Part I

Introductory Materials

Section 1. Labor Law in General

1.1 Labor Law Defined [S, R, J]

1. Labor Legislation Consists of statutes, regulations and jurisprudence

governing the relations between capital and labor by:
a. providing for certain terms and conditions of employment or
b. providing a legal framework within which these terms and
conditions and the employment relationships may be
negotiated
adjusted and
administered.

2. Social Legislation Includes all laws that provide particular kinds of

protection or benefits to society or segments thereof in furtherance
of social justice. In that sense, labor laws are necessarily social
legislation.
promote public welfare

1.2 Law Classification

1. Labor Standards Law That which sets out the minimum terms,
conditions and benefits of employment that ERs must provide or
comply with and to which EEs are entitled as a matter of legal right.
Ex. 8-hour labor law

2. Labor Relations Law That which defines [S R D & IM]

the status, rights and duties
and the institutional mechanisms
that govern the individual and collective interaction of ERs and EEs
or their representatives.
Ex. Book V of Labor Code

3. Welfare Legislation designed to take care of contingencies which

may affect workers, e.g. where there is loss of income for research
beyond the workers control. BENEFITS
* Social Security Law.

1.3 History and Origin

1.4 Basis for Enactment

1. Art. II, Sec.5, Const. : The maintenance of peace and order, the
protection of life, liberty, and property, and the promotion of general
welfare are essential for the enjoyment by all the people of the
blessing of democracy.
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2. Art. II, Sec. 18, Const. : The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote
their welfare.

3. Art. XIII, Sec. I, Const. : The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of all the
people to human dignity, reduce social, economic and political
inequalities, and remove cultural inequities by equitably diffusing
wealth and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use,
and disposition of property and its increments.

* Labor and social legislation are enacted pursuant to the police

power of the State. This is its inherent power to enact wholesome and
reasonable laws to promote order, safety, health, morals and
general welfare of society. In its exercise the state may interfere with
personal liberty, with property and with business and occupation.
(Calalang vs. Williams).

* No longer may the due process clause and the freedom of contract
be invoked to challenge labor and social legislation. This has long
been discarded since the 1937 case of West Coast Hotel vs. Parish (US)
and the 1924 case of Pp. vs. Pomar (RP).

* Labor relation laws enable workers to obtain from their employers

more than the minimum benefits set by labor standard laws

1.5 Law and Worker

The SC reaffirms its concern for the lowly worker who, often at the mercy
of his ER, must look up to the law for protection. Fittingly, the law regards
him with tenderness and even favor and always with hope in his
capacity to help in shaping the nations future. It is an error to take him
for granted. (Cebu Royal Plant vs. Deputy Minister of Labor)

Section 2. Labor and the Constitution

2.1 Constitutional Provisions

1. Art. II, Sec. 9, Const. : The State shall promote a just and dynamic
social order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a rising
standard of living, and an improved quality of life for all.

2. Art. II, Sec. 10, Const. : The State shall promote social justice in all
phases of national development.
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3. Art. II, Sec. 13, Const. : The State recognized the role of the youth in
nation-building and shall promote and protect their physical, moral,
spiritual, intellectual, and social well-being. . .

4. Art. II, Sec. 14, Const. : The State recognizes the role of women in
nation-building, and shall ensure their fundamental equality before
the law of women and men.

5. Art. II, Sec. 18, Const. : The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote
their welfare.

6. Art. XIII, Sec. 1, Const. : The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of all the
people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing
wealth and political power for the common good.
To this end, the State shall regulate the acquisition, ownership, use,
and disposition of property and its increments.

7. Art. XIII, Sec. 3 (1st par), Const. : The State shall

*afford full protection to labor, local and overseas, organized and
unorganized, and
*promote full employment and equality of employment opportunities
for all . . .

8. Art. XIII, Sec. 4, Const. : The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farmworkers, who are landless, to win collectively or collectively the
lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof . . .

9. Art. XIII, Sec. 11, Const. : The State shall adopt an integrated and
comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services
available to all the people at affordable cost . . .

10. The present Constitution has gone further than the 1973 Constitution
in guaranteeing vital social and economic rights to marginalized
groups of society, including labor. The framers of the Constitution
intended to give primacy to the rights of labor and afford the sector
full protection regardless of the geographical location of the
workers and whether they are organized or not (Globe Mackay vs.
NLRC).

2.2 Protection to Labor

1. Art. XIII, Sec. 3, Const. : The State shall afford full protection to labor,
local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to 1) self organization, 2)

collective bargaining and negotiations, and 3) peaceful and concerted
activities including the right to strike in accordance with law.
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They shall also participate in policy and decision-making

processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and ERs and the preferential use of voluntary modes
in settling disputes, including conciliation, and shall enforce mutual
compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and ERs,
recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns in investment,
expansion and growth.

1935 Const. : The State shall afford protection to labor, especially to

working women and minors, and shall regulate the relation between
landowner and tenant, and between labor and capital in industry
and in agriculture. The State may provide for compulsory arbitration.

Three aggregates of power against which the individual employee needs

protection
1. collective labor - Union
2. collective capital - management
3. collective bargaining relationship

* The law, while protecting the rights of laborers, does not authorize the
oppression or destruction of the employer

Laissez Faire
1. Laissez faire or the principle of free enterprise never found full
acceptance in this jurisdiction . . . (ACCFA vs. CUGCO)

2.3 Labor Sector

1. Art. II, Sec. 18, Const. : The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote their
welfare.

2.4 Policy Considerations Social Justice

1. Art. II, Sec. 10, Const. : The State shall promote social justice in all phases
of national development.

2. What does social justice envision? It envisions [E, R, C]

a. equitable diffusion of wealth and political power for the
common good;

b. regulation of the acquisition, ownership, use and disposition of

property and its increments;

c. and creation of economic opportunities based on freedom of

initiative and self-reliance. (Art. XIII, Sec. 1 & 2, Const. ;
Alcantara)

Definition [H, E, P, A]
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1. Social justice is neither communism nor despotism, nor atornism, nor

anarchy, but the humanization of laws and the equalization of social
and economic forces so that justice in its rational and objectively
secular conception may at least be approximated. It means the
promotion of the welfare of the people, the adoption of measures
by the government to ensure economic stability of all the competent
elements of society, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus
populi est suprema lex. (Calalang vs. Williams)

2. What does social justice guarantee?

Social justice does not champion division of property of economic
status; what it guarantees are equality of opportunity, equality of
political rights, equality before the law, equality between values
given and received, and equitable sharing of the social and material
goods on the basis of efforts exerted in their production. (Guido vs.
RPA)

Those who have less in life should have more in law

Equal pay for equal wok

Limits of Use

* The policy of social justice is not intended to countenance wrongdoing

simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the offense. Those who
invoke social justice may do so only if their hands are clean and their
motives blameless and not simply because they happen to be poor. (PLDT
vs. NLRC)

2.5 Specific Labor Rights

* Art. XIII, Sec. 3, Const. : [In the relation between workers and ERs the
following rights shall be assured by the State:
a. Rights to self-organization
b. Right to collective bargaining
c. Right to collective negotiations
d. Right to peaceful and concerted Activities including the right
to strike
e. Right to security of Tenure
f. Right to just and humane Conditions of work
g. Right to a living Wage
h. Right to participate in policy and Decision-making processes
(WACT BOND)

* Only to those that affect the rights of employees and have repercussions
on their right to security of tenure.
Protection to Labor

1. The law must protect labor, at least to the extent of raising him to
equal footing in bargaining relations with capital and to shield him
from abuses brought about by the necessity for survival. It is safe to
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presume, therefore, that an EE or laborer who waives in advance any

benefit granted him by law does so, certainly not in his interest or
through generosity but under the forceful intimidation of urgent
need; and hence, he could not have so acted, freely and voluntarily.
(Sanchez vs. Harry Lyons)

2.6 Other Rights

1. Art. II, Sec. 10, Const. : No law impairing the obligation of contracts
shall be passed.

*** Compassionate Justice

- disregarding rigid rules and giving due weight to all the equities
of the case
- years of service without derogatory record taken into account
- harshness of penalty also taken into account

2. Art. III, Sec. 16, Const. : All persons shall have the right to a speedy
disposition of their cases before all judicial, quasi-judicial or
administrative bodies.
3. Art. III, Sec. 18 (2), Const. : No involuntary servitude in any form shall
exist except as a punishment for a crime whereof the party shall have
been duly convicted.

Labor as Property

* The right of a person to his labor is deemed property within the meaning
of the Constitutional guarantees. That is his means of livelihood. He cannot
be deprived of his labor or work without due process of law. (Phil.
Movieworkers Assn. Vs. Premiere Productions)

Due Process Requirements

* The twin requirements of notice and hearing constitutes essential elements

of due process in cases of EE dismissal: the requirement of notice is intended
to inform the EE of the ERs intent to dismiss and the reason for the proposed
dismissal; upon the other hand, the requirement of hearing affords the EE
an opportunity to answer his ERs charges against him and accordingly to
defend himself therefrom before dismissal is effected. Neither of these 2
requirements can be dispensed with without running afoul of the
Constitution. (Century Textile vs. NLRC)

Liberty of Contract and State Interference

* Legislation appropriate to safeguard to peoples vital interests may modify

or abrogate contracts already in effect. Reservation of essential attributes
of sovereign power is read into contracts as a postulate of the legal order.
All contracts made with reference to any matter that is subject to
regulation under the police power must be understood as made in
reference to the possible exercise of that power. (Abella/Had. Danao vs.
NLRC) such was the case when Art. 283 of the Labor Code granted
severance pay to workers who at the time of their employment were not
entitled under the law to receive such pay. (Id.)
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** Employees have a vested and demandable right over existing benefits

voluntarily granted to them by their employer.

MGT. Rights [C P S T]
1. Right to conduct business
2. Right to prescribe rules
3. Right to select employees
4. Right to transfer and discharge employees

Waiver and Compromise

* Not all waivers and quitclaims are invalid as against public policy

1. It is only when there is clear proof that the waiver was wangled an
unsuspecting person, or the terms of settlement are unconscionable
on its face, that the law will step in to annul the questionable
transaction.
2. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking.
(Sicangco vs. NLRC)
3. Should a party fail or refuse to comply with the terms of a valid
compromise or amicable settlement, the other party could either
enforce the compromise by a writ of execution, or regard it as
rescinded and to insist upon his original demand. (Morales vs. NLRC)
- Voluntary consideration not unconscionable
- Waiver of future benefits is not valid and binding
- The law does not consider as valid any agreement
a. to receive less compensation on what a worker is
entitled to recover
b. to prevent him from demanding benefits to which he is
entitled

* Instances when quitclaim, waiver or compromise is valid:

1. C, a national promoter salesman, with high educational attainment,
tendered his resignation after a spot audit found out that he had a
tentative shortage of Php49,005.59. It is unbelievable that C,
occupying a responsible position, and with high education
attainment, can be rattled and confused into signing a resignation
letter, on account of a mere spot audit. (Callanta vs. NLRC)

2. Bank and EEs association, entered into a CBA providing for the
withdrawal of the pending case of the association against the bank
for non-payment of Php60.00 ECOLA. There is nothing in the
compromise which contravenes the law, morals, good customs,
public order, or public policy. (Monte de Piedad vs. MOLE)

3. During pendency of appeal before the NLRC, workers executed a

voluntary affidavit before the Labor Arbiter declaring intention to
withdraw appeal in lieu of payment of severance pay. The affidavits
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executed voluntarily and knowingly in the presence of the Labor

Arbiter has the effect and authority of res judicata. (Olaybar vs. NLRC)

4. A number of EEs made quitclaims in exchange for the dropping of

charges of embezzlement of P25 million which the EEs allegedly
embezzled. The consideration for the waiver is adequate. (PBC vs.
Echiveri)

Instances when quitclaim, waiver or compromise invalid:

1. A worker hospitalized for several times for work-related accidents was
told by an immediate supervisor and a personnel officer to retire and
execute a quitclaim or else would be dismissed and got nothing. The
retirement and quitclaim was made under threat of dismissal.
(Alcantara)

2. A messenger with 5 years employment resigned and executed a

quitclaim after being told by his manager to resign or else charges
will be filed against him. The threat was unjust since the messenger
did not commit any unlawful act. There was intimidation, which
vitiated consent. (Guatson Tours vs. NLRC)

3. A quitclaim of future benefits made by an EE at the time of

employment (Alcantara)

4. After the CIR rendered a decision ordering the ER to pay wage

differentials, the EEs executed a quitclaim waiving their rights under
the decision. The quitclaim contravenes public policy since after a
civil action is filed in court, the cause of action may not be subject of
compromise unless the same is with leave of court. ( Pampanga Sugar
Devt. Vs. Sugar Workers Assn.)

5. A quitclaim executed by an OFW repatriated to the Philippines

because of an illness requiring surgical treatment in consideration of
the return travel fund. There was no consideration since the EE
regularly contributed to the fund. Besides, the quitclaim is negotiable
and in congruous to the declared policy of the State to afford
protection to labor and to assure the right of workers to security of
tenure. (Cuales vs. NLRC)

6. ER appealed the decision of the POEA awarding $3,800.00 disability

benefits to worker. During pendency of appeal, the worker executed
a quitclaim in exchange for Php18,000.00 since at the time the worker
needed money for medical treatment. The law does not consider
valid any agreement to receive less compensation than what the
workers should receive. It was clear that the worker was forced to
accept the payment out of necessity.(PISC vs. NLRC)
7. After the finality of judgment awarding them severance pay, the
workers executed a quitclaim before labor arbiter who had no
participation in the case. Such settlements must be approved by the
labor arbiter before whom the case is being heard. (St. Gothard Pub vs.
NLRC)

Quitclaims are ineffective to bar recovery of the full

measure of the workers rights
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Dire Necessity is not an acceptable ground to annul

releases unless there is showing that
a. workers were forced to execute them
b. the considerations for the quitclaims where unconscionably
low

Management Prerogatives
1. Right to select and discharge employees with valid cause
2. promulgate reasonable employment rules and regulation
3. designation of work to employees
4. transfer and promote employees
5. control company operations
6. install money-saving devices
7. re-clarify or abolish positions
8. sell or close business

Drug Testing
G. R. : cannot right to privacy
Exception:
- if job or occupation involve public safety
Ex.ample:
a. bus drivers
b. security guards

Participation in Decision-making Process

Only if it affects his [R, D, W]:
c. rights
d. duties
e. welfare
- not management prerogatives regarding business operation
- must at least be informed

1. The law explicitly considers it a State Policy to ensure the

participation of workers in decision and policy-making processes
affecting their rights, duties and welfare. However, a line must be
drawn between management prerogatives regarding business
operations per se and those which affect the rights of EEs. in
treating the latter, management should see to it that EEs are at
least properly informed of its decisions or modes of action. (PAL vs.
NLRC) In this respect, a legislation providing a workers
representation in the Board of Directors of corporations is not valid
since the constitutional guaranty does not include the workers right
to participate in the management of the enterprise. (Alcantara)
2. May the ER be compelled to share with its EEs the prerogative of
formulating a code of discipline? I a code of discipline unilaterally
formulated by the ER enforceable? Yes, the ER has the obligation
to share with its EEs its prerogative of formulating a code of
discipline since this will be affecting their rights and benefits. A code
of discipline unilaterally formulated and promulgated by the ER
would be unenforceable. (Id.)

Section 3. Labor and the Civil Code

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3. 1 Role of Law

1. Art. 1700, NCC : The relation between capital and labor are merely
contractual. They are so impressed with public interest that labor
contracts must yield to common good. Therefore, such contracts are
subject to special laws on labor unions, collective bargaining, strikes,
lockouts, closed shops, wages, working conditions, hours of labor and
similar subjects.

3.2 ER-EE Standard of Conduct

* Art. 1701 : Neither capital nor labor shall act oppressively against the other,
or impair the convenience of the public.

Fair Treatment

* The NCC states that every person must in the exercise of his rights, and in
the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith. (AHS Phils. vs. NLRC)

Law Compliance

* The return-to-work order in this case not 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 a workers will. Thus, it does not constitute a violation
of the right against involuntary servitude. (Sarmiento vs. Tuico) This is
differentiated from the instance where there is a mere breach of
contractual stipulation. While the EE may be held liable for damages by
virtue of the breach of contract, he may not be compelled to work against
his will because this will be involuntary servitude. (Alcantara)

EE Obedience and Complaince ER Orders

* It is a recognized principle that company policies and regulations are,

unless shown to be grossly oppressive or contrary to law, generally binding
and valid on the parties and must be complied with until finally revised or
amended unilaterally or preferable through negotiation or by a competent
authority. (SMC vs. Ubaldo) Deliberate disregard or disobedience of rules,
defiance of management authority by the EEs cannot be countenance.
Until and unless the rules or orders imposed by the ER are declared to be
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illegal or improper by competent authority, the EEs ignore or disobey them

at their own peril. (GTE Directories vs. Sanchez)

ER Obligation

* An EE must be treated as a disdained subordinate but with respect and

fairness, if not affection and gratitude due to an equal partner. (Lagniton vs.
NLRC)

Section 4. The Labor Code of the Philippines

4.1 Decree Title * Art. 1 : Labor Code of the Philippines

4.2 Effectivity * Art. 2 : 6 months after its promulgation.

4. 3 Applicability

1. Art. 6: All rights and benefits granted under this Code shall, except as
many otherwise be provided, apply alike to all workers, whether
agricultural, or non-agricultural.

2. Art. 276: The terms and conditions of employment of all government

of all government EEs, including EEs of GOCCs shall be governed
by the Civil Service Law.

3. Art. IX-B, Sec. 2(1), Const. :The Civil Service embraces all branches
of Government, including GOCCs with original charters.

Test-GOCC

1. The rule now is that only the GOCCs with original charters come
under the Civil Service Law. (Cabrera vs. NLRC)

4.4 Implementing Rules

1. Art. 5: Implementing rules and regulations of the DOLE and other
government agencies of the Code shall become effective
* 15 days after announcement of their adoption in newspapers of
general circulation.

Limitation Rule Making Power

1. * This power is limited to the promulgation of rules and regulations to

effectuate policies of the Code. Such rules and regulations must conform
to the terms and standard prescribed in the statute. They cannot supplant
its plain and explicit command. (Alcantara)

* A rule or regulation promulgated by an administrative body, such as the

DOLE, to implement a law, in excess of its rule-making authority is void.
(Azucena)

2. Examples of void IRRs:

* IRR providing the 10-day period specified in Art. 223 refers to working days
as stated in the article.
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* An IRR providing that EEs paid by the month shall be presumed to be paid
for all days in the month, whether worked or not. In effect, will except EEs
paid by the month from the enjoyment of the holiday pay benefit. (Insular
Bank EE Union vs. Inciong)

* IRR of RA 6715 excluding security guards from those allowed to join unions.
(MERALCO vs. SOLE)

* IRR including commission in the computation of 13th month pay. Unduly

expanded the concept of basic salary. (Boie-Takeda vs. De La Serna)

4.5 Policy Declaration

* Art. 3: The State shall (APERA)

1. Afford protection to labor

2. Promote full employment
3. Ensure equal work opportunities regardless of sex, race or creed
4. Regulate the relations between workers and ERs.
5. Assure the rights of workers to self-organization, collective bargaining,
security of tenure, and just humane conditions of work.

4.6 Law Interpretation

1. Art. 4 : All doubts in the implementation and interpretation of the

provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor.

2. Art. 1702, NCC : In case of doubt, all labor legislation and labor
contracts shall be construed in favor of the safety and decent living
of the laborer.

In Favor Labor-Rationale

* This kind of interpretation gives meaning and substance to the liberal

and compassionate spirit of the law. The policy is to extend the decrees
applicability to a greater number of EEs to enable them to avail of the
benefits under the law, in consonance with the States avowed policy
to give maximum aid and protection to labor. (Abella vs. NLRC)

Liberal Construction

* Are the provisions violative of the equal protection clause? No. The ER
and the laborer do not stand on equal footing; to ensure equality, the
latter must, be afforded protection. Insofar as labor contracts are
concerned, the same are usually drafted and prepared by the ER. All
doubts in their provisions should therefore be resolved against it.
(Alcantara)

Doubt
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* When these are 2 or more possible explanations regarding an issue

affecting workers rights, that which favors the worker must be chosen.
(Clemente vs. GSIS)

No doubt

* The provision in case of doubt does not apply where the pertinent
provisions of the Labor Code leave no room for doubt either in their
interpretation or application. (Bonifacio vs. GSIS)

Sweeping Interpretation

* The Supreme Court cannot also adopt a sweeping interpretation of the

law, lest it engages itself in judicial legislation. (Bravo vs. EEC)

Factual Consideration and Rationality

* The care and solitude in the protection and vindication of the right of
workingmen cannot justify disregard of relevant facts or schewal of
rationality in the construction of the text of applicable rules in order to arrive
at disposition in favor of an EE. (PAL vs. NLRC)

Equity and Moral Consideration

* Considerations of equity and social justice cannot prevail against the

expressed provisions of labor laws. (Manning vs. NLRC)

Balancing Conflicting Claims

* The basic policy of the law is to balance or to coordinate the rights and
interests of both workers and ERs. It should not be deduced that the basic
policy is to favor labor to prejudice capital. (Azucena)

4.7 Enforcement and Sanctions

1. Art. 217 (a) (2), (3), (4), (6): Jurisdiction of Labor Arbiters and the
Commission
1. The Labor Arbiters shall have exclusive and original jurisdiction,
except as otherwise provided, the following cases involving all
workers: (unfair labor practice)
2. Termination disputes (qualified by Art. 261 which grant voluntary
arbitrators original and exclusive jurisdiction over all unresolved
grievances arising from CBAs and company personnel policies);
3. Cases involving terms and conditions of employment, if
accompanied with a claim for reinstatement (including claims of
OFWs arising out of an ER-EE relationship, including claims for actual,
moral and exemplary damages, as provided in Sec. 10, Migrant
Workers Act);
4. Claims for actual, moral, exemplary and other damages arising from
the ER-EE relations;
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5. Except claims for EEs Compensation, Social Security, Medicare and

maternity benefits, all other claims, arising from the ER-EE relations;
including
- those of persons in domestic or household service, involving an
amount exceeding Php5,000, regardless of whether of
whether accompanied with a claim for reinstatement.
6. Disputes arising from Art. 264 including legality of strikes and lockouts

2. Art. 128 : Visitorial and Enforcement Power of the Secretary of Labor or his
duly authorized representative.

1. Accesss to ERs records and premises at anytime of the day or night

whenever work is being undertaken therein and copy thereform;
2. Question any EE; and
3. Investigate any fact, condition or matter which may be necessary to
determine violations of this Code of any labor law, wage order or
rules and regulations issued pursuant thereto.

* In cases where the relationship of ER-EE still exists, the power to issue
Compliance Orders to give effect to the labor standard provisions of this
Code and other social legislation.
Writs of execution to the appropriate authority shall be issued
for the enforcement of the said orders, except in cases:
a. where the ER contests the findings of the labor
employment and enforcement officer; and
b. raises issues supported by documentary profits which
were not considered in the course of inspection.

* Order Stoppage of work or suspension of operations of any unit or

department of an establishment when non-compliance poses grave and
imminent danger to the health and safety of workers in the workplace.
Within 24 hours, a hearing shall be conducted to determine
whether an order for the stoppage of work and suspension of
operations shall be lifted or not.
In case the violation is attributable to the fault of the ER, he
shall pay EEs their EEs their salaries or wages during said
period.

* It shall be unlawful for any person to Obstruct, impede, delay or otherwise

render ineffective the order of the Secretary of Labor.
* No inferior court shall issue a temporary or permanent injunction or
restraining order or otherwise assume jurisdiction over any case involving
the enforcement orders in accordance with this Article.
* Any government EE found guilty of violation, after appropriate
administrative investigation, be subject to Summary dismissal from the
service.
* The Secretary of Labor may require ERs to keep and maintain
Employment records as may be necessary. (AS CONES)

3. Art. 129. Recovery of wages, simple money and other benefits.

* The Regional Director of the DOLE or any of the duly authorized hearing
officers of the Department is empowered, through summary proceedings
and after due notice, to hear and decide any matter involving the
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recovery of wages and other monetary claims and benefits, including legal
interest owing to a person employed in domestic or household service:
Provided
such complain does not include claim for reinstatement
aggregate money claims of each househelper does not
exceed P5,000.00
* The complaint shall be resolved within 30 days from the date of the filing
of the same.

4. Art. 288 : Penalties and Jurisdiction -

a. Except, as otherwise provided in the Code, or unless the acts
complained of hinges in a question or interpretation or
implementation of ambiguous provisions of an existing CBA,
any violation of this Code declared to be unlawful or penal in
nature shall be punished with:
a fine not less than P1,000.00 nor more than P10,000.00.
or imprisonment of not less than 3 months nor more than 3
years.
Or both such fine and imprisonment at the discretion of the
court.
In addition to such penalty any alien found guilty shall be
summarily deported upon completion of service of service.
b. Any criminal offense punished under this Code shall be under
the concurrent jurisdiction of the MTC and the RTC.

5. Art. 289 : The penalty (of the offenses listed in the Labor Code) shall be
imposed upon the guilty officer of officers of a corporation, trust, firm,
partnership, association pr entity which committed said offenses.

6. Art. 290. Prescription of Offensses -

* Offenses penalized under this Code and the IRRs 3 years.
* Unfair labor practice 1 year from accrual of such unfair labor practice.

7. Art. 291 : Prescription of Money Claims- All money claims arising from ER-
EE relations accruing during the effectivity of this Code 3 years from the
time the cause of action is accrued.

8. Art. 292 : Money claims specified in Art. 291shall be filed before the
appropriate entity independently of the criminal action that may be
instituted in the proper courts.
Pending the final determination of the merit of money claims filed
with the appropriate entity, no civil action shall be filed with any court.
This provision shall not apply to EEs compensation cases which
shall be processed and determined strictly in accordance with
the pertinent provisions of this Code.

Section 5. Work Relationship

5. 1 Work Relationship

ER and EE
 16

1. Art. 97 (a) and (b) : Person means individual, partnership,

association, corporation, business trust, legal representative, or any
organized group of persons.
(b) ER includes any person acting directly or indirectly in the interest
of the ER in relation to an EE and shall include the Government and
all its branches, subdivisions and instrumentalities, all GOCCs and
institutions, as well as non-profit private institutions, or organizations.

2. Art. 167 (f) and (g) : (f) ER means any person, natural or juridical,
employing the services of the EE.
(g) EE means any person compulsory covered by the GSIS . . .,
including members of the AFP, and any person employed as
casual, emergency, temporary, substitute or contractual, or any
person compulsory covered by the SSS. . .

3. Art. 212 (e) and (f) : ER includes any person acting in the interest of
the ER directly or indirectly. The term shall not include any labor
organization or any of its officers except when acting as an ER.
(f) EE includes any person in the employ of an ER. The term shall not
be limited to the EEs of a particular ER, unless this Code explicitly
states. It shall include any individual whose work has ceased as a
result or in connection with any current labor dispute or because of
unfair labor practice if he has not obtained any other substantially
equivalent or regular employment.

CLASSIFICATION
1. casual
2. regular
3. emergency
4. temporary
5. substitute
6. contractual

4. Is the purchaser of the assets of an ER corporation considered a

successor ER of the latters EE? No. Labor contracts are not
enforceable against a transferee of an enterprise, labor contracts
being in personam, thus binding only between parties.

ER-EE Relationship Independent Contractor and Labor Contractor

1. Art. 106 : Contractor or subcontractor

a. Whenever an ER enters into a contract with another person for

the performance of the formers work, the EEs of the
contractor and of the latters subcontractor, if any shall be
paid in accordance with the provisions of this Code.

In the event that the contractor or the subcontractor fails to pay the
wages of his EE in accordance with this Code, the ER shall be jointly and
severally be liable with his contractor or subcontractor to such EEs to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to EEs directly employed by him.
b. There is labor-only contracting where:
 17

1. the person supplying in workers to an ER does not have [C,I]

substantial capital
[substantial] investment in the form of tools, equipment,
machineries, work premises, among others
2. and the workers recruited and placed by such persons are
performing activities which are directly related to the principal
business of such ER.

In such cases, the person or intermediary shall be considered merely as

an agent of the ER who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.

2. Sec. 9, Rule VIII, Book III, IRRs : (a) Any person who undertakes to
supply workers to an ER shall be deemed to be engaged in labor-
only contracting where such person :
* Does not have
substantial capital
[substantial] investment in the form of tools, equipment,
machineries, work premises and other materials; and
* The workers recruited and placed by such person are performing activities
which are directly related to the principal business or operations of the ER
in which the workers are habitually employed.

Labor-only contracting as defined herein is hereby prohibited and the

person acting as contractor shall be considered merely as an agent or
intermediary of the ER who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.

(c) For cases not falling under this Article, the Secretary of Labor shall
determine through whether or not the contracting out is permissible in the
light of the circumstances of each case and after considering the
operating needs of the ER and the rights of the workers involved.

3. Art. 107 : Indirect ER The provisions of the immediately preceding

Article shall likewise apply in any person, partnership, association or
corporation which, not being an ER, contracts with an independent
contractor for the performance of any work, job or project.

4. Art. 109 : Every ER or indirect ER shall be held responsible with his

contractor or subcontractor for any violation of the provisions of this
Code. For purposes of determining the extent of their civil liability
under this Chapter, they shall be considered direct ERs.

5. Sec. 8, Rule VIII, Book III, IRRs : Job Contracting There is job
contracting permissible under the Code if the following conditions
are met:
1. The contractor carries on an independent business and undertakes
the contract work [A R M - F]
a. on his own account
b. under his own responsibility
c. according to his own manner and method
 18

d. free from the control and direction of his ER or principal in all

matters connected with the performance of the work except
as to the results thereof; and
2. The contractor has
a. substantial capital or
b. [substantial] investment in the form of tools, machineries, work
premises, and other materials which are necessary in the
conduct of his business.

