Labor Code Reviewer Alcantara (1)

SAMSON S. ALCANTARA Practicing Lawyer, Professor of Law and Bar Reviewer and

SAMSON B. ALCANTARA, JR. PARTNER Nisce Mamuric Guinto Rivera and Alcantara Law Offices

2004 EDITION

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REVISED AND ENLARGED WITH 2007 SUPPLEMENT

PHILIPPINE COPYRIGHT 2004 by

SAM SO N S. ALCANTARA REPRODUCTION OF THIS W O RK WITH THE USE OF COPYING MACHINES OR ANY OTHER MEANS OR DEVICE IS FORBIDDEN. PERPETRATORS W ILL BE SUBJECTED TO CRIMINAL PROSECUTION. ISBN 971 - 0 3 7 3 - 11 - 0 A genuine cop and an ai

Serial No. Published by: THE PHILIPPINES LABOR RELATIONS JOURNAL No. 3 Cadang Street, Barangay Masambong, San Francisco del Monte, Quezon City 1115 Phils. Tel. No.: (02)365-1025 Fax No.: (632)365-1025/(632)932-1316 Email: [email protected] Website: www.aasjs-lex.com

2601 Edition — Supreme Court Centennial Awardee

PREFACE TO THE REVISED EDITION

This reviewer is intended as a supplem entary reading material fo r the bar candidate; it should never be used as the sole or basic text on the subject. The reviewee must refer to the codal or statutory provi­ sions and to the books and notes that he used during his undergraduate years. This work gives emphasis to basic principles in Labor and Social Legislation, matters which candi­ dates, in their eagerness to complete their review, tend to overlook or simply assume to know. W hat may seem to be a complete review is not necessarily a thorough one. Besides, reviewees are fond of remem­ bering things which are minor or inconsequential, eas­ ily forgetting those which are basic or fundamental. The reader must not of course confine himself to the questions given in the book. He should try out variations and answer them. In this way, the actual bar questions have little chance of eluding him. If after using this book the reviewee feels confident that he can meet the challenge of the bar examination on the subject, then the authors’ efforts would have been sufficiently rewarded. Good luck to all. THE AUTHORS

Quezon City, Philippines August 2004

To the children of SAMSON S. ALCANTARA and EVELYN B: ALCANTARA on their, shoulders will fall the burden of revising this work in the years to come.

(One of them, Samson B. Alcantara, Jr., has, thanks be to GOD, become a lawyer and will continue with this work.)

TABLE OF CONTENTS Chapter

Title

Page

I

General Principles.......................................

1 -8 8

II

The Labor C o d e ................ ..........................

8 9-109

III

Recruitment and Placement of Workers .. . .

110-154

IV

Human Resources Development.......... ..

155-169

V

Hours of Work, Rest Periods, Holiday Pay, Leaves and Service C harges................... .

170-221

VI

W a g e s ......................................................... .

222-306

VII

Working Women and M inors...................... .

307 - 326

VIII

Househelpers and Homeworkers.................

327 - 333

IX

Medical and Dental Services and Occupational S a fe ty ................................ .

334 - 339

Employees' Compensation and State Insurance F u n d ............................... .

340 - 375

XI

Right to Self-Organization.......................... .

376 - 433

XII

Certification E lections........ ........................ .

434 - 484

XIII

Collective Bargaining and Collective Bargaining Agreem ent............................. .

485 - 521

X

XIV

Strikes and Lockouts...............................

.

522 - 588

XV

Unfair Labor Practices................................ .

589 - 625

XVI

Termination of Employment and Retirem ent............................................... .

626 - 875

XVII

Remedies.......................

......................... .

876 - 980

XVI11

The Social Security Law (Republic Act No. 1161, as amended) . .. .

981-1019

XIX

The Revised Government Service Insurance Act (P. D. 1146) . . : .............. . 1020-1047

XX

National Health Insurance Program (R. A. No. 7 8 7 5 )..................................... . 1048- 1055

XXI

Agrarian R e fo rm ......................................... . 1056 ■* 1085 Appendix

2003 Bar. Examination Questions in Labor and Social Legislation (With Answ ers)............................. 1089 - 1100

REVIEWER IN LABOR AND SOCIAL LEGISLATION CHAPTER I GENERAL PRINCIPLES What matters may properly fall under the term “ labor law"? ANS. The term “labor law’ covers the following: (a) Statutes passed by the state to promote the welfare of workers and employees and regulate their relations with their employers. (b) Judicial decisions applying and interpreting the aforesaid statutes. (c) Rules and regulations issued by administrative agencies, within their legal competence, to implement labor statutes. *

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Classify labor statutes. ANS. Labor statutes may be classified into: (a) la b o r s ta n d a rd la w s - those that provide for the pay and other legal benefits to which the worker, while at work, is entitled to receive from his employer; (b) w e lfa re le g is la tio n - those that require payment of benefits by government agencies to the worker or his fam ily when and while he cannot work, by reason of sickness, disability, old age, death and sim ilar haz­ ards; and (c) la b o r re la tio n s la w s - those intended to stabilize the relations of employees and their em­ ployers, adjust differences between them thru collec­ tive bargaining, and settle labor disputes through conciliation, mediation, and arbitration.

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GENERAL PRINCIPLES

Cite examples of each o f the above classes of labor statutes. ANS. A law providing for the minimum rates of pay to which workers are entitled for a day’s work is a labor standard law. The Social Security Law (Rep. Act No. 1161, as amended) which provides for payment of sickness, maternity, disability, old age and death ben­ efits is a welfare legislation. Book V of the Labor Code of the Philippines (Articles 211 to 277) is a labor relations law. it

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Are labor relations laws and labor standard laws mutu­ ally exclusive? (19S7 Bar) ANS. No. Labor relations laws enable workers to obtain from their employers more than the minimum benefits set by labor standard laws. *

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How do the provisions of the law on labor relations interrelate, if at all, with the provisions pertaining to labor standards? (2003 Bar) ANS. The law on labor relations provides for rights and procedures by which workers may be able to obtain from their employer benefits which are over and above the minimum terms and conditions of employ­ ment set by labor standard laws. Labor standard laws do not guarantee lasting industrial peace; labor rela­ tions laws, by enabling workers to obtain improves of the benefits guaranteed by labor standard laws and by providing for a mechanism by which disputes between the employer and his employees are expeditiously settled, can assure a stable and lasting industrial peace.

GENERAL PRINCIPLES

What do you understand by the term “ social legisla­ tio n ” ? ANS. The term applies to all laws passed by the State to promote public welfare. It includes statutes intended to enhance the welfare of the people even where there is no employer-employee relationship. Agrarian reform laws are important pieces of social legislation. *

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State the legal justification fo r the enactment of labor and social legislation. ANS. Labor and social legislation are enacted pursuant to the police power of the state. This is its inherent power to enact wholesome and reasonable laws to promote order, safety, health, morals, and general welfare of society. In its exercise, the state may interfere with personal liberty, with property and with business and occupation (Calalang vs. W illiams, 70 Phil. 726). Thus, tho Social Security Act, requiring compulsory coverage of employers and employees under a system providing for disability, death and sim ilar benefits to the worker and his family, has been sustained as a valid exercise of the power (Philippine Blooming Mills Co., Inc. et al. vs. Social Security System, G. R. No. L-21223, August 31, 1966). Republic Act No. 809, regulating relationships among persons engaged in the sugar industry and providing for increased participation of laborers in the income from the industry, has also been held valid on the same ground (Association de Agricultures de TalisaySilay, Inc. vs. Talisay Milling Co., Inc. et al., G. R. No. L-19937, February 19, 1979). Police power was also relied upon to sustain the constitutionality of the Code of Agrarian Reforms (Genuino vs. Court of Agrarian Relations et al., G. R. Nos. L-25035-36, February 26, 1968).

GENERAL PRINCIPLES

Labor and social legislation oftentimes impose condi­ tions o f employment which may be onerous and unac­ ceptable to the employer. Is this not a violation o f due process and the freedom of contract? Explain. ANS. According to the Supreme Court, the school of thought that resists the expansion of the social rights of employees and workers is essentially capital­ istic, conservative, reactionary and selfish. The invo­ cation of the due process clause to challenge the validity of social and labor legislation as violative of the freedom of contract and an undue deprivation of property had long been discarded in America since the 1937 case of West Coast Hotel vs. Pish (300 U. S. 379) affirming the validity of minimum age laws. In our country, such a view was repudiated after the 1924 case of People vs. Pomar (46 Phil. 440). Hereafter, other social legislations followed and survived the constitutional test such as our own minimum wage law, the 3-hour labor law, and various amendments to the workmen’s compensation law and employer’s liability act, law on maternity leave with pay, and laws for the protection of women and minors employed in danger­ ous industries and occupations. Such statutes were held not to trench upon the Constitution, even in the states of the American Union whose constitutions do not expressly guarantee social justice in favor of the working class (Basa vs. Workmen’s Compensation Commission, G. R. No. L-43425, January 22, 1980).

What is an “ employer” ? ANS. An “employer* is one for whom employees work in consideration of wages or salaries. An em­ ployer may either be a natural or juridical person.

GENERAL PRINCIPLES

What is an “ employee” ? ANS. An “employee" is one who works for an employer, a person working for salary or wages, any person in ths service of another under a contract for hire, express or implied, oral or written. An employee is always a natural person. *

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Describe briefly the relationship that arises between the employer and an employee. ANS. The employer-employee relationship is con­ tractual in character. It arises from the agreement of the parties. But such relationship is so impressed with public interest that labor contracts must yield to the common good; they are subject to special laws on labor unions, collective bargaining, strikes and lock­ outs, closed shop, wages, working conditions, hours of labor and sim ilar subjects (Art. 1700, Civil Code). The parties, furthermore, are enjoined not to act oppres­ sively against each other, or im pair the interest or convenience of the public (Art. 1701, Civil Code). *

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Aside from being contractual, give other essential fea­ tures of the employer-employee relationship. ANS. It is in personam, involves the rendition of personal service by the employee, and partakes of master and servant relationship. *

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In determining the existence of employer-employee re­ lationship, what are the elements that are generally considered?

5

GENERAL PRINCIPLES

ANS. The elements that are generally considered are the following: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. *

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Among the foregoing elements, what constitutes the most im portant index of the existence of the employeremployee relationship? ANS. It is the: so-called “control test”, and that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished (Investment Planning Corporation of the Philippines vs. Social Security System, G. R. No. L-19124, November 18, 1967). Stated otherwise, an employerempioyee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end (Dy Keh Beng vs. International Labor and Marine Union of the Philippines et al., G. R. No. L-32205, May 25, 1979). It is essentially the relationship of master and servant. *

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Why is it important to determine whether the relation­ ship between the parties is that of employer and em­ ployee or that o f principal and independent contractor? Explain. ANS. This is to determine what laws will govern the rights and liabilities of the parties, and what tribunal or court will have jurisdiction over their dis­ putes.

6

GENERAL PRINCIPLES

Where there exists an employer-employee rela­ tionship, labor laws will govern the rights and liabilities of the parties, and labor tribunals will have jurisdiction over their disputes. On the other hand, if the relationship be one of principal and independent contractor, the ordinary rules on obligations and contract will apply and the regular courts w ill have jurisdiction over their disputes. *

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Twenty-two (22) workers are engaged under a pakiao arrangement by G. whom the Philippine Refining Com­ pany considers as an independent contractor, to unload copra from trucks of carriers, store it in PRC ware­ houses, and deliver it from the warehouses to the company’s m ill. A company employee gives orders to G. on where to store copra, when to bring out, how much to load and where, and what class o f copra to handle. The copra conveyor is owned by the company, and the load it may carry as well as the time and manner o f its operation are controlled by the latter. G. had no office o f his own. Under the circumstances, are G. and the pakiao workers considered as employees of PRC? Explain. ANS. Yes. Copra is the basic raw material of PRC’s business. The company must have, and the facts show that it has, positive and direct control over the handling of copra prior to its being fed into the manufacturing process. The control test is more than satisfactorily met. G. and the pakiao workers are employees of PRC. (Philippine Refining Co. vs. Court of Appeals et al., G. R. No. L-29590, September 30, 1982). it

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Dy Keh Beng was engaged ra the manufacture of bas­ kets known as kaing. He hired piece workers to make

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GENERAL PRINCIPLES

baskets subject to his specifications. Are these piece­ workers his employees? Why? ANS. Yes. The fact that the making of the basket is subject to Dy’s specifications indicates the existence of control. And it should be borne in mind that the control test calls merely for the.existence of the right to control the manner of doing work, not the actual exercise of the right (Dy Keh Beng vs. International Labor and Marine Union of the Philippines et al., G. R. No. L-32245, May 22, 1979). *

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IPC Company which was engaged in business manage­ ment and sale of securities had two classes o f agents who sold its investment plan: (1) salaried employees who kept definite hours and worked under the control and supervision o f the company; and (2) registered representatives who worked on commission basis. The company had, with the latter, an agreement to the effect, among others, that the agent is paid compensation fo r services in the form o f commission, that he is subject to a set of rules and regulations governing the perfor­ mance o f his duties under the agreement; that he w ill put up a performance bond, and that his services may be terminated fo r ccrtain causes. U was also estab­ lished that the agent was not required to report fo r work at any time, that he did not have to devote his time exclusively fo r the company; that the time and the effort he spent in his work depended entirely upon his own w ill and initiative, that he was not required to account fo r his time nor submit a record of his activities, and that he was paid commission based on a certain per­ cent o f his sales. Most agents were regularly employed in the government or private enterprises. Were these representatives»considered employees of the company? Explain. ANS. The contract between the company and the agents contains nothing to indicate that the latter are

GENERAL PRINCIPLES

under the control of the form er in respect of the means and methods they employ in the performance of their work. The fact that for certain specified causes the relationship may be terminated (e. g., failure to meet the annual quota of sales, inability to make sales production during a six-month period, conduct detri­ mental to the company etc.) does not mean that such control exists, fo r the causes of term ination thus specified have no relation to the means and methods of work that are ordinarily required of or imposed upon the employee (Investment Planning Corporation of the Philippines vs. Social Security System, G. R. No. L-19124, November 18, 1967). *

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Manila Cosmos Aerated Water Factory, Inc. (Cosmos) entered into an Agreement to Peddle Soft Drinks with certain individuals (peddlers). The said agreement pro­ vided among others that Cosmos would provide the peddler with a delivery truck to be used by the latter under his own responsibility, exclusively fo r sale o f products purchased by him from Cosmos; that the peddler shall him self drive the truck carefully and in strict observance o f traffic rules and regulations; that should he employ a driver or helpers, they shall be his employees and he shall pay their compensation; that he shall be responsible fo r any damage to property, death, o r injuries to persons resulting from his own acts or that o f his driver o r helpers; that he shall secure at his own expense all necessary licenses and permits re­ quired by law or ordinance and shall bear all expenses incurred in the sale o f the products of Cosmos; that all soft drinks purchased by him shall be charged to him at factory price o r with dealer's discount; that he shall post a cash bond to answer fo r unpaid accounts or damage to the truck; that he shall liquidate and pay his account at the end of each day; and that the agreement is effective only up to a certain date but may even be terminated earlier upon seven (7) days prior notice by

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GENtRAL,PRINCIPLES;

on© party to the other. Are the peddlers independent contractors and not employees o f Cosmos? Why? ANS. in determining whether the relationship is that of employer and employee or whether one is an ind^pj||i4gnt).;jGO,nt>C9.c^p^ each case must be determ ijje^j on i its :Qwnr facts and all the features of the: r°lationshiR M e to be iConsidered. >ln the instant case, the peddling , cQntraet did not create an employer^: lam ploye^rpl^tipftsbip^rather, it made the peddler an independent contractor (Social Security System vs. Court of Appeals et al.. G. R. No. 55764, February 16, 1982). *

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A shipping company entered in to a c o n tra c tw ith a private security agency fors the latter to guard and protect the former’s vessels while they were m oored in the Port o f Manila.*. I t was stipulated in the contract that sts term was fo r one (1) year com m encingfrom the date of its execution and ct can be terrninated by either party upon 30 days notice to the other. The relationship of the parties was such th a t it was the security agency who hired and assigned the guards who kept watch over the vessels. The guards were not known to the shipping company fo r the latter dealt only w ith the agency on matters pertaining to the service o f the guards. A Jump sum would be paid fay the, company to the agency who in turn determined and paid the com­ pensation o f the individual watchmen. Are the watch­ men considered employees of the shipping company? Explain. ANS. Under the circumstances, the guards cannot be considered as employees of the shipping company. It is the security agency that recruits, hires and assigns the work of the watchmen. Hence, a watchman cannot perform any security service for the company's vessels unless the agency first accepts him as its watchman.

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GENERAL PRINCIPLES

With respect to his wages, the amount to be paid to a security guard is beyond the power of the company to determins. Certainly, the lump sum amount paid by the company to the agency in consideration of the latter's service is much more than the wages of any one watchman. In point of fact, it is the agency that quantifies and pays the wages to which the watchman is entitled. Neither does the company have any power to dismiss the security guards. It is true that it may request the agency to change a particular guard. B ut this precisely is proof that the power lies in the hands of the agency. Since the company has to deal with the agency, and not with the individual watchmen, on matters pertaining to the contracted task, it stands to reason that the company does not exercise any power over the watchmen's conduct. Always, the agency stands between the company and the watchmen; and it is the agency that is answerable to the company for the conduct of its guards. (American President Lines vs. Honorable Clave et al., G. R. No. L-51641, June 29, 1982). .. .

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Shipside, Inc. (SHIPSIDE), which operated harbor and wharfage facilities in* La Union, entered in 1963 into a /(»

WAGES

ers are cleaned and inspected for defects before pack­ ing. The workers in this department are paid a daily rate o f P150.00. Despite repeated appeals from manage­ ment, a worker can only clean and inspect 250 contain­ ers fo r eight (8) hours. Through time and m otion studies in accordance with standards set by the Min­ istry of Labor and Employment, the company was able to ascertain that an ordinary w orker of minimum skill or ability can clean and inspect 450 containers fo r eight hours. The company therefore changed the mode of payment of the wages of the workers in the cleaning and inspection department from time basis to piece­ work, at P0.40 per container cleaned and inspected. The workers assail this move on the part o f the em­ ployer as violative o f their rights. Decide. ANS. The company has the right to change the basis of the payment of the wages of the workers. This is to increase production. The workers would not suffer as it is within their capability to clean and inspect the number of containers needed to enable them to at least earn the rate they were receiving at the tim e the change was effected. They cannot however be deprived of the benefits they were already enjoying as employees paid on the time basis at the time of such change.

Miss X works as a manicurist in the D’Style Barbershop which has twenty (20) barbers and manicurists. She is paid P5.00 per manicure that she performs. Sometimes she earns P90.00 per day, but there are also occasions when there are no customers. Is she entitled to holiday pay? Explain. ANS. Miss X is an employee who is paid by results and she works in a service establishment employing more than ten (10) persons. She is entitled to holiday pay which shall not be less than her average daily

249

WAGES

earnings fo r the last seven (7) actual working days preceding the regular holiday and in no case less than the applicable statutory minimum wage rate. (Section 8, Rule IV, Book lil, Implementing Rules and Regula­ tions) *

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A clerk in the College o f Law o f a University worked w ithout pay but was allowed to take up no more than three (3) units o f law subjects per semester free o f charge. Realizing it would take a very long time to finish the course, he resigned at the end o f the school year and demanded payment o f unpaid wages. The university refused to pay contending th a t there was no employer-employee relationship between them. Is the clerk entitled to backwages? (1930 Bar) ANS. Yes. Under Section 14, Rule X, Book III, of the Rules and Regulations Implementing the Labor Code, there is no employer-employee relationship between students on the one hand and schools, col­ leges or universities on the other, where students work for the latter in exchange for the privilege to study free of charge, only in instances where the students are given real opportunity, including such facilities as may be reasonably necessary to finish their chosen courses under such arrangement. In the problem given, it cannot be said that the clerk was given real opportu­ nity to finish law as he was allowed to take up no more than three (3) units of law subjects per semester. There is therefore em ployer-employee relationship between the clerk and the university. *

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After rendering twenty-five (25) years o f service fo r a manufacturing firm, Mang Celo retires. A few weeks thereafter, the company proposes that he hires and pays in his ow n name persons to work in its painting

250

WAGES

department; that the company would reimburse him fo r whatever he pays as wages to the workers; and that fo r his services he would be entitled to a sum equivalent to 10% of whatever amounts are paid to the workers. If Mang Celo fails to pay the wages o f the workers, can the latter claim from the company? Explain. ANS. Yes. For Mang Celo is merely a “labor only" contractor. He supplies workers to an employer but he does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed perform activities directly related to the principal busi­ ness of the employer. He is considered merely an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by it. (Article 106, Labor Code). *

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The Prompt Service Corporation renders janitorial ser­ vice? by its own means and methods to several estab­ lishments in Metro Manila. It has more than 200 ja n i­ tors, maintains an office where its tools and cleaning equipment are kept and where the janitors assemble before going to the establishments where they are assigned, and charges its client a fixed amount per janitor assigned to them. (a) Is the Prompt Service Corporation a “labor-only” contractor? Explain. ANS. No. It carries on an independent business and undertakes the janitorial service on its own ac­ count under its own responsibility, according to its own manner and method free from the control and direction of its clients in all matters connected with the perfor­ mance of the work except as to the result thereof. It has substantial capital or investment in the form of tools and equipment and maintains its own office. It is

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WAGES

an independent or job contractor. (Sec. 8, Rule VIII, Implementing Rules and Regulations) (b) if Prompt Service Corporation fails to pay the wages o f a janitor, is the establishment to which the latter is assigned liable therefor? Why? ANS. Yes. According to Article 106 of the Labor Code in the event that the contractor or sub-contractor fails to pay the wages of his employees in accordance with the Code, the em ployer shall be jo in tly and severally liable with his contractor or sub-contractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. It cannot be denied that the em ployer is the party benefited by the services of the employees. (c) Would you change your answer if the establishment can prove that it has fu lly paid Prompt Service Corpora­ tio n under their agreement? ANS. No. I would not change my answer. The establishment will still be liable for the unpaid wages o f the janitor. The obligation of the establishment to pay is imposed by law. W hether or not Prompt Service Corporation has received full payment of its contract is not the concern of the worker. *

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Ace Building Care (ABC) and the Philippines Tuberculo­ sis Society (PTS) entered into a contract under which the form er would provide the latter w ith janitorial and allied services fo r a stipulated consideration,subject to such adjustment as m ight be subsequently required by law. Subsequently, forty-one (41) janitors ABC had detailed to PTS filed a com plaint with the NLRC against both ABC and PTS fo r unpaid wage differentials under wage orders, holiday pay, damages, reimbursement of

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WAGES

cash bond, incentive leave pay, bonus and separation pay. (a) What is the nature o f the liability o f ABC and PTS for the claims o f the janitors? ANS. Under Article 106 of the Labor Code, ABC and PTS are jo intly and severally liable fo r the claims of the janitors. (b) PTS however contends that it is not liable because the wage orders are applicable only to employers and employees in the private sector and that under Book IV o f the Labor Code (Employees Compensation Program) it is specifically mentioned as an employer in the public sector. Is this contention tenable? Why? ANS. No. W hile the wage orders do not apply to the d ire c t employees of PTS who in fact are members of the GSIS, the janitors employed by ABC are consid­ ered in d ire c t employees of PTS and as such are entitled to hold it liable, solidarity with their direct employer, for their unpaid wage differentials. In this sense, the PTS is correctly classified as an employer coming under the private sector. The reference to it as belonging to the public sector relates only to its direct employees for purposes of the employees com­ pensation program and not to its indirect employees coming from the private sector. (Rabago, et al. vs. NLRC, et al., G. R. No. 82868, August 5, 1991, citing Eagle Security Agency, Inc. vs. NLRC, et al., 173 SCRA 479) *

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Mr. and Mrs. Lim enter into a contract w ith Reliable Construction Co., whereby fo r a fixed sum the latter, supplying labor and materials, w ill put up their residen­ tial house. Some workers employed by Reliable Con­ struction Co. in the construction are not paid their wages. Are Mr. and Mrs. Lim liable therefor? Explain.

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WAGES

ANS. Yes. Under Article 101 of the Labor Code, 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, is jo intly and solidarity liable with the independent contractor for the wages employed by the latter. Mr. and Mrs. Lim are indirect employers. Besides Article 1729 of the Civil Code provides that those who put their labor for a piece of work under­ taken by a contractor have an action against the owner up to the amount owing from the latter to the contrac­ tor at the tim e the claim is made. *

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S, who was engaged in the, buy and soli o f paiay rice, entered into a verbal agreement with A, whereby it was agreed that the latter would be paid a commission fo r milled rice she sold or palay purchased fo r the former. It was further agreed that A would spend her own money fo r the undertaking, but to enable her to carry out the agreement more effectively, she was authorized to borrow money from other persons, subject to reim­ bursement from S, and that either o f them may term i­ nate the business arrangement at w ill, w ith o r w ithout cause. May A be considered an independent contractor? ANS. Yes. Under the condition set forth in their agreement, private respondent was an independent contractor, who exercising independent employment, contracted to do a piece of work according to her own method and without being subject to the control of her employer except as to the result of her work. She was paid fo r the result of her labor, unlike an employee who is paid for the labor he performs. (Sara et al. vs. Agarrado, et al., G. R. No. 73199, October 26, 1988). *

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WAGES

Feliciano Lupo, a building contractor, entered into a contract with General M illing Corporation (GMC), a cor­ poration engaged in flo u r and feeds manufacturing, fo r the construction of an annex building inside the latter's plant in Cebu City. In connection w ith the aforesaid contract, Lupo hired carpenters, masons, and laborers. (a) Is GMC considered an “ indirect em ployer" o f the workers of Lupo? ANS. On the assumption that Lupo is a jobcontractor, as distinguished from a labor-only contrac­ tor, GMC is deemed an “indirect employer’ of Lupo’s workers pursuant to Article 107 of the Labor Code. (b) May GMC be held liable fo r unpaid wages, and other monetary claims o f Lupo’s workers? ANS. Yes. Under Article 109 of the Labor Code, the employer or indirect employer is jo intly and sever­ ally liable with his contractor or sub-contractor for any violation of any provision of the Labor Code. (Baguio, et al. vs. NLRC, et al., G. R. Nos. 79004-09, October 4, 1991) *

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Is the jo in t and several liability o f the principal and the jo b contractor under Articles 107 and 109, in relation to Article 106, of the Labor Code, dependent upon the insolvency or unwillingness to pay on the part o f the contractor o r direct employer? ANS. No. Nothing in Article 106 indicates that insolvency or unwillingness to pay by the contractor or direct employer is a prerequisite for the jo in t and several liability of the principal or indirect employer. This joint and several liability facilitates, if not guaran­ tees, payment of the workers’ performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitu-

255

WAGES

lion. (Development Bank of the Philippines vs. NLRC, et al., G. R. Nos. 100376-771, June 17, 1994) *

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Janitors were hired by Contemporary Services, Inc. (CSI) and assigned to Union Carbide. They drew their salaries from CSI and not from Union Carbide. CSI exercised control over them through a CSI employee who gave orders and instructions. Moreover, CSI had the power to assign its janitors to various clients and to pull them out, as it had done in a number o f occasions, any of the janitors working at Union Carbide. CSI was registered as a service contractor and did business as such with a number of know a companies in the country. It maintains its own office and had its own office equipment. It furnished its janitors the cleaning equipment such as carpet vacuums and polishing ma­ chines. (a) Are the janitors assigned by CSI to Union Carbide considered employees o f the latter? Why? ANS. No. CSI is a job contractor, not a labor-only contractor; hence, the janitors are its own employees. (b) As later on Union Carbide sold its agriculturalchemical divisions to Rhone-Poulenc, is the latter bound by the janitorial service agreement between the form er and CSI? Why? ANS. No. As new owner, Rhone-Poulenc had every right to choose its own service contractor. (Rhone-Poulenc Agrochemicals Phils., inc. vs. NLRC, et al., G. R. Nos. 102633-35, January 19, 1993) *

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Building Care Corporation (BCC), capitalized at P1 m il­ lion which was lawfully subscribed and paid for, pro­ vided janitorial and other specific services to various

WAGES

firms. It hired Virginia Neri and Jose Cabelin and assigned them to work in the Cagayan de Oro City Branch of Far East Bank and Trust Co (FE B TC ) to work as radio/telex operator and as janitor, respectively. They reported fo r work wearing the prescribed uniform o f BCC; their leaves of absence war® filed directly with BCC; and their salaries were drawn only from BCC. FEBTC however issued a jo b description which detailed the functions of Neri as a radio/telex operator. (a) Who is the employer of Neri and Cabelin? ANS. Applying the “control test", BCC is the employer of Neri and Cabelin. BCC maintained super­ vision and control over them through its Housekeeping and Special Services Division. (b) Does the issuance by FEBTC o f a jo b description which detailed the function o f Neri establish employeremployee relationship between FEBTC and Neri? ANS. No. A cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end-result of the task, e. g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the desired end-result was achieved. It did not, however, tell TJeri how the radio/telex machine should be operated. (c) May BCC be deemed a jo b contractor considering that there was no evidence that it had investment in the form o f tools, equipment, machineries, work premises, among others? Why? ANS. Yes. It had substantial capital. Article 106 of the Labor Code does not require that the contractor has both substantial capital and investment in the form of tools, etc. It uses the word “or” , not “and” . (Neri et al. vs. NLRC, et al., G. R. Nos. 97008-09, July 23, 1993)

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The Philippine Geothermal inc. (PGI) entered into an agreement (denominated as Job Contracting Agree­ ment) with Build O. Weld' Service Co. (BOWSC) for work on patts and phases of the former’s operations in Tiwi, Albay, and which provided that PGI shall provide the plans and determine the work specifications o f each jo b to be contracted; that BOWSC shall be responsible fo r the completion of each jo b according to the afore­ said plans and specifications and within the tim e set fo r its completion; that BOWSC shall provide itself w ith the equipment, tools and implements needed fo r carrying out each order, except those highly technical equip­ ment required for drilling and other phases o f opera­ tions; that BOWSC will be responsible fo r the recruit­ ment, hiring, placement, assignment, supervision, pro­ motion, discipline and termination or lay-off o f its em­ ployees assigned to the jo b contracts, t and fo r the payment o f th e ir salaries and other benefits as well as their SSS and Medicare membership; that PGI w ill pay the fees due BOWSC fo r services rendered thru progress billing or at the end of each billing period; and BOWSC shall at all times have a competent superinten­ dent on the jo b site and who w ill be in complete control o f the work. The employees hired by BOWSC were required by PGI to subm it progress reports and register their arrivals and departures through individual time cards. fa) Is BOWSC a jo b contractor? Why?' ANS. Yes. It performed the stipulated services to PGI without being subject to the control of the latter, except only as to result of the work to be performed. The requirement for the submission of progress re­ ports and the filling out of individual time cards does not enough indicator to demonstrate control of PGI over the employees of BOWSC; at most, the same merely ensure order in the project site. fb) Are the workers engaged by BOWSC pursuant to contract w ith PGI regular employees, considering that

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they worked fo r more than one (1) year and that they were never issued any written contracts o? employment. ANS. No. They are project workers of BOWSC. They were employed only for the PGI project and were terminated upon the completion of the project or the phase for which their services were engaged. And the law does not require that an employer issue any written contracts of employment to project employees to which the employees are being assigned. (Bordeos et al. vs. NLRC, et al., G. R. Nos. 115314-23, September 26, 1996) ■it

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FYLS8N, w hich is engaged in the manufacture o f polyester fiber, entered into a contract w ith DE LIMA GENERAL SERVICES whereby the latter undertook to perform specific janitorial services at the form er’s plant in Sta. Rosa, Laguna, DE LIMA was capitalized at P1,600,000.00, P400,000.00 o f which was actually sub­ scribed. (a) May DE LIMA be considered as a labor-only contrac­ tor? Why? ANS. No. It is a highly capitalized venture. Besides, the janitors of DE LIMA render services which are merely incidental, not integral, to the business operations of FYLSIN; the latter's production and sales will not suffer even in the absence of janitorial ser­ vices. DE LIMA is an independent contractor. (b) May FYLSIN be held liable jo in tly and severally with DE LIMA fo r the claim of a ja nitor fo r backwages arising from illegal dismissal? Why? ANS. Yes. This is pursuant to Article 109 of the Labor Code which makes the principal of the indepen­ dent contractor liable jo intly and severally with the latter for any violation of any provision of the said

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Code. (Pilipinas Synthetic Fiber Corporation vs. NLRC et al., G. R. No. 113347, June 14, 1996)

Philippine Commercial International Bank (PCIB) en­ tered into a.n' agreement with Prime Manpower Re­ sources Development, Inc. (Prime) which provided among others that Prime shall provide qualified and adequate personnel services required by PCIB; that PCIB shall have the right to select, refuse o r change personnel assigned by Prime; that PCIB shall be re­ sponsible in supervising the personnel assigned to it by Prime; that the personnel assigned by Prime to PCIB shall not be considered employees o f the latter; and , that PCIB shall pay Prime specific hourly rates per Job category and status for the assigned personnel and overtime fo r work they render in excess o f regular work periods. is Prime a job contractor? Why? ANS. No. Prime is a labor only contractor. It merely acted as a placement agency providing man­ power to PCIB. The service rendered by Prime was not the performance of a specific job, but the supply of qualified personnel. The legitimate job contractor provides services while the labor-only contractor only provides man­ power. The form er undertakes to perform a specific job, while the latter merely provides the personnel to work for the empicyer. (PCi Automation Center, inc. vs. NLRC et al., G. R. No. 115920, January 24, 1996) *

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Fuji Xerox entered into an agreement w ith under which the latter supplied workers copier machines o f the former as part o f its “ Xerox Copier Project” in its sales offices.

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Skill Power to operate (Fuji Xerox) Among the

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workers assigned bw Skillpow er to F u ji'X e ro x was Garacio. , He, was hared by Skillpower, but fo r five (5) years he was. assigned to Fuji Xerox and was never assigned to any other client of Skillpower. He became a member o f the union o f employees ©f Fuji Xerox, but he received his pay from Skillpower. He was also subjected to administrative investigation by the Indus­ trial Relations Department o f Fuji Xerox. The order fo r his dismissal was however issued by SkiiiSpower. (a), Is Skillpower the employer o f Garado? Why? ANS. No. Skillpower acted as a mere labor-only contractor, a supplier of manpower and an agent of Fuji Xerox, who must be considered the employer of Garado. (b) 3t is however pointed out that Skillpower is a highly-capitalized business venture, registered with the SEC and the DOLE as an “ independent employer” , and SSS member, with assets exceeding PS m illion pesos and at least 20 typewriters, office equipment and ser­ vice vehicles, employees o f its own and a pool o f 25 clerks assigned to clients on a temporary basis. W ill these facts make Skillpower a Job contractor o f Fuji Xerox? ANS. No. The service rendered by Garado was not a specific job or special skill that Skillpower was in the business of providing. Furthermore, the typewriters and vehicle of S killpow er bore no direct relationship to the job of operating copier machines and offering copying ser­ vices to the public. It did not have copying machines of its own. The tools, equipm ent,m achineries etc. provided for in the implementing rules of the Labor Code must be directly related to the business the contractor has undertaken to render. (c) The agreement between Fuji Xerox and Skillpower provided that Skillpower is an independent contractor, that the workers hired by it shall not be considered as

261

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employees of Fuji Xerox, and that Fuji Xerox has no control or supervision whatsoever over the conduct of the contractor or any of its worker in respect to how they accomplish their work or perform the contractor’s obligation under the agreement. Does this stipulation make Skillpower an independent contractor? Why? ANS. No. The nature of one’s business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. The relations of parties must be judged from case to case and the decree of law, and not by declaration of parties. (Philippine Fuji Xerox Corporation et al. vs. NLRC et al., G. R. No. 111501, March 5, 1996) *

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Peninsula Manpower Company, Inc. (PMCI) had a “ Contract of Service” w ith Regent Food Corporation (RFC), pursuant to which the former, supposedly an independent contractor, would provide temporary man­ power services to the fatter. Amwsg the westers hired and utilized by PMCI in connection w ith Us c o n tr o l with RFC was Virtoya, a sales representative, who how­ ever came under the control and supervision o f RFC. PMCI was capitalized at P1 m illion o f which P75.000.00 was actually paid up. May PMCI be consid­ ered a jo b contractor? Why? ANS. No. PMCI does not have substantial capital­ ization; its paid-up capital of P75,000.00 cannot be considered as such. It did not also carry on an independent business nor did it undertake the perfor­ mance of its contract according to its own manner and method, free from the control and supervision of RFC; the Contract of Service itself provided that RFC can require the workers assigned by PMCI to render ser­ vices even beyond the eight hour working day when deemed necessary. Likewise, PMCi was not engaged to perform a specific and special job or service but

282

WAGES

undertook merely to provide RFC with temporary work­ force to carry out whatever service may be required of it; obviously, PMC! acted m erely as a recruitment agency for RFC. Finally, Vinoya, the worker placed by PMCI with RFC performed services directly related to the business of RFC; being in the business of food manufacturing, it was necessary for RFC to hire a sales representative to book saies orders and collect payments therefor. (Vinoya vs. NLRC et at., G. R. No. 126586, February 2, 2000) iSr"'

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Donna Louise Advertising a n d ' Marketing Associates, inc. (DL Admarfc) had a service contract with California ' Manufacturing Corporation (CMC) whereby the former undertook to supply sales promoting and merchandis­ ing services to the latter, which is a corporation en­ gaged in the manufacture of v'ood products and distri­ bution of such products to wholesalers and retailers. DL Admarfc was registered w ith the SEC as a firm engaged in promotional, advertising, marketing and merchandising activities. It Srad several merchandising contracts with companies Site Purefoods, Corona Sup­ ply, Nabisco Biscuits, and Ueson. It was likewise en­ gaged in the publication ljusiness, St had assets amounting I© P6 million, owned several motor vehicles and otlser tools, materials and equip­ ment to service its clients, it had an authorized capital stock of PS00,000.00 and paid monthly rentals of P30,020.00 for the office space it occupied. It hired the workers that it utilized in fu lfillin g its service contract w ith CMC, paid their wages, and had the power to terminate their services. No evidence was presented that would suggest that it was CMC that supervised and controlled the workers. (a) Is DL Admark a labor only contractor? Why? ANS. No. It is a job contractor. It carried on a distinct and independent business and undertook the

263

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contract work on its own account and responsibility according to its own manner and method free from the control and direction of CMC. It also had substantial capital as well as investment necessary in the conduct of its business. (b) Who is considered the employer o f the merchandis­ ers hired by DL Admark? ANS. They are considered employees of DL Admark. Under the four-fold test used in determining employer-employee relationship, the status of DL Ad­ mark as the true employer of the workers is clearly established. (Escario et al vs. NLRC et al., G. R. No. 124055, June 8, 2000) *

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The Cotabato Timberiand Co., Inc. (CTCI), which is engaged in plywood manufacturing had a contract w ith Arabi fo r the m illing, piling and bundling o f log ends or sawn lumber in small scale, as well as clearing and hauling o f firewood or waste firewood. Arabi had no equipment, tools and capital of his own; CTCI lent him the tools and equipment to his m illing, p iling and bundling work. Majority o f the workers that he hired to accomplish the work were his neighbors, friends and province mates; their wages came from the money paid by CTCI to Arabi based on sawmill production and/or number o f workers or time used in a certain jo b o r area o f operation. Work activities and schedules were set by CTCI. fa) §s Arabi a job contractor? Why? ANS. No. He is a labor-only contractor. He acted merely as a recruiter or supplier of manpower. He did not have substantial capital or equipment or tools to accomplish the work. His supposed workers were subject to the control of CTCI.

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(b) Who is liable fo r the claims o f the workers hired by Arabi? Why? ANS. CTCI, not Arabi, is responsible for the claims of the workers hired by Arabi. Arabi was a mere agent of CTCI. (c) Were the work/job activities performed by the work­ ers hired by Arabi necessary to CTCI’s principal busi­ ness? ANS. Yes. The workers performed usual regular and necessary services fo r CTCi’s production o f ply­ wood. (Lim et al vs. NLRC et al., G. R. No. 124630, February 12, 1999) *

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Philippine Airlines, Inc. (PAL) and Stellar Industrial Services, Inc. (STELLAR) entered into an agreement to the effect that STELLAR w ill provide PAL with cleaning and janitorial maintenance services; that STELLAR w ill utilize its personnel, equipment, supplies and materials to carry out its undertakings; that STELLAR warrants that the persons it shall employ to perform the work are honest, reliable and in possession of health certificates and police clearances and that the materials it w ill use are o f high quality anc{ w ill not cause any damage to PAL’s premises; that in consideration o f the services to be rendered by STELLAR, PAL w ill pay STELLAR the sum o f P3,840.00 per person per month; that STELLAR shall select, engage and discharge its employees, shall have direct control o f their services, and shall deter­ mine their rate o f wages. (a) Considering that it has sufficient capital in the form o f tools and equipment, like vacuum cleaners and pol­ ishers, and it has clients other than PAL, like San Miguel Corporation, Hongkong and Shanghai Bank and Japan Airlines, is STELLAR a jo b contractor? Why?

