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UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW
Bar Operations 2008

LABOR LAW I

Bar Operations Head Arianne Reyes

Academics Head Henry Aguda


Ryan Balisacan

Subject Head Dielle Kapunan


Rowena Salonga
LABOR LAW I LABOR STANDARDS

TABLE OF CONTENTS

Section Topic Page no.


SECTION 1 Introduction 2
SECTION 2 Labor Code of the Philippines 4
SECTION 3 Work Relationship 6
SECTION 4 Employee Classification 8
SECTION 5 Recruitment and Placement of workers 13
SECTION 6 Alien employment 16
SECTION 7 Employment of Apprentice, learners and handicapped workers 27
SECTION 8 Condition of employment Hours of work 19
SECTION 9 Condition of employment Weekly Rest Period 22
SECTION 10 Condition of employment Holidays 22
SECTION 11 Condition of employment Service Incentive Leave 24
SECTION 12 Wages 25
SECTION 13 Minimum Wages 33
SECTION 14 Women Workers 37
SECTION 15 Minors 39
SECTION 16 House helpers 41
SECTION 17 Home workers 42
SECTION 18 Termination of Employment 42
SECTION 19 Retirement 54
LABOR LAW I LABOR STANDARDS

PART I d. PAST PRACTICES American Wire and Cable Co., Inc (05)
Done for a long period of time
INTRODUCTION Instituted by the employer (ER) voluntarily
e. COMPANY POLICIES China Banking Corporation v
LABOR LAW - The law governing the rights and duties of the Borromeo (04)
employer and employees
(1) with respect to the terms and conditions of employment
and LAW AND THE CONSTITUTION
(2) with respect to labor disputes arising from collective
bargaining respecting such terms and conditions A. LABOR SECTOR CHARACTERIZED
Article II Section 18
Classifications: The State affirms labor as a primary social economic force.
It shall protect the rights of workers and promote their welfare.
LABOR STANDARDS minimum requirements prescribed by existing
laws, rules and regulations relating to wages, hours of work, cost- B. PROTECTION OF LABOR GUARANTEES
of-living allowance, and other monetary and welfare benefits, Art XIII SEC 3 (operative provision in Consti)
including occupational safety, and health standards. Maternity full protection to labor (domestic or overseas)
Childrens Hospital v. Sec. of Labor (89) guaranteed rights: labor standards in bold; otherwise, labor
relations
LABOR RELATIONS Regulates the institutional relationship between
the workers organized into a union and the employers 7 Cardinal Rights of Workers
S right to self-organization
WELFARE LAWS Designed to take care of the contingencies which C collective bargaining and negotiations
may affect the workers P peaceful concerted activities including the
T right to strike in accordance with law
Basis: H security of tenure
L humane conditions of work
1987 Constitution P living wage
Art II Sec 5 protection of life, liberty, & property participate in policy and decision-making
Art II Sec 18 State affirms labor as a primary processes affecting their rights and
social economic force benefits as may be provided by law.
Art XIII Sec1 Congress shall give highest priority to
enact measures that protect human C. SOCIAL JUSTICE
dignity Article II, Section 10
Article XIII Section 1
LAW AND WORKER SC reaffirmed its concern for the lowly worker Article XIII, Section 2
who, often at the mercy of his employer must look up to the law for Social justice is "neither communism, nor despotism, nor atomism,
his protection Cebu Royal Plant v. Deputy Minister of Labor (89) nor anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its rational
LABOR CASE not every relation between management and labor and objectively secular conception may at least be approximated.
is a labor case. Definition is strict. It is only a labor case if it deals Calalang v. Williams (40)
with the Labor Code, CBA and its associated laws/legislation
Lapanday Agricultural Development v CA (01) Limits of use:

CASE DECISION it should faithfully comply with Section 14, Article Not to undermine property rights resulting in confiscation Guido v.
VIII of the Constitution which provides that no decision shall be Rural Progress Adm. (49)
rendered by any court [or quasi-judicial body] without expressing May only protect the laborers who come with clean hands Phil.
therein clearly and distinctly the facts of the case and the law on Long Distance Telephone Co. v. NLRC (88)
which it is based. Never result to an injustice or oppression of the employer Phil.
Geothermal Inc. v NLRC (94)
MANAGEMENT FUNCTION Basis of limitation:
1. The law recognizes this right as an inherent part of Law also guarantees the ER reasonable returns from his investment
ownership (Duncan v Glaxo) Asian Alcohol Corp. v. NLRC (99)
2. The law imposes a LIMITATION in the manner that it is
exercised (Valiao v CA 04) CONSTI RIGHTS AND LABOR LAW
COMPROMISE and WAIVER - FINAL and BINDING upon the parties. LABOR, MANAGEMENT AND THE CONSTITUTION
NLRC shall only assume jurisdiction in cases of non-compliance or The law in protecting the rights of the employees authorizes neither
prima facie evidence that it was obtained through FRAUD, oppression nor self-destruction of the employer. It should be made
MISREPRESENTATION, OR COERCION. (Art 227) clear that when the law tilts the scale of justice in favor of labor, it is
but a recognition of the inherent economic inequality between
Rules: may be valid subject to certain tests labor and management. Never should the scale be so tilted if the
1. Equal bargaining positions result is an injustice to the employer. Justitia nemini neganda est
2. Nature of controversy (Justice is to be denied to none). Phil. Geothermal Inc. v. NLRC (94)
3. Amount is not unconscionable (no huge disparity
between initial claim and compromised amount) MANAGEMENT AND THE CONSTITUTION
Leading case: Periquet v NLRC (90)
Contracting out is management prerogative so long as done in good
SOURCES OF LAW faith, must not have been resorted to circumvent the law or must
not have been the result of malicious or arbitrary action. Manila
a. LABOR CODE AND RELATED SPECIAL LEGISLATION Electric Company v. Quisumbing (99)
b. CONTRACT (Art 1305 [a contract is the meeting of the LABOR AS PROPERTY
minds]; Art 1306 [may establish stipulations as they Ones employment is a "property right", and the wrongful
may deem conventient provided they are non contrary to interference therewith is an actionable wrong. Sibal v. Notre Dame
law, morals,] of Greater Manila (90)
c. COLLECTIVE BARGAINING AGREEMENT (CBA) DOLE Phils.,
v Pawis ng Makabayang Obrero (03) DUE PROCESS REQUIREMENT

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LABOR LAW I LABOR STANDARDS

A workers employment is property in the constitutional sense. He PAL Employees Savings and Loan Assn., Inc. v. NLRC (96)
cannot be deprived of his work without due process of law.
Generally speaking, contracts are respected as the law
Maneja v. NLRC (98) between the contracting parties, and they may establish such
Due process requirements are two-fold: substantive and the stipulations, clauses, terms and conditions as they may see fit; and
procedural. for as long as such agreements are not contrary to law, morals,
Substantive - dismissal must be for a valid or authorized cause as good customs, public policy or public order, they shall have the
provided by law (Articles 279, 281, 282-284, New Labor Code force of law between them. And under the Civil Code, contracts of
Procedural - notice and hearing labor are explicitly subject to the police power of the State because
they are not ordinary contracts but are impressed with public
Salaw v. NLRC (91) interest. Inasmuch as in this particular instance the contract in
Notice - intended to inform the employee concerned of the question would have been deemed in violation of pertinent labor
employer's intent to dismiss and the reason for the proposed laws, the provisions of said laws would prevail over the terms of the
dismissal contract, and private respondent would still be entitled to overtime
Hearing - affords the employee an opportunity to answer his pay.
employer's charges against him and accordingly to defend himself
therefrom before dismissal is effected EMPLOYER-EMPLOYEE STANDARD OF CONDUCT

Century Textile Mills, Inc. v. NLRC (89) Art. 1701 Neither capital nor labor shall act oppressively against
LIBERT OF CONTRACT and the other, or impair the interest or convenience of the public.
STATE INTERFERENCE 1. Fair Treatment
The prohibition to impair the obligation of contracts is not absolute the right of an employer to dismiss an employee differs from and
and unqualified. In spite of the constitutional prohibition and the should not be confused with the manner in which such right is
fact that both parties are of full age and competent to contract, it exercised. It must not be oppressive and abusive since it affects
does not necessarily deprive the State of the power to interfere one's person and property. General Bank and Trust Co., v. Court of
1. where the parties do not stand upon an equality, or Appeals (85)
2. where the public health demands that one party to the
contract shall be protected against himself. 2. Mutual Obligation
The State still retains an interest in his welfare, however reckless he The employer's obligation to give him workers just compensation
may be. Legislation appropriate to safeguarding said interests may and treatment carries with it the corollary right to expect from the
modify or abrogate contracts already in effect. For not only are workers adequate work, diligence and good conduct. Firestone Tire
existing laws read into contracts in order to fix the obligations as and Rubber Co. v. Lariosa (87)
between the parties, but the reservation of essential attributes of
sovereign power is also read into contracts as a postulate of the 3. Law Compliance
legal order. Leyte Land Transportation Co. v Leyte Farmers & It is also important to emphasize that the return-to-work order not
Workers Union (48) so much confers a right as it imposes a duty; and while as a right it
may be waived, it must be discharged as a duty even against the
WELFARE STATE
worker's will. Sarmiento v. Tuico (88)
welfare state concept found in:
1. constitutional clause on the promotion of social justice to
4. EE Obedience and Compliance to ERs Orders
ensure the well-being and economic security of all the people,
The lack of a written or formal designation should not be an excuse
2. the pledge of protection to labor with specific authority to
regulate the relations between landowners and tenants and to disclaim any responsibility for any damage suffered by the
between labor and capital employer due to his negligence. The measure of the responsibility
of an employee is that if he performed his assigned task efficiently
Alalayan v. National Power Corporation (68) and according to the usual standards, then he may not be held
LAISSEZ-FAIRE personally liable for any damage arising therefrom. Failing in this,
Constitution is primarily a document of social justice, and although
the employee must suffer the consequences of his negligence if not
it has recognized the importance of the private sector, it has not
embraced fully the concept of laissez faire or relied on pure market lack of due care in the performance of his duties. PCIB v. Jacinto
forces to govern the economy Employees Confederation of the (91)
Philippines v. NWPC (91)
To sanction disregard or disobedience by employees of a rule or
PARTICIPATION IN DECISION MAKING PROCESS order laid down by management, on the pleaded theory that the
While such "obligation" [to participate in decision-making] was rule or order is unreasonable, illegal, or otherwise irregular for one
not yet founded in law when the Code was formulated [which, reason or another, would be disastrous to the discipline and order
before the amendment, merely said to promote the enlightenment that it is in the interest of both employer and his employees to
of workers concerning their rights and obligations as ees], the preserve and maintain in the working establishment and without
attainment of a harmonious labor-management relationship and which no meaningful operation and progress is possible. Deliberate
the then already existing state policy of enlightening workers disregard or disobedience of rules, defiance of management
concerning their rights as employees demand no less than the authority cannot be countenanced. This is not to say that the
observance of transparency in managerial moves affecting employees have no remedy against rules or orders they regard as
employees' rights. Philippine Airlines, Inc. v. NLRC (93) unjust or illegal. They may object thereto, ask to negotiate thereon,
Certainly, such participation by the Union in the said bring proceedings for redress against the employer before the
committees is not in the nature of a co-management control of the Ministry of Labor. But until and unless the rules or orders are
business of MERALCO. What is granted by the Secretary is declared to be illegal or improper by competent authority, the
participation and representation. Thus, there is no impairment of employees ignore or disobey them at their peril GTE Directories
management prerogatives. Manila Electric Co. v. Quisumbing (99) Corp. v. Sanchez (91)

LABOR AND THE CIVIL CODE 5. ERs Obligation


An employer can terminate the services of an employee only for
ROLE OF LAW valid and just causes which must be supported by clear and
LABOR CONTRACTS convincing evidence. The employer has the burden of proving that
the dismissal was indeed for a valid and just cause. Failure to do so
Art. 1700, CC The relations between capital and labor are not results in a finding that the dismissal was unjustified. Maneja v.
merely contractual. They are so impressed with public interest that NLRC (98)
labor contracts must yield to the common good. Therefore, such
contracts are subject to special laws

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LABOR LAW I LABOR STANDARDS

LABOR AND INTERNATIONAL COVENANTS


International Agencies
Universal Declaration of Human Rights Arts. 3, 7, 17, 22, 23,24, 25 In order to assure independence, they are immune from suit, thus,
Phil. Laws do not apply to them. ..The grant of immunity is by
International Covenant on Economic, Social and Cultural Rights virtue of the Convention on the Privileges and Immunities of
Part III, Arts. 6, 7, 9, 11
Specialized Agencies of the U.N., which has become part of the law
International Covenant on Civil and Political Rights Part II, Art. 8 of the land under the Constitution. Ebro III v. NLRC (96)

Conventions and Recommendations if the International Labor SCHOOL TEACHERS


Organization (ILO) On the issue of whether the individual petitioners were permanent
employees, it is the Manual of Regulations for Private Schools, and
INTERNATIONAL CONVENTIONS not the Labor Code, which is applicable. National Mines and Allied
International law, which springs from general principles of law, Workers Union v NLRC (98)
likewise proscribes discrimination. General principles of law include
principles of equity, i.e., the general principles of fairness and On issues where the manual expressly provides for the rules, such
justice, based on the test of what is reasonable. Numerous treaties as probationary employment, the labor code does not apply.
embody the general principle against discrimination, the very On issues where the manual is silent, such as termination of school
antithesis of fairness and justice. The Philippines, through its teachers, the labor code applies.
Constitution, has incorporated this principle as part of its national
laws. International School Alliance of Educators v. Quisumbing RELIGIOUS CORPORATIONS
(2000) The labor code does not cover ecclesiastical affairs, defined as one
which involves the relationship between the church and its
members and relate to matters of faith, religious doctrines, worship
and governance of the congregation.
However, the Labor Code is comprehensive enough to include
PART II religious corporations on its secular affairs, as provided by Article
THE LABOR CODE OF THE PHILIPPINES 278 of the Labor Code which states that the provisions of this Title
shall apply to all establishments or undertakings, whether for profit
POLICY DECLARATION reiterates Article XIII Sec 3 of the or not. Obviously, the cited article does not make any exception in
Constitution favor of a religious corporation. Austria v. NLRC (99)

APPLICABILITY RULE MAKING POWER


Art 6 - All rights and benefits granted to workers apply alike to all Article 5 gives the Secretary of Labor general grant of authority; the
workers, whether agricultural or non-agricultural. tail end of Labor Code gives him the right to promulgate working
conditions.
Art 276 - Government employees - The terms and conditions of Art. 5. Rules and regulations. The Department of Labor and other
employment of all government employees shall be governed by government agencies charged with the administration and
the Civil Service Law, rules and regulations. Their salaries shall be enforcement of this Code or any of its parts shall promulgate the
standardized by the National Assembly as provided for in the new necessary implementing rules and regulations. Such rules and
constitution. However, there shall be no reduction of existing regulations shall become effective fifteen (15) days after
wages, benefits and other terms and conditions of employment announcement of their adoption in newspapers of general
being enjoyed by them at the time of the adoption of this Code. circulation.

ART IX, Sec 2 (1), 1987 Constituion - The civil service embraces all LIMITATION
branches, of the Government, including government-owned or 1. must be issued under authority of law
controlled corporations with original charters. 2. must not be contrary to law and the Consitution (in other
words, must not amend the Labor Code, Constitution or
The rule is that only government-owned or controlled corporations other laws in promulgating such rules and regulations)
with original charters come under the Civil Service. Since NASECO is
organized under the Corporation Law and not by virtue of a special illustration of #1
legislative charter, its relations with its personnel are governed by SONZA argues that Policy Instruction No. 40 issued by then Minister
the Labor Code and come under the jurisdiction of the NLRC of Labor Blas Ople on 8 January 1979 finally settled the status of
Cabrera v. NLRC (91) workers in the broadcast industry. Under this policy, the types of
employees in the broadcast industry are the station and program
employees. Policy Instruction No. 40 is a mere executive issuance
APPLICATION OF THE LABOR CODE which does not have the force and effect of law. A mere executive
issuance cannot exclude independent contractors from the class of
Applicability Art. 6 service providers to the broadcast industry. Such classification is
Not of universal application. only applies to: not binding on this Court, especially when the classification has no
All workers agricultural and non-agricultural basis either in law or in fact. Sonza v ABS-CBN Broadcasting Corp.
GOCCs organized under general laws e.g. Corporation Code (04)
All branches of government, and GOCCs, profit or non profit
organizations ONLY with regard to wages 97 (b) Illustration of #2
all private and government employees ONLY with regard to "it must be pointed out that the Secretary of Labor has exceeded
Employees Compensation and State Insurance Fund(167 f) his authority when he included paragraph (k) in Section 1 of the
NOT APPLICABLE TO Rules Implementing P.D. 1123. "By virtue of such rule-making
Government employees should be Civil Service Law and EO 180 authority, the Secretary of Labor issued on May 1, 1977 a set of
GOCC with original charter Art. 9 B, Sec. 2(1) of the rules which exempts not only distressed employers but also 'those
Constitution who have granted in addition to the allowance under P.D. 525, at
International Agencies and specialized agencies or UN treaty or least P60.00 monthly wage increase on or after January 1, 1977,
international conventions provided that those who paid less than this amount shall pay the
grant of immunity from suit ex. IRRI, ICMC difference.' "Clearly, the inclusion of paragraph k contravenes the
by specific treaty grant of immunity, but such treaty statutory authority granted to the Secretary of Labor, and the same
must include provisions for resolution of disputes is therefore void, as ruled by this Court in a long line of cases, . . ."
if injustice is created due to exemption from suit,
Kapisanan ng mga Manggagawang Pinagyakap v. NLRC (87)
REMEDY: ask Phil Govt to withdraw the grant of
immunity from suit.
LAW INTERPRETATION

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LABOR LAW I LABOR STANDARDS

labor lest we engage in judicial legislation. Bravo v. ECC (86)


Doubts in (implementation and interpretation of the Code)
construction resolved in favor of labor Art. 4, Labor Code Factual Considerations and Rationality
In case of doubt, all labor legislation and all labor contracts shall be But that care and solicitude (for protection of laborers rights)
construed in favor of the safety and decent living for the laborer. cannot justify disregard of relevant facts or eschewal of rationality
Art. 170, Civil Code in the construction of the text of applicable rules in order to arrive
at a disposition in favor of an employee. PAL v NLRC (91)
Liberal Construction
The interpretation herein made gives meaning and substance to the Equity and Moral Consideration
liberal and compassionate spirit of the law enunciated in Article 4 of The rule embodied in the Labor Code is that a person dismissed for
the Labor Code cause as defined therein is not entitled to separation pay. The cited
cases constitute the exception, based on equity. Equity has been
Salinas v NLRC (99) defined as justice outside law, being ethical rather than jural and
Exception: (estoppel) belonging to the sphere of morals than of law. It is grounded on the
The policy being questioned is not a policy against marriage. An precepts of conscience and not on any sanction of positive law.
employee of the company remains free to marry anyone of his or Hence, it cannot prevail against the express provision of the labor
her choosing. However, an employees personal decision does not laws allowing dismissal of employees for cause and without any
detract the employer from exercising management prerogatives to provision for separation pay. Manning International Corp. v. NLRC
ensure maximum profit and business success. (91)
the assailed company policy which forms part of respondents
Employee Code of Conduct and of its contracts with its employees, Fairness
such as that signed by Tescon, was made known to him prior to his As a general rule, the sympathy of the Court is on the side of the
employment. Tecson, therefore, was aware of that restriction when laboring classes, because of the one-sided relation between labor
he signed his employment contract and when he entered into a and capital. The Court must take care, however, that in the contest
relationship with Bettsy. Since Tecson knowingly and voluntarily
between labor and capital, the results achieved are fair and in
entered into a contract of employment with Glaxo, the stipulations
therein have the force of law between them and, thus, should be conformity with the rules. Reliance Surety and Insurance Co. Inc v
complied with in good faith."29 He is therefore estopped from NLRC (91)
questioning said policy. Duncan Association v Glaxo Wellcome (04)
Balancing Conflicting Claims
Rationale in favor of labor No less than the Constitution recognizes the right of enterprises to
Art. 4 of the Labor Code provides that all doubts in the adopt and enforce such a policy to protect its right to reasonable
implementation and interpretation of its provisions, including its returns on investments and to expansion and growth. Indeed,
implementing rules and regulations, shall be resolved in favor of while our laws endeavor to give life to the constitutional policy on
labor. For the working mans welfare should be the primordial and social justice and the protection of labor, it does not mean that
paramount consideration. Asian Transmission Corporation v CA every labor dispute will be decided in favor of the workers. The law
(04) also recognizes that management has rights which are also entitled
to respect and enforcement in the interest of fair play. Duncan
Doubt Association v Glaxo Wellcome (04)
as a rule, doubts should be resolved in favor of the claimant-
employee. Clemente v. GSIS (87) THE LABOR CODE OF THE PHILIPPINES

APPLICATION OF THE LABOR CODE POLICY DECLARATION reiterates Article XIII Sec 3 of the
Applicability Art. 6 Constitution
Not of universal application. only applies to:
All workers agricultural and non-agricultural APPLICABILITY
GOCCs organized under general laws e.g. Art 6 - All rights and benefits granted to workers apply alike to all
Corporation Code workers, whether agricultural or non-agricultural.
All branches of government, and GOCCs, profit or
non profit organizations ONLY with regard to Art 276 - Government employees - The terms and conditions of
wages 97 (b) employment of all government employees shall be governed by
all private and government employees ONLY with the Civil Service Law, rules and regulations. Their salaries shall be
regard to Employees Compensation and State standardized by the National Assembly as provided for in the new
Insurance Fund(167 f)
constitution. However, there shall be no reduction of existing
NOT APPLICABLE TO
wages, benefits and other terms and conditions of employment
Government employees should be Civil Service
being enjoyed by them at the time of the adoption of this Code.
Law and EO 180
GOCC with original charter Art. 9 B, Sec. 2(1)
of the Constitution ART IX, Sec 2 (1), 1987 Constituion - The civil service embraces all
International Agencies and specialized agencies or branches, of the Government, including government-owned or
UN treaty or international conventions controlled corporations with original charters.
grant of immunity from suit ex. IRRI, ICMC
by specific treaty grant of immunity, but such The rule is that only government-owned or controlled corporations
treaty must include provisions for resolution of
with original charters come under the Civil Service. Since NASECO is
disputes
if injustice is created due to exemption from suit,
organized under the Corporation Law and not by virtue of a special
REMEDY: ask Phil Govt to withdraw the grant of legislative charter, its relations with its personnel are governed by
immunity from suit. the Labor Code and come under the jurisdiction of the NLRC
Cabrera v. NLRC (91)
No Doubt
While we do not dispute petitioner's contention that under the law,
in case of doubt in the implementation and interpretation of the
provisions of the Labor Code, including its implementing rules and
regulations, the doubt shall be resolved in favor of the laborer, we
find that the same has no application in this case since the pertinent
provisions of the Labor Code leave no room for doubt either in their
interpretation or application. Bonifacio v. GSIS (86)

Sweeping Interpretation
we cannot adopt a sweeping interpretation of the law in favor of

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LABOR LAW I LABOR STANDARDS

the less control the hirer exercises, the more likely the worker is
considered an independent contractor.[
PART III Being an exclusive talent does not by itself mean that SONZA is an
WORK RELATIONSHIP employee of ABS-CBN. Even an independent contractor can validly
provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control. The huge
Art. 97 Definition
talent fees partially compensates for exclusivity, as in the present
(a) "Person" means an individual, partnership, association,
case. Sonza v ABS-CBN Broadcasting Corp. (04)
corporation, business trust, legal representative or any
organized group of person.
2. ESTABLISHED
(b) "Employer" includes any person acting directly or indirectly in
There is indubitable evidence showing that BSMI is an independent
the interest of an employer in relation to an employee and
contractor, engaged in the management of projects, business
shall include the Government and all its branches, subdivisions
operations, functions, jobs and other kinds of business ventures,
and instrumentalities, all government-owned or controlled
and has sufficient capital and resources to undertake its principal
corporations and institutions, as well as non-profit private
business. As a legitimate job contractor, there can be no doubt as to
institutions or organizations.
the existence of an employer-employee relationship between the
"Employee" includes any individual employed by an employer.
contractor and the workers.
Unfortunately, after a study and evaluation of its personnel
Art. 167 Definition of Terms
organization, BSMI was impelled to terminate the services of the
(f) "Employer" means any person, natural or juridical, employing
respondents on the ground of redundancy. This right to hire and
the services of the employee.
fire is another element of the employer-employee relationship[45]
(g) "Employee" means any person compulsorily covered by the
which actually existed between the respondents and BSMI, and not
GSIS under Commonwealth Act numbered one hundred
with Wack Wack. Wack-Wack Golf and Country Club v NLRC (05)
eighty-six, as amended, including members of the Armed
Forces of the Philippines, and any person employed as casual,
3. AGREEMENT
emergency, temporary, substitute or contractual; or any
Petitioner insists that the most significant determinant of an
person compulsorily covered by the SSS under Republic Act
employer-employee relationship, i.e., the right to control, is absent.
numbered eleven hundred sixty-one, as amended.
The contract of services between MAERC and SMC provided that
MAERC was an independent contractor and that the workers hired
Art. 212 Definitions
by it "shall not, in any manner and under any circumstances, be
(e) "Employer" includes any person acting in the interest of an
considered employees of the Company, and that the Company has
employer, directly or indirectly. The term shall not include any
no control or supervision whatsoever over the conduct of the
labor organization or any of its officers or agents except when
Contractor or any of its workers in respect to how they accomplish
acting as employer.
their work or perform the Contractor's obligations under the
(f) "Employee" includes any person in the employ of an employer.
Contract."
The term shall not be limited to the employees of a particular
In deciding the question of control, the language of the
employer, unless this Code so explicitly states. It shall include
contract is not determinative of the parties' relationship; rather, it is
any individual whose work has ceased as a result of or in
the totality of the facts and surrounding circumstances of each case.
connection with any current labor dispute or because of any
Thus, The existence of an employer-employees relation is a
unfair labor practice if he has not obtained any other
question of law and being such, it cannot be made the subject of
substantially equivalent and regular employment.
agreement. San Miguel v Abella (05)
EMPLOYEE
4. METHOD WAGE PAYMENT
As can be seen from this description, a distinction exists
Suffice it to say, the fact that Laudato was paid by way of
between those who have the authority to devise, implement and
commission does not preclude the establishment of an employer-
control strategic and operational policies (top and middle
employee relationship. Lazaro v SSS (04)
managers) and those whose task is simply to ensure that such
policies are carried out by the rank-and-file employees of an
5. HOURS OF WORK
organization (first-level managers/supervisors). What distinguishes
Neither does it follow that a person who does not observe normal
them from the rank-and-file employees is that they act in the
hours of work cannot be deemed an employee. In Cosmopolitan
interest of the employer in supervising such rank-and-file
Funeral Homes, Inc. v. Maalat, the employer similarly denied the
employees.
existence of an employer-employee relationship, as the claimant
"Managerial employees" may therefore be said to fall into two
according to it, was a supervisor on commission basis who did not
distinct categories: the "managers" per se, who compose the
observe normal hours of work. This Court declared that there was
former group described above, and the "supervisors" who form the
an employer-employee relationship, noting that [the] supervisor,
latter group. Whether they belong to the first or the second
although compensated on commission basis, [is] exempt from the
category, managers, vis-a-vis employers, are, likewise, employees.
observance of normal hours of work for his compensation is
measured by the number of sales he makes. Lazaro v SSS (04)

6. PROOF
It has long been established that in administrative and quasi-judicial
EMPLOYER-EMPLOYEE RELATIONSHIP proceedings, substantial evidence is sufficient as a basis for
judgment on the existence of employer-employee relationship. No
1. FACTUAL TEST/FACTORS/CONTROL TEST
particular form of evidence is required to prove the existence of
Case law has consistently held that the elements of an employer-
such employer-employee relationship. Any competent and relevant
employee relationship are: (a) the selection and engagement of the
evidence to prove the relationship may be admitted.
employee; (b) the payment of wages; (c) the power of dismissal;
Substantial evidence has been defined to be such relevant
and (d) the employers power to control the employee on the
evidence as a reasonable mind might accept as adequate to support
means and methods by which the work is accomplished. The last
a conclusion, and its absence is not shown by stressing that there is
element, the so-called control test, is the most important
contrary evidence on record, direct or circumstantial, for the
element.
appellate court cannot substitute its own judgment or criterion for
Applying the control test to the present case, we find that SONZA is
that of the trial court in determining wherein lies the weight of
not an employee but an independent contractor. The control test is
evidence or what evidence is entitled to belief.
the most important test our courts apply in distinguishing an
In a business establishment, an identification card is usually
employee from an independent contractor. This test is based on the
provided not only as a security measure but mainly to identify the
extent of control the hirer exercises over a worker. The greater the
holder thereof as a bona fide employee of the firm that issues it.
supervision and control the hirer exercises, the more likely the
Together with the cash vouchers covering petitioners salaries for
worker is deemed an employee. The converse holds true as well
the months stated therein, we agree with the labor arbiter that

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LABOR LAW I LABOR STANDARDS

these matters constitute substantial evidence adequate to support involved shall be considered the employer for purposes of this
a conclusion that petitioner was indeed an employee of private Code, to prevent any violation or circumvention of any provision of
respondent. Domasig v NLRC (96) this Code.

There is "labor-only" contracting where the person supplying


7. ABSENCE workers to an employer does not have substantial capital or
Applying the aforementioned test, an employer-employee investment in the form of tools, equipment, machineries, work
relationship is notably absent in this case. It is undisputed that premises, among others, and the workers recruited and placed by
petitioner Abante was a commission salesman who received 3% such person are performing activities which are directly related to
commission of his gross sales. Yet no quota was imposed on him by the principal business of such employer. In such cases, the person
the respondent; such that a dismal performance or even a dead or intermediary shall be considered merely as an agent of the
result will not result in any sanction or provide a ground for employer who shall be responsible to the workers in the same
dismissal. He was not required to report to the office at any time or manner and extent as if the latter were directly employed by him.
submit any periodic written report on his sales performance and (Art 106)
activities. Although he had the whole of Mindanao as his base of
operation, he was not designated by respondent to conduct his Indirect employer - The provisions of the immediately preceding
sales activities at any particular or specific place. Respondent Article shall likewise apply to any person, partnership, association
company did not prescribe the manner of selling the merchandise; or corporation which, not being an employer, contracts with an
he was left alone to adopt any style or strategy to entice his independent contractor for the performance of any work, task, job
customers. While it is true that he occasionally reported to the or project. (Art 107)
Manila office to attend conferences on marketing strategies, it was
intended not to control the manner and means to be used in Solidary liability - The provisions of existing laws to the contrary
reaching the desired end, but to serve as a guide and to upgrade his notwithstanding, every employer or indirect employer shall be held
skills for a more efficient marketing performance. We reiterate the responsible with his contractor or subcontractor for any violation of
rule that there could be no employer-employee relationship where any provision of this Code. For purposes of determining the extent
the element of control is absent. Where a person who works for of their civil liability under this Chapter, they shall be considered as
another does so more or less at his own pleasure and is not subject direct employers. (art 109)
to definite hours or conditions of work, and in turn is compensated
according to the result of his efforts and not the amount thereof, no MANAGEMENT FUNCTION
relationship of employer-employee exists. Abante v Lamadrid (04)
Additionally, We recognize that contracting out is not unlimited;
8. DENIAL rather, it is a prerogative that management enjoys subject to well-
Denying the existence of an employer-employee relationship, defined legal limitations. As we have previously held, the company
petitioner insists that the parties agreement was for a contract of can determine in its best business judgment whether it should
lease of services. We disagree. Petitioner is barred to negate the contract out the performance of some of its work for as long as the
existence of an employer-employee relationship. In its petition filed employer is motivated by good faith, and the contracting out must
before this Court, petitioner invoked our rulings on the right of an not have been resorted to circumvent the law or must not have
employer to dismiss an employee for just cause. Petitioner been the result of malicious or arbitrary action. The Labor Code and
maintained that private respondent was justifiably dismissed due to its implementing rules also contain specific rules governing
abandonment of work. By adopting said rulings, petitioner contracting out (Department or Labor Order No. 10, May 30, 1997,
impliedly admitted that it was in fact the employer of private Sections 1-25). Manila Electric Co. v. Quisumbing (99)
respondent. According to the control test, the power to dismiss an
employee is one of the indications of an employer-employee REQUIREMENTS INDEPENDENT CONTRACTOR
relationship. Petitioners claim that private respondent was legally
dismissed for abandonment was in fact a negative pregnant: an Labor-only contracting as defined in Section 5, Department Order
acknowledgement that there was no mutual termination of the No. 18-02, Rules Implementing Articles 106-109 of the Labor Code
alleged contract of lease and that private respondent was its refers to an arrangement where the contractor or subcontractor
employee. The fact that petitioner paid private respondent on merely recruits, supplies or places workers to perform job, work or
commission basis did not rule out the presence of an employee- service for a principal, and any of the following elements is present:
employer relationship. Article 97(f) of the Labor Code clearly
provides that an employees wages can be in the form of (i) The contractor or subcontractor does not have substantial
commissions. R transport v Ejanedra (04) capital or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
INDEPENDENT CONTRACTOR AND LABOR contractor or subcontractor are performing activities which are
CONTRACTOR ONLY directly related to the main business of the principal; or

A. INDEPENDENT CONTRACTOR (ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee. Manila
Water Co. v Pena (04)
Contractor or sub-contractor - Whenever an employer enters into a
contract with another person for the performance of the former's Desirable Unnecessary
work, the employees of the contractor and of the latter's sub- We perceive at the outset the disposition of the NLRC that
contractor, if any, shall be paid in accordance with the provisions of janitorial services are necessary and desirable to the trade or
this Code. business of petitioner Coca-Cola. But this is inconsistent with our
pronouncement in Kimberly Independent Labor Union v. Drilon
In the event that the contractor or sub-contractor fails to pay the where the Court took judicial notice of the practice adopted in
wages of his employees in accordance with this Code, the employer several government and private institutions and industries of hiring
shall be jointly and severally liable with his contractor or sub- janitorial services on an independent contractor basis. In this
contractor to such employees to the extent of the work performed respect, although janitorial services may be considered directly
under the contract, in the same manner and extent that he is liable related to the principal business of an employer, as with every
to employees directly employed by him. business, we deemed them unnecessary in the conduct of the
employers principal business. Coca-Cola Bottlers Phil., Inc. v. NLRC
The Secretary of Labor and Employment may, by appropriate (99)
regulations, restrict or prohibit the contracting out of labor to
protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions Employer Employee
between labor-only contracting as well as differentiations within In legitimate job contracting, no employer-employee relation
these types of contracting, and determine who among the parties exists between the principal and the job contractor's employees.