*Where the ER-EE relationship has become ascertained, the ER becomes

bound by statutory requirements pertaining, though not limited, to terms
and conditions of employment, labor relations and post employment.
(Phone-Poulenc vs. NLRC) Nonetheless, when a contractor fails to pay the
wages of his EEs, the ER who contracted out the job to the contractor
becomes jointly and severally liable with his contractor to the EEs of the
latter to the extent of the work performed under the contract as if such
ER were the ER of the contractors EEs. The law itself, establishes an ER-EE
relationship between the ER and the job contractors EEs for a limited
purpose i.e. in order to ensure that the latter get paid the wages due them.
A similar situation obtains where there is a labor-only contracting. This
time, however, for a comprehensive purpose: ER for purposes of this Code,
to prevent any violation or circumvention of any provision of this Code.
The law in effect holds both the ER and the labor only contractor
responsible to the latters EEs for more effective safeguarding of the EEs
rights under the Labor Code. (PBC vs. NLRC)

A. DETERMINATION

* In determining whether the relationship is that of ER and EE or one of

independent contractor, each case must be determined on its own facts
and all the features of the relationship must be considered. (Villaluga vs.
NLRC)

** the existence of an ER-EE relationship is a question of law and cannot be

made the subject of agreement

* the nature of ones business is not determined by self-serving appellations

one attaches thereto but by the tests provided by statute and prevailing
case law

B. FACTORS

1. The existence of ER-EE relationship is determined by the following

elements namely:
a. the Selection and engagement of the EEs
b. the payment of Wages
c. the power of Dismissal; and
d. the power to control the EEs conduct
(WEDS) although the latter is the most important element. (Rosario Brothers
vs. Ople) No particular form of evidence is required to prove the existence
of an ER-EE relationship. Any competent and relevant evidence to prove
the relationship may be admitted (Opulencia vs. NLRC)
 19

2. Is there an ER-EE relationship?

* Workers under a pakiao agreement arranged by G whom PRC

considered as an independent contractor. ER gives orders to G, on where
to store the copra, when to bring out, how much to load and where, and
what class of copra to handle. The equipment used is owned by PRC. Yes.
PRC has direct control over the handling of the copra. The control test is
satisfactorily met.

* Piece workers subject to specifications. Yes. The fact that the making of
the basket is subject to Dys specifications indicates the existence of
control. (Dy Koh Beng vs. ILMU)

* Tailors, pressers, stitchers and similar workers employed by COD on a

piece-work basis. The EEs are governed by the companys regulations i.e.
8-hour workday, recording of attendance etc Furthermore, a master
cutter distributes job orders equally, supervises the work and sees to it that
they were finished as soon as possible. Yes. The workers conduct in the
performance of their work was controlled by the company (Rosario vs. Ople)

* Cargadores and pahinantes recruited by SMC through a labor contractor

who are governed by the regulations of the SMC whose work consisted of
loading, unloading, pilling or palleting empty bottles and wooden shells
from company trucks and warehouses. Yes. The evidence firmly establishes
the control exercised by the SMC. (BLUM vs. Zamora)

* Shoe shiners who had their own customers but shared proceeds with
company. No. The company does not exercise any degree of control or
supervision over his work. The shoe shiner is a partner in trade. (Besa vs.
Trajano)

* Vendees of cigarettes who are governed by the regulations of the vendor

company i.e. definite sales territory, requirement to submit daily, weekly
and monthly reports, etc. Yes. Vendor company had control over the
vendee. (SSS vs. CA)

*I. S, a prominent social figure, had an agreement with TWS to act as

branch manager; The agreement provided that she would be entitled to
a part of the commission on sale of tickets; and that she would share in the
expenses of maintaining the office. She was also a signatory to a lease
agreement covering the branchs premises, holding herself solidarily liable
for the prompt payment of rentals. No. I. S was not subject to the control by
TWS. The services rendered by I.S must have been done by her pursuant to
a contract of agency. (Sevilla vs. CA)

* A plant manager hired by a marble company which was about to close

in a few months time due to business losses. The company had no control
over the former, either as to hours of work or method of accomplishing the
work. The former was entitled to a percentage of the net profits of the
company for that period. No. Manager was merely a party to a joint
venture. (CMC vs. NLRC)
 20

* Fishermen-crew of a trawl fishing vessel subject to control and supervision

of the owner of the vessel i.e. conduct of fishing operations; time to report
to fishing port, etc Yes. (Ruga vs. NLRC)

* Tailors, seamstresses and other workers of a haberdashery who were paid

on a piece-rate basis. They were directed by the proprietor of the
establishment as specified by the customers. They were required to finish
jobs orders in one day before due date. Yes. They did not exercise
independence in their own methods, but on the contrary were subject to
the control of the establishment from the beginning of their task to their
completion. They also had to rely on the tools and equipment supplied by
the haberdashery. (Makati Haberdashery vs. NLRC)

* The power of control refers merely to the existence of the power and not
the actual exercise thereof.

* Caddles who are not under the control and supervision of the golf club as
to working hours, manner of carrying out their services, etc. No. The club did
not have the measure of control over the incidents of the caddys work and
compensation that the ER would possess. (Manila vs. IAC)

* College teachers. Yes. The Court takes judicial notice that a university
controls the work of the members of its faculty; that it prescribes the courses
or subjects that they teach and the time and place for teaching. (Feati vs.
Bautista)

* Jeepney drivers working under the boundary system. Yes. The driver does
not have any interest in the business because he did not invest anything in
the acquisition of jeeps and did not participate in the management
thereof. (Citizens League of Free Workers vs. Abbas)

C. CONTROL TEST

*** There is an ER-EE relationship where the ER controls or has reserved the
right to control the EE not only as the result of the work but also as to the
means by which said work is to be accomplished (Paradise vs. Ng). The test
merely calls for the existence of the right to control the manner of doing the
work not the actual exercise of the right. (Ruga vs. NLRC) The line should be
drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired results without dictating the means or
methods employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means.
The first , which aim only to promote the result, create no ER-EE relationship
unlike the second, which addresses both the result and the means to
achieve it. (Insular Life vs. NLRC) The control test calls merely for the
existence of the right to control and manner of doing work, not the actual
exercise of the right. (Dy Keh Beng)

D. ECONOMIC TEST

1. The absence of ER-EE relationship may be determined through

economic tests like the inclusion of the EE in the payrolls, having
irregular compensation and having a personal stake in the business.
(Sevilla vs. NLRC)
 21

E. AGREEMENT

* The existence of an ER-EE relationship is a question of law and being such,

it cannot be made the subject of an agreement. (Tabas vs. CMC)

5.2 Independent Contractor and Labor Contractor Only

1. Art. 106 : Contractor or subcontractor

a. Whenever an ER enters into a contract with another person for
the performance of the formers work, the EEs of the
contractor and of the latters subcontractor, if any shall be
paid in accordance with the provisions of this Code.

In the event that the contractor or the subcontractor fails to pay the
wages of his EE in accordance with this Code, the ER shall be jointly and
severally liable with his contractor or subcontractor to such EEs to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to EEs directly employed by him.

b. There labor-only [considered as agent] contracting where:

* the person supplying workers to an ER does not have
substantial capital
[substantial] investment in the form of tools, equipment,
machineries, work premises, among others

With respect to the first requirement, the law does not require both
substantial capital and investment in the form of tools, equipment,
machineries, etc. This is clear from the use of the conjunction or. (Neri vs.
NLRC)

2. and the workers recruited and placed by such persons are

performing activities which are directly related to the principal
business of such ER.

With respect to the second requirement, the service provided by

janitors, firemen, mechanics, hired helpers and similar workers are
considered directly related to the operations of a company since this is
necessary to the proper maintenance of the premises and machineries as
well as the protection of the company premises against fires. (Guarin vs.
NLRC)

In such cases, the person intermediary shall be considered merely as an

agent of the ER who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.

*** Factors to Determine existence of Independent Contractor Relationship:

1. whether the contractor is carrying on an independent business;
2. whether the work is part of the ERs general business;
3. the nature and extent of the work;
4. the skill required;
5. the terms and duration of the relationship;
6. the right to assign the performance of the work to another;
 22

7. the control and supervision of the work and the ERs powers with
respect to the hiring, firing and payment of salaries;
8. the duty to supply premises, tools and appliances. (Mafinco vs. Ople)

** Examples of Independent Contractor:

* Commission agent : IPC Company entered into agreement with

registered representatives who worked on a commission basis. While the
agents were subject to a set of rules and regulations governing the
performance bond; the termination for certain causes, however, the
agents were not required to report to work; to devote their time exclusively
for the company; to account for their time nor submit a record of their
activities; and that they were paid on a commission based on a certain
percentage of sales. The fact that for a certain specified causes (failure to
meet annual quota) the relationship may be terminated does not mean
such control exists, for the causes of termination have no relation to the
means and methods of work. (IPC vs. SSS)

* Dealership : A contract whereby one engages to purchase and sell soft

drinks on trucks supplied by the manufacturer but providing that the other
party (peddler) shall have the right to employ his own workers, shall post a
bond to protect the manufacturer against losses shall be responsible for
damages caused to third person, shall obtain the necessary licenses and
permits and bear the expenses incurred in the sale of the soft drinks. (Mafinco
vs. NLRC)

Another dealership agreement wherein the dealer: handles the

products in accordance with existing laws and regulations; sends his orders
to the factory plant; is supplied by the factory with a delivery truck and all
expenses for repairs are borne by the factory; receives no commission but
given a discount for all sales; is responsible alone for any violation of the
law, sells the product at the price agreed upon between the parties; and
posts a surety bond of not less than P10,000.00. (La Suerte vs. Director of Labor
Relations)

* Security Agency : Shipping company entered into an agreement with a

security agency wherein the security agency was responsible for the hiring
and assignment of the guards, the guards were not known to the shipping
company for it dealt directly with the agency, and a payment of a lump
sum to the agency who in turn paid the compensation of the individual
watchmen. Under the circumstances, the guards cannot be considered
EEs of the shipping company. It is the security agency that recruits, hires
and assigns the work of the watchmen. It is the wages to which the
watchman is entitled. The powers to dismiss lies with the agency. Lastly,
since the company has to deal with the agency, and not with the individual
watchmen, on matters, pertaining to the contracted task, it stands to
reason that the company does not exercise any power or control over the
watchmens conduct. (APL vs. Clave)

* Stevedoring Services : SHIPSIDE entered into a Contract for Services with

La Union providing among others that the latter would furnish all labor
needed for stevedoring work in piers controlled by the former. The net
balance of the stevedoring charges will be divided equally among the
 23

parties. The records do not show any participation on the part of SHIPSIDE
with respect to the selection and engagement of the individual stevedores.
The terms and conditions of their services are matters determined not by
SHIPSIDE but by La Union. It is also sufficiently established that La Union
exercised supervision and control over its labor force. While SHIPSIDE
occasionally issued instructions to the stevedores, such instructions, in legal
contemplation are mere requests since the privity of contract lies between
the workers and La Union. (SHIPSIDE vs. NLRC)

* Collection Agency : Singer entered into a collection agency

agreement with collectors providing among others that the collector is to
be considered at all times to be an independent contactor; he was
required to comply with certain rules and regulations (i.e. use of authorized
receipts, monthly collection quota, cash bond, and submission of report of
all collections at least once a week); and his services can be terminated in
case of failure to satisfy these regulations. However, the agent was not
required to observe office hours or to report to Singer except for remitting
his collections. He did not have to devote his time exclusively for Singer and
the manner and method of collection were left solely to the discretion of
the agent, and he shouldered his transaction services. (

* Messengerial/Janitorial Services : Janitors were hired by CSI and assigned

to La Union Carbide. They drew their salaries from CSI. CSI exercised control
over them through a SCI EE who gave orders and instructions. Moreover,
CSI had the power to assign its janitors to various clients and pull them out.
CSI was a registered service contractor and did business with a number of
known companies in the country. It maintains its own office and had its own
office equipment. It furnishes its janitors the cleaning equipment. (Rhone-
Poulene vs. NLRC)

BCC, capitalized at P1 million fully subscribed and paid for provided

janitorial and other services to various firms. It hired A and B and assigned
them to work for FEBTC. The two reported for work wearing the prescribed
uniform of the BCC; their leave of absences were filed directly with BCC;
and their salaries drawn only from BCC. FEBTC however issued a job
description which detailed the functions of two. Applying the control test,
BCC is the ER of the two. Furthermore, it had substantial capital. The
guidelines in the job description were laid down merely to ensure the
desired result was achieved. It did not, however, tell how the work should
be performed. (Neri vs. NLRC)

* Repair and Maintenance Service : F doing business, was hired by Shell to

conduct a hydro-pressure test. He was paid a lump sum for the work he and
his men accomplished. He utilized his own tools and equipment. He
accepted business from other companies. He was not controlled by Shell
with regard to the manner in which he conducted the test. (Pilipinas Shell
vs. CA)

** Instances of Labor-Only Contracting

* Agency hiring : PBC and CESI entered into an agreement under which
the latter undertook to supply the former with 11 messengers. The
 24

agreement provided that the messengers would remain EEs of CESI; PBC
remitted to CESI amount equivalent to the wages of the messengers; CESI
in turn paid them and their names are not included in the PBCs payroll; the
bank, in cases of dismissal would request CESI, and CESI would in fact
withdraw such messenger, and the messengers performed their functions
within the banks premises. CESI cannot be considered a job contractor
because its undertaking is not the performance of a specific job; it merely
undertook to provide the bank with a certain number of persons able to
carry out the work of messengers. (PBC vs. NLRC)

Under the Work Contract between A and a motorshop, A undertook

to supply labor and supervision in the performance of automotive body
painting work. A and his men were paid lump sum, the company supplied
the tools, equipment, machineries and materials and moreover, the jobs
were done in the premises of the motor shop. Aside from the fact that the
company exercised control and direction over the work done by A and his
men, the line of work-automobile painting was directly related to, if not
an integral part of the regular business of the motor shop. (Broadway Motors
vs. NLRC)

LS provided helpers, janitors, mechanics to NP, a corporation

engaged in garment manufacturing. The agreement between the two
provided that LS shall provide NP with workers, NP shall pay LS a fee based
on rates fixed by the agreement, there is no ER-EE relationship between the
two and LS shall have exclusive direction in the selection, engagement and
discharge of its personnel and the latter shall be within is full control. LS is a
labor-only contractor since it is merely an agent to procure workers for
the real ER. (Guarin)

* Security Guard Hiring : Hyatt and VSS entered into a contract of services
wherein VSS agreed to protect the properties and premises of Hyatt by
providing security guards. The security guards filled up Hyatt employment
application forms and submitted the forms to the Security Department of
the hotel. Their wages were paid directly by Hyatt and their assignments,
promotions, supervisions and dismissal were approved by the Chief Security
Officer of Hyatt. (Vallum Security vs. NLRC)

Section 6. Employment Policies, Recruitment and Placement of Workers,

and Agencies

6. 1 Employment Policies

1. Art. 12 : Statement of Objectives It is the policy of the State:

a. To promote and maintain a state of Full employment through improved

manpower training, allocation and utilization;

b. To protect every citizen desiring to work locally or overseas by securing

for him the best possible terms and conditions of employment;
c. To facilitate a free choice of Available employment by persons seeking
work in conformity with national interest;
 25

d. To facilitate and regulate the Movement of workers in conformity with

national interest;

e. To regulate the employment of Aliens, including the establishment of a

registration and/or work permit system;

f. To strengthen the network of public employment offices and rationalize

the participation of the private sector in the Recruitment and placement
of workers, locally and overseas, to serve national development objectives;

g. To issue careful selection of Filipino workers for overseas employment in

order to protect the good name of the Philippines abroad. (AFP MARC)

6.2 Employment Agencies

Private Sector-Agencies and Entities

A. PARTIES

A.1. Worker

* Art. 13 (a) Worker any member of the labor force, whether employed
or unemployed

A.2 Agency

* Art. 13 (c) : Private fee-charging employment agency any person or

entity engaged in the recruitment or placement of workers for a fee which
is charged directly or indirectly, from the workers or ERs or both.

A.3 Entity

* Art. 13 (e) : Private recruitment entity any person or association

engaged in the recruitment and placement of workers, locally or overseas,
without charging, directly or indirectly, any fee from the workers or the ERs
or both.

B. ALLOWED ENTITIES

B.1 Allowed Private Agencies and Entities

* Art. 16 : Except as provided in Chapter II of this Title, no person or entity,

other than the public employment offices, shall engage in the recruitment
and placement of workers.

Sec. 1, Rule III, Book I, IRRs No person or entity shall engage in the
recruitment and placement of workers either for local or overseas
employment except the following: [allowed agencies]
1. public employment agencies
2. POEA
3. private recruitment entities
4. private employment agencies
5. shipping or manning agents or representatives; and
 26

6. such other persons or entities as may be authorized by the Secretary.

*Art. 25 : . . . the private employment sector shall participate in the

recruitment and placement of workers, locally and overseas, under such
guidelines, rules and regulations as may be issued by the Secretary of Labor.

B.2 Prohibited Business Agencies and Entities

1. Art. 18 : Ban on Direct Hiring No ER may hire a Filipino worker for overseas
employment except through the Boards and entities authorized by the
Secretary of Labor.
a. Direct hiring by members of the diplomatic corps;
b. International organizations and such other ERs as may be;
c. allowed by the Secretary of Labor is exempted from this provision.

2. Art. 26 : Travel agencies and sales agencies of airline companies are

prohibited from engaging in the business of recruitment and placement of
workers for overseas employment, whether for profit or not.

C. GOVERNMENT TECHNIQUES OF REGULATION PRIVATE RECRUITMENT AND

PLACEMENT BUSINESS

C.1 Licensing, Citizenship, Capitalization, Duration, Transferability and Fees

1. Art. 27 : Citizenship Requirement:

a. Only Filipino citizens or
b. Only corporations, partnerships or entities at least 75% of the
authorized and voting capital stock of which is owned and
controlled by Filipino citizens shall be permitted to participate
in the recruitment and placement of workers, locally or
overseas.

2. Art. 28 : Capitalization Substantial capitalization as determined by

the Secretary of Labor. (P1 M)

Sec. 1, Rule V, Book I, IRRs : Qualification of Applicants for Private

employment agencies All applicants for licenses to operate private
employment agencies either for local or overseas recruitment and
placement shall possess the following qualifications. . .

3. Art. 29 : Non-tranferability of License or Authority

* No license or authority shall be used directly or indirectly by any other
person other than the one in whose favor it was issued; or
* at any place other than that stated in the license of authority
* nor such license or authority be transferred, conveyed or assigned to
any other person or entity.
* Any transfer of business address, appointment or designation of any
agent or representative including the establishment of additional offices
everywhere shall be subject to the prior approval of the DOLE.

4. Art. 15 (a) 2 : (a) The Bureau of Employment Services shall be primarily

responsible for developing and monitoring a comprehensive
employment program. It shall have the power and duty:
 27

2) To establish and maintain a registration and/or licensing system to

regulate private sector participation in the recruitment and placement
of workers, locally or overseas, and to secure the best possible terms and
conditions of employment for Filipino contract workers and compliance
therewith under such rules and regulations as may be issued by the
Minister of Labor.

5. Distinguish authority from license? Authority means a document

issued by the Secretary of Labor and Employment authorizing a
person or association to engage in recruitment and placement
activities as a private recruitment entity; while a license is the
document issued to a person or entity to operate a private
employment agency. (Art. 13)

6. What is the duration of a license recruit? A license is valid for a period

of 2 years from the date of issuance unless sooner cancelled,
revoked or suspended for violation of the Labor Code or its IRRs.
* non-tranferrable

C.2 Bonds

1. Art. 31 : All applicants for license or authority shall post such cash and
surety bonds as determined by the Secretary of Labor to guarantee
compliance with prescribed recruitment procedures, rules and
regulations, and terms and conditions of employment as
appropriate.
2. The purpose of bonds is to insure that if the rights of these overseas
workers are violated by their ERs recourse would still be available to
them against the local companies that recruited them for the foreign
principal. (Stronghold vs. CA)

C.3 Workers Fees

* Art. 32 : Any person applying with a private fee-charging employment

agency for employment assistance shall not be charged any fee until
1. he has obtained employment through its efforts; or
2. he has actually commenced employment. Such fee shall be always
covered with the appropriate receipt clearly showing the amount
paid. The Secretary of Labor shall promulgate the schedule of
allowable fees.

C.4 Reports Submission

* Art. 33 : Whenever the public interest requires, the Secretary of Labor may
direct all persons or entities within the coverage of this Title to submit a
report on the status of employment, including job vacancies, details of job
requisitions, separation from job, wages, other terms and conditions, and
other employment data.

Percentage of salary remittance

1. seaman 80%
2. construction worker 70%
3. professional workers with free board and lodging 70%
 28

4. professional without board and lodging 50%

5. domestic helpers 50%
6. other workers 50%

C.5 Prohibited Practices [IF FAITS CHOW]

1. Art. 34 : Prohibited Practices It shall be unlawful for any individual, entity

license or holder of authority:

1. To charge or accept; directly or indirectly, any amount greater than

that specified in the schedule of allowable fees, or make a worker
pay any amount greater than that actually received by him as a loan
or advance;
2. To furnish or publish any false notice or information or document in
relation to recruitment or employment; [includes the act of furnishing
fake employment documents to a worker. (Azucena)
3. To give any false notice, testimony, information or document or
commit any Act of misrepresentation for the purpose of securing a
license of authority under this Code;
4. To induce or attempt to induce a worker already employed to quit
his employment in order to offer him to another unless the transfer is
so designed to liberate the worker from oppressive terms and
conditions of employment;
5. To influence or attempt to influence any person or entity not to
employ any worker who has not applied for employment through his
agency;
6. To engage in the recruitment or placement of workers in jobs Harmful
to public health or morality or to the dignity of the Republic of the
Philippines;
7. To obstruct or attempt to obstruct inspection by the secretary of
Labor or by his duly authorized representatives;
8. To Fail to file reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation
from jobs, departures and such other matters of information as may
be required by the Secretary of Labor;
9. To substitute or alter employment contracts approved and verified
by the DOLE from the time of actual signing thereof by the parties up
to and including the period of expiration of the same without the
approval of the Secretary of Labor Unless it is to improve the terms
and conditions of employment. (Vir-Jen vs. NLRC);
10. To become an officer or member of any corporation engaged in
Travel agency or to be engaged directly or indirectly in the
management of a travel agency;
11. To Withhold or deny travel documents from applicant workers before
departure for monetary or financial consideration other than those
authorized under this Code and its implementing rules and
regulations.

2. A, Filipina, was recruited by a local private employment agency for a

tutoring job abroad. Upon arrival in the place of employment, she was
made to work as a housemaid. What advice will you give her? I will
advice the Filipina to commence a criminal action against the
 29

employment agency for violation of Art. 34 of the Labor Code. She was
recruited under false pretense. (Alcantara)

3. STC, a travel agency, advertised for young women to work as

domestic helpers in Hongkong. Five women who left for Hongkong were
later brought to prostitution houses. Have the officers of STC committed
any unlawful acts? Yes. Violation of Art. 26 and Art. 34 (d) and (f) of the
Labor Code. (Alcantara)

C.6 Illegal Recruitment

1. Art. 13 (b) : Recruitment and Placement - Act of [CEC-TUHPI]

a. Canvassing
b. Enlisting
c. Contracting
d. Transporting
e. Utilizing
f. Hiring or
g. Procuring workers and
h. Includes referrals, contracts services, promising or advertising
for employment, locally or abroad, whether for profit or not.
Provided
That any person or entity which, in any manner, offers or promises for a fee
employment to 2 or more persons shall be deemed engaged in recruitment
or placement. [The number of persons dealt with is not, an essential
ingredient of the act of recruitment or placement. The provision merely lays
down a rule of evidence that where a fee is collected in consideration of
a promise or offer of employment to 2 or more prospective workers, the
individual or entity dealing with them shall be deemed to be engaged in
the act of recruitment or placement. (Pp vs. Panis)

** Illegal termination
- full reimbursement fees + 12%
- salaries for unexpired portion or 3 mos. For every year of
unexpired term whichever is lower

** Liability of private employment agency employment contract

- joint and solidary with employer
- all claims and liabilities that may arise in connection with the
implementation of the contracts

2. Any recruitment activities, including the prohibited practices,

enumerated under Art. 34 of this Code, to be undertaken by non-
licensees or non-holders of authority shall be deemed illegal and
punishable under Art. 39 of this Code.

* Illegal recruitment when committed by a:

syndicate
or in large scale
shall be considered an offense involving economic sabotage and shall be
penalized in accordance with Art. 39 hereof.
- non-bailable
- life imprisonment
 30

** Illegal recruitment by a syndicate Carried out by a group of 3 or more

persons conspiring and/or confederating with one another in carrying out
any unlawful or illegal transaction, enterprise or scheme defined under the
first paragraph hereof.

** Illegal recruitment in large scale Committed against 3 or more persons

individually or as a group.

[When the Labor Code speaks of illegal recruitment, committed against 3

or more persons, it must be understood as referring to the number of
complainants therein, otherwise, prosecutions for single crimes of illegal
recruitment can be cumulated to make out a case of large scale illegal
recruitment. In other words, a conviction for large-scale illegal recruitment
must be based on a finding in each case if illegal recruitment of 3 or more
persons whether individually or as a group. (Pp vs. Reyes)

3. Sec. 8, Migrant Workers Act : A criminal action arising from illegal

recruitment as defined herein shall be filed with the RTC of the province or
city where the offense was committed or where the offended party
actually resides at the time of the commission of the offense: provided, That
the court where the criminal action is first filed shall acquire jurisdiction to
the exclusion of other courts.

4. The crime of illegal recruitment has 2 elements:

a. That the offender is a non-license or non-holder of authority to
lawfully engage in the recruitment and placement of workers;
and
b. That the offender undertakes any of the recruitment activities
defined under Art. 13 (b) of the Labor Code or any of the
prohibited practices enumerated under Art. 34 of the same
Code.

5. G convinced F and S, that they could be employed for France for a fee.
G was also able to persuade A that he could give A a working visa. Nothing
happened to F, S and A. G did not have any license to recruit or authority
to recruit? A may be charged and convicted of a large-scale illegal
recruitment since he did not have the license or authority to recruit, and yet
recruit at least 3 persons. (Pp vs. Turda) Furthermore, he can also be
convicted and charged of estafa since the latter is a malum in se while the
former is a malum prohibium (Id.)

6. NATO, a national union of teachers was able to find jobs abroad for its
member by directly contacting other teachers organizations in foreign
countries, without charging additional fees. Is this legal? No. Only persons
or entities with appropriate license or authority can engage in recruitment
and placement of workers. Contact services are activities that fall within
the scope of recruitment and placement of workers. (Alcantara)

7. A paper manufacturing company in Cainta would like to know if it needs

to obtain a license authority before it can recruit workers for its plant. No
license or authority is necessary. The company is not engaged in the
business of recruitment and placement of workers, it is not recruiting workers
 31

to be employed by others. It does not represent a principal. It is recruiting

its own workers. (Alcantara)

C.7 Rule Making

* The Secretary of Labor and Employment has the power and authority not
only to restrict and regulate the recruitment and placement activities of all
agencies but also promulgate rules and regulations to carry out the
objectives and implement the provisions governing said activities. (Eastern
Assurance vs. Secretary of Labor)

C. 8 Enforcement

1. Art. 36 : The Secretary of Labor shall have the power to restrict and
regulate the recruitment and placement activities of all agencies
within the coverage of this Title and is hereby authorized to issue
orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of this Title.

Sec. 2, Rule VI, Book I, IRRs : Pending investigation of the complaint or

report, the Secretary may suspend the license of the private employment
agency concerned. . .

2. Art. 37 : The Secretary or his duly authorized representatives may, at

any time, inspect the premises, books of account and records of any
person or entity covered by this Title, require it to submit records
regularly on prescribed forms, and act on violations of any provisions
of any provisions of this Title.

Public Sector Agencies

A. EMPLOYMENT OFFICES AND THE POEA

1. Art. 14 (a) : The Secretary of Labor shall have the power and
authority: (a) To organize and establish new employment agencies
in addition to the existing employment offices under the DOLE as the
need arises.

2. Sec. 3, EO 247 : POEA functions

a. Regulate private sector participation in the recruitment and
overseas placement of workers by setting up a licensing and
registration system;
b. Formulate and implement in coordination with appropriate
entities concerned, a system for promoting and monitoring
the overseas employment of Filipino workers taking into
consideration their welfare and the domestic manpower
requirements;
c. Protect the rights of Filipino workers to fair and equitable
recruitment and employment practices and ensure their
welfare;
d. Exercise original and exclusive jurisdiction to hear and decide
all pre-employment cases which are administrative in
character involving or arising out of violation of recruitment
 32

laws, rules and regulations, or violation of the conditions for

issuance of license or authority to recruit workers. The POEA
has no jurisdiction to hear and decide a claim for
enforcement of a foreign judgment. Such a claim must be
brought before the regular courts. (Pacific Asia vs. NLRC)

B. Definition of Terms

Sec. 1 (j), (w), (z), (ff), and (qq), Rule II, Book I, Rules and regulations on
Overseas Employment

1. Contract Worker - Any person working or who has worked overseas

under a valid employment contract.

2. Manning agency Any person or entity recruiting seamen for

vessels plying international waters and fore related maritime
activities.

3. Name Hire Worker who is able to secure employment overseas

on his own without the assistance or participation of an agency.

4. Overseas employment Employment of a worker outside the

Philippines, including employment on hoard vessels plying
international waters covered by a valid employment contract.

5. Placement fee Amount charged by a private employment

agency from a worker for its services in securing employment.

6. Service fee Amount charged by a license from its foreign ER as

payment for actual services rendered in relation to the recruitment
and employment of workers for said principal.

6. 3 Sanctions

1. Art. 35 : Suspension and/or Cancellation of License or Authority The

Secretary of Labor shall have the power to suspend or cancel any
license or authority to recruit EEs for overseas employment for
violations of rules and regulations by the DOLE, the POEA, or for
violation of the provisions of this, and other applicable laws . .

2. Art. 39 : Penalties Violations of any provisions of this Tile or IRRs by

license or holder of authority :
a. imprisonment of not less than 2 years nor more than 5 years
b. or a fine of not less than P10,000.00 nor more than P50,000.00
c. or both such imprisonment and fine, at the discretion of the
court.

3. Violation of any of the provisions thereof or its implementing rules and

regulations by a non-license or non-holder of authority
a. imprisonment of not less than 4 years nor more than 8 years
b. or a fine of not less than P20,000.00 nor more than P100,000.00
c. or both such imprisonment and fine, at the discretion of the
court.
 33

4. If the offender is a corporation, partnership, association or entity, the

penalty shall be imposed upon the officer or officers of the
corporation, partnership, association or entity responsible for
violation; and if such officer is an alien, he shall in addition to the
penalties herein prescribed, be deported without further
proceedings:

* Illegal recruitment:
a. imprisonment of not less than 6 years and 1 day but not more
than 12 years and
b. a fine of not less than P200,000.00 nor more than P500,000.00.

* Illegal recruitment constituting Economic Sabotage:

c. life imprisonment; and
d. a fine of not less than P500,000.00 nor more than P1,000,000.00.

* The maximum penalty shall be imposed if:

a . the person illegally recruited is less than 18 years of age; or
b. committed by a non-license or non-holder of authority.

