Labor Relations Notes
Labor Relations Notes
NATIONAL LABOR RELATIONS COMMISSION - attached to the DOLE solely for program and policy coordination only
- composed of a Chairman and twenty-three (23) members
- The Commission may sit en banc or in eight (8) divisions, each composed of three (3) members.
- The Commission shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and
disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration
and operations.
- Of the eight (8) divisions, the first, second, third, fourth, fifth and sixth divisions shall handle cases coming from the
National Capital Region and other parts of Luzon: and the seventh and eighth divisions, cases from the Visayas and
Mindanao, respectively.
- The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or
resolution. Whenever the required membership in a division is not complete and the concurrence of two (2)
Commissioners to arrive at a judgment or resolution cannot be obtained, the Chairman shall designate such number of
additional Commissioners from the other divisions as may be necessary.
- The Commission and its eight (8) divisions shall be assisted by the Commission Attorneys in its Appellate and adjudicatory
functions whose terms shall be coterminous with the Commissioners with whom they are assigned.
- No Labor Arbiter shall be assigned to perform the functions of the Commission Attorney nor detailed to the office of any
commissioner.
- The Chairman, the Division Presiding Commissioners and other Commissioners shall all be appointed by the President.
- The Labor Arbiters shall also be appointed by the President upon recommendation of the Commission en banc to a
specific arbitration branch preferably in the region where they are residents, and shall be subject to Civil Service Law,
rules and regulations: Provided, That the Labor Arbiters who are presently holding office in the region where they are
residents shall be deemed appointed thereat.
- The Chairman of the Commission shall appoint the staff and employees of the Commission and its regional branches as
the needs of the service may require, subject to the Civil Service Law, rules and regulations, and upgrade their current
salaries, benefits and other emoluments in accordance with law. (As amended by RA . No. 9347, effective August 26,
2006.)
- The NLRC "shall exercise its adjudicatory and all other powers, functions and duties through its divisions." The " division"
is a legal entity, not the persons who sit in it. Hence, an individual commissioner has no adjudicatory power, although, of
course, he can concur or dissent in deciding a case. The law lodges the adjudicatory power on each of the eight divisions,
not on the individual commissioners nor on the whole commission. A resolution on a motion for reconsideration is valid
even if the commissioners that passed the resolution are not the same commissioners who made the decision sought to
be reconsidered. What matters is that the commissioners voting on the motion are duly assigned to the division.
- APPOINTMENT AND QUALIFICATIONS:
1. Chairman and other Commissioners
shall be members of the Philippine Bar;
engaged in the practice of law in the Philippines for at least fifteen (15) years;
with at least five (5) years experience or exposure in the field of labor-management relations, and
preferably residents of the region where they shall hold office.
2. Labor Arbiters
members of the Philippine Bar; and
engaged in the practice of law in the Philippines for at least ten (10) years;
with at least five (5) years experience or exposure in the field of labor-management relations
Note: The Chairman, the other Commissioners and the Labor Arbiters shall hold office during good behavior until they reach the age
of sixty-five (65) years, unless sooner removed for cause as provided by law or become incapacitated to discharge the duties of their
office: Provided, however, That the President of the Republic of the Philippines may extend the services of the Commissioners and
Labor Arbiters up to the maximum age of seventy (70) years upon the recommendation of the Commission en banc.
3. Commission Attorneys
members of the Philippine Bar;
with at least one (1) year experience or exposure in the field of labor-management relations
The State shall afford full protection to labor. = The worker, being the economically-disadvantaged party — whether as complainant/petitioner or as
respondent, as the case may be — the nearest governmental machinery to settle the dispute must be placed at his immediate disposal. The other
party is not to be given the choice of another competent agency sitting in another place as this will unduly burden the worker. Even in cases where
venue has been stipulated by the parties, the Court has not hesitated to set aside the same if it would lead to a situation so grossly inconvenient
to one party as to virtually negate his claim. (See Suplicio Lines, Inc. vs. NRC, 254 SCRA 506 [1996].)
Under Article 247 of the Code, "the civil aspects of all cases involving unfair labor practices, which may include claims for damages and other
affirmative relief, shall be under the jurisdiction of the labor arbiters." Xxx Jurisdiction is conferred by law and not necessarily by the nature of the
action. Civil controversies are not the exclusive domain of courts. (National Union of Bank Employees vs. Judge Alfredo Lazaro, et al, G.R. No.
