B. Labor Arbiter

Frequency: ★ ★ ★ ★ ★

1. JURISDICTION

Labor Arbiter’s original and exclusive jurisdiction:
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 279 (formerly 264) of the Labor Code, as amended, including questions involving the legality of strikes and lockouts;
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;
7) Wage distortion disputes in unorganized establishments not voluntarily settled by the parties pursuant to R.A. 6727;
8) Enforcement of compromise agreements when there is non-compliance by any of the parties pursuant to Article 232 (formerly 227) of the Labor Code, as amended;
9) 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 as provided by Section 10 of R.A. 8042, as amended by R.A. 10022; and
10) Other cases as may be provided by law. (Section 1, Rule V, 2011 NLRC Rules of Procedure, as amended)
Exceptions to the Labor Arbiter’s jurisdiction:
1) Assumption of jurisdiction by the DOLE Secretary or the President (Article 278 [263] (g), Labor Code);
2) Compulsory arbitration by the NLRC (Article 278 [263] (g), Ibid.)
3) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of the company personnel policies shall be disposed by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements (Article 224 [217] (c), Ibid.);
4) Voluntary arbitration agreed upon by the parties (Article 275 [262], Ibid.);
Cases under the jurisdiction of the Labor Arbiter may be the subject of voluntary arbitration before a Voluntary Arbitrator with the consent of both parties.
The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. (Paragraph 2, Section 3, Article XIII, 1987 Constitution)
5) The visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000.00. (Cirineo Bowling Plaza, Inc. v. Sensing, G.R. No. 146572, 14 January 2005);
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. (Allied Investigation Bureau, Inc. Secretary of Labor, G.R. No. 122006, 24 November 1999)

a. As distinguished from the jurisdiction of the DOLE Regional Director

DOLE Regional Director has jurisdiction:
1) Small monetary claims;
Recovery of wages and other monetary claims and benefits, including legal interest owing to an employee or person employed in domestic or household service or househelper, arising from employer-employee relations; Provided, the aggregate money claims of each complainant do not exceed Five Thousand Pesos (Php5,000.00). (Article 129, Labor Code)
2) Labor standards cases from DOLE inspection;
Labor standards cases resulting the visitorial and enforcement powers of the DOLE Secretary exercised through inspections/audits. (Article 128, Ibid.)

1) Divesting jurisdiction

In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. (Ex-Bataan Veterans Security Agency, Inc. v. Laguesma, G.R. No. 152396, 20 November 2007)

b. LA has no jurisdiction over corporate officers

One who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee. (Wesleyan University-Philippines v. Maglaya, Sr., G.R. No. 212774, 23 January 2017)

The determination of the rights of a corporate officer dismissed from his employment, as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. (Ibid.)

The regional trial courts exercise exclusive jurisdiction over all controversies in the election or appointment of directors, trustees, officers or managers of corporations, partnerships or associations. (Ibid.)

A corporate officer’s dismissal is always a corporate act, or an intracorporate controversy which arises between a stockholder and a corporation, and the nature is not altered by the reason or wisdom with which the Board of Directors may have in taking such action. The issue of the alleged termination involving a corporate officer, not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code. (Ibid.)

The alleged “appointment” of Maglaya instead of “election” as provided by the by-laws neither convert the president of university as a mere employee, nor amend its nature as a corporate officer. With the office specifically mentioned in the by-laws, the NLRC erred in taking cognizance of the case, and in concluding that Maglaya was a mere employee and subordinate official because of the manner of his appointment, his duties and responsibilities, salaries and allowances, and considering the Identification Card, the Administration and Personnel Policy Manual which specified the retirement of the university president, and the check disbursement as pieces of evidence supporting such finding. (Ibid.)

•••••

BAR EXAM QUESTION

(Question B.12, Part II, Labor Law, 2019 Bar Exam)

Due to serious business reverses, ABC Co. decided to terminate the services of several officers receiving “fat” compensation packages. One of these officers was Mr. X, its Vice-President for External Affairs and a member of the Board of Directors. Aggrieved, Mr. X filed a complaint for illegal dismissal before the National labor Relations Commission (NLRC) – Regional Arbitration Branch.

