employees who wanted to return to work failed to do so. On the 3rd day,
the workers reported for work, claiming that they do so in compliance with the Secretary’s
retum-to-work order that binds them as well as the Company. The Company, however,
refused to admit them back since they had violated the Secretary’s retum-to-work order and
are now considered to have lost their employment status.
The Union officers and members filed a complaint for illegal dismissal arguing that there

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was no strike but a protest rally which is a valid exercise of the workers’ constitutional right
to peaceable assembly and freedom of expression. Hence, there was no basis for the
termination of their employment.
You are the Labor Arbiter to whom the case was raffled. Decide, ruling on the following
issues:
a) Was there a strike? (4%) (2008 Bar Question)
SUGGESTED ANSWER:
a) Yes, there was a strike because of the concerted stoppage of work by the union
members.

ANOTHER SUGGESTED ANSWER:

Yes, there was a strike. No matter how they call it, the “continuing protest rally against the
company’s alleged unfair labor practices” constitutes a “temporary stoppage of work by he
concerted action of employees as a result of an industrial or labor dispute” - a case of strike as
defined in Art. 212(o) of the Labor Code.
Recently, in SantaRos& Coca-Cola Plant Employees Union, etal. vs. Coca-Cola Bottlers Phils., Inc.
(512 SCRA 437 [2007]}, the Supreme Court clarified that a strike comes in varied forms, from
“slowdowns, mass leaves, sit downs” to other “similar activities.” A protest rally which results in
temporary stoppage of work by the concerted action of employees, as a result of a labor or
industrial dispute, is clearly a case of strike.

b) Were the employees simply exercising their constitutional right to petition for
redress of their grievances? (3%) (2008 Bar Question)
SUGGESTED ANSWER:
b) No. After the issuance of a return to work order based on the assumption powers of the
Secretary of Labor under Art. 263(g) of the Labor Code, the strike was already taken outside of the
employees’ constitutionally protected right to engage in peaceful concerted activities for redress of
their grievances.

ANOTHER SUGGESTED ANSWER:

b) The employees were not simply exercising their constitutional right to petition for
redress of their grievances. Specifically, they were focusing on alleged unfair labor practice which
made the continuing protest rally a strike.

Q: On May 24, 1989, the UKM urged its member-unions to join a “Welga ng Bayan” in support
of its efforts to pressure Congress to increase the daily minimum wage. Union “X” is a
member of the UKM and represents all the rank and file employees of the Puritan Mining
Company. Following the call for a nationwide strike, Union “X” staged a strike and put up a
picket the following day. As a result, the company’s operations were paralyzed although
company officials and supervisory employees were allowed ingress and egress to and from
the company premises. The picket was likewise peaceful. On May 28, 1989, the UKM

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leadership announced the end of the “Welga ng Bayan.” Union “X” immediately lifted its
picket and its members went back to work. The company sought our legal advice on the
legality of the strike and the liability, if any, of the union officers and the participating
members. What is your opinion? Explain.
Answer:
The strike was illegal. For a strike to be legal, it should either be an economic strike, i.e., caused by a
bargaining deadlock or an unfair labor practice strike, i.e., caused by the commission of an unfair
labor practice by an employer.
The strike of Union “X” was neither an economic strike or an unfair labor strike. Thus, it was an
illegal strike.
Because it was an illegal strike, any union officer who knowingly participated in it may be declared
to have lost his employment status, meaning such union officer could be legally terminated.
As for the union members who participated in the strike, the facts show that no illegal acts were
committed. They allowed ingress and egress to and from the company premises. The picket was
peaceful. The mere participation of the union members, without their committing illegal acts, does
not constitute sufficient ground for the termination of their employment.

Alternative Answer:
The strike is legal and the union officers and participating union members incur no liability for
calling and participating in the strike respectively. Applying the rule in Philippine Blooming Mills to
the effect that the workers only personally assembled to influence the decision making process of
the government which is a constitutionally guaranteed right.
Note: Credit should be given to answer that focus on the procedural requirement for a strike to be
legal, i.e. strike vote, notice, cooling off period.

Q: On the first day of collective bargaining negotiations between rank-and-file Union A and B
Bus Company, the former proposed a P45/day increase. The company insisted that ground
rules for negotiations should first be established, to which the union agreed. After agreeing
on ground rules on the second day, the union representatives reiterated their proposal for a
wage increase. When company representatives suggested a discussion of political provisions
in the Collective Bargaining Agreement as stipulated in the ground rules, union members
went on mass leave the next day to participate in a whole-day prayer rally in front of the
company building.
A. The company filed a petition for assumption of jurisdiction with the Secretary of
Labor and Employment. The Union opposed the petition, arguing that it did not intend to
stage a strike. Should the petition be granted? Explain. (2%)
SUGGESTED ANSWER:
YES. There was a strike. What the union engaged in was actually a “work stoppage” in the guise of a
protest rally.
Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the concerted

235
action of employees as a result of an industrial or labor dispute. The fact that the conventional term
"strike” was not used by the striking employees to describe their common course of action is
inconsequential. What is controlling is the substance of the situation, and not its appearance. The
term "strike” encompasses 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 (Santa Rosa Coca- Cola Plant Employees Union, Donrico v. Sebastian, et al. v. Coca-Cola
Bottlers Phils., Inc., 512 SCRA 437 [2007]).

2. Who may declare a strike or lockout?

Q: Because of alleged “unfair labor practices" by the management of GFI System, a
government-owned and controlled financial corporation, Its employees walked out from
their jobs and refused to return to work until the management would grant their union
official recognition and start negotiations with them.
The leaders of the walk-out were dismissed, and the other participants were suspended for
sixty days. In arguing their case before the Civil Service Commission, they cited the principle
of social justice for workers and the right to self- organization and collective action,
including the right to strike. They claimed that the Constitution shielded them from any
penalty because their walk-out was a concerted action pursuant to their rights guaranteed
by the basic law.
Is the position taken by the walk-out leaders and participants legally correct? Reason
briefly. (5%) (2005 Bar Question)
SUGGESTED ANSWER:
The position taken by the walk-out leaders and participants is not legally correct. They are
government employees, and as such, they do not have the right to strike. According to the actual
wording of Section 3 of Article XIII of the Constitution, the State "shall guarantee the rights of all
workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities including the right to strike in accordance with law."
Thus, the last clause of the above-quoted provision of the Constitution makes it very clear: the right
to strike is not constitutional, it is statutory because the right should be "in accordance with law”.
And there is as yet no law giving government employees the right to strike.

ANOTHER SUGGESTED ANSWER:

No. What Art. XIII, Sec. 3 of the 1987 Constitution guarantees is "the right to strike in accordance
with law.”
Assuming that what we have is a chartered government-owned and controlled corporation, they
cannot, under EO 180 and related jurisprudence, stage such walk-out which is basically a case of
strike.
Even if GFI was organized under the corporation law, still no such walk-out is allowed without the
employees’ complying with the requirements of a valid strike, among which is that said strike or
walk-out should be validly grounded on a (a) deadlock in collective bargaining, or (b) unfair labor
practice, either of which is not present here.

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3. Requisites for a valid strike
Q: Discuss the legal requirements of a valid strike. (2007 Bar Question)
SUGGESTED ANSWER:
The legal requirements of a valid strike are as follows:
1. No labor union may strike on grounds involving inter-union and intra-union disputes.
2. In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a
notice of strike with the Department of Labor and Employment at least 30 days before the intended
date thereof. In cases of unfair labor practice, the period of notice shall be 15 days and in the
absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any
legitimate labor organization in behalf of its members. However, in case of dismissal from
employment of union officers duly elected in accordance with the union constitution and by-laws,
which may constitute union busting where the existence of the union is threatened, the 15-day
cooling-off period shall not apply and the union may take action immediately.
3. A decision to declare a strike must be approved by a majority of the total union membership
in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that
purpose.
4. In every case, the union shall furnish the Department of Labor and Employment the voting
at least seven days before the intended strike subject to the cooling-off period herein provided.
5. No labor organization shall declare a strike without first having bargained collectively;
without first having filed the notice required or without the necessary strike vote first having been
obtained and reported to the Department of Labor and Employment.
6. No strike 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.
7. In a strike no person engaged in picketing should 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.

FIRST ALTERNATIVE ANSWER:

1) Valid and factual ground;
2) Notice of strike filed by the bargaining agent (if collective bargaining deadlock) or a
registered union in the affected bargaining unit (if unfair labor practice);
3) Notice of strike filed with the NCMB;
4) Notice of strike filed at least 24 hours prior to taking a strike vote by secret balloting,
informing said office of the decision to conduct a strike vote, and the date, place, and
time thereof;
5) Strike vote where majority of union members approve the strike;
6) Strike vote report should be submitted to the NCMB at least 7 days before the intended date
of strike;
7) Except in cases of union busting, the cooling-off period prescribed (15 days, unfair labor
practice; 30 days, collective bargaining deadlock) should be fully observed;

237
8) 7-day waiting period or strike bans after submission of the strike vote report to NCMB
should be fully observed;
9) Not on grounds of ULP in violation of no-strike clause in CBA;
10) Not visited with widespread violence;
11) Not in defiance of the Secretary’s assumption of jurisdiction order;
12) Not prohibited by law (such as unions in the banking industry).

SECOND ALTERNATIVE ANSWER:

A valid strike requires compliance of both substantial and procedural grounds. Substantially, a valid
strike has to be grounded on either unfair labor practice or deadlock in collective bargaining.
Procedurally, the same must comply with the requirements of: (1) notice of strike to filed at least
15 days before the intended ULP grounded strike or at least 30 days prior to the deadlock in
bargaining grounded strike; (2) Must comply with the strike vote requirement, meaning, a majority
of the union membership in the bargaining unit must have voted for the staging of the strike, and
notice hereon shall be furnished NCMB at least 24 hours before the strike vote is taken; and (3) the
strike vote results must be furnished to the NCMB at least 7 days before the intended strike. The
dismissal of a duly elected officer excuses, however, the union from the 15/30 days cooling off
requirement in Art. 263 (c) of the Labor Code.

Q: Enumerate and discuss briefly:

1. What are the statutory requisites for a valid strike by the workers? Should these
requisites be complied with substantially or strictly? (2005 Bar Question)
SUGGESTED ANSWER:
The statutory requisites for a valid strike are the following:
A strike may be declared only in cases of bargaining deadlocks or unfair labor practices. Violations
of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No
strike or lockout may be declared on grounds involving inter-union and intra-union disputes.
No strike may be declared without first having filed a notice of strike or without the necessary
strike vote having been obtained and reported to the National Conciliation and Mediation Board. A
strike may actually take place only after a 3D-daywaiting period after notice was filed for a strike
arising from a bargaining deadlock or after a 15-day waiting period for an unfair labor practice
strike. Notice about a strike vote should be given seven days before the intended strike.
No strike can be declared after assumption of jurisdiction by the Secretary of Labor and
Employment or after certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for the strike or lockout.

ANOTHER SUGGESTED ANSWER:

1. Statutory Requirements for a Valid Strike
a. Status of Striking Union – For a ULP strike or bargaining deadlock strike, only a duly –
certified or recognized bargaining representative may declare such strike.

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b. Procedural Requirements
(1) Notice of Intent. Filing of Notice of Intent to Strike with NCMB.
(2) Cooling off Period.- Observance of Cooling-off Period.
(a) ULP - 15 days before intended date of strike
(b) Bargaining Deadlock - 30 days before intended date of strike.
(3) Strike Vote and Filing of the same with the NCMB and the observance of the seven (7) days
strike ban. [Art. 263 (c-f). Labor Code].
(4) Cause- The cause of a strike must be a labor or industrial dispute. [Art. 212(0], Labor Code],
Compliance with all legal requirements are meant to be and should be mandatory. (National
Federation of Sugar Workers v. Ovajera. 114 SCRA354 [1982].

Q: A is a member of the labor union duly recognized as the sole bargaining representative of
his company. Due to a bargaining deadlock, 245 members of the 500-strong union voted on
March 13, 2010 to stage a strike. A notice of strike was submitted to the National
Conciliation and Mediation Board on March 16, 2010. Seven days later or on March 23, 2010,
the workers staged a strike in the course of which A had to leave and go to the hospital
where his wife had just delivered a baby. The union members later intimidated and barred
other employees from entering the work premises, thus paralyzing the business operations
of the company.
A was dismissed from employment as a consequence of the strike. (2010 Bar Question)
SUGGESTED ANSWER:
NO. The strike was not legal due to the union’s failure to satisfy the required majority vote of union
membership (251 votes), approving the conduct of a strike (See Art. 263(f), Labor Code; Section 11,
Rule XXII, Dept. Order No. 40-03).
Also, the strike was illegal due to the non-observance of the 30-day cooling off period by the union
(Art. 263(c), Labor Code). rights of employees to self-organization (Club Filipino, Inc. v. Bautista,
592 SCRA 471 [2009]).

Q: On the first day of collective bargaining negotiations between rank-and-file Union A and B
Bus Company, the former proposed a P45/day increase. The company insisted that ground
rules for negotiations should first be established, to which the union agreed. After agreeing
on ground rules on the second day, the union representatives reiterated their proposal for a
wage increase. When company representatives suggested a discussion of political provisions
in the Collective Bargaining Agreement as stipulated in the ground rules, union members
went on mass leave the next day to participate in a whole-day prayer rally in front of the
company building.
xxx
B. The Union contended that assuming that the mass leave will be considered as a
strike, the same was valid because of the refusal of the company to discuss the economic
provisions of the CBA. Rule on the contention. (2%)
SUGGESTED ANSWER:

239
The Union’s contention is wrong. A strike may be declared only in cases of deadlock in collective
bargaining negotiations and unfair labor practice (Article 263(c, Labor Code); Section 1, Rule V,
NCMB Manual of Procedures).
The proposal of the company to discuss political provisions pursuant to the ground rules agreed
upon does not automatically mean that the company refuses to discuss the economic provisions of
the CBA, or that the company was engaged in “surface bargaining” in violation of its duty to bargain,
absent any showing that such tend to show that the company did not want to reach an agreement
with the Union. In fact, there is no deadlock to speak of in this case.
The duty to bargain does not compel either party to agree to a proposal or require the making of a
concession. The parties failure to agree which to discuss first on the bargaining table did not
amount to ULP for violation of the duty to bargain.
Besides, the mass leave conducted by the union members failed to comply with the procedural
requirements for a valid strike under the Rules, without which, the strike conducted taints of
illegality.

C. Union member AA, a pastor who headed the prayer rally, was served a notice of
termination by management after it filed the petition for assumption of jurisdiction. May the
company validly terminate AA? Explain. (2%)
SUGGESTED ANSWER:
NO. The company cannot terminate AA because the Labor Code provides mere participation of a
worker in a strike shall not constitute sufficient ground for termination of his employment.