* The Secretary of Labor or his duly authorized representative may order the
closure of illegal recruitment establishments.

5. Art. 38 (c) of the Labor Code granting the Secretary of Labor the
power to issue search or arrest warrants is declared unconstitutional
and null and void. (Salazar vs. Achacoso)

- money claims arising from ER-EE relationship prescribes in 3

years
- strict rules of evidence are not applicable in claims for
compensation and disability benefits

5. In case of breach of the employment contract by a foreign-based ER,

may the private employment agency or recruitment entity be held liable?
What is the nature of the liability of the recruitment and placement agency
and its principal? Yes. The agency or entity undertakes under oath to
assume full and complete responsibility for all claims and liabilities which
may arise in connection with the use of the license or authority. The agency
is jointly severally liable with the principal or foreign-based ER for any of the
violations of recruitment agreement contract of employment. (Ambraque vs.
NLRC; Pp vs. Catan)

Section 7. Alien Employment

7. 1 Technique of Regulation-Employment Permit

1. Art. 40 : Employment Permit of Non-resident Aliens Any alien seeking

admission to the Philippines for employment purposes and any
domestic or foreign ER who desires to engage an alien for
employment in the Philippines shall obtain an employment permit
from the DOLE . . .
 34

For an enterprise registered in preferred areas of investments, said

employment permit must be issued upon recommendation of the
government agency charged with the supervision of the registered
enterprise.

Sec. 7, Rule XIV, Book I, IRRs : The employment permit shall be valid for
a minimum period of 1 year.

2. Art. 41 : Prohibition Against Transfer of Employment (a) After the

issuance of an employment permit, the alien shall not transfer to
another job or change his ER without prior approval of the Secretary
of Labor.

Art. 288 : Any alien found guilty shall be summarily deported upon
completion of service of sentence.

3. May an ER in the Philippines employ a worker who is not a Filipino

citizen? Yes, except to nationalized activities such as:
a. public utility to develop, exploit and utilize natural resources
60% Filipino;
b. Mass media 100% owned by Filipino citizens
c. Advertising 70% Filipino owned
d. Retail Business 100% Filipino owned
e. Financing business 60% Filipino owned

4. Are there exceptions to the prohibition against employment of aliens

in entities engaged in nationalized activities? Yes, when (a) the
Secretary of Justice specifically authorizes the employment of
technical personnel; or (b) where aliens are elected members of
Board of Directors in proportion to their allowable participation in the
capital; or (c) when allowed under certain special laws. (Alcantara)

Coverage

* A resident alien need not obtain an employment permit in order to be

employed in the Philippines. (Almodiel vs. NLRC)

Employment Permit Conditions for Grant

1. Art. 40 : The employment permit may be issued to a non-resident alien

or to the applicant ER after a determination of: [W A C]
a. competent
b. able and
c. willing
at the time of the application to perform the services for which the alien is
desired. [The DOLE is the agency vested with jurisdiction to determine the
question of availability of the local workers. (General Milling vs. Torres)

2. Sec. 5, Rule XIV, Book I, IRRs : Requirements for Employment Permit

Applicants The applicant for an employment permit shall be
accompanied by the following:
a. Curriculum vitae signed by the applicant indicating the
educational background, his work experience and other data
 35

showing that he possesses technical skills in his trade or

profession.

b. Contract of employment between the ER and the principal,

which shall embody the following, among others:
That the non-resident alien shall comply with all applicable
laws and rules and regulations;
That the non-resident alien worker and ER shall bind themselves
to train at least 2 Filipino understudies; and
A designation by the ER of at least 2 understudies which must
be the most ranking regular EEs in the section or department
for which the expatriates are being hired to ensure actual
transfer of technology.

Section 8. Development of Human Resources

8.1 Objectives - Definitions

1. Art. 43 : It is the objectives of this [F E D]

a. Title to Develop human resources
b. Establish training institutions, and
c. Formulate such plans and programs as will ensure efficient
allocation, development and utilization of the nations
manpower and thereby promote employment and
accelerate economic and social growth.

2. What is human resources development? Process by which the actual

and potential labor force is made systematically to acquire greater
knowledge, skills and capabilities for the nations sustained
economic and social growth. (Sec. 1, Rule I, Book II, IRRs)

3. Define manpower? Is the portion of the population which has actual

or potential capability to contribute to the production of goods and
services. (Sec. 1 (c), Rule I, Book II, IRRs)

4. Is human resources development intended solely to train workers?

No. Manpower development also means training for self-
employment. This is known as entrepreneurship (Art. 44 (b).
5. What is dual system/training? It refers to a delivery system of quality
technical and vocational education which requires training to be
carried out alternatively in 2 venues:
a. in school and
b. in the production plant.
In school, training provides the trainee the theoretical foundation, basic
training, develops his skill and proficiency in actual working conditions as it
continues personal discipline and work value. (Sec. 4 (p), RA 7796)

8.2 Program Incentive

* Art. 52 : Deduction from taxable income of of the value of labor training

but not to exceed 10% direct labor wage: Provided, That in the case of
apprenticeship programs, the program is recognized by DOLE.
 36

8.3 Training and Employment of Special Workers Apprentices, Learners

and Handicapped Workers

Policy Objectives

* What is the policy of the State on apprenticeship?

1. To help meet the demand of the economy for trained manpower;
2. To establish a national apprenticeship program through participation
of ERs workers, and government and non-government agencies;
and
3. To establish apprenticeship standards for the protection of
apprentices. (Art. 57)

Definition

1. Art. 58 : Apprenticeship Practical training on the job

supplemented by related theoretical instruction.

2. Art. 73 : Learners Persons hired as trainees in semi-skilled and other

industrial occupations which are non-apprenticeable and which
may be learned through practical training on the job in a relatively
short period of time which shall not exceed 3 months.

3. Art. 78 : Handicapped workers Those whose earning capacity is

impaired by age or physical or mental deficiency or injury

Who Can Employ and When

A. APPRENTICES must be approved by TESDA

1. Art. 60 : Only ERs in highly technical industries and only in

apprenticeable occupations may employ apprentices.

Sec. 1, Rule IV, Book II, IRRs : Highly Technical Industries Trade,
business, enterprise, industry or other activity which is engaged in the
application of advanced technology.

Art. 58 : Apprenticeship Occupation Requires more than 3 months of

practical training supplemented by related theoretical instruction.

- 1 month probation
- prior approval by TESDA of the proposed apprenticeship
program is a condition sine qua non before an apprenticeship
can be validly entered into
- employer is not obliged to employ the apprentice after the
completion of his training

2. Art. 70 : Apprenticeship programs shall be primarily voluntary except:

a. When national security or particular requirements of economic
development so demand, the President may require
compulsory training where the shortage of trained manpower
is deemed critical by the Secretary of Labor.
 37

b. Where services of foreign technicians are utilized by private

companies in apprenticeable trades.

B. LEARNERS
- Learnership programs must be approved by TESDA

* Art. 74 : Learners may be employed when:

1. no experienced worker is available
2. the employment of learners is necessary to prevent curtailment of
employment opportunities
3. and the employment does not create unfair competition in terms of
labor costs or impair or lower working standards.

C. HANDICAPPED WORKERS

* Art. 79 : Handicapped workers may be employed when their employment

1. is necessary to prevent curtailment of employment opportunities;
and
2. when it not create unfair competition in labor costs or lower working
standards.

Conditions of Employment
- not exceed 8 hours
- allowed overtime

* Art. 61 :
1. Period of apprenticeship shall not exceed 6 months.
2. Wages shall not start below 75% of the minimum wage.
3. Apprenticeship program must be duly approved by TESDA or
apprentices becomes regular EE. This must be evidenced by an
apprenticeship agreement. (Nitto Enterprises vs. NLRC)

Ratio of theoretical vs. on the job training > 100: 2000

- may work overtime duly credited as his training time

* Art. 72 : The Secretary of Labor may authorize the:

1. hiring of apprentices without compensation whose training on the
job is required by the school or training program curriculum as a
requisite for graduation or board examination. There is no ER-EE
relationship between students on one hand, and schools, where
there is written agreement between them under which the former
agree to work for the latter in exchange for the privilege to study free
of charge. (Sec. 14, Rule X, Book III, IRRs)

2. A clerk in the College of Law of a University worked without pay but

was allowed to take up no more than 3 units per semester free of
charge. The clerk resigned and demanded payment of unpaid
wages. Is the clerk entitled to unpaid wages? Yes. Sec. 14, Rule X,
Book III, IRRs : only applies in instances where the students are given
real opportunity, including such facilities as may be reasonably
necessary to finish their chosen courses under such arrangement. In
this problem, the clerk was not given any real opportunity to finish law
as he was allowed to take up no more than 3 units per semester.
 38

There is therefore an ER-EE relationship between the clerk and the

university. (Alcantara)

3. Qualifications of an Apprentice:
a. At least 15 years of age: provided, those below 18
years of age shall not work in hazardous occupations;
b. Be physically fit for the occupation.
c. Possess vocational aptitude and capacity.
d. Possess the ability to comprehend, and follow oral and
written instructions. (Sec. 11, Rule VI, Book III, IRRs)

4. A 5-star hotel would like to have an apprentice program

dishwashers? No. This is not an apprenticeable program occupation
because proficiency can be attained within a very short period.
Besides, the hotel industry is not highly technical. (Alcantara)

5. After working for 1 month may an apprentice be dismissed without

cause? No. After the probationary period of 1 month, the
apprenticeship agreement may be terminated only for cause.

6. Causes for termination of apprenticeship agreement by apprentice:

a. Repeated violation by ER of agreement
b. Cruel or inhuman treatment
c. Personal problems which prevents a satisfactory performance
(bad health)
d. Substandard working conditions

EMPLOYER
a. habitual absentism
b. willful disobedience e.g. rules
c. insubordination lawful order
d. poor physical conditions apprentice
e. theft or malicious destruction
f. poor efficiency of performance
g. engaging in violence
h. gross misconduct
i. bad health or continuing illness. (Sec. 25, Rule VI, Book II, IRRs)

* employer must make a commitment to employ the business

B. LEARNERS
- learnership must be approved by TESDA

1. Art. 75 :
1. Duration of the learnership period shall be 3 months;
2. Wages and salary rates begin at not less than 75% minimum wage;
and
3. A commitment to employ learners if they so desire, as regular EEs
upon completion of the learnership.
All learners who have been allowed or suffered work during the
first 2nd months to be deemed EEs training is terminated by the
ER before the end of the stipulated period though no fault of
the learner.
 39

2. Art. 76 : Learners employed in piece or incentive-rate jobs during training

shall be paid in full for the work done.

3. J entered into a learnership agreement with employer A. Before the end

of 2 months, A terminated the agreement. When J requested for a chance
to let him finish the 3 months period. At the end of 3 months, A refused to
hire J. Is the stand of A sustainable? No. A has a commitment under the
learnership agreement to employ J as a regular worker upon the
completion of the learnership.

C. HANDICAPPED WORKERS [A P M I]

1. Art. 80 :
Rates to be paid to handicapped workers shall not be less than
75% of the applicable minimum wage.
Employment agreement must state the duration of the
employment period and the work to be performed.
2. Art. 81 : Handicapped workers may be hired as apprentices or
learners if their handicap is not such as to effectively impede the
performance of job operations in the particular occupations for
which they are hired.

Enforcement

1. Art. 66 : Appeal to the Secretary of Labor - The decision of the

authorized agency of the DOLE may be appealed to the Secretary
of Labor within 5 days from receipt of the decision. The decision of
the Secretary of Labor shall be final and executory.

2. Art. 67 : Exhaustion of Administative Remedies No person shall

institute any action for the enforcement of any apprenticeship
agreement or damages for breach of any such agreement, unless
he has exhausted all available administrative remedies.

Section 9. Conditions of Employment Hours of Work

9. 1 Hours Regulation

Rationale and Enforcement

* The 8-hour labor law was designed not only to safeguard the health and
welfare of the laborer but in a way to minimize unemployment by forcing
ERs, in cases, where more than an 8-hour operations is necessary, to utilize
different shifts of laborers working only for 8 hours each. (Manila Terminal vs.
CIR)

9.2 Coverage

I. Art. 82 : The provisions of this Title shall apply to EEs in all establishments
and undertakings whether for profit or not but to [GMS- FMDP]
 40

1. Government EEs [whether employed by the National Government

or any of its political subdivisions, including those employed in
GOCCs with original charters. (Sec. 2, Rule I, Book III, IRRs]

2. Managerial EEs [refer to those who meet all of the following

conditions, namely:
a. Their primary duty consists of the management of the
establishment in which they are employed or of a department
or sub-division thereof;
b. Customarily or regularly direct the work of 2 or more EEs
c. Has the authority to hire or fire other EEs of lower rank; or their
suggestions and recommendations as to the hiring and firing
and as to the promotion or any change of status of other EEs
are given, particular weight. (d.)]

Mere designation to a position with a high-sounding title, does

not make an EE a managerial EE where the exercise of the
independent judgment is not present. (Sierra vs. NLRC)

3. Other officers or members of the managerial staff if they perform the

following duties and responsibilities:
a. Primary duty consists of the performance of work directly
related to management policies of the ER;
b. Customarily and regularly, exercise discretion and
independent judgment;
c. Regularly directly assist a proprietor or managerial EE or
execute under general supervision work along specialized or
technical lines requiring special training, experience or
knowledge; or execute under general supervision special
assignment and tasks; and
d. Do not devote more than 20% of their hours worked to activities
which are not directly and closely related to the performance
of the work described in the preceding paragraphs. (Id.)

4. Field personnel [Non-agricultural EEs who regularly perform their

duties away from the principal place of business or branch office of
the ER and whose actual hours of work in the field cannot be
determined with reasonable certainty. (Art. 82)

5. Members of the family of the ER who are dependent on him for

support domestic helpers and persons in the personal service of
another. Perform such service:
a. In the ERs home which are usually necessary or desirable for
the maintenance or enjoyment thereof;
b. Or minister to the personal comfort, convenience or safety of
the ER as well as the members of his ERs household. (sec. 2,
Rule I, Book III, IRRs)

However, house personnel hired by a ranking company

official, but paid for the company itself, to maintain a staff
house provided for the official, are not the latters domestic
helpers but regular EEs of the company. (Cadiz vs. Philippine
Sinter)
 41

The function of a managerial employee requires the use of

discretion and independent judgment (nature of his
functions)

6. And workers who are paid by results. [Including those who are paid
on piece-work, takay, pakiao, or task basis if their output rates
are in accordance with the standards prescribed.]

II. Give the reason for the exceptions?

1. Government EEs Terms and conditions of employment are
governed by the Civil Service Law

2. Managerial EEs Employed by reason of their special training,

expertise or knowledge and for positions requiring the exercise of
discretion and independent judgment. Value of work cannot be
measured in terms of hours.

3. Non-agricultural field personnel These regularly perform their duties

away from the principal or branch office or place of business of the
ER; they are on their own in the field and the number of hours of
actual work they render cannot be reasonably ascertained.

4. Members of the family dependent upon him for support Amounts

given by way of support may far exceed the benefits to which the
EEs are entitled under the laws on overtime.

5. Domestic helpers and persons in the personal service of another

They minister to the personal needs and comfort their ER and his
family and terms and conditions of employment are governed in
other parts of the Labor Code.

6. Workers paid by results Compensation computed on the basis of

work accomplished and not on time spent in accomplishing the
work. (Alcantara)

III. Determine whether exempted EE or not?

1. Foremen, inspectors and supervisors given the power to recommend
hiring and firing of EEs but where ultimate power to hire or fire rested
with personnel manager? No. Where such recommendatory powers
are subject to evaluation and review, the same are not effective and
not an exercise of independent judgment as required by law. (
Franklin Baker Company vs. Trajano)

2. Supervisory EEs are given the following duties and functions assist the
department superintendent in various aspects of management such
as in the planning of systems and procedures, recommends
disciplinary action against erring subordinates or promotion of
deserving personnel, train and guide subordinates; communicate
and coordinate with other supervisors; recommend measures to
improve work method; and other related tasks as may be assigned
by his immediate superior. Yes. They discharge duties and
 42

responsibilities which qualify them as members of the managerial

staff. (Alcantara)

3. Cutter in tailoring shop was assigned chore of distributing work to

shops tailors when the shops manager were absent. He saw to it
that work conformed with pattern he had prepared and if not, had
them redone, repaired or sewn. No. He did not participate in policy-
making. It is true that in the absence of the manager and assistant
manager, he distributes and assigns work to EEs but such duty
though involving discretion is occasional and not regular and
customary. (Villuga vs. NLRC)

9.3 Normal Hours

* Art. 83 : The normal of hours of work of any EE shall not exceed 8 hours a
day.

** Health personnel in cities and municipalities with a population of at least

1,000,000 or in hospitals and clinics with a bed capacity of at least 100 shall
hold regular office hours for 8 hours a day, for 5 days a week, exclusive of
time of meals, except where the exigencies of the service require that such
personnel work for 6 days or 48 hours in which case they shall be entitled to
an additional compensation at least 30% of their regular wage for work on
the 6th day. [Health personnel Includes resident physicians, nurses,
nutritionists, dieticians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel]

* The 40-hour work week would not be applicable if there is a training

agreement between the resident physician and the hospital and the
training program is duly accredited or approved by appropriate
government agency. (Azucena)

9.4 Hours Worked

1. Art. 84 : Hours worked shall include:

A. all time during which an EE is required
to be on duty
to be at a prescribed workplace and

B. all time during which an EE is suffered or permitted to work.

Rest periods of short duration during working hours shall be counted as
hours worked.

2. Sec. 4, Rule III, Book III, IRRs :

Principles in Determining Hours Worked
1. All hours are hours worked which the EE is required to give to his ER
regardless of whether or not such hours are spent in productive labor
or involve physical or mental exertion;

2. An EE need not leave the premises of the workplace in order that his
rest period shall not be counted, it being enough that
a. he stops working,
 43

b. may rest completely and

c. may leave his workplace, to go elsewhere, whether within or
outside the premises of the workplace;

3. If the work performed was necessary or it benefited the ER or the EE

could not abandon his work at the end of the normal working hours
because he had no replacement, all the time spent for such work
shall be considered as hours worked, if the work was with the
knowledge of his ER or immediate supervisor;

4. The time during which an EE is inactive by reasons of interruptions in

his work beyond his control shall be considered working time either if
the imminence of the resumption of the work requires the EEs
presence at the place of work or if the interval is too brief to be
utilized effectively and gainfully in the EEs own interest.

3. Jose works as a janitor. He continues sweeping the floors after 5:00 p.m
The manager is aware of this, but he does not stop Jose from doing work
after 5:00 p.m. Is this hours of work? Yes. Although Jose was not instructed
expressly to render work, he was impliedly allowed to do so by failure of the
ER to warn him against rendering such work. Besides the work rendered by
Jose benefited the ER.

Waiting Time

1. Sec. 5, Rule I, Book III, IRRs : Waiting time spent by an EE shall be

considered as working time if waiting is an
a. integral part of his work, or
b. the EE is required to engage by an ER to wait
The controlling factor is whether waiting time spent in idleness is so
spent predominantly for the ERs benefit or for the EEs. (Azucena)

2. S, a company driver has the following work schedule: 8:30 a.m. -

fetches G.M.; 9:00 a.m. 12:00 noon does nothing on call for G.M.
at the company premises ; 12 noon 1:00 p.m. lunch; 1:00 p.m.
5:00 p.m. drives the G.M. to conferences; 5:00 p.m. goes home. The
company refuses to pay him for the 9:00 a.m. to 12:00 noon period.
Is this valid? No. S is not free to make use of the period effectively and
gainfully for his own purposes. He must remain in the premises as at
any time he may be called to drive for the G.M. (Alcantara)

3. 30 minutes prior to the start of the scheduled working hours, the

workers of an enterprise assembled at a designated area to answer
roll call. As their houses are situated right where the farms are
located, the workers can go back in their houses after roll call to do
some chores. Is the assembly time working time? No. The works are
not subject to the absolute control of the company during the
period. The workers were not deprived of the time to attend to other
personal pursuits. (Aria vs. NLRC)

Idle Time
1. A laborer need not leave the premises of the factory, shop or boat in
order that his period of rest shall not be counted, it being enough
 44

that he cease to work, may rest completely and leave or may

leave at his will the spot where he actually stays while working, or go
somewhere else, whether within or without the factory, shop or boat.
(Luzon Stevedoring vs. Luzon Marine Dept. Union)

2. A, an accountant in the manufacturing firm, has idle time in her work

schedule, waiting for company papers to work on. She dovotes this
time working on papers of other firms for which she receives
remuneration. Is the firm obligated to pay her for this time? Yes.
Although she is working on the papers of other companies, she has
no absolute control over her time. Her ER may at any time require her
to do some work. She cannot furthermore leave the place of work
during her work schedule. (Alcantara)

3. T, a machine operator was forced to stop operating his machine for

1 hour during a brownout. Is this working time? Yes. The interruption
was not due to the fault of T. Besides 1 hour is too brief to be utilized
effectively and gainfully for his own interest.

Meal Time

1. Sec. 7, Rule I, Book III, IRRs : Every ER shall give his EEs not less than 1
hour time-off for regular meals, except in the following cases where
a meal period of not less than 20 minutes may be given by the ER
provided

*(That such shorter meal period is credited as compensable hours worked

hours worked of the EE But if it is the EE who requested for the shorter meal
time, then such shortened meal period is not compensable. (Azucena):
[N O P E]
Where work is Non-manual in nature or does not involve
strenuous physical exertion;

Where the establishment regularly Operates less than 16 hours

a day;

In cases of actual or impending Emergency or there is urgent

work to be performed on machineries and equipment to avoid
serious loss which the ER would otherwise suffer; and

Where the work is necessary to Prevent serious loss of

perishable goods.

* Rest periods or coffee breaks running from 5 to 20 minutes shall be

considered as compensable working time.

2. Where during the so-called meal period, the laborers are required to
stand by for emergency work, or where said meal hour is not one of
complete rest, such period is considered overtime. (Pan Am vs. Pan Am
EEs Association)

Working While Sleeping

 45

* Sleeping time may be considered working time if it is subject to serious

interruption or takes place under conditions substantially less desirable than
would be likely to exist at the EE home i.e. firemen permitted to sleep a
portion of the time they are so on duty at the fire station. (Azucena)

On Call

1. Sec. 5, Rule I, Book III, IRRs : An EE while he is required to remain on

call in the ERs premises or so close thereto that he cannot use the
time effectively and gainfully for his own purpose shall be considered
as working hours while on call. An EE who is not required to leave
word at his own or with company officials where he may be reached
is not working while on call.

2. If an EE is kept within reach through a cellular phone. Is it on call? No.

(Azucena)

Travel Time

***Principles which determine whether or not time spent in travel is working time:

Travel from Home to Work Normal travel from home to work

is no work time but an emergency call outside of regular
working hours requiring him to go to his regular place of
business is working time.

Travel that is all in the days work Time spent by an EE in

traveling from one job site to another, during the workday,
must be counted as hours worked.

Travel away from home Travel away from home is clearly

worktime when it cuts across the EEs workday, except during
meal period or when EE is permitted to sleep in adequate
facilities furnished by the ER. The time is not only hours worked
on regular workdays but also during corresponding working
hours on non-working days. Outside of these regular working
hours, travel away from home is not considered working time.
(Azucena)

Lectures, Meetings, Training Programs

* Sec. 6, Rule I, Book III, IRRs : Attendance at lectures, meetings, training

programs and other similar activities shall not be counted as working time
if all of the following conditions are met:
1. Attendance is outside of the ERs regular working hours;
2. Attendance is in fact voluntary; and
3. The EE does not perform any productive work during such
attendance.

Semestral Break

* Regular full-time teachers are entitled to salary and COLA during

semestral break. (U.Pang. Faculty Union vs. U. Pang.)
 46

9.5 Overtime Work and Offsetting Prohibition

1. Art. 87 : Overtime Work

regular work day plus 25% basic hourly rate
Special days, holiday or rest day plus 30% of the regular hourly
rate on said days.

2. Art. 89 : Emergency Overtime Work - Any EE may be required by the

ER to perform overtime work in any of the following cases:
[WED-UPS]
a. When the country is at war
b. When any other national or local emergency has been
declared
c. When it is necessary to prevent loss of life or property or in case
of imminent danger to the public safety due to an actual or
impending emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake, epidemic or other
Disaster or calamity.
d. When there is Urgent work to be performed on machines and
installations in order to avoid serious loss or damage to the ER
or some other cause of similar nature.
e. When the work is necessary to prevent loss or damage to
Perishable goods.
f. Where the completion or continuation of the work started
before the 8th hour is necessary to prevent Serious obstruction
or prejudice to the business operations of the ER.

The EEs refusal to obey the order of the EE constitutes

insubordination for which he may be subjected to disciplinary
action. (Alcantara)

3. Art. 88 : Undertime work in any particular day shall not be offset by

overtime work on another day BUT not on someday.
Permission given to the EE to go on leave on some other day
of the week shall not exempt the ER from paying the additional
compensation required.

4. Art. 90 : For purposes of computing overtime and other additional

remuneration as required by this Chapter the regular wage of an
EE shall include the cash wage only, without deduction on account
of facilities provided by the ER.

5. Y, corporation, as a company policy, required its EEs to render only

6 hours of work daily but pays them the minimum wage
corresponding to 8 hours work. Later, the full 8-hours was required
without any increase in wages. Are the EEs entitled to overtime pay?
Yes. Though voluntary practice or policy, the company has fixed the
normal workday at 6 hours. It now constitute part of the terms and
conditions of employment and cannot be unilaterally withdrawn by
the ER. (Alcantara)
 47

6. Distinguish overtime pay from premium pay : Overtime pay is

additional compensation for work done beyond the normal work
hours on ordinary working days. Premium pay is additional
compensation for work rendered by the EE on days normally he
should not be working. But additional compensation for work
rendered in excess of 8 hours during these days is also considered
overtime pay.

7. A was late for work on a particular day. To offset for the time he was
late, A worked on additional period equivalent to the period he was
late for work. The period was offset against A undertime. Is this valid?
Yes. The prohibition to offset overtime against undertime applies to
undertime incurred and overtime rendered on different days.
Provisions for overtime covers both profit and non-profit
establishment or undertaking
For purposes of computing overtime
REGULAR WAGE includes the cash wage only; without
deduction of facilities provided.

8. May the right to overtime pay be waived? As a general rule, the right
cannot be waived. (Cruz vs. Yes Sing) However, when the waiver is
exchange for certain benefits and privileges, which may be more
than what will accrue to them in overtime pay, the waiver may be
permitted. (MERALCO Workers Union vs. MERALCO)

Rationale Overtime Pay

* The reasons for overtime pay is that the worker is made to work longer
than what is commensurate with the agreed compensation for the
statutorily fixed or voluntary agreed hours of labor he is supposed to do.
When he thus spends additional time to his work, the effect upon him is
multi-faceted; he puts in more effort, physical or mental; he is delayed in
going home to his family to enjoy the comforts thereof; he might have no
time for relaxation, amusement or sports; he might miss important pre-
arranged arrangements. (PNB vs. PEMA)

Compressed Week voluntary basis

* While as a general rule, the right to overtime pay cannot be waived under
existing laws, the EEs and ER can agree to a compressed workweek of 5
days of 9 hours each with no payment of overtime if this will redound to the
benefit of the workers i.e. if the original workweek is reduced from Monday
Saturday to Monday Friday. (Azuzena) However, Alcantara answered in
a 1984 problem differently when he answered that overtime pay should be
paid. In that problem, the workers were required to render 9.5 hours of work
for 5 days. (What is the answer, I really do not know, ask the reviewer)

Conditions for Compressed Work Week

1. voluntary agreed upon
2. not to exceed 48 hours/ week
3. no diminution on take home pay or fringe benefits
4. waivers must be made
5. all hours exceeding 48 hours/week considered overtime
 48

6. must submit report to DOLE

Retail Establishment
- sale of goods for personal or household use
ex. grocery

Service Establishment
- sale of services to individuals for their own or household use
ex. T.V. repair shop

No Formula Basic Contract

* When the contract of employment requires work for more than 8 hours at
specific wages per day, without providing for a fixed hourly rate or that the
daily wages include overtime pay, said wages cannot be considered as
including overtime compensation. (Manila Terminal vs. CIR)

Built-In Compensation

* The employment contract may provide for a built-in overtime pay.

Because of this, non-payment of overtime pay by the ER is valid. (Engineering
equipment vs. Minister of Labor)

9.6 Night Work

1. Art. 86 : Every EE shall be paid night shift differential of not less than
10% of his regular wage for each hour of work performed between
10:00 p.m. and 6:00 a.m.

2. Sec. 1, Rule II, Book III, IRRs : This rule shall apply to all EEs except:
[G R S D M F]
a. Those of the government and any of its political subdivisions,
including GOCCs.
b. Retail and service establishments regularly employing not
more than 5 workers.
c. Domestic helpers and persons in the personal service of
another.
d. Managerial EEs.
e. Field personnel and other EEs whose time and performance is
unsupervised by the ER.
f. Includes task and contract basis

3. X works at a gasoline station which has only 5 EEs. Is he entitled to

night shift differential? No. He works in a retail establishment
employing not more than 5 workers. (Alcantara)

4. What if X works at Kings Minimarts, a retail store chain with 10 outlets

of 2 EEs each outlet. Is he entitled to night shift differential? Yes. The
total number of EEs of the ER exceeds 5. It is at least 20. (Id)

Rationale Prohibition
 49

* First, there are remotely injurious effects of permanent nightwork

manifested in the later years of workers life. Of the more immediate
importance is the disarrangement of his social life, including the
recreational activities of his leisure hours and the ordinary associations of
normal family relations. From an economic point of view, it is to be
discouraged because of its adverse effect upon efficiency and output. A
moral argument in the case of workers is that they go to and from the
factory in the darkness. (Shell vs. NLU)

Exercise of a profession is neither a retail nor service

Section 10 : Weekly Rest Periods

* Art. 82 : The provisions of this Title shall apply to EEs in all establishments
and undertakings whether for profit or not, but not to [G M S F I F D R]

1. Government EEs [whether employed by the National Government

or any of its political subdivisions, including those employed in
GOCCs with original charters. (Sec. 2, Rule I, Book III, IRRs]

2. Managerial EEs [refer to those who meet all of the following

conditions, namely:
a. Their primary duty consists of the management of the
establishment in which they are employed or of a department
or subdivision thereof;
b. Customarily and regularly direct the work of 2 or more EEs;
c. Has the authority to hire or fire other EEs of lower rank; or their
suggestions and recommendations as to the promotion or any
other change of status of other EEs are given particular
weight. (Id)
> Mere designation to a position with a high-sounding title, does not make
an EE where the exercise of independent judgment is not present. (Sierra vs.
NLRC)

3. Other officers or members of the managerial staff [if they perform the
following duties and responsibilities:
a. Primary duty consists of the performance of work directly
related to management policies of the ER;
b. Customarily and regularly exercise discretion and
independent judgment;
c. Regularly directly assist a proprietor or managerial EE or
execute under general supervision work along specialized or
technical lines requiring special training, experience or
knowledge, or execute under general supervision special
assignment and tasks; and
d. Do not devote more than 20% of their hours worked to activities
which are not directly and closely related to the performance
of the work described in the preceding paragraphs. (Id)

4. Field personnel [Non-agricultural EEs who regularly perform their

duties away from the principal place of business or branch office of
the ER whose actual hours of work in the field cannot be determined
with reasonable certainty (Art. 82)]
 50

5. Members of the family of the ER who are dependent on him for

support

6. Domestic helpers and persons in the personal service of another.

[Perform such services:
a. In the ERs home which are usually necessary or desirable for
the maintenance or enjoyment thereof;
b. Or minister to the personal comfort, convenience, or safety of
the ER as well as the members of his ERs household (Sec. 2,
Rule I, Book III, IRRs)
However, house personnel hired by a ranking company
official, but paid for by the company itself, to maintain a staff
house provided for the official, are not the latters domestic
helpers but regular EEs of the company. (Cadiz vs. Philippine
Sinter)

7. And workers who are paid by results. [Including those who are paid
on piece-work, takay, pakiao, or task basis if their output rates
are in accordance with the standards prescribed.]