ABC Co. moved for the dismissal of the case on the ground of lack of jurisdiction, asserting that since Mr. X occupied the position of Vice-President for External Affairs which is listed in the by-laws of the corporation, the case should have been filed before the Regional Trial Court.

The Labor Arbiter (LA) denied ABC Co.’s motion and proceeded to rule that Mr. X was illegally dismissed. Hence, he was reinstated in ABC Co.’s payroll pending its appeal to the NLRC.

(a) Did the LA err in denying ABC Co.’s motion to dismiss on the ground of lack of jurisdiction? Explain. (2.5%)

SUGGESTED ANSWER:

(a) Yes. Answer

Under labor law jurisprudence, one who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee. The determination of the rights of a corporate officer dismissed from his employment, as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. Rule

In the case at bar, Mr. occupies the position of Vice-President for External Affairs which is listed in the by-laws of the corporation. This makes him a corporate officer, and not an employee. The issue on his dismissal is an intra-corporate dispute within the jurisdiction of the Regional Trial Court. Apply

Thus, the LA did not err in denying ABC Co.’s motion to dismiss on the ground of lack jurisdiction. Conclusion

•••••

BAR EXAM QUESTION

(Question XI[B], Labor Law, 2017 Bar Exam)

Marcel was the Vice President for Finance and Administration and a member of the Board of Directors of Mercedes Corporation. He brought a complaint for illegal suspension and illegal dismissal against Mercedes Corporation, which moved to dismiss the complaint on the ground that the complaint pertained to the jurisdiction of the RTC due to the controversy being intra-corporate based on his positions in the corporation. Marcel countered that he had only been removed as Vice President for Finance and Administration, not as a member of the Board of Directors. He also argued that his position was not listed as among the corporate officers in Mercedes Corporation’s by-laws. Is the argument of Marcel correct? Explain your answer. (2.5%)

SUGGESTED ANSWER:

Yes. Answer

Under labor law jurisprudence, one who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee. The determination of the rights of a corporate officer dismissed from his employment, as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. Rule

In the case at bar, there is no showing that Marcel’s position as Vice President for Finance and Administration is included in the by-laws of a corporation. Hence, he is not a corporate officer. The complaint is within the jurisdiction of the Labor Arbiter, and not the Regional Trial Court. Apply

Thus, the argument of Marcel is correct. Conclusion

•••••

c. Venue

All cases which Labor Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the complainant or petitioner. (Section 1 [a], 2011 NLRC Rules of Procedure, as amended)

For purposes of venue, the workplace shall be understood as the place or locality where the employee is regularly assigned at the time the cause of action arose. It shall include the place where the employee is supposed to report back after a temporary detail, assignment, or travel. In case of field employees, as well as ambulant or itinerant workers, their workplace is where they are regularly assigned, or where they are supposed to regularly receive their salaries and wages or work instructions from, and report the results of their assignment to, their employers. (Ibid.)

1) Rules on venue

Where two (2) or more Regional Arbitration Branches have jurisdiction over the workplace of the complainant or petitioner, the Branch that first acquired jurisdiction over the case shall exclude the others. (Section 1[b], Ibid.)

When venue is not objected to before the first scheduled mandatory conference, such issue shall be deemed waived. (Section 1[c], Ibid.)

The venue of an action may be changed or transferred to a different Regional Arbitration Branch other than where the complaint was filed by written agreement of the parties or when the Commission or Labor Arbiter before whom the case is pending so orders, upon motion by the proper party in meritorious cases. (Section 1[d], Ibid.)

Cases involving overseas Filipino workers may be filed before the Regional Arbitration Branch having jurisdiction over the place where the complainant resides or where the principal office of any of the respondents is situated, at the option of the complainant. (Section 1[e], Ibid.)

d. Powers of the Labor Arbiter

1) Adjudicatory power, i.e. to hear and decide cases (Section 1, Rule V, 2011 NLRC Rules of Procedure, as amended)

2) Contempt power (Section 1, Rule IX, Ibid.)