4. Requisites for a valid lockout

Q: Fifty percent (50%) of the employees of Grandeur Company went on strike after
negotiations for a collective bargaining agreement ended in a deadlock. Grandeur Company,
being a public utility, immediately petitioned the Secretary of Labor and Employment to
assume Jurisdiction and certify the case to the NLRC. On the fourth day of the strike and
before the DOLE Secretary could assume jurisdiction or certify the case to the NLRC. the
strikers communicated in writing their offer to return to work. Grandeur Company refused
to accept the offer of the strikers because it realized that they were not at all capable of
paralyzing the operations of the company. The strikers accused Grandeur Company of illegal
lockout.
Has Grandeur Company committed the act charged by refusing to accept the offer of the
strikers to return to work? Discuss fully. (1995 Bar Question)
Answer:
There is no law that prohibits strikers to decide not to continue with a strike that they have started.
Thus, the company committed an illegal lockout in refusing to accept the offer of the strikers to
return to work. Under the set of facts in the question, the Company did not give the required notice
to lockout, much less did it observe the necessary waiting period, nor did it take a needed vote on
the lockout. Thus, the lockout is illegal.

240
5. Requisites for lawful picketing
Q: President FX, head of a newly formed labor union composed of 1/3 of the total number of
rank-and-file employees in Super Stores, Inc., agitated his fellow employees to demand from
management pay increases and overtime pay. His supervisor summoned him to explain his
tardiness and refusal to obey regulations. Feeling threatened, he gathered 20 of his
members and staged a 2-day picket in front of the shopping mall. Security staff arrived and
dismantled the placards and barricades blocking the employees' entry to the mall. In
retaliation, FX threw stones at the guards, but the other striking workers just stood by
watching him. Seven days after the picket, FX who had gone absent without leave returned to
the mall and announced that he had filed a complaint for illegal dismissal and unfair labor
practice against SSl.
SSI learned that FX's group was not registered. No strike vote and strike notice were filed
prior to the picket. The guards were told not to allow FX entry 10 the company premises as
management considered him effectively terminated. Other union members were accepted
back to work by SSl.
Was the dismissal of FX for a valid cause? Was due process observed? (5%) (2005 Bar
Question)
SUGGESTED ANSWER:
There is a valid cause for the dismissal of FX, but due process was not observed.
Peaceful picketing is part of the constitutional freedom of speech. The right to free speech, however,
has its limits, and picketing as a concerted activity is subject to the same limitations as a strike,
particularly as to lawful purpose and lawful means. But it does not have to comply with the
procedural requirements for a lawful strike, like the notice of strike or the strike vote. However in
the problem given, picketing became illegal because of unlawful means, as barricades blocked the
employees' entry to the mill, and violence, ensued when FX threw stones at the guards. There was
thus, valid cause for the dismissal of FX, however, due process was not observed because SSI did
not comply with the twin requirements of notice and hearing.

Q: A division manager of a company taunted a union officer two days after the union
submitted to the Department of Labor and Employment (DOLE) the result of the strike vote.
The division manager said: “Your union threat of an unfair labor practice strike is phony or a
bluff. Not even ten percent (10%) of your members will join the strike.’' To prove union
member support for the strike, the union officer immediately instructed its members to
cease working and walk out. Two hours after the walkout, the workers voluntarily returned
to work. (2000 Bar Question)
xxx
The workers engaged in picketing activity in the course of a strike.
a) Will picketing be legal if non-employees of the strike-bound employer participate in
the activity? (3%)
b) Can picketing activity be curtailed when Illegal acts are committed by the picketing
workers in the course of the activity? (3%)
SUGGESTED ANSWER:
Yes, the picketing is legal even though non-employees join it. Picketing is a form of the exercise of

241
freedom of speech. Picketing, provided it is held peacefully, is a constitutional right. The disputants
in a legal dispute need not be employer- employee of each other. [De Leon v. National Labor Union,
100 Phil. 789 (1957); Cruz u. Cinema Stage, etc.101 Phil. 1259 (1957)].
No, the picketing activity itself cannot be curtailed. What can be curtailed are the illegal acts being
done in the course of the picket. However, if this is a “national interest" case under Art. 263(g), the
strike or work stoppage may be stopped by the power of assumption of jurisdiction or certification
of the case to the National Labor Relations Commission. Nagkakaisang Mangagawa sa Cuison Hotel
u. Libron, 124 SCRA 448 (1983); Free telephone Workers Union u. PLOT. 113 SCRA 662 (1982)].

Q: Following a deadlock in collective bargaining, the AC- AC Labor Union filed a notice of
strike with the Department of Labor and Employment and, thirty (30) days later, went on
strike and picketed the gates of the UP-UP Company, paralyzing its operations. The company
is engaged in telecommunications, including the supply of cellular phone equipment, with a
nationwide network of facilities. In a petition with the DOLE, the company questioned the
legality of the strike and asked for compulsory arbitration. The Secretary of the DOLE
certified the dispute to the NLRC for compulsory arbitration and ordered the company to
readmit the workers pending the arbitration. The workers returned and were readmitted by
the company but five (5) technicians were temporarily reassigned to the warehouse while
five (5) others were reinstated on payroll only. The company justified its acts as an exercise
of management prerogative.
xxx
xxx
a) During the strike, may the striking union picket the company's outside outlets
although they are not company- owned but independent dealers? Was there a valid strike?
Answer:
The strike is not valid.
It is true that the Labor Code provides that if an employer violates a collective bargaining
agreement, the said employer commits an unfair labor practice act, which in turn is a legal ground
for a strike.
But Rep. Act No. 6715 amended the Labor Code by providing that violations of a collective
bargaining agreement. except those which are gross in character shall no longer be treated as unfair
labor practice and shall be resolved as grievances under the collective bargaining agreement. The
violation involved in the question is not a gross violation because there is no “flagrant and/or
malicious refusal to comply with the economic provisions of such agreement which is how the Code
defines a gross violation of a collective bargaining agreement.

Answer:
Peaceful picketing conducted by employees in a strike area during any labor controversy is given
protection by the Labor Code.
Thus, if the place being picketed is a strike area which is defined by the Labor Code as “the
establishment, warehouses. depots, plants or offices, including the sites or premises used as

242
runaway shops, of the employer struck against, as well as the immediate vicinity actually used by
picketing strikers in moving to and fro before all points of entrance to and exit from said
establishment,” then the - picketing is protected, if it is peaceful.
In the question given, however, since the striking union is picketing the company's outside outlets
who are not company owned but independent dealers, the picketing is not in a strike area, thus the
picketing is not protected by the Code.

6. Assumption of jurisdiction by the DOLE Secretary or Certification of the labor dispute to

the NLRC for compulsory arbitration
Q: Which of the following may be considered among industries most vital to national interest
as to be the subject of immediate assumption of jurisdiction by the Secretary of Labor and
Employment or certification for compulsory arbitration in case of strike or work stoppage
arising from a labor dispute?
(1) Bulletin daily newspaper publishing company.
(2) Local franchise of Jollibee and Starbucks.
(3) Shipping and port services in Cebu and Manila.
(4) Enchanted Kingdom, Elephant island and Boracay Resort,
(5) LBC, DHL and FedEx centers.
Justify your answer or choice. [5%) (2005 Bar Question)
SUGGESTED ANSWER:
Certification of labor dispute for immediate assumption of jurisdiction by the Secretary of the
Department of Labor and Employment, as Indispensable to national interest. (Art. 263 [g].Labor
Code).
1. Bulletin Daily Newspaper. Access to Information. e.g. local, foreign, or otherwise are
requirements for an informed citizenry.
2. Shipping and port services in Cebu and Manila. The country needs domestic sea transport
due to our topography and for the smooth flow of business, and government operations.
3. LBC, DHL, FEDEx Centers. Couriers are essential to foreign and domestic business and
government operations.

Q: The Secretary of Labor assumed jurisdiction over a strike in Manila Airlines and
eventually issued a return-to-work. The Manila Airlines Employees Union defied the return-
to-work order and continued with their strike. The management of Manila Airlines then
declared all the employees who participated in the strike dismissed from employment.
xxx
(a) What are the effects of an assumption of jurisdiction by the Secretary of Labor upon
the striking employees and Manila Airlines? (1997 Bar Question)
Answer:
xxx

243
(b) When the Secretary of Labor assumes jurisdiction over a strike, all striking employees shall
immediately return to work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike. (Art. 263(q)

Q: What are the objectives of the Secretary of Labor and Employment in certifying a labor
dispute to the NLRC for compulsory arbitration? Explain. (1995 Bar Question)
Answer:
The objectives of the Secretary of Labor and Employment in certifying a labor dispute to the NLRC
for compulsory arbitration is to prevent a work stoppage that may adversely affect the national
interest and to see to it that a labor dispute is expeditiously settled.

Q: Calabarzon Transportation Company (CTC) and the Calabarzon Workers Union (CWU) are
parties to a collective bargaining agreement (CBA), which is effective until December 31.
1992. The CBA provides for among others, a bipartite committee composed of CTC and CWU
representatives to evaluate all positions in the CTC and detennine adjustment of wages and
allowances. The Committee members having failed to agree on the adjustments, the CWU
filed a notice of strike. Conciliation efforts by the National Conciliation and Mediation Board
failed. The CWU then declared a strike. The Secretary of Labor and Employment assumed
jurisdiction over the dispute and after proceedings issued an order (a) awarding certain
monetary benefits to the strikers, (b) declaring the strike legal on the ground that CWU
complied with all the requirements for a valid strike, and (c) restraining CTC from taking
retaliatory actions against the officers and members of CWU who were responsible for the
strike.
a) As lawyer for CTC what action should you take?
Suggested Answer:
As lawyer of CTC, I will first file with the Secretary of Labor and Employment a Motion for
Reconsideration. If this Motion is denied, then I will file with the Supreme Court a petition for
certiorari under Rule 65 of the Rules of Court. I will assail the issuance by the Secretary of Labor of
his Order, and his refusal to reconsider said Order as a grave abuse of discretion amounting to lack
or excess of jurisdiction.

b) Was the assumption of the labor dispute by the Secretary of Labor and Employment
valid?
Suggested Answer:
It is valid. Under the Labor Code, (in Article 263 (g)) the Secretary of Labor has the power to
assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest. CTC, as a transportation Company, is in an industiy
indispensible to the national interest.

244
c) Was the Secretary’s order granting monetary benefits. declaring the strike of CWU
legal and restraining the CTC from penalizing CWU members valid? Reasons.
Suggested Answer:
The Secretary's order declaring the strike of CWU legal and restraining the CTC from penalizing
CWU members on the basis of the finding of the Secretary that the strike is legal, is illegal. He is
acting in excess of his jurisdiction. It is a Labor Arbiter, not the Secretary of Labor, that has the
jurisdiction to determine the legality of a strike. (Article 217. Labor Code. Philippine Airlines, Inc.
vs. Secretanj of Labor and Employment et al., 193 SCRA 223) but in International Pharmaceuticals
vs. Secretary of oj Labor, 205 SCRA 65, (Jan. 9, 1992), the Supreme Court that the Secretary of
Labor, when he assumes jurisdiction under Article 263(g) of the Labor Code could.deal with all the
incident of the labor dispute including the issue as to whether or not a strike is legal.
The Secretary's Order granting monetary benefits is valid. When the Secretary assumed jurisdiction
over the labor disputes, he assumed such jurisdiction for compulsory arbitration, meaning, he could
thereby determine the monetary benefits that CTC and CWU cannot agree about.

Q: Following a deadlock in collective bargaining, the AC- AC Labor Union filed a notice of
strike with the Department of Labor and Employment and, thirty (30) days later, went on
strike and picketed the gates of the UP-UP Company, paralyzing its operations. The company
is engaged in telecommunications, including the supply of cellular phone equipment, with a
nationwide network of facilities. In a petition with the DOLE, the company questioned the
legality of the strike and asked for compulsory arbitration. The Secretary of the DOLE
certified the dispute to the NLRC for compulsory arbitration and ordered the company to
readmit the workers pending the arbitration. The workers returned and were readmitted by
the company but five (5) technicians were temporarily reassigned to the warehouse while
five (5) others were reinstated on payroll only. The company justified its acts as an exercise
of management prerogative.
b) Was the certification of the dispute for compulsory arbitration proper?
Answers:
The certification of the dispute for compulsory arbitration was proper.
The dispute was causing a strike in an industry indispensable to the national interest. The company
was engaged in telecommunication including the supply of cellular equipment, with a nationwide
network of facilities. All these activities are at present indispensable to the national interest.

c) Were the temporary reassignment and payroll reinstatement valid?

Answer:
No. The temporary re-assignment and payroll rein- statement are not valid. According to the Labor
Code, when the Secretary of Labor assumes Jurisdiction, such assumption has the effect of
automatically enjoining the strike that is taking place and all striking employees shall immediately

245
return to work as the employer shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strikes.

Another Answer:
The temporary re-assignment and payroll reinstatement are valid, if they are made in good faith,
and are not for the purpose of discouraging membership in the union. It is the prerogative of the
management to assign its employees to where the management believes their services could be
best utilized. As for the payroll reinstatement, it is valid if there is a valid reason to prevent the
workers placed or payroll reinstatement from actually returning to work, like a valid fear that they
will sabotage equipment in the company,

Q: Several employees and members of Union A were terminated by Western Phone Co. on the
ground of redundancy. After complying with the necessary requirements, the Union staged a
strike and picketed the premises of the company. The management then filed a petition for
the Secretary of Labor and Employment to assume jurisdiction over the dispute. Without the
benefit of a hearing, the Secretary issued an Order to assume jurisdiction and for the parties
to revert to the status quo ante litem. (2010 Bar Question)
A. Was the order to assume jurisdiction legal? Explain. (2%)
SUGGESTED ANSWER:
YES. The Secretary of Labor and Employment has plenary power to assume jurisdiction under
Article 263(g) of the Labor Code. When in his opinion, there exists a labor dispute causing or likely
to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of
Labor may assume jurisdiction over the dispute and decide it or certify it to the NLRC for
compulsory arbitration (Art. 263[g], Labor Code). This extraordinary authority giyen to the
Secretary of Labor is aimed at arriving at a peaceful and speedy solution to labor disputes, without
jeopardizing national interests (Steel Corporation v. SCP Employees Union, 551 SCRA 594 [2008]).
Such assumption shall have the effect of automatically enjoining an impending strike or lockout, or
an order directing immediate return to work and resume operations, if a strike already took place,
and for the employer to re-admit all employees under the same terms and conditions prevailing
before the strike or lockout (Art. 263(g), Labor Code; Sec. 15, Rule XXII, Dept. Order No. 40-G-03).

7. Nature of assumption order or certification order

Q: In a labor dispute, the Secretary of Labor issued an "Assumption Order". Give the legal
implications of such an order.
SUGGESTED ANSWER:
Under Art. 263(g) of the Labor Code, such assumption shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption order. If one
had already taken place at the time of assumption, all striking or lockout employees shall
immediately return to work and the employer shall immediately resume operations and re-admit
all workers under the same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may issue to enforce the same. The

246
mere issuance of an assumption order by the Secretary of Labor automatically carries with it a
return-to-work order, even if the directive to return to work is not expressly stated in the
assumption order. Those who violate the foregoing shall be subject to disciplinary action or even
criminal prosecution.
Under Art. 264 of the Labor Code, no strike or lockout shall be declared after the assumption of
jurisdiction by the Secretary.