Sec. 1, Rule III, Book III, IRRs : This rule shall apply to all ERs whether
operating for profit pr not, including public utilities operated by private
persons.

10.2 Scheduling of Rest Day; When Compulsory Work Allowed; and

Compensation
1. Art. 91 : It shall be for the duty of every ER, whether operating for profit
or not, to provide EE a rest period of not less than 24 consecutive
hours after every 6 consecutive normal working days.

* The ER shall determine and schedule the weekly rest day of his EEs
However, the ER shall respect the preference of EEs as to their
weekly rest day when such preference is based on religion
grounds.

Sec. 4, Rule III, Book III, IRRs : Where however the choice of the EEs as to
their rest day based on religious grounds will inevitably result in serious
prejudice or obstruction to the operation of the undertaking, the ER may so
schedule the weekday rest day of their choice at least 2 days in a month.

2. Art. 92 : When ER may require Work on rest day [D U A - P N A]

a. In case of actual or impending emergency caused by serious
accident, fire, flood, typhoon, earthquake, epidemic, or other
Disaster or calamity to prevent loss of life, or imminent danger
to public safety.
b. In case of Urgent work, to avoid serious loss which the ER would
otherwise suffer;
c. In the event of Abnormal pressure of work due to special
circumstances, where the ER cannot ordinarily be expected to
resort to other measures;
d. To prevent or damage to Perishable goods;
 51

e. Where the Nature of work requires continuous operations and

stoppage of the work may result in irreparable injury or loss to
the ER; and
f. Analogous (avail of favorable weather) or similar
circumstances [PANADU]

3. How much is a worker entitled if he works on a rest day?

Scheduled rest day additional compensation of at least 30%

of his regular wage.

Scheduled rest day which is a non-working holiday entitled

to additional compensation of at least 50% of his regular wage.

Scheduled rest day which is a regular holiday entitled to

additional compensation of at least 30% of his regular holiday
rate of 200% based on his regular wage rate. (Sec. 4, Rule III,
Book I, IRRs)

4. V works on board the M/V Starfish. Sometimes, the boat remains at

sea for 2 weeks, while at other times, especially during bad weather,
the vessel returns to port only after a few days. While the vessel is in
port, V stays home with his family. Can V claim the additional
compensation for work on rest day? Vs work is such that no regular
workdays and no rest days can be scheduled. In such cases, the law
provides that if he performs work on Sundays and holidays, he shall
be paid an additional compensation of at least 30 % of his regular
wage. [Art. 39 (b)]

Rationale Rest day

* Ordinarily, Sundays and legal holidays are dedicated to reading and

instruction so as to fill the mind with culture or some sort of advancement.
On these days, the laborer spends longer hours in the company of his family.
The deprivation of that opportunity to satisfy mental, moral and spiritual
needs should not be ignored, and should be properly compensated.
(MERALCO vs. Public Utilities EEs Association)

Section 11 : Conditions of Employment Holidays

11.1 Coverage

1. * Art. 94 : Every worker shall be paid his regular daily wage during holidays,
except: [RSIO, G, DH, M, FP]
a. in retail and service establishments regularly employing less than 10
workers;

Sec. 1, Rule IV, Book III, IRRs :

b. Those of the government and any of its political subdivisions, including
GOCCs.
c. Domestic helpers and persons in the personal service of another.
d. Managerial EEs.
 52

e. Field personnel and other EEs whose time and performance is supervised
by the ER.

* If required to work on regular holidays,

regular rate x 2

Regular Holidays
1. New Years day
2. Maundy Thursday
3. Good Friday
4. Bataan Day
5. Labor day
6. Independence day
7. National heroes day
8. Bonifacio day
9. X-mas day
10. Rizal day

Nationwide Special Holidays

1. Nov. 1
2. Dec. 31

2. Monthly paid EEs are not excluded from the benefits of holiday pay.
(Mantrade vs. Bacungan)

3. X is a manicurist in the DStyle Barbershop which has 20 barbers and

manicurists. Is she entitled to holiday pay? Yes. X is an EE who is paid by
results ad she works in a service establishment employing more than 10
persons. (Sec. 8, Rule IV, Book III, IRRs)

12.2 Holiday Pay

1. Art. 94 : The ER may require an EE to work on a holiday but such EE

shall be paid a compensation equivalent to twice his regular rate.

2. To receive holiday pay, the EE should not have been absent without
pay on the working day preceding the regular holiday. (Azucena)

3. A legal holiday falling on a Sunday creates no legal obligation for the

ER to pay extra to the EE who does not work on that day, aside from
the usual holiday pay, to its monthly-paid EEs. (Wellington vs. Trajano)

4. X was told by ER to work during a legal holiday which fell on a Sunday.

How much is he entitled to? X will get 200% of his daily rate plus
premium pay pf 30% of the holiday pay = regular daily rate * 230%.

5. If X works overtime during that day, how much will he earn? Holiday
pay rate/8 plus overtime pay of 30% of the holiday hourly rate =
holiday pay rate/8 * 130%.

6. R was absent without pay on December 24. Is he entitled to holiday

pay for Christmas day? No. An EE may not be paid on holiday pay if
he was absent on the day preceding holiday, or in the case of
 53

Maundy Thursday and Good Friday, if he was absent on the day

preceding the first holiday. It would be different if the day preceding
the legal holiday was the EEs rest day. Then he is entitled to holiday
pay. (Alcantara)
On leave with pay

7. Can monthly pay under employment contract already include pay

for any unworked regular holiday within the month? Yes. This is
management prerogative provided that the monthly pay comply
with the least minimum rates prescribed under minimum wage laws.

What an employer has voluntarily given cannot be unilaterally

withdrawn

If the employees are already paid for all non-working days, the
divisor should be 365 and not 251

Vacation and sick leave must be claimed otherwise waived

- cannot be converted into cash unless allowed by employer

Faculty Private School

* Regular holidays specified by law are known to both school and faculty
members as no class days. Thus, hourly paid faculty members are not
entitled to their pay for unworked regular holidays. On the other hand,
hourly paid faculty members are however entitled to their regular hourly
rate on days declared as special holidays or when classes are called off or
shortened since the faculty member, although forced to take a rest, does
not earn what he should earn on that day. (JRC vs. NLRC)

Divisor as Factor

* The daily rate is a constant figure for the purpose of computing overtime
and night differential pay and commutation of sick and vacation leave
credits, and this should also be the same basis for computing unpaid
holidays. (Union of Filipro vs. Vivar)

Section 12. Conditions of Employment Service Incentive Leave

Vacation and Sick leave

- employer must still bind himself in CBA or grant it unilaterally
- not granted by law

12.1 Coverage

Coverage

* Art. 95 : The provision on service incentive leave shall not apply to:
[E,S, IO, E, G, D, M, F]
1. Those who are already enjoying the benefit.
2. Those enjoying vacation leave with pay of at least 5 days.
3. Those employed in establishments regularly employing less than 10
workers
 54

4. Exempt establishments.
Sec. 1, Rule V, Book III, IRRs :
5. Those of the government and any of its political subdivisions including
GOCCs.
6. Domestic helpers and persons in the personal services of another.
7. Managerial EEs.
8. Field personnel and other EEs whose performance is unsupervised by
the ER including those who are engaged on task or contract basis,
purely commission basis, or those who are paid in a fixed amount of
performing work irrespective of the time consumed in the
performance thereof.

* Teachers of private schools on contract basis are entitled to service

incentive leave. (Cebu Institute of Technology vs. Ople)

12.2 Entitlement
- can be converted to cash

* Art. 95 : 5 days incentive leave with pay for at least 1 year of service.

[The term at least 1 year of service shall mean service within 12 months,
whether continuous or broken, reckoned from the date the EE started
working, including authorized absences and paid regular holidays unless
the working days in the establishment as a matter of practice or policy, or
that provided in the employment contract are less than 12 months, in which
case said period shall be considered as 1 year. (Sec. 3, Rule V, Book III, IRRs)

VACATION AND SICK LEAVE

employer must still bind himself in CBA or grant it unilaterally
not granted by law

Section 13. Minimum Wages and Wage Fixing Machinery

13.1 Minimum Wages

1. Art. 99 : The minimum wages for agricultural and non-agricultural EEs

and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards.

2. Explain the rule a fair days wage for a fair days labor? Unless
specifically required by law, contract or established policy, the ER is
not bound to pay wages to a worker who has not actually rendered
any service.

3. Give 2 aspects of agriculture ? The primary aspect covers

cultivation and tillage of the soil, growing and harvesting of any
agricultural and horticultural commodities and raising of livestock
and poultry. The secondary aspect covers any practices performed
by a farmer on a farm as an incident to or in conjunction with the
farming operations.

4. Farmers employed by B cultivate the soil and plant and harvest

tobacco and they also cut big trees grown on the land which they
 55

used for fencing and repair of the owners house. They claim for
minimum wages for non-agricultural workers. Is the claim valid?

No. They are still agricultural workers. They perform activities which fall
under the primary aspect of agriculture and the cutting of trees to be
used for fencing is incidental to the farming operations and falls under
the secondary aspect of agriculture.

Coverage

* Art. 98 : This Title shall not apply

to farm tenancy or leasehold
domestic services and
persons working in their respective homes in needle or in any
cottage industry duly registered in accordance with law.

Section 3, Rule VII, Book III, IRRs :

* Workers in duly registered cooperatives when so recommended by the
bureau of Cooperative Development and upon approval of the Secretary
of Labor . . .

Minimum Wage

1. Art. 97 (1) : Wage paid to

* The remuneration or earnings, however designated, (LEGAL TENDER)
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,
which is payable by an ER to an EE under a written or unwritten
contract of employment for work done or to be done, or for
services rendered or to be rendered
* and includes the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging or other facilities customarily furnished
by the ER to EE. [Fair and reasonable value shall not include any profit to
the ER or to any person affiliated with the ER.

2. Art. 61 : Apprentices : Wage rates shall in no case fall below 75 % of

the applicable minimum wage.

3. Art. 75 : Learners : Wage rates shall begin at not less than 75% of the
applicable minimum wage.

4. Art. 80 : Handicapped Workers : Wage rates shall not be less than

75% of the applicable minimum wage.

5. Art. 124 : All recognized learnership and apprentice agreements shall

be considered automatically modified insofar as their wage clauses
are concerned to reflect the prescribed wage rates [set by the
Regional tripartite and Wages Productivity Board].

A. FACILITIES AND SUPPLEMENTS

 56

* The law guarantees the laborer a fair and just wage. The minimum wage
can by no means imply only the actual minimum. Some margin or leeway
must be provided, over and above the minimum, to take care of
contingencies, such as increase in wants, and to provide means for a
desirable improvement in his mode of living. (Atok-Big Wedge vs. Atok-Big-
Wedge Mutual Benefit Association)

B. SUPPLEMENTAL FACILITY

1. Distinguish between supplements and facilities?

Supplements Extra remuneration or special privileges or benefits given

to or received by the worker over and above his ordinary earnings or
wages.
- granted for the convenience of the ER

Facilities Items of expense necessary for the laborers and his familys
existence and subsistence. They form part of the wage and when
furnished by the ER are deductible therefrom since if they are not
furnished, the laborer would spend and pay for them just the same i.e.
meals; housing for dwelling purposes; fuel including electricity, gas,
water for the non-commercial personal use of the EE; and other articles
and services given primarily for the benefit of the worker or his family.
- for the benefit of the worker and his family

2. The criterion in determining whether an item is a supplement or

facility is not so much with the kind of benefit or item given, but its
purpose. (State Marine vs. Cebu Seamens Association)

3. CMC has 3 buses used to transport its workers, free of charge from
Makati to its plat in Muntinlupa. The buses became dilapidated and
the service was discontinued by the company. The EEs demanded
for their replacement. Decide with reasons.

The company may be compelled to continue providing the

transportation free of charge. This is considered a supplement given
over and above the ordinary earnings or wages of the workers. Once
given, a supplement cannot be eliminated or diminished. (Alcantara)

- Test on whether or not items are facilities [C F, V A, F R]

a. Are these items automatically furnished by the trade?
b. Did the employee voluntarily accepted the same in
writing?
c. Is the value thereof fair and reasonable?
- If the employer fails to prove this:
a. Then it is a supplement not a facility.
b. Once given, a supplement cannot be eliminated or
diminished.
c. Grant of bonus may be unilaterally be reduced by the
employer if it depends on profits acquired.
 57

4. Because he lived 50 kilometers from its work, X requested his ER if he

can sleep in the company premises. The latter agreed with the
condition that he will deduct P5.00 per day as board charges from X.
Is the deduction legal?

No. Lodging is not customarily finished by the ER to his EEs. The

deduction, furthermore, is not with the written consent of X.

C. CASH WAGE legal tender

1. What is basic salary? In its common, generally accepted meaning, it

is the rate of pay for a standard work period, exclusive of such
additional payment as bonuses and overtime. (Boic-Takeda vs. Dela
Serna)

2. Are emergency cost of living allowances considered part of regular

wage?

Yes. This is taken into account in determining overtime and premium pay
, premium contributions, social security, maternity pay, etc. (EO 178)

D. EFFECT - INABILITY TO PAY

* If a company cannot pay a living wage, it has no business operating at

the expense of the lives of the workers. (Phil. Apparel vs. NLRC)

E. GRATUITY and WAGES

* Gratuity That paid to the beneficiary for past services rendered purely
out of the generosity of the giver or grantor. While it may be enforced once
it forms part of a contractual undertaking, the grant of such benefit is not
mandatory so as to be considered a part of labor standard law. (Plastic
Town vs. NLRC)

F. BENEFICIARY OF THE MINIMUM WAGE LAW

* The minimum wage law directly benefits the lowly paid EEs who receive
inadequate wages on which they support themselves and their families. It
benefits all wage earners indirectly by setting a floor below which their
remuneration cannot fall. It increases the standard of competition among
ERs since it would protect the fair-minded ER who operates at lower costs
by reason of paying his workers a wage below subsistence. (Pp vs.
Gatchalian)

G. BENEFITS

1. Art. 100 : Nothing in this Book shall be construed to eliminate or in any

way diminish supplements, or other EE benefits being enjoyed at the
time of promulgation of this Code.

2. Unless agreed otherwise, statutory benefits are apart from

contractual benefits. (Meycauayan College vs. Drilon) Thus, EEs are
entitled to the full amounts of both a wage increase under a CBA
 58

and an increase in living allowances prescribed by law during the

period when both increases are concurrently effective, for want of
an agreement between the parties to treat the increase in living
allowances as applicable to the wage increases. (Filipinas Golf vs.
NLRC)

3. The work of batillos, cargadores of fish catch, were limited to days of

arrival of fishing vessels. From 1976 to 1980, operators paid them a
fixed monthly emergency allowance which included non-working
days. Can the operators now discontinue the practice and pay the
batillos only for actual days worked, following the principle of no
work, no pay ?

No. Benefits voluntarily given cannot be unilaterally withdrawn by the

ER. Art. 100 prohibits the elimination or diminution of existing benefits.

4. Workers in a plastic manufacturing company are able to clean and

inspect only 250 containers of 8 hours despite repeated appeals from
management. They were paid a daily rate of P150.00. Through time
and motion studies set by the DOLE, the ER was able to ascertain that
an ordinary worker can clean and inspect 450 containers for 8 hours.
The company then changed its mode of payment from time basis to
piecework at P0.40 per container. Is this valid?

Yes. The company has the right to change the basis of the payment of
the wages of the workers. The workers would not suffer since it is within
their capability to clean and inspect the number of containers to enable
them to at least earn the rate they were receiving at the time the
change was effected. They cannot however be deprived of benefits
they were already enjoying at the time of such change. (Alcantara)

** While normally discretionary, the grant of a gratuity or bonus, by reason

of its long and regular concession, may become part of a regular
compensation.

* OR employer agreed to give its regularly without any condition imposed

for its payment

13.2 Rationale for Wage Rationalization

* Section 2, Wage Rationalization Act : It is hereby declared the policy of

the State to rationalize the fixing of minimum wages and to promote
productivity-improvement and gain-sharing measures: [J A D E]
1. To ensure Decent standard of living for the workers and their families;
2. To guarantee the rights to its Just share in the fruits of production;
3. To enhance Employment generation in the countryside through
industry dispersal; and
4. To Allow business and industry reasonable returns on investment,
expansion and growth.

13.3 Agencies for Wage Fixing Machinery

Advisory agency National Wages and Productivity Commission
 59

1. Art. 120 : National Wages and Productivity Commission attached to

the DOLE the policy and program coordination.

2. Give at least 5 major powers and functions of the National Wages

and Productivity Commission :
a. To act as the national consultative and advisory body to the
President and Congress on matters relating to wages, incomes
and productivity.

b. To formulate policies and guidelines on wages, incomes and

productivity improvement at the enterprise, industry and
national levels.

c. To prescribe rules and guidelines for the determination of

appropriate minimum wage and productivity measures at the
regional, provincial or industry levels.

d. To review regional wage levels set by the Regional Tripartite

Wages and Productivity Boards .
3. Art. 126 : No preliminary or permanent injunction or temporary
restraining order may be issued by any court, tribunal or any entity
against any proceedings before the Commission or the regional
Boards.

Wage Fixing Agency

1. Art. 122 : Regional Tripartite Wages and Productivity Boards In all

regions, including autonomous regions.

2. Give at least 3 major powers and functions of the Regional Tripartite

and Productivity Boards within their territorial jurisdiction:
a. To develop plans, programs and projects relative to wages,
incomes and productivity improvement for their respective
regions.
b. To determine and fix minimum wage rates applicable in their
region, provinces or industries therein and to issue the
corresponding wage orders, subject to guidelines by the
Commission.
c. To receive, process and act on applications for exemption
from prescribed wage rates as may be provided by law or any
Wage Order. [Implementation of the plans shall be through the
respective offices of the DOLE but the Regional Boards shall
have technical supervision over the said DOLE offices.]

3. Art. 126 : No preliminary or permanent injunction or temporary

restraining order may be issued by any court, tribunal or other entity
against any proceedings before the Commission or the regional
Boards.
The ECOLA now forms part regular wage
Employees paid by results should receive not less than the
applicable wage rates provided for 8 hours workday

13.4 Area Minimum Wages and Criteria

 60

* Art. 124 : Standards/Criteria for Minimum Wage Fixing Regional minimum

wages shall be nearly as adequate as is economically feasible to maintain
the minimum standards of living necessary for the health, efficiency and
general well-being of the EEs within the framework of the national
economic and social development program. In the determination of such
regional minimum wages, the Regional Board shall, among other relevant
factors, consider the following:
1. The demand of living wages;
2. Wage adjustment vis--vis the consumer price index;
3. The cost of living and changes and their families;
4. The need to induce industries to invest in the countryside;
5. Improvements in the standard of living
6. The prevailing wage levels
7. Fair return of the capital invested and capacity to pay of ERs
8. Effects on employment generation and family income; and
9. The equitable distribution of income and wealth along the
imperatives of economic and social development.
These wages shall include wages varying within industries, provinces or
localities if in the judgment of the Regional Board conditions make such
local differentiation proper and necessary to effectuate the purpose of this
Title.

13.5 Wage Order

* Art. 123 : Whenever conditions in the region so warrant, the Regional

Board shall investigate and study pertinent facts and, based on the
standards and criteria herein prescribed, shall proceed to determine
whether a Wage Order should be issued.
In the performance of its wage-determining functions, the Regional
Board shall conduct public hearings, consultations, giving notices to EEs
and ERs groups, provincial, city and municipal officials and other interested
parties.
Any party aggrieved by the Wage Order issued by the Regional
Board may appeal such order to the Commission within 10 calendar days
from the publication of such order. It shall be mandatory for the Commission
to decide such appeal within 60 calendar days from the filing thereof.

Methods of Fixing

*The determination of wages has generally involved two methods, the

floor-wage method and the salary-ceiling method. The 1st method
involves the fixing of determinate amount that would be added to the
prevailing statutory minimum wage. In the 2nd method, the wage
adjustment is applied to EEs receiving a certain denominated salary
ceiling. (ECOP vs. NWPC)

Wage Distortion

* A severe contraction of the wage or salary differences is enough

1. Art. 24 : Wage Distortion - Distortion where an increase in the

prescribed wage rates results in the elimination or severe contraction
 61

of intentional quantitative differences in wage salary rates between

and among EE groups in an establishment as to effectively obliterate
the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation.

2. How is a wage distortion corrected? Any dispute arising from wage

distortions shall be resolved through the grievance procedures under
their CBA, and if it remains unresolved, through arbitrary arbitration. If
there is no recognized labor union or there are no collective
bargaining agreements, the dispute shall be settled through the
National Conciliation and Mediation Board, or if unresolved after 10
days of conciliation, through the NLRC which shall decide the dispute
within 20 calendar days. (Art. 24) 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
problems of wage distortions through voluntary negotiation or
arbitration, rather than strikes, lockouts, or other concerted activities
of the EEs or management. (ALU-TUCP vs. NLRC) In a case where a
union went on strike over a salary distortion dispute, the Court held
the strike illegal. (Ilaw at Buklod ng Manggagawa vs. NLRC)

13. 6 Wages and Productivity Measures

Wage/Salary

Differentiate wages from salary?

* Wages Compensation for manual labor, skilled or unskilled paid at
stated times, and measured by the day, week, month, or season. It
indicates considerable pay for a lower and less responsive character of
employment.

* Salary Denotes a higher degree of employment, or a superior grade

of services, and implies a position of office; by contrast, the term wages,
while salary is suggestive of a larger and more important service. (Gaa vs.
CA)

Wage Payment

1. Art. 102 : Forms of Payment : No ER shall pay the wages of an EE by

means of promissory notes, vouchers, coupons, tokens, tickets, chits
or any object other than legal tender, even when expressly
requested by the EE. [The laborers wage shall be paid in legal
currency. (Art. 1705, NCC)]

- Payment of wages by check or money order shall be allowed

when :
a. such manner of payment is customary on the date of
the effectivity of this Code, or
b. is necessary because of special circumstances as
specified in appropriate regulations to be issued by the
Secretary of Labor or as stipulated in a CBA.
- CONDITIONS
a. bank 1 km
 62

b. written consent of EE
c. ER does not receive any pecuniary benefit
d. EE given time to withdraw from the bank considered
as compensable his work

2. Art. 103 : Time of Payment

* Generally : Once every two weeks or twice a month at intervals not
exceeding 16 days. No ER shall make payment with less frequency than
once a month.

* Force Majeure : Immediately after the force majeure or the

circumstances have ceased.

* Task cannot be completed in 2 weeks in the absence of a CBA or

arbitration award:
a. The payments are made at intervals not exceeding 16 days, in
proportion to the amount of work completed;
b. That final settlement is made upon completion of work;

3. Art. 104 : Place of Payment : Payment of wages shall be made at or

near the place of undertaking, except as otherwise provided by such
regulations as the Secretary of Labor may prescribe under conditions
to ensure greater protection of wages.
1. deterioration of peace and order conditions
2. actual or impending emergencies calamity
- ER must provide or reimburse transportation back and forth
- Time spent collecting wages considered compensable his
work

4. Art. 105 : Direct Payment of Wages

* General Rule : Wages paid directly to workers.
* Exceptions:
1. Force majeure rendering such payment impossible or under the
special circumstances, in which case the worker may be paid
through another person under written authority given by the worker
for the purpose.
2. Where the worker has died, in case the ER may pay the wages of the
deceased worker to the heirs of the latter without the necessity of
intestate proceedings.

A. DIRECT PAYMENT

Payment of wages to leader of group not violation of direct payment

since the contract to perform the services was made by the leader of the
group, for and in behalf of the latter, not for each and everyone of them
individually. (Bermiso vs. Escano)

Wage Prohibition

1. Art. 112 : Non-Interference in Disposal of Wages

- No ER shall limit or otherwise interfere with the freedom of any
EE to dispose of his wages.
 63

- He shall not in any manner force, compel or oblige his EEs to

purchase merchandise, commodities or other property from
the ER or from any other person, or otherwise make use of any
store or services of such ER or any other person.

2. A meat processing company gives a 25% discount to EEs for

purchase on credit of its product. However, said purchases on credit
will be considered payment of his wages. An EE purchases 10 cans
of the product but objects to the application of his purchases as part
of his wages. Is the objections valid?

Yes. The application of his purchases on credit as part of his wages the
products in lieu of legal tender. (Alcantara)

3. May an ER make any deductions from the wages of EEs?

General Rule : No. His own behalf or in behalf of any person.
Exceptions: [Allowable Deductions]
1. Deductions of SSS, Medicare and Pag-ibig Premiums (Alcantara)
2. Withholding tax (NLRC)
3. Deductions for reimbursement of insurance premium advanced by
the ER where the worker is insured with his consent by the former. (Art.
113)
4. Deductions for unions dues where the right to check-off has been
recognized by the ER or individual EE himself. (Id)
5. Deductions made with the written authorization of the EE for
payment to a 3rd person and the ER agrees to do so, provided that
the latter does not receive any pecuniary benefit, directly or
indirectly, from the transaction. (Alcantara)
6. Deductions for reimbursement of loss or damage to tools, materials
or equipment supplied by the ER to the EE, in trades, occupations or
business where the practice of making such deductions is
recognized. (Art. 114)
7. Deductions as a disciplinary measure for habitual tardiness
(Alcantara)
8. Agency fees under Art. 248 (e) of the Code.
9. Deductions for debts due the ER from the EE, when such debts
become due and demandable. (Art. 1706, NCC)
10. In court awards, wages may be the subject of execution or
attachment, but only for debts incurred for food, shelter, clothing
and medical attendance. (Art. 1708)
11. Deductions for value of meals and others. (Alcantara)

3. Art. 114 : Deposits for Loss or Damage : No ER shall require his worker to
make deposits from which deductions shall be made for the reimbursement
for loss or damage to tools, materials or equipment supplied by the ER
except:
a. When the ER is engaged in such trades, occupations or business where
the practice of making deductions or requiring deposits is a recognized
one, or
b. is necessary or desirable as determined by the Secretary of Labor in
appropriate rules and regulations.
 64

4. J works as a dishwasher in a big restaurant. At the time of his

employment, he was told that it was an industry practice that the value of
plates broken by him while in the performance of his work will be deducted
from his wages. May management deduct the said value from Js wages?

Yes, provided the following conditions are met: [PRO-F20]

1. The practice of making deductions is a recognized one or is
necessary and desirable in the business of the ER.
2. J is clearly shown to be responsible
3. He is given reasonable opportunity to show cause why the deduction
should not be made.
4. The amount of deductions is fair and reasonable and does not
exceed the actual loss or damage.
5. The deduction does not exceed 20% of Js wages in a week. (Sec. 14,
Rule VIII, Book III, IRRs)

5. Art. 116 : Withholding of Wages and kickbacks prohibited It shall be

unlawful for any person, directly or indirectly,
To withhold any amount from the wages of a worker or
Induce him to give up any part of his wages by force, stealth,
intimidation, threat or by any other means whatsoever without
the workers consent.

6. Art. 117 : Deduction to ensure employment - It shall be unlawful to make

any deduction from wages of any EE for the benefit of the ER or his life
representative or intermediary as consideration of a promise of
employment or retention in employment.

7. Art. 222 - No attorneys fees, negotiation fees or similar charges of any kind
arising from any collective bargaining negotiations or conclusions of the
CBA shall be imposed on any individual member of the contracting union:
Provided, however that attorneys fees may be charged against union
funds in an amount agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be null and void.

8. Art. 1708 : The laborers wages shall not be subject to execution or

attachment except for debts incurred for food, shelter, clothing and
medical attendance.

A. WAGE DEDUCTION

1. An obligation arising from non-payment of stock subscriptions to a

corporation cannot be offset against a money claim of an EE against
an ER. (Apodaca vs. NLRC)

2. The wife of an EE tells the manager that her husband has not been
giving her support. Taking pity, the manager instructs the cashier to
deduct 1/3 of the EEs pay and give the same to the wife. Is this valid?

No. The EE concerned did not give his written authorization for the
deduction. (Alcantara)
 65

3. Z borrowed P500.00 from his ER. When the loan became due and
demandable, Z did not pay his ER. May the ER, without the written
authorization of Z, deduct the loan from the latters wages?

Yes. Compensation can take place under Art. 1706 of the NCC.
(Alcantara)

B. CHECK-OFF

* An ER may be compelled to check-off union dues from the wages of his

EE when the ER has been authorized to do so by the EE. This is upon the
theory that it is necessary to promote the welfare and integrity of the union
to which he belongs. (Manila Trading vs. Manila Trading Labor Association)

C. GARNISHMENT/ATTACHMENT

1. Under Art. 1708 of the NCC, laborers wages shall not be subject to
execution or attachment, except for debts incurred for food, shelter,
clothing and medical attendance (Pacific Customs vs. Inter-Island
Dockmen and Labor Union)

2. Art 1708 which exempts laborers wage from attachment or

execution does not apply to a responsibly placed EE, supervisory or
managerial EE, but only to the rank-and-file. (Gaa vs. CA)

D. DEPOSIT

1. A marketing firm retains 5% of the weekly salary of its collectors as a

deposit to answer for any shortage in their collections. These are
refunded at the end of the month, if no shortages are incurred. Is the
practice legal?

