Labor Law: Book V; Title II; Chapter II Powers and Duties (Arts. 224-228)

 Book V

Labor Relations

Title II

National Labor Relations Commission

Chapter II

Powers and Duties

Arts. 224-228

Q:What matters fall within the jurisdiction of a labor arbiter?
Q: What are the powers of the NLRC? If some of my employees are on strike and they are blocking my factory gate, can the NLRC be of any help?
Q: Do the technicalities of court proceedings apply to cases before the labor arbiters? Can I get a nonlawyer friend to handle my case in the labor arbiter's office?


Art. 224. Jurisdiction of the Labor Arbiters and the Commission.

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

  1. Unfair labor practice cases;
  2. Termination disputes;
  3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;
  4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
  5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and
  6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.
B. The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

C. Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As amended by Section 9, Republic Act No. 6715, March 21, 1989)

Notes:

A. Labor Arbiters' Original and Exclusive Jurisdiction:
  • Labor Arbiters possess original and exclusive jurisdiction over various cases related to workers, both agricultural and non-agricultural.
  • Decision: Within thirty (30) calendar days after submission by the parties, without extension, even in the absence of stenographic notes.
  • The specified cases include:
    1. Unfair labor practice cases.
    2. Termination disputes.
    3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;
    4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
    5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and
    6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.
B. Exclusive Appellate Jurisdiction of the Commission:
  • The NLRC holds exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
C. Cases Involving Collective Bargaining Agreements and Company Personnel Policies:
  • Labor Arbiters handle cases arising from the interpretation or implementation of collective bargaining agreements and those related to the interpretation or enforcement of company personnel policies.
  • Such cases are resolved by referring them to the grievance machinery and voluntary arbitration, as stipulated in the respective agreements.

Compulsory Arbitration
  • In labor cases, compulsory arbitration is the process of settlement of labor disputes by a government agency that has the authority to investigate and make an award which is binding on all the parties. 
  • It is the Labor Arbiter who is clothed with the original and exclusive authority to conduct compulsory arbitration under Article 224. 
  • Proceedings after a labor arbiter's decision is brought up to the National Labor Relations Commission cannot be considered as part of the arbitration proceedings. 
    • This is because in the appeal stage, the Commission merely reviews the Labor Arbiter's decision for errors of fact or law. 
    • It does not duplicate the proceedings held at the Labor Arbiter's level.
    • Thus, the clause "pending final resolution of the case by arbitration" should be understood to be limited only to the proceedings before the Labor Arbiter, so that when the latter rendered his decision, the case could be considered finally resolved by arbitration. (See Philippine Airlines, December 22, 1989.)
  • The Commission itself, through any of its divisions, also conducts compulsory arbitration, but only in "national interest cases" certified or referred to it by the DOLE secretary under Article 278(g).
Philippine Airlines v. NLRC, G.R. No. 55159 December 22, 1989
  • Armando Dolina was training as a pilot with Philippine Airlines, Inc. (PAL) but was not qualified for regular employment due to insufficient flying hours and result of his medical examination. 
  • In 1976, he was put under preventive suspension pending his termination. He countered with a complaint for illegal dismissal.
  • In 1977, the Department of Labor Regional OIC lifted the preventive suspension, and ordered petitioner to reinstate Dolina to his former position with full back wages from up to actual reinstatement. The issue on termination was referred to the Executive Labor Arbiter for compulsory arbitration. PAL and Dolina entered into an agreement stating that Dolina shall be considered in the payroll pending final resolution of the case by arbitration.
  • In 1979, the Labor Arbiter found the termination valid. PAL removed Dolina from its payroll effective 1 April 1979 by virtue of the decision. Dolina appealed to the NLRC. 
  • n 1980, the NLRC affirmed the Labor Arbiter’s decision but ordered PAL to continue paying Dolina’s salaries from 1 April 1979 until the case's final resolution.
WoN the NLRC committed grave abuse of discretion in holding that private respondent Dolina was entitled to his salaries from 1 April 1979 "until this case is finally resolved." YES

In entering into the agreement, the parties could not have intended to include in the clause "final resolution of the case by arbitration" the whole adjudicatory process, including appeal. For if it were so, even proceedings on certiorari before this Court would be embraced by the term "arbitration" and private respondent will continue to receive monthly salary without rendering any service to the petitioner regardless of the outcome of the proceedings before the Labor Arbiter, for as long as one of the parties appeal to the NLRC and until the case is finally resolved by this Court. This is clearly an absurdity which could not have been contemplated by the parties.

Neither can proceedings on appeal before the NLRC en banc be considered as part of the arbitration proceeding. In its broad sense, arbitration is the reference of a dispute to an impartial third person, chosen by the parties or appointed by statutory authority to hear and decide the case in controversy. When the consent of one of the parties is enforced by statutory provisions, the proceeding is referred to as compulsory arbitration. In labor cases, compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties. Under the Labor Code, it is the Labor Arbiter who is clothed with the authority to conduct compulsory arbitration on cases involving termination disputes. When the Labor Arbiter renders his decision, compulsory arbitration is deemed terminated because by then the hearing and determination of the controversy has ended. Any appeal raised by an aggrieved party from the Labor Arbiter’s decision is already beyond the scope of arbitration since in the appeal stage, the NLRC en banc merely reviews the Labor Arbiter’s decision for errors of fact or law and no longer duplicates the proceedings before the Labor Arbiter. Thus, the clause "pending final resolution of the case by arbitration" should be understood to be limited only to the proceedings before the Labor Arbiter, such that when the latter rendered his decision, the case was finally resolved by arbitration.


Additional Cases
  • To the cases mentioned in this article, the following should be added: 
  1. Money claims arising out of employer-employee relationship or by virtue of any law or contract, involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary and other forms of damages;
  2. Wage distortion disputes in unorganized establishments not voluntarily settled by the parties, pursuant to Article 124 of the Labor Code;
  3. Enforcement of compromise agreements when there is non­-compliance by any of the parties, pursuant to Article 233 of the Labor Code;
  4. Other cases as may be provided by law.

Labor Arbiter's Jurisdiction
  • This Article enumerates the cases falling under "original and exclusive" jurisdiction of labor arbiters. This gives the impression that none but a labor arbiter can hear and decide the six categories of cases listed. But this, but this is not really so. 
  • Any or all of these cases can, by agreement of the parties be presented to and decided with finality by a voluntary arbitrator or panel of voluntary arbitrators. 
  • The law prefers or gives primacy to voluntary arbitration instead of compulsory arbitration, and this in turn is the reason the law forbids a labor arbiter from entertaining a dispute properly belonging to the jurisdiction of a voluntary arbitrator. 
  • The cases a labor arbiter can hear and decide are employment-related. 
    • One unifying element runs through all the cases and disputes enumerated in Article 224 — employment connection.
  • But additionally, as regards money claims, the law applicable to grant the relief sought should likewise be considered.
    • Principal relief sought will be resolved by:
      • applying the Labor Code or other labor relations statute or a collective bargaining agreement — labor arbiter or voluntary arbitrator. 
      • applicable law is a general civil law — regular courts, such as the Regional Trial Court. (San Miguel Corp, May 31, 1998)
San Miguel Corporation v. NLRC, G.R. No. 80774 May 31, 1988
  • San Miguel Corporation (SMC) sponsors an Innovation Program, offering cash awards to employees for beneficial ideas and suggestions. 
  • Rustico Vega submits an innovation proposal titled "Modified Grande Pasteurization Process" to improve the quality of "San Miguel Beer Grande." 
  • Despite 13 years of employment with SMC, Vega's proposal is rejected, leading to his demand for a cash award under the Innovation Program. 
  • Vega files a complaint against SMC, claiming that his proposal had been accepted and implemented, entitling him to a cash prize of P60,000.00. 
  • SMC denies approval, citing lack of originality and impossibility of achieving the desired result. 
  • Labor Arbiter: Dismisses the complaint for lack of jurisdiction but awards Vega P2,000.00 as financial assistance. 
  • NLRC: Sets aside the Labor Arbiter's order and orders SMC to pay Vega P60,000.00.