Q: Several employees and members of Union A were terminated by Western Phone Co. on the
ground of redundancy. After complying with the necessary requirements, the Union staged a
strike and picketed the premises of the company. The management then filed a petition for
the Secretary of Labor and Employment to assume jurisdiction over the dispute. Without the
benefit of a hearing, the Secretary issued an Order to assume jurisdiction and for the parties
to revert to the status quo ante litem. (2010 Bar Question)
A. xxx
B. Under the same set of facts the Secretary instead issued an Order directing all striking
workers to return to work within 24 hours, except those who were terminated due to
redundancy. Was the Order legal? Explain. (3%)
SUGGESTED ANSWER:
NO. The Secretary of Labor’s order will be inconsistent with the established policy of the State of
enjoining the parties from performing acts that undermine the underlying principles embodied in
Article 263(g) of the Labor Code.
In this case, excepting the employees terminated due to redundancy from those who are required to
return- to-work, which was the very labor dispute that sparked the union to strike, the Secretary of
Labor comes short of his duty under Article 263(g) to maintain status quo or the terms and
conditions prevailing before the strike. In fact, the Secretary could be accused of disposing of the
parties’ labor dispute without the benefit of a hearing, in clear derogation of due process of law.

8. Effect of defiance of assumption or certification orders

Q: The Secretary of Labor assumed jurisdiction over a strike in Manila Airlines and
eventually issued a return-to-work. The Manila Airlines Employees Union defied the return-
to-work order and continued with their strike. The management of Manila Airlines then
declared all the employees who participated in the strike dismissed from employment.
(b) Was the act of Manila Airlines' management in dismissing the participants in the
strike valid? (1997 Bar Question)
xxx
Answer:
(a) Yes. The act of Manila Airlines' management in dismissing the participants in the strike is valid. In a
number of Supreme Court decisions, it has ruled that the defiance by workers of a return to work order of the
Secretary of Labor Issued when he assumes jurisdiction over a labor dispute is an illegal act and could be the
basis of a legal dismissal. The return to work order imposes a duty; it must be discharged as a duty even against
the workers' will.
xxx

247
Q: On the day that the Union could validly declare a strike, the Secretary of Labor issued an
order assuming jurisdiction over the dispute and enjoining the strike, or if one has
commenced, ordering the striking workers to immediately return to work. The retum-to-
work order required the employees to return to work within twenty-four hours and was
served at 8 a.m. of the day the strike was to start. The order at the same time directed the
Company to accept all employees under the same terms and conditions of employment prior
to the work stoppage. The Union members did not return to work on the day the Secretary’s
assumption order was served, nor on the next day; instead, they held a continuing protest
rally against the company’s alleged unfair labor practices. Because of the accompanying
picket, some of the employees who wanted to return to work failed to do so. On the 3 rd day,
the workers reported for work, claiming that they do so in compliance with the Secretary’s
retum-to-work order that binds them as well as the Company. The Company, however,
refused to admit them back since they had violated the Secretary’s retum-to-work order and
are now considered to have lost their employment status.
The Union officers and members filed a complaint for illegal dismissal arguing that there
was no strike but a protest rally which is a valid exercise of the workers’ constitutional right
to peaceable assembly and freedom of expression. Hence, there was no basis for the
termination of their employment.
You are the Labor Arbiter to whom the case was raffled. Decide, ruling on the following
issues:
xxx
xxx
c) What are the consequences, if any of the acts of the employees? (3%) (2008 Bar
Question)
SUGGESTED ANSWER:
c) The consequences of defiance of the Return to Work Order is loss of employment of all
those who participated in the illegal activity. The workers continued their strike activity after the
issuance of the RTW.
The Supreme Court in Philcom Employees Union v. Philippine Global Communication (495 SCA
214[2006]), ruled:
“A strike undertaken despite the Secretary is issuance of an assumption or certification order
becomes a prohibited activity, and thus illegal, under Article 264(a) of the Labor Code. The union
officers who knowingly participate in that illegal strike are deemed to have lost their employment
status the union members, including union officers, who commit specific illegal acts or who
knowingly defy a return to work order arc also deemed to have lost their employment status.”

Q: The Secretary of Labor and Employment, after assumption of jurisdiction over a labor
dispute in an airline issued a Return to Work Order. The airline filed a Motion for
Reconsideration of the Order and pending resolution of the motion, deferred the
implementation of the Order.
Can the airline defer the implementation of the Return to Work Order pending resolution of
the motion for reconsideration? [5%] (1998 Bar Question)

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SUGGESTED ANSWER:
The airline cannot defer the implementation of the Return To Work Order on the basis of there
being a pending Motion for Reconsideration re: the assumption of jurisdiction by the Secretary of
Labor and Employment of a labor dispute.
According to the Supreme Court, the Return to Work Order issued by the Secretary of Labor and
Employment upon his assumption of jurisdiction over a labor dispute in an industry indispensable
for the national Interest is immediately executory.

ANOTHER SUGGESTED ANSWER:

No, the airline cannot defer the implementation of a return to work order pending resolution of a
Motion for Reconsideration.
The Labor Code reads -
Art. 263. Strikes, picketing, and lockouts. - xxx
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in
an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike ...as specified in the assumption or certification order. If
one has already taken place at the of assumption or certification, all striking employee.... shall
immediately return to work, (underscoring supplied)
The Supreme Court, in Baguio Colleges Foundation . NLRC, 222 SCRA 604 (1995), ruled –
xxx assumption and certification orders are executory in character and are to be strictly complied
with by the parties even during the pendency of any petition questioning their validity.
Being executory in character, there was nothing for the parties to do but implement the same,
(underscoring supplied)

Q: The Secretary of Labor assumed jurisdiction over a strike under Art. 263(g) of the Labor
Code and issued a return-to-work order. The Union defied the return-to-work order and
continued the strike. The Company proceeded to declare all those who participated in the
strike as having lost their employment status.
1) Was the Company’s action valid?
2) Was the Company still duty bound to observe the requirements of due process before
declaring those who participated in the strike as having lost their employment status?
Answer:
1) The Company’s action is valid. Any declaration of a strike after the Secretary of Labor has
assumed jurisdiction over a labor dispute is considered an illegal act. and any worker or union
officer who knowingly participates in a strike defying a retum-to-work order may consequently be
declared to have lost his employment status and forfeited his right to be readmitted, having
abandoned his position, and so could be validly replaced.
For the moment a worker defies a return-to-work order, he is deemed to have abandoned his job, as
it is already in itself knowingly participating in an illegal act, otherwise the worker will simply

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refuse to return to his work and cause a standstill in company operations while returning the posi-
tion he refuses to discharge or allow management to fill. (SL Scholastica’s College vs. Hon. Ruben
Torres, Secretary of Labor, etal., G.R. No. 100158, 29 June 1992.)
2) Considering that the workers who defied the return-to-work order are deemed to have
abandoned their employment, the only obligation required of an employer is to serve notices
declaring them to have lost their employment status at the worker's last known address. ( Sec. 2
Rule XIV, Book V, Rules Implementing the Labor Code)

Q: A deadlock in the negotiations for the collective bargaining agreement between X College
and the Union prompted the latter, after duly notifying the DOLE, to declare a strike on
November 5 which totally paralyzed the operations of the school.
The Labor Secretary immediately assumed jurisdiction over the dispute and issued on the
same day (November 5) a return to work order. Upon receipt of the order, the striking union
officers and members on November 7, filed a motion for reconsideration thereof questioning
the Labor Secretary’s assumption of jurisdiction, and continued with the strike during the
pendency of their motion.
On November 30, the Labor Secretary denied reconsideration of his return to work order
and further noting the striker’s failure to immediately return to work terminated their
employment.
In assailing the Labor Secretary’s decision, the Union contends that:
1) the Labor Secretary erroneously assumed jurisdiction over the dispute since X
College could not be considered an Industry indispensable to national interest:
2) the strikers were under no obligation to Immediately comply with the November 5
return to work order because of their then pending motion for reconsideration of such
order: and
3) the strike being legal, the employment of the striking Union officers and members
cannot be terminated.
Rule on these contention. Explain. (1996 Bar Question)
Answer:
1) The Supreme Court has already ruled that educational institutions are in an industry
indispensable to the national interest, considering the grave adverse effects that their closure
entails on their students and teachers.
2) The striking workers must immediately comply with a Return to Work Order even pending
their motion for reconsideration. Compliance is a duty imposed by law, and a Return to Work Order
is immediately executory in character.
The nature of a Return to Work Order, was characterized by the Supreme Court in Sarmiento v.
Juico, 162 SCRA 676 (1988) as:
It is also important to emphasize that the return to work order not so much confers a right as it
imposes a duty . It must be discharged as a duty even against the workers' will. Returning to work
in this situation is not a matter of options or voluntariness but of obligation.
In Baguio Colleges Foundation u. NLRC, 222 SCRA 604 (1993) the Court ruled:
Assumption and certification ordes are executory in character and are to be strictly complied with

250
by the parties even during the pendency of any petition questioning their validity.
3) The continuing strike is illegal because it is in defiance of a return to work order of the
Secretary of I abor and Employment, hence, termination of employment of all those who
participated whether officer or member, is legal.
In Sta. Scholastica's College u. Torres, 210 SCRA 565 (1992), the Court ruled:
Any worker or union officer who knowingly participates in a strike defying a return to work order
may consequently, be declared to have lost his employment status in accordance with Art. 246 of
the Labor Code.

9. Illegal strike
a) Liability of union officers
Q: A division manager of a company taunted a union officer two days after the union
submitted to the Department of Labor and Employment (DOLE) the result of the strike vote.
The division manager said: “Your union threat of an unfair labor practice strike is phony or a
bluff. Not even ten percent (10%) of your members will join the strike.’' To prove union
member support for the strike, the union officer immediately instructed its members to
cease working and walk out. Two hours after the walkout, the workers voluntarily returned
to work. (2000 Bar Question)
a) Was the walkout a strike? And if so, was it a valid activity? (3%)
b) Can the union officer who led the short walk-out, but who likewise voluntarily led
the workers back to work, be disciplined by the employer? (3%)
SUGGESTED ANSWER:
a) Yes, it was a strike because there was a work stoppage by concerted action and there is an
existing labor dispute. It was not a valid activity because the requisites for a valid strike were not
observed. [Art. 212, (o), (I) Labor Code].
b) Yes, the employer may discipline the union officer. An Illegal strike is a cause for the union
officer to be declared to have lost his employment status. [Art. 263 (c), (d),( e),-(J): Art. 264 (a),
Labor Code].

b) Liability of ordinary workers

Q: Are the strikers in an illegal strike entitled to reinstatement under the Labor Code?
Explain. (1995 Bar Question)
Answer:
No. Union officers and members who commit illegal acts lose their employment status. Any union
officerwho knowingly participates in an illegal strike, and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost
his employment status. Participants (not a union officer and did not commit any illegal act) may be
entitled to reinstatement.

Q: If the strike is declared illegal, will the strikers be entitled to their wages for the duration
for the strike? Explain. (1995 Bar Question)

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Answer:
No. The applicable doctrine will be: No work, no pay, unless there is an agreement to pay strike
duration pay.

Q: Union A filed a Notice of Strike with the National Conciliation and Mediation Board
(NCMB) of the Department of Labor and Employment. Upon a motion to dismiss by the
Company on the ground that the acts complained of in the notice of strike are non-strikeable
the NCMB dismissed the Notice of Strike but continued to mediate the issues contained
therein to prevent the escalation of the dispute between the parties. While the NCMB was
conducting mediation proceedings, the Union proceeded to conduct a strike vote as
provided for under the Labor Code. After observance of the procedural processes required
under the Code, the Union declared a strike.
1) Is the strike legal?
2) Can the employer unilaterally declare those who participated in the strike as having
lost their employment status?
3) What recourse do these employees (declared by the employer to have lost their
employment status) have, if any?
Answer:
1) No. The strike is not legal. The Labor Code provides that no labor organization shall declare
a strike without first having bargained collectively in accordance with its Title VII of Book V, which
in turn provides that during conciliation proceedings at the NCMB. the parties are prohibited from
doing any act that may disrupt or impede the early settlement of the dispute. (Arts. 264(a), also
250(d); Labor Code)

Alternative Answer:
a) The strike is not legal, considering that it was declared after the NCMB dismissed the Notice
of Strike.
Hence, it is as if, no notice of strike was filed. A strike declared without a notice of strike is illegal;
(GOP-CCP vs. CIR, 93 SCRA 118).
b) No. The strike is illegal. It is already settled in the case of PAL us. Secretary of Labor
(Drilon) that the pendency of a mediation proceedings is a bar to the staging of a strike even if all
the procedural requirements were complied with,

2) The employer may unilaterally declare those who participated in the strike as having lost
their employment status but such unilateral declaration does not necessarily mean that thereby the
strikers are legally dismissed. The strikers could still file a case of illegal dismissal and prove, if they
can, that there was no just cause for their dismissal.

Alternative Answer:
a) The employer cannot unilaterally declare those who participated in the illegal strike as
having lost their employment status. Only the union officers who knowingly participated in the

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strike and workers who knowingly participated in the commission of illegal acts, if any, may be
declared to have lost their employment status. (Art. 264).
b) The employer has two options:
i) It may declare the strikers as having lost their employment status pursuant to Art. 264 of
the Labor Code, or
ii) It may file a case before the Labor Arbiter, under Art. 217. to have the strike declared illegal
and after that proceed to terminate the strikers.

