1

Part OneTHE LABOR CODEWITH ANNOTATIONS

2

LABOR RELATIONS

3

BOOK FIVELABOR RELATIONS

4

LABOR RELATIONS

THE BEST PRESCRIPTION

From 17 years of experience in the fi eld of labor relations, I think the best prescription for the maintenance of industrial peace would come from the company itself and how it maintains its relations with the union or its employees.

We should develop the consciousness between the parties at the fi rm level for them to try to settle disputes through the grievance machinery. This, however, requires good faith and sincerity on panels of both parties. I have always counselled against management confronting the grievance and raising the fl ag of management prerogative. I can assure you that if you do it, you can never resolve a dispute through the grievance machinery. Gone are the days when you can just go under the cover of the management prerogative clause. You must address these problems, and it takes both sincerity and will to make the grievance machinery work.

Franklin M. Drilon(ECOP: 1987 Constitution: Its Implications

on Employment and Labor Relations)

THE TRUE UNION LEADER

As union leader, he must see to it that the policies and activities of the union in the conduct of labor relations are within the precepts of law. Any deviation from the legal boundaries shall be imputable to the leader. He bears the responsibility of guiding the union along the path of law; to cause the union to demand what is not legally demandable would foment anarchy which is a prelude to chaos.

Chief Justice Marcelo B. Fernan(Victoria vs. Inciong, G.R. No. 49046, January 26, 1988)

5

CAN THE LABOR UNION SURVIVE?

Now the labor union is in tatters and disarray, and in apparently irreversible decline. It is losing members fast. It is losing power even faster... English trade unions have lost a quarter of their members... Labor unions in the United States have lost two-fi fths of their members... Union membership and union power are equally declining fast in Italy and France, and are beginning to do so in West Germany.

The labor union can go in three directions. If it does nothing, it may disappear even in a free democratic society. Or it may shrink to the point where it becomes irrelevant.

A second choice is to try to maintain itself through dominating the political power structure and having government impose compulsory union membership and such power positions for the union as ‘codetermination,’ which gives it a veto power over company management.

There is a third choice: the union rethinks its function. The union might reinvent itself as the organ of society — and of the employing institution — concerned with human potential and human achievement, and with optimizing the human resource altogether. The union would still have a role as the representative of the employees against management stupidity, management arbitrariness, and management abuse of power. It would however not be an adversarial relationship but resemble the Scandinavian ‘Ombudsman.’ The union would work with management on productivity and quality and altogether on keeping enterprise competitive and thus maintaining the members’ jobs and their incomes...

These, to be sure, are but straws in the wind; and so far it is not a strong wind. But can the labour union — whether of manual, of clerical, or of knowledge workers — survive unless it accepts as an opportunity the shift to the world economy and to the knowledge society?

Peter F. DruckerThe New Realities, 1989, pp. 185-189

6

LABOR RELATIONS

WHAT STUNTS PROGRESS

The Welga ng Bayan which was in fact a Welga Laban sa Bayan is off-spring of a misreading of the constitutional provisions. The Constitution authorizes only strikes that are peaceful and in accordance with law.

But strikes, whether peaceful or in accordance with law, unfortunately are not the instrument to secure better salaries or benefi ts for the workers. This has been the world’s plainest experience in the last two decades that also saw the dismantling of the most cherished doctrines of socialism. We don’t have to go very far to bring home our point. What has debunked the dogma that strike is labor’s most necessary and rewarding right is the history of labor in the past two decades in our part of the globe, the area of economic miracle, the model Pacifi c Rim where we are.

The records show that in countries here where there are no strikes, or where strikes are few and far between, the workers enjoy the highest wages and handsomest fringe benefi ts. By the same token, in countries where strikes abound, the workingman gets very poor pay and small benefi ts.

It was ILO, International Labor Organization of the United Nations, that documented a comparative study of the number of strikes in our area and came up with the conclusion that “industrial peace is essential to the prosperity in Asean countries.”

The central folly is to try to divide wealth before creating it. It ought to be clear to the labor leaders and the bleeding-hearts in the Left and in Congress that there exists a law superior to the laws made by Congress or by wage regulatory boards. This is the economic law of supply and demand. Labor benefi ts are limited by the economic condition of the business enterprises and of the nation. The key to better deal for labor is better business. In Japan and Taiwan, workers get fantastic salaries because there are more jobs than applicants.

Smarter labor leaders negotiate for higher salaries in exchange for higher productivity. The deal benefi ts both parties.

All told, the world’s experience in the last decades is that a country’s economic prosperity is what raises the workingman’s wages and condition; and that staging strikes is what subverts and stunts economic progress. Thus, strikes work against the interest of the workers. One day not far off someone will rewrite the law books, even the Constitution, to moderate the doctrine that the right to strike is labor’s most vital and rewarding right.

Napoleon G. RamaPhilippine Panorama, Nov. 4, 1990

7

GENESIS OF INDUSTRIAL PEACE

Unrest and friction in industrial relations develop from the fact that employers frequently disregard or fail to appreciate fully the complaints and grievances of employees. Charges of favoritism, discrimination, unfair treatment, mistakes in the pay envelope, and other complaints may seem trivial to the employer, but they are usually very serious to the workers. The deaf ear that is often turned to complaining employees is largely responsible for the growth of a feeling of industrial injustice, suspicion, mistrust, and class hatred.

Not infrequently men are discharged for causes that to them seem insignifi cant, and often the reasons for dismissal are not clear or are not known at all. The absolute right to hire and fi re in modern industry has been exercised autocratically, especially when delegated to foremen who, because of favoritism, difference in political and religious views, personal jealousy, or a feeling of superiority, discharge workers indiscriminately without even attempting to assign any cause or to justify the action to the worker.

It is not sufficient, therefore, for managers to refer complaints and grievances to supervisors. Some other agency of adjustment must be provided. Either the manager must provide regular hours for hearing such cases, or the responsibility must be placed upon the employment or personnel department... Whatever method may be introduced, it is commonly agreed that the channels of communication between these parties should always be open. In no other way can even a semblance of democratic administration of industry be assured and industrial peace and goodwill promoted. An effi cient personnel department does much to make the worker feel that he is getting a square deal, and this is the genesis of successful industrial management. Without a contented personnel, productive efficiency is impossible.

GORDON S. WATKINS and PAUL A. DODDLabor Problems (1940)

8

LABOR RELATIONS

EQUALIZING FORCE

In the lopsided world of work, the job seeker is much weaker than the job provider. This imbalance explains the need for law and the role it plays. Law is the equalizing force. It tempers the power of the strong and strengthens the faith of the weak towards enlightened recognition of their interdependence. There is no better way than balanced sharing of both efforts and rewards. Law tempers greed and deception as it breeds fair sharing among partners. And yet, law by itself does not accomplish much. It is lifeless. It draws its life from the strength of reason as well as the subtlety of the human heart. Reason informs that the weakness of one ought to be transformed into the strength of the many, and that this transformation is not only allowed but zealously safeguarded by law. The mind thus educated, the heart must be brave enough to act to translate the legal concept into reality. On the employer’s part, the heart and the mind dictate respect for the workers’ rights. In this manner their interdependence will prove mutually benefi cial, and cold statutory statements will come to life.

CA. Azucena, Jr.

DISMISSAL FROWNED UPON

Except for the most serious causes affecting the business of the employer, our labor laws frown upon the penalty of dismissal. Where a penalty less punitive would suffi ce, an employee should not be sanctioned with a consequence so severe.

CHIEF JUSTICE ARTEMIO V. PANGANIBAN

Solvic Industrial Corp., et al. vs. NLRC, et al.G.R. No. 125548, September 25, 1998

9

BOOK FIVELABOR RELATIONS

Title IPOLICY AND DEFINITION

Chapter IPOLICY

Overview/Key Questions: Box 1 1. What are the policy objectives of our labor relations

law? 2. Employer-employee relationship must exist so that

labor relations law may apply within an enterprise. What factors determine the existence of such relationship?

3. What are considered labor disputes? What are the available remedies?

ART. 211. DECLARATION OF POLICY A. It is the policy of the State: (a) To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes; (b) To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development; (c) To foster the free and voluntary organization of a strong and united labor movement; (d) To promote the enlightenment of workers concerning their rights and obligations as union members and as employees; (e) To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes; (f) To ensure a stable but dynamic and just industrial peace; and (g) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare.

10

LABOR RELATIONS

B. To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or offi cial shall have the power to set or fi x wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code.

COMMENTS AND CASES1. OVERVIEW AND VIEWPOINT In the opening comments to the Preliminary Title in Volume I, it is said that labor legislation is divided broadly into labor standards and labor relations. “Labor Standards” refers to the minimum terms and conditions of employment to which employees are legally entitled and with which employers must comply. “Labor Relations” refers to the interactions between employer and employees or their representatives and the mechanism by which the standards and other terms and conditions of employment are negotiated, adjusted and enforced. Thus defi ned, Books I to IV of the Code deal largely with standards and V to VII with relations. What is the “correct” sequence of studying the books? This is just a question of instructional sequence which is not of great importance because the distinction between labor standard and labor relation is in fact academic. The distinction does not matter, for instance, when an employer and the employees negotiate a labor contract, or when an employee fi les a complaint with a government agency. Negotiating a contract and fi ling a complaint are aspects of labor relations but their subjects oftentimes are labor standards. Similarly, the government body that hears and decides labor disputes, in general, whether involving money claims or anti-union acts, is called “labor relations” commission and not “labor standards and relations” commission. Labor standards and labor relations actually intertwine; they are not mutually exclusive. What follows is a perspective of labor relations in the private sector. The government labor relations policy is declared in Article 211 which is a focused elaboration of the basic labor policy announced in Article 3 which, in turn, echoes the constitutional mandates. The policy intends to attain social justice through industrial peace and progress. The latter is signifi cantly founded on employee participation and collective interactions between employer and employees. In Management parlance, the input is the parties’ rights and duties, the process is workers’ organization and collective bargaining, and the output is industrial peace and progress towards social justice as the end goal. As in political democracy the crux of labor relations is the process and substance of employee participation, that is, how rights and duties are exercised, how agreements are reached, and how relationship is enhanced. The process starts when workers organize themselves into a union or some other form of association. They may or may not register their organization with

ART. 211

i

ii

iii

iv

v

vi

vii

viii

Books by the Author

EMPLOYMENT AND OUTSOURCING UNDER PHILIPPINE LAW

Two Basic Labor Questions: Legal concepts and court rulings on employment and nonemployment relationships explained for the general reader; 2010 edition

THE LABOR CODE WITH COMMENTS AND CASES (VOLUMES I and II)

The textbooks: A comprehensive instructional study of the whole Labor Code, richly amplifi ed with comments and court rulings; intended for law students, lawyers, and other practitioners; recipient of the Supreme Court “Centenary Book Award”; a “popular labor law textbook” (the Supreme Court in Cainta Catholic School case, May 4, 2006); now on its nineteenth year, seventh edition

EVERYONE’S LABOR CODE

The labor law fundamentals and reviewer: The Labor Code for business and law students, bar reviewees, unionists, and the general public; key codal provisions are supplemented with essential explanatory ‘Notes’ and rulings condensed in plain English; seventeenth year, sixth edition

ESSENTIAL LABOR LAWS

The companion book: A handy bible of the labor laws most frequently consulted by most practitioners and ardent students; updated with Notes; third edition forthcoming

LABOR LAWS SOURCE BOOK

The compilation: The integrated, updated, and systematic compilation of virtually all labor laws; primarily meant for practitioners, teachers, and researchers; consists of three parts: the Labor Code with update and reference notes; the Implementing Rules; and other labor laws; previously titled Labor Law Handbook; now on fourth edition

DEMOCRACY AND SOCIALISM: A CURRICULUM OF CONTENTIONS

A study in political theory: An integrating exposition of the principles and postulates of the two socio-political ideologies; approved as general reading or college reference book by the Department of Education

ix

Part of the Labor Law-Labor Relations Series

by

C. A. AZUCENA, JR.

THE

LABOR CODEWITH COMMENTS

AND CASES

VOLUME II

Seventh Edition2010

856 Nicanor Reyes, Sr. St.Tel. Nos. 735-13-64 • 736-05-67

1977 C.M. Recto AvenueTel. Nos. 735-55-27 • 735-55-34

Manila, Philippineswww.rexinteractive.com

Published & Distributed by:

x

Philippine Copyright 1991, 1992, 1996, 1999, 2004, 2007, 2010by CESARIO ALVERO AZUCENA, JR.Practitioner, Professor, Bar Reviewer

Seventh Edition, 2010Nineteenth Year

US Library of CongressCall No. KPM1214.31974.A6 A956 1991

All rights reserved.No part of this book may be reproduced in any waywithout a written permission from the author.