56431,
January 19, 1988)
TERMINATION DISPUTES - Its resolution depends on the validity of the cause and the manner of the employee's dismissal
Is the dismissal of an employee an enforcement of personnel policy and, therefore, should be brought to a voluntary arbitrator instead of a
labor arbiter? No, not necessarily, thus ruled the Supreme Court in San Miguel Corp. vs. NLRC (G.R. No. 108001, March 15, 1996).
Company personnel policies - guiding principles stated in broad, long-range terms that express the philosophy or beliefs of an organization's top
authority regarding personnel matters. They deal with matters affecting efficiency and well-being of employees and include, among others, the
procedure in the administration of wages, benefits, promotions, transfer and other personnel movements which are usually not spelled out in the
collective agreement. The usual source of grievances, however, is the rules and regulations governing disciplinary actions.
Still on termination disputes, does a labor arbiter have jurisdiction over an illegal dismissal complaint filed by a church minister? Is the
principle of separation of church and state applicable? The Court answers: It does not matter that the employer here is a religious sect and that it
was organized not for profit because the Labor Code applies to all establishments whether for profit or not. (Article 278, Labor Code.) The principle
of separation of Church and State finds no application in the case at bench. For the rationale of the principle is to delineate or demarcate the
boundaries between the two (2) institutions (church and state) to avoid encroachments by one against the other. The demarcation line calls on the
two entities to "render unto Ceasar the things that are Ceasar's and unto God the things that are God's." This means that the State is prohibited
from interfering in purely ecclesiastical affairs, and the Church likewise is barred from meddling in purely secular matter. The case at bench is
only one of dismissal of an employee in the exercise by the employer-church of its management prerogatives and therefore does not concern any
ecclesiastical matter. While the case relates to the church and its minister, it does NOT ipso facto give it a religious significance, what is involved is
only the relationship of the church as an EMPLOYER and the minister as an employee which is purely SECULAR in character and has no relation
whatsoever to practice of faith, worship or doctrines of the Seventh Day Adventist Church. The minister was not excommunicated nor expelled
from membership of the SDA church but only dismissed from employment. Terminating one from his employment is totally different from the
ecclesiastical act of expelling a member from the religious congregation. (Austria vs. NLRC & Cebu City Central Philippines Union Mission
Corporation of the Seventh Day Adventists, G.R No. 124382, August 16, 1999.)
Termination of Corporate Officer; Jurisdiction Over Intra-Corporate Disputes Transferred From SEC to RTC
The dismissal of a corporate officer by a corporate board is a corporate dispute that should be brought to the regular courts. The jurisdiction of the
Securities and Exchange Commission over such case has been transferred to the courts by the Securities Regulation Code (R.A. No. 8799),
passed on July 19, 2000.
The election, appointment or removal of an executive vice-president is a prerogative vested upon a corporate board. And it must be, not only
because it is a practice observed in the company but more so, because of an express mandate of law.
A corporate officer's dismissal is always a corporate act, or an extra-corporate controversy and the nature is not altered by the reason or wisdom
with which the Board of Directors may have in taking such action. (Section 5 of Presidential Decree No. 902-A)
Effect of Claim for Backwages, Benefits, or Damages
Where its occupant is not reelected by the Board of Directors, the officer's complaint should be lodged with the SEC, [now regular court]
not the NLRC, even if the complainant/petitioner has claims for backwages, employment benefits, and damages. Xxx While the affirmative reliefs
and monetary claims sought by petitioner in his complaint may, at first glance, mislead one into placing the case under the jurisdiction of the Labor
Arbiter, a closer examination reveals that they are actually part of the perquisites of his elective position; hence, intimately linked with his relations
with the corporation (1994 case involving Philippine Airlines' Executive Vice-President-Chief Executive Officer).
RULING BEFORE: MAINLAND V. MOVILLA 1995: “In intra-corporate matters, such as those affecting the corporation, its directors,
trustees, officers and shareholders, the issue of consequential damages may just as well be resolved and adjudicated by the SEC. It is still within
the competence and expertise of the SEC to resolve all matters arising from or closely connected with all intra-corporate disputes. Such jurisdiction
of the SEC [now the RTC] is not negated by the complainant's claims for vacation and sick leaves, 13th-month pay, Christmas bonus, medical
expenses, car expenses, and other benefits, as well as for moral and exemplary damages and attorney's fees(Andaya vs. Abadia).
In order that the SEC can take cognizance of a case, the controversy must pertain to any of the following relationships:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners, members or officers;
c) between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned; and
d) among the stockholders, partners or associates themselves.