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ANS. Yes. The circumstances establish that STELLA R undertook to perform the services on its own account, under its own responsibility, according to its own manner and method, and free from the control and direction of PAL. The janitorial services agreement between STELLAR and PAL is a case of permissible job contracting. (b) Is PAL considered the employ,r of the janitors hired .

by STELLAR? Why? A N S. No. in legitimate job contracting, no employer-employee relation exists between the princi­ pal and the job contractor’s employees. In any case, ■STELLAR had the power of selection and engagement of the janitors; it paid their wages; it had authority to dismiss them; and it had control over their conduct. (Philippine Airlines, Inc. vs. NLRC et al., G. R. No. 128792, November 9, 1998) *

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Banco d© Manila and the Ang Husay Janitorial and Pest Control Agency entered Into an independent.Contractor Agreement w ith the usual stipulations; specifically, the absence of. .esroplbyer-smpioyee’ relationship, and .the relief from liability clauses. Can the Bank, as a client, and .the>Agency, as tin, 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, (2000 Bar),;. ANS. It depends. When the employees to be assigned to work in the bank by ■the agency :will become subject to the control and supervision of the bank, the stipulation would not. be valid. The arrange-, men! would in effect be merely labor only contracting, and the employees would.be considered as employees of the bank. (Phil. Bank of Communications vs. NLRC et al.', G. R. No. L-66598, December 19, 1986)

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On the other hand, where the employees will not become subject to the control and supervision of the bank, the stipulation would be valid. In this case, there is job contracting; the employees of the contrac­ tor do not become employees of the principal. (See Article 106, Labor Code) *

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Metro Grocery Inc. arranged with Mr. Juan Dado, a Barangay Chairman, to provide the grocery w ith w ork­ ers who w ill work as cashiers, bag boys, shelf counter helpers and sanitation workers. The grocery w ill pay Mr. Dado an amount equivalent to the direct and hidden costs o f the wages o f each worker assigned, plus ten percent (10%) to cover the administrative costs related to their arrangement. Mr. Dado, in turn, w ill pay directly the workers their wages. As far as the workers are concerned, Mr. Dado is their employer. A group o f concerned workers consulted you if Mr. Dado is really under the law their employer. (2000 Bar) (a) How w ill you analyze the problem in order to formulate your answer? ANS. The issues presented involve employeremployee relationship, as well as “job contracting* and “labor -only contracting." To resolve these issues, the tests to determine the existence of employer-employee relationship must be utilized, including the control test, which is the most important test in the determination of whether such a relationship exists. The provisions of the Labor Code on “job contract­ ing’ and “labor only contracting’ (Articles 106 to 109) must also be applied. For if Mr. Dado is merely a labor only contractor, the workers that he provided the grocery would be considered employees of the latter. At any rate, under the facts given in the question, Mr. Dado is merely a labor only contractor.

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(b) What is the legal significance, if any, o f the question of tSi© concerned workers as to who is their employer? ANS. The relationship between the concerned workers and their employer will be governed by labor and social legislations; and not by ordinary rules on obligations and contracts. Their claims arising from employer-employee rela­ tionship will fall under the jurisdiction of labor tri­ bunals, like the National Labor Relations Commission, and not under that of ordinary courts. *

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The evidence on record shows that Delos Santos, a janitor, was hired by CAMARA STEEL after undergoing an interview with a timekeeper who worked under the direct supervision o f a supervisor o f the company, that he filled up time records which although bearing the heading and logo of TOPFLITE (a supposed jo b con­ tractor) were signed by officers o f CAMARA STEEL, that TOPFLITE requested CAMARA STEEL to dismiss Delos Santos, and that the contract between TOPFLITE and CAMARA STEEL stipulated that the form er shall “ provide” workers to the latter. (a) Who is considered the employer o f Delos Santos? Why? ANS. CAMARA STEEL. It exercised control and supervision over Delos'Santos. This is shown by the fact that the worker’s time records were signed be officers of CAMARA STEEL. The company also had the power to dismiss the worker; this is shown by the fact that TOPFLITE “retHJested" it to dismiss Delos Santos. (b) Is TOPFLITE a job-contractor? Why? ANS. No. It is merely a labor-only contractor. It did not adduce evidence that it had substantial capital­

288

WAGES

ization to undertake an independent business. Delos Santos also performed activities directly related to ihe daily operations of the steel factory. (Deios Santos et al vs. NLRC et al., G. R. No. 121327, December 20, 2001 ) *

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San Miguel Corporation (SMC) had a Contract of'Ser­ vices with Maerc Integrated Services, Inc. (MAERC) in connection with the washing and segregation of vari­ ous kinds of empty bottles used fey SMC in the sate and distribution of its beverages to the consuming public in Cebu. MAERC was set up to meet the pressing needs of. SMC which was then having labor problems in its segregation division. MAERC’s investments in the form of buildings, tools and equipment amounted to more that P4 million, but it was SMC that required such investments with the understanding that their business relationship would £se on a long term basis. SMC paid MAERC a lump sum for the workers" wages, but as­ sumed responsibility of paying their overtime, holiday rest day, benefits, 13® month pay, service incentive leaves as well as the employer’s share in their SSS and Medicare contributions. The workers performed their work in premises controlled by SMC and in the pres­ ence of SMC checkers, must undergo and pass eye examination don® by SMC EEN T company doctor. None of the workers of MAERC was ever assigned to other companies. (a) Is MAERC a job-contractor? ANS. No. It displayed the characteristics of a labor-only contractor. (b) The contract of services between MAERC and SMC provided that MAERC was an independent contractor and that the workers hired by it shall not in any manner and under any circumstances be considered employees of SMC and that SMC has no control over the conduct of MAERC or any of its workers in respect to how they

289

WAGES

accomplish their work or perform MAERC’s obligations under the contract. Are the supposed workers of MAERC considered workers of SMC? ANS. Yes. In deciding the question of control, the language of the contract is not determinative of the parties’ relationship; rather, it is the totality of the facts and surrounding circumstances of each case. (c) After more than three (3) years, SSV8G terminated the service contract because of the phase out of its segre­ gation activities due to the installation o f labor and cost-saving devices. Is SMC liable for the payment of separation pay and indemnity to the workers? ANS. Yes. Being considered the direct employer of the workers of MAERC, SMC is liable for the payment of separation pay to the former. It is also liable for payment of indemnity for its failure to com­ pany with the requirement of written notice to boiii the workers concerned and the DOLE which must be given at least one (1) month before the intended date of dismissal. (San Miguel Corporation vs. MAERC Integrated Services, Inc. et a!., G. R. No. 144672, July 10, 2003) *

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Give the concept of “contracting” or “subcontracting.” ANS. “Contracting” or “subcontracting0 refers to an arrangement whereby an employer, known as the “principal," agrees to put out or farm out with a contractor or subcontractor the performance or com­ pletion. of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the princi­ pal. (Section 4[d], DOLE Department Order No. 10, Series of 1997)

270

WAGES

Describe the -relationship arising from contracting ar­ rangements; ANS. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the princi­ pal and the contractor or subcontractor, and a contract of employment between the contractor or subcontrac­ tor and its workers. Hence,; there are three parties involved in these arrangements, the principal which, decides to farm out a;job or service t o c o n t r a c t o r or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the per­ formance of the job, work or service, and the contrac­ tual workers engaged by the contractor or subcontrac­ to r to accomplish the job, work or service. (Sec. 3, DOLE D epartm ent O rder Mg . 18-02) *

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What are the rights o f contractual employees? AM8. The contractual employee shall be entitled "to all the. rights and privileges due to a regular em­ ployee as provided fo r in the Labor Code, as amended, to include the follow ing:

(a) Safe and healthful working conditions; (b) Labor, standards such • as 'service incentive leave,- rest days, overtim e pay, holiday pay, 13th month pay and separation pay; , (c) Social security and w elfare benefits; (d) Self-organization, c o lle c tiv e bargaining and peaceful concerted action; and (e) Security of tenure. (Sec. ,8, DOLE Department Order No. 18-02)

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Give the effects o f termination o f contractual employment.

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WAGES

ANS. In cases of termination of employment prior to the expiration of the contract between the principal and the contractor or subcontractor, the right of the contractual employee to separation pay or other re­ lated benefits shall be governed by the applicable laws and jurisprudence on termination of employment. Where the termination results from the expiration of the contract between the principal and the contrac­ tor or subcontractor, or from the completion of the phase of the job, work or service for which the contrac­ tual employee is engaged, the latter shall not be entitled to separation pay. However, this shall be without prejudice to completion bonuses or other emol­ uments, including retirement pay as may be provided by law or in the contract between the principal and the contractor or subcontractor. (Sec. 10, DOLE Depart­ ment Order No. 18-02) *

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Distinguish between job contracting and labor only contracting. ANS, Job contracting is legally recognized; labor only contracting is prohibited. In job contracting, the contractor has substantial capital or investment in the form of tools, equipment, machinery, and work premises; in labor only contract­ ing, the contractor does not have substantial capital or investment. In job contracting, the employees utilized, by the contractor are deemed his own employees; in labor only contracting, the employees of the contractor are actually the employees of the principal. it

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Why is labor only contracting prohibited?

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ANS. Labor only contracting gives rise to confu­ sion as to who is the real employer of the workers and who is liable for their claims. This scheme also deprives workers of the opportu­ nity to become regular employees and to acquire security of tenure. *

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Give the extent of the liability o f the principal regarding the claims o f the employees of the jo b contractor. Cite instances. ANS. Pursuant to legitimate job contracting, the job contractor and the principal are jo intly and sever­ ally liable in the payment of the wages of the form er’s employees, and for violation of any provision of the Labor Code. This includes the payment of salary differential and separation pay. (United Special Welchman Agency vs. The Court of Appeals et al., G. R. No. 152476, July 8, 2003) Nilo Layno Builders, specializing in concrete works, form works and steel rebar works, was engaged by New City Builders and Development Corporation, to perform works in" the construction of an office and residential condominium. Nilo Layno Builders hired its own employees, directed them in the performance of their work, except that from time to tim e the engineers of New Golden City Builders visited the site to check whether the work was in.accord with the plans and specification of the said principal, paid their salaries, and had the authority to dismiss them fo r just and valid cause. It was ruled that Nilo Layno Builders was a job contractor. Nevertheless, in accordance with Article 106 of the Labor Code, the principal (New Golden City Builders) is jointly and severally liable with Nilo Layno Builders for the payment of the employees’ wages, including service incentive leave and 13 month pay, during the tim e they were working at the project. So long as the work, task, job or project has been per­

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formed for the principal’s benefit or on its behalf, the liability accrues for such period even if, later on, the employees are eventually transferred or reassigned elsewhere. (New Golden City Builders & Development Corporation et al vs. Court of Appeals et al., G. R. Wo. 154715, December 11, 2003) VJf ifr if an" employer Ibscomes feaoknupt or liquidates its busi­ ness, do its workers enjoy any prcferesiee as regards their unpaid' wages? AMS. Article 110 of the Labor Code provides that: In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first pref­ erence as regards their unpaid wages and other mone­ tary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the ciaims .of the Government and other creditors may be paid. (As amended by Rep. Act 6715) xfc

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Give the .reasons fo r the preference. AMS. The reason behind the” provisions of the Labor Code giving preference to claims of labor in the liquidation of a business or industrial concern is patent and manifest, it is but humane and partakes of the divine that labor, as human beings, must be treated over and above chattels, machineries and other kinds of properties and the interests of the employer who can afford and survive the hardships of life better than their workers. Universal sense of human justice, not to speak of our specific social justice and protection to labor, constitutional injunctions dictate the preference that the above provisions accord to labor. (Philippine

274

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Gommercia! and Industrial Bank and The Manila Bank­ ing Corporation vs. The National Mines & Allied Workers Union (NAMAVt?U-MIF), National Labor Rela­ tions Commission (RegionaiBranch No. IV) and Atlas Consolidated Mining & Development Corporation, G. R. No. L-50402, August 19, 1932) tit

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Under what condition may the workers’ preference un­ der Article 110 of the Labor God® bs enforced? ANS. A declaration of bankruptcy or a judicial liquidation must be present before the workers’ prefer­ ence under Article 110 of the Labor Code may be enforced. T h e said article cannot be viewed in isola­ tion; it must always be read in relation to the provi­ sions of the C ivil Code concerning the classification, concurrence and preference of credits. (Development Bank of the Philippines vs. Hon. A. C. Santos, et a!., G. R. Nos. 78281-82, March 8, 1989). *

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Why Is the application of Article 11® contingent upon the institution o f bankruptcy or judicial! liquidation pro­ ceedings against fh© employer? ANS. The rationale for making the application of Article 110 of the Labor Code contingent upon the institution of bankruptcy or judicial liquidation pro­ ceedings against the employer is premised upon the very nature of a preferential right of credit. A prefer­ ence of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtor are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid

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first or whether they shall be paid out of the proceeds of the sale of the debtor’s specific property? Indu­ bitably, the preferential right of credit attains signifi­ cance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established (Kuenzle & Streiff (Ltd.) vs. Villanueva, 41 Phil. 611 (1916); Barretto vs. Villanueva, G. R. No. L-14938, December 29, 1962, 6 SCRA 928; Philippine Savings Bank vs. Lantin, G. R. No. L-33929, September 2, 1983, 124 SCRA 476). In this jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings provide the only proper venue for the enforcement of a creditor’s preferential right such as that established in Article 110 of the Labor Code, for these are in rem proceed­ ings binding against the whole world where all persons having any interest in the assets of the debtor are given the opportunity to establish their respective credits (Development Bank of the Philippines vs. Hon. A. C. Santos et al., G. R. Nos. 78261-62, March 8, 1989). ft

iSt

On December 22, 197S, the National Mines and Allied Workers Union obtained a judgm ent from the NLRC in an unfair labor practice case ordering the Philippine iron Mines to pay to the union severance compensation of its members by reason o f the closure o f the company due to bankruptcy. Two days before, or on December 20,1975, the Philippine Commercial and Industrial Bank and the Manila Banking Corporation, mortgage credi­ tors o f Philippine Iron Mines, foreclosed all mortgages in their favor; as they were the only bidders at the auction sale, they eventually received final conveyance in their favor o f the properties. The properties were later sold by the banks to Atlas Consolidated Mining and Development Corporation. But the union sought to garnish in its favor a portion o f the purchase price due from Atlas to the banks. Are the banks, as auction

276

WAGES

purchasers of the properties o f Philippine Iron Mines mortgaged to them and. as sellers thereof to Atlas, subject to the claims of the union finally adjudged by the NLRC? Explain. ANS. Yes. Under Article 110 of the Labor Code workers enjoy first preference as regards wages owed them for services rendered during the period prior to the bankruptcy or liquidation. (Philippine Commercial and Industrial Bank, et al. vs. The National Mines and Allied Workers Union, et al., G. R. No. L-50402, August 19, 1982) *

*

*

Atlas Textile Development Corporation mortgaged its assets to the Development Bank o f the Philippines. After Atlas defaulted in its obligations, DBP foreclosed on the mortgage in March, 1985 and acquired the m ort­ gaged assets by virtue o f the foreclosure Sale. In Octo­ ber 1985 employees filed a complaint With the labor arbiter against both Atlas and DBP fo r wage differen­ tials, illegal Salary deductions, separation pay and sim i­ lar money claims. The labor arbiter as well as the NLRC ruled in favor o f the employees, holding that the work­ ers preference under Article 110 o f the Labor Code prevails over DBP's mortgage lien. (a) Are the labor arbiter and NLRC correct in holding DBP liable? Why? ANS. No. Article 110 does not create a lien in favor of the workers. Besides, the monetary claims of the workers of Atlas are not involved in judicial pro­ ceedings in rem in adjudication of claims of creditors vis-a-vis the assets of the debtor, nor have such claims accrued after the effectivity of Republic Act No. 6715. (b) State the rules governing the application o f Article 110 o f the Labor Code.

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ANS. (1) Article 110, as amended, must be viewed and read in conjunction with the provisions of the Civil Code on concurrence and preference of crediis; (2) The aforesaid provisions of the Civil Code, including Article 110 of the Labor Code, require ju d i­ cial proceedings in rem in adjudication of creditors’ claims against the debtors’ assets to become opera­ tive; (3) Republic Act No. 6715 has the effect of expanding the “worker preference” to cover not only unpaid wages but also other monetary claims of labor­ ers, to which even claims of the Government must be deemed subordinate; and (4) The amendatory provisions of Republic Act 6715, which took effect on March 21, 1989, should only be given prospective application. (Development Bank of the Philippines vs. NLRC, et al., G. R. No. 86227, January 9, 1994) *

* .■ *

The Commissioner of Internal Revenue issued warrants o f distraint against barges of the Maritime Company o f the Philippines to satisfy assessments fo r deficiency common carrier’s tax, fixed tax, commercial broker’s tax, documentary stamp tax, income tax and w ithhold­ ing taxes. About six (6) months thereafter, a deputy sheriff o f Manila levied upon and sold the barges at public auction to satisfy the claims o f employees o f the shipping company which were adjudicated in an NLRC case. Is the levy and sale justified under Article 110 of the Labor Code? Why? i ANS. No. The claim of the Bureau of Interna! Revenue for unpaid internal revenue taxes gives rise to a tax lien upon all the properties, movable and immovable, of the insolvent taxpayer. Article 110 does not purport to create a lien in favor of workers for unpaid wages either upon ail of the properties or upon any particular property owned

278

WAGES

by their employer. Furthermore, the said provision applies only in case of bankruptcy or judicial liquida­ tion of the employer. (Commissioner of Internal Rev­ enue vs. NLRC, et al., G. R. No. 74965, November 9, 1994) *

*

tt

Does the workers’ preference defeat a mortgagee’s claim over the mortgaged property? ANS. Under Article 110 of the Labor Code, the workers shall enjoy first preference as regards their unpaid wages and other monetary benefits in the event of bankruptcy or liquidation of their employer’s busi­ ness. The said article establishes merely a rule of prefer­ ence, and does not create a lien in favor of the workers. W orkers’ claims for unpaid wages and other monetary benefit's cannot prevail over a mortgagee’s lien. Furthermore, there should be bankruptcy or judicial liquidation. (DBP vs. NLRC, G. ft. No. 108031, March 1, 1995) *

*

*

Does the preferential right of worker and employees under Article 110 o f the Labor Code apply to rehabilita­ tion proceedings involving the employer? Explain. ANS. No. The preferential right of workers and employees under Article 110 of the Labor Code may be invoked only upon the institution of insolvency or judicial proceedings. Indeed, it "'is'well-settled that “a declaration of bankruptcy or a judicial liquidation must be present biefore preferences over various money claims miay be enforced.” But debtors resort to prefer­ ence of credit — giving preferred creditors the right to have their claim s paid ahead of those o f other claimants -r- only when their assets are insufficient to

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WAGES

pay their debts fully. The purpose of rehabilitation proceedings is precisely to enable the company to gain a new lease on life and thereby allow creditors to be paid their claims from its earnings. In insolvency proceedings, on the other hand, the company stops operating, and the claims of creditors are satisfied from the assets of the insolvent corporation. (Rubberworld (Phils.) Inc. vs. NLRC et al., G. R. No. 126773, April 14, 1993); see also Rubberworld (Phils.) Inc. vs. NLRC et al., G. R. No. 128003, July 26,

2000) tfr *

*

In what form should the wages o f a worker be paid? ANS. The worker’s wages should be paid in legal tender. The employer is prohibited from paying the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when expressly re­ quested by the latter. (Art. 102, Labor Code) *

*

*

May the employer pay the wages o f an employee by means o f bank checks, postal checks or money orders? Explain. ANS. Payment of wages by bank checks, postal checks or money orders is allowed where such manner of wage payment is customary on the date of the effectivity of the Code, where it is stipulated in a collective bargaining agreement, or where all of the following conditions are met: (1) There is a bank or other facility for encash­ ment within a radius of one (1) kilom eter from the workplace; (2) The employer, or any of his agents or repre­ sentatives, does not receive any pecuniary benefit directly or indirectly from the arrangement;

280

WAGES

(3) The employees are given reasonable tim e during banking hours to withdraw th e ir wages from the bank which tim e shall be considered as compensable hours worked if done during their working hours; and (4) The payment by check is with the written consent of the employees concerned if there is no collective agreement authorizing the payment of wages by bank checks (Sec. 2, Rule VIII, Book III, Implementing Rules and Regulations) *

*

*

May the employer be compelled by its employees to pay their wages in the form o f goods? Why? ANS. No, the employer cannot be compelled to pay wages by means of goods. It has the right to discharge its obligation to pay wages in the manner recognized by law. This w ill prevent any controversy that may later on arise as to whether its workers have been legally and fully paid their wages. Article 102 of the Labor Code is very explicit to the effect that the employer cannot pay the wages of his employees by means other than legal tender, even when expressly requested by the latter. Therefore, payment of the laborer's wages by means of legal tender combined with tunal liver and intestines is not lawful even where such method of payment was not only agreed upon but expressly requested by the laborers. (Congson vs. NLRC et ai., G. R. No. 114250, April 5, 1995) *

*

*

A meat processing company has among others a prod­ uct called “ True Corned Beer’ which sells at P10.00 per can. Under company rules, any o f its employees is entitled to purchase on credit the said product at 25% discount, but said purchases on credit w ill be consid­ ered as part payment o f his wages. An employee purchases on credit ten (10) cans o f “ True Corned B e ef’

281

WAGES

fesjt ofejjgete to tli© application of his purchases as part o f his wages. Is his objection valid? Why? ANS. The objection of the employee is valid. The application of his purchases on credit as part of his wages would amount to compelling him to receive as wages food in lieu of legal tender. It would also constitute as an interference by the employer with the employee’s freedom to dispose of his wages. This is prohibited by Article 112 of the Labor Code, which provides: W on-fn terfere nce in d is p o s a l o f w ages. — No employer shall lim it or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities, or other property from the employer or from other per­ sons, or otherwise make use of any store or services of such employer or any other person. ☆

ifr

it

How often should the wages of the employee be paid? ANS. Article 103 of the Labor Code provides: T im e ' of. paym ent. — Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. If on account of force majeure or circumstances beyond the employer’s control, payment of wages on or within the time herein provided cannot be made, the employer shall pay the wages immediately after such force majeure or circumstances have ceased. No employer shall make payment with less frequency than once a month. The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, in the absence of a collective bargaining agreement or arbitration award;

282

WAGES

(1) That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work completed; and (2) That fina! settlement is made upon completion of the work. *

*

*

Where should the wages be paid? ANS. As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fir©, flood, epi­ demic or other calamity rendering payment thereat impossible; (2) When the employer provides free transporta­ tion to the employees back and forth; and • (3) Under any other analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as com­ pensable hours worked. (4) No employer shall pay his employees, in any bar, night or day club, drinking establishment, mas­ sage clinic, dance hall, or other sim ilar places or in places where games are played with stakes of money or things representing money except in the case of persons employed in said places. (Sec. 4, Rule VIII, Book III, Implementing Rules and Regulations) *

*

*

'

Under what conditions may an employer pay his em­ ployees’ wages through a bank? ANS. vides:

Section 7 of Republic Act No.

283

6727 pro­

WAGES

“Upon written permission of the m ajority of the employees or workers concerned, all private establish­ ments, companies, businesses and other entities with twenty five (25) or more employees and located within one (1) kilom eter radius to a commercial, savings or rural bank shall pay the wages and other benefits of their employees through any of said banks and within the period of payment of wages fixed by Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines.” *

*

*

By reason of insurgency and other peace and order problems, the employees o f North Davao Mining Corpo­ ration had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from fheir w ork­ place and about 2 1/2 hours’ travel tiirie by public transportation. fa) Is the travel time spent by the workers in collecting their wages considered working time? Why? ANS. Yes. This is pursuant to Sec. 4, Rule VIH, Book III of the Rules Implementing of the Labor Code. (b) Are the employees entitled to reimbursement of their transportation expenses (round trip fare) in col­ lecting their wages? ANS. Yes, for equitable reasons. (North Davao Mining Corporation et al. vs. NLRC, et al., G. R. No. 112546, March 13, 1996) *

*

*

To whom should the wages be paid? ANS. Article 105 of the Labor Code states: D ire c t p aym en t o f w ages. — Wages shall be paid directly to the workers to whom they are due, except:

284

WAGES

(a) In cases of force majeure rendering such payment impossible or render other special circum ­ stances to be determined by the Secretary of Labor in appropriate regulations, in which case the worker may be paid through another person under written authority given by the worker for the purpose; or (b) Where the worker died, in which case the employer may pay the wages of the deceased worker to the heirs of the latter without the necessity of interstate proceeding. The claimants, if they are all o f age, shall execute an affidavit attesting to their rela­ tionship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next of kin. The affidavit shall be presented to the employer who shall make payment through the Secretary of Labor or his representative. The representative of the Secretary of Labor shall act as referee in dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the em ployer of any further liability with respect to the amount paid. *

*

*

May an employer make any deduction from the wages o f his employees? ANS. As a rule, the employer cannot, in his own behalf or in behalf of any person, make any deduction from the wages of his employees. The exceptions are the following: (a) Deductions of SSS, Medicare and Pag-ibig premiums; (b) Taxes withheld from wages pursuant to the Tax Code; (c) Deductions for reimbursement of insurance premium advanced by the employer where the worker is insured with his consent by the former; (d) Deductions for union dues where the right to check-off has been recognized by the employer or

285

WAGES

authorized in writing by the individual employee him­ self; (e) Deductions made with the written authorization of the employee for payment to a third person and the em ployer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indi­ rectly, from the transaction; (f) Deductions for reimbursement of loss or dam­ age to tools, materials, or equipment supplied by the employer to the employee, in trades, occupations or businesses where the practice of making such deduc­ tions is recognized; (g) Deductions as a disciplinary measure for habitual tardiness; (h) Agency fees under Article 248, paragraph (e), of the Code; (i) Dcsductions for debts due the employer from the employee. *

*

#

Juan w orks as dishwasher in a big restaurant. At the time o f his employment he was told that the manage­ ment w ould deduct from his wage® the value o f plates or glasses that may be broken by him while in the performance o f his woric. He did not however give his conform ity to th is rule. One day, Juan broke three (3) glasses. May the management deduct the value of these items from the wages of Juan? Explain. ANS. Even without the consent of Juan, the management can effect the deductions provided the following conditions are met: (a) Juan is clearly shown to be responsible for the loss or damage; (b) He is given reasonable opportunity to show cause why the deduction should not be made; (c) The amount of the deductions is fa ir and reasonable and does not exceed the actual loss or damage; and

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WAGES

(d) The deduction does not exceed 20% of Juan’s wages in a week. (Article 114, Labor Code; Section 14, Rule VIII, Book III, Implementing Rules and Regu­ lations) *

*

*

The wife o f an employee fells the manager that her husband has not been giving support to her and their children, ta k in g pity, the manager instructs the com­ pany cashier to deduct one-third o f the employee’s pay and give the same to the wife. Is the action o f the company legal? Explain. ANS. No. The employee concerned did not give his written authorization for the deduction. The ques­ tion of support is a matter between the employee and his fam ily; the employer has no authority to determine who is entitled to support from the employes. *

*

*

Z borrowed from his employer P500.00 to be repaid after three (3) months. When the loan became due, Z did not pay his employer. May the employer, w ithout the w rit­ ten consent of Z, deduct the loan from the latter’s wages? Why? ANS. Yes. The employer can effect the deduction pursuant to Article 1706 of the Civil Code which allows the withholding of wages fo r a “debt due". The consent of the employee is not necessary; the employer and the employees are debtors and creditors of each other. Compensation takes place. *

*

*

Because he lives fifty (50) kilometers from his place of work, X asked permission from his employer to sleep in the factory premises. The latter agreed but w ith the condition that X pay the sum o f P5.00 a night fo r the

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WAGES

privilege. On payday, X discovered that his employer had deducted from his pay the amount representing the charges fo r his stay in the premises. When confronted by X, the employer said that the amount deducted represents the value o f facilities furnished him by the latter. Is the deduction legal? Reason out your answer. ANS. The deduction is not legal. Lodging is not customarily furnished by the employer of X to his employees; the case of X is an isolated one. The deduction, furthermore is not within the written consent of X. *

*

*

A marketing firm retains five (5%) percent o f the weekly salary o f its collectors as a deposit to answer fo r any shortage in their collections. These are refunded at the end o f the month if no shortages are incurred. Is this practice legal? Explain. ANS. Yes. It is a recognized practice of employ­ ers to require deposits or bonds from employees entrusted with company funds. The sum retained is not excessive and is kept by the employer only for a reasonable period. *

*

*

A taxicab company required its taxi drivers to make deposits to defray any deficiency which the latter may incur in the remittance o f their “ boundary” and to cover car wash payments. Is this requirement authorized under Article 114 o f the Labor Code? Explain. ANS. The requirement for deposit to defray any deficiency in the remittance of drivers’ “boundary" is not lawful. Article 114, which provides the rule on deposits for loss or damage to tools, materials or equipments supplied by the employer, does not apply to or permit such kind of deposit.

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WAGES

But the requirement for deposit for car wash pay­ ments is lawful. There is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Furthermore, the amounts doled out were paid directly to the persons who washed the units. Finally, it w ill be noted that there was nothing to prevent the drivers from cleaning the taxi units themselves, if they wanted their car wash payments. (Five J Taxi, etc. vs. NLRC, et al., G. R. No. 111474, August 22, 1994) *

*

*

Give two (2) classes o f documents to be kept and maintained by the employer in connection with the payment of wages to its employees, and state how long such records shall be preserved by the former. ANS. Payrolls and time records. They shall be preserved by the employer for at least three (3) years from the date of the last entry therein. (Sections 6, 7, and 12, Rule X, Book III, Implementing Rules and Regulations) *

*

*

Does a Regional Director o f the Department of Labor hav* any power to adjudicate on claims fo r unpaid wages? ANS. Yes. Under Article 129 of the Labor Code as amended by Rep. Act 6715, a Regional Director is empowered through summary proceedings and after due notice, to hear and decide any matter involving recovery of wages and other monetary claims not exceeding P5.000.00 for each worker, provided there is no claim for reinstatement. *

*

289

*

WAGES

Six (6) workers filed a claim before the Regional Office against their employer fo r unpaid night shift differential, service incentive leave, premium pay fo r rest day, and overtime pay. Each worker had a claim in excess of P5.000.00. W ithout first conducting an inspection, the Regional Director required the parties to subm it their respective position papers and documentary evidence. The employer denied the claim. But the Regional Direc­ to r issued an order requiring him to pay his workers benefits in the total sum o f P206,136.60. Did the Re­ gional Director have jurisdiction over the claim? Why? ANS. No. Aside from the fact that the aggregate claims of each worker involve an amount in excess of P5.000.00, the issues raised therein from both sides are best ventilated and resolved in a more formal and extensive proceeding before the Labor Arbiter. (Baritua vs. Secretary of Labor and Employment, et al., G. R. No. 89362, November 29, 1991) *

*

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After an on-the-spot inspection and examination o f the payrolls o f Red V. Coconut Products, Ltd., labor stan­ dards and welfare officers o f the DOLE Regional Office reported that the company failed to pay its workers wage increases and allowances am ounting to P106,027.87. After hearing the workers’ union and the company, the Assistant Regional Director issued an order directing the company to pay the aforesaid aggre­ gate amount o f P106,027.87 to the worker’s. The claim of each worker did not exceed P5,000.00. (a) Did the Assistant Regional Director have jurisdiction to issue the order? Why? ANS. Yes. The amount of the claim of each worker did not exceed P5,000.00. Besides, under Article 128 (b) of the Labor Code, he has the power to issue orders requiring employers to comply with labor standard provisions of the Code and other labor legis­ lation.

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WAGES

(b) Under what circumstances, if any, may the Regional Director be divested o f his jurisdiction under Article 128 (b) o f the Labor Code? ANS. They are the following: (a) the employer contests the findings of the labor regulations officer and raises issues thereon; (b) in order to resolve such issue, there is a need to examine evidentiary matters; and (c) such matters are not verifiable in the normal course of inspection. (Red V. Coconut Products, Ltd. vs. Hon. V. Leogardo, et al., G. R. No. 72247, April 10, 1992) *

*

Or

The Regional Director o f the Department o f Labor and Employment issued an order requiring the employer to pay to eighty-six (86) employees over P800,000.00 repre­ senting their monetary claims covering a three-year period. Each employee was entitled to an aggregate amount of about P10,000.00. The order was issued follow ing an inspection conducted by labor standards and welfare officers, and it was based solely on the affidavits submitted by the employees. (a) Is the order o f the Regional Director valid and enforceable? Why? ANS. No. It was issued without jurisdiction. The claim of each employee exceeds P5.000.00. This falls under the original and exclusive jurisdiction of the Labor Arbiter to hear and decide as provided for in Article 217 of the Labor Code. (b) May not the order be justified upder the visitorial power of the Secretary o f Labor and Employment? ANS. No. To construe the visitorial power of the Secretary of Labor to order and enforce compliance with labor laws as including the power to hear and decide cases involving employees’ claims for wages arising from employer-employee relations, even if

291

WAGES

the.amount of said claims exceeds P5.000.00 for each employee, would emasculate and render meaningless, if not useless, the provisions of Article 217(a)(6) and Article 129 of the Labor Cods which confer exclusive jurisdiction on such claims. The proceeding before the Secretary of Labor (or his agents) exercising his visitoriai powers is summary in nature. When the employee’s claim is less than P5.000.00 a summary procedure for its settlement can be justified, but not when a claim is more or less substantial. if Article 128(b) of the Labor Code were to be construed as empowering the Secretary of Labor, under his visitoriai powsr, to hear and decide all types of employees’ claims, including those exceeding P5,0Q0.00 for. each employee, then Article 129 (limiting the Regional Director’s jurisdiction to a claim not exceeding PS,000.00) becomes useless surplusage in the Labor Code. The mere fact that Article 129 limits the jurisdiction o f the Regional Director to “complaints of any inter­ ested party” seeking an amount not more than P5.000.00, for each employee, does not necessarily mean that because of the absence of any complaint from any interested party, he or the Secretary of Labor is motu probio empowered to hear and decide a claim of more than P5.000.00 for each employee. (Fermin vs. Secretary of Labor arid Employment, et al., G. R. No. 83105, October 21, 1992; but see R. A. 7730, amending Art. 128, approved on June 2, 1994) •A’

On March 14, 1903, employees of a hotel filed a com­ plains with the Regional Office of the Department of Labor and Employment for underpayment of wages and non-payment of service incentive leaves. The Regional Office ordered an inspection of the employment records of the hotel; the latter objected on 4h® ground that the employer-employee relationship had been severed be­ cause of the closure of business and that the claim of each worter exceeded P5.OOO.08, On September 25,

292

1989, the Regions! Director issued'ars order recjuirirsg the hotel to pay ihe sum of P287,141.55, representing underpayment of n.inireum wage and P3,840.00 as ser­ vice incentive leave. (a) Did the Regional Director have jurisdiction to issue the order? Why? ANS. No. The Regional Director can assume authority only upon the concurrence of these requi­ sites: (1) The claim is presented by an employee or person employed in domestic or household service, or househeloer under the Code; (2) The claimant, no longer being employed, does not seek reinstatement; and (3) The aggregate money claim of the employee or househeiper does no? exceed five thousand pesos (P5.000.00). Under Article 217 of the Labor Code, as amended by Republic Act 6715, tfte case falls within the jurisdic­ tion of the Labor Arbiter. (b) Will the foregoing rote apply where the .claim arose prior to the effeeJivity c ? Republic Act 6715 on March 21, 1989? Explain. ANS. Yes. Republic Act No. 6715, amending among others Article 217 of the Labor Code is in the nature of a curative act with retroactive operation to pending proceedings. The application of the said amendatory law to pending cases has been recognized in the South Motorist case, 181 SCRA 3S6. (Rajah Humabon Hotel, inc., et al. vs. Hon. C. Trajano, et al., G. R. No. 100222-23, September 14, 1993) *

*

*

Is Republic Act No. @715, which took effect on March 21, 1989, applies^* to cases for illegal dismissal and money claims for ovsr 1*5,390.00 per employee brought

WAGES

before the Office of the Regional Director o f the then M inistry of Labor and Employment in 1980? Explain. ANS. Yes. At the time the cases were filed in 1980, the Regional Director had no jurisdiction over the claims; this pertained to the Labor Arbiter who, under Article 217 of the Labor Code, as amended by P. D. 1691. Republic Act No. 6715, amending among others Article 217 of the Labor Code which confers original and exclusive jurisdiction upon labor arbiters over money claims in excess of P5,000.00 and for claims for reinstatement is a curative act and can be applied retroactively. The cases must therefore be referred to the labor arbiter for appropriate disposition. The pendency of the cases before the Regional Director, the Office of the Secretary of Labor, and the Supreme Court is deemed to have tolled the running of the prescriptive period. The employer cannot be considered estopped from raising the issue of lack of jurisdiction of the Regional Director because it never sought affirm ative relief or submit evidence before the said officer. It also raised the issue of jurisdiction before the DOLE (Ubay Arrastre and Stevedoring Services, Inc. et al. vs. Trajano et al., G. R. No. 106813, November 25, 1993). *

*

*

M. Ramirez Industries is engaged in the manufacture of handmade rattan baskets fo r export abroad. On April 1, 1986, Carolyn Alfonso and 260 other employees filed com plaint w ith the Regional Office No. VII of the Department o f Labor in Cebu City, alleging nonpayment of minimum wage, living allowances and noncom pliance with other labor standard laws against M. Ramirez Industries and/or Manny Ramirez, its proprietor. Peti­ tioner filed a motion to remand the case to the National Labor Relations Commission, contending that the m at' ter was outside the jurisdiction o f the Regional Director. W ithout acting on the motion, the Regional Director on

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WAGES

July 18, 1986 ordered petitioner to pay private respon­ dents the total amount of P430,901.75. Petitioner moved fo r a reconsideration o f the Regional Director’s order, which was treated as an appeal to the Secretary o f Labor and Employment. On May 12,1989, the Secre­ tary issued an order affirming the Regional Director’s order. Petitioner filed a motion fo r reconsideration, but its motion was denied on August 22, 1989. Martinez contends that the Regional Director has no jurisdiction to take cognizance of the case. Decide. ANS. The Regional Director has jurisdiction over the case. Martinez Contends that the case falls within the original and exclusive jurisdiction of the Labor Arbiter, citing in support of its contention Art. 217 of the Labor Code, which, before its amendment by R. A. No. 6715 on March 21, 1989,provided: Art. 217. Commission.

Jurisdiction of Labor Arbiter and the

(a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for decision, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Those that workers may file involving wages, hours of work and other terms and conditions o f employment; 3. All money claims of workers, including those based on nonpayment or underpayment of wages, overtime compensation, separation pay and other ben­ efits provided by law or appropriate agreement, except claims for employees’ compensation, social security medical and maternity benefits; 4. Cases involving household services; and 5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts.

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(b) The Commission shall have exclusive appel­ late jurisdiction over all cases decided by Labor Ar­ biters. It is true that on April 1, 1986, when this case was filed in the Regional Office, Labor Arbiters had original and exclusive jurisdiction over money claims of labor­ ers pursuant to Art. 217(a)(3) of the Labor Code as quoted above. On March 3, 1987, however, President Corazon C. Aquino, issued E. O. No. 111, conferring jurisdiction over money claims of laborers on Regional Directors, concurrently with Labor Arbiters. In “Briad Agro Dev. Corp. v. Dela Serna," this Court, after declaring E. O. No. 111 to be in the nature of a curative statute, gave it retroactive appli­ cation with respect to claims filed in 1982 and 1987. Then on March 21, 1989, R. A. No. 6715 was enacted, amending the Labor Code so that, so far as pertinent, it now provides: ' Art. 129. Recovery of wages simple money claims and other benefits. - Upon complaint of any interested party, the regional director of the Depart­ ment of Labor and Employment or any of the duly authorized hearing officers of the Department is em­ powered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an em­ ployee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided further, that the aggregate money claims of each employee or househelper does not exceed five thousand pesos (P5.000.00). The regional director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor

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and Employment or the regional director directly to the employee or househelper concerned.... Art. 217. Commission.

Jurisdiction of Labor Arbiters and the

- ( a) Except as otherwise provided under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calen­ dar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or nonagricultural.

