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Chapter Seven

LABOR RELATIONS LAW


TOPICS PER SYLLABUS
A. Right to self-organization
1. Who may unionize for purposes of collective bargaining
a) Who cannot form, join or assist labor organizations
2. Bargaining unit
a) Test to determine the constituency of an appropriate bargaining unit
3. Bargaining agent1
a) Voluntary recognition
(i) Requirements
b) Certification election
(i) In an unorganized establishment
(ii) In an organized establishment
c) Run-off election
(i) Requirements
d) Re-run election
e) Consent election
4. Other relevant matters2
a) Affiliation and disaffiliation of the local union from the mother union
(i) Substitutionary doctrine
b) Union dues and special assessments
(i) Requirements for validity
c) Agency fees
(i) Requisites for assessment
A.
RIGHT TO SELF-ORGANIZATION3
1. CONSTITUTIONAL BASES.
Under the 1987 Constitution, it is mandated that the State affirms labor as a primary
social economic force. It shall protect the rights of workers and promote their welfare.4
Consequently, the State is required to guarantee the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law.5
Further, the Constitution declares that the right of the people, including those employed in
the public and private sectors, to form unions, associations, or societies for purposes not contrary
to law, shall not be abridged.6
2. LEGAL BASES.
The Labor Code declares as a basic policy that the State:
(1) shall assure the rights of workers, inter alia, to self-organization and collective
bargaining;7
(2) shall promote free trade unionism as an instrument for the enhancement of democracy and the
promotion of social justice and development; and
(3) shall foster the free and voluntary organization of a strong and united labor movement.8
1.

WHO MAY UNIONIZE


FOR PURPOSES OF COLLECTIVE BARGAINING

1. PERSONS WHO MAY JOIN, FORM OR ASSIST A LABOR ORGANIZATION FOR


COLLECTIVE BARGAINING PURPOSES.
The following are eligible to join, form or assist a labor organization:
In the private sector:
1. All persons employed in commercial, industrial and agricultural enterprises;9
2. Employees of government-owned or controlled corporations without original
charters established under the Corporation Code;10
3. Employees of religious, charitable, medical or educational institutions, whether operating
for profit or not;11
4. Front-line managers, commonly known as supervisory employees [See discussion below];12
5. Alien employees [See discussion below];
6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with principal but with the contractor
discussion below].

[See

In the public sector:


All rank-and-file employees of all branches, subdivisions, instrumentalities, and agencies
of government, including government-owned and/or controlled corporations with original
charters, can form, join or assist employees organizations of their own choosing.13
a. Right of front-line managers or supervisors to join a union.
There is no prohibition in the law or in the implementing rules regarding the right of
supervisory employees to organize a labor organization or workers association of their own. They are,
however, not allowed to become members of a labor union composed of rank-and-file employees. This
is clear under Article 245 of the Labor Code.14 In case there is mixed membership of supervisors and
rank-and-file employees in one union, the new rule enunciated in Article 245-A15 of the Labor Code,
unlike in the old law, is that it cannot be invoked as a ground for the cancellation of the registration of
the union. The employees so improperly included are automatically deemed removed from the list of
members of said union. In other words, their removal from the said list is by operation of law.
b. Right of alien employees to join a union.
For an alien employee to exercise his right to self-organize, the following requisites should be
complied with:
(1) He should have a valid working permit issued by the DOLE; and
(2) He is a national of a country which grants the same or similar rights to Filipino workers or
which has ratified either ILO Convention No. 8716 or ILO Convention No. 98, as certified
by the Philippine Department of Foreign Affairs (DFA) .17
c. Right of working children to self-organization.
Working children have the same freedom as adults to join the collective bargaining union of
their own choosing in accordance with existing law. Under P.D. No. 603,18 it is clearly provided that
neither management nor any collective bargaining union shall threaten or coerce working children to
join, continue or withdraw as members of such union.19
d. Right of homeworkers to self-organization.

Homeworkers have the right to form, join or assist organizations of their own choosing in
accordance with law.20 The registration of homeworkers organizations or associations following the
requirements prescribed by law will vest legal personality thereto.21
e. Right of members or employees of cooperatives to self-organization.
Members of a cooperative have no right to form or join labor organizations for purposes of
collective bargaining for being themselves co-owners of the cooperative. This prohibition covers
employees of the cooperative who are at the same time members thereof.22
However, insofar as the cooperative s employees who are not members or co-owners thereof
are concerned, they are entitled to exercise their right to self-organization and collective bargaining as
guaranteed in the Constitution and existing laws. It is the fact of ownership of the cooperative and not
involvement in the management thereof which disqualifies a member from joining any labor
organization within the cooperative. Thus, irrespective of the degree of their participation in the actual
management of the cooperative, all members thereof cannot form, assist or join a labor organization for
the purpose of collective bargaining.23
But employee-members of a cooperative may withdraw as members of the cooperative for
purposes of joining a labor union.24
f. Right of employees of legitimate contractors to self-organization.
A contractual employee of a legitimate independent contractor is entitled to all the rights and
privileges due a regular employee as provided in the Labor Code including the right to selforganization, collective bargaining and peaceful concerted action.25 But this right cannot be exercised
and invoked against the principal but only against the independent contractor which employed them.
2. EMPLOYEES WHO ARE ALLOWED TO ORGANIZE A LABOR ORGANIZATION
ONLY FOR MUTUAL AID AND PROTECTION BUT NOTFOR COLLECTIVE
BARGAINING PURPOSES.
Ambulant, intermittent and other workers, the self-employed, rural workers and those without
any definite employers may form labor organizations for their mutual aid and protection and other
legitimate purposes except collective bargaining.26 The reason for this rule is that these persons have no
employers with whom they can collectively bargain.
(a)
WHO CANNOT FORM, JOIN OR ASSIST
LABOR ORGANIZATIONS
1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR ORGANIZATIONS.
a. In the private sector.
1. Managerial employees; and
2. Confidential employees.
b. In the public sector.
The following are not eligible to form employees organizations:
1. High-level employees whose functions are normally considered as policy-making or
managerial or whose duties are of a highly confidential nature;27
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.28
2. RIGHT OF MANAGERIAL EMPLOYEES TO JOIN A UNION.
a. Types of managerial employees for purposes of exercising right to self-organization.
There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level) 29
Top Management. - This is composed of a comparatively small group of executives. It is
responsible for the overall management of the organization. It establishes operating policies and guides

the organization s interactions with its environment. Typical titles of top managers are chief executive
officer, president, or senior vice-president. Actual titles vary from one organization to another and are
not always a reliable guide to membership in the highest management classification.
Middle Management. - This refers to more than one level in an organization. Middle
managers direct the activities of other managers and sometimes also those of operating employees. The
middle managers principal responsibilities are to direct the activities that implement their
organization s policies and to balance the demands of their superiors with the capacities of their
subordinates. A plant manager in an electronic firm is an example of a middle manager.
First-Line Management. - This is the lowest level in an organization at which individuals are
responsible for the work of others. First-line managers direct operating employees only; they do not supervise
other managers. Examples of first-line managers are the foreman or production supervisor in a
manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a large
office. First-level managers are often called supervisors.
Based on the above classification, managerial employees may fall into two (2) distinct
categories: namely:
1. The managers per se composed of top and middle managers; and
2. The supervisors composed of first-line managers.
b. Not all managerial employees are prohibited from forming, joining or assisting a
union.
No. 1. above are absolutely prohibited from forming, joining or assisting any labor unions for
purposes of collective bargaining.30
Only No. 2 above are allowed to form, join or assist a labor organization for purposes of
collective bargaining.
3. RIGHT OF CONFIDENTIAL EMPLOYEES TO JOIN A UNION.
a. Confidential employee rule.
Within the context of labor relations, confidential employees are those who meet the
following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and effectuate management policies
specifically in the field of labor relations .
The two (2) criteria are cumulative and both must be met if an employee is to be considered
a confidential employee that would deprive him of his right to form, join or assist a labor
organization.31
A confidential employee may be a rank-and-file or supervisory employee but because in the
normal course of his duties, he becomes aware of management policies relating to labor relations, he
is not allowed to assist, form or join a rank-and-file union or supervisory union, as the case may be. His
exclusion from the bargaining unit is justified under the confidential employee rule. To allow him
to join a union would give rise to a potential conflict of interest. Management should not be required to
handle labor relations matters through employees who are represented by the union with which the
company is required to deal and who, in the normal performance of their duties, may obtain advance
information on the company s position with regard to collective bargaining negotiations, the
disposition of grievances, or other labor relations matters.32
However, the mere access of an employee to confidential labor relations information which is
merely incidental to his duties and, therefore, knowledge thereof is not necessary in the performance
of said duties, does not make such employee a confidential employee. If access to confidential labor
relations information is to be a factor in the determination of an employee s confidential status, such
information must relate to the employer s labor relations policies. Therefore, access to information
which is regarded by the employer to be confidential from the business standpoint, such as financial
information or technical trade secrets, will not render an employee a confidential employee. An
employee may not be excluded from an appropriate bargaining unit merely because he has access to
confidential information concerning the employer s internal business operations which isnot related to
the field of labor relations.33
Thus, even a bank cashier who also serves as the secretary of the board of directors may not
be classified as a confidential employee disqualified to join a union. True, the board of directors is

responsible for corporate policies, the exercise of corporate powers and the general management of the
business and affairs of the corporation. As secretary of the bank s governing body, the employee serves
the bank s management, but could not be deemed to have access to confidential
information specifically relating to the bank s labor relations policies, absent a clear showing on this
matter.34
b. Doctrine of necessary implication.
The doctrine of necessary implication is the legal basis for the ineligibility of a
confidential employee to join a union. The disqualification of managerial and confidential employees
from joining a bargaining unit of rank-and-file employees or supervisory employees is already wellentrenched in jurisprudence. While Article 245 of the Labor Code limits the ineligibility to join, assist
or form a labor organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who, by reason of their positions or nature of work, are required to
assist or act in a fiduciary manner to managerial employees and, therefore, are likewise privy to
sensitive and highly confidential records.35
Article 245 of the Labor Code does not directly prohibit confidential employees from
engaging in union activities. Their disqualification proceeds merely from the application of the
doctrine of necessary implication because what Article 245 singles out as ineligible to join, assist or
form any labor organization are managerial employees. By necessary implication, confidential
employees are similarly disqualified. This doctrine states that what is implied in a statute is as much a
part thereof as that which is expressed.36
Simply stated, in the collective bargaining process, managerial employees are supposed to be
on the side of the employer to act as its representatives and to see to it that its interests are wel l
protected. The employer is not assured of such protection if managerial employees themselves are
union members. Collective bargaining in such a situation can become one-sided. It is the same reason
why the positions of confidential employees are included in the disqualification found in Article 245 as
if such disqualification was written in the provision. If confidential employees could unionize in order
to bargain for advantages for themselves, then they could be governed by their own motives rather than
the interest of the employer. Moreover, unionization of confidential employees for the purpose of
collective bargaining would mean the extension of the law to persons or individuals who are supposed
to act in the interest of the employers. It is not far-fetched that in the course of the collective
bargaining negotiations, they might jeopardize that interest which they are duty-bound to protect.
c. Cases where confidential employees were not allowed to join unions.
Based on jurisprudence, the following are considered confidential employees under the
confidential employee rule:
1. Accounting personnel and radio and telegraph operators;37
2. Division secretaries, all Staff of General Management, Personnel and Industrial Relations
Department, Secretaries of Audit, EDP and Financial Systems;38
3. Legal secretaries who are tasked with, among others, the typing of legal documents,
memoranda and correspondence, the keeping of records and files, the giving of and
receiving notices, and such other duties as required by the legal personnel of the
corporation.39
4. Executive secretaries of the General Manager and the executive secretaries of the Quality
Assurance Manager, Product Development Manager, Finance Director, Management
System Manager, Human Resources Manager, Marketing Director, Engineering Manager,
Materials Manager and Production Manager were also considered confidential employees
since they have access to vital labor information.40
d. Cases where confidential employees were allowed to join unions.
Confidential employees are not absolutely prohibited from joining unions. This is the correct view
since confidential employees are allowed to join unions in some cases.
For instance, in Southern Philippines Federation of Labor v. Ferrer-Calleja,41 the
inclusion of the confidential rank-and-file employees in the bargaining unit of rank-and-file employees
was upheld by the Supreme Court. Much earlier, the High Court proclaimed in Filoil Refinery
Corporation v. Filoil Supervisory and Confidential Employees Association, 42 that confidential
rank-and-file employees may join the union of supervisors, especially in a situation where the
confidential employees are very few in number and are, by practice and tradition, identified with the

supervisors in their role as representatives of management vis--vis the rank-and-file employees. Such identity
of interest has allowed their inclusion in the bargaining unit of supervisors for purposes of collective
bargaining. They remain employees in relation to the company as their employer. This identity of interest
logically calls for their inclusion in the same bargaining unit and at the same time fulfills the law s objective
of insuring to them the full benefit of their right to self-organization and to collective bargaining which could
hardly be accomplished if the respondent association s membership were to be broken up into five separate
ineffective tiny units.
Jurisprudence, therefore, has established that there is no legal prohibition against confidential
employees who are not performing managerial functions to form and join a union.43
e. Some principles on the right to self-organization.
Any employee, whether employed for a definite period or not, shall, beginning on the
first day of his service, be eligible for membership in any labor organization.44
Right to join a union cannot be made subject of a CBA stipulation.45
The separation of unions doctrine46 has already been rendered nugatory by the latest
amendment of Article 245 of the Labor Code introduced by R. A. No. 9481 47 which
added the phrase: The rank-and-file union and the supervisors union operating within
the same establishment may join the same federation or national union. This doctrine
prohibits the situation where the supervisory union and the rank-and-file union operating
within the same establishment are both affiliated with one and the same federation because
of the possible conflict of interest which may arise in the areas, inter alia, of discipline,
collective bargaining and strike.
f. Some principles on government employees right to self-organization.
The labor organization in the government sector is technically called an employees
organization.48
Registration of employees organizations is made with both Civil Service Commission
(CSC) and the Bureau of Labor Relations (BLR) of the Department of Labor and
Employment (DOLE) . Once registered, it is technically called a registered employees
organization.49 In the private sector, this is theoretically known as a legitimate labor
organization. Cancellation of registration of an employees organization is likewise made by
both the CSC and the BLR.
The sole and exclusive bargaining union is called an accredited employees
organization.50 In the private sector, this is in principle known as a recognized or
certified collective bargaining agent.
The unit where the government employees organization seeks to operate and represent is
called organizational unit. It is the employer s unit consisting of rank-and-file
employees unless circumstances otherwise require.51 In the private sector, this is
technically known as bargaining unit.
Rights and privileges of a registered employees organization. Upon the issuance of the
certificate of registration, the employees organization shall have the following rights and
privileges:
a. To be certified, subject to the conditions prescribed in the Rules and Regulations to
Govern the Exercise of the Right of Government Employees to Self-Organization, as
the sole representative of the rank-and-file employees with the right to negotiate for
them.
b. To undertake all other activities not contrary to law or public policy for the furtherance
and protection of the interests of its members.52
Selection of the sole and exclusive representative. The duly registered employees
organization having the support of the majority of the employees in the appropriate
organizational unit should be designated as the sole and exclusive representative of the
employees.53 It is designated as such through modes similar to private sector s selection of
sole and exclusive bargaining agent through any of the following 3 modes:

a. Voluntary recognition upon a showing that no other employees organization is


registered or is seeking registration in the organizational unit, based on the records of the
BLR, and that the said organization has the majority support of the rank-and-file
employees in the organizational unit.54
b. Certification election.55
c. Run-off election in cases where there are at least three (3) contending organizations and
none received a majority of the valid votes cast. Only the two (2) registered employees
organizations receiving the largest and second largest number of votes in the first voting
shall be voted on.56
The right to strike is absolutely prohibited in the government sector.57
2.
BARGAINING UNIT
1. BARGAINING UNIT, MEANING.
A bargaining unit refers to a group of employees sharing mutual interests within a given
employer unit, comprised of all or less than all of the entire body of employees in the employer unit or
any specific occupational or geographical grouping within such employer unit.58 It may also refer to the
group or cluster of jobs or positions within the employer s establishment that supports the labor
organization which is applying for registration.
It is a legal collectivity for collective bargaining purposes whose members have substantially
mutual bargaining interests in the terms and conditions of employment as will ensure to all employees
their collective bargaining rights. To be appropriate, a bargaining unit must involve a grouping of
employees who have substantial, mutual interests in wages, hours of work, working conditions and
other subjects of collective bargaining.59
2. NO HARD AND FAST RULE TO DETERMINE A BARGAINING UNIT.
There is no hard and fast rule in determining an appropriate bargaining unit. The test whether
the designation of a bargaining unit is appropriate is whether it will best assure to all employees the
exercise of their collective bargaining rights. There should be a community of interest which should be
reflected in groups having substantial similarity of work and duties or similarity of compensation and
working conditions, among other criteria.60
(a)
TEST TO DETERMINE THE CONSTITUENCY
OF AN APPROPRIATE BARGAINING UNIT
1. TESTS IN DETERMINING AN APPROPRIATE BARGAINING UNIT.
Based on jurisprudence,61 there are certain tests which may be used in determining the
appropriate collective bargaining unit, to wit:
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.
2. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be represented by the collective bargaining agent
must have community or mutuality of interest in terms of employment and working conditions as
evinced by the type of work they perform. It is characterized by similarity of employment status, same
duties and responsibilities and substantially similar compensation and working conditions.62
San Miguel Corporation v. Laguesma.63 - The Supreme Court applied this principle in the
petition of the union which seeks to represent the sales personnel in the various Magnolia sales offices
in Northern Luzon. Petitioner took the position that each sales office should constitute one bargaining
unit. In disagreeing to this proposition of petitioner, the High Court said: What greatly militates
against this position (of the company) is the meager number of sales personnel in each of the Magnolia
sales offices in Northern Luzon. Even the bargaining unit sought to be represented by respondent union
in the entire Northern Luzon sales area consists only of approximately fifty-five (55) employees.

Surely, it would not be for the best interest of these employees if they would further be fractionalized.
The adage there is strength in number is the very rationale underlying the formation of a labor union.
San Miguel Corporation Supervisors and Exempt Employees Union v. Laguesma.64 - The
fact that the three (3) plants comprising the bargaining unit are located in three (3) different places,
namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga, was
declared immaterial. Geographical location can be completely disregarded if the communal or mutual
interests of the employees are not sacrificed. The distance among the three (3) plants is not productive
of insurmountable difficulties in the administration of union affairs. Neither are there regional
differences that are likely to impede the operations of a single bargaining representative.
University of the Philippines v. Ferrer-Calleja,65 - All non-academic rank-and-file
employees of the University of the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los
Banos, Laguna and the Visayas were allowed to participate in a certification election as one bargaining
unit.
St. James School of Quezon City v. Samahang Manggagawa sa St. James School of
Quezon City.66 - Respondent union sought to represent the rank-and-file employees (consisting of the
motor pool, construction and transportation employees) of petitioner-school s Tandang Sora campus.
Petitioner-school opposed it by contending that the bargaining unit should not only be composed of
said employees but must include administrative, teaching and office personnel in its five (5)
campuses. The Supreme Court disagreed with said contention. The motor pool, construction and
transportation employees of the Tandang Sora campus had 149 qualified voters at the time of the
certification election, hence, it was ruled that the 149 qualified voters should be used to determine the
existence of a quorum during the election. Since a majority or 84 out of the 149 qualified voters cast
their votes, a quorum existed during the certification election. The computation of the quorum should
be based on the rank-and-file motor pool, construction and transportation employees of the Tandang
Sora campus and not on all the employees in petitioner s five (5) campuses. Moreover, the
administrative, teaching and office personnel are not members of the union. They do not belong to the
bargaining unit that the union seeks to represent.
3. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe doctrine because this
principle was first enunciated in the United States case of Globe Machine and Stamping Co.,67 where
it was ruled, in defining the appropriate bargaining unit, that in a case where the company s production
workers can be considered either as a single bargaining unit appropriate for purposes of collective
bargaining or as three (3) separate and distinct bargaining units, the determining factor is the desire of
the workers themselves. Consequently, a certification election should be held separately to choose
which representative union will be chosen by the workers.68
International School Alliance of Educators [ISAE] v. Quisumbing.69 - The Supreme Court
ruled here that foreign-hired teachers do not belong to the bargaining unit of the local-hires because the
former have not indicated their intention to be grouped with the latter for purposes of collective
bargaining. Moreover, the collective bargaining history of the school also shows that these groups were
always treated separately.
4. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history and affinity of the
employees in determining the appropriate bargaining unit. However, the existence of a prior collective
bargaining history has been held as neither decisive nor conclusive in the determination of what
constitutes an appropriate bargaining unit.70
National Association of Free Trade Unions v. Mainit Lumber Development Company
Workers Union.71 - It was ruled here that there is mutuality of interest among the workers in the
sawmill division and logging division as to justify their formation of a single bargaining unit. This holds
true despite the history of said two divisions being treated as separate units and notwithstanding their
geographical distance from each other.
San Miguel Corporation v. Laguesma. 72 - Despite the collective bargaining history of
having a separate bargaining unit for each sales office, the Supreme Court applied the principle of mutuality
or commonality of interests in holding that the appropriate bargaining unit is comprised of all the sales force in
the whole of Northern Luzon.
5. EMPLOYMENT STATUS DOCTRINE.

The determination of the appropriate bargaining unit based on the employment status of the
employees is considered an acceptable mode.73For instance, casual employees and those employed on a
day-to-day basis, according to the Supreme Court in Philippine Land-Air-Sea Labor Union v.
CIR,74 do not have the mutuality or community of interest with regular and permanent employees.
Hence, their inclusion in the bargaining unit composed of the latter is not justified. Confidential
employees, by the very nature of their functions, assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial functions in the field of labor
relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or join
a labor union equally applies to them. Hence, they cannot be allowed to be included in the rank-andfile employees bargaining unit.75
The rationale for this inhibition is that if these managerial
employees would belong to or be affiliated with a union, the latter might not be assured of their loyalty
to the union in view of evident conflict of interest. The union can also become company-dominated
with the presence of managerial employees in its membership.76
Belyca Corporation v. Ferrer-Calleja.77 - This involves a corporation engaged in piggery
and poultry raising, planting of agricultural crops and operation of supermarts and cinemas. The
Supreme Court ruled that it is beyond question that the employees of the livestock-agro division of the
corporation perform work entirely different from those being performed by employees in the
supermarts and cinemas. The differences among them lie in their working conditions, hours of work,
rates of pay, including the categories of their positions and employment status. As stated by petitioner
in its position paper, due to the nature of the business in which its livestock-agro division is engaged,
very few of its employees therein are permanent, the overwhelming majority of whom are seasonal and
casual and not regular employees. Definitely, they have very little in common with the employees of
the supermarts and cinemas. To lump all its employees in its integrated business concerns cannot result
in an efficacious bargaining unit comprised of constituents enjoying a community or mutuality of
interest. Undeniably, the rank-and-file employees of the livestock-agro division fully constitute a
bargaining unit that satisfies both requirements of classification according to employment status and of
substantial similarity of work and duties which will ultimately assure its members the exercise of their
collective bargaining rights.78
3.
BARGAINING AGENT
1. EXCLUSIVE BARGAINING AGENT.
The term exclusive bargaining representative or exclusive bargaining agent refers to a
legitimate labor union duly recognized79 or certified80as the sole and exclusive bargaining representative
or agent of all the employees in a bargaining unit.81
A labor union recognized or certified as the sole and exclusive bargaining agent means that
it shall remain as such during the existence of the CBA, to the exclusion of other labor organizations,
and no petition questioning its majority status shall be entertained nor shall certification election be
conducted outside of the 60-day freedom period immediately before the expiry date of the 5-year term
of the CBA.82
The moment a union is recognized or certified, what the bargaining union represents are not
only its members but also its non-members who are included in the bargaining unit.83
The designation of a bargaining union, however, does not deprive an individual employee or
group of employees to exercise their right at any time to present grievances directly to their employer,
with or without the intervention of the bargaining union.84
2. A NON-RECOGNIZED OR NON-CERTIFIED UNION CANNOT COLLECTIVELY
BARGAIN WITH EMPLOYER.
Under Article 255 of the Labor Code, it is clear that only the labor organization duly
recognized or selected by the majority of the employees in an appropriate collective bargaining unit is
the exclusive representative of all the employees in such unit for purposes of collective bargaining.
Philippine Diamond Hotel and Resort, Inc. [Manila Diamond Hotel] v. Manila Diamond
Hotel Employees Union. 85 - In this case, the respondent union is admittedly not the exclusive
representative of the majority of the employees of petitioner, hence, it could not demand from the
petitioner the right to bargain collectively in their behalf.

3. MODES OF DETERMINING THE SOLE AND EXCLUSIVE BARGAINING AGENT.


The following are the modes:
1. Voluntary recognition;
2. Certification election;
3. Consent election;
4. Run-off election;86
5. Re-run election.87
These modes are discussed below in accordance with the order of presentation prescribed in the
syllabus.
(a)
VOLUNTARY RECOGNITION
(i)
REQUIREMENTS
1. VOLUNTARY RECOGNITION, DEFINED.
Voluntary recognition refers to the process by which a legitimate labor union is voluntarily
recognized by the employer as the exclusive bargaining representative or agent in a bargaining unit and
reported as such with the Regional Office in accordance with the Rules to Implement the Labor Code.88
2. VOLUNTARY RECOGNITION, WHEN PROPER.
Voluntary recognition is proper only in cases where there is only one legitimate labor
organization existing and operating in a bargaining unit. It cannot be done in case there are two or more unions
in contention.
3. REQUIREMENTS FOR VOLUNTARY RECOGNITION.
The notice of voluntary recognition should be accompanied by the original copy and two (2)
duplicate copies of the following documents:
(a) A joint statement under oath attesting to the fact of voluntary recognition;
(b) Certificate of posting of the joint statement of voluntary recognition for fifteen
(15)
consecutive 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 those who support the voluntary recognition comprising at least a majority 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.
It is further required that all accompanying documents of the notice of voluntary recognition
should be certified under oath by the employer-representative and president of the recognized labor
union.89
4. VOLUNTARY RECOGNITION OF A UNION MADE DURING PENDENCY OF A
PETITION FOR CERTIFICATION ELECTION FILED BY ANOTHER UNION, NOT
VALID.
The voluntary recognition by the employer of a union while a petition for certification election
filed by a rival union is pending does not have any valid effect. Thus, it was held in Me-Shurn
Corporation v. Me-Shurn Workers Union - FSM,90 that the results of the certification election
where the petitioner-union lost cannot be said to constitute a repudiation by the affected employees of
said union s right to represent them, in view of the discriminatory acts committed by the employer
against the said union prior to the holding of the certification election - acts that included the
employer s immediate grant of exclusive recognition to another union as a bargaining agent despite the
pending petition for certification election.
5. NOTICE OF VOLUNTARY RECOGNITION, WHEN AND WHERE FILED.

Within thirty (30) days from such voluntary recognition, the employer and the union should
submit a notice of voluntary recognition to the DOLE Regional Office which issued the recognized
labor union s certificate of registration or, in the case of local chapter, where the charter certificate and
the other documents required under Article 234-A were submitted and filed.91
(b)
CERTIFICATION ELECTION
1. CERTIFICATION ELECTION, MEANING.
Certification election refers to the process of determining through secret ballot the sole and
exclusive bargaining agent of the employees in an appropriate bargaining unit for purposes of
collective bargaining or negotiations.
A certification election is conducted only upon the order of the Med-Arbiter of the Bureau of
Labor Relations (BLR) of the Department of Labor and Employment (DOLE) .92
It is the most democratic method of determining the choice of the employees of their
bargaining representative.93
It is not a litigation proceeding 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 DOLE plays the part of
a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of
representation. It is not, therefore, bound by the technical rules of evidence.94
In case of doubt, the petition should be resolved in favor of the holding of a certification
election.95
2. WHO MAY FILE A PETITION FOR CERTIFICATION ELECTION.
The petition may be filed by:
1. A legitimate labor organization which may be:
(a) an independent union; or
(b) a national union or federation which has already issued a charter certificate to its local
chapter participating in the certification election;96 or
(c) a local chapter which has been issued a charter certificate by the national union or
federation.97
2. An employer, when requested by a labor organization to bargain collectively and its
majority status is in doubt.98
3. RULES PROHIBITING THE FILING OF PETITION FOR CERTIFICATION ELECTION (BAR
RULES) .
a. General rule.
The general rule is that in the absence of a CBA duly registered in accordance with Article
231 of the Labor Code, a petition for certification election may be filed at any time.99
b. Bar rules.
No certification election may be held under the following rules:
1. Certification year bar rule;
2. Negotiations bar rule;
3. Bargaining deadlock bar rule; or
4. Contract bar rule.
1. CERTIFICATION YEAR BAR RULE.
Under this rule, a petition for certification election may not be filed within one (1) year:
1. from the date the fact of voluntary recognition has been entered; or
2. from the date a valid certification, consent, run-off or re-run election has been conducted
within the bargaining unit.100

Where an appeal has been filed from the order of the Med-Arbiter certifying the results of the
election, the running of the one (1) year period shall be suspended until the decision on the appeal has
become final and executory.101
2. NEGOTIATIONS BAR RULE.
Under this rule, no petition for certification election should be entertained while the sole and
exclusive bargaining agent and the employer have commenced and sustained negotiations in good faith
within the period of one (1) year from the date of a valid certification, consent, run-off or re-run
election or from the date of voluntary recognition.
Once the CBA negotiations have commenced and while the parties are in the process of
negotiating the terms and conditions of the CBA, no challenging union is allowed to file a petition for
certification election that would disturb the process and unduly forestall the early conclusion of the
agreement.
It must be noted that there is no law or rule that imposes a particular restrictive period within
which the parties should conclude the CBA. In other words, the negotiation process may last for
months, even years, and during the period of negotiations, no petition for certification election may be
filed.
3. BARGAINING DEADLOCK BAR RULE.
Under this rule, a petition for certification election may not be entertained when a bargaining
deadlock to which an incumbent or certified bargaining agent is a party has been submitted to
conciliation or arbitration or has become the subject of a valid notice of strike or lockout.102
Collective bargaining deadlock refers to a situation where there is a failure in the collective
bargaining negotiations between the collective bargaining agent and the employer resulting in an
impasse or stalemate.103 Despite their efforts at bargaining in good faith, the parties have failed to
resolve the issues and it appears that there are no other definite options or plans in sight to break it.
Simply stated, there is a deadlock when there is a complete blocking or stoppage in the negotiation
resulting from the action of equal and opposing forces.104
Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v. Trajano.105 - The
bargaining deadlock-bar rule was not applied here because for more than four (4) years after it was
certified as the exclusive bargaining agent of all the rank-and-file employees, it did not take any action
to legally compel the employer to comply with its duty to bargain collectively, hence, no CBA was
executed. Neither did it file any unfair labor practice suit against the employer nor did it initiate a strike
against the latter. Under the circumstances, a certification election may be validly ordered and held.
Even if there is no actual deadlock, if the circumstances are similar to a deadlock, the
bargaining deadlock bar rule applies.
The case in point is Capitol Medical Center Alliance of Concerned Employees-Unified
Filipino Service Workers v. Laguesma.106- Distinguishing this case from said case of Kaisahan, the
High Court cited the fact that the bargaining agent here has taken legal actions to legally coerce the
employer to comply with its statutory duty to bargain collectively. It has charged the employer with unfair
labor practice and conducted a strike to protest the employer s refusal to bargain. It is only just and equitable
that the circumstances in this case should be considered as similar in nature to a bargaining deadlock
when no certification election could be held. This is also to make sure that no floodgates will be opened for
the circumvention of the law by unscrupulous employers to prevent any certified bargaining agent from
negotiating a CBA.
4. CONTRACT BAR RULE.
a. Concept.
Under this rule, a petition for certification election may not be filed when a CBA between the
employer and a duly recognized or certified bargaining agent has been registered with the Bureau of
Labor Relations (BLR) in accordance with the Labor Code.107 Where the CBA is duly registered, a
petition for certification election may be filed only within the 60-day freedom period prior to its
expiry.108
The purpose of this rule is to ensure stability in the relationship of the workers and the
employer by preventing frequent modifications of any CBA earlier entered into by them in good faith
and for the stipulated original period.109
b. Justifications for the rule.