Any copy of this book without the author’s signatureand a corresponding number on this page proceeds from an illegitimate source. Its possession by anyone is unauthorized.

PCPM Certifi cate of Registration No. SP 594

ISBN 978-971-23-5740-4

84 P. Florentino St., Quezon CityTel. Nos. 712-41-01 • 712-41-08

Printed by

rex printing company, inc.typography & creative lithography

xi

PREFACEKeeping Faith with Tradition

A book has to build and keep its own tradition. This seventh edition is an effort to do that.

Republic Act No. 9481 of 2007 amends a number of Labor Code articles to strengthen the self-organizational right of employees. Because of this law the Department of Labor and Employment had to make numerous changes to the rules implementing the law on labor relations, through Department Order No. 40-F-03 released in October 2008.

Aside from these legislative and administrative changes, sig-nifi cant rulings were also issued by the Supreme Court, affecting some statutory provisions and previous decisions. Among these are those declaring as unconstitutional Section 10 of R.A. No. 8042; the precedent-setting rulings on labor contracting and cooperatives; the debatable ruling on jurisdiction to determine employer-employee relationship; and again, the reversal of the ruling on the effect of employee’s defeat in an illegal dismissal case.

These developments—and many more—are all refl ected in this new edition.

Unchanged, however, are the underlying objective and the fea-tures and methodology of the book. The objective is to analyze and explain, as clearly and authoritatively as possible, the country’s labor law anchored to the Labor Code. The aim, in other words, is to build knowledge—at least to form cohesive and retainable understanding of concepts comprising a defi ned subject. This being the aim I have resisted (in this and the past editions) the easier work of merely rattling off court rulings without integrating or synthesizing them. The harder and more meaningful task is determining what materials to include, what to exclude, and how to tie them together, correctly and clearly, so as to create compact, graspable concepts. Those tasks this edition does. This book therefore continues to feature annotations consisting of authoritative explanations and court rulings, including the most signifi cant and recent ones. The codal articles and the annotations

xii

are linked, analyzed and synthesized objectively and academically.* Figuratively, my aim is not to scatter seedlings in a forest but to build a well-designed landscape with pathways and plants neatly lined up. The features and the methods of explanations, I hope, enhance the objective of offering accessible knowledge of Philippine labor law.

Because this has been the book’s mission since its birth some twenty years ago and because the book has been generously accepted in that light by generations of students, lawyers, and nonlawyers, this edition has to keep faith with that tradition.

All these twenty years, of course, I have always acknowledged my boundless debt of gratitude to my readers inside and outside the universities.

CAA

Mandaluyong City andSan Pablo CityLabor Day, 2010

*It should be the business of teachers to stand outside the strife of parties and endeavor to instill into the young the habit of impartial inquiry, leading them to judge issues on their merits and to be on their guard against accepting ex parte statements at their face value. The teacher should not be expected to fl atter the prejudices either of the mob or of offi cials. His professional virtue should consist in a readiness to do justice to all sides, and in an endeavour to rise above controversy into a region of dispassionate scientifi c investigation. If there are people to whom the results of his investigation are inconvenient, he should be protected against their resentment, unless it can be shown that he has lent himself to dishonest propaganda by the dissemination of demonstrable untruths.

BERTRAND RUSSELLUnpopular EssaysRoutledge, 1950(p. 129)

xiii

ToFather and Mother,my Lolita, Noel, Mylene, Carmen, and Bennet,my brothers and sisters,andthose of my clients and studentswho have inspired me,this work isgratefully dedicated.

Lawyer’s Formation

A lawyer’s professional life begins the day that he or she starts law school. This has not always been the case, of course, but today the fi rst place of almost every lawyer’s career consists of a period of time spent studying law in a formal academic program under the supervision of university professors. However diverse their professional experiences may be in other respects, there-fore, lawyers still share at least one thing in common: they have all been law students at one time or another, and it is as students that their professional habits fi rst take shape.

Anthony T. KronmanThe Lost Lawyer (1993)

p. 109

xiv

ABBREVIATIONS

Without meaning to be informal but only for ease and brevity, this text occasionally uses abbreviations, commonly known in labor relations practice, such as the following:

BLR Bureau of Labor RelationsBU Bargaining UnitBWC Bureau of Working ConditionsC.A. Commonwealth Act/Court of AppealsCBA Collective Bargaining AgreementCBL Constitution and By-lawsC.E. Certifi cation ElectionCNA Collective Negotiation AgreementCSC Civil Service CommissionD.O. Department OrderDOLE Department of Labor and EmploymentEBR Exclusive Bargaining RepresentativeE-E Employer-employee (Relationship)E.O. Executive OrderJC Job ContractingLA Labor ArbiterLLO Legitimate Labor OrganizationLMC Labor-Management Council/CommitteeLoC Labor-only ContractingM.O. Memorandum OrderMR Motion for ReconsiderationNCMB National Conciliation and Mediation BoardNLRB National Labor Relations Board (in U.S.)NLRC National Labor Relations CommissionNWPC National Wages and Productivity CommissionOSEC Offi ce of the SecretaryOWWA Overseas Workers’ Welfare AdministrationPD Presidential DecreePOEA Philippine Overseas Employment AuthorityR.A. Republic ActRD Regional DirectorRO Regional Offi ceRTWPB Regional Tripartite Wages and Productivity BoardTESDA Technical Education and Skills Development AuthorityTRO Temporary Restraining OrderVA Voluntary ArbitrationVR Voluntary RecognitionWA Workers’ AssociationWO Wage Order

xv

THELABOR CODE

OF THEPHILIPPINES

Presidential Decree No. 442

A DECREE INSTITUTING A LABOR CODE, THEREBYREVISING AND CONSOLIDATING LABOR ANDSOCIAL LAWS TO AFFORD PROTECTION TOLABOR, PROMOTE EMPLOYMENT AND HUMANRESOURCES DEVELOPMENT AND ENSUREINDUSTRIAL PEACE BASED ON SOCIAL JUSTICE.

As AmendedBy Presidential Decree

Nos. 570-A, 626, 643, 823, 819, 849, 850, 865-A891, 1367, 1368, 1391, 1412, 1641, 1691, 1692

1693, 1920, 1921

Batas PambansaBlg. 32, 70, 130 and 227

Executive OrderNos. 47, 111, 126, 179, 180, 203, 247, 251, 252, 307,

797

and

Republic ActNos. 6640, 6657, 6715, 6725, 6727, 7641, 7655, 7700,7730, 7796, 8042, 8188, 8558, 9177, 9256, 9347, 9481

WITHCOMMENTS AND CASESIMPLEMENTING RULES

APPENDICES

xvi

STRUCTURE

VOLUME I contains the Preliminary Title and Books I to IV of the Labor Code:

PART ONE — The Labor Code with Annotations

Preliminary Title

Book I — Pre-employment

Book II — Human Resources Development

Book III — Conditions of Employment

Book IV — Health, Safety and Social Welfare Benefi ts

PART TWO — Rules Implementing the Labor Code

Appendix

VOLUME II covers Book V to VII of the Labor Code:

PART ONE — The Labor Code with Annotations

Book V — Labor Relations

Book VI — Post-employment

Book VII — Transitory and Final Provisions

PART TWO — Rules Implementing the Labor Code

xvii

TABLE OF CONTENTS Volume II

Preface, xiAbbreviations, xivStructure, xvi

Part One Part One THE LABOR CODE WITH ANNOTATIONSTHE LABOR CODE WITH ANNOTATIONS

BOOK FIVE — LABOR RELATIONS

“The Best Prescription”, 4“The True Union Leader”, 4“Can the Labor Union Survive?”, 5“What Stunts Progress”, 6“Genesis of Industrial Peace”, 7“Dismissal Frowned Upon”, 8 “Equalizing force”, 8

Title I — POLICY AND DEFINITION

Chapter I — POLICY

Art. 211. Declaration of Policy, 9

Comments and Cases

1. Overview and Viewpoint, 10 2. Workers’ Organization, 13 3. Why Workers Organize, 13 4. ILO Convention No. 87, 14 5. Workers’ Participation in Policy-Making, 15

Chapter II — DEFINITIONS

Art. 212. Defi nitions, 16

Comments and Cases

1. Employer-Employee Relationship Essential, 18 2. Who are Employees, 19 2.1 “One Whose Work Has Ceased...”, 20 3. Labor Organization As Employer, 20 4. Labor Dispute, 21 5. Labor Disputes and Remedies: A Summary, 22

xviii

5.1 Defi nition, 22 5.2 Tests or Criteria of “Labor Dispute”, 23 5.3 Kinds of Labor Disputes, 23 5.4 Remedies in Labor Disputes, 24

Title II — NATIONAL LABOR RELATIONS COMMISSION

Chapter I — CREATION AND COMPOSITION

Art. 213. National Labor Relations Commission, 27

Art. 214. Headquarters, Branches and Provincial Extension Units, 29

Comments and Cases

1. NLRC: Nature and Organization, 29 1.1 Creation and Autonomy, 29 1.2 Administrative Supervision Delegated to the DOLE Secretary, 30 1.3 Essential Character, 30 1.4 Tripartite Composition, 31 1.5 Allocation of Powers Between NLRC En Banc and Its Divisions, 31 1.6 The NLRC Rules of Procedure, 32

Art. 215. Appointment and Qualifi cations, 32

Comments

Requiring Confi rmation by Commission on Appointments, Unconstitutional, 33

Art. 216. Salaries, Benefi ts, and Other Emoluments, 33

Chapter II — POWERS AND DUTIES[Part 1. JURISDICTION]

Art. 217. Jurisdiction of Labor Arbiters and the Commission, 34

Comments and Cases

1. Additional Cases, 35 2. Compulsory Arbitration By Labor Arbiters, 35 2.1 NLRC Appellate Proceedings Not Part of Arbitration, 35 2.2 Nature of Proceedings, 36 2.3 Article 217 Yields to Arts. 261 and 262, 36 3. Labor Arbiter’s Jurisdiction, in General, 37 3.1 Supervisory Control, Crucial, 37 4. Venue, 38 4.1 Worker’s Option, 39 4.2 Waiver, 40 5. Labor Arbiter’s Jurisdiction: U.L.P. Cases, 40 6. CBA Violation amounting to ULP, 41 7. Labor Arbiter’s Jurisdiction: Termination Disputes, 41

xix

7.1 Termination of Corporate Offi cer; Jurisdiction Over Intra-Corporate Disputes Transferred from SEC to RTC, 43 7.2 Effect of Claim for Backwages, Benefi ts, or Damages, 45 7.3 Mainland vs. Movilla: The “Better Policy” in Determining SEC Jurisdiction, 46 7.4 Tabang vs. NLRC: SEC Jurisdiction Reaffi rmed; Corporate Offi cer and Intra-Corporate Controversy Defi ned, 47 7.5 When Bank Offi cer May be a Regular Employee, 50 8. Labor Arbiter’s Jurisdiction: Money Claims, 50 8.1 Only Money Claims Not Arising from CBA, 51 8.2 Money Claims Must Have Arisen from Employment, 51 8.3 Money Claims of Coop Employees, 53 8.4 Jurisdiction Over Claims for Damages, 54 8.5 Splitting of Actions Not Allowed, 54 8.6 Employer’s Complaint for Damages, 55 9. Labor Arbiter’s Jurisdiction: Strikes and Lockouts, 55 10. Labor Arbiter’s Jurisdiction: OFW’s Money Claims or Dismissal, 56 11. Labor Arbiter’s Jurisdiction: Wage Distortion, 57 12. Labor Arbiter’s Jurisdiction: Disputes over Compromise Settlements, 57 13. Submission to Jurisdiction, 58 14. Immunity of Foreign Governments, 59 14.1 Immunity of the UN and Its Specialized Agencies, 59 15. Executing Money Claims Against the Government, 60 16. Local Water District, 61 16.1 Exception: Where NLRC Jurisdiction is Invoked, 62 17. Republic Act No. 6715 – Retroactive?, 63