3) To conduct ocular inspection (Article 226 [219], Labor Code)

4) To issue writs of execution, including enforcement of Voluntary Arbitration decision in case of absence or incapacity of the Voluntary Arbitrator or panel of Voluntary Arbitrators (Section 1, Rule IX and Section 7, Rule XI, NLRC Rules of Procedure, as amended; Article 276 [262-A], Labor Code)

5) To declare legality/illegality of a strike or lockout (Section 1, Rule V, 2011 NLRC Rules of Procedure, as amended)

2. APPEAL TO THE NLRC

a. Requirements to perfect an NLRC appeal

1) Filed within the reglementary period, i.e. within 10 days from receipt of the decision/award/order by the Labor Arbiter’s, or within 5 days from receipt of the decisions/resolutions by the DOLE Regional Director;

2) Verified by the appellant;

3) Memorandum of Appeal format, stating: (a) grounds, (b) arguments, (c) relief prayed for, (d) date of receipt of appealed decision, award or order;

4) 3 legible typewritten or printed copies;

5) Proof of payment of appeal fee and legal research fee;

6) Posting of a cash or surety bond, if applicable for employers; and

7) Proof of service upon the other parties. (Section 4, Rule VI, 2011 NLRC Rules of Procedure, as amended)

b. Grounds

1) If there is a prima facie evidence of abuse of discretion on the part of the Labor Arbiter or Regional Director;

2) If the decision/award/order was secured through fraud or coercion, including graft and corruption;

3) If made purely on questions of law; and/or

4) If serious errors in the findings of facts are raised which if not corrected, would cause grave or irreparable damage or injury to the appellant. (Section 2, Rule VI, Ibid.)

c. Venue

The appeal shall be filed with the Regional Arbitration Branch or Regional Office where the case was heard and decided. (Section 3, Rule VI, Ibid.)

d. Bond

1) General rule: No motion to reduce

In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees. (Paragraph 1, Section 6, Rule VI, Ibid.)

No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award. (Paragraph 6, Section 6, Rule VI, Ibid.)

2) Exceptions: When reducing bond is allowed

The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal. (Last paragraph, Section 6, Rule VI, Ibid.)

The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted. (McBurnie v. Ganzon, G.R. Nos. 178034, 178117, 186984-85, 17 October 2013)

For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a provisional cash or surety bond equivalent to ten percent (10,) of the monetary award subject of the appeal, exclusive of damages and attorney’s fees. (Ibid.)

Compliance with the foregoing conditions shall suffice to suspend the running of the 1 0-day reglementary period to perfect an appeal from the labor arbiter’s decision to the NLRC. (Ibid.)

The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final amount of bond that shall be posted by the appellant, still in accordance with the standards of meritorious grounds and reasonable amount. (Ibid.)

In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount of the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of the NLRC order within which to perfect the appeal by posting the required appeal bond. (Ibid.)

a) Meritorious grounds

By jurisprudence, the merit referred to may pertain to an appellant’s lack of financial capability to pay the full amount of the bond, the merits of the main appeal such as when there is a valid claim that there was no illegal dismissal to justify the award, the absence of an employer-employee relationship, prescription of claims, and other similarly valid issues that are raised in the appeal. For the purpose of determining a “meritorious ground”, the NLRC is not precluded from receiving evidence, or from making a preliminary determination of the merits of the appellant’s contentions. (Ibid.)

b) 10% as reasonable amount

All motions to reduce bond that are to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to 10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the reasonable amount of the bond in the meantime that an appellant’s motion is pending resolution by the Commission. (Ibid.)

In conformity with the NLRC Rules, the monetary award, for the purpose of computing the necessary appeal bond, shall exclude damages and attorney’s fees. Only after the posting of a bond in the required percentage shall an appellant’s period to perfect an appeal under the NLRC Rules be deemed suspended. (Ibid.)