3) They could file a case of illegal dismissal. The strikers who are union officers may contend
that the strike is not illegal. The strikers who are mere union members may contend that they did
not commit any illegal acts during the strike. (Art. 264, Labor Code)

Q: The rank-and-file union staged a strike in the company premises which caused the
disruption of business operations. The supervisors’ union of the same company filed a
money claim for unpaid salaries for the duration of the strike, arguing that the supervisors’
failure to report for work was not attributable to them. The company contended that it was
equally faultless, for the strike was not the direct consequence of any lockout or unfair labor
practice. May the company be held liable for the salaries of the supervisors? Decide. (6%)
(2008 Bar Question)
SUGGESTED ANSWER:
No. I will apply the “No Work No Pay” principle. The supervisors are not entitled to their money
claim for unpaid salaries, as they should not be compensated for services skipped during the strike
of the rank-and-file union.
The age-old rule governing the relation between labor and capital, or management and employee of
a “fair day’s wage for a fair day’s labor” remains as the basic factor in determining employees’
wages (Aklan Electric Cooperative, Inc. v. NLRC, 323 SCRA 258[2000]).

c) Liability of employer
Q: Magdalo, a labor union in Oakwood, a furniture manufacturing firm, after failing in its
negotiations with Oakwood, filed with the Department of Labor and Employment (DOLE) a
notice of strike The DOLE summoned Magdalo and Oakwood for conciliation hearings to
resolve the deadlock. Unable to agree despite efforts of the DOLE, Magdalo called a strike
participated in by its officers and union members including Cesar Trinio, a rank-and-file
employee, who led the "walk out." Oakwood filed a petition to declare illegal the strike
which Magdalo staged without observing the seven-day ban under the Labor Code. Oakwood
claimed that the strike being illegal, all those who participated therein, including Cesar
Trinio, could be dismissed as, in fact, they were so dismissed by Oakwood. Decide the case.
(2005 Bar Question)
SUGGESTED ANSWER:
When Oakwood dismissed all the officers and members of the union who participated in the strike
which was declared illegal because it was staged without observing the seven- day ban under the
Labor Code, Oakwood illegally dismissed the union members, including Cesar Trinio. The Labor
Code provides that a union officer who knowingly participates in an illegal strike loses his

253
employment status. Thus, the union officers were legally dismissed. But for a union member to lose
his employment status, he should have committed illegal acts during the strike, like acts of violence,
coercion or intimidation or obstruction of ingress to or egress from the employer’s premises for
lawful purposes or obstruction of public thoroughfares. The union members, including Cesar Trino,
did not commit any of these acts. Thus, it would be illegal to dismiss them.

Q: Some officers and rank-in-file members of the union staged an illegal strike. Their
employer wants all the strikers dismissed. As the lawyer, what will you advise the employer?
Discuss fully. (2007 Bar Question)
SUGGESTED ANSWER:
I will advise the employer that not all the strikers can be dismissed. Any union officer who
knowingly participates in an illegal strike maybe declared to have lost his employment status but a
worker who is not a union officer may be declared to have also lost his employment status only if he
commits illegal acts during a strike. (CCBPI Postmix Workers Union v. NLRC 299 SCRA 410 [1998])

Q: As a result of bargaining deadlock between ROSE Corporation and ROSE Employees Union,
its members staged a strike. During the strike, several employees committed illegal acts. The
company refused to give in to the union's demands. Eventually, its members informed the
company of their intention to return to work. 10% (2006 Bar Question)
1. Can ROSE Corporation refuse to admit all the strikers?
SUGGESTED ANSWER:
Article 264 of the Labor Code provides that “mere participation of a worker in a lawful strike shall
not constitute sufficient ground for termination of employment even if a replacement had been
hired by the employer during such lawful strike."
1. On the other hand, the same Article of the Labor Code also provides: “Any worker or
union officer who knowingly participates in the commission of illegal acts during a
strike may be declared to have lost his employment status.”
2. Because of the above-quoted provisions of the Labor Code, ROSE Corporation cannot
refuse to admit all the strikers who inform the company of their intention to return to
work, except those workers who may have committed illegal acts during the strike who
can be declared as having lost their employment status."

2. Assuming the company admits all the strikers, can it later on dismiss those
employees who committed illegal acts?
SUGGESTED ANSWER:
Even if as its initial response, the company admitted all the strikers, the company is not estopped
from afterwards dismissing those employees who committed illegal acts during the strike. Article
264 of the Labor Code expressly states that "any worker xxx who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status."

3. If due to the prolonged strike. ROSE Corporation hired replacements, can it refuse
to admit the replaces strikers?

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SUGGESTED ANSWER:
ROSE Corporation cannot refuse to admit the strikers if they did not commit any illegal acts during
a lawful strike. The Labor Code is very clear: Workers who went on strike have not lost their
employment status even if the company had hired their replacements.

10. Injunctions (Requisites for labor injunctions, “Innocent bystander rule”)

Q: Professor Juan dela Cruz, an author of the textbook Commentaries on the Labor Code of
the Philippines, citing an American case, wrote: “It is said that the prohibition against the
issuance of a writ of injunction in labor cases creates substantive and not purely procedural
law." Is there any statutory basis for the statement/comment under Philippine law? (5%)
(2000 Bar Question)
SUGGESTED ANSWER:
Yes. The statutory basis is Article 254 of the Labor Code. It prohibits issuance of injunction, as a
matter of policy, to resolve disputes except as otherwise provided in Articles 218 and 264 of the
Labor Code. [Caltex Filipino Managers and Supervisors Association v. CIR, 44 SCRA 350 (1972)1.

Q: A food processing company (the Company) engaged the services of duly licensed
independent contractors in connection with the operation of its business. The contractors
deployed workers in the Company. The contractors’ workers joined ABC the union of rank-
and-file employees of the Company, and later demanded that they be made regular
employees because they are performing functions necessary and desirable in the usual
business of the Company. The Company questioned the contractors' workers joining ABC
and rejected their demand for regularization. ABC filed a notice of strike with the
Department of Labor and Employment. In a petition filed with the Regional Trial Court, the
Company asked the court to enjoin ABC and the contractors’ workers from declaring a strike,
asserting that the workers are not employees of the Company and that there is no labor
dispute between the workers and the Company as its agreement is only with the contractors.
As trial judge, will you issue an injunction against ABC and the workers? Explain.
Suggested Answer:
As trial judge, I will not issue an injunction against ABC and the workers.
The acts of ABC and the workers, namely, the workers joining ABC said workers demanding that
they be made regular employees, ABC filing a notice of strike with the Department of Labor and
Employment, all these acts brought about a labor dispute which is not within the jurisdiction of the
Regional Trial Court.
The fact that the Company is asserting that the workers are not employees of the Company does not
make the case between the Company, on one hand, and ABC and the workers, on the other hand,
not a labor dispute. The truth cr falsity of the assertion of the Company is a matter that is within a
Labor Arbiter, not a Regional Trial Court. to decide. (San Miguel Corp. Employees Union-PTGWO-vs.
Bersamina, 186 SCRA 496)

255
If an injunction is proper, it is the National. Labor Relations Commission that can enjoin ABC and
the workers from doing any unlawful act.
The Labor Code (in Article 254) is very clear: No temporary or permanent injunction or restraining
order involving or growing out of a labor dispute shall be enjoined by any court or other entity
except by the NLRC under Articles 218 and under 264.

VIII. Procedure and Jurisdiction

A. Labor Arbiter (Jurisdiction, Reinstatement pending appeal, Requirements to perfect
appeal to NLRC)
Q: Give the original and exclusive Jurisdiction of Labor Arbiters. (1995 Bar Question)
Answer:
Labor Arbiters have original and exclusive Jurisdiction over:
a) unfair labor practices;
b) termination disputes;
c) cases accompanied with a claim for reinstatement, and Involving wages, rates of pay, hours
of work, and other terms and conditions of employment;
d) claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relations;
e) cases arising from any violation of Article 264 of the Labor Code, including questions
involving the legality of strikes and lockout; and
I) except claims of Employees Compensation, Social Security. Medicare and maternity benefits,
all other claims arising from employer-employee relations including those persons in
domestic or household service, involving an amount exceeding five thousand pesos
(P5.000.00) regardless of whether accompanied with a claim for reinstatement.

Q: As the lawyer of Mr. Excelente, state the nature of your action or complaint to be filed
against the university, the proper body or court before which it may be filed, the laws to be
invoked, and the facts or evidence to be adduced.
Answer:
As lawyer of Mr. Excelente, I will file a complaint questioning the legality of his dismissal.
I will file the complaint with the Labor Arbiter in the Regional Arbitration Branch of the NLRC
having jurisdiction over the place where Mr. Excelente works.
I will invoke the provisions of the Labor Code which are found in its Book VI that guarantee the
right of workers to security of tenure.
I will adduce facts or evidence that will disprove the allegations of the University President that
have been given as reasons for dismissing Mr. Excelente. The fact that he had served the University
for twenty five years, was well known in his field and has received many awards should disprove

256
the allegation of gross incompetence. I will content that the alteration over teaching loads of
professors is not tantamount to insubordination and dereliction of duty.

a) May the University President be impleaded as co-respondent? If so, what will be the
nature of his liability?
Answers:
The University President may not be impleaded if his acts in connection with the termination of Mr.
Excelente were official.
But he may be pleaded if he acted without or in excess of his authority or was motivated by
personal ill will towards Mr. Excelente. If he is thus impleaded, the University President shall be
personally liable for the payment of back wages and damages, if any that Mr. Excelente will be
entitled to receive if it is found that he has been unjustly dismissed.

Q: A was dismissed from the service by his employer for theft of goods owned by the
company. He was also prosecuted for theft before the Regional Trial Court of Pasay City.
Meanwhile, A filed a complaint for illegal dismissal against the employer before the labor
arbiter. The trial court subsequently acquitted A and ordered his reinstatement with
backwages from the time of his separation to the date of his actual reinstatement.
(1) Is the decision of the court correct? State your reasons.
(2) Even with such acquittal, may the labor arbiter still proceed to resolve the complaint
for illegal dismissal filed by A? State your reasons.
Answers;
(1) The decision of the court is not entirely correct.
It is within the jurisdiction of the Regional Trial Court to acquit A. As a regular court, the RTC has
jurisdiction over criminal cases. But it is outside of the jurisdiction of the RTC to order the
reinstatement of A with backwages. A termination dispute, which could give rise to a decision for
the reinstatement of an illegally dismissed employee and the payment of his backwages is outside
the jurisdiction of the RTC. It is within the original and exclusive jurisdiction of labor arbiters. (Art.
217, Labor Code).

(2) Even with A’s acquittal, the labor arbiier should still proceed to resolve the complaint for
illegal dismissal filed by A. An action for illegal dismissal is entirely separate and distinct from a
criminal action. (Pepsi Cola Bottling Company of the Philippines vs. Guanzon, G.R. No. 81162, April
19. 1989).
In many decisions, the Supreme Court has ruled that the acquittal of an employee in a criminal case
does not mean that there could be no basis for legally dismissing the employee for. say. willful
breach of trust, which is a just cause for termination. Conviction in a criminal case requires proof
beyond reasonable doubt. In a termination dispute, it is enough that there is substantial evidence to
prove that there has been willful breach of trust.

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Q: Richie, a driver-mechanic, was recruited by Supreme Recruiters (SR) and its principal,
Mideast Recruitment Agency (MRA), to work in Qatar for a period of two (2) years.
However, soon after the contract was approved by POEA, MRA advised SR to forego Richie’s
deployment because it had already hired another Filipino driver-mechanic, who had just
completed his contract in Qatar. Aggrieved, Richie filed with the NLRC a complaint against SR
and MRA for damages corresponding to his two years’ salary under the POEA- approved
contract.
SR and MRA traversed Richie’s complaint, raising the following arguments:
[a] The Labor Arbiter has no jurisdiction over the case; (2%) (2009 Bar Question)
xxx
xxx
Rule on the validity of the foregoing arguments with reasons.
SUGGESTED ANSWER:
The Labor Arbiter has jurisdiction. Sec. 10, R.A. No. 8042, reads:
“Money Claims.- Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction
to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral, exemplary and other
forms of damages.”

ANOTHER SUGGESTED ANSWER:

The Labor Arbiter has no jurisdiction over the case. The failure to deploy a worker within
the prescribed period without valid reason is a recruitment violation under the jurisdiction of the
POEA.

Q: Can a dispute falling within the exclusive jurisdiction of the Labor Arbiter be submitted to
voluntary arbitration? Why or why not? (3%). (2008 Bar Question)
SUGGESTED ANSWER:
Yes. A labor dispute falling within the exclusive jurisdiction of a Labor Arbiter may be submitted to
voluntary arbitration. Any or all disputes under the exclusive and original jurisdiction of the Labor
Arbiter under Art. 217 of the Code, maybe submitted for voluntary arbitration by a Voluntary
Arbitrator by agreement of the parties.
“Art. 262. Jurisdiction over labor disputes. The voluntary arbitrator or panel of voluntary
arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes,
including unfair labor practice and bargaining deadlocks.”

Q: May non-lawyers appear before the NLRC or Labor Arbiter? May they charge attorney’s
fee for such appearance provided it is charged against union funds and in an amount freely

258
agreed upon by the parties? Discuss fully. (2007 Bar Question)
SUGGESTED ANSWER:
Yes. Non-lawyers can appear before the NLRC or Labor Arbiters
1. if they represent themselves,
2. if they represent their legitimate labor organization or members thereof,
3. if they are duly accredited members of the legal aid office recognized by the DOJ or IBP
(Art. 222, Labor Code).
Non-lawyers cannot charge attorney’s fees because the latter presuppose the existence of attorney-
client relationship which exists only if the representative is a lawyer (PAFLU v. BISCOM, 42 SCRA
302 [1997]).

FIRST ALTERNATIVE ANSWER:

Yes, non-lawyers may appear before the labor arbiter or the NLRC but only in the following
instances:
1. if they represent themselves, or
2. if they represent their organization or members thereof, (Article 222, Labor Code) provided that
he presents a verified certification from the said organization that he is properly authorized;
3. he is duly accredited member of any legal aid office duly recognize by the DOJ or IBP (Kanlaon
Conxtruction Enterprises v. NLRC, 279 SCRA 337 [1997])
Yes, attorney’s fees may be charged against union funds in an amount agreed upon by the parties.
Any stipulation to the contrary is void (Art. 222, 2(b). However, 3 requisites must be complied with
in order that a union’s attorney’s fees and representation expenses may be valid and upheld:
1. authorization by a written resolution of majority of all the members at the general
membership meeting duly called for the purpose;
2. secretary’s record of the minutes of the meeting; and
3. individual written authorization for check-off duly signed by the employee
concerned (ABS- CBN Supervisors Employees Union Members v. ABS-CBN Corp. et al.,
Article 241 (n) (o). 304 SCRA 489 [1999]).

Q: Procedurally, how do you stay a decision, award or order of the Labor Arbiter? Discuss
fully. (2007 Bar Question)
SUGGESTED ANSWER:
Decisions, awards, or orders of the Labor Arbiter may be stayed by the filing of an appeal to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions,
awards, or orders.
In case of appeal of a LA’s judgment involving a monetary award, it may only be stayed 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. (Art.
223, Labor Code)

259
FIRST ALTERNATIVE ANSWER:
By perfecting an appeal, through the filing an Appeal Memorandum within 10 days from
receipt of such decision, verified by the appellant and accompanied by his Non- Forum Certification,
proof of service on the other party, proof of payment of the appeal fee and cash or surety bond in
the amount equivalent to the monetary award in the judgment appealed from. Reinstatement is
immediately executory. (Art. 223, Labor Code)

Q: May a decision of the Labor Arbiter, which has become final and executory be novated
through a compromise agreement of the parties? (2007 Bar Question)
SUGGESTED ANSWER:
Yes. Although Article 221 of the Labor Code requires the Labor Arbiter to exert all efforts to
amicably settle the case before him “on or before the first hearing”, it must be noted that neither the
Labor Code nor its implementing rules as well as the NLRC Rules prohibit the amicable settlement
of cases during the pendency of the proceedings or after a judgment is issued thereupon.
The established rule is that the compromise agreement or amicable settlement may still be made
even after the judgment has become final and executory. Settlement of cases is encouraged and
authorized by law. Article 2040 of the Civil Code impliedly authorizes this. It is even encouraged by
express provisions of law.