It depends. If it is a recognized practice of ERs to require such deposits,

then such is legal, since the sum retained is not excessive and is kept by
the ER only for a reasonable period. (Alcantara)

2. A taxicab company requires its drivers to make deposits to defray

boundaries and to cover car wash payments. Is this legal?

Art. 114 does not permit deposits for deficiency in the remittances of
drivers boundary but the requirement for deposit for car wash
payments is lawfull. (5-J Taxi vs. NLRC)

Prohibited Acts

1. Art. 118 : It shall be unlawful for an ER to reuse to pay or reduce the

wages and benefits, discharge or in any manner discriminate against
any EE who has filed any complaint or instituted any proceedings
under this Title or has testified or is about to testify in such
proceedings.

2. Art. 119 : It shall be unlawful for any person to make any material false
statement, report or record filed or kept pursuant to the provisions of
this Code.
 66

A. RECORD KEEPING

* The records shall be kept and maintained in or about the premises of

workplace or in the branch where the EE is regularly assigned, the keeping
of the records in any other place is prohibited. (South Motorists vs. Tosoc)

14. 7 Liability of ER and other Parties

ER, Independent Contractor and Subcontractor and Labor-Only

Contracting

1. The rules on the liability of Job contractors, Indirect ERs and Labor-only
contractors are the following:
1. General Rule : An ER who enters into a contract with a contractor to
perform work for the ER, does not thereby create an ER-EE
relationship between himself and the EEs of the contractor. Thus the
EEs of the contractor remain the contractors EEs and his alone.
(PBC vs. NLRC)

2. Nonetheless : When a contractor fails to pay the wages of his EEs in

accordance with the Labor Code, the ER who contracted out the
job to the contractor becomes jointly and severally liable with the
contractor to the EEs of the latter to the extent of the work
performed under the contract as if such ER were the ER of the
contractors EE. (Id)

The law itself, established an ER-EE relationship between the ER and the
job contractors EEs for a limited purpose i.e. in order to ensure that the
latter get paid for wages due them.

3. Indirect ER : These provisions shall likewise apply to any person,

partnership , association or corporation which, not being an ER,
contracts with an independent contractor for the performance of
any work, task, job or project. (Art. 107)

4. Labor-Only Contractor : The conclusion is different where there is

labor-only contracting. The labor-only contractor i.e. person or
intermediary, is considered merely as an agent of the ER. The
statute makes the ER directly responsible to the EEs of the labor-
only contractor as if such EEs had been directly employed by the
ER. The statute establishes an ER-EE relationship between the ER and
the EEs of the labor-only contractor, this time for a comprehensive
purpose, to prevent any violation of this Code. (Broadway Motors vs.
NLRC)

The legitimate job contractor provides services while the labor-

only contractor only provides manpower.

Job contractor undertakes to perform a specific job while

labor-only contractor merely provides personnel to work for the
employer.
 67

2. Art. 108 : An ER or indirect ER may require the contractor or subcontractor

to furnish a bond equal to the cost of labor under contract, on condition
that the bond will answer for the wages due the EEs should the contractor
or subcontractor, as the case may be fail to pay the same.

3. C, a former EE of ABC entered into an agreement with the company

wherein C will hire person to work in the painting department and the
company will reimburse him for whatever wages he will pay plus 10%
of this amount. If C fails to pay the wages, can the workers claim from
the company?

Yes. C is merely a labor-only contractor and is considered merely an

agent of the ER who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
(Alcantara)

4. X entered into a contract with R for the construction of Xs house.

Some workers of R were not paid their wages. Is X liable?

Yes. Under Art. 107, the person, though not an ER, who contracts with
the independent contractor for the damages employed by the latter
are indirect ERs. (Alcantara)

5. A entered into a verbal agreement with S wherein A would be paid

a commission for milled rice she sold or palay for the farmer. A would
spend her own money for the undertaking, but to enable her to carry
out the agreement more effectively, she was authorized to borrow
from other persons, subject to reimbursement from S and either of
them may terminate the business arrangement at will, with or without
cause. May A be considered an independent contractor?

Yes. A was contracted to do a piece of work according to her own

method and without being subject to the control of the ER except as to
the result of the work. (Sara vs. Agarrado)

Extent of Liability

1. The direct ER and the indirect ER are jointly and severally liable to
petitioners for the monetary claims. (Deferia vs. NLRC) For purposes of
determining the extent of their civil liability, they shall be considered
as direct ERs. (Art. 109)

In legitimate job contracting, no ER-EE relationship exist

between the principal and the job contractors employees.
Insolvency or unwillingness to pay by the contractor or direct
ER is not a prerequisite for the joint and solidary liability of the
principal or indirect ER. (DBP vs. NLRC)

2. If an independent service contractor fails to pay the wages of the
janitors its supplies to XYZ, is XYZ liable for the unpaid wages?
 68

Yes. According to Art. 106, the ER shall be jointly and severally liable to
the EEs of the contractor or subcontractor to the extent of the work
performed under the contract. (Alcantara)

3. Would your answer change if XYZ already paid the independent

contractor the contract price?

No, XYZ will still be liable for the unpaid wages of the janitor since the
obligation is imposed by law. (Id)

4. PTS, a government agency, entered into a service agreement with

ABC or the supply of janitors to PTS. ABS failed to pay the wages of
the janitors. PTS refused to pay on the ground that it is a government
agency. Is this claim valid?

No. The janitors employed by ABC are considered indirect EEs and not
to indirect EEs coming from the private sector. (Rabago vs. NLRC)

14. 8 Worker Preference-Bankruptcy

1. Art. 110. In the event of bankruptcy or liquidation of an ERs business,

his workers shall enjoy first preference as regards their wages and
other monetary claims, any provisions of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be
paid in full before claims of the government and other creditors may
be paid.

* The right or preference has to be asserted in distribution proceedings

such as insolvency where all the creditors convened, their claims
ascertained and inventories and the preferences determined.

2. A declaration of bankruptcy or a judicial liquidation must be present

before the workers preference may be enforced. The said article
cannot be viewed in isolation; it must always be read in relation to
the provisions of the Civil Code concerning the classification,
concurrence and preference of the credits. (DBP vs. Santos) The
aforesaid provisions of the Civil Code, including Art. 110 requires
judicial proceedings in rem in adjudication of creditors claims
against the debtors assets to become operative. (Alcantara)

3. TUCP obtained a judgment from the NLRC in an unfair labor case.

Two days before the judgment, the PCIB, mortgage creditors of the
company, foreclosed all mortgages in their favor. The union sought
to garnish in its favor a portion of the purchase price. Is the bank
subject to the claims of the union?

Yes, under Art. 110 workers enjoy first preference as regards wages owed
them for services rendered during the period prior to the bankruptcy or
liquidation. (PCIB vs. National Mines and Allied Union)

4. Atlas Textile mortgaged its assets to DBP. DBP foreclosed the asset.
The EEs filed a complaint against Atlas and DBP for the wage
 69

differentials. The labor arbiter and the NLRC held that the workers
preference under Art. 110 does not create a lien?

No. Art. 110 does not create a lien in favor of the workers. (Alcantara)

Art. 110
establishes merely a rule of preference and does not create a
lien in favor of the workers

workers claim for unpaid wages and other monetary benefits

cannot prevail over a mortgages lien

14. 9 Wage Recovery

1. Art. 217 (a) (2), (3), (4), (6) : Jurisdiction of Labor Arbiters and the
Commission The Labor Arbiters shall have exclusive and original
jurisdiction, except as otherwise provided, the following cases
involving all workers:
a. Termination Disputes (qualified by Art. 261which grant
voluntary arbitrators original and exclusive jurisdiction
over all unresolved grievances arising from CBAS and
company personnel policies);
b. Cases involving terms and conditions and
employment, if accompanied with a claim for
reinstatement (including claims of an ER-EE
relationship, including claims for actual, moral and
exemplary damages, as provided in Sec. 10, Migrant
Workers Act)
c. Claims for actual, moral, exemplary and other
damages arising from the ER-EE relations;
d. Except claims for EEs Compensation, Social Security,
Medicare and maternity benefits, all other claims,
arising from the ER- EE relations, including

those of persons in domestic or household service, involving an

amount exceeding P5,000.00 regardless of whether
accompanied with a claim for reinstatement.

2. Art. 128 : Visitorial and Enforcement Power oft the Secretary of Labor
or his duly authorized representative
Access to ERs records and premises at anytime of the day or
night whenever work is being undertaken therein and copy
therefrom; question any EE; and investigate any fact, condition
or matter which may be necessary to determine violations of
this Code and of any labor law, wage order or rules and
regulations issued pursuant thereto.

In cases where the relationship or ER-EE still exists, the power to

issue Compliance Orders to give effect to the labor standard
provisions of this Code and other social legislation.
Writ of execution to the appropriate authority shall be
issued for the enforcement of the said orders, except
 70

in cases where the ER contests the findings of the labor

employment and enforcement officer and raises issues
supported by documentary proofs which were not
considered in the course of inspection.

Order stoppage of work or suspension of operations of any unit

of or department of an establishment when non-compliance
poses grave and imminent danger to the health and safety of
workers in the workplace.
Within 24 hours, a hearing shall be conducted to
determine whether an order for the stoppage of work
or suspension of operations shall be lifted or not.
In case the violation is attributable to the fault of the
ER, he shall pay EEs their salaries or wages during the
said period.

It shall be unlawful for any person to Obstruct, impede, delay

or otherwise render ineffective the order of the Secretary of
Labor.

* No inferior court shall issue a temporary or permanent injunction or

restraining order or otherwise assume jurisdiction over any case involving
the enforcement orders in accordance with this Article.
Any government EE found guilty of violation, after appropriate
administrative investigation, be subject to Summary dismissal
from the service.
The Secretary of labor may require ERs to keep and maintain
employment records as may be necessary. (AS CONES)

* Under what circumstances may the Regional Director be divested of his

jurisdiction to issue compliance orders under Art. 128 (b)?
a. ER contests the findings of the labor regulations officer and
raises issue thereon;

b. In order to resolve such issue, there is need to examine

evidentiary matters;

c. Such matters are not verifiable in the normal course of

inspection. (Red V. Coconut vs. Leogrado)

3. Art. 129 : Recovery of wages, simple money claims and other benefits

The Regional Director of the DOLE or any of the duly authorized
hearing officers of the Department is empowered, through
summary proceedings and after due notice, to hear and
decide any monetary claims and benefits, including legal
interest to a person employed in domestic or household
service; Provided
a. Such complaint does not include claim for reinstatement
b. Aggregate money claims of each househelper does not
exceed P5,000
 71

The complaint shall be resolved within 30 days from the date

of filing of the same.

4. Art. 111 :
In cases of unlawful withholding of wages the culpable party
may be assessed attorneys fees equivalent to 10% of the
amount of wages recovered.

It shall be unlawful for any person to demand or accept, in any

judicial or administrative proceedings for the recovery of the
wages, attorneys fees, which exceed 10% of the amount of
wage recovered.

Section 14: Service Charges

14. 1 Coverage

1. Section 1, Rule V, Book III, IRRs : This rule shall apply only to
establishments collecting service charges such as hotels, restaurants,
lodging houses, night clubs, cocktail lounge, massage clinics, bars,
casinos and gambling houses, and similar enterprises, including those
entities operating primarily as private subsidiaries of the Government.

2. Section 2, Rule VI, Book III : This rule shall apply to all EEs of covered
ERs except to managerial EEs.

Managerial EE
a. powers of prerogatives to lay down, and execute
management to lay don and execute management policies
and/or
b. hire, transfer, suspend, lay-off, recall, discharge, assign, or
discipline EEs or to effectively recommend such managerial
actions.

Collection of service charges is a management decision and

not a requirement of law

14. 2 Service Charges

* Art. 96 : To be distributed at the rate of 85% for covered EEs [distributed

equally among them] and 15% for management.

X a waiter at DC Diner was receiving a share in the restaurants service

charges. Later, the restaurant discontinued the collection of service
charges. The take-home pay of X was reduced by the value of the
discontinued service charges. May X ask his ER to continue paying the
service charges?

Yes. In case the service charge is abolished, the share or the covered EEs
shall be considered integrated in their wages. (Art. 96)

The employees share in the service charges is part of the other

benefits to which he is entitled, in addition to full backwages
 72

Section 15: Thirteenth Month Pay

15.1 Law Coverage

Coverage

1. Section 2, Revised Guidelines on the 13th Month Pay Law : The

following ERs are still not covered by PD 851:
The government and any of its political subdivisions, including
GOCCs, except those corporations operating essentially as
private subsidiaries of the government.

ERs already paying their EEs a 13th month pay or more in a

calendar year or its equivalent at the time of this issuance.

[The term its equivalent shall include Christmas bonus, mid-

year bonus, cash bonuses and other payments but shall not
include cash and stock dividends, cost of living allowances
and other allowances regularly enjoyed by the EE, as well as
non-monetary benefits. Where an ER pays less than required
1/12th of the EEs basic salary, the ER shall pay the differences.]

ERs of household helpers and persons in the personal service

of another in relation to such workers, and

ERs of those who are paid on purely commission, boundary, or

task basis, and those who are paid a fixed amount for
performing specific work, irrespective of the time consumed in
the performance thereof, except where the workers are paid
on piece-rate basis in which case the ER shall grant the
required 13th month pay to such workers.

A distressed ER may qualify for exemption for the 13th month

pay if there is prior authorization from the DOLE. (Dentech vs.
NLRC)

2. The CBA provides for the payment of Christmas bonuses to all regular
EEs in the bargaining unit with of at least 1 year of continuous service.
Is this equivalent to the 13th month pay?

No. The Christmas bonuses provided in the CBA accords a reward for
loyalty to certain EEs. This is evident from the stipulation granting the
bonus in question to workers with at least 1 year of continuous service.
The bonus therefore is to be in addition to the legal requirement. (UCP
vs. NLRC)

15.2 Amount and Payment Date

1. Sec 4 Revised Guidelines on the 13th Month Pay Law:

Amount : of the total basic salary earned by an EE within a
calendar year.
 73

The 13th month pay is to be paid only to rank-and file

employees regardless of the amount of their basic salary.

Time of Payment: Not later than December 24.

2. Define basic salary: For purposes of computing the 13th month pay, basic
salary
include remuneration or earnings paid by this ER for services
rendered
but does not include allowances and monetary benefits which
are not considered or integrated as part of the regular or basic
salary, such as the cash equivalent or unused vacation and
sick leave credits, overtime, premium, night-differential and
holiday pay, and cost-of-living allowances.
However, these salary-related benefits should be
included as part of the basic salary in the computation
of the 13th month pay if the individual or collective
agreement, company practice or policy, the same are
treated as part of the basic salary of the EEs.

3. From 191 to 1997, DFC included in the computation of this 13th month
pay, the EEs sick, vacation and maternity leaves, In 1998, the
company discontinued the inclusion of the aforementioned items in
the 13th month pay. Is this valid?

The considerable length of time the questioned items had been

included by the company indicates a unilateral and voluntary action on
its part, sufficient in itself to negate any claim of mistake. A company
practice favorable to the EEs had been established, and the payments
made pursuant thereto ripened into benefits enjoyed by them. Any
benefit and supplement being enjoyed by the EEs cannot be reduced,
diminished, discontinued or eliminated by the ER. (Alcantara)

Basic Wage

1. Are the sales commission of a salesman paid a guaranteed wage

plus commissions included in the computation of this 13th month pay?

It depends on what kind of commissions may properly be considered

part of the basic salary, they should be included in computing the 13 th
month pay. If the commission are not an integral part of the basic salary,
then they should be excluded. (Azucena) Sales commissions which
comprised an automatic increment to the monetary value assigned to
each unit of work rendered by the salesman, or that of the wages-or
sales-percentage type should be included in the 13th month pay
computation. On the other hand, commission in the form of productivity
bonuses which closely resembles profit-sharing payments and have no
clear direct or necessary relation to the amount of work actually done
by each individual EE, or the profit-sharing or bonus-type, should be
excluded from the computation of the 13th month pay. (Philippine
Duplicators vs. NLRC)

Substitute Payment
 74

1. Benefits in the form of food or free electricity not proper substitute for the
13th month pay. (Framanlis vs. Minister of Labor)

14th Month Pay

1. The grant of the 14th month pay is a management prerogative, gratuitous

in nature and therefore it cannot be forced. (Kamaya Hotel vs. NLRC)

15. 3 Non-inclusion

1. Sec. 7, Revised Guidelines on the 13th Month Pay Law: The mandated
13th month pay need not be credited as part of the regular wage of
EEs for purposes of determining overtime and premium pays, fringe
benefits as well as contributions to the state insurance fund, Social
Security, Medicare and private retirement plans.

Section 16 : Bonus

16. 1 Definition

1. A bonus is an amount is an amount granted and paid to an EE for his

industry and loyalty which contributed to the success of the ERs
business and made possible the realization of profits. (Azucena)

16.2 When Demandable

1. From the legal point of view, a bonus is not a demandable and

enforceable obligation. But it is so when it is made part of the wage
or salary or compensation. In such case, the latter would be a fixed
amount and the former would be a contingent one dependent upon
the realization of profit. (Azucena) Furthermore, while normally
discretionary, the grant if gratuity or bonus by reason of its long and
regular concession, may become regarded as part of the regular
compensation. (Liberation Steamship vs. CIR)

Section 17. Working Conditions for Special Groups of Workers Women

17.1 Women and the Constitution

1. Art. II, Sec. 14, Const. : The State recognizes the role of women in
nation-building, and shall ensure the fundamental equality before
the law of women and men.

17.2 Coverage

1. Section 1, Rule XII, Book III, IRRs : This rule shall apply to all ERs except
to:
a. government and GOCCs and
b. to ERs of household helpers and persons in their personal
service insofar as such workers are concerned

17.3 Prohibited Acts

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NIGHT WORK AND EXCEPTION

1. Art. 130 : No woman shall be employed or permitted or suffered to

work, with or without compensation:
a. Industrial undertaking : Between 10:00 pm and 6:00 am of the
following day.
b. Commercial undertaking : Between midnight and 6:00 am of
the following day.
c. Agricultural undertaking : Nighttime unless she is given a period
of rest of not less than 9 consecutive hours.

2. Art. 131 : Exceptions to Nightwork prohibition

[A, F, U, P M, H, M, - FA]
a. In cases of actual or impending emergencies caused by a
serious accident, fire, flood, earthquake, epidemic or other
Disasters or calamity, to prevent loss of life or property.
b. Cases of force majeure or imminent danger to public safety.
c. Cases of urgent work to be performed on machineries,
equipment or installation, to avoid serious loss which the ER
would otherwise suffer.
d. Work is necessary to prevent serious loss of perishable goods
e. Woman EE holds a responsible position of managerial or
technical in nature.
f. Woman EE has been engaged to provide health and welfare
service.
g. Where the nature of the work requires the manual skill and
dexterity of women workers;
h. Where the women EEs are immediate members of the family
operating the establishment or undertaking; and
i. Analogous cases. (HUMMPS FAD)

3. LG, a manufacturer and exporter of jeans, has a 3-shift work schedule

but maintains a policy of not assigning women in the 3rd shift from
10:00 pm to 6:00 am. Is this policy discriminatory to women?

Yes. The women sewers, by reason of their sex, are denied the
opportunity to earn additional pay. The nature of the work requires the
manual skill and dexterity of women workers and cannot be performed
with equal efficiency to male workers. This is one of the exceptions to the
night work prohibition. (Art. 131)

B. DISCRIMINATION

1. Art. 135: It shall be unlawful for any ER to discriminate against woman

EE with respect to terms and conditions of employment solely on
account of her sex.

The following are acts of discrimination [P, F]

a. Payment of lesser compensation, as against a male EE, for
work of equal value.
 76

b. Favoring a male EE over a female EE with respect to the

promotion, training opportunities, study and scholarship grants
solely on account of their sexes.
Criminal liability for violations shall be penalized as provided in Art.
288 and 289 of this Code. The institution of any criminal action under
this provision shall not bar the aggrieved EE from filing an entirely
separate and distinct action for money claims, which may include
claims for damages and other affirmative reliefs. The actions hereby
authorized shall proceed independently of each other.

2. C, a 45-year old teacher was dismissed by the school after she got
married to Q, her 18-year old 4th year high school student. Is the
dismissal lawful?

No, in the absence of substantial evidence to show that C took

advantage of her position to court her student. There is nothing wrong if
the two fell in love despite the disparity in their ages. (Chua-Qua vs. Clave)

C. MARRIAGE

1. Art. 136 : Stipulation against marriage It shall be unlawful for an ER

to : [C, S, D]
a. Require as a condition of employment or continuation of
employment that a woman EE shall not get married;

b. Stipulate expressly or tacitly that upon getting married a

woman shall be deemed resigned or separated;

c. Actually dismiss, discharge, discriminate or otherwise

prejudice a woman EE merely by reason of her marriage.

D. GENERAL

1. Art. 137 : It shall be unlawful for any ER to : [DB, DP, RA]

a. Deny any woman EE the benefits provided for in this Chapter
or to discharge any woman employed by him for the purpose
of preventing her from enjoying any of the benefits provided
under this Code;

b. Discharge such woman on account of her pregnancy, or while

on leave or in confinement due to her pregnancy;

c. Discharge or refuse the admission of such woman upon

returning to her work for fear that she may again be pregnant.

2. In Ls contract of employment with Club E, it was stipulated that her

employment as a dancer would cease once she gets pregnant.
When L got pregnant, L was no longer allowed to dance and since
there were no other work available for which her talents were
suitable, her employment was terminated. Is the action legal?

Yes. It is both awkward and dangerous for her to dance during her
pregnancy. Of course the ER has the obligation to give her another job,
 77

but as stated in the problem there is no other work for which her talents
are suited. It is not fair to require the ER to continue employing her.
(Alcantara)

3. A pharmaceutical company rejected the applications of 5 pregnant

women as sales representatives for contraceptive pills and family
planning devices. Is this valid?

Yes. The company has the prerogative to select its EEs. What is unlawful
is for the ER to discriminate against or dismiss a woman by reason of their
pregnancy. (Alcantara)

17. 4 Facilities

1. Art. 132 : The Secretary of Labor shall establish standards that will
ensure the safety and health of women EEs. In appropriate cases,
he shall, by regulations, require ER to:
a. Provide seats proper for women and permit them to use seats
when they are free from work and during working hours,
provided they can perform their duties in the position without
detriment to efficiency.
b. To establish a nursery in a workplace.
c. To determine appropriate minimum age and other standards
for retirement or termination in special occupations such as
those of flight attendants and the like.

2. Art. 134 : (a) Establishments which are required by law to maintain

clinic or infirmary shall provide free family planning services to their
EEs.

3. Is the ER required by law to give maternity benefits to its female

workers?

No. Maternity benefits are to be paid in appropriate instances by the

SSS. The only obligation of the ER is to advance the benefit subject to
reimbursement by the SSS. (Alcantara)

17.5 Special classification Special Women Workers

1. X works as a hostess in a nightclub, she is paid a percentage of the

ladys drink ordered by customers. There are nights when she does
not earn anything because there are no customers. Is X an EE of the
nightclub?

Yes. Any woman who is permitted or suffered to work, with or without

compensation, in any nightclub, cocktail lounge, massage clinic, bar, or
similar establishment, under the effective control or supervision of the ER
for a substantial period of time as determined by the Secretary of Labor
shall be considered an EE of such establishment for purposes of labor
and social legislation. (Art. 138)

Section 18. Working Conditions for Special group of Workers Minors

 78

18.1 Minors and the Constitution

Art. II, Sec. 13, Const. : The State recognized the role of the youth in nation-
building and shall promote and protect their physical, moral spiritual,
intellectual, and social well-being. It shall inculcate in the youth patriotism
and nationalism, and encourage their involvement in public and civic
affairs.

18.2 Coverage

Section 1, Rule XII, Book III, IRRs : This Rule shall apply to all ERs except
[G H]
1. to the Government and GOCCs and
2. to ERs of household helpers and persons in their personal service
insofar as such workers are concerned.

18.3 Employable Age

Section 12, RA 7610 as amended by RA 7658 :

* General rule: Children below 15 years of age shall not be employed.

* Exceptions: [P, E]
1. Child works directly under the sole responsibility of his parents or legal
guardian and where only members of the ER family are employed,
provided:
a. his employment neither endangers his life, safety, health and
morals, nor impairs his normal development:
b. the parent or legal guardian shall provide the said minor child
with the prescribed primary and/or secondary education.
2. Child is employed in entertainment or information through cinema,
theater, radio or television, provided:
c. Employment contract is concluded by the childs parents or
legal guardian, with the expressed agreement of the child
concerned, if possible, and the approval of the DOLE.
d. The ER shall ensure the protection, health, safety and morals of
the child;
e. The ER shall institute measures to prevent the childs
exploitation or discrimination.
f. The ER shall formulate and implement, subject to the approval
and supervision of competent authorities, a continuing
program for training and skills acquisition of the child.
g. The ER shall first secure, a work permit from the DOLE which shall
ensure observance of the above requirements.

2. Art. 139 : Any person, between 15 and 18 may be employed in any

non-hazardous work. In any hazardous work, the employable age is
18 and up.

3. What are considered hazardous work places? [D C M P]

a. Where the nature of work exposes the worker to Dangerous
environmental elements, contaminations or work conditions.
b. Stevedoring, construction work, logging, firefighting,
mechanized farming and similar work.
 79

c. Manufacture or handling of Explosives and other pyrotechnic

products.
d. Where the workers are exposed to heavy or power-driven
machinery or equipment or tools.

4. L, 10 years old, was hired as a singer in a carnival which stages shows

wherever there is a town fiesta. She is paid P5,000.00 a month. L is
therefore always on the road, traveling to different parts of the
country. Is her employment lawful?

No. Such employment will endanger her health and impair her normal
development. She is also deprived of the opportunity to get primary
education as she is always traveling to different parts of the country.
(Alcantara)

18.4 Discrimination

1. Art. 140 : Prohibition against child discrimination No ER shall

discriminate against any person in respect to terms and conditions of
employment on account of his age.

2. Would a company rule providing for lower wages for workers below
18 years who are inexperienced violate the prohibition?

No. The payment of lower wages is by reason of the workers

inexperience, not his age. There is no discrimination on account of the
workers minority. (Alcantara)

Section 19. Working Conditions for Special group of Workers Househelpers

19.1 Coverage

Art. 141 : This chapter shall apply to all persons rendering services in
households for compensation

19.2 Househelpers

1. Define domestic or household service : Service in the ERs home

which is usually necessary or desirable for the maintenance and
enjoyment thereof and includes ministering to the personal comfort
and convenience of the members of the ERs household, including
services of family drivers. (Art. 141)

2. C was employed by A company to work as a maid in the cottages

of its Baguio mining site to attend to the needs of its executives or
guests who now and then visit the site. Is S a househelper or domestic
servant?

No. The services of a househelper is rendered exclusively for the personal

comfort and enjoyment of the family of the ER and are performed in the
latters home. Services rendered in an executive cottage cannot be
considered domestic. S must be considered a regular EE of the mining
company. (Apex Mining vs. NLRC)
 80

19.3 Non-Household Work Assignment

T lives in a compound where he operates a modest candy business.

Sometimes, when there is no work in his house, his maids help in the packing
of the candies and his family driver delivers the candies to the outlets. How
should the work rendered in connection with the candy business be
compensated?

For work rendered by the maids and the family driver, they should be paid
at the rate prescribed by law for non-agricultural workers. (Alcantara) No
household helper shall be assigned to work in a commercial industrial or
agricultural enterprise at a wage or salary rates lower than that provided
for agricultural or non-agricultural workers as prescribed therein. (Art. 145)

19. 4 Conditions for Employment

1. M, 15 years old, worked as a maid in the house of L. She was paid in

advance for 3 years and she agreed that she will work for L for the
said period. Is there any legal infirmity in the said agreement?

Yes. The period contract exceeds the maximum set by the law. Art. 142
provides that the original contract of domestic service shall not last for
more than 2 years, although it may be renewed for such periods as may
be agreed upon by the parties. Ms contract will therefore be good for
only 2 years. (Alcantara)

2. What are the minimum wages for househelpers?

a. Metro Manila and highly urbanized cities : P800.00

b. Chartered cities and 1st class municipalities : P650.00

c. Other municipalities : P550

Househelpers receiving P1,000.00 shall be covered by the SSS.

3. Aside from the rights to minimum wage, what other rights are enjoyed
by a househelper? [E J B - I F]
a. Opportunity for elementary education if a househelper is less
than 18 years old (Art. 146)

b. Just and human treatment (Art. 147)

c. Board, lodging and medical attendance (Art. 148)

d. Indemnity for unjust termination of services of 15 days plus the

compensation already earned.

e. Funeral benefits if the househelper has no relatives with

sufficient means in the place where the head of the family
lives. (Art. 1696, NCC) [F I B E J]

f. If househelper is unjustly dismissed,

 81

pay wages already earned + 15 days wages (Indemnity)

g. If househelper leaves without justifiable cause,

forfeits any unpaid salary not exceeding 15 days

4. M works as a live-in labandera in the house of T somewhere in Quezon

City. She works for 11 hours a day. Based on their contract, she is paid
P800.00. Is she entitled to additional compensation?

Yes. Although she is merely a househelper, she should not be allowed to

work more than 10 hours a day. (Art. 1695, NCC) Since she worked for
11 hours daily, she should be paid an additional compensation beyond
the minimum wage of P800.00 set by the law. (Alcantara)

5. Art. 150 : If the duration of the household service is not determined

either in the stipulation or by the nature of the service, the ER or the
househelper may give notice to put an end to the relationship of the
service.

Section 20. Working Conditions for Special group of Workers Homeworkers

20.1 ER

1. Art. 155 : ER 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 though any EE,
agent, contractor, sub-contractor or any other person:
a. Delivers or causes to be delivered, any goods, fabricated in or
about a home and thereafter to be returned or to be disposed
of or distributed in accordance with his directions; or
b. Sells any goods, articles or materials to be processed or
fabricated in or about a home then rebuys them after such
processing or fabrication, either himself or through some other
person.

20.2 ER Liability

1. Section 8, Rule XIV, Book III, IRRs : The ER shall be jointly and severally
liable to the EEs or homeworkers of the contractor or sub-contractor,
in the same manner as if the EEs or homeworkers were directly
engaged by the ER.

2. S represents in the Philippines the Sears chain of department stores in

the US. She sells wood and leather to housewives who makes these
into wooden clogs according to the patterns and specifications of S.
Is there an ER-EE relationship between S and the housewives?