WoN the money claim of private respondent Rustico Vega, arising from his innovation proposal under the Innovation Program of San Miguel Corporation, falls within the original and exclusive jurisdiction of Labor Arbiters. NO

Money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship.

Applying the foregoing reading to the present case, we note that petitioner's Innovation Program is an employee incentive scheme offered and open only to employees of petitioner Corporation, more specifically to employees below the rank of manager. Without the existing employer-employee relationship between the parties here, there would have been no occasion to consider the petitioner's Innovation Program or the submission by Mr. Vega of his proposal concerning beer grande; without that relationship, private respondent Vega's suit against petitioner Corporation would never have arisen. The money claim of private respondent Vega in this case, therefore, arose out of or in connection with his employment relationship with petitioner.

The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary. It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise.

Thus, whether or not an enforceable contract, albeit implied arid innominate, had arisen between petitioner Corporation and private respondent Vega in the circumstances of this case, and if so, whether or not it had been breached, are preeminently legal questions, questions not to be resolved by referring to labor legislation and having nothing to do with wages or other terms and conditions of employment, but rather having recourse to our law on contracts.

  • Unfair labor practices (UPL) cases belong to labor arbiters.
    • Articles 259 and 260 — enumeration of ULP acts
    • Article 274 — enumeration of gross violation of CBA 
    • Article 217 — includes termination disputes among the cases that only a labor arbiter can decide 
    • Article 274 — gives original and exclusive jurisdiction to voluntary arbitration over grievances arising from interpretation or enforcement of company personnel policies. 
  • Is there a conflict between Article 224 and Article 274? No, not all termination disputes involve enforcement or interpretation of personnel policies. 
    • Voluntary arbitrator
      • If the employee is CBA-covered and terminated for alleged violation of personnel policy, the dispute should be heard by a voluntary arbitrator. 
    • Labor arbiter
      • If the CBA or personnel policy is not involved, the case should be brought to a labor arbiter.
  • But even if the employee is not CBA-covered or even if no personnel policy is involved, the parties may and categorical and unequivocal language agreed to bring the case to a voluntary arbiter. Article 275 allows this option because, as a rule, voluntary rather than compulsory arbitration is the preferred mode of settling labor disputes. Without such categorical agreement, the dismissal dispute does not arise from the CBA or personnel policy should be lodged with a labor arbiter. (San Miguel Corporation, March 15, 1996)
  • Even a ULP case can, by agreement of the parties, be brought before a voluntary arbitrator. 
  • Private respondents, employed by petitioner San Miguel Corporation (SMC) as mechanics, machinists, and carpenter, were officers and members of Ilaw at Buklod ng Manggagawa.
  • They were served a memorandum stating their dismissal due to redundancy or excess personnel.
  • The union opposed the dismissal and requested a dialogue with management.
  • Despite ongoing dialogues, another memorandum was issued, confirming the dismissal.
  • Private respondents filed a complaint against SMC for illegal dismissal and unfair labor practices.
  • SMC argued that the Labor Arbiter has no jurisdiction and that the dispute should go through the grievance procedure in the Collective Bargaining Agreement (CBA).
WoN the Labor Arbiter has jurisdiction to hear a complaint for unfair labor practice, illegal dismissal, and damages, notwithstanding the provision for grievance and arbitration in the Collective Bargaining Agreement. YES

The law in point is Article 217 (a) of the Labor Code. It is elementary that this law is deemed written into the CBA. In fact, the law speaks in plain and unambiguous terms that termination disputes, together with unfair labor practices, are matters falling under the original and exclusive jurisdiction of the Labor Arbiter. The sole exception can be found under Article 262 of the same Code, which provides: "The voluntary arbitrator or panel of voluntary arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks." The exception, being present, the Labor Arbiter properly has jurisdiction over the complaint filed by the respondent union for illegal dismissal and unfair labor practice. The filing of a request for reconsideration by the respondent union, which is the condition sine qua non to categorize the termination dispute and the ULP complaint as a grievable dispute as per CBA, was decidedly absent in the case at bench. Hence, the respondent union acted well within their rights in filing their complaint directly with the Labor Arbiter.

The questioned discharges due to alleged redundancy can hardly be considered company personnel policies and therefore need not directly be subject to the grievance machinery nor to voluntary arbitration. All of the dismissed employees were officers and members of their respective unions, and their employers failed to give a satisfactory explanation as to why this group of employees was singled out. It may be the case that the discharges may really be for a bona fide authorized caused under Article 283 of the Labor Code. But it is also possible that such may be a scheme to camouflage the real intention of discriminating against union members. In any case, these matters will be best ventilated in a hearing before the Labor Arbiter. The complaint alleges facts sufficient to constitute a bona fide case of ULP, cognizable by the Labor Arbiter. This is consistent with the rule that jurisdiction over the subject matter is determined by the allegations of the complaint.


Corporate Dispute; Corporate Officer 
  • If the controversy concerns the election or appointment of directors, trustees, officers or managers of corporations, partnerships or associations, it is the Securities and Exchange Commission, not the the labor arbiters which has jurisdiction. (Dy, October 27 1986)
  • This ruling holds true even though the complainant is claiming for back wages, employment benefits and damages. (Espino, January 5, 1995)
  • Carlito H. Vailoces was the manager, director, and stockholder of the Rural Bank of Ayungon.
  • In a special stockholders’ meeting, the new Board elected new executive officers, excluding Vailoces as the bank manager.
  • Vailoces filed a complaint for illegal dismissal, damages, underpayment of salary, and non-payment of living allowance.
WoN NLRC has jurisdiction over the case, given that Vailoces' position as bank manager is an elective corporate office. YES

The Supreme Court ruled that the case falls under the original and exclusive jurisdiction of the Securities and Exchange Commission (SEC) as an intracorporate controversy.
The decisions of the Labor Arbiter and the NLRC are set aside for lack of jurisdiction.

  • Leslie W. Espino, an Executive Vice President-Chief Operating Officer of Philippine Airlines (PAL), was terminated by PAL's Board of Directors due to findings related to four cases allegedly prejudicing PAL and the Philippine Government.
  • Espino filed an illegal dismissal complaint with the National Labor Relations Commission (NLRC) seeking reinstatement and damages.
  • NLRC: Dismissed the complaint stating lack of jurisdiction and nullifying the writ of execution.
  • Espino filed for certiorari, arguing NLRC's jurisdiction under Article 217(2) of the Labor Code.
WoN NLRC has jurisdiction over the case. NO

The court asserts that SEC, not NLRC, has original and exclusive jurisdiction over cases involving the removal of corporate officers, citing Presidential Decree No. 902-A.

The Executive Vice President-Chief Operating Officer position, from which Espino claims dismissal, is an elective corporate office, and the SEC has jurisdiction over intra-corporate matters.
 