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LABOR LAW I LABOR STANDARDS

The principal is responsible to the job contractor's employees only 2. in the form of tools, equipment, machineries, work premises,
for the proper payment of wages. But in labor-only contracting, an among others,
employer-employee relation is created by law between the
principal and the labor-only contractor's employees, such that the 3. the workers recruited and placed by such person are
former is responsible to such employees, as if he or she had directly performing activities which are directly related to the
employed them. Besides, the Court has already taken judicial notice principal business of such employer.
of the general practice adopted in several government and private
institutions of securing janitorial services on an independent PART IV
contractor basis. Phil. Airlines, Inc. v. NLRC (98)
EMPLOYEE CLASSIFICATION
Liability of indirect Employer
The only time the indirect employer may be made solidarily REGULAR EMPLOYMENT
liable with the contractor is when the contractor fails to pay his Test written agreement to contrary notwithstanding and
employees their wages and other benefits claimed. Lanzadares v. regardless of oral agreement of parties provided by law
Amethyst Security (2003) Employee engaged to perform activities which are usually
necessary or desirable to the usual business or trade of
B. LABOR ONLY CONTRACTOR employer
Requisites Other Regular Employees
(a) when he does not have substantial capital or investment in the 1. Casual Employment after 1 year of service whether
form of tools, equipment, machineries, work premises and other continuous or broken (conditions Art. 280)
materials, and 2. Probationary Employee allowed to work even after the
(b) when the workers recruited and placed by him perform activities completion of the probationary period (Art. 281)
that relate directly to the principal business or operations of the 3. Learner allowed or suffered to work during the first 2
employer in which the workers are habitually employed. months of learner period, if training is terminated by the
Sec. 9(a), Rule VIII, Book III, of the Omnibus Rules Implementing employer before the end of the stipulated period.
Article 106 of the Labor Code Ponce v. NLRC (98) Not synonymous to permanent employment (no such thing as
permanent employment since he can be terminated for cause)
Prohibition EXCEPT:
Labor-only contracting, a prohibited act, is an arrangement where 1. PROJECT EMPLOYMENT
the contractor or subcontractor merely recruits, supplies or places Employment fixed on a specific project or
workers to perform a job, work or service for a principal. Vinoya v. undertaking, completion or termination of
NLRC (2000) which is DETERMINED AT THE TIME OF
ENGAGEMENT OF EMPLOYEE
Effect of Finding Must have been forewarned of the name of
As we held in Industrial Timber Corporation, et. al. vs. NLRC et. the project and the duration of the project
al.: Whether or not the project has a direct
Hence a finding that a contractor is a "labor-only" relation to the business of the employer, not
contractor is equivalent to a finding that there exists as important, BUT:
employer-employee relationship between the owner of a. Employee MUST be informed of
the project and the employees of the "labor-only" the name and duration of the
contractor since that relationship is defined and project
prescribed by law itself. b. Project and the Principal business
Accordingly, private respondents, are considered employees of the of employer are two separate
petitioner. Further, private respondents, having performed things
activities which are directly related to petitioner's business, are c. No attempt to deny Security of
deemed regular employees of petitioner pursuant to Article 280 of Tenure to worker
the Labor Code. And as regular employees, they must be accorded 2. SEASONAL EMPLOYMENT
security of tenure in their employment. Verily, their services can be Work or services to be performed seasonal in
terminated only based on "just" and "authorized" causes under nature, employment is for the duration of the
Articles 282, 283 and 284 of the Labor Code. Phil. Airlines, Inc. v. season
NLRC (98) No continuing need for worker

INDEPENDENT CONTRACTING CASUAL EMPLOYMENT


Under DOLE Department Order No. 10 (1997), contracting When not regular, project, or seasonal
shall be legitimate if the following circumstances concur: Requirement and Effect = Regular Employees
1. One (1) year service whether continuous or broken
1. The contractor or subcontractor carries on a distinct and 2. With respect to activity employed
independent business and undertakes to perform the job, work 3. Employment shall continue while such activity exists
or service on its own account and under its own responsibility, (Regular in a limited sense)
according to its own manner and method, and free from the ** Project, Seasonal and Casual Employees may be doing a
control and direction of the principal in all matters connected function that is by definition regular but are not regular because
with the performance of the work except as to the results they fall in the exception
thereof;
PROBATIONARY EMPLOYMENT
2. The contractor or subcontractor has substantial capital or
Period duration not exceed 6 months from the date the
investment; and
employee started working, unless covered by an
3. The agreement between the principal and contractor or
apprenticeship agreement stipulating a longer period
subcontractor assures the contractual employees entitlement Termination of Employment
to all labor and occupational safety and health standards, free 1. Just causes
exercise of the right to self-organization, security of tenure, and 2. Fail to qualify as regular employee in accordance with
social and welfare benefits. reasonable standards made known by the employer to
the employee at the time of engagement
LABOR ONLY CONTRACTING Effect of Work beyond 6 months deemed Regular employee
by automatic application of the law (even if there is no
1. the person supplying workers to an employer does not have appointment [Kimberly Clark v. Drilon]
substantial capital or investment Purpose:
1. Observance Period

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LABOR LAW I LABOR STANDARDS

- For the employer to know whether employee


is qualified [S]tipulations in employment contracts providing for term
- For the employee to demonstrate to the employment or fixed period employment are valid when the period
employer his skills were agreed upon knowingly and voluntarily by the parties without
2. Restrictive force, duress or improper pressure, being brought to bear upon the
Parties may agree for a longer period if company policy employee and absent any other circumstances vitiating his consent,
requires or the nature of work requires or where it satisfactorily appears that the employer and employee
Direct rationale connection: unduly long unfair to the worker dealt with each other on more or less equal terms with no moral
Nothing prohibits the employer to abbreviate or shorten the dominance whatever being exercised by the former over the latter.
period Pangilingan v General Milling Corp (04)
If agreed to extend for the benefit of worker Ex gratia
No obligation to pay the unfinished portion EMPLOYER DETERMINATION
It is of no moment that petitioner was told when he was hired that
COVERAGE his employment would only be casual, that he was paid through
applies to all establishments or undertakings whether for profit or cash vouchers, and that he did not comply with regular
not. (Art 278 LC) employment procedure. Precisely, the law overrides such
conditions which are prejudicial to the interest of the worker whose
EMPLOYEE CLASSIFICATION weak bargaining position needs the support of the State. What
determines whether a certain employment is regular or casual is
not the will and word of the employer, to which the desperate
1. Regular worker often accedes, much less the procedure of hiring the
2. EE has been engaged to perform activities which are employee or the manner of paying his salary. It is the nature of the
usually necessary and desirable in the usual business or activities performed in relation to the particular business or trade
trade of the ER (Art. 280) considering all circumstances, and in some cases the length of time
3. A casual employee who has rendered at least 1 year of of its performance and its continued existence. De Leon v. NLRC
service, whether continuous or broken, with respect to (89)
the activity in which he is employed and his employment
shall continue while such activity exists (Art. 280) Article 280 reinforces the Constitutional mandate to protect
4. A probationary employee who is allowed to work after the interest of labor as it sets the legal framework for ascertaining
the probationary period (Art. 281) ones nature of employment, and distinguishing different kinds of
5. All learners who has been allowed or suffered to work employees. Its language manifests the intent to safeguard the
during the first 2 months shall be deemed regular tenurial interest of worker who may be denied the enjoyment of
employees if training is terminated by the ER before the rights and benefits due to an employee, regardless of the nature of
end of the stipulated period through no fault of the his employment, XXX
learner. [Art. 75 (d)] XXX Thus, the nature of ones employment does not depend
6. Casual on the will or word of the employer. Nor on the procedure of hiring
7. If not covered by the preceding paragraph (280 LC) and the manner of designating the employee, but on the nature of
8. Project the activities to be performed by the employee, considering the
9. Employment has been fixed for a specific project or employers nature of business and the duration and scope of the
undertaking the completion or termination of which has work to be done. San Miguel Corporation v. NLRC (98)
been determined at the time of engagement of the EE
(280 LC)
10. Seasonal A. REGULAR EMPLOYEES
11. The work or services to be performed is seasonal in TYPE
nature and the employment is for the duration of the A regular employee is one who is engaged to perform activities
season. (280 LC) which are necessary and desirable in the usual business or trade of
12. Probationary the employer as against those which are undertaken for a specific
13. Employment shall not exceed 6 months from the date the project or are seasonal. There are two separate instances whereby
EE started working unless covered by apprenticeship it can be determined that an employment is regular: (1) if the
agreement stipulating a longer period (281 LC) particular activity performed by the employee is necessary or
desirable in the usual business or trade of the employer; and, (2) if
RECOGNITION AND TYPES the employee has been performing the job for at least a year.
Article 280 of the Labor Code comprehends three kinds of Pangilingan v General Milling Corp (04)
employees: (a) regular employees or those whose work is necessary
or desirable to the usual business of the employer; (b) project NATURE OF WORK
employees or those whose employment has been fixed for a REGULAR WORKERS EVEN IN THE FOLLOWING INSTANCES:
specific project or undertaking the completion or termination of While it may be true that some phases of petitioner company's
which has been determined at the time of the engagement of the processing operations is dependent on the supply of fruits for
employee or where the work or services to be performed is a particular season, the other equally important aspects of its
seasonal in nature and the employment is for the duration of the business, such as manufacturing and marketing are not
season; and, (c) casual employees or those who are neither regular seasonal. The fact is that large-scale food processing
nor project employees. companies such as petitioner company continue to operate
A regular employee is one who is engaged to perform activities and do business throughout the year even if the availability of
which are necessary and desirable in the usual business or trade of fruits and vegetables is seasonal. Phil. Fruit and Vegetable
the employer as against those which are undertaken for a specific Industries, Inc. v. NLRC (99)
project or are seasonal. There are two separate instances whereby
it can be determined that an employment is regular: (1) if the That petitioner employees are "pakyao" or piece workers does
particular activity performed by the employee is necessary or not imply that they are not regular employees entitled to
desirable in the usual business or trade of the employer; and, (2) if reinstatement. With more reason, the work of processed food
the employee has been performing the job for at least a year. repackers is necessary in the day-to-day operation[s] of
In the case of St. Theresas School of Novaliches Foundation vs. respondent Empire Food Products. Labor Congress of the Phil.
NLRC,[43] we held that Article 280 of the Labor Code does not v. NLRC (98)
proscribe or prohibit an employment contract with a fixed period.
There is thus nothing essentially contradictory between a definite The primary standard of determining regular employment is the
period of employment and the nature of the employees duties. reasonable connection between the particular activity performed
In the leading case of Brent School Inc. v. Zamora,[44] we laid by the employee in relation to the usual business or trade of the
down the guideline before a contract of employment may be held employer. The connection can be determined by considering the
as valid, to wit: nature of the work performed and its relation to the scheme of the

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LABOR LAW I LABOR STANDARDS

particular business or trade in its entirety. Likewise, the repeated termination of which has been determined at the time of the
and continuing need for the performance of the job has been engagement of the employee or where the work or service to
deemed sufficient evidence of the necessity, if not indispensability be performed is seasonal in nature and the employment is for
of the activity to the business Some of the petitioners had rendered the duration of the season. In the instant case, petitioner was
more than two decades of service to the MWSS. The continuous engaged to perform data encoding and keypunching, and her
and repeated rehiring of these bill collectors indicate the necessity employment was fixed for a specific project or undertaking the
and desirability of their services, as well as the importance of the completion or termination of which had been determined at
role of bill collectors in the MWSS. Lopez v MWSS (05) the time of her engagement, as may be observed from the
series of employment contracts between petitioner and
HIRING PERIOD EXTENDED private respondent, all of which contained a designation of the
We have held that where the employment of project employees is specific job contract and a specific period of employment.
extended long after the supposed project has been finished, the Imbuido v NLRC (00)
employees are removed from the scope of project employees and
considered regular employees. Audio Electric Co., Inc. v. NLRC (99) RATIONALE
The rationale of this rule is that if a project has already been
CONTRACT TO CONTRACT (REPEATED RENEWAL OF CONTRACT) completed, it would be unjust to require the employer to maintain
The petitioner cannot rightfully say that since the private them in the payroll while they are doing absolutely nothing except
respondent's employment hinged from contract to contract, it was waiting until another project is begun, if at all. In effect, these
ergo, "temporary", depending on the term of each agreement. stand-by workers would be enjoying the status of privileged
Under the Labor Code, an employment may only be said to be retainers, collecting payment for work not done, to be disbursed by
"temporary" "where [it] has been fixed for a specific undertaking the employer from profits not earned. This is not fair by any
the completion of or termination of which has been determined at standard and can only lead to a coddling of labor at the expense of
the time of the engagement of the employee or where the work or management. De Ocampo v. NLRC (90)
services to be performed is seasonal in nature and the employment
is for the duration of the season." Quite to the contrary, the private EMPLOYER OBLIGATION
respondent's work, that of "typist-clerk" is far from being "specific" The law is clear to the effect that in all cases involving employees
or "seasonal", but rather, one, according to the Code, "where the engaged on probationary' basis, the employer shall make known to
employee has been engaged to perform activities which are usually the employee at the time he is hired, the standards by which he will
necessary or desirable in the usual business." And under the Code, qualify as a regular employee. Nowhere in the employment
where one performs such activities, he is a regular employee, "[t]he contract executed between petitioner company and respondent
provisions of written agreement to the contrary notwithstanding . . Grulla is there a stipulation that the latter shall undergo a
. probationary period for three months before he can quality as a
It is true that in Biboso v. Victorias Milling Company, Inc., we regular employee. There is also no evidence on record showing that
recognized the validity of contractual stipulations as to the duration the respondent Grulla had been apprised of his probationary status
of employment, we can not apply it here because clearly, the and the requirements which he should comply in order to be a
contract-to-contract arrangement given to the private respondent regular employee. In the absence of these requisites, there is
was but an artifice to prevent her from acquiring security of tenure justification in concluding that respondent Grulla was a regular
and to frustrate constitutional decrees. Beta Electric Corp. v. NLRC employee at the time he was dismissed by petitioner, and as such
(90) cannot be done without just and authorized cause. A. M. Oreta and
Co., Inc. v. NLRC (89)
LENGTH OF TIME
SPECIFIED PERIOD
Not controlling, merely serves as a badge of regular employment
The Court has upheld the legality of fixed-term employment. It
Maraguinot v. NLRC (98)
ruled that the decisive determinant in term employment should not
be the activities that the employee is called upon to perform but
B. PROJECT EMPLOYEES whose employment has been fixed for a
the day certain agreed upon by the parties for the commencement
specific project or undertaking the completion or termination of
and termination of their employment relationship. But, this Court
which has been determined at the time of engagement of the
went on to say that where from the circumstances it is apparent
employee [Art. 280 (1)]
that the periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or
DEFINED
disregarded as contrary to public policy and morals. Purefoods
The principal test for determining whether particular employees are
Corp. V. NLRC (87)
properly characterized as "project employees," as distinguished
from "regular employees," is whether or not the "project
WORKPOOL EMPLOYEES
employees" were assigned to carry out a "specific project or
A project EE or a member of a work pool may acquire the status of a
undertaking," the duration (and scope) of which were specified at
regular employee when the following concur:
the time the employees were engaged for that project. As defined,
1. There is a continuous rehiring of project
project employees are those workers hired (1) for a specific project
employees even after cessation of a project; and
or undertaking, and (2) the completion or termination of such
2. The tasks performed by the alleged project
project or undertaking has been determined at the time of
employee are vital, necessary, and indispensable
engagement of the employee.
to the usual business or trade of the employer.
However, the length of time during which the EE was
Project employees - employed in connection with a particular
continuously rehired is not controlling, but merely serves as a badge
project. Non-project or regular employees - employed without
of regular employment.
reference to any particular project. Kiamco v. NLRC (99)
A work pool may exist although the workers in the pool do not
receive salaries and are free to seek other employment during
PROJECT EMPLOYEES
temporary breaks in the business, provided, that the worker shall
Private respondents, as well as the other 30 workers, were
be available when called to report for a project. Although primarily
needed as additional hands for the renovation work and not
applicable to regular seasonal workers, this set-up can likewise be
for ordinary upkeep and maintenance. The erection of the fire
applied to project workers insofar as the effect of temporary
escape and other small jobs after the renovation cannot be
cessation of work is concerned. This is beneficial to both the
deemed maintenance but more of casual work. Phil. Jai-Alai
employer and employee for it prevents the unjust situation of
and Amusement Corp. v. Clave (83)
coddling labor at the expense of capital and at the same time
private respondents were project employees whose work was
enables the workers to attain the status of regular employees.
coterminous with the project for which they were hired.
Maraguinot v. NLRC (98)
Sandoval Shipyards, Inc. v. NLRC (85)
A project employee is one whose employment has been fixed
Members of a work pool from which a construction company draws
for a specific project or undertaking, the completion or
its project employees, if considered employees of the construction

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LABOR LAW I LABOR STANDARDS

company while in the work pool, are non-project employees, or It goes without saying that contracts or employment govern the
employees for an indefinite period. If they are employed in a relationship of the parties. In this case, private respondent's
particular project, the completion of the project or any phase contract provided for a fixed term of nine (9) months, from June 1,
thereof will not mean severance of the employer-employee 1991 to March 31, 1992. Such stipulation, not being contrary to
relationship. Aguilar Corp. v. NLRC (97) law, morals, good customs, public order and public policy, is valid,
binding and must be respected. St. Theresas School v. NLRC (98)
LENGTH OF SERVICE
However, the Court upholds the principle that where from the
The above-quoted provisions make it clear that a project employee
circumstances it is apparent that periods have been imposed to
is one whose employment has been fixed for a specific project or
preclude acquisition of tenurial security by the employee, they
undertaking the completion or termination of which has been
should be disregarded for being contrary to public policy. Servidad
determined at the time of the engagement of the employee or
v. NLRC (99)
where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season. In D.M. SEASONAL EMPLOYEES
Consunji, Inc. v. NLRC, this Court has ruled that the length of For respondents to be excluded from those classified as regular
service of a project employee is not the controlling test of employees, it is not enough that they perform work or services that
employment tenure but whether or not the employment has been are seasonal in nature. They must have been employed only for the
fixed for a specific project or undertaking the completion or duration of one season. While the records sufficiently show that the
termination of which has been determined at the time of the respondents work in the hacienda was seasonal in nature, there
engagement of the employee. was, however, no proof that they were hired for the duration of one
In the present case, the contracts of employment of Puente attest season only. In fact, the payrolls, submitted in evidence by the
to the fact that he was hired for specific projects. His employment petitioners, show that they availed the services of the respondents
was coterminous with the completion of the projects for which he since 1991. Absent any proof to the contrary, the general rule of
had been hired. Those contracts expressly provided that his tenure regular employment should, therefore, stand. It bears stressing that
of employment depended on the duration of any phase of the the employer has the burden of proving the lawfulness of his
project or on the completion of the construction projects. employees dismissal.
Furthermore, petitioners regularly submitted to the labor The disparity in facts between the Mercado case and the instant
department reports of the termination of services of project case is best exemplified by the fact that the former decision ruled
workers Such compliance with the reportorial requirement confirms on the status of employment of farm laborers, who, as found by the
that respondent was a project employee. Filipinas Pre-Fabricated labor arbiter, work only for a definite period for a farm worker,
Building Systems v Puente (05) after which they offer their services to other farm owners,
considering the area in question being comparatively small,
C. CASUAL EMPLOYEES comprising of seventeen and a half (171/2) hectares of land, such
An employment shall be deemed casual if it is not covered by the that the planting of rice and sugar cane thereon could not possibly
preceding paragraph: Provided, that, any employee who has entail a whole year operation. In Mercado, although respondent
rendered at least one year of service, whether such service is constantly availed herself of the petitioners services from year to
continuous or broken, shall be considered a regular employee with year, it was clear from the facts therein that they were not in her
respect to the activity in which he is employed and his employment regular employ. Petitioners therein performed different phases of
shall continue while such activity exists. (Art. 281, 2nd paragraph) agricultural work in a given year. However, during that period, they
were free to work for other farm owners, and in fact they did. In
NATURE OF WORK other words, they worked for respondent, but were nevertheless
What determines regularity or casualness is not the employment free to contract their services with other farm owners. Hacienda
contract, written or otherwise, but the nature of the job. If the job Bino v Cuenca (05)
is usually necessary or desirable to the main business of the
employer, then employment is regular. AM Oreta & Co., Inc v. NLRC C. PROBATIONARY EMPLOYEES
(89)
Probationary employments hall not exceed six months from the
ONE YEAR SERVICE date the employee started working, unless it is covered by an
The fact that the petitioners have been hired on a "temporary or apprenticeship agreement stipulating a longer period. The services
seasonal" basis merely is no argument either. As we held in of an employee who has been engaged on a probationary basis may
Philippine Bank of Communications v. NLRC, a temporary or casual be terminated for a just cause or when he fails to qualify as a
employee, under Article 218 of the Labor Code, becomes regular regular employee in accordance with reasonable standards made
after service of one year, unless he has been contracted for a known by the employer to the employee at the time of his
specific project. And we cannot say that merchandising is a specific engagement. An employee who is allowed to work after a
project for the obvious reason that it is an activity related to the probationary period shall be considered a regular employee. Art.
day-to-day operations of California. 281
The records show that the petitioners had been given an initial six- There is a probationary employment where the employee upon his
month contract, renewed for another six months. Accordingly, engagement, is made to undergo a trial period during which the
under Article 281 of the Code, they had become regular employees employer determines his fitness to qualify for regular employment,
of California and had acquired a secure tenure. Hence, they based on reasonable standards made known to him at the time of
cannot be separated without due process of law. Tabas v. engagement. Art. 61, 2nd Sentence, Book VI, Rule 1, Sec. 6,
California Manufacturing Co. Inc. (89) Omnibus Rules

CONTRACT FIXED PERIOD DEFINITION


A probationary employee is one who is on trial by an employer
TESTS VALIDITY during which the employer determines whether or not he is
Article 280 of the Labor Code does not proscribe or prohibit an qualified for permanent employment. International Catholic
employment contract with a fixed period provided Migration Commission v. NLRC (89)
the same is entered into by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and PURPOSE
absent any other circumstance vitiating consent. It does not We find merit in the contention of the petitioner that "private
necessarily follow that where the duties of the employee consist of respondent had not been hired as manager of any firm before his
activities usually necessary or desirable in the usual business of the employment with petitioner. The highest previous position he
employer, the parties are forbidden from agreeing on a period of attained was that of Finance Officer. His position with petitioner's
time for the performance of such activities. There is thus nothing Iloilo Branch was his first as Manager. Moreover, Warner, Barnes &
essentially contradictory between a definite period of employment Co., private respondent's previous employer, and petitioner are
and the nature of the employee's duties. engaged in different kinds of business. Managing petitioner's Iloilo
Branch was an entirely new experience for private respondent. It

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LABOR LAW I LABOR STANDARDS

was, therefore, necessary for private respondent to undergo a this more lenient approach, she had become a regular employee of
period of probation to test his qualifications, skill and experience." Holiday Inn and acquired full security of tenure as of October 15,
Indeed, the employer has the right or is at liberty to choose as to 1991. Holiday Inn Manila v. NLRC (93)
who will be hired and who will be declined. It is within the exercise The contract signed by petitioners is akin to a probationary
of this right to select his employees that the employer may set or fix employment, during which the bank determined the employees'
a probationary period within which the latter may test and observe fitness for the job. When the bank renewed the contract after the
the conduct of the former before hiring him permanently. "The lapse of the six-month probationary period, the employees thereby
right of a laborer to sell his labor to such persons as he may choose became regular employees. No employer is allowed to determine
is, in its essence, the same as the right of an employer to purchase indefinitely the fitness of its employees. Bernardo v. NLRC (99)
labor from any person whom it chooses. The employer and the
employee have thus an equality of right guaranteed by the CRITERIA REGULARIZATION
Constitution. 'If the employer can compel the employee to work In all cases of probationary employment, the employer shall make
against the latter's will, this is servitude. If the employee can known to the employee the standards under which he will qualify as
compel the employer to give him work against the employer's will, a regular employee at the time of his engagement. Where no
this is oppression.'" Grand Motors Corp. v. MOLE (84) standards are made known to the employee at that time, he shall
be deemed a regular employee.
Conversely, an employer is deemed to substantially comply
EMPLOYER RIGHT SET PERIOD/OBLIGATION with the rule on notification of standards if he apprises the
Indeed, an employer, in the exercise of its management employee that he will be subjected to a performance evaluation on
prerogative, may hire an employee on a probationary basis in order a particular date after his hiring. We agree with the labor arbiter
to determine his fitness to perform work Mitsubishi Motors Corp v when he ruled that:
Chrysler (04) In the instant case, petitioner cannot successfully say that he
was never informed by private respondent of the standards that he
DURATION/EXCEPTION must satisfy in order to be converted into regular status. This rans
Central to the matter at hand is Article 281 of the Labor Code which (sic) counter to the agreement between the parties that after five
provides that: months of service the petitioners performance would be evaluated.
ART. 281. PROBATIONARY EMPLOYMENT. Probationary It is only but natural that the evaluation should be made vis--vis
employment shall not exceed six (6) months from the date the the performance standards for the job. Private respondent Trifona
employee started working, unless it is covered by an apprenticeship Mamaradlo speaks of such standard in her affidavit referring to the
agreement stipulating a longer period. The services of an employee fact that petitioner did not perform well in his assigned work and
who has been engaged on a probationary basis may be terminated his attitude was below par compared to the companys standard
for a just cause or when he fails to qualify as a regular employee in required of him. Alcira v NLRC (04)
accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An EXTENSION CONTRACT
employee who is allowed to work after a probationary period shall It is an elementary rule in the law on labor relations that a
be considered a regular employee. XXX probationary employee who is engaged to work beyond the
The first issue we must resolve is whether petitioner was probationary period of 6 months, as provided under Art. 281 Labor
allowed to work beyond his probationary period and was therefore Code, as amended, or for any length of time set forth by the
already a regular employee at the time of his alleged dismissal. We employer, shall be considered as a regular employee. Phil.
rule in the negative. Federation, etc. v. NLRC (98)
Petitioner claims that under the terms of his contract, his
probationary employment was only for five months as indicated by ABSORBED EMPLOYEES
the remark "Please be informed that after five months, your We agree with the Regional Director that private respondents could
performance shall be evaluated and any adjustment in salary shall not be considered probationary employees because they were
depend on your work performance." The argument lacks merit. As already well-trained in their respective functions. This conclusion is
correctly held by the labor arbiter, the appointment contract also further bolstered by the factual findings of the Labor Minister that
stated in another part thereof that petitioners employment status said order of the Director was supported by substantial evidence. As
was "probationary (6 mos.)." The five-month period referred to the stressed by the Solicitor General, while private respondents were
evaluation of his work. Alcira v NLRC (04) still with the CCAS they were already clerks. Respondent Gelig had
been a clerk for CCAS for more than ten (10) years, while
Generally, the probationary period of employment is limited to respondent Quijano had slightly less than ten (10) years of service.
six (6) months. The exception to this general rule is when the They were, therefore, not novices in their jobs but experienced
parties to an employment contract may agree otherwise, such as workers. Cebu Stevedoring Co. Inc v. Regional Director (88)
when the same is established by company policy or when the same
is required by the nature of work to be performed by the employee. DOUBLE PROBATION
In the latter case, there is recognition of the exercise of managerial
prerogatives in requiring a longer period of probationary There is no basis for subjecting an employee to a new probationary
employment, such as in the present case where the probationary or temporary employment where he had already become a regular
period was set for eighteen (18) months, i.e. from May, 1980 to employee when he was absorbed by a sister company. A Prime
October, 1981 inclusive, especially where the employee must learn Security Services, Inc. v. NLRC (2000)
a particular kind of work such as selling, or when the job requires TERMINATION AND SALARY
certain qualifications, skills, experience or training. Busier v. A probationary employee enjoys only a temporary
Leogardo (84) employment status. This means that he is terminable at any time,
permanent employment not having been attained in the meantime.
Honasan was certainly under observation during her three-week The employer could well decided he no longer needed the
on-the-job training. If her services proved unsatisfactory then, she probationary employees services or his performance fell short of
could have been dropped as early as during that period. But she expectations, etc. As long as the termination was made before the
was not. On the contrary, her services were continued, presumably termination of the six-month probationary period, the employer
because they were acceptable, although she was formally placed was well within his rights to sever the employer-employee
this time on probation. relationship. A contrary interpretation would defect the clear
meaning of the term probationary.
Even if it be supposed that the probation did not end with the
three-week period of on-the-job training, there is still no reason De la Cruz, Jr. v. NLRC (2003)
why that period should not be included in the stipulated six-month
period of probation. Honasan was accepted for on-the-job training Article 281 of the Labor Code does not preclude the employer from
on April 15, 1991. Assuming that her probation could be extended terminating the probationary employment on justifiable causes.
beyond that date, it nevertheless could continue only up to October We find unmeritorious, therefore, public respondent's
15, 1991, after the end of six months from the earlier date. Under argument that the security of tenure of probationary employees

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LABOR LAW I LABOR STANDARDS

within the period of their probation, as in the case of herein private


respondent, justified the award of salary for the unexpired portion
of her probationary employment. The termination of private
respondent predicated on a just cause negates the application on
the right of security of tenure of probationary employees.
International Catholic Migration Commission v. NLRC (89)

However, the Court cannot sustain his dismissal on this ground


because petitioner failed to specify the reasonable standards by PART V
which private respondent's alleged poor performance was RECRUITMENT AND PLACEMENT OF
evaluated, much less to prove that such standards were made WORKERS
known to him at the time of his recruitment in Manila. Neither
private respondent's Agency-Worker Agreement with ORIENT
I. Definitions
EXPRESS nor his Employment Contract with NADRICO ever
mentioned that he must first take and pass a Crane Operators'
A. "Recruitment and placement" refers to any act of
License Examination in Saudi Arabia before he would be allowed to
14. canvassing,
even touch a crane. Neither did he know that he would be assigned
15. enlisting,
as floorman pending release of the results of the examination; more
16. contracting,
importantly, that he would be subjected to a performance
17. transporting,
evaluation by his superior one (1) month after his hiring to
18. utilizing, or
determine whether the company was amenable to continuing with
19. hiring procuring workers,
his employment. Hence, respondent Flores could not be faulted for
harboring the impression that he was hired as crane operator for
and also includes
one (1) year to commence upon his arrival at the work-site and to
1. referrals,
terminate at the end of one (1) year. No other condition was laid
2. contract services,
out except that he was to be on probation for three (3) months.
3. promising, or
Due process dictates that an employee be apprised
4. advertising for employment, locally or abroad, whether
beforehand of the condition of his employment and of the terms of
for profit or not
advancement therein. Precisely, implicit in Art. 281 of the Code is
the requirement that reasonable standards be previously made
Provided, That any person or entity which, in any manner, offers or
known by the employer to the probationary employee at the time
promises for a fee employment to two or more persons shall be
of his engagement, as correctly suggested by the POEA. Such an
deemed engaged in recruitment and placement. (Art 13b)
essential requirement was not met by petitioner, even assuming
that Flores' alleged unsatisfactory performance was true. Orient
The number of persons dealt with is not an
Express Placement Philippines v. NLRC (97)
essential ingredient of the act of recruitment and
RULE PRIVATE SCHOOL TEACHERS placement of workers. Any of the acts mentioned in the basic
To extend a regular appointment: rule in Article 13(b) will constitute recruitment and
(1) the faculty member must satisfactorily complete the placement even if only one prospective worker is involved. The
probationary period of four semesters or two years, within which his proviso merely lays down a rule of evidence that
performance shall be observed and evaluated for the purpose of where a fee is collected in consideration of a promise or
determining his competency and fitness to be extended permanent offer of employment to two or more prospective workers, the
status; and individual or entity dealing with them shall be deemed to be
(2) the faculty member must pass the PBET or an equivalent civil engaged in the act of recruitment and placement. The
service examination.
words "shall be deemed" create that presumption. (People v.
Escorpizo v. University of Baguio (99)
Panis, 1988)
*Neither are they entitled to LEAVS during the 3 year probationary
period, pursuant to the Manual of Regulations for Private Schools . St.
Michael Academy v. NLRC (98) B. Referrals

People v. Meris (2000)


In People v. Agustin, the Court ruled: Hence, the
inevitable query is whether or not appellant Agustin merely
introduced complainants to the Goce couple or her actions went
beyond that. The testimonial evidence hereon show that she indeed
further committed acts constitutive of illegal recruitment. All four
prosecution witnesses testified that it was Agustin whom they
initially approached regarding their plans of working overseas. It
was from her that they learned about the fees they had to pay, as
well as the papers that they had to submit. It was after they had
talked to her that they met the accused spouses who owned the
placement agency. As such, the Court concluded that appellant that
appellant was an employee of the Goce spouses, as she was actually
making referrals to the agency. She was therefore, engaged in
recruitment activities. The same factual circumstance obtains in this
case. Although accused-appellant was not an employee of the
alleged illegal recruiter Julie Micua, the evidence show that she was
the one who approached complainants and prodded them to seek
employment abroad. It was through her that they met Julia Micua.
This is clearly an act of referral. Worse, accused-appellant declared
that she was capable of placing them in jobs overseas. Suffice it to
say that complainants' recruitment would not have been
consummated were it not for the direct participation of accused-
appellant in the recruitment process.