Yes. The housewives are considered homeweorkers and S is their ER.

(Alcantara)
3. What is the liability of Sears?

Sears is jointly and severally liable if S is not able to pay the wages of the
homeworkers. (Sec. 8, Rule XIV, Book III, IRRs)
 82

4. Terms and conditions of employment involving money claims of

homeworker shall be heard by the Regional Director of the DOLE.
Beyond that, the case falls under the jurisdiction of the Labor Arbiter.
(Azucena)

Section 21, Medical, Dental and Conditional Safety

21.1 First Aid Treatment and ER Assistance

1. Art. 156. Every ER shall keep in his establishment such first-aid

medicines and equipment as the nature and conditions of work may
require, in accordance with such regulations as the DOLE shall
prescribe.

Section 1, Rule I, Book IV, IRRs This rule shall apply to all ERs whether
operating for profit or not, including the Government ant GOCCs,
which employ in any workplace 1 or more workers.

2. Art. 161 : It shall be the duty of an ER to provide all the necessary

assistance to ensure the adequate and immediate medical and
dental attendance and treatment to an injured or sick EE in cases of
emergency.

3. The ER is not obliged to provide and spend for the continued or

follow-up treatment of the EE unless it has bound itself to do so by
contract or established practice or policy. (Alcantara)

21.2 Emergency Medical and Dental Services

When and What is Required

1. Describe briefly these free emergency medical, dental services and

facilities required to be furnished by the ER?

10 to 50 workers : The services of a first-aider shall be provided

who may be one of the workers in the workplace and who has
immediate access to the first-aid medicines.

51 to 200 workers: Services of a full-time registered nurse shall

be provided. However, if the work is non-hazardous, the
services of a full-time first-aider may be provided if a nurse is
not available.

201 to 300 workers : Services of a full-time registered nurse, a

part-time emergency clinic shall be provided regardless of the
nature of the undertaking therein. The physician and dentist
engaged for such workers shall stay in the premises for at least
2 hours a day.
Where the establishment has more than 1 workshift a
day, the required 2 hour stay shall be devoted to the
workshift which has the biggest number of workers and
they shall, in addition to the requirements under this
 83

Rule, be subject to call at anytime during the other

workshifts to attend to emergency cases.

301 or more workers : Services of a full-time nurse, a full-time

physician, a full-time dentist, a dental clinic, and an infirmary
or emergency hospital with one bed capacity for every 100
workers shall be provided. The physician and dentist shall stay
in the premises of the workplace for at least 8 hours a day.

Where the workplace has more than 1 shift per day,

they shall be at the workplace during the work-shift
which has the biggest number of workers and they shall
be subject to call at anytime during the other workshifts
to attend to emergency cases.

Where the undertaking in such workplace is non-hazardous,

the ER may engage the services of a part-time physician and
part-time dentist who shall have the same responsibilities ass
those of the part-time physician and the part-time dentist in the
preceding paragraph, and shall engage the services of a full-
time nurse.

In all workplaces where there are more than 1 workshift in a

day, the ER shall in addition to the requirements under this rule,
provide the services of a full-time first-aider for teach workshift.
(Sec. 4, Rule I, Book IV, IRRs)

What are considered hazardous work places? [D C M P]

Where the nature of the work exposes the worker to Dangerous
environmental elements, contaminations or work conditions.
Stevedoring, construction work, logging, firefighting,
mechanized farming and similar work.
Manufacture or handling of explosives and other pyrotechnic
products
Where the workers are exposed to heavy or power-driven
machinery or equipment or tools.

An auto repair shop has 8 EEs. What medical and dental

services or facilities must be furnished by the owner of the
latter?

Since the establishment employs less than 10 workers, the owner

is only obliged to keep in the workplace first aid medicines.

When not Required

Art. 158 : The requirement for an emergency hospital or dental clinic shall
not be applicable in case there is a hospital or dental clinic which is
accessible from the ERs establishment and he makes arrangement for the
reservation therein of the necessary beds and dental facilities for the use of
his EEs
5 km urban
25 min rural
 84

21.3 Administration

Art. 165 : (a) The DOLE shall be solely responsible for the administration and
enforcement of occupational safety and health laws, regulations and
standards in all establishments and workplaces wherever they may be
located.
Chartered cities may be allowed to conduct industrial safety
inspections of establishments within their respective
jurisdictions where they have adequate facilities and
competent personnel for the purpose as determined by the
DOLE and subject to national standards established by the
latter.
(b) The Secretary of Labor may, through appropriate regulations,
collect reasonable fees for the inspection of steam boilers,
pressure vessels and pipings and electrical installations, the test
and approval for safe use of materials, equipment and other
safety devices and the approval of plans for such materials,
equipment and devices. The fee so collected expended
exclusively for the administration and enforcement of safety and
other labor laws administered by the DOLE.

Section 22. EE Classification

22.1 Coverage

Section 1, Rule I, Book VI, IRRs : This Rule shall apply to all establishments
and undertakings, whether operated for profit or not, including
educational, medical, charitable and religious institutions and
organizations, in cases of regular employment with the exception of the
Government and its political subdivisions including GOCCs.

22.2 EE Classification

1. Art. 280
a. Regular EEs
b. Project EEs
c. Casual EEs
d. Seasonal EEs
2. Art. 281
Probationary EE
3. Others
Contract-fixed period

ER Determination

1. What determines whether a certain employment is regular or casual

is not the will and words of the ER, much less the procedure of hiring
the EE or the manner of paying his salary. It is the nature of the
activities performed in relation to the particular business or trade
considering all circumstances, and in some cases the length of time
of its performance and its continued existence. (De Leon vs. NLRC)
 85

2. Tucor Industries, a company engaged in moving and storage of

foods hired packers and drivers pursuant to employment contracts
which provided that the workers were employed on as-needed
basis and considered daily-hired. Are they considered regular EEs?

Yes. Packing and driving activities are usually necessary and desirable
in Tucors usual business. They are entitled to security of tenure, the
provisions of the written agreement to the contrary notwithstanding.
(Tucor vs. NLRC)

22.3 Regular EEs

1. Who are considered regular EEs?

a. Those who have been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of
the ER, their employment not being fixed for a specific project
or undertaking the completion or termination of which has
been determined at the time of the engagement, or seasonal
nature and the employment is for the duration of the season.
(Art. 280)

b. Casual EEs who have rendered at least 1 year of service is

continuous or broken; they are considered regular EEs with
respect to the activities in which they are employed; their
employment shall continue while such activity exists. (Id.)

c. A probationary EE who is allowed to work after the

probationary period. (Art. 281)

d. Learners who have been allowed or suffered work during the

first 2 months if training is terminated by the ER before the end
of the stipulated period through no fault of the learner. (Art. 75)

2. H applied for employment with Holiday Inn and was accepted for
On-the-job training as telephone operator for 3 weeks. After the
completion of the training she was employed on a probationary
basis for 6 months. Four days before the said period, she was
dismissed by the hotel on the ground that she failed to meet the
standards of the hotel. Is the dismissal valid?

No. At the time of her dismissal, she was already a regular EE since the
on-the-job training was already her probationary period. She was
not dropped after that period. Even granting that the probation did not
end with the training, there is no reason why that period should not be
included in the stipulated 6-month period probation. (Holiday Inn vs.
NLRC)
3. L was hired as a component mechanic by a manufacturing firm for
a probationary period for 6 months. Management decided not to
hire her after the probationary period. After a month, the company
again hired L for another 6-month probationary period. After the 2nd
6-month probationary period, she was dismissed. Is L a regular EE?

Yes. The nature of her job required her to perform activities which are
necessary and desirable in the usual business of her ER. She was also
 86

rehired after the probationary employment extended to her. This fact of

rehiring negates any claim that she failed to qualify as a regular EE.
Successive hirings and firings cannot be resorted to by the ER to avoid
obligations imposed by law for the protection and benefit of
probationary EEs. (Octaviano vs. NLRC)

4. J is employed on a probationary period for 3 months. Although the

ER was not satisfied with his performance, he is allowed to work after
the end of the 3-month period. Has J become a regular EE?

Yes. An EE is allowed to work after a probationary period shall be

considered a regular EE. (Alcantara)

Nature of Work

1. What is the primary standard of determining regular employment?

The primary standard to determine a regular employment is the
reasonable connection between the particular activity performed
by the EE in relation to the usual business or trade of the ER. (De Leon
vs. NLRC) The connection can be determined by considering the
nature of the work performed and its relation to the scheme of a
particular business or trade in its entirety. Also, if the EE has been
performing the job for at least one year, even if the performance is
not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business.
Hence, the employment is also considered regular, but only with
respect to such activity and while such activity exists. (Id.)

2. B, was hired by a Buddhist Temple as secretary and interpreter. She

also attended personally to some needs of the Head Monk. Is B a
regular EE or a domestic helper?

B is a regular EE. Her functions were essential and important to the

operation and religious function of the temple; they could not be
categorized as mere domestic work.

3. Stevedores were employed by corporation engaged in deep-sea

fishing to unload the tuna fish catch from latters vessels into
refrigerated vans. Their work was intermittent depending on the
arrival of fishing vessels. There were also times when the stevedores
worked on vessels belonging to other companies. Are the stevedores
regular EEs?

Yes. They were engaged to perform activities usually necessary or

desirable in the usual business or trade of their ERs. The activity of
catching fish is a continuous process; it cannot be considered as a
specific project or a seasonal activity. Their working on other vessels
does not militate against the existence of the ER-EE relationship since it
is but natural for the worker to seek other employment during the periods
of temporary la-off. (RJL Martinez vs. NLRC)
 87

4. An electric cooperative only extended permanent appointments to

linemen, secretaries, clerks and electricians after 6 months from the
date of their hiring. May the ER treat these workers as regular EEs only
from the date they were extended permanent appointments?

No. Their services are usually necessary or desirable in the usual trade or
business of the cooperative. (Central Negros Electric vs. NLRC)

Hiring Extended Period

1. A company engaged in construction hired carpenters and issued

them some notices of employment that they were hired for specific
projects and their employment shall be deemed automatically
terminated at the completion of the project. However, when the
project to which they were assigned were completed, they would
be immediately assigned to the next project. Considering that they
have been working for a number of years, are they regular EEs?

Yes. They perform activities usually necessary or desirable in the usual

business of the company. They are considered non-project EEs of the
construction company. (Fegurin vs. NLRC)

2. F, a skilled welder was hired by DM Consunji for several projects

wherein he was assigned. There was also evidence that the worker
was under obligations to be always available on call by the
company and that he could not offer his services to other ERs. Is he
a regular EE?

No. F is a project EE. (Fernandez vs. NLRC)

Contract to Contract

1. P was hired by a textile firm as a machine operator. Ps employment

contract stipulates that the company shall make an annual
assessment of his performance and his continued employment shall
depend on said evaluation. Is the stipulation valid?

No. It determines the security of tenure enjoyed by P who is a regular

EE. His continued employment is made to depend upon the whims of
the ER. (Alcantara)

2. M Co., is engaged in the manufacture of furniture for export. It has

regular customers but also receives special orders. It hires temporary
workers for special orders. These are made to sign temporary
contracts. Are these workers considered regular workers? Yes. They
are engaged in activities which are usually necessary of desirable in
the usual business or trade of the ER. Significantly, the special orders
are not seasonal but more or less regular, requiring the continuous
services of the temporary workers. The temporary employment
contracts have little probative value. (Mehitabel Furniture vs. NLRC)

3. M was employed as a carpenter by a company engaged in the

concrete structural business. His work involved the making of moulds
 88

for bridges. He was never assigned to work outside the plant of the
ER. Every 3 months, he was made to fill up and sign an employment
contract relating to a particular phase of a work in a specific project.
Is M a regular EE?

Yes. He was assigned to perform tasks which are usually necessary or

desirable in the usual trade or business of the ER. Despite the signing of
employment contracts, the work did not end on a project to project
basis. He continued to perform the same kind of work throughout his
period of employment. (Magante vs. NLRC)

22.4 Project EEs

Who are considered project EEs?

A project EE is one whose employment has been fixed for a
specific project or undertaking, the completion or termination
of which has been determined at the time of the engagement
of the EE or where the work or service to be performed is
seasonal in nature and the employment is for the duration of
the season. (Art. 280)

Test of Project EEs

What is the principal test to determine whether EEs are
project EEs as distinguished from regular EEs? The test is
whether or not the project EEs are assigned to carry out a
specific project or undertaking the duration and scope of
which are specified at the time the EEs are engaged for that
project. (ALU-TUCP vs. NLRC)

Project EEs

1. PPI, a company providing construction supervision of the Manila

Expressway hired R for a term of 24 months. After the expiration of the
period, he was hired for another term of 10 months, and then for 19
months. All these were entered during various stages prior to the
completion of the construction project. Was R a regular EE of PPI?

No. He was hired in a specific project or undertaking as a driver. He was

a project EE whose employment terminated upon the expiration of his
employment contract or upon the completion of the project. (Rada vs.
NLRC)

2. A company engaged in the building and repair of vessels hired

welders to work in the repair of a specified vessel. Is the employment
of the workers considered regular?

No. They are project EEs whose work is co-terminus with the project for
which they are hired. (Sandoval Shipyards vs. Leogardo)

3. Consumer Pulse hired field interviewers on specified project basis for

a definite period of time. Many of the interviewers worked for several
projects. Generally, the contractual employment is not continuous
 89

but intermittent, sporadic with long intervals of idle periods in

between projects due to lack of work or job contracts. Are the filed
interviewers considered regular EEs?

No. The interviewers were hired for specific projects the completion or
termination of which are determined at the start of their employment.
(Manansag vs. NLRC)

4. A construction firm hired as project EEs several workers. Instead of

being assigned solely to the job sites, they were also made to work
as inventory clerk or warehouseman in the companys central shop.
Are they project EEs?

No. Their work did not end upon the completion of a project. They
perform their jobs even after a job had been finished. Since they
performed tasks vital and indispensable to the efficient administration
and completion of the companys various projects, they are considered
regular EEs. (Capitol Industrial vs. NLRC)

Rationale

1. The rationale for this rule is that if a project has already been
completed, it would be unjust to require the ER to maintain them in
the payroll while they are doing absolutely nothing except waiting
until another program begun, if at all. In effect, these stand-by
workers would be enjoying the status of a privileged retainers,
collecting payments for work not done, to be disbursed by the ER
from profits not earned. This is not fair by any standards and can only
be lead to a coddling of labor at the expense of management. (De
Ocampo vs. NLRC)

Implication

Project EEs are not entitled to separation pay as their work was
coterminous with the completion of the project. (Sandoval Shipyards vs.
Leogardo)

22.5 Casual EEs

1. What is casual employment? An employment is casual when the EE

is engaged to perform tasks or activities which are not usually
necessary or desirable in the usual business or trade of the ER. (Art.
280)
2. Jai Alai Manila hired a mason and plumber to do renovation work on
its building. The work lasted for 11 months. Are the mason and
plumbers regular EEs?

No. They were engaged for a specific project or undertaking. They are
casual EEs and as such do not enjoy the security of tenure since they
work for only 11 months. (Philippine Jai Alai vs. Clave)

22.6 Seasonal EEs

 90

1. Agricultural workers were hired by the owners of a rice and sugar

land to perform particular phases of agricultural work necessary in
rice production, after which they were free to render services.
Considering that they rendered services for many years, in their
employment, though seasonal, deemed regular?

No. They are considered project or seasonal EEs .their employment

legally ends upon the completion of the project or the season. (Mercado
vs. NLRC)

22.7 Contract-Fixed Period

1. A was engaged as athletic director by Brent School for a fixed term

of 5 years. She was not rehired after that term. Is she a regular EE?

No. As employment was for a fixed period, her employment ended. It

does not necessarily follow that where the duties of the EEs entail
activities which are usually necessary or desirable in the usual trade or
business of the ER, the parties should not be forbidden to stipulate any
period of time for these activities. There is nothing essentially
contradictory between a definite period of employment and the nature
of the EEs duties. (Brent vs. Zamora)

2. Give the criteria under the fixed period contracts of employment

cannot be said to be in circumvention of the workers security of
tenure.
The fixed period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or
improper pressure being brought to bear upon the EE and
absent any other circumstances vitiating his consent; or
It satisfactorily appears that the ER and EE dealt with each
other on more or less equal terms with no moral dominance
whatever being exercised by the former on the latter.
(Pantranco vs. NLRC)
When such stipulations were not designed to circumvent the
laws on security of tenure. (Brent vs. Zamora)

3. C was engaged by a trucking company to work as a truck driver for

a period of six months. It appears that all drivers of the company were
hired on fixed contract basis. The company merely filled in the blanks
in a mimeographed form with the corresponding drivers data. After
the 6-month period, Cs services were terminated. Was this a valid
termination?

No. The contract for a fixed period was a clever scheme to prevent its
EEs from becoming regular EEs. he should be considered a regular EE.
(Cielo vs. NLRC)

4. 15 years after his dismissal for cause. A was re-hired as a driver for 1
month. Did such re-hiring result in his reacquisition of his former regular
status?

No. The contract specifically provided for a fixed term. (Pantranco vs.
NLRC)
 91

22.8 Probationary EEs

1. What is a probationary employment? It is employment for a specified

period generally no exceeding 6 months for the purpose of
determining whether the EE can qualify for regular employment in
accordance with reasonable standards prescribed by the ER.
(Alcantara)

2. What is the probationary period for apprentices and learners?

Apprentices : The probationary period in the apprenticeship
may not be under probationary employment in the company
where he trained. In another company, however, the
probationary period for him would be 6 months.
Learners : If the job is learnable can be learned within 3
months then the probationary period is 3 months or less.
(Policy Instructions No.1)

Purpose

Justify the rights of the ER to fix a probationary period of employment? The

ER has the right to select his EEs that the ER may set or fix a probationary
period within which the latter may test and observe the conduct of the
former before hiring him permanently. (Grand Motors vs. Minister of Labor) A
probationary appointment is made to afford the ER the opportunity to
observe the fitness of a probationer while at work, and to ascertain whether
he will become a proper and efficient EE. (International Catholic Migration
Commission vs. NLRC) It is necessary for the probationary EE to undergo a
period of probation to test his qualifications, skills and experience. (Grand
Motors)

Duration/Exception

May a company impose a longer probationary period than 6 months? Yes.

Generally, the probationary period of employment is limited to 6 months.
The exception to this general rule is when the parties to an employment
contract may agree otherwise, such as when the same is established by
company policy or when the same is required by the nature of the work to
be performed by the EE i.e. where a probationary period was set for 18
months, especially where the EE must learn a particular kind of work such
as selling or when the job requires certain qualifications, skills, experience or
training. (Buiser or Leogardo)

Extension Contract Effect EEs

D was hired on probation by Mariwasa. Upon expiration of the probationary

period, he was informed by the ER that his work proved unsatisfactory. To
give him a chance to improve his performance and to qualify for her
regular employment, Mariwasa extended, with his written conformity, his
probationary period for another 3 months. His performance did not
improve, and his services was terminated. Did he become a regular EE?
 92

NO. By voluntary agreeing to the extension of the original probationary

period, D, in effect, waived any benefit attaching to the completion of the
said period. (Mariwasa vs. Leogardo)

Absorbed EEs

Private respondents could not be considered probationary EEs because

they were already well-trained in their respective positions. (Cebu Stevedoring
vs. Regional Director)

Termination and Salary

Award to the private respondent of the salary for the unexpired 3-month
portion of her 6-month probationary employment who was validly
terminated during her probationary employment is unjust and oppressive
to the ER. (International Catholic Immigration Commission vs. NLRC)

Rule Private School Teacher

1. Give the legal requisites for a private school teacher to acquire

permanent employment and security of tenure? These requisites are:
a. The teacher is a full time teacher.
b. The teacher must have rendered 3 consecutive years of
service.
c. Such service must have been satisfactory. (Cagayan Capitol
College vs. NLRC)

2. At the time of her retirement, A has been employed as school

teacher for 22 years. After 3 years from her retirement, she was
rehired by the school teacher under contract which was renewable
yearly. After 2 years of continuous satisfactory performance, her
contract was not renewed. Was the non-renewal violative of her
security of tenure?

Yes. When she was rehired, she did not have to undergo a probationary
employment as her teaching competence had already been tried and
tested during her 22 years of service. she could not be discharged solely
on account of the expiration of her 2nd annual contract. She could not
only be dismissed for cause and with due process. (St. Theresitas Academy
vs. NLRC)

3. A teacher was hired by a private school on a yearly basis. Before the

expiration of the 2nd yearly contract, the school refused to renew her
contract on the ground that her teaching performance was not
satisfactory. Is the refusal justified?

Yes. The positions were temporary in nature and her employment was
for a definite period. Even assuming that she was on probationary
employment, the probationary period for teachers is 3 years. (Biboso vs.
Victoria Milling)

Section 23: Termination and Employment

23.1 Introduction: EEs Security of Tenure

 93

Coverage

1. Art. 278 : The provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not.

2. Confidential and managerial are also entitled to security of tenure,

fair standards of employment and the protection of labor laws. (Inter-
Orient Maritime vs. NLRC) Probationary and contractual EEs enjoy
security of tenure but only to a limited extent. That is, they remained
secure in their employment during the period of time their respective
contracts remained in effect. (Labajo vs. Alejandro)

3. Pakiao workers who by the nature of their work are considered

regular workers enjoy security of tenure. (Dy Keh Beng vs. ILMU)
However, if the circumstances indicate that they are in reality
independent contractors, then they do not enjoy security of tenure.
(Alcantara)

Security of Tenure

1. What is meant by the security of tenure? of an EE? Security of tenure

of an EE is his right against unjust and arbitrary dismissal. He cannot
be deprived of his work, which is property in the constitutional sense,
without a just cause and without the benefit of hearing. (Alcantara)

2. Is there an express constitutional guarantee of the security of tenure

of an EE? Yes. Art. XIII, Sec. 3, Const. (Rance vs. NLRC)

Nature of Rights

Termination of employment is not anymore a mere cessation or severance

of contractual relationship but an economic phenomenon affecting
members of the family. This explains why under the board principles of
social justice the dismissal of EEs is adequately protected by the laws of the
state. (Alhambra vs. NLRC) However, the workers right to security of tenure is
not an absolute right for the law provides that he may be dismissed for
cause. The law in protecting the rights of the laborers, authorizes neither
oppression nor self-destruction of the ER. (MERALCO vs. NLRC)

Rationale Regulation

The right of ER to freely select or discharge his EEs is regulated by the State,
because the preservation of the lives of citizens is a basic duty of the State,
more vital than the preservation of the corporate profit. (Llosa-Tan vs. Silahis)

23.2 Management Rights and the Just Cause of Termination

Art. 282 : An ER may terminate an employment for any of the following

casues:
1. Serious misconduct or willful disobedience by the ER of the lawful
orders of his ER or representative in connection with his work;
 94

2. Gross and habitual Neglect by the EE of his duties;

3. Fraud or willful breach by the EE of the Trust reposed in him by his ER

or duly authorized representative;

4. Commission of a crime or offense by the EE against

a. the person of his ER or
b. any immediate member of his family or
c. his duly authorized representative and

5. Analogous cases.

Management Rights
The following are management rights with respect to EEs:
1. Right to manage people in general : Except as limited by special
laws, an ER is free to regulate, according to his own discretion and
judgment, all aspects of employment. (San Miguel vs. Ople)

2. Right to just share in the fruits of production : Every business enterprise

endeavors to increase its profits. In the process it may adopt or
devise means designed toward the goal. The free will of
management to conduct its own business affairs to achieve its
purpose cannot be denied. (Id.)

3. Right to discipline : The ER has the prerogative to instill discipline in his

EEs and to impose reasonable penalties, including dismissal, on
erring EEs pursuant to company rules and regulations. (San Miguel vs.
NLRC)

4. Right to transfer EEs : It is management prerogative to transfer an EE

from one office to another within the business establishment,
provided there is no demotion in rank or diminution of his salary,
benefits and other privileges. (Yuco Chemical vs. Minisrty of Labor) An
EEs right to security of tenure does not give him such a vested right
in his position as would deprive the company of its prerogative to
change his assignment or transfer him where he will be most useful.
(PTTC vs. NLRC) The managerial prerogative, however, to transfer
personnel, must be exercised without grave abuse of discretion and
putting to mind the basic elements of justice and fair play. It cannot
be used as a subterfuge by the ER to rid himself of an undesirable
worker. Nor where the real reason is to penalize an EE for his union
activities and thereby defeat his right to self-organization. (Id.)

5. The right to demote : It is management prerogative to tranfer,

demote, discipline and even dismiss an EE to protect its business,
provided it is not tainted with unfair labor practice (Petrophil vs. NLRC)

6. Right to dismiss : The right of the company to dismiss its EEs is a

measure of self-protection. (Reyes vs. Minister of Labor) An ER cannot
legally be compelled to continue with the employment of a person
who admittedly was guilty of malfeasance towards his ER, and whose
continuance in the service of the latter is patently inimical to his
interests. (Manila Trading vs. Zulueta)
 95

Just Causes of Termination

May an ER dismiss an EE who enjoys security of tenure? Yes. Security of

tenure does not guarantee perpetual employment. If there is a just or
authorized cause the ER may terminate the services of an EE; the former
cannot be legally compelled to have in its employ s person whose
continued employment is patently inimical to its interest. (Alcantara)

A. JUST CAUSE : SERIOUS MISCONDUCT

1. What is serious misconduct? Misconduct is improper or wrong

conduct/ it is the transgression of some established and definitive rule
of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. The
misconduct to be serious must be of such a grave and aggravated
character and not merely trivial or unimportant. Such misconduct,
however serious, must, nevertheless, be in connection with the EEs
work to constitute just cause for its separation.

2. Examples of serious misconduct :

a. EE utters obscene, insulting or offensive words against a
superior (Asian Design vs. Deputy Minister of Labor) or challenging
a superior officer to a fistfight. (Luzon Stevedoring vs. CIR)
However, 2 other later cases ruled that the penalty of
termination is extreme and excessive and is not commensurate
with the acts committed. (Maranao Hotel vs. CA and Mary Johnston
Hospital vs. NLRC) The controlling factor is the circumstances
surrounding the willful misconduct. (Alcantara)

b. Serious breach of company rules by allowing 2 security guards

to come inside the Security Office, drinking and having sex with
one of the guards, although both of them are married. (Stanford
vs. NLRC)

c. As a general rule, immorality does not justify a discharge. But

when the EE holds a responsible position and has under him a
good number of men, the EE must set a good example for his
men to follow. Thus, when he got a young concubine and
drove away the members of his family from the conjugal
home, such dismissal is justified. (Sanchez vs. Ang Tibay)

d. Sleeping in post, gross insubordination, dereliction of duty and

challenging superior officers to a fight committed by a security
guard. (Luzon Stevedoring vs. CIR)

e. Seamans assault with a knife of a member of the ships crew.

(Haverton vs. NLRC)

f. Intoxication is such a misconduct as will justify separation from

employment, where such intoxication interferes with the
employment. (Azucena)
 96

g. Sexual harassment by a managerial EE of one of his

subordinates. (Villarama vs. NLRC)

h. Authorship of a manifesto which ridiculed the officers of a

school and demanded their removal, and which disrupted the
good order and decorum in the school, when such charges in
the manifesto are found to be not true. (St. Marys College vs.
NLRC)

i. Cheating a customer. (PLDT vs. NLRC)

3. What are examples of misconduct which does not warrant dismissal?

a. Fistcuffs between two EEs as a result of mere private matter
between them. (Aris vs. NLRC)

b. Vending, soliciting, and engaging in usurious activities. (Pacific

Products)

c. Borrowing money from a patient which the EE later paid back.

(Makati Medical Center vs. NLRC) However, when there is use for
a trust relationship as leverage for borrowing money, the act
becomes serious misconduct. (Pearl S. Buck Foundation vs. NLRC)

d. Teacher falling in love with student provided the teacher did

not take advantage of her position to court her student. (Chua-
Qua vs. Clave)

B. JUST CAUSE : WILLFUL DISOBEDIENCE

1. What are the requisites in order that willful disobedience may

constitute a just cause for terminating employment?
The orders, regulations, instructions of the ER or his
representative must be:
a. Reasonable and lawful has reference not only to
the kind and character of directions, but also the
manner in which they are made.
b. Sufficiently known to the EE.
c. In connection with the duties which the EE has
been engaged to discharge.

The ERs conduct must have been willful or intentional,

willfulness being characterized by a wrongful and perverse
mental attitude rendering the EEs act inconsistent with proper
subordination. (Azucena)

2. Not every case of insubordination or willful disobedience by an EE of

a lawful work-connected order of the ER or its representatives is
reasonably penalized with dismissal. There must be a reasonable
proportionality between the offense and the penalty imposed
therefor. (Gold City vs. NLRC) Past infractions, to which the EE was
already meted out disciplinary measures cannot be used as a
justification for EEs dismissal from service of the current infraction
does not suffice as a ground for just termination. (Filipino vs. Ople)
 97

3. M, an EE of Tritran was told by the personnel manager to see right

away the president to apologize for his past misdeeds. He was
dismissed because he failed to see the company president. Is the
dismissal justified?

No. The directive to see the company president was neither reasonable
nor one connected with his duties. (Mancho vs. NLRC)

4. Examples of willful disobedience :

Violation of a rule which prohibits EEs from using company
vehicles for private purposes without authority from
management and stubborn refusal to attend a grievance
conference to discuss the violation. (Soco vs. Mercantile Corp.)

Willful violation of rules and regulations designed for the safety

of laborers i. e. smoking by a painter in the painting booth.
(Northern Motors vs. NLU)

Allowing a customer to pass thru the exit gate without paying

for the work done on his car, despite clear instructions to the
contrary, (Manila Trading vs. Zulueta)

Act of gambling if it is penalized under company rules with

dismissal. (Dimalanta vs. Secretary of Labor)

Failure to comply with reportorial requirements in the sales

policies. (GTE vs. Sanchez)

N, driver refused to drive EEs to Makati head office to collect

their profit shares despite repeated orders made by the vehicle
supervisor and the officer-in-charge. (Nuez vs. NLRC) In this
case, even if he was employed for 19 years, and this was his 1st
offense, no separation pay, on the basis of compassion was
given to the EE.

B was employed as Chief Dietician of a hospital. She refused

to follow the instructions of the Board of Trustees of the hospital
to buy from a food supplier who was willing to give a discount
on food purchases. Because of this, B was dismissed. Is the
dismissal justified?

Yes. Her acts constitute serious defiance of the lawful orders of her
superiors with respect to matters involving her duties. They are also
sufficient basis for her superiors to lose their trust and confidence
in her. (St. Lukes vs. Minister of Labor)

5. D, an EE of Northwest Airlines refused a promotion. Does such refusal

constitute insubordination warranting dismissal?