FIRST ALTERNATIVE ANSWER:

Yes, provided that the same is not unconscionable, and the agreement was approved by the Labor
Arbiter, the NLRC or the Court of Appeals, before whom the case is pending.

SECOND ALTERNATIVE ANSWER:

Yes, provided that the new agreement is not tainted with fraud, duress or undue influence.

Q: P.D. 1508 requires the submission of disputes before the Barangay Lupong
Tagapamayapa prior to the filing of cases with the courts or other government bodies. May
this decree be used to defeat a labor case filed directly with the Labor Arbiter? Discuss fully.
(2007 Bar Question)
SUGGESTED ANSWER:
No. Requiring conciliation of labor disputes before the Barangay Lupong Tagapamayapa would
defeat the salutary purposes of the law. Instead of simplifying labor proceedings designed at
expeditious settlement or referral to the proper courts or office to decide it finally, the conciliation
of the issues before the Barangay Lupong Tagapamayapa would only duplicate the conciliation
proceedings and unduly delay the disposition of labor cases (Montoya v. Escayo, 171 SCRA
446[1989]).

FIRST ALTERNATIVE ANSWER:

No, because under Article 217 of the Labor Code, the Labor Arbiter exercises original and exclusive
jurisdiction to hear and decide cases involving all workers, whether agricultural or non-

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agricultural.

SECOND ALTERNATIVE ANSWER:

P.D. 1508 does not apply to labor dispute because labor cases have their own grievance and
mediation processes.

Q: Under a seaman's contract of employment with a local manning agent of a foreign

shipping company, Capt. TROY embarked on an ocean-going vessel in good health, one
stormy night at sea, he was drenched, with rainwater. The following morning, he contracted
fever which lasted for days. He suffered loose bowel movement, lost his appetite, and
eventually he died before a scheduled airlift to the nearest port. Subsequently, the widow of
Capt. TROY complained against the local manning agent and its foreign principal before the
Regional Arbitration, Branch of DOLE, for actual and exemplary damages and attorney's fees.
She invoke the Labor Code provision which requires the employer to provide all necessary
assistance to ensure the adequate and necessary medical attendance and treatment of the
injured or sick employee in case of emergency.
Respondents moved to dismiss the complaint on the ground that the Labor Arbiter has no
jurisdiction over the complaint for damages arising from illness and death of Capt. TROY
abroad. Resolve the motion with reasons. (5%). (2005 Bar Question)
SUGGESTED ANSWER:
In Tolosa v. NLRC, (G.R. 149578. April 10, 2003, the Supreme Court held that what we have in this
case is a claim arising from tort or quasi-delict. In such a situation; the seaman who died on
November 18, 1992, cannot sue before the Labor Arbiter. But this will not apply now, as under Sec.
10, RA. 8042. [effective June 7.1995], what we have is a claim "arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages”, cognizable by the
"Labor Arbiters of the National Labor Relations Commission" (NLRC) who have the original and
exclusive jurisdiction thereon.

Q: Company A and Union B had a 3-year CBA that expired on June 12, 1990. Negotiations
proved futile so the unresolved issues were referred to an Arbiter who rendered a decision
on March 15, 1992 retroactive to December 14, 1990. Is the Arbiter's decision providing for
retroactivity tenable or not? Why? (5%) (2001 Bar Question)
SUGGESTED ANSWER:
The referral of the unresolved issues of the collective bargaining negotiations to an Arbiter is not
within the jurisdiction of the Arbiter.
But assuming that the unresolved issues in the collective bargaining negotiations were properly
referred to the Arbiter pursuant to the provision of the Labor Code (Art. 262.) that states that a
Voluntary Arbitrator may hear and decide any labor dispute, including bargaining deadlocks, the
Arbiter's decision providing for retroactivity is tenable. Exercising his compulsory arbitration
power, the Arbiter could decide the issue of retroactivity in any way which is not contrary to law,
morals, good customs, public order or public policy.
But in a case {Manila Electric Co. vs. Secretary of Labor Leonardo Quisumbing, G.R. No. 127598,

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February 22, 2000), the Supreme Court said that an arbitral award shall retroact to the first day
after the six-month period following the expiration of the last day of the CBA that was being re-
negotiated.

ANOTHER SUGGESTED ANSWER:

The retroactive Order of the Labor Arbiter is void for want of jurisdiction. Jurisdiction is conferred
by law. Nowhere in the Labor Code, more specifically, Article 217, is the Labor Arbiter given
jurisdiction over unresolved issues in collective bargaining, including determining the period or
duration of a Collective Bargaining Agreement.

Q: "A" was able to obtain a Judgment against his former employer, Company "B", for
P750.000.00. In executing the Judgment in favor of A, the Labor Arbiter sought to levy on B's
office equipment. B filed an action for damages and injunction against the Labor Arbiter
before the Regional Trial Court of the province where B's offices are located. Is B's action
tenable? Why? (5%). (2001 Bar Question)
SUGGESTED ANSWER
B's action is not tenable.
In the case of Delta Ventures Resources vs. Hon. Fernando P. Labato, G.R. No. 118216, March 9,
2000, the Supreme Court ruled that the regular courts have no jurisdiction to act on labor cases or
various incidents arising therefrom, including the execution of decisions, awards or orders.

ANOTHER SUGGESTED ANSWER

Yes, B's action before the Regional Trial Court is tenable if said action is limited to the filing of a
damage suit against the Labor Arbiter because there exists no employer-employee relationship
between "B" and the Labor Arbiter, and there is no labor dispute between them. In Lapanday
Agricultural Development Corporation vs. Court of Appeals, G.R. No. 112139, January 31, 2Q00, the
Supreme Court, ruled:
"It is well settled in law and jurisprudence that where NO employer-employee relationship exists
between the parties and no issue is involved which may be resolved by reference to the Labor Code,
other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has
jurisdiction."

Q: May the Labor Arbiter, NLRC or Court of Appeals validly award attorney's fees in favor of a
complainant even if not claimed or proven in the proceedings? Why? (3%). (2001 Bar
Question)
SUGGESTED ANSWER:
A Labor Arbiter, NLRC and Court of Appeals may validly award attorney's fees in favor of a
complainant only if the claimant claimed and proved that he is entitled to attorney's fees.

ANOTHER SUGGESTED ANSWER:

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Article 2208 of the New Civil Code allows the award of attorney's fees when the defendant's act or
omission has compelled the plaintiff to litigate or incur expenses to protect his interest. Attorney's
fees may be considered as a part of an equitable relief awarded in the concept of damages.

Q: On May 2, 1988, General Finance Corp. (GFC) was placed under SEC rehabilitation
receivership as it was illiquid. Its 100 employees were kept on the payroll until May 15,
1988, when 75 of them were placed on leave without pay by the receiver. GFC’s management
met with its Board and stockholders to review a rehabilitation plan so GFC could resume
operations emphasizing collection efforts, investors and creditors agreed to reschedule
payments to them as GFC was solvent. With these agreements, the management filed a
rehabilitation plan with the receiver, who endorsed it to the SEC. Under the plan, GFC would
retain all its workers and resume its operations as soon as it achieved adequate liquidity.
Because of the plan, the union asked that all its members be paid salaries during the time
that they were laid off and GFC was preparing to re-open, whether or not they were at work.
The company agree, endorsed the request to the receiver who recommended its payment to
the SEC. The SEC approved the request. On August 1, 1988, the receiver paid all union
members salaries from May 16, 1988 up to July 31, 1988 whether or not they had worked
during the period. (1988 Bar Question)
(a) xxx
(b) xxx
(c) xxx
(d) If your demand is declined, where will you file the case on behalf of the non-union
members?
Answer:
(a) xxx
(b) xxx
(c) xxx
(d) I will file the case before the Labor Arbiter. The case here is a money claim of workers based
on the nonpayment or underpayment of wages which is one of the cases under the original and
exclusive jurisdiction of Labor Arbiters, pursuant to the Labor Code (Art. 212).

Alternative Answer
I will file the case before the SEC which has jurisdiction over the case since it is against a
corporation under receivership.

Q: Jun de Gracia, a second year law student and personnel assistant in the People’s Bank and
Trust Company, never liked his superior, the personnel manager, who was always putting
him down. When his patience ran out, he walked up to his boss during office hours and
slugged him to unconsciousness. He was dismissed. The personnel manager filed a
complaint for damages against de Gracia with the Regional Trial Court of Quezon City. In
retaliation, de Gracia filed a complaint for illegal dismissal with the Department of Labor
and Employment.

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The counsel of de Gracia then filed a motion to dismiss the damage suit, alleging that the
labor arbiter before whom the illegal dismissal case is pending has exclusive jurisdiction
over the case for damages.
Decide. (1987 Bar Question)
Answer:
The Motion to Dismiss the complaint for damages against De Gracia filed with the Regional Trial
Court should not be granted. The fact that there is a complaint for illegal dismissal with a Labor
Arbiter filed by De Gracia is not ground for dismissal of the damage suit filed with the Regional Trial
Court.
The two cases can be considered distinct from each other.
The case before the Regional Trial Court is based on the slugging by De Gracia of his superior, the
personnel manager who filed the damage suit. This, therefore, is a case based on the Civil Code, not
on the Labor Code, and is thus, within the jurisdiction of the regular courts.
On the other hand, the complaint of illegal dismissal in within the jurisdiction of the Labor Arbiter.
The Labor Arbiter could have included in the exercise of his jurisdiction also the damages arising
from the manner in which the employer dismissed an employee. But it may be noted: The damage
suit here arises from what the employee did to the personnel manager, not what the employer did
to the employee. This is an added reason why the damage suit filed by the personnel manager
against De Gracia is properly within the jurisdiction of the Regional Trial Court.

Another Suggested Answer:

The case arose from employer-employee relations and is therefore under the original and exclusive
jurisdiction of the Labor Arbiter.
Another Suggested Answer:
To avoid multiplicity of suits, the case which arose from employer-employee relations should be
heard by the
Labor Arbiter who has jurisdiction of the case.

Requirements to perfect appeal to NLRC

Q: In cases involving monetary award, why does the law require an employer to post a cash
or surety bond as an indispensable condition for the perfection of an appeal?
Answer:
An appeal stays the execution of a decision or award. Such decision or award could be in the form of
a monetary award made in favor of an employee. Thus, an appeal will mean that a monetary award
will not be executed. To ensure that an appealed monetary award will be paid to the employee once
such monetary award is affirmed and has become final and executory, the Labor Code requires that
the appeal by an employer 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 the judgment appealed from. (Art. 223, Labor Code)

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Q: The affected members of the rank and file elevated a labor arbiter's decision to the NLRC
via a petition for review filed after the lapse of the ten-day reglementary period for
perfecting an appeal. Should the NLRC dismiss the petition outright or may the NLRC take
cognizance thereof? (5%). (2001 Bar Question)
SUGGESTED ANSWER:
The NLRC should dismiss the appeal outright because the same was filed beyond the reglementary
period of appeal. Article 223 of the Labor Code reads:
"Decisions, awards, or orders of the Labor Arbiter are final and executory unless , appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions,
awards, or orders."

ANOTHER SUGGESTED ANSWER:

The NLRC could dismiss outright the appeal for being filed out of time. But if there are good reasons
that may justifiably explain why there was a delay in the filing of the appeal, substantial justice may
be the basis for the NLRC to take cognizance of the appeal.

Q: Company "A", within the reglementary period, appealed the decision of a Labor Arbiter
directing the reinstatement of an employee and awarding backwages. However, A's cash
bond was filed beyond the ten day period. Should the NLRC entertain the appeal? Why?
(5%). (2001 Bar Question)
SUGGESTED ANSWER:
No, the NLRC should not entertain the appeal, as the same was not perfected for failure to file a
bond. Art. 223 of the Labor Code reads:
"In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of cash or surety bond, in the amount equivalent to the monetary award in
the judgment appealed from."
In ABA vs. NLRC, G.R. No. 122627, July 18, 1999, the Supreme Court ruled:
"An appeal bond is necessary………. the appeal may be perfected only upon the posting of cash or
surety bond issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from."

ANOTHER SUGGESTED ANSWER:

The NLRC may still entertain the appeal.
It is true that the Labor Code (in Art. 223) provides that appeal is perfected only upon the posting of
a cash or surety bond. But if Company A filed a motion for the reduction of the bond, and said
motion was only acted upon after the reglementary period, then, the NLRC, in the interest of
substantial justice, may still take cognizance of the appeal.

Q: Cite two instances when an order of execution may be appealed. (2007 Bar Question)
SUGGESTED ANSWER:

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An Order of Execution may be appealed:
1. Where the Order of Execution varies or goes beyond the terms of the judgment it seeks to enforce
or the terms of the judgment are ambiguous (DBP v. Union Bank, 419 SCRA 131 [2004]);
2. Where the implementation of the Order was irregular (Metrobank v. C.A. 356, SCRA 563 [2001]).

FIRST ALTERNATIVE ANSWER:

1. When its execution becomes impossible or unjust, it may be modified or altered on appeal
or harmonize the same with justice and the facts. (Torres v. NLRC, 330 SCRA 311 [2000]).
2. Supervening events may warrant modification in the execution of the judgment, as when
reinstatement is no longer possible because the position was abolished as a cost-cutting measure
due to losses. (Abalos v. Philex Mining Corp., 393 SCRA 134 [2000]).

a) versus Regional Director

Q: Sara has been working as housemaid for the Bojilov spouses for three (3) years. In the
early morning of July 28, the spouses and Sara were watching the live coverage of the finals
of an Olympic boxing match between a Bulgarian and a Filipino which the foreign fighter
won on points. Peeved by Sara’s angrily remarks that the scoring was unfair, the Bojilov
spouses fired her on the spot.
Sara thereafter filed a complaint with the Regional Director of the DOLE for unpaid salaries
totaling P5.500.00. The Bojilov spouses moved to dismiss the complaint on the belief that
Sara's claim falls within the jurisdiction of the Labor Arbiter. Sara, however, claimed that the
Regional Director can decide on her claim by virtue of his plenary visitorial powers under
Art. 128 and of Art. 129 of the Labor Code, as amended, which empowers the Regional
Director to hear and decide, among others, matters involving recovery of wages.
1) Whose position will you sustain? Explain.
2) Will your answer be the same if Sara’s claim is P4.500.00 with reinstatement?
Explain. (1996 Bar Question)
Answer:
1) I will sustain the position of the Bojilov spouses. Art. 128 is not applicable because the case
did not arise as a result of the exercise of visitorial and enforcement powers by the Regional
Director, as the duly authorized representative of the Secretary of Labor and Employment. Instead,
the case is a simple money claim under Art. 129. which could be under the Jurisdiction of the
Regional Director if the claim does not exceed P5.000.00.
But the claim exceeds P5.000.00. Thus, it is the Labor Arbiter who has jurisdiction under Art.
217(a) of the Labor Code.
2) I will still hold that it is the Labor Arbiter that has jurisdiction. It is true that the money
claim no longer exceeds P5.000.00. But there is a claim for reinstatement. Thus, this claim is under
the jurisdiction of a Labor Arbiter, per Art. 129 of the Labor Code.