C. "Workers" are any member of the labor force, whether


employed or unemployed (Art. 13a)

D. A "Private employment agency" is any person or entity engaged


in the recruitment and placement of workers for a fee which is

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LABOR LAW I LABOR STANDARDS

charged, directly or indirectly, from the workers or employers or through the Boards and entities authorized by the Department of
both (Art 13c) Labor and Employment. (Art 18)

E. A License is a document issued by the Department of Labor E. BAN ON DIRECT HIRING - Exception
authorizing a person or entity to operate a private employment
agency (Art 13d) Direct hiring by members of the diplomatic service, officials and
employees of international organizations and such other employers
F. A "Private recruitment entity" is any person or association as may be allowed by the Department and Labor and Employment
engaged in the recruitment and placement of workers, locally or is not covered by the ban. (Art 18)
overseas, without charging, directly or indirectly, any fee from the
workers or employers. (Art 13e) III. Entities prohibited to recruit and place

G. An Authority is a document issued by the Department of Labor a. Persons and entities other than public employment
authorizing a person or association to engage in recruitment and offices if not authorized under Chapter 2 of the Labor
placement activities as a private recruitment entity. (Art 13f) Code (Art 16)
b. Employers hiring directly for work abroad without going
through DOLE-authorized boards and entities (Art 18)
II. Entities allowed to recruit and place c. Travel agencies and sales agencies of airline companies
are prohibited from engaging in the business of
A. General rule recruitment and placement of workers for overseas
employment whether for profit or not. (Art 26)
Only public employment offices and the OEDB for overseas
employment, shall engage in the recruitment and placement of IV. Techniques of regulation
workers (Art 16). The Secretary of Labor shall have the power and
authority to organize and establish new employment offices in A. Bonds
addition to existing employment offices under the Department of
Labor as the need arises. (Art 14g) All applicants for license or authority shall post such cash and surety
bonds as determined by the Secretary of Labor to guarantee
B. Exception compliance with prescribed recruitment procedures, rules an
regulations, and terms and conditions of employment as may be
Persons or entities allowed under Chapter 2 of the Labor Code (Art appropriate. (Art 31)
16).
B. Workers fees
For this purpose, the Labor Code expressly authorizes the
participation of the private employment sector in the recruitment Any person applying with a private fee-charging employment
and placement of workers, locally and overseas, BUT such agency for employment assistance shall not be charged any fee
recruitment and placement shall be done under such guidelines, until he has obtained employment through its efforts or has actually
rules and regulations, as may be issued by the Secretary of Labor commenced employment. Such fee shall be always covered with
and Employment. (Art 25) Private sector participation in the appropriate receipt clearly showing the amount paid. The
recruitment and placement is sought to be rationalized pursuant to Secretary of Labor shall promulgate a schedule of allowable fees.
national development objectives (Art 12f) and in order to harness (Art 32)
and maximize the use of private sector resources and initiative in
the development and implementation of a comprehensive C. Reports submission
employment program (Art 25)
Whenever the public interest so requires, the Secretary of Labor
C. License/ authority of allowed entities and Employment may direct all persons or entities within the
coverage of this Title to submit a report on the status of
1. Citizenship Requirement - Only Filipino Citizens or employment, including job vacancies; details of job requisitions,
corporations, partnership or entities at least 75 % of the separation from jobs, wages, other terms and conditions, and other
authorized and voting capital stock of which is owned employment data. (Art 33)
and controlled by Filipino citizens shall be permitted to
participate in the recruitment and placement of workers, D. Suspension and/ or cancellation of license or authority
locally or overseas. (Art 27)
2. Capitalization Requirement - All applicants for authority The Secretary of Labor shall have the power to suspend or cancel
to hire or renewal of license to recruit are required to any license or authority to recruit employees for overseas
have such substantial capitalization as determined by the employment for violation of rules and regulations issued by the
Secretary of Labor. (Art 28) Department of Labor, the Overseas Employment Development
3. Non-transferability of license or authority No Board, and the National Seamen Board, or for violation of the
license or authority shall be used directly or provisions of this and other applicable laws, General Orders and
indirectly by any person other than the one in Letters of Instructions. (Art 35)
whose favor it was issued or at any place other than that
stated in the license or authority, nor may such license or ILLEGAL RECRUITMENT
authority be transferred, conveyed, or assigned to any
other person or entity. Any transfer of business - Under the Labor Code, there are two penal
address, appointment or designation of any agent or provisions relative to recruitment and placement:
representative including the establishment of additional offices first, is the commission of the Prohibited Acts under Art 34 by a
anywhere shall be subject to the prior approval of the holder of a license or authority; second, is the
Department of Labor. (Art 29) undertaking of recruitment activities under Art 13b
1. Registration Fees The Secretary of Labor shall or the commission of the Prohibited Acts under Art 34 by a non-
promulgate a schedule of fees for the registration of all holder of a license or authority. Only the second case is
applicants for license or authority. (Art 30) considered an act of illegal recruitment. Note that under
the Labor Code, a holder of a license or authority
D. SPECIAL CIRCUMSTANCE: DIRECT HIRING FOR WORK ABROAD cannot commit illegal recruitment.
General Rule
- The Prohibited Activities under Art 34 of the Labor
No employer may directly hire a Filipino worker for overseas Code are:
employment. Every employment for work abroad must be coursed

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LABOR LAW I LABOR STANDARDS

a. To CHARGE or accept directly or indirectly any amount any law enforcement officer may initiate complaints
greater than that specified in the schedule of allowable under this Article. (Art 38a)
fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay any amount Economic sabotage
greater than that actually received by him as a loan or
advance; Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving
b. To FURNISH or publish any false notice or information economic sabotage and shall be penalized in accordance
or document in relation to recruitment or employment; with Article 39 hereof. Illegal recruitment is deemed
committed by a SYNDICATE if carried out by a group of
c. To GIVE any false notice, testimony, information or three (3) or more persons conspiring and/or
document or commit any act or misrepresentation for confederating with one another in carrying out any
the purpose of securing a license or authority under this unlawful or illegal transaction, enterprise or scheme
Code; defined under the first paragraph hereof. Illegal
recruitment is deemed committed in large scale if
d. To INDUCE or attempt to induce a worker already committed against three (3) or more persons individually
employed to quit his employment in order to offer him or as a group. (Art 38b). Note, however, that the finding
another unless the transfer is designed to liberate a of large-scale illegal recruitment must depend on
worker from oppressive terms and conditions of whether there are at least three complainants in a single
employment; complaint who alleges illegal recruitment whether
committed to them singly or collectively. Single illegal
e. To INFLUENCE or attempt to influence any person or recruitment cases cannot be cumulated to add up to a
entity not to employ any worker who has not applied for charge of large-scale illegal recruitment. Consider the
employment through his agency; following cases:

f. To ENGAGE in the recruitment or placement of workers People v. Reyes, 1995


in jobs harmful to public health or morality or to the There are, it is said, 14 other cases filed/pending in the
dignity of the Republic of the Philippines; courts against the accused for illegal recruitment. These cases
cannot be taken into account for the purpose of Art. 38(b). When
g. To OBSTRUCT or attempt to obstruct inspection by the the Labor Code speaks of illegal recruitment "committed against
Secretary of Labor and Employment or by his duly three (3) or more persons individually or as a group," it must be
authorized representatives; understood as referring to the number of complainants in each case
who are complainants therein, otherwise, prosecutions for single
h. To FAIL to file reports on the status of employment, crimes of illegal recruitment can be cumulated to make out a case
placement vacancies, remittance of foreign exchange of large scale illegal recruitment. In other words, a conviction for
earnings, separation from jobs, departures and such large scale illegal recruitment must be based on a finding in each
other matters or information as may be required by the case of illegal recruitment of three or more persons whether
Secretary of Labor and Employment; individually or as a group. Moreover, even if Blanza and Garcia had
been illegally recruited so as to make the number of persons
i. To SUBSTITUTE or alter employment contracts illegally recruited four and make the crime that of illegal
approved and verified by the Department of Labor and recruitment of a large scale, since this was not alleged in the
Employment from the time of actual signing thereof by information and this is the more serious offense which includes that
the parties up to and including the period of expiration of which was charged, the appellant can only be found guilty of the
the same without the approval of the Department of less serious offense charged, pursuant to Rule 120, 4.
Labor and Employment.
People v. Meris (2000)
j. To BECOME officer or member of the Board of any Illegal recruitment is conducted in a large scale if
corporation engaged in travel agency or to be engaged perpetrated against three (3) or more persons individually or as a
directly or indirectly in the management of a travel group. This crime requires proof that the accused: (1) engaged in
agency; and the recruitment and placement of workers defined under Article 13
or in any of the prohibited activities under Article 34 of the Labor
k. To WITHHOLD or deny travel documents from Code; (2) does not have a license or authority to lawfully engage in
applicant workers before departure for monetary or the recruitment or and placement of workers; and (3) committed
financial considerations other than those authorized the infraction against three or more, persons, individually or as a
under this Code and its implementing rules and group.
regulations.
The power of the Secretary of Labor to issue warrants
People v. Ordoo, 2000 of arrest or search which was formerly embodied in
Illegal recruitment is committed when two elements paragraph c of Article 38 has already been nullified in the
concur, namely: (1) the offender has no valid license or authority following case:
required by law to enable one to lawfully engage in recruitment and
placement of workers; and (2) he undertakes either any activity Salazar v. Achacoso
within the meaning of recruitment and placement defined under We reiterate that the Secretary of Labor, not being a
Art. 13 (b), or any of the prohibited practices enumerated under judge, may no longer issue search or arrest warrants. Hence, the
Art. 34 of the Labor authorities must go through the judicial process. To that extent, we
Code. declare Article 38, paragraph (c), of the Labor Code,
unconstitutional and of no force and effect.

A. Illegal recruitment under the Labor Code


B. Illegal recruitment under the Migrant Workers Act of 1995
1. Illegal recruitment (RA 8042)

Any recruitment activities, including the prohibited 4. Illegal recruitment committed by a non-licensee or non-
practices enumerated under Article 34 of this Code, to be holder of authority
undertaken by non-licensees or non-holders of authority
shall be deemed illegal and punishable under Article 39 ILLEGAL RECRUITMENT shall mean any act of canvassing,
of this Code. The Secretary of Labor and Employment or enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes: referring, contract

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LABOR LAW I LABOR STANDARDS

services, promising or advertising for employment l. FAILURE to actually deploy without valid reason as
abroad, whether for profit or not, when undertaken by a determined by the Department of Labor and
non-licensee or non-holder of authority contemplated Employment; and
under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the m. FAILURE to reimburse expenses incurred by the
Philippines: Provided, That any such non-licensee or non- worker in connection with his documentation and
holder who, in any manner, offers or promises for a fee processing for purposes of deployment, in cases where
employment abroad to two or more persons shall be the deployment does not actually take place without the
deemed so engaged. (Sec 6, MWA) worker's fault. (Sec 6, MWA)

i) Illegal recruitment committed regardless of whether or Economic sabotage


not licensee or holder of authority
Illegal recruitment when committed by a syndicate or in
ILLEGAL RECRUITMENT shall likewise include the large scale shall be considered an offense involving
following acts, whether committed by any person, economic sabotage. Illegal recruitment is deemed
whether a non-licensee, non-holder, licensee or holder of committed by a SYNDICATE if carried out by a group of
authority: three (3) or more persons conspiring or confederating
with one another. It is deemed committed in large scale if
a. To CHARGE or accept directly or indirectly any amount committed against three (3) or more persons individually
greater than that specified in the schedule of allowable or as a group. (Sec 6, MWA)
fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay any amount RULE OF LIABILITY: The persons CRIMINALLY LIABLE for the above
greater than that actually received by him as a loan or offenses are the principals, accomplices and accessories. In case of
advance; juridical persons, the officers having control, management or
direction of their business shall be liable. (Sec 6, MWA)
b. To FURNISH or publish any false notice or information
or document in relation to recruitment or employment; C. Enforcement and sanctions

c. To GIVE any false notice, testimony, information or


document or commit any act of misrepresentation for the (c) Regulatory power - The Secretary shall have the power to
purpose of securing a license or authority under the restrict and regulate the recruitment and placement
Labor Code; activities of all agencies is authorized to issue orders and
promulgate rules and regulations to carry out the
d. To INDUCE or attempt to induce a worker already objectives and implement the provisions of this Title. (Art
employed to quit his employment in order to offer him 36)
another unless the transfer is designed to liberate a (ci) Visitorial power - The Secretary or his duly authorized
worker from oppressive terms and conditions of representatives may at any time inspect the premises,
employment; books of accounts and records of any person or entity
covered by this Title, require it to submit reports
e. To INFLUENCE or attempt to influence any person or regularly on prescribed forms, and act on violations of
entity not to employ any worker who has not applied for any provision of this Title. (Art 37)
employment through his agency; (cii) Penalties
a. The penalty of life imprisonment and a fine of One
f. To ENGAGE in the recruitment or placement of workers Hundred thousand Pesos (P100,000) shall be imposed if
in jobs harmful to public health or morality or to the illegal recruitment constitutes economic sabotage as
dignity of the Republic of the Philippines; defined herein:

g. To OBSTRUCT or attempt to obstruct inspection by the b. Any license or holder of authority found violating or
Secretary of Labor and Employment or by his duly causing another to violate any provision of this Title or its
authorized representative; implementing rules and regulations shall, upon conviction
thereof, suffer the penalty of imprisonment of not less
h. To FAIL to submit reports on the status of employment, than two years nor more than five years or a fine of not
placement vacancies, remittance of foreign exchange less than P10,000 nor more than P50,000 or both such
earnings, separation from jobs, departures and such imprisonment and fine, at the discretion of the court;
other matters or information as may be required by the
Secretary of Labor and Employment; c. Any person who is neither a licensee nor a holder of
authority under this Title found violating any provision
i. To SUBSTITUTE or alter to the prejudice of the worker, thereof or its implementing rules and regulations shall,
employment contracts approved and verified by the upon conviction thereof, suffer the penalty of
Department of Labor and Employment from the time of imprisonment of not less than four years nor more than
actual signing thereof by the parties up to and including eight years or a fine of not less than P20,000 nor more
the period of the expiration of the same without the than P100,000 or both such imprisonment and fine, at
approval of the Department of Labor and the discretion of the court;
Employment;
d. If the offender is a corporation, partnership,
j. For an OFFICER or agent of a recruitment or placement association or entity, the penalty shall be imposed upon
agency to become an officer or member of the Board of the officer or officers of the corporation, partnership,
any corporation engaged in travel agency or to be association or entity responsible for violation; and if such
engaged directly or indirectly in the management of a officer is an alien, he shall, in addition to the penalties
travel agency; herein prescribed, be deported without further
proceedings;
k. To WITHHOLD or deny travel documents from
applicant workers before departure for monetary or e. In every case, conviction shall cause and carry the
financial considerations other than those authorized automatic revocation of the license or authority and all
under the Labor Code and its implementing rules and the permits and privileges granted to such person or
regulations; entity under this Title, and the forfeiture of the cash and
surety bonds in favor of the Overseas Employment
Development Board or the National Seamen Board, as

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LABOR LAW I LABOR STANDARDS

the case may be, both of which are authorized to use the
same exclusively to promote their objectives.

PART VI PART VII


ALIEN EMPLOYMENT EMPLOYMENT OF APPRENTICE,
LEARNERS AND HANDICAPPED WORKERS
A. Coverage
Art. 40 of the Labor Code which requires employment permit refers A. Policy
to non-resident aliens. The employment permit is required for entry It is hereby declared the policy of the State to provide relevant,
into the country for employment purposes and is issued after accessible, high quality and efficient technical education and skills
determination of the non-availability of a person in the Philippines development in support of the development of high quality Filipino
who is competent, able and willing at the time of application to middle-level manpower responsive to and in accordance with
perform the services for which the alien is desired. A resident alien Philippine development goals and priorities. The state shall
does not fall within the ambit of the provision. (Almodiel v. NLRC, encourage active participation of various concerned sectors,
1993) particularly private enterprises, being direct participants in an
immediate beneficiaries of a trained and skilled workforce, in
providing technical education and skills development opportunities.
B. Requisite: Employment Permit (Sec 2, RA 7796)

1. Who may apply for Any alien seeking admission to the B. Goals and objectives
Philippines for employment purposes and any domestic or foreign
employer who desires to engage an alien for employment in the a. Promote and strengthen the quality of technical education and
Philippines shall obtain an employment permit from the skills development programs to attain international
Department of Labor. (Art 40) competitiveness

2. Requisite for issuance, in general The employment permit may b. Focus technical education and skills development or meeting the
be issued to a non-resident alien or to the applicant employer after changing demands for quality middle-level manpower
a determination of the non-availability of a person in the Philippines
who is competent, able and willing at the time of application to c. Encourage critical and creative thinking by disseminating the
perform the services for which the alien is desired. (Art 40). Note scientific and technical knowledge base of middle-level manpower
also that, in issuing employment permits to non-resident aliens, development programs
consideration must also be given to the fact that the Constitution
mandates that the State shall promote the preferential use of d. Recognize and encourage the complementary roles of public and
Filipino labor, domestic materials and locally produced goods (Art private institutions in technical education and skills development
XII, Sec 12, Constitution) and training systems;

General Milling Corp. v. Torres, 1991 e. Inculcate desirable values through the development of moral
The Labor Code itself specifically empowers the Secretary character with emphasis on work ethic, self-discipline, self reliance,
of Labor to make a determination as to the availability of the and nationalism. (Sec 3, RA 7796)
services of a "person in the Philippines who is competent, able and
willing at the time of application to perform the services for which I. APPRENTICE
an alien is desired." In short, the Department of Labor is the agency
vested with jurisdiction to determine the question of availability of A. Definition
local workers. The constitutional validity of legal provisions granting Apprenticeship refers to training within employment with
such jurisdiction and authority and requiring proof of non- compulsory related theoretical instructions involving a contract
availability of local nationals able to carry out the duties of the between an apprentice and an employer during an established
position involved, cannot be seriously questioned. period assured by an apprenticeable occupation. (Sec. 4j, RA 7796)

3. Requisite for issuance, enterprises registered in preferred areas of Apprenticeable Occupation is an occupation officially endorsed by
investment The employment permit may be issued upon a tripartite body and approved for apprenticeship by the Authority
recommendation of the government agency charged with the (Sec 4m, RA 7796)
supervision of said registered enterprise. (Art 40)
B. SPECIAL CIRCUMSTANCE: Employment of children
C. Prohibition against transfer of employment
After the issuance of an employment permit, the alien shall not Children below fifteen (15) years of age shall not be employed
transfer to another job or change his employer without prior except:
approval of Secretary of Labor and Employment. (Art 41)
1. When a child works directly under the sole responsibility of his
D. Consequences of violation parents or legal guardian and where only members of the
Any non-resident alien who shall take up employment in violation employers family are employed: Provided, however, That his
of the provision of this Title and its implementing rules and employment neither endangers his life, safety, health and morals,
regulations shall be punished in accordance with the provisions of nor impairs his normal development: Provided, further, That the
Articles 289 and 290 of the Labor Code. In addition, the alien parent or legal guardian shall provide the said minor child with the
worker shall be subject to deportation after service of his sentence. prescribed primary and/or secondary education
(Art 41)
2. When a childs employment or participation in public and
entertainment or information through cinema, theater, radio or
television is essential: Provided, the employment contract is
concluded by the childs parents or guardian, with the express
agreement of the child concerned, if possible, and the approval of
the Department of Labor and Employment: and Provided, That the
following requirements in all instances are strictly complied with:

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LABOR LAW I LABOR STANDARDS

a. The employer shall ensure the protection, 1. Learnership agreement Any employer desiring to employer
health, safety and morals of the child learners shall enter into a learnership agreement with them, which
agreement shall include:
b. The employer shall institute measures to prevent the
childs exploitation or discrimination taking into account a. The NAMES and addresses of the learners;
the system and level of remuneration, and the duration
and arrangement of working time b. The DURATION of the learnership period, which
shall not exceed three months;
c. The employer shall formulate and implement,
subject to the approval and supervision of competent c. The WAGES or salary rates of the learners which
authorities, a continuing program for training and skills shall begin at not less than 75 percent of the
acquisition of the child. applicable minimum wage; and

In the above exceptional cases where any such child may be d. A COMMITMENT to employ the learners, if they so
employed, the employer shall first secure, before engaging such desire, as regular employees upon completion of the
child, a work permit from the Department of Labor and learnership.
Employment which shall ensure observance of the above
requirements. (Sec. 12, RA 7610, as amended by RA 7658) The learnership agreement shall be subject to inspection by the
Secretary or his duly authorized representatives. (Art 75)
C. Terms and conditions of employment
2. Regularization All learners who have been allowed or suffered
1. Apprenticeship agreements Apprenticeship agreements, to work during the first two months shall be deemed regular
including the main rates of apprentices, shall conform to the rules employees if training is terminated by the employer before the end
issued by the Minister of Labor and Employment. The period of of the stipulated period through no fault of the learner. (Art 75)
apprenticeship shall not exceed six months. Apprenticeship
agreements providing for wage rates below the legal minimum 3. Special circumstance: Learners in piecework Learners employed
wage, which in no case shall start below 75% per cent of the in piece or incentive rate jobs during the training period shall be
applicable minimum wage, may be entered into only in accordance paid in full for the work done. (Art 76)
with apprenticeship program duly approved by the Minister of
Labor and Employment. The Ministry shall develop standard model
programs of apprenticeship. (Art 61; Nitto Enterprises v. NLRC, III.HANDICAPPED WORKERS
1995)
A. Coverage
2. No-compensation apprenticeships The Secretary of Labor may The Magna Carta for Disabled Persons or RA 7277 shall cover all
authorize the hiring of apprentices without compensation whose disabled persons and, to the extent herein provided, departments,
training on the job is required by the school or training program officers and agencies of the National Government or non-
curriculum or as a requisite for graduation or board examination. government organizations involved in the attainment of the
(Art 72) objectives of this Act. (Sec 3, RA 7277)

3. Deductibility of training costs - An additional deduction from B. Definitions


taxable income of one-half of the value of labor training expenses
incurred for developing the productivity and efficiency of Disabled Persons - those suffering from restriction or
apprentices shall be granted to the person or enterprise organizing different abilities, as a result of a mental, physical or
an apprenticeship program provided such program is duly sensory impairment, to perform an activity in the manner
recognized by the Department of Labor and Employment; provided or within the range considered normal for a human being
further that such deduction shall not exceed 10 percent of direct (Sec 4a, RA 7277)
labor wage; and provided finally that the person or enterprise who Impairment - any loss, dimunition or aberration of
wish to avail of this incentive should pay his apprentices the psychological, physiological, or anatomical structure or
minimum wages. (Art 71) function (Sec 4b, RA 7277)
Disability - shall mean
D. Enforcement
Upon complaint of any interested person or upon its own initiative, physical or mental impairment that substantially
the appropriate agency of the Department of Labor and limits one or more psychological, physiological or
Employment or its authorized representative shall investigate any anatomical function of an individual or activities of
violation of any apprenticeship agreement (Art 65) such individual;
a record of such an impairment; or
The decision of the authorized agency of the Department by any
being regarded as having such an impairment (Sec
aggrieved person to the Secretary of Labor and Employment within
4c, RA 7277)
five days from receipt of the decision. The decision of the Secretary
shall be final and executory. (Art 66)
4. Handicap - refers to a disadvantage for a given individual,
resulting from an impairment or a disability, that limits or
II. LEARNERS
prevents the function or activity, that is considered
normal given the age and sex of the individual (Sec 4d, RA
A. Defined
7277)
Learners refer to persons hired as trainees in semi-skilled and
other industrial occupation which are non-apprenticeable.
Learnership programs must be approved by the Authority.
C. Rights and privileges of disabled persons
B. Requisites
Learners may be employed when no experienced workers are Equal Opportunity for Employment (Sec 5, RA 7277)
available the employment of learners is necessary to prevent
curtailment of employment opportunities, and the employment No disabled person shall be denied access to
does not create unfair competition in terms of labor costs or impair opportunities for suitable employment. A
or lower working standards. (Art 74) qualified disabled employee shall be subject to the
same terms and conditions of employment and the same
C. Terms and conditions of employment compensation, privileges, benefits, fringe benefits, incentives
or allowances as a qualified able-bodied person

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LABOR LAW I LABOR STANDARDS

Reserved contractual positions (Sec 5, RA 7277)

Five percent (5%) of all casual, emergency and


contractual positions in the Departments of Social Welfare and
Development; health, Education, Culture and Sports; and
other government agencies, offices or corporations
engaged in social development shall be reserved for
disabled persons.
PART VIII
Sheltered employment (Sec 6, RA 7277)
If suitable employment for disabled persons cannot be Conditions of Employment
found through open employment as provided in the Hours of Work
immediately preceding Section, the State shall endeavor
to provide it by means of sheltered employment. In the I. Hours Regulation
placement of disabled persons in sheltered employment,
it shall accord due regard to the individual qualities, Rationale and Enforcement
vocational goals and inclinations to ensure a good The Eight-Hour Labor Law was designed not only to safeguard the
working atmosphere and efficient production. health and welfare of the laborer or EE, but in a way to minimize
unemployment by forcing employers, in cases where more than 8-
Apprenticeship opportunity (Sec 7, RA 7277) hour operation is necessary, to utilize different shifts of laborers or
EEs working only for eight hours each.
Subject to the provisions of the Labor Code as (Manila Terminal Co. Inc v. CIR, 1952)
amended, disabled persons shall be eligible as apprentices
or learners: Provided, that their handicap is not as much II. Coverage
as to effectively impede the performance of job operations in the
particular occupation for which they are hired; provided, The provisions of this Title shall apply to employees in all
further, That after the lapse of the period of establishments and undertakings whether for profit or not. (Art. 82)
apprenticeship, if found satisfactory in the job performance,
they shall be eligible for employment. Does NOT cover: (Art. 82)
1. government employees,
D. Incentives for employers 2. managerial employees,
3. field personnel,
1. Tax incentives for employment of disabled persons (Sec 4. members of the family of the ER who are dependent on him
8, RA 7277) for support,
5. domestic helpers,
Private entities that employ disabled persons who meet 6. persons in the personal service of another, and
the required skills or qualifications, either ad regular 7. workers who are paid by results as determined by the
employee, apprentice or learner, shall be entitled to an Secretary of Labor in appropriate regulations.
additional deduction, from their gross income, equivalent
to 25% of the total amount paid as salaries and wages to managerial employees - those whose primary duty consists of the
disabled persons: Provided, however, That such entities management of the establishment in which they are employed or of
present proof as certified by the Department of Labor a department or subdivision thereof, and to other officers or
and Employment and the Department f Health as to his members of the managerial staff. (Art. 82)
disability, skills, and qualifications.
"Field personnel" - non-agricultural employees who regularly
2. Tax incentives for construction of disabled-friendly
perform their duties away from the principal place of business or
facilities (Sec 8, RA 7277)
branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. (Art. 82)
Private entities that improve or modify their physical
facilities in order to provide
reasonable accommodation for disabled persons shall Rationale Exemption Managerial Employees
also be entitled to an additional deduction from their net
taxable income, equivalent to 50% of the The philosophy behind the exemption of managerial EEs from the 8-
direct costs of the improvements or modifications. Hour Labor Law is that such workers are not usually employed for
This Section, however, does not apply to improvements or every hour of work but their compensation is determined
modifications or facilities required under Batas considering their special training, experience or knowledge which
Pambansa Bilang 344. (Sec 8, RA 7277) requires the exercise of discretion and independent judgment, or
perform work related to management policies or general business
Bernardo v. NLRC, 1999 operations along specialized or technical lines. For these workers it
In this light, the Magna Carta for Disabled Persons is not feasible to provide a fixed hourly rate of pay or maximum
mandates that a qualified disabled employee should be given the hours of labor.
same terms and conditions of employment as a qualified able- (National Waterworks and Severage Authority v. NAWASA
bodied person. Since the Magna Carta accords them the rights of Consolidated Unions, 1965)
qualified able-bodied persons, they are thus covered by Article 280
of the Labor Code. In the present case, the handicap of petitioners Tests Field Personnel
(deaf-mutes) is not a hindrance to their work. The eloquent proof of The clause "whose time and performance is unsupervised by the
this statement is the repeated renewal of their employment employer" did not amplify but merely interpreted and expounded
contracts. Why then should they be dismissed, simply because they the clause "whose actual hours of work in the field cannot be
are physically impaired? The Court believes, that, after showing determined with reasonable certainty." The former clause is still
their fitness for the work assigned to them, they should be treated within the scope and purview of Article 82 which defines field
and granted the same rights like any other regular employees. personnel. Hence, in deciding whether or not an EE's actual working
hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such EE's time and
performance is constantly supervised by the employer.
(Union of Filipro Employees v. Vivar, 1992)

Actual hours work in the field is to be read in conjunction with


Rule IV, Book III of the Implementing Rules. Therefore field

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LABOR LAW I LABOR STANDARDS

personnel are EEs whose time and performance is unsupervised by premises of his ER, is not counted as working time only where the
the employer. work is broken or is not continuous.
(Salazar v. NLRC, 1996) (National Development Co. v. CIR, 1962)