The reasons for this rule are as follows:


1. Certification election may only be entertained within the 60-day freedom period. Any
petition filed before or after this period should be dismissed outright.110
2. When there exists a CBA, it is the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions thereof during the 60-day
freedom period and/or until a new agreement is reached by them.111
3. At the expiration of the 60-day freedom period, the employer should continue to recognize
the majority status of the incumbent bargaining agent where no petition for certification
election challenging such majority status is filed by any other union.112
c. When contract bar rule does not apply.
The contract-bar rule does not apply in the following cases:
1. Where there is an automatic renewal provision in the CBA but prior to the date when such
automatic renewal became effective, the employer seasonably filed a manifestation with
the Bureau of Labor Relations of its intention to terminate the said agreement if and when
it is established that the bargaining agent does not represent anymore the majority of the
workers in the bargaining unit.113
2. Where the CBA, despite its due registration, is found in appropriate proceedings that: (a) it
contains provisions lower than the standards fixed by law; or (b) the documents supporting
its registration are falsified, fraudulent or tainted with misrepresentation.114
3. Where the CBA does not foster industrial stability, such as contracts where the identity of
the representative is in doubt since the employer extended direct recognition to the union
and concluded a CBA therewith less than one (1) year from the time a certification election
was conducted where the no union vote won. This situation obtains in a case where the
company entered into a CBA with the union when its status as exclusive bargaining agent
of the employees has not been established yet.115
4. Where the CBA was registered before or during the last sixty (60) days of a subsisting
agreement or during the pendency of a representation case.116 It is well-settled that the 60day freedom period based on the original CBA should not be affected by any amendment,
extension or renewal of the CBA for purposes of certification election.117
4. REQUIREMENTS FOR VALIDITY OF CERTIFICATION ELECTION.
a. Requisites for the validity of the petition for certification election.
The following requisites should concur:
1. The union should be legitimate which means that it is duly registered and listed in the
registry of legitimate labor unions of the BLR or that its legal personality has not been
revoked or cancelled with finality.
2. In case of organized establishments, the petition for certification election is filed during
(and not before or after) the 60-day freedom period of a duly registered CBA.
3. In case of organized establishments, the petition complied with the 25% written support of
the members of the bargaining unit.
4. The petition is filed not in violation of any of the four (4) bar rules [See above discussion
thereof].

b. Two (2) kinds of majorities.


The process of certification election requires two (2) kinds of majority votes, viz:
1. Number of votes required for the validity of the process of certification election
itself. In order to have a valid certification election, at least a majority of all eligible voters
in the appropriate bargaining unit must have cast their votes.118
2. Number of votes required to be certified as the collective bargaining agent. To be
certified as the sole and exclusive bargaining agent, the union should obtain a majority of
the valid votes cast.119
c. Example on how to reckon the majorities.

To illustrate the proper reckoning of majority votes, in a bargaining unit composed of 100
employees, the first thing to determine is how many votes should be validly cast in order to have a valid
certification election. The second issue is how many votes should a union garner in order to be declared
winner and thus be proclaimed as the sole and exclusive bargaining agent of all the employees in the
bargaining unit.
Following the rule enunciated in Article 256, in order to have a valid certification election,
majority of the 100 employees or at least 51 employees should cast their votes. In order to win the
election, a contending union should be able to garner the majority of the valid votes cast. So, if only 51
employees cast their votes, the majority thereof or at least 26 employees should vote for the winning
union. This illustration is necessary to dispel the notion that in a bargaining unit composed of 100
employees, at least 51 employees should vote for the winning union. As clearly shown in this
illustration, a vote of 26 would suffice in order to be certified as the sole and exclusive bargaining
agent.
d. Failure of election.
There is failure of election when the number of votes cast in a certification or consent election
is less than the majority of the number of eligible voters and there are no challenged votes that
could materially change the results of the election.120
The effect of failure of election is the holding of another election within six (6) months from
the date of declaration of the failure of election.121
e. Proclamation and certification of the result of the certification election.
Within twenty-four (24) hours from the final canvass of votes, there being a valid election, the
Election Officer shall transmit the records of the case to the Med-Arbiter who shall, within the same
period from receipt of the minutes and results of election, issue an order proclaiming the results of the
election and certifying the union which obtained the majority of the valid votes cast as the sole and
exclusive bargaining agent in the subject bargaining unit, under any of the following conditions:
(1) No protest was filed or, even if one was filed, the same was not perfected within the five
(5) day period for perfection of the protest;
(2) No challenge or eligibility issue was raised or, even if one was raised, the resolution of the
same will not materially change the results of the elections.
The winning union shall have the rights, privileges and obligations of a duly certified
collective bargaining agent from the time the certification is issued.122
5. SOME PRINCIPLES ON CERTIFICATION ELECTION.
The pendency of a petition to cancel the certificate of registration of a union participating in a
certification election does not stay the conduct thereof.123
The pendency of an unfair labor practice case filed against a labor organization participating in
the certification election does not stay the holding thereof.124
Direct certification as a method of selecting the exclusive bargaining agent of the employees
is not allowed.125 This is because the conduct of a certification election is still necessary in order to
arrive in a manner definitive and certain concerning the choice of the labor organization to
represent the workers in a collective bargaining unit.126
No certification election in entities immune from suit is allowed.127
The No Union vote is always one of the choices in a certification election. Where majority of
the valid votes cast results in No Union obtaining the majority, the Med-Arbiter shall declare
such fact in the order.128
The right to vote starts from first day of employment. Any employee, whether employed for a
definite period or not, shall, beginning on his first day of service, already be considered an
employee for purposes of membership in any labor union, hence, eligible to participate in a
certification election.129 Consequently, all employees - whether probationary or permanent or
regular - may be allowed to participate in the certification election. The law does not make any
distinction. It merely mentions the term employees. 130
Only persons who have direct employment relationship with the employer may vote in the
certification election, regardless of their period of employment.131

Challenging of votes, grounds. An authorized representative of any of the contending unions and the
employer may challenge a vote before it is deposited in the ballot box only on any of the following
grounds:
(a) That there is no employer-employee relationship between the voter and the employer; or
(b) That the voter is not a member of the appropriate bargaining unit which petitioner seeks to
represent.132
Spoiled ballots are not reckoned to determine majority.133
Protest; when perfected. The protesting party must have its protest recorded in the minutes of
the election proceeding and should formalize it with the Med-Arbiter, together with the specific
grounds, arguments and evidence, within five (5) days after the close of the election proceedings.
If not recorded in the minutes and formalized within the said prescribed period, the protest shall be
deemed dropped.134
A protest cannot be filed by a labor union which is not a participant in the certification election.135
(i)
CERTIFICATION ELECTION
IN AN UNORGANIZED ESTABLISHMENT136
1. UNORGANIZED ESTABLISHMENT, MEANING.
As distinguished from organized establishment, an unorganized establishment is an
employer entity where there is no recognized or certified collective bargaining union or agent.137
A company or an employer-entity, however, may still be considered an unorganized
establishment even if there are unions in existence therein for as long as not one of them is duly certified
as the sole and exclusive bargaining representative of the employees in the particular bargaining unit it
seeks to operate and represent.
Further, a company remains unorganized even if there is a duly recognized or certified
bargaining agent for rank-and-file employees, for purposes of the petition for certification election filed
by supervisors. The reason is that the bargaining unit composed of supervisors is separate and distinct
from the unionized bargaining unit of rank-and-file employees. Hence, being unorganized, the 25%
required minimum support of employees within the bargaining unit of the supervisors need not be
complied with.138
2. AUTOMATIC CONDUCT OF A CERTIFICATION ELECTION UPON FILING OF THE
PETITION FOR CERTIFICATION ELECTION.
In case of a petition
filed by a legitimate organization involving
an unorganized establishment, the Med-Arbiter is required to immediately order the conduct of a
certification election upon filing of a petition for certification election by a legitimate labor
organization.139 The twenty-five percent (25%) minimum support of the employees in the bargaining
unit which is required in organized establishments is not necessary in the case of unorganized
establishments. The obvious purpose is to make it easy for employees to self-organize - a policy which is
enunciated in the Constitution and labor laws.
(ii)
CERTIFICATION ELECTION
IN AN ORGANIZED ESTABLISHMENT140
1. REQUISITES FOR THE CONDUCT OF A CERTIFICATION ELECTION IN AN
ORGANIZED ESTABLISHMENT.
Under Article 256, the Med-Arbiter is required to automatically order the conduct of a
certification election by secret ballot in an organized establishment as soon as the following requisites are fully
met:
1. That a petition questioning the majority status of the incumbent bargaining agent is filed
before the DOLE within the 60-day freedom period;
2. That such petition is verified; and

3. That the petition is supported by the written consent of at least twenty-five percent (25%) of
all the employees in the bargaining unit.141
2. WRITTEN CONSENT OF AT LEAST 25% OF ALL THE EMPLOYEES IN THE
BARGAINING UNIT.
The 25% requirement may not be strictly enforced. Compliance therewith need not be
established with absolute certainty. Even if the statutory requirement of 25% of the labor force asking
for certification election has not been strictly complied with, the Med-Arbiter is still empowered to
order its conduct for the purpose of ascertaining which of the contending labor organizations should be
chosen as the exclusive bargaining agent.142
(c)
RUN-OFF ELECTION
(i)
REQUIREMENTS
1. RUN-OFF ELECTION, MEANING.
A run-off election refers to an election between the labor unions receiving the two (2)
highest number of votes in a certification election or consent election with three (3) or more choices,
where such a certification election or consent election results in none of the three (3) or more choices
receiving the majority of the valid votes cast, provided that the total number of votes for all contending
unions is at least fifty percent (50%) of the number of votes cast.143
2. WHEN CONDUCTED.
If there are no objections or challenges which, if sustained, can materially alter the results, the
Election Officer should motu proprio conduct a run-off election within ten (10) days from the close of
the election proceedings between the labor unions receiving the two highest number of votes. For
obvious reason, the choice of No Union should not be included in the run-off election. Notice of the
conduct of a run-off election should be posted by the Election Officer at least five (5) days before the
actual date thereof.144
3. QUALIFICATION OF VOTERS IN THE RUN-OFF ELECTION.
The same voters list used in the certification election or consent election should be used in the run-off
election. The ballots in the run-off election should provide as choices the unions receiving the highest
and second highest number of the votes cast. The labor union receiving the greater number of valid
votes cast should be certified as the winner.145
(d)
RE-RUN ELECTION
1. RULE ON RE-RUN ELECTION, NOT FOUND IN THE LABOR CODE.
This mode of choosing the sole and exclusive bargaining unit is not expressly provided in the Labor
Code or in its implementing rules. The circumstances which would justify the holding of a rerun election are
not set out in the law.
2. JUSTIFICATIONS FOR HOLDING OF RE-RUN ELECTION.
A re-run election may be justified if certain irregularities have been committed during the conduct
of the certification election such as, inter alia,disenfranchisement of the voters, lack of secrecy in the
voting, fraud or bribery, in which case, the certification election should be invalidated. Such invalidation
would necessitate the conduct of a re-run election among the contending unions to determine the true will and
desire of the employee-electorates.
3. RELEVANT JURISPRUDENCE.
Philippine jurisprudence has not exactly referred to the holding of another certification election
as re-run election but the situations for such re-holding of the certification election as described in
some cases, may be deemed descriptive of this term.
Confederation of Citizens Labor Unions v. Noriel. 146 - In ordering, inter alia, the conduct
of another run-off certification election inside the premises of the company, the Supreme Court
disposed as follows:

We hold that the certification election is invalid because of certain irregularities such
as that (1) the workers on the night shift (ten p.m. to six a.m.) and some of those in the
afternoon shift were not able to vote, so much so that out of 1,010 voters only 692 voted
and about 318 failed to vote (p. 88, Rollo) ; (2) the secrecy of the ballot was not
safeguarded; (3) the election supervisors were remiss in their duties and were
apparently "intimidated" by a union representative and (4) the participating unions were
overzealous in wooing the employees to vote in their favor by resorting to such tactics as giving
free tricycle rides and T-shirts.
The purpose of a certification election is to give the employees "true representation in
their collective bargaining with an employer" (51 C.J.S. 969) . That purpose was not
achieved in the run-off election because many employees or union members were not
able to vote and the employer, through apathy or deliberate intent, did not render
147
assistance in the holding of the election.

National Federation of Labor v. The Secretary of Labor. 148 - This involves a certification
election among the rank-and-file employees of the Hijo Plantation, Inc. resulting in the choice of no union.
In ordering a re-run election, the Supreme Court declared:
149

xxx As this Court stressed in LVN Pictures, Inc. v. Phil. Musicians Guild, it is essential
that the employees must be accorded an opportunity to freely and intelligently determine which
labor organization shall act in their behalf. The workers in this case were denied this opportunity.
Not only were a substantial number of them disfranchised, there were, in addition,
allegations of fraud and other irregularities which put in question the integrity of the election.
Workers wrote letters and made complaints protesting the conduct of the election. The
Report of Med-Arbiter Pura who investigated these allegations found the allegations of fraud
and irregularities to be true.
In one case150 this Court invalidated a certification election upon a showing of
disfranchisement, lack of secrecy in the voting and bribery. We hold the same in this case.
The workers right to self-organization as enshrined in both the Constitution and Labor
Code would be rendered nugatory if their right to choose their collective bargaining
representative were denied. Indeed, the policy of the Labor Code favors the holding of a
certification election as the most conclusive way of choosing the labor organization to
represent workers in a collective bargaining unit. In case of doubt, the doubt should be
resolved in favor of the holding of a certification election. 151

4. RE-RUN ELECTION VS. FAILURE OF ELECTION.


Re-run election should be distinguished from a failure of election. In re-run election, there is
a valid certification election but because of certain circumstances, the election is nullified and another one is
ordered to truly reflect the will and sentiment of the electorate-employees in the choice of their bargaining
representative.
In failure of election, the number of votes cast in the certification or consent election is less
than the majority of the number of eligible voters and there are no challenged votes that could
materially change the results thereof.152 Consequently, a motion for the immediate holding of another
certification or consent election within six (6) months from the date of declaration of the failure of
election may be filed. Within twenty-four (24) hours from receipt of such motion, the Election Officer
should immediately schedule the conduct of such election within fifteen (15) days from receipt of the
motion and cause the posting of the notice of certification election at least ten (10) days prior to the
scheduled date of election in two (2) most conspicuous places in the establishment. The same
guidelines and list of voters shall be used in the election.153
(e)
CONSENT ELECTION
1. CONSENT ELECTION, MEANING.
A consent election refers to the process of determining through secret ballot the sole and
exclusive representative of the employees in an appropriate bargaining unit for purposes of collective
bargaining and negotiation. It is voluntarily agreed upon by the parties, with or without the intervention
of the DOLE.154
2. CONSENT ELECTION VS. CERTIFICATION ELECTION.
A consent electionis one mutually agreed upon by the parties, with or without the intervention
of the DOLE, its purpose being merely to determine the issue of majority representation of all the

workers in an appropriate collective bargaining unit; while a certification election is one which is
ordered by the DOLE. The purpose for both electoral exercise is the same, i.e., to determine the sole
and exclusive bargaining agent of all the employees in an appropriate bargaining unit for the purpose of
collective bargaining. From the very nature of consent election, it is a separate and distinct process
from certification election and has nothing to do with the import and effect of the latter.155
By law, as a result of the consent election, the right to be the exclusive representative of all the
employees in an appropriate collective bargaining unit is vested in the labor union designated or
selected for such purpose by the majority of the employees in the unit concerned.156
3. CONSENT ELECTION MAY BE AGREED UPON BY THE PARTIES TO A PENDING
CERTIFICATION ELECTION CASE.
During the preliminary conference that the Med-Arbiter is required to conduct in a
certification election proceeding, he is required to determine if the contending labor unions are willing
to submit themselves to a consent election. In case the contending unions agree to a consent election,
the Med-Arbiter is not allowed to issue a formal order calling for the conduct of a certification election.
Instead, he should enter the fact of the agreement on the conduct of the conent election in the minutes
of the hearing which should then be signed by the parties and attested to by the Med-Arbiter.157
4. HOLDING OF A CONSENT ELECTION DURING THE PENDENCY OF A PETITION FOR
CERTIFICATION ELECTION.
Where a petition for certification election has been filed and upon the intercession of the MedArbiter, the parties mutually agree to hold a consent election, the results thereof shall constitute
a bar to the holding of a certification election for one (1) year from the holding of such consent
election. Where an appeal has been filed from the results of the consent election, the running of the
one-year period is suspended until the decision on appeal has become final and executory.158
5. HOLDING OF A CONSENT ELECTION WHERE THERE IS NO PETITION FOR
CERTIFICATION ELECTION FILED.
Where no petition for certification election is filed but the parties themselves agree to hold a
consent election with the intercession of the DOLE Regional Office, the results thereof shall constitute
a bar to the filing of a petition for certification election.159
4.
OTHER RELEVANT MATTERS
(a)
AFFILIATION AND DISAFFILIATION OF THE
LOCAL UNION FROM THE MOTHER UNION
1. AFFILIATION.
a. Mother union.
In relation to an affiliate, the federation or national union is commonly known as the mother
union. This term is not found in law but oftentimes, the Supreme Court uses this term to describe a
federation or a national union.
b. Affiliate.
An affiliate refers to:
(1) An independent union affiliated with a federation or a national union; or
(2) A local chapter160 which has been subsequently granted independent registration but
did not disaffiliate from the federation or national union which created it.161
c. A chartered local/local chapter, not an affiliate.
Based on the above definition and description, technically, a local chapter created through the
mode of chartering by a mother union 162 under Article 234-A of the Labor Code, cannot be properly
called an affiliate if it has not acquired any independent registration of its own.
d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining leverage of the affiliate. No
doubt, the purpose of affiliation by a local union with a mother union (federation or national union) is
to increase by collective action its bargaining power in respect of the terms and conditions of labor.163

e. Contract of agency.
The mother union,164 acting for and in behalf of its affiliate, has the status of an agent while the
local union remains the principal - the basic unit of the association free to serve the common interest of
all its members subject only to the restraints imposed by the constitution and by-laws of the
association.165
f. Some principles on affiliation.
Independent legal personality of an affiliate union is not affected by affiliation.166
The affiliate union is a separate and distinct voluntary association owing its creation to the
will of its members. It does not give the mother federation the license to act independently
of the affiliate union.167
The fact that the local chapter is not a legitimate labor organization does not affect the
principal-agent relationship.168
Affiliate union becomes subject of the rules of the federation or national union.169
The appendage of the acronym of the federation or national union after the name of the
affiliate union in the registration with the DOLE does not change the principal-agent
relationship between them. Such inclusion of the acronym is merely to indicate that the
local union is affiliated with the federation or national union at the time of the registration.
It does not mean that the affiliate union cannot independently stand on its own.170
The fact that it was the federation which negotiated the CBA does not make it the
principal and the affiliate or local union which it represents, the agent.171
However, if it was the federation which negotiated all the CBAs in the establishment, the
local chapter cannot negotiate the renewal of the CBA without the consent and participation
of the federation.172
The fact that it was the name of the federation that was particularly mentioned as the
bargaining party in the CBA without specifying the local union does not have any effect on
the right of the federation to participate in the bargaining process.173
It is the local union and not the federation/national union with which it is affiliated that has
the right to administer and enforce the CBA with the employer.174
In case of illegal strike, the local union, not the mother union, is liable for damages.175
2. DISAFFILIATION.
a. Right to disaffiliate.
The right of the affiliate union to disaffiliate from its mother federation or national union is a
constitutionally-guaranteed right which may be invoked by the former at any time. It is axiomatic that
an affiliate union is a separate and voluntary association free to serve the interest of all its members consistent with the freedom of association guaranteed in the Constitution.176
b. Disaffiliation of independently-registered union and local chapter, distinguished.
The disaffiliation of an independently-registered union does not affect its legitimate status as a
labor organization. However, the same thing may not be said of a local chapter which has no
independent registration since its creation was effected pursuant to the charter certificate issued to it by
the federation or national union.177 Once a local chapter disaffiliates from the federation or national
union which created it, it ceases to be entitled to the rights and privileges granted to a legitimate labor
organization. Hence, it cannot, by itself, file a petition for certification election.178
c. Some principles on disaffiliation.
Disaffiliation does not divest an affiliate union of its legal personality.179
Disaffiliation of an affiliate union is not an act of disloyalty.180
Disaffiliation for purposes of forming a new union does not terminate the status of the
members thereof as employees of the company. By said act of disaffiliation, the
employees who are members of the local union did not form a new union but merely
exercised their right to register their local union. The local union is free to disaffiliate
from its mother union.181

Disaffiliation should be approved by the majority of the union members.182


Disaffiliation terminates the right to check-off federation dues. The obligation to checkoff federation dues is terminated with the valid disaffiliation of the affiliate union from
the federation with which it was previously affiliated.183
Disaffiliation does not affect the CBA. It does not operate to amend it or change the
administration of the contract.184
As a general rule, a labor union may disaffiliate from the mother union to form an
independent union only during the 60-day freedom period prior to the expiration of the
existing CBA. It is not, however, legally impossible to effect the disaffiliation prior to the
freedom period, provided that the same is approved by the majority of the members of the
bargaining unit. Under this situation, the CBA continues to bind the members of the new
or disaffiliated and independent union up to the expiration thereof.185
Disaffiliating from the federation and entering into a CBA with the employer does not
constitute an unfair labor practice.186
Disaffiliation is not a violation of the union security clause.187
Election protest involving both the mother federation and local union is not a bar to
disaffiliation.188
The issue of affiliation or disaffiliation is an inter-union conflict the jurisdiction of which
properly lies with the Bureau of Labor Relations IBLR) and not with the Labor Arbiter.189
(i)
SUBSTITUTIONARY DOCTRINE
1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE LIFE OF A CBA.
Based on Philippine jurisprudence, the substitutionary doctrine was conceived during the time
when the law has not fixed the lifetime of the CBA as is now provided in Article 253-A of the Labor
Code. The uncertainty on when and how should the majority status of the bargaining agent may be
challenged by way of a certification election was thus the lingering problem hounding the labor front.
Thus, in General Maritime Stevedores Union of the Philippines v. South Sea Shipping
Line,190 the July 28, 1957 CBA between respondent company and the United Seamen s Union of the
Philippines (USUP) , has been continuously automatically renewed after every two years so much so
that at the time of the writing of the High Court s decision in this case, it would appear that the CBA
will still be effective up to July 28, 1961, that is to say, about a year therefrom. According to the claim
of the petitioners, the bargaining agreement of July 28, 1957 was but a renewal of the same or similar
agreement of July 1955, so that the bargaining agreement has been in existence for about five years,
which is too long a period within which a certification election has not been held. And because of the
automatic renewal clause provided in the CBA, the time when the challenge should be made
continues to pose a problem. This led the Supreme Court to analyze cases decided by the National
Labor Relations Board (NLRB) of the United States, which was the equivalent at that time of the Court
of Industrial Relations (CIR) and the present-day National Labor Relations Commission (NLRC) . It
thus concluded:
After reviewing the cases decided by the NLRB of the United States and our own
cases, we have arrived at the conclusion that it is reasonable and proper that when there
is a bargaining contract for more than a year, it is too early to hold a certification election
within a year from the effectivity of said bargaining agreement; also that a two-year
bargaining contract is not too long for the purpose of barring a certification election. For
this purpose, a bargaining agreement may run for three, even four years, but in such case,
it is equally advisable that to decide whether or not within those three or four years, a
certification election should not be held, may well be left to the sound discretion of the CIR,
considering the conditions involved in the case, particularly, the terms and conditions of
the bargaining contract.
We also hold that where the bargaining contract is to run for more than two years,
the principle of substitution may well be adopted and enforced by the CIR to the effect
that after two years of the life of bargaining agreement, a certification election may be
allowed by the CIR; that if a bargaining agent other than the union or organization that
executed the contract, is elected, said new agent would have to respect said contract, but

that it may bargain with the management for the shortening of the life of the contract if it
considers it too long, or refuse to renew the contract pursuant to an automatic renewal
191
clause.

In Benguet Consolidated, Inc. v. BCI Employees & Workers Union, (PAFLU) ,192 a CBA
was concluded on June 23, 1959 between petitioner company and Benguet-Balatoc Workers Union
(BBWU) , effective for a period of 4-1/2 years, or from June 23, 1959 to December 23, 1963. It
likewise embodied a No-Strike, No-Lockout clause. About three years later, or on April 6, 1962,
before the expiration of the CBA, a certification election was conducted by the Department of Labor
among all the rank-and-file employees of petitioner in the same collective bargaining units. Another
union, herein respondent BCI Employees & Workers Union-PAFLU (UNION-PAFLU) obtained more
than 50% of the total number of votes, defeating BBWU, and accordingly, the CIR, on August 18,
1962, certified UNION-PAFLU as the sole and exclusive collective bargaining agent of all employees
of petitioner company. One of the issues raised in the instant case is whether the CBA executed
between Benguet and BBWU on June 23, 1959 and effective until December 23, 1963 automatically
binds UNION-PAFLU upon its certification, on August 18, 1962, as sole bargaining representative of
all employees of petitioner.
Petitioner invoked the afore-quoted ruling in General Maritime193 in support of its contention
that the CBA then existing was binding on the new bargaining agent - UNION PAFLU. The Supreme
Court, however, ruled that such invocation is not persuasive because the above-quoted pronouncement
in General Maritime was obiter dictum. The only issue in said case was whether a CBA which had
practically run for five (5) years constituted a bar to certification proceedings. It was held that it did not
and accordingly directed the court a quo to order certification election. With that, nothing more was
necessary for the disposition of the case. Moreover, the pronouncement adverted to was rather
premature. The possible certification of a union different from that which signed the bargaining
contract was a mere contingency then since the elections were still to be held. Clearly, the Court was
not called upon to rule on the possible effects of such proceedings on the bargaining agreement. It
further held:
But worse, BENGUETs reliance upon the Principle of Substitution is totally
misplaced. This principle, formulated by the NLRB as its initial compromise solution to the
problem facing it 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 executed between employer and
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 interest in the existing bargaining agreement. The agents interest never entered
the picture. In fact, the justification 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 will of the principal. . .
Stated otherwise, the substitutionary doctrine only provides that the
employees cannot revoke the 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
194
course to negotiate with management for the shortening thereof.

2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON THE DEPOSED UNIONS PERSONAL


UNDERTAKINGS.
In case of change of bargaining agent under the substitutionary doctrine, the new bargaining agent is
not bound by the personal undertakings of the deposed union like the no strike, no lockout clause in a CBA
which is the personal undertaking of the bargaining agent which negotiated it. Thus in Benguet, it was
pronounced:
The substitutionary doctrine, therefore, cannot be invoked to support the
contention that a newly certified collective bargaining agent automatically assumes
all the personal undertakings like the no-strike stipulation here in the
collective bargaining agreement made by the deposed union. When BBWU bound

itself and its officers not to strike, it could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the employees,
not of the other unions which possess distinct personalities. To consider UNION
contractually bound to the no-strike stipulation would therefore violate the legal maxim that res
inter alios acta alios nec prodest nec nocet.
Of course, UNION, as the newly certified bargaining agent, could always voluntarily
assume all the personal undertakings made by the displaced agent. But as the lower court
found, there was no showing at all that, prior to the strike, UNION formally adopted the
existing CONTRACT as its own and assumed all the liabilities imposed by the same upon
BBWU.

3. SOME PRINCIPLES ON SUBSTITUTIONARY DOCTRINE.


The substitutionary doctrine cannot be invoked to subvert an existing CBA, in derogation of the
principle of freedom of contract. The substitution of a bargaining agent cannot be allowed if the
purpose is to subvert an existing CBA freely entered into by the parties. Such act cannot be
sanctioned in law or in equity as it is in derogation of the principle underlying the freedom of
contract and good faith in contractual relations.195
The substitutionary doctrine is applicable also to a situation where the local union, which was
created through the process of chartering196 by the mother union,197 disaffiliates from the latter after
it secured an independent registration. The local union will thus be substituted to that of the
federation which negotiated the CBA as in Elisco-Elirol Labor Union [NAFLU] v.
Noriel,198 where petitioner union was created through the mode of chartering by the National
Federation of Labor Unions (NAFLU) and later, it secured its independent registration with the BLR
and disaffiliated with NAFLU by virtue of a resolution by its general membership.
Substitutionary doctrine in cases of union schism or split. During the lifetime of the CBA, the
majority status of the sole and exclusive bargaining agent which negotiated it may be questioned as when
there exist extraordinary circumstances which affect its standing in terms of membership, structure and
others as may have been occasioned by union schism or split which completely changes the situation of the
employer and the bargaining agent. A petition for certification election may thus be filed to determine which
of the unions has the majority status. The union certified as the new sole and exclusive bargaining agent will
thus substitute the previous one as a party to the existing CBA. This is allowed under the same substitutionary
doctrine.
(b)
UNION DUES AND SPECIAL ASSESSMENTS199
(i)
REQUIREMENTS FOR VALIDITY
1. RIGHT OF UNION TO COLLECT DUES AND ASSESSMENTS.
All unions are authorized to collect reasonable amounts of:
1. membership fees;
2. union dues;
3. assessments;
4. fines;
5. contributions for labor education and research, mutual death and hospitalization benefits,
welfare fund, strike fund and credit and cooperative undertakings;200 and
6. agency fees.201
2. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL ASSESSMENTS.
The following requisites must concur in order for union dues and special assessments for the union
s incidental expenses, attorney s fees and representation expenses to be valid, namely:
(a) Authorization by a written resolution of the majority of all the members at a general
membership meeting duly called for the purpose;
(b) Secretary s record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the employees concerned.202
3. ASSESSMENT FOR ATTORNEYS FEES, NEGOTIATION FEES AND SIMILAR
CHARGES.