The fact that the parties involved in the controversy are all stockholders or that the parties involved are the stockholders and the
corporation does not necessarily place the dispute -within the ambit of the jurisdiction of SEC. The better policy to be followed in determining
jurisdiction over a case should be to consider concurrent factors such as the status or relationship of the parties or the nature of the question that is
the subject of their controversy. In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore, it does not necessarily
follow that every conflict between the corporation and its stockholders would involve such corporate matters as only the SEC can resolve in the
exercise of its adjudicatory or quasi-judicial powers.
In the case at bench, the claim for unpaid wages and separation pay filed by the complainant against petitioner corporation involves a
labor dispute. It does not involve an intra-corporate matter, even when it is between a stockholder and a corporation. It relates to an employer-
employee relationship which is distinct from the corporate relationship of one with the other. Moreover, there was no showing of any change in the
duties being performed by complainant as an Administrative Officer and as an Administrative Manager after his election by the Board of Directors.
What comes to the fore is whether there was a change in the nature of his functions and not merely the nomenclature or tide given to this job.
Since Movilla's complaint involves a labor dispute, it is the NLRC, under Article 217 of the Labor Code of the Philippines, which has
jurisdiction over the case.”
RULING NOW: Tabang vs. NLRC: SEC Jurisdiction Reaffirmed; Corporate Officer and Intra-corporate Controversy Defined
“The "better policy" enunciated in Mainland vs. Movilla (1995), however, did not influence and was not mentioned at all in the 1997
decision in Tabang vs. NLRC, penned by Mr. Justice Regalado. The Court ruled, again, that all kinds of controversies between stockholders and
corporations fall under SEC's jurisdiction [RTC, per R.A. No. 8799]. It also clarified the term "corporate officers."
The president, vice-president, secretary and treasurer are commonly regarded as the principal or executive officers of a corporation, and
modern corporation statutes usually designate them as the officers of the corporation. However, other officers are sometimes created by the charter
or by-laws of a corporation, or the board of directors may be empowered under the by-laws of a corporation to create additional offices as may be
necessary.
Under Section 25 of the Corporation Code, the president, secretary and treasurer are specifically mentioned as officers of the corporation.
The same section also provides that the board of directors may elect "such other officers as may be provided for in the by-laws."
Jurisprudence leads to this definition: a "corporate officer" is the president, secretary, or treasurer of the corporation or any other officer
whose office is created by the board of directors as authorized or required by the corporate charter or by-laws.
It has been held that an "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders.
On the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the
managing officer of the corporation who also determines the compensation to be paid to such employee. A further distinction may thus be drawn
between an officer and an employee of a private corporation in that the latter is subordinate to the officers and under their control and direction... It
is clear that the two terms officers and agents are by no means interchangeable...
An "intra-corporate controversy" is one which arises between a stockholder and the corporation. There is no distinction, qualification,
nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations. (Tabang vs.
NLRC, above) [Italics supplied — CAA] “
In Mainland, the complainant is a stockholder-employee while in Tabang he is a stockholder-corporate officer. Both in Mainland and
Tabang the complaints include claims for unpaid wages and 13th month pay. In Mainland the Court views it as a labor dispute, hence under
NLRC jurisdiction. But in Tabang the Court calls it an intra-corporate controversy, hence under SEC [now RTC] jurisdiction; then the Court
concludes: "The provision is broad and covers all kinds of controversies between stockholders and corporation. "
Nacpil vs. International Broadcasting Corp., G.R. No. 144767, March 21, 2002:
The Court has consistently held that there are two elements to be considered in determining whether the SEC has jurisdiction over the
controversy, to wit: (1) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.
Even assuming that the petitioner was in fact appointed by the General Manager, such appointment was subsequently approved by the
Board of Director of the IBC. That the position of Comptroller is not expressly mentioned among the officers of the IBC in the By-Laws is of no
moment, because the IBC's Board of Directors is empowered under Section 25 of the Corporation Code and under the corporation's By-Laws to
appoint such other officers as it may deem necessary.
The Court has held that in most cases the "by-laws may and usually do provide for such other officers,'' and that where a corporate office
is not specifically indicated in the roster of corporate officers in the by-laws of a corporation, the board of director may also be empowered under the
by-laws to create additional officers as may be necessary.