If required to be at specific places at specific times, EEs including A laborer need not leave the premises of the factory, shop or boat
drivers cannot be said to be field personnel despite the fact that in order that his period of rest shall not be counted, it being enough
they are performing work away from principal office of EE. that he "cease to work", may rest completely and leave or may
(Auto Bus Transport Systems, Inc. v. Bautista, 2005) leave at his will the spot where he actually stays while working, to
go somewhere else, whether within or outside the premises of said
Rationale Exemption Piece Worker factory, shop or boat. If these requisites are complied with, the
Philosophy underlying the exclusion of piece workers from the 8- period of such rest shall not be counted.
hour law is that said workers are paid depending upon the work (Luzon Stevedoring Co. v. Luzon Marine Department Union, 1957)
they do irrespective of the amount of time employed in doing said
work. Continuous Work
(Red V Coconut Products Ltd., v. CIR, 1966)
The provision of section 1 of Commonwealth Act No. 444, which
III. Normal Hours of Work states that "when the work is not continuous, the time during which
the laborer is not working and can leave his working place and can
The normal hours of work of any employee shall not exceed eight rest completely shall not be counted", finds no application in the
(8) hours a day. present case, where the laborer's work is continuous, and during
(Art. 83) the time that he is not working he can not leave and completely
rest owing to the place and nature of his work.
Special Rule for Health Personnel: (State Marine Corporation v. Cebu Seamens Association, 1963)
Health personnel in cities and municipalities with a population of at
least one million (1,000,000) or in hospitals and clinics with a bed Waiting Time
capacity of at least one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week, exclusive of time
for meals. The thirty (30)-minute assembly is a deeply-rooted, routinary
(Art. 83) practice of the employees, and the proceedings attendant thereto
are not infected with complexities as to deprive the workers the
Exception to the Special Rule: time to attend to other personal pursuits.
Exigencies of the service require work for six 6 days or 48 hours, in (Arica v. NLRC, 1989)
which case, they shall be entitled to an additional compensation of
at least 30% of their regular wage for work on the sixth day. Travel Time
(Art. 83)
The fact that he picks up employees of Philnor at certain specified
"health personnel" points along EDSA in going to the project site and drops them off at
1. resident physicians, the same points on his way back from the field office going home to
2. nurses, Marikina, Metro Manila is not merely incidental to petitioner's job
3. nutritionists, as a driver. On the contrary, said transportation arrangement had
4. dietitians, been adopted, not so much for the convenience of the employees,
5. pharmacists, but primarily for the benefit of the employer, herein private
6. social workers, respondent. Since the assigned task of fetching and delivering
7. laboratory technicians, employees is indispensable and consequently mandatory, then the
8. paramedical technicians, time required of and used by petitioner in going from his residence
9. psychologists, to the field office and back, that is, from 5:30 A.M. to 7:00 A.M. and
10. midwives, from 4:00 P.M. to around 6:00 P.M., which the labor arbiter
11. attendants, and rounded off as averaging three hours each working day, should be
12. all other hospital or clinic personnel. paid as overtime work.
(Art. 83) (Rada v NLRC, 1992)

DISTINCTION BETWEEN THE TWO CLASSES Entry Time Cards

COMMERCIAL/INDUSTRIA HEALTH It is impossible for an EE to arrive at the workplace & leave at


L exactly the same time day in day out (daily time records). The very
Normal Work 8 hrs/day 8 hrs/day uniformity & regularity of the entries are badges of
Day untruthfulness.
Normal Work 6 days 5 days (Prangan v. NLRC, 1998; Nicario v. NLRC, 1998)
Week
It is an error to rely solely on the computations of compensable
IV. Hours Worked services submitted by private resources. There must be competent
Include: proof such as time cards / office records to show that they actually
1. all time during which an employee is required to be on duty or to rendered compensable service during the stated period to entitle
be at a prescribed workplace; and them to wages.
(Aklan Electric Coop., Inc. v. NLRC, 2000)
2. all time during which an employee is suffered or permitted to
work. V. Meal Period
(Art. 84)
Subject to such regulations as the Secretary of Labor may prescribe,
* Rest periods of short duration during working hours shall be it shall be the duty of every employer to give his employees not less
counted as hours worked. (Art. 84) than sixty (60) minutes time-off for their regular meals. (Art. 85)

Meal Time Free Time

Idle Time During meal period, the laborers are required to stand by for
emergency work, or where said meal hour is not one of complete
The idle time that an employee may spend for resting & dining rest, such period is considered overtime.
which he may leave the spot or place of work though not the

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LABOR LAW I LABOR STANDARDS

(Pan-American Airways v. Pan-American Employees Association, hours worked must be in excess of and in addition to the eight (8)
1961) hours worked during the prescribed daily work period, or the forty
(40) hours worked during the regular work week Monday through
The eight-hour work period does not include the meal break. Friday.
Employees are not prohibited from going out of the premises as (Caltex Regular Employees v. Caltex Phil. Inc., 1995)
long as they return to their posts on time.
(Phil. Airlines, Inc. v. NLRC, 1999) No Computation Formula Basic Contract
A contract of employment, which provides for a weekly wage for a
VI. Overtime Work and Offsetting Prohibition specified number of hours, sufficient to cover both the statutory
minimum wage and overtime compensation, if computed on the
Overtime work - Work may be performed beyond eight (8) hours a basis of the statutory minimum, and which makes no provision for a
day provided that the employee is paid for the overtime work, an fixed hourly rate or that the weekly wage includes overtime
additional compensation equivalent to his regular wage plus at least compensation, does not meet the requirements of the Act.
25% thereof. Work performed beyond eight hours on a holiday or (Manila Terminal Co. Inc v. CIR, 1952)
rest day shall be paid an additional compensation equivalent to the
rate of the first eight hours on a holiday or rest day plus at least Built-in Compensation
30% thereof. (Art. 87)
Written contracts with a "built-in" overtime pay in the ten-hour
Undertime not offset by overtime - Undertime work on any working day and that their basic monthly pay was adjusted to
particular day shall not be offset by overtime work on any other reflect the higher amount covering the guaranteed two-hour extra
day. Permission given to the employee to go on leave on some time whether worked or unworked are valid.
other day of the week shall not exempt the employer from paying (Engineering Equipment Inc v. MOLE, 1985)
the additional compensation required in this Chapter.
(Art. 88) Proof of Work
Entitlement to overtime pay must first be established by proof that
Emergency overtime work - Any employee may be required by the said overtime work was actually performed, before an employee
employer to perform overtime work in any of the following cases: may avail of said benefit.
(Art. 89) (Lagatic v. NLRC, 1998)
a. When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the Where the veracity of the alleged documents as payrolls are
Chief Executive; doubtful considering that the laborers paid therein never affixed
b. When it is necessary to prevent loss of life or property or in their signatures to show that they actually received the amounts
case of imminent danger to public safety due to an actual or indicated, the fact that a particular laborers name does not appear
impending emergency in the locality caused by serious is no proof that he did not work in the workplace.
accidents, fire, flood, typhoon, earthquake, epidemic, or other
disaster or calamity; Unwavering testimonies of laborers employment prevail over
c. When there is urgent work to be performed on machines, incomplete & inconsistent documentary evidence of employer.
installations, or equipment, in order to avoid serious loss or
damage to the employer or some other cause of similar To constiture abandonment, there must be clear proof of deliberate
nature; & unjustified intent to sever the ER-EE relationship. Mere absence
d. When the work is necessary to prevent loss or damage to of the employee is not sufficient. The burden of proof to show a
perishable goods; and deliberate & unjustified refusal of an employee to resume his
e. Where the completion or continuation of the work started employment without any intention of returning rests on the ER.
before the eighth hour is necessary to prevent serious (Villar v. NLRC, 2000)
obstruction or prejudice to the business or operations of the
employer. (Art. 89) Employer Obligation
* Any employee required to render overtime work under this Article
shall be paid the additional compensation required in this Chapter. ER is duty-bound to keep faithful & complete records of his business
(Art. 89) affairs, not the least of which would be the salaries of the workers.
(Social Security System v. Court of Appeals, 2000)
Computation of additional compensation - For purposes of
computing overtime and other additional remuneration as required VII. Night Work
by this Chapter, the "regular wage" of an employee shall include the
cash wage only, without deduction on account of facilities provided Night shift differential - Every employee shall be paid a night shift
by the employer. differential of not less than ten percent (10%) of his regular wage
for each hour of work performed between ten oclock in the
evening and six oclock in the morning. (Art. 86)

Definition and Rationale Overtime Pay At least 110% for each hour of work between 10pm and 6am

Why is there extra compensation for overtime? Because he is made Rationale Prohibition
to work longer than what is commensurate with his agreed
compensation. The effects of spending additional time to work is Nightwork cannot be regarded as desirable, either from the point of
multi-faceted: he puts in more effort, physical and/or mental; he is view of the employer or of the wage earner. It is uneconomical
delayed in going home to his family to enjoy the comforts thereof; unless overhead costs are unusually heavy. Frequently the scale of
he might have no time for relaxation, amusement or sports; he wages is higher as an inducement to employees to accept
might miss important pre-arranged engagements; etc. It is thus the employment on the night shift, and the rate of production is
additional work, labor or service employed and the adverse effects generally lower.
that justify the extra compensation.
Reasons for prohibiting night work:
Overtime work - the lengthening of hours devoted to the interests Health risks
of the employer and the requirements of his enterprise. Disarrangement of social life
(Philippine National Bank v. PNB Employees Association, 1982)
Moral dangers
Night work lawks to enforce act fixing max period of
Overtime work consists of hours worked on a given day in excess of
employment
the applicable work period, which here is eight (8) hours. It is not
Unprofitable; inferior to day work both in quality &
enough that the hours worked fall on disagreeable or inconvenient
quantity
hours. In order that work may be considered as overtime work, the

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LABOR LAW I LABOR STANDARDS

(Shell Oil Co. Ltd v. National Labor Union, 1948) c. In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
d. To prevent loss or damage to perishable goods;
e. Where the nature of the work requires continuous operations
and the stoppage of work may result in irreparable injury or
loss to the employer; and
f. Under other circumstances analogous or similar to the
foregoing as determined by the Secretary of Labor and
Employment.
(Art. 92)
PART IX
Work on rest day 30% premium
Conditions of Employment No regular rest day 30% premium for work performed
Weekly Rest Period on Sundays & holidays
Work on special 30% premium (All Saints Day, Dec
I. Rationale holiday 31, Ninoy Aquino Day (Aug. 21))
Work when special 50% premium
Division between public utilities & others is not arbitrary. Public holiday falls on rest
utilities exempt from the prohibition (against compelling employees day
to work on Subdays & holidays without additional payment) of Sec. Where the collective The employer shall pay such
4, CA444 are required to perform a continuous service to the pubic bargaining higher rate
since the public good so demands & are not allowed to collect an agreement or other
extra charge for services performed on those days; while others are applicable
not required to do so & are free to operate of not their shops, employment contract
business or industries on Sundays & legal holidays. If they operate & stipulates the
compel their laborer to work on those days it is but just & natural payment of a higher
that they should pay extra compensation to them because it is to be premium pay than
presumed that they can make money or business by operating on that prescribed under
those days even if they have to pay such extra enumeration. this Article
(Manila Electric Co. v. Public Utilities Employees Assn., 1947) (Art. 93

II. Coverage
PART X
Coverage - The provisions of this Title shall apply to employees in all
Conditions of Employment Holiday
establishments and undertakings whether for profit or not.
(Art. 82)
I. Coverage
Except for:
Right to holiday pay - Every worker shall be paid his regular daily
1. government employees,
wage during regular holidays, except in retail and service
2. managerial employees,
establishments regularly employing less than 10 workers.
3. field personnel,
(Art. 94a)
4. members of the family of the employer who are dependent on
him for support,
Coverage and Purpose
5. domestic helpers,
6. persons in the personal service of another, and
The Secretary of Labor cannot exempt Mantrade from paying
7. workers who are paid by results as determined by the
holiday pay just because its employees are uniformly paid by the
Secretary of Labor in appropriate regulations. (Art. 82)
month irrespective of the number of working days therein. The
Labor Code only exempts retail and service establishments regularly
Right to weekly rest day - It shall be the duty of every employer,
employing less than 10 workers.
whether operating for profit or not, to provide each of his
(Mantrade / FMC Division Employees and Workers Union v.
employees a rest period of not less than 24 consecutive hours after
Bacungan, 1986)
every 6 consecutive normal work days.
(Art. 91a)
Muslim holidays are provided for in the code of Muslim personal
laws.
III. Scheduling of Rest Day
Art. 170 of the same code: 169 must be read in conjunction with
Right to weekly rest day - The employer shall determine and Art. 94.
schedule the weekly rest day of his employees subject to collective There should be no distinction between Muslims & non-Muslims
bargaining agreement and to such rules and regulations as the as regards to the payment of benefits for Muslim holidays.
Secretary of Labor and Employment may provide. However, the Wages & other emoluments granted by law to the working man
employer shall respect the preference of employees as to their are determined on the basis of the criteria laid down by laws &
weekly rest day when such preference is based on religious not on the basis of the workers faith.
grounds. Art. 3(3), PD 1083: nothing herein shall be construed to operate
(Art. 91b) to the prejudice of a non-Muslim.
(San Miguel Corp. v. Court of Appeal, 2002)
IV. Compulsory Work and Compensation
Holiday pay - legislative benefit enacted as part of the constitutional
When employer may require work on a rest day - The employer may imperative that the state shall afford protection to labor.
require his employees to work on any day:
a. In case of actual or impending emergencies caused by serious Holiday pay purpose:
accident, fire, flood, typhoon, earthquake, epidemic or other not merely to prevent diminution of the monthly income of
disaster or calamity to prevent loss of life and property, or the workers on account of work interruptions,
imminent danger to public safety; to enable the worker to participate in the national celebrations
b. In cases of urgent work to be performed on the machinery, held during the days identified as with great historical &
equipment, or installation, to avoid serious loss which the cultural significance.
employer would otherwise suffer;

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LABOR LAW I LABOR STANDARDS

Unlike a bonus, which is a management prerogative, holiday pay is a contract basis, purely commission basis, or those who are paid
statutory benefit demandable under the law. a fixed amount for performing work irrespective of the time
(Asian Transunion Corp. v. Court of Appeals, 2004) consumed in the performance thereof.

II. Holidays Work on any regular 200% of regular daily wage


holiday, not exceeding 8
REPUBLIC ACT NO. 9492 hours
AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS Work on any regular holiday 30% + 200% of regular daily
AMENDING FOR THE PURPOSE SECTION 26, CHAPTER 7, BOOK I OF which falls on the scheduled wage
EXECUTIVE ORDER NO. 292, AS AMENDED, OTHERWISE KNOWN AS rest day, not exceeding 8
THE ADMINISTRATIVE CODE OF 1987 hours
Overtime on a regular Additional 30% of the 200%
Sec. 1 holiday of regular daily wage
Section 26, Chapter 7, Book I of Executive Order No. 292, as Overtime on a regular Additional 30% of the 230%
amended, otherwise known as the Administrative Code of 1987, is holiday which falls on the of regular daily wage
hereby amended to read as follows: scheduled rest day
"Sec. 26, Regular Holidays and Nationwide Special Days. (1) Unless (Sec. 1 Rule 4 of IRR)
otherwise modified by law, and or proclamation, the following
regular holidays and special days shall be observed in the country:

a. Regular Holidays
New years Day - January 1 Faculty Private School
Maundy Thursday - Movable date
Good Friday - Movable date It is readily apparent that the declared purpose of the holiday pay
Eidul Fitr - Movable date which is the prevention of diminution of the monthly income of the
Araw ng Kagitingan - Monday nearest April 9 (Bataaan and employees on account of work interruptions is defeated when a
Corregidor Day) regular class day is cancelled on account of a special public holiday
Labor Day - Monday nearest May 1 and class hours are held on another working day to make up for
Independence Day - Monday nearest June 12 time lost in the school calendar. Otherwise stated, the faculty
National Heroes Day - Last Monday of August member, although forced to take a rest, does not earn what he
Bonifacio Day - Monday nearest November 30 should earn on that day. Be it noted that when a special public
Christmas Day - December 25 holiday is declared, the faculty member paid by the hour is deprived
Rizal Day - Monday nearest December 30 of expected income, and it does not matter that the school calendar
is extended in view of the days or hours lost, for their income that
1. Nationwide Special Holidays: could be earned from other sources is lost during the extended
Ninoy Aquino Day - Monday nearest August 21 days. Similarly, when classes are called off or shortened on account
All Saints Day - November 1 of typhoons, floods, rallies, and the like, these faculty members
Last Day of the Year - December 31 must likewise be paid, whether or not extensions are ordered.
(Jose Rizal College v. NLRC, 1987)
2. In the event the holiday falls on a Wednesday, the holiday will
be observed on the Monday of the week. If the holiday falls on Divisor as Factor
a Sunday, the holiday will be observed on the Monday that
follows: The daily rate, assuming there are no intervening salary increases, is
a constant figure for the purpose of computing overtime and night
Provided, That for movable holidays, the President shall
differential pay and commutation of sick and vacation leave credits.
issue a proclamation, at least six months prior to the holiday
Necessarily, the daily rate should also be the same basis for
concerned, the specific date that shall be declared as a
computing the 10 unpaid holidays.
nonworking day
(Union of Filipro Employees v. Vivar, 1991)
Provided, however, The Eidul Adha shall be celebrated as a
regional holiday in the Autonomous Region in Muslim
Since the rest days of petitioners fall on a Sunday, the number of
Mindanao."
unworked but paid legal holidays should be reduced to 9, instead of
10, since one legal holiday under EO 203 always falls on the last
Sec. 2
Sunday of August.
All laws, orders, presidential issuances, rules and regulations or part
thereof inconsistent with this Act are hereby repealed or modified
Transasias consistent use of 286 divisor in the computation of its
accordingly.
EEs benefits & deductions established that holiday pay is already
included in their monthly salaries.
III. Holiday Pay
(Transasia Phils. Employe Assn. v. NLRC 1999)
The employer may require an employee to work on any holiday but
Computation
such employee shall be paid a compensation equivalent to twice his
regular rate.
The cited provisions of PD 442 simply declare that night shift
(Art. 94b)
differential and additional remuneration for overtime, rest day,
Sunday and holiday work shall be computed on the basis of the
Coverage: (Sec. 1 Rule 4 of IRR)
employee's regular wage. In like fashion, the 1991 POEA Rules
All employees
merely require employers to guarantee payment of wages and
overtime pay. Thus, petitioners' stance is bereft of any legal
Except: (Sec. 1 Rule 4 of IRR)
support.
1. Those of the government and any of the political subdivision,
(Agga v. NLRC, 1998)
including government-owned and controlled corporation;
2. Those of retail and service establishments regularly employing
Sunday
less than 10 workers;
3. Domestic helpers and persons in the personal service of
In fixing the salary, Wellington used what it calls the "314 factor;"
another;
that is to say, it simply deducted 51 Sundays from the 365 days
4. Managerial employees as defined in Book 3 of the Code;
normally comprising a year and used the difference, 314, as basis
5. Field personnel and
for determining the monthly salary. The monthly salary thus fixed
6. other employees whose time and performance is unsupervised
actually covers payment for 314 days of the year, including regular
by the employer including those who are engaged on task or
and special holidays, as well as days when no work is done by

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LABOR LAW I LABOR STANDARDS

reason of fortuitous cause, as above specified, or causes not


attributable to the employees.

There is no provision of law requiring any employer to make such


adjustments in the monthly salary rate set by him to take account
of legal holidays falling on Sundays in a given year, or, contrary to
the legal provisions bearing on the point, otherwise to reckon a year
at more than 365 days. As earlier mentioned, what the law requires
of employers opting to pay by the month is to assure that "the
monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve," and to
pay that salary "for all days in the month whether worked or not," PART XI
and "irrespective of the number of working days therein."
Conditions of Employment Leaves
(Wellington Investment Inc. v. Trajano, 1995)

Proof of Payment I. Coverage

Indeed if petitioner wanted to prove its payment of holiday pays Right to service incentive leave - Every employee who has rendered
at least one year of service shall be entitled to a yearly service
and salary differentials, it could have easily presented proofs of
such monetary benefits. But it did not. It had failed to comply with incentive leave of five days with pay.
the mandate of the law. As public respondent ruled, the burden of (Art. 95a)
proof in this regard belongs to the employer, not to the employee.
(Building Care Corp. v. NLRC, 1998) This provision shall not apply to:
those who are already enjoying the benefit herein provided,
those enjoying vacation leave with pay of at least five days and
those employed in establishments regularly employing less
than 10 employees or in establishments exempted from
granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial
condition of such establishment.
(Art. 95b)

Piece-rate workers being paid at a fixed amount for performing


work irrespective of time consumed in the performance thereof fall
under one of the exceptions stated in Section 1(d), Rule V,
Implementing Regulations, Book III, Labor Code.
(Makati Haberdashery Inc. v. NLRC, 1989)

II. Entitlement and Arbitration

Right to service incentive leave - Every employee who has rendered


at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
(Art. 95a)

The grant of benefit in excess of that provided herein shall not be


made a subject of arbitration or any court or administrative action.
(Art. 95c)

III. Computation and Liability

Under Arts. 107 and 109, the indirect employer is jointly and
severally liable with the contractor for the workers wages, in the
same manner and extent that it is liable to its direct employees.
This liability of the Client covers the payment of the service
incentive leave pay of the complainants during the time they were
posted at the Cebu Branch of the Client. As service had been
rendered, the liability accrued, even if the complainants were
eventually transferred or reassigned. The service incentive leave is
expressly granted by these pertinent provisions of the Labor Code.
(Sentinel Security Agency, Inc. v. NLRC, 1998)

It is essential to recorgnize that the service incentive leave is a


curious animal in relation to other benefits granted by the law to
every employee. In case of SIL, the EE may choose to either use his
leave credits or commute it to its monetary equivalent if not
exhausted at the end of the year. If the EE does not use or commute
the same, he is entitled upon his resignation or separation from
work to the commutation of his accrued SIL.
(Auto Bus Transport Systems, Inc. v. Bautista, 2005)

Paternity Leave

RA 8187 Paternity Leave Act of 1995 and Implementing Rules

Coverage:
Sec. 2

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LABOR LAW I LABOR STANDARDS

Notwithstanding any law, rules, and regulations to the contrary,


every MARRIED male employee in the private and public sectors
shall be entitled to a paternity leave of 7 days with full pay for the
first four 7 deliveries of the LEGITIMATE spouse with whom he is
cohabiting. The male employee applying for paternity leave shall
notify his employer of the pregnancy of his legitimate spouse and
the expected date of such delivery.

For purposes of this Act, delivery shall include childbirth or any


miscarriage.

Maternity Leave

R.A. No. 8282. Sec. 14-A


A female employee who has paid at least 3 monthly contributions in PART XII
the 12-month period immediately preceding the semester of her WAGES
childbirth, or miscarriage shall be paid a daily maternity benefit
equivalent to one 100% of her average salary credit for 60 days or WAGES IN GENERAL
78 days in case of caesarean delivery subject to the following
conditions: I. Coverage
a. That the employee shall have notified her employer of her
pregnancy and the probable date of her childbirth which Employer - includes any person acting directly or indirectly in the
notice shall be transmitted to the SSS in accordance with the interest of an employer in relation to an employee and shall include
rules and regulations it may provide. the government and all its branches, subdivisions and
b. The full payment shall be advanced by the employer within instrumentalities, all government-owned or controlled corporations
30 days from the filing of the maternity leave application. and institutions, as well as non-profit private institutions, or
c. That payment of daily maternity benefits shall be a bar to the organizations.
recovery of sickness benefits provided by this Act for the (Sec 97(b))
same period for which daily maternity benefits have been
received. Employee includes any individual employed by an employer.
d. That the maternity benefits provided under this section shall (Sec 97(c))
be paid only for the first 4 deliveries or miscarriages.
e. That the SSS shall immediately reimburse the employer of Employ includes to suffer or permit to work.
one 100% of the amount of maternity benefits advanced to (Sec 97(e))
the employee by the employer upon receipt of satisfactory
proof of such payment and legality thereof; This Title shall NOT apply to:
f. That if an employee should give birth or suffer miscarriage 20. farm tenancy or leasehold
without the required contributions having been remitted for 21. domestic service, &
her by her employer to the SSS, or without the latter having 22. persons working in their respective homes in needle work
been previously notified by the employer of time of the or in any cottage industry duly registered in accordance
pregnancy, the employer shall pay to the SSS damages with law.
equivalent to the benefits which said employee member (Sec 98)
would otherwise have been entitled to.

Vacation and Sick Leave II. Wage

The payment of vacation and sick leave is governed by the policy of Definition
the employer or the agreement between the employer and
employee. 5. paid to any employee shall mean the remuneration or
earnings, however designated,
(St. Michael Academy v. NLRC, 1998) d. capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same,
e. which is payable by an employer to an employee under a
written or unwritten contract of employment
f. for work done or to be done, or for services rendered or
to be rendered and
g. includes the fair and reasonable value, as determined by
the Secretary of Labor and Employment, of:
1. board,
2. lodging, or
3.other facilities
customarily furnished by the employer to the employee.
4. Fair and reasonable value - shall not include any profit
to the employer, or to any person affiliated with the
employer.

Fair Day Pay

A "fair days wage for a fair days labor" remains as the basic factor
in determining employees wages. If there is no work performed by
the employee there can be no wage or pay unless, of course, the
laborer was able, willing and ready to work but was illegally locked
out, suspended or dismissed, or otherwise illegally prevented from
working.
(Aklan Electric Cooperative, Inc. v. NLRC, 2000)

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LABOR LAW I LABOR STANDARDS

Discrimination Gratuity Pay - a money benefit given to the workers whose


purpose is to reward employees or laborers, who have rendered
If an ER accords the same position and rank, the presumption is that satisfactory and efficient service to the company.
the EEs perform equal work. Equal work must receive equal pay. not intended to pay a worker for actual services rendered.
(International School Alliance of Educators v. Quisumbing, 2000; the grant of such benefit is not mandatory so as to be
Philex Gold Phils., Inc. v. Philex Buawan Supervisors Union, 2005) considered a part of labor standard law
gratuity pay not based on the actual number of days worked
Facilities and Supplements over the period of years forming its basis.
(Plastic Town Center Corp. v. NLRC, 1989)
Supplements - extra remuneration/ special benefits given to or
received by the EEs over and above their ordinary earnings or PAYMENT OF WAGES
wages.
I. Form
Facilities - items of expense necessary for the laborer's and his
family's existence and subsistence, so that by express provision of Forms of payment NOT allowed:
law they form part of the wage and when furnished by the (ciii) promissory notes,
employer are deductible therefrom, since if they are not furnished, (civ) vouchers,
the laborer would spend and pay for them just the same. (cv) coupons,
(States Marine Corp. v. Cebu Seamen's Assoc., Inc., 1963) (cvi) tokens,
(cvii) tickets,
2. When an employer customarily furnishes his employee board, (cviii) chits, or
lodging or other facilities, the fair and reasonable value (cix) any object other than legal tender
thereof, as determined by the Secretary of Labor and (Art 102)
Employment, is included in "wage."
(Millares v. NLRC, 1999) Payment by check or money order allowed:
3. "Customary" is founded on long-established and constant when customary on the date of the effectivity of this
practice connoting regularity. The receipt of an allowance on a Code, or
monthly basis does not ipso facto characterize it as regular and
necessary because of special circumstances as specified
forming part of salary because the nature of the grant is a
in appropriate regulations or as stipulated in a CBA.
factor worth considering.
(Art 102)
(Millares v. NLRC, 1999)
Payment through banks; Conditions:
Tips
written permission of the majority of the EEs/workers
concerned
2. It denotes a voluntary act, however it has been said that a tip
lacked the essential element of a gift, namely, the free 25 or more EEs
bestowing of a gratuity without consideration, and that it establishment located within 1 km radius of a
despite its apparent voluntariness, there is an element of commercial, savings or rural bank
compulsion in tipping. payment of wages within the period fixed in the LC.
(Ace Navigation Co., Inc. v. CA, 2000) (RA 6727, Sec 7)
3. Value depends on the giver, and it is given in addition to the
compensation given by the ER; cannot be demanded. Labor Advisory on Payment of Salaries through Automated Teller
(Ace Navigation Co., Inc. v. CA, 2000) Machine (ATM)

Cash Wage/Commissions Based on Article 104, as well as the provisions of Sec. 4, Rule VIII,
Book III of the Codes Implementing Rules and considering present-
The words "wages" and "salary" are in essence synonymous, day circumstances, practices and technology, employers may adopt
both words generally refer to one and the same meaning, that a system of payment other than in the workplace, such as through
is, a reward or recompense for services performed. Likewise, automated teller machine (ATM) of banks, provided that the
"pay" is the synonym of "wages" and "salary". following conditions are met:
(Songco v. NLRC, 1990) 1. The ATM system of payment is with the written consent of
While commissions are incentives to inspire employees to put the employees concerned.
more industry on the jobs assigned to them, still these 2. The employees are given reasonable time to withdraw their
commissions are direct remuneration for services rendered. wages from the bank facility which time, if done during
Commissions have been defined as the recompense, working hours, shall be considered compensable hours
compensation or reward of an agent, salesman, executor, worked.
trustee, receiver, factor, broker or bailee, when the same is 3. The System shall allow workers to receive their wages within
calculated as a percentage on the amount of his transactions the period or frequency and in the amount prescribed under
or on the profit to the principal. The nature of the work of a the Labor Code, as amended.
salesman and the reason for such type of remuneration for 4. There is a bank or ATM facility within a radius of one
services rendered demonstrate clearly that commissions are kilometer to the place of work
part of a salesman's wage or salary. 5. Upon request of the concerned employee/s, the employer
(Iran v. NLRC, 1998) shall issue a record of payment of wages, benefits and
deductions for particular period.
Wages and Salary 6. There shall be no additional expenses and no dimunition of
benefits and privileges as a result of the ATM system of
Wages - compensation for manual labor, skilled or unskilled, paid payment
at stated times, and measured by the day, week, month, or season. 7. The employer shall assume responsibility in case the wage
5. indicates considerable pay for a lower and less responsible protection provisions of law and regulations are not
character of employment. complied with under the arrangement.

Salary - denotes a higher degree of employment, or a superior Full Payment


grade of services, and implies a position of office.
ii) suggestive of a larger and more important service The law does not consider as valid any agreement whereby a
(Gaa v. CA, 1985) worker agrees to receive less compensation than what he is
entitled to recover. A deed of release or quitclaim cannot bar
Gratuity and Wages an EE from demanding benefits to which he is legally entitled.
(Lopez Sugar Corp. v. Franco, 2005)

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LABOR LAW I LABOR STANDARDS

The fact of partial payment does not shift the burden of proof 6. There shall be no additional expenses and no diminution of
to the EE because partial payment does not extinguish the benefits and privileges as a result of the ATM system of
obligation. payment
(G&M (Phil.), Inc. v. Batomalaque, 2005) 7. The employer shall assume responsibility in case the wage
protection provisions of law and regulations are not
Payroll Payment complied with under the arrangement.