  • The SEC jurisdiction over corporate disputes, however, has been transferred to the regular courts by the Securities Regulation Code. (R.A. No. 8799, July 19, 2000)
  • A corporate office derives its character either from the Corporation Code or the corporation's by laws.
    • Under Section 25 of the Corporation Code, the corporate officers are the:
      • president,
      • secretary,
      • treasurer, and 
      • such other officers as may be provided by the by laws. 
  • The dismissal is deemed an intra-corporate dispute and falls within the jurisdiction of a trial court if the complainant is a corporate officer. 
  • He is a corporate officer if the circumstances occur:
    • his position is a creation of the corporate charter or by-law
    • his position is elective
    • his election is by the act of the directors or stockholders
    • (Cosare v. Broadcom, February 5, 2014 & United Tourist Promotions v. Kemplin, February 5, 2014)
  • WPP Marketing v. Galera, March 25, 2010:
    • The Vice-President was held to be an employee because even by the time she was dismissed, her vice-president position was non-existent as the SEC approved the by-laws amendment after the employee's dismissal. 
Award of Damages
  • The legislative intent appears clear to allow recovery of moral and other forms of damages, in all cases arising from the employer-employee relations. 
    • This include instances where an employee has been unlawfully dismissed.
    • The Labor Arbiter may award the dismissed employee not only the reliefs provided by labor laws, (Art. 294), but also moral and other forms of damages governed by the Civil Code. 
  • Moral damages would be recoverable for example, where the dismissal of an employee was not only effected without authorized cause or due process but also:
    1. was attended by bad faith or fraud,
    2. constituted an act oppressive to labor, or 
    3. was done in a manner contrary to morals, good customs or public policy. 
  • Also within the labor arbiters jurisdiction is an employer's claim for actual damages against an employee. 
    • The employer's claim arising as it does from employer-employee relationships, and being necessarily connected with the dispute over the employee's dismissal, should be entered as a counterclaim in the illegal dismissal case. 
    • The employer's claim cannot be filed with a regular court. (BaΓ±ez, May 9, 2000)
  • Leonardo D. Suario, an employee of Bank of the Philippine Islands, alleged illegal dismissal due to denial of a 6-month leave for bar review.
  • Despite previous assurances from management, petitioner's leave was approved for only 30 days. He proceeded with the review and received a letter to return to work. Petitioner refused, considering the considerable expenses in Manila.
  • Petitioner sought P9,995.00 actual damages, P300,000.00 moral damages, P200,000.00 exemplary damages, and attorney’s fees, in addition to separation pay.
  • NLRC: Denied his claim for damages arising from an alleged illegal dismissal. 

WoN NLRC erred in not granting damages despite finding the dismissal was illegal. NO

Moral damages would be recoverable, for example, where the dismissal of the employee was not only effected without authorized cause and/or due process - for which relief is granted by the Labor Code — but was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy — for which the obtainable relief is determined by ‘the Civil Code.

We do not find any bad faith or fraud on the part of the bank officials who denied the petitioner’s request for a six months’ leave of absence without pay. If the petitioner was made to believe that his request would be granted, we can not fault the branch manager or his subsequent replacement for giving their assurances. They were merely personal assurances which could be reconsidered on the basis of later developments or upon consultation with higher authorities and which are not binding. Certainly, the bank officials who gave their verbal assurances had only the petitioner’s paramount welfare in their minds. There is no evidence to show that they meant to deceive the petitioner. They themselves thought that such a request would be granted. Unfortunately, company policy had to be followed. The fact that the petitioner’s request for six months’ leave of absence was denied does not ipso facto entitle him to damages.

  • Bebanio BaΓ±ez was the sales operations manager of private respondent Oro Marketing, Inc. in Iligan City.
  • In 1993, the private respondent "indefinitely suspended" the petitioner.
  • Petitioner filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC) in Iligan City.
  • Labor Arbiter: Found petitioner illegally dismissed and ordered payment of separation pay, backwages, and attorney’s fees.
  • NLRC: Dismissed the appeal on procedural grounds.
  • Private respondent then filed a complaint for damages before the Regional Trial Court (RTC) seeking payment for various losses.
WoN Regional Trial Court (RTC) has jurisdiction over an action for damages filed by the employer against the dismissed employee, despite a prior labor case. NO

There is no mistaking the fact that in the case before us, private respondent’s claim against petitioner for actual damages arose from a prior employer-employee relationship. The issue of actual damages has been settled in the labor case, which is now final and executory.

Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee relations — in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code. 

Thus, it is obvious that private respondent’s remedy is not in the filing of this separate action for damages, but in properly perfecting an appeal from the Labor Arbiter’s decision. Having lost the right to appeal on grounds of untimeliness, the decision in the labor case stands as a final judgment on the merits, and the instant action for damages cannot take the place of such lost appeal.


Issuance of Injunction
  • Questions relating to legality of strikes or lockout or any form of work stoppage, including their incidents under Article 279, fall within the labor arbiter's jurisdiction. (Sec. 1, Rule V, NLRC, Rules of Procedure, 2011)
  • But the authority of the labor arbiter to issue injunctions as an ancillary remedy has been deleted from the NLRC Rules of Procedure.
Overseas Workers 
  • As mentioned in Book 1, R.A. No. 8042 has transferred from the POEA to the labor arbiters the jurisdiction over claims arising from employer-employee relationship involving Filipino workers overseas.
  • Such claims include termination dispute involving an OFW who work and was dismissed by the employer abroad. (Philippine National Bank, June 21 2005)

PNB v. Cabansag, G.R. No. 157010, June 21, 2005

  • Florence Cabansag, a Filipino, applied for employment at the Singapore branch of the Philippine National Bank (PNB) and was offered a temporary appointment as Credit Officer.
  • She was later terminated by PNB Singapore, allegedly due to a cost-cutting measure and the bank's transformation into a remittance office.

WoN National Labor Relations Commission (NLRC) in the National Capital Region has jurisdiction over the case and is the most convenient venue for the dispute. YES

The NLRC has jurisdiction over the case. Filipino workers, whether employed locally or overseas, enjoy the protection of Philippine labor laws.

The venue is proper. For overseas Filipino workers (OFWs), the case may be filed either where the complainant resides or where the principal office of the employer is situated.


Venue
  • All cases which labor arbiters of authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the complainant, or petitioner, however, cases involving Overseas Filipino worker shall be filed before the Regional Arbitration Branch, where the complainant resides or where the principal office of the respondents employers is situated at the option of the complainant.

Art. 225. Powers of the Commission. 
The Commission shall have the power and authority:

(a) To promulgate rules and regulations governing the hearing and disposition of cases before it and its regional branches, as well as those pertaining to its internal functions and such rules and regulations as may be necessary to carry out the purposes of this Code; (As amended by Section 10, Republic Act No. 6715, March 21, 1989)
 
(b) To administer oaths, summon the parties to a controversy, issue subpoenas requiring the attendance and testimony of witnesses or the production of such books, papers, contracts, records, statement of accounts, agreements, and others as may be material to a just determination of the matter under investigation, and to testify in any investigation or hearing conducted in pursuance of this Code;
 
(c) To conduct investigation for the determination of a question, matter or controversy within its jurisdiction, proceed to hear and determine the disputes in the absence of any party thereto who has been summoned or served with notice to appear, conduct its proceedings or any part thereof in public or in private, adjourn its hearings to any time and place, refer technical matters or accounts to an expert and to accept his report as evidence after hearing of the parties upon due notice, direct parties to be joined in or excluded from the proceedings, correct, amend, or waive any error, defect or irregularity whether in substance or in form, give all such directions as it may deem necessary or expedient in the determination of the dispute before it, and dismiss any matter or refrain from further hearing or from determining the dispute or part thereof, where it is trivial or where further proceedings by the Commission are not necessary or desirable; and
 
(d) To hold any person in contempt directly or indirectly and impose appropriate penalties therefor in accordance with law.
 