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee rela­ tions, including those of persons in domestic or house­ hold service, involving an amount exceeding five thousand pesos (P5.000.00) regardless or whether accompanied with a claim for reinstatement...." Like E. O. No. 111, this amendatory statute was also retroactively applied to cases where the money claims of laborers were filed in 1980, 1986, 1987 and 1989, i. e., long before the enactment of said statute on March 21, 1989. As we have construed the above provisions of the Labor Code, as thus amended, the Regional Director has the power to decide the cases involving money claims of laborers where the following requisites concur: (1) the claim must arise from employer-employee relationship; (2) the claimant does not seek reinstatement; and (3) the aggregate money claim of each employee does not exceed P5.000.00 and, even if they do not, if they include claims for ■veinstatement, the matter falls within the original and '■exclusive jurisdiction of the Labor Arbiter. It is not disputed that the time of the filing of the complaint, private respondents were employees of petitioner and that said relationship gave rise to pri­

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vate respondents’ claim for wage differentials. Al­ though no longer employees of petitioner, private respondents do not seek reinstatement and the aggre­ gate money claim of each of them does not exceed P5.000.00. As a matter of fact, the Regional Director’s order shows that the aggregate claim of each of the 261 femployees involved does not exceed P2.500.00. (M. Ramirez Industries et al. vs. Hon. Secretary of Labor and Employment et al., G. R. No. 89894, January 3, 1997) ★ *

*

Wh&t is a “ wage distortion” ? ANS. A w age d is to r tio n shall mean a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates be­ tween and among employee groups in an establish­ ment as to effectively obliterate the distinctions em­ bodied in such wage structure based on skills, length of service, or other logical bases of differentiation. (Art. 124, Labor Code) ★ *

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For a wage distortion to arise, is it necessary that there be an elim ination or total abrogation o f quantitative wage o r salary differences? Explain. ANS. No. A severe contraction of the wage or salary differences is enough. Thus, where the quanti­ tative difference between the wages of regular and non-regular employees, as provided in the CBA has, by reason of the grant of mandated wage increase of P25.00 per day, been reduced from P900.00 to barely P150.00, it has been held that a severe contraction has arisen warranting correction by the NLRC. Such correction, however, need not necessarily be an across-the-board increase; a fa ir and equitable formula may be the following:

OQfi

WAGES

Minimum Wage Adjustment Actual Salary =

% x Prescribed Increase

Distortion

(Metropolitan Bank and Trust Co. Employees Union, et al. vs. NLRC, et al., G. R. No. 102636, September 10, 1993)

Franklin Baker Company o f the Philippines (Davao) had tw o (2) sets o f workers, namely, regular and nonregular. Prior to the effectivity o f Wage Orders Nos. 3, 4 and 5, in 1983 and 1984, there existed a positive differential between the two (2) groups in the amount o f P4.56. After the implementation o f the aforesaid wage orders, the gap was obliterated and reduced to zero. Did a “ wage distortion” arise? Explain. ANS. Yes. There existed a two-fold classification of workers within the company into regular and nonregular, and the classification was reflected in a differ­ ing wage rate for each group. Distortion, consisting of complete elim ination of the wage rate differential, occurred. (National Federation of Labor vs. NLRC, et al., G. R. No. 103586, July 26, 1994) *

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May the increases provided fo r in a collective or other voluntary agreement be taken into account in determin­ ing whether a wage distortion has been corrected, considering that employee benefits derived from law are exclusive, distinct and separate from those obtained through negotiation and agreement? Explain. ANS. Yes. Article 124 of the Labor Code, as amended by Republic Act No. 6727, expressly pro­ vides that where the application of any prescribed

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wage increase by virtue of a lav-/ or wage order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct ihe distortions. The Saw recognizes, therefore, the validity of negoti­ ated wage increases to correct wage distortions. The legislative intent is to encourage the parties to seek solution to the problem of wage distortions through voluntary negotiation or arbitration, rather than strikes, lockouts, or other concerted activities of the employees or management. Recognition and validation of wage increases given by employers either unilaterally or as a result of collective bargaining negotiations for the purpose of correcting wags distortions are in keeping with the public policy of encouraging employers to grant wage and allowances increases to their employees which are higher than the minimum rates of increases prescribed by statute or administrative regulation. (Associated Labor Unions-TUCP, etc. vs. NLRC, et al., G. R. No. 109328, August 16, 1994) \V

Vf

if.*

What am the points to remember with magard to wags distortions? ANS. (a) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classifica­ tion is reflected in a differing wage rate for each of the existing classes of employees. (b) Wage distortions have often been the result of government-decreed increases in minimum wages. There are, however, other causes of wage distortions, like the merger of two (2) companies (with differing classifications of employees and different wage rates) where the surviving company absorbs all the employ­ ees of the dissolved corporation. (c) Should a wage distortion exist, there is no legal requirement that, in the rectification of that distortion

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by re-adjustment of the v;age rates of the differing classes of employees, the yap which had previously or historically existed be restored in precisely til© same amount. In other words, correction of a wage distor­ tion may be done by reestablishing a substantial or significant gap (as distinguished from the historical gap) between the wage ratss of differing classes of employees. (d) The re-establishment of a significant differ­ ence in wage rates may be the result of resort to grievance procedures or collective bargaining negotia­ tions. (Metro Transit Organization, Inc. vs. NLRC st al., G. R. No. 116008, July 11, 1995; Manila Mandarin Employees Union vs. NLRC et al., G. R. No. 108556, November 19, 1996) 'S i

&

it

Does disparity in wages between employees holding sim ilar positions bu£ in dsffarem eegfons of the country constitute wage distortion as contemplated by taw? Explain. ANS. No. Varying in each region of the country are controlling facts such as the cost of living; supply and demand of basic goods, services and necessities; and the purchasing power of the peso.. The wages in different regions is not uniform. And the fact that a person is receiving more in one region does not necessarily mean that he or she is better off than a person receiving less in another region. Wage distortion presupposes an increase in the compensation of the lower ranks in an office hierarchy without a corresponding raise for higher-tiered employ­ ees in the same region of the country, resulting in the elimination or the severe diminution of the distinction between the two groups. (Prubankers Association vs. Prudential Bank and Trust Co., G. R. No. 131247, January 25, 1999) •St

>;

301

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WAGES

How is a wage distortion resolved? ANS. Under Article 124 of the Labor Code, where the application of any prescribed increase by virtue of law or Wage Order results in wage distortions within an establishment, the employer and the union shall nego­ tiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the paities in writing, such dispute shall be decided by the voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitra­ tion. In cases where there are no collective bargaining agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the NCMB and, if it remains unresolved after ten (10) calendar days of conciliation, it shall be referred to the appropriate branch of the NLRC. *

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Is the classification based on rank covered by the concept of “ wage distortion” ? ANS. The formulation of a wage structure through the classification of employees is a matter of manage­ ment judgm ent and discretion. This may be a subject of collective bargaining. It falls outside the concept of “wage distortion.* Where the classification under the wage structure is based on rank of an employee, not on seniority, wage distortion will not result from an increase in the rates of a newly hired employee in the same rank, absent any showing that the same is due to a law or wage order. If the compulsory mandate under Article 124 to correct “wage distortion’ is applied to voluntary and

WAGES

unilateral increases by the employer in fixing hiring rates which is inherently a business judgment preroga­ tive, then the hands of the employer would be com­ pletely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity o f a particular group. An employer would be discouraged from adjusting the salary rates of a particular group o f employees for fear that it would result to a demand by all employees fo r a sim ilar increase, especially if the financial conditions of the business cannot address an across-the-board increase. (Bankard Employees Union - W orkers A l­ liance Trade Unions vs. NLRC et al., G. R. No. 140689, February 17, 2004) tV *

*

Give fo u r (4) instances where the visitorial power o f the Secretary o f Labor may be exercised under the Labor Code. ANS. U n d e r A rtic le 37, the Secretary of Labor or his duly authorized representatives may at any time inspect the premises, books of accounts and records of any person or entity engaged in recruitment and placement, require it to submit reports regularly on prescribed forms, and act on violations of any provi­ sions of Code on recruitment and placement. A rtic le 128 empowers the Secretary of Labor or his duly authorized representative to have access to employers’ records and premises to determine viola­ tions of or enforce the Code and any labor law, wage order rules and regulations issued pursuant thereto. The Department o f Labor, u n d e r A rtic le 165, is empowered to conduct industrial safety inspections of establishments. A rtic le 274 empowers the Secretary of Labor or his duly authorized representative to inquire into the financial activities of legitimate labor organizations and examine their books of accounts upon the filing of a complaint under oath and duly supported by the

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written consent of at least twenty (20%) percent of the total membership of the labor organization concerned. it

*

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State the provision o f Article 123(b) oif th© Labor Code as amended by Republic Act No. 7730, approved on June 2,1994. ANS. ‘ Art. Power. -

128.

V is ito r ia l and E n fo rc e m e n t

“ (b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary; and in case where the relationship of employer-employee still ex­ ists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforce­ ment of their orders, except in cases where the em­ ployer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. “An order issued by the duly authorized representa­ tive of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from .’ &

it

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WAGES

Based on a Notice of Inspection Results of a senior labor enforcement officer, the Regional Director issued an order requiring Allied Investigation Bureau, Inc. (a security agency) to pay to ninety-two (92) employees the sum o f P807,570.36 representing wage differentials. The company however assailed the order on the ground that the Regional Director did not have the power to adjudicate money claims where the aggregate amount fo r each employee exceeds P5,000.00. Decide. ANS. The contention of the company is not tenable. The order was issued pursuant to Article 123 of the Labor Code, as amended by R. A. No. 7730, granting to the Secretary of Labor or his duly autho­ rized representatives the visitoriai and enforcement power. While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5.000.00, said provisions do not contemplate nor cover the visitoriai and enforcement powers of the Secretary of Labor and Employment or his duly authorized representatives under Article 128 (b). This provision explicitly ex­ cludes Article 129 and 217 of the Labor Code by the phrase “Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary x x x .' (Allied Investigation Bureau, Inc. vs. Secretary of Labor and Employment et al., G. R. No. 122006, November 24, 1999, citing Lord and Lady Salon etc. vs. Hon. R. Young et al., G. R. No. 123258, November 11, 1996) Similarly, it has been held that a claim of the workers of mining company for unpaid salaries, 13th month pay, vacation/sick leave benefits, totaling more than P4 m illion may be taken cognizance of by the DOLE Regional Director in the exercise of his visitoriai power under Art. 128 (b) of the Labor Code, as amended by Republic Act No. 7730. The said amendatory law dispensed with the jurisdictional cap of P5.000.00 per worker, imposed by the Servando ruling. It is considered a curative act and even apply to cases pending at the time of its enactment in 1994.

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WAGES

(Batong Buhay Gold Mines, Inc. vs. Hon. Dionisio dela Serna et at., G. R. No. 86963, August 1999) *

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Who has the burden o f proving payment o f monetary claims o f employees? Explain. ANS. The burden rests on the employer. This is because the pertinent personnel files, payrolls, records, rem ittances and other sim ilar documents which w ill show that the claims have been paid are not in the possession of the worker but in the custody and absolute control of the employer. (National Semicon­ ductor, Ltd. vs. NLRC, G. R. No. 123520, June 26,1998; Jimenez vs. NLRC, G. R. No. 116960, April 2, 1996; Villa et al vs. NLRC et al., G. R. No. 130935, May 11, 2000) *

*

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felay attorney’s fees he awarded in cases involving recovery o f wages? Explain. ANS. Yes. Article 111 of the Labor Code provides that in cases of “unlawful withholding of wages the culpable party may be assessed attorney’s fees equiv­ alent to ten (10%) percent of the amount of wages recovered. The said article further provides that it is unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered. The above-mentioned amount constitutes indem­ nity for damages sustained by and payable to the prevailing party; it is not attorney’s fees payable by a party to his lawyer. (Traders Royal Bank Employees Union vs. NLRC et al., G. R. No. 120592, March 14, 1997)

306

CHAPTER VII WORKING WOMEN AND MINORS Give the rules governing nightworfc o f women employ­ ees. ANS. Article 130 of the Labor Code provides: “N ig h tw o rk p r o h ib itio n . — No woman, regard­ less of age, shall be employed or permitted or suffered to work, with or without compensation: (a) In an industrial undertaking or branch thereof between ten o’clock at night and six o’clock in the morning of the following day; or (b) In any commercial or non-industrial undertak­ ing or branch thereof, other than agricultural, between m idnight and six o’clock in the morning of the following day; or (c) In any agricultural undertaking at nighttime unless she is given a period of rest of not less than nine (9) consecutive hours.” However, the foregoing prohibitions do not apply in the following cases: (a) in cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earth­ quake, epidemic or other disaster or calam ity, to prevent loss of life or in cases of force majeure or imminent danger to public safety. (b) in case of urgent work to be performed on machineries, equipment or installation, to avoid seri­ ous loss which the employer would otherwise suffer. (c) where the work is necessary to prevent serious loss of perishable goods; (d) where the woman employee holds a responsi­ ble position of a managerial or technical nature or where the woman employee has been engaged to provide health and welfare services;

Art

WORKING WOMEN AND MINORS

(e) where the nature of the work requires the manual skill and dexterity of women workers and the same cannot be performed with equal efficiency by male workers or where the employment of women is the established practice in the enterprises concerned on the date these rules become effective; and (f) where the women employees are immediate members of the fam ily operating the establishment or undertaking. (Sec. 5, Rule XI, Book III, Implementing Rules and Regulations). *

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The Lady Godiva Garments Factory, Inc., a manufac­ turer and exporter o f jeans, has a 3-shift work schedule but maintains a policy o f not assigning women sewers to w ork in the third shift from 10:00 p. m. to 6:00 a. m. the follow ing day. This policy is assailed as discrim ina­ tory by women sewers who want to work in the third sh ift and get the night shift differential. Is the policy discrim inatory? Why? ANS. Yes. The women sewers, by reason of their sex, are denied the opportunity to earn additional pay. The employer is not prohibited from assigning them to the third shift. The nature of the work requires the manual skill or dexterity of women workers and cannot be performed with equal efficiency by male workers. This is one of the exceptions to the prohibition against the assignment of women to night-work. (Article 131 paragraph (e), Labor Code) *

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To insure the safety and health o f women employees, what facilities may the employer be required to pro­ vide? ANS. Article 132 of the Labor Code empowers the Secretary of Labor and Employment to require, in appropriate cases, the employer to:

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WORKING WOMEN AND MINORS

(a) Provide seats proper for women and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to e ffi­ ciency; (b) To establish separate toilet rooms and lavato­ ries for men and women and provide at least a dressing room for women; (c) To establish a nursery in a workplace for the benefit of the women employees therein; and (d) To determine appropriate minimum age and other standards for retirement or term ination in special occupations such as those of flight attendants and the like. *

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Is the employer required by law to give maternity leave benefits to its female workers? Explain. ANS. No. Maternity leave benefits are to be paid in appropriate instances by the Social Security Sys­ tem. The employer is obliged to contribute maternity leave benefit premiums to the SSS and to advance the benefit to the employee, subject to reimbursement by the SSS. The employer, by contractor by voluntary practice e or policy, may however bind itself to give maternity leave benefits in addition to that provided for in the SSS law. *

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Cite the provision o? the Labor Code on population control. ANS. Article 134. F a m ily p la n n in g s e rv ic e ; in c e n tiv e s fo r fa m ily p la n n in g . — (a) Establish­ ments which are required by law to maintain a clinic or infirmary shall provide free fam ily planning services to

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WORKING WOMEN AND MINORS

their employees which shall include, but not limited to, the application or use of contraceptive pills and in­ trauterine devices. (b) In coordination with other agencies of the Government engaged in the promotion of fam ily plan­ ning, the Department of Labor shall develop and prescribe incentive bonus schemes to encourage fam ­ ily planning among female workers in any establish­ ment or enterprise. *

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A security agency employing male and female security guards has a policy to the effect that female guards be paid less than the men. Is this policy valid? Why? ANS. The policy is not valid. It is discriminatory against female guards simply by reason of their sex. There should be equal pay for both men and women for work of equal value. (Art. 135, Labor Code). The rule is also violative of the policy of the State to insure fundamental equality before the law of women and men. (Article II, Section 14, Constitution) *

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Give the acts of the employer which are considered discrim inatory against a woman employee. ANS. Article 135 of the Labor Code provides: It shall be unlawful for any employer to discrim i­ nate against any woman employee with respect to terms and conditions of employment solely on account of her sex. The following are acts of discrimination: (a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employee as against a male employee, for work of equal value; and

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WORKING WOMEN AND MINORS

(b) Favoring a male employee over a female employee with respect to promotion, training-opportu­ nities, study and scholarship grants solely on account of their sexes. Criminal liability for the w illful commission of any unlawful act as provided in this article or any violation o f the rules and regulations issued pursuant to Section 2 hereof shall be penalized as provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action under this provision shall not bar the aggrieved employee from filing an entirely sepa­ rate and distinct action for money claims, which may include claims fo r damages and other affirm ative reliefs. The actions hereby authorized shall proceed independently of each other. [As amended by R. A. 6725]. *

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Before accepting female workers fo r employment, a company requires them to sign an undertaking that during their employment they w ill not get married, and that if they get married, they w ill be deemed resigned or separated from work. Is this undertaking binding? Why? ANS. No. The Labor Code provides that: Article 136. S tip u la tio n a g a in s t m arria ge. — It shall be unlawful for an employer to require as a condition of employment or for continuation of employ­ ment 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, dis­ criminate or otherwise prejudice a woman employee merely be reason of her marriage. To give validity to such an undertaking w ill drive the women employees to enter into relationships with­ out the benefit of marriage. It is not conducive to the

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WORKING WOMEN AND MINORS

establishment of the legitimate family, which is the foundation of society. Furthermore, the married woman should be given an opportunity to pursue a career and contribute her talents to national development. *

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Grace de Guzman was hired as a probationary em­ ployee by Philippine Telegraph and Telephone Co. (PT&T) in September 1991. In her jo b application form, she indicated that she was single although she had contracted marriage a few months earlier. As PT&T had a policy o f not hiring married women, Grace de Guzman was dismissed, ju s t as she was about to complete her probationary employment due to dishonesty in conceal­ ing her true marital status. (a) Is the dismissal of Grace lawful? ANS. No. It is violative of Article 136 of the Labor Code which makes it unlawful for an employer to require as a condition of employment or continuation o f employment that a woman 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, discrim i­ nate or otherwise prejudice a woman employee merely by reason of marriage. (b) Should Grace de Guzman be penalized fo r conceal­ ing her true marital status? ANS. Yes. She committed dishonesty albeit under the compulsion or an unlawful imposition of the em­ ployer. A three (3) month suspension is appropriate. This is to obviate the impression that such act should be condoned. (c) Under what conditions may a requirement that a woman employee remain unmarried be justified?

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WORKING WOMEN AND MINORS

ANS. Such requirement may be valid if it reflects an inherent quality reasonably necessary for satisfac­ tory job performance. Only then may the same be a “bona fide occupational qualification" or BFOQ. (Philippine Telegraph and Telephone Co. vs. NLRC et al., G. R. No, 118978, May 23, 1997) *

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To minimize immorality among its female employees, the company lays down a rale that any unmarried female employee v/ho gets pregnant w ill be dismissed. Is this rule valid? Why? ANS. The rule is not valid. Under Article 137 of the Labor Code, it is unlawful fo r an employer to discharge a woman employee on account of her preg­ nancy. *

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An exclusive school fo r girls, run by a religious order, dismissed tw o female faculty members on account cv pregnancy out o f wedlock. Did the school violate any provision o f th« Labor Code on the employment of women? (2000 Bar) ANS. No. The dismissal of the faculty members was not due to their pregnancy alone; this is coupled with another element, i. e., their pregnancy out of wedlock. Teachers are role models. Pregnancy out of wedlock would not be a good example for the girls to follow. The dismissal in question is reasonably neces­ sary to protect the school and the students. *

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An exclusive school fo r girls, run by a religious order, has a policy of not employing unwed mothers, women with live-in partners, and lesbians. Is the policy viola­

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tive o f any provision of the Labor Code on employment o f women? (2000 Bar) ANS. No. The acts of discrimination against women employees prohibited and penalized by Article 135 of the Labor Code must be solely on account of their sex. In this case, the policy of the exclusive school for girls is not premised solely on sex. The school has the duty to protect its students from un­ wholesome influences. *

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Evelyn Chua, a 30-year old teacher, was dismissed by the school soon after she got married to Bobby Qua, a 16-year old student in the sixth grade class o f which she was the adviser. Is the dismissal lawful? Why? ANS. No, in the absence of substantial evidence to show that Evelyn Chua took advantage of her position to court her student. If the two eventually fell in love despite the dispar­ ity in 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. Yielding to this gentle and universal emotion is not to be casually equated with immorality. The deviation of the circum­ stances of their marriage from the usual societal pattern cannot be considered as a defiance of contem­ porary social mores. (Evelyn Chua-Qua vs. Hon. J. C. Clave, et al., G. R. No. 49549, August 30, 1990.) ★ *

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The Club Eternally employs Miss L as an ago-go dancer. One of the conditions of her employment is that once she gets pregnant her work would cease as it would be awkward fo r her to be dancing before the customers during her pregnancy and besides ago-go dancing m ight induce abortion or miscarriage. After

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WORKING WOMEN AND MINORS

three months, Miss L becomes pregnant; the manage­ ment gives notice to her that she would no longer be allowed to dance and that since there is no other work available and for*w hich her talents are suitable, her employment is in effect terminated. Is the action of the management legal? Why? ANS. The action of the company is legal. It is both awkward and dangerous for her to dance during her pregnancy. O f course, the employer has the obligation to give her another job, but as stated in the problem there is no other work for which her talents are suited. It is not fair to require the employer to continue employing her. ★ *

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A pharmaceutical company manufacturing contracep­ tive pills and fam ily planning devices advertises fo r sales representatives to promote its products. Ten (10) women, five (5) o f whom are on the fam ily way, apply fo r employment. The company rejects the application of the pregnant women and employs the rest. Is the action o f the company legal? Explain. ANS. Yes. The company has the prerogative to select its employees. Besides, its refusal to employ the pregnant applicants is reasonable; they cannot effectively promote its products which are precisely intended to prevent pregnancies. What is unlawful is for the employer to discriminate against or dismiss a woman employee by reason of her pregnancy. *

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Miss X works as a hostess in a nightclub along Roxas Boulevard. The club requires her to be in the premises at 8:00 o’clock in the evening and to stay up to 3:00 o’clock the follow ing morning. She is told to be nice to customers and is paid a percentage of whatever is

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WORKING WOMEN AMD MINORS

collected by the club from the latter. There are nights when she does not earn anything because there are no customers. Is Miss X nevertheless an employee of the nightclub? Why? ANS. Yes. The Labor Code provides: Article 138. C la s s ific a tio n o f c e rta in w om en w o rk e rs . — Any woman who is permitted or suffered to work, with or without compensation, in any night club, cocktail lounge, massage clinic, bar or sim ilar establishment, under the effective control or supervi­ sion of the employer for a substantial period of time as determined by the Secretary of Labor shall be consid­ ered as an employee of such establishment for pur­ poses of labor and social legislation. *

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Oivina, a clerk typist, was invited by Mr. V., her boss in the materials department of the company, and Mr. J. fo r dinner together w ith some other employees. They had a few drinks in the course of the dinner. Divina, thereafter, rode in the car o f Mr. V. thinking that he would bring her home, instead, Mr. V. drove info a motel. The next day Divina reported the incident to the company president and tendered her resignation. Is the behavior of Mr. V. sufficient ground fo r his dismissal? Why? ANS. Yes. As a managerial employee, Mr. V. is bound by a more exacting work ethics. He failed to live up to this higher standard of responsibility when he succumbed to his moral perversity. And when such moral perversity is perpetrated against his subordi­ nate, he provides a justifiable ground for his dismissal for lack of trust and confidence. It is the duty of every employer to protect its employees from over sexed superiors. (Villarama vs. NLRC, et al., G. R. No. 106341, September 2, 1994)

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WORKING WOMEN AND MINORS

What are the acts constituting sexual harassment under Republic Act No. 7877, otherwise known as the Sexual Harassment Act of 1995? ANS. vides:

Section 3 of Republic Act No.

7877 pro­

SEC. 3. W ork, E d u c a tio n o r T ra in in g -re la te d S exual H arassm ent D e fined. — Work, education or training-related sexual harassment is committed by an employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, re­ quests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said Act. (a) In- a work-related or employment environment, sexual harassment is committed when: (1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or contin­ ued emplovment of said individual, or in granting said individual favorable compensation, terms, conditions, promotions, or privileges, or the refusal to grant the sexual favor results in limiting, segregating or classify­ ing the employee which in any way would discriminate, deprive or diminish employment opportunities or other­ wise adversely affect said employee; (2) The above acts would impair the employee’s rights or privileges under existing labor laws; or (3) The above acts would result in an intimidating, hostile, or offensive environment for the employee. (b) In an education or training environment, sexual harassment is committed: (1) Against one who is under the care, custody or supervision of the offender; (2) Against one whose education, training, appren­ ticeship or tutorship is entrusted to the offender;

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WORKING WOMEN AND MINORS

(3) When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, al­ lowance or other benefits, privileges, or considera­ tions; or (4) When the sexual advances result in an intim i­ dating, hostile or offensive environment for the stu­ dent, trainee or apprentice. Any person who directs or induces another to commit any act of sexual harassment as herein de­ fined, or who cooperates in the commission thereof by another without which it would not have been commit­ ted, shall also be held liable under this Act. *

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A Personnel Manager, while interviewing an attractive female applicant fo r employment, stared directly at her fo r 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 can invite her fo r dinner and dancing at some future time. Did the Personnel Manager, by the above acts, commit sexual harassment? Reason. (2000 Bar) ANS. Yes. Under Section 3 of Republic Act No. 7877, otherwise known as the Anti-Sexual Harassment Act of 1995, work-related sexual harassment is among others committed by a manager, who demands, re­ quests, or otherwise requires any sexual favor from another as a condition for hiring. In this case, while the request for a sexual favor in exchange for employ­ ment was not expressly made, the same was clearly implied from the actuations of the personnel manager. *

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In the course of an interview, another female applicant inquired from the same Personnel Manager if she had

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WORKING WOMEN AND MINORS

the physical attributes required fo r the position she applied for. The Personnel Manager replied: “ You w ill be more attractive if you w ill wear micro-mini dresses w ithout the undergarments that ladies normally wear.” Did the Personnel Manager, by the above reply, commit an act of sexual harassment? Reason. (2000 Bar) ANS. No. There is no demand, express or implied, for a sexual favor as a condition or in ex­ change fbr employment. It should also be noted that the request for comment came from the applicant. The remarks may be vexatious but they do not fall under the purview of Republic Act No. 7877. *

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May sexual harassment be a ground fo r suspension? ANS. Sexual harassment made by a manager to his female secretary, consisting of touching her hand and shoulder, caressing her nape and telling other people that she was the one who hugged and kissed or that she responded to the sexual advances, is a ground for disciplinary action. The Anti-Sexual Ha­ rassment Act (R. A. 7877) cannot apply since the harassment took place prior to the enactment of the law. The manager was penalized with 30-day suspen­ sion. (Libres vs. NLRC et al., G. R. No. 123737, May 28, 1999) *

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What are the duties of the employer relative to the prevention or deterrence of the commission o f acts of sexual harassment? ANS. vides:

Section 4 of Republic Act No.

7877 pro­

SEC. 4. D u ty o f the E m p lo y e r o r Head o f O ffic e in a W o rk -re la te d , E d u c a tio n o r T ra in in g

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WORKING WOMEN AND MINORS

E n v iro n m e n t. — It shall be the duty of the employer or the head of the work-related, educational or training environment or institution, to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment. Towards this end, the employer or head of office shall: (a) Promulgate appropriate rules and regulations in consultation with and jointly approved by the em­ ployees or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation of sexual harassment cases and the adm inistrative sanctions therefor. Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of sexual harassment. The said rules and regulations issued pursuant to this subsection (a) shall include, among others, guide­ lines on proper decorum in the workplace and educa­ tional or training institutions. (b) Create a committee on decorum and investiga­ tion of cases on sexual harassment. The committee shall conduct meetings, as the case may be, with officers and employees, teachers, instructors, profes­ sors, coaches, trainors and students or trainees to increase understanding and prevent incidents of sex­ ual harassment. It shall also conduct the investigation of alleged cases constituting sexual harassment. In the case of a work-related environment, the committee shall be composed of at least one (1) representative each from the management, the union, if any, the employees from the supervisory rank, and from the rank-and-file employees. In the case of the educational or training institu­ tion, the committee shall be composed of at least one (1) representative from the administration, the train­ ors, teachers, instructors, professors or coaches and students or trainees, as the case may be. The employer or head of office, educational or training institution shall disseminate or post a copy of this Act for the information of ail concerned.

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WORKING WOMEN AND MINORS

What are the liabilities of an employer fo r sexual harass­ ment? ANS. Republic Act No. 7877 provides: SEC. 5. Liability of the Employer, Head of Office, Educational or Training Institution. -— The employer or head of office, educational or training institution shall be solidarily liable fo r damages arising from the acts of sexual harassment committed in the employ­ ment, education or training environment if the em­ ployer of head of office, educational or training institu­ tion is informed of such acts by the offended party and no immediate action is taken thereon. SEC. 6. Independent Action for Damages. —Nothing in this Act shall preclude the victim of work, education or training-related sexual harassment from instituting a separate and independent action for dam­ ages and other affirm ative relief. SEC. 7. Penalties. — Any person who violates the provisions of this Act shall, upon convicti.on, be penalized by imprisonment of not less than one (1) month nor more than six (6) months, or a fine of not less than Ten thousand pesos (P10,000) nor more than Twenty thousand pesos (P20,000), or both such fine and imprisonment at the discretion of the court. Any action arising from the violation of the provi­ sions of this Act shall prescribe in three (3) years. *

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An airline which flies both the international and domes­ tic routes requested the Secretary of Labor and Employ­ ment to approve the policy that all female flig h t atten­ dants upon reaching age forty (40) with at least fifteen (15) years of service shall be com pulsorily retired; how­ ever, flig h t attendants who have reached age forty (40) but have not worked fo r fifteen (15) years w ill be al­ lowed to continue working in order to qualify fo r retire­

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WORKING WOMEN AND MINORS

ment benefits, but in no case w ill the extension exceed fo u r (4) years. Does the Secretary o f Labor and Employment have the authority to approve the policy? (1998 Bar) ANS. Yes. Article 132 (d) of the Labpr Code empowers the Secretary of Labor and Employment to determine appropriate minimum age and other stan­ dards for retirement or termination in special occupa­ tions such as those of flight attendants and the like. *

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Can an individual, the sole proprietor o f a business enterprise, be said to have violated the Anti-Sexual Harassment Act o f 1995 if he clearly discriminates against women in the adoption o f policy standards fo r employment and prom otions in the enterprise? Explain. (2003 Bar) ANS. No. Violation of the Anti-Sexual Harass­ ment Act requires demand for a sexual favor. The act of discrimination against women employ­ ees may however be a violation of Article 135 of the Labor Code. *

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Give the conditions fo r the employment of children below fifteen (15) years o f age. ANS. Republic Act 7810 provides: Sec. 12. E m p lo ym e n t o f C h ild re n . — Children below fifteen (15) years of age may be employed: Provided, That, the following minimum requirements are present: a) The employer shall secure for the child a work permit from the Department of Labor and Employment; b) The employer shall ensure the protection, health, safety and morals of the child;

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WORKING WOMEN AND MINORS

c) The employer shall institute measures to pre­ vent exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and d) The employer shall formulate and implement a continuous program for training and skill acquisition of the child. XXX

Sec. 14. Prohibition on the Employment of Children in Certain Advertisements. — No person shall employ child models in all commercials or adver­ tisements promoting alcoholic beverages, intoxicating drinks, tobacco and its by products, and violence. *

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/ , Give the conditions fo r the employment o f children below fifteen (15) years of age under Republic Act No. 7658, approved on November 9,1993, further amending Republic Act No. 7610.

ANS. Under Republic Act No. 7658, approved on November 9, 1993, children below fifteen (15) years of age shall not be employed except: 1) When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the employer’s fam ily are employed: Provided, however, That his employment neither endangers his life, safety, health and morals, nor impairs his normal development: Provided, fur­ ther, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or 2) Where a child’s employment participation in public entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract is concluded by the child’s par­ ents or legal guardian, with the express agreement of

WORKING WOMEN AND MINORS

the child concerned, if possible, and the approval of the Department of Labor and Employment: and Pro­ vided, That the following requirements in all instances are strictly complied with: a) The employer shall ensure the protection; health, safety, morals and normal development of the child; b) The employer shall institute measures to pre­ vent the child’s exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and c) The employer shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. In the above exceptional cases where any such child may be employed, the employer shall first se­ cure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance or the above requirements. The Department of Labor and Employment shall promulgate rules and regulations necessary for the effective implementation of this Section. *

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What are the hours o f work of a working child? ANS. (1) A child below fifteen (15) years of age may be allowed to work for not more than twenty (20) hours a week: Provided, That the work shall not be more than four (4) hours at any given day; (2) a child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for more than eight (8) hours a day, and in no case beyond forty (40) hours a week; (3) no child below fifteen (15) years of age shall be allowed to work between eight o’clock in the evening and six o’clock in the morning of the following day and no child fifteen (15) years of age but below eighteen

11A

WORKING WOMEN AND MINORS

(18) shall be allowed to work between ten o’clock in the evening and six o’clock in the morning of the following; day. (Sec. 12-A; Republic Act No. 9231) *

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Little Lea Paloma is only ten ( W ) years o!d, but sha is already an accom plished singer. Sh© is hired at P5,000.00 a month by a carnival outfit which stages shows wherever there is a town fiesta. Little Lea is therefore always on the road, traveling to different parts of the country. Is her employment lawful? Why? ANS. Her employment is not legal. Such employ­ ment will endanger her health and impair her normal development. She is also deprived of the opportunity to get primary education as she is always traveling to different parts of the country. *

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A m ining company seeks your opinion whether it can employ persons aged eighteen (18) years as miners. What would be your advice? ANS. There is no prohibition against the employ­ ment of persons eighteen (18) years or over in under­ takings which are hazardous or deleterious in nature. What is not allowed is the employment of a person below eighteen (18) years of age in such undertakings. (Art. 139, Labor Code) *

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Mang Pedro who works as a cook in a restaurant has a fourteen (14) year old son, Pedro Jr., who after coming from school, goes to the restaurant to help his father in his kitchen chores and learn the trade. Is Pedro Jr. considered an employee of the restaurant?

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WORKING WOMEN AND MINORS ANS. No. Where a child below fifteen (15) years of age works under the direct responsibility of his parents or guardian, he is not considered an employee of the employer of his parents or guardian. (Section 2, Rule XI, Book III, Implementing Rules and Regula­ tions) *

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Under Article 140 of the Labor Code, no employee shall discriminate against any person in respect to terms and conditions o f employment on account o f his age. Would a company rule providing fo r lower wages fo r workers below 18 years who are inexperienced violate the prohibition? Why? ANS. No. The payment of lower wages is by reason of the worker’s inexperience, not his age. There is no discrimination on account of the worker’s minority.

CHAPTER VIII HOUSEHELPERS AND HOMEWORKERS What is “ domestic or household service"? ANS. “Domestic or household service’ shall mean service in the employer’s home which is usually neces­ sary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal com­ fort and convenience of the members of the em­ ployer’s household, including services of fam ily drivers. (Article 141, Labor Code). *

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Maria, who is fifteen (15) years old, is brought by her parents to Manila to work as a maid in the house o f Mrs. Lopez. They are paid in advance her salary fo r three (3) years and agree that she w ill work fo r Mrs. Lopez fo r the said period. Do you perceive any legal infirm ity in this arrangement? Explain. ANS. The period of the contract exceeds the maximum set by law. Article 142 of the Labor Code provides that the original contract of domestic service shall not last for more than two (2) years, although it may be renewed for such periods as may be agreed upon by the parties. Maria's contract will therefore be good for two (2) years onty. *

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A m ining company employs maids in the cottages in its Baguio m ining site to attend to the needs of its execu­ tives o r guests who now and then visit the site. Are the maids considered househelpers? Explain. ANS. No. They are hired by an industrial concern in eonnection with its operations. They attend to the

HOUSEHELPERS AND HOMEWORKERS

needs of whoever may occupy the cottages, not any particular person or family. Their job is no different from the chambermaids in a hotel. *

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Sinclitica Candido was employed by Apex Mining Com­ pany, Inc. to perform laundry services at Its staff house at Masara, Maco, Davao del Norte, th e staff house was used by guests, officers and employees o f the com­ pany. Is Sinclitica a househelper or domestic servant? Why? ANS. No. The services of a househelper or domestic servant are rendered exclusively for the personal comfort and enjoyment of the fam ily of the employer and are performed in the latter’s home. Services rendered in a staffhouse within the business premises of the company cannot be considered do­ mestic. SinGlitica must be considered as a regular employee of the mining company. (Apex Mining Company, Inc. vs. NLRC, et a l., G. R. No. 94951, April 22, 1991) *

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Nova Banking Corporation has resthouse and recre­ ational facility in the highlands of Tagaytay City fo r the use of its top executives and corporate clients. The rssthouse staff includes a caretaker, tw o cooks arid a laundry woman. AH of them are reported to the Social Security System as domestic or household employees o f the resthouse and recreational facility and not o f the bank. Can the bank legally consider the caretaker, cooks and laundrywoman as domestic employiees of the resthouse and not of the bank? (2000 Bar) ANS. No. They cannot be considered as domestic employees because they do not render services for a particular fam ily in a private home. (Apex Mining

328

HOUSEHELPERS AND HOMEWORKERS

Company Inc. vs. NLRC et al., G. R. No. 94951, April 22, 1991) Their services are in furtherance of the business activities of the bank. it

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Aling Maria works as a live-in iabandera (laundry woman) in the heme of Mr. and Mrs. U. Tang in Quezon City. She starts working at 6:00 a. m., rests from 12:00 noon to 1:00 p. m., then resumes work until 10:00 p. m. She is paid P800.00 a month. In your opinion, should she receive more? Why? ANS. Aling Maria should receive more. Although she is merely a househelper, she should not be al­ lowed or suffered to work for more than ten (10) hours a day (Article 1695, C ivil Code). Under the problem, she works for fifteen (15) hours a day. Since P800.00 is her pay for working for ten (10) hours a day during the month, she should be paid for the additional five (5) hours work rendered daily. *

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What is the minimum wage fo r househelpers? ANS. Article 143 of the Labor Code as amended by R. A. 7655 provides that: ART. 143. M inim u m wage. — (a) Househelpers shall be paid the following minimum wage rates: (1) Eight hundred' pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay and Caloocan cities and m unicipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Paraftaque, Las Pifias, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly urbanized cities; (2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first class munici­ palities; and

HOUSEHELPERS AND HOMEWORKERS

(3) Five hundred fifty pesos (P550.00) a month for those in other municipalities. Provided, That the employers shall review the employment contracts of their househelpers every three (3) years with the end in view of improving the terms and conditions thereof. Provided, further, That those househelpers who are receiving at least One thousand pesos (P1,000.00) shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided thereun­ der.’ Article 144 of the Labor Code also provides: M inim u m cash wage. — The minimum cash wage rates prescribed under this Chapter shall be the basic cash wage which shall be paid to the house­ helpers in addition to lodging, food and medical atten­ dance. *

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Mr. Tan lives in a compound where he also operates a modest candy business. Sometimes when there is no work in his house, his maids help in the packing of candies; his family driver, after bringing Mr. Tan’s children to school, drives the pick-up and delivers candies to outlets. How should the work rendered by the maids and the family driver in connection with Mr. Tan’s candy business be compensated? Explain. ANS. For work rendered by the maids and the fam ily driver in connection with Mr. Tan’s candy business, they should be paid at the rate prescribed by law for non-agricultural workers. Article 145 of the Labor Code provides that no househelper shall be assigned to work in a commercial, industrial or agricul­ tural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural workers. *

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Aside from the right to a minimum wage, what other rights are enjoyed by a househelper? ANS. The Labor Code provides: Article 146. O p p o rtu n ity fo r e d u c a tio n . — If the househelper is under the age of eighteen (18) years, the employer shall give him or her an opportu­ nity for at least elementary education which shall be part of the househelper’s compensation, unless there is a stipulation to the contrary. Article 147. T re a tm e n t o f h o u s e h e lp e rs . — The employer shall treat the househelper in a just and humane manner. In no case shall physical violence be used upon the househelper. Article 148. B oard, lo d g in g a nd m e d ic a l a tte n ­ dance. — The employer shall furnish the househelper free of charge suitable and sanitary living quarters as well as adequate food and medical attendance. Article 149. In d e m n ity f o r u n ju s t te rm in a tio n o f s e rv ic e s . — If the period of household service is fixed, neither the employer nor the househelper may term inate the contract before the expiration of the term, except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid the com­ pensation already earned plus that for fifteen (15) days by way of indemnity. If the househelper leaves without justifiable rea­ son, he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15) days. *

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May the relationship be terminated w ithout ju s t cause? ANS. Article 150 of the Labor Code provides: If the duration of the household service is not determined either in stipulation or by the nature of the service, the employer or the househelper may give notice to put an end to the relationship five (5) days before the intended termination of the service.