Under the IRR, every ER is required to pay his EEs by means of IV. Direct Payment
payroll. The payroll should show the EE's rate of pay, deductions
made, and the amount actually paid to the EEs. General Rule: Wages shall be paid directly to the workers to whom
they are due.
Cash Wage
Exceptions:
Wages shall be paid only by means of legal tender. The only 3. Force majeure rendering payment impossible or under
instance when an employer is permitted to pay wages in forms other special circumstances to be determined by the
other than legal tender, that is, by checks or money order, is when SOLE in appropriate regulations
the circumstances prescribed in the second paragraph of Article 102 - worker may be paid through another person under
are present. written authority given by the worker; or
- payment in tuna liver and intestines not allowed 4. Worker has died
(Congson v. NLRC, 1959) - ER may pay the wages to the heirs without necessity for
intestate proceedings; payment through SOLE or his
II. Time Payment representative.
- Claimants to execute an affidavit attesting to their
GR: Wages paid at least relationship to the deceased and the fact that they are
once every 2 weeks or his heirs.
twice a month at intervals not exceeding 16 days. (Sec 105)

Exception: V. Contractor - Subcontractor


Force majeure or circumstances beyond the ER's control
ER may pay immediately after such force majeure or In the event that the contractor or subcontractor fails to pay the
circumstances have ceased wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or
ER must pay at least once a month
subcontractor to such employees to the extent of the work
(Art 103)
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.
Payment of wages of EEs engaged to perform a task which cannot
(Art 106)
be completed in 2 weeks;
Conditions in absence of a CBA or arbitration award:
Payments are made at intervals not exceeding 16 days, in
PROHIBITION REGARDING WAGES
proportion to the amount of work completed;
Final settlement is made upon completion of work I. Non-interference in Disposal of Wages
completed.
(Art 103) No employer shall limit or otherwise interfere with the freedom of
any employee to dispose of his wages.
III. Place of Payment
He shall not in any manner force, compel, or oblige his employees
Payment of wages shall be made at or near the place of to purchase merchandise, commodities or other property from any
undertaking, other person, or otherwise make use of any store or services of
EXCEPT as otherwise provided by such regulations as the Secretary such employer or any other person.
of Labor may prescribe under conditions to ensure greater (Art 112)
protection of wages.
(Art 104) II. Wage Deduction

Labor Advisory on Payment of Salaries through Automated Teller General Rule: No employer, in his own behalf or in behalf of any
Machine (ATM) person, shall make any deduction from the wages of his employees

Based on Article 104, as well as the provisions of Sec. 4, Rule VIII, Exceptions:
Book III of the Codes Implementing Rules and considering present- 1. The worker is insured with his consent by the employer,
day circumstances, practices and technology, employers may adopt and the deduction is to recompense the employer for the
a system of payment other than in the workplace, such as through amount paid by him as premium on the insurance;
automated teller machine (ATM) of banks, provided that the 2. For union dues, in cases where the right of the worker or
following conditions are met: his union to check-off has been recognized by the
1. The ATM system of payment is with the written consent of employer or authorized in writing by the individual
the employees concerned. worker concerned; and
2. The employees are given reasonable time to withdraw their 3. In cases where the employer is authorized by law or
wages from the bank facility which time, if done during regulations issued by the Secretary of Labor and
working hours, shall be considered compensable hours Employment.
worked. (Art 113)
3. The System shall allow workers to receive their wages within
the period or frequency and in the amount prescribed under It shall be unlawful to make any deduction from the wages of any
the Labor Code, as amended. employee for the benefit of the employer or his representative or
4. There is a bank or ATM facility within a radius of one intermediary as consideration of a promise of employment or
kilometer to the place of work retention in employment.
5. Upon request of the concerned employee/s, the employer (Art 117)
shall issue a record of payment of wages, benefits and
deductions for particular period.
2. Article 222 Labor Code requires an individual written
authorization as a prerequisite to wage deductions seeks to

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LABOR LAW I LABOR STANDARDS

protect the employee against unwarranted practices that the wages of its laborers pursuant to its contract w/ them or their
would diminish his compensation without his knowledge and labor union w/o contravening the letter and spirit of article 1708.
consent. (Pacific Customs Brokerage, Inc. v. Inter-Island Dockmen and Labor
(Radio Communication of the Phil., Inc. v. Sec. of Labor, 1989) Union, 1951)
3. Assuming there was a call for payment of the unpaid
subscription, the NLRC cannot validly set it off against the The exemption in Article 1708 of the New Civil Code operates in
wages and other benefits due petitioner. favor of those who are laboring men or women in the sense that
(Apodaca v. NLRC, 1989) their work is manual. Persons belonging to this class usually look to
the reward of a day's labor for immediate or present support, and
Check-off such persons are more in need of the exemption than any others.
(GAA v. CA, 1985)
An employer may be compelled to "check-off" union dues from the
wages of his employee when it has been authorized to do so by the Record Keeping
employee. This is upon the theory that it is necessary to promote
It shall be unlawful for any person to make any statement, report,
the welfare and integrity of the union to which he belongs. It is a
or record filed or kept pursuant to the provisions of this Code
forward step to promote social justice as envisaged by our knowing such statement, report or record to be false in any
Constitution. material respect.
(Art 119)
(Manila Trading and Supply Co. v. Manila Trading Labor Association,
1953) Sec 11 of Rule X, Book II, IRR:
All employment records of the employees of an employer shall be
kept and maintained in or about the premises of the workplace.
III. Deposit premises of a workplace - main or branch office or establishment,
if any, depending upon where the employees are regularly
General Rule: No employer shall require his worker to make assigned.
deposits from which deductions shall be made for the The keeping of the employee's records in another place is
reimbursement of loss of or damage to tools, materials, or prohibited.
equipment supplied by the employer
OTHER FORMS OF REMUNERATION
Exception:
ER is engaged in such trades, occupations or business where the I. Service Charges
practice of making deductions or requiring deposits is a recognized
one, or is necessary or desirable as determined by the SOLE in ART. 96. Service charges. - All service charges collected by hotels,
appropriate rules and regulations. restaurants and similar establishments shall be distributed:
(Art 114) 85% = all covered employees
* equally distributed among EEs
Deduction from the deposits of an employee for the actual amount
of the loss or damage 15% = management
Conditions:
EE has been heard thereon, and In case the service charge is abolished, the share of the covered
his responsibility has been clearly shown employees shall be considered integrated in their wages.
(Art 115) (Art 96)

Five J Taxi v. NLRC, 1994 Book III Rule VI Omnibus Rules


The article providing the rule on deposits for loss or damage to Coverage only establishments collecting service
tools, materials or equipment supplied by the employer does not charges such as hotels, restaurants, lodging
apply to or permit deposits to defray any deficiency which the taxi houses, night clubs, cocktail lounge,
driver may incur in the remittance of his "boundary." And when massage clinics, bars, casinos and gambling
worker stops working for employer, the alleged purpose for the houses and similar enterprises, including
unauthorized deposits no longer exists. In other case, any balance those entities operating primarily as private
due to private respondents after proper accounting must be subsidiaries of the Government.
returned to them with legal interest. Employees shall apply to all employees of covered
covered employers REGARDLESS OF THEIR
IV. Withholding of Wages & Record Keeping POSITIONS, DESIGNATIONS OR
EMPLOYMENT STATUS, and IRRESPECTIVE
It shall be unlawful for any person, directly or indirectly, to: OF THE METHOD BY WHICH THEIR WAGES
withhold any amount from the wages of a worker ARE PAID
Exception MANAGERIAL EMPLOYEES (defined as one
or induce him to give up any part of his wages by force,
who is vested with powers or prerogatives
stealth, intimidation, threat or by any other means
to lay down and execute management
whatsoever without the workers consent.
policies and/or to hire, transfer, suspend,
(Art 116)
lay-off, recall, discharge, assign, or discipline
employees or to effectively recommend
Garnishment or Attachment
such managerial actions.)
Distribution 85% - employees to be distributed EQUALLY
What EE ha worked for, his ER must pay. Thus, an ER cannot simply
15% - management (for the disposition by
refuse to pay the wages or benefits of its EEs because he has either
management to answer for losses and
defaulted in paying a loan guaranteed by the ER, or violated their
breakages and distribution to managerial
memorandum of agreement, or failed to render an accounting of
employees at the discretion of the
his ER's property.
management in the latter case)
(Special Steel Corp. v. Villareal, 2004)
Frequency of shall be distributed and paid to the
Distribution employees not less than once every two
Art 1708 NCC: "laborers' wages shall not be subject to execution or
weeks or twice a month at intervals not
attachment, except for debts incurred for food, shelter, clothing
exceeding 16 days
and medical attendance". Writ of garnishment issued by CFI, while
Permanency of In case the service charge is abolished, the
purporting to include all moneys and properties of the employing
service charges share of covered employees shall be
company, cannot affect what the co. has in its possession to pay
considered integrated in their wages. The

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LABOR LAW I LABOR STANDARDS

basis of the amount to be integrated shall computation of the 13th month pay shall include the cost of living
be the average monthly share of each allowances (COLA) integrated into the basic salary of a covered
employee for the past 12 months employee pursuant to EO 178.
immediately preceding the abolition or
withdrawals of such charges Basic salary
Relation to Nothing in this rule shall prevent the
agreements employer and his employees from entering include all remunerations or earning paid by this employer for
into any agreement with terms more services rendered
favorable to the employees than those
provided herein, or be used to diminish any does not include allowances and monetary benefits which are not
benefit granted to the employees under considered or integrated as part of the regular or basic salary, such
existing laws, agreement and voluntary as the cash equivalent of:
employer practice. unused vacation and sick leave credits,
overtime,
premium,
Service charges collected during the period of his preventive
suspension: night differential and
forms part of his earnings; EE entitled not only to full backwages but holiday pay and
also to other benefits, including a just share in the service charges, cost-of-living allowances.
to be computed from the start of his preventive suspension until his salary-related benefits included if by individual or collective
reinstatement. agreement, company practice or policy, the same are treated as
(Maranaw Hotels, etc. v. NLRC, 1999) part of the basic salary of the employees.

Time of payment
II. Thirteenth Month Pay
Paid not later than December 24 of each year.
Coverage
Exception: An employer, however, may give to his employees of
the required 13th Month Pay before the opening of the regular
Revised Guidelines on the implementation of the 13th Month pay
school year and the other half on or before the 24th of December
every year.
Removal of the Salary Ceiling (Aug 13, 1986, Pres. Aquino's Memo
Order No. 28)
The frequency of payment of this monetary benefit may be the
subject of agreement between the employer and the recognized
General Rule: ALL EMPLOYERS are hereby required to pay all their
CBA of the employees.
rank and file employees a 13th month pay not later than December
24 of every year, provided that they have worked for at least one 13th Month Pay for Certain Type of Employees
(1) month during a calendar year.
Paid by Results
Exempted EMPLOYERS
The Government and any of its political subdivisions, Employees who are paid on piece work basis are by law entitled to
including government-owned and controlled corporations, the 13th Month Pay
except those corporations operating essentially as private
subsidiaries of the Government; Employees who are paid a fixed or guaranteed wage plus
Employers already paying their employees a 13th month commission are entitled to 13th month pay
pay or more in a calendar year or its equivalent at the time of basis: both their fixed or guaranteed wage and commission.
this issuance;
ITS EQUIVALENT : includes Christmas bonus, mid-year Those with Multiple Employers
bonus, cash bonuses and other payments amounting to not
less than 1/12 of the basic salary but shall NOT INCLUDE Government employees working part time in a private enterprise,
cash and stock dividends, cost of living allowances and all including private educational institutions, as well as employees
other allowances regularly enjoyed by the employee as working in two or more private firms, whether on full or part time
well a non-monetary benefits. bases, are entitled to the required 13th Month Pay from all their
3. Employers of household helpers and persons in the personal private employers regardless of their total earnings from each or all
service of another relation to such workers and; their employers.
4. Employers of those who are paid on purely commission,
boundary or task basis and those who are paid a fixed Private School Teachers
amount for performing specific work, except where the
workers are paid on piece-rate basis in which case the Private school teachers, including faculty members of universities
and colleges, are entitled to the required 13th month pay,
employer shall grant the required 13th month pay to such
workers. regardless of the number of months they teach or are paid within a
year, if they have rendered service for at least one (1) month within
a year.
Workers paid on a piece rate basis: those who are paid a
standard amount for every piece or unit of work produced that is
Resigned or Separated Employee
more or less regularly replicated, without regard to the time spent
in producing the same.
An employee who has resigned or whose services were terminated
at any time before the time for payment of the 13th month pay is
entitled to this monetary benefit in proportion to the length of time
Amount and Date of Payment
he worked during the year, reckoned from the time he started
working during the calendar year up to the time of his resignation
or termination from service.
Minimum Amount
minimum 13th month = not be less than 1/12 of the total basic Manner of Wage Payment
salary earned by an employee within a calendar year for the year
1987
PD 851, as amended by Memorandum Order No. 28, provides that
employees are entitled to the thirteenth-month pay benefit

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LABOR LAW I LABOR STANDARDS

regardless of their designation and irrespective of the method by the term "basic salary" for purposes of computing their 13th month
which their wages are paid. pay.
(Jackson Building v. NLRC, 1995)

Commissions are considered part of wages. While commissions are,


Wage Difference indeed, incentives or forms of encouragement to inspire employees
to put a little more industry on the jobs particularly assigned to
The difference between the minimum wage and the actual salary them, still these commissions are direct remunerations for services
received by the EE cannot be deemed as his 13th month pay as such rendered.
difference is not equivalent to or of the same import as the said (Iran v. NLRC, 1998)
benefit contemplated by law.
(JPL Marketing Promotions v. CA, 2005)
1/12 of standard monthly wage x length of service = basic salary

Househelpers (Honda Phils. Inc. v. Samahan ng Malayang Manggagawa sa


Honda, 2005)
Ultra Villa Food House v. Geniston, 1999
The Revised Guidelines on the Implementation of the 13th Substitute Payment
Month Pay Law also excludes employers of household helpers from
the coverage of Presidential Decree No. 851. Under Section 3 of PD No. 851, such benefits in the form of food or
Nevertheless, would be ust to award private respondent 13th free electricity, assuming they were given, were not a proper
month pay in view of petitioner's practice of according private substitute for the 13th month pay required by law. Neither may
respondent such benefit. Indeed, petitioner admitted that she gave year-end rewards for loyalty and service be considered in lieu of
private respondent 13th month pay every December. 13th month pay.(Framanlis Farms, Inc. v. MOLE, 1989)

Government Employees 14th Month Pay

An analysis of the "whereases" of PD No. 851 shows that the There is no law that mandates the payment of the 14th month pay.
President had in mind only workers in private employment when he This is emphasized in the grant of exemption under Presidential
issued the decree. There was no intention to cover persons working Decree 851 (13th Month Pay Law) which states: "Employers already
in the government service. paying their employees a 13th month pay or its equivalent are not
(Alliance of Government Workers v. NLRC, 1995) covered by this Decree." Necessarily then, only the 13th month pay
is mandated.
Terminated Employees (Kamaya Port Hotel v. NLRC, 1989)
III. Bonus
The payment of the 13th month pay may be demanded by the
employee upon the cessation of employer-employee relationship. Management Function
This is consistent with the principle of equity that as the employer
can require the employee to clear himself of all liabilities and The grant of a bonus is a prerogative, not an obligation, of the
property accountability, so can the employee demand the payment employer (Traders Royal Bank vs. NLRC). The matter of giving a
of all benefits due him upon the termination of the relationship. bonus over and above the worker's lawful salaries and allowances is
(Archilles Manufacturing Corp. v. NLRC, 1995) entirely dependent on the financial capability of the employer to
give it.
Rationale of Whereas Clauses and Limitations of PD 851 (Businessday Information Systems and Services, Inc. v. NLRC, 1993)

It is necessary to further protect the level of real wages Nature of Bonus When Demandable
from the ravage of world-wide inflation;
There has been no increase in the legal minimum wage When part of the salary or wage
rates since 1970; When there is a contractual agreement promising to pay
The Christmas season is an opportune time for society to such
show its concern for the plight of the working masses so When it is established company practice
they may properly celebrate Christmas and New Year.

Basic Wage or Commissions


Bonus becomes demandable so when it is made a part of the wage
or salary or compensation. In such a case the latter would be a fixed
In remunerative schemes consisting of a fixed or guaranteed wage
amount and the former would be a contingent one dependent upon
plus commission, the fixed or guaranteed wage is patently the the realization of profits. If there be none, there would be no
"basic salary" for this is what the employee receives for a standard
bonus.
work period. Commissions are given for extra efforts exerted in
(Luzon Stevedoring Corporation v. CIR, 1965)
consummating sales or other related transactions. They are, as
such, additional pay, which this Court has made clear do not form
If one enters into a contract of employment under an agreement
part of the "basic salary."
that he shall be paid a certain salary by the week or some other
(Boie Takeda v. Dela Serna, 1993)
stated period and, in addition, a bonus, in case he serves for a
specified length of time, there is no reason for refusing to enforce
Philippine Duplicators Inc v. NLRC, 1995
the promise to pay the bonus, if the employee has served during
The sales commissions received for every duplicating machine
the stipulated time, on the ground that it was a promise of a mere
sold constituted part of the basic compensation or remuneration of
gratuity.
the salesmen of Philippine Duplicators for doing their job. The
(Marcos v. NLRC, 1995)
portion of the salary structure representing commissions simply
comprised an automatic increment to the monetary value initially
A bonus may be considered demandable based on equitable
assigned to each unit of work rendered by a salesman.
considerations as when the giving of such bonus has been the
The sales commissions were an integral part of the basic salary company's long and regular practice. To be considered a "regular
structure of Philippine Duplicators' employees salesmen. These
practice," the giving of the bonus should have been done over a
commissions are not overtime payments, nor profit-sharing
long period of time, and must be shown to have been consistent
payments nor any other fringe benefit. Thus, the salesmen's
and deliberate.
commissions, comprising a pre-determined percent of the selling
(Manila Electric Co. v. Quisumbing, 1999)
price of the goods sold by each salesman, were properly included in

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LABOR LAW I LABOR STANDARDS

b. Productivity agreements reached by the parties as provided


IV. Productivity Incentives Act of 1990 (RA 6971) in this Act supplement existing collective bargaining
agreements.
POLICY (2) c. If, during the existence of the productivity incentives
23. To encourage higher levels of productivity, maintain program or agreement, the employees will join or form a
industrial peace and harmony and promote the principle union, such program or agreement may, in addition to the
of shared responsibility in the relations between workers terms and conditions agreed upon by labor and
and employers, recognizing the right of labor to its just management, be integrated in the collective bargaining
share in the fruits of production and the right of business agreement that may be entered into between them.
enterprises to reasonable returns of investments and to
expansion and growth, and accordingly to provide BENEFITS AND TAX INCENTIVES (7)
corresponding incentives to both labor and capital for a. Subject to the provisions of Section 6 hereof, a business
undertaking voluntary programs to ensure greater enterprise which adopts a productivity incentives program,
sharing by the workers in the fruits of their labor duly and mutually agreed upon by the parties to the labor-
management committee, shall be granted a special
COVERAGE (3) deduction from gross income equivalent to 50% of the total
24. Applies to all business enterprises with or without productivity bonuses given to employees under the program
existing and duly recognized or certified labor over and above the total allowable ordinary and necessary
organizations, including government-owned and business deductions for said bonuses under the National
controlled corporations performing proprietary functions Internal Revenue Code, as amended.
25. It shall cover all employees and workers including casual, b. Grants for manpower training and special duties given to
regular, supervisory and managerial employees. rank-and-file employees pursuant to a program prepared by
the labor-management committee for the development of
DEFINITION (4) skills identified as necessary by the appropriate government
Business Enterprise: industrial, agricultural, or agro-industrial agencies shall also entitle the business enterprise to a special
establishments engaged in the production manufacturing, deduction from gross income equivalent to 50% of the total
processing, repacking, or assembly of goods, including service- grants over and above the allowable ordinary and necessary
oriented enterprises, duly certified as such by appropriate business deductions for said grants under the National
government agencies. Internal Revenue Code, as amended.
c. Any strike or lockout arising from any violation of the
Labor-management Committee: a negotiating body in a business productivity incentives program shall suspend the effectivity
enterprise composed of the representatives of labor and thereof pending settlement of such strike or lockout:
management created to establish a productivity incentives Provided, That the business enterprise shall not be deemed
program, and to settle disputes arising therefrom in to have forfeited any tax incentives accrued prior to the date
accordance with Section 9 hereof. of occurrence of such strike or lockout, and the workers shall
not be required to reimburse the productivity bonuses
Productivity Incentives Program: a formal agreement established by already granted to them under the productivity incentives
the labor-management committee containing a process that program. Likewise, bonuses which have already accrued
will promote gainful employment, improve working conditions before the strike or lockout shall be paid the workers within
and result in increased productivity, including cost savings, six (6) months from their accrual.
whereby the employees are granted salary bonuses d. Bonuses provided for under the productivity incentives
proportionate to increases in current productivity over the program shall be given to the employees not later than every
average for the preceding three (3) consecutive years. The six (6) months from the start of such program over and
agreement shall be ratified by at least a majority of the above existing bonuses granted by the business enterprise
employees who have rendered at least six (6) months of and by law: Provided, That the said bonuses shall not be
continuous service. deemed as salary increases due the employees and workers.
e. The special deductions from gross income provided for
LABOR MANAGEMENT COMMITTEE (5) herein shall be allowed starting the next taxable year after
a. A business enterprise or its employees, through their the effectivity of this Act.
authorized representatives, may initiate the formation of a
labor-management committee that shall be composed of an NOTIFICATION (8)
equal number of representatives from the management and A business enterprise which adopts a productivity incentives
from the rank-and-file employees: Provided, That both program shall submit copies of the same to the National Wages and
management and labor shall have equal voting rights: Productivity Commission and to the Bureau of Internal Revenue for
Provided, further, That at the request of any party to the their information and record.
negotiation, the National Wages and Productivity
Commission of the Department of Labor and Employment DISPUTES AND GRIEVANCES (9)
shall provide the necessary studies, technical information Whenever disputes, grievances, or other matters arise from
and assistance, and expert advice to enable the parties to the interpretation or implementation of the productivity incentives
conclude productivity agreements. program, the labor-management committee shall meet to resolve
b. In business enterprises with duly recognized or certified the dispute, and may seek assistance of the National Conciliation
labor organizations, the representatives of labor shall be and Mediation Board of the Department of Labor and Employment
those designated by the collective bargaining agent(s) of the for such purpose. Any dispute which remains unresolved within 20
bargaining unit(s). days from the time of its submission to the labor-management
c. In business enterprises without duly recognized or certified committee shall be submitted for voluntary arbitration in line with
labor organizations, the representatives of labor shall be the pertinent provisions of the Labor Code, as amended.
elected by at least a majority of all rank-and-file employees The productivity incentives program shall include the name(s)
who have rendered at least six (6) months of continuous of the voluntary arbitrator or panel of voluntary arbitrators
service. previously chosen and agreed upon by the labor-management
committee.
PRODUCTIVITY INCENTIVES PROGRAM (6)
a. The productivity incentives program shall contain provisions NON-DIMUNITION OF BENEFITS (12)
for the manner of sharing and the factors in determining Nothing in this Act shall be construed to diminish or reduce
productivity bonuses: Provided, That the productivity any benefits and other privileges enjoyed by the workers under
bonuses granted to labor under this program shall not be existing laws, decrees, executive orders, company policy or practice,
less than half of the percentage increase in the productivity or any agreement or contract between the employer and
of the business enterprise. employees.

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Wage Recovery, Liabilities, and Worker Preference accident, or illness resulting from the nature of the
employment;
I. Liability of Employer and Other Parties
Republic v. Peralta (87)
In the event that the contractor or sub-contractor fails to pay wages We believe and so hold that Article 110 of the Labor Code did
of employees in accordance with this Code, the employer shall be not sweep away the overriding preference accorded under the
JOINTLY AND SEVERALLY liable with his contractor or sub-contractor scheme of the Civil Code to tax claims of the government or any
to such employees to the extent of the work performed under the subdivision thereof which constitute a lien upon properties of the
contract, in the same manner and extent that he is liable to Insolvent. It is frequently said that taxes are the very lifeblood of
employees directly employed by him. government. The effective collection of taxes is a task of highest
(Art 106) importance for the sovereign. It is critical indeed for its own
survival. It follows that language of a much higher degree of
In labor-only contracting, the person or intermediary shall be specificity than that exhibited in Article 110 of the Labor Code is
considered merely as an agent of the employer who shall be necessary to set aside the intent and purpose of the legislator that
responsible to the workers in the same manner an extent as if the shines through the precisely crafted provisions of the Civil Code. It
latter were directly employed by him. cannot be assumed simpliciter that the legislative authority, by
(Art 106) using in Article 110 the words "first preference" and "any provision
Art. 107 of law to the contrary notwithstanding" intended to disrupt the
Indirect employer - The provisions of the immediately preceding elaborate and symmetrical structure set up in the Civil Code.
article shall likewise apply to any person, partnership, association or Neither can it be assumed casually that Article 110 intended to
corporation which, not being an employer, contracts with an subsume the sovereign itself within the term "other creditors" in
independent contractor for the performance of any work, task, job stating that "unpaid wages shall be paid in full before other
or project. creditors may establish any claim to a share in the assets of
employer." Insistent considerations of public policy prevent us from
The joint and several liability of the contractor and the principal is giving to "other creditors" a linguistically unlimited scope that
mandated by the Labor Code to assure compliance with the would embrace the universe of creditors save only unpaid
provisions therein including the minimum wage. The contractor is employees.
made liable by virtue of his status as direct employer. The principal, We, however, do not believe that Article 110 has had no
on the other hand, is made the indirect employer of the impact at all upon the provisions of the Civil Code. Bearing in mind
contractors employees to secure payment of their wages should the overriding precedence given to taxes, duties and fees by the
the contractor be unable to pay them. Even in the absence of an Civil Code and the fact that the Labor Code does not impress any
employer-employee relationship, the law itself establishes one lien on the property of an employer, the use of the phrase "first
between the principal and the employees of the agency for a preference" in Article 110 indicates that what Article 110 intended
limited purpose i.e. in order to ensure that the employees are paid to modify is the order of preference found in Article 2244, which
the wages due them. In the above-mentioned cases, the solidary order relates, as we have seen, to property of the Insolvent that is
liability of the principal and contractor was held to apply to the not burdened with the liens or encumbrances created or recognized
aforementioned Wage Order Nos. 5 and 6. by Articles 2241 and 2242. We have noted that Article 2244,
(Lapanday Agricultural Development Corporation v. Court of number 2, establishes second priority for claims for wages for
Appeals, 2000) services rendered by employees or laborers of the Insolvent "for
one year preceding the commencement of the proceedings in
insolvency." Article 110 of the Labor Code establishes "first
II. Worker Preference Bankruptcy preference" for services rendered "during the period prior to the
bankruptcy or liquidation," a period not limited to the year
Art. 110 Labor Code immediately prior to the bankruptcy or liquidation. Thus, very
In the event of bankruptcy or liquidation of an employer's substantial effect may be given to the provisions of Article 110
business, his workers shall enjoy first preference as regards their without grievously distorting the framework established in the Civil
wages and other monetary claims, any provision of law to the Code by holding, as we so hold, that Article 110 of the Labor Code
contrary notwithstanding. has modified Article 2244 of the Civil Code in two respects: (a)
Such unpaid wages and monetary claims shall be paid in full firstly, by removing the one year limitation found in Article 2244,
before the claims of the Government and other creditors may be number 2; and (b) secondly, by moving up claims for unpaid wages
paid. (As amended by R. A. 6715) of laborers or workers of the Insolvent from second priority to first
priority in the order of preference established by Article 2244.
Art. 1707, Civil Code
The laborer's wages shall be a lien on the goods manufactured Phil. Export etc. v. Court of Appeals (95)
or the work done. A final observation On 21 March 1989, Article 110 of the Labor
Code was amended by Republic Act No. 6715 so as to read:
Art. 2241, Civil Code "Article 110. Worker preference in case of bankruptcy -
With reference to specific movable property of the debtor, the In the event of bankruptcy or liquidation of an employer's
following claims or liens shall be preferred: business, his workers shall enjoy first preference as
6. Claims for laborers' wages, on the goods manufactured or the regards their wages and other monetary claims, any
work done; provisions of law to the contrary notwithstanding. Such
unpaid wages and monetary claims shall be paid in full
Art. 2242, Civil Code before claims of the Government and other creditors may
With reference to specific immovable property and real rights be paid."
of the debtor, the following claims, mortgages and liens shall be Since then, the Court has had a number of occasions to rule on
preferred, and shall constitute an encumbrance on the immovable the effects of the amendment. In Development Bank of the
or real right: Philippines vs. National Labor Relations Commission, the Court has
3. Claims of laborers, masons, mechanics and other workmen, as said:
well as of architects, engineers and contractors, engaged in "The amendment expands worker preference to cover
the construction, reconstruction or repair of buildings, canals not only unpaid wages but also other monetary claims
or other works, upon said buildings, canals or other works; to which even claims of the Government must be
deemed subordinate.
Art. 2244, Civil Code xxx
With reference to other property, real and personal, of the "Notably, the terms 'declaration' of bankruptcy or
debtor, the following claims or credits shall be preferred in the order 'judicial' liquidation have been eliminated. Does this
named: mean then that liquidation proceedings have been done
4. Compensation due the laborers or their dependents under away with?
laws providing for indemnity for damages in cases of labor

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LABOR LAW I LABOR STANDARDS

"We opine in the negative, upon the following Art. 111.


considerations: Attorney's fees
a. In cases of unlawful withholding of wages, the culpable party
"1. Because of its impact on the entire system of credit, may be assessed attorney's fees equivalent to 10 % of the
Article 110 of the Labor Code cannot be viewed in amount of wages recovered.
isolation but must be read in relation to the Civil Code b. It shall be unlawful for any person to demand or accept, in
scheme on classification and preference of credits. any judicial or administrative proceedings for the recovery of
the wages, attorneys fees, which exceed 10% of the amount
"2. In the same way that the Civil Code provisions on of wages recovered.
classification of credits and the Insolvency Law have
been brought into harmony, so also must the kindred
provisions of the Labor Law be made to harmonize with
those laws.