As far as attorney s fees, negotiation fees or similar charges are concerned, the rule is that no
such attorney s fees, negotiation fees or similar charges of any kind arising from the negotiation or
conclusion of the CBA shall be imposed on any individual member of the contracting union. Such fees
may be charged only against the union funds in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary is deemed null and void.203 Clearly, what
is prohibited is the payment of attorney s fees when it is effected through forced contributions from the
workers from their own funds as distinguished from the union funds.204
4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.
Check-off means a method of deducting from the employee s pay at prescribed periods, any
amount due for fees, fines or assessments.205 It is a process or device whereby the employer, on
agreement with the union recognized as the proper bargaining representative, or on prior authorization
from its employees, deducts union dues and assessments from the latter s wages and remits them
directly to the union.206
5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.
The law strictly prohibits the check-off from any amount due an employee who is a member
of the union, of any union dues, special assessment, attorney s fees, negotiation fees or any other
extraordinary fees other than for mandatory activities under the Labor Code, without the individual
written authorization duly signed by the employee. Such authorization must specifically state the
amount, purpose and beneficiary of the deduction.207 The purpose of the individual written
authorization is to protect the employees from unwarranted practices that diminish their compensation
without their knowledge or consent.208
6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT REQUIRED.
In the following cases, individual written authorization is not required:
a. Assessment from non-members of the bargaining agent of agency fees which should be
equivalent to the dues and other fees paid by members of the recognized bargaining agent,
if such non-members accept the benefits under the CBA.209
b. Deductions for fees for mandatory activities such as labor relations seminars and labor
education activities.210
c. Check-off for union service fees authorized by law.211
d. Deductions for withholding tax mandated under the National Internal Revenue Code.
e. Deductions for withholding of wages because of employee s debt to the employer which is
already due.212
f. Deductions made pursuant to a judgment against the worker under circumstances where the
wages may be the subject of attachment or execution but only for debts incurred for food,
clothing, shelter and medical attendance.213
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for PhilHealth, social security, PagIBIG, employees compensation and the like.
7. SOME PRINCIPLES ON UNION DUES AND ASSESSMENTS.
Check-off for a special assessment is not valid after the withdrawal of the individual written
authorizations.214
Unlike in authorization for union dues and assessments, disauthorization does not require that it be
written individually. The fact that the disauthorizations were collective in form consisting of
randomly procured signatures and under loose sheets of paper, is of no moment for the simple
reason that the documents containing the disauthorizations have the signatures of the union
members. Such retractions were valid. There is nothing in the law which requires that the
disauthorizations must be in individual form.215
The right of the incumbent bargaining representative to check off and to collect dues is not
affected by the pendency of a representation case or an intra-union dispute.216
Approval of the union dues and assessments by the majority of all the members of the union is
required.217 The Labor Code218 and the Rules to Implement the Labor Code219 disallow a deduction
for special assessment which was passed by a mere board resolution of the directors, and not by

the majority of all the members of the union. Also, a written authorization duly signed individually by the
employees concerned is a conditionsine qua non therefor. Employees are protected by law from
unwarranted practices that have for their object the diminution of the hard-earned compensation
due them.
(c)
AGENCY FEES220
(i)
REQUISITES FOR ASSESSMENT
1. NATURE OF AGENCY FEE - NEITHER CONTRACTUAL NOR STATUTORY BUT
QUASI-CONTRACTUAL.
The bargaining agent which successfully negotiated the CBA with the employer is given the right to
collect a reasonable fee, called agency fee from its non-members - who are employees covered by the
bargaining unit being represented by the bargaining agent - in case they accept the benefits under the CBA.
It is called agency fees because by availing of the benefits of the CBA, they, in effect, recognize and accept
the bargaining union as their agent as well.
According to Holy Cross of Davao College, Inc. v. Joaquin,221 payment of agency fees to
the certified collective bargaining agent which successfully negotiated the CBA is but a reasonable
requirement recognized by law. The collection of agency fees in an amount equivalent to the union dues and
fees, from employees who are not bargaining union members, is recognized by Article 248(e) of the Labor
Code. The employee s acceptance of benefits resulting from a CBA justifies the deduction of agency fees
from his pay and the union s entitlement thereto. In this aspect, the legal basis of the union's right to agency
fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that
non-bargaining union employees may not unjustly enrich themselves by benefiting from employment
conditions negotiated by the bargaining agent.
2. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO ACCEPT OR NOT THE
BENEFITS OF THE CBA.
There is no law that compels a non-bargaining union member to accept the benefits provided
in the CBA. He has the freedom to choose between accepting and rejecting the CBA itself by not
accepting any of the benefits flowing therefrom. Consequently, if a non-bargaining union member does
not accept or refuses to avail of the CBA-based benefits, he is not under any obligation to pay the
agency fees since, in effect, he does not give recognition to the status of the bargaining union as his
agent.
3. LIMITATION ON THE AMOUNT OF AGENCY FEE.
The bargaining union cannot capriciously fix the amount of agency fees it may collect from its
non-members. Article 248(e) of the Labor Code expressly sets forth the limitation in fixing the amount of the
agency fees, thus:
(1) It should be reasonable in amount; and
(2) It should be equivalent to the dues and other fees paid by members of the recognized
collective bargaining agent.222
Thus, any agency fee collected in excess of this limitation is a nullity.
4. NON-MEMBERS OF THE CERTIFIED BARGAINING AGENT NEED NOT BECOME
MEMBERS THEREOF.
The employees who are not members of the certified bargaining agent which successfully
concluded the CBA are not required to become members of the latter. Their acceptance of the benefits
flowing from the CBA and their act of paying the agency fees do not make them members thereof.
5. CHECK-OFF OF AGENCY FEES.
Check-off of agency fees is a process or device whereby the employer, upon agreement
with the bargaining union, deducts agency feesfrom the wages of non-bargaining union members who
avail of the benefits from the CBA and remits them directly to the bargaining union.223
6. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND CHECK-OFF OF
AGENCY FEES.

The right of the bargaining union to demand check-off of agency fees accrues from the
moment the non-bargaining union member accepts and receives the benefits from the CBA. This is the
operative fact that would trigger such liability.224
7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-BARGAINING UNION
MEMBERS REQUIRED.
To effect the check-off of agency fees, no individual written authorization from the nonbargaining union members who accept the benefits resulting from the CBA is necessary.225
8. EMPLOYERS DUTY TO CHECK-OFF AGENCY FEES.
It is the duty of the employer to deduct or check-off the sum equivalent to the amount of
agency fees from the non-bargaining union members' wages for direct remittance to the bargaining
union. 226
9. THE NON-BARGAINING UNION MEMBERS WHO ARE PAYING AGENCY FEES TO
THE BARGAINING UNION REMAIN LIABLE TO PAY UNION DUES TO THEIR OWN
UNION.
The fact that the non-members of the bargaining union who are members of the minority union
are paying agency fees to the former does not free them from their obligation as members to continue paying
their union dues and special assessments to their union (minority union) . There is no law that puts a stop to
such obligation simply because their union failed to be recognized or certified as the collective bargaining
agent. Union dues are required for the continued existence and viability of their union. Hence, they are
obligated to pay two (2) kinds of dues:
(1) Union dues and special assessments to their own union; and
(2) Agency fee to the bargaining agent.
This is clear from a reading of Article 241227 which does not qualify that the right to collect
union dues and assessments, on the part of the union, and the obligation to pay the same, on the part of
its members, are extinguished the moment the union is unsuccessful in its quest to become the sole and
exclusive bargaining agent of the employees in the bargaining unit where it seeks to operate.
10. MINORITY UNION CANNOT DEMAND FROM THE EMPLOYER TO GRANT IT THE
RIGHT TO CHECK-OFF OF UNION DUES AND ASSESSMENTS FROM THEIR
MEMBERS.
The obligation on the part of the employer to undertake the duty to check-off union dues and
special assessments holds and applies only to the bargaining agent and not to any other union/s (called
Minority Union/s) . This is clear from the manner by which the Supreme Court described check-off
in the case of Holy Cross of Davao College, Inc. v. Joaquin,228 that it is on the basis of the agreement
with the union which is recognized as the proper bargaining representative that the employer is
obligated to perform its task of checking off union dues or agency fees. When stipulated in a CBA, 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 the employees in the bargaining unit if not, indeed, to
its very existence.
------------oOo------------

Chapter Seven
LABOR RELATIONS LAW
TOPICS PER SYLLABUS
B. Right to collective bargaining
1. Duty to bargain collectively
a) When there is absence of a CBA
b) When there is a CBA
2. Collective Bargaining Agreement (CBA)
a) Mandatory provisions of CBA

(i) Grievance procedure


(ii) Voluntary arbitration
(iii) No strike-no lockout clause
(iv) Labor management council
b) Duration
(i) For economic provisions
(ii) For non-economic provisions
(iii) Freedom period
3. Union Security
a) Union security clauses; closed shop, union shop, maintenance of membership
shop, etc.
b) Check-off; union dues, agency fees
4. Unfair Labor Practice in collective bargaining
a) Bargaining in bad faith
b) Refusal to bargain
c) Individual bargaining
d) Blue sky bargaining
e) Surface bargaining
5. Unfair Labor Practice (ULP)
a) Nature of ULP
b) ULP of employers
c) ULP of labor organizations

B.
RIGHT TO COLLECTIVE BARGAINING
1. CONSTITUTIONAL FOUNDATION.
The right of all workers to collective bargaining and negotiations is a right duly guaranteed
under the Constitution. Thus, it is expressly provided in Section 3, Article XIII thereof that the State,
among others, shall guarantee the rights of all workers to collective bargaining and negotiations.
2. STATE POLICY.
It is the policy of the State to promote and emphasize the primacy of free and responsible
exercise of the right to self-organization and collective bargaining, either through single enterprise
level negotiations or through the creation of a mechanism by which different employers and recognized
or certified labor unions in their establishments bargain collectively.1
1.
DUTY TO BARGAIN COLLECTIVELY2
1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.
The duty to bargain collectively means the performance of a mutual obligation to meet
and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms and conditions of employment, including proposals
for adjusting any grievances or questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but such duty does not compel any party to
agree to a proposal or to make any concession.3
The duty does not compel any party to agree blindly to a proposal nor to make
concession. While the law imposes on both the employer and the bargaining union the mutual duty to
bargain collectively, the employer is not under any legal obligation to initiate collective bargaining
negotiations.4
2. ULTIMATE GOAL IS TO CONCLUDE A CBA.
Obviously, the ultimate purpose of collective bargaining is to reach an agreement resulting in
a contract binding on the parties; but the failure to reach an agreement after negotiations continued for

a reasonable period does not establish a lack of good faith. The statutes invite and contemplate a
collective bargaining contract, but they do not compel one. The duty to bargain does not include the
obligation to reach an agreement.5
3. BARGAINING, NOT EQUIVALENT TO ADVERSARIAL LITIGATION.
Caltex Refinery Employees Association [CREA] v. Brillantes. 6 - Bargaining is not
equivalent to an adversarial litigation where rights and obligations are delineated and remedies applied. It is
simply a process of finding a reasonable solution to a conflict and harmonizing opposite positions into a fair
and reasonable compromise.
4. TWO (2) SITUATIONS CONTEMPLATED.
The duty to bargain collectively involves two (2) situations, namely:
1. Duty to bargain collectively in the absence of a CBA under Article 251 of the Labor
Code.7
2. Duty to bargain collectively when there is an existing CBA under Article 253 of the Labor
Code.8
(a)
DUTY TO BARGAIN COLLECTIVELY
WHEN THERE IS ABSENCE OF A CBA9
1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO CBA YET.
The duty to bargain collectively when there has yet been no CBA in the bargaining unit where the
bargaining agent seeks to operate should be complied with in the following order:
First, in accordance with any agreement or voluntary arrangement providing for a more
expeditious manner of collective bargaining; and
Secondly, in its absence, in accordance with the provisions of the Labor Code, referring to
Article 250 thereof which lays down the procedure in collective bargaining.10
2. RATIONALE.
Clearly, the law gives utmost premium and extends due respect to the voluntary arrangement
between the parties on how they will discharge their respective duties to bargain collectively before
resort to the procedure laid down in the Labor Code may be made. In other words, it is only when there
is no such voluntary arrangement that the procedure laid down in Article 250 of the Labor Code should
be followed. What is essentially required, however, is that the employer and the bargaining union
should promptly meet, convene and confer in good faith for collective bargaining purposes.
(b)
DUTY TO BARGAIN COLLECTIVELY
WHEN THERE IS A CBA11
1. CONCEPT.
When there is a collective bargaining agreement, the duty to bargain collectively shall mean
that neither party shall terminate nor modify such agreement during its lifetime. However, either party
can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties.12
2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to its expiration is
called the freedom period. It is denominated as such because it is the only time when the law allows
the parties to freely serve a notice to terminate, alter or modify the existing CBA. It is also the time
when the majority status of the bargaining agent may be challenged by another union by filing the
appropriate petition for certification election.13
3. AUTOMATIC RENEWAL CLAUSE.
a. Automatic renewal clause deemed incorporated in all CBAs.

Pending the renewal of the CBA, the parties are bound to keep the status quo and to treat the
terms and conditions embodied therein still in full force and effect during the 60-day freedom period
and/or until a new agreement is negotiated and ultimately concluded and reached by the parties. This
principle is otherwise known as the automatic renewal clause which is mandated by law and
therefore deemed incorporated in all CBAs.14
For its part, the employer cannot discontinue the grant of the benefits embodied in the CBA
which just expired as it is duty-bound to maintain the status quo by continuing to give the same
benefits until a renewal thereof is reached by the parties. On the part of the union, it has to observe and
continue to abide by its undertakings and commitments under the expired CBA until the same is
renewed.
For example, the union security clause must continue to be in effect even after the expiration
of the CBA. Otherwise, there would be a gap during which no agreement would govern from the time
the old agreement expired to the time a new agreement is concluded by the parties.15
b. Some principles.
If unchallenged, the majority status of the existing bargaining agent should be
respected. A petition for certification election challenging the majority status of the
existing bargaining agent should be filed within - and notbefore or after - the 60-day
freedom period. Upon the expiration of the said period and no petition for certification
election is filed by a challenging union, the employer is duty-bound to continue to recognize
the majority status of the incumbent bargaining agent.16
All the terms and conditions of the CBA are deemed automatically renewed. The law
does not provide for any exception or qualification on which economic provisions of the
existing CBA are to retain their force and effect. Therefore, the automatic renewal of its
provisions must be understood as encompassing all the terms and conditions of the CBA. 17
4. KIOK LOY DOCTRINE.
This doctrine is based on the ruling In Kiok Loy v. NLRC,18 where the petitioner, Sweden Ice
Cream Plant, refused to submit any counter-proposal to the CBA proposed by its employees certified
bargaining agent. The High Court ruled that the employer had thereby lost its right to bargain the terms and
conditions of the CBA. Thus, the CBA proposed by the union was imposed lock, stock and barrel on the erring
company.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad faith consisting of the
employer s refusal to bargain with the collective bargaining agent by ignoring all notices for
negotiations and requests for counter-proposals. Such refusal to send a counter-proposal to the union and to
bargain on the economic terms of the CBA constitutes an unfair labor practice under Article 248(g) 19 of the
Labor Code.20
5. OTHER CASES AFTER KIOK LOY.
The ruling that the CBA proposed by the bargaining union may be adopted as the new CBA if
employer refused to negotiate has been reiterated in the following cases:
1. Divine Word University of Tacloban v. Secretary of Labor and Employment,21 where
the university refused to perform its duty to bargain collectively; hence, the High Tribunal
upheld the unilateral imposition on the university of the CBA proposed by the Divine Word
University Employees Union.
2. General Milling Corporation v. CA,22 where the Supreme Court imposed on the employer
the draft CBA proposed by the union for the last two (2) years commencing from the
expiration of the 3-year term of the original CBA. This was because of the employer s
refusal to counter-propose to the union s proposals which was declared as an unfair labor
practice under Article 248(g) [23 of the Labor Code.
2.
COLLECTIVE BARGAINING AGREEMENT (CBA)
1. CBA.
A Collective Bargaining Agreement or CBA for short, refers to the negotiated contract
between a duly recognized or certified exclusive bargaining agent of workers and their

employer, concerning wages, hours of work and all other terms and conditions of employment in the
appropriate bargaining unit, including mandatory provisions for grievances and arbitration
machineries.24 It is executed not only upon the request of the exclusive bargaining representative but
also by the employer.25
2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.
Prior to any collective bargaining negotiations between the employer and the bargaining union,
the following requisites must first be satisfied:
1. Employer-employee relationship must exist between the employer and the members of the
bargaining unit being represented by the bargaining agent;26
2. The bargaining agent must have the majority support of the members of the bargaining unit
established through the modes sanctioned by law;27 and
3. A lawful demand to bargain is made in accordance with law.28
3. SOME PRINCIPLES ON CBA.
CBA is the law between the parties during its lifetime and thus must be complied with in good
faith.29 It lays down the norms of conduct between the parties and compliance therewith is
mandated by the express policy of the law.30 It incorporates the agreement reached after
negotiations between the employer and the bargaining agent with respect to the terms and
conditions of employment.31
Being the law between the parties, any violation thereof can be subject of redress in court. 32
Non-impairment of obligations of contract. A contract is the law between the parties and courts
have no choice but to enforce such contract so long as it is not contrary to law, morals, good
customs or public policy. Otherwise, courts would be interfering with the freedom of contract of
the parties. Simply put, courts cannot stipulate for the parties or amend the latter s agreement, for
to do so would be to alter the real intention of the contracting parties. The function of courts is to
give force and effect to the intention of the parties.33
Unilateral changes in the CBA are not allowed without the consent of both parties.34
Management rights and prerogatives are limited by the CBA.35
CBA is not an ordinary contract as it is impressed with public interest.36
Automatic Incorporation Clause - law is presumed part of the CBA.37
The benefits derived from the CBA and the law are separate and distinct from each other.38
Workers are allowed to negotiate wage increases separately and distinctly from legislated
wage increases. It is provided under Article 125 of the Labor Code that no Wage Order should be
construed to prevent workers in particular firms or enterprises or industries from bargaining for
higher wages with their respective employers. This is usually the case because all CBA
negotiations are conducted for the purpose of effecting increases in wages and other benefits over
and above the rates provided for by law. Obviously, the parties do not sit down and negotiate a
CBA for the purpose of reducing existing benefits way below what the law mandates.
The parties may validly agree in the CBA to reduce wages and benefits of employees
provided such reduction does not go below the minimum standards. 39
Entering into a CBA which contains terms and conditions of employment below minimum
standards established by law shall, despite its registration, not constitute a bar to the conduct of a
certification election.
Ratification of the CBA by majority of all the workers in the bargaining unit makes the same
binding on all employees therein.40
Employees entitled to CBA benefits. The following are entitled to the benefits of the CBA:
(1) Members of the bargaining union;
(2) Non-members of the bargaining union but are members of the bargaining unit;41
(3) Members of the minority union/s who paid agency fees to the bargaining union;42 and
(4) Employees hired after the expiration of the CBA.43

Pendency of a petition for cancellation of union registration is not a prejudicial question


before CBA negotiation may proceed. 44
CBA should be construed liberally. 45 If the terms of a CBA are clear and there is no doubt as to
the intention of the contracting parties, the literal meaning of its stipulation shall prevail.46
(a)
MANDATORY PROVISIONS OF CBA47
1. MANDATORY STIPULATIONS OF THE CBA.
The Syllabus mentions 4 provisions that are mandatorily required to be stated in the CBA, to
wit:
1. Grievance Procedure;48
2. Voluntary Arbitration;49
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC) .50
If these provisions are not reflected in the CBA, its registration will be denied by the BLR.
(i)
GRIEVANCE PROCEDURE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised by either the employer or the union
regarding any of the following issues or controversies:
1. The interpretation or implementation of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Any claim by either party that the other party is violating any provisions of the CBA or
company personnel policies.51
In order to be grievable, the violations of the CBA should be ordinary and not gross in
character; otherwise, they shall be considered as unfair labor practice (ULP). Gross violation of the
CBA is defined as flagrant and/or malicious refusal by a party thereto to comply with the economic
provisions thereof. 52 If what is violated, therefore, is a non-economic or a political provision of the
CBA, the same shall not be considered as unfair labor practice and may thus be processed as a
grievable issue in accordance with and following the grievance machinery laid down in the CBA.
2. GRIEVANCE MACHINERY.
Grievance machinery refers to the mechanism for the adjustment and resolution of
grievances arising from the interpretation or implementation of a CBA and those arising from the
interpretation or enforcement of company personnel policies.53
3. GRIEVANCE PROCEDURE.
Grievance procedure refers to the internal rules of procedure established by the parties in
their CBA with voluntary arbitration as the terminal step, which are intended to resolve all issues
arising from the implementation and interpretation of their collective agreement.54 It is that part of the
CBA which provides for a peaceful way of settling differences and misunderstanding between the
parties.55
The terms grievance procedure and grievance machinery may be used interchangeably.
(ii)
VOLUNTARY ARBITRATION
1. VOLUNTARY ARBITRATION.
Voluntary arbitration refers to the mode of settling labor-management disputes in which
the parties select a competent, trained and impartial third person who is tasked to decide on the merits
of the case and whose decision is final and executory.56
2. VOLUNTARY ARBITRATOR.

A Voluntary Arbitrator refers to any person who has been accredited as such by the
National Conciliation and Mediation Board (NCMB or Board) , or any person named or
designated in the CBA by the parties as their Voluntary Arbitrator, or one chosen by the parties with or
without the assistance of the NCMB pursuant to a selection procedure agreed upon in the CBA or one
appointed by the NCMB in case either of the parties to the CBA refuses to submit to voluntary
arbitration. This term includes a panel of Voluntary Arbitrators.57
A Voluntary Arbitrator is not an employee, functionary or part of the government or of the
Department of Labor and Employment, but he is authorized to render arbitration services provided
under labor laws.58
(iii)
NO STRIKE, NO LOCKOUT CLAUSE
1. SIGNIFICANCE OF THE CLAUSE.
A No Strike, No Lockout clause in the CBA is an expression of the firm commitment of
the parties thereto that, on the part of the union, it will not mount a strike during the effectivity of the
CBA, and on the part of the employer, that it will not stage a lockout during the lifetime thereof. It has
heretofore been held that a No Strike, No Lockout provision in the CBA is a valid stipulation
although the clause may be invoked by an employer only when the strike is economic in nature or one
which is conducted to force wage or other concessions from the employer that are not mandated to be
granted by the law itself. It does not bar strikes grounded on unfair labor practices. 59
The same rule also applies in case of lockout. The said clause may only be invoked by the union in
case the ground for the lockout iseconomic in nature but it may not be so cited if the ground is unfair labor
practice committed by the union.
2. EFFECT OF VIOLATION OF THE CLAUSE.
The Supreme Court consistently ruled in a long line of cases that a strike is illegal if staged in
violation of the said clause in the CBA especially when conclusive arbitration clause is provided
therein.60 Thus, in C. Alcantara & Sons, Inc. v. CA,61 it was declared that a strike may be regarded as
invalid although the labor union has complied with the strict requirements for staging one as provided in
Article 263 of the Labor Code when the same is held contrary to an existing agreement, such as a no strike,
no lockout provision that enjoins both the union and the company from resorting to the use of economic
weapons available to them under the law and to instead take recourse to voluntary arbitration in settling
their disputes.
In National Union of Workers in the Hotel, Restaurant and Allied Industries
[NUWHRAIN-APL-IUF] Dusit Hotel Nikko Chapter v. The Hon. CA,62 the strike which arose out
of a bargaining deadlock in the CBA negotiations with the Hotel was declared as an economic strike
upon which the no strike/work stoppage and lockout prohibition in the CBA is squarely applicable
and legally binding.63
In Interphil Laboratories Employees Union-FFW v. Interphil Laboratories,
Inc.,64 the overtime boycott and work slowdownconducted by the employees were considered an
illegal strike, the same being in violation of the CBA which prohibits the union or employees, during
the existence of the CBA, to stage a strike or engage in slowdown or interruption of work.65
(iv)
LABOR-MANAGEMENT COUNCIL
1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY JUSTIFIED.
The Labor-Management Council (LMC) whose creation is mandated under the Labor
Code,66 is meant to implement the constitutionally mandated right of workers to participate in policy
and decision-making processes of the establishment where they are employed insofar as said processes
will directly affect their rights, benefits and welfare.67
The LMC is mandated to be created in both organized and unorganized establishments.
2. SELECTION OF REPRESENTATIVES TO LMC.

In organized establishments, the workers representatives to the committee or council should


be nominated by the exclusive bargaining representative. In establishments where no legitimate labor
organization exists, the workers representative should be elected directly by the employees at large.
3. LABOR-MANAGEMENT COUNCIL (LMC) VS. GRIEVANCE MACHINERY (GM).
To avoid confusion and possible major legal complication, a clear distinction line should be drawn
between LMC and GM. The following may be cited:
1. Constitutional origin. - The creation of the LMC is based on the constitutional grant to
workers of the right to participate in policy and decision-making processes under the 1 paragraph, Section
3, Article XIII of the 1987 Constitution, thus:
st

It shall guarantee the rights of all workers to self-organization, collective


bargaining and negotiations, and peaceful concerted activities, including the right to
strike in accordance with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage.They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be
68
provided by law.

The creation of a GM, on the other hand, is based on a different constitutional provision, the 2
paragraph, Section 3, Article XIII of the 1987 Constitution, which provides as follows:

nd

The State shall promote the principle of shared responsibility between


workers and employers and the preferential use of voluntary modes in settling
disputes , including conciliation, and shall enforce their mutual compliance therewith
to foster industrial peace. 69

2. Legal anchor. - The creation of LMC is provided under Article 255 of the Labor Code; while
the formation of a GM is mandated under Article 260 of the same Code.
3. Compulsory provision in the CBA. - Both LMC and GM are compulsorily required to be
embodied in the CBA in order for it to be considered a valid agreement.
4. Purpose for creation. - The LMC is created for the purpose of affording workers the right
to participate in policy and decision-making processes in matters affecting their rights, benefits and
welfare; while that of the GM is to resolve disputes and grievances arising from such policies or
decisions or more specifically, to adjust and resolve grievances arising from (1) the interpretation or
implementation of the CBA or (2) the interpretation or enforcement of company personnel policies.70
5. Nature of functions. - The LMC is in the nature of a preventive mechanism meant to prevent
and avoid disputes or grievances by co-determining the proper policies that should be implemented by
the employer in respect of the workers rights, benefits and welfare; while a GM is an adjudicatory
mechanism which is set into motion only when a dispute or grievance occurs.
6. Nature of cognizable issues. - The LMC performs non-adversarial and non-adjudicatory tasks
as it concerns itself only with policy formulations and decisions affecting the workers rights, benefits and
welfare and not violations or transgressions of any policy, rule or regulation; while that of the GM is
adversarial and adjudicatory in character since its jurisdiction is confined to resolving and deciding disputes
and grievances between management and the workers arising from violations or transgressions of existing
policies, rules or regulations. In other words, the LMC does not resolve grievable or contentious issues; the
GM does.
A case illustrative of this principle is the 2011 case of Cirtek Employees Labor UnionFederation of Free Workers v. Cirtek Electronics, Inc.71 The CBA negotiation between petitioner
union and respondent company was deadlocked resulting in the staging of a strike by the former. The
DOLE Secretary assumed jurisdiction over the labor dispute but before he could rule on the
controversy, respondent created a Labor-Management Council (LMC) through which it concluded with
the remaining officers of petitioner a Memorandum of Agreement (MOA) providing for daily wage
increases of P6.00 per day effective January 1, 2004 and P9.00 per day effective January 1, 2005.
Petitioner submitted the MOA to the DOLE Secretary, alleging that the remaining officers signed the
MOA under respondent s assurance that should the Secretary order a higher award of wage increase,
respondent would comply.
Respecting the MOA, petitioner posits that it was surreptitiously entered into [in] bad faith,
it having been forged without the assistance of the Federation of Free Workers or counsel, adding that
respondent could have waited for the Secretary s resolution of the pending CBA deadlock or that the
MOA could have been concluded before representatives of the DOLE Secretary. As found by the
DOLE Secretary, the MOA came about as a result of the constitution, at respondent's behest, of the

LMC which, he reminded the parties, should not be used as an avenue for bargaining but for the
purpose of affording workers to participate in policy and decision-making.
Hence, the agreements
embodied in the MOA were not the proper subject of the LMC deliberation or procedure but of CBA
negotiations and, therefore, deserving little weight.
7. Kind of establishment where it is required to be set up. - The classification of the
establishment, whether organized or unorganized, is not material as far as LMC is concerned since it is
required to be established in all establishments - whether organized or unorganized; while the GM is
required only in case of organized establishments since it is mandated to be stipulated in the CBA.
8. Composition. - The representatives of the workers to the LMC may or may not be
nominated by the recognized or certified bargaining agent, depending on whether the establishment is
organized or unorganized. Thus, in organized establishments, the workers representatives to the
LMC should be nominated by the exclusive bargaining agent. In establishments where no legitimate
labor organization exists, the workers representatives should be elected directly by the employees of
the establishment at large; while those in the GM are nominated solely by the bargaining agent.72
9. Procedure. - The LMC does not involve any specific procedure prescribed by law to
govern its proceedings; while the GM is required to follow a multi-step procedure starting from a
discussion of the grievance between the employee and the union steward, on the one hand, and the
foreman and supervisor, on the other, and ending with the highest decision-making officials of the
company, reflecting the hierarchy of command responsibility.73
10. Appeals. - The LMC does not make any decisions since no dispute or grievance is
cognizable by it, hence, any policy formulations are not appealable to any office or authority; while
the decision of the GM on any dispute or grievance should be elevated to voluntary arbitration if not
resolved with finality by the GM within seven (7) calendar days from the date of submission, thus:
All grievances submitted to the grievance machinery which are not settled
within seven (7) calendar days from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the Collective Bargaining Agreement.

While strictly speaking, such elevation to voluntary arbitration may not be considered an appeal
as this term is technically defined in law, jurisprudence or rules, this is clearly the intention behind the law
since it is required that the unresolved dispute or grievance be automatically elevated to a Voluntary
Arbitrator or panel of Voluntary Arbitrators for voluntary arbitration purposes if unresolved within the
said 7-day period.
(b)
DURATION OF CBA
(i)
FOR ECONOMIC PROVISIONS
(ii)
FOR NON-ECONOMIC PROVISIONS
1. TERMS OF A CBA.
The terms of a CBA are classified into two (2) , viz:
(a) Representation aspect - 5 years which is the lifetime of a CBA;
(b) All other provisions - Subject to renegotiation after first 3 years of the 5-year lifetime of
CBA.74
2. REPRESENTATION ASPECT.
The phrase representation aspect in Article 253-A of the Labor Code refers to the identity
and majority status of the bargaining agent that successfully negotiated the CBA as the exclusive
bargaining representative of the employees in the appropriate bargaining unit concerned.75
The 5-year representation status of the incumbent exclusive bargaining agent should be
reckoned from the effectivity of the CBA. This means that no petition for certification election
questioning its majority status may be entertained during the lifetime of the CBA except within the 60day freedom period immediately preceding the expiry date of the 5-year term.
Suspension of CBA for a period longer than 5 years, held valid.

The case of Rivera v. Espiritu,76 is in point. It was held here that the suspension of the CBA
between PAL and PALEA for ten (10) years77 in order to resolve the strike is not violative of the
Constitution or the law. This is so because the right to free collective bargaining includes the right to
suspend it.78 There is nothing in Article 253-A which prohibits the parties from waiving or suspending
the mandatory timetables and agreeing on the remedies to enforce the same.
Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability.
Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said
agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables
wherein negotiations become a matter of right and requirement. Nothing in Article 253-A prohibits the
parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce
the same. The suspension agreement is a valid exercise of the freedom to contract. Under the principle
of inviolability of contracts guaranteed by the Constitution, the contract must be upheld.79 The
agreement afforded full protection to labor; promoted the shared responsibility between workers and
employers; and exercised the voluntary modes in settling disputes, including conciliation to foster
industrial peace.80
3. RE-NEGOTIATION OF ALL PROVISIONS OTHER THAN THE REPRESENTATION
ASPECT OF THE CBA SHOULD BE MADE AFTER FIRST 3 YEARS FROM
EFFECTIVITY.
Considering that the five (5) year period is quite long during which the economic situations of
the parties may have already changed, Article 253-A recognizes the need for the parties to re-assess
and re-negotiate all the provisions of the CBA, except its representation aspect, after the lapse of the
first three (3) years of its 5-year lifetime. Such re-negotiation, however, should only pertain to the
terms and conditions of the parties relationship for the last remaining two (2) years of the CBA s 5year term.81 This re-negotiation process may be invoked by any of the parties as a matter of right.82
4. ALL OTHER PROVISIONS, REFER TO BOTH ECONOMIC AND NON-ECONOMIC
PROVISIONS.
The phrase all other provisions mentioned in Article 253-A simply refers to all the
provisions of the CBA irrespective of whether they are economic or non-economic in nature. The
only item excepted therefrom is the representation status of the incumbent exclusive bargaining agent
which may only be questioned during the 60-day freedom period.83
The phrase not later than three years (or not later than the third year),84 means that all the
economic and non-economic provisions of the CBA other than the representation aspect may be renegotiated before the end of the third year.85
5. RETROACTIVITY OF THE CBA.
The application of the rules on retroactivity depends on any of the following two (2) situations:
(a)

When the CBA is voluntarily concluded by the parties; or

(b)

When the CBA is concluded through arbitral award.