331

HOUSEHELPERS AND HOMEWORKERS

Distinguish househelpers from homeworkers. ANS. A househelper ministers to the personal needs and comfort of his employer in the latter’s home. A homeworker on the other hand performs in or about his own home any processing or fabrication of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an employer and thereafter sold or returned to the latter. *

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Who may be considered the employer of the home­ worker? ANS. The ■employer’ of homeworkers includes any person, natural or artificial, who for his account or benefit, or on behalf of any person residing outside the country, directly or indirectly or through any employee, agent, contractor of any other person: (1) Delivers, or causes to be delivered, any goods, articles or materials to be processed or fabricated in or about a home and thereafter to be returned or to be disposed o f or distributed in accordance with his directions: or (2) Sells any goods, articles or materials for the purpose of having the same processed or fabricated in or about a home and then rebuys them after such processing or fabrication, either hims®lf or through some other person. (Article 155, Labor Code). *

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Mrs. Phyllis Simons represents in the Philippines the Sears chain o f department stores in the U. S. She sells wood and leather to housewives w ith the condition that these materials be made by the latter in their respective homes into wooden clogs according to patterns and specifications given by her and that she w ill buy the

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HOUSEHELPERS AND HOMEWORKERS

wooden clogs at a specified price per pair. Is there an employer-employee relationship between Mrs. Simons and the housewives? Why? ANS. Yes. This is one of the situations covered by Article 155 of the Labor Code. The housewives are considered homeworkers, and Mrs. Simons is their employer. *

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Mrs. Josie Juan is the confidential secretary of Chairman o f 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 ma­ chine in her residence, and gave her a cellphone and a beeper. Is Mrs. Juan a homeworker under the law? Explain. (2000 Bar) ANS. Mrs. Juan is not a homeworker. A home­ worker, under the Labor Code, is engaged in process­ ing or fabrication of materials in or about a place tfSed regularly, in whole or in part, as a dwelling place (Article 155, Labor Code) On the other hand, Mps. Juan is engaged in providing secretarial services.

CHAPTER IX MEDICAL AND DENTAL SERVICES AND OCCUPATIONAL SAFETY Is the employer obliged to furnish his employees free medicines and equipments as well as free medical and dental services and facilities? ANS. The employer is required to keep in his establishment such first aid medicine and equipment as the nature and condition of work may require, in accordance with such regulations as the Ministry of Labor and Employment may prescribe. (Article 165, Labor Code). He is also required to furnish his employees free emergency medical and dental services and facilities. These free medicines, equipment, services and facilities are intended to provide immediate and nec­ essary treatment in case of injury or sudden illness of the worker, whether the same is work-connected or not before more extensive medical and/or dental treat­ ment can be secured. The employer is not obliged to provide and spend for the continued or follow-up treatment of the emr-'ioyee unless it has bound itself to do so by contract or established practice or policy. *

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Describe briefly these free emergency medical, dental services and facilities required to be furnished by the employer. ANS. (a) When the number of workers is from 10 to 50 in a workplace, the services of a first-aider shall be provided who may be one of the workers in the workplace and who has immediate access to the first-aid medicines prescribed in Section 3 of this Rule.

MEDICAL AND DENTAL SERVICES AND OCCUPATIONAL SAFETY

(b) Where the number of workers exceeds 50 but not more than 200 the services of a full-tim e registered nurse shall be provided. However, if the workplace is non-hazardous, the services of a full-tim e first-aider may be provided if a nurse is not available. (c) Where the number of workers in a workplace exceeds 200 but not more than 300, the services of a full-tim e registered nurse, a part-time physician and part-time dentist, and an emergency clinic shall be provided, regardless of the nature of the undertaking therein. The physician and dentist engaged for such workplace shall stay in the premises for at least two (2) hours a day; Provided, however, That where the establishment has more than one (1) workshift a day, the required two-hour stay shall be devoted to the workshift which has the biggest number of workers and they shall, in addition to the requirements of this Rule, be subject to call at anytime during the other workshifts to attend to emergency cases. (d) Where the number of workers in a hazardous workplace exceeds 300, the services of a full-tim e nurse, a full-tim e physician, a full-tim e dentist, a dental clinic and an infirmary or emergency hospital with one bed capacity for every 100 workers shall be provided. The physician and dentist shall stay in the premises of the workplace for at least eight (8) hours a day; Provided, however, That where the workplace has more than one (1) workshift a day, they shall be at the workplace during the workshift which has the biggest number of workers and they shall be subject to call at anytime during the other v/orkshifts to attend to emergency cases. Where the undertaking in such a workplace in non-hazardous in nature, the employer may engage the services of a part-time physician and a part-time dentist who shall'have the same responsi­ bilities as those provided in sub-section (c) of this Section, and shall engage the services of a full-tim e registered nurse. (e) In all workplaces where there are more than one (1) workshift in a day, the employer shall in addition to the requirements of this Rule, provide the services of a full-tim e first-aider for each workshift.

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MEDICAL AND DENTAL SERVICES AND OCCUPATIONAL SAFETY

(Sec. 4, Rule I, Book IV, Implementing Rules and Regulations). Establishments which are required by law to main­ tain a clinic or infirmary shall provide free family planning services to their employees which shall in­ clude but not limited to the appiication or use of contraceptive pills and intra-uterine devices. (Article 134, Labor Code) *

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What are the factors that make a workplace hazardous? ANS. (a) Where the nature of the work exposes the workers to dangerous environmental elements, contaminants or work conditions including ionizing radiations, chemicals, fire, flammable substances, noxious components and the like. (b) Where the workers are engaged in construction work, logging, firefighting, mining, quarrying, blasting, stevedoring, dock work, deep sea fishing and mecha­ nized farming. (c) Where the workers are engaged in the manu­ facture or handling of explosive and other pyrotechnic products. (d) Where the workers use or are exposed to heavy or power-driven machinery or equipment. (Sec. 8, Rule I, Book IV, Implementing Rules and Regula­ tions). •* *

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When is the requirement fo r an emergency hospital or dental clinic not applicable? ANS. An employer need not put up an emergency hospital or dental clinic in the workplace as required in these regulations where there is a hospital or dental clinic which is not more than five (5) kilometers away

336

MEDICAL AND DENTAL SERVICES AND OCCUPATIONAL SAFETY

from the workplace, if situated in any urban area or which can be reached by motor vehicle in twenty-five (25) minutes of travel; if situated in a rural area and the employer has facilities readily available for trans­ porting a worker to the hospital or clinic in case of emergency; Provided, That the employer shall enter into a written contract with the hospital or dental clinic for the use thereof in the treatment of workers in case of emergency. (Sec. 5, Rule I, Book IV, Implementing Rules and Regulations) ik

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The Abra Mining Corporation has a m ining site in tsis mountain of Abra and employs thereof one hundred fifty (150) miners. The miners complain that the com­ pany has employed a graduate first-aider on!y and r.ot a full-tim e registered nurse. Is the com plaint wellfounded? Why? ANS. The complaint of the miners is weil-founded. Under Art. 157 of the Labor Code, where the number of employees exceeds fifty (50) but not more than two hundred (200) and the workplace is hazardous, the services of a full-tim e registered nurse must be pro­ vided. A mining site is considered a hazardous workplace. *

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An auto repair shop has eight (8) employees. Whs': medical and dental services or facilities mus2 be fu r­ nished by the owner to the latter? ANS. Since the establishment employs less than ten (10) workers, the owner is only obliged to keep in the workplace first aid medicines. *

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MEDICAL AND DENTAL SERVICES AND OCCUPATIONAL SAFETY

Dr. Juan Trapper works as the company physician of the iiocos Chemical Co., Inc. employing 1,000 workers. Aside from providing medical services to the workers in cases o f emergency, what are the other duties o? Dr. Trapper? ANS. (a) Conduct pre-employment medical exam­ ination, free of charge for the proper selection and placement of workers; (b) Conduct free of charge annual physical exami­ nation of the workers; (c) Collaborate closely with the safety and techni­ cal personnel of the establishment to assure selection and placement of workers from the standpoint of physical, mental, physiological and psychological suit­ ability, including investigation of accidents where the probable causes are exposure to occupational health hazards; and (d) Develop and implement comprehensive occu­ pational health program for the employees of the establishment. A report shall be submitted annually to the Bureau of Working Conditions describing the pro­ gram established and the implementation thereof. (Sec. 9, Rule I, Book IV, Implementing Rules and Regulations) *

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Aside from providing free emergency medical and den­ tal services and facilities, are there other obligations of the employer in connection with health and safety o f his employees? ANS. The employer is obliged to keep and main­ tain his workplace free from hazards that are causing or likely to cause physical harm to the workers or damage to property. He must comply with the provi­ sions of the Occupational Health and Safety Code. (Rule VI, Book IV, Implementing Rules and Regula­ tions)

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MEDICAL AND DENTAL SERVICES AND OCCUPATIONAL SAFETY

Who is empowered to enforce and adm inister occupa­ tional safety and health laws? ANS. Article 165 of the Labor Code provides: A d m in is tra tio n o f s a fe ty and h e a lth la w s. — (a) The Department of Labor shall be solely responsi­ ble for the administration and enforcement of occupa­ tional safety and health laws, regulations and stan­ dards in all establishments and workplaces wherever they may be located; however, chartered cities may be allowed to conduct industrial safety inspections of establishm ents within th e ir respective jurisdiction where they have adequate facilities and competent personnel for the purpose as determined by the De­ partment of Labor and subject to national standards established by the latter. (b) The Secretary of Labor may, through appropri­ ate regulations, collect reasonable fees for the inspec­ tion of steam boilers, pressure vessels and pipings and electrical installations, the test and approval fo r safe use of materials, equipment and other safety devices and the approval of plans fo r such materials, equip­ ment and devices. The fees so collected shall be deposited in the national treasury to the credit of the occupational safety and health fund and shall be expended exclusively for the administration and en­ forcement of safety and other labor laws administered by the Department o f Labor.

CHAPTER X

EMPLOYEES’ COMPENSATION PROGRAi AND STATE INSURANCE FUND What is the employees’ compensation/program? ANS. It is the program provided for in Article 166 to 208 of the Labor Code whereby a fund known as the State Insurance Fund is established through premium payments exacted from employers and from which employees and their dependents in the event of workconnected disability or death, may promptly secure adequate income benefit, and medical or related bene­ fits. *

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Give the characteristics o f the Employees’ Compensa­ tion Program under the Labor Code. ANS. The Supreme Court has characterized tho Employees Compensation Program established under the Labor Code as follows: a) it is tax exempt; b) designed to ensure promptitude, in cases of work-connected disability or death, in the award to employees and their dependents of adequate income benefit and medical or related benefits; c) funded by monthly contributions of all covered employers; d) compulsory on all employers and their empioyees not over 60 years of age; e) the benefits of which are exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents; f) having its own adjudication machinery with original exclusive jurisdiction to settle any dispute with

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EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

respect to coverage, entitlement to benefits, collection and payment of contributions and penalties thereon, or any other matter related thereto, independent of other tribunals except the Supreme Court. (San Miguel Corporation vs. NLRC, et al., G. R. No. 57473, August 15, 1988). iSr

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Who are subject to coverage under the employees’ compensation program? ANS. Employers and their employees not over sixty (60) years of age are subject to compulsory coverage under this program. The employer may belong to either: (1) The public sector covered by the GSIS, com prising the National Government, including government-owned or controlled corporations, the Philippine Tuberculosis Society, the Philippine Na­ tional Red Cross, and the Philippine Veterans Bank; and (2) The private sector covered by the SSS, comprising all employers other than those defined in the immediately preceding paragraph. The employee may belong to either: (1) The public sector comprising the employed workers who are covered by the GSIS, including the members of the Armed. Forces of the Philippines, elective officials who are receiving regular salary and any person employed as casual, emergency, tempo­ rary, substitute or contractual, (2) The private sector comprising the employed workers who are covered by the SSS. *

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When does such compulsory coverage take effect?

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EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

ANS. Coverage of an employer takes effect on the first day of operation. Coverage of an employee takes effect on the first day of employment. *

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On what grounds may a claim be made fo r benefits under the employees compensation program? ANS. They are the following: (a) Sickness and the resulting disability or death by reason of an employment accident; and (b) Sickness and the resulting disability or death by reason of an occupational disease. *

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What is an injury? ANS. “Injury” means any harmful change in the human organism from any accident arising out of and in the course of employment. (Art. 167 (k), Labor Code, as amended by P. D. 1921) *

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What is “ sickness” ? ANS. “Sickness” means any illness definitely accepted as an occupational disease listed by the Commission or any illness caused by employment, subject to proof that the risk of contracting the same is increased by working conditions. For this purpose, the Commission is empowered to determine and approve occupational diseases and work-related illness that may be considered compensable based on peculiar hazards of employment. (Article 167 (I) of the Labor Code, as amended by P. D. 1368) *

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What is an occupational disease?

EMPLOYEES' COMPENSATION PROGRAM AND STATE INSURANCE FUND

ANS. An occupational disease is one which results from the nature of the employment, and by nature is meant conditions to which all employees of a class are subject and which produce the disease as a natural incident of a particular occupation, and attach to that occupation a hazard which distinguishes it from the usual run of occupations and is in excess of the hazard attending the employment in general. To be occupational, the disease must be one wholly due to causes and conditions which are normal and constantly present and characteristic of the partic­ ular occupation; that is, those things which science and industry have not yet learned how to eliminate. Every plant of the same industry is alike constantly exposed to the danger of contracting a particular occupational disease, An occupational disease is one which develops as a result of hazards peculiar to certain occupations, due to toxic substances (as in the organic solvents indus­ try), radiation (as in television repairmen), repeated mechanical injury, emotional strain, etc. (Schm idt’s Attorney’s Dictionary of Medicine, p. 561). *

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May an illness not listed by the Employees Compensa­ tion Commission as an occupational disease be com­ pensable? If so, cite examples. ANS. Where the illness is not listed by the Employees Compensation Commission as an occupa­ tional disease, it must be established that the risk of contracting the same is increased by working condi­ tions. Where there is ample proof that petitioner, a public high school teacher, contracted rheumatoid arthritis and pneumonitis due to her exposure to adverse working conditions, it was held that such illnesses are compensable although they are not listed by the Em­ ployees Compensation Commission as occupational diseases. (Menez vs. Employees’ Compensation Commission, et al., G. R. No. L-48488, April 25,

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EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

1980). Similarly, disability arising from tuberculosis, an illness considered occupational only in employ­ ments involving the treatment or nursing of a person suffering from such illness or work with material which is a source of tuberculosis infection, has nevertheless been held to be compensable where petitioner, as land investigator of the Bureau of Lands, had to travel a lot thereby exposing him self to dust, heat, cold and hunger. (Corales vs. Em ployees’ Compensation Commission, et al., G. R. No. L-44063, August 25, 1978). Death due to severe anemia secondary to gastric malignancy has also been held to be compens­ able in a case where the nature of the duties of the deceased as ditchtender must have subjected him to heat and exposure to the elements which ultimately weakened him. (Leal vs. Employees’ Compensation Commission, et al., G. R. No. L-46546, October 30, 1980) Where the work of the employee as a public school teacher was not confined to the classroom but included extra-curricular activities which exposed her to the elements and weakened her resistance, her death due to cancer of the liver is compensable. (Abadiano vs. GSIS, et al., G. R. No. L-52254, January 30, 1982). W hile until now the cause of cancer is not known, cancer of the lungs is compensable where it is shown that the work of the deceased as a librarian exposed her to dusty books and other deleterious substances. (Dator vs. Employees’ Compensation Commission, et al., G. R. No. L-57416, January 30, 1982) Senile cataract, though not listed as an occupa­ tional disease, is compensable where it is established that petitioner’s duties as construction worker exposed him to the heat of the sun. (Jarillo vs. Employees’ Compensation Commission, ei al., G. R. No. L-52058, February 25, 1982) Where the deceased was exposed to analgesics and antibiotics by reason of treatment and hospitaliza­ tion for angina pectoris, coronary insufficiency, and gouty arthritis (developed as a result of the perfor­ mance of his work as municipal judge), which expo­ sure can be reasonably held to have caused leukemia,

EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND death resulting therefrom is compensable. (Duran vs. Employees’ Compensation Commission, et al., G. R. No. 52463, March 30, 1982). *

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Discuss briefly the theory of “ increased risk.” ANS; The term “sickness” as defined in paragraph (I) of Article 167 of the Labor Code includes “any illness caused; by employment, subject to proof that the risk of contracting the same is increased by working conditions.” This is a recognition of the th e o ry o f in cre a se d ris k . To establish compensabil­ ity under the same, the claimant must show substantial proof o f work-connection, but what is required is merely a re a so n a b le w o rk -c o n n e c tio n and not a direct causal relation. (Jimenez vs. Employees’ Compensation Commission, et al., G. R. No. L-58176, March 23, 1984; Cristobal vs. Employees’ Compensa­ tion Commission, et al., G. R. No. L-49280, February 26, 1981). Proof of actual cause of the ailment is not necessary. The test of evidence of the relation of the disease with the employment is p r o b a b ility and not certainty. (Panotes vs. Employees’ Compensation Commission, et al., G. R. No. L-64802, March 29, 1984). To require otherwise would not be consistent with the liberal interpretation of the Labor Code and the social justice guarantee. *

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Is cancer an occupational disease? Explain. ANS. Although the cause of cancer is not yet known, it has already been included as a qualified occupational disease in certain cases. Thus, cancer of the epithelial lining of the bladder is considered occu­ pational when contracted by employees engaged in work involving exposure to alphanaphtylamine, betanaptylamine, or benzidine or part of the salts, and suramine or magenta; likewise, cancer of the skin or of

345

EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

the corneal surface of the eye is considered occupa­ tional in work involving the use or handling of or exposure to tar, pitch, bitumen, mineral oil including paraffin, soot or any compound product or residue of any of these substances. Cancer of the stomach and other lymphatic and forming vessels, or of the nasal cavity and sinuses is recognized as an occupational disease among woodworkers, carpenters, loggers, and employees in pulp, paper and plywood mills; while cancer of the lungs, liver and brain is listed as an occupational disease of vinyl chloride or plastic work­ ers. *

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F. C. worked in the printing department o f a govern­ ment agency. He handled various chemicals fo r print­ ing, ate w ithout washing his hands, and was exposed to intense heat. He often neglected personal necessity due to inadequate facilities in his place o f work. F. C. later died o f rectal cancer. Is his death compensable? Why? ANS. Yes. Although rectal cancer is not listed as an occupational disease, there is ample proof that the risk of contracting the same was increased, if not caused, by the working conditions prevailing in the em ployer’s premises. (Cristobal vs. Employees’ Compensation Commission, et al., G. R. No. L-49280, April 30, 1980) •it

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S., employed as a mechanic in a naval shipyard, died of pyelonephritis (acute pyogenic infection of the kidney) and bronchopneumonia (infection of the bronchi and lung tissue). Is his death compensable? Why? ANS. No. The diseases are not occupational with respect to the work of the deceased. Besides, the risk of contracting them was not increased by his working

346

EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

conditions (Sulit vs. Employees’ Compensation Com­ mission, et al., G. R. No. L-48602, June 30, 1980). *

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Rino, a stevedore of Allied Port Services, Inc., died of uremia secondary to chronic renal failure, and chronic glomerulonephritis. Is the death o f Rino, due to the aforesaid causes (not listed as occupational diseases) compensable? Explain. ANS. No. No proof was adduced to show reason­ able connection between the work of the deceased and the cause of his death. There was no showing that the progression of the disease was brought about early by the conditions of his work. No medical history, records or physician’s report were presented to substantiate the claim that the conditions at the Port Area in­ creased the risk of uremia, renal failure or glomeru­ lonephritis. Such proof must constitute a reasonable basis for concluding that the conditions of employment of the deceased caused the ailment or aggravated the risk of contracting the same. The evidence must be real and substantial and not merely apparent; for the duty to prove work-causation or work aggravation imposed by existing law is real, not merely apparent. (Rino vs. Employees’ Compensation Commission et al., G. R. No. 132558, May 9, 2000) *

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Is Hansen’s Disease (leprosy) compensable? ANS. Yes, provided the illness is traceable to employment. Leprosy, like tuberculosis, is a system disease; its specific cause is bacteria and the same can be acquired through body contact with a person harboring the germs; and some of the participating factors leading to the development of the disease are exposure to sudden changes of environment and tem ­ perature and the lessening of the body resistance of the person affected. (Better Buildings, Inc. vs.

347

EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

Pucan, et al., G. R. No. L-42731, February 28; 1985; Batangas Laguna Bus Co. vs. WCC, 99 SCRA 710). *

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Is the claimant under the Employees’ Compensation Program required to present proof of causal relation or aggravation where the cause or origin of the disease is s till unknown? ANS. Yes. If diseases not intended by law to be compensated are inadvertently or recklessly included, the integrity of the State Insurance Fur.d is endan­ gered. Compassion for the victim s o f diseases not covered by the law ignores the need to show a greater concern for the trust fund to which the tens of millions o f workers and their fam ilies look for compensation whenever accidents, disease, and deaths occur. Con­ sequently, disability of a clerk in the Bureau of Mines and Geosciences due to brain tumor, and the death of a driver of the Department of Public W orks and Highways due to amyotrophic lateral sclerosis, have been held not to be compensable, as the claimants failed to submit such proof as would constitute a reasonable basis for concluding either that the condi­ tions of employment of the claimants caused the ailment or that such working conditions had aggra­ vated the risk of contracting those aiiments. (Raro vs. Employees’ Compensation Commission, G. R. No. 58445, April 27, 1989; Sante vs. Employees’ Compen­ sation Commission, G. R. No. 34415, June 29, 1989) But the law does not require a direct causal rela­ tion. It is enough that the hypothesis on which the workman’s claim is based is probable. Medical opinion to the contrary can be disregarded especially where there is some basis in the facts for inferring workconnection. (Salalirna vs. ECC & SSS, G. R. No. 146360, May 20, 2004) ft

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EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

Is cirrhosis o f the liver contracted by a public school teacher and which resulted in his death compensable? Why? ANS. Nd; The work of a public school teacher, though underpaid and difficult, does not create haz­ ards which naturally cause liver sickness. The disease is one to which mankind in general is exposed or afflicted without regard to the nature of his work. It is not caused by hard work because a rich man who does not do any physical labor at all is susceptible to liver cirrhosis. (Librea vs. Employees’ Compensation Commission, et al., G. R. No. 58879, March 6, 1992) ........ A forty (40) year old public school teacher died due to profuse bleeding resulting from a prolapsed uterus. She had five (5) pregnancies. She had to take long walks to and from her place o f teaching, an elementary school on the side o f the Mayon Volcano. Is the death o f the teacher compensable? Why? A N S f Nov 'Prolapsed uterus is not among the occupational diseases listed under Annex “A ” of the Amended Rules on Employees’ Compensation. Be­ sides, this illness is the result of the physiological structure and changes in the body on pregnancy and childbirth. (Corporal vs. Employees’ Compensation Commission and GSIS, G R. No. 86020, August 5, 1994) *

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Is ureterolithiasis (presence o f renal stones in the ureter arid urinary stones) of a chemical laboratory technician o f the NBI compensable under the employees’ compen­ sation program? Explain. ANS. Yes. Though not expressly recognized as an occupational disease, ureterolithiasis may be com­ pensable by reason of the theory of increased risk. It

EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND is medically established that environment, water or other fluid intake and the nature of the occupation are im portant factors in the development or inhibition of the disease. The work of the NBI laboratory technician exposed her to drugs, insecticides, volatile poisons, fuels and inorganic compounds, and chemical laboratory equip­ ment. Moreover, she attended to field cases and rendered holiday and night duties once a week and helped the chemists in the examination of incoming cases. She often missed some important health habits such as regularly drinking water and urination in order not to interrupt the flow of concentration. Despite the abandonment of the presumption of compensability established under old workmen’s com­ pensation law, the present law has not ceased to be a social legislation; the liberality of the law in favor of the working man or woman still prevails. (Employees’ Compensation Commission et al. vs. Court of Ap­ peals et al., G. R. No. 121545, November 14, 1996) *

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What defenses may be interposed by the State Insur­ ance Fund against a claim fo r compensation made by a covered employee o r his dependents? ANS. The following defenses may be set up: (a) The injury is not work-connected or the sick­ ness is not occupational. (b) The disability or death was occasioned by the employee’s intoxication, willful intention to injure or kill him self or another, or his notorious negligence. (Article 172, Labor Code) (c) No notice of sickness, injury or death was given to the employer. (Article 206, Labor Code) (d) The claim was filed beyond three (3) years from the time the cause of action accrued. (Article 201 of the Labor Code, as amended by P. D. 1921)

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EMPLOYEES’ COMPENSATION PROGRAM AND STATE INSURANCE FUND

What is notorious negligence? Give a brief discussion. ANS. Notorious negligence is equivalent to gross negligence; it is something more than mere careless­ ness or lack of foresight; it falls under the designation of evident and manifest negligence; it signifies a deliberate act of the employee to disregard his own personal safety. Disobedience to rules, orders and/or prohibition does not in itself constitute notorious negli­ gence, if no intention can be attributed to the injured to end his life. (Caunan vs. Cia General de Tabacos, 56 Phil. 542; Paez vs. W orkmen’s Compensation Commission, et al., infra). Thus, the drowning of a sailor assigned to watch and take care of a barge of the company, which occurred while he was swimming with some compan­ ions somewhere in the Pasig river near the place where the barge was moored, has been held not arising from notorious negligence, notwithstanding the fact that he was supposed to be on duty 24 hours a day and that he could have taken a bath in a water tank on the barge; it could have however been otherwise had the deceased been one who did not know how to swim or one not accustomed to the perils of the water. (Luzon Stevedoring Co., Inc. vs. W orkmen’s Com­ pensation Commission, et al., G. R. No. L-19742, January 21, 1964). Where the deceased driver, paid on commission basis, left the truck assigned to him and went to the other side of the river for the purpose of advising the other truck driver to have all the palay bought loaded early because he was in a hurry to go back, and he (deceased), outside his regular duties, even helped the other driver in the work, loading and unloading the palay at the bank of the river to be ferried to the other side where his truck was parked, but said driver against the advice of the other truck driver rode on the third banca which capsized and sunk and he drowned, it was held that his disregard of a warning merely constituted a miscalculation and not notorious negligence. (Paez vs. W orkmen’s Compen­ sation Commission, et al., G. R. No. L-18438, March 30, 1963). Similarly, it has been held that the act of

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EMPLOYEES' COMPENSATION PROGRAM AND STATE INSURANCE FUND

the deceased in drinking during a cold night oil of wintergreen, believing it to be Tanduay Rhum, and there being no warning made by his companions that drinking the same could be fatal to him, cannot be considered notorious negligence. (Luzon Stevedoring Corporation vs. W orkmen’s Compensation Commis­ sion, et al., G. R. No. L-37896, July 22, 1981) A *

-k

Eddie Duque works as a delivery man in a construction supply establishment owned by Mr. Ong, a chinaman w ith a bad temper. One day, while Eddie was making reports on his deliveries, he had an altercation with Mr. Ong; irked by the disrespectful attitude o f his employee, Mr. Ong pulled cu t his gun and shot Eddie, hitting him in the spinal column and paralyzing him completely. Mr. Ohg was prosecuted crim inally fo r the act. (a) Is the disability suffered by Eddie Duque compens­ able? ANS. Yes. The injury was sustained by Eddie Duque in his place of work and while in the perfor­ mance of his official functions. (b) If Eddie Duque recovers compensation from the State Insurance Fund, can he still recover from Mr. Ong damages in the criminal case? Why? ANS. Eddie Duque can no longer recover dam­ ages in the criminal case. Article 173 of the Labor Code, as amended by P. D; classifiable as technical and internal business operations data which has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Confidential employees who may be excluded from the bargaining unit must be strictly defined so as not to needlessly deprive many employees of their right to bargain collectively through representatives of their choosing. (San Miguel Corporation Supervisors and Exempt Union et al. vs. Hon. B. Laguesma et al., G. R. No. 110399, August 15, 1997)

The bank’s head of the loans department, initially ap­ proves loan applications before they are passed on to the Board of Directors fo r confirmation; the cashier is one o f the authorized signatories of the bank and ap­ proves the opening o f accounts withdrawals and en­ cashment, and acceptance of check deposits; while the accountant is also one of the authorized signatories of the bank, handles the financial reports and reviews the debit/credit tickets submitted by the other departments. (a) Are the foregoing officers o f the bank disqualified from joining unions fo r being managerial employees? Why? ANS. No. They have no power to transfer, suspend, lay-off, recall, discharge, assign or discipline employees; neither do they formulate and execute management policies. (b) May they be disqualified from joining unions fo r being confidential employees? Why?

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RIGHT TO SELF-ORGANIZATION

ANS. No. They have no access to confidential labor relations information. (Sugbuanon Rural Bank, Inc. vs. Hon. Undersecretary Bienvenido Laguesma et al., G. R. No. 116194, February 2, 2000) *

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May aliens jo in labor unions in the Philippines? ANS. As a general rule, aliens cannot join labor unions in the Philippines; they are prohibited under Article 269 of the Labor Code from engaging directly or indirectly in all forms of trade union activities. However, under the same article, as amended by Rep. Act 6715, aliens working in the Philippines with valid permits issued by the Department of Labor and Em­ ployment may exercise the right to self-organization and join or assist labor organizations of their own choosing for purposes of collective bargaining; pro­ vided, that said aliens are nationals of a country which grants the same or similar rights to Filipino workers. *

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What are “ trade union activities” ? ANS. “Trade union activities' shall mean: (1) organization, formation and administration of labor organizations; (2) negotiation snd administration of collective bargaining agreements; (3) all forms of concerted union actions; (4) organizing, managing, or assisting union con­ ventions, meetings, rallies, referenda, teach-ins, semi­ nars, conferences and institutes; (5) any form of participation or involvement in representation proceedings, representation elections, consent elections, union elections; and (6) other activities or actions analogous to the foregoing. (Art. 270, Labor Code)

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RIGHT TO SELF-ORGANIZATION

Are employees of a cooperative entitled io form a union? Why? ANS. Employees of a cooperative are entitled to exercise their right to self-organization except those who are members of the cooperative. The latter are considered owners and certainly an owner cannot bargain with himself or his co-owners. (Cooperative Rural Bank of Davao City, Inc. vs. Calleja, et al., G. R. No. 77951, September 26, 1988) *

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What is the purpose of the formation of a labor union? ANS. The union has been evolved as an organiza­ tion of collective strength for the protection of the workers against the unjust exactions of the employer and for securing to its members fa ir and just wages and good working conditions. The individual, acting alone, cannot hope to wrest from the employer as much concession as can be exacted by the workers acting collectively. In a union there is strength. *

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Cite features of the Labor Code that protect and strengthen labor unions. ANS. Among the features of the Labor Code that protect and strengthen labor unions are its provisions (a) on unfair labor practices of employers (Article 248, Labor Code), (b) recognizing the right of labor organi­ zations to prescribe their own rules with respect to the acquisition or retention of membership therein (Article 249 (a), Labor Code), (c) recognizing the validity of closed shop, union shop and other union security arrangements (Article 248 (e), Labor Code), (d) autho­ rizing deductions or check offs from the wages of an

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RIGHT TO SELF-ORGANIZATION

employee for union duos (Article 113 (b), Labor Code), (e) allowing the imposition of an agency fee (Articlo 248 (e), Labor Code), and (f) prohibiting abridgment of the right to seSf-organization (Article 246, Labor Code). *

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When does a labor organization acquire legal personal­ ity and become entitled to the rights and privileges granted by law to legitimate labor organizations? ANS. Upon issuance of the certificate of registra­ tion. (Art. 234, Labor Code)' *

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Is the issuance o f a certificate o f registration to a chapter o r local o f a federation o r national union a condition fo r the legitimacy and acquisition by the form er of legal personality? Explain. ANS. No. A local or chapter becomes a legitimate labor organization upon submission to the BLR of its charter certificate, constitution and by-laws, a state­ ment on the set of officers, and the books o? accounts The certificate of registration is not required. The satisfaction of these requirements by the ioca! or chapter shall vest upon it the status of legitimacy with all its concomitant statutory privileges, one or which is the right to be certified as the exclusive representative of all the employees in an appropriate bargaining unit. (San Miguel Foods, Inc. - Cebu B-Meg Plant vs. Hon. B. Laguesma et al, G. R. No. 116172, October 10, 1996) *

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What is the purpose of registration of a labor organiza­ tion?

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RIGHT TO SELF-ORGANIZATION

ANS. The requirement of registration is not a limitation on the right of assembly or association, which may be exercised with or without said registra­ tion. The latter is merely a condition s in e qua non for the acquisition of legal personality by labor organi­ zations, associations, or unions, and the possession of the rights and privileges granted by law to legitimate labor organizations. Registration is required to protect both labor and the public pose as organizers, although not truly accredited agents of the union they purport to represent. Such requirement, is valid exercise of the police power, because the activities in which labor organizations, associations, and unions of workers are engaged affect public interest and should be pro­ tected. (Phil. Association of Free Labor Unions (PAFLU), et al. vs. The Secratary of Labor, et al., G. R. No. L-22228, February 27, i9S9) *

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Give the requirements fo r the registration o f an inde­ pendent union and of a federation or national union. ANS. The application for registration of an inde­ pendent union shall be accompanied by the following documerrts: 1) the name of the applicant labor union, its principal address, the name of its officers and their respective addresses, approximate num­ ber of employees in the bargaining unit where it seeks to operate, with a statement that it is not reported as a chartered local o f any federa­ tion or national union;, 2) the minutes of the organizational rneeting(s) and the list of employees wtio participated to the said meeting(s); 3) the name of all its members comprising at least 20% of the employees in the bargaining unit; 4) the annual financial reports if the applicant has been in existence for one or more years, unless

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RIGHT TO SELF-ORGANIZATION

it has not collected any amount from the mem­ bers, in which case a statement of this effect shall be included in the application; 5) the applicant’s constitution and by-laws, min­ utes of its adoption or ratification, and the list of the members who participated in it. The list ratifying members shall be dispensed with where the constitution and by-laws was ratified or adopted during the organizational meeting. In such a case, the factual circumstances of the ratification shall be recorded in the minutes — • of the organizational meeting(s). The application for registration of federations and national unions .shall be accompanied by the following documents: 1) a statement indicating the name of the appli­ cant labor union, its principal address, the name of its officers and their respective ad­ dresses; 2) the minutes of the organizational meeting(s) and the list of employees who participated in the said meeting(s); 3) the annual financial reports if the applicant union has been in existence for one or more years, unless it has not collected any amour?* from the members, in which case a statement to this effect shall be included in the applica­ tion; 4) the applicant union’s constitution and by-laws, minutes of its adoption or ratification, and the list of the members who participated in it. The list of ratifying members shall be dispensed with where the constitution and by-laws was ratified or adopted during the organizational meeting(s). In such a case, the factual circum­ stances of the ratification shall be recorded in the minutes of the organizational meeting(s); 5) the resolution of affiliation of at least ten (10) legitimate labor organizations, whether inde­ pendent unions or chartered locals, each of

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RIGHT TO SELF-ORGANIZATION

which must be a duly certified or recognized bargaining agent in the establishment where it seeks to operate; and 6) the name and addresses of the companies where the affiliates operate and the list of all the members in each company involved. Labor organizations operating within an identified industry may also apply for registration as a federation or national union within the specified industry by submitting to the Bureau the same set of documents. (Sec. 2, Rule ill, Book V, Implementing Rules, as amended by D. O. 40-03) *

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How should the requirements fo r union registration be complied with? ANS. The formal requirement for the registration of a labor union must be strictly complied with; other­ wise the union does not acquire legal personality. The submission of statements of accounts, in lieu of the accounting books (journals, ledgers etc.) re­ quired under the Labor Code and its implementing rules, is not considered sufficient compliance with the law. (Protection Technology, Inc. vs. Honorable Secretary of Labor et al., G. R. No. 117211, March 1,1995) The registration of a local or chapter is not valid where no books of accounts were filed before the BLR, the constitution, by-laws and the list of members who supposedly ratified the same were not attested to by the union president, and the oonstitution and by-laws were not verified under oath. (Phoenix Iron and Steel Corporation vs. Secretary of Labor and Employment et al.,G. R. No. 112141, May 16, 1995) *

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!s the issuance of a certificate o f registration to the union conclusive proof that it has the legal personality to file a petition fo r certification election? Explain. ANS. The issuance of a certificate of registration in favor of a union is not an adequate and unassailable proof that it possesses the requisite legal personality to file a petition for certification election. If a labor organization’s application for registration is vitiated by falsification and serious irregularities, a labor organi­ zation should be denied recognition as a legitimate labor organization. And if a certificate of registration has been issued, the propriety of its registration could be assailed directly through cancellation of registration proceedings in accordance with Articles 238 and 239 of the Labor Code, or indirectly, by challenging its petition for certification election. (Toyota Motors Philippines Corporation Labor Union vs. Toyota Motor Philippines Corporation Employees and Workers Union et al., G. R. No. 135806, August 8, 2002) fr

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Give some principles relative to the right o f a local union to disaffiliate from its mother federation. ANS. The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when circumstances warrant. This right is consistent with the constitutional guaran­ tee of freedom of association (Volkschel Labor Union vs. Bureau of Labor Relations, No. L-45824, June 19, 1985, 137 SCRA 42). When the local union withdrew from the old federa­ tion to join a new federation, it was merely exercising its primary right to self-organization for the effective enhancement of common interests. In the absence of enforceable provisions in the federation's constitution preventing disaffiliation of a local union, a local may

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sever its relationship with its parent (People’s Indus­ trial and Commercial Employees and Workers Organi­ zation (FFW) vs. People’s Industrial and Commercial Corporation, No. 37687, March 15, 1982, 112 SCRA 440). A local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs. And the noncompliance of the local union with the provision in the constitution of the mother federation requiring the service of three months notice of intention to withdrew did not produce the effect of nullifying the disaffilia­ tion; this is purely a technical ground which cannot rise above the fundam ental right to self-organization. (Tropical Hut Employees Union-CGW, et al. vs. Tropical Hut Food Market, Inc., et al., G. R. Nos. 43495-99, Januaiy 20, 1990) But while it is true that a local union, being an entity separate and distinct from the mother federa­ tion, is free to serve the interest of all its members and enjoys the freedom to disaffiliate, such right may be exercised and is thus considered a warranted by circumstances. Generally a labor union may d isa ffili­ ate from the mother union to form a local or indepen­ dent union only during the 60-day freedom period im m ediately preceding the expiration of the CBA. Even before the onset of the freedom period (and despite the closed-shop provision in the CBA between the mother union and management) disaffiliation may still be carried out, but such disaffiliation must be effected by a majority of the members in the bargain­ ing unit. This happens when there is a substantial shift in allegiance on the part of the majority or the mem­ bers of the union, 'n such a case, however, the CBA continues to bind the members of the new or disaffili­ ated and independent union up !o the CBA’s expiration date. (Associated Workers Union-PTGWO vs. NLRC, et al., G. R. Nos. 87266-69, July 30, 1990) it

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RIGHT TO SELF-ORGANIZATION

The Philippine Sky landers Employees Association (PSEA), a labor union affiliated w ith the Philippine Association of Free Labor Unions (PAFLU) won in the certification election conducted among the rank-andfiie employees of Philippine Skylanders, Inc. But the rival union protested the result of the election before the Secretary of Labor, Several months later, pending settlement of the controversy, PSEA disaffiliated from PAFLU allegedly for the letter's deliberate and habitual dereliction of duty towards the former's members. More than ninety percent (90%) of PSEA’s membership sup­ ported the disaffiliation. Is PSEA’s disaffiliation valid? Discuss briefly. ANS. There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the former nor were there any conditions imposed for a valid breakaway. The pendency of an election protest involving both the mother federation and the local union did not consti­ tute a bar to a valid disaffiliation. (Philippine Skylan­ ders, Inc. et al. vs. NLRC, et al., G. R. Nos. 127374 and 127431, January 3i, 2002) •k •k it What is the essence of affiliation? ANS. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protec­ tion of their interests. (Philippine Skylanders, Inc. et al. vs. NLRC, et al., G. R. Nos. 127374 and 127431, January 31, 2002) •ft

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The union of the supervisory personnel of Atlas Litho­ graphic Services, Inc. affiliated with the Kaisahan ng Manggagawang PiHpino (KAMPIL), a national federa­

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RIGHT TO SELF-ORGANIZATION

tion. The local union of ths rank-and-file was also affiliated w ith the said national federation. When KAMPIL filed a petition fo r certification election in be­ half of the supervisors’ union, the company opposed the same on the ground that under Article 245 o f the Labor Code, the said federation could not represent the supervisory employees because it already represented the union o f the rank-and-file employees, who were directly under the supervisors composing the supervi­ sors’ union. Is the contention of the company tenable? Explain. ANS. Yes. Under Article 245 of the Labor Code, supervisory employees are not eligible for membership In a labor organization of the rank-and-file employees. Supervisors should not be given an occasion to bar­ gain together with the rank-and-file against the inter­ ests of the employer regarding terms and conditions of work. Conflict of interest may arise. Members of the supervisory union might refuse to carry disciplinary measures against their co-member rank-and-file em­ ployees. In the area of bargaining, their interests are not identical; the needs of one are different from those of the other. And in the event of a strike, the national federation might influence the supervisors' union to conduct a sympathy strike on the sole bssis of a ffilia­ tion. The prohibition in Article 245 extends to a supervi­ sors’ local union applying for membership in a national federation the members of which include local unions of rank-and-file employees. (Atlas Lithographic Ser­ vices, Inc. vs. Laguesma, et al., G. R. No. 96568, January 6, 1992) *

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The Macho Hair Saloon receives a set o f proposals fo r collective bargaining from the Macho Barbers L ^ io r composed of the eight (8) barbers in the establish The owner refuses to bargain with the union because

397

RIGHT TO SELF-ORGANIZATION

(1) the barbershop is sim ply a service establishment, (2) the barbers are not paid on time basis but the sum o f P4.00 per haircut, and (3) they cannot form a union since they number less than ten. Which o f the forego­ ing grounds is tenable? Why? ANS. None. Although the barbershop is simply a service establishment, the employees therein are enti­ tled to exercise the right to self-organization. And the fact that the members are paid by results (per haircut) does not disqualify them from forming a union; if there is control of the establishment over the means and methods by which they do their work, they are consid­ ered employees of the former. Finally, the law does not fix a minimum number o f employees for the exercise of the right to self-organization. ★

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The faculty members in a school, run by a religious missionary order, converted their faculty club into a labor union and affiliated the same w ith a national federation o f teachers’ unions. The school, claiming that it was being run on a nonprofit basis, refused to recognize the union and instead proposed that the local disaffiliate w ith the mother federation and revert itself back to a mere faculty club. Is there unfair labor practice on the part o f the school? Give your reasons. (1981 Bar) ANS. Yes, the school has interfered with the exercise by the faculty members of their right to self-organization. Even employees in non-profit or religious organizations or establishments are entitled to exercise this right. (Article 243, Labor Code) *

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What is the effect o f the registration o f a labor organiza­ tion?