"3. In the event of insolvency, a principal objective


should be to effect an equitable distribution of the
insolvent's property among his creditors. To accomplish
this there must first be some proceeding where notice
to all of the insolvent's creditors may be given and
PART XIII
where the claims of preferred creditors may be
bindingly adjudicated (De Barretto vs. Villanueva). Minimum Wages

"4. A distinction should be made between a preference I. Wages and the Constitution
of credit and a lien. A preference applies only to claims
which do not attach to specific properties. A lien creates Art XIII Sec 3, 1987 Constitution guarantees the right the the EE to
a charge on a particular property. The right of first a living wage.
preference as regards unpaid wages recognized by
Article 110 does not constitute a lien on the property of The law guarantees the laborer fair and just wage. The minimum
the insolvent debtor in favor of workers. It is but a wage can by no means imply only the actual minimum. Some
preference of credit in their favor, a preference in margin or leeway must be provided, over and above the minimum,
application. It is a method adopted to determine and to take care of contingencies, such as increase of prices of
specify the order in which credits should be paid in the commodities and increase in wants, and provide means for a
final distribution of the proceeds of the insolvent's desirable improvement in his mode of living.
assets. It is a right to a first preference in the discharge (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit
of the funds of the judgment debtor. Assoc., 1953)

Beneficiaries
"In fine, the right to preference given to workers under
Article 110 of the Labor Code cannot exist in any The establishment of the maximum wage benefits directly the low-
effective way prior to the time of its presentation in paid employees, who now receive inadequate wages on which to
distribution proceedings. It will find application when, in support themselves and their families. It benefits all wage earners
proceedings such as insolvency such unpaid wages shall indirectly by setting a floor below which their remuneration cannot
be paid in full before the claims of the Government and fail. It raises the standards of competition among employers, since
other creditors' may be paid. But, for an orderly it would protect the fair-minded employer who voluntarily pays a
settlement of a debtor's assets, all creditors must be wage that supports the wage earner from the competition of the
convened, their claims ascertained and inventoried, and employer, who operates at lower cost by reasons of paying his
thereafter the preferences determined in the course of workers a wage below subsistence.
judicial proceedings which have for their object the (People v. Gatchalian, 1959)
subjection of the property of the debtor to the payment
of his debts or other lawful obligations. Thereby, an
orderly determination of preference of creditors' claims II. Agencies for Wage-Fixing Machinery
is assured (Philippine Savings Bank vs. Lantin); the
adjudication made will be binding on all parties-in- A. National Wages and Productivity Commission
interest, since those proceedings are proceedings in
rem; and the legal scheme of classification, concurrence Created thru Art. 120
and preference of credits in the Civil Code, the 26. attached to the DOLE for policy and program
Insolvency Law, and the Labor Code is preserved in coordination.
harmony."
Powers and Functions of the Commission (Art. 121)
Receivership a. To act as the national consultative and advisory body to the
President of the Philippines and Congress on matters relating
The law (PD 902-A) is clear: upon the creation of a management to wages, incomes and productivity;
committee or the appointment of a rehabilitation receiver, all claims for b. To formulate policies and guidelines on wages, incomes and
actions "shall be suspended accordingly." No exception in favor of labor productivity improvement at the enterprise, industry and
claims is mentioned in the law. Since the law makes no distinction or national levels;
exemptions, neither should this Court. Ubi lex non distinguit nec nos c. To prescribe rules and guidelines for the determination of
distinguere debemos. Allowing labor cases to proceed clearly defeats
appropriate minimum wage and productivity measures at
the purpose of the automatic stays and severally encumbers the
the regional, provincial or industry levels;
management committee's and resources.
d. To review regional wage levels set by the Regional Tripartite
(Rubberworld (Phils.), Inc. v. NLRC, 1999)
Wages and Productivity Boards to determine if these are in
accordance with prescribed guidelines and national
III. Wage Recovery and Attorney's Fees
development plans;
Art. 128. Visitorial and enforcement powers
e. To undertake studies, researches and surveys necessary for
the attainment of its functions and objectives, and to collect
Art. 129. Recovery of wages, simple money claims and other
and compile data and periodically disseminate information
benefits In connection with Art. 217. ; Jurisdiction of
on wages and productivity and other related information,
Labor Arbiters and the Commission
including, but not limited to, employment, cost-of-living,
labor costs, investments and returns;

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LABOR LAW I LABOR STANDARDS

f. To review plans and programs of the Regional Tripartite e. To receive, process and act on applications for exemption
Wages and Productivity Boards to determine whether these from prescribed wage rates as may be provided by law or
are consistent with national development plans; any Wage Order; and
g. To exercise technical and administrative supervision over the f. To exercise such other powers and functions as may be
Regional Tripartite Wages and Productivity Boards; necessary to carry out their mandate under this Code.
h. To call, from time to time, a national tripartite conference of
representatives of government, workers, and employers for Composition of each Regional Board :
the consideration of measures to promote wage
rationalization and productivity; and 36. Regional Director of DOLE as chairman
i. To exercise such powers and functions as may be necessary 37. Regional Directors of NEDA & DTI as vice-chairman
to implement this Act. 38. 2 members each from workers and employers sectors
who shall be appointed by the President upon
Composition of the Commission: recommendation of the SOLE to be made on the basis of
27. Secretary of Labor and Employment as ex-officio the list of nominees submitted by the workers and
chairman employers sectors, respectively, and who shall serve for a
28. Director-General of the NEDA as ex-officio vice-chairman term of 5 years.
29. 2 members each from workers and employer sectors who Each Regional Board to be headed by its chairman shall be
shall be appointed by the President upon assisted by a Secretariat. (As amended by RA 6727)
recommendation of the Secretary of Labor
30. to be made on the basis of the list of nominees Functions
submitted by the workers & employers sectors,
respectively, and NWPC lays down the guidelines which the RTWPB implements.
31. who shall serve for a term of 5 years. (Nasipit Lumber Co. v. NLRC, 1998)

Note: members of the Commission representing labor


and management shall have the same rank, emoluments III. Area of Minimum Wages and Criteria
& other benefits as those prescribed by law for labor and
mgt reps in the ECC STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING (ART. 124):
39. The regional minimum wage to be established by the
The Executive Director of the Commission Secretariat shall also Regional Board shall be as nearly adequate as is
be a member of the Commission. economically feasible to maintain the minimum
The Commission shall be assisted by a Secretariat composed standards of living necessary for the health, efficiency
of and general well-being of the employees within the
1. Executive Director(as head) - same rank/salary/benefits as a framework of the national economic and social
Dept Asst. Secretary development program.
2. Deputy Directors, appointed by the Pres. upon recom. of the 40. Factors in determining regional minimum wages:
SOLE - same rank, salary, benefits and other emoluments as a. The demand for living wages;
that of a Bureau Director. b. Wage adjustment vis-a-vis the consumer price index;
c. The cost of living and changes or increases therein;
Prohibition against Injunction (Art. 126) d. The needs of workers and their families;
No preliminary or permanent injunction or temporary e. The need to induce industries to invest in the
restraining order may be issued by any COURT, TRIBUNAL OR countryside;
OTHER ENTITY against any proceedings before the Commission or f. Improvements in standards of living;
the Regional Boards. g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of
B. Regional tripartite Wages and Productivity Board employers;
i. Effects in employment generation and family income;
Created thru Art. 122 and
j. The equitable distribution of income and wealth along
32. referred to as Regional Boards in all regions, including the imperatives of economic and social development.
autonomous regions as may be established by law. 41. The wages prescribed in accordance with the provisions
33. The Commission shall determine of this Title shall be the standard prevailing minimum
offices/headquarters of the respective Regional wages in every region. These wages shall include wages
Boards. varying with industries, provinces or localities if in the
judgment of the Regional Board conditions make such
Powers and Functions in their respective territorial jurisdiction (Art. local differentiation proper and necessary to effectuate
122) the purpose of this Title.
a. To develop plans, programs and projects relative to wages, 42. Any person, company, corporation , partnership or any
incomes and productivity improvement for their respective other entity engaged in business shall file and register
regions; annually with the appropriate Regional Board,
34. to be implemented thru the respective regional Commission and the National Statistics Office an itemized
offices of the DOLE within their territorial jurisdiction listing of their labor component specifying the names of
35. Regional Boards shall have technical supervision over their workers and employees below the managerial level,
the regional office of the DOLE with respect to the including learners, apprentices and
implementation of said plans, programs and projects. disabled/handicapped workers who were hired under the
b. To determine and fix minimum wage rates applicable in their terms prescribed in the employment contracts, and their
respective regions, provinces or industries therein and to corresponding salaries and wages.
issue the corresponding wage orders, subject to guidelines
issued by the Commission; 43. WAGE DISTORTION
c. To undertake studies, researches, and surveys necessary for 44. Where the application of any prescribed wage
the attainment of their functions, objectives and programs increase by virtue of a law or wage order issued by
and to collect and compile data on wages, incomes, any regional board results in distortions of wage
productivity and other related information and periodically structure within an establishment, the employer
disseminate the same; and the union shall negotiate to correct the
d. To coordinate with the other Regional Boards as may be distortions.
necessary to attain the policy and intention of this Code; 45. Any dispute arising from wage distortions shall be
resolved through the grievance procedure under
their collective bargaining agreement and, if it

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LABOR LAW I LABOR STANDARDS

remains unresolved, through voluntary arbitration. MINIMUM WAGE FIXING


46. Unless otherwise agreed by the parties in
writing, such dispute shall be decided by the Agencies:
voluntary arbitrator or panel of voluntary 1. NWPC
arbitrators within 10 calendar days from the a. Prescribe rules, guidelines for the determination
time said dispute was referred to voluntary of appropriate minimum wage and what factors
arbitration. should be considered
47. In cases where there are no collective bargaining b. Review Regular wage levels set by RTWPB if they
agreements or recognized labor unions, the are in accordance to prescribed guidelines
employers and workers shall endeavor to correct c. REMEMBER, NWPC does not set the minimum
such distortions. wage.
48. Any dispute arising therefrom shall be settled 2. RTWPB
through the National Conciliation and a. Determine and fix the minimum wage rates
Mediation Board and, if it remains unresolved applicable to the region, provinces, industries
after 10 calendar days of conciliation, shall be b. Issue the corresponding wage order subject to
referred to the appropriate branch of the guidelines issued by the NWPC
National Labor Relations Commission (NLRC).
49. It shall be mandatory for the NLRC to conduct NOTES:
continuous hearings and decide the dispute 59. Composition TRIPARTITE: Employer, employee
within 20 calendar days from the time said and government
dispute is submitted for compulsory arbitration 60. Functions are delineated
50. The pendency of a dispute arising from a wage
distortion shall not delay the applicability of any Procedure:
increase in prescribed wage rates pursuant to
provisions of law or wage order. RTWPB
51. Wage distortion - a situation where an increase in 61. When conditions warrant, investigate and
prescribed wage rates results in the elimination or study pertinent facts, based criteria (Art. 124)
severe contraction of intentional quantitative 62. Conduct public hearings/consultations, notice
differences in wage or salary rates between and to employer and employees groups, provinces,
among employee groups in an establishment as to city, municipal officials and other interested
effectively obliterate the distinctions embodied in parties
such wage structure based on skills, length of 63. Decide to ISSUE or NOT TO ISSUE a wage order
service, or other logical bases of differentiation. 64. If it decides to ISSUE a wage order, the wage
order takes effect after 15 days from complete
52. All workers paid by result, including those who are paid publication in at least 1 newspaper of general
on piecework, takay, pakyaw, or task basis, shall receive circulation in the region
not less than the prescribed wage rates per eight 8 hours 65. Appeal wage order to NWPC within 10
of work a day, or a proportion thereof for working less calendar days; mandatory for the NWPC to
than 8 hrs. decide within 60 calendar days from filing
66. Filing of an appeal DOES NOT STAY order
53. All recognized learnership and apprenticeship unless appellant filed an undertaking with
agreements shall be considered automatically modified surety, sureties, guarantees payment of
insofar as their wage clauses are concerned to reflect the employees if the wage order is affirmed
prescribed wage rates.

10.04 WAGE ORDER

Art. 123 Methods of Fixing


54. Whenever the conditions so warrant, the Regional Board
shall investigate and study all pertinent facts; and based The Act is meant to rationalize wages, that is, by having permanent
on the standard and criteria herein prescribed, shall boards to decide wages rather than leaving wage determination to
proceed to determine whether a Wage Order should be Congress year after year and law after law. The Court is not of
issued. course saying that the Act is an effort of Congress to pass the buck,
55. Any such wage order shall take effect after 15 days from or worse, to abdicate its duty, but simply, to leave the question of
its complete publication in at least 1 newspaper of wages to the expertise of experts.
general circulation in the region. (Employers Confederation of the Philippines v. NWPC, 1991)
56. In the performance of its wage-determination functions,
the Regional Board shall conduct public Requirements for Validity
hearings/consultations, giving notices to employees &
employers' groups, provincial, city and municipal officials Regional Board shall conduct public hearings and
and other interested parties. consultations, giving notices to interested parties
57. Any party aggrieved by the Wage Order issued by the The Wage Order shall take effect only after publication in
Regional Board may appeal to the Commission within 10 a newspaper of general circulation in the region.
days from the publication of such order. It shall be (Cagayan Sugar Miling Co. v. Secretary, 1998)
mandatory for the Commission to decide such appeal
within 60 days from the filing thereof. Piece Worker
58. The filing of appeal does not stay the order unless the
person appealing shall file with the Commission, an
undertaking with a surety or sureties for the payment to In the absence of wage rates based on time and motion studies
the employees affected by the order of the determined by the labor secretary or submitted by the employer to
corresponding increase, in the event such order is the labor secretary for his approval, wage rates of piece-rate
affirmed. (As amended by RA 6727) workers must be based on the applicable daily minimum wage
determined by the Regional Tripartite Wages and Productivity
Commission.
(Pulp and Paper, Inc. v. NLRC, 1997)

The term wage is broadly defined in Art. 97 of the Labor Code as


remuneration or earnings, capable of being expressed in terms of

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LABOR LAW I LABOR STANDARDS

money whether fixed or ascertained on a time, task, piece or (Prubankers Assn. v. Prudential Bank and Co. (99)
commission basis.
(Lambo v. NLRC, 1999) Effect of Benefits

Wage Distortion Art. 100


Prohibition against elimination or diminution of benefits
Wage Distortion - a situation where an increase in prescribed wage Nothing in this Book shall be construed to eliminate or in any
rates results in the elimination or severe contraction of intentional way diminish supplements or other employee benefits being
quantitative differences in wage or salary rates between and among enjoyed at the time of the promulgation of this Code.
employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length Prubankers Assn. v. Prudential Bank and Co. (99)
of service, or other logical bases of differentiation. Petitioner also insists that the Bank has adopted a uniform
wage policy, which has attained the status of an established
1. Cause: implementation of a wage order increase prescribe management practice; thus, it is estopped from implementing a
minimum wage rate wage order for a specific region only. We are not persuaded. Said
2. Result: nationwide uniform wage policy of the Bank had been adopted
67. Elimination OR severe contraction of intentional prior to the enactment of RA 6727. After the passage of said law,
quantitative wages/salary rates between or among the Bank was mandated to regionalize its wage structure. Although
employees the Bank implemented Wage Order Nos. NCR-01 and NCR-02
68. Effectively obliterates distinctions on wage structure nationwide instead of regionally even after the effectivity of RA
which was based on skills, length of service or other 6727, the Bank at the time was still uncertain about how to follow
logical differences. the new law. In any event, that single instance cannot be
3. Procedure for Settlement constitutive of "management practice."
a. Organized Establishment
1. CBA Grievance Procedure
2. Voluntary Arbitration Night shift differential on a 110% (Additional 10% of the
b. Unorganized Establishment normal day (10pm-6am) regular daily wage)
1. Employer and employee, with aid of National Overtime on normal day 125% (At least an additional
Conciliation Mediation Board (NCMB) settles 25% of regular daily wage)
conciliation mediation per hour
2. NLRC Compulsory Arbitration Work on any regular 200% of regular daily wage
holiday, not exceeding 8
NOTES: hours
69. Both the employer and employee cannot use economic Work on any regular holiday 230% (Additional 30% of
weapons (Employer cannot declare a lock-out; Employee which falls on the scheduled 200% of regular daily wage)
cannot declare a strike) because the law has provided for rest day, not exceeding 8
a procedure for settling hours
70. Cases say that: Overtime on a regular 230% (Additional 30% of the
1. Parties are encouraged to settle the dispute voluntarily holiday 200% of regular daily wage)
2. Neither party can use economic weapons per hour
3. Original decree of differential need not be restored Overtime on a regular 260% (Additional 30% of the
4. NLRC has no authority to impose directly or indirectly holiday which falls on the 230% of regular daily wage)
under guise of rectifying a wage distortion upon the scheduled rest day per hour
employer a new scheme of classification

The law recognizes the validity of negotiated wage increases to


correct wage distortions. The legislative intent is to encourage the
parties to seek solution to the problem of wage distortions through
voluntary negotiation or arbitration, rather than strikes, lockouts, or
other concerted activities of the employees or management.
(Associated Labor Union v. NLRC, 1994)

The concept of wage distortion assumes an existing grouping


or classification of employees which establishes distinctions among
such employees on some relevant or legitimate basis.
The remedy in Article 124 of the Labor Code, for a wage
distortion consisted of negotiations between employer and
employees for the rectification of the distortion by re-adjusting the
wage rates of the differing classes of employees. As a practical
matter, this ordinarily meant a wage increase for one or more of
the affected classes of employees so that some gap or differential
would be re-established. There was no legal requirement that the
historical gap which existed before the implementation of the Wage
Orders be restored in precisely the same form or amount.
(National Federation of Labor v. NLRC, 1994)

Wage distortion involves four elements:


1. An existing hierarchy of positions with corresponding
salary rates
2. A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate
of a higher one
3. The elimination of the distinction between the two
levels
4. The existence of the distortion in the same region of
the country

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LABOR LAW I LABOR STANDARDS

PART XIV 7. Under other analogous cases exempted by the Secretary of


Labor and Employment in appropriate regulations.
WOMEN WORKERS (ART. 131)

I. WOMEN AND THE CONSTITUTION DISCRIMINATION

The State recognizes the role of women in nation-building, and shall It shall be unlawful for any employer to discriminate against any
ensure the fundamental equality before the law of women and woman employee with respect to terms and conditions of
men. employment solely on account of her sex.
(Art II Sec 14, 1987 Constitution)
Acts of discrimination:
WOMEN WORKERS 1. Payment of a lesser compensation, including wage, salary or
other form of remuneration and fringe benefits, to a female
employee as against a male employee, for work of equal
The Constitution, cognizant of the disparity in rights between value; and
men and women in almost all phases of social and political life, 2. Favoring a male employee over a female employee with
provides a gamut of protective provisions: respect to promotion, training opportunities, study and
1. Section 14, Article II on the Declaration of Principles and State scholarship grant solely on account of their sexes.
Policies: recognizes the role of women in nation-building and
commands the State to ensure, at all times, the fundamental Criminal liability for the willful commission of any unlawful
equality before the law of women and men. acts as provided in this article or any violation of the rules and
2. Section 3 of Article XIII: requires the State to afford full protection regulations issued pursuant to Sec. 2 hereof shall be penalized as
to labor and to promote full employment and equality of provided in Articles 288 and 289 of this Code: Provided, That the
employment opportunities for all, including an assurance of institution of any criminal action under this provision shall not bar
entitlement to tenurial security of all workers. the aggrieved employee from filing an entirely separate and distinct
3. Section 14,Article XIII: mandates that the State shall protect action for money claims, which may include claims for damages and
working women through provisions for opportunities that would other affirmative reliefs. The action hereby authorized shall proceed
enable them to reach their full potential. independently of each other.
(Art. 135)
II. COVERAGE
General Rule: shall apply to all employers, whether operating for MARRIAGE
profit or not, including educational, religious and charitable
institutions It shall be unlawful for an employer:
Exception: 1. to require as a condition of employment or continuation of
1. Government employment that a woman employee shall not get married,
2. Government-owned or controlled corporations and or
3. Employers of household helpers and persons in their 2. to stipulate expressly or tacitly that upon getting married a
personal service insofar as such workers are concerned. woman employee shall be deemed resigned or separated
(Book III, Rule XIII, Sec. 1, Omnibus Rules) or
3. to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her
III. PROHIBITED ACTS marriage.
(Art. 136)
NIGHT WORK AND EXCEPTION
GENERAL
General Rule: Night work Prohibition
No woman, regardless of age, shall be employed or permitted or It shall be unlawful for any employer:
suffered to work, with or without compensation: 1. To deny any woman employee the benefits provided for in
1. In any industrial undertaking or branch thereof between this Chapter or to discharge any woman employed by him for
10pm & 6am of the following day the purpose of preventing her from enjoying any of the
2. In any commercial or non-industrial undertaking or branch benefits provided under this Code;
thereof, other than agricultural, between 12mn & 6am of 2. To discharge such woman on account of her pregnancy,
the following day. while on leave or in confinement due to her pregnancy; or
3. In any agricultural undertaking at night time unless she is 3. To discharge or refuse the admission of such woman upon
given a period of rest of not less than 9 consecutive hours. returning to her work for fear that she may again be
(Art. 130) pregnant.
(Art. 137)
Exceptions:
1. In cases of actual or impending emergencies caused by IV. FACILITIES
serious accident, fire, flood, typhoon, earthquake, epidemic
or other disasters or calamity, to prevent loss of life or Facilities for women:
property or in cases of force majeure or imminent danger to The Secretary of Labor and Employment shall establish standards
public safety; that will ensure the safety and health of women employees. In
2. In case of urgent work to be performed on machineries, appropriate cases, he shall require any employer to:
equipment or installation, to avoid serious loss which the 1. Provide seats proper for women and permit them to use
employer would otherwise suffer; such seats when they are free from work and during working
3. Where the work is necessary to prevent serious loss of hours, provided they can perform their duties in this position
perishable goods; without detriment to efficiency;
4. Where the woman employee holds a responsible position of 2. Establish separate toilet rooms and lavatories for men and
managerial or technical nature, or where the woman women and provide at least a dressing room for women;
employee has been engaged to provide health and welfare 3. Establish a nursery in a workplace for the benefit of the
services; woman employees therein; and
5. Where the nature of the work requires the manual skill and 4. Determine appropriate minimum age and other standards
dexterity of woman worker and the same cannot be for retirement or termination in special occupations such as
performed with equal efficiency by male worker; those of flight attendants and the like.
6. Where the women employees are immediate members of (Art. 132)
the family operating the establishment or undertaking; and
Family planning services; incentives for family planning:

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LABOR LAW I LABOR STANDARDS

1. Establishments which are required by law to maintain a clinic 3. guarantee full respect for human rights, and
or infirmary shall provide free family planning services to 4. uphold the dignity of workers, employees, applicants for
their employees which shall include, but not limited to, the employment, students or those undergoing training,
application or use of contraceptive pills and intra-uterine instruction or education.
devices.
b. In coordination with other agencies of the government All forms of sexual harassment in the employment, education
engaged in the promotion of family planning, the or training environment are hereby declared unlawful.
Department of Labor and Employment shall develop and
prescribe incentive bonus schemes to encourage family Work, education or training-related sexual harassment is
planning among female workers in any establishment or committed:
enterprise. a. by an employer, employee, manager, supervisor, agent of
(Art. 134) the employer, teacher, instructor, professor, coach,
trainor or any other person who, having authority,
V. SPECIAL CLASSIFICATION, SPECIAL WOMEN WORKERS influence or moral ascendancy over another
b. in a work or training or education environment,
Any woman who is permitted or suffered to work with or without c. demands requests or otherwise requires any sexual favor
compensation in any night club, cocktail lounge, massage clinic, bar from other,
or similar establishment, under the effective control or supervision d. regardless of whether the demand, request for
of the employer for a substantial period of time as determined by requirement for submission is accepted by the object of
the Secretary of Labor and Employment, shall be considered as an said act.
employee of such establishments for purposes of labor and social
legislation. In a work-related or employment environment, sexual harassment
(Art. 138) is
committed when:
a. The sexual favor is made as a condition in the hiring or in
VI. MATERNITY LEAVE the employment, re-employment or continued
employment of said individual or in granting said
A female employee who has paid at least three (3) monthly individual favorable compensation, terms, conditions,
contributions in the twelve-month period immediately preceding promotions, or privileges, or the refusal to grant the
the semester of her childbirth, or miscarriage shall be paid a daily sexual favor results in limiting, segregating or classifying
maternity benefit equivalent to one hundred percent (100%) of her the employee which in any way would discriminate,
average salary credit for sixty (60) days or seventy-eight days in case deprive or diminish employment opportunities or
of caesarean delivery subject to the following conditions: otherwise adversely affect said employee;
b. The above acts would impair the employees rights or
1. That the employee shall have notified her employer of her privileges under existing labor laws; or
pregnancy and the probable date of her childbirth which c. The above acts would result in an intimidating, hostile, or
notice shall be transmitted to the SSS in accordance with the offensive environment for the employee.
rules and regulations it may provide.
2. The full payment shall be advanced by the employer within In an education or training environment, sexual harassment is
thirty (30) days from the filing of the maternity leave committed:
application. a. Against one who is under the care, custody or supervision
3. That payment of daily maternity benefits shall be a bar to the of the offender
recovery of sickness benefits provided by this Act for the b. Against one whose education, training, apprenticeship or
same period for which daily maternity benefits have been tutorship is entrusted to the offender;
received. c. When the sexual favor is made a condition to the giving
4. That the maternity benefits provided under this section shall of a passing grade, or the granting of honors and
be paid only for the first four (4) deliveries or miscarriages. scholarships, or the payment of a stipend, allowance or
5. That the SSS shall immediately reimburse the employer of other benefits, privileges, or considerations; or
one hundred percent (100%) of the amount of maternity d. When the sexual advances result in an intimidating,
benefits advanced to the employee by the employer upon hostile or offensive environment for the result, trainee or
receipt of satisfactory proof of such payment and legality apprentice.
thereof;
6. That if an employee should give birth or suffer miscarriage Any person who directs or induces another to commit any act of
without the required contributions having been remitted for sexual harassment as herein defined, or who cooperates in the
her by her employer to the SSS, or without the latter having commission thereof by another without which it would not have
been previously notified by the employer of time of the been committed, shall also be held liable under this Act.
pregnancy, the employer shall pay to the SSS damages
equivalent to the benefits which said employee member (Sec. 14 A RA 8282)
would otherwise have been entitled to.
DUTY OF THE EMPLOYER OR HEAD OF OFFICE IN A WORK-RELATED,
Paternity Leave Act of 1996 (RA 8187) EDUCATION OR TRAINING ENVIRONMENT OR INSTITUTION
1. to prevent or deter the commission of acts of sexual
Every MARRIED male employee in the private and public sectors harassment and
shall be entitled to a paternity leave of seven (7) days with full pay 2. to provide the procedures for the resolution, settlement
FOR THE FIRST FOUR (4) DELIVERIES OF THE LEGITIMATE SPOUSE or prosecution of acts of sexual harassment.
WITH WHOM HE IS COHABITING.
- The male employee applying for paternity leave shall The employer or head of office shall:
notify his employer of the pregnancy of his legitimate a. Promulgate appropriate rules and regulations in
spouse and the expected date of such delivery. consultation with and jointly approved by the employees
*Delivery includes childbirth or any miscarriage.)\ or students or trainees, through their duly designated
(Sec.2) representatives prescribing the procedure for the
investigation of sexual harassment cases and the
VII. SEXUAL HARASSMENT administrative sanctions therefore.
The said rules and regulations issued
POLICY pursuant to this subsections (a) shall include, among
The State shall: others, guidelines on proper decorum in the
1. value the dignity of every individual, workplace and educational or training institutions
2. enhance the development of its human resources,

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LABOR LAW I LABOR STANDARDS

b. Create a committee on decorum and investigation of PART XV


cases on sexual harassment. The Committee shall conduct
meetings, as the case may be, with officers and MINORS
employees, teachers, instructors, professors, coaches,
trainors and students or trainees to increase I. MINORS AND THE CONSTITUTION
understanding and prevent incidents of sexual
harassment. It shall also conduct the investigation of The State recognizes the vital role of the youth in nation-building
alleged cases constituting sexual harassment. and shall promote and protect their physical, moral, spiritual,
In the case of work-related environment, the intellectual, and social well-being. It shall inculcate in the youth
committee shall be composed of at least 1 patriotism and nationalism, and encourage their involvement in
representative each from the management, the public and civic affairs. (Art II Sec 13, 1987 Constitution)
union, if any, the employees from the supervisory
rank, and from the rank and file employees.
In the case of the educational or training II. LAW
institution, the committee shall be composed of at
least 1 representative from the administration, the RA 7610 Special Protection of Children Against Child Abuse,
trainors, teachers, instructors, professors or coaches Exploitation and Discrimination Act
and students or trainees, as the case may be.
POLICY OF THE STATE
The employer or head of office, educational
or training institution shall disseminate or post a copy 1. provide special protection to children from all forms of abuse,
neglect, cruelty, exploitation and discrimination, and other
of this Act for the information of all concerned.
conditions prejudicial to their development;
2. provide sanctions for their commission and carry out a
LIABILITY OF THE EMPLOYER, HEAD OF OFFICE, EDUCATIONAL OR TRAINING
program for prevention and deterrence of and crisis
INSTITUTION
intervention in situations of child abuse, exploitation and
discrimination.
The employer or head of office, educational or training
3. intervene on behalf of the child when the parent, guardian,
institution shall be solidarily liable for damages arising from the
teacher or person having care or custody of the child fails or is
acts of sexual harassment committed in the employment, education
unable to protect the child against abuse, exploitation and
or training environment if the employer or head of office,
discrimination or when such acts against the child are
educational or training institution is informed of such acts by the
offended party and no immediate action is taken thereon. committed by the said parent, guardian, teacher or person
having care and custody of the same.
INDEPENDENT ACTION FOR DAMAGES 4. protect and rehabilitate children gravely threatened or
endangered by circumstances which affect or will affect their
- the victim of work, education or training-related sexual
harassment can institute a separate and independent action for survival and normal development and over which they have no
control.
damages and other affirmative relief.
5. The best interests of children shall be the paramount
consideration of all actions concerning them, whether
PENALTIES
undertaken by public or private social welfare institutions,
courts of law, administrative authorities, and legislative
- violations of this act shall be penalized by imprisonment of
bodies, consistent with the principle of First Call for Children as
not less than 1 month nor more than 6 months, or a fine or not less
enunciated I the United Nations Convention on the Rights of
than P10,0000 nor more than P20,000.00, or both such fine and
the Child. Every effort shall be exerted to promote the welfare
imprisonment at the discretion of the court.
of children and enhance their opportunities for a useful and
happy life.
Prescription of Action: 3 years.
DEFINITION OF TERMS
Sexual Harassment as a valid and just Cause for Termination
As a managerial employee, petitioner is bound by more
Children are those:
exacting work ethics. He failed to live up to his higher standard of
responsibility when he succumbed to his moral perversity. And 1. below 18 years of age, or
2. those over but are unable to fully take care of themselves or
when such moral perversity is perpetuated against his subordinate,
he provides a justifiable ground for his dismissal for lack of trust and protect themselves from abuse, neglect, cruelty, exploitation or
discrimination because of a physical or mental disability or
confidence. It is the right, nay the duty of every employer to
condition
protect its employees from oversexed superiors. (Libres v. NLRC,
1999)
Child Abuse maltreatment, whether habitual or not, of the child
which includes any of the following:
Abuse of Power by the Employer
1. Psychological and physical abuse, neglect, cruelty, sexual
The gravamen of the offense in sexual harassment is not the
abuse and emotional maltreatment;
violation of the employee's sexuality but the abuse of power by the
2. Any act by deeds or words which debases, degrades or
employer. Any employee, male or female, may rightfully cry "foul"
provided the claim is well substantiated. Strictly speaking, there is demeans the intrinsic worth and dignity of a child as a
human being;
no time period within which he or she is expected to complain
through the proper channels. The time to do so may vary depending 3. Unreasonable deprivation of his basic needs for survival,
such as food and shelter; or
upon the needs, circumstances, and more importantly, the
emotional threshold of the employee. (Phil. Aelous Automotive 4. Failure to immediately give medical treatment to an injured
child resulting in serious impairment of his growth and
United Corp. v. NLRC, 2000)
development or in his permanent incapacity or death.

Circumstances which gravely threaten or endanger the survival


and normal development of children, include, but are not limited
to, the following:
a. Being in a community where there is armed conflict or being
affected by armed conflict-related activities;
b. Working under conditions hazardous to life, safety and
morals which unduly interfere with their normal
development

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LABOR LAW I LABOR STANDARDS

c. Living in or fending for themselves in the streets of urban or 3. tobacco and its byproducts, and
rural areas without the care of parents or a guardian or any 4. violence.
adult supervision needed for their welfare. (SEC. 14)
d. Being a member of an indigenous cultural community and/or
living under conditions of extreme poverty or in an area
which is underdeveloped and/or lacks or has inadequate DUTY OF EMPLOYER
access to basic services needed for a good quality of life;
e. Being a victim of a man-made or natural disaster or calamity; Every employer shall comply with the duties provided for in
or Articles 108 and 109 of PD 603.
f. Circumstances analogous to those abovestated which (SEC. 15)
endanger the life, safety or normal development of children.
1. Article 108, PD 603 - Duty of Employer to Submit Report
Comprehensive program against child abuse, exploitation and 2. Article 109, PD 603 - Register of Children
discrimination refers to the coordinated program of services and
facilities to protect children against: PENALTIES
a. Child prostitution and other sexual abuse;
b. Child trafficking; Violations of this provision shall be penalized by a fine of not
c. Obscene publications and indecent shows; less than P1,000.00 but not more than P10,000.00 or imprisonment
d. Other acts of abuse; and of not less than 3 months but not more than 3 years, or both at the
e. Circumstances which threaten or endanger the survival and discretion of the court, In case of repeated violations of the
normal development of children. provisions of this Article, the offenders license to operate shall be
revoked.
WORKING CHILDREN (SEC. 16)
General Rule: Children below fifteen (15) years of age shall not be
employed.
Exceptions: III. DISCRIMINATION
1. works directly under the sole responsibility of his parents or legal
guardian and where only members of the employers family are No employer shall discriminate against any person in respect to
employed, provided: terms and conditions of employment on account of his age.
- his employment neither endangers his life, safety, health and (Art. 140)
morals, nor impairs his normal development, and
- the parent or legal guardian shall provide the said minor child
with the prescribed primary and/or secondary education;
2. childs employment or participation in public and entertainment
or information through cinema, theater, radio or television is
essential, provided:
- the employment contract is concluded by the childs parents or
guardian, with the express agreement of the child concerned, if
possible
- the approval of the Department of Labor and Employment
- the following requirements in all instances are strictly complied
with:
a. The employer shall ensure the protection, health, safety
and morals of the child
b. The employer shall institute measures to prevent the
childs exploitation or discrimination taking into
account the system and level of remuneration, and the
duration and arrangement of working time
c. The employer shall formulate and implement, subject
to the approval and supervision of competent
authorities, a continuing program for training and skills
acquisition of the child.