A person guilty of misbehavior in the presence of or so near the Chairman or any member of the Commission or any Labor Arbiter as to obstruct or interrupt the proceedings before the same, including disrespect toward said officials, offensive personalities toward others, or refusal to be sworn, or to answer as a witness or to subscribe an affidavit or deposition when lawfully required to do so, may be summarily adjudged in direct contempt by said officials and punished by fine not exceeding five hundred pesos (P500) or imprisonment not exceeding five (5) days, or both, if it be the Commission, or a member thereof, or by a fine not exceeding one hundred pesos (P100) or imprisonment not exceeding one (1) day, or both, if it be a Labor Arbiter.
 
The person adjudged in direct contempt by a Labor Arbiter may appeal to the Commission and the execution of the judgment shall be suspended pending the resolution of the appeal upon the filing by such person of a bond on condition that he will abide by and perform the judgment of the Commission should the appeal be decided against him. Judgment of the Commission on direct contempt is immediately executory and unappealable. Indirect contempt shall be dealt with by the Commission or Labor Arbiter in the manner prescribed under Rule 71 of the Revised Rules of Court; and (As amended by Section 10, Republic Act No. 6715, March 21, 1989)
 
(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party: Provided, That no temporary or permanent injunction in any case involving or growing out of a labor dispute as defined in this Code shall be issued except after hearing the testimony of witnesses, with opportunity for cross-examination, in support of the allegations of a complaint made under oath, and testimony in opposition thereto, if offered, and only after a finding of fact by the Commission, to the effect:
  1. That prohibited or unlawful acts have been threatened and will be committed and will be continued unless restrained, but no injunction or temporary restraining order shall be issued on account of any threat, prohibited or unlawful act, except against the person or persons, association or organization making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying the same after actual knowledge thereof;
  2. That substantial and irreparable injury to complainant’s property will follow;
  3. That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief;
  4. That complainant has no adequate remedy at law; and
  5. That the public officers charged with the duty to protect complainant’s property are unable or unwilling to furnish adequate protection.
Such hearing shall be held after due and personal notice thereof has been served, in such manner as the Commission shall direct, to all known persons against whom relief is sought, and also to the Chief Executive and other public officials of the province or city within which the unlawful acts have been threatened or committed, charged with the duty to protect complainant’s property: Provided, however, that if a complainant shall also allege that, unless a temporary restraining order shall be issued without notice, a substantial and irreparable injury to complainant’s property will be unavoidable, such a temporary restraining order may be issued upon testimony under oath, sufficient, if sustained, to justify the Commission in issuing a temporary injunction upon hearing after notice. Such a temporary restraining order shall be effective for no longer than twenty (20) days and shall become void at the expiration of said twenty (20) days. No such temporary restraining order or temporary injunction shall be issued except on condition that complainant shall first file an undertaking with adequate security in an amount to be fixed by the Commission sufficient to recompense those enjoined for any loss, expense or damage caused by the improvident or erroneous issuance of such order or injunction, including all reasonable costs, together with a reasonable attorney’s fee, and expense of defense against the order or against the granting of any injunctive relief sought in the same proceeding and subsequently denied by the Commission.
 
The undertaking herein mentioned shall be understood to constitute an agreement entered into by the complainant and the surety upon which an order may be rendered in the same suit or proceeding against said complainant and surety, upon a hearing to assess damages, of which hearing, complainant and surety shall have reasonable notice, the said complainant and surety submitting themselves to the jurisdiction of the Commission for that purpose. But nothing herein contained shall deprive any party having a claim or cause of action under or upon such undertaking from electing to pursue his ordinary remedy by suit at law or in equity: Provided, further, That the reception of evidence for the application of a writ of injunction may be delegated by the Commission to any of its Labor Arbiters who shall conduct such hearings in such places as he may determine to be accessible to the parties and their witnesses and shall submit thereafter his recommendation to the Commission. (As amended by Section 10, Republic Act No. 6715, March 21, 1989)


Art. 226. Ocular inspection. 
The Chairman, any Commissioner, Labor Arbiter or their duly authorized representatives, may, at any time during working hours, conduct an ocular inspection on any establishment, building, ship or vessel, place or premises, including any work, material, implement, machinery, appliance or any object therein, and ask any employee, laborer, or any person, as the case may be, for any information or data concerning any matter or question relative to the object of the investigation.

Notes
  • Rule-making Authority:
    • Power to promulgate rules and regulations for hearings, disposition of cases, internal functions, and other necessary under the Code.
  • Administrative Powers:
    • Administer oaths, 
    • Summon parties,
    • Issue subpoenas for witnesses and documents material to a just determination of the matter under investigation
    • Testify in any investigation or hearing conducted in pursuance of the Code
  • Investigative and Determination Powers:
    • Conduct investigations to determine questions, matters, or controversies within its jurisdiction
    • Proceed to hear and determine disputes even in the absence of summoned parties.
    • Conduct proceedings, either in public or private
    • Adjourn hearings to any time and place
    • Refer technical matters or accounts to an expert
    • Accept expert reports as evidence after hearing the involved parties upon due notice
    • Direct parties to be joined or excluded from the proceedings.
    • Correct, amend, or waive errors, defects, or irregularities in substance or form
    • Give all necessary or expedient directions in dispute determination.
    • Dismiss matters or refrain from further hearing or determining disputes or parts deemed trivial or unnecessary/undesirable.
  • Contempt Powers:
    • Authority to hold individuals in contempt, directly or indirectly, with the ability to impose fines or imprisonment, depending on the nature of contempt.
    • Direct Contempt:
      • Misbehavior in the presence of or near the:
        • Chairman, 
        • Commission members, or 
        • Labor Arbiter.
      • Actions include:
        • obstruction or interruption of proceedings,
        • disrespect, 
        • offensive personalities, 
        • refusal to be sworn or answer as a witness, when required
        • refusal to be subscribe an affidavit or disposition, when required
    • Penalty (Commissioner):
      • Fine not exceeding P500 or 
      • Imprisonment not exceeding 5 days, or both.
    • Penalty (Labor Arbiter):
      • Fine not exceeding P100 or 
      • imprisonment not exceeding 1 day, or both.
    • Appeals for Direct Contempt by LA:
      • NLRC
      • Execution of judgment is suspended during the appeal if the person files a bond agreeing to abide by the Commission's judgment if the appeal is decided against them.
      • Judgment of the Commission on direct contempt is immediately executory and unappealable.
    • Indirect Contempt:
      • Indirect contempt is addressed by the Commission or Labor Arbiter following the rules in Rule 71 of the Revised Rules of Court.
  • Injunction and Restraint:
    • Purpose of Injunction:
      • The Commission has the authority to enjoin or restrain any actual or threatened commission of prohibited or unlawful acts in labor disputes.
    • Conditions:
      • No temporary or permanent injunction can be issued without a hearing that includes:
        • Testimony of witnesses, with cross-examination, supporting the complaint made under oath.
        • Testimony in opposition, if offered.
        • A finding of fact by the Commission.
    • Criteria:
      • Injunction can only be issued if:
        1. Prohibited or unlawful acts have been threatened and will be committed and continued unless restrained.
        2. Substantial and irreparable injury to the complainant's property will follow.
        3. Denial of relief would cause greater injury to the complainant than granting relief would inflict on the defendants.
        4. Complainant has no adequate remedy at law.
        5. Public officers responsible for protecting the complainant's property are unable or unwilling to provide adequate protection.
    • Notice and Hearing Requirements:
      • Hearing should be held after due and personal notice, served as directed by the Commission, to all known persons against whom relief is sought.
      • Notice also provided to the Chief Executive and other public officials of the relevant province or city charged with protecting complainant's property.
    • Temporary Restraining Order (TRO):
      • TRO may be issued without notice if complainant alleges substantial and irreparable injury to their property.
      • Effective for a maximum of twenty (20) days and becomes void afterward.
    • Conditions:
      • Issuance is conditional on the complainant filing an undertaking with adequate security.
      • The undertaking includes:
        • Adequate security in an amount determined by the Commission.
        • Compensation for those enjoined, covering all reasonable costs.
        • Reasonable attorney’s fees.
        • Expenses of defense against the order or the granting of injunctive relief subsequently denied by the Commission.
      • The undertaking is considered an agreement between the complainant and the surety.
      • It serves as the basis for rendering an order in the same suit or proceeding against the complainant and surety.
    • Assessment of Damages and Remedy:
      • A hearing is held to assess damages based on the undertaking.
      • The presence of the undertaking does not prevent any party with a claim or cause of action from pursuing their ordinary remedy by suit at law or in equity.