B. National Labor Relations Commission (NLRC)

1. Jurisdiction

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Q: What is the jurisdiction of the National Labor Relations Commission? (1995 Bar Question)
Answer:
Jurisdiction of the NLRC:
a) exclusive appellate jurisdiction over all cases decided by Labor Arbiter;
b) exclusive appellate jurisdiction over all cases decided by Regional Directors or hearing offic-
ers involving the recovery of wages and other monetary claims and benefits arising from employer-
erpployee relations where the aggregate money claim of each employee or househelper does not
exceed five thousand pesos (P5.000.00);
c) original jurisdiction to act as a compulsory arbitration body over labor disputes certified to
NLRC by the Secretary of Labor and Employment; and
d) power to issue a labor injunction.

Q: What matters may be taken up by the National Labor Relations Commission (NLRC) En
Banc?
Answer:
The NLRC shall sit en banc only for purposes of promulgating rules and regulations governing the
hearing and disposition of cases before any of its divisions and regional branches and formulating
policies affecting its administration and operations. (Art. 213, Labor Code)

Q: Mr. Esto Pido is employed as a medical representative of Taypa Laboratories. By nature of

his work, he was allowed to avail of the company’s car loan policy whereby the company
advanced the purchase price of the car to be paid back by the employee through monthly
deductions from his salary with the company retaining the ownership of the motor vehicle
until it shall have been fully paid.
Six months after the availment by Mr. Esto Pido of Taypa Laboratories’ car loan policy, he
was dismissed from the service for having participated in an illegal strike. In the Notice of
Dismissal sent to him by his employer, he had been directed to either return the car to the
company or settle the remaining balance of the cost of the car. Esto Pido filed an action
against Taypa Laboratories for illegal dismisssal before the Arbitration branch of the
National Labor Relations Commission (NLRC). The Labor Arbiter, however, upheld the
legality of his dismissal hence he appealed his case before the NLRC.
In the meantime. Taypa Laboratories filed before the Regional Trial Court a civil suit to
recover possession of the car which Esto Pido refused to return and/or settle the remaining
balance. The RTC thereafter directed the Deputy Sheriff to take into his custody the motor
vehicle from Esto Pido.
To counter the order of the RTC, Esto Pido sought a temporary restraining order in the NLRC
to stop the Taypa Laboratories from collecting their monthly amortization pending final
resolution of his appeal in the illegal dismissal case. According to him, had he not been dis-
missed he would not have defaulted in his amortization. NLRC granted the relief prayed for

267
by Esto Pido by restraining Taypa Laboratories from collecting the monthly amortization
pending resolution by the NLRC of the illegal dismissal case. Taypa Laboratories filed a
Petition for Certiorari alleging that NLRC gravely abused its discretion in issuing the
temporary restraining order. NLRC argues that it has the power to issue an injunction based
on Art. 218 of the Labor Code. Decide the controversy with reason.
Answer:
NLRC has no power to issue the injunction.
The powers of NLRC enumerated in Art. 218 of the Labor Code are powers that it could exercise
only in connection with labor disputes.
The case involving the contract on the car loan entered into by Taypa Laboratories and Esto Pido is
not a labor dispute. It is properly under the exclusive jurisdiction of the RTC. Thus, the NLRC has no
power to issue the temporary restraining order that it issued.

Q: May the NLRC or the courts take jurisdictional cognizance over compromise agreements/
settlements involving labor matters?
SUGGESTED ANSWER:
No. Any compromise agreement, including those involving labor standards laws, voluntary agreed
upon by the parties with the assistance of the Bureau or the regional office of the Department of
Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any
court shall not assume jurisdiction over issues involved therein except in case of non- compliance
thereof or if there is prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion. (Art. 227, Labor Code)

Q: Some disgruntled members of Bantay Labor Union filed with the Regional Office of the
DOLE a written complaint against their union officers for mismanagement of union funds.
The Regional Director did not rule in the complainants' favor. Not satisfied, the
complainants elevated the Regional Director’s decision to the NLRC. The union officers
moved to dismiss on the ground of lack of jurisdiction. Are the union officers correct? Why?
(3%). (2001 Bar Question)
SUGGESTED ANSWER:
Yes, the union officers are correct in claiming that the NLRC has no jurisdiction over the appealed
ruling of the Regional Director. In Barles vs. Bitonio. G.R. No. 120220, June 16, 1999, the Supreme
Court ruled:
"Appellate authority over decisions of the Regional Director involving examination of union
accounts is expressly conferred on the BLR under the Rule of Procedure on Mediation- Arbitration,
xxx
Section 4. Jurisdiction of the Bureau – (b) The Bureau shall exercise appellate jurisdiction over all
cases originating from the Regional Director involving…. Complaints examination of union books of
accounts.
The language of the law is categorical. Any additional explanation on the matter is superflous."

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Q: Mr. Jonathan Pe, a registered stockholder of New Wave Beauty Shop, Inc. was elected Vice-
President of New Wage at a regular monthly meeting.
At a subsequent meeting of the Board of Directors, it was resolved to dismiss Jonathan as
Vice-President due to loss of trust and confidence. Jonathan Pe filed with the National Labor
Relations Commission a complaint for illegal dismissal with damages against New Wage
claiming that he was dismissed without due process. New Wage filed a Motion to Dismiss
based on lack of Jurisdiction.
Resolve the motion.(1997 Bar Question)
Answer:
The Motion to Dismiss should be granted. The election of Jonathan Pe as Vice President of New
Wave Beauty Shop, Inc., made him a corporate officer.
His subsequent dismissal as such corporate officer is considered an intra-corporate matter. Thus,
the dismissal of Pe is not a case of a termination dispute which is under the jurisdiction of a
Regional Branch of the NLRC. Instead, it is under the jurisdiction of the Securities and Exchange
Commission, it having jurisdiction over intra-corporate matters.

Q: Diego, Executive Vice-President of Evergreen Development Corporation (EDC) was

dismissed by the Board of Directors for his involvement in irregularities prejudicial to EDC’s
interests. He filed a complaint for illegal dismissal with the Labor Arbiter, praying for
reinstatement with backwages, P5 million pesos as moral damages, P1 million pesos as
exemplary damages and attorney's fees. EDC questioned the Jurisdiction of the Labor
Arbiter. Diego, in turn contended that the Labor Arbiter has Jurisdiction over the case as it
Involves the termination of an employee and claims for backwages, benefits and damages.
Decide. (1996 Bar Question)
Answer:
The dismissal of an Executive Vice-President of a Corporation who is a corporate officer, by the
Board of Directors of the corporation is not a termination dispute under the jurisdiction of a Labor
Arbiter. It is an intra-corporate dispute that is under the jurisdiction of the Securities and Exchange
Commission.

Q: The national council of X Union, the exclusive bargaining representative of all daily paid
workers of Z Corp., called a general meeting and passed a resolution which provides that
each union member was to be assessed P1,000.00 to be deducted from the lump sum of P
10,000.00 which each employee was to receive under the CBA. Sergio, a Union member,
protested and refused to sign the authorization slip for the deduction. X Union then passed a
resolution expelling Sergio from the union. Sergio filed a complaint before the Labor Arbiter
for illegal deduction and expulsion from the union.
Will the complaint prosper? Explain. (1996 Bar Question)
Answer:
The complaint will not prosper before the Labor Arbiter because there is here an intra-union
conflict which is under the jurisdiction of the Med-Arbiter. (See Art. 226 and Rule V of Book V of the

269
Rules and Regulations Implementing the Labor Code).

2. Remedies
Q: An employee filed a complaint against his employer before the National Labor Relations
Commission (NLRC). The labor arbiter decided the case in favor of the employee. The
employer received a copy of the decision on April 10. 1984. April 20 being a Good Friday and
the following Saturday having been declared a non-working public holiday by the President,
the employer filed his appeal with the NLRC from the said decision on April 23. 1984.
(1) Was the appeal filed on time? Explain your reason.
(2) Assuming the decision of the labor arbiter is affirmed by the NLRC. what is the
recourse of the employer? State the nature of the action, the court which has jurisdiction
over the action, and the period within which the same must be filed.
Answers:
(1) The appeal was filed on time. The Supreme Court has ruled that in the counting of the ten
day period within which to file an appeal, if the tenth day is a holiday, then the appeal may be filed
on the day after said holiday. But if the day after said holiday is also a non-working public holiday as
in the case in the question, then the appeal cannot be filed because government offices are closed.
The appeal could then be filed on the day after such non-working public holiday. But again, in the
case, this day is a Sunday when government offices are also closed. Thus, the filing on the following
Monday. April 23. is still within the ten-day period. (Pacana v. National Labor Relations
Commission, et al.. G.R. No. 83513. April 18. 1989)
(2) According to the Labor Code (in Art. 223). in the exercise of its appellate jurisdiction over
decisions of labor arbiters, a decision of the National Labor Relations Commission is final and
executory after ten (10) calendar days from receipt thereof by the parties.
In view of the above provision, the employer in the case in the question who is aggrieved by the
decision of the NLRC should file a petition for certiorari with the Supreme Court under Rule 65 of
the Rules of Court within a reasonable period from receipt of the decision which is the subject of the
petition for certiorari usually within 30 days. (Pacana, op.cit)

Q: FACTS: The Labor Arbiter dismissed the complaint for illegal dismissal filed by Genevieve
Cruz against Bulag Optical Inc. (BOI) which denied her prayer for reinstatement but awarded
Financial assistance in her favor. BOI appealed the decision of the Labor Arbiter to the NLRC
within the regle- mentary period. Genevieve filed an opposition io the appeal. The NLRC
affirmed in toto the decision of the Labor Arbiter. Both the BOI and Genevieve are not
satisfied with the decision of the NLRC. (1999 Bar Question)
1. What is the remedy, if any, of BOI and before what forum? Explain briefly. (3%)
SUGGESTED ANSWER:
BOI can file a Motion for Reconsideration with the NLRC after ten (10) calendar days from receipt of
the decision.
If the NLRC denies the Motion for Reconsideration, BOI can file a petition for certiorari with the
Court of Appeals under Rule 65 of the Rules of Court since the decision of the NLRC is final and

270
executory.

2. Can Genevieve Cruz avail herself of the same remedy as that of BOI? Why? (2%)
SUGGESTED ANSWER:
Genevieve Cruz can avail herself of the same remedy as that of the BOI. The remedies described for
the BOI are also the same remedies available to Genevieve Cruz as a party to the case, pursuant to
the Labor Code (Article 223) and the Rules of Court (Rule 65).
Panel: But the facts of the case indicates that Genevieve did not appeal. She therefore cannot avail of
the remedy.

C. Bureau of Labor Relations – Med-Arbiters (Jurisdiction (original and appellate))

Q: Can the Bureau of Labor Relations certify a union as the exclusive bargaining
representative after showing proof of majority representation thru union membership cards
without conducting an election? [5%] (1998 Bar Question)
SUGGESTED ANSWER:
The Bureau of Labor Relations cannot certify a union as the exclusive collective bargaining
representative after showing of proof of majority representation thru union membership cards
without conducting a certification election.
The Labor Code (in Arts. 256,257 and 258) provides only for a certification election as the mode for
determining the exclusive collective bargaining representative if there is a question of
representation in an appropriate bargaining unit.

ANOTHER SUGGESTED ANSWER:

No, the Bureau of Labor Relations cannot certify a union as the exclusive bargaining representative
without conducting a certification election.
The Supreme Court, in Colgate Palmolive Philippines, Inc. v. Ople, 163 SCRA 323 (1988), ruled -
The procedure for a representation case is outlined [in the] Labor Code ... the main purpose of
which is to aid in ascertaining majority representation. The requirements under the law ... are all
calculated to ensure that the certified bargaining representative is the true choice of the employees
against all contenders, xxx When an ... official by-passes the law on the pretext of retaining a
laudable objective, the Intendment or purpose of the law will lose its meaning as the law itself is
disregarded. When the [Bureau of Labor Relations] directly [certifies] a union, he in fact
disregarded this procedure and its legal requirements. There was therefore failure to determine
with legal certainty whether the union indeed enjoyed majority representation.

D. National Conciliation and Mediation Board

1. Nature of proceedings
2. Conciliation vs. Mediation
Q: Distinguish the terms “conciliation,” “mediation” and “arbitration”. (3%) (2010 Bar
Question)

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SUGGESTED ANSWER:
There is a DOLE official called a “Conciliator Mediator”. He is an officer of the NCMB whose principal
function is to assist in the settlement and disposition of labor - management disputes through
conciliation and preventive mediation. However, he does not promulgate decisions that settle
controversies about rights, which are demandable and enforceable. The latter is called arbitration
and is the function of a labor arbiter or a voluntary arbitrator.

ALTERNATIVE ANSWER:
(1) CONCILIATION is the process of dispute management whereby parties in dispute are
brought together for the purpose of: (1) amicably settling the case upon a fair compromise; (2)
determining the real parties in interest; (3) defining and simplifying the issues in the case; (4)
entering into admissions or stipulations of facts; and (5) threshing out all other preliminary matters
(Section 3, Rule V, 2005 NLRC Rules of Procedure). In resolving labor disputes, this comes before
arbitration, as a mandatory process, pursuant to the State policy of promoting and emphasizing
conciliation as modes of settling labor disputes (Art. 211 (A)(a), Labor Code).
(2) MEDIATION is a voluntary process of settling dispute whereby the parties elect a
mediator to facilitate the communication and negotiation between the parties in dispute for the
purpose of assisting them in reaching a compromise (Sec. 3(q), Rep. Act No. 9285 or the Alternative
Dispute Resolution Law).
(3) ARBITRATION is a system of dispute settlement that may be compulsory or voluntary,
whereby the parties are compelled by. the government, or agree to submit their dispute before an
arbiter, with the intention to accept the resolution of said arbiter over the dispute as final and
binding on them (Luzon Development Bank v. Association of Luzon Development Employees, 249
SCRA 162 [1995]).
In this jurisdiction, compulsory arbitration in labor disputes are submitted to a labor
arbiter, whose powers and functions are clearly defined under Article 217(a) of the Labor Code;
whereas in voluntary arbitration, the powers and functions of the voluntary arbitrator or panel of
voluntary arbitrators elected to resolve the parties’ dispute involve the interpretation and
implementation of the parties’ collective bargaining agreement, pursuant to Articles 260-262 of the
Labor Code.