No. There is no law which compels an EE to accept a promotion. He

was exercising a right and he cannot be punished for it as quijure suo
utitor neminem laedit. He who uses his own legal right injures no one.
(Dosch vs. NLRC)
 98

6. G, a press-helper of a printing company drank beer outside

company premises after his tour of duty. He later went to the
companys canteen to eat lunch. He was dismissed based on the
company policy prohibiting drinking in the company premises or
coming to work under the influence of alcohol. Is the dismissal
justified?

No. He did not drink beer in the company premises; neither did he report
for work under the influence of liquor because it was not their tour of
duty then. (Catalan vs. Genilo)

C. JUST CAUSE : NEGLECT OF DUTIES

1. What is the rule on neglect of duties to constitute a just cause for

termination? In order to constitute a just cause for EEs dismissal, the
neglect of duties must not only be gross but also habitual . Gross
neglect means an absence of that diligence that an ordinarily
prudent man would use in his own affairs, unless the contract of
employment requires a higher degree of care. It is sufficient that the
gross and habitual neglect by the EE tends to prejudice the ERs
interest since it would be unreasonable to require the ER to wait until
he is materially injured before removing the cause of the impending
evil. (DOLE Manual)

2. Examples of gross negligence :

Failure to properly estimate the fair market value of a property
to be used for a loan by an appraiser. (Associated Bank vs. NLRC)
Abandonment. To constitute abandonment, two elements
must concur:
a. The failure to report for work or absence without
valid or justifiable reason, and
b. A clear intention to sever the ER-EE relationship,
with the second element as the more
determinative factor and being manifested by
overt acts. (Labor vs. NLRC)

Habitual tardiness and absenteeism (Sajonas vs. NLRC)

Numerous unauthorized absences. (Cando vs. NLRC)

3. S, working as a lobby boy of a movie theater, was pursuant to

standard management practice transferred from the day shift where
he had been for quite some time to the night shift. He asked that the
change be recalled but his request was denied. As he disliked the
new assignment, he did not report for work. The company dismissed
him due to abandonment. Is the dismissal jusitified?

Yes. There was nothing unusual or discriminatory in his change of

assignment because the rotation was standard company practice.
(Castillo vs. CIR)
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4. Due to unauthorized absences, M, employed with the company for

18 years, was transferred from the Fire Tender Section to the Pan
Grinding Section. He however did not report to his new section, on
the ground that the transfer was unreasonable and amounted to
demotion. The company contends that his failure to work despite
repeated notices constitutes abandonment and a ground for his
dismissal. Is this valid?

The penalty of dismissal is out of proportion to the offense committed

considering the number of years of Ms employment. A 1 year
suspension would be sufficient. (Meracap vs. International Ceramics)

5. A, met a work-connected accident. When he was completely

recovered, he failed to report to work despite the certification of 5
doctors that he could resume his normal work. He was dismissed
pursuant to company [policy that an EE who incurs without valid
reason 6 or more absences is subject to dismissal. Is the dismissal
valid?

Yes. He was guilty of serious neglect of his duties. (Phil. Geothermal vs.
NLRC)

D. JUST CAUSE : DISHONESTY, LOSS OF CONFIDENCE

1. What kind of fraud justifies as just termination? Fraud has been

defined as any act, omission, or concealment which involves a
breach of a legal duty, trust or confidence justly reposed and is
injurious to another. To constitute a just cause for terminating the EEs
services, the fraud must be committed against the ER, or
representative and in connection with the EEs work. Thus, fraud
committed by an EE against 3rd persons not in connection with his
work and which does not in any way involve his ER not a ground for
the dismissal of the EE. (DOLE, Manual)

2. Example of Dishonesty
Falsification of time cards. (SMC vs. NLRC)

Theft of company property. (Firestone vs. Lariosa) However, the

penalty must be proportional to the offense committed i.e. EE
should not be dismissed for theft of used motor oil of minimal
quantity if the EE has no previous record. (Gelmart vs. NLRC); EE
should not be dismissed for theft of lead pipe to be used for
personal use if the EE has no previous record. (PAL vs. PALEA);
president of union should not be dismissed for leading an
unexpected strike which lasted for 2 days and which resulted
in a loss to the company of only P3,000.00 (Sampang vs. Inciong);
counter clerk of PLDT should not be dismissed for tampering
with a phone bill where the worth of the tampering only
amounted to P30.00 and it was the first offense in 7 years (PTTC
vs. NLRC). Note that the length of time the EE is employed and
the fact that it was the EEs 1st offense is an important factor in
many of these cases wherein the penalty of dismissal was
deemed to harsh. Where a penalty less punitive would suffice,
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whatever missteps may be committed by the worker should

not be visited with the supreme penalty of dismissal. (Almira vs.
BF Goodrich)

Circulating fake tickets. (Ibarrientos vs. NLRC)

3. Explain loss of confidence as a ground for just termination : The basic

premise for dismissal on the ground of loss of confidence is that the
EE concerned holds a position of trust and confidence. (Quezon
Electric vs. NLRC) Mere existence of basis for believing that the EE has
breached the trust of ER is sufficient and does not require proof
beyond reasonable doubt. (Kwikway vs. NLRC) However, to constitute
as valid ground, it must be substantial and not arbitrary, and must be
founded on clearly established facts sufficient to warrant the EEs
separation from work. (Labor vs. NLRC)

4. Examples of loss of confidence as ground for just termination :

GM of hotel found to have anti-Filipino tendencies, who did
not perform his functions properly and who requisitioned wines
for personal use. (Riker vs. Ople)

Director who represented to the company that machinery

brought were brand-new when in fact they were second-
hand. (Pepsico vs. NLRC)

Bank tellers act allowing encashment of checks over the

counter without verification of drawers signature. (Allied Bank
vs. Castro)
Violation of the company sales policy of distributing its goods
to as many customers as possible by a salesman who made it
appear that they were sold to many customers. (Filipro vs.
NLRC)

Engaging in business other than that of ER, if the activities tend

to injure or endanger the business of the ER or the EE is unable
to give time and attention to the discharge of his duties.
(Azucena)

Competing with ERs business. (Azucena)

Repeated shortages incurred by a bill collector, although

resulting in no material damage as the amounts were returned.
(Piedad vs. Lanao del Norte Electric Cooperative)

5. 5 EEs of an electric cooperative were dismissed for loss of

confidence when they were caught pilfering electric current through
tampered meters in their houses. Considering that the EEs held no
position involving trust and confidence, is loss of confidence a
ground to dismiss them?

No. The offense they committed is not work-related. The pilferage could
have been effected even if they were not EEs of the cooperative.
(Quezon Electric Cooperative vs. NLRC) Compare this with the case of Flores
 101

vs. NLRC, where the same act constituted a ground of serious

misconduct and breach of trust.

6. J, a checker, was dismissed by San Miguel for breach of trust due to

possible involvement in a burglary incident. The dismissal was
effected despite Js acquittal in a criminal case for the said offense.
Is the dismissal lawful?

No. The termination of rank and file EEs due to breach of trust requires
proof of actual involvement in the acts constituting the offense. (SMC vs.
NLRC)

E. JUST CAUSE : COMMISSION OF A CRIME OR OFFENSE

1. Another just cause of terminating an employment is the EEs

commission of a crime or offense against the person of his ER or
against any immediate member of the ERs family. The immediate
members of the family referred to are limited to the spouse,
ascendants, descendants, or legitimate, natural, or adopted
brothers or sisters of the ER or of his relative by infinity in the same
degrees, and those by consanguinity within the 4th degree. (Azucena)

2. Conviction or prosecution is not required, to warrant his dismissal by

his ER and the fact that a criminal complaint against the EE has been
dropped by the city fiscal as not binding and conclusive upon the
tribunal. (Starlite vs. NLRC)

F. ANALOGOUS CASES

1. To be considered analogous to the just cases enumerated, the cause

must be due to the voluntary and/or willful act or omission of the EE.
(Nedura vs. Benguet Consolidated)

2. Examples of Analogous Cases :

Unreasonable behavior and unpleasant deportment in
dealing with the people she closely works with in the course of
her employment, is analogous to the other just causes
enumerated under the Labor Code. (Cathedral School vs. NLRC)

G. OTHERS

1. Other examples of just termination:

Courtesy resignation (Batongbacal vs. Associated Bank)

Faculty members of a school whose appointments as

department heads are terminated. (La Sallette vs. NLRC)

23.3 Authorized Cases of Termination

Art. 283 : The ER may also terminate the employment of the EE due to:
1. the Installation of labor saving device.
2. redundancy
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3. retrenchment to prevent losses.

4. closing or cessation of operation of the establishment or undertaking.

Art. 284: EE who has been found to be suffering from and Disease and
whose continued employment is prohibited by law or is prejudicial to his
health as well as to the health of his co-EEs.

Introduction of Labor saving Devices

Redundancy

Redundancy exists where the services of an EE are in excess of what is

reasonably demanded by the actual requirements of the enterprise; a
position is redundant when it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors such as:
1. the overthrowing of workers
2. decreased volume of business or
3. the dropping of a particular product line or
4. service activity previously manufactured or undertaken by the
enterprise.

Redundancy is an ERs personnel force, however does not necessarily or

even ordinarily refer to duplication of work. That no other person was
holding the same position which the dismissed EE held prior to the
termination of his services does not show that his position had not become
redundant. (Escareal vs. NLRC)
Retrenchment

What are the general standards to determine whether the retrenchment is

valid? The general standards are the following:
1. The losses expected should be substantial and not merely de minimis
in extent.
2. The substantial loss apprehended must be reasonably imminent, as
such imminence can be perceived objectively and in good faith by
the ER.
3. It must be reasonably necessary and likely to prevent the expected
losses.
4. The ER should have taken other measures prior or parallel to the
retrenchment to forestall losses. I. e. ; cut other costs other than labor
costs.
5. Alleged losses if already realized, and the expected minimum losses
sought to be forestalled, must be proved by sufficient and
convincing evidence. (Lopez Sugar vs. FFW)

Distinguish redundancy from retrenchment? Redundancy means that the

position of the EE has become superfluous, an excess over what is actually
needed, even if the business reduction or reverses. (Azucena)

Closure of Business

1. The burden of proving that the termination was for a valid or

authorized cause shall rest on the ER. (Indino vs. NLRC)
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2. Is the ER required to pay separation pay for closure of business due

to the serious business losses?

No. The cases of State Investment House vs. CA, Mendoza vs. NLRC, and
the Mindanao Terminal vs. Minister of Labor provide that the rule in
Article 283 with respect to separation pay applies only to closure not due
to business reverses. (Azucena)

3. What are the requirements for a valid cessation of business not due
to business reverses?
Service of a written notice to the EEs and to the DOLE at least
1 month before the intended date thereof.
Cessation or withdrawal from business operations must be
bona fide in character.
Payment to the EEs termination pay amounting to at least
month pay, for every year of service, or 1 month pay,
whichever is higher. (ALU vs. NLRC)

Ailment or Disease

If the EE suffers from a disease and his continued employment is prohibited

by law or prejudicial to his health or to the health of his co-EEs, the ER shall
not terminate his employment unless there is a certification by a competent
public health authority that the disease is of such nature or at such a stage
that it cannot be cured within a period of 6 months even with proper
medical treatment. (Sec. 8, Rule 1, Book VI, IRRs) A medical certificate
issued by the companys own physician, is not a competent public health
authority.

23.4 Procedure to Terminate Employment

Two Facets of Valid Termination

1. The legality of the act of dismissal which constitutes discharge with
just cause; and
2. The legality in the manner of dismissal with due process. (Shoemart vs.
NLRC)

Due Process : Notice

The law requires that the ER must furnish the worker sought to be dismissed
with two written notices before termination of employment can be legally
effected:
1. Notice which apprises the EE of the particular acts or omissions for
which his dismissal is sought; and
2. Subsequent notice which informs the EE of the ERs decision to dismiss
him. Failure to comply with the requirements taints the dismissal with
illegality. (Pepsi-Cola vs. NLRC)

Opportunity to be Heard

1. An EE must be given ample opportunity prior to his dismissal to

adequately prepare for his defense. By ample opportunity is meant
every kind of assistance that management must be accord to the EE
 104

to enable him to prepare adequately for his defense. Under the rules,
indeed workers may be provided with a representative. (Ruffy vs.
NLRC) The requirement of hearing affords the EE the opportunity to
answer his ERs charges against him and accordingly to defend
himself therefrom before dismissal is effected. (Salaw vs. NLRC)

2. No hearing is required if the grounds for dismissal or termination of

service does not relate to blameworthy act or omission on the part of
the EE i.e. retrenchment or redundancy. (Witshire vs. NLRC).

3. W was called to the Office of the General Manager and was told
that she was being charged with discourtesy and insubordination.
During that time, she was also called to explain her side. As she could
not give an explanation, she was dismissed. Is the dismissal valid?

No. She was denied procedural due process. She was not given ample
opportunity to be heard and to defend herself.

4. 36 conductors of a bus were dismissed after investigations

conducted by the Jago and the fiscal found out that they defrauded
the company. Is the dismissal violative of due process?

No. For the company to conduct its own investigation is a duplication of

the JAGO and the city fiscals investigation. (BLTB vs. NLRC)
5. D was dismissed by his ER based on the preliminary investigation of
the city fiscal which relied on an affidavit of an accused-turned state
witness. Is this violative of due process?

Yes. As compared to the BLTB case, the findings of the city fiscal were
based solely on the affidavit of the accused-turned state witness. The
substantial evidence requirement is not present. (China City Restaurant vs.
NLRC)

6. S was dismissed by his ER due to his well documented involvement in

pilferage. Prior to dismissal, he was called to a meeting of all delivery
personnel to discuss pilferage incidents. He denied involvement
therein. Later he was dismissed. Is the dismissal violative of due
process?

Yes. The meeting called by the ER does not qualify as the hearing
required by law. (Segismundo vs. Montalvo)

Right to Counsel

The right to counsel is a basic requirement of substantive due process. The

right to counsel cannot be waived except in writing and in the presence of
counsel. (Salaw vs. NLRC)

Burden of Proof

Art. 277 : The burden of proving that the termination was for a valid or
authorized cause shall rest on the ER.
 105

Degree of Proof

In administrative or quasi-judicial proceedings, proof beyond reasonable

doubt is not required as basis for a judgment of the legality of an ERs
dismissal of an EE, nor even preponderance of evidenced, substantial
evidence being sufficient. (MERALCO vs. NLRC)

Condonation

Having condoned the misconduct of the EE and pardoned the latter, he is

deemed to have lost or waived his right to insist on the ERs acts as a ground
for dismissal. (Azucena)

Dismissal for Cause but Without Due Process

A sanction, in the form of damages, must be imposed upon the ER for failure
to give a formal notice and conduct an investigation as required by law
before dismissing the EE from employment. (Wenphil vs. NLRC)

Rules Managerial EEs and Rank and File EEs

As a general rule, ERs are allowed a wider latitude of discretion in

terminating the employment of managerial personnel or those who, while
not of similar rank, perform functions which by their nature require the ERs
full trust and confidence. This must be distinguished from the case of
ordinary rank-and-file EEs whose termination on the basis of these same
grounds require a higher proof of involvement in the events in question;
mere uncorroborated assertions and accusations by the ER will not suffice.
(Coca-Cola vs. NLRC)

Offer to Reinstate

The fact that his ER latter made an offer to re-employ him did not cure the
vice of his earlier arbitrary dismissal. (Ranara vs. NLRC)

Prescription

A complaint founded on illegal dismissal is not an ordinary money claim but

for reinstatement. The action may be brought within 4 years from dismissal
pursuant to Art. 1146 of the NCC. (New Imus Lumber vs. NLRC)

23.5 Consequences of Termination

Separation Pay
A. General Rule
If there is valid cause to terminate an employment, no separation pay need
be paid. (Sec. 7, Rule I, Book VI, IRRs)

B. Exceptions
1. Art. 283 :
Installation of labor saving devices and redundancy : 1 month
or 1 month pay for every year of service, whichever is higher.
 106

Retrenchment to prevent losses and closure or cessation of

operation or establishment or undertaking not due to serious
business losses or financial reverses : 1 month pay or month
pay for every year of service, which ever is higher.

2. Art. 284 :
Disease : 1 month salary or month salary for every year of
service, whichever is higher.

3. Even if an EE resigns, he shall be given a separation pay if there is a

company policy to that effect. (Philoil vs. Ministry of Labor)

4. Discerning compassion Doctrine: Separation pay shall be allowed as

a measure of social justice for instances where the EE is validly
dismissed for causes other than serious misconduct or those reflecting
on his moral character i.e. A was found to have demanded and
received money in consideration for promise to facilitate approval of
telephone line application. (Nasipit Lumber vs. NLRC)

5. Antipathy and Antagonism Reinstatement is no Longer Possible :

Strained relations in order that it may justify award of separation pay
in lieu of reinstatement with backwages, should be such, that they
are so compelling and so serious in character, that the continued
employment has become inconsistent with peace and tranquility
which is an ideal atmosphere in every workplace. (Sibal vs. Notre Dame)
This is particularly true when the position the EE is occupying is a
position involving trust and confidence. (Alcantara)

C. COMPUTATION of SEPARATION PAY

Includes not just the basic salary but also the regular allowances the EE has
been receiving. (Planters Products vs. NLRC) However, commissions are not
included in such base figure. (Soriano vs. NLRC)

D. EFFECT- RECEIPT

EEs who received their separation pay are not barred from contesting the
legality of their dismissal. The acceptance of those would not amount to
estoppel. (San Miguel vs. Javate)

Backwages
1. Backwages in general are granted on grounds of equity which a
worker has lost due to his illegal dismissal. (Torillo vs. Leogrardo) As a
general rule, an EE is entitled to backwages only where his dismissal
is due to the unlawful act of the ER or to the latters bad faith. (Reyes
vs. Minister of Labor) While generally an order of reinstatement carries
with it an award of backwages, the court may not only mitigate, but
also absolve the ER from liability fro backwages where good faith is
evident. (Durabilt vs. NLRC)

2. Differentiate backwages from separation pay? Separation pay is the

amount that an EE receives at the time of his severance from the
service and is designed to provide the EE with the wherewithal
 107

during the period that he is looking for another employment. (Torillo

vs. Leogardo) Backwages represent compensation that should be
earned but not controlled because of the unjust dismissal. (Lim vs.
NLRC) The basis of computing the two are different, the 1st being
usually the length of the EEs service and the 2nd the actual period
when he was lawfully prevented from working. (Id.)

A. COMPUTATION OF BACKWAGES

1. Art. 279 : An EE who is unjustly dismissed from work shall be entitled to

full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalents computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.

2. The effects of extraordinary inflation are not to be applied without an

agreement between the parties and without an official declaration
thereof by competent authorities. (Lantion vs. GAUF)

Reinstatement
1. Reinstatement is a restoration to a state which one has been
removed or separated. It is the turn to the position from which he was
removed and assuming again the functions of the office already
held. Reinstatement presupposes that the previous position from
which one had been removed still exists, or that there is an unfilled
position more or less of a similar nature as the one previously
occupied by EE (NATU vs. Secretary of Labor)

2. An ER has 2 options in order for him to comply with an order of

reinstatement, which is immediately executory, even pending
appeal, firstly, he can admit the dismissed EE back worth under the
same terms and conditions prevailing prior to his dismissal or
separation or to a substantially equivalent position if the former
position is already filled up. Secondly, he can reinstate the EE merely
in the payroll. (Medina vs. CBS)

3. The decision of the labor arbiter reinstating a dismissed EE is

immediately executory even while the case is brought up on appeal.
(Art. 223) In authorizing this, the law itself has laid down a
compassionate policy which once more vivifies and enhances the
provisions of the Constitution. (Aria vs. NLRC)

4. Reinstatement is not self-executing. Payroll reinstatement or actual

reinstatement needs the issuance of a writ of execution. (Maranao
Hotel vs. NLRC)

5. What if reinstatement is not prayed for in the case before the labor
arbiter. Is the labor arbiter allowed to grant reinstatement?

No. The EE will not be reinstated if he did not pray for reinstatement.
(Labor vs. NLRC) But an earlier case, (General Baptist Colloge vs. NLRC) says
that EE is entitled to reinstatement although he failed to specifically pray
for the same. The Labor case is a later case.
 108

6. After a finding that the dismissal of G, the manager of Dunkin Donuts

violated procedural due process. G asked that he be reinstated. The
company refused on the ground of loss of confidence of G. Is the
refusal valid?

Yes. G held a sensitive position. The case left both parties with less than
full trust and faith in each other. He should be paid severance
compensation in lieu of reinstatement. (Golden Donuts vs. NLRC)

23.6 Termination by EE and Suspension of Operation

Termination by EE Just Causes

Art. 285 : An EE may put an end to the relationship without serving any
notice on the ER for any of the following just causes:
1. Serious insults by the ER and or his representative on the honor and
person of the EE;
2. Ihuman and unbreakable Treatment accorded the EE by the ER or
his representative;
3. Commission of a crime or offense or his representative against
the person of the EE
or any immediate members of his family, and
Analogous cases.

Without Just Cause Requisites

Art. 285(a) : An EE may terminate without just cause the ER-EE relationship
by serving a written notice on the ER at least 1 month in advance. The ER
upon whom no such notice has been served may hold the EE liable for
damages.

A. RESIGNATION

Resignation is a voluntary act of an EE who finds himself in a situation where

he believes that personal reasons cannot be sacrificed in favor of the
exigency of the service, then he has no other choice but to disassociate
himself from his employment. The ER has no control over resignation and
so, in order to ensure that no disruption of work would be involved by reason
of resignation. This practice has been recognized because every business
enterprise endeavors to increase its profits by adopting a device or means
designed towards that goal. Resignation once accepted and being the
sole act of the EE may not be withdrawn without the consent of the ER. (
Intertrod Maritime vs. NLRC)

B. CONSTRUCTIVE DISCHARGE

1. A constructive discharge is a quitting because continued

employment is rendered impossible, unreasonable or unlikely; as, an
offer involving a demotion in rank and diminution in pay. (Philippine
Japan Active Carbon vs. NLRC) This is not a case of voluntary
resignation. It is in the nature of a contrivance to effect to dismissal
without cause. (Rizal Memorial vs. NLRC)
 109

2. Z was hired as a production recorder by a tobacco company. After

14 years of occupying the position, she was demoted to picker by
reason of inefficiency due to alleged frequent mistakes in her report.
Z refused to report for work and filed a complaint for illegal dismissal.
Was the dismissal justified?

No. The management based its action merely on communications

between officers of the company. She was not notified in advance of
the companys actions. The demotion done in bad faith constitute
constructive dismissal.

Suspension of Operations
1. Art. 286 : The bona fide suspension of the operation of a business or
undertaking for a period not exceeding 6 months, or the fulfillment
by the EE of a military or civic duty shall not terminate employment.
In all such cases, the ER shall reinstate the EE to his former position
without loss of seniority rights if he indicates his desire to resume his
work not later than 1 month from the resumption of operations of his
ER or from his relief from the military or civic duty.

2. It is settled that when the bona fide suspension of operations of a

business undertaking exceed 6 months, then the workers
employment shall be deemed terminated. (Lucky Textile vs. NLRC)

Section 24. Retirement

Art. 287 : Any EE may be retired upon reaching the retirement age
established in the CBA or other applicable employment contract.

In case of retirement, the EE shall be entitled to receive such

retirement benefits as he may have earned under existing laws and any
CBA agreement and other agreements: Provided, however, That an EEs
retirement benefits under any CBA and other agreements shall not be less
than those provided therein.

In the absence of a retirement plan or agreement providing for

retirement benefits of EEs in the establishment, an EE upon reaching the
age of 60 years or more, but not beyond 65 years which is hereby declared
the compulsory retirement age, who has served at least 5 years in the said
establishment, may retire and shall be entitled to retirement pay equivalent
to at least month salary for every year of service, a fraction of at least 6
months being considered as 1 whole year.

Unless the parties provide for broader inclusions, the term month
salary shall mean 15 days plus 1/12th of the 13th month pay and the cash
equivalent of not more than 5 days of service incentive leaves.

Retail, service and agricultural establishments or operations

employing not more than 10 EEs or workers are exempted from the
coverage of this provision.

Violation of this provision is hereby declared unlawful and subject to

the penal provisions under Art. 288 of this Code.
 110

Obligation
1. The law does not impose any obligation upon ERs to set up a
retirement scheme for their EEs over and above that already
established under existing laws. (Llora Motors vs. Drilon)

2. Entitlement of EEs to retirement benefits must be specifically granted

under existing laws, a CBA or employment contract or an established
EE policy. (GVM vs. NLRC)

Benefit
1. Retirement benefits are intended to help the EE enjoy the remaining
years of his life, lessening the burden of worrying for his financial
support, and are a form of reward for his loyalty and service to the
ER. (Aquino vs. NLRC)

2. The CBA between a university and its faculty members provided that
in case of unusual circumstances, faculty members whose services
are terminated shall be granted retirement benefits. Are faculty
members affected by an unusual circumstance, such a phase-out,
and who are given separation pay pursuant to law also entitled to
retirement benefits?

Yes. There is no provision in the CBA to the effect that termination

benefits received under the law shall preclude the EE from receiving
other benefits under the agreement. Separation arising from a forced
termination of employment and benefits given as a contractual right
due to many years of faithful service and are not necessarily
antagonistic to each other. (UE vs. Minister of Labor)

PART II
SOCIAL SECURITY

25. 1 Social Security Law (SSL) RA 1161 (as amended by RA 8282)

Section 1, SSL : The Act shall be known as the Social Security Act of 1997.

25.2 Policy of the State

1. Section 2, SSL : It is a policy of the State to establish, develop, promote

and perfect a
promote social justice and
provide meaningful protection to members and their
beneficiaries against the hazardous of disability, sickness,
maternity, old age, death, and other contingencies resulting in
loss of income or financial burden.

2. The law imposes upon ERs and EEs the obligation to become
members of and make contributions to the Social Security System. Is
such a legal imposition valid and constitutional?
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Membership in the SSS is not the result of a bilateral, consensual

agreement where the rights and obligations of the parties are defined
by and the subject to their will. The law requires compulsory coverage
of ERs and EEs, designed to provide security to the working men.
Membership in the SSS is, therefore, in compliance with a lawful exercise
of the police power of the State, to which the principle of non-
impairment of the obligation of contract is not a proper defense. (PBM
vs. SSS)

25.3 Definitions

ER
1. Section 8, SSL : ER any person, natural or juridical, domestic or
foreign, who carries on in the Philippines any trade, business industry,
undertaking or activity of any kind and uses the services of another
person who is under his orders as regards the employment.

Self employed is both ER and EE at the same time.

2. What ERs are exempted from the SSS Law? Government and any of
its political subdivisions, branches or instrumentalities, including
GOCCs controlled by the government.

EE
Section 8, SSL : EE Any person who performs services for an ER where
either mental and physical efforts are used and who receives
compensation for such services and where there is an ER-EE relationship.

Dependent
1. Section 8, SSL : Legal spouse entitled by law to from member to
receive support.
Child :
legitimate
legitimated
legally adopted
illegitimate
who is unmarried, and not gainfully
employed and not reached 21 or over 21 is
congenitally or while still minor permanently
incapacitated and incapable of self-
support, physically or mentally.
Parent: Who is receiving regular support from member.

Beneficiaries
A. PRIMARY
1. Sec. 8, SSL :
Dependent spouse until remarriage
Dependent legitimate, legitimated or legally adopted and
illegitimate children provided that the illegitimate children
shall be entitled to 50% of the share of the legitimate,
legitimated and legally adopted children.
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2. After 4 years of marriage, the spouses Salmonte broke up. The wife
left the conjugal home. Thereafter, the husband V lived with another
woman. When V died, who is entitled to his death benefits?

Any legitimate children of V and illegitimate children (50% of the share

of the legitimate children). The wife of V is not entitled since she does
not qualify anymore as beneficiary since she is not dependent upon the
husband. (Salmonte vs. Salmonte)

B. SECONDARY

Sec. 8
Dependent parents

C. OTHERS

1. Sec. 8 : Absent primary and secondary beneficiaries any other

person designated be members as secondary beneficiary.

2. S, a bachelor dies. His death benefits are claimed by L, his girlfriend

whom he designated as beneficiary. The claim is contested by V, S
brother. Who is preferred?

L, V is not among the primary and secondary beneficiaries provided

under the law. Thus, L, the designated beneficiary is preferred. (Alcantara)

3. E. a widower, designated M as his beneficiary. The unemployed

married children of E contests the payment of death benefits to M. Is
the contention valid?

No. Eddies legitimate children are not considered dependents since

they are already married. (Alcantara)

25.4 Coverage

A. COMPULSORY

I. Enumerate the kinds of employment under compulsory coverage under

the SSL:
1. All EEs not over 60 years of age on date of employment and ERs on
1st day of operation. (Sec. 9 and 10, SSL)

2. Self-employed as determined by the commission but not limited to

self-employed professionals; partners and single proprietors of
businesses, actors, actresses, directors, scriptwriters, news
correspondents who are not EEs; professional athletes, coaches,
trainers, and jockeys and individual farmers and fisherman. (Sec. 9,
SSL)

II. Enumerate the kinds of employment which are excepted from

compulsory coverage under the SSL?
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1. Employment purely casual and not for the purpose of occupation or

business of the ER. (Sec. 8, SSL)

2. Service performed on or in connection with alien vessel if EE

employed when such vessel is outside of the Philippines. (Id.)

3. EEs of the Philippine government, instrumentality or agency thereof.

(Id.)

4. Service performed in the employ of a foreign government, or

international organizations or wholly-owned instrumentality. (Id.)

5. Services performed by temporary EEs excluded by SSS regulation.

(Id.)

6. Domestic helpers who are 60 years of age and below with a monthly
income of not less than P1,000.00 on the date of their employment.
(Sec. 9)

7. Individual farmers and fishermen under SSS rules and regulations. (Id.)

III. As sacristan in the Catholic Church, B cleaned the premises of the

church, tolled its bells, and assisted the priests in the masses and other
church services. In consideration of these services, he received 5% of the
monthly income of the church. Is B subject to compulsory coverage?

Yes. He is considered an EE. The Archbishop as corporation sole, to whom

a share of the income or collection is sent, is considered his ER. (Bascuna vs.
Roman Catholic Archbishop)

B. VOLUNTARY

Enumerate the kinds of employment under the SSL?