    • Delegation of Evidence Reception:

      • The Commission may delegate the reception of evidence for the application of a writ of injunction to any of its Labor Arbiters.
      • Labor Arbiters conduct hearings in accessible places, submit recommendations to the Commission.
  • Ocular Inspection
    • Authority:
      • The Chairman, any Commissioner, Labor Arbiter, or their duly authorized representatives have the authority to conduct ocular inspections.
    • Scope of Inspection:
      • Inspections can be conducted on any establishment, building, ship, vessel, place, or premises.
      • This includes any work, material, implement, machinery, appliance, or object within the specified locations.
    • Timing of Inspection:
      • Ocular inspections can take place at any time during working hours.
    • Inquiry Authority:
      • Those conducting the inspection have the right to ask any employee, laborer, or person for information or data related to the matter or question under investigation.

Powers of the NLRC
  • Under Articles 225 and 226, the NLRC has the power to:
    1. make rules and regulations pertaining to its functions;
    2. administer oaths and issue subpoenas and summons; 
    3. investigate, hear and decide disputes within its jurisdiction; 
    4. hold persons in contempt;
    5. issue restraining orders and injunctions;
    6. conduct ocular inspection; and
    7. decide appealed cases.
NLRC's Rules of Procedure
  • The hearing and disposition of cases by the NLRC divisions and the labor arbiters are governed by rules of procedure that the NLRC itself devises and promulgates. 
  • The most recent set is the 2011 NLRC Rules of Procedure which was promulgated on May 31, 2011.
Suppletory Rules
  • In the absence of specific provisions in the NLRC Rules or in applicable laws like the Labor Code and its implementing rules, the provisions of the Rules of Court apply in a suppletory character. 
  • Under the Rules of Court, for instance, when a party is represented by counsel, notices should be made upon the counsel of record at his given address, to which notices of all kinds emanating from the court should be sent. (UERM Employees, August 31, 1989)
  • But note Article 230. It requires that copies of decisions to be executed should be furnished to both the party litigant and the counsel.
  • UERM Employees Union is the bargaining representative of University of the East — Ramon Magsaysay Memorial Medical Center (UERM) employees.
  • The labor union seeks to annul decisions and orders by the Minister of Labor and Employment regarding salary increases and a collective bargaining agreement (CBA) involving employees of the University of the East-Ramon Magsaysay Memorial Medical Center (UERM).
Whether the decision of the Minister of Labor and Employment became final and executory. NO.

Accordingly, when a party is represented by counsel, notices should be made upon the counsel of record at his given address, to which notices of all kinds emanating from the court should be sent. 

It is not disputed that both parties herein were represented by counsel. However, instead of proper service by Ministry process servers on the said lawyers of the parties, the xerox copy of the decision of March 18, 1986 was released to and received by representatives of the union who had been following up the case in the office of the Minister. 

Clearly, therefore, as correctly observed by the Solicitor General, the period of appeal has not commenced to run against private respondent UERM. 


Injunctive Power
  • An order or writ of injunction commands a person to do or not to do a particular act.
    • Article 225(e) gives exclusive and original jurisdiction to the NLRC to hear and resolve petitions for injunction. 
    • But injunctions or restraining orders are frowned upon as a matter of labor relations policy. (See Art. 266) 
    • This policy is the reason Article 225(e) prescribes strict procedure and requisites that must be satisfied before an injunctive relief may issue.
  • Where the trial court (now NLRC) did not follow in observe the procedure in issuing the injunction the writ is illegal and void.
  • The issuance of a temporary restraining order ex parte (no notice to the other party) is not per se prohibited.
    • Its issuance, however, should be characterized by care and caution.
    • The law requires that it be clearly justified by considerations of extreme necessity when the commission of unlawful acts is causing substantial and irreparable injury to company properties and the company is, for the moment, bereft of an adequate remedy at law. (Bisig Ng Manggagawa sa Concrete Aggregates, September 16 1983)
  • CompaΓ±ia Maritima, Iligan Branch, had an "arrastre and stevedoring contract" with the Allied Free Workers’ Union.
  • When the contract expired, the union continued services until the company then terminated the contract and engaged Iligan Stevedoring Association.
  • The union filed charges of unfair labor practice and engaged in picketing, obstructing the company's operations.
  • The company filed a case seeking to enjoin the union's interference.
  • CFI-Lanao: Issued an ex parte preliminary injunction.
  • The union contested the court's jurisdiction, arguing it belonged to the Court of Industrial Relations due to a labor dispute.
WoN the trial court has jurisdiction to issue the preliminary injunction in question. NO.

The first question should be answered in the affirmative, considering our finding that the trial court has jurisdiction to take cognizance of the case, but we hold nevertheless that the injunction issued by it is void because the procedure laid down by section 9 (d) of Republic Act 875 was not followed in its issuance. The instant case, being an outgrowth of a labor dispute arising from the picketing of the premises of respondent company by the members of petitioning union, the trial court cannot grant the injunction merely ex parte under section 6, Rule 60 of the Rules of Court, but must follow what is provided for in Republic Act No. 875. 

  • United States Line, et.al. filed a complaint alleging that the petitioner Associated Watchmen and Security Union engaged in coercive picketing to force a collective bargaining agreement about watchmen's employment.
  • CFI-Manila: granted a preliminary injunction without following the requisites of Section 9 of Republic Act 875, which deals with labor disputes.
  • Respondents argued there was no employer-employee relationship and the picketing involved violence, coercion, and fraud, not peaceful protest.
WoN the trial court has jurisdiction to issue the preliminary injunction in question. NO.

It is evident that a "labor dispute" existed between the watchmen, members of the petitioning union, and the steamship agencies, the respondents herein.  We find, therefore, that the court should have found that a labor dispute exists and should have proceeded in accordance with section 9 of the Republic Act No. 875 before issuing an injunction. In issuing the injunction without following the procedure outlined in said section, the court exceeded its jurisdiction.