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RIGHT TO SELF-ORGANIZATION

ANS. The registration makes a labor organization a “legitimate labor organization” and entitles it to the following rights: (a) To act as the representative of its members for the purpose of collective bargaining; (b) To be certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining; (c) To be furnished by the employer, upon written request, with his annual audited financial statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar days from the date of receipt of the request, after the union has been duly recognized b / the employer or certified as the sole and exclusive bargaining representative of the employees in the I'argaininfi unit, or within sixty (60) calendar days before the expiration of the existing collective bargaining at, eem ert; (d) To own property, real or personal, for the use and benefit of the labor organization and its members; (e) To sue and be sued in its registered name; (f) To undertake all other activities designed to benefit the organization and its members, including cooperative, housing, welfare and other projects, not contrary to law. (g) To be free, with respect to its income and properties including grants, endowments, gifts, dona­ tions and contributions from fraternal and sim ilar orga­ nizations, local or foreign, which are actually, directly and exclusively used for their lawful purposes, from taxes, duties and other assessments (Art. 242, Labor Code, as amended by R. A. 6715). (h) To file a notice of strike in behalf of its members on grounds of unfair labor practices, in the absence of a duly certified ,or recognized bargaining representative. (Art. 263, Labor Code) (i) To collect reasonable membership fees, union dues, assessments and fines and other contributions for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund and credit and cooperative undertakings. (Art. 277 (a>, Labor Code)

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RIGHT TO SELF-ORGANIZATION

May an employee be compelled to become a member of a labor organization? Explain briefly. ANS. An employee cannot be compelled to be­ come a member of a labor organization. The right to self-organization includes the freedom not to join a union. For a “right* comprehends at least two broad notions, namely first, liberty or freedom, i. e., the absence of legal restraint, and second, power, whereby an employee may, as he pleases, join or refrain from joining an association. (Victoriano vs. Elizalde Rope Workers Union, et al., G. R. No. L-25246, September 12, 1974) However, by virtue of the operation or enforcement of a closed shop or union shop clause in a collective bargaining agreement, an employee may be influ­ enced, on pain of dismissal, into becoming a member of a labor union. *

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May an employer impose as a condition fo r employment that the applicant shall not jo in a labor organization or shall withdraw from one to which he belongs? Explain. ANS. No. Such a condition partakes of the nature of a “yellow dog contract” and constitutes an unfair labor practice (Article 248 (b), Labor Code). It is an interference with the in dividual’s right to se lf­ organization. *

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Enumerate the rights of membership in a labor organi­ zation. ANS. Article 241 of the Labor Code enumerates the rights of membership in a labor organization. They are:

400

RIGHT TO SELF-ORGANIZATION

(a) Right against the imposition of arbitrary, excessive, or oppressive initiation fees, fines and forfeitures. (b) Right to full and detailed reports from their officers and representatives of all financial transac­ tions as provided for in the union’s constitution and by-laws. (c) Right to directly elect their officers, local or national, by secret ballot at intervals of five (5) years. (d) Right to determine by secret ballot, after due deliberation, any question of major policy affecting the entire membership of the organization, unless the nature of the organization or fo rc e -m a je u re renders such secret ballot impractical, in which case the board of directors may make the decision in behalf of the general membership. (e) Right to inspect during office hours the books of accounts and other records of the financial activities of the organization. (f) Right to be informed about the provisions of the organization’s constitution and by-laws, collective bar­ gaining agreement, the prevailing labor relations sys­ tems, as well as rights and obligations under existing labor laws. (g) Right to report to the Bureau of Labor Rela­ tions any violation of the rights and conditions of membership. *

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Union members filed a com plaint w ith the regional office of the Ministry of Labor and Employment fo r the expulsion o f their union officers fo r gross violation of Article 242 (now Art. 241) o f the Labor Code and their union’s constitution and by-laws. Instead of deciding the case, the med-arbiter ordered the holding of a referendum among the union members to decide on the issue o f expulsion o f the officers from their respective positions. (a) Is the action taken by the med-arbiter proper?

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RIGHT TO SELF-ORGANIZATION

ANS. No. The m eo-arbiter must hear and decide the case and impose th3 appropriate penalty; there is no legal basis for the calling of a referendum. (b) In case the union officers sought to be expelled get re-elected during the pendency o f the expulsion pro­ ceedings, should the cas«? be dismissed? ANS. Yes. Their re-election indicates that the members have disregarded or have forgiven their faults or misconduct. The will of the members should not be frustrated. (Krpisanan ng Manggagawang Pinagyakap (KMP), et al vs. Hon. C. Trajano, et al., G. R. No. L-62306, January 21, 1985, citing Duyag vs. Inciong, 98 SCRA 522; and Pascual vs. Provincial Board of Nueva Ecija, 106 Phil. 471) *

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May fees o r assessments be checked-off from the wages o r other amounts due the employee w ithout his written authorization? Explain. ANS. As a general rule, fees and assessments due the union cannot be deducted from his wages or other amounts due him without his individual written autho­ rization. However, such deduction without written authorization can be done in the following cases: (a) for union dues in cases where the right to checkoff has been recognized by the employer; and (b) for reason­ able assessments in connection with mandatory activi­ ties such as labor education and research and labor relations seminars. (Article 241 (o), Labor Code) *

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What is “ check-off’? May an employer be held liable fo r the payment o f union dues and agency fees not de­ ducted from the members’ wages pursuant to the check-off provision in the CBA? Give a discussion.

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RIGHT TO SELF-ORGANIZATION

ANS. A check-off is a process or device whereby the employer, on agreement with the union recognized as the proper bargaining representative, or on prior authorization from its employees, deducts union dues or agency fees from the latter’s wages and remits them directly to the union. Its desirability to a labor organi­ zation is quite evident; by it, it is assured of continu­ ous funding. Indeed, the system of check-off is prim arily for the benefit of the union and, only indi­ rectly, of the individual laborers. When so stipulated in a collective bargaining agreement, or authorized in writing by the employees concerned — the Labor Code and its Implementing Rules recognize it to be the duty of the employer to deduct sums equivalent to the amount of union dues from the employees’ wages for direct remittance to the union, in order to facilitate the collection of funds vital to the role of the union as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the local union which continues to represent the employees under the terms of a CBA, and not to the parent association from which it has disaffiliated. The legal basis of check-off is thus found in statute or in contract. Statutory lim itations on check-offs generally require written authorization from each em­ ployee to deduct wages; however, a resolution ap­ proved and adopted by a m ajority of the union mem­ bers at a general meeting w ill suffice when the right to check-off has been recognized by the employer, in­ cluding collection of reasonable assessments in con­ nection with mandatory activities of the union, or other special assessments and extraordinary fees. No provision of law mdkes the employer directly liable fo r the payment to the labor organization of union dues and assessments that the form er fails to deduct from its employees* salaries and wages pur­ suant to a check-off stipulation. The em ployer’s failure to make the requisite deductions may constitute a violation of a contractual commitment fo r which it may incur liability for unfair labor practice. But it does

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RIGHT TO SELF-ORGANIZATION

not by that omission, incur liability to the union for the aggregate of dues or assessments uncollected from the union members, or agency fees for non-union employees. Check-offs in truth impose an extra burden on ihe employer in the form of additional administrative and bookkeeping costs, ii is a burden assumed by man­ agement at ihe instance of the union and for its benefits, in order to facilitate the collection of dues necessary for the latter’s life and sustenance. But the obligation to pay union dues and agency fees obvi­ ously devolves not upon the employer, but the individ­ ual employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee to consent to a check-off. The only obliga­ tion of the employer under a check-off is to effect the deductions and remit the collections to the union. The principle of unjust enrichment necessarily precludes recovery of union dues — or agency fees — from the employer, these being, to repeat, obligations pertain­ ing to the individual worker in favor of the bargaining union. Where the employer fails or refuses to imple­ ment a check-off agreement, logic and prudence dic­ tate that the union itself undertake the collection of union dues and assessments from its members (and agency fees from non-union em ployees); this, of course, without prejudice to suing the employer for unfair labor practice. (Holy Cross of Davao College, Inc. vs. Hon. J. Joaquin et al., G. R. No. 110007, October 18, 1996) *

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Atty. ABX, the lawyer of Union Y on a retainer basis, wiU have his birthday on November 6, 1983. In deep appreciation fo r his faithful and courageous services to tfts union, the board of directors passes a resolution assessing every union member the sum of P2.00 to be used in the purchase of a birthday gift fo r Atty. ABX. Some union members refuse to pay tiv? assessment. Is their refusal justified? Why?

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RIGHT TO SELF-ORGANIZATION

ANS. Yes, their refusal is justified. The assess­ ment was not authorized by a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. The board of directors has no power to impose the assessment. ft ft ft May a union collect “ union service fee” fo r its appear­ ances in labor proceedings? ANS. Yes. This is in accordance with the liberal­ ized scheme and theory of representation for labor adopted in the Labor Code. It should be noted that Article 222 of the Code allows non-lawyers to repre­ sent their organization or members thereof. (Radio Communications of the Philippines, Inc. vs. The Sec­ retary of Labor and Employment, et al., G. R. No. 77959, January 9, 1989) ft ft ft At a general membership meeting called fo r the purpose o f raising funds to finance a projected strike, a m ajority o f the members o f the union voted fo r a written resolu­ tion assessing each member the sum of P5.00. Later on a member who did not vote affirmatively fo r the resolu­ tion and did not execute an individual written authoriza­ tion fo r the deduction o f the assessment from his wages refused to pay the same. Is his refusal justified? Reason out your answer. ANS. No, his refusal is not justified. He is bound by the resolution. To be valid and enforceable, a resolution levying special assessments or other ex­ traordinary fees need not be approved unanimously by the members; a majority vote of all the members is sufficient. The absence of a written check o ff autho­ rization will only mean that the assessment cannot be deducted by the employer from his wages or other

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RIGHT TO SELF-ORGANIZATION

amounts due him, but he is still obliged to pay the same. *

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Atty. Saavedra was hired by a bank union to assist its president in negotiating a collective bargaining agree­ ment w ith the bank. After the execution o f the CBA, Atty. Saavedra sought to collect his attorney’s fees out o f the benefits due the employees by virtue o f the agreement. Is this proper? Why? ANS. No. Atty. Saavedra's claim for attorney’s fees should be satisfied out of funds of the union. This is in accordance with Article 222 of the Labor Code which provides in part: ART. 222. Appearance and Fees. — x x x (b) No attorney’s fees, negotiation fees or sim ilar charges of any kind arising from any collective bargaining negoti­ ations or conclusion of the collective agreement shall be imposed on any individual member of the contract­ ing union: Provided, however, that attorney’s fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agree­ ment or arrangement of any sort to the contrary shall be null and void. (Pacific Banking Corporation vs. Clave, et al., No. L-56965, March 7, 1984) The deduction from the workers’ benefits would however be valid if authorized by a resolution individu­ ally signed by them. (Associated Labor Union et al. vs. NLRC et al., G. R. Nos. 76916-17, March 31, 1989) it

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Cruz and Associates, a law firm, had a retainer agree­ ment w ith a union o f bank employees whereby it under­ took and committed to render to the latter legal ser­ vices, when required or necessary, in consideration o f a

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RIGHT TO SELF-ORGANIZATION

m onthly retainer fee o f P3.000.00. Actual litigation would however be the subject o f special billings. The law firm handled in behalf o f the union a claim fo r holiday pay as well as mid-year and year-end bonus. No agreement was however made as to the attorney’s fees o f the law firm. A judgm ent in favor o f the union fo r P175,794.32 was obtained in the case. (a) Considering that no agreement as to the amount of attorney’s fees was entered into, is the law firm entitled to ten percent (10%) o f the award as attorney’s fees, in accordance with Article 111 o f the Labor Code? Why? ANS. No. The fees mentioned in Article 111 of the Labor Code are the extraordinary attorney's fees re­ coverable as indemnity for damages sustained by and payable to the prevailing party; it is not attorney’s fees payable by a party to his lawyer. Besides, the ten percent (10%) is the maximum amount of the award that may be granted. (b) Is the law firm nonetheless entitled to attorney’s fees? Why? ANS. Yes. On the basis of quantum meruit (as much as he deserves). This is to prevent undue enrichment. An award of P10,000.00 is fa ir and reasonable under the circumstances. (Traders Royal Bank Employees Union vs. NLRC et al., G. R. No. 120592, March 14, 1997) *

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Give the rules governing the collection and disburse­ ment o f funds o f a labor organization. ANS. part;

Article 241 of the Labor Code provides in

(g) No officer, agent or member of a labor organi­ zation shar collect fees, dues or other contributions in its behalf o. make any disbursement of its money or

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RIGHT TO SELF-ORGANIZATION

funds unless he is duly authorized pursuant to its constitution and by-laws; (h) Every payment of fees, dues or other contribu­ tions by a member shall be evidenced by a receipt, signed by the officer or agent making the collections and entered in the records of the organization to be kept and maintained for the purpose; (i) The funds of the organization shall not be applied for any purpose or object other than those expressly authorized by written resolution adopted by the m ajority of the members at a general meeting duly called for the purpose; (j) Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is made which shall state the date, place, and purpose of such payment. Such record and receipt shall form part of the financial records of the organization; Any action involving the funds of the organization shall prescribe after three (3) years from the date of submission of the annual financial report to the De­ partment of Labor and Employment or from the date the same should have been submitted as required by law, whichever comes earlier. P ro vid e d , That this provision shall apply only to a legitimate labor organi­ zation which has submitted the financial report re­ quirements under this Code: P ro v id e d , fu rth e r, That failure of any labor organization to comply with the periodic financial reports required by law and such rules and regulations promulgated thereunder six (6) months after the effectivity of this Act shall automati­ cally result in the cancellation of union registration of such labor organization. (As amended by R. A. 6715) (k) The officers of any labor organization shall not be paid compensation other than the salaries and expenses due to their positions as specifically pro­ vided for in its constitution and by-laws or in a written resolution duly authorized by a m ajority of ail the members at a general membership meeting duly called for the purpose. The minutes of the meeting and the list of participants and ballots cast shall be subject to

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RIGHT TO SELF-ORGANIZATION

inspection by the Secretary of Labor or his duly authorized representatives. Any irregularity in the approval of the resolutions shall be a ground for impeachment or expulsion from the organization; (I) The treasurer of any labor organization or any officer thereof who is responsible for the accounts of such organization or for the collection, management, disbursement, custody or control of the funds, moneys and other properties of the organization, shall render to the organization and to its members a true and correct account of all moneys received and paid by him since he assumed office or since the last date on which he rendered such account, and of the balance remaining in his hands at the time of rendering such account, and of all bonds, securities, and other proper­ ties of the organization, entrusted to his custody or under his control. The rendering of such account shall be made: (1) At least once a year within thirty (30) days after the close of its fiscal year; (2) At such other times as may be required by a resolution of the m ajority of the members of the organization; and (3) Upon vacating his office. The account shall be duly audited and verified by affidavit and copy thereof shall be furnished the Sec­ retary of Labor. *

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The union sought to collect a 10% special assessment from the CBA lump-sum granted to union members. The purpose o f the special assessment was to put up a cooperative and credit union, purchase vehicles and other items needed fo r the benefit o f the officers and the general membership, and fo r the payment o f ser­ vices rendered by union officers/consultants and oth­ ers. The levy was however contested on the grounds that the same was approved in separate local member­ ship meetings on various dates and not in a general

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membership meeting as required by Articie 241 (n); that the check-off authorizations required by Article 241 (o) were withdrawn; and that Article 222 (b) prohibits the special assessment, considering the purpose thereof. Decide. ANS. The special assessment must be struck down. Article 241 (n) requires that the special assess­ ment be authorized by a written resolution of a major­ ity of all the members at a general membership meeting duly called for the purpose; local membership meetings on separate occasions, on different dates and at various venues would not be sufficient. In addition, the secretary of the organization must record the minutes of the meeting which, in turn, must in­ clude, among others, the list of all the members present as well as the votes cast. Article 241 (o) requires an individual written check­ off authorization duly signed by every employee in order that a special assessment may be validly checked-off. A withdrawal of individual authorizations is equivalent to no authorization at all. Article 222 (b) prohibits attorney's fees, negotiation fees and similar charges arising out of the conclusion of a collective bargaining agreement from being im­ posed on any individual union member. The collection of the special assessment partly as payment for ser­ vices rendered by union officers, consultants and others is an exaction which fall within the category of a “similar charge" and therefore within the prohibition in the aforementioned article. The failure of the union to comply strictly with the requirements set out by the law invalidates the ques­ tioned special assessment. Substantial compliance is not enough in view of the fact that the special assess­ ment will diminish the compensation of the union members. The steps required by law must be followed to the letter; no shortcuts are allowed. (Palacol, et al. vs. Pura Ffirrer-Calleja, et al., G. R. No. 85333, February 26, 1990)

RIGHT TO SELF-ORGANIZATION

May a deduction for death as$ benefits bs made from the wages of the union members by means of a board resolution of the directors of the union? ANS. No. The deduction for death aid benefits pursuant to a resolution of the board of directors of the union cannot be lawfully mjide from the wages of the member. Such deduction can be characterized as a special assessment. A mere board resolution of the directors, and not by the majority of ali the members, is not sufficient. Also a written individual authorization duly signed by the employee concerned, is a condition sine qua non therefor. (Stellar industrial Services, inc. vs. NLRC et al., G. R. No. 117418, January 24, 1998) •ft

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What are the requisites for tbs validity of special as­ sessments? ANS. Article 241 of the Labor Code mentions three (3) requisites that must be complied with in order that the special assessment for the union’s incidental expenses, attorney’s fees and representation ex­ penses as stipulated in the CBA may be valid and upheld, namely: 1) authorization by a written resolu­ tion of the majority of ail the members at the genera! 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 employees concerned. To illustrate: The ABS-CB N Supervisors Union held a general membership, meeting whereat it was agreed that a ten percent (10%) special assessment from the tots! economic package due to every member would be checked-off to cover expenses for negotia­ tion, other miscellaneous expenses end attorney’s fees. The minutes of the said meeting were recorded by the union’s secretary, end noted by the union president. Eighty-five (G5) moml'ers of the union

RIGHT TO SELF-ORGANIZATION

executed individual written authorizations for check-off for regular union dyes and for incidental expenses such as attorney’s fees, representation and other miscellaneous expenses. It was ruled that the special assessment is valid except that no deductions shall be taken from the workers who did not give their individ­ ual written check-off authorization. (ABS-CBN Super­ visors Employees Union Members vs. ABS-CBN Broadcasting Corporation et al., G. R. No. 106518, March 11, 1999) *

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Who are disqualified from election or appointment as a union officer? ANS. (a) A person who has been convicted of a crime involving moral turpitude. (Article 241 (f), Labor Code). (b) A person who is not an employee or worker of the company or establishment. (Sec. 4 (f), Rule III, Rules Implementing P. D. 1391) *

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Will failure to comply with the technical requirements or form alities in relation to the election o f union officers invalidate the election? Explain. ANS. No, as long as it does not appear that such failure resulted in the deprivation of any substantial right or prerogative of anyone, or caused the perpetra­ tion of fraud or other serious anomaly, or preclude the expression and ascertainment of the popular will in the choice of officers. (Timbungco vs. Hon. Ricardo Castro, et al., G. R. No. 76111, March 14, 1990) *

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In a general assembly, faculty members of the Univer­ sity o f Santo Tomas called by the secretary general of

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the university fo r the purpose o f discussing the unsatis­ fied CBA and the states and election o f officers of the union, a new set o f union officers was elected by acclamation and clapping o f hands. The union’s con­ stitution and by-laws however provided, in connection with union elections, that a committee on election be constituted at least thirty (30) days before the election and that the election be done by secret balloting. But the constitution and by laws was allegedly suspended by the members during the assembly. (a) Was the election o f the officers by acclamation and clapping o f hands valid? Why? ANS. No. In the first place, the assembly was not called by the union but by the university; it was merely a convocation of faculty clubs. In the second place, no commission on elections, as mandated by the union’s constitution and by-laws, was formed prior to the election. Finally, the purported election was not done through secret balloting, as required by the union's constitution and by-law. Members of the union are bound and must respect the latter’s rules and regula­ tions. (b) Would years o f inaction and mismanagement on the part o f the old set of officers ju stify the election o f the new set of officers in violation of the union's constitu­ tion and by-law? Why? ANS. No. The members should have followed the procedure provided for in the union’s constitution and by-laws as well as the Labor Code for the redress of their grievances. (c) Did the ratification by the union members of the collective bargaining agreement entered into by the university and the new set of officers validate the elec­ tion of the latter? Why? ANS. No. The ratification referred to the terms of the contract, and not to the issue of union leadership,

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which is a matter that should be decided only by unton triembers in the proper forucn at the proper time and after observance of proper procedures. (U S T Faculty Union et ai vs. Bitonio et a!., G. R. No. 131235, November 1G, 1998) >Y

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The Associated Labor Union for ftfoittal Workers (ALUMETAL) and fits affiliate, Volkschel Labor Union, jo in tly entered Into a e le c tiv e bargaining agreement witE*i the DMG group of companies. The CBA provided among others that the employers would make payroll deductions for union dues covered by the individual cSe^ck-off authorization of the union memiiers and remit the* same to the 5ocal union and to ALUMETAL. About seven (7) months after the execution o? the CBA, VoJkschel Labor Union disaffiliated from ALUMETAL a?3egptfSy because of the tetter’s d&iiberate and habitual dereliction of duties towards its affiliate. Ths union members accordingly revoked their check-off authoriza­ tion ?.i favor o f ALUMETAL. (a) is tr=s dteaffiHIation of VoSkschel Labor Union from ALUMETAL valid and lawful? ANS. Yes. The right of a local union to disaffiliate from its mother union is well-settled. A local union, being a separate and voluntary association, is free to serve the interest of all Us members including the freedom to disaffiliate when circumstances warrant. This right \3 consistent with the constitutional guaran­ tee of freedom of association. (b) Is the CBA a bar to the disaffiliation of the Ioca! • union? ANS. No. It would go against the spirit of the labor law to restrict the affiliate’s right to sefforgsnization due to the existence of the CBA. The working man’s welfare should be the primordial or paramount consideration.

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RIGHT TO SELF-ORGANIZATION

(c) Are the companies entitled o r obliged to effect collection o f union dues intended fo r £JLUiV5ETAL de­ spite revocation by t?;e employees o f the check-off authorization in favor o f said fecVsration. ANS. No. ALUMETAL’s right to the union dues ceased upon the disaffiliation of the local union and the revocation of the check-off authorization in its favor. W ithout the affiliation of the local union, the employer has no link to the mother union, th e obligation of an employee to pay union dues is coter-r,inus with his affiliation or membership, ev*n if the check-off authorization was made irrevocable. And a contract between an employer and the parent organi­ zation as bargaining agent for the employees is term i­ nated by the disaffiliation of the local of which tho employees are members. (d) is Volkschel Labor Union still entitled to the pay­ ment o f dues? ANS. Yes. A local union which has validly withdrawn from its affiliation with the parent associa­ tion and which continues to represent the employee of an employer is entitled to the check-off of dues under a collective bargaining contract. (Volkschel Labor Union vs. BLR, et al., G. R. No. L-45824, June 19, 1985) *

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Because Atty. Ravelo won a big case fo r the union at the University of the West, he became very popular with the union members. He was persuaded to run as union President but this was opposed by David Eduardo, incumbent union President, on the ground that Atty. Ravelo was not an employee of the University. When Atty. Ravelo was sought to be disqualified on this technicality, the issue was thrown fo r decision by the general membership. After due deliberation, the

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RIGHT TO SELF-ORGANIZATION

general membership, by secret ballot, declared him qualified. Overwhelmingly, he won the election. May Atty. Ravelo serve as union President? Amplify. (1981 Bar) ANS. No. Atty. Ravelo is not an employee of the University of the West; he is disqualified from becom­ ing an officer of any union therein. The act of the general membership in declaring him qualified has no legal effect. It cannot cure the ineligibility of Atty. Ravelo. ★ hi ht Z is a member of the local of a national union in a m anufacturing firm . During a general membership meeting called fo r the purpose of discussing proposals fo r bargaining negotiations, he was surprised to know that his Tocal through their union president disaffiliated from the national union. (a) Has Z any ground to complain? Explain. ANS. Yes, Z, as a union member, has the right to participate by secret ballot, to determine any question of major policy affecting the entire membership. Dis­ affiliation is a question of major policy. (b) What is the remedy available to Z? ANS. He and others constituting at least 30% of the general membership may file with the Regional O ffice where the union is dom iciled a com plaint against the union president for violation of Article 241 of the Labor Code. The proceedings may result in the expulsion of the union president from the organization. *

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May a labor union disaffiliate from its mother federation prior to the 60-day freedom period immediately preced­ ing the expiration o f the CBA? Why?

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RIGHT TO SELF-ORGANIZATION

ANS. Yes. This is part of the workers’ right to self­ organization and to form and join labor organizations of* their own choosing for the purpose of collective bargaining. Even before the onset of the freedom period, disaffiliation may be carried out when there is a shift of allegiance on the part of the m ajority of the members of the union. (Alliance of Nationalist and Genuine Labor Organization vs. Samahan ng mga Manggagawang Nagkakaisa sa Manila Bay Spinning Mills et al., G. R. No. 118562, July 5, 1996) *

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Describe briefly the nature o f the constitution and by­ laws o f labor unions. ANS. Trade unions have the right to adopt consti­ tutions, rules or by-laws within the scope of their lawful purposes, and bind their members thereby. To be valid, the provisions in the constitution and by-laws must be reasonable, uniform and not contrary to public policy or the law of the land. The constitution, rules and by-laws of a union constitute a jio n tra c t between it and its members and between theTmembers themselves, and the court will enforce such contract as long as it is not immoral, contrary to law or public policy, or beyond reason. (Johnson and Johnson Labor Union, et al. vs. Direc­ tor of Labor Relations, G. R. No. 76427, February 21, 1989) The constitution and by-laws, to be binding, must f:ave been ratified by the majority of the members at the time of its adoption. To be acceptable as one of the documents in support of the union’s application for registration, it must contain a definite procedure for settling internal disputes, provide for an education research fund and for a three (3) year term (now five years) for the officers. (Section 5, Rule II, Book V, Implementing Rules and Regulations)

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RIGHT TO SELF-ORGANIZATION

The union’s constitution and by-laws provides that no individual who previously belonged to another union may be admitted as awssbsr thereof, Is this provision valid? Why? ANS. The provision is not valid. While a union is in general free to select its own members, it cannot impose arbitrary and discriminatory conditions for ad­ mission to membership. In the present problem, it is very clear that the provision discriminates against an individual fo r having exercised his right to self­ organization. *

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Discuss the binding effect of the union’s constitution and by-laws on the individual union member. ANS. When a man joins a labor union (or almost any other dem ocratically controlled group), necessarily a portion of his individual freedom is surrendered for the benefit of all members. He accepts the w ill of the m ajority of the members in order that he may derive the advantages to be gained from the concerted action of all. Just as the enactments of the legislature bind all of us, to the constitution and by-laws of the union (unless contrary to good morals or public policy, or otherwise illegal), which are duly enacted through democratic processes, bind all of the members. If a member of a union dislikes the provisions of the by-laws, he may seek to have ihem amanueu or sriay withdraw from the union; otherwise, he must abide by them. It is not the function of courts to decide the wisdom or propriety of legitimate by-laws of a trade union. On joining a labor union, the constitution and by-laws become a part of the member’s contract of membership under which he agrees to become bound by the constitution and governing rules of ihe union so far as it is not inconsistent with controlling principles of law. The constitution and by-laws of an unincorpo­

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RIGHT TO SELF-ORGANIZATION

rated trade union express the terms of a contract, which define the privileges and rights secured to, and duties- assumed by, those who have become members. The agreement of a member on joining a union to abide by its Jaws and comply with the will of the lawfully constituted majority does not require a mem­ ber to. submit to the determination of the union any question involving his personal rights. (Ang Malayang Mangagawa ng Ang Tibay Enterprises et al. vs. Ang Tibay, 102 Phi!. 669, December 23, 1957). *

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May a:~union he compelled to admit a person as a member? Explain. ANS. No person has an absolute right to member­ ship in a trade union; generally, a union has the right to select its members. It has however been held that where union membership is a pre-requisite to employ­ ment, as where the union has a closed shop agreement with the employer, the union may be compelled to admit a person in case of its unreasonable refusal to do so. In such cases, union membership becomes impressed with public interest. (51 CJS Sec. 68, pp. 691-692; Salunga vs. CIR, et al., G. R. No. L-22456, September 27, 1967) *

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May a union sue the employer fo r the individual claims ©f its members or fo r unfair labor practice committed against the latter ? Explain. ANS. A labor union has the requisite personality to sue on behalf of its members for their individual money claims. It would be an unwarranted impairment of the right to self-organization through the formation of labor associations if thereafter such collective enti­ ties would be barred from instituting actions in their

419

RIGHT TO SELF-ORGANIZATION

representative capacity. (La Carlota Sugar Central vs. CIR, G. R. No. L-20203, May 19, 1975) It is the function precisely of a labor union to carry the representation of its members particularly against the employer's unfair labor practices and to file an action for their benefit without joining them, to avoid the cumbersome procedure of joining each and every member as a separate party. (Davao Free Workers Front vs. CIR, G. R. No. L-29356, October 31, 1974) *

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After obtaining a judgm ent fo r the reinstatement with backwages o f its members who were victim s of the company’s unfair labor practice acts, the union through its legislative council dismissed the union counsel who successfully prosecuted the case, and through a new counsel filed a m otion to dismiss the case alleging that they “ after carefiil and serious consideration of their petition, taken in the light o f recent developments af­ fecting their relationship with the respondent-company have decided that they have lost interest in the further prosecution o f their claim.” Rule on the legal effect of the motion to dismiss. ANS. While it may be true that the labor union itself has lost interest in the case, we do not believe that such should give ground for the dismissal of this case. The labor union as a body in reality has not so great a material interest in the controversy as would prejudice it in the event of dismissal. It is the j twenty-one (21) members for whose benefit the ULP case was prosecuted, who stand to take tremendous I losses. Nor is the argument that union and employer are now in the process of formulating a collective bargaining agreement of any consequence. That would not be affected by the decision we now render as an aftermath of the ULP case. Unless of course such a dismissal is q u id pro q u o before the parties could sit around the bargaining table. Which surely enough is not to the “best interest” of the laborers. (La

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RIGHT TO SELF-ORGANIZATION

Campana Food Products, Inc. vs. CIR, G. R. No. L-27907, May 22, 1969) The recognition of the right of working men to join, or assist in the formulation of an association for the purpose of demanding reasonable concessions from their employer, and of their legitimate aspiration to work and live decently, did not come by an Aladdin’s lamp. No greater perfidy can be conceived than that after a union has emerged victor in a bitterly-fought struggle, its officers, by the simple expedient of a stroke of the pen, become p a rtic e p s c rim in is in the betrayal of the union’s aggrieved members. (Kaisahan ng mga Manggagawa sa La Campana vs. De los Angeles, G. R. No. L-30798, November 26, 1970) *

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The union filed a charge against the company fo r unfair labor practices committed against three (3) o f its mem­ bers. - During the pendency o f the case, the union staged a strike. Later on, the union and the company reached an agreement fo r the amicable settlement o f all differences, disputes and/or controversies between them, subject to the condition among others that the company w ill pay the sum equivalent to three (3)months separation pay to each striking employee. A m otion to withdraw the ULP case, signed by the union president and the three employees against whom th e a lle g e d unfair labor practices had been committed as well as their counsel, was also filed. The vice-president o f the union and twenty-seven (27) members objected to the dismissal of the case and even filed a new case fo r unfair labor practice. Is the compromise agreement binding upon the union vice-president and the twentyseven (27) union members? Explain. ANS. It is an accepted rule under our laws that the will of the m ajority should prevail over the minority. (Betting Workers Union vs. Jai-Alai, G. R. No. L-9330, June 29, 1957, Jesalve, et al. vs. Bautisia, G. R. Nos. L-11928-30, March 24, 1959). Otherwise,

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RIGHT TO SELF-ORGANIZATION

no employer would ever enter into any compromise agreement with the union for the m inority members will always dishonor the terms of the agreement, and demand for better terms. (Dionela, et al. vs. CIR et al., G. R. No. L-18334, August 31, 1963)

May the union and its officers waive the right of union members to reinstatement provided fo r under an NLRC decision? Why? ANS. No. The waiver of reinstatement, like waivers of money claims, must be regarded as a personal right which must be exercised personally by the workers themselves. For a waiver thereof to be legally effective, the individual consent or ratification of the workers or employees involved must be shown. (Jag & Haggar Jeans and Sportswear Corporation vs. NLRC et al., G. R. No. 105710, February 23, 1995) *

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When may an employee’s money claims against th© employer be settled through the union? ANS. Before money claims can be the object of settlement through a union, the individual consent of the employee concerned should first be procured. This is because a waiver of money claims is consid­ ered a personal right which must be protected by the courts on consideration of public policy. To really give teeth to the constitutional mandate of giving laborers maximum protection and security, they must be pro­ tected not only against their employer but also against the leaders of their own union. But a union has the requisite personality to file a representative suit in behalf and for the benefit of its members. (Liana’s Supermarket vs. NLRC et al., G. R. No. 111014, May 31, 1996)

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RIGHT TO SELF-ORGANIZATION

Give a discussion on the right of a union to sue in a representative capacity. ANS. One of the rights granted by Art. 242 of the Labor Code to a legitimate labor organization is to sue and be sued in its registered name. In Liberty Manu­ facturing Workers Union v. Court o f First Instance of Bulacan (G. R. No. L-35252, November 1972, 48 SCRA 273), citing National Brewery and Allied Indus­ tries Labor Union o f the Philippines vs. San Miguel Brewery, Inc. (G. R. No. L-19017, December 1963, 9 SCRA 847), and Itogon-Suyoc Mines, Inc. v. Sangilo-ltogon Workers' Union (G. R. No. L-24189, August 1968, 24 SCRA 873), the Court held that the aforementioned provision authorizes a union to file a “representative suit” for the benefit of its members in the interest of avoiding an otherwise cumbersome procedure of joining all union members in the com­ plaint, even if they number by the hundreds. In another case, Davao Free Workers Front v. Court o f Industrial Relations (G. R. No. L-29356, October 31, 1974, 60 SCRA 408), the Court stated that the detail that the number and names of striking members of petitioner union were not specified in the decision nor in the complaint is of no consequence. Reiterating the rule in the Liberty case, the Court held that it was the function precisely of a labor union to carry the representation of its members and to file an action for the benefit and behalf without joining them and avoid the cumbersome procedure of joining each and every member as a separate party. Still, in La Cariota Sugar Central v. Court o f Industrial Relations (G. R. No. L-20203, May 19, 1975, 64 SCRA 79), the Court emphasized that it would be an unwarranted impairment of the right to' self-organization through formation of labor associations if thereafter such col­ lective entities would be barred from instituting action in their representative capacity. W hile a party acting in a representative capacity, such as a union, may be permitted to intervene in a case, ordinarily, a person whose interests are already

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represented will not be permitted to do the same, except when there is a suggestion of fraud or collusion or that the representative will not act in good faith for the protection of all interests represented by him. There must be clear and convincing evidence of fraud or collusion or lack of good faith. To reiterate, for a member of a class to be permitted to intervene in a representative action, fraud or collusion or lack of good faith on the part of the representative must be proven. It must be based on facts borne on record. Mere assertions do not suffice. (Acedera et al vs. International Container Terminal Services, Inc. et al., G. R. No. 146073, January 13, 2003) *

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Two hundred fifty-seven (257) out of two hundred sixtytwo (262) union members agreed through their union to a compromise settlement whereby they would be paid separation benefits in exchange fo r the dismissal of the criminal and unfair labor practice cases filed by the company against them. (a) Is the compromise agreement entered into by the union w ith the company binding on the union members who did not consent thereto? Why? ANS. No. Absent a special authority to settle the individual members’ claim s for reinstatem ent and backwages, a union has no authority to compromise the individual claims of members who did not consent to such settlement. (b) Are m inority union members who did not consent to a compromise settlement bound by the m ajority deci­ sion approving said settlement? Why? ANS. No. W aiver of money claims of workers are regarded as a personal right. (Golden Donuts, Inc. vs. NLRC et al., G. R. Nos. 113666-68, January 19, 2000 )

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RIGHT TO SELF-ORGANIZATION

On what grounds may a union registration be can­ celed? ANS. Article 239 of the Labor Code gives the following grounds: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who took part in the ratification of the constitution and by-laws or amendments thereto; (b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from the adoption or ratification of the constitution and by-laws or amendments thereto; (c) Misrepresentation, false statements, or frauds in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to submit these documents together with the list of the newly elected/appointed officers and their postal ad­ dresses within thirty (30) days from election; (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal yr»ir and misrepresentation, false entries or fraud in the preparation of the financial report itself; (e) Acting as a labor contractor or engaging in the “cabo” system, or otherwise engaging in any activity prohibited by law; (f) Entering into collective bargaining agreements which provide terms and conditions of employment below minimum standards established by law; (g) Asking for or accepting attorney’s fees or negotiation fees from employers; (h) Checking off special assessments or other fees without duly signed individual written authorization of the members; (i) Failure to submit a list of individual members to the Bureau once a year or whenever required by the Bureau; and (j) Failure to comply with requirements under Articles 237 and 238.

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Violation of any of the rights and conditions of membership in a labor organization provided for in Article 241 of the Labor Code is also a sufficient cause for the cancellation of the certificate of registration. •ft •/* 4a A labor union at the waterfront supplies to shipping companies stevedores to load and unload cargoes. Is th is Sega!? Explain. ANS. No. A union is not allowed to engage in the “cabo” system. It is formed primarily t-s safeguard the rights of its members. Acting as a supplier of labor, whether in the capacity of an agent of the employer or as an ostensible independent contractor, negates this purpose. *

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Who may order the cancellation o f a union’s certificate o f registration? ANS. Subject to the requirements of notice and due process, the registration of any legitimate inde­ pendent labor union, chartered local and workers’ association may be canceled by the Regional Director, or in the case of federations, national or industry unions and trade union centers, by the Bureau Direc­ tor, upon the filing of an independent complaint or petition for cancellation. (Sec. 1, Rule XIV, Book V, Implementing Rules, as amended by D. O. No. 40-03) *

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What is the effect of cancellation of a union’s certificate registration? ANS. The cancellation of a certificate of registra­ tion is the equivalent of snuffing out the life of a labor

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RIGHT TO SELF-ORGANIZATION

organization. For without such registration, it loses, as a rule, its rights under the Labor Code. A labor union is indisputably entitled to be heard before a judgment could be rendered canceling its certificate of registra­ tion. (Alliance of Democratic Frae Labor Organization vs. Laguesma et al., G. R. No. 108625, March 11, 1996) it

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On what grounds may a union member be expelled from the organization? ANS. A union member may be expelled from the organization on the following grounds: (a) For causes specified in the union’s constitution and by-laws provided the same are not arbitrary, unreasonable or contrary to law or public policy and the member is accorded a fa ir hearing. (b) Participation in any irregularity in the approval o f a resolution authorizing payment of compensation to union officers. (Article 241 (k), Labor Code) *

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The union constitution and by-laws provides that a member may be expelled from the union upon a vote of two-thirds (2/3) o f all the members. Rule on the validity o f th is provision. ANS. The provision is not valid. Expulsion of a union member cannot be made to depend upon'the whims and caprices of his co-members. It must be founded on some just and serious grounds. His membership cannot be trifled with. For oftentimes, by virtue of a union security clause, his continued em­ ploym ent depends upon his membership in good standing in the union.