[Part 2. POWERS]

Art. 218. Powers of the Commission, 64

Art. 219. Ocular Inspection, 67

Comments and Cases

1. Powers of the Commission, 67 1.1 Rule-Making Power, 67 1.2 Power to Issue Compulsory Processes, 67 1.3 Power to Investigate and Hear Disputes Within Its Jurisdiction, 67 1.4 Contempt Power, 68 1.5 Power to Conduct Ocular Inspection, 68 1.6 Adjudicatory Power: Original, 68 1.7 Adjudicatory Power: Appellate, 69 2. Power to Issue Injunction or Temporary Restraining Order, 70 2.1 Injunction by Labor Arbiter, 71 2.2 Requisites for Issuance of Restraining Order or Injunction, 72 2.3 Conditions for Issuance Ex Parte of a Temporary Restraining Order (TRO), 72

xx

2.4 No Adequate Remedy, 74 2.5 Cash Bond, 74 2.6 Scope, 75 2.7 Reception of Evidence, 75 2.8 Twenty-day Life of TRO, 76 2.9 Illustrative Case: Issuance of TRO, 76 2.10 Injunction from NLRC Not the Proper Remedy Against Employee’s Dismissal, 77

[Part 3. PROCEDURE]

Art. 221. Technical Rules Not Binding and Prior Resort to Amicable Settlement, 79

Comments and Cases

1. Proceedings Before Labor Arbiter or the Commission; Technical Rules Not Applicable, 79 1.1 Modicum of Admissibility; Substantial Evidence, 80 1.2 Cardinal Rights in Quasi-Judicial Proceedings, 80 1.3 Verifi cation, 82 1.4 Party Respondent, 83 1.5 Prohibited Pleadings and Motions, 84 2. Mandatory Conciliation and Mediation Conference; Compromise Encouraged, 84 2.1 Binding Effect of Compromise Agreement, 86 2.2 Quitclaim and Waivers, 87 2.2a Final and Executory Judgment Cannot be Negotiated, 89 3. Motion to Dismiss, 89 3.1 Motu Propio Dismissal of Complaint Based on Prescription, 90 3.2 Res Judicata as Reason to Dismiss Complaint, 90 3.3 No Dismissal of Complaint Despite Death, 91 3.4 Revival or Refi ling of Dismissed Case, 91 4. Submission of Position Papers and Reply, 92 4.1 Determination of Necessity of Hearing or Clarifi catory Conference, 92 4.2 Role of the Labor Arbiter in Hearing and Clarifi catory Conference, 92 4.3 Non-appearance of Parties; Postponement of Hearing and Clarifi catory Conferences, 92 5. Submission of the Case for Decision, 93 5.1 Position Papers as Basis of Decision, 93 5.2 Lack of Verifi cation, Not Fatal, 94 5.3 Due Process: Opportunity To be Heard, 94 5.4 Inhibition, 95 5.5 Due Process Includes Impartiality of the Appeal Body, 95 6. Suspension of Proceedings, 96 7. Filing and Service of Pleadings and Decisions, 97 7.1 Service of Notice and Resolutions, 97

xxi

7.2 Proof and Completeness of Service, 98 8. Resolution of Doubt in Law or Evidence, 99 9. Decision of Labor Arbiter, 101 9.1 Contents of Decisions, 101 9.2 No Motions for Reconsideration and Petitions for Relief from Judgment, 101“Not Automatically in Favor of Labor”, 102

Art. 222. Appearances and Fees, 102

Comments and Cases

1. Appearance of Non-lawyers, 102 2. Change of Lawyer, 103 3. Authority to Bind Party, 104 4. Attorney’s Fee, 105 4.1 Negotiation Fee, 105 4.2 For Services Rendered by Union Offi cers, 106 4.3 Attorney’s Fee Collectible Only from Union Funds, 106

Chapter III — APPEAL

Art. 223. Appeal, 108

Comments and Cases

1. No Motion for Reconsideration of Labor Arbiter’s Decision, 109 1.1 Final Decisions Cannot be Amended, 109 2. Period to Appeal from Labor Arbiter, 110 2.1 Ten Calendar Days, 110 2.2 Ten-Calendar-Day Rule Not Applicable Prior to Vir-Jen Case, 111 2.3 Under the 2005 NLRC Rules of Procedure, 111 2.4 Date of Receipt by Mail, 111 2.5 Failure to Give Copy of Appeal to Adverse Party Within Ten Days, 111 2.6 No Extension of Period, 112 2.7 Periods Generally Mandatory, 112 3. Grounds of Appeal, 112 4. Where to File Appeal, 113 5. Requisites for Perfection of Appeal, 113 6. Frivolous Appeal, 113 6.1 Unverifi ed Letter Not Proper Appeal, 114 7. Payment of Appeal Fees, 114 8. Appeal Bond; Filing on Time; Exceptions, 115 8.1 Motion to Reduce Bond under NLRC Rules, 118 8.2 No Bond, No Appeal Perfected, 118 8.2a Relaxing the Ten-Day Period, 119 8.3 No Distinction Between “Filing” and “Perfection” of Appeal; Star Angel Decision, Not “Venerable”, 119 8.4 Amount of Appeal Bond Excludes Damages, 120

xxii

8.5 Is Property Bond Acceptable, 120 8.6 Bond Accepted Conditionally, 121 8.7 Supersedeas Bond, 121 9. Records and Transmittal, 121 10. Effect of Appeal of Arbiter’s Decision, 122 10.1 Execution or Reinstatement Pending Appeal, 122 10.2 Effect of Perfection of Appeal on Execution, 122 11. Frivolous or Dilatory Appeals, 122 12. Appeals from Decisions of other Agencies, 122 13. Proceedings Before the Commission, 123 13.1 Issues on Appeal, 124 13.2 Technical Rules Not Binding, 124 13.2a Evidence Submitted on Appeal to NLRC, 124 13.3 Conciliation/Mediation, 125 13.4 Consultation, 125 13.5 Dissenting Opinion, 125 13.6 Inhibition, 126 14. Form of Decision, Resolution and Order, 126 14.1 Reasoned Reversal, 126 14.2 Extended Meaning of “Appeal” under Article 223; NLRC May Issue Writ of Certiorari, 127 15. Finality of Decision of the Commission and Entry of Judgment, 128 16. Motions for Reconsideration, 128 16.1 Party who Failed to Appeal on Time From Decision of Labor Arbiter may Still File Motion for Reconsideration of NLRC Decision, 128 17. Certifi ed Cases, 129 18. Appeal from the National Labor Relations Commission, 129 18.1 Review by Certiorari by the Court of Appeals; the St. Martin case, 129 18.2 When and Where to File Petition, 131 18.2a One Day Late, 132 18.2b Certifi ed True Copy of NLRC Decision, 132 18.3 Effect on NLRC’s Decision, 132 18.4 Appeal to Labor Secretary Abolished, 132 18.5 Grounds for Certiorari, 132 18.6 “Grave Abuse of Discretion”, 133 18.7 Sole Offi ce of Certiorari, 133 18.8 Not a Slave to Technical Rules, 134 18.9 Appeal from OSEC to CA; St. Martin Ruling Applies, 135 18.10 Exhaustion of Administrative Remedies; Motion for Reconsideration Required, 136 18.10a Exceptions, 136 19. Certifi cate of Non-Forum Shopping, 138 19.1 Certifi cation of Nonforum Shopping Must be Made by Petitioner, 139 20. Disposition by the Court of Appeals, 140

xxiii

20.1 Remand, 140 20.2 Dismissal of Appeal, 140 20.3 Findings of Facts Generally Final, 141 20.4 Exceptions, 141 20.5 Examples: Some Findings of Facts Reversed, 142 21. From CA to SC; Only Question of Law, Rule 45, 143“Faster Disposition of Appealed Cases”, 144

Art. 224. Execution of Decisions, Orders, or Awards, 145

Comments and Cases

1. Execution, 145 1.1 Both Party and Counsel Should Be Notifi ed, 146 1.2 Article 244 is Execution, Not Appeal, Procedure, 146 2. Execution upon Finality of Decision or Order, 146 3. Appeal on the Execution of Decision; Supervening Events, 148 4. General Rule: Regional Trial Court Cannot Issue Injunction Against NLRC, 150 4.1 Execution Over Property Owned Only by Judgment Debtor; Remedies of Third-Party Claimant; the Yupangco Case, 151 4.2 RTC Injunction Against Labor Arbiter or NLRC, When Allowed, 154 4.3 Third Party Claim, 156 4.4 Simulated Sale, Void Ab Initio, 156

Art. 225. Contempt Powers of the Secretary of Labor, 157

Title III — BUREAU OF LABOR RELATIONS

Art. 226. Bureau of Labor Relations, 158

Comments and Cases

1. BLR Jurisdiction and Functions, 158 2. Inter-Union and Intra-Union Disputes; D.O. No. 40-03, 159 2.1 D.O. No. 40-03, 160 2.2 Effect of Pendency, 160 2.3 Appeal, 161 3. Extent of BLR Authority, 162 4. Katarungang Pambarangay, Not Applicable to Labor Disputes, 163

Art. 227. Compromise Agreements, 163

Comments and Cases

1. Compromise Agreements, 164 2. Formal Requirements of Compromise Agreement, 165 3. Valid Compromise and Quitclaim, 165 4. Compromise Should Be Duly Authorized, 167 5. Rulings on Compromise Settlements Summarized, 169 6. When to Effect Compromise: Final Decision, Negotiable?, 170

xxiv

6.1 The defi nitive Ruling: Magbanua vs. Uy, 170 6.2 Absence of Counsel Remedied, 172 6.3 Reiteration, 172 7. Options When Compromise Agreement is Violated, 173

Art. 228. Indorsement of Cases to Labor Arbiters (Repealed by Batas Pambansa Blg. 230), 173

Art. 229. Issuance of Subpoenas, 173

Art. 230. Appointment of Bureau Personnel, 174

Art. 231. Registry of Unions and File of Collective Agreements, 174

Comments and Cases

Registry of Unions and CBAs, 174

Art. 232. Prohibition on Certifi cation Election, 175

Comments

The Contract-Bar Rule, 175

Art. 233. Privileged Communication, 176

Title IV — LABOR ORGANIZATION

Chapter I — REGISTRATION AND CANCELLATION

Art. 234. Requirements of Registration, 177

Art. 234-A. Chartering and Creation of a Local Chapter, 178

Art. 235. Action on Application, 178

Art. 236. Denial of Registration; Appeal, 178

Art. 237. Additional Requirements for Federations or National Unions, 178

Art. 238. [Repealed by EO 111, December 24, 1986], 179

Comments and Cases

1. Labor Organization; Two Broad Purposes, 179 1.1 Distinction between “Collective Bargaining” and “Dealing with Employer”, 180 1.2 Labor Organization Not Necessarily a Union, 181 2. Classifi cation of Labor Organizations, 181 2.1 At the National Level, 181 2.2 At the Enterprise Level, 182 2.3 Recent Changes by R.A. No. 9481, 183 3. Registration Rationale, 185 3.1 Effect of Registration Under the Corporation Law, 186 4. Where to Register, 186 5. Registration Requirements, 186 5.1 Federation or National Union, 186

xxv

5.2 Independent Labor Union, 187 5.3 Worker’s Association, 188 5.4 Chartered Local, 188 5.4a Chartered Local has to be Registered; Requirements, 188 5.4b Legal Personality only to File a PCE, 189 5.4c Submission of Confi rming Documents, 189 5.4d A Trade Union Center cannot Create a Chapter, 189 5.4e When does a Chapter Become an LLO?, 190 5.4f Recognition by BLR not a Ministerial Duty, 190 5.4g Requirements Relaxed, 192 5.5 Union’s Legitimacy not Subject to Collateral Attack, 192 6. Collective Bargaining Unit (CBU), 192 7. Constitution, By-Laws, and Regulations, 193“Some Reasons For Joining A Union”, 195 7.1 Limitation to By-laws, 196 7.2 Amendments, 196 8. Provisions Common to the Registration of Labor Organizations and Workers’ Association, 196 8.1 Attestation, Fee, Copies of Documents, 196 8.2 Action on the Application/Notices, 196 8.3 Denial of Application/Return of Notice, 197 8.4 Appeal, 197 9. Affi liation, 197 9.1 Report of Affi liation; Requirements, 198 10. Disaffi liation, 199 10.1 Local Union is the Principal; Federation, the Agent, 201 10.2 When to Disaffi liate, 201 10.3 Disaffi liation Must be by Majority Decision, 202 10.4 Disaffi liation: Effect on Legal Status, 203 10.5 Disaffi liation: Effect on Union Dues, 203 10.6 Disaffi liation; Effect on Existing CBA; the “Substitutionary” Doctrine, 204 11. Revocation of Charter, 204 11.1 Effect of Cancellation of Registration of Federation or National Union on Locals/Chapters, 204 12. Merger or Consolidation, 205 12.1 Notice of Merger/Consolidation of Labor Organizations; Where to File, 206 12.2 Requirements of Notice of Merger/Consolidation, 206 12.3 Certifi cate of Registration, 207 13. Change of Name, 207 13.1 Effect of Change of Name, 207