6.RULE WHEN VOLUNTARILY CONCLUDED BY THE PARTIES IN THE NEGOTIATING


TABLE.
(a) The effectivity of the CBA shall retroact to the day immediately after the date of expiry of
the old CBA in case the new CBA is concluded and entered into within six (6)
months from the said expiry date.86
(b) If the new CBA is entered into beyond six (6) months from the expiry date of the old
CBA, the parties are given the right to negotiate the duration of the retroactivity thereof.87
7. RULE ON RETROACTIVITY IN CASE OF CONCLUSION OF CBA THROUGH
ARBITRAL AWARD.
a. No law on retroactivity in case of CBA arbitral awards.
The law is silent as to the retroactivity of a CBA secured through arbitral award or that
granted not by virtue of the mutual agreement of the parties but by intervention of the government.88
b. Variations in the application of the retroactivity rule.
The rule laid down by the Supreme Court in cases involving this particular issue of
retroactivity varies from case to case. Basically, the rule, based on jurisprudence, may be restated in the
following manner:

(1) Prospectivity rule;89


(2) Retroactivity rule which makes the CBA retroactively effective to:
(a) the date of the expiration of the previous CBA;90 and
(b) the first day after the six-month period following the expiration of the last day of the
CBA.91
(iii)
FREEDOM PERIOD92
1. 60-DAY FREEDOM PERIOD.
When there is an existing CBA, the parties thereto are bound to observe the terms and
conditions therein set forth until its expiration. Neither party is allowed to terminate nor modify such
agreement during its lifetime. The only time the parties are allowed to terminate or modify the
agreement is within the so-called freedom period of at least sixty (60) days prior to its expiration date by
serving a notice to that effect.
2. REASON IT IS CALLED FREEDOM PERIOD.
The last 60 days of the 5-year lifetime of a CBA immediately prior to its expiration is called the
freedom periodbecause:
(a)

it is the only time when the law allows the parties to freely serve a notice to terminate,
alter or modify the existing CBA; and

(b)

it is also the time when the majority status of the bargaining agent may be challenged by
another union by filing the appropriate petition for certification election.93

3. RULE ON FILING OF CERTIFICATION ELECTION VIS--VIS FREEDOM PERIOD.


In a petition involving an organized establishment or enterprise where the majority status of
the incumbent collective bargaining union is questioned by a legitimate labor organization, the MedArbiter shall immediately order the conduct of a certification election if the petition is filedduring the
last sixty (60) days of the CBA. Any petition filed before or after the 60-day freedom period shall be
dismissed outright.94
The 60-day freedom period based on the original collective bargaining agreement shall not be
affected by any amendment, extension or renewal of the CBA for purposes of certification election.95
4. AUTOMATIC RENEWAL CLAUSE.
A petition for certification election challenging the majority status of the existing bargaining
agent should be filed within - and not before or after- said 60-day freedom period. Upon the expiration
of the said period and no petition for certification election is filed by a challenging union, the employer
is duty-bound to continue to recognize the majority status of the incumbent bargaining
agent.96 Negotiation for a new CBA may even validly commence between the incumbent bargaining
agent and the employer during the 60-day freedom period if no challenge to the bargaining agent s majority
status is posed by another union.
3.
UNION SECURITY
1. NATURE AND PURPOSE OF UNION SECURITY CLAUSE.
The stipulation in a CBA based on the second sentence of paragraph [e] of Article 248 of the Labor
Code commonly known as the union security clause allows the parties thereto to enter into an agreement
requiring membership in the bargaining agent which successfully negotiated said CBA as a condition for
continued employment with the exception of employees who are already members of another union at the
time of the signing of the CBA.
Union security is a generic term which is applied to and comprehends closed shop,
union shop, maintenance of membership or any other form of agreement which imposes upon the
employees the obligation to acquire or retain union membership as a condition to their continued
employment. In other words, the purpose of a union security arrangement is to guarantee the continued
existence of the union through enforced membership for the benefit of the workers.97 The employer
under this clause recognizes that the membership of employees in the union which negotiated the CBA

should be maintained and continued as a condition for employment or retention of employment. The
obvious purpose is to safeguard and ensure the union s continued existence and to strengthen and
protect it from the fickleness or perfidy of its own members. Without this clause, the existence of the
union is always subject to uncertainty as its members may resign anytime resulting in the decimation of
its ranks. The union becomes gradually weakened and increasingly vulnerable to company
machinations. In this security clause lies the strength of the union during the enforcement of the CBA.
It is this clause that provides labor with substantial power in collective bargaining.98
The law therefore allows stipulations for union shop, closed shop or other forms of union
security as a means of encouraging workers to join and support the union of their choice in the
protection of their rights and interests vis--vis the employer.
By thus promoting unionism, workers
are able to negotiate with management on an even playing field and with more persuasiveness than if
they were to individually and separately bargain with the employer.99
2. THE RIGHT NOT TO JOIN A UNION IS NOT ABSOLUTE SINCE IT MAY BE
RESTRICTED.
The right of an employee not to join a union is not absolute and must give way to the
collective good of all members of the bargaining unit. When certain employees are obliged to join a
particular union as a requisite for continued employment, as in the case of a union security clause, this
condition is a valid restriction on the freedom or right not to join any labor organization because it is in
favor of unionism. Time and again, it has been ruled that the individual employee s right not to join a
union may be validly restricted by a union security clause in a CBA. Theoretically, there is nothing in
law or jurisprudence to prevent an employer and a union from stipulating that existing employees (who
already attained regular and permanent status but who are n ot members of any union) are to be
included in the coverage of a union security clause.
Even Article 248(e) of the Labor Code only
expressly exempts old employees who already have a union from inclusion in a union security
clause.100
3. UNION SECURITY CLAUSE DOES NOT VIOLATE CONSTITUTIONAL RIGHT TO
FREEDOM OF ASSOCIATION.
A union security clause in a CBA is not a violation or a restriction of the employee s right to
freedom of association guaranteed by the Constitution. In Peoples Industrial and Commercial
Employees and Workers Organization v. Peoples Industrial and Commercial Corporation,101 it
was recognized that [l]abor, being the weaker in economic power and resources than capital, deserves
protection that is actually substantial and material.
The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge
upon the individual employee s right or freedom of association, is not to protect the union for the
union s sake. Laws and jurisprudence promote unionism and afford certain protection to the certified
bargaining agent in a unionized company because a strong and effective union presumably benefits all
employees in the bargaining unit since such a union would be in a better position to demand
improved benefits and conditions of work from the employer.
This is the rationale behind the State
policy to promote unionism declared in the Constitution. Nonetheless, settled jurisprudence has already
swung the balance in favor of unionism, in recognition that ultimately the individual employee will be
benefited by that policy.
In the hierarchy of constitutional values, the High Court has repeatedly held
that the right to abstain from joining a labor organization is subordinate to the policy of encouraging
unionism as an instrument of social justice.102
4. EMPLOYEES EXEMPTED FROM COVERAGE OF UNION SECURITY CLAUSE.
All employees in the bargaining unit covered by a Union Security Clause in their CBA with the
employer are subject to its terms. However, under law and established jurisprudence, the following kinds of
employees are exempted from its coverage, namely:
1. Employees who, at the time the union security agreement takes effect, are bonafide members of a religious organization which prohibits its members from joining labor
unions on religious grounds;103
2. Employees already in the service and already members of a union other than the bargaining
agent at the time the union security agreement took effect;104
3. Confidential employees who are excluded from the rank-and-file or supervisory bargaining
unit;105

4. Supervisory employees who are excluded from becoming members of the rank-and-file
union and vice-versa;106 and
5. Employees excluded from the union security clause by express terms of the agreement.107
(a)
UNION SECURITY CLAUSES:
CLOSED SHOP, UNION SHOP, MAINTENANCE OF MEMBERSHIP SHOP, ETC.
1. CLASSIFICATION OF UNION SECURITY ARRANGEMENTS.
Generally, a union security clause may take the form of:
1. Closed-shop agreement;
2. Maintenance of membership agreement;
3. Union shop agreement;
4. Modified union shop agreement;
5. Exclusive bargaining agreement;
6. Bargaining for members only agreement;
7. Agency shop agreement; or
8. Preferential hiring agreement.
Modification of arrangements.
The above classification admits of certain modified types which the parties may agree upon in
the CBA depending on the peculiar requirements of the situation.
2. CLOSED-SHOP AGREEMENT.
A closed-shop may be defined as a scheme in which, by agreement between the employer
and its employees through their bargaining union/agent, no person may be employed unless he or she
is, becomes, and, for the duration of the agreement, remains a member in good standing of the
bargaining union.108 Basically, this kind of agreement stipulates the undertaking by the employer not to
hire or employ any person who is not a member of the bargaining union. Once employed, it is required
that the said person should remain a member of the bargaining union in good standing as a condition
for continued employment, at least during the whole duration of the CBA. This requirement for
employees or workers to become members of a union as a condition for employment redounds to the
benefit and advantage of said employees because by holding out to loyal members a promise of
employment in the closed shop, the union wields group solidarity. In fact, it is said that the closed
shop contract is the most prized achievement of unionism.109
3. MAINTENANCE OF MEMBERSHIP AGREEMENT.
There is maintenance of membership agreement when employees, who are union
members as of the effective date of the agreement, or who thereafter become members, must
maintain union membership as a condition for continued employment until they are promoted or
transferred out of the bargaining unit, or the agreement is terminated.110 Its role is to protect the
unions current membership.

By its express terms, it covers and renders continued union

membership compulsory for: (1) those who were already union members at the time the CBA was
signed; and (2) the new employees who will become regular during the life of the CBA. This form of
union security clause is considered the mildest because it does not require non-members of the
bargaining union to join the latter but simply stipulates that those who are its members at the time of
the execution of the CBA and those who may, after its execution, on their own, voluntarily join the
bargaining agent, should maintain their membership in good standing therein for the whole duration
of the CBA as a condition for their continued employment with the employer until they are promoted
or transferred out of the bargaining unit or the agreement is terminated. Simply put, employees who
are not members of the bargaining agent at the time of the execution of the CBA are not, in any

manner, bound to become members of the bargaining agent. Employees hired after the execution of
the CBA are likewise not duty-bound to join the bargaining agent. They may or may not join it.111
4. UNION SHOP AGREEMENT.
There is union shop when all new regular employees are required to join the union within a
certain period as a condition for their continued employment.112 Its role is to compel the membership of
those who are not yet union members. Under this scheme, the employer is given the freedom to hire
and employ any person who is not a member of the bargaining agent. Once such person becomes an
employee, he is required to become a member of the bargaining agent and to remain as such member in
good standing for the whole period of the effectivity of the CBA as a condition for his continued
employment.
5. MODIFIED UNION SHOP AGREEMENT.
Employees under this arrangement who are not union members at the time of the signing or
execution of the CBA are not required to join the bargaining union. However, any and all workers
hired or employed after the signing or execution of the CBA are required to join the bargaining union.
6. EXCLUSIVE BARGAINING AGENT AGREEMENT.
The union which negotiated and concluded the CBA with management is considered and
recognized as the sole and exclusive bargaining agent of all the covered employees in the bargaining unit,
whether they be members or not of the said agent.
7. BARGAINING FOR MEMBERS ONLY AGREEMENT.
Under this arrangement, the union which negotiated and concluded the CBA with
management is recognized as the bargaining agent only for its own members.113
8. AGENCY SHOP AGREEMENT.
Under this scheme, there is no requirement for non-members of the bargaining agent to
become its members. However, it is required that such non-union members should pay to the
bargaining agent an agency fee as a condition for their continued employment. The third sentence of Article
259(e) [248(e) ] of the Labor Code validates this arrangement.
9. PREFERENTIAL HIRING AGREEMENT.
It is the principal feature of this arrangement that the employer gives preference in hiring to the
members of the bargaining agent under equal circumstances and qualifications. Once hired or employed,
they are required to maintain their membership in good standing in the bargaining agent for the duration
of the CBA as a condition for their continued employment.
10. DISMISSAL DUE TO VIOLATION OF UNION SECURITY CLAUSE.
a. Requisites for valid termination based on union security clause.
The following are the requisites that the employer should comply prior to terminating the
employment of an employee by virtue of the enforcement of the union security clause:
(1) The union security clause is applicable;
(2) The union is requesting for the enforcement of the union security provision in the CBA;
and
(3) There is sufficient evidence to support the union s decision to expel the employee from the
union.114
The foregoing requisites constitute a just cause for terminating an employee based on the
CBA s union security provision.115
b. The due process afforded by the union prior to expulsion is different from the due
process required prior to termination of employment.
The distinction is not hard to comprehend. The due process afforded by the union is meant
solely and exclusively to address the issue of validity of the termination of the membership of the

employee in the union; while that required of the employer is aimed at addressing the issue of validity of the
employee s termination of employment. Hence, it is complete error on the part of the employer to adopt as its
own due process what has been earlier afforded by the union to the erring employee without conducting its
own independent and separate due process.
Thus, in declaring the illegality of the dismissal of petitioner in Cario v. NLRC,116 the
Supreme Court noted in regard to the involvement of the company in his dismissal, that the company,
upon being formally advised in writing of the expulsion of petitioner Cario from the union, in turn
simply issued a termination letter to Cario, the termination being made effective the very next day.
The Company should have given petitioner Cario an opportunity to explain his side of the controversy
with the union. Notwithstanding the union security clause in the CBA, the company should have
reasonably satisfied itself by its own inquiry that the union had not been merely acting arbitrarily and
capriciously in impeaching and expelling petitioner Cario. Had the company taken the trouble to
investigate the acts and proceedings of the union, it could have very easily determined that the union
had acted arbitrarily in impeaching and expelling from its ranks petitioner Cario. The com pany
offered the excuse that the union had threatened to go on strike if its request had not been forthwith
granted. Assuming that such a threat had in fact been made, if a strike was in fact subsequently called
because the company had insisted on conducting its own inquiry, the Court considers that such would
have been prima facie an illegal strike. The company also pleaded that for it to inquire into the
lawfulness of the acts of the union in this regard would constitute interference by the company in the
administration of union affairs. We do not believe so, said the Supreme Court.117
11. SOME PRINCIPLES ON TERMINATION DUE TO VIOLATION OF UNION SECURITY
CLAUSE.
Dismissal based on union security clause may only be valid if it is expressly provided therein as
the penalty for its violation. A dismissal founded on a union security clause which does not
explicitly authorize it for its violation constitutes an unfair labor practice.118
Employer is obligated to act upon being demanded by the union to terminate the employment of
its errant members.119
Members of the minority union cannot be compelled to join the bargaining union. The
union security clause therefore does not cover employees who are members of the union/s120 other
than the bargaining union.121 Not being so covered, they cannot be dismissed for violation of said
clause.122
Non-retroactivity of union security clause (closed-shop) as to cover employees who are not
members of any labor organization at the time of effectivity of the CBA.123
Exception to the non-retroactivity rule is when non-members of any other labor organization at
the time of effectivity of the CBA may be compelled to join the bargaining union.124
The employer has the right to be reimbursed for payment of any claims arising out of dismissals
demanded by the union under the union security clause. Such right of reimbursement may be
invoked:
(1) By express provision in the CBA to that effect; or
(2) By securing it through judicial directive.
(b)
CHECK-OFF; UNION DUES, AGENCY FEES
1. CHECK-OFF OF AGENCY FEE, DIFFERENT FROM CHECK-OFF OF UNION DUES AND
ASSESSMENTS.
Check-off of agency fee does not require the execution by the non-bargaining union members
of individual written authorizations;125 while such is an indispensable requisite for check-off of union
dues and special assessments from members of the bargaining union.126 Article 248(e) of the Labor
Code makes it explicit that paragraph [o] of Article 241 thereof requiring individual written
authorization is inapplicable to non-bargaining union members who receive benefits from the CBA.127
2. RELEVANT JURISPRUDENCE.

Petitioner in Del Pilar Academy v. Del Pilar Academy Employees Union,128 admitted its
failure to deduct the agency fees from the salaries of non-union employees, but justifies the nondeduction by the absence of individual written authorization. It posits that Article 248(e) is inapplicable
considering that its employees derived no benefits from the CBA. The annual salary increase of its
employee is a benefit mandated by law, and not derived from the CBA. According to petitioner, the
Department of Education, Culture and Sports (DECS) required all educational institutions to allocate at
least 70% of tuition fee increases for the salaries and other benefits of teaching and non-teaching
personnel; that even prior to the execution of the CBA in September 1994, petitioner was already
granting annual salary increases to its employees. Besides, the non-union employees objected to the
deduction; hence, a written authorization is indispensable to effect a valid check off.
The argument cannot be sustained, said the Supreme Court, thus:
Contrary to what DEL PILAR wants to portray, the grant of annual salary increase is not
the only provision in the CBA that benefited the non-union employees. The UNION
negotiated for other benefits, namely, limitations on teaching assignments to 23 hours per week,
additional compensation for overload units or teaching assignments in excess of the 23 hour per
week limit, and payment of longevity pay. It also negotiated for entitlement to summer vacation
leave with pay for two (2) months for teaching staff who have rendered six (6) consecutive
semesters of service. For the non-teaching personnel, the UNION worked for their
entitlement to fifteen (15) days leave with pay. These provisions in the CBA surely benefited
the non-union employees, justifying the collection of, and the UNIONs entitlement to,
agency fees.
Accordingly, no requirement of written authorization from the non-union employees is
needed to effect a valid check off. Article 259(e) [248(e) ] makes it explicit that Article 250
[241], paragraph (o) , requiring written authorization is inapplicable to non-union members,
especially in this case where the non-union employees receive several benefits under the
CBA.
[NOTE: This sub-topic is also extensively discussed under the topic VII.
LABOR RELATIONS LAW, 4. Other relevant matters xxx (b) Union dues and
special assessments (i) Requirements for validity (c) Agency fees (i)
Requisites for assessment, supra]

4.
UNFAIR LABOR PRACTICE
IN COLLECTIVE BARGAINING
(a)
BARGAINING IN BAD FAITH
1. BASIC PRINCIPLES.
It is essential that the employer and the employees should both act in good faith. Collective
bargaining is not merely going through the motions of negotiating a CBA. A party must not have a
predetermined resolve not to budge from an initial position. It is not surface bargaining accompanied
by a purpose to defeat it. It is not shadow boxing to a draw. But it is not necessarily incompatible with
stubbornness. Good faith bargaining requires that claims made by either bargainer should be honest
claims. It would not be far-fetched to reach the conclusion that bargaining lacks good faith when an
employer mechanically repeats claim of inability to pay without making the slightest effort to
substantiate the claim.129
Where an 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.130
2. MAKING A PROMISE DURING THE CBA NEGOTIATIONS, NOT AN INDICATION OF BAD
FAITH.
Promises made by management during the CBA negotiations may not be considered an
indication of bad faith or a scheme of feigning to undertake the negotiation proceedings through empty
promises. The union has, under the law, the right and opportunity to insist on the foreseeable
fulfillment of the company s promises by demanding their incorporation in the CBA. As held
in Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines
SMTFM-UWP] v. NLRC,131 because the proposal was never embodied in the CBA, the promise has
remained just that, a promise, the implementation of which cannot be validly demanded under the law.

3. ADAMANT STANCE RESULTING IN AN IMPASSE, NOT AN INDICIUM OF BAD


FAITH.
The adamant insistence on a bargaining position to the point where the negotiations reach an
impasse does not establish bad faith. Neither can bad faith be inferred from a party s insistence on the
inclusion of a particular substantive provision unless it concerns trivial matters or is obviously
intolerable.132
4. PARTIES HAVE NO OBLIGATION TO PRECIPITATELY AGREE TO THE PROPOSALS OF
EACH OTHER.
While the law makes it an obligation for the employer and the employees to bargain
collectively with each other, such compulsion does not include the commitment to precipitately accept
or agree to the proposals of the other. All it contemplates is that both parties should approach the
negotiation with an open mind and make reasonable effort to reach a common ground of agreement.133
5. ALLEGATIONS OF BAD FAITH WIPED OUT WITH THE SIGNING OF THE CBA.
With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of
the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. The CBA is proof enough that the company exerted reasonable
effort at good faith bargaining.134
(b)
REFUSAL TO BARGAIN
1. FAILURE OR REFUSAL OF MANAGEMENT TO GIVE COUNTER-PROPOSALS TO THE
UNIONS DEMANDS.
The failure of the employer to submit its counter-proposals to the demands of the bargaining
union does not, by itself, constitute refusal to bargain.135 However, it is different if the
employer refuses to submit an answer or reply to the written bargaining proposals of the certified
bargaining union. In this case, unfair labor practice is committed. While the law does not compel the
parties to reach an agreement, it does contemplate that both parties will approach the negotiation with
an open mind and make a reasonable effort to reach a common ground of agreement.136
In General Milling Corporation v. CA,137 the Supreme Court found the petitioner guilty of
unfair labor practice under Article 248 [g] for refusing to send a counter-proposal to the union and to bargain
anew on the economic terms of the CBA.
Similarly, in the earlier case of Colegio de San Juan de Letran v. Association of Employees
and Faculty of Letran,138 the petitioner school was declared guilty of unfair labor practice when it
failed to make a timely reply to the proposals of the certified bargaining union more than a month after
the same were submitted to it. In explaining its failure to reply, the school merely offered the feeble
excuse that its Board of Trustees had not yet convened to discuss the matter. Clearly, its actuation
showed a lack of sincere desire to negotiate the CBA thereby rendering it guilty of unfair labor
practice.
2. REFUSAL OF A PARTY TO SIGN THE CBA.
A party to a fully-concluded CBA may be compelled to sign it, especially if said refusal to
sign is the only remaining hitch to its being implemented. Such refusal is considered an unfair labor
practice.139
(c)
INDIVIDUAL BARGAINING
1. EMPLOYERS ACT OF NEGOTIATING WITH UNION MEMBERS INDIVIDUALLY, A
ULP.
To negotiate or attempt to negotiate with individual workers rather than with the certified
bargaining agent is an unfair labor practice. For instance, the act of an employer in notifying absent
employees individually during a strike following unproductive efforts at collective bargaining that the
plant would be operated the next day and that their jobs were open for them should they want to come
in has been held to be an unfair labor practice, it being an active interference with the right of collective
bargaining through dealing with the employees individually instead of through their collective
bargaining representatives. 140

In Insular Life Assurance Co. , Ltd. , Employees Association-NATU v. Insular Life


Assurance Co. , Ltd. ,141 respondent company, through its president, sent two (2) sets of letters to the
individual strikers during the strike. The first contained promises of benefits to the employees in order
to entice them to return to work; while the second contained threats to obtain replacements for the
striking employees in the event they did not report for work on June 2, 1958. The respondents contend
that the sending of the letters constituted a legitimate exercise of their freedom of speech. The Supreme
Court, however, disagreed. The said letters were directed to the striking employees individually - by
registered special delivery mail at that - without being coursed through the unions which were
representing the employees in collective bargaining. Moreover, the sending of these letters is not
protected by the free speech provision of the Constitution. The free speech protection under the
Constitution is inapplicable where the expression of opinion by the employer or his agent contains a
promise of benefit or threats or reprisal.142
2. UNION CANNOT VALIDLY BARGAIN IN BEHALF OF ITS MEMBERS ONLY.
Respondent union in Philippine Diamond Hotel and Resort, Inc. [Manila Diamond Hotel]
v. Manila Diamond Hotel Employees Union,143 insists that it could validly bargain in behalf of its
members only. The Supreme Court, however, ruled that the same would only fragment the
employees of petitioner. What respondent union will be achieving is to divide the employees, more
particularly, the rank-and-file employees of petitioner hotel. The other workers who are not
members are at a serious disadvantage, because if the same shall be allowed, employees who are nonunion members will be economically impaired and will not be able to negotiate their terms and
conditions of work, thus defeating the very essence and reason of collective bargaining which is an
effective safeguard against the evil schemes of employers in terms and conditions of work. Petitioner s
refusal to bargain then with respondent cannot be considered an unfair labor practice to justify the
staging of the strike.144
(d)
BLUE-SKY BARGAINING
1. CONCEPT.
Blue-sky bargaining means making exaggerated or unreasonable proposals.145 This kind
of unfair labor practice act may only be committed by the bargaining union.
In Standard Chartered Bank Employees Union [NUBE] v. Confesor,146 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. Hence, it cannot be said that the union was
guilty of an unfair labor practice for blue-sky bargaining.
(e)
SURFACE BARGAINING
1. CONCEPT.
Surface bargaining is defined as going through the motions of negotiating without any legal
intent to reach an agreement. This kind of unfair labor practice may only be committed by the employer.
According to the same case of Standard Chartered Bank, it involves the question of whether
an employer s conduct demonstrates an unwillingness to bargain in good faith or is merely hard
bargaining. There can be no surface bargaining, absent any evidence that management 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. Here, admittedly, the
parties were not able to agree and thus reached a deadlock. However, it must be 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 agree does not amount to an unfair labor practice under
Article 248(g) of the Labor Code.147
5.
UNFAIR LABOR PRACTICE
(ULP)

(a)
NATURE OF ULP
1. WHEN AN ACT CONSTITUTES ULP.
At the outset, it must be clarified that not all unfair acts constitute ULPs. While an act or
decision of an employer or a union may be unfair, certainly not every unfair act or decision thereof
may constitute ULP as defined and enumerated under Articles 248 and 249 of the Labor Code.148
The act complained of as ULP must have a proximate and causal connection with the
following:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical signification of the term
unfair labor practice.149
2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO THE EXERCISE OF THE
RIGHT TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.
The only ULP which is the exception as it may or may not relate to the exercise of the right to
self-organization and collective bargaining is the act described under Article 248 [f], i.e. , to dismiss,
discharge or otherwise prejudice or discriminate against an employee for having given or being about
to give testimony under the Labor Code.150
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions related to ULP, to wit:
1. Article 247 which describes the concept of ULPs and prescribes the procedure for their
prosecution;
2. Article 248 which enumerates the ULPs that may be committed by employers;
3. Article 249 which enumerates the ULPs that may be committed by labor organizations;
4. Article 261 which considers violations of the CBA as no longer ULPs unless the same are
gross in character which means flagrant and/or malicious refusal to comply with the
economic provisions thereof.
5. Article 263 [c] which refers to union-busting, a form of ULP, involving the dismissal from
employment of union officers duly elected in accordance with the union constitution and
by-laws, where the existence of the union is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor organization. Article 248 describes the
ULPs that may be committed by an employer; while Article 249 enumerates those which may be committed
by a labor organization.
On the part of the employer, only the officers and agents of corporations, associations or
partnerships who have actually participated in or authorized or ratified ULPs are criminally liable.151
On the part of the union, only the officers, members of governing boards, representatives or
agents or members of labor associations or organizations who have actually participated in or
authorized or ratified the ULPs are criminally liable.152
5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have committed ULP, the following
elements must concur:
1. There should exist an employer-employee relationship between the offended party and the
offender; and
2. The act complained of must be expressly mentioned and defined in the Labor Code as an
unfair labor practice.

Absent one of the elements aforementioned will not make the act an unfair labor practice.
The first requisite is necessary because ULP may only be committed in connection with the
right to self-organization and collective bargaining by employees. Necessarily, there must be an
employment relationship in order for the organizational right to be validly and lawfully invoked.
The second requisite should be present since the Labor Code itself requires that the ULP be
expressly defined by this Code. If an act is not covered by any of the grounds expressly mentioned in the
law, it cannot be deemed a ULP act.
6. ASPECTS OF ULP.
Under Article 247, a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual, moral and exemplary
damages, attorney s fees and other affirmative reliefs.153 Generally, these civil claims should be asserted
in the labor case before the Labor Arbiters who have original and exclusive jurisdiction over unfair
labor practices.154 The criminal aspect, on the other hand, can only be asserted before the regular court.
(b)
ULP OF EMPLOYERS155
1. ENUMERATION OF SPECIFIC ULP ACTS OF EMPLOYERS.
Article 248. Unfair Labor Practices of Employers. - It shall be unlawful for an
employer to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to selforganization;
(b) To require as a condition of employment that a person or an employee shall not
join a labor organization or shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their rights
to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work and other terms and conditions
of employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition
for employment, except those employees who are already members of another
union at the time of the signing of the collective bargaining agreement. Employees
of an appropriate 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 recognized collective bargaining
agent, if such non-union members accept the benefits under the collective
bargaining agreement: Provided, that the individual authorization required under
Article 242, paragraph (o) of this Code shall not apply to the non-members of the
recognized collective bargaining agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate against an employee
for having given or being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorneys fees to the union or its officers or agents as part of
the settlement of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and
agents of corporations, associations or partnerships who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable.156

I.
INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. TEST OF INTERFERENCE, RESTRAINT OR COERCION.
The terms interfere,restrain and coerce are very broad that any act of management that
may reasonably tend to have an influence or effect on the exercise by the employees of their right to
self-organize may fall within their meaning and coverage. According to the Supreme Court in Insular
Life Assurance Co.,
Ltd., Employees Association-NATU v. Insular Life Assurance Co.,
Ltd.,157 the test of whether an employer has interfered with or restrained or coerced employees within
the meaning of the law is whether the employer has engaged in conduct which may reasonably tend to
interfere with the free exercise of the employees rights. It is not necessary that there be direct evidence
that any employee was in fact intimidated or coerced by the statements or threats of the employer if
there is a reasonable inference that the anti-union conduct of the employer does have an adverse effect
on the exercise of the right to self-organization and collective bargaining.
However the act is called or denominated - whether as interference, restraint or coercion, or as
a discriminatory discharge, or as a refusal to bargain, or even as a combination of any or all of these - is
of no consequence. What is important is that the act constitutes an unfair labor practice.158Determining
the validity of an employer s act involves an appraisal of his motives. However, motivations are
seldom expressly avowed and avowals are not always candid. There must be a measure of reliance on
the appraisal of evidence by the administrative agency. It is for the labor tribunal, in the first instance,
to weigh the employer s expressed motive in determining the effect on the employees of management s
otherwise equivocal act.
The significant point to consider, for a charge of unfair labor practice to prosper, is that it
must be shown that the employer s act was motivated by ill will, bad faith, or fraud, or was oppressive
to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings or grave anxiety resulted. 159 It bears emphasis, however, that
according to jurisprudence, basic is the principle that good faith is presumed and he who alleges bad
faith has the duty to prove the same. By imputing bad faith to the actuations of the employer, the
employee has the burden of proof to present substantial evidence to support the allegation of unfair
labor practice. Should he fail to discharge this burden, his bare allegations deserve no credit.160
2. TOTALITY OF CONDUCT DOCTRINE.
In ascertaining whether the act of the employer constitutes interference with, restraint or
coercion of the employees exercise of their right to self-organization and collective bargaining, the
totality of conduct doctrine may be applied.
The totality of conduct doctrine means that expressions of opinion by an employer, though
innocent in themselves, may be held to constitute an unfair labor practice because of the circumstances
under which they were uttered, the history of the particular employer s labor relations or anti-union
bias or because of their connection with an established collateral plan of coercion or interference. An
expression which may be permissibly uttered by one employer, might, in the mouth of a more hostile
employer, be deemed improper and consequently actionable as an unfair labor practice.161 The past
conduct of the employer and like considerations, coupled with an intimate connection between the
employer s action and the union affiliation or activities of the particular employee or employees taken
as a whole, may raise a suspicion as to the motivation for the employer s conduct. The failure of the
employer to ascribe a valid reason therefor may justify an inference that his unexplained conduct in
respect of the particular employee or employees was inspired by the latter s union membership and
activities.162
If the totality of conduct of the employer shows an evident attempt to restrain the employees
from fully exercising their rights under the law, this cannot be done under the Labor Code. The
employer will be declared guilty of unfair labor practice.163 Further, it bears underscoring that an
employer may be held guilty of unfair labor practice constituting an interference with the employees
right to self-organization even before the union is registered.164
3. INTERFERENCE IN THE EMPLOYEES RIGHT TO SELF-ORGANIZATION.
a. Interference is always ULP.