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RIGHT TO SELF-ORGANIZATION

The union constitution and by-laws provides that a member may be expelled, after notice and hearing for non-payment of union dues or disloyalty to the union. Are these grounds reasonable. Explain. ANS. The grounds are reasonable. A union member has the obligation to give financial support to his organization. This is in exchange for the protection and services that the union gives to the member. Loyalty is expected of every union member. The union is formed as an instrument of collective strength. A member is not allowed to provide the very causes for its disintegration. it ★ ★ May a union member voluntarily terminate his member­ ship or resign from the union at any time? Explain. ANS. Yes. It is within his prerogative to determine when to get out from the union; this is part of his right to self-organization. There may however be adverse consequences of his resignation; by virtue of a union security clause, it may even result in the loss of his employment. It is all up to the member to decide. *

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Five regular employees of Occidental Foundry Corpora­ tion were dismissed allegedly pursuant to the union security clause of the CBA. They had previously been expelled from the union fo r attempting to oust the union leadership, but they were not given opportunity to explain their side, as required by the union’s constitu­ tion and by-laws, before their expulsion. The company also did not conduct an investigation before dismissing the employees; it took fo r granted that the union had conducted an inquiry and considered the union secu­ rity clause as self-operating so that, upon receipt of a notice that some members of the union had failed to

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maintain their membership in good standing, it sum­ marily dismissed them. (a) is the dismissal of the five (5) regular employees lawful? Why? ANS. No. The union should have given them an opportunity to explain their side before expelling them. And the company should have conducted its own investigation before dismissing them. The twin re­ quirements of notice and hearing are essential ele­ ments of due process and must be met in employment termination cases. (b) is the act of the employees in trying to oust the union leadership, due to the latter’s alleged inattention to the former’s demand for the implementation o f the P25-wage increase, a ground to expel them from the union? Why? ANS. No. This may be disloyalty to the union leadership, but it cannot be considered as disloyalty to the union. (c) Distinguish this case from Carlrio vs. NLRC, 185 SCRA 177. ANS. In C a rifio , the erring union official was given the chance to answer the complaints against him before an investigating committee created for that purpose. No such opportunity was given either by the union or the company, to the employees involved in the instant case. (Ferrer, et al. vs. NLRC, et al,, G. R. No. 100898, July 5, 1993) *• * * The union constitution and by-laws provides that oniy employees with two (2) years service in the company are eligible fo r membership therein. Is the provision valid? Why?

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RIGHT TO SELF-ORGANIZATION

ANS. The provision is an unreasonable restriction on the worker’s exercise of his right to se lf­ organization. It would leave those who have less than two (2) years of service without representation in bargaining with the employer. *

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As o f what time is an Individual considered an em­ ployee fo r purposes o f membership in a labor union? ANS. Article 277 (c) of the Labor Code, as amended by Rep. Act 6715, provides: “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.’ *

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Give a brief discussion on union loyalty. ANS. While an employee is given the right to join a labor organization, such right should only be as­ serted in a manner that will not spell the destruction of the same organization. Loyalty is necessary to obtain to the full extent the union's cohesion and integrity. And as an act of loyalty a union may certainly require its members not to affiliate with any other labor union and to consider its infringement as a reasonable cause for separation. (Ang Malayang Manggagawa sa Ang Tibay Enterprises, et al. vs. Ang Tibay, et al., 102 Phil. 669) Inherent in every labor uriion, or any organization for that matter, is the right of self-preservation. When members of a labor union, therefore, sow the seeds of dissension and strife within the union, when they seek the disintegration and destruction of the very union to which they belong, they thereby forfeit their right to remain as members of the union which they seek to

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RIGHT TO SELF-ORGANIZATION

destroy. (Villar, et al. vs. Inciong, et al., G. R. Nos L-50283-84, April 20, 1983) *

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May labor unions or employers’ organization accept donations, assistance or grants given by foreign indi­ viduals, organizations or entities in relation to or in support of trade union activities? ANS. Labor organizations, employers or employ­ ers’ organizations cannot receive directly or indirectly any donations, grants or other forms of assistance given by a foreign individual, organization or entity in relation to or in support of trade union activities without prior permission from the Department of Labor and Employment. (Article 270, Labor Code) Hr

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Is a labor organization responsible for the preservation pf industrial peace? ANS. The preservation of industrial peace is not the sole responsibility of the employer. The labor union in the company is equally responsible. This is following the principle of “shared responsibility and mutual respect” announced in Article 277 (g) of the Labor Code and Section 3, Article XIII of the 1987 Constitution. *

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In establishments where no labor organization exists, what step may be taken to promote industrial peace? ANS. In establishments where no legitimate labor organization exists, labor management committees may be formed vcSuntarily by workers and employers for the purpose of promoting industrial peace. (Article 277 (h), Labor Code)

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RIGHT TO SELF-ORGANIZATION

What is the scope of the visitoriai power o f the Secre­ tary o f Labor and Employment over labiir unions? ANS. Art. 274 of the Labor Code as amended by Rep. Act 6715 provides: Visitoriai power - The Secretary of Labor and Employment or his duly authorized representative is hereby empowered to inquire into the financial activi­ ties of legitimate labor organizations upon the filing of a complaint under oath and duly supported by the written consent of at least twenty percent (20%) of the total membership of the labor organization concerned and to examine their books of accounts and other records to determine compliance or non-compliance with the law and to prosecute any violations of the law and the union constitution and by-laws: Provided, that such inquiry or examination shall not be conducted during the sixty (60) day freedom period nor within thirty (30) days immediately preceding the date of election of union officers. *

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Under Article 274 of the Labor Code, the Secretary of Labor and Employment or his duly authorized represen­ tative is empowered to inquire info the financial activi­ ties o f legitimate labor organizations. May such visito­ riai power be exercised by the Bureau o f Labor Rela­ tions (BLR)? Explain. ANS. The BLR may exercise the visitoriai power provided for in Article 274 if the matters of examina­ tion of union accounts is endorsed to it by the DOLE Secretary. And independently of any delegation, the BLR has power of its own to conduct the examination of union accounts under Section 16, Chapter 4, Title VII, Book IV, of the Administrative Code of 1987 which among others empowers the said Bureau to set policies, standards and procedures on the examination of finan­

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RIGHT TO SELF-ORGANIZATION

cial records of accounts of labor organizations. Articie 226 of the Labor Code furthermore authorizes the BLR to decide intra-union disputes. The examination of the financial records of the union is an intra-union dispute. (La Tondefia Workers Union vs. The Honorable Sec­ retary of Labor and Employment, et al., G. R. No. 96821, December 9, 1994) *

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State the procedure in the registration o? unions of government employees. ANS. Executive Order No. 180 provides: “Section 7. Government employees’ organizations shall register with the Civil Service Commission and the Department of Labor and Employment. The appli­ cation shall be filed with the Bureau of Labor Relations of the Department which shall process the same in accordance with the provisions of the Labor Code of the Philippines, as amended. Applications may also be filed with the Regional Offices of the Department of Labor and Employment which shall immediately trans­ mit the said applications to the Bureau of Labor Relations within three (3) day? from receipt thereof. “Section 8. Upon approval of the application, a registration certificate shall be issued to the organiza­ tion recognizing it as a legitimate employees’ organi­ zation with the right to represent its members and undertake activities to further and defend its interest. The corresponding certificates of registration shall be jointly approved by the Chairman of the Civil Service Commission and the Secretary of Labor and Employ­ ment. . .

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CHAPTER XII CERTlFlCATiOM ELECTIONS What is certification election? Distinguish it from con­ sent election. ANS. Certification election refers to the process of determining through secret ballot the sole and exclu­ sive representative of the employees in an appropriate bargaining unit for purposes of collective bargaining or negotiation. A certification election is ordered by the Depart­ ment of Labor and Employment, while a consent election is voluntarily agreed upon by the parties, with or without the intervention by the Department. (Sec. 1 (h), Rule I, Book V, Implementing Rules, as amended by D. O. 40-03)

Describe briefly the nature of certification election. ANS. Certification election is the fairest and most effective way of determining which labor organization can truly represent the working force. It is a funda­ mental postulate that the will of the majority, if given expression in an honest election with freedom on the part of the voter to make their choice, is controlling. No better device can assure the institution of industrial democracy with the two parties to business enterprise, management and labor, establishing a regime of selfrule. (FOfTAF vs. Director of the Bureau of Labor Relations, et ai., G. R. No. L-41937, July 6, 1976) A certification proceeding is not a litigation in the sense in which this term is commonly understood; it is a mere investigation of a non-adversary fact-finding character in which the Bureau of Labor Relations of the Department of Labor plays the part of a disinterested investigator seeking merely to ascertain the desires of

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CERTIFICATION ELECTIONS the employees as to the matter of their representation. (Airline Pilots Association of the Philippines vs. CIR, et al., G. R. No. L-33705, April 15, 1977) *

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Who may file a petition fo r certification election? ANS. A legitimate labor organization (Article 257, Labor Code), or an employer when requested to bar­ gain collectively. (Art. 258, Labor Code) *

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Where should the petition fo r certification election be filed? ANS. A petition for certification election shall be filed with the Regional Office which issued the petition­ ing union's certificate o f registration/certificate of cre­ ation of chartered local. The petition shall be heard and resolved by the Med-Arbiter. Where two or more petitions involving the same bargaining unit are filed in one Regional Office, the same shall be autom atically consolidated with the Med-Arbiter who first acquired jurisdiction. Where the petitions are filed in different Regional Offices, the Regional O ffice in which the petition was first filed shall exclude all others; in which case, the latter shall indorse the petition to the form er for consolidation. (Sec. 2, Rule VIII, Book V, Implementing Rules, as amended by DOLE D. O. No. 40-03) *

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When may a certification election be autom atically called? ANS. Article 257 of the Labor Code, as amended by Rep. Act No. 6715, provides that in any establish­

435

CERTIFICATION ELECTIONS ment 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 legitim ate labor organization. In an organized establishment, when a verified petition questioning the majority status of the incum­ bent bargaining agent is filed within the sixty-day period before the expiration of a 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 twentyfive percent (25%) of all the employees in the bargain­ ing unit. (Art. 256, Labor Code, as amended by R, A. 6715) *

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iSr

When may a petition fo r certification election be filed? ANS. A petition for certification election may be filed anytime, except: (a) when a fact of voluntary recognition has been entered or a valid certification, consent or run-off election has been conducted within the bargaining unit within one (1) year prior to the filing of the petition for certification election. Where an appeal has been filed from the order of the Med-Arbiter certifying the results of the election, the running of the one-year period shall be suspended until the decision on the appeal has become final and executory; (b) when the duly certified union has commenced and sustained negotiations in good faith with the employer in accordance with Article 250 of the Labor Code within the one-year period referred to in the immediately preceding para­ graph; (c) when a bargaining deadlock to which an incum­ bent or certified bargaining agent is a party had been submitted to conciliation or arbitration or

436

CERTIFICATION ELECTIONS had become the subject of a valid notice of strike or lockout; (d) when a collective bargaining agreement be­ tween the employer and a duly recognized or certified bargaining agent has been registered in accordance with Article 231 of the Labor Code. Where such collective bargaining agree­ ment is registered, the petition may be filed only within sixty (60) days prior to its expiry. (Sec. 3, Rule VIII, Book V, Implementing Rules, as amended by DOLE Department Order No. 40-03) *

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NAFLU filed on November 7, 1995, in behalf of its affiliate COPPER, a petition fo r certification election at PASAR. This was during the freedom period. On November 29, 1996, the Med-Arbiter issued an order granting the petition. But on December?, 1995, another union PEA-ALU moved to dismiss the petition fo r failure of NAFLU to acquire fo r and in behalf of its local charter affiliate COPPER a legal personality as a legitimate labor organization. However, on the same day COPPER was issued by the DOLE a certificate of registration. Is the motion to dismiss m eritorious? Explain. ANS. It was ruled that the acquisition of legal personality by COPPER retroacted to the date of the filing the petition for certification election. By fiction of law, COPPER was already a duly registered labor union when the petition was filed and could then act as principal of NAFLU. Besides, PEA-ALU must be considered estopped from questioning the legal per­ sonality of COPPER as it had entered into an agree­ ment with NAFLU regarding the holding of a certifica­ tion election. (Associated Labor Unions (ALU) and PASAR Employees Association vs. Quisumbing et al., G. R. No. 128192, April 14, 1999) ■*

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CERTIFICATION ELECTIONS May a new labor union be organized and granted regis­ tration during the lifetime o f a collective bargaining agreement between the company and another union? ANS. Yes. Section 3, Rule V, Book V of the Omnibus Rules Implementing the Labor Code, pro­ hibits not the registration of a new union but the holding of a certification election “within one year from the date of issuance of a final certification election result.’ (Katipunan ng mga Manggagawa Sa Daungan vs. Hon. Pura Ferrer-Calleja et al., G. R. No. 104692, September 5, 1997) *

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What is an “ organized establishment” ? ANS. It is an enterprise where there exists a recognized or certified exclusive bargaining agent. (Section 1(11), Rule I, Book V, Implementing Rules, as amended by DOLE Department Order No. 40-03) *

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Under what conditions may the Med-Arbiter automati­ cally order a certification election by secret ballot in an organized establishment? ANS. (1) That a petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE within the sixty-day freedom period; (2) that such petition is verified; and (3) that the petition is supported by the written consent of at least twenty five (25%) per cent of all employees in the bargaining unit. The mere fact that the contending unions are bound by a Code of Ethics requiring affiliation/disaffili­ ation disputes among them to be referred to a fraternal relations committee for final determination or settle­ ment cannot prevent the automatic holding of the certification election or deprive the Med-Arbiter of jurisdiction. Jurisdiction is vested by law, not by agreement between or among the parties. Moreover,

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CERTIFICATION ELECTIONS labor disputes involve public interest, and hence a private agreement on their settlement cannot prevaii over what is provided for by law. (Trade Unions of the Philippines and Allied Services (TUPAS) vs. Hon. B. Laguesma, G. R. No. 102350, June 30, 1994) *

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May the employer file a petition fo r certification election in an “ unorganized establishment” ? Explain. ANS. Ordinarily, it is the union in an unorganized establishm ent that files a petition for certification election. But where the union requests the employer to voluntarily recognize it as the bargaining agent, the latter may itself file the petition inasmuch as such request is equivalent to a request to bargain collec­ tively. Under Article 258 of the Labor Code, the employer may petition for certification election “when requested to bargain collectively." (Ilaw at Buklod ng Manggagawa vs. Hon. P. Ferrer-Calleja, et al., G. R. No. 84685, February 23, 1990) *

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X union, w inner in a certification election, was certified in August 1981. Bargaining negotiations w ith the com­ pany started thereafter but the parties could not arrive at an engagement. To break the deadlock, they agreed in September 1982 to subm it the matter to voluntary arbitration. In October 1983, o r after one (1) year from the certification of X union, Y union filed a petition fo r certification election. W ill the petition be entertained? Why? ANS. No. The petition will not be entertained. A bargaining deadlock between X, the certified union, and the employer is pending arbitration. A certification election w ill only aggravate the situation. It w ill seriously disturb, rather than promote, industrial peace.

/IIQ

CERTIFICATION ELECTIONS What should the petition fo r certification election con­ tain? ANS. The petition shall be in writing, verified under oath by the president of petitioning labor organi­ zation. Where the petition is filed by a federation or national union, it shall be verified under oath by the president or its duly authorized representation. The petition shall contain the following: (a) the name of petitioner, its address, and a ffilia­ tion if appropriate, the date and number of its certificate of registration. If the petition is filed by a federation or national union, the date and number of the certificate of registration or certificate of creation of chartered local; (b) the name, address and nature of employer’s business; (c) the description of the bargaining unit; (d) the approximate number of employees in the bargaining unit; (e) the names and addresses of other legitimate labor unions in the bargaining unit; (f) a statement indicating any of the following circumstances: v 1) that the bargaining unit is unorganized or that there is no registered collective bar­ gaining agreement covering the employees in the bargaining unit; 2) if there exists a duly registered collective bargaining agreement, that the petition is filed within the sixty-day freedom period of such agreement; or 3) if another union had been previously recog­ nized voluntarily or certified in a valid certi­ fication, consent or run-off election, that the petition is filed outside the one-year period from entry of voluntary recognition or con­ duct of certification or run-off election and no appeal is pending thereon.

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CERTIFICATION ELECTIONS (g) in an organized establishment, the signature of at least twenty-five percent (25%) of all em­ ployees in the appropriate bargaining unit shall be attached to the petition at the tim e of its filing; and (h) other relevant facts. (Sec. 4, Rule VIII, Book V, Implementing Rules, as amended by DOLE Department Order No. 40-03) *

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May a local o r chapter o f a federation file a petition fo r certification election and be certified as the sole and exclusive bargaining agent o f the employees in the bargaining unit? May a federation file such petition in behalf o f its chapter or local? Explain. ANS. A local or chapter of a federation may file a petition for certification election provided it is a legiti­ mate labor organization. It becomes a legitimate labor organization only upon submission of the following to the Bureau of Labor Relations: (1) a charter certifi­ cate within 30 days from its issuance by the labor federation or national union, and (2) the constitution and by-laws, a statement on the set of officers, and the books of accounts all of which are certified under oath by the secretary or treasurer, as the case may be, of such local or chapter, and attested to by its president. Absent com pliance with these mandatory require­ ments, the local or chapter does not become a legiti­ mate labor organization. Consequently, the failure of the secretary of the local or chapter to certify the required documents under oath is fatal to its acquisi­ tion of a legitimate status. The formation of a local or chapter can be a handy tool for the circumvention of union registration require­ ments. Absent the institution of safeguards, it be­ comes a convenient device for a sm all group of employees to foist a not-so-desirable federation or union on unsuspecting co-workers. The mother federation, being merely an agent of the local or chapter, may file a petition for certification

441

CERTIFICATION ELECTIONS election in behalf of the latter who is considered the principal. The local or chapter must how ever be a legitimate labor organization; it 'cannot merely re!y on the le g itim a te status of the mother fed e ra tion . (P rogressive D evelopm ent C orporation vs. Secretary of Labor and Em ploym ent, et ai., G. R. No. 96425, February 4, 1992) •$t

is

May a petition fo r ce rtification ©Section file d by a na­ tio n a l federation fo r a locai chapter not d uly registered be granted? ■ ANS. No. A petition for certification election filed by a national federation in behalf of its local chapter which is not duly registered should be dismissed. The local chapter, as the principal, must be a duly regis­ tered legitimate iabor organization; the federation's bona fide status would not suffice. (Lopez Sugar Central Corporation vs. Hon. Secretary of Labor and Employment et a!., G. R. No. 93117, August 1, 1995)

Dacongcogors S ugar and Rice Shilling Co., Inc. had a co llective bargaining agreement w ith the SMationa! Fed­ eration o f Sugar W orkers w h ich expired on November 14, 1SS7. Upon the expiration o f the CBA, the parties negotiated fo r its renewal; however, .a deadlock ensued

on the matter o f wage increases and optional retire­ ment. On December S, 1988 another uniors, the National Congress o f Unions in the Sugar in d u stry o f the P h ilip ­ pines, Filed a p etitio n fo r ce rtifica tion election. St was however ordered dism issed by the. D irector o f the B u­ reau o f Labor Relations as the same was filed beyond the freedom period. (a) 3s the dismissal correct? W hy?

ANS. Yes. Under Section 6, Rule V, Book V of the rules implementing the Labor Code, any petition filed

CERTIFICATION ELECTIONS before or after Use sixty (60) day freedom period shall be dismissed outright. This Is to ensure stability in the relationship of the workers and the management by preventing frequent m odifications of any collective bargaining agreement earlier entered into by them in good faith and for the stipulated original period. fib) Fssidirtg settlement o f the bargaining deadlock,, what contract shall govern the relationship between the company and the National Federation of Sugar Work­ ers? Explain. ANS. The CBA entered into in 1987 w ill continue to govern the relationship of the parties. Despite the lapse of the forma! effectivity of the contract, the law still considers the same as continuing in force and effect until a new CBA shall have been validly exe­ cuted. (National Congress o f Unions in the Sugar Industry of the Philippines (N A C U S IP )-TU C P vs. Hon. Pura Ferrer-Calleja, et a!., G. R. No. 89609, January 27, 1992) *

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State the reason fo r the prohibition o f the holding o f a certification election outside the freedom period. ANS. This is to ensure industrial peace between the employer and its employees during the existence of the CBA. Thus, where the collective bargaining agreement was effective from June 30, 1988 to June 30, 1991, it was held that a petition for certification filed on Jan­ uary 21, 1991 is premature and should be dismissed. (Republic Planters Bank General Services Employees Union vs. Laguesma et al., G. R. No. 119675, November 21. 1996) *

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The Nations! Federation o f Sugar Workers (NFSW) filed a petition fo r certification election in Victorias Milling

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CERTIFICATION ELECTIONS Company, Inc. (VICMICO) which had a total of 3,017 rank-and-file workers. The petition was supported by 1,325 signatures. It was however contended by another union, Victorias Industrial Workers Association (VIWA), that more than 600 bona fide rank-and-file members had disaffiliated from NFSW, thereby reducing the number o f signatories to the petition to less than 30% (now 25%) o f the employees in the bargaining unit. Assuming this to be true, should the petition be dismissed? Explain. ANS. On the issue that more than 600 bona fide rank-and-file members of VIWA had disaffiliated with respondent NFSW, this Court had occasion to state what should be followed in case o f withdrawal or retraction or signatures. In National Mines and Allied W orkers Union vs. Luna, 83 SCRA 607, it was held that “the best forum for determining whether there were indeed retractions from some of the laborers is the certification election itself wherein the workers can freely express their choice in a secret ballot." And, pursuant to Article 257 of the Labor Code; “if there is any reasonable doubt as to whom the employees have chosen as their representative for the purpose of collective bargaining, the Bureau shall order a secret ballot election to be conducted by the Bureau to ascertain who is the freely chosen representative of the employees concerned, x x x . ' To hold otherwise would be violative of the liberal approach constantly followed by this Court in matters of certification elec­ tions. (VICMICO Industrial W orkers Association (VWA) vs. The Hon. Carmelo Noriel, et al., No. L-59167, August 31, 1984) *

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Associated Labor Union (ALU), a legitimate labor orga­ nization, filed a petition fo r direct certification praying that it be certified as the sole and exclusive bargaining representative o f all the rank-and-file employees of George and Peter Lines, Inc., there being no labor union organized thereat. The company opposed the petition

CERTIFICATION ELECTIONS on the ground th a t more than 80% o f the licensed and unlicensed crew o f its vessels claim than they are not members o f any union and have no desire to jo in any; it later on filed a petition fo r certification election to deter­ mine once and fo r all whether the employees concerned wanted ALU to be their sole bargaining representative. Should ALU be directly certified as the bargaining agent or should a certification election be called? ANS. As the right of respondent Union to represent the employees is seriously put in doubt by the with­ drawal of 80% of the membership, which the Union claims to be involuntary, the best forum to determine if there was, indeed, undue pressure exerted upon the employees to retract their membership is in the certifi­ cation election itself, wherein they can freely express their choice in a secret ballot. Certification election is the best and most appropriate means of ascertaining the w ill of the employees as to their choice of an exclusive bargaining representative. That there are no competing unions involved should not alter that princi­ ple, the freedom of choice by the employees being the primordial consideration besides the fact that the em­ ployees can still choose between ALU and No Union. Even if the withdrawals of the employees concerned were submitted after the petition for direct certification had been filed, the doubt as to the majority representa­ tion of the Union has arisen, and it is best to determine the true sentiment of the employees through a certifi­ cation election. If respondent Union is confident that it commands the majority of the workers there is no reason why it should object to the holding of a certifi­ cation election. (George & Peter Lines, Inc. vs. ALU, et al., L-51602, January 17, 1985) *

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The International Container Terminal Services, Inc. (ICTSI) had a collective bargaining agreement w ith the Associated Port Checkers and Workers Union (APCWU) which would expire on April 14, 1990. On March 14,

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CERTIFICATION ELECTIONS 1990, or about a month prior to the expiration of the CBA, the Sandigasi ng Manggagawa sa Daungan (SAIV1ADA) filed a petition for certification election; the consent signatures in support of the petition were how­ ever submitted on March 28, 1900 or eleven days after the filing of the petition. On April 2,1990, Port Checkers Union of the Philippines (PWUP) filed a petition for intervention. On April 6, 1990 another petition for certification election was filed by the Port Employees Association and Labor Union fPEALU); the consent signatures in support thereof were submitted on May 11, 1990, or thirty-five days after the filing of the peti­ tion. Upon motion of APCWU, the petitions of SAMADA and PEALU were dismissed for failure to comply with Section S, Rule ¥, Book ¥ of the Implementing Rules and Regulations providing that the 25% consent signa­ ture requirement shall be satisfied upon the filing of the petition, otherwise the same shall be dismissed, inter­ vener PWUP appealed the order o f dismissal to the Secretary of Labor but the appeal was dismissed. Thereafter, on September 2 8 , 1990, the employer (ICTSI) and APCWU concluded a new collective bargaining agreement.' This was ratified by a majority of the work­ ers in the bargaining unit on October 7,1990. a) Was the dismissal of the petitions filed by SAMADA and PEALU justified? Why? " ANS. No. The administrative rule requiring the simultaneous submission of the 25% consent signa­ tures upon the filing of the petition for certification election should not be strictly applied to frustrate the determination or the legitimate representative of the workers. Significantly, the requirement in the rule is not found in Article 256, the law it seeks to implement; it should at best be given only a directory effect. The mere filing of a petition for certification elec­ tion within the freedom period is sufficient basis for the issuance of an order for the holding of a certification election, subject to the submission of the consent signatures within a reasonable period from such filing.

CERTIFICATION ELECTIONS b) Is the requirement o f the 25% consent signatures a p p lica b le ' to -the- petition fo r intervention file d by PWUP? ANS. SMd; The requirement is applicable only to the original petition. c) May the new CBA executed by ICTSI and APCWU on September 28, 1990 and ratified on October 7, 1990 b® considered as a bar to the certification election? Why? ANS. No. Under Section 4, Rule V, Book V of the Implementing Rules and Regulations, the representa­ tion case shall not be adversely affected by a collec­ tive agreement submitted before or during the last 60 days of a subsisting agreement or during the pendency of the representation case. (Port Workers Union of the Philippines (P\A/UP) Vs. Hon. Undersecretary of Labor and Employment, et al., G. R. Nos. 94929-30, March 18, 1992) '• ' *

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May a certification election be called by the Med-Arbiter although the 25% statutory requirement has not been complied with? ExplainANS. Yes. Even conceding that the statutory requirement of 25% consent signatures is not strictly -complied- with, the Med-Arbiter is still empowered to order that ihe certification'election be held precisely for the purpose of ascertaining which of the contending labor organizations shall be the exclusive bargaining agent; The requirement then is relevant only when it becomes mandatory to conduct a certification election. In all other instances, the discretion ought to be ordinarily exercised in favor of a petition for certifica­ tion election. (California Manufacturing Corporation vs. Hon. Undersecretary of Labor, et al., G. R. No. 97020, June 8, 1992)

CERTIFICATION ELECTIONS The employer presents the written statements of same workers to the effect that they were tricked into giving th e ir written consent to the filin g o f the petition fo r certification election. W ill these statements prevent the holding o f a certification election? Explain. ANS. The rule that should be followed in case of alleged withdrawals and retractions is that the best forum for determining whether there were indeed re­ tractions from some of the laborers is in the certifica­ tion election itself wherein the workers can freely express their choice in a secret ballot. The will of the rank-and-file employees should in every possible in­ stance be determined by secret ballot rather than by adm inistrative or quasi-judicia| inquiry. Such repre­ sentation and certification election cases are not to be taken as contentious litigations or suits but as mere investigations of a non-adversary, fact-finding charac­ te r as to which of the competing unions represents the genuine choice of the workers to be their sole and exclusive collective bargaining representative with their employer.- (Federation Obrera de la Industria y Otros Trabajadores de Filipinas vs. Noriel, et al., G. R. No. L-41937, July 6, 1976) W ithdrawals made before the filing of the petition are presumed voluntary unless there is convincing proof to the contrary, whereas withdrawals made after the filing of the petition are deemed involuntary. The reason for such distinction is that if the withdrawal or retraction made before the filing of the petition, the names o f employees supporting the petition are sup­ posed to be held secret to the opposite party. Logi­ cally, any such withdrawal or retraction shows volun­ tariness in the absence of proof to the contrary. Moreover, it becomes apparent that such employees had not given consent to the filing of the petition, hence the subscription requirement has not been met. When the withdrawal or retraction is made after the petition is filed, the employees who are supporting the petition become known to the opposite party since their names are attached to the petition at the tim e of filing. Therefore, it would not be unexpected that the oppo-

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CERTIFICATION ELECTIONS site party would use foul means for the subject employ­ ees to withdraw their support. (La Suerte Cigarette Factory vs. Director of the Bureau of Labor Relations, G. R. No. L-55674,July 25, 1983) *

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May the Med-Arbiter validly order the holding o f a certi­ fication election upon the filin g o f a petition fo r certifi­ cation election by a registered union despite the com­ pany's appeal pending before the DOLE Secretary against the issuance o f the union’s registration? ANS. Yes. Article 251 of the Labor Code man­ dates that a c e rtific 0 p n election shall autom atically be conducted by tl¥e Med-Arbiter upon the filing or a petition by a legitimate labor union. Nothing is said therein that prohibits automatic conduct of the certifi­ cation election if the management appeals on the issue o f the validity of the union's registration (Sugbuanon Rural Bank, Inc. vs. Hon. Undersecretary Bienvenido Laguesma et al., G. R. No. 116194, February 2,

2000) *

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What is the Contract Bar Rule? ANS. The existence of a collective bargaining agreement duly filed with and submitted to the Depart­ ment of Labor and Employment, in compliance with the requirements and standards of the said office, between the employer and a legitimate labor organization, bars a certification election in the collective bargaining unit except within sixty (60) days prior to the expiration of the life of such contract. This is the contract bar rule, and it is intended to assure industrial peace and stability. (Foamtex Labor Union-TUPAS vs. Director of Bureau of Labor Relations, et al., G. R. No. L-42349, August 17, 1976) *

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CERTIFICATION ELECTIONS On November 15,1989, the Integrated Labor Organiza­ tion (ILO-Phils) was certified as the sole and exclusive bargaining agent o f the rank-and-file employees o f Transunion Corporation-Glassware Division. On November 28, 1989, a collective bargaining agreement was forged between Transunion and ILO-Phils. The CBA, w ith a five-year term from December 1, 1989 to December 1,1994 was ratified by a great m ajority o f the rank-and-file workers on December 8, 1989. In the meantime, the union president died and an intra-union conflict ensued. The CBA was registered w ith the DOLE only on March 14,1990, more o r less three (3) months from its execution. On March 23,1990, the Trade Unions o f the Philippines - February Six Movement (TUPAS-FSM) filed a petition fo r certification election fo r the purpose of choosing a bargaining representative o f the rank-and-file employ­ ees o f Transunion Corporation-Glassware Division Is the petition filed by TUPAS-FSM barred by the CBA between ILO-Phils. and Transunion CorporationGlassware Division, which contract was registered ber yond the thirty (30) day period prescribed by Article 231 o f the Labor Code? Why? ANS. Yes. Non-compliance with the procedural requirement of Article 231 should not adversely affect the substantive validity of the CBA. A collective bargaining agreement is more than a contract. It is highly impressed with public interest for its is an essential instrum ent to promote industrial peace. Hence, it bears the blessings not only of the employer and employees concerned but even the DOLE. To set it aside on technical grounds is not conducive to the public good. (Trade Unions of the Philippines / Febru­ ary Six Movement vs. Laguesma et al., G. R. No. 95013, September 21, 1994) *

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May a petition fo r certification election filed after the lapse o f sixty-day freedom period be allowed? Why?

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CERTIFICATION ELECTIONS ANS. No. The contract bar rule still applies. For despite the lapse of the form a' effectivity of the CBA, the law still considers the same as continuing in force and effept until a new CBA, shall have been validly executed. (Colegio de San Juan de Letran vs. Associ^tiQO; pf iBrnpipyees and Faculty of Letran et al., G. R. No' 14’1471, September 18, 2000) it

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In case no petition fo r certification eScction is filed w ithin the freedom period, is the employer obliged to continue recognizing the majority status o f the incum­ bent bargaining agent? ANS. Yes. (Art. 256, 2nd par., Labor Code, as amended by R. A. No. 6715) *

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What is the Deadlock Bar Rule? Give an illustration of its application. ANS. The Deadl6ck Bar Rule provides that a petition for certification5 election-can only be enter­ tained if there is no pending bargaining deadlock suDmitted to 1conciliation or arbitration or which has become the subject of a valid notice of strike or «lo6kout; The principal purpose is to ensure stability in the relationship of the workers and the management: To illustrate: The National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP) TUCP was the certified exclusive bargaining represen­ tative of the rank-and-file workers of Calinog Refinery Corporation. On July 14, 198^; the deadlock in collec­ tive bargaining between the said union and the com­ pany was submitted to compulsory arbitration. On July 21, 1982 a petition fo r certification election was filed by Federation of Unions of Rizal (FUR) alleging among others that no Selection had been held for the past twelve (12) months and that while NACUSIP had been -certified as the sole collective bargaining agent, for

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CERTIFICATION ELECTIONS over a year it failed to conclude a collective bargaining agreement with the company. The petition should however be dismissed because of the Deadlock Bar Rule. (National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP)-TUCP vs. Dir. C. Trajano, et al., G. R. No. 67485, April 10, 1992) *

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In February 1981 the National Federation o f Labor Unions (NAFLU) was declared by the Bureau o f Labor Relations as the exclusive bargaining representative of all rank-and-file employees of Viron Garments Manufac­ turing Co., Inc. More than four (4) years thereafter, o r in April 1985, the Kaisahan ng Manggagawang Pilipino (KAMPIL) filed a petition fo r certification election among the employees of VIRON. Should the petition of KAMPIL be given due course considering that there was an existing certified bargaining agent (NAFLU) in VI­ RON? Why? ANS. Yes. The prohibition on the holding of a certification within one year from the date of issuance of declaration of a final certification election result has no application to the case. That one-year period known as the “certification year’ during which the certified union is required to negotiate with the em­ ployer, and certification election is prohibited - has long expired. There was furthermore no deadlock in collective bargaining between NAFLU and VIRON which had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike o r lockout. (Kaisahan ng Manggagawang Filipino vs. Hon. C. Trajano et al G. R. No. 75810, September 9, 1991) it

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May a certification election be barred in an organized bargaining unit w ith a collective bargaining agent but w ith out a collective bargaining agreement although

CERTIFICATION ELECTIONS there is no CBA deadlock and the twelve-month period (certification year) from the issuance o f the declaration o f the final certification election result has long lapsed? Explain. ANS. Yes. This is where the delay in the forging of a CBA is not attributable to the bargaining agent but to the employer’s use of all legal means to block the certification of the union as a bargaining agent and use the same as leverage for its failure to bargain with the union; and the latter has taken an action to legally coerce the employer to comply with its statutory duty to bargain collectively, i. e., charging the employer with unfair labor practice and conducting a strike to protest against the em ployer’s refusal to bargain. (Capitol Medical Center Alliance of Concerned Employees-UFSW vs. Hon. Laguesma et al., G. R. No. 118915, February 4, 1997) *

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Give the statutory recognition o f the contract bar rule. ANS. Article 232 of the Labor Code, as amended by R. A. 6715, provides: “Art. 232. Prohibition on certification election. — The Bureau shall not entertain any petition fo r certifi­ cation election or any other action which may disturb the administration of duly registered existing collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256 of this Code." ★ *

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W ithin sixty (60) days prior to the expiration o f the collective bargaining agreement between the Associ­ ated Labor Union (ALU) and the Firestone Tire and Rubber Company o f the Philippines, some 233 out o f about 400 rank-and-file employees resigned from ALU and formed another union, FEU. After the issuance of its registration permit, the new union filed a petition fo r

453

CERTIFICATION ELECTIONS direct certification or certification election; but the same cou|d not be acted upon because o f the question raised by ALU regarding the validity of the new union’s regis­ tration. Meanwhile, ALU and the company entered irtto a new collective bargaining agreement. When FEU filed a new petition fo r direct certification election, the new collective bargaining agreement was interposed as a bar thereto. Is the contract bar rule applicable? Explain. ANS. No. The contract bar rule should not be made to apply. It seems to be the better; view that a contract does not operate as a bar; to representation proceedings where it is shown that because of a schism in the union the contract can no longer serve to promote industrial stability. In the case at bar* it is doubtful if any contract that may have been entered into between ALU and the company will foster stability in the bargaining unit in view of the fact that a substantial number of the employees therein have resigned from ALU and joined FEU. At any rate, this is a matter that must be finally determined by means o^a, certification election. (Firestone Tire and Rubber Co! Employees Union, etc. vs. Hon. F. Esirella, et al., G. R. Nos. L-45513-14, January 6, 1978) 'V, wrj

Eight (8) months prior to the expiration o f the collective bargaining agteementv ihe company and the /union re^ newed the Same for another threfe (3) years. W ithin sixty (60) days prior to the wiew) of the CBA signed by the company and one of theipatticjpant'unipns= d urin a the pendency o f the pro­ ceedings; and (c) That the certification election cannot be held in view of the pendency o f cancellation proceedings against the union that filed the petition. Decide. ANS (3) It should ideally be the payroll which should be used for the purpose of the election. How­ ever, the unjustified refusal of a company to submit the payroll in its custody, despite efforts to compel it to produce it, makes the SSS list the next best source of information. After all, the SSS list is a public record whose regularity is presumed. The policy under the Labor Code is to encourage the holding of a certifica­ tion election as the .definitive and certain way of ascertaining the choice of employees as to their bar­ gaining agent. No obstacle must be placed to the holding of the election. Insistence on the use of the payroll could defeat this policy and could facilitate fraud, by employers who can easily suppress the pay­ roll to prevent the election from being held. ...(b) The representation case shall not be adversely affected by a collective bargaining agreement during the pendency of the said case. (c) A certification election can be held despite the pendency of a petition to cancel the certificate of registration of the union that filed the representation case. The cancellation case is not a prejudicial question. At the time it filed the petition.it still had the legal personality to perform such act absent an order directing its cancellation. (Samahan ng Manggagawa sa Pacific Plastic vs. Laguesma et al., G. R. No. 111245, January 31, 1997)

478

What is the vot^-,nfs;c1f s s a ^ 3to um^ke,;a:.union.win in a certification election? ANS. A majority of the valid votes cast is sufficient for certjfijG3 |jqf \3 fs§sP§Npd ballots are not counted in S^ejnpining«tl^rn»ajoj;% 5) £ £ insist on the absolute m ajorily tend to foster long drawn-out and protracted proceedings (PAFLU vs Bureau of Labor Relations, et al., G R No L-43760, August 21 r 1976) However, to have a valid election, at least a majority of. all eligible voters in the unit must cast their votes. (Article 256, Labor Code) f oilo ;;; •* * exclusive bargaining agent of the workers and em ployee^of “ X” Mining Co., a certifi­ cation election was held among the three contending unions, namely, Union ‘A,’ Union ‘B,’ and Union ‘C.’ of the 356O\eli0 ib le ftv ^ i^ « p n ly i^ O actu a llyca stth e ir votes, Union “ A ” garnered 220jvotes,r Union “ B” garnered 242 votes, Union “ C" garnered 30 votes, while the rest of the ballots were considered as “ spoiled.” (1982 Bar) b a) How do you determine the m ajority vote in a certifica­ tion election? ANS. The m ajority vote in a certification election i§ 50% plus 1 of the valid votes cast. Spoiled ballots are excluded. b) In the problem, which of the contending unions won the certification election, if any? Why? ANS. None. To be declared the winner, a union should have obtained at least 247 votes. This consti­ tutes m ajority of the valid votes cast. Although 500 votes were cast, 8 thereof were spoiled; there were therefore 492 valid votes cast. The majority of the valid votes cast is 247. noiflw soii'fO mo omen 9 nt n;nvv nc^tn 000 si vie ?n^'D v

419

CERTIFICATION ELECTIONS When may there be a “ run o f f ’ election? ANS. When an election which provides for three (3) or more choices results in no choice receiving a m ajority of the valid votes cast, a run o ff election shall be conducted between the labor unions receiving the two (2) highest number of votes; provided that the total number of votes for all contending unions is at least fifty (50%) percent of the number of votes cast. (Art. 256, Labor Code) “No Union’ shall not be a choice in the run-off election. *

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Is “ direct certification” still recognized as a method of selecting the bargaining agent? ANS. Direct certification is no longer allowed as a method of selecting the bargaining agent. By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct certification originally al­ lowed under Article 257 of the Labor Code has appar­ ently been discontinued. And where a union has filed a petition for certification election, the mere fact that no opposition is made does not warrant a direct certification. (Central Negros Electric Cooperative, Inc. vs. Hon. Secretary of Labor and Employment, et al., G. R. No. 94045, September 13, 1991) *

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What are the requirements fo r voluntary recognition? ANS. In unorganized establishments with only one legitim ate labor organization, the employer may volun­ tarily recognize the representation status of such a union. W ithin thirty (30) days from such recognition, the em ployer and union shall submit a notice of voluntary recognition with the Regional Office which issued the recognized labor union’s certificate of regis­ tration or certificate of creation of a chartered local.