Art. 238. Cancellation of Registration, 207

Art. 238-A. Effect of Petition for Cancellation of Registration, 207

Art. 239. Grounds for Cancellation of Union Registration, 208

xxvi

Art. 239-A. Voluntary Cancellation of Registration, 209

Comments and Cases

1. Cancellation of Registration; Grounds, 209 1.1 Invalid Grounds, 209 1.2 “Cabo” and other Grounds Deleted, 210 1.3 Administrative Cancellation; the “reportorial requirements”, 210 2. Who Files Petition for Cancellation, 211 3. Where to File Petition, 212 4. Procedure, 212

Art. 240. Equity of the Incumbent, 212

Chapter II — RIGHTS AND CONDITIONS OF MEMBERSHIP

Art. 241. Rights and Conditions of Membership in a Labor Organization, 213

Comments and Cases

1. Democratization of Unions, 216 2. Nature of Relationship Between Union and Its Members, 216 2.1 Duty of Court to Protect Laborers from Unjust Exploitation by Oppressive Employers and Union Leaders, 217 3. Rights of Union Members, 217 3.1 Eligibility for Membership, 218 4. Election of Union Offi cers, 218 4.1 Eligibility of Voters, 220 4.2 Union Offi cer Must Be an Employee, 221 4.3 Disqualifi cation of Union Offi cers, 221 4.4 Union Election Protest: Proclamation of Winners, 222 5. Action Against Union Offi cers, 222

“Rights of Union Members”, 222

6. Due Process in Impeachment, 223 7. Expulsion of Member, 224 8. Relief Within the Union, 226 8.1 Exceptions, 227 9. Consequence of Violation of Rights, 227 9.1 Exception: When 30% Not Required, 228 10. Visitorial Power, 229 11. Check-Offs and Assessments, 229 11.1 Assessments, Like Dues, May also be Checked Off, 229 11.2 Three Requisites to Collect Special Assessment, 232 11.2a Article 241 (n and o): Authorization Should Proceed from Free Consent, 232

xxvii

11.3 Check-Off of Agency Fee, 233 11.4 Illegal Check-Off Ground for Cancellation, 233 11.5 Employer’s Liability in Check-Off Arrangement, 233 11.6 Jurisdiction Over Check-Off Disputes, 234

Chapter III — RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS

Art. 242. Rights of Legitimate Labor Organizations, 235

Comments and Cases

1. Not Any L.L.O., 236 2. Right of Union to Represent Its Members, 236 2.1 Members Doubting their Union, 237 3. Compromise Binding Upon Minority Members of Union; Exception, 237 4. Compromise of Money Claims, 238 5. Right to be Furnished with Financial Statement, 239 6. Right to Collect Dues, 239

Art. 242-A. Reportorial Requirements, 239

Title V — COVERAGE

Art. 243. Coverage and Employees’ Right to Self-Organization, 241

Comments and Case

1. Organizing in General, 241 1.1 Coverage of the Right to Organize; Exceptions, 242 2. Right to Organize Cannot be Bargained Away, 242 3. Employees of Nonprofi t Institutions, 243 4. Exception: Employee-Members of a Cooperative, 243“A Fundamental Human Right”, 244 4.1 Exception to Exception: Association, Not Union, 245 5. Exception: International Organizations, 245 5.1 Waiver of Immunity, 246 5.2 Foreign Workers, 246 6. Exception: Religious Objectors; Iglesia ni Kristo Members, 247 6.1 Does the Exemption Still Stand?, 248 6.2 Iglesia ni Kristo Members May Form and Join Own Union, 249

Art. 244. Right of Employees in the Public Service, 249

Comments and Cases

1. Government Employees’ Right to Organize; Limitations, 249 1.1 Limited Purpose, 251 1.2 No Signing Bonus, 251 1.3 Excepted Employees, 252 1.3a Professors as Rank-and-File Employees, 252 1.4 Right to Strike, 254

xxviii

2. Registration, 254 3. Certifi cation Election in Government Corporation, 255 3.1 Election of Offi cers in Government Unions, 255 4. When PSLMC May Rule on Legality of Dismissal, 256 5. Union-busting in a Government Agency, U.L.P., 256 5.1 Even Temporary Employees May Organize, 257

Art. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees, 257

Art. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit, 257

Comments and Cases

1. Categories of Employees, 258 2. Ineligibility of Managers, 258 2.1 Types of Managerial Employees, 258 2.2 Constitutionality of the Prohibition, 260 2.2a Other Opinions, 261 3. Evolution of Supervisors’ Right to Organize, 262 3.1 First Period: Under the Industrial Peace Act, 262 3.2 Second Period: Under the Labor Code Before Amendment by R.A. No. 6715, 263 3.3 Third Period: Under the Labor Code as Amended by R.A. 6715, 263 4. Defi nitions of Manager and Supervisor, 264 5. Test of Supervisory Status, 265 5.1 The Power to Recommend, 266 5.2 Examples of Ineffective or Clerical Recommendation, 267 5.3 Managers or Supervisors: Under the ILO Convention, 267 6. Segregation of Rank-and-File and Supervisors, 267 6.1 Effects of Having Mixed Membership, 268 6.2 Affi liation of Supervisors and Rank-and-File Unions, 269 7. Confi dential Employees, 269 7.1 First Swing: Inclusion Among Rank-and-File, 269 7.2 Second Swing: Exclusion from Rank-and-File, 270 7.3 Third Swing: Inclusion Among Supervisors, 270 7.4 Fourth Swing: Inclusion Among Monthly Paid Rank- and-File, 271 7.4a Limited Exclusion; Doctrine of Necessary Implication, 272 7.4b The Metrolab and Meralco Summations: Exclusion from bargaining unit and Closed-shop Clause, 273 7.4c Who are Confi dential Employees?, 275 7.4d The Labor Nexus, 276 7.4e New CBA may Include Employees Excluded from old CBA; Expired CBA may be Modifi ed, not just Renewed, 277

xxix

8. Security Guards, May Join Rank-and-File on Supervisor Union, 278 9. Workers in Export Processing Zones, 278

Art. 246. Nonabridgment of Right to Self-Organization, 279

Comments

1. Concept of the Right to Self-Organization, 279

Title VI — UNFAIR LABOR PRACTICES

Chapter I — CONCEPT

Art. 247. Concept of Unfair Labor Practice and Procedure for Prosecution Thereof, 281

Comments and Cases

1. Concept of Unfair Labor Practice, 282 1.1 Elements, 283 1.2 Prejudice to Public Interest not an Element of U.L.P, 284 2. Prosecution of U.L.P., 284“Right Culture — Instead of Anti-Unionism”, 285

Chapter II — UNFAIR LABOR PRACTICES OF EMPLOYERS

Art. 248. Unfair Labor Practices of Employers, 286

Comments and Cases

1. Conditions Precedent to U.L.P. Charge, 287 1.1 Historical Evidence of the Link, 288 2. ILO Convention No. 98, 289 3. No U.L.P: Illustrative Instances of Valid Exercise of Management Rights, 290 3.1 Personnel Movements, 290 3.2 Acceptance of Mass Resignation, 291 3.3 Grant of Profi t-Sharing Benefi ts to Non-Union Members, 292 3.4 Forced Vacation Leave, 293 3.5 Issuance of Rules or Policy, 293 3.6 Taking Action Against Slowdown, 294 4. Determination of Validity, 295 5. First U.L.P. Interference (Art. 248[a]), 295 5.1 Interrogation, 297 5.2 U.L.P Even Before Union is Registered, 297 5.3 Prohibiting Organizing Activities, 298 5.4 Violence or Intimidation, 299 5.5 Espionage and Surveillance, 300 5.6 Economic Inducements, 300 5.7 Employer’s Expression of Opinion; Totality of Conduct Doctrine, 300 5.8 Mass Layoff Amounting to U.L.P., 302 5.9 Lockout or Closure Amounting to U.L.P., 303 5.9a Sale in Bad Faith, 304

xxx

5.9b Assumption of Obligation by New Company, 305 5.10 Successor Employer; Piercing the Corporate Veil, 305 6. Second U.L.P.: “Yellow Dog” Condition (Art. 248[b]), 307 7. Third U.L.P.: Contracting Out (Art. 248[c]), 307 7.1 Contracting Out Restricted by CBA, 309 7.2 Runaway Shop, 310 8. Fourth U.L.P.: Company-domination of Union (Art. 248[d]), 312 9. Fifth U.L.P.: Discrimination (Art. 248[e]), 314 9.1 Discrimination in Work Quota, 315 9.2 Discrimination in Bonus Allocation or Salary Adjustments, 315 9.3 Discrimination in Layoff or Dismissal, 316 9.4 Discrimination in Regularization, 316 9.5 Discrimination by Blacklisting, 317 9.6 Indirect Discrimination, 318 9.7 Test of Discrimination, 318 9.8 Constructive Discharge, 320 9.9 Discharge Due to Union Activity, A Question of Fact, 320 9.10 Valid Discrimination: Union Security Clause, 320 9.10a Kinds of Union Security Agreements, 321 9.10b Validity of Closed-Shop Agreement, 322 9.10c Advantages and Disadvantages of Closed-Shop Agreement, 323 9.10d Valid Dismissal Because of Application of Union Security Clause, 324 9.10e Dismissal Pursuant to Closed-Shop Clause Must Clearly Appear in Contract, 326 9.10f Due Process Required in Enforcing Union Security Clause; Intra-union Matter becomes Termination Dispute with Employer, 327 9.10g Liability of Union to Pay Wages and Fringe Benefi ts of Illegally Dismissed Employee, 328 9.10h Employer in Good Faith Not Liable, 329 9.10i Closed-Shop, To Whom Not Applicable, 329 9.10j Agency Fee Instead of Union Membership, 330 10. Sixth U.L.P.: Discrimination Because of Testimony (Art. 248[f]), 330 10.1 Refusal to Testify, 331 10.2 Labor Standards Violation May Lead to a Strike, 332 11. Seventh U.L.P.: Violation of the Duty to Bargain (Art. 248[g]), 332 12. Eighth U.L.P.: Paid Negotiation (Art. 248[h]), 333 13. Ninth U.L.P.: Violation of the CBA (Art. 248[i]), 333 14. Relief in U.L.P. Cases, 333 14.1 Cease and Desist Order, 333 14.2 Affi rmative Order, 334 14.3 Order to Bargain; Mandated CBA, 334 14.4 Disestablishment, 334 15. U.L.P. Not Subject to Compromise, 335

xxxi

16. U.L.P. in a Given Period Should Be Included in Single Charge, 335 17. Employer’s Responsibility for U.L.P. Acts by Subordinate Offi cials, 335