As petitioner's appointment as comptroller required the approval and formal action of the IBC's Board of Directors to become valid, it is
clear therefore that petitioner is a corporate officer whose dismissal may be the subject of a controversy cognizable by the SEC [now RTC]
under Section 5(c) of P.D. 902-A which includes controversies involving both election and appointment of corporate directors, trustees, officers, and
managers. Had petitioner been an ordinary employee, such board action would not have been required.
(NOTE: 1. "business judgment doctrine" - encompasses the removal from office of a corporate officer at the discretion of the board of directors.
2. Such latitude of discretion, he (petitioner) argues, runs counter to the guarantee of security of tenure of "all workers" under the
Constitution and the Labor Code. He sees an open constitutional issue.)
The original and exclusive jurisdiction of the Labor Arbiter under Article 217(c ) for money claims is limited only to those arising from statutes or
contracts other than a Collective Bargaining Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and
exclusive jurisdiction over money claims "arising from the interpretation or implementation of the Collective Bargaining Agreement, and those
arising from the interpretation or enforcement of company personnel policies," under Article 261.
Xxxxxxxx
Splitting of Actions Not Allowed - An employee who has been illegally dismissed so as to cause him moral damages has a cause of action for
reinstatement, backwages and damages. However, he cannot sue in two forums: one, before the Labor Arbiter for reinstatement and recovery of
backwages upon the theory that his dismissal was illegal; and two, before a court of justice for recovery of moral damages upon the theory that his
dismissal was injurious or tortious.
The judgment of the Labor Arbiter granting separation pay operated as a bar to his subsequent action for the recovery of damages before the Court
of First Instance under the doctrine of res judicata.
Employer's Complaint for Damages - An employer's claim for damages against an employee may be filed as counterclaim in the illegal dismissal
case filed by the employee. Such claim for damages, arising from employment relationship, is outside the jurisdiction of the regular court.
LABOR ARBITER'S JURISDICTION: STRIKES AND LOCKOUTS - The power to issue injunction is lodged with an NLRC division, not a labor
arbiter. Moreover, "national interest" cases are handled differently. Article 263(g) empowers the DOLE Secretary or the President of the Republic
to assume jurisdiction or refer the case to the NLRC if the labor dispute or impending strike or lockout involves an industry indispensable to national
interest.
regular courts – has the jurisdiction to hear and decide actions filed by third parties being affected by a strike of people who are not their
employees. Finally, if a crime is committed, whether in relation to a strike or not, the prosecution of the crime has to be done not before a labor
arbiter but a regular court, because in such case the laws to be administered are primarily the penal laws of the land.
SUBMISSION TO JURISDICTION - A party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate or question that same jurisdiction.
The Supreme Court frowns upon the undesirable practice of a party submitting his case for decision and then accepting the judgment only if
favorable, and attacking it for lack of jurisdiction when adverse. (see Tijam v. Sibonghanoy)
EXECUTING MONEY CLAIMS AGAINST THE GOVERNMENT - Even when a government agency enters into a business contract with a private
entity, it is not the Labor Code but C.A. No. 327 that applies in pursuing a money claim (against the Government) arising from such contract.
In this jurisdiction, the general law waiving the immunity of the State from suit is found in Act No. 3083, when the Philippine
government "consents and submits to be sued upon any money claim involving liability arising from contract, express or implied, which could serve
as a basis of civil action between private parties." Implied consent, on the other hand, is conceded when the State itself commences litigation, thus
opening itself to a counter-claim or when it enters into a contract. In this situation, the government is deemed to have descended to die level of the
other contracting party and to have divested itself of its sovereign immunity. Not all contracts entered into by the government operate as a
waiver of its nonsuability; distinction must still be made between one which is executed in the exercise of sovereign function and another which is
done in its proprietary capacity. XXX Pursuant, however, to Commonwealth Act No. 327, as amended by Presidential Decree No. 1445, the money
claim should first be brought to the Commission on Audit. XXX The Labor Code, in relation to Act No. 3083, provides the legal basis for the State
liability but the prosecution, enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in CA
327, as amended by PD 1445. (Department of Agriculture vs. The National Labor Relations Commission, et al., G.R. No. 104269, November 11,
1993)
POWER TO ISSUE INJUNCTION OR TEMPORARY RESTRAINING ORDER - injunctions or restraining orders are frowned upon as a matter of
labor relations policy
action for injunction - the main action of injunction seeks a judgment embodying a final injunction which is distinct from, and should not be
confused with the provisional remedy of preliminary injunction
preliminary injunction - the sole object of which is to preserve the status quo until the merits can be heard. A writ of preliminary injunction is
generally based solely on initial and incomplete evidence. (72)