The judicial dictum is that any act of interference by the employer in the exercise by
employees of their right to self-organization constitutes an unfair labor practice. This is the very core
of ULP.
In Carmelcraft Corporation v. NLRC,165 petitioner company invoked as reason to justify the
cessation of its operations the fact that it sustained losses in the amount of P1,603.88 as of December 31,
1986. There is no report, however, of its operations during the period after that date, that is, during
the succeeding seven and a half months before it decided to close its business. Significantly, the
company is capitalized at P3 million. Considering such a substantial investment, a loss in the paltry sum of
less than P2,000.00 could hardly be considered serious enough to call for the closure of the company.
This justification is hardly credible; in fact, it is preposterous when viewed in the light of the other relevant
circumstances. The real reason for the decision of the petitioners to cease operations was the
establishment of respondent Carmelcraft Employees Union. It was apparently unwelcome to the
corporation, which would rather shut down than deal with the union. The company had in fact
suggested that it might decide not to close the business if the employees were to affiliate with
another union which the management preferred. The act of the petitioners was an unfair labor
practice prohibited by Article 248 of the Labor Code.
In General Milling Corporation v. CA,166 the Supreme Court considered the act of the
employer in presenting the letters between February to June 1993 by thirteen (13) union members
signifying their resignation from the union clearly indicative of the employers pressure on its
employees. The records show that the employer presented these letters to prove that the union no
longer enjoyed the support of the workers. The fact that the resignations of the union members
occurred during the pendency of the case before the Labor Arbiter shows the employers desperate
attempt to cast doubt on the legitimate status of the union. The ill-timed letters of resignation from
the union members indicate that the employer had interfered with the right of its employees to selforganization. Because of such act, the employer was declared guilty of unfair labor practice.
In Hacienda Fatima v. National Federation of Sugarcane Workers - Food and General
Trade,

167

the Supreme Court upheld the factual findings of the NLRC and the Court of Appeals that

from the employers refusal to bargain to its acts of economic inducements resulting in the promotion of
those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and
the dismissal of union officials and members, one cannot but conclude that the employer did not want a
union in its hacienda - a clear interference in the right of the workers to self-organization. Hence, the
employer was held guilty of unfair labor practice.
In De Leon v. NLRC and Fortune Tobacco Corporation,168 the Supreme Court held that based
on the facts, there is sufficient ground to conclude that respondents were guilty of interfering with
the right of petitioners to self-organization which constitutes an unfair labor practice under Article
248(a) of the Labor Code. Petitioners who are security guards, have been employed with Fortune
Integrated Services, Inc. (FISI) since the 1980s and have since been posted at the premises of Fortune
Tobacco Corporation (FTC) - in its main factory plant, tobacco redrying plant and warehouse. It
appears from the records that FISI, while having its own corporate identity, was a mere
instrumentality of FTC, tasked to provide protection and security in the company premises. The

records show that the two corporations had identical stockholders and the same business address.
FISI also had no other clients except FTC and other companies belonging to the Lucio Tan group of
companies. Moreover, the early payslips of petitioners show that their salaries were initially paid by
FTC. To enforce their rightful benefits under the laws on labor standards, petitioners formed a union
which was later certified as the bargaining agent of all the security guards. On February 1, 1991, the
stockholders of FISI sold all their participations in the corporation to a new set of stockholders which
renamed the corporation as Magnum Integrated Services, Inc. (MISI) . On October 15, 1991, FTC,
without any reason, pre-terminated its contract of security services with MISI and contracted two
other agencies to provide security services for its premises. This resulted in the displacement of
petitioners. As MISI had no other clients, it failed to give new assignments to petitioners. Petitioners
have remained unemployed since then. All these facts indicate a concerted effort on the part of
respondents to remove petitioners from the company and thus abate the growth of the union and
block its actions to enforce their demands in accordance with the labor standards laws.
It was likewise held in Insular Life Assurance Co. , Ltd. , Employees Association-NATU v.
Insular Life Assurance Co. , Ltd. ,169 that it is an act of interference for the employer to send individual
letters to all employees notifying them to return to work at a time specified therein, otherwise new
employees would be engaged to perform their jobs. Individual solicitation of the employees or visiting their
homes, with the employer or his representative urging the employees to cease union activity or cease
striking, constitutes unfair labor practice. All the above-detailed activities are unfair labor practices
because they tend to undermine the concerted activity of the employees, an activity to which they are
entitled free from the employer's molestation.
b. Formation of a union is never a valid ground to dismiss.
In ruling in Mark Roche International v. NLRC,170 that the private respondents were not
constructively dismissed but illegally dismissed, it was established that it was the filing of the petition
for certification election and organization of a union within the company which led petitioners to
dismiss private respondents and not petitioners' allegations of absence or abandonment by private
respondents.
Evidently, it was after receiving the notice of hearing of the petition for certification
election on October 27, 1992 that petitioners immediately told private respondents that they were no
longer employed. The formation of a labor union has never been a ground for valid termination, and
where there is an absence of clear, valid and legal cause, the law considers the termination illegal.171
What transpired in the 2014 case of T & H Shopfitters Corp. /Gin Queen Corp. v. T & H
Shopfitters Corp. /Gin Queen Workers Union,172 also indicates unfair labor practice on the part of
the employer. Here, a day after the initial meeting to form the union,173 petitioners barred 17 employees
from entering petitioners factory premises located in Castillejos, Zambales, and ordered them to transfer
to T&H Shopfitters warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its expansion.
Afterwards, the said 17 employees were repeatedly ordered to go on forced leave due to the unavailability of
work. They were not given regular work assignments while subcontractors were continuously hired to
perform their functions.
After the conduct of a certification election was ordered by the DOLE, the efforts of
petitioners at preventing respondent union from being certified as a bargaining agent intensified.
Petitioners relocated its office and workers to Cabangan, Zambales which respondents discovered was a
talahiban or grassland. The union officers and members were made to work as grass cutters in Cabangan,
under the supervision of a Barangay Captain. Due to these circumstances, the employees assigned in
Cabangan did not report for work. As a consequence, the THS-GQ Union president was made to explain
why he should not be terminated for insubordination. The other employees who likewise failed to report in
Cabangan were meted out with suspension.
A day before the certification election, petitioners sponsored a field trip to Iba, Zambales, for
its employees. The officers and members of the THS-GQ Union were purportedly excluded from the

field trip. On the evening of the field trip, a sales officer of petitioners campaigned against the union in the
forthcoming certification election. On the day of the certification election, the employees were escorted
from the field trip to the polling center in Zambales to cast their votes. Due to the heavy pressure exerted
by petitioners, the votes for no union prevailed. The following week after the certification elections
were held, petitioners retrenched THG-GQ union officers and members assigned at the Zambales plant.
Respondents claimed that the workweeks of those employees in the SBFZ plant were drastically reduced to
only three (3) days in a month.
The Supreme Court declared that all the acts of petitioners described above, taken together,
constitute unfair labor practice. Such were all orchestrated to restrict respondents free exercise of their right
to self-organization. Petitioners undisputed actions prior to and immediately before the scheduled
certification election, while seemingly innocuous, unduly meddled in the affairs of its employees in
selecting their exclusive bargaining representative.
c. It is ULP to dismiss a union officer or an employee for his union activities.
Article 263(c) of the Labor Code provides that it is an act of union-busting to dismiss from
employment any union officers who were duly elected in accordance with the union constitution and
by-laws where the existence of the union is threatened. Union-busting is an unfair labor practice.
In Colegio de San Juan de Letran v. Association of Employees and Faculty of
Letran,174 the outright termination for alleged insubordination of the union president while the CBA
negotiation was on-going was declared as an act of union-busting as it interfered with the employees right to
self-organization. The factual backdrop of the termination of the union president leads to no other conclusion
but that she was dismissed in order to strip the union of a leader who would fight for the right of her
co-workers at the bargaining table.
In Cathay Pacific Steel Corp. v. Hon. CA,175 the act of the employer in dismissing a supervisory
employee (Personnel Superintendent) on account of his union activities related to the formation of the
supervisory union was held an unfair labor practice.
According to Samahang Manggagawa ng Via Mare v. Noriel,176 to dismiss union members
in order to ensure the defeat of the union in the certification election is an unfair labor practice.
4. INTERFERENCE IN INTRA-UNION DISPUTE.
Petitioners, in De la Salle University and Dr. Quebengco v. De la Salle University
Employees Association (DLSUEA-NAFTEU) ,177were declared liable for unfair labor practice for
which they were ordered to pay respondent union nominal damages in the amount of P250,000 and
attorney's fees in the amount of P50,000 because of their act of temporarily doing the following at the height
of an intra-union dispute involving the election of officers of respondent union:
(1) Establishing a savings account for the union where all collected union dues and agency
fees will be deposited and held in trust; and
(2) Discontinuing normal relations with any group within the union including the incumbent
set of officers.
The said act of petitioners was precipitated by the request of one of the contending groups in
respondent union for them "to please put on escrow all union dues/agency fees and whatever money
considerations deducted from salaries of concerned co-academic personnel until such time that an
election of union officials has been scheduled and subsequent elections has been held. " Petitioners'
move drew respondent union to file a complaint against petitioners for unfair labor practice, claiming
that petitioners unduly interfered with its internal affairs and discriminated against its members. The
Supreme Court found the said act of petitioners constitutive of interference, an unfair labor practice act,
because pending the final resolution of the intra-union dispute, respondent's officers remained duly
authorized to conduct union affairs. It bears noting that at the time petitioners' questioned moves were
adopted, there was a valid and existing CBA between the parties. It thus behooved petitioners to
observe the terms and conditions thereof bearing on union dues and representation. It is axiomatic in
labor relations that a CBA entered into by a legitimate labor organization and an employer becomes the
law between the parties, compliance with which is mandated by express policy of the law.
But in the earlier case of Arellano University Employees and Workers Union v. CA,178 the
act of the employer in withholding the union dues and death benefits was not considered an unfair
labor practice because it was made on the request of union members in the light of their gripes against
the union and its officers. The employer even deposited the amounts corresponding to the union dues

and death benefits with the Department of Labor and Employment where the parties could settle the issues
among themselves. The employer therefore cannot be faulted for unfair labor practice as it in good faith
merely heeded the request of union members.
II.
YELLOW DOG CONTRACT
1. GENERAL DESCRIPTION OF A YELLOW DOG CONTRACT.
Paragraph [b] of Article 248 describes what is commonly known as yellow dog contract. It is
one which exacts from workers as a condition of employment that they shall not join or belong to a labor
organization, or attempt to organize one during their period of employment or that they shall withdraw
therefrom in case they are already members of a labor organization.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a labor organization;
(2) A promise by the employee that he will not join a union; and
(3) A promise by the employee that upon joining a labor organization, he will quit his
employment.
The act of the employer in imposing such a condition constitutes unfair labor practice under
Article 248(b) of the Labor Code. Such stipulation in the contract is null and void.
III.
CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. GENERAL RULE.
Paragraph [c] of Article 248 describes when the act of the employer of contracting out of
services or functions being performed by union members is considered an unfair labor practice.
As a general rule, the act of an employer in having work or certain services or functions being
performed by union members contracted out is not per se an unfair labor practice. This is so because
contracting-out of a job, work or service is clearly an exercise by the employer of its business judgment
and its inherent management rights and prerogatives. Hiring of workers is within the employer s
inherent freedom to regulate its business and is a valid exercise of its management prerogative subject
only to special laws and agreements on the matter and the fair standards of justice. The employer
cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units
are essential for its operation. It has the ultimate right to determine whether services should be
performed by its personnel or contracted to outside agencies.179
2. WHEN CONTRACTING-OUT BECOMES ULP.
It is only when the contracting out of a job, work or service being performed by union
members will interfere with, restrain or coerce employees in the exercise of their right to selforganization that it shall constitute an unfair labor practice.180 Thus, it is not unfair labor practice to
contract out work for reasons of business decline, inadequacy of facilities and equipment, reduction of cost and
similar reasonable grounds. The court usually refuses to substitute its judgment for that of the business
decision of the employer in ascertaining the validity or legality of the motivation for the contracting out of
services.
In Shell Oil Workers Union v. Shell Oil Company of the Philippines, Ltd. ,181 the Supreme
Court ruled that the contracting out of security services to an outside private security agency to
undertake the work of the company security guards who were re-assigned to other sections of the
company, is violative of the existing CBA. It could have been purely an exercise of management

prerogative on the part of the company if it were not bound by what was stipulated in the CBA to
continue to maintain a security guard section at least during the lifetime of the agreement.
Another instance where the employer was declared guilty of unfair labor practice consequent
to contracting out of services is the 2012 case ofDigital Telecommunications Philippines, Inc. v.
Digitel Employees Union (DEU) . 182 In this case, petitioner closed Digiserv, a department of the
company, to outsource its call center operation. While losses may have been a valid reason to close
down its operations in the light of the decline in the volume of transaction of operator-assisted call
services as supported by Financial Statements for the years 2003 and 2004, during which Digiserv
incurred a deficit of P163,624.00 and P164,055.00, respectively, it was, however, made in bad faith. In
declaring petitioner guilty of unfair labor practice, the Supreme Court cited the case of St. John
Colleges, Inc. v. St. John Academy Faculty and Employees Union,183 where the closure of
petitioner s high school department occasioned by the CBA deadlock and its subsequent reopening one
year later was declared an unfair labor practice act. It was then held that the closure was done by
petitioner school to defeat the affected employees security of tenure. In this case, the closure of
Digiserv was made after the DOLE Secretary had issued the first assumption order to enjoin an
impending strike. When Digiserv effected the dismissal of the affected employees, the union filed
another notice of strike. Significantly, the Secretary of Labor ordered that the second notice of strike be
subsumed by the previous assumption order. Thus, it was held that as in St. John, bad faith was
manifested by the timing of the closure of Digiserv and the rehiring of some employees to Interactive
Technology Solutions, Inc. (I-tech) , a corporate arm of Digitel. The assumption order directs
employees to return to work and the employer to reinstate the employees. The existence of the
assumption order should have prompted Digitel to observe the status quo. Instead, Digitel proceeded to close
down Digiserv. The Secretary of Labor had to subsume the second notice of strike in the assumption
order. This order notwithstanding, Digitel proceeded to dismiss the employees.
The timing of the creation of I-tech is dubious. It was incorporated on 18 January 2005 while the
labor dispute within Digitel was pending. I-tech s primary purpose was to provide call
center/customer contact service, the same service provided by Digiserv. It conducts its business inside the
Digitel office at 110 E. Rodriguez Jr. Avenue, Bagumbayan, Quezon City. The former head of Digiserv, Ms.
Teresa Taniega, is also an officer of I-tech. Thus, when Digiserv was closed down, some of the employees
presumably non-union members were rehired by I-tech. Thus, the closure of Digiserv pending the existence
of an assumption order coupled with the creation of a new corporation performing similar functions as
Digiserv leaves no iota of doubt that the target of the closure are the union member-employees. These factual
circumstances prove that Digitel terminated the services of the affected employees to defeat their security of
tenure. The termination of service was not a valid retrenchment; it was an illegal dismissal of employees.
In ruling that the closure of Digiserv to outsource its operations to I-tech constitutes an unfair labor
practice act under Article 248(c) of the Labor Code, the Supreme Court pronounced:
It needs to be mentioned too that the dismissal constitutes an unfair labor practice under
Article 248(c) of the Labor Code which refers to contracting out services or functions being
performed by union members when such will interfere with, restrain or coerce employees in
the exercise of their rights to self-organization. At the height of the labor dispute, occasioned
by Digitels reluctance to negotiate with the Union, I-tech was formed to provide, as it did
provide, the same services performed by Digiserv, the Union members nominal employer.
xxx
Indeed, while we have found that the closure of Digiserv was undertaken in bad faith,
badges thereof evident in the timing of Digiservs closure, hand in hand, with I-techs
creation, the closure remains a foregone conclusion. There is no finding, and the Union makes
no such assertion, that Digiserv and I-tech are one and the same corporation. The timing of
Digiservs closure and I-techs ensuing creation is doubted, not the legitimacy of I-tech as a
business process outsourcing corporation providing both inbound and outbound services to
an expanded local and international clientele.
The finding of unfair labor practice hinges on Digitels contracting-out certain services
performed by union member-employees to interfere with, restrain or coerce them in the
exercise of their right to self-organization.

The primordial issue in the 2013 case of BPI Employees Union-Davao City -FUBU
(BPIEU-Davao City-FUBU) v. Bank of the Philippine Islands (BPI),184 is whether or not the act of
respondent BPI to outsource the cashiering, distribution and bookkeeping functions to BPI Operations

Management Corporation (BOMC) is in conformity with the law and the existing CBA. Particularly in
dispute is the validity of the transfer of twelve (12) former FEBTC employees to BOMC, instead of
being absorbed in BPI after the corporate merger. Petitioner union claims that a union shop agreement
is stipulated in the existing CBA. It is unfair labor practice for employer to outsource the positions in
the existing bargaining unit, citing the case of Shell Oil Workers Union v. Shell Oil Company of the
Philippines, Ltd.185
A finding of ULP necessarily requires the alleging party to prove it with substantial evidence.
Unfortunately, the union failed to discharge this burden. Consequently, in ruling that respondent BPI did
not commit ULP, the Supreme Court cited the following ratiocinations:
(1) The union s reliance on the Shell Oil case is misplaced. The rule now is covered by Article 261
of the Labor Code. Clearly, only gross violations of the economic provisions of the CBA are treated as
ULP. Otherwise, they are mere grievances. In the present case, the alleged violation of the union shop
agreement in the CBA, even assuming it was malicious and flagrant, is not a violation of an economic
provision in the agreement.
(2) The provisions relied upon by the union were those articles referring to the recognition of the
union as the sole and exclusive bargaining representative of all rank-and-file employees, as well as the articles
on union security, specifically, the maintenance of membership in good standing as a condition for
continued employment and the union shop clause. It failed to take into consideration its recognition of the
bank s exclusive rights and prerogatives, likewise provided in the CBA, which included the hiring of
employees, promotions, transfers, and dismissals for just cause and the maintenance of order, discipline
and efficiency in its operations.
(3) The union, however, insists that jobs being outsourced to BOMC were included in the
existing bargaining unit, thus, resulting in a reduction of a number of positions in such unit. The
reduction interfered with the employees right to self-organization because the power of a union
primarily depends on its strength in number. It is incomprehensible how the reduction of positions in
the collective bargaining unit interferes with the employees right to self-organization because the
employees themselves were neither transferred nor dismissed from the service. As the NLRC clearly
stated: In the case at hand, the union has not presented even an iota of evidence that petitioner bank
has started to terminate certain employees who are members of the union. In fact, what appears is that
the Bank has exerted utmost diligence, care and effort to see to it that no union member has been
terminated. In the process of the consolidation or merger of the two banks which resulted in increased
diversification of functions, some of these non-banking functions were merely transferred to the
BOMC without affecting the union membership. BPI stresses that not a single employee or union
member was or would be dislocated or terminated from their employment as a result of the Service
Agreement. Neither had it resulted in any diminution of salaries and benefits nor led to any reduction
of union membership. As far as the twelve (12) former FEBTC employees are concerned, the union
failed to substantially prove that their transfer, made to complete BOMC s service complement, was
motivated by ill will, anti-unionism or bad faith so as to affect or interfere with the employees right to
self-organization.
(4) It is to be emphasized that contracting out of services is not illegal per se. It is an exercise of business
judgment or management prerogative. Absent proof that the management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an employer. In this case, bad faith
cannot be attributed to BPI because its actions were authorized by CBP Circular No. 1388, Series of 1993
issued by the Monetary Board of the then Central Bank of the Philippines (now Bangko Sentral ng Pilipinas)
.
IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d] of Article 248 considers it an unfair labor practice to initiate, dominate, assist or
otherwise interfere with the formation or administration of any labor organization, including the giving
of financial or other support to it or its organizers or supporters. Such union is calledcompany
union as its formation, function or administration has been assisted by any act defined as unfair labor
practice under the Labor Code.186
2. ULP CHARGE OF COMPANY DOMINATION AGAINST UNION, A PREJUDICIAL
QUESTION THAT BARS HOLDING OF CERTIFICATION ELECTION.

While generally, the pendency of an unfair labor practice case filed against a labor
organization participating in the certification election does not stay the holding thereof,187 however, the
pendency of a formal charge of company domination against one of the unions which is participating in
the certification election is a prejudicial question that bars the holding thereof until its final
resolution.188
3. SUSPENSION OF CBA FOR A LONG PERIOD DOES NOT MAKE THE UNION
COMPANY-DOMINATED.
If warranted by circumstances, a CBA may be suspended for more than the usual 5-year
lifetime thereof. During the period of suspension, the parties may mutually agree that the exclusive
bargaining union s status shall continue to be recognized as such. The question is, does this prolonged
recognition tantamount to making the union company-dominated? This poser was answered in the
negative in Rivera v. Espiritu,189 where the CBA between the management of Philippine Airlines
(PAL) and the bargaining union, Philippine Airlines Employees Association (PALEA) , with expiry
date of September 30, 2000, was mutually agreed by the parties to be suspended until 2008, to prevent
the closure of PAL because of severe financial losses. It was accordingly stipulated in the agreement of
suspension that:
a. PAL shall continue recognizing PALEA as the duly
certifiedbargaining agent of the regular rank-and-file ground employees of the
Company;
Petitioners allege that the 10-year suspension of the CBA under the PAL-PALEA agreement
virtually installed PALEA as a company union for said period, amounting to unfair labor practice, in
violation of Article 253-A of the Labor Code mandating that an exclusive bargaining agent serves for
five years only. The Supreme Court, however, disagreed and pronounced that the PAL-PALEA
agreement dated September 27, 1998, is a valid exercise of the freedom to contract. Under the
principle of inviolability of contracts guaranteed by the Constitution, the contract must be upheld.
4. ILLUSTRATIVE CASES OF COMPANY UNION.
In Kapisanan Ng Mga Manggagawa Ng Alak v. Hamilton Distillery Company,190 there
were two unions existing in the company, namely: Kapisanan ng mga Manggagawa ng Alak (NAFLU) , and
respondent Hamilton Workers' Union, (Workers' Union) . The company preferred the latter union over the
former. It asked the president of the former to dissolve NAFLU and when he refused, he was dismissed.
Subsequently, some members of NAFLU resigned therefrom and joined the Workers' Union because
otherwise they would be dismissed by the Company and those who remained affiliated with NAFLU were
allowed to work only two (2) days a week. Later, 52 employees who are members of NAFLU were also
terminated for refusing to join the Workers Union. Because of these circumstances, the Supreme Court
declared that the Workers Union is a company union.
In Oceanic Air Products v. CIR,191 several employees were forced by company officers to
join a union. No member of the union had been dismissed despite the implementation of a
retrenchment policy which resulted in the dismissal of other employees who are officers and members of
another union. After the dismissals, the company hired several laborers. All these circumstances indicate
that the union is company-dominated.
In Philippine American Cigar and Cigarette Factory Workers Independent Union v.
Philippine American Cigar and Cigarette Manufacturing Co. ,192 it was pronounced that one
indication that the union is company-dominated is the act of the employer in securing authorization
cards from employees and by immediately granting the union exclusive recognition as a bargaining
agent and entering into a contract therewith although it was not the duly authorized representative of
the employees. Another is when the union approached the management rather than the employees in
getting the union organized and management extended the requested assistance to the union. The acts
of the company in soliciting membership and allowing union activities to be held during working time
and coercing employees to join the union under threat of dismissal or demotion are clear indicia of
company domination.
In Davao Free Workers Front v. CIR,193 the following acts of respondent employer, 7-UP
Bottling Company of the Philippines at its Davao branch, were cited as indicia that the union was
company-dominated: It refused to bargain with petitioner union; it interfered with and coerced its
members to vote for its hand-picked candidate as president of petitioner union; it required the members
of petitioner union to join the Seven-Up Employees Association, a newly organized labor union

obviously sponsored and favored by it with which it immediately executed a CBA granting the
members of such new union fringe benefits while refusing to bargain with petitioner union regarding
the renewal of their just-expired contract and instead foisting upon petitioner union its unilateral
version of a CBA; and it filed a notice of lock-out and refused entry to members of petitioner union
when the latter refused to accept its unilateral contract version. These union-busting and discriminatory
acts led petitioner union justifiably to declare a strike against respondents unfair labor practices.
In Progressive Development Corporation v. CIR,194 several employees were dismissed
because of their refusal to resign from their union and join the other union being supported and aided
by the company. It was ruled that their dismissal because of their union activities is unfair labor
practice.
V.
DISCRIMINATION
1. CONCEPT.
Discrimination has been defined as the failure to treat all persons equally when no reasonable
distinction can be found between those favored and those not favored.195 There is discrimination only
when one is denied privileges which are granted to others under similar conditions and
circumstances.196 Thus, before a claim for discrimination can prosper, it must be established that first,
there is no reasonable distinction or classification that can be obtained between persons belonging to
the same class and, second, persons belonging to the same class have not been treated alike.197 It must
be stressed, however, that discrimination per se is not unlawful. There can be no discrimination where
the employees concerned are not similarly situated.198
2. DISCRIMINATION AND CLASSIFICATION, DISTINGUISHED.
Discrimination should be distinguished from classification. While discrimination is considered an
unfair labor practice, classification is not because it merely differentiates the employees in
accordance with their respective jobs and accords them the appropriate levels of pay or benefits due
them by reason thereof.
3. COVERAGE OF PROHIBITION.
What is prohibited as unfair labor practice under the law is to discriminate in regard to wages,
hours of work, and other terms and conditions of employment in order to encourage or discourage
membership in any labor organization.199
4. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY ACT.
In Rizal Cement Workers Union v. Madrigal and Co. ,200 it was held that for discrimination by
reason of union membership to be considered an unfair labor practice, the same must have been
committed to encourage or discourage such membership in the union. Here, this cannot be said of
the act of the company complained of. As clearly established by evidence, the refusal to allow the
employees to work and the requirement that they should stay out of the premises in the meantime
while the strike was still going on in the factory was borne out of the companys justified
apprehension and fear that sabotage might be committed in the warehouse where the products,
machinery and spare parts were stored. It has never been shown that the act of the

company was

intended to induce the employees to renounce their union membership or as a deterrent for
nonmembers to affiliate therewith, nor as a retaliatory measure for the activities of the union or in the
furtherance of the cause of the union.
In Manila Pencil Co. , Inc. v. CIR,201 it was ruled that even assuming that business conditions
justify the dismissal of employees, it is an unfair labor practice of employer to dismiss permanently only
union members and not non-unionists.

In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa Manila Railroad


Co.,202 the non-regularization of long-time employees because of their affiliation with the union while
new employees were immediately regularized was declared an act of discrimination.
In Luzon Stevedoring Corporation v. CIR,203 it was pronounced that the disapproval of the
application for leave of absence with pay does not necessarily indicate discrimination, unless it could be
shown that such disapproval was due to the employee s union membership or activity.
In AHS/Philippines Employees Union v. NLRC,204 the employer transferred the union
president from the main office in Manila to Cebu at the time when the union was still being organized. It was
held that the uneven application of its marketing plan resulting in the said transfer of the union president is
patently an act of discrimination constitutive of unfair labor practice.
In Bondoc v. CIR,205 the employee charged his employer as having discriminated against him
in the grant of promotion because he was not a member of any labor union. The Supreme Court held that the
employee s contention that he was discriminated against to force him to join a labor organization is
untenable because he failed to mention any specific union. Moreover, it is not believable for the
employer to harass and oppress an employee to force him to join a union, for it cannot be comprehended
how his joining a union would benefit his employer.
5. DISMISSING ONLY A FEW BUT NOT ALL OF THE ERRING EMPLOYEES, EFFECT.
Employees have no right to continue working upon their own terms while rejecting the
standards desired by their employer. It is not an unfair labor practice for employer to dismiss
employees who engage in slowdown. This holds true even if the employer dismissed only some of the
employees who participated in the slowdown where such dismissal is made to serve as an example to
stop the slowdown and not for discriminatory reasons.206
6. IMPOSITION OF CONDITIONS ON RETURNING STRIKERS, EFFECT.
a. Requiring to fill up forms, valid.
The act of the employer in requesting returning strikers to fill up forms to indicate the date of
their availability for work is not an unfair labor practice.207
b. Promise not to destroy company property, valid.
In the same vein, the requirement by the company that returning strikers should promise not to
destroy company property and no acts of reprisal should be made against union members who did not
participate in the strike is not an unfair labor practice. It is an act of self-preservation, designed to
maintain industrial peace in the company premises.208
c. Medical examination as pre-condition to re-admission for work, not proper.
In Davao Free Workers Front v. CIR,209 involving a valid strike occasioned by the ULP of
the employer, it was held that requiring medical examination as a condition precedent for reinstatement
or return to work is not proper. This is so because the filing and pendency of an unfair labor practice
case as in the case at bar presupposes a continuing employer-employee relationship and when the case
is decided in favor of the workers, this relationship is in law deemed to have continued uninterruptedly
notwithstanding their unlawful dismissal or the lawful strike and stoppage of work and, hence,
seniority and other privileges are preserved in their favor. To require them to undergo a physical or
medical examination as a precondition of reinstatement or return to work simply because of the long
pendency of their case which is due to no fault of theirs would not only defeat the purpose of the law
and the constitutional and statutory mandates to protect labor but would work to their unfair prejudice
as aggrieved parties and give an undue advantage to employers as the offenders who have the means
and resources to wage attrition and withstand the bane of protracted litigation. Hence, the aggrieved
workers may be subjected to periodic physical or medical examination as old reinstated workers, but
not as a precondition to their reinstatement or return to work with the important consequence that if
they are found to be ill or suffering from some disability, they would be entitled to all the benefits that
the laws and company practices provide by way of compensation, medical care, disability benefits and
gratuities, etc. to workers.
d. When physical fitness is declared a valid pre-condition for re-admission to work.
In contrast to the said Davao Free Workers case, is Mercury Drug Co., Inc. v. CIR,210 where
it was held that an employer should not be compelled to reinstate an employee who is no longer
physically fit for the job from which he was ousted. However, the employee can be reinstated after

securing a certification of his physical fitness from a government physician. In accordance with
this Mercury Drug ruling, it was likewise ruled in Jackbilt Concrete Block Co., Inc. v. Norton &
Harrison Co. and Jackbilt Concrete Block Co. Labor Union-NLU,211 that the strikers, before they
can be reinstated, should undergo the required usual physical and medical examinations by petitioners
company physician to determine their fitness for continued work and employment. Thus, the
petitioners were directed to immediately reinstate the strikers formerly found to have been suffering from
tuberculosis and other illness upon presentation by them of certification of their physical fitness for work by a
government physician.
7. RECALL OF SOME BUT NOT ALL STRIKERS, EFFECT.
Recall of workers clearly falls within the ambit of management prerogative.212 The employer
can exercise this prerogative without fear of any liability so long as it is done in good faith for the
advancement of its interest and not for the purpose of defeating or circumventing the rights of its
employees under special laws or valid agreements. It is valid as long as it is not performed in a
malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.
InGreat Pacific Life Employees Union v. Great Pacific Life Assurance Corporation,213 it
was ruled that the act of the respondent company in opting to reinstate all the strikers except Domingo and de la
Rosa is an option taken in good faith for the just and lawful protection and advancement of its interest.
Readmitting the union members to the exclusion of Domingo and de la Rosa was nothing less than a sound
exercise of management prerogative, an act of self-preservation in fact, designed to insure the maintenance of
peace and order in the company premises. The dismissal of Domingo and de la Rosa who had shown their
capacity for unmitigated mischief was intended to avoid a recurrence of the violence that attended the fateful
strike.
8. DISCRIMINATION IN GRANT OF BONUS.
In a case decided by the NLRC, Philippine Blooming Mills Employees Organization
[PAFLU] v. Philippine Blooming Mills Co., Inc.,214 the employer reserved its right under the CBA to
grant better bonus to those who are exceptionally good or efficient. It was held that it is neither
discriminatory nor an unfair labor practice for said employer to give such bonus to non-union members,
it being clear that many union members were also given the bonus and it was purely a valid exercise of
management prerogative.
But in Manila Hotel Co. v. Pines Hotel Employees Association,215 it was enunciated that
there was unjust discrimination when management departed from its previous practice of dividing
equally to all employees certain percentage of its net profit as Christmas bonus - giving only to its
employees in the operation where there was no union and not giving any to its unionized
establishments.
9. RUNAWAY SHOP.
A runaway shop is a form of discriminatory act of the employer. Technically, it is defined
as an industrial plant moved by its owners from one location to another to escape union labor
regulations or state laws. The term is also used to describe a plant moved to a new location in order to
discriminate against employees at the old plant because of their union activities.216 A runaway shopin
this sense is a relocation motivated by anti-union animus rather than for legitimate business reasons.217
In A. C. Ransom Labor Union-CCLU v. NLRC,218 the run-away corporation was
declared liable not only for the backwages but also for the reinstatement of the terminated employees
of A. C. Ransom (Phils. ) Corporation. In so holding, the Supreme Court declared that aggravating
Ransom's clear evasion of payment of its financial obligations is the organization of a "run-away
corporation," the Rosario Industrial Corporation, in 1969 at the time the unfair labor practice case was
pending before the Court of Industrial Relations (CIR) by the same persons who were the officers and
stockholders of Ransom, engaged in the same line of business as Ransom, producing the same line of
products, occupying the same compound, using the same machineries, buildings, laboratory, bodega
and sales and accounts departments used by Ransom and which is still in existence. Both corporations
were close corporations owned and managed by members of the same family. Its organization proved
to be a convenient instrument to avoid payment of backwages and the reinstatement of the 22 workers.
This is another instance where the fiction of separate and distinct corporate entities should be
disregarded. It is very obvious that the second corporation seeks the protective shield of a corporate
fiction whose veil in the present case could, and should, be pierced as it was deliberately and
maliciously designed to evade its financial obligation to its employees.
VI.