Chapter III — UNFAIR LABOR PRACTICES OF LABOR ORGANIZATIONS

Art. 249. Unfair Labor Practices of Labor Organizations, 337

Comments and Cases

1. Restraint or Coercion by Labor Organization; Interference by Union is Not ULP, 338 1.1 Coercing Participation in Strike, 338 2. Union-Induced Discrimination, 339 2.1 Arbitrary Use of Union Security Clause, 339 2.2 Not Disloyalty to Ask Help from Another Union, 342 3. Refusal to Bargain, 342 4. Featherbedding and Make-Work Arrangements, 343 5. CBA Deal with Employer, 343

Title VII — COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT

[Part 1. COLLECTIVE BARGAINING CONCEPT AND PROCEDURE]

Art. 250. Procedure in Collective Bargaining, 344

Art. 251. Duty to Bargain Collectively in the Absence of Collective Bargaining Agreements, 345

Comments and Cases

1. Nature of Collective Bargaining, 345 1.1 Defi nition, 345 1.1a CBA Defi ned, 346 1.2 Rationale, 346 1.3 Strength of the Collective Bargaining Method, 347 2. Emergence of Collective Bargaining, 348 2.1 Originator, 349 2.2 Adoption in the Philippines, 349 “The Status of Free Men”, 350 3. Parties to Collective Bargaining, 351 4. Jurisdictional Preconditions of Collective Bargaining, 351 4.1 Bargaining with Minority Union, ULP, 352 5. When Bargaining Should Begin, 353 6. Single Enterprise Bargaining Procedure Broadly Described, 354 7. Multi-Employer Bargaining, 354 7.1 Rationale of Multi-employer Bargaining, 355 7.2 Multi-employer Bargaining Procedure, 356 7.3 Unfavorable to Consumers?, 358 7.4 Optional, 358

xxxii

Art. 252. Meaning of Duty to Bargain Collectively, 359

Art. 253. Duty to Bargain Collectively When There Exists a Collective Bargaining Agreement, 359

Comments and Cases

1. Duty to Bargain Defi ned, 360 1.1 Four Forms of ULP in Bargaining, 360 2. First ULP in Bargaining: Failure or Refusal to Meet and Convene, 361 2.1 Unresolved Petition for Union Cancellation, 361 2.2 Selling the Company, 362 2.3 Successor Employer: Continuity and Identity, 363 2.4 Conversion to Independent Franchise or Operation, 364 2.5 Do Economic Exigencies Justify Refusal to Bargain?, 364 2.6 Acts not Deemed Refusal to Bargain, 365 2.7 Alleged Interference in the Selection of the Union’s Negotiating Panel, 367 2.8 Non-reply to Proposal; CBA Imposed on Employer, 367 2.8a Repetition in Divine Word University, 368 3. Second U.L.P. in Bargaining: Evading the Mandatory Subjects, 369 3.1 Wages and Employment Conditions, 369 3.1a Wage Factors; “Solomonic” Approach, 371 3.2 Workloads and Work Rules, 372 3.2a Code of Conduct, 372 3.3 Management Prerogatives Clause, 372 3.4 Union Discipline Clause, 373 3.5 Arbitration, Strike-Vote, or No-Strike Clauses, 373 3.6 No-Lockout Clause; Clause Fixing Contractual Term, 373 3.7 Signing Bonus, 373 3.8 Voluntary Benefi ts, 374 3.9 No Duty to Agree Even on Mandatory Subjects, 374 3.10 Non-mandatory Subjects, 375 3.11 Bargaining to the Point of Impasse: Not Necessarily Bad Faith, 375 3.12 When Is There Deadlock or Impasse?, 377 3.12a Duty to Bargain When There is Deadlock or Impasse, 377 3.12b Strike or Lockout in Case of Deadlock, 378 4. Third ULP in Bargaining: Bad Faith, 379 4.1 Determination of Good Faith, 379 4.2 When Can Bargaining in Bad Faith Occur?, 380 4.3 Instances of Bad Faith: Delay of, or Imposing Time Limit on, Negotiations, 381 4.3a Bad Faitth: Surface Bargaining; Shifting Bargaining Positions; Blue Sky Bargaining, 384 4.3b Bad Faith: Infl exible Demands; Strike Amid Negotiation, 386 4.3c Bad Faith: Bloulwarism; Take-It-or-Leave-It Bargaining, 387

xxxiii

4.4 Not Bad Faith to Propose Modifi cations to the Expiring CBA, 388 4.5 Giving of Information, 388 5. Fourth ULP in Bargaining: Gross Violation of the Contract, 390 6. Ratifi cation by the CBU; Mandatory Requirements, 390 6.1 Invalid Ratifi cation, 390 6.2 When Ratifi cation Not Needed, 391 6.3 Ratifi ed but Unsigned, 392 6.4 Unratifi ed but Implemented, 392 7. Execution of Contract, 392 7.1 Unwritten or Unsigned Agreement, 393 7.2 Effect of Signing on Other Disputes, 393 8. Registration of CBA, 393“Management’s Negotiation Strategy”, 394 8.1 Registration Requirements, 395 9. Implementation, then Renegotiation, 395 10. Automatic Renewal of CBA, 396

Art. 253-A. Terms of a Collective Bargaining Agreement, 399

Comments and Cases

1. Effectivity and Retroactivity, 399 1.1 Effectivity of CBA Concluded After Six Months from Expiration of Old CBA, 400 2. Duration of a C.B.A., 401 3. Extension of Effectivity of CBA, When Valid, 405 3.1 Ten-year Suspension of CBA, 405

Art. 254. Injunction Prohibited, 407

Comments and Cases

1. No Injunction Policy, 407 1.1 Reason of the No-Injunction Policy, 408 1.2 Injunction Issued by Regular Court, When Proper, 409“Social Dumping/Concession Bargaining”, 410

Title VII — COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT

[Part 2. EMPLOYEE PARTICIPATION AND REPRESENTATION]

Art. 255. Exclusive Bargaining Representation and Workers’ Participation in Policy and Decision-Making, 411

Comments and Cases

1. Workers’ Participatory Right: Its Constitutional Meaning, 412 1.1 Employees’ Participation in Formulating the Code of Discipline, 415 2. Workers’ Participation as the Real Objective: The LMC, 417 2.1 Department’s Promotion of LMC and Other Councils, 418

xxxiv

3. Individual Grievance, 419 4. Collective Bargaining Unit (CBU) Defi ned, 419 5. Appropriateness of Bargaining Unit; Factors Considered, 420 5.1 Bargaining History Not Decisive Factor, 422 5.2 Exclusion of Confi dential Employees, 423 5.3 Temporary or Part-Time Employees, 423 5.4 Seasonal Employees, 424 5.5 Probationary Employees, 424 6. Referendum Where Interests Are Dissimilar, 424 6.1 Desire of the Employees; The Globe Doctrine, 425 7. Single or “Employer Unit” is Preferred, 426 7.1 Exceptions to One-unit Policy, 426 8. Two Companies with Related Businesses, 427 8.1 Subsidiaries and Spun-off Corporations, 429 9. Summation of Signifi cance, 430

Art. 256. Representation Issue in Organized Establishments, 431

Art. 257. Petitions in Unorganized Establishments, 431

Art. 258. When an Employer May File Petition, 432

Art. 258-A. Employer as Bystander, 432

Art. 259. Appeal From Certifi cation Election Orders, 432

Comments and Cases

1. Determining the Bargaining Union: Overview of the Methods, 432 2. First Method: Voluntary Recognition (V.R.), 434 2.1 V.R. Under D.O. No. 40-03, 434 3. Second Method: Certifi cation Election (C.E.), 436 3.1 Fact-Finding, 436 3.1a Certifi cation Election Differentiated from Union Election, 437 3.2 Direct Certifi cation No Longer Allowed, 438 3.3 Who Files Petition for Certifi cation Election (PCE), 438 3.3a Intervention, 439 3.4 Where to File the PCE, 440 3.5 When to File the PCE, 440 3.6 Form and Contents of Petition, 441 3.7 Action on the Petition; Preminary Conference, 442 3.8 Action on the Petition; Hearings and Pleadings, 442 3.9 Action on the Petition: Denial; Eight Grounds, 443 3.9a First Ground: Non-appearance, 444 3.9b Second Ground: Illegitimacy: Unregistered Union, 445 3.9c Third Ground: Illegitimacy: No Charter, 447 3.9d Fourth Ground: Absence of Employment Relationship, 447 3.9e Fifth Ground: The 12-month Bar, 447 3.9f Sixth Ground: Negotiation or Deadlock Bar, 449

xxxv

3.9g Seventh Ground: Election Bar: Existing CBA, 451 3.9h Eight Ground: Election Bar: Lack of Support, 458 3.10 Prohibited Ground for the Denial/Suspension of the Petition, 461 3.10a Commingling, 461 3.10b Validity of Registration, 461 3.10c Authority to Decide Existence of Employer- Employee Relationship; Med-Arbiter’ Order Appealable to Secretary, 461 3.11 Employer a Bystander; Cannot Oppose PCE, 462 3.12 Action on the Petition; Approval, 463 3.13 Appeal of Order Granting or Denying Petition, 464 3.14 Conducting the C.E., 465 3.14a Pre-election Conference, 465 3.14b Conducting the C.E.; the Voters, 467 3.14c Conducting the C.E.: The Voting, 470 3.14d Conducting the C.E.: Canvassing of Votes, 472 3.14e Who Wins in the C.E.; Proclamation and Certifi cation, 472 3.14f Failure of Election; Motion for a Remedial Election, 473 3.14g Run-off Election, 473 3.15 Appeal to Secretary as to Election Result, 475 3.16 Election Irregularities, Protest by Employer, 476 4. Third Method: Consent Election, 476 4.1 Effect of Consent Election, 477 5. The Winner as Sole and Exclusive Representative, 478 5.1 Exclusive Bargaining Agent Represents Even the Minority Union, 478 5.2 Protection and Capacity of the Loser; the Duty of Fair Representation, 478 5.3 Is the Bargaining Union a Majority Union?, 479 5.4 May the Bargaining Agent Represent Retired Employees?, 480

Title VII-A — GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION

Art. 260. Grievance Machinery and Voluntary Arbitration, 481

Comments and Cases

1. Contract Administration as Part of the Duty to Bargain, 482 2. CBA, Law Between the Parties, 482 2.1 Construing the Contract, 486 2.2 Proposal Contained in Minutes but Not in the CBA Itself, 487 2.3 “Zipper Clause”, 488 3. Law Deemed Written in Contract, 489 4. Binding Effect of Agreement, 489 4.1 Persons Entitled to Benefi ts, 489 4.2 Managers Not Entitled to CBA Benefi ts; Exception, 490

xxxvi

4.3 Effect of Collective Agreement on the Individual Contracts of Employment, 490 5. Enforceability Against Transferee of Enterprise, 490 5.1 Purchase of Assets, 490 5.2 Exceptions, 492 5.3 Merger and Consolidation, 493 5.4 Wiley Doctrine, 493 6. Change of Bargaining Agent; Substitutionary Doctrine, 494 7. Grievances, 496 7.1 By-passing the Grievance Machinery: ULP, 496 7.2 Waiver of Grievance Machinery Procedure and Submission To VA, 498 7.3 Structure and Procedure, 498 8. Voluntary Arbitration, 499“Settling Grievances”, 500“Grievance Handling Tips For T.U.C.P. Shop Stewards”, 501 8.1 Voluntary Arbitration: A Private Judicial System, 503 8.2 Voluntary Arbitration, a Master Procedure, 503 9. Who May Be Accredited as Voluntary Arbitrator, 504 10. How Voluntary Arbitrator Is Chosen, 505 11. Distinguished from a Court of Law, 505

Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators, 506

Art. 262. Jurisdiction Over Other Labor Disputes, 506

Comments and Cases

1. Arbitrable Disputes, 506 2. Jurisdiction of L.A. and V.A., 507 2.1 Jurisdiction Over Termination Disputes, 509 2.1a “Policies,” “Rules,” “Procedures”, 510 2.2 Jurisdiction Over CBA Violations, 511 2.3 Other Cases, 512 2.4 Dispute over Company’s Drug Abuse Policy, 513 3. How Voluntary Arbitration Is Initiated, 513 3.1 The Submission Agreement; Extent of Arbitrator’s Authority, 513 4. Powers of the Arbitrator, 515 4.1 Power to Arbitrate Any Dispute, 515 4.2 No Power to Add to or Subtract from the Contract, 516 5. Functions of Arbitrator, 517 5.1 Arbitrator’s Interpretation of CBA, 517

Art. 262-A. Procedures, 518

Comments and Cases

1. Compliance with Duty to Arbitrate, 519 2. Who Determines the Arbitration Procedures, 519 3. Ethical Standards of Arbitrators, 519

xxxvii

4. Voluntary Arbitration Award, Generally Final; Exceptions, 520 4.1 Motion for Reconsideration, 521 4.2 Review of Award by Certiorari, 522 4.2a From VA to CA: Mode of Appeal is Rule 43, not 65, 523 4.3 Findings of Facts of a Voluntary Arbitrator, 524

Art. 262-B. Cost of Voluntary Arbitration and Voluntary Arbitrator’s Fee, 524

“Principles of Union Management Relations”, 524

Title VIII — STRIKES AND LOCKOUTS AND FOREIGN INVOLVEMENTIN TRADE UNION ACTIVITIES

Chapter I — STRIKES AND LOCKOUTS

[Part 1. REGULATIONS AND LIMITS OF STRIKE AND LOCKOUT]

Art. 263. Strikes, Picketing, and Lockouts, 528

Art. 264. Prohibited Activities, 531

Art. 265. Improved Offer Balloting, 532

Comments and Cases

1. The Right to Engage in Concerted Activities, 532 1.1 Concerted Activity by one, 533 2. Nature of Strike, 534 2.1 Defi nition, 534 2.2 Characteristics, 534 2.3 Basic Objective, 535 2.4 Constitutional Status, 535 2.5 Nature and Defi nition of Lockout, 536 3. Grounds for Strike/Lockout, 537 4. Kinds of Strike, 539 4.1 Extent, 539 4.2 Nature of the Act, 539 4.3 Degree of Employee Interest, 539 4.4 Purpose or Nature of Employee Interest, 539 5. A Valid Strike Needs a Labor Dispute, 542 5.1 Sympathetic Strike, 543 5.2 Welga ng Bayan (People’s Strike), 543 6. Avoidance of Strike, 544 6.1 Conciliation, Mediation, Compromise to Avoid Strike, 545 6.2 Premature Strike, 545 7. Protection of Strike, 546 7.1 Role of the Police, 547 8. Status of Strikers, 548 8.1 Notion of “Striking Employee”, 549

xxxviii

9. Legality of Strike: The Six Factors Affecting Legality, 549 10. First Factor in Legality of Strike: Statutory Prohibition, 550 11. Second Factor in Legality of Strike: Procedural Requirements, 553 11.1 Declaration of Strike or Lockout, 557 11.2 Procedural Requirements, Mandatory; Non-observance Makes Strike Illegal, 557 11.2a Strike on Installment: Work Slowdown and Overtime Boycott, 561 11.3 In Case of Union Busting, 562 11.4 Strike During Arbitration, Illegal, 563 11.5 Strike Despite Preventive Mediation, 564 11.6 Violation of a Valid Order, 566 11.7 Grievance Procedure Bypassed, 566 11.8 Dismissal of Employees During Conciliation, When Legal and Enforceable, 569 12. Third Factor in Legality of Strike: Purpose; Economic and ULP Strike, 570 12.1 The Conversion Doctrine, 571 12.2 Lawful Purpose: Strike Incident to Collective Bargaining, 572 12.2a Legality of Strike Nor Dependent Upon Ability of Management to Grant Demands, 573 12.3 Lawful Purpose: Strike Against Employer’s Unfair Labor Practice, 574 12.4 Lawful Purpose: ULP Strike in Good Faith, 575 12.4a The “Good-Faith Strike” Doctrine Retraced and Reiterated, 577 12.4b “Good-Faith Strike” Doctrine Applied Even to a Strike without Prior Notice and Despite a No-Strike Clause, 579 12.4c Even “Good-Faith Strike” Requires Rational Basis, 580 12.4d Do the Procedural Requirements Apply even to a ULP Strike in Good Faith?, 582 12.5 Lawful Purpose: Strike to Compel Recognition of and Bargaining with the Majority Union, 583 12.6 Unlawful Purpose: Strike for Union Recognition Without Having Proven Majority Status, 584 12.6a May a Minority Union Strike?, 585 12.6b Strike Held to Compel Recognition while Case is Unresolved, Illegal, 586 12.7 Unlawful Purpose: Trivial, Unjust, or Unreasonable, 587 12.8 Strike to Compel Removal of an Employee; Implied Assertion of Union Infallibility, 588 12.9 Unlawful Purpose: Strike on Nonstrikeable Issue, 589 12.9a Nonstrikeable: Physical Rearrangement of Offi ce, 589

xxxix

12.9b Nonstrikeable: Company’s Sales Evaluation Policy, 590 12.9c Nonstrikeable: Salary Distortion Under the Wage Rationalization Act, 591 12.9d Nonstrikeable: Inter-union or Intra-union Dispute, 593 13. Fourth Factor in Legality of Strike: Means and Methods, 593 13.1 Threats, Coercion or Violence, 593 13.1a Violence on Both Sides, 595 13.2 Responsibility for Use of Force: Individual or Collective?, 595“Causes of Violence”, 596 13.3 Minor Disorders, 597 13.4 Offi cials’ Inability to Leave Premises, Not Illegal Detention, 598 13.5 Blockade or Obstruction, 599 14. Fifth Factor in Legality of Strike: Injunction, 599 14.1 “National Interest” Cases; Automatic Injunction and Return-to-Work Order, 599“Don’t Pull Down the House”, 599 14.2 What are Considered “National Interest” Cases, 600 14.2a “National Interest” by Statutory Declaration, 601 14.3 Assumption of Jurisdiction: Prior Notice Not Required, 602 14.4 Power to Assume Jurisdiction, Constitutional, 602 14.5 Certifi cation to NLRC, 603 14.6 Effects of Defi ance, 603 14.7 Assumption or Certifi cation Order Immediately Effective Even without Return-to-Work Order; Strike Becomes an Illegal Activity, 605 14.8 Refusing to Receive the RTWO, 606 14.9 Defying the RTWO, 608 14.10 Defi ance of RTWO, an Illegal Act, 609 14.10a “Abandonment” has Varying Elements, 612 14.11 Restoration of Condition Upon Issuance of Return- to-Work Order, 612 14.12 Actual, Not-Payroll, Readmission, 613 14.13 Voluntary Return to Work Is Not Waiver of Original Demands, 614 14.14 All Issues to be Determined in the Certifi ed Industrial Dispute, 615 14.15 Submission of Incidental Issues; Rulings Reconciled, 617 14.16 Procedure in Certifi ed Cases, 620 14.17 Assumption Order Regulates Management Prerogatives, 621 14.18 “Legal Discretion”; Judicial Review of Secretary’s Award or Order, 622 14.19 Secretary’s Abuse of Discretion, Examples, 623 14.20 Withdrawal of Case to Submit to VA, 624 15. Sixth Factor in Legality of Strike: Agreement of the Parties, 624 15.1 Ruling in Master Iron Case, 626 15.2 No-Strike Clause Binding; Primacy of Voluntary Arbitration Agreement, 627

xl

15.3 No-Strike Clause Not Binding Upon Newly Certifi ed Bargaining Agent, 629 15.4 If Members Disregard a No-Strike Clause, Union May Become Liable, 630 15.5 No Violation If Work Stoppage Not Initiated or Supported by the Union, 630 15.6 No-Strike Pledge Inferred from Other Provisions, 631 16. Improved-Offer Balloting, 631

[Part 2. PICKETING AND OTHER CONCERTED ACTIONS]

1. Picketing, 632 1.1 As Phase of Freedom of Speech, 632 1.2 Picketing without Striking, 633 1.3 Moving Picket, 633 1.4 Picketing of Neutral Parties or “Innocent Bystanders”, 634 1.5 Picketing of Home, 636 1.6 Limitations, 636 1.7 Obstruction, 636 1.8 Violence and Intimidation, 637 1.9 Untruthful Picketing, 637 2. Other Concerted Activities, 638 2.1 Collective Letter, 638 2.2 Publicity, 638 2.3 Placards and Banners, 639 2.4 Wearing of Armbands, 639 2.5 Speeches, Music, and Broadcasts, 640 2.6 Employees’ Demonstration to Protest Police Abuses, 640 2.6a Rallies as Illegal Strike, 641 3. Boycott, 641 3.1 Kinds of Boycott, 642 3.2 Lawfulness of the Boycott, 643 3.3 Means or Methods to Carry Out the Boycott, 643 3.4 Overtime Boycott, 644 4. Slowdown, 644

Art. 266. Requirement for Arrest and Detention, 645

Comments

Directive to Prosecutors, 645

[Part 3. CONSEQUENCES OF CONCERTED ACTIONS]

1. Strikers’ Retention of Employment, 646 2. Strikers’ Loss of Employment, 648 2.1 What “Illegal Acts”?, 648 2.2 Suspension Instead of Dismissal, 649 2.3 Union Offi cers or Leaders?, 649 2.4 Shop Stewards are Union Offi cers, 650 2.5 Union Members, 651

xli

3. Who Declares “Loss of Employment Status”?, 651 3.1 Declaration of illegality of Strike Not a Prerequisite to Dismissal of illegal Strikers, 652 3.1a Exception: Pending Case at the NLRC, 652 4. “Good-Faith Strike”, 653 5. Strike Which Is Illegal and Not Marked with Good Faith — Strikers Forfeit their Employment, 654 6. Forfeiture of Reinstatement, 655 7. Discrimination in Readmission of Strikers, 656 8. Exaction of Promise or Clearances from Returning Strikers, 657 9. Reinstatement may Render Moot the Question of Illegality of Strike, 657 10. Generally, No Backwages in Strike, 658 10.1 Economic Strike, 658 10.1a Unfair Labor Practice Strike, 659 10.2 Exception: “Involuntary” Strikers Illegally Locked Out, 660 10.2a “Volunatry” Strikers in ULP Strike who Offered to Return to Work Unconditionally, 661 11. Court’s Discretion on Backwages, 662 12. Employer’s Right to Hire Replacements During Strike; Discharge of Replacements, 664 12.1 Where Reinstatement of Illegally Dismissed Strikers Has Become Impossible, Backwages Should be Paid, 665 13. Resignation of Strikers Does Not Prevent Signing of CBA, 666 14. Civil Liability of Labor Organizations, 667 14.1 Labor Organizations Not Liable for Unauthorized Acts of Offi cers, 667 14.2 Liability of Offi cers of Labor Organizations, 667 14.3 Liability of Members of Labor Organizations, 667 14.4 Liability of Labor Unions for Damages Arising from Boycott, 668 14.5 Liability of Labor Unions for Damages for Interfering with Right of Laborers to Work, 668 14.6 Liability for Extorting Money from Employers, 669 14.7 Liability for Damages Arising Out of Publications and Circulation of False Statements, 669 15. Damages, 669

Chapter II — ASSISTANCE TO LABOR ORGANIZATIONS

Art. 267. Assistance by the Department of Labor, 672

Art. 268. Assistance by the Institute of Labor and Manpower Studies, 672

Comments

Labor Education, 672

xlii

Chapter III — FOREIGN ACTIVITIES

Art. 269. Prohibition Against Aliens; Exceptions, 673

Art. 270. Regulation of Foreign Assistance, 673

Art. 271. Applicability to Farm Tenants and Rural Workers, 674

Chapter IV — PENALTIES FOR VIOLATION

Art. 272. Penalties, 675

Title IX — SPECIAL PROVISIONS

Art. 273. Study of Labor-Management Relations, 676

Art. 274. Visitorial Power, 676

Comments

1. Visitorial-Enforcement Power, 677 2. Under D.O. No. 40-03, 677

Art. 275. Tripartism and Tripartite Conferences, 679

Comments

Tripartism, 679

Art. 276. Government Employees, 680

Art. 277. Miscellaneous Provisions, 680

“Labor-Management Council: The Nonadversarial, Participative Approach”, 683“Protecting Labor in the Global Economy”, 684