The employer shall first secure, before engaging such child, a work
permit from the Department of Labor and Employment which shall
ensure observance of the above requirements.
(Sec. 12, RA 7610, as amended by RA 7658)

NON-FORMAL EDUCATION FOR WORKING CHILDREN

The Department of Education, Culture and Sports shall


promulgate a course design under its non-formal education
program aimed at promoting the intellectual, moral and vocational
efficiency of working children who have not undergone or finished
elementary or secondary education. Such course design shall
integrate the learning process deemed most effective under given
circumstances.
(SEC. 13)

PROHIBITION ON THE EMPLOYMENT OF CHILDREN IN CERTAIN


ADVERTISEMENTS

No employment of child models in all commercial


advertisements promoting:
1. alcoholic beverages
2. intoxicating drinks,

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LABOR LAW I LABOR STANDARDS

No househelper shall be assigned to work in a commercial,


industrial or agricultural enterprise at a wage or salary rate lower
PART XVI than that provided for agricultural or non-agricultural worker as
HOUSEHELPERS prescribed herein
(Art. 145)
I. COVERAGE
Opportunity for education.
If below 18 the employer shall give him or her an opportunity for at
Coverage: All persons rendering services in households for
least elementary education. The cost of such education shall be part
compensation.
of the househelper's compensation, unless there is a stipulation to
the contrary.
"Domestic or household services" shall mean service in the
(Art. 146).
employer's home, which is usually necessary or desirable for the
maintenance and enjoyment thereof and includes ministering to Treatment of househelpers.
the personal comfort and convenience of the members of the - just and humane manner. In no case shall physical violence be
employer's household, including services of family drivers. used upon the househelper.
(Art. 141) (Art. 147).
Board, lodging and medical attendance.
II. HOUSEHELPERS ER furnish free of charge suitable and sanitary living quarters +
adequate food and medical attendance.
- All persons rendering services in households for compensation. (Art. 148)
The term `househelper' is synonymous to the term `domestic Indemnity for unjust termination of services
servant' and shall refer to any person, whether male or female, who If the period of household if period of service fixed = no termination
renders services in and about the employer's home and which by either party except for just
services are usually necessary or desirable for the maintenance and unjust dismissal = compensation already earned plus that of 15 days
enjoyment thereof, and ministers exclusively to the personal by way of indemnity.
comfort and enjoyment of the employer's family. (Apex Mining Co.
v. NLRC) leaves w/o justifiable reason = any unpaid salary due him or her not
exceeding 15 days.
"Domestic or household services" shall mean service in the (Art. 149).
employer's home, which is usually necessary or desirable for the
maintenance and enjoyment thereof and includes ministering to Service of termination notice.
the personal comfort and convenience of the members of the If the duration of the household service is not determined either by
employer's household, including services of family drivers. stipulation or by the nature of the service, the employer or the
(Art. 141) househelper may give notice to put an end to the relationship five
days before the intended termination of the service.
III. NON-HOUSEHOLD WORK ASSIGNMENT (Art. 150)

No househelper shall be assigned to work in a commercial, Employment certification.


industrial or agricultural enterprise at a wage or salary rate lower Upon the severance of the household service relation, the employer
than that provided for agricultural or non-agricultural worker as shall give the househelper a written statement of the nature and
prescribed herein. duration of the service and his or her efficiency and conduct as
(Art. 145) househelper.
(Art. 151)
Domestic Work Employment records.
The employer may keep such records as he may deem necessary to
The work that petitioner performed in the temple could not be reflect the actual terms and conditions of employment of his
categorized as mere domestic work. The petitioner attended to the househelper which the latter shall authenticate by signature or
visitors, mostly Chinese, who came to pray or seek advice before thumbmark upon request of the employer. (Art. 152) See ARTICLES
Buddha for personal or business problems; arranged meetings 1689 1699. NCC
between these visitors and Su and supervised the preparation of
the food for the temple visitors; acted as to urist guide of foreign No Overtime Pay for Househelpers
visitors; acted as liaison with some government offices; and made
the payment for the temple's Meralco, MWSS and PLDT bills. Domestic or household service" shall mean services in the
Indeed, these tasks may not be deemed activities of a household employers home which is usually necessary or desirable for the
helper. They were essential and important to the operation and maintenance and enjoyment thereof and includes ministering to
religious functions of the temple. (Barcenas v. NLRC, 1990) the personal comfort and convenience of the members of the
employers household, including services of family drivers. Chapter
III, Title III, Book III, however, is silent on the grant of overtime pay,
IV. CONDITIONS OF EMPLOYMENT holiday pay, premium pay and service incentive leave to those
engaged in the domestic or household service. Moreover, the
Contract for Domestic Service specific provisions mandating these benefits are found in Book III,
Title I of the Labor Code, and Article 82, which defines the scope of
The original contract for domestic service shall not last for more the application of these provisions, expressly excludes domestic
than two years but it may be renewed for such periods as may be helpers from its coverage. (Ultra Villa Food Haus v. Geniston, 1999)
agreed upon by the parties.
(Art. 142)

Minimum Wage
(Art. 143)

Minimum Cash Wage


Minimum wage rates= basic cash wages + lodging, food and medical
attendance.
(Art. 144)

Assignment to non-household work.

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LABOR LAW I LABOR STANDARDS

PART XVII PART XVIII


HOMEWORKERS TERMINATION OF EMPLOYMENT

I. COVERAGE AND REGULATION GENERAL CONCEPTS

Regulations of industrial homework I. SECURITY OF TENURE


The employment of industrial homeworkers and field personnel
shall be regulated by the Government through appropriate General Rule: In case of regular employment, the ER shall NOT
regulations issued by the Secretary of Labor and Employment to terminate the services of an EE (Art 279)
ensure the general welfare and protection of homeworkers and
field personnel and the industries employing them. Exceptions: (Art 279)
(Art. 153)
4. Termination for just cause
Regulations of Secretary of Labor and Employment 5. Termination authorized by this Title
The regulations or orders to be issued pursuant to this Chapter shall
be designed to assure the average employee of an undertaking the If EE is unjustly dismissed, he is entitled to:
minimum terms and conditions of employment applicable to the
industrial homeworkers or field personnel involved. 6. Reinstatement
(Art. 154) without loss of seniority rights and other privileges, AND

Coverage 7. Full backwages


-apply to any person who performs industrial homework for an inclusive of allowances, and other benefits or their monetary
employer, contractor or sub-contractor. (1) equivalent computed from the time compensation was
withheld up to the time of actual reinstatement. (Art 279)
Industrial Homework- a system of production under which work for
an employer or contractor is carried out by a homework at his/her The entitlement of workers to SECURITY of TENURE is recognized in
home. Materials may or may not be furnished by the employer or Art XIII, Sec. 3, 1987 Constitution
contractor. (2a)
(Department Order No. 005 92)
A. Nature of Security of Tenure:

II. EMPLOYER 5. A right guaranteed by the Constitution - should not be lightly


denied on so nebulous a basis as mere speculation.
Distribution of homework. (Civil Service Corp. Workers Union v. City Service Corp.1985)

"employer" of homeworkers- includes any person, natural or


artificial, who for his account or benefit or on behalf of any person
residing outside the country, directly or indirectly, or through any 6. NOT an absolute right a worker may still be dismissed for
employee, agent, contractor, sub-contractor or any other person: cause
(Manila Electric Co. vs. NLRC, 1991)
1. Delivers, or causes to be delivered, any goods, articles or
materials to be processed or fabricated in or about a home 7. Qualified by the Doctrine of Strained Relations Where
and thereafter to be returned or to be disposed of or reinstatement is not feasible, expedient or practical, as where
distributed in accordance with his directions; or reinstatement would only exacerbate the tension and strained
2. Sells any goods, articles or materials for the purpose of having relations between the parties, or where the relationship
the same processed or fabricated in or about a home and between the employer and employee has been unduly
then rebuys them after such processing or fabrication, either strained by reason of their irreconcilable differences,
himself or through some other person. (Art. 155) particularly where the illegally dismissed employee held a
managerial or key position in the company, it would be more
prudent to order payment of separation pay instead of
reinstatement.
(Quijano vs. Mercury Drug Corp., 1998)

8. Does NOT give an EE an absolute right to his position - When a


transfer is not unreasonable, nor inconvenient, nor prejudicial
to an employee; and it does not involve a demotion in rank or
diminution of his pay, benefits, and other privileges, the
employee may not complain that it amounts to constructive
dismissal.
(Lanzadares vs. Amethyst Security, 2003)

71. B. Coverage

Applies to ALL establishments or undertakings, whether for profit or


not. (Art 278)

h. Regular EE Art 279

i. Contract EE security of tenure to a limited extent, i.e. they


remain secure in their employment during the period their
respective contracts of employment remain in effect
(Labajo vs. Alejandro, 1988)

j. Probationary EE security of tenure to a limited extent

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LABOR LAW I LABOR STANDARDS

Limitations on power of ER to terminate a probationary unworthy of trust and confidence demanded by his
EE: position.
(Reyno v. Manila Electric Co., 2004)
exercised in accordance with the specific
requirements of the contract
dissatisfaction of the ER must be real and in good E. Factors
faith, not feigned so as to circumvent the contract
or the law
no unlawful discrimination in the dismissal iii) Value of articles pilfered
(Lopez vs. Javier, 1996) (Associated Labor Union v. NLRC, 1999)

k. Managerial EE entitled to security of tenure, and cannot be iv) Whether is EE is a managerial or confidential EE.
arbitrarily dismissed at any time, and without cause as - managerial or confidential EE: greater trust is placed by
reasonably established in an appropriate investigation. management, and greater fidelity to duty is
(Inter Orient Maritime Enterprises, Inc. vs. NLRC, 1994) correspondingly expected.
- rank-and-file EE: generally mere wage earners whose
C. Management Rights and Security of Tenure dismissal from employment can have severe financial
consequences on their families.
(Associated Labor Union v. NLRC, 1999)
Requisites for Validity of Management Prerogative regarding
Dismissal: v) Length of service
(PLDT, Inc. v. NLRC, 1999)
vi) Number of violations committed during his employ.
4. Exercised in good faith for the advancement of the ER's (PLDT, Inc. v. NLRC, 1999)
interest, and
5. NOT for the purpose of defeating or circumventing the
rights of the EEs under special laws or under valid
F. Rules Managerial and Rank-and-File EEs
agreements
(San Miguel Brewery, etc. v. Ople, 1989)
Managerial EE/Confidential EE
The dismissals of the EEs must be made within the parameters sufficient that there is some basis for such loss of confidence,
of law and pursuant to the tenets of equity and fair play. The such as when the employer has reasonable ground to believe
ER's right to terminate the services of an EE for just or that the employee concerned is responsible for the purported
authorized cause must be exercised in GF. It must NOT amount misconduct, and the nature of his participation therein renders
to interfering with, restraining or coercing EEs in the exercise him unworthy of the trust and confidence demanded by his
of their right to self-organization because it would amount to position; proof beyond reasonable doubt is NOT required
ULP under Art 248. (Caoile v. NLRC, 1998)
(Colegio de San Juan de Letran v. Assn. of Employees, etc.,
2000) employment for a long time taken against the EE
(Salvador v. Phil. Mining Service Corp., 2003)

D. Guidelines on Imposition of Penalties


Rank-and-file EE
(cx) loss of trust and confidence as ground for valid dismissal
6. ER's prerogative to discipline or dismiss its EE must NOT requires proof of involvement in the alleged events in
be exercised wantonly, but must be controlled by question, and that mere uncorroborated assertions and
substantive due process and tempered by the accusations by the employer will not be sufficient
fundamental policy of protection to labor enshrined in (Caoile v. NLRC, 1998)
the Constitution.
(Farrol v. CA, 2000)
7. The penalty must be commensurate with the act, TERMNATION OF EMPLOYMENT BY EMPLOYEE
conduct or omission imputed to the employee and
imposed in connection with the employers disciplinary I. CAUSES
authority.
(Farrol v. CA, 2000) A. Just causes for termination by EE: SICA
8. [P]olicies, rules and regulations on work-related activities (no written notice to ER required)
of the employees must always be fair and reasonable,
and the corresponding penalties, when prescribed, must Serious insult by the ER or his representative on the
be commensurate to the offense involved and to the honor and person of the EE;
degree of the infraction. Inhuman and unbearable treatment accorded the EE by
(VH Manufacturing, Inc. v. NLRC, 2000; St. Michael's the ER or his representative;
Institute v. Santos, 2001) Commission of a crime or offense by the ER or his
representative against the person of the EE or any of the
9. Employers are allowed a wider latitude of discretion in immediate family members of his family; and
terminating the employment of managerial personnel or
Other causes analogous to any of the foregoing. (Art 285
those of similar rank performing functions which by their
(b))
nature require the employers trust and confidence, than
in the case of ordinary rank-and-file employees.
B. Termination by EE without just cause:
(Etcuban, Jr. v. Sulpicio Lines, Inc., 2005)
10. Substantial proof is sufficient as basis for the imposition EE to serve written notice on ER at least 1 month in advance. (Art
of any disciplinary action upon the EE. The standard of 285(a))
substantial evidence is satisfied where the ER has
reasonable ground to believe that the EE is responsible Effect of failure to serve notice: ER may hold EE liable for damages
for the misconduct and participation therein renders his (Art 285(a))

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LABOR LAW I LABOR STANDARDS

a. special laws and decrees


C. Resignation b. individual or collective bargaining agreement
c. voluntary ER practice or policy
Definition (Bk VI, Rule I, Sec 12, Omnibus Rules)
When the bona fide suspension of the operation of a business
The voluntary act of an EE who finds himself in a situation where he or undertaking exceeds six months, then the employment of
believes that personal reasons cannot be sacrificed in favor of the the employee shall be deemed terminated.
exigency of the service and he has no other choice but to dissociate (Valdez v. NLRC, 1998)
himself from his employment.
(Habana vs. NLRC, 1998) TERMINATION OF EMPLOYMENT BY EMPLOYER

Requisites of Resignation: PRELIMINARY MATTERS

5. Unconditional I. Basis of Right and Requirements


(Azcor Manufacturing, Inc. v. NLRC, 1999)
6. Intention to relinquish a portion of the term of office A. Basis:
accompanied by an act of relinquishment.
(Azcor Manufacturing, Inc. v. NLRC, 1999) The right of an employer to freely select or discharge his
- No valid resignation where it was made without proper employees, is subject to regulation by the State basically in the
discernment (Metro Transit Organization, Inc. v. NLRC, exercise of its paramount police power. (Commonwealth Acts
1998) Nos. 103 and 213.) But an employer cannot legally be
4. Voluntary compelled to continue with the employment of a person who
(Pascua v. NLRC, 1998) admittedly was guilty of misfeasance or malfeasance towards
4. Acceptance of ER necessary to make the resignation his employer, and whose continuance in the service of the
effective latter is patently inimical to his interests. The law, in protecting
(Shie Jie Corp./Seastar Ex-im Corp. v. National Federation the rights of the laborer, authorizes neither oppression nor
of Labor, 2005; Reyes v. CA, 2003) self-destruction of the employer.
- Resignations, once accepted and being the sole act of (Manila Trading and Supply Co., Inc. v. Zulueta, 1940)
the employee, may not be withdrawn without the [I]t has been established that the right to dismiss or otherwise
consent of the employer. impose disciplinary sanctions upon an employee for just and
(Intertrod Maritime, Inc. v. NLRC, 1991) valid cause, pertains in the first place to the employer, as well
as the authority to determine the existence of said cause in
Rule: Filing of an illegal dismissal case is inconsistent with accordance with the norms of due process.
resignation (Valdez v. NLRC, 98) (Makati Haberdashery, Inc. v. NLRC, 1989)

Willi Hahn Enterprises v. Maghuyop, 2004: B. Requisites for Valid Dismissal


The rule that the filing of a complaint for illegal dismissal is
inconsistent with resignation is not applicable to the instant case. Substantive Due Process Dismissal for any of the just or
The filing of an illegal dismissal case by respondent was evidently a valid causes under Arts 282 284
mere afterthought. It was filed not because she wanted to return
Procedural Due Process EE must be given notice with
to wok but to claim separation pay and back wages.
adequate opportunity to be heard before he is notified of
his actual dismissal for cause.
Constructive Dismissal
(Fujitsu v. CA, 2005)
- ER may NOT substitute the required prior notice &
Definition
opportunity to be heard with the mere payment of 30
An involuntary resignation resorted to when continued
days' salary.
employment is rendered impossible, unreasonable, or unlikely;
(PNB v. Cabanag, 2005)
when there is a demotion in rank and/or a diminution in pay; or
when a clear discrimination, insensibility or disdain by an employer
Grounds for Termination
becomes unbearable to the employee.
(Phil. Wireless, Inc. v. NLRC, 1998)
Serious misconduct or willful disobedience
Gross or habitual neglect of duties
if the employee was forced to remain without work or
assignment for a period exceeding six months, then he is in Fraud or willful breach of trust
effect constructively dismissed. Commission of a crime or offense against the person of
(Valdez v. NLRC, 1998) the ER or any immediate member of his family or duly
authorized representative
II. No Termination Analogous Causes
Installation of labor saving devices
Circumstances that shall NOT terminate employment: Redundancy
Retrenchment to prevent losses
Bona fide suspension of the operation of a business or Closing or cessation of operation
undertaking NOT exceeding 6 months; OR Disease
Fulfillment by the EE of a military or civic duty. (Art 286)

ER shall reinstate the EE to his former position without loss of II. Just Causes
seniority rights if EE indicates his desire to resume to work not (Art 282)
later than 1 month from the resumption of operations of his
ER or from relief from the military or civic duty. A. Serious Misconduct or Willful Disobedience
(Art 286)
ER-EE relationship deemed SUSPENDED in case of suspension Art 282 Termination by Employer
of operation, unless suspension is for the purpose of defeating An employer may terminate an employment for any of the
the rights of the EEs, or mandatory fulfillment of military or following causes:
civic duty. (a) Serious misconduct or willful disobedience by the employee of
(Bk VI, Rule I, Sec 12, Omnibus Rules) the lawful orders of his employer or representative in connection
Payment of wages and grant of other benefits and privileges with his work;
while EE is on military or civic duty shall be subject to:
1. Serious Misconduct

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LABOR LAW I LABOR STANDARDS

Gross negligence connotes want of care in the performance of


Definition one's duties, while habitual neglect implies repeated failure to
Improper or wrong conduct; the transgression of some established perform one's duties for a period of time, depending upon the
and definite rule of action, a forbidden act, a dereliction of duty, circumstances.
willful in character, and implies wrongful intent and not mere error (Chua v. NLRC, 2005)
in judgment.
To be serious, the misconduct must be of such grave and Requisites for Neglect of Duty to be a Ground for Dismissal:
aggravated character. It must be in connection with the employee's
work to constitute just cause for separation. Gross want of care in the performance one's duties;
(Austria v. NLRC, 1999; Samson v. NLRC, 2000; Villamor Golf Club v. Habitual repeated failure to perform one's duties for a
Pehid, 2005; Lakpue Drug, Inc. v. Belga, 2005) period of time, depending upon the circumstances
(Chua v. NLRC, 2005)
Requisites:
Neglect of duty must be BOTH gross and habitual
Serious
Related to the performance of the EE's duties; AND Simple Negligence
Shows that the EE has become unfit to continue working
for the ER. Under the Labor Code simple negligence is NOT a ground for
(Philippine Aeolus Automotive United Corp. v. NLRC, the dismissal of an EE.
2000; Coca-Cola Bottlers, Phil., Inc. v. Kapisanan ng (RDS Trucking v. NLRC, 1998)
Malayang Manggagawa sa Coca- Cola, 2005) Mere involvement in an accident, absent any showing of fault
or recklessness on the part of the EE, is NOT a valid ground for
2. Willful Disobedience dismissal.
(Paguio Transport Corp. v. NLRC, 1998)
Requisites:
C. Fraud Willful Breach of Trust
EE's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; AND Art 282 Termination by Employer
The order violated must have been: An employer may terminate an employment for any of the
a. reasonable following causes:
b. lawful (c) Fraud or willful breach by the employee of the trust reposed in
c. made known to the EE him by his employer or duly authorized representative;
d. pertain to the duties which he had been engaged to
discharge. Requisites of Loss of Confidence
(Westin Phil. Plaza Hotel v. NLRC, 1999; Micro Sales
Operation Network v. NLRC, 2005) (PLDT v. Tolentino, 2004; Jardine Davies, Inc. v. NLRC, 1999)
EE concerned holds a position of trust and confidence
Not every case of willful disobedience may be penalized by - person is entrusted with confidence on delicate
dismissal; the penalty must be proportionate. matters, such as care and protection, handling or custody
(Bascon v. CA, 2004) of the employer's property
(Panday v. NLRC, 1992)
Tierra International Production Corp. v. NLRC, 1996: Act complained of must be "work-related"
According to the report of the company's Site - act would show the employee concerned to be unfit to
Administration Officer, private respondents were given three continue working for the employer
"options:" (1) to go back to work; (2) to apologize to their Basis for such loss of confidence
supervisor; and (3) to be repatriated. What private respondents - proof beyond reasonable doubt NOT necessary
were given were not really "options." They were given the choice of - sufficient that employer has reasonable ground to
apologizing for their refusal to work and then resume working as believe that the employee concerned is responsible for
ordered, or, else, resign and be sent back home. Under the the purported misconduct, and the nature of his
circumstances they really had no choice but to resign. It was not participation therein renders him unworthy of the trust
pride or arrogance which made them refuse to work as ordered, but and confidence demanded of his position
the assertion of their right not to be made to work outside of what
they had been hired to do. For asserting their right, private Guidelines for Application of Doctrine of Loss of Confidence
respondents should not be punished. We, therefore, hold that
private respondents' dismissal was illegal and that for this reason a. Loss of confidence should NOT be simulated;
they are entitled to be paid their salaries corresponding to the b. It should NOT be used as a subterfuge for causes which are
unexpired portion of their employment contract, in addition to their improper, illegal or unjustified;
unpaid salaries prior to their dismissal, as found by both the POEA c. It should NOT be arbitrarily asserted in the face of overwhelming
and the NLRC. evidence to the contrary;
d. It must be genuine, NOT a mere afterthought to justify earlier
B. Gross and Habitual Neglect of Duties action taken in bad faith;
e. The EE involved holds a position of trust and confidence.
Art 282 Termination by Employer (Vitarich v. NLRC, 1999; Coca-Cola Bottlers, Phils., Inc. v. Kapisanan
An employer may terminate an employment for any of the ng Malayang Manggagawa sa Coca-Cola, 2005)
following causes:
Willful Breach of Trust
(b) Gross and habitual neglect by the employee of his duties;
Willful Breach - breach done intentionally, knowingly,
Definition of Gross Negligence and Habitual Neglect: purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently.
Gross negligence is negligence characterized by want of even (Atlas Consolidated Mining and Development Corp. v. NLRC,
slight care, acting or omitting to act in a situation where there 1998)
is a duty to ac, not inadvertently but willfully and intentionally There must be actual breach of duty which must be
with a conscious indifference to consequences insofar as other established by substantial evidence.
persons may be affected. (Atlas Consolidated Mining and Development Corp. v. NLRC,
(Tres Reyes v. Maxim's Tea House, 2003; Cebu Filveneer Corp. 1998)
v. NLRC, 1998; Citibank v. Gatchalian, 1995)

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LABOR LAW I LABOR STANDARDS

Coverage demanded by his position. It cannot be gainsaid that the breach of


trust must be related to the performance of the employee's
The term trust and confidence is restricted to MANAGERIAL EEs function. On the other hand, the commission of a crime by the
(Fujitsu Computer Products Corp. v. CA, 2005) employee under Article 282 (d) refers to an offense against the
person of his employer or any immediate member of his family or
Lack of Damage his duly authorized representative. Analogous causes must have an
element similar to those found in the specific just cause
The lack of material or pecuniary damages would NOT in any way enumerated under Article 282. Clearly lacking in the ground invoked
mitigate a person's liability nor obliterate the loss of trust and by petitioner is its relation to his work or to his employer.
confidence. In the case at bar, the commission of the crime of homicide
(Cadiz v. CA, 2005) was outside the perimeter of the IRRI complex, having been
committed in a restaurant after office hours and against a non-IRRI
employee. Thus, the conviction of Micosa for homicide was not
D. Commission of Crime work-related, his misdeed having no relation to his position as
laborer and was not directed or committed against IRRI or its
Art 282 Termination by Employer authorized agent.
An employer may terminate an employment for any of the
following causes: Violation of a company rule prohibiting the infliction of harm
(d) Commission of a crime or offense by the employee against the or physical injury against any person under the particular
person of his employer or any immediate member of his family or circumstances provided for in the same rule may be deemed
his duly authorized representative; analogous to "serious misconduct".
(Oania v. NLRC, 1995)
Gross inefficiency is closely related to gross neglect for both
E. Analogous Cases involve specific acts or omission on the part of the employee
resulting in damage to the employer or to his business.
(Lim v. NLRC, 1996)
Art 282 Termination by Employer
An employer may terminate an employment for any of the F. Others Just Causes Claimed by Employer
following causes:
(e) Other causes analogous to the foregoing. 1. Abandonment

Quarrelsome - Bossy Definition

An EE's attitude problem is a valid ground for dismissal, The deliberate and unjustified refusal of an EE to resume his
equivalent to loss of trust and confidence: employment; it is a form of neglect of duty.
An EE who cannot get along with his fellow co-EEs is (Nueva Ecija Electric Cooperative v. NLRC, 2005)
detrimental to the company for he can upset and restrain the A deliberate, unjustified refusal of an employee to resume his
working environment. Management has the prerogative to work, coupled with a clear absence of any intention of
take the necessary action to correct the situation and protect returning to his work.
its organization. (Escobin v. NLRC, 1998)
(Heavylift Manila, Inc. v. CA)
Requisites:

Cathedral School of Technology v. NLRC, 1992: 5. Failure to report for work or absence without valid or
The reason for which private respondent's services were justifiable reason; and
terminated, namely, her unreasonable behavior and unpleasant 6. A clear intention, as manifested by some overt act, to
department in dealing with the people she closely works with in the sever the ER-EE relationship.
course of her employment, is analogous to the other "just causes" (Floren Hotel v. NLRC, 2005; Leonardo v. NLRC, 2000)
enumerated under the Labor Code, as amended.
Petitioners' averments on private respondent's disagreeable Inference
character "quarrelsome, bossy, unreasonable and very difficult to
deal with" are supported by the various testimonies of several Abandonment of position CANNOT be lightly inferred, much less
co-employees and students of the school. The conduct she legally presumed from certain equivocal acts such as interim
exhibited on that occasion smacks of sheer disrespect and defiance employment.
of authority and assumes the proportion of serious misconduct or (Hacienda Dapdap v. NLRC, 1998)
insubordination, any of which constitutes just cause for dismissal
from employment. No Abandonment

Probable Cause Instances that do NOT constitute abandonment:

Although after preliminary investigation probable cause has Mere absence from work, especially where the employee has
been found and the accused has been detained, this is NOT been verbally told not to report, cannot by itself constitute
legal basis for immediate termination of employment. abandonment.
(Standard Electric Manufacturing Corp. v. Standard Electric (Mendoza v. NLRC, 1999)
Union, 2005) EEs do not need to take their meals within the company
premises. The act of going home to have dinner does NOT
Conviction Moral Turpitude constitute abandonment.
(PAL v. NLRC, 1999)
International Rice Research Institute v. NLRC, 1993:
The act of leaving his workplace to relieve himself can hardly
Article 282 of the Labor Code enumerates the just causes
be characterized as abandonment, much less a willful or
wherein an employer may terminate an employment. Verily,
intentional disobedience of company rules since he was
conviction of a crime involving moral turpitude is not one of these
merely answering the call of nature over which he had no
justifiable causes. Neither may said ground be justified under Article
control.
282 (c) nor under 282 (d) by analogy. Fraud or willful breach by the
(Dimabayo v. NLRC, 1999)
employees of the trust reposed in him by his employer or duly
authorized representative under Article 282 (c) refers to any fault or
culpability on the part of the employee in the discharge of his duty
rendering him absolutely unworthy of the trust and confidence

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Employer has Burden of Proving Abandonment (Brent School v. Zamora, 1990; Romares v. NLRC, 1998;
Medenilla v. Phil. Veterans Bank, 2000)
The unflinching rule in illegal dismissal cases is that the employer
bears the burden of proof. To establish a case of abandonment, the If a contract is for a fixed term and the EE is dismissed without
employer must prove the employee's deliberate and unjustified just cause, he is entitled to the payment of his salaries
refusal to resume employment without any intention of returning. corresponding to the unexpired portion of the employment
Specifically, the employer has to show the concurrence of the contract.
following: (1) the employee's intention to abandon employment (Medenilla v. Phil. Veterans Bank, 2000)
and (2) overt acts from which such intention may be inferred as
when the employee shows no desire to resume works. 6. Past Infractions
(Mendoza v. NLRC, 1999)
Past Offenses
Filing of Case for Illegal Dismissal Inconsistent with Abandonment
Previous offenses may be so used as valid justification for dismissal
The immediate filing of a complaint for illegal dismissal against the from work only if the infractions are related to the subsequent
employer is a clear indication that the employee has not given up offense upon which basis the termination of employment is
on his work. decreed.
(CMP Federal Security Agency, Inc. v. NLRC, 1999) (Stellar Industrial Service, Inc. v. NLRC, 1996; La Carlota Planters
Assn. v. NLRC, 1998)
2. Loans
7. Professional Training
Borrowing Money
Residency Training
Borrowing money is neither dishonest, nor immoral, nor illegal,
much less criminal. (Medical Doctors, Inc. [Makati Medical Center] Felix v. Buenaseda, 1995:
v. NLRC) A residency or resident physician position in a medical
However, said act becomes a serious misconduct that may justly be specialty is never a permanent one. Residency connotes training
asserted as a ground for dismissal when reprehensible behavior and temporary status. It is the step taken by a physician right after
such as the use of a trust relationship as a leverage for borrowing post-graduate internship (and after hurdling the Medical Licensure
money is involved. Examinations) prior to his recognition as a specialist or sub-
(Pearl S. Buck Foundation, Inc. v. NLRC, 1990) specialist in a given field.
Under this system, residents, specially those in university
Medical Doctors, Inc. v. NLRC, 1985: teaching hospitals enjoy their right to security of tenure only to the
The act of borrowing money by a hospital probationary clerk from a extent that they periodically make the grade, making the situation
patient is NOT a ground for termination of employment as her quite unique as far as physicians undergoing post-graduate
borrowing was due to economic necessity protected by the residencies and fellowships are concerned.
Constitution. She paid what she borrowed, and was recommended
for permanent appointment. 8. Love and Morals

3. Courtesy Resignation Immorality

Batongbacal v. Associated Bank, 1988: When a teacher engages in extra-marital relationship, especially
Resignation per se means voluntary relinquishment of a position or when the parties are both married, such behavior amounts to
office. Adding the word "courtesy" did not change the essence of immorality, justifying his termination from employment.
resignation. That courtesy resignations were utilized in government (Santos v. NLRC, 1998)
reorganization did not give private respondent the right to use it as
well in its own reorganization and rehabilitation plan. There is no Love
guarantee that all employers will not use it to rid themselves
arbitrarily of employees they do not like, in the guise of Chua-Qua v. Clave, 1990:
"streamlining" its organization. On the other hand, employees Private respondent utterly failed to show that petitioner took
would be unduly exposed to outright termination of employment advantage of her position to court her student. If the two eventually
which is anathema to the constitutional mandate of security of fell in love, despite the disparity in their ages and academic levels,
tenure. this only lends substance to the truism that the heart has reasons of
its own which reason does not know. But, definitely, yielding to this
4. Work Attitude gentle and universal emotion is not to be so casually equated with
immorality. The deviation of the circumstances of their marriage
Absences from the usual societal pattern cannot be considered as a defiance
of contemporary social mores.
An employees habitual absenteeism without leave, which violated
company rules and regulations is sufficient cause to justify 9. Violation of Company Rules
termination from service.
(Manila Electric Co. v. NLRC, 1996) Company policies and regulations, unless shown to be grossly
oppressive or contrary to law, are generally valid and binding on the
5. Term Employment parties and must be complied with until finally revised or amended,
unilaterally or preferably through negotiation, by competent
Brent Ruling Criteria under which term employment does NOT authority.
Circumvent Security of Tenure (Aparente, Sr. v. NLRC, 2000)

The fixed period of employment was knowingly and 10. Criminal Case
voluntarily agreed upon by the parties without any force,
duress, or improper pressure being brought to bear upon Effect of Acquittal
the employee and absent any other circumstances
vitiating his consent; OR Dismissal of the criminal case against an EE shall NOT necessarily be
It satisfactorily appears that the employer and the a bar to his dismissal from employment on the ground of loss of
employee dealt with each other on more or less equal trust and confidence.
terms with no moral dominance exercised by the former (Ramos v. NLRC, 1998)
or the latter.