3. Reinstatement and/or execution pending appeal

a. Order of reinstatement by the Labor Arbiter

It is immediately executory. (Section 9, Rule VI, 2011 NLRC Rules of Procedure, as amended)

The execution is not stayed by an appeal. (Section 3, Rule XI, Ibid.)

The employer is required to submit a report of compliance within ten (10) calendar days from receipt of said decision. (Section 9, Rule VI, Ibid.)

b. Reinstatement

Reinstatement may either be: (a) physical/actual reinstatement, or (b) payroll reinstatement. (Paragraph 1, Section 12, Rule XI, Ibid.)

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. (Paragraph 3, Article 229 [223], Labor Code)

c. Effect of non-compliance

If disobeyed, the Labor Arbiter shall immediately issue a writ of execution, even pending appeal, directing the employer to immediately reinstate the dismissed employee either physically or in the payroll, and to pay the accrued salaries as a consequence of such non-reinstatement in the amount specified in the decision. (Paragraph 1, Section 12, Rule XI, 2011 NLRC Rules of Procedure, as amended)

The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy the reinstatement wages as they accrue until actual reinstatement or reversal of the order of reinstatement. (Paragraph 2, Section 12, Rule XI, Ibid.)

The Sheriff shall serve the writ of execution upon the employer or any other person required by law to obey the same. If s/he disobeys, such employer/person may be cited for contempt. (Paragraph 3, Section 12, Rule XI, Ibid.)

d. Reinstatement wages pending appeal, exempt from restitution

Where the executed judgment is totally or partially reversed or annulled by the Court of Appeals or the Supreme Court with finality and restitution is so ordered, the Labor Arbiter shall, on motion, issue such order of restitution of the executed award, except reinstatement wages paid pending appeal. (Section 18, Rule XI, Ibid.)

If the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. (Roquero v. Philippine Airlines, Inc., G.R. No. 152329, 22 April 2003)

e. Order of reinstatement by the NLRC, CA, or SC

Unlike the Labor Arbiter’s order of reinstatement which is immediately executory, the order of reinstatement by appellate courts such as the NLRC, CA, or the SC, is not immediately executory and thus requires a writ of execution.

•••••

BAR EXAM QUESTION

(Question B.12, Part II, Labor Law, 2019 Bar Exam)

Due to serious business reverses, ABC Co. decided to terminate the services of several officers receiving “fat” compensation packages. One of these officers was Mr. X, its Vice-President for External Affairs and a member of the Board of Directors. Aggrieved, Mr. X filed a complaint for illegal dismissal before the National labor Relations Commission (NLRC) – Regional Arbitration Branch.

ABC Co. moved for the dismissal of the case on the ground of lack of jurisdiction, asserting that since Mr. X occupied the position of Vice-President for External Affairs which is listed in the by-laws of the corporation, the case should have been filed before the Regional Trial Court.

The Labor Arbiter (LA) denied ABC Co.’s motion and proceeded to rule that Mr. X was illegally dismissed. Hence, he was reinstated in ABC Co.’s payroll pending its appeal to the NLRC.

(b) Assuming that jurisdiction is not at issue and that the NLRC reverses the LA’s ruling of illegal dismissal with finality, may ABC Co. claim reimbursement for the amounts it paid to Mr. X during the time that he was on payroll reinstatement pending appeal? Explain. (2.5%)

SUGGESTED ANSWER:

(b) No. Answer

Under labor law jurisprudence, the employer cannot recover amounts paid to the employee during the period of payroll reinstatement if subsequently the NLRC or an appellate court reverses the order of reinstatement by the Labor Arbiter. Rule

In the case at bar, ABC Co. observed payroll reinstatement pending appeal. Should the NLRC reverse the Labor Arbiter’s ruling of illegal dismissal with finality, ABC Co. cannot claim reimbursement for amounts paid during the period of payroll reinstatement. Apply

Thus, ABC Co. may not claim reimbursement for the amounts it paid to Mr. X during the time that he was on payroll reinstatement pending appeal. Conclusion

•••••

Disclaimer: All information herein is for educational and general information only intended for those preparing for the bar exam. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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