Q: How sacrosanct are statements/data made at conciliation proceedings in the Department

of Labor and Employment? What is the philosophy behind your answer? (2007 Bar
Question)
SUGGESTED ANSWER:
It is sacrosanct as privilege communication. This is so because information and statements at
conciliation proceedings cannot be used as evidence in the NLRC. Conciliators and similar officials
cannot testify in any court or body regarding any matter taken up at conciliation proceedings
conducted by them. (Article 233, Labor Code.) This is to enable the conciliator to ferret out all the
important facts of the controversy which the parties may be afraid to divulge if the same can be
used against them.

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E. DOLE Regional Directors
1. Jurisdiction
Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false.
Explain your answer in not more than two (2) sentences. (5%)
xxx
xxx
xxx
xxx
[e] The visitorial and enforcement powers of the DOLE Regional Director to order and
enforce compliance with labor standard laws can be exercised even when the individual
claim exceeds P5,000.00. (2009 Bar Question)
SUGGESTED ANSWER:
True. The visitorial and enforcement powers of the DOLE Regional Director to order and enforce
compliance with labor standards laws can be exercised even when the individual claims exceed
P5,000.00 The authority under Article 128 may be exercised regardless of the monetary value
involved. Under Article 129, however the authority is only for claims not exceeding P5,000.00 per
claimant.

Q: Savoy Department Store (SDS) adopted a policy of hiring salesladies on five-month cycles.
At the end of a saleslady’s five-month term, „ another person is hired as replacement.
Salesladies attend to store customers, wear SDS uniforms, report at specified hours, and are
subject to SDS workplace rules and regulations. Those who refuse the 5-month employment
contract are not hired.
The day after the expiration of her 5-month engagement, Lina wore her SDS white and blue
uniform and reported for work but was denied entry into the store premises. Agitated, she
went on a hunger strike and stationed herself in front of one of the gates of SDS. Soon
thereafter, other employees whose 5-month term had also elapsed joined Lina’s hunger
strike.
xxx
xxx
c) Assume that no fixed-term worker complained, yet in a routine inspection a labor
inspector of the Regional Office of the DOLE found the 5-month term policy of SDS violative
of the Labor Code’s security of tenure provisions and recommended to the Regional Director
the issuance of a compliance order. The Regional Director adopted the recommendation and
issued a compliance order. Is the compliance order valid? Explain your answer. (3%) (2008
Bar Question)
SUGGESTED ANSWER:
No, the Compliance Order is not valid. The Regional Director only exercises both visitorial and
enforcement powers over labor standard cases, and empowered to adjudicate uncontested money
claims of persons still employed.
The Regional Director has no jurisdiction to rule on SDS’ 5-month term policy.

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ANOTHER SUGGESTED ANSWER:
The compliance order is not valid. Without any of the salesladies complaining, there could be no
basis for a finding that their employment contract for a fixed term was invalid.

Q: Tina Aquino, a domestic helper in the household of Fidel Aldeguer, filed an action in the
Regional Office of the Department of Labor and Employment. (DOLE) for recovery of unpaid
wages amounting to P3.500.00 and PI.499.00 as moral damages. Aquino claimed that the
amount of P3, 500.00 is equivalent to the P500.00 a month she failed to receive for the last
seven months of her employment with Aldeguer. based on their agreed P2.500.00 monthly
salary. Aldeguer moved to have Aquino’s complaint dismissed, alleging that as a domestic
helper Ms. Aquino should have first brought the matter to the Lupong Barangay.
If you were the Regional Director, how would you resolve the matter?
Answer:
As Regional Director. I will assume jurisdiction. 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.
Article 129 of the Labor Code empowers the Regional Director to hear and decide any matter
involving the recovery of wages and other monetary claims and benefits owing to an employee or
person employed in* domestic or household service, provided that the money claim does not
exceed P5.000.CX). (Montoya vs. Escayo, G.R Nos. 82211-12, March 21. 1989)

Q: In a letter to the Regional Director of Region VII of the Department of Labor and
Employment, employee Ricardo Malalang claims that his employer, the Visayan Sea Products
Corp., has not compensated him for various legal benefits, including overtime pay, holiday
pay, 13th month pay and other monetary benefits totaling P6.000.00.
Despite the fact that the amount claimed exceeds P5.000 how may the Regional Director
exercise jurisdiction over the case? Why?
Answer:
The power of the Regional Director over money claims may arise under either Article 128 or Article
129 of the Labor Code.
Under Article 129, for the Regional Director to exercise Jurisdiction, the aggregate money claims of
an employee should not exceed P5.000.00.
Under Article 128, as the duly authorized representative of the Secretary of Labor, the Regional
Director has the power to order and administer, after due notice and hearing, compliance with the
labor standards provisions of the Labor Code and other labor legislation based on the findings of
labor regulation officers made in the course of inspection and issue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases where the employer

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contests the findings of the labor regulation officer and raises issues which cannot be resolved
without considering evidentiary matters that are not verifiable in the normal course of inspection.
Article 128 applies where the relationship of employer- employee relationship still exists.

F. DOLE Secretary
1. Visitorial and enforcement powers
Q: The Bantay-Salakay Security Agency (BSSA) employed ten security guards and assigned
them to Surot Theater which contracted BSSA for its security needs.
On November 3. 1988, the ten (10) security guards of BSSA addressed to the Office of the
President, a letter- complaint against their employer for non-compliance with R.A. 6640
providing for an increase in the statutory minimum wage and salary rates of employees and
workers in the private sector. The letter was endorsed to the Secretary of Labor who, in turn,
referred the matter to the Regional Director of Makunat City in Region XII where the ten (10)
security guards reside and where their employer conducts business. The Office of the
Regional Director conducted an investigation and called for a hearing with all the parties
present. Therefrom, the Regional Director found that there were indeed violations commit-
ted by BSSA against the ten (10) security guards, such as underpayment of wages, non-
integration of cost of living allowance, underpayment of 13th-month pay and underpayment
of five (5) days incentive pay BSSA and Surot Theater were directed to comply with the labor
standards and ordered BSSA and Surot Theater to pay jointly and severally to the ten (10)
security guards their respective claim of P 10,000.00 each or an aggregate amount of
PI00,000.00. BSSA and Surot Theater filed a Petition for Certiorari before the Supreme Court
seeking to annul the decision of the Regional Director on the ground of grave abuse of
discretion in assuming jurisdiction over the case. Will the Petition for Certiorari prosper?
Decide with reason.
Answer:
It is to be noted that the Regional Director assumed jurisdiction before the effectivity of Rep. Act No.
6715 (which is March 21, 1989). Thus, applying Art. 128 of the Labor Code, the petition for
certiorari will not prosper.
Under said article of the Labor Code, the Secretary of Labor or his duly authorized representatives -
and Regional Directors are duly authorized representatives - have visitorial and enforcement
powers. Thus, a Regional Director not only has visitorial powers, i.e., to visit the premises of an
employer and examine his records, he also has enforcement powers, i.e. based on the findings of
labor regulation officers or industrial safety engineers made in the course of inspection. A Regional
Director has the power to order and administer, after due notice and hearing compliance with the
labor standards, provisions of the Labor Code. Thus, he could issue writs of execution to the
appropriate authority for the enforcement of his orders, except in cases where the employer
contests the findings of the labor regulation officer and raises issues which cannot be resolved
without considering evidentiary matters that are not verifiable in the normal course of inspection.

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Therefore, pursuant to Art. 128 of the Labor Code, the Regional Director was only exercising his
visitorial and enforcement powers in the case of BSSA and Surot Theater. Thus, he has jurisdiction
to do what he did.
In a dissenting opinion. Chief Justice Narvasa said that even after the effectivity of Rep. Act No.
6715, the Regional Director has jurisdiction to act on claims exceeding P5.000.00.
The petition for certiorari will prosper under Rep. Act No. 6715. its provision limiting the power of
Regional Directors to money claims not exceeding P5,000.00 per employee, the Regional Director
no longer has the power to act on money claims exceeding P5.000.00 per employee, even if the
same power i£ exercised pursuant to his visitorial and enforcement power under the Labor Code
(Art. 128) where the P5.000 limitation is not found.
Note:
Chief Justice Narvasa dissents from the above majority view of the Supreme Court.

Q: FACTS: Polaris Drug Company had an existing Collective Bargaining Agreement with
Polaris Workers Union (PWU) which was due to expire on May 31. 1999. PWU had a total
membership of one hundred (100) rank-and-file employees of the company. Mike Barela, a
militant member of the union, suspected that the union officers were misappropriating
union funds as no financial report was given to the general membership during the union’s
general assembly. Hence, Mike Barela prepared a sworn written complaint and filed the
same with the Office of the Secretary of Labor on May 10, 1999, petitioning for an
examination of the financial records of PWU. (1999 Bar Question)
1. Is the Secretary of Labor authorized by law to examine the financial records of the
union? If so, what power? If not, why not? (3%)
SUGGESTED ANSWER:
The Secretary of Labor is expressly authorized by the Labor Code (In Article 274) to examine the
financial records of the unions to determine compliance or non- compliance with the pertinent
provisions of the Labor Code and to prosecute any violation of the law and the union constitution-
and-by-Iaws. But this authority may be exercised only upon the filing of a complaint under oath and
duly supported by the written consent of at least twenty percent (20%) of the total membership of
the labor organization concerned.

ALTERNATIVE ANSWER:
Among the rights and conditions of membership in a labor organization is the right implied by the
proviso in the Labor Code (Article 241 (m)) stating that the books of accounts and other records of
the financial activities of any labor organization shall be open to inspection by any officer or
member thereof during office hours.
As a union member, Mike Barela could file an intra-union case that may entail the act of the
Secretary of Labor examining the financial records of the union. (See La Tondeha Workers Union v.
Secretary of Labor and Employment, 239 SCRA 117)

2. Under the facts given above, could an examination or audit of the financial records of

276
the union be ordered? Why? (2%)
SUGGESTED ANSWER:
Under the facts given in the question, an examination or audit of the financial records of the union
cannot be ordered because for such examination or audit to take place, there should be a complaint
under oath and duly supported by written consent of at least twenty (20%) per cent of the total
membership of the labor organization concerned. In this case, the aforementioned requirement was
not fulfilled. It was only a sworn written complaint by one union member that was filed.
Also, the Labor Code provides that an examination of the books of a union shall not be conducted
during the sixty (60) day freedom period nor within thirty (30) days immediately preceding the
date of election of union officials.
In the case, the complaint was filed on May 10, 1999 which is within the freedom period of the
current CBA which was to expire on May 31, 1999.

Q: An airline which flies both the international and domestic routes requested the Secretary
of Labor and Employment to approve the policy that all female flight attendants upon
reaching age forty (40) with at least fifteen (15) years of service shall be compulsorily
retired; however, flight attendants who have reached age forty (40) but have not worked for
fifteen (15) years will be allowed to continue working in order to qualify for retirement
benefits, but In no case will the extension exceed four (4) years.
Does the Secretary of Labor and Employment have the authority to approve the policy? [5%]
(1998 Bar Question)
SUGGESTED ANSWER:
Yes, the Secretary of Labor and Employment has the authority to approve a policy dealing with the
retirement of flight attendants of airlines.
Article 132 (d) of the Labor Code provides that the Secretary of Labor and Employment shall
establish standards that will ensure the safety and health of women employees, including the
authority to determine appropriate minimum age and other standards for retirement or
termination in special occupations such as those of flight attendants and the like.
CAVEAT:
It could be argued that Article 132 (d) may be unconstitutional because this may constitute
discrimination in violation of the spirit of Section 14 of Article xni of the Constitution which
provides that the State shall protect working women by providing safe and healthful working
conditions, taking into account their maternal functions, and such facilities and opportunities that
will enhance their welfare and enable them to realize their full potential in the service of the nation.

Q: The Manila Industrial Corp. has fifty (50) contract workers supplied by the National
Employment Agency. They joined the Novato Labor Union, the sole and exclusive bargaining
representative of the rank-and-file workers in the company. In turn, the union demanded
that the company consider the fifty new union members as regular employees accordance
with the Labor Code. When the company refused to make their employment regular, the
union, after complying with the requirements, staged a strike. The Secretary of Labor and
Employment assumed Jurisdiction of the case.

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Assuming that there is no employer-employee relationship between the company and the
fifty contract workers, is there a labor dispute between them that properly falls under the
jurisdiction of the Secretary of Labor and Employment?
Answer:
Yes. There is a labor dispute that could properly fall under the jurisdiction of the Secretary of Labor
and Employment assuming that Manila Industrial Corp. is an industry indispensable to the national
interest, since the dispute between the corporation and the contract workers is a labor dispute,
even if there is no employer-employee relationship between the corporation and the contract
workers.
Under the Labor Code, a labor dispute includes any controversy or matter concerning terms and
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 employer and employee."
From the above definition, it is noted that there is a labor dispute regardless of whether the
disputants stand in proximate relation of employer and employee.
The demand of the union that the company regularize the employment of the contract worker is a
controversy concerning terms and conditions of employment.

2. Power to suspend/effects of termination

Q: The Secretary of Labor and Employment, after receipt of a Notice to Terminate
Employment of one hundred (100) workers, enjoined the employer from implementing their
termination.
Has the Secretary of Labor and Employment the authority to enjoin the employer from
terminating the employment of the workers? If so on what grounds? (5%) (1998 Bar
Question)
SUGGESTED ANSWER:
The Secretary of Labor and Employment has the authority to enjoin an employer from terminating
the employment of workers.
The Labor Code (in Article 277(b) provides that the Secretary of Labor and Employment may
suspend the effectivity of the termination of workers pending the resolution of a labor dispute in
the event of a prima facie finding of an appropriate official of the Department of Labor and
Employment before whom such dispute is pending that the termination may cause a serious labor
dispute or is In Implementation of a mass lay off.

3. Assumption of jurisdiction
Q: Employees of ABC declared a strike after filing a Notice of Strike with the DOLE. They
barricaded company gates and damaged vehicles entering company premises. On the second
day of the strike, ABC filed a petition with the DOLE Secretary to intervene through the
issuance of an assumption of jurisdiction order that the Secretary may issue when a strike or
lock-out will adversely affect national interest. ABC furnished the Secretary with evidence to

278
show that company vehicles had been damaged; that electric power had been cut off; and
equipment and materials were damaged because electric power was not immediately
restored. ABC forecast that the country’s supply of chlorine for water treatment (which die
company produces) would be affected adversely if ABC’s operations were closed down by
the strikers.
Could the DOLE Secretary intervene, assume jurisdiction and issue a TRO (Temporary
Restraining Order)? Briefly justify your answer. (5%) (2005 Bar Question)
SUGGESTED ANSWER:
Yes, the Secretary of Labor and Employment can assume jurisdiction over the dispute because ABC
could be considered as an industry indispensable to the national interest since it produces the
country’s supply of chlorine for water treatment.
The assumption of jurisdiction by the Secretary of Labor and Employment has the effect of ending
the strike. The strikers will be subject to a return to work order by the Secretary of Labor and
Employment upon her assumption of jurisdiction.