BOOK SIX — POST-EMPLOYMENT

“The Job as Property Right”, 687“Due Process”, 688“Loss of Confi dence”, 688“Non-Technical”, 688“Justitia Nemini Neganda Est”, 689“Respect for Finding of Facts”, 689“No Coddling of Labor”, 690

Title I — TERMINATION OF EMPLOYMENT

[Part 1. INTRODUCTION: EMPLOYEE’S SECURITY OF TENURE]

Art. 278. Coverage, 691

Art. 279. Security of Tenure, 691

xliii

Comments and Cases

1. Constitutional Guaranty of Tenure, 691 1.1 Non-regular Employees, 692 2. Tenure of Managerial Personnel, 693 2.1 Even Managerial Employees Are Entitled to Security of Tenure, 693 3. Right to Security of Tenure cannot be Contracted Away, 694

[Part 2. KINDS OF EMPLOYMENT]

Art. 280. Regular and Casual Employment, 695

Comments and Cases

1. Essentiality of Employer-Employee Relationship, 695 1.1 Article 280 Presupposes Employment Relationship, 696 2. Regular Employment, 697 2.1 Examples of Regular Employment by Nature of Work, 698 2.1a Workers Supplied by Labor-only Contractor Considered Regular Employees of Contractee, 699 2.1b “Contractual Project” Employee Becoming Regular, 700 2.1c “Day-to-Day Contractual” Employee Becoming Regular, 701 2.1d Temporary Employee Becoming Regular, 702 2.2 Casual employee; Regular Employee by Year(s) of Service, 702 2.2a Casual Employee with Less Than One Year of Service does not become Regular, 704 2.2b Salary of Casual Employee Converted to Regular should not be Reduced, 704 2.3 May Regular Jobs be Contracted Out?, 705 2.4 Contracting Out Almost All Regular Jobs, 706 2.5 Does Contracting Out Require Union’s Conformity?, 708 3. Project Employment: Meaning and Scope, 709 3.1 Two Types of Project Activities, 710 3.2 Principal Test, 711 3.3 Project Employees in the Construction Industry, 712 3.4 Indicators of Project Employment, 713 3.5 Work Pool, 714 3.5a Illustrative Case: Project Employee, 714 3.5b Project Employees not Entitled to Separation Pay; Exception, 715 3.6 Non-Project Employee; Three Types, 716 3.7 What Makes a Project Employee Regular, 718 3.7a Recapitulation: Circumstances that make a Project Employee Regular, 719 3.7b “Completion of Project” nor Valid Reason to Separate a Project Employee who has become Regular, 721

xliv

3.7c Computing the Backwages of Project Employee who has become Regular; “No work, No Pay” Rule Applicable, 721 4. Seasonal Employment; “Regular Seasonal” After One Season, 721 4.1 Employer-Employee Relationship Exists Between Milling Company and Its Workers Even During Off Season, 723 4.2 Seasonal “Pakiao” Employees, 723 4.3 The Mercado Ruling: Project Employees Do Not Become Regular Although Service Exceeds One Year, 724 4.3a Mercado Reconciled with Earlier Rulings, 726 4.4 “Regular Contractuals” Entitled to Benefi ts of Regular Employees, 726 5. Fixed-Period Employment, When Valid, 727 5.1 Brent Doctrine Summarized, 729 5.2 Pretermination of Fixed-Period Employment, Liability of Employer, 730 5.3 Illegal “Fixed Period Employment”; Brent Ruling Clarifi ed, 730 5.3a Effect of Retention of Employee Beyond the Period of Employment, 731 5.3b When “Five-Month Contractuals” considered Regular Employees; the Purefoods Precedent, 733 5.3c Effect of Renewals of Fixed-Period Employment in Regular Jobs, 734 5.3d Seafarers are Contractuals, 735

Art. 281. Probationary Employment, 736

Comments and Cases

1. Probationary Employment, 736 2. Employer’s Right to Select; the Need for Probation, 737 3. Rights of Probationary Employee; Termination Only for Cause, 738 4. Limitations to Termination of Probation; Regular Status After Probationary Period, 741 5. No Successive Probations, 741 5.1 Probation in Sister Company, 742 6. Period of Probation Not Necessarily Six Months, 742 7. Extension of Probation, 743 8. Last Day of Probation, 744 9. Probation of Teachers, 745 9.1 Reversion from Full-time to Part-time Teacher, 746 10. Employment Contracts Mostly Adhesion Contracts, 747

[Part 3. MANAGEMENT RIGHTS AND THE JUST CAUSES OF TERMINATION]

Art. 282. Termination By Employer, 748

xlv

Comments and Cases

I. MANAGEMENT RIGHTS

1. Right to Manage People, in General, 749 2. The Right to Discipline, 750 3. The Right to Transfer Employees, 750 4. The Right to Demote, 751 5. The Right to Dismiss, 751 5.1 Power to Dismiss Not Absolute, 752II. JUST CAUSES OF TERMINATION

1. Causes of Dismissal in General, 752 2. Just Cause: Serious Misconduct, 753 2.1 Examples of Misconduct, 753 2.1a Illustrative Case: Sexual Harassment, 754 2.2 Cause Found Inadequate, 755 2.2a Teacher in Love with Student: The Heart has Reasons which Reason does not know, 756 2.3 Extra-marital Relationship as Immorality, 757 2.3a Immortal Conduct Defi ned, 757 2.4 Being the Spouse of a Co-employee, 758 3. Just Cause: Willful Disobedience, 758 3.1 Valid Termination: Employer’s Policy Enforceable Despite Union’s Objection, 759 3.2 Elements of Disobedience, 760 3.3 Disobeying an Order to Transfer, 761 3.3a Valid Transfer, 761 3.3b Invalid Transfer, 762 3.3c May an Employee Disobey an Inconvenient Transfer?, 763 3.3d Change of Position and Work, 767 3.3e Test of Validity of Transfer, 768 3.3f Invalid Change of Position, 769 3.3g Transfer with Promotion of a Manager, 770 3.3h Transfer Distinguished from Promotion, 772 4. Just Cause: Neglect of Duties, 773 4.1 Gross Negligence Defi ned; Examples, 774 4.2 Abandonment, 775 4.2a Elements of Abandonment; Immediate fi ling of Dismissal Complaint, 775 4.2b Immediate Filing of Complaint Negates Abandonment; Exception, 776 4.3 Tardiness and Absenteeism, 776 4.3a Illustrative Case: Valid Dismissal Due to Unauthorized Absences of a Union Offi cer, 777 4.4 Is “Attitude Problem” a Just Cause to Dismiss on Employee?, 778 5. Just Cause: Dishonesty, Loss of Confi dence, 778 5.1 Examples of Dishonesty: Falsifi cation of Time Cards, 779 5.1a Theft of Company Property, 780

xlvi

5.2 Loss of Confi dence, 780 5.2a To Whom Applicable; “Position of Trust” Explained, 781 5.2b Confl ict of Interest; Employment with Competitor, 782 5.3 Proof Required, 782 5.4 Guidelines Summarized, 783 6. Just Cause: Commission of a Crime or Offense, 784 6.1 Conviction or Prosecution Not Required, 784 7. Analogous Causes, 784

[Part 4. AUTHORIZED CAUSES OF TERMINATION]

Art. 283. Closure of Establishment and Reduction of Personnel, 786

Art. 284. Disease as Ground for Termination, 786

Comments and Cases

1. Authorized Causes in General, 787 1.1 Many Other Authorized Causes, 787 1.2 Separation Pay, 787 1.3 Backwages Incompatible with Statutory Separation Pay, 788 2. Introduction of Labor-Saving Devices, 788 3. Redundancy, 789 “Subcontracting in the Global Economy”, 790 3.1 Creation of Positions with Functions Related or Similar to those of the Abolished Positions Does Not Necessarily Invalidate the Declarations of Redundancy, 791 3.2 Valid Abolition of Position and Transfer to Lower Position, 792 3.3 Replacing a Regular Employee with an Independent Contractor, 794 3.4 Invalid Declaration of Redundancy; Illustrative Case, 796 4. Retrenchment, 797 4.1 Causes of Retrenchment, 798 4.2 Basic Requisites of Valid Retrenchment, 799 4.2a Criteria; Whom to lay Off, 801 4.2b Seniority Rights, 801 4.3 Four Standards of Retrenchment, 801 4.4 Evidence to Prove Losses: “Modicum of Admissibility, 803 4.5 Hiring of Replacements after Retrenchment, 804 4.6 Contracting Out After Retrenchment/Redundacy, 804 4.7 Redundancy Distinguished from Retrenchment; Temporary Versus Permanent Retrenchment, 805 4.8 The Puzzle: Redundancy or Preventive Retrenchment?, 808 4.9 Reduction of Work Days; Constructive Retrenchment, 811 5. Closure of Business, 811 5.1 Closure Because of Losses, 811 5.1a Losses must be Shown, 812 5.2 Right to Close Whether Losing or Not, 813

xlvii

5.2a Closure Contrasted to Downsizing, 814 5.3 Partial Closure, 814 5.4 Temporary Shutdown, 815 5.5 Should Separation Pay be Paid in Case of Closure Because of Serious Business Losses?, 815 5.5a Contrary Jurisprudence, 816 5.5b The Final Word: Rulings in North Davao and Reahs Corporation, 816 5.5c Does Previous Generosity Obligate the Company?, 817 5.6 Justifi cation for Closure Not Credible; Unfair Labor Practice, 818 5.7 Closure by Operation of the Agrarian Reform Law, 820 5.7a Expiration of Lease, 820 6. Sale in Good Faith, 821 6.1 Sale of Business: Is it “Closure” or “Cessation of Business”?, 822“Global Competition in Labor Cost”, 824 6.2 Successor-in-Interest, Contractual Obligation to Employ, 825 7. Merger, 825 8. Consolidation, 828 9. Ailment or Disease, 828

[Part 5. PROCEDURE TO TERMINATE EMPLOYMENT]

1. Procedure Under the Rules, 830 2. Procedural Due Process; Ample Opportunity to be Heard, 831 2.1 Standards of Procedural Due Process, 832 2.2 Two-Notice Requirement for the “Just” and the “Authorized” Causes, 833 2.3 Preventive Suspension and Investigation Do Not Replace “Two-Notice” Requirement of Due Process; Defect Not Cured by NLRC Hearings, 833 2.4 Consultation with Union, Insuffi cient Notice, 834 2.5 Illustrative Case: “Ample Opportunity” for Employee’s Defense, 835 2.5a At least Five Days, 835 2.5b Participation of Counsel, 835 2.5c Formal Hearing Nor Required, 837 2.6 Procedural Due Process Not Wiped Away by Union Security Clause, 838 2.7 When Hearing Not Required, 840 2.8 Due Process in Authorized Causes; Two-Notices Required but Not a Hearing, 840 2.8a Individual, Not Collective, Notice, 841 2.8b Voluntary Arbitration as Notice, 841 2.8c When Notice Not Needed, 842 2.9 Burden of Proof, 842

xlviii

2.10 Condonation, 843 3. Preventive Suspension, 843 3.1 Invalid Preventive Suspension, 843 3.2 Valid Preventive Suspension, 844 3.3 Period of Suspension, 845 3.4 Preventive Suspension Exceeding 30 Days; Constructive Dismissal, 845 4. Appropriate Penalty, 845 4.1 Value of Property, 846 4.2 Past-Offenses, 847 5. Filing of Illegal Dismissal Complaint; Venue and Time, 848 6. Clearance No Longer Required, 848

[Part 6. CONSEQUENCES OF TERMINATION]