AIM

CERTIFICATION ELECTIONS The notice of voluntary recognition shall b® accom­ panied by the original copy and two (2) duplicate copies of the following documents: (a) a joint statement under oath of voluntary recog­ nition attesting to the fact of voluntary recogni­ tion; (b) certificate of posting of the joint statement of voluntary recognition for fifteen (15) consecu­ tive days in at least two (2) conspicuous places in the establishment or bargaining unit where the union seeks to operate; (c) the approximate number of employees in the bargaining unit, accompanied by the names of thosr who support the voluntary recognition comprising at least a m ajority of the members of the bargaining unit; and (d) a statement that the labor union is the only legitimate labor organization operating within the bargaining unit. All accompanying documents of the notice for voluntary recognition shall be certified under oath by the employer representative and president of the rec­ ognized labor union. (Secs. 1 and 2, Rule VII, Book V, Implementing Rules, as amended by D. O. 40-03) *

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What is the effect of voluntary recognition? ANS. From the time of recording of voluntary recognition, the recognized labor union shall enjoy the rights, privileges and obligations of an existing bar­ gaining agent of all the employees in tho bargaining unit. ‘ ' Entry of voluntary recognition shall bar the filing of a petition for certification election by any labor organi­ zation for a period of one (1) year from the c!3te of entry of voluntary recognition’ Upon expiration of this one-year period, any legitimate labor organization may file a petition for certification election in the same bargaining unit represented by the voluntarily recog­

481

CERTIFICATION ELECTIONS nized union, unless a collective bargaining agreement between the employer and voluntarily recognized labor union was executed and registered with the Regional Office in accordance with Rule XVII of these Rules. (Sec. 4, Rule VII, Book V, Implementing Rules, as amended by D. O. 40-03) ★ *

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After winning over Y union in a certification election and after being certified as the exclusive bargaining repre­ sentative o f the workers in the bargaining unit, X union concludes a collective bargaining agreement w ith the employer granting substantial benefits to its (X's) mem­ bers only, excluding the members o f the loser Y union. Are the actuations o f X union legal and proper? Why? ANS. In concluding a collective bargaining agree­ ment exclusively for the benefit of its members, X union violated its primary duty, i. e., to act as the representative of all ihe employees in an appropriate bargaining unit for purposes of collective bargaining. (Article 242 (b), Labor Code). The certification im­ poses upon the winning union the obligation to repre­ sent and protect the interest of all the workers in the appropriate bargaining unit. (Article 256, Labor Code) *

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Is a collective bargaining agreement entered into by and between the employer and the union representing ma­ jo rity o f the employees valid and binding on all the employees o f the said employer, whether or not they are union members? Why? (1975 Bar) ANS. The agreement is valid and binding on all rank-and-file employees in the appropriate bargaining unit, whether or not they belong to the union conclud­ ing the agreement. They constitute the unit repre­ sented by the union. They are deemed the principal and they are bound by the actions of their agerrt.

482

CERTIFICATION ELECTIONS Juan, a member o f the union that has been certified as the sole and exclusive bargaining representative o f the employees in the bargaining unit, aends a letter to the management requesting, in view o f inflation, fo r an increase in his wages. The management refuses to entertain Juan’s request on the ground that this should be made by Juan’s union and not by him in his individ­ ual capacity. Is the position of the employer tenable? Why? ANS. No. Although there may exist an exclusive bargaining representative in the unit, an individual employee or group of employees have the right at any time to present grievances to their employer. (Article 155, Labor Code). The individual employee should not be rendered totally helpless and without recourse in case his union unreasonably refuses to fight for his rights or is in collusion with the employer. It would have been different if Juan demanded for wage in­ creases for the other employees. He has no authority to represent them.

Describe the procedure in the selection o f the sole and exclusive representative of government employees. ANS. Executive Order No. 180, approved June 1, 1981, in part provides: “Section 9. The appropriate organizational unit shall be the employer unit consisting of rank-and-file employees unless circumstances otherwise require. “Section 10. The duly registered employees’ orga­ nization having the support of the m ajority of the employees in the appropriate organizational unit shall be designated as the sole and exclusive representative of the employees. “Section 11. A duly registered employees’ organi­ zation shall be accorded voluntary recognition upon a showing that no other employees’ organization is regis­ tered or is seeking registration, based on records of

483

CERTIFICATION ELECTIONS the Bureau of Labor Relations, and that the said organization has the majority support of the rank-andfile employees in the organizational unit. m “Section 12. Where there are two or more duly registered employees’ organizations in the appropriate organizational unit, the Bureau of Labor Relations shall, upon petition, order the conduct of a certification election and shall certify the winner as the exclusive representative of the rank-and-file employees in said organizational unit." *

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Does the Bureau of Labor Relations have jurisdiction over a petition fo r certification election filed by a union of employees o f the ComiI of Appeals? ANS. Yes. The Bureau of Labor Relations has the expertise, machinery and experience in this particular activity. The Civil Service Commission has no fa cili­ ties, personnel or experience in the conduct of. certifi­ cation elections. And the doctrine of separation of powers does not require the Supreme Court to super­ vise the details of self-organization activities in the courts. (Association of Court of Appeals Employees vs. Hon. Pura Ferrer-Calleja, et al., G. R. No. 94716, November 15, 1991) *

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Are the ondters ofth e Med-Arbiter in certification election proceedings appealable? ANS. Yes. Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground that the rules and regula­ tions for the conduct of the election have been vio­ lated. (Art. 259, Labor Code, as amended by X. A. 6715)

484

CHAPTER XSI1 COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS What is collective bargain ng? (1975 Bar) ANS. Collective bargaining has been defined as the process of negotiation between an employer or employers and employees organization or union to reach an agreement on the terms and conditions of employment for a specified period. It covers the entire range of organized relationships between employers and employees represented by unions; this includes5 the negotiation, administration, interpretation or appli­ cation of the labor contract. *

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What is a collective bargaining agreement? ANS. It is the negotiated contract between a legitimate labor organization and the employer con­ cerning wages, hours of work and all other terms and conditions of employment in a bargaining unit, includ­ ing mandatory provisions for grievance and arbitration machineries. (University of Immaculate Conception, Inc. vs. Secretary of Labor and Employment et al., G. R. No. 146291, January 23, 2002) It constitutes the law between the parties. (Mindanao Steel Corporation vs. Minsteel Free Workers Organization, G. R. No. 130693, March 4, 2004) *

it r ft

Distinguish between an employment contract and a collective bargaining agreement. A.vS. An employment contract establishes the p oyer-employee relationship, while a collective

485

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS bargaining agreement presupposes the existence of such relationship. . An employment contract is between the employer and an individual employee, while a collective bargain­ ing agreement is between the employer and a union in representation of a group of workers. An employment contract ends or terminates when the period fixed therein expires, while a collective bargaining agreement continues to be binding and effective as long as no new CBA is entered into. ■ M

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What are the most important aims or aspects o f collec­ tive bargaining? (1975 Bar). ANS. The most important aims of collective bar­ gaining are: a) To establish industrial peace by enabling capital and labor to resolve their disputes and controversies on terms mutually acceptable and satisfactory to them­ selves. b) To enhance industrial efficiency through speedy resolution of labor disputes concerning the fixing of wages, working hours and other terms and conditions of employment, the execution of contracts incorporat­ ing such agreements, and the adjustment or settlement of any grievance arising thereunder. c) To establish benefits for tabor higher or greater than those fixed by lav/. The various aspects of collective bargaining are: a) The duty of the parties to bargain anc! negotiate on proposals concerning wages, working hours and other terms and conditions of employment; b) The duty of the parties to adhere to the statutory standards of good faith, promptness and expeditious actions; c) The duty to refrain from unilateral changes concerning matters subject to bargaining; and

488

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS d) In case there is an existing collective contract, the duty to adhere faithfully to its terms and not terminate or modify the same during its period of effectivity. *

ft ft

Explain the meaning of the duty to bargain collectively. (1917 Bar). ANS. The meaning of the duty to bargain is given in the following provisions of the Labor Code: Article 252. M eaning o f d u ty to b a rg a in c o lle c ­ tiv e ly . — The duty to bargain collectively means the performance of a mutual obligation to meet and confer promptly and expeditiously and in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms and condi­ tions of employment including proposals for- adjusting any grievances or questions arising under such agree­ ment and executing a contract incorporating such agreement if requested by either party, but such duty does not compel any party to agree to a proposal or to make any concession. Article 253. D uty to b a rg a in c o lle c tiv e ly w h en th e re e x is ts a c o lle c tiv e b a rg a in in g agree m en t. — The duty to bargain collectively shall also mean that either party shall not terminate nor modify such agree­ ment during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expira­ tion date. It shall be the duty, of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the sixty day period and/or until a new agree­ ment is reached by the parties. ft ft ft

487

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS Among the objectives of the State under Article 211 of the Labor Code is the promotion of frea collective bargaining as a mode of settling Eabor or industrial disputes. What in your opinion is the most important factor that will assure free collective bargaining? Ex­ plain. ANS. Free and genuine collective bargaining can exist only if the parties are of equal strength. If by reason of weakness, one is dominated by the other, collective bargaining becomes a farce. This is best illustrated by collective bargaining between an em­ ployer and a company union. Being companydominated, the union cannot be expected to fight for the rights of its members. A

i3r

Describe briefly the procedure in collective bargaining. ANS. in the absence of an agreement or other voluntary arrangement providing for a more expedi­ tious manner of collective bargaining, the following procedure shall be observed: a) When a party desires to negotiate an agree­ ment, it shall serve a written notice upon the other wish a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice; b) Should differences arise on the basis of such notice and reply, either party may request for a confer­ ence which shall begin not later than ten (10) calendar days from the date of request; , c) if the dispute is not settled, the Board (now the National Conciliation and Mediation Board) shall inter­ vene upon request of either or both parties or at its own initiative call the parties to conciliation meetings. The Board shall have the power to issue subpoenas requiring the attendance of the parties to such meet­ ings. It shall be the duty of the parties to participate

488

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS fully and promptly in the conciliation meetings the Board may call; d) During the conciliation proceedings in the Board, the parties ar6 prohibited from doing any act which may disrupt or impede the early settlement of the disputes; e) The Board shall exert efforts to settle disputes amicably and encourage the parties to submit their case to voluntary arbitration. (Article 250, Labor Code, as amended by R. A. 6715) *

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Under what conditions may multi-employer bargaining take place? Explain. ANS. A legitimate labor union(s) and employers may agree in writing to come together for the purpose of collective bargaining, provided: (a) only legitimate labor unions who are incumbent exclusive bargaining agents may participate and negotiate in multi-employer bargaining; (b) only employers with counterpart legitimate la­ b o r , unions who are incumbent bargaining agents may participate and negotiate in m ulti­ employer bargaining; and (c) only those legitimate labor unions who pertain to em ployer units who consent to m ulti­ employer bargaining may participate in m ulti­ employer bargaining. M ulti-employer bargaining may be initiated by the labor unions or by the employers. (a) Legitimate labor unions who desire to negotiate with their employers collectively shall execute a written agreement among themselves, which shall contain the following: 1) the names of the labor unions who desire to avail of m ulti-em ployer bargaining; 2) each labor union in the employer unit;

AftQ

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS 3) the fact that each of the labor unions are the incumbent exclusive bargaining agents for their respective employer units; 4) the duration of the collective bargaining agreements, If any, entered into by each labor union with their respective employers. Legitimate labor unions who are members o f the same registered federation, national, or industry union are exempt from execution of this written agreement. (b) The legitimate labor unions who desire to bar­ gain with multi-employers shall send a written notice to this effect to each employer con­ cerned. The written agreement stated in the preceding paragraph, or the certificates of reg­ istration of the federation, hational, or industry union, shall accompany said notice. Employers who agree to group themselves or use their existing associations to engage in multi-employer bargaining shall send a written notice to each of their counterpart legitimate labor unions indicating their desire to engage in multi-employer bargaining. Said notice shall Indicate the following: 1) the names of the employers who desire to avail of multi-employer bargaining; 2) their corresponding legitimate labor organi­ zations; 3) the fact that each corresponding legitimate labor union is any incumbent exclusive bargaining agent; 4) Vhe duration of the current collective bar­ gaining agreement, if any, entered into by each employer with the counterpart legiti­ mate labor union. (c) Each employer or concerned labor union shall express its willingness or refusal to participate in m ulti-em ployer bargaining in writing, ad-

490

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

dressed to its corresponding exclusive bargain­ ing agent or employer. Negotiations may com­ mence only with regard to respective employ­ ers and labor unions who consent to participate in multi-employer bargaining; (d) During the course of negotiations, consenting employers and the corresponding legitim ate labor unions shall discuss and agree on the following: 1) the manner by which negotiations shall proceed; 2) the scope and coverage of the negotiations and the agreement; and 3) where appropriate, the effect of the negoti­ ations on current agreements or conditions of employment among the parties. Two (2) signed copies of collective bargaining agreement reached through multi-employer bargaining shall be posted for at least five (5) days' in two conspicuous areas in each workplace of the employer units concerned. Said collective bargaining agreement shall affect only those employees in the bargaining units who have ratified it. The same collective bargaining agreement shall be registered with the Department in accordance with the following Rule. (Sections 5-7, Rule XVI, Book V, Implementing Rules, as amended by D. O. No. 40-03) ■rff

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Is the duty to bargain collectively fulfilled by the reli­ gious attendance of a party in collective bargaining conferences? Explain. ANS. True collective bargaining involves more than the holding of conferences and the exchange of pleasantries. While the law does not compel the parties to reach agreement, they must approach the

491

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS negotiations with an open mind and make reasonable efforts to reach a common ground of agreement. Proposals must be matched with counter-proposals. Although the law cannot open a man’s mind, it can at least compel him to conduct himself as if he were trying to persuade and were willing to be persuaded. But where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collec­ tively. (The Bradman Co., Inc. vs. CIR, et al., G. R. No. L-23134, July 21, 1977) *

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Is the employer bound to commence contract negotia­ tions? ANS. While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to initiate contract negotiation. The me­ chanics of collective bargaining is set in motion only when the following jurisdictional preconditions are present, namely (1) possession of the status of m ajority representation of the employees’ representa­ tive in accordance with any of the means of selection or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to bargain under Article 250, par. (a) of the New Labor Code. (Kiok Loy vs. NLRC, et al., G. R. No. 54334, January 22, 1986) *

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Give the effect of a violation of the duty to bargain collectively. ANS. The violation of the duty to bargain collec­ tively constitutes an unfair labor practice on the part of the employer. (Art. 248 (g), Labor Code) or the labor organization selected as representative of the employ­ ees. (Article 249 (c), Labor Code)

400

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS May the draft CBA submitted to the employer by the bargaining agent be approved and adopted as the par­ ties' CBA even w ithout the employer’s consent? Ex­ plain. ANS. As a general rule, no. But where the employer violated its duty to bargain collectively, as it did not even bother to submit an answer or reply to the union's proposals, the draft CBA submitted by the union may be approved and adopted as the parties' CBA. (Kiok Loy vs. NLRC et al., G. R. No. L-54334, January 22, 1986; Divine Word University of Tacloban vs. Secretary of Labor and Employment et al., G. R. No. 9 t9 1 5, September 11, 1992) *

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What do you understand by the off-repeated statement that “ collective bargaining is a continuous process” ? ANS. Collective bargaining does not end with the execution of a collective bargaining agreement. Thereafter, parties to the agreement are obliged to meet and confer promptly, expeditiously and in good faith to thresh out any grievances in accordance with the grievance procedure therein provided. Indeed, the grievance procedure is a part of the continuous pro­ cess of collective bargaining: (Republic Savings Bank vs. CIR, et al., G. R. No. L-20303, September 27, 1967)

What are the usual provisions, stipulations, or clauses in a collective bargaining agreement? ANS. They are the following: a) D e fin itio n o f B a rg a in in g U n it. — This is a statement of the scope of the appropriate bargaining unit covered by the agreement and of the jiositk i s included in and excluded from the unit.

493

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

b) U n ion S e c u rity C lause. — This is intended to maintain the strength of the contracting union during the life of the agreement and safeguard it against the perfidy or fickleness of its own members and incur­ sions by the employer. c) C h e c k -o ff P ro v is io n . — Pursuant to this provision the employer undertakes to deduct from the wages of union members union dues and other assess­ ments and remit the same to the treasurer of the union. d) M anagem ent P re ro g a tiv e s C lause. — The rights and prerogatives of the company are enumer­ ated in this provision. e) E co n o m ic B e n e fits . — Provisions granting economic benefits to the employees such as increases, vacation and sick leaves, hospitalization and retire­ ment. f) P ro v is io n on A d m in is tra tio n o f A g ree m e nt. — Article 260 of the Labor Code requires the parties to include in their agreement provisions to ensure mutual observance of the terms and conditions of the agree­ ment and to establish a machinery for the adjustment of grievances arising from the interpretation or imple­ mentation of the CBA and arising from the interpreta­ tion or enforcement of company personnel policies.. g) V o lu n ta ry A rb itra tio n CJause. —- The parties are also required to provide in their agreement for the submission to voluntary arbitration of grievances not settled through the grievance procedure and to desig­ nate in advance an arbitrator or panel of arbitrators or provide the manner for the selection of such arbitrator or panel of arbitrators. (Art. 260, Labor Code) h) No S trike -N o L o c k o u t C lause. — The parties may stipulate that during the life of the agreement, the union shall not go.on strike and the employer shall not declare a lockout. i) C o m p le te n e ss o f A g reem ent. — In this clause, the parties stipulate that the CBA is a full and complete settlement of all demands and proposals made during the negotiations. j) P ro v is io n s on F a m ily P la n n in g , P a rtic ip a ­ tio n in S p o rts etc. — The parties undertake to

494

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

encourage employee participation in programs for fam ­ ily planning or population control and in sports and recreational activities to reduce work monotony, and to have periodic discussions on cooperative schemes to increase productivity and sharing of profits therefrom. k) P ro v is io n A g a in s t D rug Use in W o rkp la ce . — Section 49 of R. A. 9165 requires the parties to include in their CBA joint continuing programs and information campaigns to achieve a drug-free work­ place. 0 D u ra tio n o f A greem ent. — This provision states the duration of the agreement. Linder Article 253-A of the Labor Code, as amended by R. A. 6715, the term of the CBA, insofar as the representation aspect is concerned, shall be five (5) years. *

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Describe briefly the different classes of union security clauses. ANS. C losed sh o p agree m en t is an'agreem ent whereby an employer binds himself to hire only mem­ bers of the contracting union who must continue to remain members of the union in good standing for the duration of the agreement as a condition for continued employment. U n io n s h o p agree m en t is one whereby the em­ ployer is permitted to employ a non-union worker, but to retain employment such worker must become a union member after some period and maintain his membership therein in good standing for the duration of the agreement. M a inten ance o f m e m b e rsh ip cla use does not require non-members to join the union but provides that those who do join most maintain their membership for the duration of the union contract, under penalty of discharge. P re fe re n tia l s h o p a g re e m e n t recognizes the right of the employer to select his employees but requires him to give p/ef lo members of the contracting union who are qualme-d.

495

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

Is there an express statutory recognition o f the closed shop agreement? ANS. Yes. Article 248 (e) of the Labor Code provides in part: “Nothing in this Code or any other law shall prevent the parties from requiring member­ ship 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.” *

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X union has with Y, Inc. a collective bargaining agree­ ment which provides among others: “ The Company undertakes not to employ anyone who is not a member o f the Union and to dismiss from employment any employee who resigns or is expelled from the Union.” Zi an employee, resigns from X union, and by reason of such resignation he is dismissed from the company. He contends that his dismissal violates his right to selforganization which includes the freedom not to jo in or resign from a labor union. Decide with reason. ANS. The contention of Z is untenable. His dismissal was effected pursuant to the closed shop provision of the collective bargaining agreement. The validity of such a provision is legally recognized; it is intended to make the union strong so that true collec­ tiv e bargaining may be assured. Statutes recognizing the validity of closed shop agreements have been justified on the police power. And the recognition of the validity of such agreements has been held to be the most prized achievement of unionism. (Juat vs. CIR, e ta l.,G . R. No. L-20764, November 29, 1965) ★ *

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Union A wins over Union B in a certification election, then enters into a collective bargaining agreement with the employer. The CBA contains among others a closed

496

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS shop provision. As the members of Union B, the loser, did not apply fo r membership in Union A, the latter demanded that the employer dismiss the said employ­ ees pursuant to the closed shop agreement. Is the employer obliged to dismiss them? Why? ANS. No. The closed shop agreement cannot be enforced against employees who are already members of another union at the time of the signing of the collective bargaining agreement. To compel the mem­ bers of a m inority union to disaffiliate from their union and join the majority or contracting union would render nugatory the right of the employees to selforganization and to form, join or assist a labor organi­ zation of their own choosing. (Freeman Shirt Mfg. Co. vs. CIR, G. R. No. L-16661, January 28, 1961; Sta. Cecilia Sawmills, Inc. vs. CIR, G. R. No. L-19273, February 29; 1964; U. S. Lines Co. vs. Associated Watchmen Security Union, G. R. No. L-15508, June 29, 1963; Guijarno vs. CIR, G. R. No. L-28791, August 27, 1973) *

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The Bagong Buhay Labor Union had with the Artex Development Co., Inc. a collective bargaining agree­ ment w ith a closed shop stipulation. Three o f its members affiliated themselves w ith another union, the Artex Free Workers. The Bagong Buhay Labor Union therefore declared them guilty o f disloyalty, expelled them, then demanded that the employer dismiss them from employment pursuant to the closed shop agree­ ment. The company terminated the employment of the three. The latter however contended that they were unaware o f the contents of the CBA and should not therefore be bound by it. Decide. ANS. Even, if we assume, in g ra n tia a rg u m e n tis , that the employees involved were unaware of the stipulations set forth in the collective bargaining agree­ ment, since their membership in BBLU prior to their

497

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS expulsion therefrom is undenied, there can be no question that as long as the agreement with closed shop provision was in force, they were bound by it. Neither their ignorance of, nor the!r dissatisfaction with, its terms and conditions would ju stify breach thereof or the formation by them of a union of their own. As has been aptly said, “a collective bargaining agreement entered into by officers of a union, as agent of the members, and an employer, gives rise to valid enforceable contractual relations, against the individ­ ual union members in matters that affect them pecu­ liarly, and against the union in matters that affect the entire membership or large classes of its members,’’ and a “a union member who is employed under an agreement between the union and his employer is bound by the provisions thereof, since it is a jo int and several contract of the members of the union entered into by the union as their agent." (Jose Manalang, et al. vs. Artex Development Co., Inc., G. R. No. L-20432, October 30, 1976) *

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A collective bargaining agreement provides: “ That the UNION shall have the exclusive right and privilege to supply the COMPANY w ith such laborers, employees and workers as are necessary in the logging, mechanical, etc. x x x and that the COMPANY agrees to em ployer hire in any o f its departments only such person o r persons who are members o f the UNION.” If a union member resigns or is expelled from the union during the lifetime o f the agreement, is the company obliged to terminate his employment pursuant to the foregoing provision? Why? ANS. No. The stipulation above-quoted does not establish a closed shop agreement. It simply estab­ lishes the exclusive right of the union to supply labor­ ers and lim its the authority of the company to employ or hire them. In other words, it requires that the

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

laborers, employees and workers hired or employed by the company be members of the union at the time of the commencement of the employer-employee rela­ tion. But membership in the union is not a condition for the continuation of said relation or for the retention of a laborer or employee engaged either before said agreement or while he was a member of the union. (Confederated Sons of Labor vs. Anakan Lumber Co., et al., G. R. No. L-12503, April 29, 1960) "ft *

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A collective bargaining agreement stipulates as follows: “ The EMPLOYER agrees to have in its employ and to employ only members in good standing o f the UNION in all its branches, units, plants, quarries, warehouses, docks, etc. The UNION agrees to furnish at all times the laborers, employees and all the technical helps that the EMPLOYER may require. EMPLOYER, however, re­ serves its right to accept o r reject where they fail to meet its requirements.” (Article 1, Section 5) “ The EMPLOYER agrees not to have in its employ nor to hire any new employee or laborer unless he is a member of good standing of the UNION, and a bona fide holder of a UNION (NWB) card, provided such new employee or laborer meets the qualifications required by the EM­ PLOYER." (Article VII, Section 1-d) If a member o f the union is expelled therefrom fo r disloyalty, is the employer obliged under the foregoing provision to terminate his employment? Why? ANS. No. The contract does not clearly prescribe the period within which the employee must remain as a member of good standing of the union. And it is not clear that membership in the union is a condition for continuation or retention of employment. Stipulations of this nature are strictly construed; doubts are resolved against the existence of the right to dismiss. (Rizal Labor Union, et al. vs. Rizal Cement Co., Inc., et al., G. R. No. L-19779, July 30, 1966)

499

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS A collective bargaining agreement provides: “ MAINTENANCE OF MEMBERSHIP. Both parties agree that all employees o f the COMPANY who are already members of the UNION at the time o f the signing o f this AGREEMENT shall continue to remain members o f the UNION fo r the duration o f this AGREEMENT.” Three (3) members o f the contracting union who re­ signed to jo in a new union were dismissed by the company pursuant to the above-quoted provision. Is their dismissal legal? Why? ANS. Their dismissal is not legal. The contractual provision relied upon does not expressly provide that membership in the union is a condition for continued employment. In order that an employer may be bound to d ism iss’employees who do not maintain their mem­ bership in the union, the stipulation to this effect must be so clear as to leave no room for doubt thereon. An undertaking of this nature is so harsh that it must be strictly construed and doubts must be resolved against the existence of the right to dismiss. (Manila Cordage Co. vs. CIR, e ta l., G. R. No. L-27079, August 31, 1977) *

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Union “ A ” and "B ” company entered into a collective bargaining agreement containing, among others, a “ closed shop” provision whereby the company agreed to hire only members of union “ A” of good standing. When the CBA was executed, ‘X,’ % ’ and ‘Z’ had been working w ith ‘B’ company fo r the past 5 years. Because ‘X,’ ‘Y,’ and *Z’ belonged to a religious sect which prohibits its members from joining any organization, including labor unions, they refused to jo in “ A.” In view of the “ closed shop” agreement may the com­ pany be compelled by union “ A " to dismiss ‘X,’ 'Y,' and ‘Z’? Reasons. (1982 Bar).

500

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS ANS. The company cannot be compelled to dis­ miss ‘X ,’ ‘Y ,’ and ‘Z .’ The closed shop agreement cannot be made to apply to them; otherwise, religious freedom, which enjoys a preferred position in the hierarchy of valued, will be violated. Religious profes­ sion or belief is superior to contract rights; the latter must yield to the former. (Victoriano vs. Elizalde Rope W orkers Union, et al., G. R. No. L-25246, September 12, 1974; Anucesion, et al. vs. NLU, et al., G. R. No. L-26097, November 29, 1977) *

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Distinguish closed shop from union shop. ANS. Under c lo s e d sh o p , the employer cannot hire any worker who is not a member of the contracting union; under u n io n shop , the employer, may do so but the workers must within a specified period after his employment become a member of the contracting union. In c lo s e d shop , membership in the contract­ ing union is a condition for employment and retention of employment; in u n io n sh o p , membership in the contracting union is a condition for continued employ­ ment. *

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About eight (8) months after the execution o f a collec­ tive bargaining agreement between the company and their union, some union members joined another union and even filed a petition fo r certification election. As the CBA contained a maintenance o f membership clause, the bargaining agent sbught the dismissal o f the said members. (a) Is there a ground fo r the enforcement o f the union security clause? Why? ANS. Yes. The union members committed acts of disloyalty. Inherent in every labor union is the right of self preservation. When members of a union seek the

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COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS disintegration of destruction of the very organization to which they belong, they forfeit their rights to remain members thereof. (b) Does the expiration o f the CBA preclude the dis­ missal o f the union members guilty of disloyalty? ANS. No. The expiration of the CBA did not cleanse them from the acts of disloyalty. They com­ mitted such acts while the CBA was in force and existing for which they have to face the sanctions lawfully imposed by the union. (c) If the act of disloyalty was committed during the “ freedom period,” could the union security clause be still enforced? ANS. No more. The requirement for union mem­ bers to maintain their membership in good standing ceases to be binding during the 60-day freedom period im m ediately preceding the expiration of the CBA. (Tanduay Distillery Labor Union vs. NLRC, et al., G. R. No. 75037, April 30, 1981) it

it

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Blanco belonged to a union (LEA) which had a closed shop agreement with LITEX textile company where he worked. But he and several other union members formed another union (CIALO) and filed a petition fo r certification election. This was however dismissed and LEA was certified as the sole and exclusive bargaining representative of the rank-and-file employees of LITEX. As under its constitution and by-laws, a member may be expelled therefrom fo r jo ining another union, LEA after conducting an investigation demanded fo r the d is­ missal from employment o f the employees who formed CIALO. The company complied. Is the dismissal of the employees involved legal? Why?

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS ANS. Yes. The company had to comply with the closed shop agreement, which is a valid form of union security. And it cannot be said that there was no reasonable ground for the employees’ expulsion from LEA. By organizing a rival union, they violated the union's constitution and by-laws. (Lirag Textile Mills, Inc. vs. Blanco, et al., G. R. No. L-27029, November 12, 1981) ★ *

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X union has with Y Co. a collective bargaining agree­ ment containing, among others, a maintenance-ofmembership clause. Due to the refusal o f Z, an em­ ployee o f Y Co., to jo in it, despite repeated invitations, X union sends a demand to Y Co. fo r the dismissal o f Z. Y Co. refuses. Is the refusal o f the company justified? Why? ANS. The refusal of the company is justified. It is not bound to dismiss an employee who refuses to join the union. The maintenance-of-membership clause applies only to employees who are members of the contracting union at the tim e of the execution of the collective bargaining agreement and to those who may thereafter on their own volition join the union; these must maintain their membership in good standing in the union to keep their jobs. *

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Is a union shop clause contained in a collective bargain­ ing agreement which has not yet been certified (now registered) by the Bureau of Labor Relations operative and enforceable? ANS. Yes. The certification (now registration) of the collective bargaining agreement by the Bureau of Labor Relations is not required to put a stamp of validity to such contract. Once it is duly entered into and signed by the parties, a collective bargaining

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS agreement becomes effective as between the parties regardless of whether or not the same has been certified (now registered) by the BLR. (Liberty Flour Mills Employees, et al. vs. Liberty Flour Mills, Inc., et al., G. R. Nos. 58768-70, December 29, 1989) *

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Carifio, the union president, was at a general member­ ship meeting impeached and ordered recalled by unani­ mous vote of the union membership fo r acts against the interest o f the union and w illfu l violation o f the union’s constitution and by-laws. He was also expelled from the union. The union then sent notice of Carino's expulsion to the company and demanded enforcement of the union security clause of the existing collective bargain­ ing agreement. The company dismissed Carino the follow ing day. (a) Is the impeachment and recall o f Caririo valid considering'that under the constitution of the union such proceedings must be initiated by a formal petition or resolution signed by at least thirty (30%) percent of all bona fide union members? ANS. Yes. Failure to comply literally with the requirement is not necessary. Carino was impeached and ordered recalled by unanimous vote of the mem­ bership. The prescribed impeachment and recall pro­ ceeding was more than substantially complied with. (b) Is the dismissal of Carino by the company effected with procedural due process? ANS. No. The company should have given Carino an opportunity to explain his side of the controversy with the union. It should have reasonably satisfied itself by its own inquiry that the union had not been merely acting arbitrarily and capriciously in impeach­ ing and expelling Oarino. (c) Is Carifto entitled to reinstatement?

COLLECTIVE BARGAINING AMD COLLECTIVE BARGAINING AGREEMENTS

ANS. No. His dismissal was effected pursuant to the union security clause in the collective bargaining agreement. He should however be paid the sum of P5.000.00 by way of penalty to be borne by the company and the union solidarily. (Carino vs. NLRC, et al., G. R. No. 91086, May 8, 1990) * * vV Some regular employees of Occidental Foundry Corpo­ ration were dismissed from work after their union Sarnahan notified the company that they failed to retain membership in the union in good standing; they had conducted a special election of officers of Sarnahan and tried to stage a strike based on economic demands. No hearing was conducted by the union before the workers were expelled therefrom despite a requirement for such hearing in the constitution and by-laws. The company likewise did not, before dismissing the workers, hear the side of the workers; it took for granted that Sarnahan had actually conducted an inquiry, is the dismissal of the workers lawful? Why? ; ANS. No. Their dismissal was effected without prior notice and hearing, which are essential elements of due process. (Ferrer et al. vs. NLRC et al., G. R. No. 100898, July 5, 1993) *

>Y

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The union security clause in the collective bargaining agreement provided that any employee covered by the agreement who fails to maintain his membership in the union for non-payment of union dues, for resignation and for violation of the union’s constitution and by­ laws, and any new employee who fails to join or to maintain his membership in the union, shall upon writ­ ten notice of such failure to join or to maintain member­ ship in the union and upon written recommendation to the company by the union, be dismissed from employ­ ment by the company. Pursuant to this clause, the

505

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS company dismissed th irty (30) union officers who were expelled due to acts o f disloyalty from the union by the federation that had placed the union under trusteeship. The company did not however conduct a separate and independent investigation into the causes o f the em­ ployees’ alleged expulsion before dism issing them. The dismissal became effective on the day the employ­ ees received their termination notices. (a) Is the dismissal valid? Why? ANS. N o .' W hile the company may validly dismiss employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon recommendation by the union, the dismissal should not be done hastily and summarily thereby eroding the employees' right to due process, self-organization and security of tenure. Even on the assumption that the federation had valid grounds to expel the union officers, due process requires that they be accorded a separate hearing by the company. (b) Under the union security clause, the union under­ took to hold the company free from any liability result­ ing from such a dismissal. Does this free the company from liability in favor of the dismissed employees? ANS. No. The company may still be held liable if it was remiss in its duty to accord the employees their right to be heard on the matter. (c) May workers who lose their union membership on grounds other than those stipulated in the union secu­ rity clause be validly dismissed pursuant thereto? Why? ANS. No. The workers may be validly dismissed pursuant to the union security clause only if they lost membership in the union on the grounds specified in the collective bargaining agreement. Thus, it has been held that where the CBA lim ited the grounds for dismissal to only three (3) grounds, to wit: failure to maintain membership in the union for (1) non-payment

508

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS of union dues, (2) for resignation, and (3) for violation of the union’s constitution and by-laws, the workers could not be validly dismissed for their act of establish­ ing a federation different from the one that expelled them, as this act is not among those grounds specified in the CBA as grounds fo r dismissal. (Malayang Samahan Ng Mga Manggagawa sa M. Greenfield et ai vs. Hon. Cresencio J, Ramos et al., G. R. No. 113907, February 28, 2000) *

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Discuss briefly the importance of the union security clause. ANS. The union security clause is intended to strengthen the contracting union and to protect it from the fickleness or perfidy of its own members. W ithout such safeguard, group solidarity becomes uncertain; the union becomes gradually weakened and increas­ ingly vulnerable to company machinations.- In this clause lies the strength of the union during the en­ forcement of the collective bargaining agreement. It provides substantial power in collective bargaining. (Caltex Refinery Employees Association vs. Hon. J. Brillantes et al., G. R. No. 123782, September 16, 1997) *

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A collective bargaining agreement provides: “ The EMPLOYER undertakes to deduct m onthly from the wages o f the employees in,the bargaining unit who do not belong to the UNION but who accept and enjoy the benefits provided fo r in this Agreement an amount equivalent to the union dues paid by members o f the UNION and remit the same to the UNION.” Is such a stipulation valid? Why?

507

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

ANS. Yes. It provides for the collection of agency fee from the members who accept and enjoy the benefits attained through the efforts of the bargaining agent. The non-union members should not be unjustly enriched at the expense of the bargaining agent. The legality of the imposition of the agency fee is recognized in Article 248 (e) of the Labor Code. This provision states in part: ‘ Employees belonging to an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recog­ nized collective bargaining agent, if such non-union members accept the benefits under the collective agreement x x x." *

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A union succeeds in negotiating with the employer a collective bargaining agreement w hich provides fa r substantial .benefits .to the employees in the bargaining unit. Among these employees are members of a reli­ gious organization which prohibits their members from giving contributions to unions or organizations. Since they have accepted the .benefits of the CBA, the union demands that the em ployer deduct from thesr wages agency fees under Article 248 (e) of the Labor Code. Js such demand justified ? Explain. ANS. Although these employees cannot be com­ pelled to become members of the bargaining agent, they are obliged to pay agency fees to the latter since they accepted the CBA; otherwise, they would be unjustly enriched at the expense of the union. They were not under compulsion to accept the benefits; they should not be allowed to utilize religious freedom to obtain free benefits. ’*•

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After winning over Union Y in a certification ejection, Union X negotiates and concludes a collective bargain­

508

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

ing agreement with the employer. Since the members of Union Y accepted the salary increases provided for ip the CBA, Union X requested the employer to deduct monthly from the wages of said employees the amount of P1.00 as agency fee. The company refused 1o effect the deduction on the follow ing grounds: a) the employees concerned did not authorize in writing such deduction. b) the collective bargaining agreement does not ex­ pressly provide for the collection of agency fees. c) the employees concerned toelong to another union. Which of the foregoing is/are tenable? Give reasons. ANS. None of the foregoing grounds is tenable. It is not necessary that the employee authorizes in writing the deduction of agency; fees. (Article 248 (e) proviso, Labor Code). His acceptance of the benefits under th© CBA is sufficient justification for the deduc­ tion of the amount. The law does not impose as a condition-for the collection of the agency fee that the same be provided for in the CBA. The basis of the union’s right to the agency fee is quasi-contraclual, not contractual. The fact that the employees concerned belong to another union cannot exempt them from the payment of agency fee. In the same manner that they cannot be compelled to leave their union to join the contract­ ing or majority union, they should not he allowed to utilize their union membership as a shield against the imposition of a reasonable fee for their enjoyment of benefits obtained through the efforts of the majority union; otherwise, they would be placed in a more favored situation than members of the contracting or majority union. *

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The collective bargaining agreement negotiated by Union Y provides for a P2.00 daily wage increase for the employees in the production and maintenance depart­ ment which constituted the bargaining unit. To avoid

5A8

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

any charges o f discrim ination, the company also granted the same increase to employees in the adm inis­ trative and sales department. Union Y now demands that agency fee be deducted from the wages o f the employees in the administrative and sales department. Is such demand valid? Why? ANS. The demand is not valid. In the first place, the employees in the administrative and sales depart­ ment do not belong to the bargaining unit covered by the agreement. In the second place, the wage in­ creases given to the said employees were not obtained through the efforts of Union Y. *

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What do you understand by the “ substitutionary doc­ trine” ? ANS. The principle, formulated as a compromise solution when there occurs a shift in employees' union allegiance after the execution of a bargaining contract with their employer, merely states that even during the effectivity of a collective bargaining agreement exe­ cuted between the employer and the employees thru their agent, the employees can change said agent but the contract continues to bind them up to its expiration date. They may bargain however for the shortening of said expiration date. In formulating the “substitutionary" doctrine the only consideration involved was the employees’ inter­ est jn the existing bargaining agreement. The agent’s interest never entered the picture. In fact, the ju s tifi­ cation for said doctrine was that the majority of the employees, as an entity under the statute, is the true party in interest to the contract, holding rights through the agency of the union representative; thus, any exclusive interest claimed by the agent is defeasible at the w ill of the principal. Stated otherwise, the “substitutionary’' doctrine only provides that the employees cannot revoke the

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COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase “said new agent would have to respect said contract” must be understood. It only means that the employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the short­ ening thereof. (Benguet Consolidated, Inc. vs. BCI Employees and Workers Union - PAFLU, G. R. No L-24711, April 30, 1968) *

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Under the “ substitutionary doctrine,” is the new agent or substitute automatically bound by the personal un­ dertakings, like a no-strike stipulation, o f the deposed or substituted union? Explain. ANS. No. When the old union assume.d in the contract certain personal undertakings, like the under­ taking not to strike, it did so as agent of the employees and not of the other unions in the company. To hold the new agent automatically bound would be to violate the legal maxim of res in te r a lio s acta. O f course, the new agent could always voluntarily assume all the personal undertakings made by the displaced agent. (Benguet Consolidated, Inc. vs. BCI Employees and Workers Union - PAFLU, G. R. No. L-24711, April 30, 1968) *

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A few months after the execution o f a collective bargain­ ing agreement between A Co. and B Union, all the members of the latter resigned from the union. Since B Union, the bargaining agent, had no more members, A Co. refused to further implement the bargaining con­ tract, contending that the same has been novated. De­ cide.