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Conviction reduced, and such reduction is not grounded on valid grounds


Sampaguita Garments Corp. v. NLRC, 1994: such as genuine business necessity.
The private respondent's conviction of the crime of theft of (Go v. CA, 2004)
property belonging to the petitioner has affirmed the existence of a
valid ground for her dismissal and thus removed the justification for Mark Roche International v. NLRC, 1999:
the administrative decision ordering her reinstatement with back Respondent was illegally dismissed but there was not
wages. constructive dismissal as it did not involve a demotion in rank or
diminution in pay. They were simply told, without prior warning or
Dismissal Criminal Case notice, that there was no more work for them.

Conviction of an EE in a criminal case is NOT indispensable to Employer has Burden of Proof


warrant his dismissal and the fact that a criminal complaint against
the EE has been dropped by the fiscal is NOT binding and conclusive In constructive dismissals, the employer has the burden has the
upon a labor tribunal. burden of proving that the transfer and demotion of an employee
(Lacoste v. Inciong, 1988) are for just and valid grounds such as genuine business necessity.
(Globe Telecom, Inc. v. Florendo, 2003)
Guilt or Innocence
Preventive Suspension
The guilt or innocence in a criminal case is NOT determinative of the
existence of a just or authorized cause for dismissal. Definition
(Chua v. NLRC, 1993)
Preventive suspension is a disciplinary measure for the protection
11. Abolition of Position of the company's property pending investigation of any alleged
malfeasance or misfeasance committed by the employee. The
The abolition of a position deemed no longer necessary is a employer may place the worker concerned under preventive
management prerogative, which must be done without malice and suspension if his continued employment poses a serious and
arbitrariness. imminent threat to the life or property of the employer or of his co-
(Benguet Electric Cooperative v. Fianza, 2004) workers.
(PAL v. NLRC, 1998)
12. Dishonesty
Preventive Suspension Limited to 30 days
Nuguit v. NLRC, 2003:
As custodian of the petty cash fund, he had the duty to Preventive suspension for an indefinite period amounts to a
ascertain that the circumstances which brought about any claim dismissal, and is violative of Rule XIV, Sec. 4, IRR, which limits the
therefrom were in order. He cannot now shirk from this preventive suspension to 30 days.
responsibility by indirectly pinning the blame on the approving (Kwikway Engineering Works v. NLRC, 1991)
officer and asserting that the transgression was the result of mere
inadvertence.
III. Other Causes Business Related Causes
Transfers Discharge and Suspension
Recognition of Right
The ER has the right to transfer or assign EEs from one area of
operation to another, or one office to another or in pursuit of its Uichico v, NLRC, 1997:
legitimate business interest, provided there is no demotion in rank The law recognizes the right of every business entity to
or diminution of salary, benefits and other privileges and not reduce its workforce if the same is made necessary by compelling
motivated by discrimination or made in bad faith, or effected as a economic factors which would endanger its existence or stability.
form of punishment or demotion without sufficient cause. This The fundamental law itself guarantees, even during the process of
matter is a prerogative inherent in the ER's right to effectively tilting the scales of social justice towards workers and employees,
control and manage the enterprise. the right of enterprises to reasonable returns of investment and to
(Lazanderas v. Amethyst Security and General Services, 2003; expansion and growth. To hold otherwise would not only be
Castillo v. NLRC, 1999; Westin Phil. Plaza Hotel v. NLRC, 1999) oppressive and inhuman, but also counter-productive and
ultimately subversive of the nation's thrust towards a resurgence in
When Transfer amounts to Constructive Dismissal our economy which would ultimately benefit the majority of our
people. Where appropriate and where conditions are in accord with
A transfer amounts to constructive dismissal when the transfer is law and jurisprudence, the Court has authorized valid reductions in
unreasonable, inconvenient, or prejudicial to the employee, and it the volume of business which has rendered certain employees
involves a demotion in rank or diminution of salaries, benefits and redundant.
other privileges.
(Mendoza v. Rural Bank, 2004; OSS Security and Allied Services, Inc. Art 283 Closure of Establishment and Reduction of Personnel
v. NLRC, 2000)
The ER may also terminate the employment of any employee due
Constructive Discharge to:
Installation of labor saving devices
Definition Redundancy
Retrenchment to prevent losses, OR
A quitting because continued employment is rendered Closing or cessation of operation of the establishment or
impossible, unreasonable or unlikely; as, an offer involving a undertaking,
demotion in rank and a diminution in pay. unless the closing is for the purpose of circumventing the
(Mobile Protective and Detective Agency v. Ompad, 2005; provisions of this Title xxx
Philippine-Japan Active carbon Corp. v. NLRC, 1989)
There is constructive dismissal when there is a demotion in Manner of Termination
rank and/or diminution in pay, or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to ER to serve a written notice to:
the employee. Wokers, AND
(Dusit Hotel Nikko v. National Union in Hotel, Restaurant and DOLE
Allied Industries, 2005) at least 1 month before the intended date of termination.
Constructive dismissal is present when an employee's (Art 283)
functions, which were originally supervisory in nature were

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LABOR LAW I LABOR STANDARDS

Procedure Requirements
A. Installation of Labor Saving Devices
The ER must comply with the following requisites:
Worker Affected to receive: Written notice served on both the EEs and the DOLE at
separation pay = 1 month pay or at least 1 month pay for every year least 1 month prior to the intended date of
of service retrenchment;
Payment of separation pay equivalent to at least one
B. Redundancy month pay or at least one month pay for every year of
service, whichever is higher;
Definition Good faith in abolishing the redundant positions; and
Redundancy exists where the services of an employee are in excess Fair and reasonable criteria in ascertaining what positions
of what is reasonably demanded by the actual requirements of the are to be declared redundant and accordingly abolished.
enterprise. A position is redundant where it is superfluous, and (Asian Alcohol Corp. v. NLRC, 1999)
superfluity of a position or positions may be the outcome of a
number of factors, such as over hiring of workers, decreased Venue of Complaint
volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the The appropriate forum for such controversy would, however, be the
enterprise. DOLE and NOT an investigation or hearing to be held by the
(Wiltshire File Co., Inc. v. NLRC, 1991; Tierra International employer itself.
Construction Corp. v. NLRC, 1992) (Wiltshire File Co., Inc. v. NLRC, 1991)

In redundancy, what is looked into is:


a. the position itself, C. Retrenchment to Prevent Losses
b. the nature of the services performed by the employee, and
c. the necessity of such position. Definition
(Tierra International Construction Corp. v. NLRC, 1992; Edge
Apparel, Inc. v. NLRC, 1998) Retrenchment is the termination of employment initiated by the
Redundancy does NOT refer to duplication of work. That no employer through no fault of the employees and without prejudice
other person was holding the same position which the to the latter, resorted to by management during periods of business
dismissed employee held prior to the termination of his recession, industrial depression, or seasonal fluctuations or during
services does not show that his position had not become lulls occasioned by lack of orders, shortage of materials, conversion
redundant. of the plant for a new production program or the introduction of
(Escareal v. NLRC, 1992) new methods or more efficient machinery, or of automation.
(FF Marine Corp., v. NLRC, 2005)
Worker Affected to receive:
separation pay = 1 month pay or at least 1 month pay for every year
of service
Retrenchment Redundancy Closure
Business Judgment Reduction of The service of an The reversal of
personnel usually EE is in excess of the fortune of the
The determination of the continuing necessity of a particular officer due to poor what is required ER whereby there
or position in a business corporation is management's prerogative, financial returns by an enterprise is a complete
and the courts will not interfere with the exercise of such so long as so as to cut down cessation of
no abuse of discretion or merely arbitrary or malicious action on the on costs of business
part of management is shown. operations in operations and/or
(Wiltshire File Co., Inc. v. NLRC, 1991; DOLE Philippines, Inc. v. NLRC, terms of salaries and actual
2001; Asufrin v. San Miguel Corp., 2004) and wages locking-up of the
doors of the,
Financial Loss usually due to
financial losses
Art. 283 does NOT require that the ER should be suffering from
Resorted to Aims to prevent
financial losses before he can terminate and EE on the ground of
primarily to avoid further financial
redundancy.
or minimize drain upon the ER
The fact that a company is suffering from financial losses merely
business losses
provides stronger justification for the termination.
(Escareal v. NLRC, 1992)
Coverage
Criteria Selection of Employees
14. Contemplates termination of employment to minimize
A company must have fair and reasonable criteria in implementing established business losses and to prevent impending business
its redundancy program, such as but not limited to: losses
(Balbalec v. NLRC, 1995)
a. preferred status (ex. temporary EE) 15. Applies to non-stock, non-profit organizations
b. efficiency, and (Philippine Tuberculosis Society, Inc. v. NLRC, 1998)
c. seniority
(Panlilio v. NLRC, 1997; Golden Thread Knitting Industries, Inc. v. Temporary Retrenchment
NLRC, 1999)
Article 286 may be applied but only by analogy to set a specific
Employment of an Independent Contractor Effect period that employees may remain temporarily laid-off or in
floating status. The temporary lay-off wherein the employees
An employer's good faith in implementing a redundancy program is likewise cease to work should also not last longer than six months.
not necessarily destroyed by availment of the services of an After six months, the employees should either be recalled to work
independent contractor to replace the services of the terminated or permanently retrenched following the requirements of the law,
employees. The reduction of the number of workers in a company and that failing to comply with this would be tantamount to
made necessary by the introduction of an independent contractor is dismissing the employees and the employer would thus be liable for
justified when the latter is undertaken in order to effectuate more such dismissal.
economic and efficient methods of production.
(Asian Alcohol Corp. v. NLRC, 1999)

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LABOR LAW I LABOR STANDARDS

Procedure - Requisites Requirements

Necessity of the retrenchment to prevent losses and Service of a written notice to the employees and to the
proof of such losses; [D]OLE at least 1 month before the bona fide in
Written notice to the EEs and to the DOLE at least one character; and
month prior to the intended date of retrenchment; and Payment to the employees of termination pay amounting
Payment of separation pay equivalent to one month pay to at least one-half month pay for every year of service,
or at least month pay for every year of service, or 1 month pay, whichever is higher.
whichever is higher. (Caffco International Ltd. v. Office MOLE, 1992)
(Guerrero v. NLRC, 1996)
Partial Closure
Standards
The phrase "closure or cessation of operation of an establishment
The losses expected should be substantial and NOT or undertaking not due to serious business losses or reverses"
merely de minimis in extent; under Article 283 of the Labor Code includes both the complete
The substantial loss apprehended must be reasonably cessation of all business operations and the cessation of only part of
imminent, as such imminence can be perceived a companys business.
objectively and in good faith by the employer; (Cheniver Deco Print Technics Corp. v. NLRC, 2000)
It must be reasonably necessary and likely to effectively
prevent the expected loss; and Temporary Cessation of Operation
Sufficient and convincing evidence must prove the
The bona fide suspension of operation of a business or undertaking
alleged losses, if already incurred, or the expected
for a period not exceeding 6 months shall NOT terminate
imminent losses sought to be forestalled.
employment.
(Lopez Sugar Corp. v. Federation of Free Workers, 1990;
(Art 286)
Blucor Plywood Corp. v. Amarilla, 2005)
ER to reinstate EE to his former position without loss of seniority
Nature of Loss
rights if he indicates his intention to resume his work not later than
1 month from the resumption of operations of the ER.
Losses must be substantial and not merely de minimis in
(Art 286)
extent
(Lopez Sugar Corp. v. Federation of Free Workers, 1990)
I. Temporary suspension of operations is recognized as a valid
The ER must prove serious business losses, and not just any exercise of management prerogative provided it is not carried
kind of loss. Otherwise, a company may feign excuses to suit out in order to circumvent the provisions of the Labor Code or
its whims and prejudices or to rid itself of unwanted EEs. to defeat the rights of the employees under the Code.
(Bogo-Medellin Sugar Cane Planters Assn., Inc. v. NLRC, 1998) (San Pedro Hospital of Digos v. Sec. of Labor, 1996)
II. The burden of proving that such a temporary suspension is
Working Capital Ratio or Current Ratio: bona fide falls upon the employer.
Tests the liquidity of the ER (San Pedro Hospital of Digos v. Sec. of Labor, 1996)
Measures the number of times that the current liabilities could
be paid with the current assets Effect on ER-EE Relationship
(Cama v. Joni's Food Services, Inc., 2004)
Employers who contemplate terminating the services of their
Sliding Income decreasing gross revenues workers must base their decisions on more than just flimsy excuses,
not necessarily losses, much less serious business losses considering that the dismissal of an employee from work involves
(San Miguel Jeepney Service v. NLRC, 1996) not only the loss of his position but, what is more important, his
means of livelihood. The same principle applies in temporary
Proof of Loss suspension of operations, as in this case, considering that it involves
laying off employees for a period of six months.
Financial statements audited by independent external auditors (San Pedro Hospital of Digos v. Sec. of Labor, 1996)
constitute the normal method of proof of the profit and loss
performance of a company. IV. Disease
(Lopez Sugar Corp. v. Federation of Free Workers, 1990)
Financial statements for 2 corporate years is insufficient proof ER my terminate an EE who:
of serious business losses. 1. Has been found to be suffering from any disease; AND
(Bogo-Medellin Sugar Cane Planters Assn., Inc. v. NLRC, 1998) 2. whose continued employment is prohibited by law or is
The condition of business losses is normally show by audited prejudicial to his health as well as as to the health of his
financial documents like yearly balance sheets and profit and co-employees.
loss statements as well as annual income tax returns. Financial (Art 284)
statements must be prepared and signed by independent
auditors. Separation pay = at least 1 month salary or to salary for every
(Damas International, Inc. v. Daguman, 2005) year of service, whichever is greater.

Effect of Rehiring V. Special Case of Business Transfers

Re-hiring or reemployment does NOT negate the imminent losses Nature of Labor Contract
which prompted the ER to retrench.
(Atlantic Gulf and Pacific Co. of Manila v. Meris, 2005) Sundowner Development Corp. v. Drilon, 1989:
Unless expressly assumed, labor contracts such as
D. Closing of Business employment contracts and collective bargaining agreements
are NOT enforceable against a transferee of an enterprise,
Right labor contracts being in personam, thus binding only between
the parties.
An ER may close or cease his business operations or undertaking No law requires a bona fide purchaser of assets of an on-going
even if he is not suffering from serious business losses or financial concern to absorb in its employ the employees of the latter.
reverses, as long as he pays his employees their termination pay in The parties are liable to the employees if the transaction
the amount corresponding to their length of service. between the parties is colored or clothed with bad faith.
(Catatista v. NLRC, 1995)

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LABOR LAW I LABOR STANDARDS

PROCEDURAL DUE PROCESS

In General

Agabon v. NLRC, 2004

Procedural Requirements Effect of Failure of Procedural Due Process

Basis for termination Requirements


Prior to 1989 termination illegal
Just Cause Art 282 1. Notice specifying the
Wenphil Corp. v. if termination for just cause
grounds for which dismissal
NLRC, 1989 = termination valid
is sought
- Belated Due (NO reinstatement and backwages)
2. Hearing or opportunity to
Process Rule +
be heard
3. Notice of the decision to
ER to indemnify EE
dismiss
Authorized Cause Notice to: * how computed: depends on the
Arts 283 & 284 1. Employee, & factual circumstances
2. DOLE
Serrano v. NLRC, if termination for just or valid cause
at least 30 days prior to the
2000 = termination valid + payment of
effectivity of the separation
full backwages

* how computed: from the time of


Four Possible Effect Liability of ER dismissal until the Court finds the
Situations dismissal to be for just cause
Just or Authorized Terminatio No liability Agabon v. NLRC, if termination for just or authorized
Cause + Due n valid * separation pay if for 2004 cause
Process authorized cause = termination valid
+
No Just or Terminatio Reinstatement + Full
Authororized n invalid Backwages ER to indemnify EE
Cause
+ Due Process * if reinstatement NOT * sanction in the nature of
possible = separation indemnification or penalty and
pay depends on the facts of each case,
No Just or Terminatio Reinstatement + Full taking into special consideration
Authorized Cause n invalid Backwages the gravity of the due process
+ No Due Process violation
* if reinstatement NOT * indemnity in the form of nominal
possible = separation damages
pay * indemnity stiffer to discourage
the practice of dismiss now, pay
Just or Authorized Terminatio Liable for non- later
Cause + No Due n valid compliance with
Process procedural req'ts
Burden of Proof
*separation pay if for
authorized cause The burden of proving that the termination of an employee is
for a valid or authorized cause rests on the employer. In any
event, the employer must comply with due process
Right to Counsel
requirements before any termination is done.
(Gothong Lines, Inc. v. NLRC, 1999)
The right to counsel, a very basic requirement of substantive due
Unsubstantiated suspicions and baseless conclusions by
process, has to be observed. Indeed, the rights to counsel and to
employers are not legal justification for dismissing employees.
due process of law are two of the fundamental rights guaranteed by
(Maranaw Hotel and Resort Corp. v. NLRC, 1999)
the 1987 Constitution to any person under investigation, be the
proceeding administrative, civil, or criminal.
Degree
(Salaw v. NLRC, 1991)
The ground for an employer's dismissal of an employee need be
Hearing
established only by substantial evidence; proof beyond reasonable
doubt not required.
No formal hearing necessary when the EE already admitted his
(Manila Electric Co., Inc. v. NLRC, 1991)
responsibility for the act he was accused of. (Magos v. NLRC,
1998)
Prescription Period
A formal or trial type hearing is not at all times and in all
instances essential to due process, the requirements of which An action for reinstatement by reason of illegal dismissal is one
are satisfied where the parties are afforded fair and based on an injury which may be brought within 4 years from the
reasonable opportunity to explain their side of the time of dismissal pursuant to Art. 1146 of the Civil Code.
controversy. It is deemed sufficient for the ER to follow the
natural sequence of notice, hearing and judgment. (National Offer to Reinstate
Semi-Conductor (HK) Distribution Ltd. v. NLRC, 1998)
Ample Opportunity in due process means that kind of The fact that his ER later made an offer to re-employ the EE did not
assistance that management must accord the EE to enable him cure the vice of earlier arbitrary dismissal.
to prepare adequately for his defense including legal (Ranara v. NLRC, 1992)
representation. (La Carlota Planters Assn., Inc. v. NLRC, 1998)
SANCTIONS and REMEDIES

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LABOR LAW I LABOR STANDARDS

The parties to a case should not be forced into a situation


Art 279 where a peaceful relationship is not feasible. As the petitioner
If EE is unjustly dismissed, he is entitled to: appears to have lost its trust in private respondent, who in
turn is not seeking reinstatement, it would be an act of
1. Reinstatement oppression to compel them to return to the status quo ante.
- without loss of seniority rights and other privileges, AND (Pearl S. Buck Foundation, Inc. v. NLRC, 1990)
Sentinel Security Agency, Inc. v. NLRC, 1998:
2. Full Backwages The Agency cannot reassign them to the Client, as the former
- inclusive of allowances, and to other benefits or their has recruited new security guards; the complainants, on the other
monetary equivalent computed from the time his hand, refuse to accept other assignment. Verily, complainants do
compensation was withheld up to the time of actual not pray for reinstatement; in fact they refused to be reinstated.
reinstatement. Such refusal is indicative of strained relations. Thus, separation pay
Reinstatement and backwages are separate and distinct reliefs is awarded in lieu of reinstatement.
given to an illegally dismissed EE.
(Judy Phils., Inc. v. NLRC, 1998) No Strained Relations

I. Reinstatement Strained relations in order that it may justify the award of


separation pay in lieu of reinstatement with backwages, should be
Definition such, that they are so compelling & so serious in character, that the
continued employment of an employee is so obnoxious to the
Reinstatement is aimed to restore the situation as nearly as person/business of the employer & that the continuation of such
possible to status quo ante the unfair labor practice. This employment has become inconsistent with peace & tranquility
requires that those deprived of a recognized and protected which is an ideal atmosphere in every workplace.
interest by violations of the law should be made whole so as to (Sibal v. Notre Dame of Greater Manila, 1990)
prevent the violator from profiting from his misdeeds
(Union of Supervisor, etc. v. Secretary of Labor, 1984) Options and Rationale

Employee Right The order of immediate reinstatement pending appeal, in


cases of illegal dismissal is an ancillary relief under RA 6715
An illegally dismissed employee is entitled to reinstatement as a granted to a dismissed employee to cushion him & his family
matter of right. against the impact of economic dislocation or abrupt loss of
However, where reinstatement is not feasible, expedient or earnings. If the employee chooses not to report for work
practical, as where reinstatement would only exacerbate the pending the resolution of the case on appeal, he foregoes such
tension and strained relations between the parties, or where the a temporary relief and is not paid of his salary.
relationship between the employer and employee has been unduly (Jardine Davies, Inc. v. NLRC, 1993)
strained by reason of their irreconcilable differences, particularly The provision of Article 223 is clear that an award for
where the illegally dismissed employee held a managerial or key reinstatement shall be immediately executory even pending
position in the company, it would be more prudent to order appeal and the posting of a bond by the employer shall not
payment of separation pay instead of reinstatement. stay the execution for reinstatement. The legislative intent is
(Quijano v. Mercury Drug Corp., 1998) quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the
Effect of failure to Ask Relief application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award
The relief of reinstatement, to which the EE is entitled to under the would certainly betray and run counter to the very object and
law, may be granted in his favor although he failed to specifically intent of Article 223, i.e., the immediate execution of a
pray for it in his complaint. reinstatement order. The reason is simple. An application for a
(General Baptist Bible College v. NLRC, 1993) writ of execution and its issuance could be delayed for
numerous reasons.
Exceptions (Pioneer Texturizing Corp. v. NLRC, 1997)
The posting of a bond by the ER shall NOT stay the execution
1. Business Conditions for reinstatement.
(International Container Services, Inc. v. NLRC, 1998)
The reinstatement remedy must always be adapted to
economic-business conditions. II. Backwages
(Union of Supervisors, etc. v. Sec. of Labor, 1984)
Sec. 13, Book IV, of the IRR provides that in the absence of a Definition
retirement plan, agreement or policy an employee may be The term "backwages" has been defined as that for earnings
retired upon reaching the age of 60 years. Thus, t an employee lost by a worker due to his illegal dismissal. Backwages are
may retire, or may be retired by his employer, upon reaching generally granted on grounds of equity. Payment thereof is a
60. An employee held to be illegally dismissed cannot be form of relief that restores the income lost by reason of such
reinstated if he had already reached the age of 60 years at the unlawful dismissal. It is not private compensation or damages,
time of his second complaint (pressing for reinstatement) but is awarded in furtherance and effectuation of the public
before the Labor Arbiter's Office. objectives of the labor Code. Nor is it a redress of a private
(Espejo v. NLRC, 1996) right but, rather, in the nature of a command to the employer
to make public reparation for dismissing an employee, either
2. Strained Relations due to the former's unlawful act or bad faith. (St. Theresa's
School of Novaliches Foundation v. NLRC, 1998)
Doctrine of Strained Relations: The term back wages without qualification and deduction
Where reinstatement is not feasible, expedient or practical, as means that the workers are to be paid their back wages fixed
where reinstatement would only exacerbate the tension and as of the time of the dismissal or strike without deduction for
strained relations between the parties, or where the their earnings elsewhere during their layoff and without
relationship between the employer and employee has been qualification of their wages as thus fixed; i.e., received by their
unduly strained by reason of their irreconcilable differences, co-workers who are not dismissed or did not go on strike.
particularly where the illegally dismissed employee held a Awards including salary differentials are not allowed. The
managerial or key position in the company, it would be more salary base properly used should, however, include not only
prudent to order payment of separation pay instead of the basic salary but also the emergency cost of living
reinstatement. (Quijano vs. Mercury Drug Corp., 1998) allowances and also transportation allowances if the workers

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LABOR LAW I LABOR STANDARDS

are entitled thereto. (General Baptist Bible College v. NLRC,


1993) Exception: Separation pay allowed as a measure of social justice in
instances where the EE is dismissed for causes other than serious
Remedy Basis of misconduct or those reflecting on his moral character.
Computation (PLDT Co. . NLRC, 1988)

Backwages Represents Actual period When Not Allowed


compensation when EE was
that should be unlawfully Financial assistance is NOT allowed when:
earned but not prevented from 1. The cause of the dismissal is serious misconduct on the
collected because working part of the EE, or
of unjust 2. Other causes reflecting adversely on the EE's moral
dismissal character.
Separation Pay Granted when Length of EE's
(due to strained reinstatement is service IV. Separation Pay
relations) not longer
advisable because Basis Amount
of strained
Installation of labor saving 1 month pay or at least 1
relations
devices month pay for every year of
Unpaid Salary Salaries earned Salaries actually service
prior to dismissal earned
Redundancy 1 month pay or at least 1
month pay for every year of
Effect of Failure to Claim service

The failure to claim back wages in a complaint for illegal dismissal Retrenchment to prevent 1 month pay or at least
has been held to be a mere procedural lapse which cannot defeat a losses month pay for every year of
right granted under substantive law. service, whichever is higher
(De la Cruz v. NLRC, 1998) Closure or cessation of 1 month pay or at least
operations NOT due to month pay for every year of
Effect of Failure to Order serious business losses service, whichever is higher

Auror Land, etc. v. NLRC, 1997: Disease 1 month salary or month


In this case, the failure of the Labor Arbiter and the public salary for every year of
respondent NLRC to award back wages to the private respondent, service, whichever is
who is legally entitled thereto having been illegally dismissed, greater
amounts to a plain error which we may rectify in this petition, Strained Relations in lieu 1 month pay for every year
although private respondent did not bring any appeal regarding the of Reinstatement of service
matter, in the interest of substantial justice.
Computation
Period - Computation
Millares v. NLRC,1999:
PRIOR TO 1974 Backwages reduced by wages In case of retrenchment to prevent losses, Art. 283 of the
actually earned by EE from Labor Code imposes on the employer an obligation to grant to the
employment during the period affected employees separation pay equivalent to one (1) month pay
of his separation, or the wages or at least one-half (1/2) month pay for every year of service,
he could have earned had he whichever is higher. Since the law speaks of "pay," the question
been diligent enough to find a arises, "What exactly does the term connote?" We correlate Art.
job 283 with Art. 97 of the same Code on definition of terms. "Pay" is
Mercury Drug Co., Inc. Backwages for a period of 3 not defined therein but "wage." In Songco the Court explained that
v. CIR, 1974 years without qualification and both words (as well as salary) generally refer to one and the same
deduction meaning, i.e., a reward or recompense for services performed.
Specifically, "wage" is defined in letter (f) as the remuneration or
RA 6715, 1989 FULL BACKWAGES earnings, however designated, capable of being expressed in terms
Ferrer v. NLRC, 1993 Mercury Drug Rule no longer of money, whether fixed or ascertained on a time, task, piece, or
applicable, but Court still commission basis, or other method of calculating the same, which is
allowed ER to deduct any payable by an employer to an employee under a written or
amount earned by EE during unwritten contract of employment for work done or to be done, or
period of illegal termination. for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board,
Bustamante v. NLRC Backwages to be awarded to an lodging, or other facilities customarily furnished by the employer to
and Evergreen Farms, illegally dismissed EE, should the employee.
1996 NOT, as a general rule, be We invite attention to the above-underlined clause. Stated
diminished or reduced by the differently, when an employer customarily furnishes his employee
earnings derived by him board, lodging or other facilities, the fair and reasonable value
elsewhere during the period of thereof, as determined by the Secretary of Labor and Employment,
illegal dismissal. is included in "wage." In order to ascertain whether the subject
allowances form part of petitioner's "wages," we divide the
Effect of Inflation discussion on the following "customarily furnished;" "board,
lodging or other facilities;" and, "fair reasonable value as
The effects of extraordinary inflation are not to be applied without determined by the Secretary of Labor."
an official declaration thereof by competent authorities. "Customary" is founded on long-established and constant
(Lantion v. NLRC, 1990) practice connoting regularity. The receipt of an allowance on a
monthly basis does not ipso facto characterize it as regular and
III. Financial Assistance forming part of salary because the nature of the grant is a factor
worth considering.
GR: A person dismissed for cause is NOT entitled to separation pay.

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LABOR LAW I LABOR STANDARDS

Although it is quite easy to comprehend "board" and PART XIX


"lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III,
of the Rules Implementing the Labor Code gives meaning to the RETIREMENT
term as including articles or services for the benefit of the employee Retirement Plan or Agreement
or his family but excluding tools of the trade or articles or service
primarily for the benefit of the employer or necessary to the An EE may be retired upon reaching the retirement age established in:
conduct of the employer's business. XXX In determining whether a
privilege is a facility, the criterion is not so much its kind but its 1. Collective Bargaining Agreement, OR
purpose. 2. Other applicable employment contract

EE entitled to receive retirement benefits under:


Effect of Acceptance
1. existing laws
2. any collective bargaining agreement
A dismissed employee who has accepted separation pay is not 3. other agreements
necessarily estopped from challenging the - An EE's retirement benefits under any CBA and other agreements
validity of his or her dismissal. Neither does it relieve the employer shall not be less than those provided therein
of legal obligations.
(Anino v. NLRC, 1998) No Retirement Plan or Agreement
An EE may retire if he has:
Liability of Corporate Officers 1. Reached the age of 60 or more, but not beyond 65;
2. Served at least 5 years in the establishment
In cases of illegal dismissal, corporate directors and officers are
solidarily liable with the corporation, where terminations of EE entitled to at least month salary for every year of service
employment are done with malice or in bad faith. a fraction of at least 6 months = 1 year
(Bogo-Medelin Sugarcane Planters Assn., Inc. v. NLRC, 1998) month salary = 15 days
+ 1/12 of the 13th month pay
V. Damages + cash equivalent of not more than 5 days of
service incentive leaves
Award of moral and exemplary damages for an illegally the parties my provide for broader
dismissed employee is proper where the employee had been inclusions
harassed and arbitrarily terminated by the employer. Moral Underground Mining EE may retire upon reaching the age of 50 or
damages may be awarded to compensate one for diverse more, but not more than 60, if he has served at least 5 years
injuries such as mental anguish, besmirched reputation, Exempted
wounded feelings and social humiliation occasioned by the
employers unreasonable dismissal of the employee. 1. Retail
(Cruz v. NLRC, 2000) 2. Service
To warrant an award of moral damages, it must be shown that 3. Agricultural
the dismissal of the employee was attended to by bad faith, or 4. establishments or operations employing not more than 10
EEs or workers
constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy. Rationale
(Nueva Ecija Electric Cooperative, Inc. v. NLRC, 2000) It is intended to help the employee enjoy the remaining years of his life,
Moral damages are recoverable only where the dismissal of releasing him from the burden of worrying for his financial support, and
the employee was tainted by bad faith or fraud, or where it are a form of reward for his loyalty.
constituted an act oppressive to labor, and done in a manner (Producers Bank of the Phils. v. NLRC, 1998)
contrary to morals, good customs, or public policy. Exemplary Eligibility
damages may be awarded only if the dismissal was done in a
Before a right to retirement benefits or pension vests in an employee,
wanton, oppressive, or malevolent manner. None of these
he must have met the stated conditions of eligibility with respect to the
circumstances exist in the present case.
nature of employment, age and length of service. This is a condition
(Permex, Inc. v. NLRC, 2000)
precedent to his acquisition of rights thereunder.
(Brion v. South Phil. Union Mission of the Seventh Day Adventist
Determination of Amount Church, 1999)

In determining the amount of damages recoverable, the business, Accrual of Benefits


social and financial position of the offended parties and the Entitlement to retirement benefits may accrue either (a) under existing
laws or (b) under a collective bargaining agreement or other
business and financial position of the offender are taken into
employment contract. It is at once apparent that Article 287 does not
account. (Nueva Ecija Electric Cooperative, Inc. v. NLRC, 2000)
itself purport to impose any obligation upon employers to set up
retirement scheme for their employees over and above that already
established under existing laws.
(Llora Motors, Inc. v. Drilon, 1989)

Private Plan Employer Obligation


There are 3 kinds of retirement schemes:
1. compulsory and contributory in character
2. set up by agreement between the employer and the
employees in collective bargaining agreements or other
agreements between them (Llora v. Drilon).
3. one that is voluntarily given by the employer, expressly as in
an announced company policy or impliedly as in a failure to
contest the EEs claim for retirement benefits (Allied
Investigation Bureau, Inc. v. Ople)

100% UP LAW UP BAROPS 2008 Page 55 of 56


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