1. Separation Pay, 849 1.1 Background: Old Law, 849 1.2 Under Present Law; Four Kinds of Separation Pay, 850 1.3 First Kind of Separation Pay: As a Statutory Requirement for Authorized Causes Under Art. 283 and 284, 850 1.3a Amount of Separation Pay for Authorized Causes, 850 1.3b Computation of Statutory Separation Pay; Inclusion of Regular Allowance, 851 1.4 Second Kind of Separation Pay: As Financial Assistance in Legal Dismissal Under Article 282, 851 1.4a More Exceptions: No Financial Assistance, 854 1.4b Dishonesty Doubted: Financial Assistance may be Granted, 855 1.4c Financial Assistance for an Uncovered Retiree, 857 1.4d Grant of Financial Assistance, Although Not Objected to, may be Revoked, 857 1.4e Amount of Financial Assistance, 857 1.5 Third Kind of Separation Pay: As Substitute for Reinstatement in Illegal Dismissal Cases, 858 1.6 Fourth Kind of Separation Pay: As Employment Benefi t from Employer, 858 2. Backwages, 859 2.1 Backwages Distinguished from Separation Pay, 860 2.1a Backwages Distinguished from Unpaid Salary, 861 2.2 Complainant’s Failure to Claim Backwages, 861 2.3 Labor Arbiter’s Failure to Award Backwages, 861 2.4 Basis of Computation of Backwages, 863 2.4a Reckoning of Backwages, 866 2.5 “Full” Backwages: The Rule Before R.A. 6715; The Mercury Drug Rule, 867 2.5a Backwages: The Rule after R.A. 6715; “Full”

xlix

Backwages but with Deductions; Mercury Drug Rule Abandoned, 868 2.5b Full Backwages without Deduction; Pines City Ruling Abandoned in Bustamante, 869 2.6 Full Backwages Amendment Not Retroactive, 869 2.7 Backwages Up to Retirement Age Only, 870 2.8 Infl ation, 870 2.9 Dismissal for Cause But Without Due Process; The Wenphil Doctrine, 870 2.9a Amount of Penalty for not Observing Due Process, 871 2.9b No Just Cause and No Due Process – The WenPhil Doctrine does not apply; Dismissal Illegal, 872 2.10 Objections to Wenphil: Indemnity Only Too Niggardly?, 873 2.11 Illegal or Merely Defective?, 874 2.12 Serrano Modifi es Wenphil: Where Due Process is Disregarded, Full Backwages Must be Awarded, 875 2.13 From Wenphil to Serrano to Viernes: Not Only Full Backwages but also Indemnity, 877 2.14 Agabon Discards Serrano and Partially Restores Wenphil, 878 2.14a JAKA Revises Agabon: Higher Indemnity in the Authorized Causes, 881 2.14b JAKA Refi ned Further by Industrial Timber, 882 3. Reinstatement, 883 3.1 Reinstatement without Backwages, 884 3.2 Reinstatement Not Feasible Due to Changed Circumstances, 884 3.2a Contrast: Reinstatement Enforced Despite Closure of Original Employer, 885 3.3 Reinstatement Not Feasible Due to Strained Relations, 887 3.3a Qualifi cations to the “Strained Relations” Principle, 888 3.4 When Reinstatement Not Feasible; Separation Pay in Lieu of Reinstatement, 890 3.4a “Separation Pay in lieu of Reinstatement” Different from Backwages, 891 3.4b “Separation Pay in lieu of Reinstatement” Different from Separation Pay in Legal Terminations, 891 3.4c How much is the Separation Pay in lieu of Reinstatement? 892 3.4d Separation Pay in lieu of Reinstatement of Seasonal Worker, 892 3.5 Objection: Disproportionate Substitution, 893 4. Remedy if Reinstatement is Thwarted, 894 4.1 Backwages Continue to Accrue until Employer Complies with Reinstatement Order, 897 5. Salary Rate Upon Reinstatement, 898 6. Reinstatement Immediately Executory; Employer’s Options, 899

l

6.1 May an Employee Lose the Right to Reinstatement?, 900 6.2 No Obligation to Reimburse, 902 6.2a Garcia Drops Genuino and Reaffi rms Roquero, 903 6.3 Rationale of Payroll Reinstatement, 904 6.4 Rationale and Constitutionality of Reinstatement During Appeal, 904 6.5 Exception to Immediate Reinstatement, 905 6.6 Reinstatement Pending Appeal is Enforceable Despite Employer’s Denial of Employer-Employee Relationship, 905 6.7 Reinstatement Should have been Ordered by Labor Arbiter, 906 6.8 Amendment by R.A. 6715 Not Retroactive, 906 7. Is Reinstatement Self-Executory?, 907 7.1 NLRC’s Reinstatement Order Not Self-Executory, 908 8. If Reinstatement is not Prayed For, 908 9. Damages, 909 9.1 Moral Damages, 909 9.2 Exemplary Damages, 911 10. Indemnity to Househelper, 912 11. Attorney’s Fees, 912 12. Persons Liable for Wrongful Dismissal: General Rule — The Sunio Doctrine, 912 12.1 Government as Stockholder Not Directly Liable for Corporate Indebtedness, 913 12.2 Exception: Piercing the Corporate Veil: Offi cers Become Personally Liable, 913 12.3 Instances When Corporate Offi cers Become Solidarily Liable, 916 12.4 Limited Liability of Indirect Employer, 917 13. Quitclaim; Public Policy Protects Labor, 919 13.1 Not All Waivers are Against Public Policy; Elements of Validity of Waivers and Quitclaims, 920 13.1a “Dire Necessity” does not Nullify Quitclaim, 921

[Part 7. TERMINATION BY EMPLOYEE AND SUSPENSION OF OPERATION]

Art. 285. Termination by Employee, 922

Comments and Cases

1. Resignation and Resignation Notice, 922 2. Withdrawal of Resignation, 923 3. Resignation Pay, 924 4. Constructive Dismissal; Forced Resignation, 924 4.1 Constructive Dismissal Even Without Quitting; Preventive Suspension Beyond 30 Days Amounts to Constructive Dismissal, 926 5. Not Constructive Dismissal, Valid Transfer, 928 5.1 Not Constructive Dismissal: Voluntary Resignation, 929

li

5.2 Not Constructive Dismissal: Resignation to Avoid Dismissal, 929 6. Intention to Resign, 929

Art. 286. When Employment Not Deemed Terminated, 930

Comments and Cases

1. Suspension of Operations; “Floating Status”, 931

Title II — RETIREMENT FROM THE SERVICE

Art. 287. Retirement, 933

Comments and Cases

1. Previous Law and its Amendments, 934 1.1 Amendments by R.A. No. 7641 and R.A. No. 8558, 934 1.2 Coverage, 935 2. Retirement Defi ned, 935 2.1 Conditions for Entitlement to Retirement, Not Continuing, 935 3. Two Kinds of Retirement; Employee’s Option, 936 3.1 Employer’s Option, 937 3.2 Is Compulsory Retirement Below Age 60 Allowable?, 937 3.2a Employee’s Assent to the Retirement Plan, 939 4. New Retirement Law Given Retroactive Effect, 940 4.1 Conditions for Retroactive Application, 941 5. Amount of Retirement Pay, 941 6. Retirement Benefi ts Aside from Separation Pay; Distinction, 942 6.1 Gratuity Pay Distinguished from Retirement Benefi t, 946 7. Unjustifi ed Denial of Retirement Benefi t, 946 7.1 Separation Disguised as Retirement, 947 7.2 Dismissal to Avoid Retirement Benefi ts, 948 8. Extension of Service of Retiree, 949

BOOK SEVEN — TRANSITORY AND FINAL PROVISIONS “The New Reality: The Transnational Economy”, 953“Cheap Labor: Globalization of Poverty?”, 954

Title I — PENAL PROVISIONS AND LIABILITIES

Art. 288. Penalties, 957

Art. 289. Who are Liable When Committed by Other than Natural Person, 957

Title II — PRESCRIPTION OF OFFENSES AND CLAIMS

Art. 290. Offenses, 958

Art. 291. Money Claims, 958

Art. 292. Institution of Money Claims, 958

lii

Comments and Cases

1. Prescriptive Period for Money Claims, 959 1.1 Reckoning of the Three-year Prescription; Accrual of Cause of Action, 959 1.2 Money Claims Based on a Foreign Law, 961 1.3 Filing after Three Years: “Promissory Estoppel”, 962 1.4 Money Claim that Accrued Before the Labor Code, 963 2. Award for Monetary Benefi ts May Exceed Three Years, 963 3. Money Claims Include Incremental Proceeds Arising from Tuition Fee Increases, 964 4. Action for Reinstatement Prescribes in Four Years, 964 4.1 When Does the Period Begin?, 965 4.2 Prescriptive Period Not Suspended by Criminal Case, 965 5. Laches, 966

Title III — TRANSITORY AND FINAL PROVISIONS

Art. 293. Application of Law Enacted Prior to this Code, 967

Art. 294. Secretary of Labor to Initiate Integration of Maternity Leave Benefi ts, 967

Art. 295. Funding of the Overseas Employment Development Board and the National Seamen Board, 967

Art. 296. Termination of the Workmen’s Compensation Program, 967

Art. 297. Continuation of Insurance Policies and Indemnity Bonds, 968

Art. 298. Abolition of the Court of Industrial Relations and the National Labor Relations Commission, 968

Art. 299. Disposition of Pending Cases, 968

Art. 300. Personnel Whose Services are Terminated, 969

Art. 301. Separability Provisions, 969

Art. 302. Repealing Clause, 969

Part Two Part Two IMPLEMENTING RULES IMPLEMENTING RULES

“American Labor Productivity”, 973“Competitiveness Plan”, 974“Anti-Labor Laws”, 975“Massive Failure”, 976

IMPLEMENTING RULES OF BOOK V — LABOR RELATIONS

Rule I. Defi nition of Terms, 977Rule II. Coverage of the Right to Self-Organization, 981Rule III. Registration of Labor Organizations, 982

liii

Rule IV. Provisions Common to the Registration of Labor Organizations and Workers’ Association, 986Rule V. Reporting Requirements of Labor Unions and Workers’ Associations, 988Rule VI. Determination of Representation Status, 988Rule VII. Voluntary Recognition, 989Rule VIII. Certifi cation Election, 990Rule IX. Conduct of Certifi cation Election, 997Rule X. Run-Off Elections, 1001Rule XI. Inter/Intra Union Disputes and Other Related Labor Relation Disputes, 1002Rule XII. Election of Offi cers of Labor Unions and Workers’ Associations, 1007Rule XIII. Administration of Trade Union Funds and Actions Arising Therefrom, 1008Rule XIV. Cancellation of Registration of Labor Organizations, 1011Rule XV. Registry of Labor Organizations and Collective Bargaining Agreements, 1012Rule XVI. Collective Bargaining, 1013Rule XVII. Registration of Collective Bargaining Agreements, 1015Rule XVIII. Central Registry of Labor Organizations and Collective Bargaining Agreements, 1017Rule XIX. Grievance Machinery and Voluntary Arbitration, 1017Rule XX. Labor Education and Research, 1020Rule XXI. Labor-Management and Other Councils, 1021Rule XXII. Conciliation, Strikes and Lockouts, 1021Rule XXIII. Contempt, 1024Rule XXIV. Execution of Decisions, Awards or Orders, 1025Rule XXV. General Provisions, 1025Rule XXVI. Transitory Provisions, 1026

ADDENDA TO IMPLEMENTING RULES OF BOOK V

Addendum V-1: Rule XIV – Termination of Employment, 1027 Addendum V-2: Rule XXII – Termination of Employment, 1028

IMPLEMENTING RULES OF BOOK VI — POST-EMPLOYMENT

Rule I. Termination of Employment and Retirement, 1031Rule II. Retirement Benefi ts, 1034

APPENDIX TO THE IMPLEMENTING RULES OF BOOK VI

Labor Advisory on Retirement Pay Law, 1038Rules Prescribing the Retirement Age for Underground Mine Employees, 1040

liv

IMPLEMENTING RULES OF BOOK VII — PRESCRIPTION, TRANSITORY AND FINAL PROVISIONS

Rule I. Venue of Actions, 1043Rule II. Prescription of Actions, 1043Rule III. Laws Repealed, 1044Rule IV. Date of Effectivity, 1045