FILING OF CHARGES OR GIVING OF TESTIMONY


1. CONCEPT.
Under paragraph [f] of Article 248 of the Labor Code, it is an unfair labor practice for an
employer to dismiss, discharge or otherwise prejudice or discriminate against an employee for having
given or being about to give testimony under the Labor Code.219
2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO EMPLOYEES EXERCISE OF THE
RIGHT TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.
It must be underscored that Article 248(f) is the only unfair labor practice that need not be
related to the exercise by the employees of their right to self-organization and collective bargaining.220
In Philippine American Cigar and Cigarette Factory Workers Independent Union v.
Philippine American Cigar and Cigarette Manufacturing Co.,221 the employer dismissed the
brother of an employee who filed a case against it. The Supreme Court ruled that such act of the
employer constitutes unfair labor practice. Although Section 4[a] 5 of R.A. No. 875222 would seem to
refer only to the dismissal of the one who filed charges against the company as constituting an unfair
labor practice, the legislative intent is to assure absolute freedom of the employees to establish labor
organizations and unions as well as to proffer charges for violation of labor laws. If the dismissal of an
employee due to the filing by him of said charges would be and is an undue restraint upon said
freedom, the dismissal of his brother owing to the non-withdrawal of the charges of the former would
be and constitute as much, in fact a greater and more effective, restraint upon the same freedom. What
is prohibited to be done directly shall not be allowed to be accomplished indirectly.
In Itogon-Suyoc Mines, Inc. v. Baldo,223 it was declared that an unfair labor practice was
committed by the employer when it dismissed the worker who had testified in the hearing of a
certification election case despite its prior request for the employee not to testify in the said proceeding
accompanied with a promise of being reinstated if he followed said request.224
VII.
CBA-RELATED ULPs
1. THREE (3) CBA-RELATED ULPs.
Article 248 enunciates three (3) CBA-related unfair labor practices, to wit:
1. To violate the duty to bargain collectively as prescribed in the Labor Code.225
2. To pay negotiation or attorney s fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute.226
3. To violate a collective bargaining agreement.227
No. 1 above is discussed earlier under a separate topic in the syllabus entitled VII. Labor
Relations Law xxx B. Right to collective bargaining; 1. Duty to bargain collectively; (a) When there is
absence of a CBA; (b) When there is a CBA, supra.
Nos. 2 and 3 above will be discussed hereunder seriatim.
VII-A.
PAYMENT OF NEGOTIATION AND ATTORNEYS FEES
1. WHEN PAYMENT CONSIDERED ULP.
Article 248(h) of the Labor Code considers as an unfair labor practice the act of the employer in
paying negotiation fees or attorney s fees to the union or its officers or agents as part of the settlement
of any issue in collective bargaining or any other dispute.
2. NEGOTIATION FEES VS. ATTORNEYS FEES.
To enlighten further, the term negotiation fees is different from attorney s fees. The law
uses negotiation fees to justify payment of fees to non-lawyers who are not entitled to attorney s fees.

The inclusion in Article 222(b)228 of negotiation fees or similar charges of any kind is meant
to address the issue of fees that should be paid to non-lawyers who assist the contracting union in its CBA
negotiations and dealings with the employer. Being non-lawyers, they cannot be paid nor are they entitled to
attorney s fees.
This principle has been affirmed in Philippine Association of Free Labor Unions (PAFLU)
v. Binalbagan Isabela Sugar Company,229 where the sole issue was whether a non-lawyer can
recover attorney's fees for legal services rendered. The Court of Industrial Relations (CIR) in this case awarded
25% of the backwages as compensation for professional services rendered in the case, 10% of which was
ordered paid to Quintin Muning, a non-lawyer, and the rest to two (2) lawyers. This award to Quintin Muning
is sought to be voided. In so voiding, the Supreme Court considered it immoral and cannot be justified. An
award by a court of attorney's fees is no less immoral in the absence of a contract, as in the present case.
The existence of an attorney-client relationship is a condition to the recovery of attorney's fees.
Such a relationship cannot exist unless the client's representative in court be a lawyer. Since respondent
Muning is not one, he cannot establish an attorney-client relationship with his individual clients, or with
PAFLU, and he cannot, therefore, recover attorney's fees.
The fact that non-lawyers are allowed to appear in labor proceedings does not justify their
entitlement to attorney s fees.230 A lawyer cannot share his attorney s fees with a non-lawyer in
situations where a lawyer engaged by the union works with, or is assisted by, non-lawyers, like union
organizers or federation representatives who may lay a claim for their services alongside the lawyer.
This is proscribed under the Code of Professional Responsibility for Lawyers,231 thus:
Rule 9.02 - A lawyer shall not divide or stipulate to divide a fee for legal services with
persons not licensed to practice law, xxx

Hence, in this situation, the fees of the lawyer should properly be denominated as attorney s fees
and those of the non-lawyers, as negotiation fees or similar charges.
3. ATTORNEYS FEES AND NEGOTIATION FEES SHOULD BE PAID FROM UNION
FUNDS.
Article 222(b) of the Labor Code requires that such attorney s fees, negotiation fees or similar
charges should be paid from the union funds. These fees cannot be collected from the individual
employees.232 Any contract, agreement or arrangement of any sort to the contrary shall be null and
void.233
Clearly, Article 222(b) prohibits the payment of attorney s fees only when it is effected
through forced contributions from the workers from theirown funds as distinguished from the union
funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually
contribute their respective shares in the fees to be paid the attorney for his services on behalf of the
union in its negotiations with the employer.234 This is so because it is the union, not the employees,
which is obligated to the lawyer.235
4. COUNTERPART PROVISION IN ARTICLE 249(e) .
On the part of the union, asking for or accepting attorney s fees or negotiation fees from the
employer as part of the settlement of any issue in collective bargaining or any other dispute is
considered an unfair labor practice under Article 249(e) of the Labor Code.
VII-B.
VIOLATION OF THE CBA
1. CORRELATION.
Article 248(i) of the Labor Code should be read in relation to Article 261 thereof. Under
Article 261, as amended,236 violations of a CBA, except those which are gross in character, shall no
longer be treated as an unfair labor practice and shall be resolved as grievances under the CBA. Gross
violations of CBA shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.237
2. CASE LAW.

The act of the employer in refusing to implement the negotiated wage increase stipulated in
the CBA, which increase is intended to be distinct and separate from any other benefits or privileges
that may be forthcoming to the employees, is an unfair labor practice.238
Refusal for a considerable number of years to give salary adjustments according to the
improved salary scales in the CBA is an unfair labor practice.239
The act of the employer in permitting non-union members to participate in the service
charges, contrary to the stipulation in the CBA, is an unfair labor practice.240
VIII.
BURDEN OF PROOF
IN ULP CASES UNDER ARTICLE 248
In unfair labor practice cases against employers, it is the union which has the burden to
present substantial evidence to support its allegation of unfair labor practice committed by the
employer. It is not enough that the union believed that the employer committed unfair labor practice
when the circumstances clearly negate even a prima facie showing to warrant such a belief.241
IX.
PERSONS CRIMINALLY LIABLE
FOR ULPs OF EMPLOYER
As provided under the last paragraph of Article 248, only the officers and agents of
corporations, associations or partnerships who have actually participated in, authorized or ratified
unfair labor practice shall be held criminally liable therefor. Absent any such participation,
authorization or ratification, the officers and agents of said entities cannot be held personally liable for
unfair labor practice.
(c)
ULP OF LABOR ORGANIZATIONS
1. ENUMERATION OF ULPs OF LABOR ORGANIZATIONS.
Article 249. Unfair Labor Practices of Labor Organizations. - It shall be unfair labor
practice for a labor organization, its officers, agents or representatives:
(a) To restrain or coerce employees in the exercise of their right to self-organization.
However, a labor organization shall have the right to prescribe its own rules with
respect to the acquisition or retention of membership;
(b) To cause or attempt to cause an employer to discriminate against an employee,
including discrimination against an employee with respect to whom membership in
such organization has been denied or to terminate an employee on any ground
other than the usual terms and conditions under which membership or
continuation of membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the employer, provided it
is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or
deliver any money or other things of value, in the nature of an exaction, for
services which are not performed or not to be performed, including the demand for
fee for union negotiations;
(e) To ask for or accept negotiation or attorneys fees from employers as part of the
settlement of any issue in collective bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers,
members of governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in, authorized or ratified unfair
labor practices shall be held criminally liable.242

I.
RESTRAINT AND COERCION OF EMPLOYEES

IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION


1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR COERCE EMPLOYEES IN THE
EXERCISE OF THEIR RIGHT TO SELF-ORGANIZE.
Under Article 249(a) , it is ULP for a labor organization, its officers, agents or representatives
to restrain or coerce employees in the exercise of their right to self-organization. Compared to similar
provision of Article 248(a) of the Labor Code, notably lacking is the use of the word interfere in the
exercise of the employees right to self-organize. The significance in the omission of this term lies in
the grant of unrestricted license to the labor organization, its officers, agents or representatives to
interfere with the exercise by the employees of their right to self-organization. Such interference is not
unlawful since without it, no labor organization can be formed as the act of recruiting and convincing
the employees is definitely an act of interference. It becomes unlawful within the context of paragraph
[a] of Article 249 only when it amounts to restraint or coercion which is expressly prohibited
thereunder.
2. RIGHT TO PRESCRIBE OWN RULES NOT ONLY ON ACQUISITION OR RETENTION OF MEMBERSHIP BUT THE
LOSS THEREOF.
Under the same provision, a labor organization is granted the right to prescribe its own
rules with respect to the acquisition or retention of membership. Although not expressly
mentioned in the law, it is equally the right of the union to prescribe in the same rules with respect to the
loss of membership therein through various modes allowed by law, such as resignation, expulsion or
impeachment. These rules are normally embodied in the constitution and by-laws of the labor
organization. Pursuant to this right, the labor organization can prescribe the proper qualifications for
membership therein as well as the rules and regulations to be followed by its members in order to retain
their membership in good standing therein.
3. THE RULES MUST BE REASONABLE.
The rules, to be valid, must be reasonable and within the bounds of the law. Thus, the labor
organization in M. D. Transit v. de Guzman,243 was declared to have committed unfair labor practice
when it expelled a member just because he filed charges against the union officers.
II.
DISCRIMINATION
1. CONCEPT.
Under Article 249(b) , it is ULP for a labor organization, its officers, agents or representatives to
cause or attempt to cause an employer to discriminate against an employee, including discrimination against
an employee with respect to whom membership in such organization has been denied, or to terminate an
employee on any ground other than the usual terms and conditions under which membership or
continuation of membership is made available to other members.
2. COUNTERPART PROVISION.
This ground is the counterpart of the ULP of employers under Article 248(e) which consists in the
act of discriminating against an employee in regard to wages, hours of work and other terms and conditions
of employment in order to encourage or discourage membership in any labor organization. If the act of
discrimination committed by the employer was instigated by the union, both the employer and the union may
be declared guilty of unfair labor practice.
III.
DUTY OF UNION TO BARGAIN COLLECTIVELY
1. CONCEPT.
Under Article 249(c) , it is ULP for a duly certified sole and exclusive bargaining union, its
officers, agents or representatives to refuse or violate the duty to bargain collectively with the

employer. This is the counterpart provision of Article 248(g) respecting the violation by the employer of its
duty to bargain collectively.
2. PURPOSE.
The obvious purpose of the law is to ensure that the union will negotiate with management in
good faith and for the purpose of concluding a mutually beneficial agreement regarding the terms and
conditions of their employment relationship. For instance, it is unfair labor practice for a labor
organization to demand that the employer should negotiate a CBA with it at a time when it has yet to
be certified as the sole and exclusive bargaining agent of the employees since the certification election
case is still pending. This act violates the employer s right to collectively bargain only with the sole
and exclusive representative of the majority of its workers.244
IV.
ANTI-FEATHERBEDDING DOCTRINE
1. CONCEPT.
Under Article 249(d) , it is ULP for a labor organization, its officers, agents or representatives to
cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things
of value, in the nature of an exaction, for services which are not performed or not to be performed, including
the demand for fee for union negotiations.
This practice of the union is commonly known as
featherbeddingas it unduly and
unnecessarily maintains or increases the number of employees used or the amount of time consumed to
work on a specific job. This is done by the employees to unduly secure their jobs in the face of
technological advances or as required by minimum health and safety standards, among other
justifications. These featherbedding practices have been found to be wasteful and without legitimate
justifications.
2. DEMAND FOR PAYMENT OF STANDBY SERVICES.
A union commits an unfair labor practice under this provision by causing or attempting to
cause an employer to pay or agree to pay for standby services. Payments for standing-by, or for the
substantial equivalent of standing-by, are not payments for services performed within the meaning
of the law. When an employer received a bona-fide offer of competent performance of relevant
services, it remains for the employer, through free and fair negotiation, to determine whether such offer
should be accepted and what compensation should be paid for the work done.245
A union s demand for a contract calling for payments for the presence of one of its members
at a jobsite when no unionist s work was being done therein, and when the employer indicated that it
had no need for such labor, coupled with a strike to make the employer respond to such demand, is an
exaction within the meaning of this law, and the demand is considered not a bona-fide offer of
competent performance of relevant services.246
A union s demand that a theater corporation employ maintenance men at its theater is also an
arguable violation of the anti-featherbedding provision of the law where maintenance men employed at
other theaters under union compulsion did little or no actual work, but were merely present on the
premises during working hours.247
3. DEMAND FOR PAYMENT OF MADE WORK.
Where work is actually done by an employee with the employer s consent, the union s
demand that the employee be compensated for time spent in doing the work does not violate the
law.248 The law leaves to collective bargaining the determination of what work, if any, including bonafidemade work, shall be included as compensable services and what rate of compensation shall be
paid for it.249
A musicians union has been held not to have violated the anti-featherbedding provision by
refusing to permit a union band to perform at the opening game of the baseball season, refusing to
permit a union organist to play at the home games, and picketing the baseball stadium, in order to force
the owner of the baseball team to hire a union band to play at all weekend home games; or by refusing
to consent to appearances of travelling bands in a theater unless the theater manager also employs a
local orchestra in connection with certain programs where the local orchestra is to perform actual and
not token services, even though the theater manager does not need or want to employ the local
orchestra.250

Similarly, a printers union does not violate the anti-featherbedding provision by securing
payment of wages to printers from newspapers for setting bogus - duplicate forms for local
advertisements although the newspaper already has cardboard matrices to be used as molds for metal
casting from which to print the same advertisements - even though the bogus is ordinarily not used
but is melted down immediately.251
4. DEMAND FOR PAYMENT OF WORK ALREADY COMPENSATED.
The anti-featherbedding provision has been held not to bar a union from demanding payment
for work for which the employer has already paid another person. Hence, a union has been held not
guilty of an unfair labor practice in demanding payment to it of an amount equal to the wages paid by
the employer to a non-union employee for work to which the union s members were entitled. If the
work is actually done by employees, there can be no conflict with the anti-featherbedding provision,
regardless of whether or not the persons receiving payment are the ones who performed the work.252
V.
DEMAND OR ACCEPTANCE
OF NEGOTIATION FEES OR ATTORNEY S FEES
1. CONCEPT.
Under Article 249(e) , it is ULP for a labor organization, its officers, agents or representatives to ask
for or accept negotiation fees or attorney s fees from employers as part of the settlement of any issue in
collective bargaining or any other dispute.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 248(h) regarding the payment, on the part of the
employer, of negotiation fees or attorney s fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute.
3. RATIONALE BEHIND THE PROHIBITION.
The reason for this policy of the law is to prevent undue influence by the employer on the
independence of the union in its decision over any issues it may have with the former. Moreover, it is
possible that the matter of fixing the amount of negotiation fees or attorneys fees alone would
present a problem much complicated than the more substantive issues involving the terms and
conditions and welfare of the workers.
VI.

VIOLATION OF THE CBA


1. CONCEPT.
Under Article 249(f) , it is ULP for a labor organization, its officers, agents or representatives to
violate a CBA.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 248(i) regarding the employer s act of violating a CBA.
But it must be noted that under Article 261 of the Labor Code, violation of the CBA is generally considered
merely a grievable issue. It becomes an unfair labor practice only if the violation is gross in character which
means that there is flagrant and/or malicious refusal to comply with the economic (as distinguished from
non-economic) stipulations in the CBA. This principle applies not only to the employer but to the labor
organization as well.
VII.

CRIMINAL LIABILITY FOR ULPs OF LABOR ORGANIZATION

1. PERSONS LIABLE.
Article 249 is explicit in its provision on who should be held liable for ULPs committed by labor
organizations. It states that only the officers, members of governing boards, representatives or agents or
members of labor associations or organizations who have actually participated in, authorized or ratified
unfair labor practices shall be held criminally liable.
2. THE LAW SPEAKS ONLY OF CRIMINAL LIABILITY.
The same provision clearly provides only for the criminal culpability of those involved in the
commission of ULP by labor organizations. There is nothing therein that holds any of the persons so held
liable for the civil aspect thereof which may take the form of damages.
For instance, if after expelling a member, the bargaining union recommends to the employer
his termination pursuant to the union security provision of the CBA, and the employer approves the
same and later on, the court declares that the dismissal was illegally effected, normally, the employer is
held liable only for the reinstatement aspect and the union is ordered to pay not only the resulting
backwages but damages as well. As far as the personal liability of the union officers and the other
persons mentioned in the law is concerned, there is no provision that can hold them therefor. The
silence of the law on this point can only be construed that they are not so liable therefor.
------------oOo------------

Chapter Seven
LABOR RELATIONS LAW
TOPICS PER SYLLABUS
C. Right to peaceful concerted activities
1. Forms of concerted activities
2. Who may declare a strike or lockout?
3. Requisites for a valid strike
4. Requisites for a valid lockout
5. Requisites for lawful picketing
6. Assumption of jurisdiction by the DOLE Secretary or Certification of the labor
dispute to the NLRC for compulsory arbitration
7. Nature of assumption order or certification order
8. Effect of defiance of assumption or certification orders
9. Illegal strike
a) Liability of union officers
b) Liability of ordinary workers
c) Liability of employer
d) Waiver of illegality of strike
10. Injunctions
a) Requisites for labor injunctions
b) Innocent bystander rule
C.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES1

1. CONSTITUTIONAL FOUNDATION.
The following constitutional tenets are relevant in connection with the exercise of workers of
their right to strike and picket:
1. Section 18, Article II [Declaration of Principles and State Policies], 1987 Constitution:

The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.
2. Section 4, Article III [Bill of Rights], 1987 Constitution:
No law shall be passed abridging the freedom of speech, of expression, or of
the press, or the right of the people peaceably to assemble and petition the
government for redress of grievances.
3. Section 3 (Labor) , Article XIII [Social Justice and Human Rights], 1987 Constitution:
The State shall xxx guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. xxx
2. STATE POLICY ON FREE TRADE UNIONISM AND FREE COLLECTVE BARGAINING.
It is the policy of the State to encourage free trade unionism and free collective bargaining.
Pursuant thereto, workers shall have the right to engage in concerted activities for purposes of (a)
collective bargaining or (b) for their mutual benefit and protection. In the same vein, the employer may
conduct a lockout to redress its grievance against the commission by the certified bargaining union of unfair
labor practice or to resolve a bargaining impasse.
Under the law, the right of legitimate labor organizations to strike and picket and of employers
to lockout consistent with the national interest should continue to be recognized and respected.2
3. EXISTENCE OF AN INDUSTRIAL OR LABOR DISPUTE NECESSARY.
A strike or lockout may only be justified if there exists an industrial or labor dispute. As
defined in law, the term industrial or labor disputeincludes any controversy or matter concerning the
terms and conditions of employment or the association or representation of persons in negotiating,
fixing, maintaining, changing or arranging the terms and conditions of employment regardless of
whether the disputants stand in the proximate relation of employer and employee. 3 In legal parlance,
an actual existing labor dispute subject of a notice of strike or lockout or a case of actual strike or
lockout is referred to as a conciliation case.4
1.
FORMS OF CONCERTED ACTIVITIES
1. FORMS OF CONCERTED ACTIVITIES.
There are three (3) forms of concerted activities, namely:
1. Strike;
2. Lockout; and
3. Picketing.
2. STRIKE.
a. Definition.
Strike means any temporarystoppage of work by the concerted action of the employees as a
result of an industrial or labor dispute.5
b. Forms and classification of strikes.
A strike may be classified:
1. As to nature:
a. Legal strike - one called for a valid purpose and conducted through means allowed by
law.6
b. Illegal strike - one staged for a purpose not recognized by law or, if for a valid purpose, it
is conducted through means not sanctioned by law.7
c. Economic strike - one declared to demand higher wages, overtime pay, holiday pay,
vacation pay, etc.8 It is one which is declared for the purpose of forcing wage or other
concessions from the employer for which he is not required by law to grant.9
d. Unfair labor practice (ULP) or political strike - one called to protest against the
employer s unfair labor practices enumerated in Article
248 of the Labor Code,

including gross violation of the CBA under Article 261 and union-busting under Article
263(c) of the Labor Code.10
e. Slowdown strike - one staged without the workers quitting their work but by merely
slackening or reducing their normal work output.11 It is also called a strike on the
installment plan. 12
f. Mass leaves - One where the employees simultaneously filed leaves of absence based on
various reasons such as, inter alia, vacation and sick leaves.13
g. Wildcat strike - one declared and staged without the majority approval of the recognized
bargaining agent.14
h. Sitdown strike - one where the workers stop working but do not leave their place of
work.15
i. Overtime boycott - one involving the act of the workers in refusing to render overtime
work in violation of the CBA, resorted to as a means to coerce the employer to yield to
their demands.16
j. Boycott of products - one which involves the concerted refusal to patronize an
employer's goods or services and to persuade others to a like refusal.17
k. Attempts to damage, destroy or sabotage plant equipment and facilities and similar
activities;18
l. The sporting by the workers of closely cropped hair or cleanly shaven heads after
their union filed a notice of strike as a result of a CBA deadlock is a form of illegal
strike.19
2. As to coverage:
a. General strike - one which covers and extends over a whole province or country. In this
kind of strike, the employees of various companies and industries cease to work in
sympathy with striking workers of another company. It is also resorted to for the
purpose of putting pressure on the government to enact certain labor-related measures
such as mandated wage increases or to cease from implementing a law which workers
consider inimical to their interest. It is also mounted for purposes of paralyzing or
crippling the entire economic dispensation.
b. Particular strike - one which covers a particular establishment or employer or one
industry involving one union or federation.
3. As to purpose:
a. Economic strike.20
b. Unfair labor practice strike or political strike.21
4. As to the nature of the strikers action:
a. Partial strike - one which consists of unannounced work stoppages such as slowdowns,
walkouts or unauthorized extension of rest periods.
b. Sit-down strike.22
c. Slowdown strike.23
5. As to the extent of the interest of strikers:
a. Primary strike - refers to a strike conducted by the workers against their employer,
involving a labor dispute directly affecting them.
b. Secondary strike - refers to a strike staged by the workers of an employer involving an
issue which does not directly concern or affect their relationship but rather, by some
circumstances affecting the workers such as when the employer persists to deal with a
third person against whom the workers have an existing grievance. Workers stage this
kind of strike to secure the economic assistance of their employer to force the third
person to yield to the union on the issues involving it and said third person.
c. Sympathy strike - refers to a strike where the strikers have no demands or grievances or
labor dispute of their own against their employer but nonetheless stage the strike for the
purpose of aiding, directly or indirectly, other strikers in other establishments or
companies, without necessarily having any direct relation to the advancement of the
strikers interest. This is patently an illegal strike.24 An example of asympathy strike is

the welga ng bayan where workers refuse to render work to join a general strike
which does not involve a labor or industrial dispute between the strikers and the employer
struck against but it is staged in pursuit of certain ends such as reduction in the electric power
rates, increase in the legislated wages, etc.
3. LOCKOUT.
Lockout means the temporaryrefusal by an employer to furnish work as a result of
an industrial or labor dispute.25
It consists of the following:
1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the employer.26
3. The employer s act of excluding employees who are union members.27
4. PICKETING.
Picketing is the act of workers in peacefully marching to and fro before an establishment
involved in a labor dispute generally accompanied by the carrying and display of signs, placards and
banners intended to inform the public about the dispute.28
2.
WHO MAY DECLARE A STRIKE OR LOCKOUT?
1. WHO MAY DECLARE A STRIKE?
a. Proper party.
Only a legitimate labor organization may declare a strike. For obvious reason, the employer
cannot.
b. Basic requirements.
As to the personality of the union, the following requirements should be shown before a strike may
be validly declared and staged:
a. The union should be legitimate. A strike conducted by a union which has not been shown
to be a legitimate labor organization is illegal.29
b. In organized establishment where there is a certified bargaining agent, only the
recognized or certified collective bargaining union can validly stage a strike.30 A minority
union cannot stage a strike. A strike conducted by a minority union is patently illegal
because no labor dispute which will justify the conduct of a strike may exist between the
employer and a minority union. To permit the union s picketing activities would be to
flaunt at the will of the majority.31
c. In unorganized establishment where there is no certified bargaining agent,
any legitimate labor organization in the establishment may declare a strike but only on the
ground of unfair labor practice.32 The only other ground of bargaining deadlock cannot be
invoked in support of a strike in an unorganized establishment for the simple reason that
no CBA can be negotiated and concluded absent such recognized or certified collective
bargaining agent. In this situation, the existence of a bargaining deadlock is an
impossibility.33
2. WHO MAY DECLARE A LOCKOUT?
a. Proper party.
Only the employer can declare and stage a lockout. For obvious reason, no union can.
b. Grounds.
The employer may declare a lockout based on any of the two (2) grounds that may similarly
be invoked by the union in staging a strike, i.e., (1) bargaining deadlock; and/or (2) unfair labor
practice.34
3. WHO MAY STAGE A PICKET?
Although not mentioned in the syllabus, it is important to discuss this point. Distinctively, in
case of picketing, the absence of employment relationship between the employer and the picketers or

some of them does not affect its validity. Picketing, if peacefully carried out, cannot be prohibited even
in the absence of employer-employee relationship.35
3.
REQUISITES FOR A VALID STRIKE
1. REQUISITES FOR A VALID STRIKE.
a. Procedural but mandatory requisites.
In accordance with Article 263 and pertinent prevailing jurisprudence, a strike, in order to be valid
and legal, must conform to the following procedural requisites:
1 requisite - It must be based on a valid and factual ground;
2 requisite - A notice of strike must be filed with the NCMB-DOLE;
3 requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours
prior to the taking of the strike vote by secret balloting, informing said office
of the decision to conduct a strike vote, and the date, place, and time
thereof;
4 requisite - A strike vote must be taken where a majority of the members of the union
obtained by secret ballot in a meeting called for the purpose, must approve it;
st

nd

rd

th

5 requisite - A strike vote report should be submitted to the NCMB-DOLE at least seven (7)
days before the intended date of the strike;
6 requisite - Except in cases of union-busting, the cooling-off period of 15 days, in case of
unfair labor practices of the employer, or 30 days, in case of collective
bargaining deadlock, should be fully observed; and
7 requisite - The 7-day waiting period/strike ban reckoned after the submission of the
strike vote report to the NCMB-DOLE should also be fully observed in all
cases.
th

th

th

All the foregoing requisites, although procedural in nature, are mandatory and failure of the
union to comply with any of them would render the strike illegal.36
I.
FIRST REQUISITE:
EXISTENCE OF VALID AND FACTUAL GROUND/S
1. VALID GROUNDS.
The law recognizes only two (2) grounds in support of a valid strike,37 viz:
1. Collective bargaining deadlock (Economic Strike); and/or
2. Unfair labor practice (Political Strike).38
A strike not based on any of these two grounds is illegal.39
2. SOME PRINCIPLES ON THE FIRST REQUISITE.
Violation of CBA, except when gross, is not an unfair labor practice, hence, may not be
cited as ground for a valid strike. Ordinary violation of a CBA is no longer treated as an
unfair labor practice but as a mere grievance which should be processed through the
grievance machinery and voluntary arbitration.40
Inter-union or intra-union dispute is not a valid ground.41
Violation of labor standards is not a valid ground.42
Wage distortion is not a valid ground.43
II.
SECOND REQUISITE:
FILING OF A NOTICE OF STRIKE
1. NOTICE OF STRIKE.
No labor organization shall declare a strike without first having filed a notice of strike.44

2. WHERE FILED.
A notice of strike is filed with the National Conciliation and Mediation Board (NCMB) of the
Department of Labor and Employment (DOLE).45
III.
THIRD REQUISITE:
SERVICE OF A 24-HOUR PRIOR NOTICE
In the 2005 case of Capitol Medical Center, Inc. v. NLRC,46 it was imposed as additional
requisite that a 24-hour notice must be served to the NCMB-DOLE prior to the taking of the strike vote by
secret balloting, informing it of the union s decision to conduct a strike vote as well as the date, place, and
time thereof.
IV.
FOURTH REQUISITE:
CONDUCT OF A STRIKE VOTE
1. MAJORITY APPROVAL OF THE STRIKE.
No labor organization shall declare a strike without the necessary strike vote first having been
obtained and reported to the NCMB-DOLE.47
A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called
for that purpose.48 This process is called strike vote balloting. 49
2. PURPOSE.
The purpose of a strike vote is to ensure that the decision to strike broadly rests with the
majority of the union members in general and not with a mere minority. At the same time, it is meant to
discourage wildcat strikes, union bossism and even corruption.50
3. DURATION OF THE VALIDITY OF THE MAJORITY APPROVAL OF A STRIKE.
The majority decision to stage a strike is valid for the duration of the dispute based on
substantially the same grounds considered when the strike vote was taken.51
V.
FIFTH REQUISITE:
SUBMISSION OF THE STRIKE VOTE TO NCMB-DOLE
1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.
The evident intention of the law in mandatorily requiring the submission of the strike vote
report is to reasonably regulate the right to strike which is essential to the attainment of legitimate
policy objectives embodied in the law. Verily, mere substantial compliance with a mandatory provision
will not suffice. Strict adherence to the mandate of the law is required.52
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
The strike vote report should be submitted to the NCMB-DOLE at least seven (7) days before
the actual staging of the intended strike, subject to the observance of the cooling-off periods provided
under the law.53
VI.
SIXTH REQUISITE:
OBSERVANCE OF THE COOLING-OFF PERIOD
1. GENERAL RULE.
The cooling-off periods provided under the law before the intended date of the actual
mounting of the strike are as follows:
1. In case of bargaining deadlock, the cooling-off period is thirty (30) days from the filing of
the notice of strike; or
2. In case of unfair labor practice, the cooling-off period is fifteen (15) days from the filing
of the notice of strike.54
2. EXCEPTION: IN CASE OF UNION-BUSTING.