  • Bisig Ng Manggagawa sa Concrete Aggregates held a strike protesting alleged unfair labor practices by the private respondent Concrete Aggregates Corporation at multiple locations.
  • The company petitioned the NLRC for an injunction to stop the strike, citing illegal acts and obstruction of business operations.
  • The union claimed it wasn't provided a copy of the petition and wasn't properly notified of the hearings.
  • NLRC: Issued a temporary restraining order against the union.
    • After hearings, NLRC granted a preliminary injunction against the union.
WoN NLRC can issue a preliminary injunction, as it did issue, after the lapse of a twenty day temporary restraining order. NO

To be sure, the issuance of an ex parte temporary restraining order in a labor dispute is not per se prohibited. Its issuance, however, should be characterized by care and caution for the law requires that it be clearly justified by considerations of extreme necessity, i.e., when the commission of unlawful acts is causing substantial and irreparable injury to company properties and the company is, for the moment, bereft of an adequate remedy at law. This is as it ought to be, for imprudently issued temporary restraining orders can break the back of employees engaged in a legal strike. 

Often times, they unduly tilt the balance of a labor warfare in favor of capital. When that happens, the deleterious effects of a wrongfully issued, ex parte temporary restraining order on the rights of striking employees can no longer be repaired for they defy simple monetization. Moreover, experience shows that ex parte applications for restraining orders are often based on fabricated facts and concealed truths. A more becoming sense of fairness, therefore, demands that such ex parte applications should be more minutely examined by hearing officers, lest, our constitutional policy of protecting labor becomes nothing but a synthetic shibboleth. The immediate need to hear and resolve these ex parte applications does not provide any excuse to lower our vigilance in protecting labor against the issuance of indiscriminate injunctions. Stated otherwise, it behooves hearing officers receiving evidence in support of ex parte injunctions against employees in strike to take a more active stance in seeing to it that their right to social justice is in no way violated despite their absence. This equalizing stance was not taken in the case at bar by the public respondents.


Art. 227. Technical rules not binding and prior resort to amicable settlement.
In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. In any proceeding before the Commission or any Labor Arbiter, the parties may be represented by legal counsel but it shall be the duty of the Chairman, any Presiding Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the proceedings at all stages.

Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts towards the amicable settlement of a labor dispute within his jurisdiction on or before the first hearing. The same rule shall apply to the Commission in the exercise of its original jurisdiction. (As amended by Section 11, Republic Act No. 6715, March 21, 1989)

  • Rules of Evidence:
    • The prevailing rules of evidence in courts of law or equity are not controlling.
  • Spirit and Intention of the Code:
    • The spirit and intention of the Labor Code emphasize that the Commission, its members, and Labor Arbiters shall:
      • use every and all reasonable means 
      • to ascertain the facts in each case speedily and objectively and
      • without regard to technicalities of law or procedure,
      • all in the interest of due process
  • Proceedings:
    • Parties in Commission or Labor Arbiter proceedings may have legal counsel.
    • The Chairman, Presiding Commissioner, Commissioner, or Labor Arbiter has the duty to exercise complete control over the proceedings at all stages.
  • Amicable Settlement:
    • Labor Arbiters shall exert all efforts towards the amicable settlement of a labor dispute within their jurisdiction on or before the first hearing.
    • The same rule applies to the Commission in the exercise of its original jurisdiction.

Procedural Rules
  • In their exercise of adjudicative functions, i.e., in hearing and deciding labor-management disputes, administrative agencies like the National Labor Relations Commission and the Labor Arbiters are not bound by strict rules of evidence and of procedures (mostly found in the Rules of Court). 
  • When confronted with conflicting versions of factual matters it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received. (Gelmart Industries, November 5, 1987)
  • But there are cardinal primary rights which must be respected in administrative or quasi-judicial proceedings (Ang Tibay, February 27, 1940)
    • These rights include, as explained under Articles 129 and 227, the right to present evidence in support of one's case and the right to a decision that explains its reasons based on issues and evidence. 
    • In short, procedural due process must be observed.
  • A formal or trial type hearing is not all times essential to due process. 
    • Its requirements are satisfied when parties are afforded fair and reasonable opportunity to explain their sides of controversy.
    • To expedite dispute resolution, the technical rules of evidence under the Rules of court do not control m labor cases.
  • Labor cases can be decided on the basis of position papers and other documents submitted by the contending parties. 
  • It is well-settled doctrine that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. 
    • It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be resolved in the favor of the laborer. 
    • The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. (Nicario, September 17, 1998)
  • Gelmart Industries (Phils. Is.), Inc. (GELMART) filed a special civil action for certiorari to reverse the reinstatement order issued by the Regional Director of the Ministry of Labor and Employment (MOLE) for Jenny Juanillo.
  • GELMART had a collective bargaining agreement with National Union of Garment, Textile Cordage and Allied Workers of the Philippine (GATCORD) covering its workers, including Juanillo, who was part of a strike initiated by GATCORD.
  • Juanillo claimed she was on pre-filed vacation leave during the strike and was dismissed without proper clearance from the Ministry of Labor. She filed a complaint for illegal dismissal.
  • MOLE: Ordered Juanillo's immediate reinstatement with backwages, citing her absence from the strike due to vacation leave and lack of proof from GELMART.
  • GELMART argued that Juanillo's dismissal was covered by a prior decision from NLRC Case No. RB-IV-13275-77, and her separate complaint was untimely and barred by finality of judgment.
WoN Juanillo's complaint of February 15, 1979, was filed seven (7) months after the NLRC decision on her case of September 13, 1978: it is, therefore, barred by finality of judgment, estoppel and res judicata. YES

It is axiomatic that in their exercise of adjudicative functions they are not bound by strict rules of evidence and of procedure. When confronted with conflicting versions of factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received. 

A careful review of the basis on which the decision of the labor arbiter as affirmed by the respondent Leogardo as deputy minister of MOLE reveals that not only is there no substantial evidence to support Juanillo's claim but also that the respondents' evidence to the contrary contravenes it. All that was needed was to show that she had indeed not participated in the strike by presenting her letter asking for leave. Instead she filed her case seven months after the decision had become final and executory. By way of evidence all she presented was a self- serving uncorroborated letter purportedly asking for leave, receipt of which was not proved. This quantum of evidence fails the substantiality of evidence test to support a decision, a basic requirement in administrative adjudication. 

  • Toribio Teodoro, the owner of Ang Tibay, claimed that some employees were temporarily laid off due to a shortage of leather soles. 
  • The National Labor Union, Inc. (NLU) requested a new trial in the Court of Industrial Relation, arguing that the shortage claim was false and unsupported by evidence, and that it was a scheme to avoid contractual obligations. 
  • The NLU also contended that the National Worker's Brotherhood, an employee union dominated by Teodoro, was illegal. They accused Teodoro of unfair labor practices and discrimination against the NLU.
  • Ang Tibay opposed the NLU's motion for reconsideration.
WoN the National Labor Union Inc, was deprived of due process. YES

Cardinal primary requirements of due process in administrative proceedings:
  1. The right to a hearing which includes the right to present one's case and submit evidence in support thereof;
  2. The tribunal must consider the evidence presented;
  3. The decision must have something to support itself;
  4. The evidence must be substantial, and "substantial evidence" means such evidence as a reasonable mind might accept as adequate to support a conclusion;
  5. The decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected;
  6. The tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate; and
  7. The board or body should, in all controversial questions, render its decisions in such manner that the parties to the proceeding can know the various issues involved, and the reason for the decision rendered.
In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to the alleged agreement between the Ang Tibay and the National Worker's Brotherhood, the record is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a national way, a conclusion of law. Therefore, the case is remanded to the CIR for further proceedings and to allow the presentation of pertinent evidence.