1. Filipinos recruited by foreign ERs for employment abroad. (Section 9,
SSL)

2. EE separated from employment (Sec. 11, SSL)

3. Spouse who devote full time managing household and family affairs
unless specifically mandatorily covered. (Sec. 9, SSL)

C. BY ARRANGEMENT

When can coverage be by arrangement? Any foreign government,

international organization or wholly owned instrumentality employing
workers in the Philippines or employing Filipinos outside of the Philippines
may enter into an agreement with the Philippines for the inclusion of such
EEs in the SSS except those already covered by their respective civil service
retirement system. (Sec. 8, SSL)

25.5 Effect of Separation from Employment or Interruption of Business of

Professional Income
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I. What are the effects of separation from employment of an EE compulsorily

covered?
1. ER contribution shall cease at the end of the month of separation an
EE not required to pay contributions.
2. EE credited with all contributions paid and entitled benefits
according to SSL.
3. EE may continue to pay total contribution to maintain right to full
benefit. (Sec. 11, SSL)

II. What are the effects if self-employed realizes no professional or business

income?
1. He shall not be required to pay contributions.
2. He may be allowed to continue to pay contributions under the same
rules as a separated EE. (Sec. 11, SSL)

III. After working for 5 years, J was fired without cause. His dismissal effected
him so much that 2 months after he suffered a stroke. Is he entitled to
disability benefits at the time of his stroke?

Yes. Although an EE is separated from service and has ceased to pay

premiums, he shall be entitled to contributions and to benefits available
under the law. As J was a member of SSS, he remained an SSS member.
(Alcantara)

25.6 Reporting Requirements

1. Sec. 24, SSL : Each ER shall immediately report EEs names, ages, civil
status, occupations, salaries and dependents.

2. Sec. 24-A : Each covered self-employed shall within 30 days from the
1st day he started practice register and report to the SSS his name,
age, civil status, occupation, average monthly net income and his
dependents.

25.7 Funding

I. What are the different sources of funding for the SSS?

1. EE s contribution : The ER shall deduct and withhold from such EEs
monthly salary, wage, compensation or earnings, the EEs
contribution. (Sec. 18) [Compensation an actual remuneration as
well as cash value of any remuneration paid in any medium other
than cash. (Sec. 8)]

2. ERs contribution : ER shall pay, with respect to such covered EE, the
ERs contribution in accordance with the schedule indicated in
Section 18 of this Act.

3. Government contributions : Appropriation of necessary sums to meet

the estimated expenses of the SSS for each ensuing year.

4. Contributions from those voluntarily covered by the SSS.

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II. The funds contributed to the System belong to the members who will
receive benefits, as a matter of right, whenever the hazards provided by
the law occur. (CMS Estate vs. SSS)

Effects of Non-remittance

Sec. 22, SSL : Failure of refusal of the ER to pay or remit contributions shall
not prejudice the right of the covered EE to the benefits of coverage.

25. 8 Benefits

I. What are the different types of benefits under the SSL?

1. Monthly pension. (Sec. 12, SSL)
Minimum pension of P1,200.00 for members with at least 10
credited years of service and P2,400.00 for those with 20
credited years of service.

2. Dependents pension (Sec. 12-A, SSL)

3. Retirement (Sec. 12-B, SSL)

paid at least 120 monthly contributions
monthly pension for as long as he lives
4. Death (Sec. 13, SSL)
paid at least 36 monthly contributions
lump sum of 36 monthly pensions

5. Permanent disability (Sec. 13-A, SSL)

6. Funeral (Sec. 13-B, SSL)

7. Sickness (Sec. 14, SSL)

payment of at least 3 monthly contributions in the 12-month
period immediately preceding the sickness.
Confinement for more than 3 days
Notice to ER within 5 calendar days of sickness
Exhaustion of sick leaves with full pay.

8. Maternity (Sec. 14-A, SSL)

A female member who has paid at least 3 monthly
contributions in the 12-month period immediately preceding the
semester of her childbirth or miscarriage shall be paid a daily
maternity benefit equivalent to 100% of her average daily
salary credited for 60 days or 78 in case of caesarian delivery
for the 1st 4 deliveries or miscarriages.

These are all tax-exempt.

II. Section 2, Paternity Leave Act of 1995: Notwithstanding any law, rules and
regulations on the contrary, every male EE in the private and public sectors
shall be entitled to a paternity leave of 7 days with a full pay for the 1st four
deliveries of the legitimate spouse with whom he is cohabiting. The male EE
applying for paternity leave shall notify his ER of the pregnancy of his
legitimate spouse and the expected date of such delivery.
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III. On his way home from work, R went to a movie house to watch. He is
stabbed by an unknown assailant while watching. The SSS denied his claims
on the ground that the injury is not work-connected. Is the denial valid?

No. It is not necessary for the enjoyment of benefits that there be casual
connection between the injury and the work of the EE. What is required is
membership in the SSS.

Prescription Periods

Art. 1144 : 10 years from the time the right of action accrues since this is an
obligation created by law.

Benefit Protection

1. Sec. 15, SSL : Benefits are not transferable. No power of attorney or

other documents executed as beneficiary in favor of any agent,
attorney or other person for the collection of their behalf shall be
recognized except which beneficiary is physically unable to collect.
2. Sec. 15, SSL : When Beneficiary is a national of a foreign country
which does not extend benefits to Filipino beneficiary residing in the
Philippines or which is not recognized by the Philippines.
General Rule : He is not entitled to benefit.
Exception: Social Security Commission may authorize payment
where the best interest of the SSS will be served.

3. Sec. 16, SSL : All benefit payments made by SSS shall be exempt from
all kinds of taxes, fees or charges and shall not be liable to
attachment, garnishments, levy or seizures by or under any legal or
equitable process whatsoever, either before or after receipt except
to pay any debt of member to SSS.

4. Sec. 17, SSL : No fees shall be payable to agent, attorney, other

person-in-charge of preparation, filing or pursuing any claim and any
stipulation to the contrary is void. Members of the Bar who appear as
counsel in any case heard by the Commission shall be entitled to
attorneys fees not exceeding 10% of the amount collected, any
stipulation of the contrary shall be null and void.

25.9 Dispute Settlement

Jurisdiction and Period of Dispute Settlement

Sec. 5 : Disputes involving coverage, benefits, contribution, penalties and

any related matter shall be decided by the Social Security Commission or
duly designated member, or duly authorized hearing officers and should
be decided within the mandatory period of 20 calendar days from
submission. Decision shall be final 15 days after date of notification.

Execution of Decisions
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Sec. 5, : The Commission motu proprio or on motion of any interest party

may issue order of execution of decision after same is final and executory.

Appeal

Sec. 5 : Appeal to CA on law and facts. Appeal to the SC on pure questions

of law.

Section 26. Workmens Compensation EEs Compensation and State

Insurance Fund (ECSIF)

26.1 Law

Policy Objective

Art. 166 : To promote and develop a tax exempt EEs compensation

program whereby EEs and their dependents, in the event of work-
connected disability or death, may secure adequate income benefit, and
medical or related benefit.

Rationale
The primary purpose of a workmens compensation act is to provide
compensation for disability or death resulting from occupational injuries or
diseases or accidental injury; the statute is a remedial one, to compensate
reasonably those who are injured while in the employment of others, as part
of the natural, necessary cost of production. (Azucena)

Nature of the State Insurance Fund

1. The law establishes a state insurance fund built by the contribution of
ERs based on the salaries of their EEs. The injured worker does not
have to litigate his right to compensation. The worker simply files a
claim with the ECC. The payment of benefits is more prompt. The cost
of administration low. (Sarmiento vs. ECC)

2. Give the characteristics of the EEs Compensation Program

Tax exempt.
Designed to ensure promptitude in cases of work-connected
disability or death in the award of benefits.
Funded by monthly contributions of all covered ERs.
Compulsory on all ERs and their EEs not over 60 years of age.
Benefits are exclusive and in place of all other liabilities of the
ER to the EE.
Has its own adjudicative machinery with original exclusive
jurisdiction on any matter related thereto, independent of
other tribunals except the SC. (SMC vs. NLRC)

Interpretation

As agent charged by the law to implement social justice guaranteed and

secured by the Constitution, the ECC should adopt a liberal attitude in favor
of the EE in deciding claims for compensability, especially where there is
some basis in the facts inferring a work connection to the accident. (Lazo
vs. ECC)
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26.2 Definitions

ER
Art. 266 : Any person, natural or juridical, employing the services of an EE.

Dependent

What are the dependents under the ECSIF?

1. Legitimate
2. Legitimated
3. Acknowledged natural child
who is unmarried, and not gainfully employed, and not over
21 years of age, or over 21 provided he is incapable of self-
support due to physical or mental defect which is congenital
or acquired during minority.
4. Spouse : Legitimate and living with the EE.
5. Parents : of EE wholly dependent upon EE for regular support. (Art.
166)

Beneficiaries
Who are the beneficiaries under the ECSIF?
1. Primary
a. Spouse dependent spouse until remarriage
b. Children dependent; provided dependent acknowledged
natural children shall be considered as primary beneficiary
when there are no other dependent children who are not
eligible and qualified for monthly income benefit.
2. Secondary
a. Parents dependent subject to restrictions imposed on
dependent children.
b. Children illegitimate subject to restrictions imposed on
dependent children
c. Legitimate descendants.

26.3 Compensability

1. What is an injury? Harmful change in the human organism from any

accident arising out of and in the course of the employment. (Art.
167)

2. If a soldier is killed by an accidental discharge of his companions rifle

while an overnight pass to a rebel infested area, is the death of a
soldier compensable?

Yes. The death arose out of and in the course of the employment since
the soldier was not on vacation leave and he had lawful permission to
go to the place and the other soldier was authorized to carry a firearm.
(Hinoguin vs. ECC)

3. What are the requisites for an injury to be considered as work-

related?
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The injury must be the result of an employment accident satisfying all of

the following grounds:
a. The EE must have been injured at the place where his work
requires him to be.
b. The EE must have been performing his official functions.
c. If the injury is sustained elsewhere, the EE must have been
executing an order for the ER. (Sec. 1, Rule III, Book I, IRRs)

Proximate Cause

The right to compensation extends to disability due to disease

supervening upon and proximately and naturally resulting from a
compensable injury. Where the primary injury is shown to have arisen in the
course of employment, unless it is the result of an independent intervening
cause attributable to claimants own negligence or misconduct i.e.
condition of classroom floor caused Belarmino to slip and fall and suffer
injury as a result, hence all medical consequences flowing from it, the
premature delivery of her baby, and her death are compensable.
(Belarmino vs. ECC)

Going to or Coming from Work Rule

1. What is the going and coming rule?

In the absence of special circumstances, an EE injured while going to or

coming from his place of work is excluded from the benefits of
workmens compensation acts, except:

a. Where the EE is proceeding to or from his work on the premises

of the ER.

b. Where the EE is about to enter or about to leave the premises

of his ER by way of the exclusive or customary means of ingress
and egress.

c. Where the EE is charged, while on his way to or from his place

of employment or at his home, or during his employment with
some duty or special errand connected with his employment.

d. Where the ER as an incident of the employment provides the

means of transportation to and from the place of employment.

2. What is the ingress or egress/proximity rule?

Employment includes not only the actual doing of the work, but a
reasonable margin of time and space necessary to be used in passing
to and from the place where the work is to be done. As a general rule,
employment may be said to begin when the EE reaches the entrance
to the ERs premises where the work is to be done; but it is clear that in
some cases the rule extends to include adjacent premises used by the
EE as a means of ingress and egress with the express or implied consent
of the ER. (Iloilo Dock vs. WCC)
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Incidents of Employment

It is settled that injuries sustained in connection with acts which are

reasonably incidental to the employment are deemed arising out of such
employment. Generally, such incidents of work include:

1. Acts of personal ministration for the comfort and convenience of the

EE i.e. answering a call of nature.

2. Acts for the personal benefit of the ER i.e. special errand rule.

3. Acts done to further the goodwill of the business.

4. Slight deviations from work, from curiosity or otherwise.

5. Acts in emergencies i.e. death of an EE while attempting to rescue a

co-EE (Azucena)

Living, Boarding, Lodging on Premises of ER, or at Working Place

Compensable if living on the ERs premises or at the place of work is an

express or implied requirement of the contract of hiring and when the injury
results from a risk or danger which is reasonably incidental to the
employment. (Azucena)

While Travelling

Compensation depends upon whether the injury results from a risk inherent
in the nature of the employment, or reasonably incidental incidental
thereto, and upon whether the EE was engaged in the exercise of some
functions or duties reasonably necessary or incidental in the performance
of the contract of employment, or whether he was authorized or required
by such contract to be. (Azucena)

Assault

If there is a causal relation between the assault and the employment, the
assault is compensable. (Iloilo Dock vs. WCC)

Sickness Defined; Occupation or Compensable Disease

1. Define sickness?
Any illness
a. definitely accepted as an occupational disease listed by the
Commission, or
b. any illness caused by employment subject to proof that the risk
of contracting the same is increased by working conditions.
(Art. 167)
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If the illness are not occupational diseases, the claimant must

present proof that he contracted them in the course of his
employment. (Galanida vs. ECC)

2. What is occupational disease?

Disease due wholly to causes and conditions which are normal and
constantly present and characteristic of the particular conditions which
are normal and constantly present and characteristic of the particular
occupation. (Menez vs. ECC)

A. THEORY OF THE INCREASED RISK

If an ailment is not included in the list of occupational diseases as drawn up

by the Commission, the claimant has the burden of proving that the nature
of the work increased the risk of contracting the disease. (Dabatian vs. GSIS)
To establish compensability under the increased risk theory, the claimant
must show proof of reasonable work-connection, not necessarily direct
causal relation. The degree of proof is merely substantial evidence as will
support a decision, or clear and convincing evidence. (Narazo vs. ECC)

A.1 Specific Illnesses

Give examples of diseases which are not listed as occupational diseases:

1. Peptic ulcer
2. Cancer. But in some cases, it is
3. Bangungot
4. Incomplete abortion
5. Schistomiasis
6. Rheumatoid Arthritis
7. Adenocarcinoma
8. Cirrhosis of the liver
9. Prolapsed uterus.

26.4 Coverage and Liability

Compulsory Coverage

Art. 168 : All ERs and their EEs not over 60 years of age, provided, an EE
who is over 60 and paying contribution to qualify for retirement or life
insurance benefits shall be subject to compulsory coverage.

Foreign Employment

Art. 170 : The Commission shall ensure adequate coverage of Filipino EEs
employed abroad. Compulsory coverage of the ER shall take effect on the
1st day of operation, and that of the EE on the date of employment.

Exclusions

1. Art. 172 : The State Insurance Fund shall be liable for compensation
to the EE or his dependents, except when the disability or death was
occasioned by the:
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a. EEs intoxication,
b. Willful intention to injure or kill himself or another,
c. Notorious negligence, or
d. Otherwise provided under this Title.

2. What defenses may be interposed by the ECSIF against a claim for

compensation made by a covered EE?

a. The injury is not work-connected or the sickness is not

occupational.

b. The disability or death was occasioned by the EEs intoxication,

willful intention to injure or kill himself or another, or his notorious
negligence. (Art. 172)

c. No notice of sickness, injury or death was given by ER. (Art. 206)

d. The claim was filed beyond 3 years from time of cause of

action. (Art. 201)

A. INTOXICATION OR DRUNKENNESS

It has been held that even if it could be shown that a person drank
intoxicating liquor it is incumbent upon the person invoking drunkenness as
a defense to show that said person was extremely drunk. Thus, intoxication
which does not incapacitate the EE from following his occupation is not
sufficient to defeat the recovery of compensation, although intoxication
may be a contributory cause to his injury. It must be shown that the
intoxication was the proximate cause of death or injury and the burden of
proof lies on him who raises drunkenness as a defense. (Nitura vs. ECC)

B. SELF-INFLICTED INJURIES

According to American authorities, suicide is compensable in the following

cases:
1. When it results from insanity from compensable work injury or disease.
2. When it occurs during a delirium resulting from compensable disease.
(NAESS Shipping vs. NLRC)

C. NOTORIOUS NEGLIGENCE

Notorious negligence has been defined as something more than mere or

simple negligence or contributory negligence; it signifies a deliberate act
of the EE to disregard his own personal safety. Disobedience to rules, orders,
and/or prohibition does not in itself constitute notorious negligence, if no
intention can be attributed to the injured to end his life. (Nitura vs. ECC)

26.5 Funding

What are the sources of funding of the ECSIF? Contribution shall be paid in
their entirety by the ER and any contract or device for the deductions of
any portion thereof from the wages or salaries of the EEs shall be null and
void. (Art. 183) EEs do not have any contribution. The government accepts
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general responsibility for the solvency of the ECSIF. Any deficiency will be
covered by the supplemental appropriations from the National
Government. (Art. 184)

Effects of Non-Remittance

Art. 196 : Failure or refusal of the ER to pay or remit the contributions shall
not prejudice the right of the EE or dependent to benefits.

26.6 Benefits

What are the different types of benefits under the ECSIF?

1. Medical benefits consisting of medical services and rehabilitation
services. (Art. 185)
2. Disability
a. Temporary total (Art. 191)
b. Temporary permanent (Art. 192)
c. Partial permanent (Art. 193)
3. Death and Funeral minimum death benefit shall be P15, 000.00 and
funeral benefit shall be P8,000.00 (Art. 194)

All the benefits are tax-exempt.

Benefit Protection

Art. 175 : Except as otherwise provided under this Title, no contract

,regulation or device whatsoever shall operate to deprive the EE or his
dependents of any part of the income benefits and medical or related
services granted under this Title. Existing medical services being provided
by the ER shall be maintained and continued to be enjoyed by their EEs.

Prescriptive Periods

Art. 201 : 3 years from the time the cause of action accrued.

Exclusivity of Benefits

1. Art. 173 : Liability of the ECSIF shall be exclusive and in place of other
liabilities of ER to EE, dependents or anyone otherwise entitled to
receive damages on their behalf. The payment of compensation
shall not bar the recovery of benefit provided in other laws i.e.
payment bars recovery for damages arising from the death of the
member.

2. As a result of a cave-in, several miners were buried alive. The heirs

filed an action with the RTC for damages against the company on
grounds of breach of contract. The company moved to dismiss the
suit on grounds of exclusive liability of the ECSIF. Is the motion
meritorious?

No. The EE or his heirs has the right of selection or choice of action. He
cannot however pursue both courses of action simultaneously. (Floresca
vs. Philex)
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Liability of Third Parties

Art. 174 : When disability or death is caused by circumstances creating a

legal liability against a 3rd party, the system shall still pay for the benefits.
However, the system shall be subrogated to the rights of the disabled EE or
dependents in case of death in accordance with the general law. Where
the system recovers damages in excess shall be delivered to the disabled
EE or other persons entitled, after deducting the costs of the proceedings
and expenses of the system.

Benefit Protection

1. Art. 198 : As a general rule, no claim for compensation is transferable

or liable to tax, attachment, garnishment, levy or seizure by or under
any process whatsoever, either before or after receipt, except if it is
to pay any debt of the EE to the system.
2. Art. 203 : No agent, attorney, or other person pursuing or in-charge of
preparation of filing any claim shall demand or charge any fee and
any stipulation to the contrary shall be null and void. The retention or
deduction of any amount from any benefit for the payment of such
fee or such services is prohibited.

26.7 Dispute Settlement

Art. 180 : Government service insurance system or the social security system
shall have original and exclusive jurisdiction to settle any dispute with
respect to coverage, entitlement of benefits, collection of contributions
and penalties and other related matters.

Appeal

Art. 181 : Decisions or orders shall be reviewable by the SC on question of

law.

Section 27: Government Service Insurance System

27. 1 Revised Government Service Insurance Act of 1997

27.2 Definitions

ER

Sec. 2, GSIS Act of 1997 : The ER includes :

1. The national government, its political subdivisions, branches,
agencies or instrumentalities.
2. GOCCs.
3. Financial institutions with original charters.
4. Constitutional commissions and the judiciary.

EE
Sec. 2, GSIS Act of 1997 : EE shall include :
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1. Any person receiving compensation while in the service of ER

whether by election, or appointment, irrespective of the status of
appointment.
2. Barangay officials.
3. Sanggunian officials.

Dependents

Who are considered dependents under the GSIS Law?

1. Child
a. Legitimate.
b. Legitimated.
c. Legally adopted.
d. Illegitimate.
who is unmarried, not gainfully employed, and not
over the age of majority, or is over the age of majority
but is incapacitated and incapable of self-support
due to mental or physical defect, acquired prior to
age of majority.
2. Spouse legitimate and dependent for support upon member or
pensioner.
3. Parents legitimate parent dependent upon member for support.
(Sec. 2, GSIS Act of 1997)

Beneficiaries
Who are the beneficiaries under the GSIS Law?
1. Primary :
a. Legal dependent spouse until remarriage.
b. Dependent children.
2. Secondary :
a. Dependent parents.
b. Legitimate descendants subject to restrictions of dependent
children.
27.3 Compulsory Coverage

Sec. 3, GSIS Act of 1997 : Coverage shall be compulsory for all EEs receiving
compensation who have not reached compulsory retirement age,
irrespective of the employment status.

27.4 Effect of Separation of Employment

Sec. 4, GSIS Act of 1997 : A member separated from the service shall
continue to be a member and entitled to whatever benefits he has
qualified, in event of any contingency compensable under this Act.

27.5 Reporting Requirements

Sec. 6, GSIS Act of 1997 : The ER shall report to the GSIS the names of all EEs,
corresponding employment status, positions, salaries and other pertinent
information.

27.6 Funding
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What are the different sources of funding of the GSIS?

1. ER and member contributions. (Sec. 5, GSIS Act of 1997)
2. Government guarantees the fulfillment of the obligations of the GSIS
to members. (Sec. 8, GSIS Act of 1997)

27.7 Benefits

What are the benefits provided by the GSIS?

1. All members
a. Lifetime insurance.
b. Retirement at least 60 years of age, and 15 years of service.
however, EE is allowed to continue to work to
complete the 15-year service requirement. (Cana vs.
CSC)
2. Disability Provided :
he has paid at least 36 monthly contributions within the
5-year period immediately preceding his disability, or
he has paid a total of at least 180 monthly
contributions prior to his disability; and his disability is
not compensable under any other law.

a. Survivorship - dependent spouse shall be entitled to

survivorship benefits for life or until she remarries. Dependent
children are entitled to benefit while still minors and
unmarried.

b. Separation

c. Unemployment.

3. Judiciary Life insurance only. (Sec. 3, GSIS Act of 1997)

*** All are tax exempt.

Prescriptive Period

Sec. 28, GSIS Act of 1997 : All claims, except for life and retirement
benefits shall prescribed within 4 years from date of contingency.

Benefit Protection

Sec. 39, GSIS Act of 1997 :

1. All benefits paid shall be exempt from taxes.
2. All benefits shall be exempt from attachment, garnishment,
executions, levy or other processes, issued by courts, quasi-judicial
agencies or administrative bodies including COA disallowances and
all forms of financial obligations of members, including pecuniary
accountability arising from or caused or occasioned by exercise of
performance or official functions or duties, or incurred relative to or
in connection with his position or work except when monetary
liability, contractual or otherwise, is in favor of the GSIS.

27.8 Dispute Settlement

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Sec. 30, GSIS Act of 1997 : Government Service Insurance System shall have
original and exclusive jurisdiction to settle any dispute arising under act or
any laws administered by the GSIS. The Board may designate any member
of the Board or official of the GSIS who is a lawyer as hearing officer to
receive evidence, make findings of fact and submit recommendations.

Appeals

Sec. 31, GSIS Act of 1997 : Appeals of decisions/awards of the Board shall
be governed by Rules 43 and 45 of the 1997 Rules of Civil Procedure.
Appeal shall not stay orders unless stayed by orders of the Board, CA or the
SC.

Section 28. National Health Insurance Act of 1995

28.1 Law National Health Insurance Act of 1995 RA 7875

28.2 Purposes/Objectives

1. Section 2, National Health Insurance Act : The State shall adopt an

integrated and comprehensive approach to health development
which shall endeavor to make essential goods, health and other
social services available to all the people at affordable cost.

(b) Universality The National Health Insurance Program shall give the
highest priority to achieving coverage of the entire population with at
least at a basic minimum package of health insurance benefits.

2. Section 3, National Health Insurance Act : This Act seeks to :

a. Provide all citizens of the Philippines with the mechanism to
gain financial access to health services;
b. Create the National Health Insurance Program, hereinafter
referred to as the Program to serve as the means to help the
people pay for health care services; and
c. Establish the Philippine Health Insurance Corporation, that will
administer the Program at central and local levels.

3. Section 5, National Health Insurance Act : There is hereby created the

National Health Insurance Program which shall provide health
insurance coverage and ensure affordable, acceptable, available
and accessible health care services for all the citizens of the
Philippines, in accordance with the policies and specific provisions of
this Act. This social insurance program shall serve as the means for the
healthy to pay for the care of the sick and those who can afford
medical care to subsidize those who cannot. It shall initially consist of
Programs I and II of Medicare and be expanded progressively to
constitute one universal health insurance program for the entire
population. The Program shall include a sustainable system of the
funds constitution, collection, management and disbursement for
financing of the availment of a basic minimum package and other
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supplementary packages of health insurance benefits by a

progressively expanding proportion of the population.

4. The Program shall be limited to:

a. paying for the utilization of health services by covered
beneficiaries or
b. to purchasing health services in behalf of such beneficiaries.

It shall be prohibited from:

c. providing health care directly
d. from buying and dispensing drugs and pharmaceuticals,
e. from employing physicians and other professionals for the
purpose of directly rendering care, and from
f. owning or investing in health care facilities.

28.3 Coverage
1. Section 7, National Health Insurance Act : All citizens of the Philippines
shall be covered, provided, the Program shall not be made
compulsory in certain provinces and cites until the Corporation shall
be able to ensure the members in such localities shall have
reasonable access to adequate and acceptable health care
services.

2. Who are the legal dependents of a member?

a. Legitimate spouse who is not a member.
b. Unmarried and unemployed legitimate, legitimated,
illegitimate, acknowledged children, legally adopted or
stepchildren
below 21 years of age or 2 years old and above but suffering
from congenital disability, either physical or mental, or any
disability acquired that renders them totally dependent on
member for support.
c. Parents who are over 60 years of age whose monthly income
is below an amount to be determined by the Corporation.
(Sec. 4, National Health Insurance Act)

28.4 Funding
What are the sources of funding of the NHIF?
1. Members contributions.
2. Current balance of the Health Insurance Funds of the SSS and the
GSIS
3. Other appropriations earmarked by the national and local
governments purposely for the implementation of the Program.
4. Subsequent appropriations.
5. Donations and grant-in-aid.
6. Accruals.
7. Contributions by LGUs for indigent members.

28.5 Health Care Providers

I. What are the minimum accreditation requirements of health care

providers
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1. Human resource, equipment and physical structure in conformity

with the standards of the relevant facility, as determined by the Dept.
of Health.
2. Acceptance of formal program of quality assurance and utilization
review.
3. Acceptance of the payment mechanisms specified in the following
section.
4. Adoption of referral protocols and health resources sharing
arrangements.
5. Recognition of the right of patients.
6. Acceptance of information system requirements and regular transfer
of information.

II. Give the categories of personal health services to be granted under the
NHIP :
1. Inpatient hospital care i.e. room and board services of health care
professionals.
2. Outpatient care i.e. diagnostic, laboratory and other medical
examinations services and personal preventive services.
3. Emergency and transfer services.
4. Such other health services that the Corporation shall determine to
be appropriate and cost-effective.

III. Give the services that are excluded :

1. Non-prescription drugs and devices.
2. Outpatient psychotherapy and counseling for mental disorders.
3. Drug and alcohol abuse or dependency treatment.
4. Cosmetic surgery.
5. Home and rehabilitation services.
6. Optometric Services.
7. Normal Obstetrical delivery. (Sec. 11, National Health Insurance Act)

28.6 Grievance and Appeal

I. Section 40, National Health Insurance Act : The following acts shall
constitute valid grounds for grievance action:
1. Violation of the rights of patients.
2. Willful Neglect of duties of program implementers that results in the
loss or non-enjoyment of benefits by members or their dependents.
3. Unjustifiable delay in actions or claims.
4. Delay in the processing of claims that extends beyond the period
agreed upon.
5. Any other Act or neglect that tends to undermine or defeat the
purposes of this Act. (VANUD)

II. Section 41, National Health Insurance Act : A member, his dependent, or
a health care provider may file a complaint for grievance based on any of
the above grounds, in accordance with the following procedure :
1. A complaint for grievance must be filed with the Office which shall
rule on the complaint within 90 calendar days from receipt thereof.

2. Appeals from Office decisions must be filed with the Board within 30
days from receipt of notice of dismissal or disallowance by the Office.
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3. The Office shall have no jurisdiction over any issue involving the
suspension or revocation of accreditation, the imposition of fines, or
the imposition of charges on members or their dependents in case of
revocation of their entitlement.

4. All decisions by the Board as to entitlement of benefits of members

or to payments of health care providers shall be considered final and
executory.

Section 29. CARL, RA 6657

1. Give the provisions of the 1987 Constitution of agrarian reform?

The State shall promote comprehensive rural development
and agrarian reform. (Sec. 21, Art. II, Const.)
The State shall by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who
are landless, to own directly or collectively the lands they till or,
in the case of other farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands, subject
to such priorities and reasonable retention limits as the
Congress may prescribe, taking into account ecological,
developmental and equity considerations, and subject to the
payment of just compensation. In determining retention limits,
the State shall respect the right of small landowners. The State
shall provide incentives of voluntary land-sharing. (Sec. 4, Art.
XIII, Const.)

2. Define agrarian reform.

Agrarian reform means the redistribution of lands regardless of crops or

fruits produced to farmers and regular farmworkers who are landless,
irrespective of tenurial arrangement, to include the totality of factors
and support services designed to life the economic status of the
beneficiaries and all other arrangements alternative to the physical
redistribution of lands, such as production or profit sharing, labor
administration and distribution of shares of stock, which will allow the
beneficiaries to receive a just share of the fruits of the lands they work.
(Sec. 3, CARL)

3. Lands covered by the CARL.

All alienable and disposable lands of the public domain
devoted to or suitable for agriculture. No reclassification of
forest or mineral lands to agriculture lands shall be undertaken
after the approval of this Act until Congress, taking into
account ecological, developmental and equity
considerations, shall have determined by law, the specific
limits of the public domain.

All lands of the public domain in excess of the specific limits as

determined by Congress in the preceding paragraphs.
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All other lands owned by the Government devoted to or

suitable for agriculture; and

All private lands devoted to or suitable for agriculture

regardless of the agricultural products raised or that can be
raised thereon. (Sec. 4, CARL)

>9/30/02<
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