In case of an unfair labor practice involving the dismissal from employment of union
officers (not ordinary members) duly elected in accordance with the union constitution and by-laws
which may constitute union-busting because the existence of the union is threatened by reason of such
dismissal, the 15-day cooling-off period does not apply and the union may take action immediately
after the strike vote is conducted and the results thereof duly submitted to the regional branch of the
NCMB.55
In cases of union-busting, only the 15-day cooling-off period need not be observed; all the
other requisites must be fully complied with.56
3. RECKONING OF THE COOLING-OFF PERIODS.
The start of the cooling-off periods should be reckoned from the time the notice of strike is
filed with the NCMB-DOLE, a copy thereof having been served on the other party concerned.57
4. PURPOSE OF THE COOLING-OFF PERIODS.
The purpose of the cooling-off periods is to provide an opportunity for mediation and
conciliation of the dispute by the NCMB-DOLE with the end in view of amicably settling it.58
VII.
SEVENTH REQUISITE:
7-DAY WAITING PERIOD OR STRIKE BAN
1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.
The seven (7) day waiting period is intended to give the NCMB-DOLE an opportunity to
verify whether the projected strike really carries the approval of the majority of the union members.59
2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.
The 7-day waiting period or strike ban is a distinct and separate requirement from the coolingoff period prescribed by law. The latter cannot be substituted for the former and vice-versa.60
The cooling-off period is counted from the time of the filing of the notice of strike. The 7-day
waiting period/strike ban, on the other hand, is reckoned from the time the strike vote report is
submitted to the NCMB-DOLE.
Consequently, a strike is illegal for failure to comply with the prescribed mandatory coolingoff period and the 7-day waiting period/strike ban after the submission of the report on the strike vote.61
3. BOTH MUST BE COMPLIED WITH SEPARATELY AND DISTINCTLY FROM EACH
OTHER.
The requirements of cooling-off period and 7-day waiting period/strike ban must both be
complied with. The labor union may take the strike vote and report the same to the NCMB-DOLE
within the statutory cooling-off period. In this case, the 7-day waiting period/strike ban should be
counted from the day following the expiration of the cooling-off period. A contrary view would
certainly defeat and render nugatory the salutary purposes behind the distinct requirements of coolingoff period and the waiting period/strike ban.62
Example: In a case where the notice of strike grounded on ULP is filed on October 1, 2014, and
the strike vote is taken within the cooling-off period, say, on October 5, 2014 and the strike vote report
showing majority support for the intended strike is submitted to the NCMB-DOLE the following day, October
6, 2014, the question is when can the union legally stage the strike?
Following the above principle, the answer obviously is on October 24, 2014 or any day
thereafter. This is so because the 15-day cooling-off period for ULP expires on October 1663 and adding
the 7-day strike ban which should be counted from the day following the expiration of the cooling-off period,
the 7 day would be on October 23, 2014. Obviously, the strike cannot be conducted on the 7 day but rather
after the lapse thereof; hence, it is only on October 24, 2014 and onwards that the union may lawfully
conduct the strike.
4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY WAITING PERIOD.
th

th

A strike staged on the same day the notice of strike is filed is patently illegal.64
A strike mounted on the same day the strike vote report is submitted to the NCMB-DOLE
is likewise illegal.65
Deficiency of even one (1) day of the cooling-off period and 7-day strike ban is fatal.66

One-day strike without complying with the 7-day strike ban is illegal.67
4.
REQUISITES FOR A VALID LOCKOUT
1. SUBSTANTIALLY SIMILAR REQUISITES AS IN STRIKE.
With a slight, insignificant variation, the procedural but mandatory requisites for a valid strike
discussed above are substantially similar to those applicable for valid lockout. For purposes of ease and
clarity, the same are presented as follows:
1 requisite - It must be based on a valid and factual ground;
2 requisite - A notice of lockout must be filed with the NCMB-DOLE;
3 requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior
to the taking of the lockout vote by secret balloting, informing said office of the decision to
conduct a lockout vote, and the date, place, and time thereof;
4 requisite - A lockout vote must be taken where a majority of the members of the Board of
Directors of the corporation or association or of the partners in a partnership obtained by secret
ballot in a meeting called for the purpose, must approve it;
5 requisite - A lockout vote report should be submitted to the NCMB-DOLE at least seven
(7) days before the intended date of the lockout;
6 requisite - The cooling-off period of 15 days, in case of unfair labor practices of the labor
organization, or 30 days, in case of collective bargaining deadlock, should be fully observed;
and
7 requisite - The 7-day waiting period/lockout ban reckoned after the submission of the
lockout vote report to the NCMB-DOLE should also be fully observed in all cases.
st

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th

th

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5.

REQUISITES FOR LAWFUL PICKETING


1. THE REQUISITES FOR A VALID STRIKE ARE NOT APPLICABLE TO PICKETING.
The seven (7) requisites for a valid strike discussed above do not apply to picketing.
2. REQUISITES FOR LAWFUL PICKETING.
The most singular requirement to make picketing valid and legal is that it should
be peacefully conducted. This is articulated in paragraph (e) of Article 264 of the Labor Code in this
wise:
(e) No person engaged in picketing shall commit any act of violence, coercion or
intimidation or obstruct the free ingress to or egress from the employers premises for lawful
purposes, or obstruct public thoroughfares.

Based on the foregoing provision, the requisites may be summed up as follows:


1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or intimidation attendant thereto;
3. The ingress to (entrance) or egress from (exit) the company premises sh ould not be
obstructed; and
4. Public thoroughfares should not be impeded.68
3. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION AND THE LAW.
Unlike a strike which is guaranteed under the Constitutional provision on the right of workers
to conduct peaceful concerted activities under Section 3, Article XIII thereof, the right to picket is
guaranteed under the freedom of speech and of expression and to peaceably assemble to air
grievances under Section 4, Article III (Bill of Rights) thereof.69
The right to picket is likewise guaranteed as part of the right to engage in concerted activities
for purposes of collective bargaining for their mutual benefit and protection. 70
4. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE CONDUCT OF THE
PICKET.
In the event the picketers employ discourteous and impolite language in their picket, such may
not result in, or give rise to, libel or action for damages.71

5. PICKETING VS. STRIKE.


(a) To strike is to withhold or to stop work by the concerted action of employees as a result of an
industrial or labor dispute. The work stoppage may be accompanied by picketing by the striking
employees outside of the company compound.
(b) While a strike focuses on stoppage of work, picketing focuses on publicizing the labor
dispute and its incidents to inform the public of what is happening in the company being picketed.
(c) A picket simply means to march to and fro in front of the employer s premises, usually
accompanied by the display of placards and other signs making known the facts involved in a labor dispute.
It is but one strike activity separate and different from the actual stoppage of work.
Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA) . 72 - While the
right of employees to publicize their dispute falls within the protection of freedom of expression and
the right to peaceably assemble to air grievances, these rights are by no means absolute.
Protected
picketing does not extend to blocking ingress to and egress from the company premises.
That the
picket was moving, was peaceful and was not attended by actual violence may not free it from taints of
illegality if the picket effectively blocked entry to and exit from the company premises.
6. WHEN PICKET CONSIDERED A STRIKE.
In distinguishing between a picket and a strike, the totality of the circumstances obtaining in a case
should be taken into account.
Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils. , Inc. 73 Petitioners contend that what they conducted was a mere picketing and not a strike. In disagreeing to
this contention, the High Court emphasized that it is not an issue in this case that there was a labor
dispute between the parties as petitioners had notified the respondent of their intention to stage a strike,
and not merely to picket. Petitioners insistence to stage a strike is evident in the fact that an amended
notice of strike was filed even as respondent moved to dismiss the first notice. The basic elements of a
strike are present in this case: 106 members of petitioner Union, whose respective applications for
leave of absence on September 21, 1999 were disapproved, opted not to report for work on said date,
and gathered in front of the company premises to hold a mass protest action. Petitioners deliberately
absented themselves and instead wore red ribbons and carried placards with slogans such as: YES
KAMI SA STRIKE, PROTESTA KAMI, SAHOD, KARAPATAN NG MANGGAGAWA
IPAGLABAN, CBA-WAG BABOYIN, STOP UNION BUSTING. They marched to and fro in front of
the company s premises during working hours. Thus, petitioners engaged in a concerted activity which
already affected the company s operations. The mass concerted activity obviously constitutes a strike.
Moreover, the bare fact that petitioners were given a Mayor s permit is not conclusive evidence that
their action/activity did not amount to a strike. The Mayor s description of what activities petitioners were
allowed to conduct is inconsequential. To repeat, what is definitive of whether the action staged by
petitioners is a strike and not merely a picket is the totality of the circumstances surrounding the situation.
Petitioner union, in the 2011 case of Leyte Geothermal Power Progressive Employees
Union-ALU-TUCP v. Philippine National Oil Company - Energy Development
Corporation,74 contends that there was no stoppage of work; hence, they did not strike.
Euphemistically, petitioner union avers that it only engaged in picketing, and maintains that without any
work stoppage, [its officers and members] only engaged in xxx protest activity. The Supreme Court,
however, ruled that it was a strike and not picketing or protest activity that petitioner union staged. It found
the following circumstances in support of this finding:
(1) Petitioner union filed a Notice of Strike on December 28, 1998 with the DOLE grounded on
respondent s purported unfair labor practices,i.e. ,refusal to bargain collectively, union busting and mass
termination. On even date, petitioner union declared and staged a strike.
(2) The DOLE Secretary intervened and issued a Return-to-Work Order dated January 4, 1999,
certifying the labor dispute to the NLRC for compulsory arbitration. The Order indicated the following
facts: (1) filing of the notice of strike; (2) staging of the strike and taking control over respondent s
facilities of its Leyte Geothermal Project on the same day petitioner union filed the notice of strike; (3) attempts
by the NCMB to forge a mutually acceptable solution proved futile; and (4) in the meantime, the strike
continued with no settlement in sight placing in jeopardy the supply of much needed power supply in the
Luzon and Visayas grids.

(3) Petitioner union itself, in its pleadings, used the word strike.
(4) Petitioner union s asseverations are belied by the factual findings of the NLRC, as
affirmed by the CA thus: The failure to comply with the mandatory requisites for the conduct of strike
is both admitted and clearly shown on record. Hence, it is undisputed that no strike vote was
conducted; likewise, the cooling-off period was not observed and that the 7-day strike ban after the
submission of the strike vote was not complied with since there was no strike vote taken.
In fine, petitioner union s bare contention that it did not hold a strike cannot trump the factual
findings of the NLRC that petitioner union indeed struck against respondent. In fact, and more
importantly, petitioner union failed to comply with the requirements set by law prior to holding a
strike.
6.
ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR CERTIFICATION OF
THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION75
1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A LABOR DISPUTE.
Article 263(g) of the Labor Code provides that when in the opinion of the DOLE Secretary, the
labor dispute causes or will likely to cause a strike or lockout in an industry indispensable to the national
interest, he is empowered to do either of two (2) things:
1. He may assume jurisdiction over the labor dispute and decide it himself; or
2. He may certify it to the NLRC for compulsory arbitration, in which case, it will be the
NLRC which shall hear and decide it.76
This power may be exercised by the DOLE Secretary even before the actual staging of a strike
or lockout since Article 263(g) does not require the existence of a strike or lockout but only of a labor
dispute involving national interest.77
2. WHAT CONSTITUTES A NATIONAL INTEREST CASE?
The Labor Code vests in the DOLE Secretary the discretion to determine what industries are
indispensable to the national interest. Accordingly, upon the determination by the DOLE Secretary that
such industry is indispensable to the national interest, he has authority to assume jurisdiction over the
labor dispute in the said industry or certify it to the NLRC for compulsory arbitration.78
Past issuances of the DOLE Secretary have not made nor attempted to mention specifically
what the industries indispensable to the national interest are. It was only in Department Order No. 40H-13, Series of 2013,79 that certain industries were specifically named, thus:
Section 16. Industries Indispensable to the National Interest. - For the
guidance of the workers and employers in the filing of petition for assumption of
jurisdiction, the following industries/services are hereby recognized as deemed
indispensable to the national interest:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply services such as
bottling and refilling stations;
d. Air traffic control; and
e. Such other industries as may be recommended by the National Tripartite
Industrial Peace Council (TIPC) .

Obviously, the above enumerated industries are not exclusive as other industries may be
considered indispensable to the national interest based on the appreciation and discretion of the DOLE
Secretary or as may be recommended by TIPC.
3. DIFFERENT RULE ON STRIKES AND LOCKOUTS IN HOSPITALS, CLINICS AND
MEDICAL INSTITUTIONS.
As a general rule, strikes and lockouts in hospitals, clinics and similar medical institutions
should be avoided.80
In case a strike or lockout is staged, it shall be the duty of the striking union or locking-out
employer to provide and maintain an effectiveskeletal workforce of medical and other health
personnel whose movement and services shall be unhampered and unrestricted as are necessary to

insure the proper and adequate protection of the life and health of its patients, most especially
emergency cases, for the duration of the strike or lockout.81
The DOLE Secretary may immediately assume, within twenty four
(24) hours from
knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the
NLRC for compulsory arbitration.82
4. SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION POWER OF THE DOLE
SECRETARY.
Prior notice and hearing are not required in the issuance of the assumption or certification order.83
When the DOLE Secretary exercises the powers under Article 263(g) , he is granted great
breadth of discretion in order to find a solution to a labor dispute.84 It necessarily includes and
extends to all questions and controversies that may have arisen from the labor dispute over which
he assumed jurisdiction, including those cases falling under the original and exclusive jurisdiction
of Labor Arbiters.85 It also includes matters incidental to the labor dispute, i.e. , issues that are
necessarily involved in the dispute itself, not just to those ascribed in the notice of strike or
otherwise submitted to him for resolution.86
The DOLE Secretary may seek the assistance of law enforcement agencies like the Philippine
National Police to ensure compliance with the provision thereof as well as with such orders as he may
issue to enforce the same.
5. RETURN-TO-WORK ORDER.
a. It is always part of assumption/certification order even if not expressly stated therein.
The moment the DOLE Secretary assumes jurisdiction over a labor dispute involving national
interest or certifies it to the NLRC for compulsory arbitration, such assumption or certification has the
effect of automatically enjoining the intended or impending strike or, if one has already been
commenced, of automatically prohibiting its continuation. The mere issuance of an assumption or
certification order automatically carries with it a return-to-work order, even if the directive to return to
work is not expressly stated therein.87 It is thus not necessary for the DOLE Secretary to issue another
order directing the strikers to return to work.
It is error therefore for striking workers to continue with their strike alleging absence of a
return-to-work order since Article 263(g) is clear that once an assumption/certification order is issued,
strikes are enjoined or, if one has already taken place, all strikers should immediately return to work.88
b. Nature of return-to-work order.
Return-to-work order is compulsory in character. It is not offensive to the constitutional
provision against involuntary servitude.89 It must be discharged as a duty even against the worker s will.
The worker must return to his job together with his co-workers so that the operation of the company
can be resumed and it can continue serving the public and promoting its interest. It is executory in
character and should be strictly complied with by the parties even during the pendency of any petition
questioning its validity in order to maintain the status quo while the determination is being made.90
c. Some principles on return-to-work order.
The issue of legality of strike is immaterial in enforcing the return-to-work order.91
Return-to-work order is a limitation on employer s exercise of management prerogatives.92
Upon assumption or certification, the parties should revert to the status quo ante
litem which refers to the state of things as it was before the labor dispute or the state of
affairs existing at the time of the filing of the case. It is the last actual, peaceful and
uncontested status that preceded the actual controversy.93
Retrenched or redundant employees whose termination brought about the labor dispute are
included in the return-to-work order.94
To implement the return-to-work order, the norm is actual reinstatement. However, payroll
reinstatement in lieu of actual reinstatement may properly be resorted to when special
circumstances exist that render actual reinstatement impracticable or otherwise not
conducive to attaining the purposes of the law.
Examples:

University of Sto. Tomas v. NLRC,95 where the teachers ordered to return to work could
not be given back their academic assignments since the return-to-work order of the DOLE
Secretary was issued in the middle of the first semester of the academic year. The Supreme
Court affirmed the validity of the payroll reinstatement order of the NLRC 96 and ruled that
the NLRC did not commit grave abuse of discretion in providing for the alternative remedy of
payroll reinstatement. It observed that the NLRC was only trying its best to work out a
satisfactory ad hocsolution to a festering and serious problem.
University of Immaculate Concepcion, Inc. v. The Honorable Secretary of
Labor,97 where, by virtue of the special circumstances in this case involving the final
decision of the panel of arbitrators as to the confidential nature of the positions of the
twelve (12) private respondents, the employees actual and physical reinstatement was
rendered impracticable and more likely to exacerbate the situation. The payroll
reinstatement in lieu of actual reinstatement, therefore, appears justified as an exception to the rule
until the validity of their termination is finally resolved.
Non-waiver of demands upon voluntary return to work. The act of the strikers in
voluntarily returning to work does not result in the waiver of their original demands. Such
act of returning to work only means that they desisted from the strike which desistance is a
personal act of the strikers and cannot be used against the union and interpreted as a waiver
by it of its original demands for which the strike was adopted as a weapon.98
Filing of a motion for reconsideration does not affect the enforcement of a return-towork order which is immediately executory.99
The extension of the return-to-work order and the admission of all striking workers by the
company, cannot in any way be considered a waiver that the union officers can use to
negate liability for their illegal actions of defying the first return-to-work order and for
commission of illegal acts in the course of the strike.100
7.
NATURE OF ASSUMPTION ORDER
OR CERTIFICATION ORDER
1. A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an extraordinary authority granted
to the President and to his alter ego, the DOLE Secretary, the exercise of which should be strictly
limited to national interest cases.101
It is in the nature of a police power measure. This is done for the promotion of the common
good considering that a prolonged strike or lockout can be inimical to the national economy. The
DOLE Secretary is mandated to act to maintain industrial peace. Thus, his assuming jurisdiction over a
labor dispute or his certification thereof to the NLRC for compulsory arbitration is not intended to
impede the workers right to strike but to obtain a speedy settlement of the dispute.102
Having been enacted pursuant to the police power of the State, Article 263 [g] requires that
the powers thereunder be exercised only in labor disputes involving industries indispensable to the
national interest.103 A prolonged strike or lockout can be inimical to the national economy and,
therefore, the situation is imbued with public necessity and involves the right of the State and the
public to self-protection.104
2. GRANT OF ASSUMPTION/CERTIFICATION POWER IS FOR THE PROTECTION OF THE
STATE, NOT OF LABOR OR OF EMPLOYER.
The exercise of the power 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 is an
error to view the assumption order of the DOLE Secretary as a measure to protect the striking workers
from any retaliatory action from the employer. 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.105
8.

EFFECT OF DEFIANCE OF
ASSUMPTION OR CERTIFICATION ORDERS
1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.
The defiance by the union, its officers and members of the Labor Secretary's assumption of
jurisdiction or certification order constitutes a valid ground for dismissal.106
The following are the justifications:
1. A strike that is undertaken after the issuance by the DOLE Secretary of an assumption or
certification order becomes a prohibited activityand thus illegal. The defiant striking
union officers and members, as a result, are deemed to have lost their employment
statusfor having knowingly participated in an illegal strike.
2. From the moment a worker defies a return-to-work order, he is deemed to
have abandoned his job.107
3. By so defying, the workers have forfeited their right to be readmitted to work.108
2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER THEY ARE OFFICERS OR
ORDINARY MEMBERS, ARE DEEMED DISMISSED.
Once the DOLE Secretary assumes jurisdiction over a labor dispute or certifies it to the NLRC
for compulsory arbitration, such jurisdiction should not be interfered with by the application of the
coercive processes of a strike or lockout.
Any defiance thereof is a valid ground for the loss of
employment status.109
3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER, NOT MATERIAL.
The length of time within which the return-to-work order was defied by the strikers is not
significant in determining their liability for the legal consequences thereof. The following cases are
illustrative of this rule:
a. University of San Agustin Employees Union-FFW v. The CA. 110 - The period of
defiance was less than nine (9) hours from 8:45 a.m. to 5:25 p.m. on September 19, 2003.
b. Federation of Free Workers v. Inciong.111 - The period of defiance was only nine (9)
days.
c. Sarmiento v. Tuico.112 - The period of defiance was for five (5) months.
4. SOME PRINCIPLES ON DEFIANCE OF THE ASSUMPTION/CERTIFICATION ORDER.
The assumption/certification order may be served at any time of the day.113
No practice of giving 24 hours to strikers within which to return to work. There is no law or
jurisprudence recognizing this practice.114
The defiant workers, besides being dismissed, may be subject of criminal prosecution as well.115
The defiant strikers could be validly replaced.116
The refusal to acknowledge receipt of the assumption/certification orders and other processes
is an apparent attempt to frustrate the ends of justice, hence, invalid. The union cannot be allowed
to thwart the efficacy of the said orders issued in the national interest through the simple
expediency of refusing to acknowledge receipt thereof.117
9.
ILLEGAL STRIKE
1. WHEN IS A STRIKE CONSIDERED ILLEGAL?
A strike is illegal if it is declared and staged:
1)
2)

3)

Without complying with the procedural but mandatory requisites.


For unlawful purpose such as to compel the dismissal of an employee 118 or to force
recognition of the union 119 or for trivial and puerile purpose120 or to circumvent contracts
and judicial orders.121
Based on non-strikeable or invalid grounds such as:

Inter-union or intra-union disputes.122

a)
b)

Simple violation of CBA in contrast to gross violation thereof which is deemed


ULP.123

c)

Violation of labor standards.124

d)

Legislated wage orders (wage distortion) . 125

4)

Without first having bargained collectively.126

5)

In violation of the no strike, no lockout clause in the CBA.127

6)

Without submitting the issues to the grievance machinery or voluntary arbitration or


failing to exhaust the steps provided therein.128

7)

While conciliation and mediation proceeding is on-going at the NCMB.129

8)

Based on issues already brought to voluntary or compulsory arbitration.130

9)

During the pendency of a case involving the same ground/s cited in the notice of strike.131

10)

In defiance of an assumption or certification or return-to-work order.132

11)

In violation of a temporary restraining order or an injunction order.133

12)

After the conversion of the notice of strike into a preventive mediation case.134

13)

Against the prohibition by law.135

14)

By a minority union.136

15)

By an illegitimate union.137

16)

By dismissed employees.138

17)

18)

In violation of the company code of conduct which prohibits inciting or participating


in riots, disorders, alleged strikes or concerted actions detrimental to [Toyota s]
interest, The penalty for which is dismissal.139
As protest rallies in front of government offices such as in the following cases:
Toyota Motor Phils. Corp. Workers Association [TMPCWA] v. NLRC,140 where the
Supreme Court ruled that the protest rallies staged by the employees from February 21 to 23,
2001 in front of the offices of the Bureau of Labor Relations (BLR) and the DOLE
Secretary constitute illegal strike and not legitimate exercise of their right to peaceably
assemble and petition the government for redress of grievances. It was illegal for having been
undertaken without satisfying the mandatory pre-requisites for a valid strike under Article 263
of the Labor Code.
The ruling in Toyota141 was cited in Solidbank Corporation v. Gamier,142 as basis in
declaring the protest action of the employees of petitioner Solidbank which was staged in front
of the Office of the DOLE Secretary in Intramuros, Manila, as constitutive of illegal strike
since it paralyzed the operations of the bank. The protest action in this case was conducted
because of the CBA deadlock.

19)

As welga ng bayan which is in the nature of a general strike as well as an extended


sympathy strike.143

20)

In violation of the rules on picketing such as the commission of any of the following
prohibited acts:
(a)

Obstructing, impeding or interfering with, by force, violence, coercion, threats or


intimidation, any peaceful picketing by employees during any labor controversy or
in the exercise of their right to self-organization or collective bargaining, or aiding
or abetting such obstruction or interference.

(b)

Conducting a stationary picket and using means like placing of objects to constitute
permanent blockade or to effectively close points of entry or exit in company
premises.

(c)

Committing any act of violence, coercion or intimidation by any picketer.

(d)
(e)

Obstructing the free ingress to or egress from the employer s premises for lawful
purposes.
Obstructing public thoroughfares while engaged in picketing.144
(a)
LIABILITY OF UNION OFFICERS145
(b)
LIABILITY OF ORDINARY WORKERS146

These two topics will be discussed jointly because of their close interrelation.

1. PARTICIPATION IN LAWFUL STRIKE.


The declaration or actual conduct of a strike does not result in the severance of the
employment relationship nor a renunciation thereof. The employment relationship is merely suspended
during the period of work stoppage.147
An employee who participates in a lawful strike is not deemed to have abandoned his
employment but is merely exercising his right to self-organization precisely to protect his rights as an
employee and/or to obtain better working conditions.148 Such participation should not constitute
sufficient ground for the termination of his employment even if a replacement has already been hired
by the employer during such lawful strike.149
2. PARTICIPATION IN ILLEGAL STRIKE.
a. Distinction in the liability between union officers and ordinary union members.
1. Union officers.
The mere finding or declaration of illegality of the strike will result in the termination of all
union officers who knowingly participated in the illegal strike.150 Unlike ordinary members, it is not
required, for purposes of termination, that the officers should commit an illegal act during the strike.151
However, the 2012 case of Naranjo v. Biomedica Health Care, Inc. ,152 instructs that absent
any showing that the employees are union officers, they cannot be dismissed based solely on the
illegality of the strike.
Thus, in the 2011 case of Fadriquelan v. Monterey Foods Corporation,153the Supreme
Court took pains in assessing the evidence to ascertain the individual culpability of the unin officers based on
their participation in the illegal slowdown strike which was staged after the DOLE Secretary has issued an
assumption of jurisdiction order.
To illustrate how the knowing participation of union officers may be ascertained and
established, the following factors were taken into account in another 2011 case, Abaria v.
NLRC,154 which led to the declaration that they knowingly participated in the illegal strike:
(1) Their persistence in holding picketing activities despite the declaration by the NCMB that
their union was not duly registered as a legitimate labor organization and notwithstanding the letter
from the federation s155 legal counsel informing them that their acts constituted disloyalty to the
national federation; and
(2) Their filing of the notice of strike and conducting a strike vote despite the fact that their
union has no legal personality to negotiate with their employer156 for collective bargaining purposes.
2. Ordinary union members.
The mere finding or declaration of illegality of a strike will not result in termination of
ordinary union members. For an ordinary union member to suffer termination, it must be shown by
clear evidence that he has committed illegal acts during the strike.157
b. Reason for the distinction.
The reason for this distinction is that the union officers have the duty to guide their members
to respect the law. If instead of doing so, the officers urged the members to violate the law and defy the
duly constituted authorities, their dismissal from the service is a just penalty or sanction for their
unlawful act. Their responsibility as main players in an illegal strike is greater than that of the ordinary
union members and, therefore, limiting the penalty of dismissal only to the former for their
participation in an illegal strike is in order.158

c. Some principles on illegality of a strike.


For purposes of identifying the union officers, the certifications as to the union officers
issued by the Chief of the Labor Organization Division of the Bureau of Labor Relations
(BLR), being public records, enjoy the presumption of regularity and deserve weight and
probative value. Thus, in the absence of a clear and convincing evidence that said
certifications are flawed, they should be taken on their face value.159
The fact that the employees are signatories to the CBA does not in itself sufficiently
establish their status as union officers during the illegal strike. Neither were their active
roles during the bargaining negotiations be considered as evidence of their being union
officers.160
Only the union officers during the period of illegal strike are liable.161 If the employees
acted as union officers after the strike, they may not be held liable and, therefore, could
not be terminated in their capacity as such.162
Shop stewards are union officers.163 Hence, they should be terminated upon the
declaration of the illegality of the strike.164
Union officers may be dismissed despite the fact that the illegal strike was staged
only for 1 day165 or even for less than 10 hours.166 This holds true in cases of defiance of
the assumption/ certification order issued in national interest cases.
If the dispositive portion of the decision failed to mention the names of union officers,
resort should be made to the text of the decision.167
Wholesale forfeiture of employment status is not allowed. The mere filing of charges
against an employee for alleged illegal acts during a strike does not by itself justify his
dismissal. The charges must be proved in an investigation duly called for that purpose,
where the employee should be given an opportunity to defend himself. This holds true
even if the alleged ground constitutes a criminal offense.168
No wholesale dismissal of strikers allowed. The employer cannot just unceremoniously
dismiss a hundred of its employees in the absence of clear and convincing proof that these
people were indeed guilty of the acts charged and then, afterwards, go to court to seek
validation of the dismissal it whimsically executed. That certainly cannot be allowed.169
3. PARTICIPATION IN THE COMMISSION OF ILLEGAL ACTS DURING A STRIKE.
a. Legality or illegality of strike, immaterial.
As far as liability for commission of illegal acts during the strike is concerned, the issue of
legality or illegality of the strike is irrelevant.
As long as the union officer or member commits an
illegal act in the course of the strike, be it legal or illegal, his employment can be validly terminated.170
b. Meaning of illegal acts.
The term illegal acts under Article 264(a) may encompass a number of acts that violate existing
labor or criminal laws, such as the following:
(1) Violation of Article 264(e) of the Labor Code which provides that [n]o person engaged
in picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer s premises for lawful purposes, or obstruct public
thoroughfares.
(2)

Commission of crimes and other unlawful acts in carrying out the strike.171

(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or
NLRC in connection with the assumption of jurisdiction or certification order under
Article 263(g) of the Labor Code.172
This enumeration is not exclusive as jurisprudence abounds where the term illegal acts has been
interpreted and construed to cover other breaches of existing laws.
c. Mere substantial evidence required to hold strikers guilty of commission of illegal acts.
While in all cases, it is required that the striker must be identified, proof beyond reasonable
doubt, however, is not required; substantial evidence available under the attendant circumstances

suffices to justify the imposition of the penalty of dismissal on participating workers and union
officers.173 Liability for illegal acts should be determined on an individual basis. For this purpose,
the individual identity of the union members who participated in the commission of illegal acts may
be proved thru affidavits and photographs.174 Simply referring to them as strikers, or complainants
in this case is not enough to justify their dismissal.175
Photographs alone, however, will not suffice. In Arellano University Employees and
Workers Union v. CA, 176 while the university adduced photographs showing the strikers picketing
outside its premises, it failed to identify who they were.
It thus failed to meet the substantiality of
evidence test applicable in dismissal cases.
d. Some principles on commission of illegal acts in the course of the strike.
Only members who are identified as having participated in the commission of illegal acts
are liable. Those who did not participate should not be blamed therefor.177
To effectively hold ordinary union members liable, those who participated in the
commission of illegal acts must not only be identified but the specific illegal acts they
each committed should be described with particularity.178
The heated altercations and occasional blows exchanged in the picket line do not affect
or diminish the right to strike.179
Exchange of hot words in the picket line is not an illegal act that would impede or
diminish the right to strike.180
Use of slanderous, libelous and obscene language during the strike or lockout is a
prohibited act.181
If violence was committed by both employer and employees, the same cannot be cited as
a ground to declare the strike illegal.182
Dismissal of the criminal case filed by reason of the illegal acts committed in the course
of the strike does not extinguish liability under the Labor Code.183
4. CIVIL AND CRIMINAL LIABILITIES OF PERSONS COMMITTING ANY OF THE
PROHIBITED ACTS UNDER ARTICLE 264.
a. Where filed.
Any person performing any of the prohibited activities mentioned in Article 264 of the Labor
Code may be charged before the appropriate civil and criminal courts.184
b. Rule in case person charged or convicted is an alien.
If the person so convicted is a foreigner, he shall be subjected to immediate and summary
deportation and will be permanently barred from re-entering the country without the special
permission of the President of the Philippines.185
c. Prosecution under the Labor Code bars prosecution under the Revised Penal Xode.
If the act is, at the same time, a violation of the Revised Penal Code, a prosecution under the
Labor Code will preclude prosecution for the same act under the Revised Penal Code, or vice-versa.186
(c)
LIABILITY OF EMPLOYER187
The discussion below on the liability of the employer is divided into two (2) parts, namely:
(1)
(2)