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COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

ANS. The refusal of the company to implement the contract is not justified. Although all the members of B Union have resigned therefrom, they remain the parties io ihe contract; they are the principals; the union is simply their agent. Mere change of agent does not abrogate the CBA. Vf tV * Articie 231 of the Labor Code requires the parties to a collective bargaining agreement to submit for registra­ tion copies thereof to the Bureau of Labor Relations or the regional offices. Within what period should this duty be complied with? ANS. Copies of the collective bargaining agree­ ment must be submitted within thirty (30) days from execution thereof. * * * . What is the effect of the registration of a collective bargaining agreement in accordance with Article 231 of the Labor Code? ANS. The contract will bar a certification election except w ith in the last sixty days (freedom period) before the expiration of the representation period of five (5) years. *

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The collective bargaining agreement was not formally ratified by the majority of all the workers in the bargain­ ing unit. However, the workers received and enjoyed the beneHts under the CBA. Can the employees later on have the contract invalidated for lack of formal ratifica­ tion? •w ANS. No. The employees have already enjoyed benefits from it. They cannot receive benefits under provisions favorable to them and later insist that the

512

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS CBA is void simply because other provisions turn out not to the liking of certain employees. It is iniquitous to receive benefits from a CBA and later on disclaim its validity. (Planters Products, Inc. vs. NLRC, et al., G. R. Nos. 78524 & 78739, January 20, 1989) ★ *

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On January 1,1983, Company A signed a 3-year collec­ tive bargaining agreement (CBA) with Union X, the duly recognized collective bargaining agent o f the employ­ ees. The CBA was never form ally ratified by the employ­ ees, although they all accepted and enjoyed the wage increase and other benefits provided fo r in the said CBA. Neither was a copy o f the CBA submitted to the Secretary o f Labor and Employment. Eighteen (18) months after the CBA was signed, Union Y filed a petition fo r the holding o f a certification election among the employees covered by the CBA and subm it­ ted in support thereof the signatures o f 30% o f the employees. (a) Is the CBA between Company A and Union X valid? Why? ANS. Yes, the CBA is valid. Union “X,” being the duly recognized collective bargaining agent, was legally authorized to execute the CBA. W hile there was no express ratification, the fact that the employ­ ees accepted the benefits under the CBA without any reservation is an implied ratification of the terms of the agreement. The non-submission of a copy of the CBA to the Secretary of Labor and Employment did not affect its validity; it is valid and binding in all respects as between the parties. (b) W ill the petition filed by Union Y prosper? Explain. (1984 Bar) ANS. No, the petition will not prosper because of the “contract bar" rule. Except for the formal submis­ sion of a copy of the CBA to the MOLE, the CBA is

C49

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS valid in all respects and was duly ratified when the employees accepted the benefits in the CBA. The non-submission of a copy of the CBA to the MOLE is a mere formal requirement which should not prevent the application of the “contract bar" rule. Hr *

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The company voluntarily recognized ALU as the bar­ gaining agent and concluded a CBA with the said union despite the existence of other unions in the unit. The contract was not posted in at least two (2) conspicuous places in the establishment before ratification. More than a m ajority of the employees in the unit repudiated the alleged negotiation and ratification o f the CBA. Is the contract valid. Why? ANS. No. There was a failure to properly deter­ mine whether ALU enjoyed majority representation. There was no posting of copies of the contract as required by law. Ratification was not established. It cannot promote industrial stability. (Associated Labor Unions vs. Hon. Ferrer-Calleja, et al., G. R. No. 77282, May 5, 1989) *

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What is the “ freedom period” ? ANS. It is the sixty-day (60) day period immedi­ ately preceding the expiration of the representation period of five (5) years in the collective bargaining agreement. A certification election can be held within the period. *

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Union A and B Co. concluded a collective bargaining agreement with a duration of three (3) years and provid­ ing fo r an increase o f P3.00 per day in the wages of the employees. Upon the expiration o f the three (3) year period and since the contract was not renewed, B Co.

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COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS

discontinued giving the P3.00 daily increase to its em­ ployees. Is this legal? Why? ANS. No. Article 253 of the Labor Code requires the parties to keep the s ta tu s q uo and to continue in full force and effect the terms and conditions of the existing contract until a new agreement is reached. Besides, benefits that an employer has given to his employees cannot be unilaterally withdrawn. *

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May the benefits provided fo r in a CBA be extended to employees who are employed in the bargaining unit after the expiration of the stipulated term o f the con­ tract? Explain. ANS. Yes. This is to avoid discrimination. Even after the expiration of the stipulated term of the contract, its provisions continue to have legal effect as long as there is no new agreement. (New. Pacific Timber & Supply Company, Inc. vs. NLRC et al., G. R. No. 124224, March 17, 2000) *

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Is renegotiation of the CBA during its lifetime required? ANS. Article 253-A of the Labor Code provides: Art. 253-A. Term s o f a c o lle c tiv e b a rg a in in g agreem ent. — Any collective bargaining agreement that the parties may enter into shall, insofar as the representation aspect is concerned be fo r a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be con­ ducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the collective bargaining agreement. All other provisions of the collective bargaining agreement shall be re-negotiated

COLLECTIVE BARGAINING AND COLLECTIVE BARGAINING AGREEMENTS not later than three (3) years after its execution. Any agreement on such other provisions of the collective bargaining agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the collective bargaining agreement, shall retroact to the day immediately fol­ lowing such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agree­ ment, the parties may exercise their rights under this Code. *

*

*

Article 253-A o f the Labor Code requires the parties to a collective bargaining agreement to renegotiate the pro­ visions of the CBA (except the representation aspect) not later than three (3) years after its execution. May the renegotiated contract be fo r a period exceeding the remainder of the original five-year term in the CBA? Why? ANS. Yes. Article 253-A does not fix the period of the renegotiated contract. A longer period will promote industrial peace and will afford the new union and the employer time to know each other. The renegotiated contract must however be ratified by the majority of the workers within the bargaining unit. It will not also bar a petition for certification election during the last sixty (60) days of the original five-year period. (San Miguel Corporation Employees Union-PTGWO et al. vs. Hon. Ma. Nieves D. Confesor et al.,G. R. No. 111262, September 19, 1996) *

*

*

Article 253-A also provides that any “ agreement” on such provisions entered into w ithin six (6) months from the date of expiry of the term thereof as fixed in the CBA shall retroact to the day immediately follow ing such

C FILE UNION-FFW. G. R. NO. 152356. AUGUST 16. 2005. 1) The issuance of the certificate of registration by the Bureau or Regional Office is not the operative act that ests legal personality upon a local/chapter under 'Department Order No. 9. Such legal personality is cquired from the filing of the complete documentary squirements enumerated in Section 1, Rule VI. 2) However, where the federation issued a charter certificate to the putative local/chapter but did not submit Ine other required documents to the Regional Office or Bureau, the legal personality of the local/chapter may btdeemed to have vested upon its filing of its petition for certification election to which the required documents were; attached. While the strict letter of the procedural rule was r;ot complied with, labor laws are generally construed berally in favor of labor, to give effect to the constitutionally guaranteed right to self-organization. 3) Petitioner cites the cases of Toyota Motors and Progressive Development Corporation-Pizza Hut v. Ledesma (271 SCRA 593) wherein the Court ruled that the question of prohibited membership of both supervisory and rank-and-file employees in the same union must be inquired into anterior to the granting of an order allowing a certification election; and that a union composed of both of these kinds of employees does not possess the requisite personality to file for recognition as a legitimate labor organization. It should be noted thought that in the more recent (2003) case of Tagaytay Highlands International Golf Club v. Tagaytay Highlands Employees Union,(395

4

SCRA 699) the Court, notwithstanding Toyota and Progressive, ruled that after a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack, but questioned only in an independent petition for cancellation. 7) C e rtifica tio n E le ctio n s; E m ployer to P articipate.

Appeal;

S tand ing

of

SMC QUARRY 2 WORKERS UNION ETC. VS. TITAN MEGABAGS INDUSTRIAL CORPORATION. G. R. NO. 150761, MAY 19. 2004. (1) Under Article 259 of the Labor Code, as amended, any party to a certification election may appeal the order of the Med-Arbiter directly to the Secretary of Labor who shall decide the same within fifteen(15) calendar days. (2) Along this line, Section 15, Rule XI, Book V of the Omnibus Rules Implementing the Labor Code provides that the Decision or Resolution of the Secretary of the DOLE on appeal shall be final and executory. Upon finality of the Decision of the Secretary, the entire records of the case shall be remanded to the office of origin for implementation of the Decision, unless restrained by the appropriate court. (3) In National Federation of Labor vs. Laguesma, (304 SCRA 405) we ruled that the remedy of an aggrieved party in a Decision or Resolution of the Secretary of the DOLE is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a special civil action for certiorariunder Rule 65 of the 1997 Rules of Civil Procedure. And without a motion for reconsideration seasonably filed within the ten-day reglementary period, the questioned Decision or Resolution of the Secretary becomes final and executory. Consequently, the merits of the case can no

5

longer be reviewed to determine if the Secretary could be faulted for grave abuse of discretion. (4) When a petition for certification election is filed by a legitimate labor organization, it is good policy of the employer not to have any participation or partisan interest in the choice of the bargaining representative. While employers may rightfully be notified or informed of petitions of such nature; they should not, however, be considered parties thereto with an inalienable right to oppose it. 8) Collective Bargaining Agreement; Interpretation. MINDANAO STEEL CORPORATION VS. MINSTEEL FREE WORKERS ORGANIZATIONCAGAYAN DE PRO. G. R. NO. 130693. MARCH 4. 2004. 1) Where the CBA expressly stipulated that salary increases, such as the P20.00 provided therein, shall not include any wage increase that rray be provided by law as a result of any economic change, the CBA increase cannot be deemed compliance with an interim wage order requiring the payment of an ECOLA. 2) In Mactan Workers Union vs. Aboitiz, (45 SCRA 577) we held that “the terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for redress.” 9) Strikes and Lockout; Requisites for Validity SAMAHANG MANGGAGAWA SA SULPICIO LINES, INC-NAFLU E TA L. G. R. NO. 140992. MARCH 25. 2004 (1) A strike is a powerful weapon of the working class. But like, a sensitive explosive, it must be handled

6

carefully, lest it blows up in the workers’ own hands. Thus, the right to strike has to be pursued within the bounds of law. (2) There is no showing that the petitioner union observed the 7-day strike ban; and that the results of the strike vote were submitted by petitioners to the Department of Labor and Employment at least seven(7) days before the strike. (3) In Gold City Integrated Port Service, Inc. vs. NLRC, (245 SCRA 628) we stressed that the language of the law leaves no room for doubt that the cooling-off period and the seven-day strike ban after the strike vote report were intended to be mandatory. (4) As explained in National Federation of Labor vs. NLRC (283 SCRA 275) with the enactment of Republic Act No. 6715 which took effect on March 21,1989, the rule now is that such requirements as the filing of a notice of strike, strike vote, and notice given to the Department of Labor are mandatory in nature. Thus, even if the union acted in good faith in the belief that the company was committing an unfair labor practice, if no notice of strike and a strike vote were conducted, the said strike is illegal. (5) The basic elements of a strike are present in the case at bar. First, petitioner’s officers and members numbering 167, in a concerted manner, did not report for work on May 20, 1994; second, they gathered in front of respondent’s office at Pier 12, North Harbor at Manila to participate in a strike voting conducted by petitioner; and third, such union activity was an aftermath of petitioner’s second notice of strike by reason of respondent’s unfair labor practice. Clearly, what transpired then was a strike because the cessation of work by petitioner’s concerted action resulted from a labor dispute.

(6) Invoking compassion, petitioner pleads that its officers who participated in the one-day strike should not be dismissed from the service, considering that respondent’s business activities were not interrupted, much less paralyzed. While we sympathize with their plight, however, we must take care that in the contest between labor and capital, the results achieved are fair and in conformity with the law. (7) When the Secretary of Labor and Employment certifies the labor dispute to the NLRC for compulsory arbitration the latter is concomitantly empowered to resolve all questions and controversies arising therefrom including cases otherwise belonging and exclusively to the Labor Arbiter. 10) S trike s and L o c k o u t; A rtic le 264, L a b o r Code.

SAN JUAN DE DIOS EDUCATIONAL FOUNDATION EMPLOYEES UNIONALLIANCE OF FILlPINO WORKERS ET AL. G. R. NO. 143341. MAY 28. 2004. 1) A strike declared in defiance of a return to work order issued by the DOLE Secretary, as in a strike in a hospital, is a prohibited activity under Article 264 of the Labor Code; hence, the dismissal of the union officers is in order. 2) The return-to-work order is deemed validly served where copies of the same were left by the Sheriff with the strikers at the picket line, although they refused to acknowledge receipt thereof, and another copy left at their counsel’s office. A sheriff’s report is an official statement by him of his acts under the writs and processes issued by the court in obedience to its directive and in conformity with law. In the absence of contrary evidence, a presumption exists that a sheriff has regularly performed his official duty. To controvert the presumption arising therefrom,

8

there must be clear and convincing evidence. In this case, the petitioners failed to adduce clear and convincing evidence to overcome the presumption. The bare denial by the petitioners of receiving copies of the order will not suffice. , 11) S trike s and L o c k o u ts ; A rtic le 263 (g), L a b o r Code; R eturn to W o rk O rder.

MANILA DIAMOND HOTEL EMPLOYEES UNION VS. COURT OF APPEALS ET AL. G. R. NO. 140518. DECEMBER 16. 2004. (1) Under Article 263(g), all workers must immediately return to work and the employer must readmit all of them under the same terms and conditions prevailing before the strike or lockout. It must be pointed out that the law uses the precise phrase of “under the same terms and conditions,” revealing that it contemplates only actual reinstatement. This is in keeping with the rationale that any work stoppage or slowdown in that particular industry can be inimical to the national economy. It is clear that Article 263(g) was not written to protect labor from the excesses of management, nor was it written to ease management from expenses, which it normally incurs during a work stoppage or slowdown. It was error to view the assumption order of the Secretary as a measure to protect the striking workers from any retaliatory action from the Hotel. This Court reiterates that this law was written as a means to be used by the State to protect itself from an emergency or crisis. It is not for labor, nor is it for management. (2) The Secretary's subsequent order for mere payroll reinstatement constitutes grave abuse of discretion amounting to lack or excess of jurisdiction. Indeed, this Court ahs always recognized the “great breadth of discretion” by the Secretary once he assumes jurisdiction over a labor dispute. However, payroll reinstatement in

9

lieu of actual reinstatement is a departure from the rule in these cases and there must be showing of special circumstances rendering actual reinstatement impracticable, or otherwise not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest. None, appears to have been established in this case. Even in the exercise of his discretion under Article 236(g), the Secretary must always keep in mind the purpose of the law. Time and again, this Court has held that when an official by-passes the law on the asserted ground of attaining a laudable objective, the same will not be maintained if the intendment or purpose of the law would be defeated.

12) Strikes and Lockouts; Article 263 (g), Labor Code; Return to Work Order. UNIVERSITY OF IMMACULATE CONCEPCION, INC. VS. THE HONORABLE SECRETARY OF LABOR ET A L. G. R. 151379. JANUARY 14: 2005. (1) When the Secretary of Labor and Employment assumes jurisdiction over labor disputes involving industries indispensable to the national interest under Article 263 (g) of the Labor Code, the said official may interfere with the legitimate business decisions of the employer. (2) One of the substantive evils which Article 263(g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. The Secretary of Labor and Employment may therefore order the employer (a university) to suspend the effect of the termination of the employment of the employees, which termination was the reason of one of the notices of strike filed by the union.

10

(3) It is not a question anymore of whether or not the dismissed employees are part of the bargaining unit. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase tensions between the parties should be considered an act of exacerbation and should not be allowed. (4) “Payroll reinstatement” of the employees, as an exception to the actual reinstatement required by a return to work order, may be allowed, pending final resolution of the validity of their dismissal, in view of a “superseding circumstance,” i.e., the final decision of the panel of arbitrations as to the confidential nature of their positions. 13) S trike s and L o c k o u ts ; R e q u isite s fo r V a lid ity.

.

BUKLURAN NG MANGGAGAWA SA CLOTHMAN KNITTING CORPORATION ET AL VS. COURT OF APPEALS ET A L. G. R. NO. 158158. JANUARY 17. 2005. (1) A strike is considered to have taken place where for five(5) days the president of the union and some union members and other employees assembled in front of the company carrying placards protesting among others the closure of a department and the non-payment of their benefits. It is of no moment that a department of the company had been closed; the other divisions were still functioning. There was a temporary work stoppage by reason of a labor dispute. It was however illegal for failure of the union to comply with the requisites provided for in Article 263 of the Labor Code. (2) Where the petitioners in the petition for certiorari are the union and the officers and members of the union’s Board of Directors', the certification on non­ forum shopping should be signed by all of them and not only by the president of the union. The execution by the individual petitioners of a special power of attorney subsequent to the dismissal of the petition by the Court of

11

Appeals authorizing the union president to execute the requisite certification does not cure the fatal defect in the petition. 14) S trike s and L o c k o u ts ; R equisites fo r V alidity.

CAPITOL MEDICAL CENTER, INC. VS. NLRC ET AL.. G. R. NO. 147080. APRIL 26. 2005. (1) Aside from the mandatory notices embedded in Article 263, paragraphs (c) and (f) of the Labor Code, a union intending to stage a strike is mandated to notify the NCMB of the meeting for the conduct of strike vote, at least twenty-four(24) hours prior to such meeting. Unless the NCMB is notified of the date, place and time of the meeting of the union members for the conduct of a strike vote, the NCMB would be unable to supervise the holding of the same, if and when it decides to exercise its power of supervision. (2) A union is mandated to notify the NCMB of an impending dispute in a particular bargaining unit via a notice of strike. Thereafter, the NCMB, through its conciliator-mediators, shall call the parties to a conference at the soonest possible time in order to actively assist them in exploring all possibilities for amicable settlement. In the event of the failure in the conciliation/mediation proceedings, the parties shall be encourage to submit their dispute for voluntary arbitration. However, if the parties, refuse, the union may hold a strike vote, and if the requisite number of votes if obtained, a strike may ensue. The purpose of the strike vote is to ensure that the decision to strike broadly rests with the majority of the union members in general and not with a mere minority, and at the same time, discourage wildcat strikes, union bossism and even corruption. A strike vote report submitted to the NCMB at least seven days prior to the intended date of strike ensures that a strike vote was, indeed, taken. In the event that the report is false, the seven-day period affords the

12

members an opportunity to take the appropriate remedy before it is too late. The 15 to 30 day cooling-off period is designed to afford the parties the opportunity to amicably resolve the dispute with the assistance of the NCMB conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members.

(3) The requirement of giving notice of the conduct of a strike vote to the NCMB at least 24 hours before the meeting for the said purpose is designed to (a) inform the NCMB of the intent of the union to conduct a strike vote, (b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c) should the NCMB decide on its own initiative or upon the request of an interested party including the srnpioyer, to supervise the strike vote, to give it ample time to prepare for the deployment of the requisite personnel, including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the union’s decision to conduct a strike vote, and the date, place and time thereof, the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The failure of a union to comply with the requirement of the giving cf notice to the NMCB at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal. 15) S trike s and L o c k o u ts ; A rtic le 263(g), L a b o r Code.

CAPITOL MEDICAL CENTER, INC. VS. HON. C. TRAJANO. ET AL.. G. R. No. 155690. JUNE 30. 2005.

(1) The discretion to assume jurisdiction may be exercised by the Secretary of Labor and Employment without the necessity of prior notice or hearing given to any

13

of the parties. The rationale for his primary assumption of jurisdiction can justifiably rest on his own consideration of the exigency of the situation in relation to the national interests. (2) The pendency of a petition for cancellation of union registration does not preclude collective bargaining. 16) Unfair Labor Collectively.

Practices;

Refusal

to

Bargain

GENERAL MILLING CORPORATION VS. COURT OF APPEALS ET A L, G. R. NO. 146728. FEBRUARY 11. 2004. 1) The employer’s refusal to make a counter­ proposal to the union’s proposal for CBA negotiations is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. 2) The CBA proposed by the union may thus be unilaterally imposed on the erring employer-lock, stock and barrel. 3) Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be allowed to resort with impunity to schemes feigning negotiations by going through empty gestures. Thus, by imposing on the employer the provisions of the draft CBA proposed by the union, the interests of equity and fair play were properly served and both parties regained equal footing, which was lost when the employer thwarted the negotiations for new economic terms of the CBA.

14

17) Unfair Labor Colllectively.

Practices;

Duty

to

Bargain

STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE) VS. CONFESSOR ET A L, G. R. No. 114974, JUNE 16, 2004 (1) Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or the right to form association. The right to self-organization necessarily includes the right to collective bargaining. (2) If an employer interferes in the selection of the union’s negotiators or coerces the union to exclude from its panel of negotiators a representative of the union, and if it can be inferred that the employer adopted the said act to yield adverse effects on the free exercise of the right to self-organization or on the right to collective bargaining of the employees. ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed. (3) In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In the case at bar, the union bases its claim of interference on the alleged suggestions of the employer’s representative to exclude the Federation president from the Union’s negotiating panel. (4) The circumstances that occurred during the negotiation do not show that the suggestion made is an anti-union conduct from which it can be inferred that the Bank consciously adopted such act to yield adverse effects on the free exercise of the right to self-organization and collective bargaining of the employees, especially

15

considering that such was undertaken previous to the commencement of the negotiation and simultaneously with the union’s suggestion that the bank lawyers be excluded from its negotiating panel. (5) Surface bargaining is defined as “going through the motions of negotiating” without any legal intent to reach an agreement. The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent 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. (6) The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any intention of violating its duty to bargain with the union. Records show that after the union sent its proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on February 24, 1993. Thereafter, meetings were set for the settlement of their differences. The minutes of the meetings show that both the Bank and the Union exchanged economic and non-economic proposals and counter-proposals. (7) The union has not been able to show that the Bank had done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement with the union or to settle the differences between it and the Union. Admittedly the parties were not able to agree and reached a deadlock. However, it is herein emphasized that the duty to bargain "does not compel either party to agree to a proposal or require the making of a concession.” Hence, the parties’ failure to

16

agree did not amount to ULP under Article 248(g) for violation of the duty to bargain. (8) While the refusal to furnish requested information is in itself an unfair labor practice, and also supports the inference of surface bargaining, in the case at bar, the union negotiator, in a meeting dated May 18, 1993, requested that the Bank to validate its guestimates on the data of the rank and file. However, he failed to put his request in writing as provided for in Article 242© of the Labor Code. (9) The approval of the CBA and the release of signing bonus do not necessarily mean that the Union waived its ULP claim against the Bank during the past negotiations. After all, the conclusion of the CBA was included in the order of the SOLE, while the signing bonus was included in the CBA itself. Moreover, the Union twice filed a motion for reconsideration respecting its LUP charges against the Bank before the SOLE. (10) The Union is not guilty of ULP for engaging in blue-sky bargaining or making exaggerated or unreasonable proposals. The Bank failed to show that the economic demands made by the Union were exaggerated or unreasonable. The minutes of the meeting show that the Union based its economic proposals on data of rank and file employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the Philippines and other branches of the Bank in the Asian region. o O o

17

SUPPLEMENT - il SERIOUS MISCONDUCT Misconduct is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the employee’s work to constitute just cause for his separation. A female employee’s absence for 16 days, considering that she had just delivered a child, can hardly be considered a forbidden act, a dereliction of duty; much less does it imply wrongful intent on the part of the employee. Her failure to formai'y inform of the company of her pregnancy cannot also be considered as grave misconduct directly connected to her work as to constitute just cause for her separation. (Lakpue Drug, Inc. et al vs. Belga, G. R. No. 166379, October 20, 2005)

GROSS AND HABITUAL NEGLECT One of the just causes for terminating an employment under Article 282 of the Labor Code is gross and habitual neglect by the employee of her duties. This cause includes gross inefficiency, negligence and carelessness. Such just cause is derived from the right of the employer to select and engage his employees. Habitual neglect implies repeated failure to perform one’s duties for a period of time. The employee’s repeated acts of absences without leave and her frequent tardiness reflect her indifferent attitude to and lack of motivation in her work. Her repeated and habitual infractions, committed despite several warning, constitute gross misconduct. Habitual absenteeism without leave constitute

18

gross negligence and is sufficient to justify dismissal of an employee. The employee’s repeated negligence is not tolerable; neither should it merit the penalty of suspension only. The record of an employee is a relevant consideration in determining the penalty that should be meted out: She committed several infractions in the past and despite the warnings and suspension, she continued to display a neglectful attitude towards her work: An employee’s past misconduct and present behavior must be taken together in determining the proper imposable penalty. The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by him should not be taken singly and separately but in their totality. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct, and ability separate and independent of each other. It is the totality, not the compartmentalization, of such company infractions that she had consistently committed which justified her dismissal. (Challenge Socks Corporation vs. Court of Appeals et al., G. R. No. 165268, November 8, 2005) Gross negligence under Article 282 of the Labor Code, as amended, connotes want of care in the performance of one’s duties, while habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. The employee’s repeated failure to submit his daily coverage reports on time, as well as his failure to submit the doctors’ call cards constitute habitual neglect of duties and a just cause employment. (Dennis A. Chua vs. NLRC, et al., G. R. No. 146780, March 11, 2005)

LOSS OF TRUST AND CONFIDENCE

Loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence. And in order to constitute a just cause for dismissal, the act complained of must be so related to the performance of the duties of the dismissed employee as would show that he or she is unfit to continue working for the employer. The position of project controller of a construction company required trust and confidence, for it related to the handling of business expenditures or finances. However, his act allegedly constituting breach of trust and confidence was not in any way related to his official functions and responsibility as controller. In fact, the questioned act, disposing of property belonging to the company but placed in his name to avoid the effects of agrarian reform laws pertained to an unlawful scheme deliberately engaged in by the company in order to evade a constitutional and legal mandate. (Phil. National Construction Corp. vs. Rolando Matias, G. R. No. 156283, May 6, 2005) The dismissal of the finance officer of a realty company allegedly due to loss of trust and confidence cannot be upheld where the basis therefor, such as inefficient accounting and financial policies and failure to come out with an E-VAT study, did not translate to financial losses. (Baiba vs. Peak Development, Inc. et al., G. R. No 148288, August 12, 2005) Recent decisions distinguish the treatment of managerial from that of rank-and-file personnel insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-andfile personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged

20

events in question and that mere uncorroborated assertions and accusations by the employer will riot suffice. But as regards a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer wouid suffice for his dismissal. (Dr. Ernesto I. Maquiling vs. Phil Tuberculosis Society, Inc., G. R. No. 143384, February 4, 2005)

ABANDONMENT Abandonment is the deliberate and unjustified refusal of an employee to resume his employment; it is a form of neglect of duty, and a just cause for dismissal. But where it is established that the employee repeatedly pleaded to be readmitted to work, he cannot be validly dismissed for abandonment. (Neeco il vs. NLRC et al., G. R. No. 157603, June 23, 2005) The filing by the employee of a complaint for illegal dismissal on the day of effectivity of his dismissal is proof of his desire to return to work and negates the charge of abandonment of work. (Northwest Tourism Corporation et al. vs. Court of Appeals et al., G. R. No. 150591, June 27, 2005)

ANALOGOUS CAUSE An employee who cannot get along with his co­ employees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot, function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employee’s attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer.

21

Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer a' But the employee's supposed “attitude? problem” must be shown by clear and convincing evidence. The mere mention of negative feedback from the employee’s team members is not sufficient proof of her attitude problem. And her failure to refute the employer’s allegation of her negative attitude does not amount to admission. (Heavylift Manila, Inc. et al vs. Court of Appeals etal., G: R. No. 154410, October 20, 2005) ji ^nsrnyofqme airi s-muaa's oi ssvoiqrna ns to isai/isi REDUNDANCY yibiisv ;The general rule is that the charactenzation by an employee’s- services as no longer necessary or sustainable is an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterization or decision is not, as a general rule subject to discretionary review on the part of the LiSbor Arbiter, the NLRC and the CA?t Such characterization may, however, be rejecied if the same is found to be in violation of the law or is arbitrary or malicious. The dismissal of workers allegedly due to “downsizing” of a department has thus been ruled to be illegal where the obvious purpose was to debilitate the union and decapitate its leadership, no fair and reasonable parameters to determine who among the employees should be supposedly ‘retired” due to redundancy, the employees were not properly apprised of the existence of i the special retirement program, and the downsizing of personnel was not even among the measures recommended by the auditing firm commissioned to conduct a study of the corporation and its operations to identify changes to achieve cost effectiveness and global competitiveness. (Lopez Sugar Corporation vs Franco et al., G R. No. 148195, May 16, 2005)

22

RETRENCHMENT

.

tjgts In'P/1

The requirements for retrenchment are:. (1)( undertaken to prevent losses, which are not merely d e v minimis, but substantial, sen§y^(j i ^ f i ^ ^ d expected, are reasonably imminent as perceived o ^ g ^ / p ^ s i ^ e g ^ c j f ^ c M y - ) ^ e^Rlf&yeRof?) the eraplgygr^rM^iWHttSO the,^Q tE );€it te ^ ^ p p ^ g jo rijth ^ p H o /^ ^ ^ s M e p ^ c ^ d ^ te ,^ , retrenchment;; (3) the employer ,pays;^ h e : r at le a s t,^i^Q !^ !R ^y J ^r(eyery y e a r^^s ^ r^ic ^ is higher; $ ) t ^ j,ej^pfo;ye|ilmust

vyould'pt^H^taiged a§t$if>g f e s t ! ^ 9 ^ § ® s ; y " thf^, relren^irnent ^ ^ b ^ i ^ € | r t § | f r^ i^ o q fl r !s is ,S!^V^ Even assuming that the employersro josses :s v v ^ ^ f» ^ |e d ^ j^ f|i^ g ^ a p d that | h § ^ p l p y e r ^ ^ n ^ b ^ s e r v e ^ d ^ i j ^ t e r Kg @t i s 'tp the workers^andq the DOLE, b u y ^ a jle c i K Jrriplement the-retrenchment program in a just and proper manner as it did not use a reasonable and fair standard in the computation of the employees’ demerits points for purposes of determining who among the workers should be dismissed, the retrenchment program is invalid. The employer’s failure to use a reasonable and fair standard in the selection of the workers to0b^ dismissed jS[|Kj| r^erejy^ gr$c$5% f l by^a substa^tiy^, jiny;f|idjt§s^4hei dismissaj.^Afiolaiet a I cws>r%Hile^rl^lning Corporation et#!.,; G. R. No.147756, August 9, 2005) " Where the garments company failed to present eyid^fic^ showing that it suffered from serious financial losses and to comply; with the one-month notice „ requirement to the th e ,, dismissal of the employees of3i;etrenshgT£nt is »■ unlawful The employer did not present audited financial documents, like yearly balance sheets, profit and loss

statements, and annual income tax returns. It also failed to refuie the employees’ allegation that it established another garments company immediately after it supposedly ceased operations. (Stanley Garments Specialist et la vs. Gomez e t a l , G R. No. 154818, August 11, 2005) Normally, the condition of business losses is shown by audited financial documents like yearly balance sheets, profi' and loss statements and annual income tax returns. The financial statements must be prepared and signed by independent auditors failing which they can be assailed as self-s.erying documents. Where company losses were duly established by financial documents audited by Joaquin Cunarian & Co. showing that the aquaculture operations of the company accumulated losses amounting to P145,848,172 00 in 1992 resulting in the closure of its Calatrava Aquaculture Center in Negros Occidental, P11,393,071,00 in 1993 and P80,325,608.00 in 1994 wnich led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant in 1995, it was held that the company has proven substantial business reverses justifying retrenchment of its employees. For termination due to retrenchment to be valid, however, the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the DOLE at ;east one (1) month before the actual date of the retrenchment, in order to give employees some time to prepare for the eventual loss of their jobs, as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. The employees, however, were merely verbally informed on September 10, 1995 by the company manager that effective the following day or on September 11f 1995, they were no longer to report for work as SMC would be closing its operations. Nominal damages of P5C,000.00 per employee is warranted. (San Miguel

Corporation vs. Prospero A. Aballa et al., G. R. No. 149011, June 28, 2005) Where the employees had barely two weeks’ notice of the intended retrenchment program, the one-month notice rule was violated. Such rule is mandatory regardless of whether the retrenchment is temporary or permanent. (Phil. Telegraph and Telephone Co. vs. NLRC et al., G. R. No. 147002, April 15, 2005) To prove that it incurred losses, the company presented its Income Tax Return and Audited Financial Statements for the year 2000 alone. Previously, however, the company had admittedly enjoyed profitable initial years of operation. This situation falls short of the stringent requirement of the law that the employer must sufficiently and convincingly prove its allegation of substantial losses. It is necessary to show that the losses increased through a period of time, and that the condition of the company is not likely to improve in the near future. (Blucor Minerals Corporation, et al. vs. Alfredo M. Amaiilla, G. R. No. 161217, May 4, 2005)

CLOSURE/CESSATION OF BUSINESS The closure of operation of an establishment or undertaking not due to serious business losses or financial reverses includes both the complete cessation of operations and the cessation of only part of a company’s activities. For any bona fide reason, an employer can lawfully close shop anytime. 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 a 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 the workers continued employment.

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But where the employer failed to prove that the closure of a department was due to substantial losses, the workers’ dismissal was ruled to be nonetheless valid, on the ground of closure not due to serious business losses or reverses, entitling the workers to separation pay (Alabang Country Club, Inc. et al. vs. NLRC, et al., G. R. No. 157611, August 9, 2005) The existence of business losses is not required to justify the closure or cessation of establishment or undertaking as a ground to terminate employment of employees: Abolition or closure could be justified on other grounds such as extinct demand. But the employer must present sufficient and convincing evidence to support such claim o f extinct demand. (Capitol Medical Center Inc. vs. Mens, G. R. No. 155098, September 16, 2005) INVOLUNTARY CLOSURE Where the rubber and banana plantations were taken over by the Department of Agrarian Reform pursuant to the government’s Comprehensive Agrarian , 'w o rm Program, resulting in the severance of the employees’ services due to c££3€$gn |^fat|ie«'plan^ajSons.:- busi^es^ operations, it was ruled that the employees ware not e^titl^grii 92sggaxat(o,ii -pay as the cessation of, business came about involuntarily. The closure of business operations contemplated under Article 283 refers ic -■ voluntary act or decision on the part of the employer.; r o t one forced upon it, as in this case, by an act of the Law or State to benefit the workers by making them agrarian lot beneficiaries...(Manaban et. al vs. Sarphil Corporation et al.f G. R. No. 150915, April 11, 2005) DISMISSAL DUE TO DISEASE fsaob of sviJepcnena a ■* For a dismissal on the ground of disease to be considered valid, tv/o requisites must concur, (a) tne employee which cannot be cui;ejdn

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within six months and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, and (b) a certification to that effect must be issued by a competent public health authority. In the present case, there was no proof that the dispatcher/welder’s continued employment was prohibited by law or prejudicial to his health and that of his co­ employees. No medical certificate by a competent public health authority was submitted that the disease was suffering from (cataract) cannot be cured within a period of six months. In the absence of such certification, his dismissal must necessarily be declared illegal. (Manly Express Inc. and Siu Eng T. Ching v. Romualdo Payong, Jr., G. R. No. 167462, October 25, 2005) CONSTRUCTIVE DISMISSAL An employee has been held to have been constructively dismissed where he was replaced as operations manager, instructed to go on indefinite leave, and during which period his salaries were withheld. He was asked to return to work only after more than three years and only after the NLRC promulgated its decision reversing the labor arbiter’s, dismissal of his complaint. (Dynamic Signmaker Outdoor Advertising Services, Inc. et al vs. Potongan, G. R. No. 156589, June 27, 2005) A transfer amounts to constructive dismissal when the transfer *is unreasonable, unlikely, inconvenient, impossible, or prejudicial to the employee. It is defined as an involuntary resignation resorted when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. It has thus been ruled that the transfer o f b a n k security guard from Santiago City to Malabor o»ty s::nply because he failed to wear his perch'ng cap, and despite the request of the client bank mat he be retained in

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Santiago City, amounts to a constructive dismissal. (Philippine Industrial Security Agency Corporation vs. Percival Aguinaldo, G. R. No. 149974, June 15, 2005) RESIGNATION; WHEN CONSIDERED VOLUNTARY Where the managerial employee’s letter of resignation was categorical that he was resigning “to embark on management consultancy in the field of strategic planning and import/export”, it was ruled that the resignation was voluntary, it appearing that he could not have been coerced and intimidated into signing the same as he was no ordinary employee with limited education; he had a Bachelor of Arts Degree in Economics from the University of Santo Tomas, had completed academic requirements for Masters of Business Economics, studied law for two(2) years at Adamson University, and had a good professional record. (Domondon vs. NLRC et al., G. R. No. 154376, September 30, 2005) PROCEDURAL REQUIREMENTS FOR TERMINATION Where the first notice sent to the employee sought to be dismissal did not contain the particulars of the charges nor the circumstances in which the violation happened, was couched is in general terms that it only mentioned the specific sections of the code of discipline that was violated without defining what such violation was, and did not state that the employee was in fact facing a possible dismissal from the company, it was ruled that the notice was legally deficient. (Cruz vs. Coca Bottlers Phils., Inc. et al, G. R. No. 165586, June 15, 2005) SUFFICIENCY OF NOTICE OF DISMISSAL There is no requirement that the notices of dismissal themselves be couched in the form and language of judicial or quasi-judicial decisions. What is required is that the employer conduct a formal investigation

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process, with notices duly served on the employees informing them of the fact of investigation, and subsequently, if warranted, a separate notice of dismissal. Through the formal investigatory process, the employee must be accorded the right to present his/her side, which must be considered and weighed by the employer. The employee must be sufficiently apprised of the nature of the charge against him/her, so as to. be able to intelligently defend against the charges. . The employer bank has been ruled to have complied with the two-notice rule prescribed in Article 277(b) of the Labor Code where the employees were given all avenues to present their side and disprove the allegations of the bank, An informal meeting was held between the branch manager, of the employees and the vice-president of the employees union; employees admitted having used an account to divert funds intended for other accounts; a special audit investigation was conducted to determine the extent of the fraudulent transactions; and based on the results of the investigation, the bank sent show-cause memoranda to the employees, asking them to explain their lapses, under pain of disciplinary action. The memoranda, which constitute the first notice, specified the various questionable acts committed by the employees. Afterwards, the employees submitted their respective replies to the memoranda. This, very well complies with the requirement for hearing, by which the employees were afforded the opportunity to defend themselves. The second notice came in the form of the termination memoranda, informing the employees of their dismissal from service. From the foregoing, it is clear that the required procedural due process for their termination was strictly complied with. (Romeo C. Cadiz, et al vs. Court of Appeals, et al, G. R. No. 153784, October 25, 2005)

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The requirement of law mandating the giving of notices of intention to dismiss must be complied with even if the ground for dismissal is supposed serious business losses The employer’s failure to comply with this requirement taints its actuations with bad faith. (Mayon Hotel & Restaurant et al vs. Adana et al., G. R. No. 157634, May 16, 2005) INDEMNITY IN CASE DISMISSAL IS FOR CAUSE BUT WITHOUT STATUTORY DUE PROCESS. It is well established that the twin requirements of notice and hearing constitute the essential elements of due process, and neither of those elements can be eliminated without running afoul of the constitutional guaranty. These requisites cannot be replaced as they are not mare technicalities, but requirements of due process to which every emoloyee is entitled to ensure that the employer’s prerogative to dismiss is not exercised arbitrarily. Pursuant to the case of Agabon v. NLRC, (G. R. No. 158693, November 17, 2004) the prevailing doctrine is that where the dismissal is for just cause, the lack of statutory due process does riot nullify the dismissal or render it illegal. The employer, however, should indemnify the employee in the form of nominal damages to vindicate or recognize the employee’s right that was violated. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. In this case, the amount of P20,000;00 is sufficient for the purpose. (Cornelio C. Cruz vs. Coca-Cola Bottlers Phils., Inc., G. R. No. 165506, June 15, 2005) BURDEN OF PROOF IN ILLEGAL DISMISSAL CASES In termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. The employer’s case succeeds or

fails on the strength of its evidence and not on the weakness of the employee’s defense, if cio'.'bi exists between the evidence presented by the employer and t^e •employee, the scales of justice must be tilted in favor of the latter. Moreover, the quantum of proof required in determining the legality of an employee’s dismissal is oniy substantial evidence. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to r v h >,