Q: FACTS: Jenson & Jenson (J & J) is a domestic corporation engaged in the manufacturing of
consumer products. Its rank-and-file workers organized the Jenson Employees Union (JEU),
a duly registered local union affiliated with PAFLU, a national union. After having been
certified as the exclusive bargaining agent of the appropriate bargaining unit, JEU-PAFLU
submitted its proposals for a Collective Bargaining Agreement with the company.
In the meantime, a power struggle occurred within the national union PAFLU between its
National President. Manny Pakyao, and its National-Secretary General. Gabriel Miro. The
representation issue within PAFLU is pending resolution before the Office of the Secretary'
of Labor.
By reason of this intra-union dispute within PAFLU. J & J obstinately and consistently refused
to offer any counterproposal and to bargain collectively with JEU-FAFLU until the
representation issue within PAFLU shall have been resolved with finality. JEU-PAFLU filed a
Notice ot Strike. The Secretary of Labor subsequently assumed jurisdiction over the labor
dispute. (1999 Bar Question)
1. xxx
2. Can the Secretary of Labor decide the labor dispute by awarding the JEU CBA
Proposals as the Collective E3argaining Agreement of the parties? Explain briefly. (2%)
SUGGESTED ANSWER:
Yes. The Secretary of Labor can decide the labor dispute by awarding the JEU CBA proposals as the
Collective Bargaining Agreement of the parties because when the Secretary of Labor (under Article
263[g]) assumes jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
Industry indispensable to the national interest, the Secretary of Lai or exercises the power of
compulsory arbitration over the labor dispute, meaning, that as an exception to the general rule, the
Secretary of Labor now has the power to set. or fix wages, rates of pay, hours of work or terms and
conditions of employment by determining what should be the CBA of the parties. (See Divine Word
University vs. Secretary of Labor, 213 SCRA 759)

Q: Savoy Department Store (SDS) adopted a policy of hiring salesladies on five-month cycles.

279
At the end of a saleslady’s five-month term, „ another person is hired as replacement.
Salesladies attend to store customers, wear SDS uniforms, report at specified hours, and are
subject to SDS workplace rules and regulations. Those who refuse the 5-month employment
contract are not hired.
The day after the expiration of her 5-month engagement, Lina wore her SDS white and blue
uniform and reported for work but was denied entry into the store premises. Agitated, she
went on a hunger strike and stationed herself in front of one of the gates of SDS. Soon
thereafter, other employees whose 5-month term had also elapsed joined Lina’s hunger
strike.
xxx
b) The owner of SDS considered the hunger strike staged by Lina, et al., an eyesore
and disruptive of SDS’ business. He wrote the Secretary of Labor a letter asking him to
assume jurisdiction over the dispute and enjoin the hunger “strike”. What answer will you
give if you were the Secretary of Labor? (3%) (2008 Bar Question)
SUGGESTED ANSWER:
I will deny the letter-request of SDS because its business is not indispensable to the national
interest. Although the Secretary of Labor has a wide latitude of discretion in deciding whether or
not to assume jurisdiction over a labor dispute or certify the same to the NLRC for compulsory
arbitration, SDS’s business is clearly not one which is indispensable to the national interest.
Moreover, the grounds relied upon by SDS, to wit: “eyesore and disruptive of its business”, betrays
the weakness of its case.

ANOTHER SUGGESTED ANSWER:

As Secretary of Labor, I could not assume jurisdiction over the hunger strike, simply because
there is no strike to speak of. Lina et al. had already been terminated when they staged their
concerted action, hence there was no temporary stoppage of work at SDS.

Q: Under what conditions may the Secretary of Labor or his duly authorized representative
inquire into the financial activities or legitimate labor organizations? (2%). (2001 Bar
Question)
SUGGESTED ANSWER:
The Labor Code (in Art. 274), the Secretary of Labor and Employment or his duly authorized
representative is empowered to inquire into the financial activities of legitimate labor organization
upon the filing of a complaint under oath and duly supported by the written consent of at least
twenty (20%) percent of the total membership of the labor organization concerned and to examine
their books of accounts and other records,

G. Grievance Machinery and Voluntary Arbitration

Q: What issues or disputes may be the subject of voluntary arbitration under the Labor
Code? (4%) (2008 Bar Question)
SUGGESTED ANSWER:
Disputes or issues subject to Voluntary Arbitration:

280
1. all unresolved grievances arising from the implementation or interpretation of the CBA
after exhaustion of the grievance procedure’
2. all unresolved grievances arising from the implementation or interpretation of company
personnel policies;
3. all wage distortion issues arising from the application of any wage orders in organized
establishments;
4. all unresolved grievances arising from the interpretation and implementation of
productivity incentive programs under R.A. 6971;
5. all other labor disputes including unfair labor practices and bargaining deadlocks, upon
agreement of the parties.

Q: Can a dispute falling within the jurisdiction of a voluntary arbitrator be submitted to

compulsory arbitration? Why or why not? (3%) (2008 Bar Question)
SUGGESTED ANSWER:
A dispute falling within the jurisdiction of a voluntary arbitrator can be submitted to
compulsory arbitration. This situation can arise when the Secretary of Labor and Employment has
assumed jurisdiction over a labor dispute in an industry indispensable to the national interest. In
the foregoing situation, in accordance with applicable Supreme Court decisions, the Secretary of
Labor and Employment shall also assume jurisdiction over subsequent labor cases involving the
same establishment, including those that maybe resolved by a Voluntary Arbitrator.

ANOTHER SUGGESTED ANSWER:

No. A dispute falling within the jurisdiction of a Voluntary Arbitrator cannot be submitted for
compulsory arbitration. Under Art. 263(g) of the Code, only the following disputes can be submitted
for compulsory arbitration:
1. Labor dispute causing or likely to cause a strike or lockout in an industry indispensable to
the national interest; and
2. Strikes and lockouts in hospitals, clinics, and similar medical institutions.

1. Subject matter of grievance

Q: How are cases arising from the interpretation or implementation of collective bargaining
agreements handled and disposed? (1995 Bar Question)
Answer:
Through the grievance machinery and if not resolved the grievance machinery, through voluntary
arbitration.

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2. Voluntary Arbitrator
a) Jurisdiction
Q: When the Collective Bargaining Agreement (CBA) negotiations between COMPUTER
WORKERS UNION and COMPUTER TECH CORPORATION resulted in a deadlock, both parties
agreed to submit their dispute to voluntary arbitration stipulating, among other things, that
the decision of the Voluntary Arbitrator shall be “final unappealable and executory"
conformable with the provisions of Art. 262 of the Labor Code.
The Voluntary Arbitrator rendered his decision or award worded as follows:
“COMPUTER TECH CORP. to award a sum total package benefits to COMPUTER WORKERS
UNION in the amount of TWENTY MILLION (P20.000.000.00) PESOS for the three-year period
of the CBA, the distribution and availment per year to be suggested by the UNION subject to
the approval of the CORPORATION, seeing to it that the decretal benefits shall first be
satisfied above all others.
The UNION filed a “Motion for Clarification" claiming that the package benefit award of P20-
million does not cover the decretal benefits granted by Wage Order No. 2 which was issued
on the same day when the arbitration award was made. The Arbitrator issued an order
which modified the original award of P20-million and sought to impose upon the
CORPORATION an additional burden of decretal benefits given by Wage Order No. 2. The
CORPORATION assailed the Arbitrator’s modification of the original award claiming that the
modification of the original award was null and void and without or in excess of the
Arbitrator’s authority and brought the issue to the Supreme Court by petition for certiorari
1) Are decisions or awards of the Voluntary Arbitrators appealable? Discuss.
2) Has the Voluntary Arbitrator the authority to modify his original award under the
above-narrated facts. Discuss.
Answer:
1) No. The decisions or awards of Voluntary Arbitrators are not appealable because, according
to Art.262-A of the Labor Code, they are final and executory' after ten (10) calendar days from
receipt of the copy of the award or decision by the parties.
But said award or decision could be brought to the Supreme Court on certiorari on the ground that
the Voluntary Arbitrator committed grave abuse of discretion amounting to lack or excess of
jurisdiction. The Supreme Court has taken cognizance of petitions questioning decision of
Voluntary Arbitrator where want of jurisdiction, grave abuse of discretion, violation of due process,
denial of substantial justice and erroneous interpretation of the law were brought to its attention.
2) No. The Voluntary Arbitrator has no authority to modify his original award. Acting on a
Motion for Clarification, he could only clarify his award. It is in excess of his jurisdiction to go
beyond clarifying his award by radically modifying and in fact increasing the original award.

Alternative Answers:
a) If his award has not yet become final and executory because it is still within the ten (10)

282
day period from receipt of the copy of award by the parties, the Voluntary Arbitrator could still
modify his original award in the way he did it because in the facts of the case, a Wage Order was
issued on the same day when the arbitration award was made. In his award, the Voluntary
Arbitrator made reference to decretal benefits. He said: “seeing to it that the decretal benefits shall
first be satisfied above all others.” Thus, the Voluntary Arbitrator was just clarifying that the
employer should pay the decretal benefits granted by Wage Order No. 2 which was not dealt with in
the award of the Voluntary Arbitrator because the Wage Order was issued on the same day the
arbitration award was made.
b) No. such authority has disappeared, upon rendition of an award which is final, in
appealable and executory by stipulation of the parties. Enforcement of the Wage Order must be by
legal process, through claims filed before the Labor Arbiter.

Q: State the cases when a labor dispute would fall under the jurisdiction of voluntary
arbitrators or panel of voluntary arbitrators. (1997 Bar Question)
Answer:
A labor dispute falls under the jurisdiction of a voluntary arbitrator or a panel of voluntary
arbitrator if a labor disputes arises from an unresolved grievance which in turn arises from the
Interpretation or implementation of a Collective Bargaining Agreement or of company personnel
policies. (Art. 261)
Upon agreement of parties, a voluntary arbitrator or panel of voluntary arbitrators may also hear
and decide all other labor disputes including unfair labor practices and bargaining deadlock. (Art.
262)

Q: Company C, a toy manufacturer, decided to ban the use of cell phones in the factory
premises. In the pertinent Memorandum, management explained that too much texting and
phone-calling by employees disrupted company operations. Two employees-members of
Union X were terminated from employment due to violation of the memorandum-policy. The
union countered with a prohibitory injunction case (with prayer for the issuance of a
temporary- restraining order) Filed with the Regional Trial Court, challenging the validity
and constitutionality of the cell phone ban. The company filed a motion to dismiss, arguing
that the case should be referred to the grievance machinery pursuant to an existing
Collective Bargaining Agreement with Union X, and eventually to Voluntary Arbitration. Is
the company correct? Explain. (3%) (2010 Bar Question)
SUGGESTED ANSWER:
YES. Termination cases arising in or resulting from the interpretation and implementation of
collective bargaining agreements, and interpretation and enforcement of company personnel
policies which were initially processed at the various steps of the plant-level Grievance Procedures
under the parties collective bargaining agreements, fall within the original and exclusive
jurisdiction of the voluntary arbitrator pursuant to Article 217 (c) and Article 261 of the Labor
Code.

ALTERNATIVE ANSWER:
NO. The Regional Trial Court has jurisdiction to hear and decide the prohibitory injunction case
filed by Union X against Company C to enjoin the latter from implementing the memorandum-policy

283
against use of cell phones in the factory. What is at issue is Union X S challenge against the validity
and constitutionality of the cell phone ban being implemented by Company C. The issue, therefore,
does not involve the interpretation of the memorandum-policy, but its intrinsic validity (Haliguefla
v. PAL, 602 SCRA 297 [2009]).

Q: The employer company, in a directive to the union president, ordered the transfer of
some of its employees, including a number of union officials, to its plant offices. The order
was opposed by the union. Ultimately, the union filed an unfair labor practice against the
company alleging that the purported transfer of its union officials was unjust and in
violation of the Collective Bargaining Agreement (CBA). Pursuant to the terms of the CBA, the
dispute was referred to a voluntary arbitrator who later ruled on the issues raised by the
parties. Could it later be validly asserted that the “decision" of the voluntary arbitrator
would have no '‘compulsory" effect on the parties? Explain. (2005 Bar Question)
SUGGESTED ANSWER:
No. A voluntary arbitrator chosen under the Grievance Machinery of a CBA can exercise jurisdiction
not only on disputes involving interpretation/implementation of a CBA and/or company rules,
personnel policies (Art. 261, Labor Code) but also, upon agreement of the parties, “all other labor
disputes including unfair labor practice’ (Art. 262, Labor Code). As no objection was raised by any
of the parties when ‘the dispute was referred to a voluntary arbitrator who later ruled on the issues
raised by the parties”, itfollows that what we have is voluntary arbitration agreed upon by the
parties. His decision is binding upon the parties and may be enforced through any of the sheriffs,
including those of the NLRC, he may deputize.

ANOTHER SUGGESTED ANSWER:

No. The award of voluntary arbitrators acting within the scope of their authority determines the
rights of the parties, and their decisions have the same legal effects as a judgment of the Court. Such
decisions on matters of fact or law are conclusive, and all matters in the award are thenceforth res
judicata on the theory that the matter has been adjudged by the tribunal which the parties have
agreed to make final as tribunal of last resort. (Volkschel Labor Union v. NLRC, 98 SCRA 314
f19801).

H. Prescription of actions
Q: On October 30, 1980, A, an employee, was served notice of dismissal allegedly for gross
dishonesty. Forthwith, the Union to which A was a member raised A’s dismissal with the
grievance machinery as provided for in its Collective Bargaining Agreement (CBA). At that
point, negotiations for a new CBA was in progress. Hence, both the Union and the Company
had very little time to address A’s grievance. In fact, said grievance, as it were, slept the sleep
of the dead, being resolved only with finality on November 23, 1983 when the General
Manager of the Company affirmed A’s dismissal on the fifth and the last step of the grievance
machinery.
A filed an action for illegal dismissal with the Arbitration Branch of the NLRC on November
25, 1983. The Company immediately filed a Motion to Dismiss on the ground of prescription,
invoking Article 290 of the Labor Code.
If you were the Labor Arbiter, how would you resolve the Company’s Motion to Dismiss?

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Answer:
As the Labor Arbiter. I will deny the Motion to Dismiss. Where an employee was dismissed and the
matter of his dismissal was then referred to the grievance machinery pursuant to the provision in
the existing collective bargaining agreement, and the grievance machinery had a final meeting after
quite a long while thereafter, the complaint for illegal dismissal was then filed, the action was not
barred by laches, as the pendency of the matter before the grievance machinery affected the
ripeness of the cause of action for illegal dismissal. [Radio Communications of the Philippines, Inc.
(RCPI), us. National Labor Relations Commission, et al. G.R No. 102958. 25 June 1993, J. Davide. Jr.
223 SCRA 656.

Alternative Answer:
If I were the Labor Arbiter. I will deny the motion to dismiss because the action for illegal dismissal
has not yet prescribed. The prescriptive period for an action for illegal dismissal is four (4) years.
[Callanta vs. Carnation. 145 SCRA 268)

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