Liability of employer in case of strike; and


Liability of employer in case of illegal lockout.
I.
LIABILITY OF EMPLOYER IN CASE OF STRIKE

1. LIABILITY FOR REINSTATEMENT OF STRIKERS.


a. Reinstatement, when proper.
Reinstatement (without backwages) of ordinary rank-and-file union members who did not
participate in the commission of illegal acts during the conduct of the illegal strike may be ordered.
b. No reinstatement for strikers who committed illegal acts.
The strikers who committed illegal acts during and in the course of a strike may be
terminated. They are not entitled to be reinstated. Additionally, they may be held criminally liable
therefor.188
c. Strikers who failed to return to work forfeit reinstatement.
Strikers who failed to report for work without proper justification and despite the order
reinstating them to their job are deemed to have forfeited their right to reinstatement.189
d. Employer who fails to reinstate strikers who were ordered reinstated by the Labor
Arbiter is liable to pay thembackwages reckoned from Labor Arbiters issuance of the
reinstatement order up to its reversal by the NLRC. 190
2. SEPARATION PAY IN LIEU OF REINSTATEMENT IN STRIKE CASES.
a. Separation pay in lieu of reinstatement, when proper.
In strike cases, the award of separation pay in lieu of reinstatement is proper only when the
strikers did not participate in the commission of illegal acts in the course thereof.191
Separation pay is made an alternative relief in lieu of reinstatement in certain circumstances,
like: (a) when reinstatement can no longer be effected in view of the passage of a long period of time or
because of the realities of the situation; (b) reinstatement is inimical to the employer s interest; (c)
reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties
involved; (e) the employer is prejudiced by the workers continued employment; (f) facts that make
execution unjust or inequitable have supervened; or (g) strained relations between the employer and
employee.192
For example, because their participation in the commission of illegal acts in the course of the
strike was not established by substantial evidence, sixty-one (61) ordinary union members were
ordered reinstated in Dusit Hotel Nikko .193 However, in view of the possibility that the Hotel might
have already hired regular replacements for the said 61 employees, the Hotel was given the option to pay
separation pay in lieu of reinstatement computed at one (1) month pay for every year of service, a fraction of at
least six (6) months being considered one year of service.
If reinstatement is no longer possible given the lapse of considerable time from the occurrence
of the strike, say, seventeen (17) years, as in the case of G & S Transport Corp. v. Infante,194 the
award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, was held to
be in order.
Following this ruling, the same separation pay of one (1) month salary for every year of
service, in lieu of reinstatement, was awarded to similarly situated strikers in Escario v. NLRC. 195 The
employer here manifested that the reinstatement of the petitioners would not be feasible because: (a) it
would inflict disruption and oppression upon the employer; (b) petitioners [had] stayed away for
more than 15 years; (c) its machines had depreciated and had been replaced with newer, better ones;
and (d) it now sold goods through independent distributors, thereby abolishing the positions related to
sales and distribution. Under these circumstances, the grant of separation pay in lieu of reinstatement of
the petitioners was proper.196
b. Separation pay as financial assistance, when not proper.
In a slew of cases, the High Tribunal refrained from awarding separation pay or financial
assistance to union officers and members who were separated from service due to their participation in,
or commission of, illegal acts during the strikes.
The reason is that the participation of strikers in the
commission of illegal acts during the conduct of a strike is considered serious misconduct that would
not justify the award of separation pay as a form of financial assistance.197
In Toyota Motor Phils. Corp. Workers Association [TMPCWA] v. NLRC,198 the High
Court refrained from awarding separation pay or financial assistance to union officers and members

who were separated from service due to their participation in or commission of illegal acts during the
strike.
In Pilipino Telephone Corporation v. Pilipino Telephone Employees Association
(PILTEA) ,199 the validity of the dismissal of the union officers who participated in the illegal strike
and openly defied the assumption order issued by the DOLE Secretary was upheld and consequently,
no separation pay or financial assistance was granted.200
In Sukhothai Cuisine and Restaurant v. CA,201 the strike was held illegal because it violated
the agreement providing for arbitration. The union officers who participated in, and the union members
who committed illegal acts during the illegal strike were declared to have lost their employment status
and were not awarded any separation pay or financial assistance.202
In Grand Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel,
Restaurant and Allied Industries, 203 the validity of the dismissal of the union officers who
participated in the illegal strike without awarding separation pay was affirmed, despite the urging by the
NLRC that the company should give financial assistance to the dismissed employees.
In Interphil Laboratories Union-FFW v. Interphil Laboratories, Inc. ,204 the legality of the
dismissal of the union officers who led the concerted action in refusing to render overtime work and
causing work slowdowns was affirmed and no separation pay or financial assistance was allowed.
In Chua v. NLRC,205 the Supreme Court deleted the NLRC s award of separation benefits to
an employee who participated in the unlawful and violent strike which resulted in multiple deaths and
extensive property damage.
c. Separation pay in lieu of reinstatement by reason of considerable lapse of time.
While reinstatement is the standard relief for an illegally dismissed employee, however, because
of the considerable period that had elapsed from the time of the illegal dismissal, separation pay of one (1)
month salary for each year of service but without backwages, should be awarded instead. This was the
standard ruling in the following illustrative cases:
(1) G & S Transport206 where seventeen (17) years had elapsed since respondents were
illegally dismissed;
(2) Association of Independent Unions in the Philippines [AIUP] v. NLRC,207 where more
than eight (8) years had passed since the petitioners therein staged a strike and were found to have been
unlawfully terminated;
(3) Abaria v. NLRC,208 where 15 years had elapsed from the onset of the labor dispute, not
to mention the strained relations that ensued plus the fact that replacements have already been hired by the
employer-hospital.
3. BACKWAGES IN STRIKE CASES.
a. Award of backwages, discretionary on labor court.
Albeit generally, the strikers are not entitled to backwages, however, the labor court has the
discretion to determine whether or not to grant it depending on the peculiar circumstances of each case.
This is so because the right to backwages is not absolute.209
b. If the strike is illegal, no backwages should be paid.
Thus, in the case of Arellano University Employees and Workers Union v. CA,210 where the
strike was declared illegal, petitioner-union members who were found not to have participated in the
commission of illegal acts during the strike were ordered reinstated to their former positions but
without backwages. If reinstatement is no longer possible, they should receive separation pay of one
(1) month for every year of service in accordance with existing jurisprudence. With respect to the
union officers, their mere participation in the illegal strike warrants their dismissal.
InDusit Hotel Nikko,211 it was held that the union members who participated in an illegal
strike but were not identified to have committed illegal acts are entitled to be reinstated to their former
positions but without backwages.212
In Telefunken,213 petitioners claimed the payment of backwages. In denying it, the Supreme
Court affirmed the finding of the Court of Appeals that with the blatant disregard by the strikers of
official edicts ordering their temporary reinstatement, there is no basis to award them backwages
corresponding to said time frames. Otherwise, they will recover something they have not or could not

have earned by their willful defiance of the return-to-work order, a patently incongruous and unjust
situation. It is simply inconsistent, nay, absurd, to award backwages when there is no finding of illegal
dismissal and when the record shows that the striking workers did not comply with the lawful orders for
them to return to work during said periods of time.
c. The principle of no work, no pay applies.
Employees who participated in a strike, irrespective of whether it is legal or illegal, are not
entitled to their wages during the period of strike pursuant to the principle of a fair days wage for a
fair days labor. Simply stated, the strikers are not so entitled because they performed no work during
the strike. Verily, it is neither fair nor just that the dismissed employees should litigate against their
employer on the latter s time.214
The applicability of this rule to strike situations has been affirmed in Solidbank.215 Thus, it
was held that while the acts of respondents did not merit their dismissal from employment because it
has not been substantially proved that they committed any illegal act while participating in the illegal
strike, they are nonetheless not entitled to any backwages based on the principle of no work, no pay.
This was also the holding in the 2011 case of Abaria v. NLRC,216 and in the 2014 case
of Visayas Community Medical Center (VCMC) v. Yballe,217 which arose from the same illegal
strike case decided in Abaria. The rule was reiterated that for the exception to apply that ordinary strikers
who did not participate in the commission of illegal acts in the course of the strike are entitled to backwages, it
is required that the strike be legal, a situation that does not obtain in the case at bar, since the strike herein was
declared illegal.
d. Rule on entitlement to backwages in case of economic strike.
The rule is that backwages should not be awarded in an economic strike based on the principle
that a fair days wage accrues only for a fair days labor.218
e. Rule on entitlement to backwages in case of ULP strike.
Even in cases of unfair labor practice strikes, award of backwages rests on the court s
discretion and only in exceptional instances. It is the policy that when employees voluntarily go on
strike, even if in protest against unfair labor practices, no backwages during the strike should be
awarded.219
In Cromwell Commercial Employees and Laborers Union
(PTUC) v. CIR,220 the
Supreme Court made a distinction between two (2) types of employees involved in an unfair labor practice
strike:
(1) Those who are discriminatorily dismissed for union activities and therefore entitled
to backwages from the date of the act of discrimination, that is, from the day of their
discharge; and
(2) Those who voluntarily go on strike as a form of protest against what they considered an
unfair labor practice of their employer and therefore are held generally not entitled to
backwages.
Cromwell ordains that even if the strike is declared legal because it was occasioned by the unfair
labor practices of the employer, the strikers who struck as a voluntary act of protest against what they
considered unfair labor practices of their employer are not entitled to backwages since the stoppage of
their work was not the direct consequence of the company s unfair labor practice. Their economic loss
should not be shifted to the employer. In regard to those who were discriminatorily discharged, they are
entitled to receive backwages from the date of the act of discrimination, that is, from the day of their
discharge.
f. Exceptions to the no backwages rule.
Jurisprudential law recognizes several exceptions to the no backwages rule, viz:
(1) When the employees did not participate in the strike but were practically locked-out by the
employer.221
(2) When the employer is guilty of the grossest form of unfair labor practice.222
(3) When the employer committed discrimination in the rehiring of strikers - refusing to
readmit those against whom there were pending criminal cases while admitting nonstrikers who were also criminally charged in court.223

g. Abandonment of strike to voluntarily return to work, effect on entitlement to


backwages.
When strikers abandon the strike and apply for reinstatement despite the existence of valid
grounds but the employer either refuses to reinstate them or imposes upon their reinstatement new
conditions that constitute unfair labor practice, the strikers who refuse to accept the new conditions and
are consequently refused reinstatement are entitled to the losses of pay they may have suffered by
reason of the employer s discriminatory acts reckoned from the time they were refused
reinstatement.224
As held in many cases, workers who staged a voluntary unfair labor practice strike and who
later offered to return to work unconditionally but the employer refused to reinstate them are entitled to
backwages.225 But in G & S Transport Corp. v. Infante,226 while it was found that respondents
expressed their intention to report back to work, the refusal of the employer to admit them back to work was
held justified and thus should not result in the grant of backwages to them. This is based on the rule that if
there is no work performed by the employee, there can be no payment of any wage to him. The exception is
when the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. This exception, however, should not apply to a case such as this
since the strike was illegal.
In Philippine Diamond Hotel and Resort, Inc.
[Manila Diamond Hotel] v. Manila
Diamond Hotel Employees Union,227respondent union urged the Supreme Court to apply the
exceptional rule enunciated in Philippine Marine228 and similar cases where the employees
unconditionally offered to return to work and were thus entitled to backwages. It argued that there was such an
offer on its part to return to work but the hotel screened the returning strikers and refused to readmit those
whom it found to have perpetrated prohibited acts during the strike.
It was held, however, that for the exception in Philippine Marine to apply, it is required that the
following conditions should be present:
(1) That the strike was legal;
(2) That there was an unconditional offer to return to work, and
(3) That the strikers were refused reinstatement.
Resultantly, if the offer to return to work made by the strikers is conditional in that it was
based on the employers compliance with the provisions of the CBA - the very reason for the strike the returning strikers are not entitled to backwages. To be so entitled, the offer to return to work
must be unconditional, that is, to return to work under the same terms and conditions under which
they worked prior to their strike.229 However, where the unconditional offer to return to work was not
implemented because of the injunction issued by the Supreme Court, it was held that the employer is
not duty-bound to give backwages.230
h. Agreement on strike duration pay.
There is no legal impediment for the employer and the union to enter into an agreement that during
periods of strike, the strikers should be paid their regular wages or that their absence from work be charged to
their unused vacation leaves or other leave benefits.
i. Remedy of strikers is to ask for reimbursement from their union.
A worker who absents himself from work as a result of a strike must seek reimbursement for
his wages from his union which declared the strike or he might have his absence charged against his
unused vacation leave.231
4. ATTORNEYS FEES.
The strikers whose dismissal is declared illegal are entitled to attorney s fees by reason of
their being compelled to litigate in order to seek redress and protect their rights. The legal basis for
such grant is Article 2208 (2) of the Civil Code.232 But this entitlement to attorney s fees is available
only to those who appealed from the decision of the Court of Appeals which did not include the award
of attorney s fees.233
5. EFFECT OF COMPROMISE SETTLEMENT DURING PENDENCY OF CASE.

The amounts received by illegally dismissed strikers by way of compromise settlement under
any release, waiver or quitclaim should be deducted from the total separation pay due to each of them
as may be awarded in the case.234 However, if some of the strikers have entered into compromise
agreements with their employer and the same have been duly approved by the Court, they should be
excluded from any monetary awards rendered in the case.235
6. EFFECT OF DEFIANCE BY AN EMPLOYER OF THE RETURN-TO-WORK ORDER.
In case of non-compliance by the employer with the return-to-work order issued in connection
with the assumption/certification of the labor dispute, he may be held liable to pay backwages,
damages and/or other affirmative reliefs, including criminal prosecution.236 Employers who refuse to
readmit returning workers may be held liable upon filing of the proper petition for the payment of
wages and other benefits from the date of actual refusal until the workers are readmitted.237
Contempt citation. In addition to the reliefs granted under the law, the DOLE Secretary may
cite any defiant party in contempt pursuant to the power vested in him under the provisions of the
Labor Code.238
II.
LIABILITY OF EMPLOYER IN CASE OF ILLEGAL LOCKOUT
1. RELIEFS AVAILABLE TO ILLEGALLY LOCKED-OUT EMPLOYEES.
In case of an illegal lockout, any worker whose employment has been terminated as a
consequence thereof shall be reinstated with payment of full backwages and other benefits.239
2. RULE IN CASE BOTH PARTIES ACTED IN PARE DELICTO.
a. Effect when both parties have acted in pari delicto.
If both parties have acted in pari delicto in that the employer is guilty of illegal lockout and
the union is culpable for illegal strike, the dismissal of the striking employees is unwarranted and their
reinstatement should be ordered as a matter of course. This doctrine in labor cases is not a novel
concept. It has been applied as early as 1982 in the case of Philippines Interfashion, Inc. v.
NLRC. 240
Subsequently, in the 1997 case of Philippine Airlines, Inc. v. Brillantes,241 while it was duly
proved that the employees participated in the strike in defiance of the order of the DOLE Secretary,
however, the records clearly established that the employer, Philippine Airlines, Inc. , had terminated the
employment of 183 union officers and members in violation of the order issued by the Secretary. This
constitutes an exception to the unequivocal rule that employees who defied the order of the Secretary
are deemed to have lost their employment status.
The same rule was applied in another 1997 strike case, First City Interlink Transportation
Co. , Inc. v. The Hon. Secretary Confesor,242 where it was declared that as both the employer and the
employees were, in a sense, at fault or inpari delicto, the non-returning employees should be
considered entitled to reinstatement, provided they did not participate in the commission of illegal acts.
But since reinstatement is no longer feasible, they should be given separation pay in lieu thereof.
The 2011 case of Automotive Engine Rebuilders, Inc. (AER) v. Progresibong Unyon ng
mga Manggagawa sa AER,243 lately applied the in pare delicto doctrine. Both parties here filed
charges against each other, blaming the other party for violating labor laws. Petitioner AER filed a
complaint against respondent union (Unyon) and its 18 members for illegal concerted activities. It
likewise suspended 7 union members who tested positive for illegal drugs. On the other hand, Unyon
filed a countercharge accusing AER of unfair labor practice, illegal suspension and illegal dismissal. In
other words, AER claims that Unyon was guilty of staging an illegal strike while Unyon claims that
AER committed an illegal lockout. However, since both AER and Unyon are at fault or in pari delicto,
it was ruled that they should be restored to their respective positions prior to the illegal strike and
illegal lockout. Nonetheless, if reinstatement is no longer feasible, the concerned employees should be
given separation pay up to the date set for the return of the complaining employees in lieu of
reinstatement.244
b. Employer must come to court with clean hands.
The in pare delicto doctrine simply requires that the party seeking relief from the court should
come with clean hands. For instance, in affirming the validity of mere suspension rather than dismissal
of the employees in the same Philippine Airlines245 case , the High Court emphasized that the
employer which seeks the dismissal of the employees who defied the DOLE Secretary s return-to-work

order should come to court with clean hands. It noted the fact that the employer has itself violated
the court s cease and desist order when it terminated en masse the employment of 183 officers and
members of the union. Moreover, the Supreme Court invoked in the same case its judicial prerogative
to resolve disputes in such a way as to render to each interested party the most judicious solution.
c. The proper relief in in pare delicto cases.
In its 2013 Resolution on the Motion for Reconsideration filed by the union in the same case
of Automotive Engine,246 the Supreme Court distinguished the proper relief available to the strikers
who were in pare delicto with the employer and those that were not. It held that the former are entitled to
reinstatement but without backwages; while the latter should be reinstated and given their backwages with
interest at the rate of six percent (6%) per annum which shall be increased to twelve percent (12%) after
the finality of the judgment.
The strikers who were deemed in this case as having been in pare delicto with the employer were
the ones who were charged by the employer for conducting the illegal strike. Technically, as no charges for
illegal strike were filed by the employer against some of the employees, they cannot be among those found
guilty of illegal strike. Thus, they cannot be considered in pari delicto. They should therefore be reinstated and
given their backwages.
(d)
WAIVER OF ILLEGALITY OF STRIKE
1. WAIVER, MEANING.
A waiver is a voluntary and intentional relinquishment or abandonment of a known legal
right or privilege. A waiver, to be valid and effective, must be couched in clear and unequivocal terms
which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to
him. For instance, the management prerogative to discipline employees and impose punishment is a
legal right which cannot, as a general rule, be impliedly waived.247
2. EMPLOYERS ACT OF CONDONATION.
An employer s act of condonation or forgiveness of the effects of a wrongful act committed by an
employee is an effective waiver of his right to discipline or dismiss the latter.
Condonation may be express or implied. While the inaction of an employer may not be
considered as an implied act of condonation if there is no clear proof that he has knowledge of the employee
s wrongful act, however, if such inaction occurs after the discovery of such wrongful act so as to give the
impression or inference that the employer has condoned the same, the employer can no longer invoke such
wrongful act as a ground to terminate the employee.
It should be underscored, however, that the condonation of one wrongful act does not, in any way,
involve the condonation of other wrongful acts for which the employer may still proceed against the erring
employee.
When grant of separation benefits not considered condonation.
Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc.248 - In this
illegal strike case, the act of the employer in paying substantial separation package to the union officers
during the pendency of the illegal strike case was held not an act of condonation of their illegal acts
committed during the strike. The reason cited is that at the time the union officers obtained their
separation benefits, they were still considered employees of the company, the illegal strike case which
resulted in the loss of their employment status not having been finally resolved yet. Hence, the
employer may be said to be merely complying with its legal obligations. The employer could have
withheld these benefits pending the final resolution of the case. Yet, considering perhaps the financial
hardships experienced by its employees and the economic situation prevailing, it chose to let its
employees avail of their separation benefits. The gesture of the employer should be viewed not as an
act of condonation but as an act of generosity for which it should not be punished.
3. VOLUNTARY REINSTATEMENT CONSTITUTES A WAIVER OF THE ILLEGALITY
OF THE STRIKE.
In Citizens Labor Union v. Standard Vacuum Oil Co.,249 the act of the employer in inviting
the workers to return to their posts without making any reference to the pending case involving the
issue of the illegality of the strike or imposing any condition or alteration of the terms of their

employment was deemed a waiver of its right to consider the strikers as wrongdoers. More so in this case
when such invitation was accepted by the strikers. By said act, the parties may be said to have both
abandoned their original positions and come to a virtual compromise to resume unconditionally their
former relations.
To proceed with the declaration of the illegality of the strike would not only breach this
understanding which was freely arrived at but would unnecessarily revive animosities to the prejudice
of industrial peace. When an employer therefore accedes to the peaceful settlement brokered by the
NLRC, by agreeing to accept all the employees who had not yet returned to work, it thereby waives the
issue of the illegality of the strike.250
4. COMPLIANCE WITH RETURN-TO-WORK ORDER DOES NOT MEAN WAIVER OF
ILLEGALITY OF STRIKE; EXCEPTION.
A return-to-work order does not have the effect of rendering as moot and academic the issue
of the legality of the strike.251
However, according to Trans-Asia Shipping Lines, Inc. - Unlicensed Crews Employees
Union - Associated Labor Unions [TASLI-ALU] v. CA,252 an employer may be considered to have
waived its right to proceed against the striking employees for alleged commission of illegal acts during
the strike when, during a conference before the Chairman of the NLRC, it agreed to reinstate them and
comply fully with the return-to-work order issued by the DOLE Secretary.253
10.
INJUNCTIONS254
1. RATIONALE BEHIND THE POLICY PROHIBITING ISSUANCE OF INJUNCTION.
The Labor Code provides:
Article 254. Injunction Prohibited. - No temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be issued by
any court or other entity, except as otherwise provided in Articles 218 and 264 of this
Code.

The reason for prohibiting the issuance of a temporary or permanent injunction or restraining
order in any case involving or growing out of labor disputes, except in the specified cases mentioned in
the law, is to afford more or less equal bargaining power to labor in dealing with the employer. The
prohibition must be liberally construed in favor of the workingman as the same involves not merely
procedural but substantive rights.255
This anti-injunction policy would result in more freedom in the workplace.
It is more
appropriate in the promotion of the primacy of free collective bargaining and negotiations, including
voluntary arbitration, mediation and conciliation as modes of settling labor and industrial disputes.256
2. GENERAL RULE.
The general rule is that no temporary injunction or restraining order in any case involving or
growing out of a labor dispute shall be issued by any court or other entity.257
3. EXCEPTIONS REFERRED TO IN ARTICLE 254.
Article 254 excepts the situations contemplated in Articles 218 and 264 of the Labor Code.
Under the first exception, Article 218(e) expressly confers upon the Commission (NLRC) the power
to enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require
the performance of a particular act in any labor dispute which, if not restrained or performed forthwith,
may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party
xxx.
The second exception, on the other hand, is when the labor organization or the employer
engages in any of the prohibited activities listed in Article 264 in connection with strikes, lockouts
and picketing. The commission of said prohibited activities in the course of the strike or lockout may
be properly forbidden or stopped by a restraining order or injunction.258
(a)
REQUISITES FOR LABOR INJUNCTIONS

1. INDISPENSABLE CONDITIONS FOR GRANT OF INJUNCTIVE RELIEF.


The following are the indispensable conditions for granting the temporary injunctive relief:
(a) That the complaint alleges facts which appear to be satisfactory to establish a proper basis
for injunction; and
(b) That on the entire showing from the contending parties, the injunction is reasonably
necessary to protect the legal rights of the plaintiff pending the litigation.259
It must be further emphasized that injunction may only issue upon strict compliance with the
statutory requirements.260
2. EXISTENCE OF A LABOR DISPUTE NECESSARY.
The case of Ravago v. Esso Eastern Marine, Ltd. ,261 is instructive in that the law proscribes
the issuance of injunctive relief only in those cases involving or growing out of a labor dispute. The
petitioner s complaint merely revolves around the issue of his alleged dismissal from service and his
claim for backwages, damages and attorney s fees. Consequently, it was held that the said case before
the NLRC neither involves nor grows out of a labor dispute. It does not involve the fixing of the terms
and conditions of employment or the representation of persons with respect thereto. This means that if
the rights and obligations of the parties under certain contracts are not at issue in a labor case, the same
may be enforced in a civil action in the regular courts, not in the NLRC.262
I.
INJUNCTION IN PICKETING, STRIKE OR LOCKOUT CASES
1. PROHIBITION ON INJUNCTION AGAINST STRIKES AND LOCKOUTS.
As a general rule, strikes and lockouts that are validly declared enjoy the protection of the law
and cannot be enjoined unless illegal acts are committed or threatened to be committed in the course
thereof. In the case of strikes, this policy applies even if the strike appears to be illegal in nature. The
rationale for this policy is the protection extended to the right to strike under the Constitution and the
law. It is basically treated as a weapon that the law guarantees to employees for the advancement of
their interest and for their protection.263
2. EXCEPTIONS WHEN THE STRIKE ITSELF MAY BE ENJOINED.
However, in some cases, injunctions issued to enjoin the conduct of the strike itself and not
only the commission of illegal or prohibited acts in the course thereof, were held to be valid. For
instance, in San Miguel Corporation v. NLRC,264 the Supreme Court ruled that injunction may be
issued not only against the commission of illegal acts in the course of the strike but against the strike
itself. In this case, the notice of strike filed by the union has been converted into a preventive
mediation case. Having been so converted, a strike can no longer be staged based on said notice.
Upon such conversion, the legal effect is that there is no more notice of strike to speak of. When the
NCMB ordered the preventive mediation, the union had thereupon lost the notice of strike it had
filed. However, the NCMB which effected the conversion has, under the law, no coercive powers of
injunction. Consequently, petitioner company in the instant case sought recourse from the NLRC. The
NLRC, however, issued a TRO only for the free ingress to and egress from petitioners plants, but did
not enjoin the conduct of the unlawful strike itself. It ignored the fatal lack of notice of strike
consequent to the conversion thereof into a preventive mediation case. Article 264(a) of the Labor
Code explicitly states that a declaration of strike without first having filed the required notice is a
prohibited activity which may be prevented through an injunction in accordance with Article 254 of
the same Code. Clearly, public respondent should have granted the injunctive relief to prevent the
grave damage brought about by the unlawful strike.265

In the earlier case of San Miguel Corporation v. NLRC,266 where the same issue of NLRC s
duty to enjoin an unlawful strike was raised, the Supreme Court ruled that the NLRC committed grave abuse of
discretion when it denied the petition for injunction to restrain the union from declaring a strike based on
non-strikeable grounds.
In ILaw at Buklod ng Manggagawa [IBM] v. NLRC,267 it was held that it is the legal duty and
obligation of the NLRC to enjoin a partial strike staged in violation of the law. Failure to promptly
issue an injunction by the NLRC was likewise held therein to be an abuse of discretion.
In Bulletin Publishing v. Sanchez,268 an injunction was allowed against the strike which was
staged to compel the employer to ignore the law. The reason is that when trade unionism and strikes are
used in violation of the law, misuse thereof can be the subject of judicial intervention.
3. REGULAR COURTS ARE PROHIBITED FROM ISSUING INJUNCTION AGAINST
STRIKES OR LOCKOUT.
It bears stressing that all the cases cited above involve the issuance of restraining order or
injunction by the NLRC pursuant to the exercise of its injunctive power. In contrast, regular courts are
absolutely prohibited to grant any injunctive relief in cases of strikes or lockouts.
The best illustrative case on this point is Associated Labor Unions (ALU-TUCP) v. Hon.
Borromeo and Belyca Corporation. 269 As a consequence of a controversy arising from charges of
unfair labor practice against the private respondent, Belyca Corporation, a firm engaged in livestock
farming, the petitioner filed a notice of strike with the then Ministry of Labor and Employment. Later,
it filed a complaint for various offenses against the private respondent ranging from unfair labor
practice to non-payment of the minimum wages. It subsequently conducted a strike. On the same date
of the strike, the private respondent commenced suit for injunction with the respondent Regional Trial
Court (RTC) presided by Hon. Antonio V. Borromeo. It alleged that the petitioner had obstructed free
ingress to the firm's premises, preventing workers of Belyca farms from entering the business
establishments . . . preventing said workers from giving feeds and/or food to the hogs and fowls which
would kill all of said hogs and fowls if not attended to this very day . . . On the same day, the
respondent judge issued a temporary restraining order (TRO) commanding herein defendants [the
striking workers], their agents and/or representatives to allow plaintiff [the private-respondent) or
workers or authorized representatives free passage to and from Belyca Farms, located at Kalasungay
Malaybalay, Bukidnon to feed plaintiff s seven thousand five hundred (7,500) hogs and eight thousand
(8,000) fowls. The petitioner filed a motion for reconsideration (to lift TRO as well as for the
dismissal of the case on the ground of lack of jurisdiction) . Respondent judge, however, denied the
motion. He later extended the TRO for another 20 days for the sake of justice and fairness.
In ruling that the RTC had acted without jurisdiction when it issued the TRO, the Supreme Court
cited the following justifications:
(1) The courts of law have no jurisdiction to act on labor cases or various incidents arising
therefrom. That is basic and elementary. Jurisdiction to try and adjudicate such cases pertains
exclusively to the proper labor officials of the Department of Labor, particularly the Labor Arbiter under
Article 217 of the Labor Code.
(2) Well-established jurisprudence is to the effect that the regular courts have no
jurisdiction.270
(3) The reason for such exclusive jurisdiction is that since picketing and strikes may be mere
incidents or consequences of an unfair labor practice, it is but proper that a Writ of Injunction prayed
for in connection with that labor dispute originate from the [labor] court having jurisdiction over the
main case inasmuch as it is that [labor] court that has cognizance of all relevant facts.271
(4) The respondent judge cannot enjoin acts carried out as a consequence of the strike without
unavoidably ruling on the legality of the strike itself. (The strike can continue. It does not mean that
this Court has ruled on the legality or illegality of the said strike. ) To say indeed that the workers had
obstructed free passage to the strike-bound firm, is, by necessity, to say that the strike was illegal,
notwithstanding the judge's own words of caution (that he was not ruling on the legality or illegality of
the strike) . For under the Labor Code: (E) No person engaged in picketing shall commit any act of

violence, coercion, or intimidation or obstruct the free ingress to or egress from the employer's
premises for lawful purposes, or obstruct public thoroughfares. 272
II.
INJUNCTION IN PICKETING CASES
1. PROHIBITION ON INJUNCTION AGAINST PEACEFUL PICKETING.
As a general rule, injunction cannot be issued against the conduct of picketing by the workers.
Under our constitutional set up, picketing is considered part of the freedom of speech duly guaranteed
by the Constitution.273 However, excepted from this legal proscription are the situations mentioned
below.
2. EXCEPTIONS.
Under the following circumstances, picketing may be enjoined by the NLRC:
(1) Where picketing is carried out through the use of illegal means;274
(2) Where picketing involves the use of violence and other illegal acts;275
(3) Where picketing affects the rights of third parties and injunction becomes necessary to
protect such rights.276
(b)
INNOCENT BYSTANDER RULE
1. WHEN INJUNCTION ON PICKETING IS ALLOWED THROUGH THE REGULAR
COURTS AND NOT THROUGH THE NLRC.
In situations where the picket affects not only the employer but also the business operations of
other establishments owned by third parties, an injunction may be secured by the latter from
the regular courts to enjoin the picket. Picketing strikers cannot prevent employees of other
companies from using the same premises being picketed. A picketing labor union has no right to
prevent employees of another company which is not their employer, from getting in and out of its
rented premises, otherwise, it will be held liable for damages for its acts against an innocent
bystander.277
Under the Innocent Bystander Rule, the third-party employers or innocent bystanders who
have no employer-employee relationship with the picketing strikers, may apply for injunction with the
regular courts (not with the NLRC) to enjoin the conduct of the picket.
Because of the absence of such employer-employee relationship, the NLRC cannot entertain such
application for injunction from innocent bystanders. Only the employer of the picketers can apply for
injunctive relief from the NLRC.
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