  • Concepcion M. Joaquin was hired by Asiaworld Publishing House, Inc. as advertising sales director. After two years, she was appointed to Vice President for marketing. 
  • Asiaworld terminated her services because of continued losses despite her contributions.
  • Respondent filed a complaint for illegal dismissal, seeking unpaid leave credits and reimbursement of representation expenses.
  • Regional Director: Ordered to reinstate respondent to her former position with full backwages
  • Petitioner contested due process, claiming lack of hearing and failure to receive respondent's position paper.
  • Minister of Labor: Dismissed appeal for lack of merit.
WoN Asia World Publishing House was afforded due process. YES

The respondent Minister or the Regional Director can decide the case on the basis of the position papers and other documents submitted by the contending parties without resorting to the technical rules of evidence observed in the courts of justice. Such a procedure substantially complies with the requirements of due process. 

When the order was handed down by the Regional Director, the petitioner filed a motion for reconsideration which was treated as an appeal and which was decided on the merits by the respondent Minister. The petitioner, therefore, was given sufficient opportunity to be heard. Assuming that there was any procedural defect in arriving at the Regional Director's order, the same was cured when the petitioner filed a motion for reconsideration and the motion was considered. Even on the assumption that no documentary evidence was ever submitted by private respondents, still, on appeal, the entire record of the case was reviewed by the respondent Minister of Labor and in fact, decided the case on the merits. Besides, a motion for reconsideration filed by petitioner invoking due process cured the defect based on the alleged lack of procedural due process. 

  • Emelita Nicario worked at Mancao Supermarket from 1986, later terminated in 1989. She filed a complaint for illegal dismissal before the NLRC
  • Labor Arbiter: Dismissed the complaint.
  • NLRC: Found lack of due process and remanded to arbitration for further proceedings.
    • Ruled that since petitioner assailed her supposed signatures appearing on the payrolls presented by the company as a forgery, the labor arbiter should not have merely depended on the xerox copies of the payrolls, as submitted in evidence by the private respondent but ordered a formal hearing on the issue. 
  • Labor Arbiter: Awarded claims but dismissed holiday premium pay and unpaid salaries.
  • NLRC: Deleted the award for overtime pay and ruled that private respondent Antonio Mancao is not jointly and severally liable with Mancao Supermarket.
WoN the petitioner is entitled to overtime pay. YES

It is a well-settled doctrine, that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be resolved in the former's favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor.

This rule should be applied in the case at bar, especially since the evidence presented by private respondent company is not convincing. Accordingly, we uphold the finding that petitioner rendered overtime work, entitling her to overtime pay.


Dismissal of Complaint Based on Prescription
  • When the plaintiffs own allegations in the complaint show clearly that the action has prescribed, i.e., the time to file the complaint has lapsed, the court may dismiss the case, on the ground of prescription. 
  • The NLRC Rules of 2011 state that on or before the date set for the conciliation/mediation conference, the respondent may file a motion to dismiss based only on any of the following grounds: 
    • lack of jurisdiction over the subject matter
    • improper venue
    • prescription, and 
    • forum shopping. 
  • Denial of the motion or deferment of its resolution is not appealable.
  • Articles 305, 306 and 307 specify the various periods for filing complaints in labor cases.
  • Job Guanzon was hired by Pepsi Cola Bottling Company of the Philippines (PEPSI) was terminated for alleged misappropriation and falsification. 
  • PEPSI filed an Estafa -Through Falsification of Commercial Documents complaint against Guanzon which got dismissed. 
  • Guanzon then filed for reinstatement, backwages, and damages.
  • Labor Arbiter: Initially dismissed the complaint due to prescription.
    • Labor Code provides for a three-year prescriptive period for all money claims arising from an employer-employee relationship.
  • NLRC: Reversed the decision, ordering backwages instead of reinstatement due to the time elapsed.
    • The applicable law is Article 1146 of the Civil Code which provides for a four-year prescriptive period in cases of violation of or injury to the rights of the plaintiff.
WoN private respondent's action for illegal dismissal with claims for reinstatement and backwages had prescribed. YES

In an illegal dismissal case, the cause of action accrues from the time the employee was unjustly terminated. In this case private respondent's cause of action arising from his alleged illegal dismiss accrued on July 17, 1979, the effective date of the termination of his employment.

The Court cannot sustain NLRC's argument that it was only when PEPSI refused to reinstate private respondent to his former position, after the dismissal of the criminal case on May 25, 1984, that the latter's cause of action accrued. Guanzon was dismissed by PEPSI way back in 1979. He could have immediately challenged his dismissal without waiting for the outcome of the criminal case. His right to file an action for illegal dismissal is now barred by prescription precisely because he chose to wait for the dismissal of the criminal case before filing his complaint. The filing of the criminal case against private respondent did not have the effect of suspending or interrupting the prescriptive period for the filing of the action for illegal dismissal. An action for illegal dismissal is an administrative case which is entirely separate and distinct from a criminal action for estafa. Each may proceed independently of the other.

The Court, after considering the foregoing arguments and the applicable laws on the matter, finds that there was no waiver of the defense of prescription. As correctly pointed out by the petitioner, the Labor Code and the NLRC Rules do not provide for a specific period within which to file a motion to dismiss. And even if we apply the technical rules of procedure obtaining in ordinary civil actions, the dismissal of the private respondent's complaint was still proper since it is apparent from its face that the action has prescribed. Private respondent himself alleged in the complaint that he was unlawfully dismissed in 1979, while the complaint was filed only on November 14, 1984. This Court has held in a number of cases that the rule on waiver of defenses by failure to plead in the answer or motion to dismiss does not apply when the plaintiffs own allegations in the complaint shows clearly that the action has prescribed.


Amicable Settlement
  • Settlement of disputes through compromise is an accepted, even desirable and encouraged practice in the courts of law and administrative tribunals. 
    • Through compromise, the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced.
  • The NLRC Rules of Procedure requires the labor arbiter to call and preside over a mandatory conciliation and mediation conference:
    • to try to amicably settle the case, 
    • to define and simplify the issues, or 
    • thresh out other preliminary matters. 
  • The Rules encourage compromise settlements but they have to be approved by the labor arbiter. 
  • If the conciliation conference fails, the labor arbiter may proceed to require the parties to file their position papers, with supporting documents, within 10 calendar days. 
  • The arbiter has the discretion to determine whether there is need for a hearing or conference before he makes his decision.
  • By a new law, all labor or employment issues are subject to mandatory conciliation-mediation. (See Art. 234.) 
  • Attorneys and other representatives of parties 
    • ✅have authority to bind their clients in all matters of procedure. 
    • ❌cannot without a special power of attorney or express consent, enter into a compromise agreement with the opposing party in full or partial discharge of a client's claim. (Section 7, Rule III of the 2011 NLRC Rules of Procedure)
Decision of the Labor Arbiter 
  • General Rule: The Labor Arbiter shall render his decision within 30 calendar days, without extension, after submission of the case by the parties for decision.
  • Exception: However, cases involving Overseas Filipino Workers shall be decided within 90 calendar days after the filing of the complaint.
  • The decision shall state the:
    • facts of the case, the issues, 
    • the applicable laws or rules, and 
    • the conclusions with reasons. 
  • If the decision calls for reinstatement of a dismissed employee, the employer must comply and submit a report of compliance within ten days from receipt of the decision even if he he intends to appeal the the decision.

