Labor Arbiter

Summary

▪ The Labor Arbiter has original and exclusive jurisdiction of certain labor cases.

▪ The jurisdiction of the Labor Arbiter is different from the DOLE Regional Director.

▪ The Labor Arbiter’s order of reinstatement is immediately executory.

1. Concept

Labor Arbiter – resolves labor complaints before the National Labor Relations Commission (NLRC).

2. Labor Arbiter’s Jurisdiction

a. Original and exclusive jurisdiction of the Labor Arbiter

The Labor Arbiter has original and exclusive jurisdiction for the following:

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)

b. Excluded from the Labor Arbiter’s jurisdiction

The following are excluded from 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.)

NB: 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. As mandated by the 1987 Constitution, 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)

6) Corporate officers for intra-corporate controversies

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 intra-corporate 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.)

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.)

3. Labor Arbiter’s Jurisdiction v. DOLE Regional Director’s Jurisdiction

The DOLE Regional Director has jurisdiction over the following:

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:

1) That the employer contests the findings of the labor regulations officer and raises issues thereon;

2) That in order to resolve such issues, there is a need to examine evidentiary matters;

3) That such matters are not verifiable in the normal course of inspection; and,

4) 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)

4. Powers of the Labor Arbiter

The Labor Arbiter has the following powers:

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); and,

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

5. 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:

1) Physical/actual reinstatement; or,

2) 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.

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References

▪ Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

▪ 2011 NLRC Rules of Procedure, as amended

▪ Jurisprudence or Supreme Court Decisions