Art. 222. Appearances and Fees.

Non-lawyers may appear before the Commission or any Labor Arbiter only:
  1. If they represent themselves; or
  2. If they represent their organization or members thereof.
No attorney’s fees, negotiation fees or similar charges of any kind arising from any collective bargaining agreement shall be imposed on any individual member of the contracting union: Provided, However, that attorney’s fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. (As amended by Presidential Decree No. 1691, May 1, 1980)

  • Representation by Non-Lawyers:
    • Non-lawyers can appear before the Commission or any Labor Arbiter only under two conditions:
      1. If they represent themselves.
      2. If they represent their organization or members.
  • Restriction on Fees:
    • No attorney’s fees, negotiation fees, or similar charges from any collective bargaining agreement can be imposed on individual members of the contracting union.
  • Exception for Attorney’s Fees:
    • Attorney’s fees may be charged against union funds, but the amount must be agreed upon by the parties.
  • Invalidity of Contrary Agreements:
    • Any contract, agreement, or arrangement contrary to the specified conditions shall be null and void.
Notes:
  • The obligation to pay the attorney's fees belongs to the union and cannot be shunted to the individual workers as their direct responsibility. (Bank of the Philippine Islands, [and two companion cases] March 31, 1989)
    • So categorical is this intent that the law also makes it clear that any agreement to the contrary shall be null and void ab initio, or invalid from the start.
  • The 10% negotiation fee which covers attorney's fees, agency and the like is based on the amount of backwages receivable under the CBA which is beyond what the law grants. (Cebu Institute of Technology, April 15, 1988)
  • The union president, a nonlawyer, is not entitled to attorney's fees due a lawyer who negotiated the CBA. An agreement where the union officer shares the lawyer's fee is immoral and violates Canon 34 of Legal Ethics: "No division of fees for legal services is proper, except with another lawyer based upon a division of service or responsibility." (Amalgamated Laborers, 22 SCRA 1266 [1968])

  • Ignacio Lacsina filed a motion for an attorney's lien based on a resolution from the Bank of P.I. Employees Union (BPIEU) authorizing payment of attorney's fees (5% of economic benefits) for negotiating a new collective bargaining agreement.
  • BPI deducted P 200.00 from each employee who signed the authorization. Petitioners objected that it was not authorized under Labor Code.
  • NLRC: Initially set aside the order, stating the rights needed determination; later, an en banc resolution ordered release amounts to Lacsina except for cases without signed authorization or withdrawn authorization.
  • Petitioners argued that the deductions contravened Article 222(b) of the Labor Code, preventing fees imposed on individual union members.
WoN the payment for the legal services must be made not by the individual workers directly, but by the union itself from its own funds. YES

The Court reads the afore-cited provision as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own 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 fee to be paid the attorney for his services on behalf of the union in its negotiations with the management. The obligation to pay the attorney's fees belongs to the union and cannot be shunted to the workers as their direct responsibility. Neither the lawyer nor the union itself may require the individual workers to assume the obligation to pay the attorney's fees from their own pockets. So categorical is this intent that the law also makes it clear that any agreement to the contrary shall be null and void ab initio.

We see no such imposition in the case at bar. A reading of the above-cited resolution will clearly show that the signatories thereof have not been in any manner compelled to undertake the obligation they have there assumed. On the contrary it is plain that they were voluntarily authorizing the check-off of the attorney's fees from their payment of benefits and the turnover to Lacsina of the amounts deducted, conformably to their agreement with him.

The agreement in question is in every respect a valid contract as it satisfies all the elements thereof and does not contravene law, morals, good customs, public order, or public policy. On the contrary, it enables the workers to avail themselves of the services of the lawyer of their choice and confidence under terms mutually acceptable to the parties and, hopefully, also for their mutual benefit.

Note: May be wrong case. April 15, 1988 not found
  • Motions for Reconsideration and Clarification in four of six consolidated cases decided by the Court, regarding the allocation of tuition fee increases under Presidential Decree No. 451 and the Education Act of 1982.
    • (a) That no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per centum of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other employees of the school concerned, and the balance for institutional development, student assistance and extension services, and return to investments: Provided That in no case shall the return to investments exceed twelve (12%) per centum of the incremental proceeds;
  • Biscocho Case:
    • Clarification on the basis for computing the ten percent (10%) negotiation fee. 
    • Petitioners and Espiritu Santo Parochial School propose a 30% basis for the ten percent (10%) negotiation fee, citing it's fixed by law at 60%.
    • Respondent Faculty Association argues for a 90% basis, tied to their influence on benefits due to the demand and strike related to P.D. 451.
WoN the 30% shall be the basis for the ten percent (10%) negotiation fee. YES

The whole ninety percent (90%) economic package awarded by the National Labor Relations Commission cannot be the basis for computing the negotiation fees. The law has already provided for the minimum percentage of tuition fee increases to be allotted for teachers and other school personnel. This is mandatory and cannot be diminished although it may be increased by collective bargaining. It follows that only the amount corresponding beyond that mandated by law should be subject to negotiation fees and attorney’s fees for the simple reason that it is only this which the school employees had to bargain for. The sixty percent (60%) which is what the law grants them is not a negotiable issue.

The term "backwages" as used in the questioned order of the former Minister of Labor apparently refers to whatever back payments will be received by the teachers and other school employees from the economic package which was ordered to be included in the collective bargaining agreement. The ten percent (10%) negotiation fee should be computed on the amount in excess of that portion allocated by law for increases in salaries of teachers and other school employees for the entire contract period covered by the economic package

  • Amalgamated Laborers' Association filed a complaint in the Court of Industrial Relations (CIR) against Binalbagan Sugar Central Company, Inc. (Biscom) for unfair labor practices.
  • CIR: rendered a judgment in favor of the complainants, directing reinstatement and back wages. 
  • Atty. Leonardo C. Fernandez claimed a 25% to 30% contingent fee based on a purported contract signed by some of the winning claimants. 
  • Atty. Jose Ur. Carbonell objected to this fee division, stating an oral agreement for equal division among Fernandez, Carbonell, and the union president.
  • CIR: Awarded 25% of the total recovery as attorney's fees solely to Atty. Fernandez. However, Carbonell was also actively involved in the case and did not file a notice of Attorney's Lien.

WoN the union president should share in the attorneys' fees. NO

We strike down the alleged oral agreement that the union president should share in the attorneys' fees. Canon 34 of Legal Ethics condemns this arrangement in terms clear and explicit. It says: "No division of fees for legal services is proper, except with another lawyer, based upon a division of service or responsibility." The union president is not the attorney for the laborers. He may seek compensation only as such president. An agreement whereby a union president is allowed to share in attorneys' fees is immoral. Such a contract we emphatically reject. It cannot be justified.


Nonlawyer
  • Under the 2011 NLRC Rules, Section 6, Rule III, a nonlawyer may appear before the Commission or Labor Arbiter only if:
    1. he represents himself as party to the case;
    2. he represents a legitimate labor organization, which is a party to the case;
    3. he represents a member or members of a legitimate labor organization existing in the employer's establishment who are parties to the case;
    4. he is duly accredited member of any legal aid office duly recognized by the Department of Justice or Integrated Bar of the Philippines;
    5. he is the owner or president of a corporation or establishment which is party to the case. 
  • He needs to present:
    1. a certification under oath that he is so authorized, and
    2. a copy of the resolution of the board of directors of the corporation granting him such authority.

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